Sectors Shares

Nampak Limited - Unaudited Group Results And Ordinary Dividend Announcement For The Half Year Ended 31 March 2017

Release Date: 30/05/2017 14:20
Code(s): NPK
 
Wrap Text
Unaudited group results and ordinary dividend announcement for the half year ended 31 March 2017

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 2017

* Group revenue of R9.3 billion, down 1% with foreign operations results 
  impacted by a 10% stronger average ZAR/USD exchange rate
* Group trading profit of R1.1 billion, up 12%
* Trading profit from the Rest of Africa of R610 million, up 32%, now
  55% of group trading profit
* Group operating profit of R1.1 billion up 30%
* Net profit for the period of R853 million up 41%
* Earnings per share of 120.8 cents up 15%
* Headline earnings per share of 113.1 cents up 8%
* Net gearing at 51% is within target range with significant headroom in 
  funding covenants
* Nigeria and Angola risk and exposure successfully managed cash
  extraction rate at 80% and 61% of in country cash balances hedged
* USD54 million cash extraction expected from Nigeria before 30 September 2017

Comments from the CEO, Andre de Ruyter
During the period, Nampak delivered good results in spite of a challenging 
trading environment, with group operating profit of R1.1 billion up 30% from 
prior year accompanied by a 12% increase in trading profit. This was due to 
record beverage can sales in Angola; improved results from Bevcan South Africa, 
Nigeria general metal packaging, liquid packaging in South Africa as well as 
paper packaging in Zimbabwe. Nampak's comprehensive plan to improve operational 
performance also contributed, with margins improving to 11.9% from 10.5% in 2016. 
This improvement is pleasing in view of the 10% strengthening in the average 
ZAR/USD (South African rand/US dollar) exchange rate that impacted the translation 
of foreign earnings to ZAR. Trading conditions, across the continent, were 
characterised by sluggish growth and low consumer confidence which impacted 
consumer spending and hence demand for packaging with group revenue slightly 
down 1% for the period.

Being mindful of the challenging and uncertain macroeconomic environment, we 
continue to focus on managing and optimising aspects of the business within our 
control, namely costs, asset performance and processes. Capex spend of R470 million 
for the period was tightly controlled and hence 49% lower than the prior year with 
significantly improved project management capability. Key projects were delivered on 
time, within budget and with operational efficiencies meeting expectations. The 
asset recapitalisation programme in South Africa is almost complete and already 
contributing to improved efficiencies and competitiveness.

It is expected that consumer demand will remain subdued for the rest of the year
affected by various macroeconomic dynamics. Accordingly, internal efficiencies
and cost control remain key focus areas with cost savings of R70 million recorded
for the period.

The substantially strengthened Nampak statement of financial position has 
significantly enhanced our ability to be resilient during continued macro-economic 
uncertainty. Group net gearing at 51% remains within the target range and short term 
liquidity ratios are strong. Adequate funding facilities, to be used prudently, are 
available both internationally and locally, and the group remains well within its 
debt covenants.

Cash held in the restricted areas of Nigeria and Angola increased to R2.4 billion 
from R1.5 billion at 31 March 2016 and R2.0 billion at 30 September 2016 on the back 
of strong cash generation. Cash extraction from both countries remains a key focus 
area in an effort to mitigate currency devaluation risk. The combined cash extraction 
rate in these countries was 80% and the cash position hedged was 61% at 31 March 2017, 
up from 50% at 30 September 2016. The slower than optimal cash extraction as well as 
the exposure to currency volatility on the cash and monetary items remain risk areas to 
the extent that the positions are not fully hedged.

In view of the current risks and challenges, Nampak has decided not to declare an 
interim ordinary dividend, rather focusing its efforts on conserving cash. The medium 
to long term outlook for packaging in key African markets remains favourable, 
underpinned by expected growth in household consumption.

Group performance review
Group performance from continuing operations
R million                                                  2017      2016   % change 
Revenue                                                   9 331     9 422         (1) 
Trading profit                                            1 108       989         12
Abnormal gains/(losses)                                      24      (119)         - 
Operating profit                                          1 132       870         30
Profit for the period                                       853       606         41
Basic earnings per share (cents)                          120.8     105.0         15
Headline earnings per share (cents)                      113.1      105.2          8

Group revenue at R9.3 billion was 1% lower for the six months to 31 March 2017, with 
a 10% stronger average ZAR/USD exchange rate negatively impacting translation of 
foreign operations. Strong revenue growth of 11% was achieved by the Metals 
division and is attributable to robust beverage can sales in Angola and improved 
volumes from Bevcan SA. This strong performance was offset by negative growth in the 
Plastics division outside of South Africa, lower demand in most markets in the Paper 
division as well as a subdued performance by the Glass division, owing to softer demand.

The Metals division strengthened its trading profit by R261 million and trading margin 
to 15.9% for the six months ended 31 March 2017, resulting in an overall improved 
group margin of 11.9% from 10.5%. Operating profit improved by 30% to R1.1 billion. 
This was primarily as a result of net abnormal gains of R24 million compared to net 
abnormal losses of R119 million in the prior year which were largely attributable to a
devaluation in the Angolan kwanza in December 2015.

The effective tax rate for the period increased from 4% to 9% primarily as a result of 
deferred tax assets raised in the current period being lower than the prior period mainly 
due to the utilisation of capital gains tax losses on the sale and leaseback transaction 
in 2016. The tax rate is lower than previous guidance owing to a higher profit contribution 
from particularly Angola where we currently have the benefit of a tax holiday. Future 
effective tax rates will be impacted by relative contributions from Nigeria and Angola, 
with the tax rate in 2018 expected to increase to between 15% and 20%. The Bevcan Nigeria 
pioneer status expires on 31 December 2017 which will impact Nampak's tax rate in FY2018 
while the Bevcan Angola tax holiday ends on 31 December 2018 which will impact Nampak's tax
rate in FY2019.

Basic earnings per share advanced by 15% to 120.8 cents per share. An increased minority 
share of earnings coupled with a 1% increase in the weighted average number of shares in 
issue impacted earnings per share. Headline earnings per share consequently increased by 
8% to 113.1 cents per share.

The net working capital cycle absorbed R912 million during the period (2016: R488 million). 
The increased absorption was mainly due to R223 million invested in inventory compared to a 
R169 million reduction in the first six months of 2016. This was mainly due to an increased 
funding of inventories required to meet increased demand in Angola. A lower inflow from 
trade receivables relative to the prior year was in the main compensated for by a lower 
absorption of cash in accounts payables as capital project expenditure reduced. The quality 
of the group's accounts receivables book remains extremely good. The release of cash into 
the working capital cycle from inventory in the prior year was achieved through the right 
sizing of inventory levels off high inventory holdings at September 2015 that benefited 
both the first and second halves of the 2016 financial year. The business started the first 
half of the 2017 financial year with very low inventory and trade receivables levels owing 
to the good progress made in managing inventories and account receivables in 2016. 

The balance sheet remained strong on the back of the reduction of borrowings achieved in 
2016, the strengthening of the ZAR as well as lower investment in capital expenditure during 
the period, compared to prior periods. Proceeds from the sale and leaseback transaction
received in September 2016 were utilised to reduce interest bearing debt in South Africa, 
reducing net borrowings to R5.2 billion. This led to a 17% lower net interest expense and 
improved net gearing to 51% from 74% in the comparative period.

Whilst the group experienced ongoing currency volatility and liquidity constraints in 
Angola and Nigeria, the situation continued to be monitored closely. Foreign exchange 
allocations for the six months to 31 March 2017 from Angola were at an average of 80% of 
invoices presented for payment, whilst foreign exchange allocations in Nigeria also 
improved to 80% for the period. Cash held in these restricted areas increased to 
R2.4 billion from R1.5 billion at 31 March 2016 and R2.0 billion at 30 September 2016 
on the back of strong cash generation. The combined hedged position of 61% at 31 March 2017 
was up from 25% at 31 March 2016 and 50% at 30 September 2016. The slower than optimal 
cash extraction as well as the exposure to currency volatility on the cash and monetary 
items remain risk areas to the extent that the positions are not fully hedged. 

Nampak's cash, cash extraction rates and hedging positions in Angola and Nigeria at 
different periods are presented below:

At 31 March 2017
R million                                                    Angola     Nigeria     Total
Cash on hand                                                  1 436         955     2 391
Hedged                                                        1 107         344     1 451
Net unhedged cash                                               329         611       940
Cash extraction rate (%)*                                        80          80        80
% of cash on hand hedged                                         77          36        61
                                                     
At 30 September 2016                                 
R million                                                    Angola     Nigeria     Total
Cash on hand                                                  1 004         984     1 988
Hedged                                                          614         376       990
Net unhedged cash                                               390         608       998
Cash extraction rate (%)*                                        95          57        77
% of cash on hand hedged                                         61          38        50
                                                     
At 31 March 2016                                     
R million                                                    Angola     Nigeria     Total
Cash on hand                                                    474       1 018     1 492
Hedged                                                          367           -       367
Net unhedged cash                                               107       1 018     1 125
Cash extraction rate (%)*                                      n/a         n/a       n/a
% cash on hand hedged                                            77           -        25

* Cash extraction rate = cash extracted in period as a percentage of invoices presented 
  for payment in the period.

Nampak's operations are exposed to various exchange rates. Below is a table that shows 
average and closing exchange rate movements for the current period, compared to the 
same period in the prior year:

Exchange rate movements                                          Closing
                                                  31 March            31 March   30 Sept
                                                      2017         %      2016      2016
ZAR/USD                                              13.41         9     14.69     13.72
ZAR/GBP                                              16.83        20     21.15     17.80
NGN/USD                                             314.29       (58)   199.05    315.00
AOA/USD                                             171.73        (3)   166.32    171.72
                                          
Exchange rate movements                                           Average
                                                  31 March            31 March   30 Sept
                                                      2017         %      2016      2016
ZAR/USD                                              13.57        10     15.04     14.79
ZAR/GBP                                              16.83        24     22.13     21.07
NGN/USD                                             311.69       (57)   198.91    229.60
AOA/USD                                             171.73       (13)   151.73    161.57

The ZAR strengthened against the USD and GBP (British Pound) in the period under 
review and there has been no devaluation in the official exchange rates of the 
kwanza and naira since September 2016. Period on period, there has been a 58% 
devaluation in the closing rate of the naira and a 3% weakening in the kwanza rate. 
All figures have been translated at the official exchange rates.

Nigeria foreign exchange rate and liquidity update for the period post half-year 
end, 31 March 2017 
Further progress has been made in the extraction of cash from Nigeria with at least 
USD54 million in cash extraction expected to be achieved before the financial year 
end (30 September 2017), further strengthening the group's ability to fund the Rest 
of Africa growth markets. This extraction consists of the following:
* USD29 million secured dollar deliverable forwards, 98% of which will mature 
  before 30 September 2017;
* an additional USD25 million secured after 31 March 2017 through the newly 
  introduced NAFEX market (Nigerian Autonomous Foreign Exchange market), USD10 million 
  of which has already been remitted to the group's offshore treasury operation with 
  the balance of USD15 million to flow before 30 September 2017 with no significant 
  counter-party risk.

At the current Central Bank of Nigeria ("CBN") official exchange rate, only USD29 million 
of the aforementioned USD54 million dollars will be exposed to devaluation through the 
income statement in the second half of the financial year with an anticipated abnormal 
foreign exchange loss between R95 million and R110 million at current exchange rates. 
The USD29 million comprises USD4 million of deliverable forwards and USD25 million secured 
on the NAFEX market post 31 March 2017. A significant portion of the foreign exchange 
losses attributable to the USD deliverable forwards were recognised in the prior 
financial year.

Should further cash, in addition to the USD54 million mentioned above be extracted, 
it may be exposed to further abnormal foreign exchange losses. Should there be an 
official devaluation in the respective central banks official exchange rates to the 
dollar for either the naira or the kwanza, further foreign exchange losses could be 
incurred in the second half of the financial year on the translation of the portion 
of unhedged monetary items. These foreign exchange losses could be further impacted by 
movements in the ZAR/USD exchange rate.

Based on the current monthly funding requirements in these countries the group can fund 
the respective operations, without raising any additional debt or equity, for 
approximately 36 to 40 months even if no further cash is extracted.

Segmental performance review
Segmental report (continuing operations)
                                       Revenue      Trading profit*  Trading margin (%)
R million                            2017    2016     2017    2016        2017     2016
Metals                              5 570   5 041      883     622        15.9     12.3
Plastics                            2 400   2 891       89     202         3.7      7.0
Paper                                 698     831       57      95         8.2     11.4
Glass                                 663     659       42      44         6.3      6.7
Corporate Services                      -       -       37      26           -        - 
Total                               9 331   9 422    1 108     989        11.9     10.5

* Operating profit before abnormal items.

Metals
This cluster benefited from buoyant sales in Angola's beverage can market and increased 
volumes from South Africa's new beverage can ends plant, with revenue up 11%. Trading 
profit was up 42% and the margin at 15.9% was an improvement on the previous year's 
performance of 12.3%. The overall performance of the cluster was impacted by lower sales 
in the remaining units. Contractual USD linked prices in Nigeria and Angola continue to 
abate the impact on revenue and margins of local currency volatility.

Bevcan South Africa's beverage can volumes were marginally lower, as a result of constrained 
consumer demand. The newly commissioned ends plant expansion, which was commissioned on 
time and executed within budget, contributed positively to revenue. Previously imported 
ends into Nigeria and Angola were replaced by ends produced in South Africa. Following the 
installation of capacity to manufacture 500ml cans, revenue expanded and trading profit was 
significantly higher due to an improvement in internal efficiencies. The closure of the 
Durban facility became effective on 15 December 2016 and delivered cost savings in the six 
month to the end of March 2017. Current long term sales agreements with major customers, a 
well-established cost-competitive manufacturing footprint and strong market position put the 
business in the best possible position to defend market share and leverage opportunities.

The Angolan beverage can market recovered strongly in the first six months, with record sales 
achieved in a number of months. All customer volumes were significantly higher although the 
low crude oil price and high inflation remain key risks in the country. The conversion of the 
tinplate line to aluminium is still awaiting government allocation of foreign currency, 
utilising cash on hand in Angola. The provisional targeted commissioning date, should foreign 
currency become available, is in the second half of 2018. In the medium term, the market is 
expected to benefit from investments already made by new customers in additional can filling 
line capacity. Once the tinplate line is converted, it is expected that total installed capacity 
will increase to around 2 billion cans per annum.

The continued slowdown in Nigerian discretionary consumer spending, in line with macroeconomic 
challenges, impacted overall beverage can demand. As a result, Bevcan Nigeria's volumes were 
down 12% on previous year's performance as the consumer remained under pressure amid negative
economic growth and a high inflation environment. Both revenue and trading profit were down on 
the previous year. Post 30 March 2017, Bevcan Nigeria secured a three year sales contract 
extension with a key customer. The substitution of beverage cans with other packs remains a key 
risk and is being monitored closely while market growth is expected to remain sluggish in the 
short term due to high inflation and subdued demand.

In South Africa, DivFood has made significant progress in the implementation of its business 
improvement project which includes the replacement of old and outdated machines as well as cost 
reduction initiatives. However, the division's revenue and trading profit were below that of 2016, 
due to lower volumes in a number of product categories. Monobloc aerosols, polish cans, paint cans 
and exports into various emerging markets were below prior year volumes. Fish can sales were 
disappointing following a much lower allowable catch quota for 2017. Cash fixed costs were lower 
due to cost management measures implemented during the period. Continued efficiency improvements 
are expected to enhance competitiveness and deliver business benefit in 2017.

The general metal packaging businesses in the Rest of Africa delivered better revenue and trading 
profit than the prior year. The Nigerian operation reported improved sales volumes on the back of 
import substitution of retail products and increased demand for locally manufactured packaging. 
Kenya's metal business, however, was impacted by subdued demand in the agricultural sector due 
to poor rains and harvests, as well as the move to in-house manufacture by its key customer. 
Market development and business rationalisation initiatives are being implemented to recoup the 
lost volumes and improve business profitability.

Plastics
Revenue and trading profit were adversely impacted by disappointing results from Plastics Europe 
and the Zimbabwe divisions, resulting from lower sales volumes that overshadowed continued 
improvement in operations, cost savings and product diversification. Revenue and trading profit 
were down 17% and 56%, respectively.

Plastics South Africa's revenue was 3% higher than last year whilst volumes were lower driven by 
sluggish second quarter sales. Although liquid packaging and closures volumes were up on the 
previous year in the first quarter, driven by the recovery in demand in the regions affected by 
the drought in 2016, second quarter volumes were disappointing due to lower demand. Improved drum 
volumes were recorded due to a recovery in bulk alcohol sales to the Rest of Africa, as well as 
improved conical and crate volumes. In the short term, the South African plastics business will 
focus on cost and organisational consolidation.

Plastics Europe continued to be under pressure, with volumes down on the prior year due to vertical 
integration by major customers. Revenue declined by 33% while trading profit and margins reduced 
significantly as a result of margin sacrifice to regain market share, as well as cost increases 
related to a new investment in Ireland. The average ZAR/GBP rate for the period at R16.83 from 
R22.13 in 2016 affected results. The business continues evaluating projects aimed at improving 
operational performance and capturing opportunities outside the milk industry to grow volumes. 
Key management changes were made during the period and good progress was made in operational 
performance improvement.

The Zimbabwe plastics division's performance was down on 2016 due to a weakness in demand 
experienced by both CMB and Megapak divisions on the back of macroeconomic challenges. The 
inconsistent availability of foreign exchange impacted the operations' performance and consumer 
demand. In both divisions, alternative sales markets are being explored and cost management 
measures implemented to minimise the impact of the slowdown. The continued shortage of USD liquidity 
in the Zimbabwean economy remains a concern.

Paper
The paper segment consists of the paper and board operations in the Rest of Africa. Revenue and 
trading profit for 2017 were down compared to 2016, due to lower volumes from the majority of the 
businesses on the back of challenging macroeconomic conditions. A solid performance by Hunyani in 
Zimbabwe boosted results. Trading margins at 8.2% were significantly down from the 11.4% achieved 
in prior year mainly due to the poor performance of the Zambian business that was impacted 
negatively by lower volumes in sorghum beer cartons and local currency devaluation.

Nigeria Cartons' revenue and trading profit were below prior year due to generally lower demand 
across all market segments resulting mainly from the impact of limited foreign exchange availability 
on the general economy. Performance is expected to improve in the remainder of the year with 
improved demand anticipated. Import restrictions are anticipated to continue encouraging the local 
sourcing of packaged retail goods which will benefit demand. Liquidity issues and currency 
volatility remain a concern.

In Zimbabwe, Hunyani revenue and trading were up significantly on the back of good tobacco carton 
sales and improved operating efficiencies. Import duties on various packaging formats have stimulated 
demand for locally manufactured packaging. Benefits from cost containment initiatives also contributed 
to a good performance in the year.

In Zambia, sorghum beer carton sales volumes were significantly down due to lower demand. The 
volatility of the Zambian kwacha against hard currencies also impacted trading profit negatively.

Malawi's results, despite a late surge in orders for tobacco cases, were down as a result of lower 
sorghum beer carton sales.

Kenya Bullpak's revenue was below the previous year due to subdued demand and the vertical 
integration of some customers.

Glass
Glass revenue at R663 million was marginally up on 2016 due mainly to good market share in wine. 
This was overshadowed by disappointing sales volumes in all other product categories reflective of 
overall subdued market demand in the South African container glass market. As a result both trading 
profit and margin were below expectation. Following a successful operational turnaround, the glass 
factory is running at satisfactory production efficiencies with further operational improvement 
initiatives underway. Performance in the second half of the year is expected to improve due to 
anticipated volume growth.

Corporate Services
Group corporate services include group research and development services, treasury services and 
other corporate activity costs.  Reduced property rental recoveries were offset by foreign exchange 
gains due to the strengthening of the ZAR/USD exchange rate from September 2016 and cost savings 
at the corporate center.

Geographical update

                                             Revenue      Trading profit*  Trading margin (%)
R million                                  2017    2016   2017      2016      2017      2016
South Africa                              5 616   5 459    500       466       8.9       8.5
Rest of Africa                            2 933   2 805    610       462      20.8      16.5
Europe                                      782   1 158    (39)       35      (5.0)      3.0
Corporate Services                            -       -     37        26         -         - 
Total                                     9 331   9 422  1 108       989      11.9      10.5

* Operating profit before abnormal items.

South Africa
During the six months to 31 March 2017, South Africa, like most emerging markets experienced 
volatile exchange rates, slow growth rates and lower consumer demand, on the back of low 
commodity prices and political uncertainty. In spite of these conditions, revenue and trading 
profit increased by 3% and 7% respectively. A good performance by Bevcan and an improved 
performance from liquid packaging (Plastics SA) contributed positively to performance. The 
region contributed 45% to group trading profit (2016: 47%).

Rest of Africa
The Rest of Africa recorded sales of R2.9 billion, up 5% while trading profit rose by 32%. 
The trading results were adversely impacted by a strong average ZAR/USD exchange rate used to 
translate the results. During the period, key market GDP growth rate estimates were revised 
downwards and inflation remained high. With the oil price at current levels, Nigeria and Angola 
continued to experience foreign exchange shortages. Bevcan Angola recorded a particularly strong 
performance on volume recovery, while Nigeria general metal packaging and paper packaging in 
Zimbabwe performed well due to import replacement. The Rest of Africa now contributes 55% to 
trading profit, up from 47% in 2016. Nampak's strategy remains focused on its overall investment 
rationale in key markets where consumption of, in particular, packaged beer and carbonated soft 
drinks is driven by sustainable demographic trends.

Europe
The UK economy continues to demonstrate slow GDP growth while the dairy market faces intense 
pricing and industry pressures. The division recorded a trading loss of R39 million compared 
to a trading profit of R35 million in the prior period, which reflects the poor performance 
of the recently commissioned plant in Ireland.

Update on capital expenditure
As part of the group's cash conservation measures, capital expenditure (including replacement 
and expansion projects) for 2017 is expected at between R0.9 - R1.1 billion, with some 60% being 
replacement or sustenance capital, and the balance being expansion capital. Maintenance expenditure 
is not compromised by cutbacks on capital expenditure, as this forms part of the operational 
expenditure. Total capital expenditure for the period amounted to R470 million compared to 
R921 million spent during the same period in 2016. R242 million was spent on expansion projects, 
with R228 million spent on replacement projects. Further capital expenditure for the remainder 
of the year will be prudently evaluated and will be limited to key projects.

Growth projects
Nampak continues to be circumspect regarding further capital investment in view of prevailing 
macroeconomic conditions. Notwithstanding this, opportunities in a variety of substrates are 
being evaluated taking into account market conditions and the prospects of improvement in 
the availability of foreign exchange.

Special project: Reducing post-retirement medical aid liability
During 2016, Nampak offered continuation members who received a monthly medical scheme contribution 
subsidy the option of converting the monthly subsidy into an annuity secured in the pensioner's 
own name. A total of 684 of continuation members accepted this offer. The total settlements
paid to continuation members during the current financial year is R562 million, of which R406 
million was accrued at 30 September 2016. R436 million was funded from the R1.744 billion raised 
from the sale and leaseback transaction in September 2016, and the balance of R126 million was 
funded from cash generated in the period.

Active portfolio management
In line with the strategic imperative of growth through acquisitions, the group subscribed for 
a 74% interest in Nampak DivFood Botswana ("NDB") for a nominal consideration, effective 
2 February 2017. The Botswana Development Corporation ("BDC"), the holder of the remaining 
interest in this entity, transferred plant and equipment to the value of R37 million to this 
entity on its incorporation, resulting in a consolidated gain on acquisition of R27 million. 
As part of this transaction, BDC has a put option to sell its 26% interest in NDB to the group 
at the end of a period of five years from the effective date of acquisition. This option was 
valued at R17 million and is presented on the statement of financial position as part of 
"other non-current liabilities".

Nampak Plastics Europe disposed of its in-plant operations at two United Kingdom sites, on 
termination of the respective contracts. Plant, equipment and net working capital with a 
carrying value of R26 million were disposed of for a net consideration of R56 million resulting 
in a profit on disposal of these operations of R30 million.

Outlook
It is expected that consumers in key trading markets will remain under pressure for the rest 
of the year with a concomitant negative impact on sales volumes. However, gains from improved 
factory efficiencies, business improvement initiatives as well as cost savings are expected to 
reduce this negative impact.

The group's operations in the Rest of Africa are expected to continue generating cash as demand 
for some products grows, supported by import replacement, with overall performance being impacted 
by macroeconomic challenges. The limited availability of foreign exchange and possible currency 
devaluations in Nigeria and Angola may result in potential foreign currency translation impacts. 
In the absence of a catalyst to promote economic growth and, consequently, consumer spending in 
key markets, demand for packaged goods and exchange rates are expected to remain a key factor 
influencing results.

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 will sustain its competitive advantage.

Ordinary dividend
Despite a significantly improved group balance sheet the Nampak Limited Board has decided not 
to declare an interim dividend. The decision was made in light of the overall performance of 
the group in the current challenging trading conditions and given the continued volatile and 
uncertain macroeconomic environment, capital expenditure requirements and the availability of 
foreign exchange for repatriation from restricted areas. This prudent approach will further 
strengthen the group's balance sheet and improving the group's resilience during uncertain 
economic times.

On behalf of the board

TT Mboweni        AM de Ruyter              GR Fullerton
Chairman          Chief executive officer   Chief financial officer

30 May 2017

Condensed group statement of comprehensive income

                                      Unaudited  Unaudited            Audited
                                       6 months   6 months               Year 
                                          ended      ended              ended
                                         31 Mar     31 Mar  Change     30 Sep
R million                      Notes       2017       2016       %       2016
Revenue                                 9 331.3    9 422.2      (1)  19 138.9
Operating profit                   3    1 132.3      870.1      30    2 162.8
Finance costs                            (243.6)    (256.8)            (527.5) 
Finance income                             46.1       17.8               42.0
Share of net (loss)/         
profit from associates       
and joint ventures                         (2.3)       2.7                0.1
Profit before tax                         932.5      633.8      47    1 677.4
Income tax expense                        (79.3)     (27.6)            (199.1) 
Profit for the period                     853.2      606.2      41    1 478.3
Other comprehensive          
(expense)/income, net        
of tax                       
Items that may be            
reclassified subsequently    
to profit or loss            
Exchange differences on      
translation of foreign       
operations                        11    (138.8)      297.7             (509.4)
(Loss)/gain on cash flow     
hedges                                    (0.7)      111.9              (34.3) 
Items that will not be       
reclassified to profit or    
loss                         
Net actuarial loss from      
retirement benefit           
obligations                                  -          -              (491.0) 
Other comprehensive          
(expense)/income for the     
period, net of tax                      (139.5)     409.6  (>100)    (1 034.7) 
Total comprehensive                      713.7    1 015.8    (30)       443.6
income for the period        
Profit/(loss)                
attributable to:             
Owners of Nampak Ltd                     773.4      664.2      16     1 610.4
Non-controlling interest     
in subsidiaries                           79.8      (58.0)             (132.1)
                                         853.2      606.2      41     1 478.3
Total comprehensive income/      
(expense) attributable to:       
Owners of Nampak Ltd                     641.6    1 047.4     (39)      572.6
Non-controlling interest         
in subsidiaries                           72.1      (31.6)             (129.0)
                                         713.7    1 015.8     (30)      443.6
Basic earnings per share         
(cents)                                  120.8      105.0      15       254.5
Diluted basic earnings           
per share (cents)                        120.4      104.7      15       253.9
Headline earnings per            
share (cents)                            113.1      105.2       8       107.6
Diluted headline earnings        
per share (cents)                        112.8      104.9       8       107.3
                                 
Condensed group statement of financial position

                                          Unaudited    Unaudited      Audited
R million                               31 Mar 2017  31 Mar 2016  30 Sep 2016
Assets
Non-current assets
Property, plant and equipment
and investment property                    10 471.3     11 807.4     10 573.4
Goodwill and other intangible            
assets                                      3 979.3      4 299.2      4 043.4
Joint ventures, associates and           
other investments                              25.3         34.8         27.7
Deferred tax assets                            57.3        152.2         70.6
Other non-current assets                       65.5         43.9         56.4
                                           14 598.7     16 337.5     14 771.5
Current assets                           
Inventories                                 3 572.9      3 827.1      3 376.7
Trade receivables and other              
current assets                              3 016.1      3 276.4      3 109.0
Tax assets                                    194.6          9.4         11.2
Bank balances, deposits and cash         
equivalents                                 3 476.3      2 398.2      2 835.4
                                           10 259.9      9 511.1      9 332.3
Assets classified as held for sale                -         21.4            - 
Total assets                               24 858.6     25 870.0     24 103.8
EQUITY AND LIABILITIES                   
Capital and reserves                     
Share capital                                  35.4         35.3         35.4
Capital reserves                             (112.3)        32.0       (121.4) 
Other reserves                                (98.0)     1 444.3         51.0
Retained earnings                          10 011.9      8 166.0      9 238.5
Shareholders' equity                        9 837.0      9 677.6      9 203.5
Non-controlling interest                      322.6        338.4        241.0
Total equity                               10 159.6     10 016.0      9 444.5
Non-current liabilities                  
Loans and borrowings                        6 080.2      5 462.5      6 202.1
Retirement benefit obligation               1 602.5      1 996.5      1 855.7
Deferred tax liabilities                      423.1        274.8        230.1
Other non-current liabilities                  53.4         55.9         37.0
                                            8 159.2      7 789.7      8 324.9
Current liabilities                      
Trade payables, provisions and           
other current liabilities                   3 797.3      3 681.3      4 937.7
Bank overdrafts                             2 348.6      3 424.6        993.4
Loans and borrowings                          338.3        938.4        329.4
Tax liabilities                                55.6         20.0         73.9
                                            6 539.8      8 064.3      6 334.4
Total equity and liabilities               24 858.6     25 870.0     24 103.8

Condensed group statement of cash flows

                                              Unaudited  Unaudited   Audited
                                               6 months   6 months      Year 
                                                  ended      ended     ended
                                                 31 Mar     31 Mar    30 Sep
R million                              Notes       2017       2016      2016
Cash generated from operations       
before working capital changes                  1 435.5    1 370.9   2 103.0
Working capital changes                          (911.5)    (488.3)    561.3
Cash generated from operations                    524.0      882.6   2 664.3
Net interest paid                                (198.2)    (236.4)   (521.4) 
Income tax paid                                   (75.1)    (166.8)   (201.3) 
Replacement capital expenditure                  (227.8)    (273.5)   (475.7) 
Cash flows from operations                         22.9      205.9   1 465.9
Dividends paid                                        -     (572.4)   (575.5)
Net cash generated from/             
(utilised in) operating              
activities                                         22.9     (366.5)    890.4
Expansion capital expenditure                    (241.9)    (647.7)   (951.7) 
Net proceeds from sale and           
leaseback transaction                                 -          -   1 701.1
Net proceeds on disposal of          
business                                 4.2       56.5          -         - 
Post-retirement medical aid          
buy-out                                  4.3     (562.3)         -         -
Other investing activities                         20.3      146.7     142.0
Net cash (utilised)/generated        
before financing activities                      (704.5)    (867.5)  1 781.8
Net cash raised from financing       
activities                                         11.7    1 885.9   2 380.7
Net (decrease)/increase in cash      
and cash equivalents                             (692.8)   1 018.4   4 162.5
Net cash and cash equivalents/       
(overdraft) at beginning of period              1 842.0   (2 084.9) (2 084.9) 
Translation of cash in foreign       
subsidiaries                                      (21.5)      40.1    (235.6)
Net cash and cash                          
equivalents/(overdraft) at           
end of period                              6    1 127.7   (1 026.4)  1 842.0

Condensed group statement of changes in equity

                                              Unaudited  Unaudited   Audited
                                               6 months   6 months      Year 
                                                  ended      ended     ended
                                                 31 Mar     31 Mar    30 Sep
R million                              Notes       2017       2016      2016
Opening balance                                 9 444.5    9 172.4   9 172.4
Net shares issued during the        
period                                             11.7       28.4      28.9
Share-based payment expense                         9.1        9.1      13.9
Share grants exercised                            (11.7)     (28.4)    (28.8) 
Shares repurchased and cancelled                      -       (0.8)     (0.8) 
Share of movement in associate's    
and joint venture's non-            
distributable reserve                                 -          -       0.9
Release of share of non-            
distributable reserve of joint      
venture disposed                                      -       (0.6)        - 
Treasury shares disposed                              -      387.0     384.2
Acquisition of business                 4.1        (7.7)         -         -
Total comprehensive income for      
the period                                        713.7    1 015.8     443.6
Dividends paid                                        -     (566.9)   (569.8) 
Closing balance                                10 159.6   10 016.0   9 444.5
Comprising:                         
Share capital                                      35.4       35.3      35.4
Capital reserves                                 (112.3)       32.0   (121.4) 
Share premium                                     262.4      250.3     250.7
Treasury shares                                  (557.9)    (399.7)   (557.9) 
Share-based payments reserve                      183.2      181.4     185.8
Other reserves                                    (98.0)   1 444.3      51.0
Foreign currency translation        
reserve                                         1 363.8    2 289.1   1 494.9
Financial instruments hedging       
reserve                                            18.1      165.0      18.8
Recognised actuarial losses                    (1 466.6)    (975.6) (1 466.6) 
Share of non-distributable          
reserves in associates and joint    
ventures                                            3.7        3.9       3.7
Available-for-sale financial        
assets revaluation reserve                           -       (38.3)        - 
Other                                             (17.0)       0.2       0.2
Retained earnings                              10 011.9    8 166.0   9 238.5
Shareholders' equity                            9 837.0    9 677.6   9 203.5
Non-controlling interest                          322.6      338.4     241.0
Total equity                                   10 159.6   10 016.0   9 444.5

Notes
1. Basis of preparation
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
The accounting policies adopted and methods of computation used are consistent with 
those applied for the group?s 2016 annual financial statements.

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                                            2017       2016       2016
Depreciation                                        413.2      423.4      863.1
Amortisation                                         21.8       24.3       48.6
Net translation loss recognised              
on financial instruments                             19.1       95.2      655.2
Net loss arising from Angolan and            
Nigerian illiquidity                                  4.5      113.8      681.0
Net loss/(gain) arising from                 
normal operating activities                          14.6      (18.6)     (25.8) 
Reconciliation of operating                  
profit and trading profit                    
Operating profit                                  1 132.3      870.1    2 162.8
Net abnormal (gain)/loss*                           (24.0)     119.2     (257.7) 
Retrenchment and restructuring               
costs                                                20.2        1.5       34.1
Net impairment losses on plant,              
equipment, intangible assets,                
investments and shareholder loans                    10.2       16.0      360.4
Net (profit)/loss on disposal of             
business and investments                            (30.1)       1.0       (3.5) 
Gain on acquisition of business                     (27.0)         -          - 
Profit on disposal of property               
subject to sale and leaseback                           -          -    (1 318.9)
Net profit on disposal of other              
property                                             (1.8)     (14.1)      (15.2) 
Devaluation loss arising from                
Angolan and Nigerian illiquidity                      4.5      113.8       681.0
Business acquisition-related costs                      -        1.0         4.4
Trading profit                                    1 108.3      989.3     1 905.1

* Abnormal (gains)/losses are defined as (gains)/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. Corporate activity
4.1 DivFood Botswana
The group acquired a 74% interest in DivFood Botswana ("DB") for strategic purposes 
effective 2 February 2017 on its incorporation for a nominal consideration. The 
Botswana Development Corporation ("BDC"), being the holder of the remaining interest 
in this entity, transferred plant and equipment to the value of R36.5 million to this 
entity on its incorporation resulting in a consolidated gain on acquistion of 
R27.0 million.

As part of this transaction, BDC has a put option to sell its 26% interest in DB to 
the group at the end of a period of five years from the effective date of acquisition. 
This option has been valued at R17.2 million and is presented on the statement of 
financial position as part of "other non-current liabilities".

4.2 Operations located at customers
The group disposed of its operations at two sites in the United Kingdom of a customer 
of Nampak Plastics Europe, on termination of the respective contracts. Plant, equipment 
and net working capital with a carrying value of R26.4 million was disposed of for 
a net consideration of R56.5 million resulting in a profit on disposal of these 
operations of R30.1 million.

4.3 Post-retirement medical aid buy-out
During the 2016 financial year, the group offered a specific group of 1 285 continuation 
members, out of the total continuation members who receive a monthly medical scheme 
contribution subsidy, the option of converting the monthly subsidy into an annuity 
secured in the pensioner's individual name.

A total of 684 (53%) of these continuation members accepted this offer. The total 
settlements paid to these continuation members during the current financial year was 
R562.3 million, of which R406.4 million was accrued at 30 September 2016.

5. Determination of headline earnings

                                                 Unaudited  Unaudited      Audited
                                                  6 months   6 months         Year 
                                                     ended      ended        ended
                                                    31 Mar     31 Mar       30 Sep
R million                                             2017       2016         2016
Profit attributable to equity                   
holders of the company for the                  
period                                               773.4      664.2      1 610.4
Less: preference dividend                                -          -         (0.1) 
Basic earnings                                       773.4      664.2      1 610.3
Adjusted for:                                   
Net impairment losses on plant,                 
equipment, intangible assets and                
investments                                           10.2       16.0        360.8
Net profit on disposal of                       
business   and investments                           (30.1)         -         (3.5) 
Gain on acquisition of business                      (27.0)         -            - 
Profit on disposal of property                           -          -     (1 318.9)
subject to sale and leaseback                   
Net (profit)/loss on disposal                   
of other property, plant, equipment             
and intangible assets                                 (2.5)     (15.0)         6.8
Tax effects and non-controlling                 
interests                                              0.2       (0.1)        25.4
Headline earnings for the period                     724.2      665.1        680.9

6. Cash and cash equivalents/(net overdraft)

                                                 Unaudited  Unaudited      Audited
                                                  6 months   6 months         Year 
                                                     ended      ended        ended
                                                    31 Mar     31 Mar       30 Sep
R million                                             2017       2016         2016
Bank balances, deposits and cash               
equivalents*                                       3 476.3    2 398.2      2 835.4
Bank overdrafts                                   (2 348.6)  (3 424.6)      (993.4)
                                                   1 127.7   (1 026.4)     1 842.0

* Cash equivalents include US dollar indexed Angolan kwanza bonds of
  R1 106.8 million (March 2016: nil; September 2016: R617.4 million).

7. Carrying amount of financial instruments
The carrying amounts of financial instruments as presented on the statement 
of financial position are measured as follows:

                                                 Unaudited  Unaudited      Audited
                                                  6 months   6 months         Year 
                                                     ended      ended        ended
                                                    31 Mar     31 Mar       30 Sep
R million                                             2017       2016         2016
At fair value - level 2                         
Financial assets                                
Derivative financial assets                           14.1      178.0            - 
Financial liabilities                           
Derivative financial liabilities                      22.6       18.5         40.7
At cost                                         
Financial assets                                
Investments                                            0.1        3.2            - 
At amortised cost                               
Financial assets                                   6 364.5    5 364.9      5 789.7
Non-current financial assets                          65.5       43.9         56.4
Trade receivables and other                     
current assets1                                    2 822.7    2 909.0      2 897.9
Bank balances, deposits and cash                
equivalents                                        3 476.3    2 398.2      2 835.4
Assets classified as held for sale3                      -       13.8            -
Financial liabilities                             12 368.7   13 380.4     12 152.9
Non-current loans and borrowings                   6 080.2    5 462.5      6 202.1
Trade payables and other current                
liabilities2                                       3 601.6    3 554.9      4 628.0
Bank overdrafts and current loans                  2 686.9    4 363.0      1 322.8
1 Excludes derivative financial assets (disclosed separately) and prepayments.                              
2 Excludes derivative financial liabilities (disclosed separately) and provisions.                               
3 Current portion of loan to Sancella SA (Pty) Ltd.                        

8. Capital expenditure, commitments and contingent liabilities

                                                Unaudited  Unaudited     Audited
                                                 6 months   6 months        Year 
                                                    ended      ended       ended
                                                   31 Mar     31 Mar      30 Sep
R million                                            2017       2016        2016
Capital expenditure                                 469.7      921.2     1 443.6
Expansion                                           241.9      647.7       951.7
Replacement                                         227.8      273.5       475.7
Intangibles                                             -          -        16.2
Capital commitments                                 250.2      768.5       454.4
Contracted                                          171.3      407.3       276.3
Approved not contracted                              78.9      361.2       178.1
Lease commitments (including sale             
and leaseback transaction)                        3 545.1      120.0     3 759.5
Land and buildings                                3 515.4      108.1     3 732.2
Other                                                29.7       11.9        27.3
Contingent liabilities                                6.0        8.5        83.6
Customer claims and guarantees                        6.0        8.5         6.7
Tax contingent liabilities                              -          -        76.9

9. Share statistics

                                               Unaudited  Unaudited     Audited
                                                6 months   6 months        Year 
                                                   ended      ended       ended
                                                  31 Mar     31 Mar      30 Sep
R million                                           2017       2016        2016
Ordinary shares in issue (000)                   689 404    688 650     688 668
Ordinary shares in issue -                    
net of treasury shares (000)                     640 620    638 923     639 884
Weighted average number of ordinary           
shares on which basic earnings and            
headline earnings per share are               
based (000)                                      640 496    632 361     632 667
Weighted average number of ordinary           
shares on which diluted basic                 
earnings and diluted headline                 
earnings per share are based (000)               642 164    634 218     634 335

10. Key ratios and exchange rates

                                               Unaudited  Unaudited     Audited
                                                6 months   6 months        Year 
                                                   ended      ended       ended
                                                  31 Mar     31 Mar      30 Sep
R million                                           2017       2016        2016
10.1 Key ratios                              
EBITDA*                                          1 577.5    1 333.8     3 434.9
Net gearing (%)                                       51         74          49
Current ratio                                        1.6        1.2         1.5
Acid test ratio                                      1.0        0.7         0.9
Net debt: EBITDA (debt covenants)              1.7 times  2.7 times   1.7 times
EBITDA: Interest cover (debt                 
covenants)                                     7.8 times  5.9 times   5.4 times
Return on equity (%)                                15.9       15.9        17.9
Return on net assets (%)                            12.0       11.2        11.2
Net worth per ordinary share                 
(cents)**                                          1 536      1 515       1 438
Tangible net worth per ordinary              
share (cents)**                                      914        842         806

* EBITDA is calculated before net impairments.                           
** Calculated on ordinary shares in issue - net of treasury shares.           
                                             
10.2 Exchange rates                          
Key currency conversion rates used           
for the periods concerned were               
as follows:                                  
Rand/UK pound                                
Average                                            16.83      22.13      21.07
Closing                                            16.83      21.15      17.80
Rand/Euro                                    
Average                                            14.54      16.53      16.43
Closing                                            14.29      16.72      15.42
Rand/US dollar                               
Average                                            13.57      15.04      14.79
Closing                                            13.41      14.69      13.72
Naira/US dollar                              
Average                                           311.69     198.91     229.60
Closing                                           314.29     199.05     315.00
Kwanza/US dollar                             
Average                                           171.73     151.73     161.57
Closing                                           171.73     166.32     171.72

11. Translation reserve movement
Due to the strengthening of the rand, a translation loss of R138.8 million 
(2016: R297.7 million gain) was realised for the period.

The closing exchange rates at 31 March 2017 for the rand against the UK
pound and US dollar respectively were 16.83 (September 2016: 17.80) and
13.41 (September 2016: 13.72).

12. Related party transactions
Group companies, in the ordinary course of business, entered into various 
purchase and sale transactions with associates, joint ventures and other 
related parties. The effect of these transactions is included in the financial 
performance and results of the group.

Administration
Independent non-executive directors
TT Mboweni (Chairman), RC Andersen, E Ikazoboh, RJ Khoza, J John, NV Lila, 
PM Madi, IN Mkhari, 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, 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

Website http://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: 30/05/2017 02:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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