| Tue 12 Jun 2001, 0:00 | | Malbak - Audited Results |
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Malbak
Audited results for the year ended 31 March 2001
Group income statement for the year ended 31 March
%
Rm 2001 2000 change
Revenue 3 976 3 219
Continuing 3 976 2 780 43
Discontinued - 439
Operating profit 218 251
Continuing 218 227 (4)
Discountinued - 24
Exceptional items (14) 90
Net interest (paid)/
received (62) 45
Profit before taxation 142 386
Taxation 45 53
Profit after taxation 97 333
Outside shareholders'
interest - 30
Income from associates 15 13
Attributable net profit 112 316
Headline earnings 121 196 (38)
Number of shares in
issue (m)
- period end 530,2 530,2
- excluding treasury
shares 477,2 530,2
- weighted average 493,3 529,9
Earnings per share (cents)
- Headline 24,5 37,0 (34)
- Attributable 22,7 59,6
Dividend per ordinary
share (cents) 8,0 13,0
Headline earnings
reconciliation (Rm)
Attributable net profit 112 316
Exceptional items 14 (90)
Profit on disposal of property,
plant and equipment (8) (5)
Impairment of assets 2 -
Goodwill amortisation 6 -
Taxation effect (5) (25)
Headline earnings 121 196
Additional information
(Rm)
Depreciation 214 158
Goodwill amortisation 6 -
Ratios
Operating profit to sales
margin (continuing) (%) 5,5 8,2
Effective tax rate (excluding
exceptional items) (%) 32,7 26,4
Dividend cover (headline
earnings) (times) 3,1 2,8
Group balance sheet
as at 31 March
Rm 2001 2000
Property, plant and equipment 1 518 986
Goodwill 150 -
Investments - unlisted 68 67
Investments in associates 98 89
Deferred taxation asset 8 -
Current assets 1 363 1 032
Cash equivalents 344 515
Total assets 3 549 2 689
Ordinary shareholders' equity 1 413 1 475
Deferred taxation 116 44
Total interest bearing debt 1 163 382
Trade and other payables 857 788
Total equity and liabilities 3 549 2 689
Additional information
Net borrowings/(cash) (Rm) 819 (133)
Borrowings to equity (%)
- gross 82,3 25,9
- net 58,0 (9,0)
Net asset value per share (cents) 296 278
Directors' valuation of unlisted
investments (Rm) 68 67
Directors' valuation of associates (Rm) 98 89
Operating lease commitments (Rm) 388 417
Contingent liabilities (Rm) 22 3
Capital expenditure (Rm)
- contracted but not provided for 26 33
- authorised but not contracted for 13 8
Group cash flow statement
for the year ended 31 March
Rm 2001 2000
Cash generated by operations 398 428
Working capital requirements (76) (94)
Financing costs and taxation paid (135) (93)
Dividends paid (56) (74)
Net cash inflow from operating
activities 131 167
Net cash outflow from investing
activities (923) (263)
Capital expenditure (177) (162)
Acquisition of business (755) -
Net other investment activities 9 (101)
Net cash inflow from financing
activities 621 205
Net financing activities 781 205
Share purchase (160) -
Net (decrease)/increase in cash
equivalents (171) 109
Segmental analysis
for the year ended 31 March
South Africa Offshore
2001 2000 2001 2000
Revenue* (Rm) 1 687 1 606 2 289 1 174
Folding cartons and
cores 591 515 1 746 654
Flexible and rigid
plastics 1 096 1 091 543 520
EBITDA* (Rm) 145 161 293 211
Folding cartons and
cores 30 45 257 137
Flexible and rigid
plastics 115 116 36 74
Operating profit*
(Rm) 55 66 163 161
Folding cartons
and cores 11 29 153 107
Flexible and rigid
plastics 44 37 10 54
EBITDA margin* (%) 8,6 10,0 12,8 18,0
Folding cartons
and
cores 5,1 8,7 14,7 20,9
Flexible and rigid
plastics 10,5 10,6 6,6 14,2
Operating profit
margin* (%) 3,3 4,1 7,1 13,7
Folding cartons
and cores 1,9 5,6 8,8 16,4
Flexible and rigid
plastics 4,0 3,4 1,8 10,4
Headline earnings
(Rm) 33 107 88 89
Total assets
excluding cash (Rm) 1 270 1 368 1 935 806
* in respect of
continuing business
Group statement of changes in equity
for the year ended 31 March
Rm 2001 2000
Net gain recognised directly in equity 51 30
Transfer from retained earnings 9 6
Subsidiaries disposed - 1
Increase in foreign currency
translation reserve 42 23
Attributable net profit for the year 112 316
Goodwill and intangibles written off - (485)
Aggregate increase/(decrease) in net worth 163 (139)
Capital transactions with and
distributions to owners (225) (74)
Shares issued - 1
Treasury shares acquired (160) -
Ordinary dividends (56) (69)
Transfer to non-distributable reserves (9) (6)
Change in equity for the year (62) (213)
Equity at the beginning of the year 1 475 1 651
Change in accounting policy - 37
Equity at the end of the year 1 413 1 475
Commentary
Business review
A year ago, the packaging industry had looked forward with a degree of
cautious optimism. Whilst no real improvement in market conditions was
expected, it was believed that the position had plateaued. As the year
progressed, it became evident that the deterioration in the state of trade
was more severe than expected. Raw material prices soared, surplus capacity
chased available volume and margins declined further. The poor results for
the half-year were preceded by a profit warning. The second half saw
improvements in several areas, but overall, performance has been
disappointing.
The group has undergone substantial reshaping in the past three years and
has achieved most of its strategic objectives, becoming a more narrowly
focused packaging producer, concentrating on folding cartons and plastics,
and having the majority of its manufacturing base situated in the United
Kingdom and Europe. The offshore businesses contributed 73% of headline
earnings.
Financial results
Group revenue from continuing operations increased by 43%, largely due to
the acquisition of the Low & Bonar folding cartons businesses - rebranded
M.Y. Cartons - Imca. Profit before interest, tax, depreciation and
amortisation of goodwill (EBITDA) increased to R438 million, an 18% gain on
the prior period, but continuing operating profit declined by 4%. As was
reported to shareholders in November, the half-year results were affected by
high raw material price increases which could not be fully passed on to
customers, retrenchment programmes, plant breakdowns and adverse weather
conditions. Both profit and margins showed a welcome improvement
in the second half of the year in several of the businesses, but this
turnaround was marred by accounting irregularities discovered at the Cores
and Tubes Roodekop plant, where losses, whilst not material to the group,
have adversely affected the results of the South African division.
Net interest of R62 million was paid, primarily due to the debt raised to
acquire M.Y. Cartons - Imca and the absorption of cash following the share
buy-back programme.
After a lower tax rate, and income from associates, headline earnings of
R121 million were achieved, a 38% decline on the prior year. Headline
earnings per share of 24,5 cents declined by 34% on last year.
Segmental comment
South Africa - Continuing revenue in the second half of the year grew by 3%
on the first six month period, resulting in a 5% growth for the year.
Operating profit for the year declined to R55 million, with second half
income marginally exceeding that earned in the first half. EBITDA margins
and operating margins declined to 8,6% and 3,3% respectively.
Offshore - United Kingdom, Europe and Australia - Continuing revenue
increased substantially on the first half of the year and for the full year
recorded growth of 95%. Notwithstanding this, operating profit for the year
showed marginal growth as price pressures and poor results from the offshore
rigid plastics division saw EBITDA and operating margins fall to 12,8% and
7,1% respectively.
Folding cartons and cores - The group's offshore folding carton operations
now rank number 5 in Europe and number 2 in the United Kingdom. M.Y. Cartons
- Imca has met pre-acquisition objectives and has gained volume in the post-
acquisition period. Margins from the existing M.Y. Carton operations
declined during the year following downward pressure on selling prices and
unrecovered raw material price increases but volume gains enabled the
businesses to achieve operating profit growth. In South Africa, the
integration of Interpak was successfully completed, contributing positively
to an operating profit which remained under pressure in the second half of
the year. The Cores and Tubes Western Cape factory, having incurred losses
for some time, is now breaking even, but the results of the division were
adversely affected by the accounting irregularities referred to above.
Flexible and rigid plastics - The results from the South African flexible
plastics operations showed a pleasing improvement notwithstanding the
increases in the price of raw material. Attention to cost cutting and
operating efficiencies contributed to better margins, losses at the Cape
Town operations have been eliminated and the Pinetown facility is recording
continued improvements. Kohler Tubes and Tubs produced another solid set of
results following further volume gains.
The rigid plastics operations did not perform well. Xactics, the blowmoulder
of containers, which incurred losses during the year, has completed its
programme of automation and retrenchment. Improving trends have been evident
in recent months. The results from Kohler Versapak were disappointing as raw
material price increases and competitor activity resulted in operating
losses. M.Y. Plastics, the United Kingdom producer of plastic trays to the
food and consumer sectors, which experienced a significant decline in
profitability earlier in the year, has seen price cutting continue to affect
margins.
Change in accounting policies
The group complies with the requirements of the South African Statements of
Generally Accepted Accounting Practice. During the year the group changed
its accounting policies with regard to goodwill, provisions, deferred
taxation and impairment of assets. The effect of these changes has been
accounted for as a prior year adjustment to equity and the prior year
balance sheet has been restated.
Prospects
The outlook for South Africa indicates static or shrinking volumes, industry
overcapacity and a likelihood that selling prices will remain under
pressure. Major improvements will only be achieved through rigorous cost
reductions, combined with internal or industry rationalisation. The European
scenario appears less gloomy, volume growth is expected to improve and
margins to stabilise, though cost measures, rather than a market price
revival, will be the major contributor. Much will depend, however, on the
extent of any slowdown created by the declining American economy. Within
this scenario, the folding carton businesses will continue to contribute
positively. The results of the plastics divisions will depend on the
stability of polymer prices and improved management control of the business
processes particularly in rigid plastics.
Dividend
A final dividend (number 101) of 5,0 cents (2000: 8,0 cents) per share has
been declared for the year ended
31 March 2001 and will be payable on or about 20 July 2001 to shareholders
registered on 29 June 2001.
By order of the board
M H Visser G D de Jager
Chairman Chief Executive11 June 2001
Malbak Limited (Registration number 1946/022234/06)
Registered office Transfer secretaries
4 Pybus Road Mercantile Registrars Limited
Wierda Valley 11 Diagonal Street
Sandton, 2196 Johannesburg, 2001
Websites
www.malbak.co.za
www.kohler.co.za
www.mycartons.nl
Kohler
Innovative Packaging Solutions
Xactics
M.Y. Holdings
Setting the pace of packaging
