| Thu 22 Nov 2001, 0:00 | | Malbak Limited - Unaudited Results For The Six Mon |
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Unaudited results for the six months
ended 30 September 2001
* Revenue up 32% * Headline earnings per share up 61%
Group income statement
Twelve
months
Six months to to
30 September 31 March
Rm 2001 2000 2001
Revenue 2 264 1 773 3 976
Continuing 2 259 1 709 3 848
Discontinued 5 64 128
Operating profit 136 90 218
Continuing 137 90 223
Discontinued (1) - (5)
Exceptional items (4) 4 (14)
Net interest paid (37) (19) (62)
Income from associates 12 11 22
Profit before taxation 107 86 164
Taxation 35 35 52
Attributable net profit 72 51 112
Headline earnings 68 45 121
Number of shares in issue (m)
- period end 530,2 530,2 530,2
- excluding treasury
shares 477,2 477,2 477,2
- weighted average 477,2 509,3 493,3
Earnings per share (cents)
- Headline 14,2 8,8 24,5
- Attributable 15,1 10,0 22,7
Dividend per ordinary
share (cents) 4,0 3,0 8,0
Headline earnings reconciliation (Rm)
Attributable
net profit 72 51 112
Discontinued and disposed
businesses 1 (4) 3
Provision for diminution in value of
employee share trust - - 11
Profit on disposal of property, plant
and equipment (6) (5) (8)
Impairment of assets - - 2
Goodwill amortisation 4 2 6
Taxation effect (3) 1 (5)
Headline earnings 68 45 121
Additional information (Rm)
Depreciation 117 94 214
Goodwill amortisation 4 2 6
Exceptional items
Discontinued and disposed
businesses (1) 4 (3)
Provision for diminution in value of
employee share trust - - (11)
Defined benefit pension
fund deficit (3) - -
Exceptional items (4) 4 (14)
Ratios
Operating profit to sales
margin (continuing) (%) 6,1 5,3 5,8
Effective tax rate (%) 32,7 40,7 31,7
Dividend cover (headline
earnings) (times) 3,6 2,9 3,1
Group statement of changes in equity
Twelve
months
Six months to to
30 September 31 March
Rm 2001 2000 2001
Net gain recognised directly in
equity 100 (5) 51
Transfer (to)/from retained earnings (19) 1 9
Increase in foreign currency
translation reserve 119 (6) 42
Attributable net profit for the period 72 51 112
Aggregate increase in net worth 172 46 163
Capital transactions with and
distributions to owners (5) (203) (225)
Treasury shares acquired - (160) (160)
Ordinary dividends (24) (42) (56)
Transfer from/(to) non-distributable
reserves 19 (1) (9)
Change in equity for the period 167 (157) (62)
Equity at the beginning of the period 1 413 1 475 1 475
Equity at the end of the period 1 580 1 318 1 413
Group balance sheet
30 September 31 March
Rm 2001 2000 2001
Property, plant and equipment 1 678 1 514 1 518
Goodwill 171 150 150
Investments - unlisted 69 69 68
Investments in associates 71 96 98
Deferred taxation asset 1 - 8
Current assets 1 522 1 368 1 363
Cash equivalents 435 343 344
Total assets 3 947 3 540 3 549
Ordinary shareholders' equity 1 580 1 318 1 413
Deferred taxation 122 104 116
Total interest bearing debt 1 268 1 105 1 163
Trade and other payables 977 1 013 857
Total equity and liabilities 3 947 3 540 3 549
Additional information
Net borrowings (Rm) 833 762 819
Net borrowings to equity (%) 52,7 57,8 58,0
Net asset value per share (cents) 331 276 296
Directors' valuation of unlisted
investments (Rm) 69 69 68
Directors' valuation of
associates (Rm) 134 96 98
Operating lease commitments (Rm) 400 402 388
Contingent liabilities (Rm) 22 - 22
Capital commitments (Rm)
- contracted but not provided for 63 21 26
- authorised but not contracted for 27 6 13
Group cash flow statement
Twelve
months
Six months to to
30 September 31 March
Rm 2001 2000 2001
Cash generated by operations 237 166 398
Working capital requirements (52) 43 (76)
Financing costs and taxation paid (39) (58) (135)
Dividends paid (24) (42) (56)
Net cash inflow from
operating activities 122 109 131
Net cash (outflow) from
investing activities (136) (844) (923)
Capital expenditure (124) (111) (177)
Acquisition of business - (753) (755)
Net other investment activities (12) 20 9
Net cash outflow before
financing activities (14) (735) (792)
Net financing activities 105 723 781
Share purchase - (160) (160)
Net increase/(decrease) in
cash equivalents 91 (172) (171)
Segmental analysis
for the six months ended 30 September
South Africa Offshore
2001 2000 2001 2000
Revenue* (Rm) 875 827 1 384 882
Folding cartons and cores 306 297 1 126 676
Flexible and rigid plastics 569 530 258 206
EBITDA* (Rm) 88 71 170 113
Folding cartons and cores 19 27 143 94
Flexible and rigid plastics 69 44 27 19
Operating profit* (Rm) 42 26 95 64
Folding cartons and cores 10 18 81 54
Flexible and rigid plastics 32 8 14 10
EBITDA margin* (%) 10,1 8,6 12,3 12,8
Folding cartons and cores 6,2 9,1 12,7 13,9
Flexible and rigid plastics 12,1 8,3 10,5 9,2
Operating profit margin* (%) 4,8 3,1 6,9 7,3
Folding cartons and cores 3,3 6,1 7,2 8,0
Flexible and rigid plastics 5,6 1,5 5,4 4,9
Headline earnings (Rm) 27 14 41 31
Total assets excluding
cash (Rm) 1 261 1 375 2 251 1 822
* In respect of continuing businesses
Commentary
Business review
The benefits of the strategic reshaping and operational
restructuring, which commenced some time ago, are now being
realised and the group has completed a satisfactory six-
month period. Strategically, Malbak had identified the need
to narrow its areas of focus in South Africa and expand its
core operations in the growth regions of the United Kingdom
and Europe, simultaneously increasing the level of hard
currency earnings. The disposals locally, the acquisition of
the minority shareholdings in M.Y. Holdings plc and the
purchase of the Imca folding carton business have
strengthened Malbak. The foreign operations now contribute
some 60% of the group's revenue and 70% of operating profit.
The operational restructuring necessitated plant closures
and business disposals, retrenchments and capital
expenditure but, together with the greater management focus,
has resulted in improved efficiencies and profitability in
many of the previously non-performing Flexible and Rigid
Plastics operations. Whilst certain of the costs associated
with these activities have been treated as exceptional, some
R7 million has impacted directly on operating profit.
Financial results
The success of the actions described above has translated
into a most pleasing 61% growth in headline earnings per
share.
Revenue from continuing operations increased by 32% over the
comparative period, whilst continuing operating profit grew
by 52% to R137 million. Revenue growth was recorded in all
segments of the business and the improvement in
profitability was due to solid performances in the offshore
folding carton and local flexible and rigid plastics
operations. The group also benefited from a full six-month
contribution from the Imca business acquired on 21 June
2000.
Net interest paid of R37 million increased due to the timing
of the Imca acquisition and the share buy-back programme
during the comparative period. Interest cover at 3,7 times
has improved marginally on the 2001 year-end position. After
income from associates and taxation at an effective rate of
32,7%, attributable earnings grew by 41% and headline
earnings of R68 million by 51%.
The decline in the value of the rand against the pound
during the period to a rate of 13,4 at 30 September 2001 has
been substantial. The full benefit of this decline on the
group's earnings stream is yet to be fully recognised as the
average rate of exchange determined in accordance with
Generally Accepted Accounting Practice and used in the
conversion of the income statement has been 11,9. Conversion
upside exists on the group's future earnings, emphasising
the rand hedge quality of the business.
The impact of the declining rand on the balance sheet,
converted at the period end rate of 13.4, has been
significant, given that the greater portion of the group's
assets reside offshore. The net effect of the exchange rate
on equity amounted to R119 million and the rand values of
foreign fixed assets, goodwill, net current assets and debt
have increased accordingly. The balance sheet is strong, net
gearing has declined to an acceptable 53% and, whilst rand
converted net borrowings have increased marginally to R833
million, foreign denominated net debt reduced from 67
million to 62 million and locally, net debt of R53 million
was improved to a net cash position of R3 million.
Segmental comment
Southern Africa - Continuing revenue for the period grew by
6%. Ebitda showed a 24% increase and operating income a
satisfactory 62% improvement as the flexible and rigid
plastics divisions improved their performance through
efficiency gains and cost reductions. Despite the folding
cartons and cores division suffering a decline in
profitability against the comparative period, a pleasing
recovery over the second half of 2001 was achieved following
management's corrective actions.
Offshore - United Kingdom, Europe and Australia - Continuing
revenue for the period increased by 57% following both
acquisition and volume growth. Selling prices remained under
severe pressure. Ebitda grew by 50% and operating profit by
48% with both folding cartons and rigid plastics
contributing to the improvement.
Folding Cartons and Cores - Notwithstanding a continuation
of the downward pressure on selling prices, the offshore
operations achieved volume gains and profit improvements.
M.Y. Healthcare in particular, increased its market share
and is, together with the Pharmapactr alliance, a key player
in the European marketplace. The M.Y. Cartons - Imca
business, after fifteen months in the group, continues to
perform to expectations. M.Y. Cartons - Insight has
weathered the selling price pressures and increased its
contribution to earnings by managing costs and gaining
volume.
In South Africa the Kohler folding cartons operations are in
a turnaround situation, following the decline in
profitability in the previous year. Although margins have
improved, further consolidation is necessary for the
operations to achieve a satisfactory level of income and
return on assets.
Flexible and Rigid Plastics - The improvements noted last
year in the profitability of the flexible plastics
operations continued through this period. Kohler Flexible
Pinetown, Kohler Tubes and Tubs and Flexpak performed well.
The Cape Town Flexible plant has continued to disappoint,
despite management's efforts to achieve improvements.
The rigid plastics operations in South Africa have been
restored to profitability and further improvements are
expected in the second half. Cost reductions have been
achieved at the Versapak and Xactics operations.
In the United Kingdom, the M.Y. rigid plastics division has
undergone restructure with the closure of the Edinburgh
facility and the disposal of that property. A plant renewal
programme has been introduced to upgrade outdated equipment
at the Aylesham and Bridgwater facilities. at the Aylesham and Bridgwater facilities. the period have been disappointing, but improvements are
expected as the benefits from the capital investment
programme are realised.
Accounting policies
The group complies with the requirements of the South
African Statements of Generally Accepted Accounting
Practice. The group's accounting policies are consistent
with those applied in the prior years.
Prospects
Despite the prevailing economic uncertainty, the board
expects that the recent improvements in results can be
sustained and that the businesses will continue to benefit
from their strong market positions.
Shareholders are referred to the cautionary announcement
with regard to the merger negotiations between Malbak and
Nampak, released on 2 November 2001.
Dividend
An interim dividend (number 102) of 4,0 cents (2000: 3,0
cents) per share has been declared for the six-month period
ended 30 September 2001. The last day to trade ("CUM" the
dividend) in order to participate in the dividend will be
Friday, 11 January 2002. The shares of Malbak Limited will
commence trading "EX" the dividend from the commencement of
business on Monday, 14 January 2002 and the record date will
be Friday, 18 January 2002. Dividends will be paid to
members on Monday, 21 January 2002.
Shareholders are advised that share certificates may not be
dematerialised or rematerialised between Monday, 7 January
2002 and Friday, 18 January 2002, both days inclusive.
By order of the board
M H Visser G D de Jager
Chairman Chief Executive 21 November 2001
Malbak Limited (Registration number 1946/022234/06) (Share
code: MLB ISIN code: ZAE000004487)
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.mypackaging.com
Kohler
Xactics
MY Holdings
