| Thu 1 Dec 2022, 7:05 | | NAMPAK LIMITED - Trading statement for the year ended 30 September 2022 and proposed capital raise |
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Trading statement for the year ended 30 September 2022 and proposed capital raise
NAMPAK LIMITED
Registration number 1968/008070/06
Incorporated in the Republic of South Africa
Share Code: NPK ISIN: ZAE000071676
Share Code: NPP1 ISIN: ZAE000004966
Share Code: NPKP ISIN: ZAE000004958
LEI: 3789003820EC27C76729
(“Nampak” or “the group” or “the company”)
TRADING STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2022 AND PROPOSED CAPITAL RAISE
Nampak is in the process of finalising its audited annual results for the year
ended 30 September 2022 (“the year” or “FY22”). In terms of the JSE Listings
Requirements, shareholders are advised that Nampak is satisfied that a reasonable
degree of certainty exists that the financial results for the year to be reported
upon will differ by at least 20% from 30 September 2021 (“the prior year” or
“FY21”).
The change in headline earnings per share (“HEPS”) and loss per share
(“LPS”)/earnings per share (“EPS”) for the group for the year are expected to be
as follows:
- HEPS is expected to decrease to between 33.0 cents and 37.0 cents compared to
HEPS of 62.3 cents in FY21, representing a decrease of between 41% and 47%.
- A LPS of between 22.0 cents and 25.0 cents is expected compared to EPS of 32.1
cents in FY21.
Proposed capital raise
With the group’s current debt package and the US Private Placement funding
maturing on 31 December 2023 and on 28 May 2023 respectively, coupled with the
requirement to repay R1.35 billion of net debt by 31 March 2023, the group is
required to refinance its debt package before the 31 March 2023. This refinancing
is in process and subject to the group raising capital of no less than R1.35
billion (net of fees and expenses) by 31 March 2023.
As a result of the current economic environment self-help measures have not fully
yielded the required results. Nampak will therefore convene an extra-ordinary
general meeting in respect of which a circular will be published on or about 15
December 2022, seeking all relevant authorisations required to enable the company
to proceed with a potential rights offer of up to R2.0 billion during the course
of the first quarter of 2023 which, if successful, will enable management to
focus on delivering on Nampak’s growth strategy and result in a simplified, more
robust capital structure.
A breakdown of the use of proceeds of the proposed rights offer is as follows:
- R1.35 billion to repay lenders, as a minimum requirement for the
refinancing;
- R350 million to upgrade a beverage can line in South Africa. This will add
urgently needed production capacity to satisfy the unprecedented growth in
beverage can demand;
- R150 million to provide operating flexibility, as the group is currently
operating with inadequate capacity to handle seasonal fluctuations in
working capital requirements; and
- R150 million to cover the estimated transaction costs of both the
refinancing and the proposed rights offer.
A number of historic impairments, such as the goodwill in Nigeria and asset
impairments in Angola and more recently, impairments arising from the application
of a higher weighted average cost of capital to asset valuations together with
the net effects of hyperinflation in Zimbabwe and an expected credit loss raised
in 2019 against the debt from the Reserve Bank of Zimbabwe, have all resulted in
elevated levels of gearing.
The historical decisions to fund the African expansion mainly with US dollar debt
has meant that the impact of the aforementioned macro-economic and operational
pressures placed significant strain on the balance sheet and required the group
to seek covenant relaxations from its funding partners. This has resulted in an
increase in funding costs, which has been more acute in the context of the rising
commodity prices and interest rate environment that has emerged since the onset
of the war in Ukraine.
As pressures on the group’s fiscal position increased, the group has undertaken
a number of self-help initiatives to de-lever the balance sheet and improve
capital allocation. As a result, Nampak has become a smaller and more focused
business. There is still however, a high level of complexity as the group operates
in 10 countries across the African continent, many of which are dependent on
commodities and therefore vulnerable to price changes, currency instability
(including the pegging of currencies to the dollar) and a general lack of
availability of foreign exchange. The group is also being disproportionally
funded by a complex consortium of lenders with gearing levels exceeding
shareholders’ equity.
In light of the proposed rights offer and associated capital raise, shareholders
are advised of the following features of the FY22 financial results which would
ordinarily not be disclosed prior to the formal results announcement nor appear
in a normal trading statement:
- R222 million benefit of pension fund surplus recognised;
- higher net foreign exchange losses of R546 million (FY21: R246 million)
incurred primarily due to foreign currency shortages in Nigeria;
- R101 million increase in net finance costs; and
- R512 million net impairments (FY21 264 million), of which R392 million is due
to the negative impact of the group’s increased weighted average cost of
capital on asset valuations resulting from increased country risk premiums and
long-term interest rates. The bulk of these impairments are asset impairments
that could reverse should country risk premiums or long-term interest rates
return to normal.
The information contained in this announcement has not been reviewed or reported
on by the company's external auditors. Nampak expects to release its audited
annual results on or about Monday, 5 December 2022.
Bryanston
1 December 2022
Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Forward-looking statements: Certain statements in this document are not reported
financial results or historical information, but forward-looking statements.
These statements are predictions of or indicate future events, trends, future
prospects, objectives, earnings, savings or plans. Examples of such forward-
looking statements include, but are not limited to, statements regarding volume
growth, increases in market share, exchange rate fluctuations, shareholder return
and cost reductions. Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as “believe”,
“continue”, “anticipate”, “ongoing”, “expect”, “will”, “could”, “may”, “intend”,
“plan”, “could”, “may”, and “endeavour”. By their nature, forward-looking
statements are inherently predictive, speculative and involve inherent risks and
uncertainties, because they relate to events and depend on circumstances that
may or may not occur in the future. If one or more of these risks materialise,
or should underlying assumptions prove incorrect, our actual results may differ
materially from those anticipated. There are a number of factors that could cause
actual results and developments to differ materially from those expressed or
implied by these forward-looking statements. These factors include, but are not
limited to: changes in economic or political conditions and changes to the
associated legal, regulatory and tax environments; lower than expected
performance of existing or new products and the impact thereof on the group’s
future revenue, cost structure and capital expenditure; the group’s ability to
expand its portfolio; skills shortage; changes in foreign exchange rates and a
lack of market liquidity which holds up the repatriation of earnings; increased
competition, slower than expected customer growth and reduced customer retention;
acquisitions and divestments of group businesses and assets and the pursuit of
new, unexpected strategic opportunities; the extent of any future write-downs or
impairment charges on the group’s assets; the impact of legal or other proceedings
against the group; uncontrollable increases to legacy defined benefit liabilities
and higher than expected costs or capital expenditures. When relying on forward-
looking statements to make investment decisions, you should carefully consider
both these factors and other uncertainties and events. Forward-looking statements
apply only as of the date on which they are made, and we do not undertake any
obligation to update or revise any of them, whether as a result of new
information, future events or otherwise.
Date: 01-12-2022 07:05:00
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