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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')
VOLUNTARY TRADING UPDATE FOR THE 11 MONTHS TO 31 AUGUST 2021
This announcement is to update the market on the group's performance for the 11 months to
date of the 2021 financial year.
Improved trading conditions due to eased restrictions
Trading conditions improved for the 11-month period ended 31 August 2021 ('the period')
relative to the prior comparative period ('FY20'), as COVID-19 restrictions were eased in
South Africa and most markets in the Rest of Africa, resulting in significantly improved group
operating results. Group revenue for the period increased by more than 20%, boosted by
stronger volumes in our key markets of Nigeria, South Africa and Zimbabwe. Trading profits
and margins grew as the group successfully restructured two divisions, improved volumes as
a result of export opportunities and continued its focus on reducing operating costs by
consolidating operations and simplifying product offerings.
Healthier demand in South Africa, strong performance in Nigeria, and partial recovery
in the Rest of Africa
Metals
Bevcan South Africa volumes were boosted by export contracts and a recovery in the local
market, despite the alcohol bans and ongoing restrictions on sporting events. Bevcan Nigeria
continued to perform better than expected, with double digit volume increases over the
comparative period. Demand at Bevcan Angola remained subdued due to a continued weak
economy and pandemic restrictions, including closed borders. Nevertheless, profitability in
Angola was higher than expected as operating costs were contained in line with lower
demand.
Divfood South Africa returned to profitability as a result of successful restructuring that
simplified the business and reversed a significant loss in the prior period. Diversified can
volumes compared favourably with the prior period and overall food can demand was stable
even with lower than expected fish can volumes. Performance in South Africa was somewhat
limited in 2H21 due mainly to the civil unrest in July 2021 that led to the closure of some
operations of key customers and the disruption of supply chain routes. Congestion and the
temporary closure of ports delayed raw material imports and finished good exports. Demand
in Divfood Nigeria was strong.
Plastics
Rigids South Africa improved volumes for several segments, driven by increased home-
consumption of certain staples, while liquid bottles were limited by milk shortages and lower
spending on smaller pack sizes due to lockdown restrictions. Profitability improved, despite
higher raw materials prices, as the division benefited from savings achieved through
successful site consolidations. Carton volumes in South Africa continued to recover from prior
year lows caused by the pandemic with pleasing profitability improvements. Volumes at our
Zimbabwean operations increased despite a continually challenging operating environment,
with additional growth being limited by the erratic supply of raw materials and availability of
foreign exchange.
Paper
Overall performance improved as demand was robust in Zimbabwe with trading volumes
recovering in Zambia and Malawi compared to the comparative period. While certain
economies remained weak, the easing of COVID-19 restrictions has seen an improvement in
trading activities and good growth from customers.
Cash transfers and foreign exchange impacts
Constrained availability of foreign currency at the official rate slowed cash transfers from
Nigeria and had a negative impact on profitability. Transfers from Angola were pleasing and
did not limit our ability to operate. Transfers from Zimbabwe were boosted by repayments
totalling USD4.0 million from the Reserve Bank of Zimbabwe related to historical debt.
Cash transfers from key markets in the Rest of Africa remain a focus area.
Covenant compliance
As previously reported, all quarterly covenants to date have been met within adjusted limits.
Furthermore, covenants were within the original limits of less than or equal to 3.0 times for net
debt:EBITDA and greater than or equal to 4.0 times for EBITDA:interest cover for the last
reported quarter ended 30 June 2021.
Update on business disposal process
Nampak has successfully concluded an agreement for the sale of the Nampak Tubes
business, which has previously been classified as held for sale. For several reasons, Nampak
has not been able to conclude the other anticipated business disposals to date, but as part of
Nampak's strategic objectives to reduce risk and to simplify our business portfolio we are still
actively engaging with potential buyers. This process is taking longer than originally
anticipated.
Renegotiation of funding agreements
In terms of the funding agreements negotiated in September 2020, the group's debt funders
required interest-bearing debt to be reduced by R1 billion by 30 September 2021, through a
strategic asset disposal process or a combination of asset disposals and a capital raise.
Ongoing negotiations have been held with Nampak's lenders to revise certain funding
requirements in light of improved trading performance by the group to date. After considering
the group's results for the 11 months ended 30 August 2021, the milestone date for
assessment of the group's ability to reduce debt by R1 billion has been deferred to 30 June
2022.
The restriction to reduce debt only through asset disposals and/or a capital raise has now
been relaxed so as to allow the utilisation of all cash flows generated through normal operating
activities, inclusive of the repayments of historical debt by the Reserve Bank of Zimbabwe, but
subject to the cancellation of available commitments.
Nampak's lenders have agreed to a relaxation of the net debt:EBITDA covenant to 3.5 times
from 30 September 2021 to 30 September 2022, returning to a covenant requirement of 3.0
times for the period commencing on 1 October 2022.
Conference call with management
Nampak management will hold a telephonic conference call on Friday, 1 October 2021 at
10h30 Central Africa Time (UTC+2) to discuss this trading update and address questions from
the investment community. Dial-in details are available on Nampak's website.
The financial information contained in this statement is based on unaudited management
accounts and has not been reviewed or reported on by the company's external auditors.
Nampak will release its results for the financial year ending 30 September 2021 on the Stock
Exchange News Service on or about 6 December 2021. Nampak will be in a closed period
from 1 October 2021 until the release of its annual results.
Bryanston
1 October 2021
Sponsor: UBS South Africa (Pty) Ltd
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: 01-10-2021 09:41:00
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