|Mpact final results December 2020|
|5 March 2021 8:07|
|Group revenue for the year ended 31 December 2020 of R11.1 billion was similar to the prior year, with a 3.5% increase in Plastics offset by a slight decline in Paper. Operating profit turned around to R601.5 million (2019: loss of R576 million), profit for the year from continuing operations came in at R363.4 million (2019: loss of R722 million), while headline earnings per share from continuing operations increased 5.5% to 196.1 cents (2019: 185.8 cents per share).
The Company received 99.9% support for the decision to buy back shares at the special general meeting held on 11 December 2020. During the period September 2020 to January 2021, Mpact repurchased 25 129 154 of its shares at an average purchase price of R13.71 per share, which equates to a 38% discount to the Group's net asset value per share as at 31 December 2020 and at a greater discount to its intrinsic value. The total cash outflow for the shares repurchased was R345 million, of which R87.5 million relates to the year ended 31 December 2020.
The Board reviews capital allocation for the Group on an ongoing basis. Given the discount of Mpact's share price to intrinsic value, the Board's view is that the substantial share repurchase programme enhances value creation for shareholders over a cash dividend.
The Board has therefore resolved not to declare a dividend for the financial year ended 31 December 2020.
The Board will continue to focus on driving long term value for shareholders. This is done through prudent capital allocation in the context of growth opportunities, which do exist, and cash returns to shareholders by dividends, share buybacks or a combination thereof.
Mpact has had a positive start to the 2021 financial year and is well positioned despite a weak economy. There are indications of good fruit crops and a gradual recovery in the FMCG and Quick Service Restaurant sectors. Mpact is also expected to benefit from an improved global outlook for containerboard and cartonboard.
Working capital management will remain a key focus area, but it is anticipated that working capital levels will increase in the current period to ensure continuity of supply.
Mpact's integrated business model continues to be uniquely focused on closing the loop in paper and plastic packaging, contributing to the circular economy, and benefiting all stakeholders. The Group's focus on innovation and sustainability provides our customers with packaging solutions that ensure product quality whilst reducing the environmental impact.
The Group has a robust strategy and substantial financial capacity, as well as an experienced management team to navigate and prosper in the current volatile trading environment.
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