It all depends which half you look at

EXXARO’s spin doctors sang from different hymn sheets at yesterday’s presentation of the group’s interim results, with amusing results.

Executive strategy and corporate affairs head Mzila Mthenjane, who recently joined the group from Royal Bafokeng Holdings, made the introductory comments and was less than completely enthusiastic about Exxaro’s performance. But he was followed by CEO Sipho Nkosi and chief financial officer Wim de Klerk, who maintained that Exxaro had done really well in the six months to end-June.

The reason for the differing views? Mthenjane was comparing interim results with interim results, as per the standard financial reporting convention, the one followed by Business Day. On that basis Exxaro turned in a shocker, with profits down 75% and a chopped dividend.

But the two sets of interim results are not strictly comparable because of the accounting “funnies” involved. These included more than R4bn in extraordinary profits earned through the sale of noncore assets in the first half of 2012, and the R292m impairment charge against New Clydesdale Collieries taken in the first half of this year.

So Mr de Klerk compared the first-half numbers for 2013 with the second-half numbers for 2012. On that basis Exxaro’s performance looks far better, with headline earnings nearly trebling and the dividend up instead of down.

And journalists are the ones who are always being accused of never letting the facts get in the way of a good story?

AS TRADE opens up globally, especially in Africa, companies with histories in other sectors are expanding into packaging. Soaring emerging market demand increases the need for goods to be packaged carefully so they maintain their quality from purchase to delivery.

This week, Transpaco, a small JSE-listed packaging group with an operating profit of about R90m, said on releasing its annual results that it was seeing increased competition. Even though the culture of Transpaco is to grow very cautiously, CEO Phillip Abelheim said his group was looking into acquisitions in sectors that are not completely packaging focused. One of these is recycling.

Transpaco’s turnover grew 6.7% to R1.12bn in the year to June. In the previous year, growth of 11% was achieved. The group does a lot of business in plastic bags and is more specialised than, say, Nampak. But with rising raw material prices, especially plastic, a group like Transpaco is under pressure.

Giants such as Nampak can burn a bit of cash on plastic bags and other niche markets because they have bigger balance sheets. Sappi is another large group with packaging businesses. It works with chemical cellulose, which, while used to package goods, has a variety of other uses, even lining clothes.

Dave Marrs edits Company Comment (marrsd@bdfm.co.za)