PIM Financial Highlights and Chairman's Report

Contents
Mission Statement The Board of Directors Senior Management Financial Highlights Chairmans Statement Managing Directors Report Corporate Governance Report of the Directors Statement of Directors Responsibility Auditors Report Balance Sheet Income Statement Cash Flow Statement Statement of Changes in Equity Notes to the Financial Statements Value Added Statement Statistics Analysis of Shareholders Notice of the Forty First Annual General Meeting Proxy Form
3 4 5 7 8 - 11 12 - 17 18 - 19 22 24 25 26 27 28 29 30 - 53 54 55 56
57 - 58 59
Packaging Industries (Malawi) Limited
Mission Statement
OUR VISION
To continuously supply packaging products that satisfy customer requirements and expectations
OUR MISSION
Packaging Industries (Malawi) Limited, recognising its responsibility to satisfy customers needs, sets out to achieve the following:Facilitate the effective distribution of agricultural and manufactured goods Provide reliable and quality protection and storage of goods Render professional advice and quality ser vice on packaging to customers Enhance presentation of products by continuously investing in new design technologies
Paper sack production
Board of Directors
Senior Management
Raymond Lund (44) B.Sc (Eng), UCT, PhD Chairman
Willie Wiese (48) M.Sc (E.Eng), M.Sc (Ind.Eng), MBA (Up to February 2009) Simon Itaye (52) B.Com, FCCA, MBA Managing Director
Gift Mtileni (38) B.Acc, FCCA Financial Controller/ Company Secretary Limbani Medi (37) BA (PA) Human Resources Manager
Gregory Mhango (45) Gautoni Kainja (53) LL.B (Hons), LL.M (Monash) Shadreck Ulemu (50) M.Sc (E.Eng), B.Sc (Ind.Eng), B.Sc Procurement and Logistics Manager PatriQUE Chithila (42) B.Sc (Mech. Eng) Factory Manager
Harry Nyakhoko Nsona (52) Nebert Nyirenda (47) MA (Econs) John Van Gend (43) B.Com, ACMA B.Sc Marketing Manager Chimenya (44) B.Sc Information Systems Manager
Financial Highlights
3000 2500 2000 1500 1000

MK (Million)
TURNOVER
160 140 120 100 80 60

MK (Million)
PROFIT BEFORE TAX
160 140 120 100 80 60

MK (Million)
PROFIT AFTER TAX
40 20 0 2005 2006 2007 2008 2009
40 20 0 2005 2006 2007 2008 2009
500 0
2005 2006
2007
2008
2009
160 140 120 100 80 60 40 20 0
EARNINGS PER SHARE
45 40 35 30 25 20 15
TAMBALA
DIVIDEND PER SHARE
TAMBALA
10 5 0 2005 2006 2007 2008 2009
2005 2006
2007
2008
2009
Paper sacks quality inspection
Chairmans Statement
Turnover for the year at MK2.6 billion was up on prior year sales by 17.7% mainly because of sales volume increases in liquid packaging cartons and corrugated cartons.
Raymond Lund CHAIRMAN
Chairmans Statement
OV E RV I E W
The economy grew by 9.7% in 2008 and the base lending interest rate although still high remained stable throughout the year. Due to the tumbling maize and fuel prices, inflation went down from 9.8% in 2008 to 7.5% by September 2009. These factors, together with the high volume in the tobacco crop should have resulted in increased demand for packaging materials. This, however, did not fully materialise due to many factors including, most importantly, the shortage of foreign currency in the economy. Whilst the Kwacha has been fluctuating against most major currencies including the Euro, Pound and Rand, the state regulated Kwacha/United States Dollar official rate remained controlled at about MK142 throughout the 2009 financial year. This situation created a triangular arbitrage between the three currencies that dominate the companys business which the company has been unable to take advantage of, but it has caused an acute shortage of foreign currency in the economy. These shortages affected the companys ability to pay foreign creditors on time. Receipts of raw materials were affected which in turn resulted in stock outs in raw materials for various product lines. Even with this difficult trading Pre-tax profit at MK119.9 million was 23.5% above prior year results. Although profit margins were under pressure due to raw material price increases and the depreciation of the Kwacha against trading currencies such as the Euro and the Rand, managements focus on cost and productivity issues assisted in the attainment of improved results for the year. Apart from increases in exchange losses and in financial charges on the importation of materials and other imports, all overhead cost increases were within expectations. Turnover for the year, at MK2.6 billion, was up on prior year by 17.7% mainly due to volume increases in liquid packaging cartons and corrugated cartons. Adjustments in selling prices in all product lines also contributed towards this improvement in turnover. Turnover would have been higher had it not been for stock outs in raw materials which affected delivery schedules to customers. The shortage affected customer delivery service as raw material supplies withheld deliveries while awaiting the settlement of outstanding payments from the company.
F I N A N C I A L YEA R 2 0 0 9 R E S U LT S
C O R P O R ATE G OV E R N A N CE AND SOCIAL R E S P O N S I B I L I TY

The board and management are
and in some rural areas in Lilongwe through the purchase of cassava starch which is used in the corrugated cartons production process. The company, in association with organisations such as Malawi Entrepreneurs Development Institute (MEDI), the University of Malawi, Ministry of Agriculture and Food Security and Southern Africa Root Crops Research Network (SARRNET) have over the past years been involved in the promotion of the growth and processing of cassava for industrial use. Apart from buying starch from farmers cooperatives in NkhotaKota and Lilongwe, the company also provides advice on the production of starch that meets internationally accepted industrial standards. Because of the rudimentary technology that is used in processing starch to cassava, local starch producers are
committed to the principles of good corporate governance and highest ethical standards. The company has a code of conduct and control procedures which are periodically reviewed to ensure that principles of good corporate governance are in place, up to date and that the highest ethical standards are at all times upheld. The companys business decision making process recognises and places significant importance on the need to take into account ethical values, compliance with legal requirements and respect for all stakeholders including employees, communities and the environment. As part of the companys compliance with good corporate governance practices, group internal auditors from Nampak, the majority shareholder, visit the company at least once in every year to check on the companys internal control systems and procedures and carry out normal internal audit duties. The board has also a very active audit committee which among other roles is responsible for upholding good corporate governance principles. In line with the companys commitment in assisting small and medium enterprises, management have continued supporting the growth of cassava in Nkhota-Kota
unable to meet the companys annual starch requirements the bulk of which is currently being imported. We believe that these small scale import substitute industries if properly nurtured would not only assist in contributing towards the governments poverty reduction strategy but would also economically empower rural local communities in areas that such starch plants are located. PIM is therefore committed to offer relevant assistance in the promotion of these small scale cassava processing ventures.
environment, the company produced a significant improvement in performance in the financial year.
Chairmans Statement
Chairmans Statement
more and
resources transport
towards and
economic
D I R ECTO R ATE
I take this opportunity to thank Willie Wiese who resigned as chairman during the year for his invaluable contribution during the period of his chairmanship for the company. I also would like to welcome Rob Morris and Derek Perryman who joined the board in the last quarter of the year.
sectors of agriculture and food security, communication infrastructure should result in improved business activity in the economy which in turn should boost demand for packaging materials.The Kwacha/US dollar exchange rate, which had been tightly controlled for a long time, has recently been allowed to fluctuate and it has started weakening. Regardless of this improvements in the foreign currency situation will take some time to be realised. Foreign currency shortages are, therefore, likely to persist for some time. The trend in inflation experienced over the past year is expected to continue into next year. Due to the very tight demand/ Corrugated board production line supply situation in the World paper market, and the expected depreciation of the Kwacha against major currencies that the company trades in, prices for raw materials and other input costs are likely to increase in the year ahead. Profit Management has also joined other of this initiative, the company donated some equipment to the department of Physics and Biochemical Sciences at the college. margins will remain under pressure but we are however confident that with managements focus on operational issues that are within the companys control, we will attain growth in earnings in the 2010 financial year. organisations in collaborating with one of the University of Malawi constituent colleges, the Polytechnic through the companys participation higher involvement in a and active Private-Public aim of the Economic growth in Malawi in 2009 and 2010 is likely to slow down when compared to the growth attained in the past two years. Government intention to allocate Raymond Lund 3 December 2009 I would like to thank management and staff for their efforts and directors for their direction and support in what has been a very challenging year for the company.
A P P R EC I AT I O N
Partnership arrangement for sustainable education. The initiative is to ensure that there is close collaboration between the university and industry in research, information transfer and technology development. As part
F I N A N C I A L YEA R 2 010 P RO S P ECT S
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Managing Directors Report
Simon Itaye MD
P E R F O R M A N CE OV E RV I E W
Performance of the company in the 2009 financial year was affected by sporadic shortages of foreign currency, high input costs and competition especially from substitute packaging and imports. Raw material stock outs in various product lines as a result of forex shortages, affected the companys ability to satisfactorily service its local and export customers. Improvements attained in sales volumes in liquid packaging and corrugated cartons, however, mitigated the impact that the above factors would have had on the performance of the company in the 2009 financial year. Since all our raw materials are imported, and our export proceeds are inadequate to meet our foreign currency requirements for import financing, shortages in foreign exchange in the market affected the servicing of bills for foreign creditors. As a result of this, some suppliers closed open accounts credit facilities that were accorded to the company opting for the use of Letters of Credit for the importation of some of the companys critical raw materials. This had a very negative impact on receipt of some raw materials as banks were in most cases unable to establish letters of credit in time to meet raw materials delivery schedules. In some instances, banks were requesting for
upfront payments for the establishment of Letters of Credit thereby forcing the company to unnecessarily lock in cash that would have efficiently been used for other company operations. Apart from the delays in establishment and the requirement for prepayments, Letters of Credit are generally more expensive than open account facilities. Attempts by the Central bank to intervene in the foreign currency market did not have the expected impact on foreign currency availability. As a result of shortages in foreign currency and input material cost escalations especially towards the end of the 2009 financial year, margins especially on products lines whose inputs are denominated in Euro and Rand were under pressure. Due to the use of letters of credit for import financing and the depreciation of the Kwacha against Euro and Rand, the company incurred abnormally high exchange losses and exceptionally higher finance charges in the year. With the sporadic stock outs that were experienced and improvement in efficiencies in the Durban/Blantyre route we did not explore the use of Beira or other alternative routes for some of our imports as indicated in my last years report. Arrangements have however Corrugated boards for box making already been made to try by December 2009 the Beira route.
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C O M PA N Y O P E R AT I O N S
Having completed the major
also completed in the year and further work is expected to be undertaken in the year ahead. As part of our own going continuous improvements initiatives, we have continued with the implementation of Hazard Analysis and Critical Control Point (HACCP) systems whose full implementation has been delayed due to logistical problems. Arrangements with the Malawi Bureau of Standards (MBS) for staff training on PIMs ISO certified systems, as reported in my last years report, are in place and we are benefiting from the arrangement through periodic ISO audits conducted by MBS.
As the country does not have training facilities in packaging, and in particular paper packaging, we have continued with arrangements with Nampak for scheduled visits of technical staff from the Nampak Group. These short-term visits are arranged for the provision of technical advice to the company and for conducting hands-on shop floor training to factory employees. As a result of the above initiatives and the improvement in product quality that has been achieved over the last year, we believe we have now well positioned the company to take advantage of the opportunities in the Malawian market and favourably compete in the segments that we currently serve.
Exports of liquid packaging cartons were also affected by the lack of forex as we were unable to obtain adequate forex to finance the importation of raw materials to meet increases in customers demands. Profit before tax at MK119.9 million was 23.5% above last years pre-tax profit largely as a result of improvements in margins and our focus on factory efficiencies, which delivered good improvements . Although there have been improvements in the working capital situation, foreign exchange shortages had a very negative effect on the operations of the company and on balance sheet management. Raw material stocks were in many months below optimum holding levels and there were also at times huge backlogs of foreign creditors payments leading to suspension of credit terms from some suppliers. Stock values at year end were 27% lower than those in 2008 mainly due to delayed receipts of some raw materials towards the end of the financial year. The huge tax balance in the balance sheet is partially because of a reassessment of prior year export incentive tax allowances by the Malawi Tax Revenue (MRA). Due to inconsistencies in legislation on the computation of export incentives, the MRA reassessed export tax on exports from 2003 based on the Taxation Act ignoring provisions in the Investment Promotion Act. Representations on the issue by the
rehabilitation of the board making plant in 2008, we have now started focusing our attention on the rehabilitation and modification of plant and equipment in the liquid packaging cartons division. This process has already been initiated and arrangements are underway for a consultant from Nampak to assist with the rehabilitation and upgrading of the rest of plant and equipment in the division. Modifications, especially on electrical and electronic systems on plant and equipment in the box making section of the corrugated cartons division was
2009 FINANCIAL P E R F O R M A N CE R E V I E W
There were improvements in both sales volumes and turnover for the year when compared to last years results. Sales volumes at 10,245 tons were 3.4% above prior year volumes and turnover at MK2.6 billion was higher than 2008 turnover by 17.7%. Liquid packaging cartons and corrugated carton attained above expected sales. Economic growth and the higher tobacco crop grown in the year, account for the increase in sales Liquid packaging cartons production line volumes of these two product lines. Sales would have been higher had it not been for raw material related stock outs which impacted on customer delivery schedules.
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Manufacturers Association and the Malawi Confederation of the Chamber of Commerce and Industry to the relevant Ministries did not yield desired results. Shortages in forex and the international financial meltdown also partly affected the level of capital expenditure in the year which, at MK50 million, was far lower than planned expenditure. Cash generated from operating activities was higher than last year and a larger proportion of it was used for the acquisition of assets, payment of interest and repayment of long term loans.
up and the trend is likely to continue because of the prevailing tight demand/ supply situation in paper products. The economy is however, expected to grow and this should trigger general business activity including that of the packaging sector. In the year just ended, we focused particularly on productivity improvements and we have already benefited from this through the attainment of cost reductions from factory efficiency improvements. In the 2010 financial year our strategies are geared towards further improving factory operations, focusing on customer service and exploring export markets. These strategies, together with expected improvements in the economy should result in the attainment of satisfactory results for the company in the year ahead.
F O RT I ETH A N N I V E R S A RY
Packaging Industries (Malawi) Limited was incorporated as Amalgamated Packaging Industries on 16th September 1969 and to mark the fortieth anniversary of the company, different activities were undertaken including the hosting of a reception where stakeholders for the company were invited. These functions were very successful and enjoyed by employees, customers, suppliers and other stakeholders.
A P P R EC I AT I O N
The company has experienced growth in its business for which I would like to thank customers for their loyalty and raw material suppliers for their support and confidence in the company. I also would like to thank management and staff for their efforts and commitment and fellow directors for their counsel.
2 010 O U T LO O K
The foreign currency situation prevailing in the country is unlikely to substantially improve in the next few months as we are going towards forex lean periods after the closure of tobacco auction floors. Raw material prices have already started moving
Simon Itaye 3 December 2009
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Corporate Governance
The directors are chosen for their skills and professionalism and the current board is composed of individuals with vast experience in a wide range of professions.
Corporate Governance
Packaging Industries (Malawi) Limited upholds the principles of Integrity and Accountability as advocated by the King report on Corporate Governance. The company complies with the provisions of the King report save for circumstances where such compliance is not practicable. In such cases adequate procedures and systems are maintained to ensure good corporate governance.
AU D I T C O M M I TTEE / APPOINTMENTS A N D R E M U N E R AT I O N C O M M I TTEE

The company has an audit committee composed of four non-executive directors. The committee operates within written terms of reference and meets at least twice a year. Among other responsibilities, the committee reviews interim and annual results before presentation to the board of directors. The committee also reviews the effectiveness of the companys
WO R KE RS PA RT I C I PAT I O N
An employee representative committee is in place with the objective of handling issues that affect employees welfare as well as the companys productivity. The committee meets with management every month to discuss issues affecting their wellbeing and productivity issues.Through this committee, employees are encouraged to have free and open communication and have access to information concerning company performance and they are also encouraged to discuss company performance in their own meetings.
C O DE O F C O N D U CT
Directors and Management are required to maintain high ethical standards at all times. A formal code of business conduct was circulated and signed by management and other senior employees. In addition, the company observes a closed period during which directors, management and senior employees are not allowed to deal in the companys shares. The closed period is 30 days before the end of the first six months of the financial year until the publication of the interim results and 30 days before the financial year end until the publication of the year end results.
B OA R D O F D I R ECTO RS
The Board of Directors is composed of seven directors, out of which six are nonexecutive directors. The directors are chosen for their skills and professionalism and the current board is composed of individuals with vast experience in a wide range of professions. The board meets four times a year with additional meetings being held depending upon need. The board is responsible for strategic and policy decisions, the approval of budgets and monitoring the companys performance. The day to day running of the operations of the company is vested in the companys Managing Director who is in constant contact with the Chairman of the board. At each meeting of the board, the Managing Director presents a comprehensive report on the operations of the company, which includes financial results.
internal controls. The companys external auditors are invited to attend all audit committee meetings. The Managing Director and the Financial Controller attend audit committee meetings by invitation. In addition to the above, the Audit Committee has been entrusted with the and functions of the Appointments committee Remuneration
I N TE R N A L AU D I T
The company has access to the services of Nampak group internal auditors. These auditors visit Packaging Industries every year and their reports are made available to the board of directors as well as external auditors.
responsibilities which includes ensuring that the companys directors and senior management are appropriately appointed and fairly rewarded for their individual contributions towards the companys overall performance. The committee plays an active role in succession planning activities for the managing director and senior management positions. Corrugated box making
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FINANCIAL STATEMENTS
2009
PE board for liquid packaging carton production
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PACKAG I N G I N D U ST R I E S ( M A L AW I ) L I M I TED
Report of the Directors

For the year ended 30 September 2009
Report of the Directors

The Directors have pleasure in submitting their report together with the annual financial statements for the year ended 30 September 2009.
AU D I TO RS
The auditors, Deloitte, have signified their willingness to continue in office and a
R E G I STE R ED O FF I CE
The address of its principal place of business and registered office is plot number NY 189, Makata Industrial Area, P O Box 30533, Chichiri, Blantyre 3, Malawi.
resolution is to be proposed at the forthcoming Annual General Meeting in relation to their appointment as auditors in respect of the year ending 30 September 2010.
H O L D I N G C O M PA N Y
The Companys immediate holding Company is Transmar (Isle of Man) Limited, a wholly owned subsidiary of Nampak Limited, a Company incorporated in the Republic of South Africa.
N AT U R E O F B U S I N E S S
The principal activity of the Company, which is incorporated in Malawi, consists of the manufacture of cardboard and paper containers.
F O R A N D O N BEHA L F O F THE B OA R D F I N A N C I A L P E R F O R M A N CE
Revenue Profit before tax Income tax expense Profit after tax 2009 MK000 2,597,354 119,879 52,277 67,602 2008 MK000 2,206,689 97,037 29,401 67,636 CHAIRMAN MANAGING DIRECTOR
D I R ECTO R S
The following directors served in office during the year: Willie Wiese Raymond Lund John Van Gend Simon Itaye Gautoni Kainja Nerbert Nyirenda Shadreck Ulemu
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Statement of Directors Responsibilities

Report of the Independent Auditor

TO THE MEMBERS OF
P.O Box 187 Blantyre Malawi
Public Accountants First Floor INDEbank House Kaohsiung Road Tel : +265 (0)1 822 277 +265 (0)1 820 506 Fax : +265 (0)1 821 229 Email : btdeloitte@deloitte.co.mw
The Companies Act, 1984, requires the directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the operating results for that year. The Act also requires the directors to ensure the Company keeps proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act, 1984. In preparing the financial statements the directors accept responsibility for the following: Maintenance of proper accounting records; Selection of suitable accounting policies and consistent application thereof; Making judgements and estimates that are reasonable and consistently applied; Compliance with applicable accounting standards when preparing financial statements; and Preparation of financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business in the foreseeable future. The directors also accept responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to maintain adequate systems of internal control to prevent and detect fraud and other irregularities. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Company and of its operating results.
We have audited the financial statements of Packaging Industries (Malawi) Limited as set out on pages 26 to 53, which comprise the balance sheet as at 30 September 2009, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
M A N AG E M E N T S R E S P O N S I B I L I TY F O R THE F I N A N C I A L STATE M E N T S
Management is responsible for preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
AU D I TO R S R E S P O N S I B I L I TY
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion the financial statements give a true and fair view of the financial position of Packaging Industries (Malawi) Limited as of 30 September 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act, 1984.
CHAIRMAN
MANAGING DIRECTOR
Public Accountants Blantyre 3 December 2009
Audit Tax Consulting Financial Advisory

Resident Partners: N.T Uka J.S. Melrose L.L. Katandula V.W. Beza
A member firm of Deloitte Touche Tohmatsu
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Balance Sheet
30 September 2009
Income Statement
30 September 2009
Notes ASSETS NON-CURRENT ASSETS Property, plant and equipment
2009 MK000
2008 MK000
Notes Revenue Cost of sales
2009 MK000 2,597,354
2008 MK000 2,206,689
(2,182,211) (1,914,552) 415,143 (51,817) (130,949) (43,266) (28,511) (40,720) 119,880 (52,277) 67,603 101t 5t 292,137 (42,362) (102,600) (21,603) 16,931 (45,466) 97,037 (29,401) 67,636 101t 29t
545,907
569,872 Gross profit
CURRENT ASSETS Inventories 6 Trade and other receivables 7 Bank balances and cash Taxation recoverable Total current assets TOTAL ASSETS EQUITY AND LIABILITIES
652,240 419,179 2,468 - 1,073,887 1,619,794
891,875 270,534 214 11,263 1,173,886
Distribution costs Administrative expenses Other operating expenses Exchange (losses)/gains
1,743,758 Interest payable Profit before tax 14 15 16
EQUITY Share capital Share premium Revaluation reserve Retained earnings Total equity NON-CURRENT LIABILITIES Borrowings Deferred tax Severance allowance provision
13,450 19,220 187,216 545,366 765,252
13,450 19,220 191,832 475,038 699,540
Income tax expense
Profit for the year Earnings per share Dividend per share 18 19
8 9 10
30,326 100,291 44,182 174,799
84,859 101,796 51,775 238,430
Total non-current liabilities CURRENT LIABILITIES Bank overdraft 11 Trade and other payables 12 Related party payables 13 Current portion of borrowings 8 Taxation payable Total current liabilities TOTAL EQUITY AND LIABILITIES
120,622 409,629 67,729 55,861 25,902 679,743 1,619,794
167,379 407,235 177,561 53,613 805,788 1,743,758
The financial statements were authorised for issue by the Board of Directors on 11 November 2009 and were signed on its behalf by:
Chairman
Managing Director
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Cash Flow Statement
Statement of Changes in Equity

30 September 2009
2008 MK000 2008 Share capital MK000 Share Revaluation premium reserve MK000 MK000 Retained earnings MK000

Cash flows from operating activities Profit before tax Adjustments for: - depreciation - profit on disposal of property, plant and equipment - interest receivable - interest payable - exchange loss/(gain) on borrowings Operating profit before working capital changes Movement in trade and other receivables Movement in inventories Movement in trade and other payables Movement in severance pay provision Movement in related party payables Cash generated from operations Interest paid Taxation paid Net cash flow from operating activities Cash flows from investing activities Purchase of property, plant and equipment Interest received Proceeds from disposal of property, plant and equipment Net cash flow from investing activities Cash flows from financing activities Finance lease repayments Dividends paid Borrowings received Borrowings repaid Net cash flow from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Analysed as: Foreign currency denominated (US$) account Other bank accounts Bank overdraft 2009 MK000
119,880 54,928 (213) (1,425) 40,720 794 214,684 (148,645) 250,937 2,394 (7,593) (109,832) 201,945 (40,720) (15,145) 146,080
97,037 35,923 (901) (289) 45,466 (10,416) 166,820 (56,495) (323,387) 278,262 (9,767) 30,143 85,576 (45,466) (14,931) 25,179
Total MK000
At beginning of the year 13,450 Profit for the year - Dividends declared and paid - Deferred tax - Realisation of excess depreciation - Revaluation during the year - At end of the year 2009 At beginning of the year 13,450 Profit for the year - Dividends declared and paid - Deferred tax - Realisation of excess depreciation - At end of the year Analysis of share capital 13,450 13,450
19,220 - - - - - 19,220
86,351 - - (16,728) (2,238) 124,447 191,832
424,667 67,636 (19,503) - 2,238 - 475,038
543,688 67,636 (19,503) (16,728) 124,447 699,540
19,220 - - - - 19,220
191,832 - - 1,472 (6,088) 187,216
475,038 67,603 (3,363) - 6,088 545,366
699,540 67,603 (3,363) 1,472 756,252
(25,162) 1,425 2,163 (21,574)
(102,722) 289 5,959 (96,474)
The Company has authorised share capital of 75,000,000 Ordinary shares of 20t each. Issued and fully paid share capital comprises 67,250,000 Ordinary shares of 20t each. Analysis of dividends declared and paid Final dividend in respect of prior year Interim dividend in respect of current year Total dividends declared and paid during the year 2009 MK000 2008 MK000
(13,686) (3,363) - (58,446) (75,495) 49,011 (167,165) (118,154)
(7,581) (19,503) 67,454 (34,276) 6,094 (65,201) (101,964) (167,165)
- 3,363 3,363
10,088 9,415 19,503
- 2,468 2,648 (120,622) (118,154)
101 113 214 (167,379) (167,165)

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Notes to the Financial Statements

30 September 2009
1. G e n e r a l in f orm at ion
The principal activity of the company, which is incorporated in Malawi, consists of the manufacture of cardboard and paper containers. The address of its principal place of business and registered office is plot number NY 189, Makata Industrial Area, P O Box 30533, Chichiri, Blantyre 3, Malawi.The Companys immediate holding Company is Transmar (Isle of Man) Limited, a wholly owned subsidiary of Nampak Limited, a Company incorporated in the Republic of South Africa.

30 September 2009
The directors anticipate that other than the adoption of IAS 1 and IFRS 8, the adoption of these standards in future periods will have no material impact on the financial statements of the Company. The adoption of IAS 1 will impact the presentation of the financial statements.
3 . S igni f i c a n t ac c oun t ing poli c i e s

Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards. Basis of preparation The financial statements are prepared in terms of the historical cost convention except for certain non-current assets which are carried at fair value. No other procedures have been adopted to reflect the impact on the financial statements of specific price changes or changes in the general level of prices. The significant accounting policies are set out below.
2 . A d op t ion o f n e w a n d r e vis e d I n t e rn at ion a l Fin a n c i a l R e port ing Sta n da r d s

In the current year, the company has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for annual reporting periods beginning on 1 September 2008. There has been no impact on the financial statements of the Company as a result of the adoption of these new and revised Standards and Interpretations. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: AS 1 Presentation of financial statements has been substantially rewritten, with I many changes in terminology, including changes to the titles of individual financial statements and is effective for periods beginning on or after 1 January 2009; Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs during the period of construction and is effective for financial statements for periods beginning on or after 1 January 2009; IFRS 2 Share-based Payments has been amended to clarify definition of vesting conditions and the accounting treatment of cancellation by the counterparty to a share-based arrangement and is effective for periods beginning on or after 1 January 2009; IFRS 8 Operating segments (Effective for annual periods beginning on or after 1 January 2009) IFRIC 13 Consumer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers and is effective for periods beginning on or after 1 January 2009; There have also been terminology changes and clarifications as part of the IASB annual improvements project, to: IAS 7, IAS 8, IAS 10, IAS 16, IAS 18, IAS19, IAS 20, IAS 23, IAS 32, IAS 36, IAS 38, IAS 39, IAS 40, IAS 41, IFRS 5 and IFRS 7, and are effective for periods beginning on or after 1 January 2009; IFRIC 17 Distributions of Non-cash Assets to Owners provides guidance on the appropriate accounting treatment when an entity distributes assets other than cash as dividends to its shareholders and is effective for periods beginning on or after 1 January 2010; and IFRIC 18 Transfers of Assets from Customers addresses the accounting by recipients for transfers of property, plant and equipment from customers. The recipient should recognise the asset at its fair value on the date of the transfer, with the credit recognised as revenue in accordance with IAS 18 Revenue and is effective to transfers of assets from customers received on or after 1 July 2009.
3.1 Property, plant and equipment

Certain property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date. Any revaluation increase arising on the revaluation of such property, plant and equipment is credited to a non-distributable revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in the income statement, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to the income statement to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued property, plant and equipment is charged to the income statement. On the realisation of revalued property, either through sale or use, the attributable revaluation surplus in the revaluation reserve is transferred directly to retained earnings. Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companys accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are available for their intended use. Other categories of property, plant and equipment are stated at cost and valuation less accumulated depreciation and any accumulated impairment losses.
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30 September 2009
3 . S igni f i c a n t ac c oun t ing poli c i e s ( c on t inu e d )
(Continued)

30 September 2009
Transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period.
3.1 Property, plant and equipment (continued)
Depreciation is charged so as to write off the cost or valuation of assets, other than freehold land and properties under construction, over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year-end, with the effect of any changes in estimate being accounted for on a prospective basis. The gain or loss arising on the sale or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.
3.4 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost for the various categories of inventories is determined as follows: erchandise, raw materials and consumable stores: cost on a first-in, M first-out basis; Spares: weighted average cost; Finished products and work in progress are valued at the raw material cost plus, where appropriate, a proportion of manufacturing overhead expenses; and Goods in transit at invoiced cost.
3.2 Income taxes

Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on the taxable profit for the period. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis.
Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
3.5 Revenue
Revenue is measured at the fair value of the consideration received or receivable. Sale of goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: he company has transferred to the buyer the significant risks and rewards of t ownership of the goods; the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the entity; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue is reduced for estimated customer returns, rebates and other similar allowances.
3.6 Financial assets

Investments are recognised and derecognised on their value date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
3.3 Foreign currency translation

The results and financial position of the company are expressed in Malawi Kwacha, which is the functional currency of the company and the presentation currency for the financial statements.
32
33

30 September 2009
(Continued)

30 September 2009
In respect of AFS equity securities, any increase in fair value subsequent to an impairment loss is recognised directly in equity.
3.6 Financial assets (continued)
Financial assets are classified into the following specified categories: financial assets as at fair value through profit or loss (FVTPL), held-to-maturity investments, available-for-sale (AFS) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL. Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially measured at fair value and subsequently at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement. AAP Holdings Limited With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the income statement to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
3.7 Financial liabilities and equity instruments

Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. GAAP Financial liabilities Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: it has been incurred principally for the purpose of repurchasing in the near future; or it is a part of an identified portfolio of financial instruments that the company manages together and has a recent: (i) Actual pattern of short-term profit-taking; or (ii) It is a derivative that is not designated and effective as a hedging instrument.
3.7 Financial liabilities and equity instruments

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: uch designation eliminates or significantly reduces a measurement or recognition s inconsistency that would otherwise arise; or the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the company s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.
34
35

30 September 2009
(Continued)

30 September 2009
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement.
3.7 Financial liabilities and equity instruments (continued)

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the income statement. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
3.10 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of fixed assets are capitalised as part of the cost of those assets. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use. All other borrowing costs are expensed in the period in which they are incurred.
3.8 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the income statement, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the companys general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
3.11 Retirement benefit costs

The Company operates a defined contribution retirement benefit plan. NICO Life administers pensions through a defined contribution pension scheme. Employees contribute 5% (2008: 5%) and the company contributes 14.8% (2008: 14.8%) of basic salary. Payments to the scheme are charged as an expense as they fall due.
3.12 Earnings per share

Earnings per share is calculated by dividing the profit for the period by the weighted average number of shares in issue during the period (note 18).
3.13 Dividend per share

Dividend per share is calculated by dividing dividends declared and paid during the period by the weighted average number of shares in issue during the period (note 19).
3.14 Severance allowance provision

The company provides for severance pay for all eligible employees in line with the requirements of the Employment Act as follows: Number of years worked More than 1 but less than 10 years More than 10 years Severance allowance 2 weeks pay for each year of service 4 weeks pay for each year of service
3.9 Impairment of non-financial assets

At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
Severance allowance provision is adjusted accordingly with employers pension contributions and related bonuses in line with the provisions of the Group Pension and Life Assurance Trust Deed.
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30 September 2009
4 . Cri t i c a l ac c oun t ing j u d g e m e n t s a n d k e y sour c e s o f e st im at ion un c e rta in ty
(Continued)

30 September 2009
5 . P rop e rty, pl a n t a n d e quipm e n t
Land and buildings MK000 2008 COST OR VALUATION At beginning of the year Additions Transfers Disposals Revaluation At end of the year DEPRECIATION At beginning of the year Charge for the year Disposals Revaluation At end of the year NET BOOK AMOUNT At end of the year 2009 COST OR VALUATION At beginning of the year Additions Transfers Disposals Transferred to inventories At end of the year DEPRECIATION At beginning of the year Charge for the year Disposals At end of the year NET BOOK AMOUNT At end of the year Capital Vehicles, work in plant and progress equipment MK000 MK000
4.1 Critical judgements in applying the groups accounting policies

In the application of the Companys accounting policies, which are described in note 3, management are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. There were no critical judgments in applying the Companys accounting policies.
Total MK000
4.2 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
133,460 - - (2,059) 116,719 248,120
4,121 95,844 (82,715) - - 17,250
355,938 27,429 82,715 (6,246) - 459,836
493,519 123,273 (8,305) 116,719 725,206
4.2.1 Useful lives of plant and equipment

The Company reviews the estimated useful lives of property, plant and equipment at the end of each annual reporting period as described in note 3.1 above.
4.2.2 Severance allowance provision

Included under non-current liabilities is an estimated provision of MK44.2m (2008 as restated: MK51.7m) in respect of severance pay. The amount includes all eligible employees of the Company and is based on 100% of total emoluments as adjusted by the number of years served less employers pension contributions and related bonuses and gratuity paid to contract employees. The actual liability to be incurred will depend on a number of factors including rates of death, retirement, resignations and dismissals. As such the actual amounts to be paid in future may differ from the provision currently shown in the balance sheet.
5,186 2,640 (98) 7,728) -
- - - - -
125,200 33,283 (3,149) - 155,334
130,386 35,923 (3,247) (7,728) 155,334
248,120
17,250
304,502
569,872
248,120 - 7,302 (690) - 254,732
17,250 21,682 (27,030) - (11,302) 600
459,836 22,533 19,728 (4,101) - 497,996
725,206 44,215 (4,791) (11,302) 753,328
- 9,080 (13) 9,067
- - - -
155,335 45,847 (2,828) 198,354
155,334 54,928 (2,841) 207,421
245,665
600
299,642
545,907
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39

30 September 2009
5 . P rop e rty, pl a n t a n d e quipm e n t ( Con t inu e d )
The following useful lives were used in the calculation of depreciation: Land and buildings Plant and equipment Furniture and equipment Motor vehicles - - - - 30 years 4 - 20 years 10 years 5 - 8 years 2009 MK000
(Continued)


30 September 2009
2009 MK000 2008 MK000
7. Tr a d e a n d ot h e r r e c e iva b l e s
Trade receivables Other receivables and prepaid expenses
322,906 102,606 425,512 (6,333) 419,179
257,405 18,514 275,919 (5,385) 270,534
2008 MK000 Allowance for doubtful debts Total trade and other receivables 30,750 7,302 216,680 254,732 30,750 217,370 248,120
Land and buildings Cost or valuation at end of the year comprises the following: Freehold - at valuation Leasehold - at cost - at valuation Total cost or valuation at end of the year
At the year-end the company had foreign currency receivables equivalent to MK5m (2008: MK12m). The average credit period for the sale of goods is 60 days and no interest is charged for balances beyond this period. Movement in allowance for doubtful debts At beginning of the year Additions Recoveries 2009 MK000 5,385 3,924 (2,976) 6,333 2008 MK000 10,458 730 (5,803) 5,385
Land and buildings were valued as at 30 September 2008 by Mr. D. Whayo B.Sc., Dip (Urban. Man) B.A., MRICS, MSIM qualified valuer, of Knight Frank (Malawi) Limited, an independent valuer, on the bases of open market value. The valuation was prepared in accordance with the RICS Appraisal and Valuation Standards. Vehicles, plant and equipment include vehicles with a carrying value of MK47.8m (2008: MK35.1m), which were purchased under finance lease arrangements. The Directors are of the opinion that the carrying values of property, plant and equipment are not materially different to their fair values. Property, plant and equipment are encumbered as indicated in note 11. The register of land and buildings is open for inspection at the registered office of the Company. Transfers to inventories The transfer relates to a spare part, a cutting cylinder, that was included in WIP as at 1 September 2008. The item qualified to be in inventory as it is a spare part of an existing item of plant and machinery. 2009 MK000 2008 MK000
At end of the year
In determining the recoverability of a trade receivable, the company considers any change in the credit quality of the trade receivables from the date credit was initially granted up to the reporting date. There is no significant concentration of credit risk, with exposure spread over a relatively large number of counterparties and customers. Included in receivables are balances with a carrying amount of MK2.0m (2008: MK2.7m) which are past due date at the reporting date for which the company has not provided for as there has not been a significant change in credit quality and the amounts are still considered recoverable. The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
6 . I nv e n tori e s
Raw materials Consumables stores Work in progress Finished goods Merchandise Goods in transit
432,232 138,674 762 35,050 17,237 28,285 652,240
551,318 103,214 4,311 63,840 13,518 155,674 891,875
Total inventories
40
41

30 September 2009
2009 MK000
(Continued)
2008 MK000

30 September 2009
The National Bank of Malawi loan, which is denominated in US Dollars, is unsecured and is repayable in sixteen quarterly instalments, which commenced on 1 October 2007. Interest rate (variable) on the loan is 8.9% (2008: 8.9%). The National Bank of Malawi leases, which are secured over five (2008: five) motor vehicles with a net book value of MK47.8m (2008: MK35.1m), cover a minimum 18-month period and a maximum of 36 months. The leases attract variable interest rates of 20.5% (2008: 20.5%) per annum. Further analysis on maturity profiles is disclosed in note 17. Nampak Corrugated loan was obtained to finance the purchase of a Klett Rotary die cutter. The loan is payable over a period of 18 months and is interest free. Interest is chargeable on overdue amounts. 2009 MK000 2008 MK000
8 . Borrowings
National Bank of Malawi - loan At beginning of the year Received during the year Foreign exchange losses Repaid during the year At end of the year Less: repayable within one year Non-current portion at end of the year Nampak Corrugated - loan At beginning of the year Received during the year Foreign exchange gain Repaid during the year At end of the year Less: repayable within one year Non-current portion at end of the year National Bank of Malawi - leases At beginning of the year Addition Repayment At end of the year Minimum lease payments MK000 Amounts payable under finance leases: within one year in 2 - 5 years Less future finance charges 21,844 24,836 (9,325)
75,535 - 6 (33,240) 42,301 (33,247) 9,054
83,722 17,019 125 (25,331) 75,535 (10,284) 65,251
30,949 - 788 (25,206) 6,531 (6,531) -
50,435 (10,541) (8,945) 30,949 (30,949) -
9 . D e f e rr e d ta x
At beginning of year as previously reported Deferred tax on severance allowance Deferred tax on revaluation reserve At beginning of the year as restated Revaluation reserve Income tax expense At end of the year Analysed as: Accelerated capital allowances Revaluation of land and buildings Other temporary differences
101,796 - - 101,796 (1,472) (33) 100,291 67,631 48,993 (16,333) 100,291
63,084 (18,463) 11,424 56,045 16,728 29,023 101,796 68,375 50,465 (17,044) 101,796
31,988 19,053 (13,686) 37,355 Present value of minimum lease payments MK000
19,018 20,551 (7,581) 31,988
2008 MK000
16,083 21,272 - 37,355 (16,083) 21,772 55,861 30,326 86,187
12,380 19,608 31,988 (12,380) 19,608 53,613 84,859 138,472

Present value of lease obligations 37,355 Less: repayable within one year Non-current portion at end of the year Total borrowings repayable within one year Total borrowings repayable after one year Total borrowings at end of the year
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30 September 2009
2009 MK000
(Continued)
2008 MK000

30 September 2009
2009 MK000 2008 MK000
10 .
S e v e r a n c e a llowa n c e provision
1 2 . Tr a d e a n d ot h e r paya b l e s
Trade payables Bills payable Other payables and accrued expenses Total trade and other payables
At beginning of the year Severance pay provision Reversal due to resignations At end of the year
51,775 6,630 (14,223) 44,182
61,542 6,254 (16,021) 51,775
26,493 334,742 48,394 409,629
33,913 311,485 61,837 407,235
Section 35 (1) of the Employment Act No. 6 of 2000 requires employers to pay severance allowance to employees whose employment contracts are terminated either by mutual agreement between the employer and the employee or unilaterally by the employer. Accordingly the company has made a net provision of MK44.2m (2008: MK51.7m) in line with the Act as a defined benefit scheme under IAS 19. The Company has assumed that the wage increase rate and market investment rate are the same and therefore a full provision has been made less pension contributions and gratuities paid in respect of contract staff. Pension contributions by the employer are deducted after the Trustees amended the trust deed and conditions of services to enable pension contributions by employer to be utilised for statutory obligation.
At the year-end, the Company had foreign currency payables equivalent to MK335m (2008: MK311m). The average credit period on purchase is 60 days and no interest is charged on late payments. The Company has financial risk management policies in place to ensure that all payables are paid within credit time frame.
1 3 .
R e l at e d pa rt i e s
13.1 Related party payables

Transactions involving related parties are conducted at arms-length. Such transactions relate to both purchases and sales and at the year-end the related party balances are disclosed separately on the face of the balance sheet. A significant portion of the Companys purchases are sourced from related companies whereas sales to related parties constitute a relatively small portion of turnover. During the year, the company made purchases amounting to MK85m (2008: MK580m) from group companies. In addition, MK50m (2008: MK43m) in technical assistance fees were paid to a related company (note 15). Sales to related companies amounted to MK nil (2008: MK6.9m) for the year.
11. B a n k ing fac ili t i e s

Bank overdrafts - National Bank of Malawi - NBS Bank Limited - First Merchant Bank Limited - Standard Bank Limited - INDEbank Letter of Credits - National Bank of Malawi Total bank overdraft facilities 210,000 20,000 20,000 20,000 30,000 120,000 420,000 210,000 20,000 20,000 120,000 370,000
At the end of the year related party payables were as follows: Shipping guarantees - National Bank of Malawi 500 500 The banking facilities of the Company are secured by floating charges over the Companys assets. In addition to floating charges, National Bank of Malawi has a collateral legal mortgage of MK0.5m (2008: MK0.5m) over property with a net book value of MK215m (2008: MK216m). Nampak International Limited Teknol BV Hunyani Limited Nampak Laminated Products Limited Nampak Liquid Packaging Limited Nampak Tissue Products Limited Nampak Paper Limited Nampak Management Services 2009 MK000 5,008 46,553 1,327 10,337 411 3,714 - 379 67,729 2008 MK000 100,589 11,816 24,086 746 1,561 - 38,763 177,561
Except for the amount due to Teknol BV, which is Kwacha denominated, related party payables are primarily denominated in foreign currencies. The related party loan from Nampak Corrugated is disclosed in note 8 to the financial statements.
44
45

30 September 2009
1 3 .

(Continued)

30 September 2009
17. Fin a n c i a l inst rum e n t s
R e l at e d pa rt i e s ( c on t inu e d )
2009 MK000 2008 MK000
a) Capital risk management

The Company, through its Audit Committee, monitors its capital adequacy to ensure that it remains a going concern while maximising return to stakeholders. The capital structure of the Company consists of share capital and premium, non-distributable reserves and retained earnings as disclosed in the Statement of Changes in Equity. The Audit Committee reviews the capital structure on a regular basis. As a part of this review, the committee considers the cost of capital and its associated risks. Based on recommendations of the committee, the Company will balance its overall capital structure through the payment of dividends and revaluation of its assets.
13.2 Compensation of key management

Salary and benefits
76,808
58,223
1 4 .
I n t e r e st paya b l e
6,821 6,201 27,698 40,720 15,737 5,400 24,329 45,466
Borrowings Lease finance Bank overdraft Total interest payable
1 5 .
P ro f i t b e f or e ta x
b)
Significant accounting policies
Profit before tax is arrived at after (crediting)/charging the following: Staff costs: - salaries and other costs - pension contributions Directors remuneration: - fees for services as directors - for managerial services Technical assistance fees Depreciation Machinery rental Auditors remuneration: - audit fee - other services Stock exchange costs Interest receivable Profit on disposal of property, plant and equipment 142,246 10,651 1,240 22,640 50,172 54,928 (1,556) 5,428 192 4,203 (1,425) (213) 130,115 9,328 (191) 20,615 42,912 35,923 (1,520) 5,673 198 3,818 (289) (901)
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial assets, financial liabilities and equity instruments are disclosed in note 3 to the financial statements.
c)
Financial risk management objectives
The Companys operations consists of provision of packaging solutions, largely to the domestic market and it manages the financial risks relating to the operations of the Company through internal risk reports and executive management meetings. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company seeks to minimise the effects of these risks by using standardised procedures to hedge these risk exposures. The use of financial derivatives, where applicable, is governed by the Nampak Groups policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivates financial instruments, and the investment of excess liquidity.The directors on a continuous basis review compliance with policies and exposure limits. As at the reporting date, there were no derivative financial instruments.
1 6 .
I n c om e ta x e xp e ns e
39,574 12,736 (33) 52,277 % 30 12 2 44 378 29,023 29,401 % 30 30
Income tax - current year - prior year Deferred tax Total income tax expense Reconciliation of rate of taxation Standard rate of taxation Prior year taxes Permanent tax differences Effective rate of taxation
d)
Market risk
This is the risk that changes in market prices, interest rates, equity prices, foreign exchange rates will affect the companys income or value of holding financial instruments. The company monitors this risk on a continuing basis. here has been no change to the Companys exposure to market risks or the manner T in which it manages and measures the risk.
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30 September 2009
17. Fin a n c i a l inst rum e n t s ( c on t inu e d )
(Continued)

30 September 2009 i) Categories of financial instruments
Accounting classifications and fair values Loans Other and amortised cost Notes receivables MK000 MK000 At 30 September 2009 Assets Receivables 7 Bank and cash balances Total financial assets Liabilities Borrowings 8 Payables and accrual 12 Related party payables Bank Overdraft 11 Total financial liabilities At 30 September 2008 Assets Receivables 7 270,534 - 270,534 Bank and cash balances - 214 214 Total financial assets 270,534 214 271,048 Liabilities Borrowings 8 - 138,472 138,472 Related party payables - 177,561 177,561 Payables and accrual 12 - 407,235 407,235 Bank Overdraft 11 - 167,379 167,379 Total financial liabilities - 890,647 890,647 Total carrying amount MK000
e)
Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising a combination of accelerated payments and borrowing in foreign currencies. The Companys exposure to foreign currency risk and sensitivity analysis is detailed below.
Fair value MK000
f)
Interest rate risk management
The Company is exposed to interest rate risk as it finances a significant portion of its capital equipment and refurbishment through external borrowings from financial institutions. The risk is managed by maintaining an appropriate mix of maturities with business operations. Debt and currency exposures are evaluated regularly to align with interest rate projections. Optimal strategies are applied, by either borrowing in local or foreign currency depending on managements determination on the movement of foreign exchange or interest rates. The Companys exposures to interest rates on financial liabilities are detailed in the liquidity risk management section of this note.
419,179 - 419,179
- 2,468 2,468
419,179 2,468 421,647
419,179 2,468 421,647
- - - - -
86,187 409,629 67,729 120,622 684,167
86,187 409,629 67,729 120,622 684,167
86,187 409,629 67,729 120,622 684,167
g) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Companys exposure and the credit rating of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is monitored and controlled by executive management on a continuing basis. The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with sound integrity and robust financial positions. The Companys credit risk exposure is included in Note 7 to the financial statements
270,534 214 271,048
138,472 177,561 407,235 167,379 890,647
i) Categories of financial instruments

The following table details the Companys remaining contractual maturity for its nonderivative financial liabilities.The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
h)
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the Companys short, medium and long-term funding and liquidity management requirements. The responsibility for the management of these risks lies with the Audit Committee of the board of directors.The Company manages liquidity risk by maintaining adequate reserves, and continuously monitoring forecast and actual cash flows.
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49

30 September 2009
17. Fin a n c i a l inst rum e n t s ( Con t inu e d )
Weighted average effective interest rate % 2009 External short-term loan *** 0.00 External long-term debt** 8.86 External finance leases* 20.50 Payables and accruals Bank overdraft 2008 External short-term loan *** External long-term debt** External finance leases* Less than 12 months MK000 6,531 36,192 21,844 64,567 409,629 120,622 594,818
(Continued)

30 September 2009 k) Currency risk exposure
The Company had the following significant foreign currency positions: 2009 Euro - 68,707 - - - 67,707 Euro - 95,593 - 91,688 - 187,281 USD (11,795) 325,092 75,535 84,312 66,357 539,501 USD (4,782) 248,552 42,301 16,672 35,359 328,102 Rand - 18,377 30,949 1,561 - 50,887 Rand - 19,586 6,531 11,035 - 37,152 - 201 - - - 201 Total (4,782) 336,845 48,832 27,707 35,359 443,961 Total (11,795) 439,263 106,484 177,561 66,357 777,870
i) Categories of financial instruments (continued)

13 - 23 months MK000 - 9,856 16,325 26,181 - - 26,181 24 - 60 months MK000 - - 8,511 8,511 - - 8,511 Carrying Total MK000 6,531 46,048 46,680 99,259 409,629 120,622 629,510
Value MK000 6,531 42,301 37,355 86,187
Trade receivables Trade and other payables Borrowings Related party payables Bank overdraft Totals 2008
409,629 120,622 614,438
Trade receivables Trade and other payables Borrowings Related party payables Bank overdraft Total
0.0 8.9 20.5
30,949 11,199 15,558 57,706 407,235 167,379 67,629 699,949
- 26,313 13,346 39,659 - - - 35,659
- 44,745 11,295 56,040 - - - 56,040
30,949 82,257 40,199 153,405 - - - 153,405
30,949 75,535 31,988 138,472 407,235 167,379 67,629 780,715
Payables and accruals Bank overdraft Related party payables
The Company is mainly exposed to the USD and RAND. The following table details the Companys sensitivity to a 5% increase and decrease in the MK against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below denotes a decrease in profit where the Kwacha weakens against the relevant currency. For a 5% strengthening of the Kwacha against the relevant currency, there would be an equal and opposite impact on the profit and the balances below would be negative.
All long-term debt is at variable interest rates. * ** *** Denominated in Malawi Kwacha Denominated in United States Dollars Denominated in South African Rand
17. Fin a n c i a l inst rum e n t s ( Con t inu e d )
k) Currency risk exposure

Euro impact USD impact Rand impact 2009 2008 2009 2008 2009 2008 MK000 MK000 MK000 MK000 MK000 MK000 Profit or loss 3,435 9,364 16,905 26,975 1,858 2,544
j)
Interest rate sensitivity
Interest rate sensitivity analysis The sensitivity analyses below have been determined based on the exposure to interest rates for the finance leases and other bank borrowings as at 30 September 2009. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at 30 September 2009 was outstanding for the whole year. A 2.5% (0.5% for the dollar loan) increase or decrease represents managements assessment of the reasonably possible change in interest rates. If interest was to increase/decrease by 2.5%, Profit for the year ended 30 September 2009 would decrease/increase by MK1.1 million (2008: decrease/increase by MK1.1 million).
l)
Fair value of financial instruments
The fair value of financial assets and financial liabilities are determined as follows: The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted prices; and the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions.
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51

30 September 2009
2009 Tambala
(Continued)
2008 Tambala

30 September 2009
2009 MK000 2008 MK000
18 . E a rnings p e r s h a r e
Basic earnings per share
2 2 . Commi t m e n t s
101
101
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the company is based on the following data: 2009 2008 MK000 MK000 Earnings Earnings for the purposes of basic/diluted earnings per share (thousands) 67,602 67,636 2009 2008 Nos. Nos. Number of shares (thousands) Weighted average number of ordinary shares (thousands) 67,250 67,250 The Company does not have any discontinued operations.
Capital expenditure Contracted and approved 7,946 Authorised, but not contracted 730 Total capital expenditure 8,676 Capital expenditure will be financed from internal and external resources.
3,000 127,577 130,577
2 3 . Exc h a ng e r at e s a n d in f l at ion
The average of the year-end buying and selling rates of the foreign currencies most affecting the performance of the company is stated below, together with the increase in the National Consumer Price Index for the preceding year, which represents an official measure of inflation. Kwacha/US Dollar Kwacha/GB Pound Kwacha/Rand Kwacha/Euro Inflation rate % 2009 142.0 232.2 19.6 211.7 8.7 2008 142.0 263.9 17.3 205.3 9.3
19 . Divi d e n d p e r s h a r e
Dividend declared and paid in the year Weighted average number of ordinary shares in issue (thousands) Dividend per share 3,363 67,250 Tambala 5 19,503 67,250 Tambala 29
As at the date of approval of these financial statements, the exchange rates had moved as disclosed below Kwacha/US Dollar Kwacha/GB Pound Kwacha/Rand Kwacha/Euro 143.7 241.2 19.1 215.3 2009 MK000 2008 MK000
2 0 .
R e t ir e m e n t b e n e f i t s c h e m e
Some of the employees of the company are members of an independently administered defined contribution scheme. The company is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the company with respect to the retirement benefit scheme is to make the specified contributions. The scheme is eligible to employees who are not on contract and who have successfully completed their probation period for the company.
2 4 . Con t ing e n t li a b ili t i e s
2 1.
S e gm e n ta l in f orm at ion
Legal claims (a) Guarantees in respects of staff loans (b) Total contingent liabilities
1,224 5,737 6,961
300 3,800 4,100
For management purposes, the company is currently organised into one principal business segment relating to the manufacture of cardboard and paper containers the results of which are set out on page 4 of the financial statements. During the period, export sales amounted to MK57m (2008: MK82m). Costs associated with export sales are not separately identifiable.
(a) These represent legal claims made against the company in the ordinary course of business, the outcome of which is uncertain. The amount disclosed represents an estimate of the cost to the company in the event that legal proceedings find the company to be in the wrong. In the opinion of the directors the claims are not expected to give rise to a cost to the company. (b) These represent the companys maximum exposure at the balance sheet date if guarantees entered into by the company in support of staff borrowings from Malawi Savings Bank Limited were called upon.
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Value Added Statement

Statistics
ANNEXURE I
REVENUE Paid to suppliers for materials and services rendered Income from investments TOTAL WEALTH CREATED WEALTH DISTRIBUTION SALARIES, WAGES AND OTHER BENEFITS Salaries and wages Other benefits Pension PROVIDERS OF CAPITAL Bank overdraft interest Interest on loans Dividends to shareholders MONEY EXCHANGES WITH CENTRAL GOVERNMENT Income tax RETAINED TO MAINTAIN AND DEVELOP OPERATIONS Retained profit after appropriation Depreciation Deferred tax TOTAL WEALTH DISTRIBUTED 2009 MK000 2008 MK000
2,597,354 2,206,689 (2,207,744) (1,853,941) 1,425 289 391,035 353,037
2009
2008
2007
2006
2005
Earnings and dividends

Number of ordinary shares (000) Earnings per share Dividend per share Dividend cover (times) 67,250 101t 5t 20.1 67,250 101t 29t 3.5 67,250 74t 12t 6.2 67,250 145t 42t 3.5 67,250 20t 35t 3.4
125,669 39,218 10,651 175,538
110,103 40,627 9,328 160,058
Financial data
Return on capital employed (%) Gearing (%) Interest cover (times) Effective rate of taxation (%) Cash generated from operations (MK,000) Net increase / (decrease) in cash (MK,000) 17.1 11.3 3.9 43.6 201,945 15.2 19.8 3.1 30.3 16.7 18.9 2.3 27.5 32.8 14.8 3.3 29.9 59,763 25.8 26.1 4.8 26.1 36,045
27,698 13,022 3,363 44,083
24,329 21,137 19,503 64,969
85,576 212,553
49,011 (65,201)
67,128 (120,647) (28,394)
Turnover and employee data

52,277 14,931 Number of permanent employees Turnover per employee (MK,000) Sales Volumes ( Tons) 146 17,790 10,245 146 15,114 9,908 158 9,864 7,330 161 10,752 10,104 168 9,277 11,443
64,239 54,931 (33) 119,137 391,035
48,133 35,923 29,023 113,079 353,037
Share price data

Market price per share (tambala) - Highest - Lowest - Year end 625 620 625 625 500 625 500 425 500 425 200 425 200 190 200
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Analysis of Shareholders
30 September 2009
Notice of the 41st Annual General Meeting

NOTICE IS HEREBY GIVEN that the Forty First Annual General Meeting of the Company will be held at Protea Hotel Ryalls, Blantyre on Wednesday 10th February 2010 at 2:00 p.m. to transact the following business: -
Category Individuals 1 5000 5001 10 000 10 001 50 000 50 001 100 000 100 001 200 000 200 001 300 000 300 001 - 400 000 400 001 - 500 000 500 001 and over Total for Individuals Holding company Insurance and assurance companies Investment and trust companies Non-resident Other corporate bodies Pension and provident funds Banks and Nominees Total Shareholding
Shareholders Number %
Ordinary Shares Number % of shares held issued
To receive and consider the financial statements of the company for the financial year ended 30th September 2009, Directors and Auditors Report thereon.
To confirm the remuneration of the Executive Director as determined by the Directors.
R e solu t ion
380 81 106 7 0 3 0 0 1 578 1 1 9 6 5 11 13 624 60.90 12.98 16.99 1.12 0.00 0.48 0.00 0.00 0.16 92.63 0.16 0.16 1.44 0.96 0.80 1.76 2.08 100.00 758,822 719,926 2,248,502 626,700 - 764,473 - - 631,544 5,749,967 40,350,000 7,846,800 6,017,307 24,100 102,700 3,729,326 3,429,800 67,250,000 1.13 1.07 3.34 0.93 0.00 1.14 0.00 0.00 0.94 8.55 60.00 11.67 8.95 0.04 0.15 5.55 5.10 100.00 That Messrs. N. Nyirenda and S. Ulemu be re-elected as Directors . To re-appoint Deloitte Public Accountants 40,350,000 7,846,800 2,401,485 2,021,917 2,000,000 1,434,205 864,967 56,919,374 60.00 11.67 3.57 3.01 2.97 2.13 1.29 84.64 That Deloitte be and are hereby appointed as auditors for the 2010 financial year and that the Directors be authorised to fix their remuneration. as auditors and authorise the Directors to fix their remuneration. To declare a final dividend of MK10.1 million or 15 tambala per share making a total dividend for the financial year ended 30 September 2009 of MK13.5 million or 20 tambala per share as recommended by the Directors. To elect Directors in place of Messrs. N. Nyirenda and S. Ulemu. In terms of Article 77 of the Articles of Association Messrs. N. Nyirenda and S. Ulemu retire as Directors by rotation but being eligible, they have offered themselves for reelection. That the remuneration of the Chairman and other Non-Executive Directors be fixed as follows: To fix the remuneration of the Chairman and other Non-Executive Directors. That the audited financial statements for the financial year ended 30th September 2009, Directors and Auditors Report thereon be adopted.
R e solu t ion
That in accordance with Article 103 of the Articles of Association the remuneration of the Executive Director for the financial year ended 30 September 2009 at levels as determined by Directors be confirmed.
R e solu t ion
R e solu t ion
Chairman MK 278,300 per annum payable quarterly in arrears Directors MK 237,600 per annum payable quarterly in arrears.
SHAREHOLDERS HOLDING 1% OR MORE OF TOTAL EQUITY TRANSMAR (ISLE OF MAN) LTD OLD MUTUAL LIFE ASSURANCE (MALAWI) PRESS TRUST INDERTRUST LIMITED NATIONAL BANK OF MALAWI PENSION FUND NATIONAL INVESTMENT TRUST LTD NICO LIFE FUND
R e solu t ion
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57
Notice of the 41st Annual General Meeting
Proxy Form
30 September 2009
I/We of Address member/members of the above named company, hereby appoint of
R e solu t ion
That a final dividend of MK10.1 million or 15 tambala per share making a total dividend for the financial year ended 30 September 2009 of MK13.5 million or 20 tambala per share as recommended by the Directors be declared and that the final dividend shall be payable to shareholders registered in the books of the Company at the close of business on Friday, 26 February 2010. Date: 03 December 2009 BY ORDER OF THE BOARD Proxy forms and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Company Secretarys Office, not less than twenty four hours prior to the time for holding the meeting and, in default, the proxy forms shall not be treated as valid. Proxy forms shall be in the form attached hereto or a form as near thereto as circumstances permit. GIFT MTILENI COMPANY SECRETARY Registered office: Macleod Road, Heavy Industrial Area, Makata P O Box 30533, Chichiri, BLANTYRE 3 A member qualified to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his/ her stead. A proxy need not be a member of the company.
or failing him of as my/our proxy to vote for me/us on my/our behalf at the (annual or extraordinary, as the case may be) general meeting of the company, to be held on the 25th day of February 2009 and at any adjournment thereof. This form is to be used: In favour of * resolution no 1 against in favour of * resolution no 2 against in favour of * resolution no 3 against in favour of * resolution no 4 against in favour of * resolution no 5 against in favour of * resolution no 6 against Unless otherwise instructed the proxy will vote as he thinks fit.
Date
Signed
Strike out whichever is not desired. A proxy need not be a member of the company
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PIM Financial Highlights and Chairman's Report

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Contents

Packaging Industries (Malawi) Limited

Paper sack production

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Raymond Lund (44) B.Sc (Eng), UCT, PhD Chairman

Packaging Industries (Malawi) Limited

3000 2500 2000 1500 1000

160 140 120 100 80 60

PROFIT BEFORE TAX

160 140 120 100 80 60

PROFIT AFTER TAX

40 20 0 2005 2006 2007 2008 2009

40 20 0 2005 2006 2007 2008 2009

160 140 120 100 80 60 40 20 0

EARNINGS PER SHARE

DIVIDEND PER SHARE

10 5 0 2005 2006 2007 2008 2009

Paper sacks quality inspection

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

C O R P O R ATE G OV E R N A N CE AND SOCIAL R E S P O N S I B I L I TY

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

F I N A N C I A L YEA R 2 010 P RO S P ECT S

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Managing Directors Report

Managing Directors Report

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Managing Directors Report

Managing Directors Report

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Managing Directors Report

Managing Directors Report

Simon Itaye 3 December 2009

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

AU D I T C O M M I TTEE / APPOINTMENTS A N D R E M U N E R AT I O N C O M M I TTEE

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

PE board for liquid packaging carton production

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Report of the Directors

Report of the Directors

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Statement of Directors Responsibilities

Report of the Independent Auditor

P.O Box 187 Blantyre Malawi

Public Accountants Blantyre 3 December 2009

Audit Tax Consulting Financial Advisory

A member firm of Deloitte Touche Tohmatsu

Packaging Industries (Malawi) Limited

Packaging Industries (Malawi) Limited

Notes ASSETS NON-CURRENT ASSETS Property, plant and equipment

Notes Revenue Cost of sales

2009 MK000 2,597,354

2008 MK000 2,206,689

2 . A d op t ion o f n e w a n d r e vis e d I n t e rn at ion a l Fin a n c i a l R e port ing Sta n da r d s

4.1 Critical judgements in applying the groups accounting policies