ubs paper & packaging conference - mpact - home · 3 │ mpact limited 2012 ubs paper &...

1 │ Mpact Limited Annual Results│ 8 March 2012

UBS Paper & Packaging Conference

Cape Town - Thursday, 27 September 2012

│ Presentation title │ 00 Month 2011 2 2 │ Mpact Limited 2012 UBS Paper & Packaging Conference

Agenda

• Introduction

• Mpact business overview

• Group financial results review

• Progress against strategy

• Outlook

3 │ Mpact Limited 2012 UBS Paper & Packaging Conference

Introduction

• Listed on JSE Main Board 11 July 2011 – demerged from Mondi Limited

• Mpact is a leading Southern African producer of paper and plastic packaging

• Market capitalisation – R2,9bn at 6 September 2012


Management team Bruce Strong

CEO

CEO Mpact since March 2009

Former GM Packaging and Industrial Paper

16 years experience in paper and packaging, both locally and in Europe

Brett Clark CFO • Joined Mpact from Absa Capital Private Equity • CFO of Clover Industries Limited and Unihold Limited • Former executive director of Brait Private Equity.

Hugh Thomson MD PIP Division MD Packaging and Industrial Paper since October 2009 MD Plastics until Sept 2009, CFO Mpact until March 2007 Former SVP Corporate Finance Anglo American plc 9 years experience in packaging sector

Ray Crewe-Brown Executive Chairman Plastics Division Executive Chairman of Plastics since November 2009 Founder of Astrapak and CEO from inception to June 2008 35 years experience in the plastics industry

Ralph von Veh MD Corrugated Division MD Corrugated Division since 1999 Former Regional director of Kohler Corrugated 35 years experience in the paper and packaging industry

John Hunt MD Recycling Division Business Manager: Technology Optimisation Executive Director of Paper Manufacturers Association of South Africa 20 years experience in the paper industry

Source: Mpact

Board of directors

• Tony Phillips*: Non-exec Chairman

• Bruce Strong: CEO

• Brett Clark: CFO

• Andrew Thompson*: Non-executive

• Neo Dongwana*: Non-executive

• Timothy Ross*: Non-executive

• Ntombi Langa-Royds*: Non-executive

* Independent director


Shareholders

Source: Keyter Rech Investor Solutions


Agenda

• Introduction




• Outlook


Mpact business overview

Plastics

Mpact

Primary product categories

Recovered paper collection

Packaging and industrial papers such as cartonboard and

containerboard

Corrugated packaging

Primary product categories

PET bottles and preforms, hot fill bottles, PET jars and

closures

Large injection moulded containers

Styrene trays, fast food containers and clear plastic films

Other plastic packaging

Paper

No. 1 in corrugated packaging

No. 1 in recycled based cartonboard and containerboard

No. 1 in recovered paper collection

No. 1 in PET preforms

No. 1 in styrene trays

No. 1 in plastic jumbo bins

CENTRES OF EXCELLENCE

Human Resources, Safety, Health, Environment

Employing 3,700 people, 23 manufacturing operations, 30 operating sites

SHARED SERVICES

Finance, IS&T, Stellenbosch R&D

Sources: Mpact, BMI Report (2010), PAMSA and PRASA

http://www.mpcsa.co.za/product_details.php?product_id=45


Footprint

Richards Bay

Durban

Port Elizabeth

Nelspruit Maputo1

East London

Bloemfontein2

Walvis Bay1

Windhoek1

Cape Town

Piet Retief

Pretoria

Felixton

Corrugated2

Recycling

Plastics

Harare

Packaging and Industrial Paper

Brits

Johannesburg

Atlantis

Operating structure which enables superior flexibility and responsiveness to customer requirements

Broad manufacturing and service

footprint enabling

Superior customer focus

Responsiveness and flexibility in meeting

customer requirements

Customised solutions

Source: Mpact

Notes: (1) Mpact has 2 sheet plants in Mozambique and Namibia in which it holds a controlling interest

(2) Corrugated sales office

Paarl

Springs

Midrand


PAGE 9

Key products : Cartonboard

: Containerboard

: Retail ready packaging

: Regular slotted cartons

: POS packaging and displays

: Die cut solutions

Key customers : Packaging Converters (Containerboard and Cartonboard)

: Agricultural producers

: FMCG companies

: Other consumer and industrial packaging companies

Operations : Recycling

: Paper Manufacturing

: Corrugated

Leader in recovered paper collection, production of cartonboard, containerboard and corrugated packaging

Paper

Divisions : Recycling

: Paper Manufacturing

: Corrugated Cartonboard

Standard and customised cases

Fru

it a

nd

ve

ge

tab

le t

ray

s

POS packaging & displays

Retail ready packaging

Containerboard

Paper business overview

http://www.colgate.com/app/ColgateTotal/US/EN/Products.cvsp


Recycling

PAGE 10 Paper

Geographic footprint

Sources of recovered paper

Sappi

Nampak

Kimberly Clark

Lothlorien

Gayatri

Independents

Key competitors

Richards Bay

Durban

Port Elizabeth

East London

Cape Town

Johannesburg

Springs

Pretoria

Midrand

Governments and local authorities

Schools

Paper banks

Converters

Agents, dealers, waste management companies

Business and offices

Kerbside

Imports

Mobile cages and bakkies

59% Current recovery rate of

recoverable paper in SA

Target rate 63%

Mpact Recycling shareholding

75% Mpact Limited

25% Mondi Limited


Paper manufacturing

PAGE 11 Paper

Geographic footprint Customers

Key competitors Production capacity in kt

Additionally, Mpact distributes all containerboard products of

Mondi Group’s Richards Bay Mill, selling mainly into South Africa

and selected markets in sub-Saharan Africa and Indian Ocean

Islands

Mill/Plant Main products Capacity 2011

(ktpa)

Piet Retief Linerboard and semichemical

fluting 133

Felixton Linerboard and semichemical

fluting 150

Springs Cartonboard and specialities 137

Containerboard and cartonboard packaging

converters (internal and external)

Geographic sales

Non integrated

Sappi

Lothlorein

Imports

Integrated

Nampak

Gayatri

Durban

Port Elizabeth

East London

Cape Town

Johannesburg Springs

Piet Retief

Felixton

Domestic, 88%

Richards Bay

Export, 12%


Durban

Port Elizabeth

Nelspruit Maputo

East London

Bloemfontein

Walvis Bay

Windhoek

Cape Town

Johannesburg Springs

Epping

Brakpan

Corrugated Packaging

PAGE 12 Paper

Geographic footprint Customers

Key competitors

Overview

Nampak

New Era

APL

Corruseal

Houers

Three high-graphic printing

machines situated in Springs,

Pinetown and Epping which offer

high quality graphic printing on

corrugated board. These are

complimented by in-house

graphic design facilities

ISO 14,000 and ISO 9,000

environmental and quality

management systems,

respectively

Corrugated packaging products

include:

Corrugated regular cases

Die cut cases

Folded glued cases

Trays

Point of sale displays

Localised customer base

Customers include producers of

agricultural, food durable and non durable

goods:

Sheet board, 20%

Agricultural, 38%

FMCG, 30%

Other, 12%


Kuilsriver modernisation

• Quality, flexibility and cost competitiveness

• Investment of R95m now complete

• Holds BHS world record for machine type

• Plant accredited to ISO 14000, 18000, 9000, 22000

• Part of countrywide modernisation programme in Corrugated division


Plastics business overview

PAGE 14

Leader in the manufacture of PET preforms, styrene trays and plastic jumbo bins

Key products : PET preforms, bottles and jars

: Plastic jumbo bins, wheelie bins, plastic crates

: Plastic containers such as bottles, jars, closures, with in-mould labelling capability

: Styrene trays, fast food containers and clear plastic films

Key customers : FMCG Companies (carbonated soft drinks, personal care, pharmaceuticals, food producers)

: Fast food producers

: Agricultural producers

: Retail Chains

Operations : Styrene and PET trays, and clear plastic film

: Large injection moulds

: PET injection and FMCG plastic packaging

Plastic Jumbo Bins, Wheelie Bins, Plastic Crates and Pallets

Styrene and PET Trays, Fast Food Containers and Clear Plastic Film

PET Preforms, Bottles and Jars

FMCG Bottles, Jars, Closures and In-Mould Labelling

Plastics


Plastics segment overview (cont’d)

PAGE 15 Plastics

Geographic footprint

Key competitors

Plants and main products Mill/Plant Main products

Wadeville PET preforms, jars, bottles and hot fill bottles Injection moulding, blow moulding, closures

Atlantis (Large Injection) Plastic jumbo bins, wheelie bins, plastic crates Injection moulding

Brits Plastic jumbo bins, wheelie bins, plastic crates Injection moulding

Pinetown FMCG packaging bottles, jars, closures, in-mould labels Injection moulding, blow moulding, IML

Robertville FMCG plastic bottles, jars, closures Injection moulding, blow moulding, compression moulding

Atlantis (FMCG) FMCG plastic bottles, jars, closures Injection moulding, blow moulding, PET bottles and printing

Versapak Paarl Styrene trays, fast food containers and clear plastic films

Versapak Harare Styrene trays, fast food containers and clear plastic films

Nampak

Astrapak

Bowler Metcalf

Polyoak

MCG

CIBA

Boxmore

Durban

Port Elizabeth

Brits

East London Atlantis

Johannesburg

Paarl

Pretoria

Harare

Pinetown

Robertville Wadeville

Source: Mpact

Note: A significant proportion of beverage sales is made up by an Amalgamated Beverages (ABI) contract for PET preforms


Agenda

• Introduction




• Outlook


Financial performance to date

2 733 2 874 3 210

2 985 3 275

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2010 2011 2012

H1 H2

5 718

6 149

Revenue (Rm)

170 205 222

305

319

0

100

200

300

400

500

600

2010 2011 2012

H1 H2

475

524

Underlying operating profit (Rm)

• The results above exclude Paperlink – pro forma figures for 2010 and 2011


Financial highlights

13.4%

13.8%

14.1%

13.0%

13.5%

14.0%

14.5%

H1 2011 H2 2011 H1 2012

Return on capital employed

3697

1718

1307 1382

1000

2000

3000

4000

H1 2011pre-listing

11 July 2011at listing

H2 2011 H1 2012

R’

mil

lio

ns

Net debt

• Return on capital employed of 14.1%

(June 2011: 13.4%)

• Gearing down to 36%

(June 2011: 96%)

• Net debt down to R1.4bn

(June 2011: R3.7bn)


Paper business

• Revenue • Volumes up – agriculture and displaced imports

• Price increases below inflation

• Underlying operating profit

• Margin pressure – transport, electricity and labour; only partially offset by price increases and other cost savings

• Good progress on projects

• Corrugated converting – quality and cost competitiveness • Paper mill drives – cost and reliability • Recycling network – cost and supply

2 114 2 160 2 387

2 293 2 413

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2010 2011 2012

H1 H2

4 407 4 573

Revenue (Rm) Underlying operating profit (Rm)1

192 220 231

285 291

0

100

200

300

400

500

600

2010 2011 2012

H1 H2

477 511

1 For comparative purposes 2010 and 2011 full year underlying operating profit has been restated to reflect corporate costs of R50 million (R25 million for half

year), directly attributable but previously not charged to the Paper business


Plastics business

• Revenue • 12.2% organic, 3.0% acquisitions • Volumes driven mainly by agriculture and PET

• Average prices up due to raw materials and product segment mix

• Underlying operating profit

• Optimisation

• Good progress on projects • Relocation of closures complete • Reorganisation of Robertville and Atlantis underway • PET recycling in earliest stage

619 715 823

691

862

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2010 2011 2012

H1 H2

1 310

1 577

Revenue (Rm) Underlying operating profit (Rm)1

23 23 37

54

77

0

20

40

60

80

100

120

2010 2011 2012

H1 H2

77

100

1 For comparative purposes 2010 and 2011 full year underlying operating profit has been restated to reflect corporate costs of R14 million (R7million for half

year), directly attributable but previously not charged to the Plastics business


Agenda

• Introduction




• Outlook


Strategy

Leading market

positions

Develop and selectively grow our leading market positions in rigid plastics, paper-based packaging

and packaging papers in sub-Saharan Africa

o Growth where we are able to extract value through business and operational management

expertise as well as product application, design and market knowledge

Customer focused

operating structure

Further develop our established manufacturing and service footprint to continually deliver superior

solutions to our customers

Underpinned by:

o a decentralised structure reflecting management depth and experience at all levels

o an innovative customer focused product offering

o leading market positions that enable us to achieve sustainable cost effectiveness through

economies of scale

Focus on

performance

Focus on performance through effective business excellence programmes and sound asset

management

Enabling us to sustainably:

o provide our customers with quality products and services worth their price

o retain a motivated and skilled workforce

o deliver good returns to our shareholders


Progress against strategy

• Leading market positions • New business generation remains a focus to grow market share in

certain key products and geographical areas • Strategic acquisitions

• Customer focused operating structure • Investing to meet changing customer needs and to remain cost

competitive • Continue to develop geographic footprint

• Focus on performance

• Delivering acceptable returns to our shareholders • Cost containment and improved production efficiencies a key

focus area


Opportunities for continued growth

Increase number of available sources of quality fibre for use in paper

production

Reduce cost of recovered fibre by leveraging existing infrastructure

Continue modernisation programme to enhance leading market position

Growth where we are able to extract value through business and operational

management expertise as well as product application, design and market

knowledge

Op

tim

ise

Gro

w

Op

tim

ise

Gro

w

Pa

pe

r P

las

tic

s

Op

tim

ise

Gro

w

Optimise existing operations to realise full potential

Grow market share in key product segments / potential growth into Africa

Grow where we are able to extract value through business and

operational management expertise as well as product application,

design and market knowledge

Recycling

Corrugated

Plastics

Paper

Manufacturing

Position for further quality leadership and lightweight capability

Further optimisation of paper mills through rigorous cost control, product

mix and improved operational efficiencies Op

tim

ise


Agenda

• Introduction




• Outlook


Outlook

• Global economic prospects expected to remain uncertain and will impact on South African economy

• Trading environment to remain highly competitive

• Emphasis on securing new and retaining existing business at acceptable margins

• Strong cash generation supports new business opportunities and organic expansion

• Mpact well positioned within the sectors it operates


Thank you for your participation

For further information:

www.mpact.co.za

[email protected]

Bruce Strong, CEO

(011) 994-5508

or

Marlize Keyter

Keyter Rech Investor Solutions (011) 447-5204


Disclaimer This document including, without limitation, those statements concerning the demand outlook, expansion projects and its capital resources and

expenditure, may be considered to be forward looking statements. By their nature, forward-looking statements involve risk and uncertainty and although

Mpact believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will

prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other

factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other

government action and business and operational risk management. While Mpact has taken reasonable care to ensure the accuracy of the information

presented, Mpact accepts no responsibility for any consequential, indirect, special or incidental damages, whether foreseeable or unforeseeable, based on

claims arising out of misrepresentation or negligence arising in connection with a forward-looking statement. This document is not intended to contain

any profit forecasts or profit estimates.

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