Slide 1: PG Bison Mkhondo Investor and analyst site visit
PG BISON MKHONDO Investor and analyst site visit 1 June 2023
Slide 2: Agenda
AGENDA Opening and welcome Gary Chaplin, KAP CEO Who we are and what we do Gerhard Victor, PG Bison CEO Our customers and markets Gerhard Victor, PG Bison CEO Our manufacturing facilities Gerhard Victor, PG Bison CEO Sustainability Sibusiso Dlamini, PG Bison human capital and stakeholder relations e
Slide 3: Who we are and what we do
ee Who we are and what we do
Slide 4: We are a leading manufacturer of decorative wood-based panels
WHO WE ARE AND WHAT WE DO We are a leading manufacturer of decorative wood-based panels Timber Panel production Finished kitchen • Largest integrated wood-based decorative panel manufacturer in Africa with 120 years of experience, Level 3 B-BBEE • Current panel production capacity of c. 830 000 m3 p
Slide 5: We have high aspirations, which drives everything we do
WHO WE ARE AND WHAT WE DO We have high aspirations, which drives everything we do Our aspiration Our purpose Our strategy To be recognised as the global leader To inspire and enable beautiful To secure profitable and sustainable in wood-based decorative panels living spaces growth What this means: W
Slide 6: Holistic strategy to deliver a unique customer value proposition
WHO WE ARE AND WHAT WE DO We have developed a holistic strategy to deliver a unique customer value proposition Strategic focus Theme Audience 2011 # 1 manufacturer with lowest cost of Our Stakeholders product to market investments Strategic focus Focus Theme Audience 2013 “Solution Selling” – Brick-
Slide 7: Holistic strategy to deliver a unique customer value proposition continued
WHO WE ARE AND WHAT WE DO We have developed a holistic strategy to deliver a unique customer value proposition continued Our strategic pillars What we offer our customers • Quality brands and products, produced sustainably #1 • We invest in our brands and develop new products that consider consumer
Slide 8: Our customers and markets
Our customers and markets
Slide 9: Panels distributed to a diverse customer base in formal and informal markets
OUR CUSTOMERS AND MARKETS Our panels are distributed to a diverse customer base in formal and informal markets Key direct and indirect customers Resellers, cut-and-edge manufacturers Office furniture manufacturers Kitchen manufacturers Furniture manufacturers DIY trade chains Upgraders • More than 5
Slide 10: Primary market is Africa, with select markets where we have an advantage
OUR CUSTOMERS AND MARKETS Our primary market is Africa, with select markets where we have an advantage providing further growth opportunities Operations • Kenya, JV with Kenyan investors, secondary processing (20 years) • South Africa, primary processing, including c. 44 000 ha of FSC* certified aff
Slide 11: Primary market is Africa, with growth opportunities continued
OUR CUSTOMERS AND MARKETS Our primary market is Africa, with select markets where we have an advantage providing further growth opportunities continued Consumption, m3 5-y CAGR Imports, m3 Country-specific demand and supply themes (2021) (2016–2021) (2021) South Africa Particleboard • Fragmentation
Slide 12: Our manufacturing facilities
Our manufacturing facilities
Slide 13: Proudly South African business with world-class facilities
OUR MANUFACTURING FACILITIES We are a proudly South African business, with world-class facilities equipped with the latest European technology PG Bison, Boksburg MDF # plant PG Bison, Mkhondo 2 x MFB* upgrading Foil press Resin plant 2 x hot coating line 2 x paper treatment for gloss and matt plants
Slide 14: Consistent investment in facilities supporting global competitiveness
OUR MANUFACTURING FACILITIES We have consistently invested in our facilities, which has supported global competitiveness Key developments for PG Bison Humble Boksburg: MDF Mkhondo: Paper treatment Boksburg: Hot Mkhondo: Particleboard line beginnings line plant commissioned coating line front-end cap
Slide 15: Sustainability
Sustainability
Slide 16: Sustainability by virtue of what we do, with intentions to do more
SUSTAINABILITY Sustainability by virtue of what we do, with intentions to do more Annual tCO2e sequestered (2021): c. 600 000* PG Bison, through its Annual tCO2e emitted (FY21): c. 200 000 operations, acts as a ‘carbon sink’ (Scope 1 & 2 GHG) SDGs impacted and prioritised through our day-to-day acti
Slide 17: Committed to communities with initiatives supporting long-term sustainability
SUSTAINABILITY We are committed to communities, with several initiatives to support long-term sustainability PG Bison is committed to over 20 social responsibility programmes across the communities we operate in Infundo Project Knockout Cup Safe Hub Vegetable Project Teaches Math, Science, Accountin
Slide 18: Our financial performance
Our financial performance
Slide 19: Key macroeconomic indicators influencing domestic market demand
OUR FINANCIAL PERFORMANCE Key macroeconomic indicators influencing domestic market demand for our panels South Africa real GDP growth (%) FNB/BER consumer confidence index Excluded or partially captured 6 30 by formal statistics • Renovation activity 4 20 • Informal market spending 2 10 (new constru
Slide 20: Sales volumes increased by c. 45% over the past decade
OUR FINANCIAL PERFORMANCE Sales volumes increased by c. 45% over the past decade Total sales volumes* in ‘000 m3 (LHS#) compared with value-add ratio (RHS^) Extended Recovery post Mkhondo shut 1 200 No maintenance Covid-19 100% Panel sales volume CAGR of c. 4% 1 000 shuts 69% 67% 80% 58% 61% 800 53%
Slide 21: Revenue and operating profit showed good growth
OUR FINANCIAL PERFORMANCE Supported by higher sales volumes and increased value-add, revenue and operating profit showed good growth Revenue* (Rm) Key financials (FY12–FY22) 6 000 Covid-19 impact • Revenue CAGR of c. 8% 5 000 4 000 • Operating profit CAGR of c. 19% 3 000 • Revenue, trading profit an
Slide 22: Operating profit margin drivers: costs, pricing and market dynamics
OUR FINANCIAL PERFORMANCE Our operating profit margin is influenced by raw material costs, plant efficiencies, volumes, sales mix and market dynamics Costs • Raw materials c. 58% of total product costs* • Urea (priced in dollar), melamine and raw paper (priced in euro) are imported • Methanol is loc
Slide 23: Our returns are improving as we continue to execute our strategy
OUR FINANCIAL PERFORMANCE Our returns are improving as we continue to execute our strategy Return on capital employed (ROCE)* Drivers of improved returns (FY12–FY22) 16% • Increased sales volumes and capacity utilisation • Improved efficiencies (technology 12% investments) • Increased value-add sale
Slide 24: Mkhondo cluster overview
Mkhondo cluster overview
Slide 25: Mkhondo cluster: positioning and site overview
MKHONDO CLUSTER Positioning and site overview N2 towards Johannesburg Resin and paper PG Bison – Mkhondo treatment plants Resin plant 2 x paper treatment plants Mkhondo site Particleboard plant 3 x MFB upgrading Particleboard and New warehouse MFB plants New MDF plant Mkhondo town Fibre supply: with
Slide 26: The site is integrated, with key raw materials produced in-house
MKHONDO CLUSTER The site is integrated, with key raw materials produced in-house Imported/externally supplied Paper treatment Internally supplied Urea and melamine formaldehyde syrup Raw decorative paper Methanol Urea Resin Finished board MFB value-add Melamine to customers Urea formaldehyde resin R
Slide 27: Resin plant
MKHONDO CLUSTER Resin plant Overview • Largest urea formaldehyde resin and formaldehyde producer in sub-Saharan Africa region UFC and • Founded in 2000 and supplies over 30 industries throughout sub-Saharan Africa formaldehyde plant • 90 permanent employees Methanol tanks • Consists of formaldehyde,
Slide 28: Paper treatment plant
MKHONDO CLUSTER Paper treatment plant Overview • Commissioned in 2015, replaced imported treated paper • Two European (VITS) production lines, with capacity to produce 80 million m2 per annum • Supplies internally to Mkhondo, Boksburg and Ugie value-add plants Benefits of a local paper treatment pla
Slide 29: Particleboard plant
MKHONDO CLUSTER Particleboard plant Particleboard plant • Established in 1966, with a single daylight press Warehouse • Recent investments to replace old technology (daylight press) and equipment to deliver increased reliability, improved efficiencies and increased capacity to meet local demand (c.
Slide 30: MFB plant
MKHONDO CLUSTER MFB plant MFB plant • First MFB press commissioned in 2010 • Currently three MFB presses (MFB 2: 2017 and MFB 3: 2021) that use particleboard as substrate and, in the future MDF (following the commissioning MFB plant of the MDF plant) • MFB production 34 000 m2 (6 800 boards per day)
Slide 31: MDF expansion project
MKHONDO CLUSTER MDF expansion project Scope New c. 274 000 m3 continuous press, additional warehouse, front-end, energy plant, sanding line, infrastructure Motivation Local market is underserviced, to replace MDF imports (c. 100 000 m3), and to increase cost-competitiveness through larger capacity l
Slide 32: MDF plant project
MKHONDO CLUSTER MDF plant project Engineering/technical design • Press New warehouse • German ContiRoll® press Potential • Fourth ContiPress® continuous press installation supplied future PV by Siempelkamp for PG Bison • Press can produce low-, medium- and high-density fibreboard (new market potenti
Slide 33: By ||! Til i
By ||! Til i
Slide 34: Thank you
Thank you ron KODA > PG BISON
Slide 35: Appendices
Appendices
Slide 36: Particleboard production process
PARTICLEBOARD P Pine & Eucalyptus . DUCTION PROCESS Dust to Energy plant Dust to v al Energy plant DRY pees > DE-BARKER —=P> | CHIPPER —=p> FLAKE . “) ; = SCREENING Y SECTION SS y ‘ . CYCLONES SURF CORE WOODYARD OPERATIONS PREPARATION OPERATIONS ACE siLo u RESINATION SECTION u PRODUCTION FINISHED GO
Slide 37: MDF production process
UCTION PROCESS Homogenises chips to break intemal bonds, using seperati pressurised eparation steam to make : of oversize stear | Steam fromboilers | Debarked ofover ; Eucalyptus Remove fines & ‘sand content re CHIPPE CHIP - ROUND WooD 4 aii eee i — DIGES” _— WOODYARD OPERATIONS PREPARATION OPERATIO