Slide 1: Results presentation for the year ended 31 December 2022
Results presentation for the year ended 31 December 2022
Slide 2: 2022 in context
01 2022 in context 2
Slide 3: 2022 in context
2022 in context • Robust financial performance • Strong local demand for containerboard, cartonboard and converted paper products • Improved profitability in the Plastics business • Good progress implementing capital projects • Enhancing operational resilience to counter load-shedding and other supp
Slide 4: Financial review
02 Financial review 4
Slide 5: Financial review
Financial review from continuing operations, excluding Versapak¹ Group revenue 14,000 12,373 • Revenue up 7.1% to R12.4bn 11,549 12,000 10,258 • Higher average selling prices 10,000 R million 8,000 6,090 6,630 • Excluding Baywhite, revenue up 15.2% and sales volumes up 5,568 6,000 6.3% 4,000 • Under
Slide 6: Operating review
03 Operating review
Slide 7: Paper Business
Paper Business Segment revenue 12,000 10 373 • Segment revenue up 6.7% to R10.3bn 9 725 10,000 8 665 • Excluding Baywhite, revenue increased by 16.3% and sales R million 8,000 5 458 volumes up 6.9% 5 086 6,000 4 659 • Strong demand for containerboard, cartonboard and converted 4,000 paper products 2
Slide 8: Plastics business
Plastics business from continuing operations, excluding Versapak¹ Segment revenue 2,500 2,041 • Revenue up 9.7% to R2.0bn 1,861 2,000 1,629 • Higher average selling prices R million 1,500 1192 • Sales volumes marginally lower than prior year 1022 930 1,000 • FMCG sales volumes impacted by floods in
Slide 9: Versapak – discontinued operations
Versapak – discontinued operations Disclosed separately in the Annual Financial Statements for the year ended 31 December 2022, with the assets and liabilities being reported as “held- for-sale” and the Income Statement reported as a “discontinued operation” • Revenue up 20.3% to R1.1bn December Dec
Slide 10: Capital projects and product development
Capital projects and 04 product development 10
Slide 11: New injection moulding factory, Mpact Plastic Containers, Castleview
New injection moulding factory Mpact Plastic Containers, Castleview • Purpose: Expansion of capabilities to meet customer requirements and extend innovative product offering, including food grade production facility and automated warehouse • Scope: Property acquisition; setup manufacturing facility
Slide 12: New recycling facility, Mpact Plastic Containers, Brits
New recycling facility Mpact Plastic Containers, Brits • Purpose: Closing the loop by increasing end-of- life buyback arrangements with bin and crate customers and offering increased recycled content in new products; free up space in existing operation for injection moulding machines • Scope: Acquis
Slide 13: Other notable investments: Paper Converting
Other notable investments Paper Converting • Purpose: Expansion of capabilities to meet customer requirements and extend innovative product and service offering • Scope: • New RDC and FFG lines: Paper Converting Western Cape, Mpumalanga, Eastern Cape • Site expansions: Eastern Cape, Mpumalanga • New
Slide 14: Mpact Renewable Energy
Mpact Renewable Energy • Purpose: Sustainable energy generation, security of supply, cost saving and carbon Completed Approved emissions saving Capacity still to be constructed • Scope: Installation of solar PV and inverters and Location MWp Capacity compatibility with other energy backup where Loca
Slide 15: Recycling and export handling facility, Mpact Recycling, KZN
Recycling and export handling facility Mpact Recycling, KZN • Purpose: Closing the loop and reducing costs by increasing collection and processing of recyclables closer to Mpact’s Felixton paper mill, replace facilities currently leased for recycling and handling of the Group’s exports and imports (
Slide 16: Mkhondo Mill upgrade project
Mkhondo Mill upgrade project Mpact Paper Capex budget R1.226 billion 1H 2025: Pulp plant upgrade, new spray dryer, paper machine modifications Planned completion 2H 2027: Upgraded waste management infrastructure Virgin pulp: 120,000 tonnes (additional 58,000 tonnes) Targeted capacity Containerboard:
Slide 17: Award-winning Innovation
Award-winning Innovation 17
Slide 18: Financial performance
Financial 05 performance 18
Slide 19: Variable costs
Variable costs from continuing operations, excluding Versapak 9,000 7 625 Benchmark recovered paper prices (OCC) 8,000 7 287 150 65 (December 2020 = 100) 934 22% 7,000 6 503 798 963 8% 748 764 6,000 Index 13% 100 756 888 953 5,000 R million 801 844 1,053 11% 4,000 690 951 50 3,000 747 Dec-20 Dec-21
Slide 20: Fixed costs
Fixed costs from continuing operations, excluding Versapak +8.1% 4,000 3 584 3,500 3 316 3 149 508 2% 500 • Overall, fixed costs increased by 8.1% 3,000 538 • Personnel costs up 6%, similar to prior year on a per ton 2,500 1,135 16% basis 978 R million 903 • Maintenance and net operating expenses pe
Slide 21: Financial review
Financial review December December R million 2022 2021 Change Underlying profit before tax 1,026 816 25.7% Tax charge (293) (233) (25.5%) Non-controlling interest (71) (54) (31.0%) Underlying earnings 662 529 25.1% Special items, net of tax - (12) 100% Basic earnings for the year from continuing ope
Slide 22: ROCE and Net Debt
ROCE and Net Debt Return on Capital Employed (ROCE)¹ 20% • Solid improvement in ROCE to 18.5% (2021: 17.8%) 18.5% • Increase in underlying EBIT, partially offset by higher capital employed % 17.8% 15% 11.4% 10% 2020 2021 2022 • Net debt increased in-line with expectations to R2.3bn (2021: R1.8bn) Ne
Slide 23: Net finance cost
Net finance cost December December R million 2022 2021 Change Net debt close 2,327 1,756 32.5% • Net finance costs increased by 31.8% • Higher average net debt Net debt average 2,326 1,714 35.7% • Higher interest rates, partially offset by the unwinding of an interest swap Net finance costs 184 140
Slide 24: Long-term debt facilities
Long-term debt facilities 2 975 3000 • 2 to 3-year funding 2500 • R1,075m at JIBAR plus 150 bps 1,450 • R300m Mpact Plastic Containers RCF at JIBAR 165 bps 2000 • 3 to 5-year funding R million 1500 • R1,875m at JIBAR plus 160 bps 1000 • R1,100m at prime less 2.5% with 367-day notice 1,375 1,525 • In
Slide 25: Trade working capital
Trade working capital excluding Versapak, and Baywhite purchased for trading Trade working capital % of revenue 3,000 • Trade working capital percentage to revenue increased to 22.6% 2,500 • Higher inventory level of R708 million due to build up of 22.6% stock due to uncertainty of supply and higher
Slide 26: Movement in net debt
Movement in net debt 2,000 1,771 1,500 1,000 500 0 R million (179) (131) -500 (272) -1,000 (754) (1,006) -1,500 -2,000 (1,756) -2,500 (2,327) -3,000 Net debt at Cash generated Working capital Capital Net interest paid Income tax paid Dividend paid to Net debt at December 2021 from operations outflow
Slide 27: Taxation
Taxation from continuing operations, excluding Versapak December December R million 2022 2021 Change Tax charge 293 233 25.6% Effective tax rate 28.5% 28.5% - Tax paid 272 115 >100% 27
Slide 28: Capital expenditure cash flows
Capital expenditure cash flows 1,200 1 006 1,000 267 • Significant investment opportunities 800 687 • Capital commitment of R2.9bn, of which R million 600 171 • R1.6bn to be spent in the next 12 months 322 518 • Total commitment includes R1.2bn Mkhondo mill project 400 214 252 81 200 417 223 264 0 2
Slide 29: Dividends
Dividends Returns to shareholders – dividend and share buybacks • Final dividend per share of 75 cents declared bringing total for the year to 115 cents per share (2021: 50 cps) 400 • The Board will continue to focus on driving long term value for shareholders. 331 This is done through prudent capit
Slide 30: Outlook
06 Outlook 30
Slide 31: Outlook
Outlook • Expect input costs to remain elevated and consumer spending to remain under pressure • Containerboard and cartonboard capacity fully allocated to customer until end September 2023 • Felixton mill upgrade project scheduled to be completed during 3Q2023 • Margins in the Paper Converting busi
Slide 32: Living by our Values, Driven by our Purpose
Living by our Values, Driven by our Purpose At Mpact we are differentiated by our people who are: Resolute Trustworthy Responsible Driven by our purpose • Setting and achieving • Ethical • Taking care of their safety, of: challenging targets • Transparent health and personal • Providing our customer
Slide 33: Thank you
Thank you Bruce Strong Chief Executive Officer Brett Clark Chief Financial Officer For any further Investor Relations questions please contact: 33 Keyter Rech Investor Solutions Marlize Keyter mkeyter@kris.co.za | +27 83 701 2021