Slide 1: 2023 Results Presentation
2023 RESULTS PRESENTATION for the year ended 31 December 2023
Slide 2: 2023 in context
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Slide 3: 2023 in context
2023 in context • Resilient performance • Strategic projects contributing positively • Record operating cash flow • Increased NAV per share 11% to R33.64 • Increased underlying operating profit and HEPS • Challenging operating environment • Margin recovery offset by sales volume declines across most
Slide 4: Delivering on our strategy: Investing for the future
Delivering on our strategy Investing for the future 4
Slide 5: Springs Paper Mill 5.4MWp Solar energy project
Springs Paper Mill 5.4MWp Solar energy project 5
Slide 6: Mpact Renewable Energy
Mpact Renewable Energy • Purpose: Sustainable energy generation, Approved security of supply, cost saving and carbon emissions saving Completed still to be constructed Capacity Capacity • Scope: Installation of solar PV and inverters Location MWp Location MWp and compatibility with other energy back
Slide 7: Recycled containerboard capacity expansion, Felixton Mill
Recycled containerboard capacity expansion Mpact Felixton Mill, KwaZulu-Natal • Purpose: Expansion of capabilities to meet customer requirements and extend innovative product offering • Scope: 16 800 tons per annum production capacity increase. New shoe press and ancillaries on paper machine; increa
Slide 8: Extending our innovative product and service offering: Paper Converting
Extending our innovative product and service offering Paper Converting • Purpose: Expansion of capabilities to meet Mbombela customer requirements and extend innovative product and service offering • Scope: • Converting equipment (Corrugator, RDC, FFG, bag and cup lines): Western Cape, Mpumalanga, E
Slide 9: New injection moulding factory, 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 10: Mkhondo Mill upgrade project, Mpumalanga
Mkhondo Mill upgrade project, Mpumalanga Mkhondo Mill Project Capex budget R1.23 billion with anticipated 6 % overspend mainly due to forex movements and inflationary pressures 1H 2025: Pulp plant upgrade, new spray dryer, paper machine modifications Planned completion 2H 2027: Upgraded waste manage
Slide 11: Innovation, a cornerstone of our business
Innovation, a cornerstone of our business Developing and maintaining systems of sustainable competitive advantage based on innovation, research and technical support, so that Mpact and their customers are successful. Systems of Packaging in competitive a circular advantage economy Products for exist
Slide 12: Award winning innovation
Award winning innovation ficsa 7 FLEXOGRAPHIG SF PRINT EXCELLENCE AWARDS. 12
Slide 13: Our systematic, science-based and multidimensional approach to innovation
Our systematic, science-based and multidimensional approach to innovation goes beyond packaging products Circular Economy Digital Innovation Systems Approach Designing end-to-end business solutions Enhancing innovation and driving operational Developing systems of advantage that extend aligned with
Slide 14: Unlocking value beyond packaging for fresh produce
Our innovation system in action Fresh produce ventilation system that moves beyond packaging Considering the entire value chain in the design stage to unlock value for fresh fruit producers and exporters: faster and more homogenous cooling lower energy usage faster throughput rates at packhouses imp
Slide 15: Building on the three key pillars of our strategy
Building on the three key pillars of our strategy… Customer-focused Leading market Focus on positions performance Decentralised structure Scale Financial returns ▪ ROCE and profitable growth ▪ Customer-centric ▪ Disciplined capital allocation and spending ▪ Responsive ▪ Maintain leading market posit
Slide 16: Financial overview
02 Financial overview 16
Slide 17: Financial review
Financial review from continuing operations, excluding Versapak Group revenue • Revenue up 3.6% to R12.8bn 14,000 11,549 12,373 12,823 • Higher average prices offset by 10.7% decrease in sales 12,000 volumes 10,000 6,583 R million 8,000 6,090 6,630 • Underlying operating profit up 4.0% to R1.210m 6,
Slide 18: Operating review
03 Operating review 18
Slide 19: Paper Business
Paper Business Segment revenue • Revenue up 3.3% to R10.7bn 12,000 10,715 9,725 10,373 • Higher average selling prices offset by 11.2% decrease in sales 10,000 volumes R million 8,000 5,458 5,446 5,086 6,000 • Weak consumer demand 4,000 • Customers overstocked with imported containerboard 4,639 4,91
Slide 20: Plastics Business
Plastics Business from continuing operations, excluding Versapak Segment revenue • Revenue up 5.9% to R2.2bn 2,500 2,041 2,161 • Higher average selling prices, offset by lower sales volumes 1,861 2,000 down 3.8% R million 1,500 1192 1168 • Lower sales volumes in Preforms & Closures offset by 1022 in
Slide 21: Versapak – discontinued operations
Versapak – discontinued operations Disclosed separately in the Annual Financial Statements for the year ended 31 December 2023, with the assets and liabilities being reported as “held-for-sale” and the Income Statement reported as a “discontinued operation” • Revenue up 2.6% to R1.1bn December Decem
Slide 22: Financial performance
05 Financial performance 22
Slide 23: Variable costs
Variable costs from continuing operations, excluding Versapak +1% 9,000 Benchmark recovered paper prices (OCC) 7 625 7 701 120 8,000 (December 2021= 100) 7 287 2% 1,038 1,022 7,000 822 100 933 895 4% 866 Index 6,000 80 844 953 1,031 8% 5,000 R million 60 951 1,053 967 8% 4,000 40 Dec-21 Dec-22 Dec-2
Slide 24: Fixed costs
Fixed costs of continuing operations, excluding Versapak +9.1% 4,500 3 911 4,000 3 584 Fixed costs up 9.1% 3 316 5% 533 3,500 508 • Personnel cost up 6.5% 3,000 500 15% • Wage settlements around 7%, and overtime cost 1,308 2,500 1,135 related to load shedding and projects R million 978 2,000 • Maint
Slide 25: Financial review
Financial review December 2023 December 2022 change Underlying operating profit from profit continuing operations 1,210 1,164 4.0% Net finance costs (284) (184) 54.7% Earnings from equity accounted investees and other 18 45 (60.0%) Underlying profit before tax from continuing operations 944 1,025 (7
Slide 26: ROCE and Net debt from total operations
ROCE and Net debt from total operations Return on Capital Employed (ROCE)¹ 20% • ROCE of 17.4% (2022: 18.9%) 17.0% 18.9% 17.4% • Increase in EBIT offset by higher capital employed 15% % 10% 2021 2022 2023 • Net debt increased to R2.7bn (2022: R2.3bn) Net debt • Investment in capital projects of R1.5
Slide 27: Net finance costs and net debt
Net finance costs and net debt December December 2023 2022 change Net debt close 2,665 2,327 14.6% Net debt average 2,921 2,326 25.6% • Net finance costs increased to R284m Net finance costs 284 184 54.7% • Higher average net debt and interest rates Gearing 32.9% 32.5% 0.4 Interest cover (underlying
Slide 28: Long-term debt facilities
Long-term debt facilities 1 to 2-year funding 2 975 3000 • R1,075m at JIBAR plus 150 bps • R300m Mpact Plastic Containers revolving credit facility 2500 1,450 at 3-month JIBAR plus 165 bps 2000 2 to 4-year funding • R1,875m at JIBAR plus 160 bps R million 1500 • R1,100m at prime less 2.5% with 367-d
Slide 29: Trade working capital
Trade working capital from continuing operations, excluding Versapak ¹ Trade working capital % of revenue 5,000 2 771 2 804 • Trade working capital percentage of revenue decreased to 21.9% 22.6% 4,000 21.9% • Inventory up 1% , increase in cost per ton of raw material, 2,719 offset by lower volumes 2
Slide 30: Movements in net debt
Movements in net debt 2,000 1,899 1,500 1,000 500 108 0 R million -213 -176 -126 -500 -294 -1,000 -1,500 -1,537 -2,000 -2,500 -2,327 -2,665 -3,000 Net debt at Cash generated Working capital Capital Net interest paid Income tax paid Dividend paid to Other Net debt at December 2022 from operations inf
Slide 31: Taxation from total operations
Taxation from total operations December December 2023 2022 change • Effective tax rate of 24.7%, lower than statutory rate due to Tax charge from total operations 249 293 14.7% • Recognition of a deferred tax asset of R64 million Effective tax rate 24.7% 27.2% 2.5 attributable to previously unrecogn
Slide 32: Capital expenditure cash flows
Capital expenditure cash flows 1,800 1 537 1,600 114 1,400 361 1,200 1 006 • Capital projects on track R million 1,000 687 267 • Cash outflow of R1.5bn, of which approximately 55% is expansion 800 and 45% stay in business 600 171 322 1,062 • Corporate comprises mainly building and solar projects 400
Slide 33: Dividends
Dividends Returns to shareholders – dividends and share buybacks 400 331 • Total dividend per share of 120 cents per share (2022: 115 cps) 300 • Continue to focus on: • driving long-term value for shareholders; R million 200 257 179 • prudent capital allocation in the context of growth 170 opportuni
Slide 34: Outlook
06 Outlook 34
Slide 35: Outlook
Outlook • In South Africa, consumer demand is expected to remain under pressure • continued high levels of load shedding and increased cost of living • national election adding another level of uncertainty • sales volumes and selling prices to come under pressure • Input cost inflation still concern
Slide 36: Thank you
Thank you Bruce Strong Chief Executive Officer Brett Clark Chief Financial Officer For any further Investor Relations questions please contact: Keyter Rech Investor Solutions Marlize Keyter mkeyter@kris.co.za | +27 83 701 2021 36
Slide 37: 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