[PPT] - Results presentation for the year ended 31 December 2019 2019 in PowerPoint Presentation

SLIDE 1

Results presentation

for the year ended 31 December 2019

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2019 in context

Financial review Operating review Financial performance Outlook

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One of Mpact’s toughest years with the trading performance impacted by
Sales volumes under pressure across most sectors
Improved safety performance
Good progress in transformation initiatives
Achieved B-BBEE level 1
Dalisu recognised at President’s investment summit
Successful introduction of innovative sustainable packaging alternatives
Recognised with 4 gold pack awards
Closure of Mpact Polymers
Selling price of rPET at similar levels to 2015, unsustainable
Impairment of goodwill, plant and equipment – R1.3bn
Successfully refinanced R2.6bn debt facilities

2019 in context

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2019 in context

Financial review

Operating review Financial performance Outlook

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Financial review

from continuing operations¹

4,796 4,948 5,132 5,257 5,595 5,944

2,000 4,000 6,000 8,000 10,000 12,000 2017 2018 2019

R million

HY1 HY2

10 053 10 543 11 076

Group revenue

199 206 255 331 545 469 5.3% 7.1% 6.5%

200 400 600 800 2017 2018 2019

R million

HY1 HY2 margin

530 751 724

Revenue up 5.1% to R11.1bn
Higher average prices, offset by

lower volumes

EBITDA of R1,276m in line with prior

year (excl. IFRS 16, R1,374m)

Underlying operating profit down 3.7%

to R724m (R720m excl. IFRS 16)

Higher Paper gross margin offset by

decline in Plastics

Underlying EPS of 192 cents (2018:

248 cents) (excl. IFRS 16, 206 cents)

Gearing 32.8% (2018: 27.9%)
ROCE at 11.8% (2018: 11.9%)
Total dividend 60 cps (2018: 70 cps)

1. Excluding Mpact Polymers. Actual 2017 and 2018 has been restated to exclude Mpact Polymers

Underlying operating profit

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2019 in context Financial review

Operating review

Financial performance Outlook

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Paper business

3,720 3,916 4,078 4,025 4,370 4,655

2,000 4,000 6,000 8,000 10,000 2017 2018 2019

R million

HY1 HY2

7 745 8 286 8 733

Segment revenue

177 219 296 266 475 420 5.7% 8.4% 8.2%

200 400 600 800 2017 2018 2019

R million

HY1 HY2 margin

443 694 716

Revenue up 5.4% to R8.7bn
Higher average selling price partially
ffset by lower sales volumes, down

3.1%

Underlying operating profit up 3.1% to

R716m

Good contribution from recent capital

investments – Felixton mill and PE corrugator

Higher gross margins offset by

commercial downtime in paper mills (10% annual capacity)

Underlying operating profit

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Focus on Environmental Footprint – Felixton mill

70 75 80 85 90 95 100 105 2012 2013 2014 2015 2016 2017 2018 2019

Total Energy Input per tonne of paper produced (Indexed GJ/T)

Total Energy Consumption

70 75 80 85 90 95 100 105 110 2012 2013 2014 2015 2016 2017 2018 2019

Electricity consumption per tonne of paper produced (Indexed kWh/T)

Electricity Consumption

50 60 70 80 90 100 110 2012 2013 2014 2015 2016 2017 2018 2019

Total carbon dioxide emitted (Indexed tonnes of carbon / tonne of paper produced)

Carbon Reduction

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Focus on Sustainable Development – Felixton mill

20 40 60 80 100 120 2014 2015 2016 2017 2018 2019

Total Suspended Solids in Wastewaster (Indexed Tonnes/day)

Wastewater Quality Improvement

50 60 70 80 90 100 110 120 2014 2015 2016 2017 2018 2019

Water Consumption per tonne of paper produced (Indexed kL/T)

Water Consumption

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Plastics business - Converting

1,121 1,062 1,076 1,267 1,251 1,310

500 1,000 1,500 2,000 2,500 3,000 2017 2018 2019

R million

HY1 HY2

2 388 2 313 2 386

Segment revenue

57 26 85 104 83 5.9% 5.6% 3.5%

50 100 150 2017 2018 2019

R million

HY1 HY2 margin

142 130 83

Revenue up 3.2% to R2.4bn
Volumes up 4.2% due to growth in

preforms & closures

Average price down 1% due to lower

polymer prices

Underlying operating profit of R83m (2018:

R130m)

Solid performances in preforms &

closures and bins & crates

Trays & films restructure completed
Negative sales mix in FMCG

Underlying operating profit

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2019 in context Financial review Operating review

Financial performance

Outlook

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Financial summary

from continuing operations¹

Revenue Underlying operating profit Underlying EPS Total dividend ROCE Gearing²

5.1%

R11.1 billion R724 million 192 cents per share 60 cents per share 11.8% 32.8%

1. Excluding Mpact Polymers 2. Gearing % excludes lease liabilities (IFRS 16)

4.9

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Variable costs

from continuing operations

Notes: 1. Paper business raw materials include purchased paper, wood, pulp and recovered paper 2. Plastic raw materials include styrene, PET, HDPE, PVC and polypropylene and post consumer PET bottles 3. Other variable costs include chemicals, packaging costs and stock movements.

40 60 80 100 120 Dec-17 Dec-18 Dec-19 Index (December 2017 = 100) ZAR US$

Benchmark recovered paper prices (OCC)

3,178 3,211 3,460 627 688 736 1,151 1,146 1,173 825 879 869 652 597 637 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2017 2018 2019 R million Paper business raw materials Energy Plastic raw materials Selling & distribution costs Other 70 80 90 100 110 120 130 140 150 Dec-17 Dec-18 Dec-19 Index(ZAR) (December 2017 = 100) P1 P2 P3

Benchmark polymer prices

Virgin paper cost increased above inflation
Inclusion of WCPT

Source: Mpact Source: RISI – PPI Asia, Old Corrugated Containers (OCC), CNF China US$, converted to ZAR

6 433 6 875 6 521 +5.4%

1.1% 2.4% 7.0% 7.8% 6.7%

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Fixed costs

from continuing operations

Fixed costs up 6.5%
Depreciation up 4.7%
excl. IFRS 16 - R93m
Net operating expenses down

1.2%

Lower rental costs (IFRS 16)
ffset by increase in bad debt

provision (R43m)

Personnel cost increased 4.8%

before WCPT acquisition

1,604 1,725 1,830 988 1,011 999 514 532 650 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2017 2018 2019 Depreciation and amortisation Maintenance and net operating expenses Personnel costs 3 106 3 268 3 479 +6.5%

22.2% 1.2% 6.1%

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Financial review

R million 2018 2019 change 2019 before IFRS 16 Change vs 2018 Underlying profit before tax 571 494 (13.5%) 527 (7.7%) Tax charge before special items (116) (128) 9.8% (136) 17.2% Non-controlling interests (34) (38) 11.8% (39) 14.7% Underlying earnings 421 328 (21.6%) 352 (16.4%) Special items, net of tax (39) (1,086) >100% (1,086) >100% Basic earnings/(loss) for the year from continuing operations 382 (758) (>100%) (733) (>100%) Loss from discontinued operation (66) (64) (5.1%) (64) (5.1%) Reported basic earnings/(loss) for the year 316 (822) (>100%) (797) (>100%) Underlying earnings per share from continuing operations (cps) 247.7 191.8 (22.6%) 205.8 (16.9%)

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Impairment charged on goodwill, plant and equipment reported under special items

Cash generating units R’m Goodwill Plant & equipment Total charge Springs mill 197 202 399 Piet Retief mill 160 277 437 Trays & Films 192 253 445 Other

10

10 Gross impairment charge 549 742 1,291 Tax and non-controlling interest effect

(211)

(211) Net impairment charge 549 531 1,080

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Mpact Polymers – Discontinued operation

Placed into business rescue on 10 December 2019
Disclosed as a discontinued operation
Deconsolidated from Mpact

R’m 2019 Trading loss 79 Net finance cost 12 Loss before tax 91 Impairment on plant and equipment 232 Gain on deconsolidation (160) Effects of non-controlling interest on loss before tax and impairment charge (99) Net loss on discontinued operations 64

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ROCE and net debt

from continuing operations

ROCE of 11.8% (December 2018: 11.9%)
Reflects marginally lower earnings
Higher working capital levels
Net debt closed at R1,972m before IFRS 16 lease

liabilities adjustment of R321m

Gearing increased to 32.8%, excluding lease liabilities

(December 2018: 27.9%)

1,960 1,830 2,292 1,972 1,500 2,000 2,500 2017 2018 2019 R million Net debt - as reported Net debt excl. IFRS 16

Net debt

8.9% 11.9% 11.8% 5% 10% 15% 2017 2018 2019 ROCE %

Return on Capital Employed (ROCE)

1. Return on Capital Employed (ROCE) is based on underlying operating profit plus share of equity accounted investees’ net earnings divided by average capital employed.

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Net finance cost and net debt

from continuing operations

R million 2018 2019 Change vs net debt Change vs net debt after IFRS 16 Net debt Lease liabilities (IFRS 16) Net debt after IFRS 16 Net debt – close 1 830 1 971 321 2 292 7.7% 25.3% Net debt – average 2 096 2 140 410 2 550 2.1% 21.7% Net finance cost 209 207 38 245 (1.0%) 17.2% Gearing 27.9% 32.8% 5.4% 38.2% 4.9 10.3 Interest cover (underlying EBIT) (times) 3.6 3.5 3.0 Net debt to EBITDA (times) 1.4 1.4 1.7

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Trade working capital

from continuing operations

Trading working capital increased by

R393m

Lower trade payables at end of Q4

due to sales not meeting expectations

1,719 2,016 2,409 17.1% 19.1% 21.7% 500 1,000 1,500 2,000 2,500 3,000 2017 2018 2019

Trade working capital % of revenue

R million

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Movement in net debt

from continuing operations*

(1 830) 1,364 (367) (569) (258) (65) (125) (122) (1 971)

2,500
2,000
1,500
1,000
500

500 1,000 1,500 Net debt at December 2018 Cash generated from

perations

before working capital Working capital

utflows

Capital expenditure Interest paid Income tax paid Dividend paid to equity holders Other items Net debt at December 2019 R million

* Excludes the effects of IFRS 16

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Debt facilities

900 850 850 200 400 600 800 1000 Between 2 - 3 years Between 3 - 4 years After 4 years R million

Maturity profile of committed facilities

Re-financed debt of R2.6bn
R800m swapped from floating to

fixed rate

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Taxation

before special items

2018 effective tax rate benefitted for S12I tax allowance

R million 2018 2019 change Taxation charge 116 128 10.3% Effective tax rate 20.3% 25.7% 5.4 Tax paid 72 65 (9.7%)

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Capital expenditure cash flows

172 197 175

50 100 150 200 250 300 2017 2018 2019

R million 569 259 264

100 200 300 400 500 600 2017 2018 2019

R million

1. Excludes Corporate capital expenditure of R130 million (2018: R63 million) which comprise spends related mainly to the purchase of Land and Buildings.

Paper business Plastics converting business

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Dividends

15 15 18 40 55 42 20 40 60 80 100 120 2017 2018 2019

Cents per share Interim Final

Dividends to be paid in cash. No scrip distribution alternative

Salient dates for the 2019 final cash dividend Publication of dividend declaration Wednesday, 4 March 2020 Last day of trade to receive a dividend Tuesday, 31 March 2020 Shares commence trading “ex” dividend Wednesday, 1 April 2020 Record date Friday, 3 April 2020 Payment date Monday, 6 April 2020 55 70 60

14.3%

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2019 in context Financial review Operating review Financial performance

Outlook

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Outlook

No growth in SA this year, uncertain export demand
Impact of load shedding and other power outages
Springs mill down since 16 February 2020 due to catastrophic failure
f municipal substation
Favourable recycled fibre market
Prioritise cash preservation, cost savings, efficiency gains and product