Our strategy – performance and plans

Nampak’s strategy is our plan to get the best out of our business over the near to medium term, and in so doing deliver value to all our stakeholders through our advanced manufacturing offering. We measure progress against our strategy through the performance indicators (KPIs) of our group executive committee, details of which are in the remuneration report.

Good progress made Some progress, more to come Disappointing performance

STRATEGIC OBJECTIVE

UNLOCK FURTHER VALUE FROM BASE BUSINESS

HOW WE WILL ACHIEVE THIS
HOW WE DID IN 2017
WHAT WE WILL DO NEXT
  • Actively manage our portfolio
  • Manage costs stringently
  • Manage working capital prudently
  • Improve business performance by buying, making and selling better
  • Invest to compete
  • Closed Bevcan Durban tinplate line
  • Closed small crown line in Ndola, Zambia
  • Launched five-year derisking plan to address unfunded UK pension fund liability
  • Impaired R321 million of goodwill and R114 million of intangibles at Glass, R112 million related to Nampak Plastics Europe in-plant
  • Rationalise Paper, Plastic and Metals production facilities in southern and east Africa
  • Engage with UK pensioners to find acceptable solutions under strict guardianship of trustees
Good progress made
  • Reduced head office costs by R57 million
  • Reduced supply chain costs by approximately R100 million
  • Commissioned dedicated gas transmission line to Glass factory gate
  • Reduced DivFood headcount by 50
  • Established capital assurance committee to oversee capex
  • Cut finance costs by 19% through reduction in interest-bearing debt
  • Consolidate the Isando and Industria Plastics Liquid Packaging facilities
  • Extract value and savings on total cost of ownership
  • Focus on operations excellence to drive efficiencies
  • Ensure below inflation cash fixed cost increases
  • Continue to tightly control our capital investment programme
Good progress made
  • Reduced working capital days, reached optimal inventory holdings
  • Introduced a new sales and operations planning system at DivFood
  • Secure reductions in working capital
  • Maintain optimal inventory holdings
  • Further streamline procurement processes
  • Increase working capital velocity
Good progress made
  • Simplified Glass’s manufacturing footprint
  • Reduced spoilage, reported world-class safety performance at Bevcan
  • Grew Glass’s market share in wine sector
  • Diversified our Plastics product portfolio
  • Focused on further improving safety, delivered LTIFR of 0.41
  • Continued to rationalise DivFood’s product offering and customer base
  • Introduce new technical skills and greater management oversight at Glass to improve operation of our furnaces
  • Continue to embed systems and processes to improve Plastics business effectiveness
  • Further rationalise underutilised Bevcan assets
  • Leverage Nampak R&D capabilities to grow product and customer base in Plastics
  • Optimise contribution margins and continue SKU rationalisation
  • Drive sales excellence for margin expansion, driven by data
Some progress, more to come Good progress made
  • Commissioned new bottle inspection equipment at Glass
  • Invested in multi-deck printer for DivFood Mobeni and upgraded large-format can assembly plant, Paarl
  • Marked first full year of production of new Bevcan ends plant
  • Entered joint venture in Botswana to make can ends; acquired two can-assembly lines for Paarl and Nigeria
  • Convert Angola tinplate beverage can line to aluminium at cost of US$13 million using kwanza/US dollar swap
  • Recapitalise Plastics crate business and a key customer in-plant for liquids
  • Launch second phase of DivFood recapitalisation
  • Ensure return on capital invested at benchmark rates
Some progress, more to come Good progress made

STRATEGIC OBJECTIVE

ACCELERATE GROWTH IN THE REST OF AFRICA

HOW WE WILL ACHIEVE THIS
HOW WE DID IN 2017
WHAT WE WILL DO NEXT
  • Grow through greenfield investment and acquisitions in Glass, Metals and Plastics
  • Grow at a reasonable and sustainable return
  • Partner with major multinational customers
  • Sensibly manage and grow our presence in current jurisdictions
  • Put this strategic imperative on hold, pending improvement in macro-economic conditions
  • Continue to explore feasibility of opportunities, but be judicious in our investments and risks
  • Consider further rigid plastic investments in Zambia and Zimbabwe
  • Extend Nigerian closure business
Some progress, more to come Good progress made
  • Increased Bevcan Angola’s profitability
  • Grew Bevcan Nigeria’s market share
  • Pursue market development and business rationalisation initiatives in Kenya
  • Growth at hurdle rate
Good progress made
  • Increased Bevcan Nigeria sales
  • Reported robust demand for Nigerian plastic closures from multinational customers
  • Continue to leverage strong relationships with multinationals
  • Closely monitor changes in the purchasing strategies of multinationals
  • Extend technology partnerships to sustain market positions
Good progress made
  • Leveraged import replacement opportunities in Zimbabwe and Nigeria
  • Drive exports in select markets where margins are attractive
Good progress made


KEY PERFORMANCE INDICATORS

Among the most important KPIs in 2017 were:

  • Improve safety performance
  • Focus on integrity and ethics management
  • Deleverage balance sheet
  • Manage liquidity
  • Manage inventory
  • Implement DivFood plan
  • Reduce Bevcan spoilage; ensure solid project execution and minimise impacts of competitor activity
  • Effect Glass operating efficiency improvements and business turnaround
  • Achieve Plastics operational excellence targets, business turnaround and new customers

  • Ensure world-class project execution
  • Secure operational excellence
  • Maintain project pipeline in Rest of Africa
  • Deleverage balance sheet
  • Manage liquidity
  • Manage inventory
  • Implement DivFood plan
  • Reduce Bevcan spoilage; ensure solid project execution and minimise impacts of competitor activity
  • Effect Glass operating efficiency improvements and business turnaround
  • Achieve Plastics operational excellence targets, business turnaround and new customers

These will remain the most important KPIs in 2018, along with:


  • Improve information management focus
  • Reinvigorate maintenance policy and practice
  • Carry out group restructuring project to improve operating effectiveness using external benchmarks
  • Continue to review and engage with stakeholders to manage exposure to legacy defined benefit liabilities

LINK TO REMUNERATION

Performance against KPIs determines a component of executives' annual STI