HOW WE CREATE VALUE

Sustaining value with the six capitals

  HUMAN CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Our leadership defines the group’s strategic direction and implements policies and procedures that guide all employees
  • Our manufacturing workforce makes products of the highest quality and ensures that they are delivered to customers on time and in full
  • Our support staff ensure that all legal, financial, human resources, governance and administrative tasks are carried out diligently, effectively and in accordance with applicable laws and regulations
   
      2018     2017
Number of employees     5 641     5 986
Graduate development programme graduates     men 2     17
    women 12     11
Nampak apprenticeships     146     210
Bursaries awarded     34     31
Investment in employee development (Rm)     56.7     56.6
Annual HIV counselling and testing in South Africa (%)     72     76
   
OUTCOMES     2018     2017
Wages and salaries paid (Rb)     3.1     3.1
Lost-time injury frequency rate     0.27     0.41
Work-related fatalities:            
– Employees     0     0
– Contractors     0     1
Non-work-related fatalities     0     0
Managers attending training development programmes     143     129
Graduate development programme graduates employed     26     13
Employees retrenched     140     25
 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Paid wages and salaries that are competitive
  • Proactively managed safety and diligently monitored the lost-time injury frequency rate (LTIFR) to ensure a safe working environment
  • Continued our programme of self-audits and peer-audits on risk control standards
  • Reinforced our code of ethics
  • Implemented new tools for enhanced performance and succession planning
  • Stepped up our talent management processes
  • Provided bursaries for studies in engineering, science and accounting
  • Invested in training and development to improve the skills of employees at all levels
   

The drive for increased productivity in a lowgrowth and highly competitive environment led to a 6% reduction in employee numbers in the year. This negatively impacted on human and social capital but will be positive for financial capital as we will benefit from a lower cost structure in the years ahead.

  MANUFACTURED CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Producing modern and sophisticated packaging that preserves and transports food, drink and other products
  • Providing our customers with detailed assessments of which packaging types best suit their products. Our R&D facility is a key facilitator of this unique service
  • Creating employment for several thousand employees
  • Purchasing raw materials, machinery, spares and services from various suppliers thereby creating value along the supply chain
   
      2018     2017
Production facilities:            
South Africa     23     28
Rest of Africa     18     18
UK/Ireland     8     8
Research and Development facility        
Cullet (tonnes)     63 000     63 000
Polymer resin (tonnes)     119 000     105 000
* Aluminium and tinplate usage not disclosed for competitive reasons.
   
OUTCOMES     2018     2017
Capital expenditure (Rm)            
   Expansion     176.6     358.3
   Replacement     359.9     377.0
Depreciation and amortisation (Rm)     569.0     606.2
Impairment of assets (Rm)     7.0     232.5

OUTPUTS

  • Beverage cans, food cans, aluminium aerosol cans and a range of other metal cans and closures
  • Plastic bottles, closures, crates and drums
  • Folding cartons, corrugated boxes, paper sacks and liquid cartons
  • Glass bottles

For competitive reasons we do not disclose the quantities of products manufactured

 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Employed “Advanced Manufacturing” to improve overall performance in the manufacture of packaging products
  • Invested in new technologies, including additional aerosol can capacity and upgrading of DivFood two-piece line
  • Consolidated Plastics operations in Gauteng, resulting in the closure of a factory
  • Closed our tinplate Bevcan line in Cape Town to optimise total beverage can capacity
  • Rationalised Paper packaging production in Malawi, Zambia and Zimbabwe
   

In our drive to remain competitive we continually invest in modern technologies and rationalise production facilities. In many cases this regrettably leads to job losses which negatively impact human capital. While investments have a shortterm negative impact on financial capital, they have a long-term beneficial impact on this capital stock. The closure of the tinplate Bevcan facility in Cape Town cost R32 million but is expected to result in savings of R60 million a year.

  FINANCIAL CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Generating working capital to ensure that the business continues in operation
  • Investing in new and replacement equipment to increase capacity and remain competitive
  • Paying salaries and wages to almost 6 000 employees
  • Paying dividends to our shareholders when the cash position permits
  • Paying interest to providers of capital
  • Securing appropriate funding structures to ensure financial sustainability of the group
   
      2018     2017
Market capitalisation (Rb)     10.6     12.1
Total equity (Rb)     10.8     9.7
Net working capital (Rb)     2.5     2.3
Capital investment (Rb)     0.5     0.7
Net interest-bearing debt (Rb)     3.9     4.4
– long     3.4     4.8
– short     0.5     (0.4)
Net interest cost (Rm)     221.0     221.4
   
OUTCOMES     2018     2017
Trading profit (Rb)     2.0     1.9
Operating profit (Rb)     1.5     1.4
Cash generated from operations before working capital (Rb)     2.3     2.4
Cash generated from operations (Rb)     1.6     2.1
Net gearing (%)     37.0     45.0
Profit for the year – (Rb) continuing     1.2     0.9
Earnings attributable to shareholders (Rb)     0.5     0.2
Earnings per share (cents)     169.2     122.3
Headline earnings per share (cents)     168.7     146.3
Return on net assets (%)     14.3     14.4
Employment costs (Rb)     3.1     3.1
Interest paid to providers of capital (Rm)     220.9     221.4
 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Operated efficiently and increased the trading margin to 11.4 from 11.0
  • Reduced working capital
  • Transfer of R3.5 billion from Angola, Nigeria and Zimbabwe
  • Reduced interest-bearing debt
  • Restructured group’s maturing debt profile
  • Prudently allocated capital through capital assurance committee
  • Managed net finance costs
   

The use of our financial capital has positive impacts on all the other capitals. However, by investing in new equipment, human capital may on occasions be negatively impacted due to the loss of jobs. The suspension of dividends over the past few years has improved our financial position and has increased our ability to invest for the future but has been to the detriment, in the short term, of social capital.

  INTELLECTUAL CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Providing our customers with world-class packaging solutions
  • Giving customers the confidence that their products will be packaged in dependable and innovative packaging
  • Ensuring that our investments help us adapt to changing market needs
   
  • Experience, skills, competencies of all employees established over numerous years
  • At least 25 scientists, one engineer, 10 technologists, three technicians and four business information researchers at our R&D facility
  • An R&D budget of R44 million
  • Our operational excellence initiative, other business processes and management systems
  • Technical association and agreements with several global packaging companies
   

OUTCOMES

  • Manufacture of more convenient products with improved performance
  • Improved customer relationships
  • Light-weighting of plastic and metal packaging
  • More stable and consistent production of two-piece food cans
  • Increased experience and expertise of staff
 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Tested BPA-NI coatings to comply with the latest EU legislation
  • Implemented new tinplate grade with improved ageing characteristics
  • Reduced the weight of PET bottles for ice tea by between 3% and 4%
  • Trials are currently under way to reduce the weight of 2l milk bottles by a further four grammes
  • Down-gauged material requirements for plastic bottles and metal cans for food and beverages
  • Provided bursaries and training to develop our intellectual capacity
  • Removed complexity in many parts of our business, including in Plastics in South Africa and Plastics and Paper in Malawi and Zambia
   

Our investment in intellectual capital reduces our financial capital in the short term but increases stocks of human, manufactured, financial, social and natural capital in the longer term.

  SOCIAL CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Fostering good relationships with all our stakeholders
  • Informing investors of our performance and strategy
  • Furthering meaningful B-BBEE in South Africa
  • Participating in greater recycling initiatives
  • Contributing a substantial proportion of our turnover to corporate social investment
  • Supporting enterprise development
   
  • Effective employee relations, positive relationships with trade unions
  • Beneficial engagements with government and tax authorities
  • Sound partnerships with our customers and suppliers
  • The support of our shareholders
  • The trust of the communities in which we operate
  • A number of projects to uplift the communities in which we operate
   
OUTCOMES     2018     2017
Taxes paid to South African governments (Rb)     885.9     1 279.1
Economic value-added (Rb)     5.4     5.6
Corporate social investment (Rm)     7.6     9.7
B-BBEE contributor status (level)     6     6
Strike action     3 days     None
Black management (%)     58     58
 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Centralised control and visibility of all B-BBEE activities through steering committee
  • Extended work on a new B-BBEE ownership structure
  • Updated our procurement policy for consideration by management
  • Benefited from established relationships with trade unions amid restructuring
  • Held investor presentations on performance and strategy progress
  • Provided trading updates to investors
  • Supported various enterprise development initiatives
  • Financially supported our partner schools
  • Contributed to hospices and other worthy causes
  • Actively engaged investors on remuneration
   

Our ongoing investment in social capital reduces our financial capital in the short term, but as it helps create a stronger environment for operations and investments, over the long term it has a positive impact on our financial capital. Our support of enterprise development supports the stocks of intellectual, manufactured and financial capital.

  NATURAL CAPITAL              
  HOW WE CREATE VALUE     KEY INPUTS     OUTCOMES AND OUTPUTS  
   
  • Using natural resources as efficiently as possible
  • Recycling post-consumer packaging waste
  • Limiting the production of greenhouse gas emissions
  • Light-weighting our products
   
      2018     2017
Water consumption (Mega litres)     1 605     1 431
Covered land area used (sqm)     1 013 373     991 700
Energy use (Gigajoules)     4 267 967     4 376 599
Electricity purchased (Megawatt hours)     284 761     298 877
   

OUTPUTS

Total greenhouse gas emissions intensity (scope 1 and 2) of 16.58 tonnes versus 18.39 tonnes in 2017.

OUTCOMES     2018     2017
Energy intensity
(% tCO2e from electricity)
    65     66

Post-consumer recycling rates in South Africa*     2017     2016
Metal collection (%)     76     73
Plastic packaging collection (%)     46     45
CDP climate change score     A-     A-

* Recycling Association’s reporting periods.

 
    HOW WE ACHIEVED THESE     TRADE-OFFS
   
  • Actively promoted the recycling of postconsumer packaging and the use of an increased percentage of recycled material in our production processes
  • Worked closely with our customers to reduce the weight of packaging products
   

Our emissions and wastes impact negatively on natural capital. But by converting natural capital into value-added products, we boost the stocks of all the other capitals. The use of recovered waste in our production processes impacts positively on natural capital.