How we sustain value with the six capitals

 

HUMAN CAPITAL

HOW WE CREATE VALUE
  • We have an inclusive culture and we value diversity. All our employees are guided by well-defined and unbiased policies and procedures
  • Our leadership defines the group's strategic direction and implements investment and operational decisions that will sustain and grow the business and develop talent
  • Manufacturing is key to our success and our factory employees make products of the highest quality and ensure that they are delivered to customers on time and in full
  • Complying with applicable laws and regulations is critical to good corporate governance and our support staff ensure that all legal, financial, human resources, governance and administrative tasks are carried out diligently and effectively
  • We support the YES4Youth initiative in South Africa, providing unemployed young people with a sponsored year of work experience
KEY INPUTS
    2019 2018
Number of employees   5 061 5 641
Graduate development   men 3 2
programme graduates   women 7 12
Nampak apprenticeships   195 146
Bursaries   30 34
Investment in employee development (Rm)   30.5 56.7
Investment in youth unemployment (Rm)   7.1
Annual HIV counselling and testing in South Africa (%)   40 72
OUTCOMES
    2019 2018
Wages and salaries paid   2.9 3.1
Lost-time injury frequency rate   0.34 0.27
Work-related fatalities      
   Employees   1
   Contractors  
Non-work-related fatalities  
Managers attending training development programmes   280 143
Graduate development programme graduates employed   21 26
Employees retrenched   9 140
HOW WE ACHIEVED THESE
  • Renewed our focus on health and safety in the workplace after a disappointing safety performance
  • Paid wages and salaries that are competitive
  • Continued our system of risk control audits
  • Provided bursaries for studies in engineering, science and accounting
  • Invested in training and development to improve the skills of employees at all levels
TRADE-OFFS
There is no trade-off for the loss of life and any workplace fatality is unacceptable. Severely challenging trading conditions during the year, especially in Angola, led to a 5% reduction in overall employee numbers. This negatively impacted human and social and relationship capital but will ultimately be positive for financial capital as labour costs will reduce.

MANUFACTURED CAPITAL

HOW WE CREATE VALUE
  • Producing innovative and dependable packaging that preserves and transports food, drink and other products
  • Purchasing raw materials, machinery, spares and services from various suppliers thereby creating value along the supply chain
KEY INPUTS
      2019 2018
Production facilities        
   South Africa   Number 22 23
   Rest of Africa   Number 17 18
Research and development facility     TICK TICK
Cullet   tonnes 57 000 63 000
Polymer resin   tonnes 70 000 119 000

* Aluminium and tinplate usage not disclosed for competitive reasons

OUTCOMES
      2019 2018
Capital expenditure   (Rm)    
   Expansion     217.8 176.6
   Replacement     517.0 359.8
Depreciation and amortisation   (Rm) 518.2 693.8
Net impairment of assets   (Rm) 847.0 684.3

Our Bevcan Rosslyn factory was awarded AT Kearney's 2019 "Factory of the year" in South Africa in terms of excellence in resource efficiency

OUTPUTS

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

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

HOW WE ACHIEVED THESE
  • Employed continuous improvement programmes to optimise capacity and reduce complexity
  • Modernised our two-piece food can line in Rosslyn
  • Installed new tinplate 52mm aerosol can capacity in Vanderbijlpark
  • Invested in the moulds and injection moulders required to produce closures for motor lubricants bottles
  • Invested in machinery for new water bottle closures
  • Continued to invest in conversion of Bevcan's tinplate line in Angola to aluminium, and adding capability to produce slender cans
TRADE-OFFS
In order to remain competitive we invest in the latest technologies, reduce manufacturing complexity and rationalise outdated production facilities. Often this leads to job losses which negatively impact human capital. While investments have a short-term negative impact on financial capital, they have a long-term beneficial impact on this capital stock. More efficient production facilities as well as products help mitigate negative impacts on natural capital.

 

FINANCIAL CAPITAL

HOW WE CREATE VALUE
  • Appropriately investing in 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 5 000 employees
  • Paying interest to providers of capital
  • Securing appropriate funding structures to ensure financial sustainability of the group
KEY INPUTS
      2019 2018 
Market capitalisation   (Rbn) 6.5 10.6 
Total equity   (Rbn) 8.2 10.6 
Net working capital   (Rbn) 2.7 2.5 
Capital investment   (Rbn) 0.7 0.5 
Net interest-bearing debt   (Rbn) 5.6 3.9 
   Long     5.3 6.2 
   Short     0.3 (2.3)
Net interest incurred   (Rm) 246.3 224.3 
OUTCOMES
      2019  2018 
Trading profit (continuing)   (Rbn) 1.6  2.0
Cash generated from operations before working capital   (Rbn) 1.8  2.3
Cash generated from operations   (Rbn) 1.1  1.6
Net gearing   (%) 68.2  37.0
(Loss)/profit for the year (continuing)   (Rbn) (0.4) 1.2
(Loss)/earnings attributable to shareholders   (Rbn) (0.9) 0.5
Earnings per share (continuing)   (cents) 42.2  176.7
Headline earnings per share (continuing)   (cents) 54.1  173.3
Return on net assets (continuing)   (%) 11.3  14.6
Employment costs (continuing)   (Rbn) 2.3  2.5
Interest paid to providers of capital (cash flow)   (Rm) 506.4  458.1
HOW WE ACHIEVED THESE
  • Transfer of R3.2 billion from Angola, Nigeria and Zimbabwe
  • Prudently allocated capital through capital assurance committee
  • Managed net finance costs
  • Reduction in net finance income due to requirement for cash-backed letters of credit (LCs) in Angola
  • Finance costs well managed and decreased by 24%
TRADE-OFFS
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
  • Providing customers with world-class packaging
  • Giving customers confidence that their products will be packed in dependable and innovative packaging
  • Ensuring that our investments help us adapt to changing market needs
KEY INPUTS
  • Experience, skills, competencies established over many years
  • At least 21 scientists, one engineer, 10 technologists, four technicians and four business information researchers at our R&D facility
  • Our operational excellence initiative, other business processes and management systems
  • Technical association and agreements with several global packaging companies
OUTCOMES
  • More convenient products with improved performance
  • Improved customer relationships
  • Lighter weight plastic and metal packaging
  • More cost-effective production processes
  • Increased experience and expertise of staff
HOW WE ACHIEVED THESE
  • Ongoing assessment of BPA-NI coatings to comply with the latest EU legislation
  • Continuing evaluation and qualification of new tinplate and aluminium suppliers
  • Extensive use of our FEA modelling in lightweighting of plastic packaging
  • Extensive use of our 3D modelling capability for customers on new packaging designs
  • Continued to provide bursaries and training
  • Terminated Nampak's technical agreement with Crown Cork at the end of 2019. Equipment manufacturers will provide the required technical support from 2020
TRADE-OFFS
Our investment in intellectual capital reduces our financial capital in the short term but increases all capital stocks in the longer term.

 

SOCIAL CAPITAL

HOW WE CREATE VALUE
  • Promoting good relationships with all our stakeholders
  • Advancing meaningful B-BBEE initiatives in South Africa
  • Engaging with investors on our strategy and performance
  • Participating in recycling projects
  • Contributing to corporate social investment
  • Supporting enterprise development
  • Assisting to reduce youth unemployment in South Africa
KEY INPUTS
  • The support of our shareholders
  • Effective employee relations, positive relationships with trade unions
  • Beneficial engagements with government and tax authorities
  • Sound partnerships with our customers and suppliers
  • The trust of the communities in which we operate
  • Projects to uplift the communities in which we operate
  • Involvement in the YES4Youth programme
OUTCOMES
      2019 2018 
Taxes paid to governments   (Rbn) 1.2 0.9
Economic value added   (Rbn) 4.2 5.4
Corporate social investment   (Rm) 5.4 7.6
B-BBEE contributor status     2 6
Strike action     2 days 3 days
Black management   (%) 67 58
HOW WE ACHIEVED THESE
  • Set up a dedicated and resourced B-BBEE office, working closely with our B-BBEE steering committee
  • Provided investors with regular trading updates and hosted our annual investor day site visit
  • Supported various enterprise development initiatives
  • Financially supported our partner schools
  • Prioritised ongoing beneficial relationships with trade unions amid continued restructuring
TRADE-OFFS
Our ongoing investment in social capital reduces our financial capital in the short term. However, 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
  • Using natural resources as efficiently as possible
  • Recycling post-consumer packaging waste
  • Limiting the production of greenhouse gas emissions
  • Lightweighting our products
KEY INPUTS
      2019 2018 
Water consumption   (Mega litres) 1 177 1 306
Area under roof   (sqm) 857 062 1 013 373
Energy use   (Gigajoules) 2 146 862 1 926 285
Electricity purchased   (Megawatt hours) 233 282 235 845
OUTCOMES

OUTPUTS

Total greenhouse gas emissions (scope 1 and 2) of 19.05 tonnes versus 17.00 tonnes in 2018.

      2019 2018 
Energy intensity   (% tCO2e
from
electricity)
76% 80%
Post-consumer recycling rates in South Africa*     2018 2017
Metal collection   (%) 79 76
Plastic packaging collection   (%) 45 46
CDP climate change score     A- A-

* Recycling Association's reporting periods.

HOW WE ACHIEVED THESE
  • Actively promoted the recycling of post-consumer packaging
  • Increased the percentage of recycled material in our production processes
  • Participated in the World Clean Up day on beaches in Cape Town and Durban
  • Worked closely with our customers to reduce the weight of packaging products
TRADE-OFFS
Our emissions and wastes impact negatively on natural capital. 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.