AGENDA 10h00 - Welcome and apologies 10h03 - Short new Petco DVD 10h10 - Chairmans Annual Report 10h20 - CEOs Review 10h35 - Financial Statements & Auditors Report 10h40 - Appointment of auditors for the coming year 10h45 - Incoming Chairmans Road Ahead 10h55 - Introduction of existing Board of Directors 11h00 - General: any other business Break for refreshments 11h20 - Guest Speaker Claire Janisch: Biomimicry – Innovation beyond sustainability 12h00 - Light lunch and Networking 13h00 - Discover the World of Beer Tour
ITS OUR 5 TH ANNIVERSARY… … and we are proud of what has been achieved. PETCO understands that the whole is greater than the sum of its parts The result of hard work by all concerned is a successful network of people involved in PET Plastic Recycling This network improves economies, lives and the environment It grows stronger and benefits all concerned Petco has become part of the success story of post-consumer PET recycling around the world
PETCO TOP 10 ACCOMPLISHMENTS FOR 2009 29,048 tons (957 million bottles) post consumer PET bottles collected & recycled in SA 6311 tons up from 2008 32% of beverage PET in 2009 (local market size:130 000 tons) Achieved despite extremely tough market conditions Contracted recycler Extrupet upgraded their recycling plant to accommodate 2000MT+ of bottles per month Extrupet installed & commissioned a new wash plant to produce a quality of flake suitable for Bottle-2-Bottle Sen li Da Chemical Fibre Company commissioned integrated Bottle-2-Fibre plant in Newcastle (22 737 ton capacity) to produce fibre for the domestic market Signed up 16 new Associate Members: part of broadening stakeholder network
PETCO TOP 10 ACCOMPLISHMENTS FOR 2009 Hosted 3 membership workshops in Cape Town & 3 in Johannesburg including one that focused on Design for Recycling Despite economic recession & closure of SANS, collection of recycling levies invoiced to end Dec. 2009 maintained as percentage of market size - largely due to voluntary import declarations Invited to join the Global Alliance for Recycling and Sustainable Development (GARSD) PETCO & partners in Recovery Action Group developed a collective recycling brochure (part of a combined communication strategy) Inserted into the Pick 'n Pay Fresh Living Magazine The new Waste Management Act came into effect 01 July 2009. PETCO has been involved in all public participation processes
OPERATIONAL SUMMARY OF THE YEAR: Even though 2009 was a very difficult year for PET recycling globally, we still managed to achieve our recycling targets This was possible through increased voluntary financial support from bottlers, converters, raw material producer & Coca-Cola South Africa
OPERATIONAL SUMMARY OF THE YEAR: COMMODITY PRICES During the period of collapsed commodity prices, recycled PET struggled to compete with virgin alternative Crude oil crashed from $150/barrel to $50/barrel in global recession downstream market for PET chip fell sharply to Nov 2008 low (recovered thereafter) 30% lower cost of virgin polyester versus using recyclate previously viable schemes plunged back to poor economics before 2004 the levels of subsidy required to sustain the buying, collecting & recycling of post consumer PET bottles, shot up PETCO battled to support its Category A projects & maintain PET recycling targets: had to dig into its reserves. During late 2009 prices recovered: relief, inter alia, for recyclers Strong rand resulted in PET industry struggling to compete with imported products (cost base US $) PETCO would like to see price levels stabilise where recycling becomes viable in its own right.
OPERATIONAL SUMMARY OF THE YEAR: LIMITED LEVY INCREASE Limited financial support acquired from the PET industry - companies tried to cut operating costs In early 2009, PETCO implemented a limited levy increase of R250/ton for those buying PET resin Brand owners, notably Coca Cola, have increased their grant in aid Reduced levels of business volumes: increased competition in all sectors (virgin producers unwilling to relinquish volumes to recyclers)
OPERATIONAL SUMMARY OF THE YEAR: B2B On the upside, recent advances in PET recycling technology makes it possible to close the loop by recycling bottles and containers back into bottles The used bottle-to-fibre end-use market saturated & limits PETCOs performance In future an increasing amount of post-consumer bottles back into PET bottle resin Extrupet (Pty) Ltd now produces around 24,000 t PET recyclate annually, mostly from post-consumer PET beverage bottles Extrupet can produce food-safe rPET to North American FDA standards & likely to production material that comply to requirements of European EFSA soon. We hope Extrupet & possibly Hosaf will invest in more Bottle-2-Bottle capacity in next 1-2 years PETCO still needs to encourage and improve sorting among the collectors to improve the quality of post consumer PET.
OPERATIONAL SUMMARY OF THE YEAR NEW CONTRACTED RECYCLER PETCO started to engage with a new recycler Sen Li Da Chemical Fibre (Pty) Ltd. (15 000 sq m plant): Vertically integrated Uses all of its PET flakes for fibre conversion Two collection points (Jhb & Durban) Provides income opportunities for +/- 200 people (120 are local, 80 from overseas)
OPERATIONAL SUMMARY OF THE YEAR: LEGISLATION New Waste Management Act effectively makes Extended Producer Responsibility a legal requirement going forward Packaging industry (including PETCO) developing a Paper and Packaging Industry Waste Management Plan (IWMP) as required by Minister In future there will be a compulsory packaging and paper levy of some kind A new structure will be needed to manage inter-alia the funding and monitor progress - consistent with current good practice globally Our challenge at PETCO is to ensure that the levy is as low as possible & that all players in packaging & paper industry share the responsibility We dont want to jeopardise existing initiatives such as the current PETCO levy, but to support it & extend it to other packaging sectors
OPERATIONAL SUMMARY OF THE YEAR: PARTNERSHIPS Our partnership with the Plastics Federation of South Africa (PFSA) in creating awareness continues to be close & mutually beneficial Our target for 2010 is 30 380 tons or 31% beverage PET We believe that high rates of recycling can only be achieved through the separation of waste at household level This year PETCO supported projects (cost: almost R1m) with a strong focus on public & consumer-based education and awareness programmes
CATEGORY A PROJECTS PETCO spent R26.2m (87%) of its 2009 budget on Category A projects from January to December 2009 Three Category A projects approved to date: Extrupet: 5-year agreement with PETCO: 5676 tons of PET recycled in 2005; 12 333 tons in 2007, 14 000 in 2008, 14 295 in 2009 and rising to approx 26 000 tons by 2010 (depends on market conditions) Hosaf Recycling: 5-year agreement with PETCO; 2164 tons of PET recycled in 2005; 3901 tons for 2007, 4091 for 2008, 3371 for 2009 and rising to +6000 by 2010 (depends on market conditions) Kaytech Engineered Fabrics: 4-year contract with PETCO: 7800 tons of RPET over the period Two additional projects due to come on stream in 2010: Extrupet's new Bottle-to-Bottle Recycling Plant ramping up to 9000 tpa through 2010, and State-of-the-art bottle-to-fibre plant by SenLi Da Chemical Fibre (Newcastle,KZN). Will take approx 12 000 tons of bottles in 2010 (capability of up to 22 000 tons in the periods following)
PET Recovery and Recycling Pet recovery stations Pet recovery projects and events Information and Communication Exhibitions and workshops : Petco Specific In conjunction with the Plastics Federation of South Africa High visiblity events with partners: supported 11 events where PETCO provided branded clean-up bags (up to 8000 per event), T-Shirts, flags and banners, posters at registration & adverts in event programmes Petco Associate Membership Programme: 16 new associate members 6 PETCO membership workshops Communication and public relations: Enviromark newsletter; PET ReFresh electronic newsletter; recycling brochure produced by Recovery Action Group (RAG); PETCO Pulse electronic newsletter aimed at those involved in the technical side of PET recycling.
Clean Up Campaigns and Litter Awareness PETCO supported 16 clean-ups across South Africa Education and Training Pet presentations to schools, communities and environmental organisations PET recycling collectors training The Fantastic Plastics School Competition Joint Venture Projects with Industry and the Private Sector Coca-Cola /PETCO Confederation Cup/Rustenburg School collection competition - 20 000 PET bottles collected Kruger Park: PETCO, PLASFED, Collect-a-Can, TRGC and Buyisa-e-bag developed public awareness Recovery Action Group sponsored trailer signage for Mama-She Waste Recyclers Sasol, in partnership with PETCO launched a drop off site at petrol stations in Ferndale, Johannesburg
RELOOK, RETHINK, RECYCLE: COCA-COLA CHAIRS & SHIRTS Coca-Cola Company and Emeco, a leading furniture manufacturer, have combined their iconic products, the Coca-Cola contour bottle package and the famous Navy® Chair, to create a new chair made from at least 111 recycled plastic bottles It is estimated that more than 3 million PET plastic bottles will be repurposed annually for the production of 111 Navy Chairs
RELOOK, RETHINK, RECYCLE: NIKE & 2010 FIFA World Cup
8 STRATEGIC IMPERATIVES FOR PETCO: 2010/2011 Further bottle-2-bottle recycling Stakeholders are encouraged to invest in B2B rPET capacity to match rPET growth targets. PETCO will continue to support new end use development for rPET (B2B recycling is an international trend – THE FINAL FRONTIER) Strive towards inclusion of ALL pet industry role players We want companies that are still not members of PETCO to become participants in PETCO (Become a member, there are many membership categories) Re-evaluate collection strategy The current collection strategy should be re-evaluated. The possibility of direct support of collectors could start new collection initiatives and improve the quality of the collected bottles. Develop an understand pet bottle end-use economics The detailed economics of competing end-use solutions to be set out and assessed.
8 STRATEGIC IMPERATIVES FOR PETCO: 2010/2011 Reaffirm and ensure ongoing stakeholder commitment Buy-in and continued support from PETCO shareholders, recyclers, suppliers and municipalities is essential: a strategy required Get the retailers on board Retailers could support end-use markets & assist in expanding collections, assist with funding & take up their percentage shareholding Changed financial management practices Given increased market volatility, we are re-assessing & balancing both income and expenditure more frequently Increased consumer awareness, marketing and PR Continue existing education and awareness work Seek integration with corporate social investment programmes Develop an improved strategy to communicate with municipalities
4 THREATS TO SUCCESSFUL EXECUTION OF STRATEGIC IMPERATIVES Funding pressure Due to the market conditions of 2009, PETCO has used reserves to fund recycling through the recent adverse economic cycle. Government legislation Deposit or Levy on NRPET bottles PET could be labelled a priority waste in terms of the new act PET converters who do not belong to PETCO may be asked to prepare their own industry waste management plan (IWMP) Legislation is potentially positive: DEA is looking to industry to put IWMP together Legislation could also support PETCO's levy collection efforts
Lack of leverage… …with some key stakeholders within the PET industry who do not participate in PETCO Inadequate collection infrastructure: The current method of collection largely from dumpsites may not be capable of yielding the volumes as targeted Efforts in curb side collection, MRF's & separation at source may be stalled due to lack of funding 4 THREATS TO SUCCESSFUL EXECUTION OF STRATEGIC IMPERATIVES
WHERE TO FROM HERE? PETCO is committed to work with our partners in government, industry and civil society in South Africa to diverting plastics from landfill in order to reduce climate change impact, address the energy deficit, and achieve a step change in efficient use of resources It will be an exciting process to watch, and we hope that you'll be involved
INTRODUCING PETCOS BOARD OF DIRECTORS FOR 2010 – THANK YOU Casper Durandt, Chairman representing the Brand Owners - Technical Manager SA Division, Coca-Cola SA Bronwen Rohland, Vice-Chairman representing Retailers - Director Strategy, IS, Supply Chain and Sustainability, Pick 'n Pay NON-EXECUTIVE DIRECTORS Greg Morse PETCO Board Appointment - Manufacturing Director, Peninsula Beverage Company Rob Rodger representing the Environment - Director, Nampak Polycyclers EXECUTIVE DIRECTORS Carel Engelbrecht representing Bottlers - Supply Chain Manager, Coca-Cola Canners David Taylor representing the Converters - Regional Director Nampak Megapak and Petpak Cape Peter White representing the Resin Producer - Managing Director, Hosaf Fibres Vimlan Moonsamy representing the Bottlers - Manager Technical Services, SAB Miller (ABI Soft Drinks Div) ALTERNATE DIRECTOR Justin Smith representing Retailers - Manager, The Good Business Journey, Woolworths
GUEST SPEAKER: CLAIRE JANISCH Biomimicry - Innovation beyond sustainability Claire Janisch has an MSc.ChemEng in the field of Environmental Process Engineering A sustainability and innovation advisor, environmental educator and biomimicry professional. She currently heads up the biomimicry activities and projects in South Africa She is also a co-creator of the Genius Lab in South Africa, an experiential learning organisation inspiring innovation and future thinking for organisations and individuals
Thank you! Next: Light Lunch, followed by World of Beer Tour