Agenda 1. Strategic context 2. Progress to date 3. Next 2-3 years 4. Strategy outcomes This presentation has been prepared by Nuplex and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. 1
1. Strategic context 2
Prior to 2010, Nuplex grew primarily by acquisitions Flooring to resins Broadening product range in New Zealand ANZ industry consolidator Global player 1950s and 60s 1970s 1980 and 90s 2000-10 1952 Flooring distributor 1960 Revertex JV (water borne resins) 1967 Revertex Industries (water borne, solvent borne and composite resins) Technology partnerships and licensing Export to Australia and Asia Smaller NZ companies 1998 Australian Chemical Holdings and Dulux Resins 2002 Asia Pacific Specialty Chemicals 2004 Foshan facility in China 2005 PML Holding 2005 Akzo Nobel s global coatings resin business 2007 Huntsman Composites 3
Post GFC 1, Nuplex was ANZ centric, with an intention to grow globally FY10 EBITDA contribution by region EBITDA margin %, sales 15 EBITDA margin % 10 ANZ 41% of EBITDA 5 The Asia EMEA ANZ Specialties Americas 1 GFC = Global Financial Crisis 0 0.0 0.5 Net sales 1.0 1.5 NZ$ billions 4
In 2010, the Board set clear objectives Nuplex objectives Management alignment Safety Zero harm Short-term financial performance Above cost of capital returns Generate low double digit EBITDA to sales margin Generate cash flow, manage working capital Short-term Incentives Long-term value Generate 10% year-over-year EPS growth Deliver > P50 TSR performance Long-term Incentives Sustainability Conduct our business in a sustainable way 5
Strategy development Reviewed macro economic and industry trends Mega trends Demographics Consumers Natural resources Globalisation Technology and innovation Chemicals industry Industry consolidation Emerging markets Raw materials and feed stock Business models Sustainability Coatings industry Industry consolidation Geography Regulatory Value Chain Cost and performance 6
and undertook a multi-dimensional assessment of our portfolio Three-dimensional aspects of the business Portfolio review framework 1. Market attractiveness Regions 2. Competitive advantage 3. Strategic relevance Market segments Technology/ chemistry 4. Investment attractiveness 7
Confirmed where to play Elements Strategic choice 1 Value chain participation Resins supplier in the global coatings industry Maintain existing Specialties portfolio in ANZ 2 Coatings segment Focused on the industrial segment Selectively participate in the architectural and non-coating segments 3 Resins technology Leading, global solvent borne capability Selective technology in water borne and powder 4 Growth levers New products Leading positions in local market segments Emerging markets 8
1 A global, independent resins supplier The global merchant resins market is greater than US$20bn Raw materials Intermediates/ coating resins Finished products Distribution Customer Basic petro chemicals Solvents Resins Architectural coating / deco paint Direct channel own store network Consumers Chemical intermediates Monomers Additives Industrial coatings Indirect channel distributors / agents Industrial end users Organic chemicals Pigments Direct sales force Nuplex s role in the value chain Crosslinkers Non-coating applications 9
1 Maintain existing Specialties portfolio in ANZ Historical Growth in ANZ Complimentary to Resins Fits Criteria Strategy to consolidate and grow in ANZ market Decision prior to going global High compliance Technical know-how and support Special supply chain requirements Cross sell to customers Back office efficiencies Market segment leadership Consistent above cost of capital returns 10
2 Primary focus on industrial coatings, selective participation in the architectural segment Coating industry market segment mix % Global coatings Industrial coatings Industrial Architecture/ Deco 44% 56% 57% 44% 5% 2% 7% 5% 11% 14% 18% 18% 4% 12% 5% 5% 14% Coil 10% Auto OEM Wood 18% Marine and Protective 14% Other Transportation Vehicle Refinish Packaging Powder Comments Value and differentiation in industrial coatings With time, share of merchant resins market is likely to increase 20% 18% General Industrial Mix by volume Source: Orr & Boss, IRL, Nuplex analysis Mix by value Mix by volume Mix by value 11
3 Build on leading positions in global solvent borne industrial coatings market Relevance of solvent borne in industrial coatings Example: Solvent borne s share in Europe Market segment, % Protective Other Transportation 1 Marine Vehicle Refinish Auto OEM Wood 25-30 40-45 90-95 85-90 85-90 70-80 Performance attributes Auto OEM: colours and finish, consistent quality, scratch resistance, durable performance Vehicle Refinish: colour matching, fast curing Protective: anti-corrosion Marine: vessel efficiency, antifouling ACE 1 : outdoor durability 1. ACE (Agricultural, construction and mining equipment) segment share shown in Other transportation Source: IRL, IAL, BASF, News search, Nuplex analysis 12
4 as well as grow in water borne that plays to our strengths Segment Water borne trend Nuplex strategy Auto OEM Vehicle refinish Wood Architectural Non Coatings Water borne coatings system (base coat) Legislation in China End user productivity Low VOC Green Emulsions UV curing applications Low VOC Same performance as solvent borne Growth in Asia Develop technology for integrated processing High performance Faster drying Low VOC Chemical resistance Fast drying Low VOC Eco friendly products in high end applications High gloss Textile, ink, construction and adhesives 13
4 Asia is the largest, high growth coatings market Regional mix of global chemicals industry Billions sales Growth in Asian coatings market Billion litres Asia 480 15% 2,353 4,637 +14% 15.8 CAGR Europe NAFTA RoW 45% 30% 10% 49% 25% 19% 7% 66% 15% 12% 7% Other India Japan China 10.8 2.4 1.1 1.6 5.7 3.8 1.5 2.8 7.7 16% 11% 20% 11% 1985 2010 2030e 2009 2012 Source: A.T. Kearney, PCI, Orr & Boss, Coatings World, Nuplex analysis 14
4 Identified Nuplex growth levers Market themes Existing markets 1. Auto OEM, plastics and vehicle refinish 2. High-end metal and protective coatings New markets 3. Powder expansion 4. Composites in SEA Geographic themes 5. ANZ focus on returns 6. Europe build on leading positions 7. Asia growth 8. Other emerging markets Technology themes 9. Optimise solvent borne industrial coatings technologies 10. Develop water borne for industrial applications 15
Assessed internal capabilities Area Safety People and Organisation Operational Efficiency & Effectiveness Technology Average performance Experienced people Diversity Assessment Looking to change Silo structure Lack of structure and process Attractive technologies Regional focus Objectives Strive for world s best performance Build One global team Make a step change and embed continuous improvement Leverage globally Risk Management Not formalised Embed a formal framework 16
Strategy development - Conclusions 1 Merchant resins market large enough to achieve Board objectives 2 Existing geographic footprint, capabilities and technologies will enable Nuplex to be a market leader in resins segments 3 Identified levers for growth 4 Recognise opportunities to strengthen the business through operational excellence 17
Developed Nuplex strategy for the five year horizon Our ambition Our strategy To be a leading, trusted independent resins manufacturer globally, and agency and distribution business in ANZ To achieve superior shareholder returns by delivering high quality products to our customers through pursuing operational excellence, innovation and building market leading positions Perform & grow Strengthening through operational excellence Growing through building market leading positions Key planks Safety People NuLEAP R&D Strategic acquisitions Emerging markets 18
What we mean Leading A top three market leader in chosen market segment Trusted Quality, delivery performance, protect IP Independent Do not play in upstream or downstream Superior returns Strengthening To deliver above cost of capital returns Create a safe and an engaging work place for employees Make organisation sustainably stronger Growing Profitably grow 19
2. Progress to date 20
Strategy execution well advanced December 2010 Strategic review completed January 2011 New strategy implemented February 2012 Refreshed strategic plans, focus on execution February 2013 Accelerate organic growth Organisation NuLEAP Emerging market growth Strategic acquisitions R&D Systems China, Changshu: Secured land for new 3rd site Russia: Signed MoU with KVIL and started due diligence China, Changshu: commenced construction AX go live in ANZ AX go live in BoZ AX go live in Bitterfeld AX to go live in China and Americas June 2010 January 2011 June 2011 January 2012 June 2012 January 2013 June 2013 January 2014 NuLEAP I delivered $3m benefits 1 st year NuLEAP I delivered $14m benefits 2 nd year ANZ restructure commenced NuLEAP I delivered $33m program benefits NuLEAP II procurement started NuLEAP II $2.3m net benefits in FY13 Vietnam: Commenced capacity expansion project Vietnam: Commissioned new plant on time & on budget Indonesia: Permitting underway Thailand: Commission Oct 2013 1 st Employee Survey New One Team & Overlay Structure Decision to invest in China application laboratory European coatings show new products launched Acquired Acquos masterbatch operations, started integration into Nuplex Masterbatch 2 nd Employee Survey ReNU performance management system $ figures in NZD Acquired Viverso and started integration Viverso fully integrated, delivered 12.5 M EBITDA 21
FY13 strategy scorecard Focus Initiatives Deliverables Status Comments Operational excellence Building market leading positions NuLEAP I program NuLEAP II procurement $30m net benefits by end FY13 $13m in FY13 EXCEEDED ü Delivered $15.2m in FY13 ü Delivered total program net benefits of $33.0m Net benefits $2.3m in FY13 DELIVERED ü Delivered net benefits of $2.3m in FY13 On track to deliver ~$12.0m in FY14 ANZ restructure Cost savings - FY14 $3.7m - FY15 $5.6m Invest $13m in remaining sites Global ERP system Viverso acquisition Cost ~$21m All business operating AX system PROGRESSING Annualised savings now expected to be $6.5m delivered in FY16 On track to deliver savings of $5.6m FY15 Now investing $20.5m (previously ~$13m) due to extra capex at Wacol, Australia ON TIME ON BUDGET ü Viverso integrated ü China July 2013 USA Oct 2013 Indonesia and Vietnam Q3 FY14, project complete 12.0m EBITDA in FY13 DELIVERED ü Delivered 12.5m ü Operations integrated into EMEA ü Products integrated global portfolio New products Develop/commercialise products with leading performance characteristics Emerging markets presence Increase via 3 rd site in China Increased capacity in Indonesia, Thailand and Vietnam Enter Russian market PROGRESSING At 2013 European Coatings Show launched Powder; High-Flow products Vehicle Refinish products with faster curing times and optimal appearance Waterborne products for wood PROGRESSING ü Vietnam Waterborne capacity doubled China Approvals received, construction commenced Indonesia Permitting underway Thailand Commission Oct 2013 Russia Negotiations well advanced $ figures in NZD 22
Today we are more global FY10 vs. FY13 EBITDA contribution by region EBITDA margin %, sales FY10 15 FY13 15 ANZ 41% of EBITDA ANZ 26% of EBITDA 10 10 5 0 The Americas Asia EMEA ANZ Specialties 0.0 0.3 0.6 0.9 1.2 Net sales NZ$ billions 1.5 5 0 Asia The Americas EMEA 0.0 0.3 0.6 0.9 Net sales NZ$ billions ANZ 1.2 Specialties 1.5 1.8 23
3. Next 2-3 years 24
Continue to strengthen and grow the business To achieve superior shareholder returns by delivering high quality products to our customers through pursuing operational excellence, innovation and building market leading positions Strengthening through operational excellence Growing through building market leading positions Safety People NuLEAP R&D Strategic acquisitions Emerging markets Global SHE management system- policy, procedures and standards Health & wellbeing Site safety audits- internal global team Global performance management system Succession planning Mentoring program Overlay teams NuLEAP I complete the program NuLEAP II- Complete procurement program Bitterfeld step change Business model / cost to serve and channel to market ANZ restructure New products Waterborne industrial High performance Acrylics High flow powder Eco friendly architectural China applications laboratory Water borne in Asia Viverso Leverage product portfolio Optimise operations New opportunities to fit strict strategic (market leading, new technologies, emerging markets) and financial criteria China new Changshu site Indonesia and Thailand capacity expansion Russia Explore Turkey and Middle East Other new markets in Asia 25
Questions & Discussion 10 minute break 26
3. Next 2-3 years emerging markets deep dive 27
China: Growing with domestic consumption of industrial goods Example: Growth of passenger car sales Million units, CAGR % Key automotive trends 9 12 13 15 16 18 +8% 20 21 23 Continued market growth Local demand, first time buyers New car brands China becoming an exporter Growing quality standards Localisation of value chains Government policy Increasing vehicle age 2009 2010 2011 2012 2013 Est. 2014 2015 2016 2017 Industry consolidation? Source: A.T. Kearney, McKinsey & Co, Nuplex analysis 28
China: Forecast continued growth in relevant industrial coating resins market China industrial coatings end market mix % total volume, 2011 China industrial coatings 1 expected growth K tonne, 2011 2015E, CAGR % +9% Coil Others Plastics 3% Road Marking 7% 3% 3% Marine 10% 31% Protective Waterborne 4,963 5,382 6,913 Auto Refinish Auto OEM 2% 12% 13% Wood 16% Powder Solventborne 91% 2011 90% 2012 89% 2015E 1. Excludes powder and other coatings technologies Source: IRL, Nuplex analysis 29
Indonesia: Government blue print and demographics to enable broad economic growth Six economic corridors Infrastructure improvements FDI attractiveness Affluent middle class Regional growth GDP US$B and CAGR %, 2009-2011 104 +12% 112 130 47 +4% 45 51 19 +17% 22 26 15 +19% 18 21 Sumatra +12% Kalimantan Sulawesi Maluku and Papua 154 170 191 Nuplex focus 114 +11% 126 142 Jakarta & West Java East Java Source: Statistics Indonesia, Indonesian Ministry for Economic Affairs, BCG, A.T. Kearney, HSBC, News search 30
Indonesia: Coatings market forecast to grow at CAGR 6-8% with proportion of Industrial increasing Indonesia coatings market mix % of total volume, 2011 Auto OEM Powder Vehicle Refinish Other Industrial Metal 2% 1% Marine and Protective 3% Wood 3% 10% 2% 1% 78% Architecture Growth outlook Growth across all coatings segments Vehicle refinish Auto OEM Industrial Protective Expected growth rate Solvent borne ~ 6-7% Water borne ~ 7-8% Source: IRL, Nuplex analysis 31
Vietnam: Coatings market continues to grow Vietnam coatings market mix % of total volume, 2012 Coil Other Powder Marine and Protective 3% 4% 8% 2% Wood 19% 64% Architecture /Deco Growth outlook GDP growth 5.1-5.4% (2013 14) Construction market growing Manufacturing ~ 5.3% growth in 2012 Coatings market ~ 6% CAGR, to reach US$ 1 billion by 2015 Source: VPIA, General Statistics of Vietnam Office, McKinsey & Co, HSBC, World Bank 32
Asia: 75% capacity increase committed, all to be on line by late 2014 CHINA, Changshu building new site US $35.0m Commissioning late 2014 INDIA, Mumbai sales office established 2012 CHINA, Suzhou upgrading site facilities US $4.0m Building R&D Applications lab THAILAND, Bangkok adding capacity Increasing powder capacity by 40% Commissioning Q4 2013 VIETNAM, Ho Chi Minh City, 2012 commissioned new plant US $7.5m INDONESIA, Surabaya, adding capacity & technology US $5.4m Commissioning late 2014 33
By end of FY18 Nuplex Asia expected to deliver ~NZ $500 million sales Asia sales growth projection CAGR % +11% FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 1. Forecast subject to unforeseen circumstances and economic uncertainty 34
India and Brazil: Growing markets, structurally less attractive 1 and facing some uncertainty Indian coatings market K tonne, CAGR % South American coatings market K tonne, CAGR % Industrial Architecture 2,205 495 1,710 +11% 3,724 827 2,897 Peru Venezuela Colombia Argentina Other Brazil 2,820 275 1,714 +7% 150 190 234 257 3,720 320 343 379 2,262 196 220 2011 2016 2011 2015 1. More captive resin production Source: IRL, Nuplex analysis 35
Russia and Turkey are key emerging markets for EMEA Eastern European and neighbouring coatings market K tonne 2,723 1,500 Expected coatings market growth 4-5% Architectural segment shifting to water borne Industrial segment introducing solvent borne Acrylics 800 Expected coatings market growth 5-7% Manufacturing growth Demand for industrial coatings growing 423 Total Russia Turkey Other Source: IRL, Nuplex analysis 36
Market entry using a repeatable framework Market entry and growth approach Import products Establish local sales presence Build technical / distribution capability Manufacture locally Full operations China Vietnam Malaysia Indonesia Thailand India Russia MENA & Turkey Brazil? Myanmar 37
Approach to grow in specific countries China Vietnam Grow with the market Broaden product portfolio and market segments Introduce industrial water borne coatings Continue to grow as the market leader Indonesia Invest to grow with industrial markets Thailand Invest to grow with powder markets in Asia India Continue import model, watching brief Turkey and MENA Continue import model, explore options Russia Entry by acquisition, followed by investment in new plant Brazil Continue import model 38
4. Strategy outcomes 39
The primary objective is to consistently deliver shareholders above cost of capital returns Our strategy To achieve superior shareholder returns by delivering high quality products to our customers through pursuing operational excellence, innovation and building market leading positions Strengthening through operational excellence Growing through building market leading positions Safety People NuLEAP R&D Strategic acquisitions Emerging markets Improve returns Profitable growth Cash flow + Prudent capital management Shareholder value Focused on delivering above cost of capital returns 40
Sales driven by mid-cycle demand in mature markets and organic growth in emerging markets Global sales growth projection 1 CAGR % 4-7% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1. Forecast subject to unforeseen circumstances and economic uncertainty 41
Resins volume shifting towards emerging markets Global resins volume mix projection 1,2 % of total Americas 10% 9% 10% 9% Grow with market Asia 27% 26% 30% 32% Filling new capacity EMEA 29% 38% 40% 40% Leverage Viverso Russia ANZ 35% 28% 20% 19% Return to midcycle demand FY10 FY13 FY16 FY18 1. EMEA volume includes emerging markets in East and Central Europe, including Russia 2. Forecast subject to unforeseen circumstances and economic uncertainty 42
Strategy to deliver above capital cost of capital returns ROFE projection 1 FY13 FY16-18 Comments Group 11% >16% Above cost of capital returns by FY16 ANZ Resins 7% Specialties > 18% ~ 16 % ANZ restructure to return to cost of capital Asia > 18% > 18% Above cost of capital returns while still investing in growth EMEA 12% > 16% Viverso full potential Russia new growth Americas > 18% > 18% Sustain above cost of capital returns 1. ROFE defined as earnings before interest, tax and unusual items divided by average funds 2. Forecast subject to unforeseen circumstances and economic uncertainty 43
Gearing remains within the target range Net debt to net debt plus equity ratio projection 1,2 % 35 35% 30 25 20 20% 15 10 5 0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1. Forecast subject to unforeseen circumstances and economic uncertainty 44
Questions & Discussion 45