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Mpact Limited
(Incorporated in the Republic of South Africa)
(Company registration number 2004/025229/06)
Income tax number: 9003862175
JSE Share Code: MPT JSE ISIN: ZAE 000156501
("Mpact" or "the Group" or "the Company")
AUDITED PRELIMINARY SUMMARISED CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 AND
DECLARATION OF A SCRIP DISTRIBUTION WITH A CASH DIVIDEND ALTERNATIVE
HIGHLIGHTS
- Revenue of R9.5 billion up 10.8% (December 2014: R8.6 billion)
- Underlying operating profit up 21.0% to R909 million (December 2014: R751 million)
- Basic underlying earnings per share up 36.3% to 366.9 cents (December 2014: 269.2 cents)
- Total gross dividend up 19.6% to 110 cents per share (December 2014:92 cents per share)
- Return on Capital Employed (ROCE) of 18.9% (December 2014: 18.1%)
- B-BBEE rating improved to Level 3
- rPET project and phase 1 of the Felixton mill rebuild commissioned on time and within budget
COMPANY PROFILE
Mpact is one of the leading paper and plastics packaging businesses in southern Africa, listed on the JSE's Main Board in the Industrial -
Paper and Packaging sector. The Group has a leading market position in southern Africa in recovered paper collection, corrugated
packaging, recycled-based cartonboard and containerboard, polyethylene-terephthalate (PET) preforms, styrene trays and plastic jumbo
bins. These leading market positions allow Mpact to meet the increasing requirements of its customers and to achieve economies of scale
and cost effectiveness at the various operations.
Mpact has 33 operating sites, of which 23 are manufacturing operations, in South Africa, Namibia, Mozambique, Botswana and
Zimbabwe. South African-based customers accounted for approximately 90% of Mpact's sales for the current year, with the balance of
sales predominantly to customers in the rest of Africa.
As at 31 December 2015 Mpact employed 4,467 people.
GROUP PERFORMANCE
The Group's results for the year ended 31 December 2015 reflect a strong improvement in the Plastics business and a lower effective tax
rate. The improvement in Plastics was on the back of good volume growth, cost containment and the restructure of the FMCG business in
2014. The Paper business delivered steady growth underpinned by increased sales to the fruit sector.
Revenue was 10.8% higher than the comparable prior year period at R9.5 billion, attributable to higher average selling prices, organic
volume growth of 2.1% and acquisitions which contributed 1.2%
Underlying operating profit increased by 21.0% to R909 million with the operating profit margin increasing to 9.5% from 8.7% in the prior
year.
ROCE for the year improved to 18.9% (December 2014: 18.1%)
Underlying earnings per share increased by 36.3% to 366.9 cents (December 2014: 269.2 cents) with the effective tax rate decreasing to
21.8% (December 2014: 28.4%)
On 1 April 2015 Mpact announced the successful implementation of a Broad-Based Black Economic Empowerment ("B-BBEE") transaction.
This contributed to an improved B-BBEE rating to Level 3 from Level 5.
The Group's two major capital investment projects progressed well during the year. Phase 1 of the R765 million Felixton Mill upgrade was
commissioned on time and within budget with the mill's subsequent performance reflecting the expected benefits. Phase 2 of the project is
on schedule to be completed during 2017.
The new R350 million recycled polyethylene-terephthalate (rPET) operation, which forms part of our recently established Mpact Polymers
business, was commissioned on time and within budget. In September 2015 having complied with the relevant EU regulations, Mpact's
rPET, branded Savuka PET, was formally declared safe for use in the packaging of food and beverage products. Approval from The
Coca-Cola Company for use of Savuka PET in the bottling of their brands was obtained on 10 February 2016.
Paper business
In the Paper business revenue for the year was up 11.8% to R7.0 billion. Acquisitions and organic volume growth increased revenue by
1.7% and 0.9% respectively, with higher sales volumes to the fruit sector partially offset by lower external sales of recovered fibre and
exports. Underlying operating profit increased by 13.0% to R803 million due to higher selling prices and a favourable product mix, the
benefits of which were reduced by increased raw material costs. The underlying operating margin improved marginally from 11.3% to
11.4%.
Plastics business
Revenue in the Plastics business increased by 8.1% to R2.5 billion with volume growth of 12.1%, mainly attributable to fruit packaging,
bulk bins and beverage preforms, offset by lower average selling prices which reflected lower polymer prices. The FMCG business
delivered a much improved result following its restructuring in 2014.
Underlying operating profit increased by 50.8% to R199 million and the underlying operating profit margin improved to 7.9% from 5.6% in
the comparable prior year period.
Net finance costs
Net finance costs increased by 9.1% to R132 million (December 2014: R121 million) as a result of higher interest rates and increased average
net debt over the year. Net finance costs were reduced by capitalised interest of R27 million on major projects.
Tax
The effective tax rate for the period was 21.8%. (December 2014: 28.4%). The lower effective tax rate is due mainly to the recognition of
deferred tax on previously unrecognised tax losses.
Earnings per share
Underlying earnings per share increased by 36.3% to 366.9 cents (December 2014: 269.2 cents).
Net debt
Net debt at 31 December 2015 was R1,592 million (December 2014:R1,303 million), an increase of 22.2% from the prior year. Gearing at
year-end was 30.2% (December 2014: 29.0%). During the year Mpact fixed the interest rate on R700 million of its debt facilities comprising
R500 million at 9.49% for 5 years and R200 million at 9.15% for 8 years.
OUTLOOK
It remains difficult to predict developments in the South African economy in the year ahead, suffice to say that we share the belief that the
economic turbulence in which the Group operates, possibly exacerbated by the effects of drought, will not abate.
As noted in the interim results, the change of ownership of a number of paper mills and recycling businesses in South Africa has changed
the competitive landscape. While the short term consequences of these changes are uncertain, we remain confident that interventions
such as the Felixton Mill upgrade, the Mpact Polymers rPET project and investments in the recycling and corrugated businesses will
advance Mpact's growth prospects.
Notwithstanding the current headwinds, our strategy addresses sustainable growth initiatives over the long-term and we are confident in
the Group's ability to meet the challenges.
SCRIP DISTRIBUTION AND CASH DIVIDEND ALTERNATIVE
1. Introduction
Notice is hereby given that the Board has declared a final distribution for the year ended 31 December 2015, by way of the issue of
fully-paid Mpact ordinary shares of no par value each ("the Scrip Distribution") as a scrip distribution payable to ordinary shareholders
("Shareholders") recorded in the register of the Company at the close of business on the Record Date, being Friday, 15 April 2016.
Shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive a gross cash dividend of 80 cents per
ordinary share in lieu of the Scrip Distribution, which will be paid only to those Shareholders who elect to receive the cash dividend, in
respect of all or part of their shareholding, on or before 12h00 on Friday, 15 April 2016 ("the Cash Dividend").
The Cash Dividend has been declared from income reserves. A dividend withholding tax of 15% will be applicable to all Shareholders
not exempt therefrom, after deduction of which the net Cash Dividend is 68 cents per Mpact ordinary share.
The new ordinary shares will, pursuant to the Scrip Distribution, be settled by way of capitalisation of the Company's distributable
retained profits.
The Company's total number of issued ordinary shares as at 1 March 2016 is 165,958,619. Mpact's income tax reference number is
9003862175.
2. Terms of the Scrip Distribution
The number of Scrip Distribution shares to which each of the Shareholders will become entitled pursuant to the Scrip Distribution (to
the extent that such Shareholders have not elected to receive the Cash Dividend) will be determined by reference to such
Shareholder's ordinary shareholding in Mpact (at the close of business on the Record Date, being Friday, 15 April 2016 in relation to
the ratio that 80 cents bears to the volume weighted average price ("VWAP") of an ordinary Mpact share traded on the JSE during the
30-day trading period ending on Thursday, 31 March 2016. Details of the ratio will be announced on the Stock Exchange News
Service ("SENS") of the JSE in accordance with the timetable below.
Where the application of this ratio gives rise to a fraction of an ordinary share, the number of shares will be rounded up to the nearest
whole number, if the fraction is 0.5 or more, and rounded down to the nearest whole number, if the fraction is less than 0.5.
3. Circular and salient dates
A circular providing shareholders with full information on the Scrip Distribution and the Cash Dividend alternative, including a Form of
Election to elect to receive the Cash Dividend alternative will be posted to Shareholders on or about Wednesday, 16 March 2016. The
salient dates of events thereafter are as follows:
EVENT 2016
Announcement released on SENS in respect of the ratio applicable to the
Scrip Distribution, based on the 30-day volume weighted average price
ending on Thursday, 31 March 2016, by 11h00 on Friday, 1 April
Announcement published in the press of the ratio applicable to the Scrip
Distribution, based on the 30-day volume weighted average price ending
on Thursday, 31 March 2016 on Monday, 4 April
Last day to trade in order to be eligible for the Scrip Distribution and the
Cash Dividend alternative Friday, 8 April
Ordinary shares trade "ex" the Scrip Distribution and the Cash Dividend
alternative on Monday, 11 April
Listing and trading of maximum possible number of ordinary shares on the
JSE in terms of the Scrip distribution from the commencement of business Monday, 11 April
Last day to elect to receive the Cash Dividend alternative instead of the
Scrip Distribution, Forms of Election to reach the Transfer Secretaries by
12h00 noon on Friday, 15 April
Record Date in respect of the Scrip distribution and the Cash Dividend
alternative Friday, 15 April
Scrip Distribution certificates posted and Cash Dividend payments made,
CSDP/broker accounts credited/updated, as applicable, on Monday, 18 April
Announcement relating to the results of the Scrip Distribution and the
Cash Dividents alternative released on SENS on Monday, 18 April
All times provided are South African local times. The above dates and times are subject to change. Any material change will be
announced on SENS.
Share certificates may not be dematerialised or rematerialised between Monday, 11 April 2016 and Friday, 15 April 2016, both days
inclusive.
Change in directorate
There has been no change to the Board of directors for the period ended 31 December 2015.
AJ Phillips BW Strong
Chairman Chief Executive Officer
2 March 2016
Directors:
Independent Non-Executive:
AJ Phillips (Chairman), NP Dongwana, NB Langa-Royds, TDA Ross, AM Thompson
Executive:
BW Strong (Chief Executive Officer), BDV Clark (Chief Financial Officer)
Company secretary:
MN Sepuru
Registered office:
4th Floor, No.3 Melrose Boulevard, Melrose Arch, 2196
(Postnet Suite #179, Private Bag X1, Melrose Arch, 2076)
Transfer secretaries:
Link Market Services South Africa (Proprietary) Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000, South Africa)
Sponsors:
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196
(P O Box 786273, Sandton, 2146)
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2015
Notes 2015 2014
R'm R'm
Revenue 9 547.7 8,617.2
Cost of sales (5,883.0) (5,332.3)
Gross margin 3,664.7 3,284.9
Administration and other operating expenses (2,345.7) (2,150.6)
Depreciation, amortisation and impairments (410.0) (405.8)
Operating profit 3 909.0 728.5
Share of profit from equity accounted
investees 13.0 15.6
Profit on sale of equity accounted investees 0.2 -
Total profit from operations and equity
accounted investees 922.2 744.1
Net finance costs (132.0) (121.0)
Investment income 8.7 9.7
Finance costs (140.7) (130.7)
Profit before taxation 790.2 623.1
Tax charge (172.4) (176.9)
Profit for the year 617.8 446.2
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss
Actuarial gains (losses) on post-retirement benefit
scheme 6.7 (0.6)
Tax effect (1.9) 0.2
Items that may be reclassified subsequently to
profit or loss
Effects of cash flow hedges 8.1 0.2
Tax effect (2.3) (0.1)
Exchange differences on translation of foreign
operations 7.5 2.4
Other comprehensive income for the financial year
net of tax 18.1 2.1
Total comprehensive income for the year 635.9 448.3
Attributable to:
Non-controlling interests in subsidiaries 14.6 23.2
Equity holders of Mpact 621.3 425.1
635.9 448.3
Profit for the year 617.8 446.2
Attributable to:
Non-controlling interests in subsidiaries 15.3 23.2
Equity holders of Mpact 602.5 423.0
Earnings per share (EPS) for profit attributable to
equity holders of Mpact
Basic EPS (cents) 4 366.9 259.1
Diluted EPS (cents) 4 363.3 256.9
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at year ended 31 December 2015
2015 2014
R'm R'm
Goodwill and other intangible assets 1,066.5 1,076.4
Property, plant and equipment 3,041.2 2,422.9
Investments in equity accounted investees 90.5 90.2
Financial asset investments 24.6 19.8
Deferred tax assets 15.3 18.5
Derivative financial instruments 13.9 5.0
Non-current assets 4 252.0 3,632.8
Inventories 1,275.0 1,125.8
Trade and other receivables 2,013.2 1,765.3
Cash and cash equivalents 508.9 535.1
Derivative financial instruments 15.1 1.0
Current tax receivable 5.0 2.8
Current assets 3,817.2 3,430.0
Total assets 8,069.2 7,062.8
Short-term borrowings 770.0 887.7
Trade and other payables 1,855.6 1,697.4
Current tax liabilities 4.0 6.5
Provisions 3.6 2.4
Other current liabilities 4.6 4.6
Derivative financial instruments 7.0 0.2
Deferred income 5.5 1.9
Current liabilities 2,650.3 2,600.7
Non-current borrowings 1,331.0 950.3
Retirement benefits obligation 53.0 57.4
Deferred tax liabilities 266.8 214.0
Other non-current liabilities 21.7 21.7
Deferred income 34.6 12.6
Non-current liabilities 1,707.1 1,256.0
Total liabilities 4,357.4 3,856.7
Stated capital (see note 5) 2,426.2 2,344.1
Retained earnings 1,170.8 738.0
Other reserves 7.8 9.2
Total attributable to equity holders of Mpact 3,604.8 3,091.3
Non-controlling interests in subsidiaries 107.0 114.8
Total equity 3,711.8 3,206.1
Total equity and liabilities 8,069.2 7,062.8
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2015
2015 2014
R'm R'm
Operating cash flows before movements in working capital 1,321.7 1,146.5
Net increase in working capital (235.2) (156.6)
Cash generated from operations 1,086.5 989.9
Dividends from equity accounted investees 12.5 5.4
Taxation paid (115.5) (167.2)
Net cash inflows from operating activities 983.5 828.1
Cash flows from investing activities
Acquisition of subsidiaries, net of cash - (1.9)
Additions to property, plant and equipment (979.2) (700.7)
Government grant received 31.1 -
Proceeds from the disposal of property, plant and equipment 5.1 4.1
Proceeds from disposal of associates 0.4 -
Loan repayments (advances to)/from external parties (4.7) 5.1
Interest received 8.7 9.7
Acquisition of non-controlling interest in a subsidiary (1.4) -
Net cash outflows from investing activities (940.0) (683.7)
Cash flows from financing activities
Borrowings raised 253.9 274.6
Finance costs paid (170.5) (127.6)
Dividends paid to non-controlling interests (4.1) (4.6)
Dividends paid to equity holders of Mpact Limited Group (75.8) (119.1)
Purchase of treasury shares (73.5) (49.4)
Repayment of other non-current liabilities 3.2 -
Payment of deferred settlement charge (4.6) -
Net cash outflows from financing activities (71.4) (26.1)
Net (decrease) increase in cash and cash equivalents (27.9) 118.3
Cash and cash equivalents at beginning of year(1) 510.7 392.4
Cash and cash equivalents at end of year(1) 482.8 510.7
(1)Cash and cash equivalents net of overdrafts.
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2015
Total
Share- Cash Post- attributable
based flow retirement to equity Non-
Stated payment hedge benefit Other Treasury Retained holders of controlling Total
capital reserves reserves reserves reserves(1) shares earnings Mpact Ltd interests equity
R'm R'm R'm R'm R'm R'm R'm R'm R'm R'm
Balance at 31 December 2013 2,326.0 30.1 4.1 8.3 (31.5) (30.3) 478.8 2,785.5 98.1 2,883.6
Total comprehensive income for the year - - 0.1 (0.4) 2.4 - 423.0 425.1 23.2 448.3
Dividends paid(2) 18.1 - - - - - (137.2) (119.1) - (119.1)
Purchase of treasury shares(3) - - - - - (49.4) - (49.4) - (49.4)
Share plan charges for the year - 15.4 - - - - - 15.4 - 15.4
Dividends paid to non-controlling interests - - - - - - - - (4.6) (4.6)
Reclassification - - - - 2.7 - (2.7) - - -
Deferred settlement charge - - - - - - (4.6) (4.6) - (4.6)
Issue/exercise of shares under employee share scheme - (16.1) - - - 40.7 (19.3) 5.3 - 5.3
Put option held by non-controlling shareholder of subsidiary(4) - - - - 33.1 - - 33.1 - 33.1
Acquisition of subsidiary - - - - - - - (1.9) (1.9)
Balance at 31 December 2014 2,344.1 29.4 4.2 7.9 6.7 (39.0) 738.0 3,091.3 114.8 3,206.1
Total comprehensive income for the year - - 5.8 4.8 8.2 - 602.5 621.3 14.6 635.9
Dividends paid(2) 82.1 (0.8) (157.1) (75.8) - (75.8)
Purchase of treasury shares(3) - (73.5) (73.5) - (73.5)
Share plan charges for the year - 19.6 19.6 - 19.6
Dividends paid to non-controlling interests - (4.1) (4.1)
Issue /exercise of shares under employee share scheme - (15.2) 49.7 (25.0) 9.5 - 9.5
Increase in shareholding in subsidiaries(5) - 17.0 17.0 (18.3) (1.3)
Deferred settlement charge (4.6) (4.6) - (4.6)
Balance at 31 December 2015 2,426.2 33.8 10.0 12.7 14.9 (63.6) 1,170.8 3,604.8 107.0 3,711.8
(1) Other reserves consist of the put option to equity holder reserve and the foreign currency translation reserve.
(2) Dividends declared amounted to R157.1 million (2014: R137.2 million) of which R82.1 million (2014: R18.1 million) related to a capitalisation issue.
(3) Treasury shares purchased represent the cost of shares in Mpact Ltd purchased in the market and held by the Mpact Incentive Share Trust to satisfy share awards under
the Group's share incentive scheme. As at 31 December 2015, there are 1 457 388 (2014: 1 063 281) treasury shares on hand.
(4) During the prior year Mpact Limited acquired a subsidiary where the minority shareholders have a put option to sell the remainder of their interest to Mpact at a future date.
(5) The group increased its shareholding in two subsidiaries by acquiring a further 9% and 5% respectively.
NOTES TO THE SUMMARISED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
for the year ended 31 December 2015
1. ACCOUNTING POLICIES
Basis of preparation
These preliminary summarised, consolidated financial statements have been prepared in accordance with the framework concepts and
measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting
Standards Council, the JSE Limited's listing requirements and the Companies Act of South Africa and contains at a minimum the
information required by IAS 34: Interim Financial Reporting.
These summarised consolidated financial statements for the year ended 31 December 2015 have been audited by Deloitte & Touche,
who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the consolidated financial
statements from which these summarised consolidated financial statements were derived. A copy of the auditor's report on the
summarised consolidated financial statements and of the auditor's report on the consolidated financial statements are available for
inspection at the company's registered office, together with the financial statements identified in the respective auditor's reports. The
auditor's report does not necessarily report on all of the information contained in this announcement. Shareholders are therefore
advised that in order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of that report
together with the accompanying financial information from the registered office of the company. Any reference to future financial
performance included in this announcement has not been reviewed or reported on the Company's auditors.
The preparation of these summarised consolidated financial statements was supervised by the chief financial officer, BDV Clark
CA(SA).
The directors take full responsibility for the preparation of the summarised consolidated financial statements and the financial
information has been correctly extracted from the underlying annual financial statements.
Accounting policies
The accounting policies and methods of computation used are consistent with those applied in the preparation of the consolidated
annual financial statements.
The Group has adopted the following amendment to a published Standard during the current year, which had no significant impact on
the Group's results:
- IAS 19 - Employee Benefits ' Defined benefit plans
2. OPERATING SEGMENTS
Operating segment revenue
2015 2014
Segment Internal External Segment Internal External
revenue revenue(1) revenue revenue revenue(1) revenue
R'm R'm R'm R'm R'm R'm
Paper 7,060.1 (45.8) 7,014.3 6,294.0 (21.2) 6,272.8
Plastics 2,533.4 - 2,533.4 2,344.4 - 2,344.4
Segments total 9,593.5 (45.8) 9,547.7 8,638.4 (21.2) 8,617.2
(1)Inter-segment transactions are conducted on an arm's length basis.
2015 2014
R'm R'm
Operating segment underlying operating profit/(loss)
Paper 802.7 710.6
Plastics 199.0 132.0
Corporate (92.7) (91.1)
Segments total before special items 909.0 751.5
Special items(1) - (23.0)
Share of profit from equity accounted investees 13.0 15.6
Net finance costs (132.0) (121.0)
Profit on sale of equity accounted investee 0.2 -
Profit before tax 790.2 623.1
Significant components of operating profit
Depreciation, amortisation and impairment
Paper 233.6 239.8
Plastics 157.4 138.7
Corporate 19.0 27.3
Segments total 410.0 405.8
Operating segment assets
Segment assets(2)
Paper 4,247.4 3,720.6
Plastics 1,858.7 1,500.6
Corporate 1,184.8 1,081.3
Inter-segment elimination (6.4) (3.6)
Segment total 7,284.5 6,298.9
Unallocated:
Investments in equity accounted investees 90.5 90.2
Deferred tax assets 15.3 18.5
Other non-operating assets(3) 145.4 100.3
Trading assets 7,535.7 6,507.9
Financial asset investments 24.6 19.8
Cash and cash equivalents 508.9 535.1
Total assets 8,069.2 7,062.8
(1) Special items include impairment charged on property, plant and equipment of Rnil (2014: R9.3 million), and restructure
costs of Rnil. (2014: R 13.7 million).
(2) Segment assets are operating assets and as at 31 December 2015 consist of property, plant and equipment of R3,041.2
million (2014: R2,422.9 million), goodwill and other intangible assets of R1,066.5 million (2014: R1,076.4 million),
inventories of R1,275.0 million (2014: R1,125.8 million) and operating receivables of R1,901.8 million
(2014: R1,673.8 million).
(3) Other non-operating assets consist of derivative assets of R29.0 million (2014: R6.0 million), other non-operating
receivables of R111.4 million (2014: R91.5 million) and current tax receivable of R5.0 million (2014: R2.8 million).
2015 2014
R'm R'm
3. OPERATING PROFIT
Operating profit for the year has been arrived at after
charging:
Impairment charge of property, plant and equipment - 9.3
Depreciation of property, plant and equipment 400.1 385.5
Amortisation of intangibles 9.9 11.0
4. EARNINGS PER SHARE
Cents per share
2015 2014
Earnings per share (EPS)
Basic EPS 366.9 259.1
Diluted EPS 363.3 256.9
Headline earnings per share for the financial year(1)
Basic headline EPS 365.8 262.7
Diluted headline EPS 362.2 260.5
Underlying earnings per share for the financial year(2)
Basic underlying EPS 366.9 269.2
Diluted underlying EPS 363.3 267.0
(1) The presentation of Headline EPS is mandated under the JSE Listings Requirements. Headline earnings has been calculated
in accordance with Circular 2/2015, 'Headline Earnings', as issued by the South African Institute of Chartered Accountants.
(2) Underlying earnings is arrived at after adjusting profit attributable to equity holders of Mpact for special items, net of tax. (See
note 2, segment operating profit).
The calculation of basic and diluted EPS and basic and diluted headline EPS is based on the following data:
Earnings
2015 2014
R'm R'm
Profit for the financial year attributable to equity holders of Mpact 602.5 423.0
Impairment of tangible assets - 9.3
Profit on sale of equity accounted investees (0.2) -
Profit on disposal of tangible assets (2.4) (1.0)
Related tax 0.8 (2.4)
Headline earnings for the financial year 600.7 428.9
Weighted number of shares
2015 2014
Weighted average number of ordinary shares in issue 164,218,439 163,268,866
Effect of dilutive potential ordinary shares(1) 1,626,716 1,362,284
Diluted number of ordinary shares in issue 165,845,155 164,631,150
(1) Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, on the assumption of
conversion of all potentially dilutive ordinary shares.
2015 2014
R'm R'm
5. STATED CAPITAL
Authorised share capital
217,500,000 shares of no par value - -
Issued share capital
Issue of shares of no par value 2,344.1 2,326.0
Capitalisation issue 82.1 18.1
2,426.2 2,344.1
During the year 1,857,822 new ordinary shares were issued to shareholders who elected to receive capitalisation shares in
terms of the capitalisation issue. As at 31 December 2015, 165,958,619 shares were in issue (2014: 164,100,797).
6. FAIR VALUE ESTIMATION
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are
determined using standard valuation techniques. These valuation techniques maximise the use of observable market data were
available and rely as little as possible on Group specific estimates.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The significant inputs required to fair value all of the Group's financial instruments are observable.
Specific valuation methodologies used to value financial instruments include:
- the fair values of interest rate swaps and foreign exchange contracts are calculated as the present value of expected future
cash flows based on observable yield curves and exchange rates;
- other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial
instruments.
Financial instruments by category
At fair value
Fair value Loans and through profit
2015 hierarchy receivables or loss Total
R'm R'm R'm
Financial assets
Trade and other receivables Level 2 2,013.2 - 2,013.2
Financial asset investments Level 2 24.6 - 24.6
Derivative financial instruments Level 2 - 29.0 29.0
Cash and cash equivalents Level 1 508.9 - 508.9
Total 2,546.7 29.0 2,575.7
At fair value
Fair value Loans and through profit
2014 hierarchy receivables or loss Total
R'm R'm R'm
Financial assets
Trade and other receivables Level 2 1,765.3 - 1,765.3
Financial asset investments Level 2 19.8 - 19.8
Derivative financial instruments Level 2 - 6.0 6.0
Cash and cash equivalents Level 1 535.1 - 535.1
Total 2,320.2 6.0 2,326.2
7. CAPITAL COMMITMENTS
Contracted for 443.0 503.8
Approved, not yet contracted for 885.6 848.4
1,328.6 1,352.2
The capital commitments will be financed from existing cash resources and unutilised borrowing facilities.
8. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a. Contingent liabilities for the Group comprise aggregate amounts at 31 December 2015 of R17.4 million (2014: R7.8 million)
in respect of loans and guarantees given to banks and other third parties.
b. A Group mill is the subject of a land claim, which should not have a material impact on the financial position of the Group.
c. In 2013 a settlement was reached in respect of a dispute relating to the valuation of put options in a group subsidiary. The
settlement agreement provides for a deferred payment contingent upon the achievement of certain EBITDA and ROCE
levels for the years 2016 to 2018, subject to a maximum amount of R6.5 million (2014: R11.1 million).
d. There were no significant contingent assets for the Group at 31 December 2015 and 31 December 2014.
9. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with non-controlling shareholders of subsidiaries, its associates, joint ventures and
directors.
The Group, in the ordinary course of business, enter into various sales, purchase and services transactions with joint ventures and
associates and others in which the Group has a material interest. These transactions are under terms that are no less favourable
than those arranged with third parties. These transactions in total are not significant.
10. EVENTS OCCURRING AFTER THE REPORTING DATE
There were no significant or material subsequent events which would require adjustment to or disclosure of in the annual
financial statements.
Date: 02/03/2016 08:00:00 Supplied by www.sharenet.co.za
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