MPACT LIMITED - Trading statement

Trading statement

Mpact Limited
(Incorporated in the Republic of South Africa)
(Registration number 2004/025229/06)
JSE share code: MPT ISIN: ZAE000156501
(“Mpact” or “the Company” or “the Group”)


TRADING STATEMENT

In terms of the JSE Limited Listings Requirements, companies are required to publish a
trading statement as soon as they are satisfied that a reasonable degree of certainty exists
that the financial results for the period to be reported on next will differ by 20% or more from
the financial results of the previous corresponding reporting period.

Continuing operations

Trading performance
For the year ended 31 December 2019, the Group expects revenue to be up approximately
5% on the prior year to R11.1 billion. It is anticipated that earnings before interest, tax,
depreciation and amortisation (EBITDA), before taking into account the effects of IFRS 16
will be at similar levels to the financial year ended 31 December 2018, with underlying
earnings before interest and tax (EBIT) expected to decline by approximately 4%.

Impairment of goodwill, plant and equipment
The trading environment in which the Group operates has further deteriorated over the past
year due to subdued growth, overcapacity in certain sectors and unreliable electricity supply.
This, together with Mpact’s share price trading below its net asset value during most of the
past year, necessitated the test for possible impairment for each cash generating unit in the
Group.

Consequently, an impairment of R1.3 billion comprising R549 million of goodwill and R742
million of property, plant and equipment was raised against the Springs and Piet Retief
paper mills as well as the trays and films business. This non-cash charge equates to
approximately 633.2 cents per share and is excluded from headline and underlying earnings
per share. Notwithstanding the impairments these businesses remain operational.


Earnings per share
Based on the above, shareholders are advised that for the year ended 31 December 2019
earnings per share from the Group’s continuing operations are expected to be as follows:

   -   Headline earnings per share (HEPS) to be between 195 cents and 175 cents, a
       decrease of between 17.1% and 25.6%. when compared to prior period HEPS of
       235.3 cents.

   -   Underlying earnings per share (EPS) to be between 200 cents and 185 cents, a
       decrease of between 19.3% and 25.3% when compared to the prior period
       underlying EPS of 247.7 cents.

   -   Basic loss per share to be between 435 cents and 455 cents, a decrease of between
       293.5% and 302.4% when compared to the prior year basic earnings per share of
       224.8 cents.

Discontinued operation

Discontinuation of Mpact’s polyethylene terephthalate (PET) recycling operation
(Mpact Polymers (Pty) Limited)
As announced to shareholders on the JSE Stock Exchange News Service (SENS) on 14
November 2019, the Board of Mpact approved a decision to discontinue its Mpact Polymers
operation. Following from that announcement, on 10 December 2019, Mpact Polymers (Pty)
Limited commenced voluntary business rescue proceedings. As at 31 December 2019, the
Mpact Polymers balance sheet was deconsolidated from the Group and therefore its profit
and loss statement for the reporting period will be presented separately as a discontinued
operation.

The loss per share attributable to Mpact Polymers as a discontinued operation is expected to
be as follows:

   •   Headline loss per share of 36.7 cents, a decrease of 7.6% when compared to prior
       year headline loss per share of 39.7 cents.

   •   Basic loss per share of 37.1 cents, a decrease of 6.6% when compared to the prior
       year basic loss per share of 39.7 cents.


Total operations (continuing and discontinued operations)

For the year ended 31 December 2019, earnings from total operations are expected to be as
follows:

   -   HEPS to be between 158 cents and 138 cents, a decrease of between 19.2% and
       29.5% when compared to prior period HEPS of 195.6 cents.

   -   Underlying EPS to be between 163 cents and 148 cents, a decrease of between
       21.6% and 28.8% when compared to the prior period underlying EPS of 208 cents.

   -   Basic loss per share to be between 472 cents and 492 cents, a decrease of between
       355.0% and 365.8% when compared to the prior year basic earnings per share of
       185.1 cents.

Shareholders are advised that the financial information on which this trading statement is
based has not been reviewed nor reported on by the Company’s external auditor.

Mpact’s audited results for the year ended 31 December 2019 will be released on SENS on
or about 4 March 2020.

Melrose Arch

17 February 2020

Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 17-02-2020 05:30:00
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