VOLUNTARY TRADING UPDATE FOR THE FIVE MONTHS TO 28 FEBRUARY 2018

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1 SENS ANNOUNCEMENT - Nampak Limited (Incorporated in the Republic of South Africa) Registration Number: 1968/008070/06 Share Code: NPK ISIN: ZAE ( Nampak or the "Group") VOLUNTARY TRADING UPDATE FOR THE FIVE MONTHS TO 28 FEBRUARY 2018 Macroeconomic environment in key markets The South African gross domestic product ( GDP ) growth data for 2017 were better than expected and the recent Statistics SA January 2018 manufacturing production results showed an increase on the January 2017 results. The renewed and improving consumer confidence in 2018, together with expected higher growth rates and a stronger Rand, in line with historic trends is expected to have a positive multiplier effect on packaging demand and drive growth in volume and overall performance for the year. The Nigerian economy is displaying an improvement, having emerged from a recession during Whilst overall inflation remains high, wage inflation has now caught up and purchasing power has been restored resulting in stronger consumer demand. The World Bank is forecasting GDP growth of 2.5%. As small shifts in Nigeria s sizeable population of approximately 194 million contribute towards significant changes in demand, Nampak has experienced volume growth substantially in excess of GDP growth for the period to date. Significant improvement in liquidity since the introduction of the Nigerian Autonomous Foreign Exchange Market ( NAFEX ) in April 2017 and the improvement in the oil price have also led to foreign currency reserves doubling to approximately USD44 billion. The Angolan Government introduced a series of foreign currency auctions in late 2017 to devalue the kwanza in order to stimulate liquidity. This followed the new President s shift in monetary policy and focus on attracting foreign investment and diversifying the country s dependence away from the oil industry. Whilst devaluation of the kwanza is proceeding slower than anticipated, this is a positive development by the Central Bank towards increasing foreign exchange reserves. Further devaluations are expected to result in market-determined floating exchange rates. Divisional update METALS Bevcan South Africa has experienced pleasing volume growth in excess of GDP growth for the period. Should this trend continue on the back of improved consumer sentiment, additional capacity by a new entrant in

2 the beverage can market is likely to be absorbed in the medium term. Discussions with a major customer regarding the renewal of an existing supply agreement that comes to an end on 31 March 2018 are in progress and we expect that some volume will be allocated to the new entrant. Bevcan Angola volumes have shown pleasing growth for the period as beverage can demand remains strong. The decision to convert the tin plate line to aluminium is in abeyance pending sustained cash extraction and subject to the Angolan Government agreeing to a kwanza dollar swop to fund the import capital equipment requirements of the expansion project. Bevcan Nigeria has experienced a very robust recovery in demand. Relationships with key customers are strong and the recovery in demand of this market has been pleasing since the easing of the financial crisis. Should the current demand growth trend continue, management will assess the viability of a second line to double existing capacity. DivFood is seeing improved volumes from fish can sales on the back of the imported frozen fish and a higher local allowable catch. Meat can sales are up and there appear to be early signs of improving consumer confidence. General metals packaging in the Rest of Africa is trading to expectations with modest growth in certain categories. PLASTICS Plastics South Africa is enjoying a moderate volume recovery in certain sub-categories, but performance for the period has been impacted by the loss of volume from lower tender allocations by a major customer in late This volume loss has been partially mitigated by higher capacity utilisation initiatives and strong water container demand throughout the country, especially in regions impacted by the drought. The operational turnaround is continuing and individual assets are being optimised. Further structural labour cost saving initiatives including plant closures and/or consolidations will be implemented in the second half of 2018 and in 2019, resulting in cost savings and improved profitability going forward. Demand in Zimbabwe continued to grow, bolstered by new customers and increased market share. The turnaround at Plastics Europe is progressing well and management expects this business to return to profitability during the 2018 financial year, one year earlier than previously guided. Sales volumes continue to be impacted by backward integration by a major customer, but good progress has been made in securing additional volume from second-tier dairies. Satisfactory progress has also been made in addressing the unfunded portion of the defined benefit pension liability in Plastics Europe and it is now considered appropriate to investigate strategic options regarding the portfolio role of this business. GLASS

3 Market demand, driven primarily by substrate substitution into glass, exceeds the operation s current ability to supply given ongoing production limitations. While municipal supply of electricity remains very inconsistent, stable electricity supply to the glass plant has been secured from the operation s rotary uninterruptible power supply system for the second quarter of the financial year. The business is being closely managed by the group executive responsible for Glass, supported by external consultants and the company s technical partner. Progress, however, has not been as fast as desired and this business is expected to make a loss for the half year to March 2018 due to lower than targeted operational efficiencies resulting from insufficient technical skills. PAPER Demand in Zimbabwe has slowed and continues to be impacted by the lack of foreign currency. Cartons volumes in Nigeria were strong, in line with the improving consumer demand currently being experienced in this country. Zambia and Malawi continue to be affected by subdued carton demand owing to a change in the packaging strategy of a major customer, although this trend is expected to be reversed in the second half of the financial year as the sale of this major customer to a local brewer is finalised. Foreign currency movements Nampak has sizeable operations outside of South Africa and is exposed to various foreign currency movements. As a result, Nampak s performance for the five months ended 28 February 2018 has been impacted by foreign currency movements. Since the 2017 year end, there has been no devaluation in the Nigerian naira. In Angola, the kwanza has been devalued through a series of controlled auctions by the Central Bank and has devalued by 27% to the end of February The strengthening of the South African rand ( Rand ) will adversely impact the translation of foreign earnings for all Rest of Africa territories but will benefit the translation of the Group s dollar denominated borrowings. Currency movements for key markets: Average rates Closing rates Currency 28 Feb 2018 (1) 31 Mar % 2017 (2) change 30 Sep 2017 (3) 28 Feb Sep 2017 % change 31 Mar 2017 ZAR/GBP (4)% % ZAR/EUR (7)% % ZAR/USD % % AOA/USD (7)% (27)% NGN/USD (15)% (0)% (1) For the 5 months to 28 February 2018, (2) For the 6 months to 31 March 2017, (3) For the year to 30 September 2017 Currency, liquidity and procurement in Rest of Africa The Rand equivalent of cash balances held in the currently cash restricted areas of Angola and Zimbabwe increased by 21% to R3.4 billion from R2.8 billion at 30 September 2017.

4 As indicated at the year-end presentation in November 2017, there are currently no further constraints to extracting cash from Nigeria. Nampak has successfully extracted R567 million (USD48 million) from that country for the five months. Cash balances in Nigeria reduced to R586 million as at end February 2018 from R828 million at the 2017 year end. Cash from Nigeria will be used to repay outstanding loan balances with the Group s procurement and treasury operations. Angolan cash balances have grown from R2.2 billion at 30 September 2017 to R2.6 billion as a result of continuing strong can demand in Angola and a continued in country shortage of US dollars. Initiatives to alleviate the rate at which cash is accumulating have been implemented with the cash extraction rate increasing to 68% from 47% achieved in the prior financial year. One of these initiatives is that can ends are now being supplied directly to customers from Bevcan South Africa. The Group continues to engage in high level discussions with authorities on liquidity and the allocation of foreign currency, to improve Nampak s operating ability and funding model in Angola. Some progress has been made in repatriating cash from Angola with R239 million (USD20 million) being extracted for the five months ended 28 February Cash balances in Zimbabwe have grown to R841 million from R654 million at 30 September Following intensive engagements with customers and the Zimbabwe Central Bank, Nampak expects to be allocated foreign currency on a monthly basis beginning in the second half of the 2018 financial year. These funds will be utilised to continue operations in Zimbabwe as well as to repay monies advanced by the Rest of Africa procurement hub. Cash balances and extraction rates in Angola, Zimbabwe and Nigeria are as follows: 28 FEBRUARY 2018 RESTRICTED NON-RESTRICTED Angola Zimbabwe Total Nigeria Cash on hand R2 598m R841m R3 439m R586m Hedged cash R2 598m (2) R2 589m (3) % cash hedged 100% (2) 75% (3) Cash extraction rate (1) 68% 1% 37% 133% 30 SEPTEMBER 2017 RESTRICTED NON-RESTRICTED Angola Zimbabwe Total Nigeria Cash on hand R2 188m R654m R2 842m R828m Hedged cash R1 954m (2) R1 954m (3) % cash hedged 89% (2) 69% (3) Cash extraction rate (1) 47% 40% 47% 93% (1) Liquidity ratio of invoices presented for payment in the period. (2) There are currently no appropriate hedges available in Zimbabwe. (3) Cash balances in Nigeria are no longer considered restricted as a consequence of the liquidity that has been provided by the introduction of the NAFEX.

5 Currency volatility and liquidity constraints are expected to remain in the short to medium term in Angola. The Angolan Government has signaled its intention to allow the kwanza to devalue against the dollar through controlled auction processes in an attempt to find a more appropriate exchange rate that is expected to stimulate trade and attract foreign investment. Accordingly, the Group has increased its hedging of its kwanza cash balances through US dollar indexed kwanza bonds from 89% at 30 September 2017 to 100% at 28 February % of US dollar linked kwanza bonds mature after September 2019, 19% mature after September 2018 and the remaining 14% mature during the next six months. Alternative hedging instruments are being considered to mitigate further foreign exchange risks. As there are currently no appropriate hedging instruments in Zimbabwe, interventions with the authorities and customers will continue. In addition, consideration is being given to the potential alternative uses of the cash balances in order to limit the amount of cash accumulation in Zimbabwe to strengthen the Group s position. Taxation The pioneer status in Nigeria ended on 31 December 2017 resulting in Bevcan Nigeria becoming a taxable entity from 1 January The Bevcan Nigerian effective tax rate will be reduced through the deduction of accumulated wear and tear allowances brought forward from the five year pioneer period as well as other allowable tax deductions, thereby reducing the effective tax rate that is applicable in the commencement year. The tax holiday in Angola will end on 31 December The group tax rate will accordingly be affected by the respective contributions to earnings from Angola and Nigeria for the Group s financial year ending 30 September Capital expenditure Guidance post the release of the 2017 financial results for capital expenditure was between R1.0 and R1.2 billion for the 2018 financial year. As a result of stringent capital allocation processes, capital expenditure for 2018 is expected to be lower than the initial guidance and more in line with the 2017 full year spend of R735 million. Debt restructuring and gearing As indicated to investors in 2017, Nampak is in the process of restructuring a portion of its debt obligations to committed term revolving credit facilities with its banking partners in order to further strengthen the group statement of financial position and address the group s debt maturity profile. To the extent that Nampak Limited will be required to extend direct or indirect financial assistance to related or inter-related corporate entities as part of the debt restructuring process, shareholders approval will be sought for intra-group financial assistance in terms of section 45 of the Companies Act 71. A shareholders meeting will be called for this purpose before the 2018 financial year end. Taking into account the Group s current shareholders equity, gearing for the half year to March 2018 and the full year is expected to remain

6 within the target range of 40-60% with comfortable headroom in key covenant ratios. Structural changes The Board has decided to dispose of the Glass business. To ensure the long term profitability of Glass and to address the operational skills gap, the Board has resolved to approach packaging industry players to invite proposals for the sale of the Glass business. Exploratory discussions have been held with a number of strategic players with a formal corporate finance disposal process currently in progress. Outlook for the remainder of the year With renewed consumer confidence and increasing spending expected in South Africa, demand for packaging is expected to improve. Gains from improved operating efficiencies and cost savings from a reduced manufacturing footprint are expected to mitigate the impact of the new entrant in the beverage can market. The Group s operations in the Rest of Africa are anticipated to continue generating cash as demand in Angola and the recovering economy in Nigeria drive increased demand for packaging products. Overall performance will however, be impacted by macroeconomic dynamics. Despite measures having been put in place already, if liquidity in Zimbabwe does not improve in the second half, performance will be subdued as more stringent requirements for customers have been put in place to limit exposure in that country. US dollar shortages in Angola and Zimbabwe and a series of expected currency devaluations in Angola may result in potential foreign currency translation impacts. Shareholders are advised that the financial information contained in this announcement has not been audited, reviewed or reported upon by Nampak s external auditors. The Group s interim results for the six month period ended 31 March 2018 are scheduled to be announced on the Stock Exchange News Service on or about 30 May Bryanston 29 March 2018 Sponsor: UBS South Africa (Pty) Ltd Forward-looking statements: Certain statements in this document are not reported financial results or historical information, but forward-looking statements. These statements are predictions of or indicate future events, trends, future prospects, objectives, earnings, savings or plans. Examples of such forward-looking statements include, but are not limited to, statements regarding volume growth, increases in market share, exchange rate fluctuations, shareholder return and cost reductions. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as believe, continue, anticipate, ongoing, expect, will, could, may, intend, plan, could, may, and endeavour. By their nature, forward-looking statements are inherently predictive, speculative and involve inherent risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in economic or political conditions and changes to the

7 associated legal, regulatory and tax environments; lower than expected performance of existing or new products and the impact thereof on the Group s future revenue, cost structure and capital expenditure; the Group s ability to expand its portfolio; skills shortage; changes in foreign exchange rates and a lack of market liquidity which holds up the repatriation of earnings; increased competition, slower than expected customer growth and reduced customer retention; acquisitions and divestments of Group businesses and assets and the pursuit of new, unexpected strategic opportunities; the extent of any future writedowns or impairment charges on the Group s assets; the impact of legal or other proceedings against the Group; uncontrollable increases to legacy defined benefit liabilities and higher than expected costs or capital expenditures. When relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.