Prospectus Summary. MED PAPER Public Limited Company with a Board of Directors Share Capital: MAD 258,255,500

Transcription

1 MED PAPER Public Limited Company with a Board of Directors Share Capital: MAD 258,255,500 not held by the Members of the concerted action Initiated by the Members of the concerted action, represented by Mr. Mohsine Sefrioui Characteristics of the Offer Number of shares concerned 1,081,141 shares Price per share MAD 22 Maximum amount of the Offer MAD 23,785,102 Offer duration From 14 th March to 27 th March 2018 inclusive Financial Advisor and Global Coordinator Body in charge of the Operation Registration APPROVAL OF THE MOROCCAN CAPITAL MARKET AUTHORITY (AMMC) In accordance with the provisions of the circular of the Moroccan Capital Market Authority (AMMC), pursuant to Article 14 of the Dahir providing Law no of 21 st September 1993 as amended and supplemented, and Article 36 of Law no relating to public offerings on the stock market as amended and supplemented by Law no , the original copy of this prospectus was approved by the AMMC on the 6 th of March 2018, under reference no. VI/EM/003/2018.

2 DISCLAIMER The Moroccan Capital Market Authority (AMMC) approved on the 6 th of March 2018 a prospectus relating to the Mandatory Tender Offer for MED PAPER shares, initiated by the Members of the concerted action, represented by Mr. Mohsine Sefrioui. The prospectus approved by AMMC is available at all times at MED PAER s headquarters and at its financial advisor s office. The prospectus is available to the public at the Casablanca Stock Exchange headquarters and on its website It is also available on AMMC s website 2

3 PRESENTATION OF THE OPERATION 3

4 I.1. Objectives of the Operation Reasons for the Operation Pursuant to the applicable legal and regulatory provisions, the Offer is intended for the acquisition of the MED PAPER shares not held by all the Members of the concerted action. I.2. Intentions of the Initiators On the eve of this Offer, the Initiators directly and indirectly hold 58.14% of the Company's share capital and voting rights. Hence, the proposed Operation should not make any changes to MED PAPER's strategy. The Initiators, represented by Mr. Mohsine Sefrioui, do not intend to continue their purchases on the MED PAPER value in the twelve months following the Offer, with the exception of the shares tendered as part of the Offer by MED PAPER shareholders. Based on the number of shares tendered to the Offer by MED PAPER shareholders, the percentage of MED PAPER capital and voting rights - which will be controlled by Mr. Mohsine Sefrioui as representative of the Initiators at the completion of the Offer - will be between 19.11% and 60.97%. Thus, depending on the number of shares tendered to the Offer by MED PAPER shareholders, the percentage of MED PAPER share capital and voting rights that will be held by all the Initiators at the completion of the Offer will be between 58.14% and 100%. It should be noted that Mr. Mohsine Sefrioui, representative of the Members of the concerted action, shall acquire all the shares tendered to the Mandatory Tender Offer. Furthermore, in accordance with the provisions of article 10 of the Law relating to public offers on the stock market, the Members of the concerted action are jointly and severally bound to the obligations that are made to them under the said Law. I.3. Financing Arrangements As representative of the Initiators, Mr. Mohsine Sefrioui asserts having the necessary financial means for the completion of this Offer and the payment of the related costs. I.4. Evolution of the shareholder structure of MED PAPER The table below presents the shareholder structure of MED PAPER before and after the Offer in the event that all the shares covered by the Offer are contributed: Shareholders Before the Operation (31/12/2017) Nb. of shares Capital % Voting rights % After the Operation Nb. of shares Capital % Voting rights % Aliken % 31.52% % 31.52% Mohsine Sefrioui % 19.11% % 60.97% Habiba Bennani % 4.42% % 4.42% Med Fouad Sefrioui % 2.05% % 2.05% Ilham Sefrioui % 1.04% % 1.04% Controlling interest % 58.14% % % Various shareholders % 41.86% Total % % % % Source: MED PAPER 4

5 II.1. Structure of the Offer Number of the concerned shares The Offer will concern all the shares not held by all the Members of the concerted action at the date of this offer prospectus, i.e. 1,081,141 shares representing 41.86% of MED PAPER's share capital and voting rights. II.2. Price of the Offer The Initiators offer the other MED PAPER shareholders who are not part of the Members of the concerted action the opportunity to sell their shares at MAD 22 per share. II.3. Amount of the Offer The Offer will cover 1,081,141 shares at MAD 22 per share, i.e. for a total maximum of MAD 23,785,102 excluding charges. II.4. Opening date of the Offer The Offer will begin on 14 th March II.5. Closing date of the Offer The Offer will be closed on 27 th March 2018 inclusive. II.6. Offer duration The Offer duration is between the opening date and the closing date of the Offer, i.e.10 trading days. II.7. Waiver threshold Due to the mandatory nature of the Offer, no waiver threshold is envisaged by the Initiators. Mr. Mohsine Sefrioui, as representative of the Initiators, undertakes to firmly and irrevocably acquire all the shares contributed by the shareholders affected by this operation. II.8. Date of settlement The settlement date is scheduled for 10 th April II.9. Acquisition of shares outside the Offer The Initiators have not acquired, and do not intend to acquire, MED PAPER shares outside the Offer. II.10. Links between MED PAPER and the Initiators At the date of this prospectus, Mr. Mohsine Sefrioui as representative of the Initiators holds 19.11% of MED PAPER capital and voting rights. The Members of the concerted action thus hold a total of 58.14% of MED PAPER capital and voting rights. Summary of valuation Given the different valuation methods, the price used by the Initiators of the Takeover Bid amounts to MAD 22 per MED PAPER share. The table below presents the share value resulting from each of the methods selected for the valuation of the MED PAPER share. 5

6 Valuation method used Value per share (in MAD) Method weighting Offered Premium / discount Stock prices approach /3-22.0% Reference transactions method /3-23.0% Discounted Cash Flows method 0 1/3 n.s. Average % Source: BMCE Capital Conseil 6

7 Schedule of the Offer Order Steps No later than 1 Receipt by the Casablanca Stock Exchange of the complete file of the operation 05/03/ Issuance by the Casablanca Stock Exchange of the Notice of Approval of the operation 06/03/ Receipt by the Casablanca Stock Exchange of the AMMC-approved prospectus 06/03/ Publication of the excerpt of the prospectus in the Official List (Bulletin de la Cote) 07/03/ Publication of the extract of the prospectus in a legal gazette 08/03/ Opening of the duration of the Takeover Bid 14/03/ Closing of the duration of the Takeover Bid 27/03/ Receipt by the Casablanca Stock Exchange of the files relating to the orders on securities contributed, before 12:00 a.m. Centralization and consolidation of the orders on securities contributed by the Casablanca Stock Exchange 28/03/ /03/ Sending to AMMC of a summary statement of orders on securities contributed 30/03/ Receipt of AMMC's response on the Takeover Bid (approval or not) and publication of the announcement in the Official List by the Casablanca Stock Exchange, in case AMMC rejects the Operation Presentation by the Casablanca Stock Exchange of the results of the Takeover Bid to the order collectors Registration of the Offer on the stock exchange and announcement of its results in the Official List Payment / Delivery Publication of the results of the Operation by the representative of the Initiators in a legal gazette 02/04/ /04/ /04/ /04/2018 7

8 PRESENTATION OF THE INITIATORS 8

9 General presentation of the representative of the Members of the concerted action Chairman and Chief Executive Officer of MED PAPER, Mr. Mohsine Sefrioui has also been Chief Executive Officer of Nacinox and Cotamac since 1994 and of Maestro since II.1. Presentation of the Members of the concerted action (other than Mr. Mohsine Sefrioui) Presentation de Ms. Habiba Bennani Ms. Habiba Bennani was born in She is a shareholder of the Company and has no operational role in it. II.2. Presentation de Ms. Ilham Sefrioui Ms. Ilham Sefrioui was born in She holds a Bachelor of Laws. II.3. Presentation de Mr. Mohammed Fouad Sefrioui Mr. Mohammed Fouad Sefrioui was born in He is a trained architect. 9

10 II.4. Presentation of Aliken It should be noted that the partners, shareholders and board members of Aliken since the day the threshold crossing triggered the obligation to deposit the Takeover Bid are presumed to act in concert with it. II.4.1. General information Corporate Name Aliken Headquarters Legal Form Date of Establishment 19 th May , rue Souleimane Al Farissi, Casablanca A Limited Company (by decision of the Extraordinary General Meeting of Partners dated 6 th July 2017) Life Span 99 years Registry of Commerce Number Fiscal Year From January 1 st to December 31 st In Morocco and abroad, the corporate objectives of the company are as follows: Real estate agent activity and real estate intermediation Marketing, buying and selling on its own account or on behalf of third parties of any real estate; Completion of all requests and formalities (administrative, financial, legal and land) related to the real estate activity on its own account or on behalf of third parties; Business purpose The exploitation by all means and in particular by lease, of all built or unbuilt real estate that the company would own by means of acquisition, contribution or otherwise; Number of Shares 300,000 The exploitation by all means and in particular by lease, of all built or unbuilt real estate that the company would own by way of acquisition, contribution or otherwise; Stake holding by way of acquisition, subscription or any other means, in any company having an object that is directly or indirectly related to the above operations; And in general, all securities or real estate transactions, which may relate directly or indirectly to this object or likely to facilitate its realization or development. Share Capital List of Applicable Laws and Regulations Court of competent jurisdiction MAD 30,000,000 with a par value of MAD 100 per share By its legal form, the company is governed by the law no promulgated by Dahir no dated 30 th August 1996 relating to limited companies, as amended and supplemented by the laws no , and 20-05, Casablanca Source: Aliken 10

11 II.4.2. Information on Aliken Shareholding Since its establishment, Aliken shareholding has evolved as follows: Event Establishment (1993) EGM of 31 th December 1999 EGM of 31 th March 2014 EGM of 6 th July 2017 Shareholders OIP Mr. Anas Sefrioui OIP Mr. Anas Sefrioui Bayt Al Hamd Mr. Anas Sefrioui Mr. Malik Sefrioui Ms. Kenza Sefrioui Ms. Alia Sefrioui Ms. Mounia Benzakri Number of Membership shares / shares 992 shares 8 shares 992 membership shares 8 membership shares 992 membership shares 8 membership shares shares shares shares 2 shares Source: Aliken Bayt Al Hamd Aliken was founded in 1993 as a limited company (S.A.). 1 share The company was later converted into a Limited Liability Company in 1999 (S.A.R.L.). In 2014, OIP sold all of its shares to Bayt Al Hamd. By decision of the Extraordinary General Meeting of shareholders on 6 th July 2017, it was decided to reduce the capital of Aliken to zero MAD (MAD 0) by the cancellation of 1,000 shares of MAD 100 each, followed by a capital increase of MAD 30,000,000 to bring it from MAD zero (MAD 0) to MAD 30,000,000, by creating 300,000 new shares of MAD 100 each with an issue premium of MAD 90,000,000 by setting-off unquestionable, liquid and due claims on the company. As a result of the deliberations, the company was transformed into a limited company. Following this operation, the shareholders of the company are Mr. Malik Sefrioui, Ms. Kenza Sefrioui, Ms. Alia Sefrioui, Ms. Mounia Benzakri and the company Bayt Al Hamd. II.4.3. Governance body The administration of Aliken is entrusted to a board of directors. The board of directors is composed of the three following members: Members of the Board of Directors Title Appointment date Appointment expiration date Malik Sefrioui Chairman of the Board of Directors 6 th July 2017 OGM ruling on the accounts of the fiscal year ending 2022 Mounia Benzakri Board Secretary 6 th July 2017 Alia Sefrioui Board member 6 th July 2017 OGM ruling on the accounts of the fiscal year ending 2022 OGM ruling on the accounts of the fiscal year ending 2022 Source: Aliken 11

12 II.5. Financial situation of Aliken It should be noted that the 2014, 2015 and 2016 financial statements of Aliken presented below have not been reviewed by the statutory auditors. In addition, as part of Aliken's transformation from a limited liability company to a limited company, and in accordance with Article 36 of the Law as amended and supplemented, a transformation commissioner has certified that the net position as at 31/12/2016 is at least equal to one quarter of the share capital. 12

13 II.5.1. Balance sheet for the past three fiscal years In MAD thousand Var. 14/ Var.15/16 CAGR Fixed assets % % -29.0% In % of total balance sheet 5.8% 3.7% 2.8% Fixed assets in non-value 0 0 n.a. 0 n.a. n.a. Intangible assets 0 0 n.a. 0 n.a. n.a. Tangible assets % % % Financial fixed assets % % -9.5% Current assets % % 4.6% In % of total balance sheet 93.9% 95.9% 97.0% Inventory % % 0.0% Receivables % % -1.2% Securities and investment securities % % 7.3% Translation-asset differences 0 0 n.a. 0 n.a. n.a. Cash assets % % -1.1% In % of total balance sheet 0.3% 0.3% 0.2% Total Assets % % 2.9% Source: Aliken In MAD thousand Var. 14/ Var.15/16 CAGR Equity % % -8.4% In % of total balance sheet n.s. n.s. n.s. Share capital % % 0.0% Issue, merger, contribution premiums 0 0 n.a. 0 n.a. n.a. Legal reserve 0 0 n.a. 0 n.a. n.a. Investment reserve 0 0 n.a. 0 n.a. n.a. Volunteer reserve 0 0 n.a. 0 n.a. n.a. Retained earnings % % -15.8% Net income for the fiscal year % 482 n.a. n.a. Financial debts 0 0 n.a. 0 n.a. n.a. In % of total balance sheet 0.0% 0.0% 0.0% Other financing debts 0 0 n.a. 0 n.a. n.a. Current liabilities % % 6.7% In % of total balance sheet 309.8% 337.6% 333.2% Current liabilities debts % % 6.7% Other provisions for risks and charges 0 0 n.a. 0 n.a. n.a. Translation-liability differences 0 0 n.a. 0 n.a. n.a. Cash-liability % 2 0.0% -89.7% In % of total balance sheet 0.6% 0.0% 0.0% Total Liabilities % % 2.9% Source: Aliken 13

14 Financial fixed assets The financial assets item amounts to MAD 1.0 million in It consists of a loan to a related company. Inventory The company's inventory amounts to MAD 0.2 million over the period. It represents a land plot owned by the company. Receivables Receivables rose from MAD 10.5 million in 2014 to MAD 10.2 million in This item includes, in 2016, an advance from suppliers of MAD 4.4 million and advances made to companies of the group for MAD 2.7 million. 14

15 II.5.2. Income statement for the past three fiscal years In MAD thousand Var. 14/ Var.15/16 CAGR Turnover 0 0 n.a. 0 n.a. n.a. Product inventory variation 0 0 n.a. 0 n.a. n.a. Operating reversals; charge transfer 0 0 n.a. 0 n.a. n.a. Operating income 0 0 n.a. 0 n.a. n.a. Purchases consumed (2) of materials and supplies 0 0 n.a. 0 n.a. n.a. Other external charges % % 28.2% Duties and taxes % % 0.0% Staff costs 0 0 n.a. 0 n.a. n.a. Other operating expenses 0 0 n.a. 0 n.a. n.a. Depreciation & Amortization % % -15.1% Operating income % % -19.5% Income from equity securities and other investment securities % % 110.4% Exchange gains 0 0 n.a. 0 n.a. n.a. Interests and financial revenues % % -27.4% Financial reversals; charge transfer 0 0 n.a n.a. n.a. Financial products % % 20.6% Interest expenses % % -20.9% Exchange losses 0 0 n.a. 0 n.a. n.a. Other financial charges % % 14.1% Financial allocations % % n.a. Financial expenses % % -25.8% Financial income % n.a. n.a. Current income % 532 n.a. n.a. Non-current revenue 0 69 n.a. 0 n.s. n.a. Non-current expenses % % 13.1% Non-current income n.a. -32 n.a % Pre-tax income % 500 n.a. n.a. Corporate Taxes % % -28.3% Net Income % 482 n.a. n.a. Source: Aliken 15

16 Operating expenses In 2016, operating expenses mainly comprise of commissions paid to financial intermediaries. Financial products Financial products amounted to MAD 11.2 million in They consist mainly of dividends received on the sale of shares held by the company for MAD 3.2 million and reversals of financial provisions for MAD 4.4 million. Financial expenses In 2016, Aliken's financial expenses mainly include capital losses realized on disposals of shares held by the company. 16

17 GENERAL PRESENTATION OF THE COMPANY 17

18 Evolution of shareholder structure The evolution of MED PAPER s shareholder structure over the period is presented in the table below: Shareholders 31/12/ /12/ /12/2017 Nb. of shares Capital % Nb. of shares Capital % Nb. of shares Capital % Aliken % Mohsine Sefrioui % % % Habiba Bennani % % % Med Fouad Sefrioui % % % Ilham Sefrioui % % % CDG Développement % % - - Floating % % % Total % % % Source: MED PAPER The graphic below shows the shareholder structure of the Company as at 31/01/2018: Aliken Mohsine Sefrioui Fouad Sefrioui Habiba Bennani Ilham Sefrioui Flottant Source : MED PAPER During the 2017 fiscal year, CDG Développement declared that it no longer holds any MDP shares following a contribution of 462,300 MED PAPER shares on 29 th June 2017 and a sale of 358,631 MED PAPER shares on 3 rd July Also, on 3 rd July 2017, Aliken acquired 814,037 MED PAPER shares on the market, making it the main shareholder of the Company. Board of Directors As at 31 st January 2018, the Board of Directors of the Company is composed as follows: Members of the Board of Directors Title Appointment date Appointment expiry date Mohsine Sefrioui Chairman of the Board 25/06/2 015 Mohamed Fouad Sefrioui Board Member 25/06/2 015 Khalid Sefrioui Board Member 25/06/2 015 Sanaa Messaoudi Board Member 19/09/2 017 Mohamed Anouar Bennani Board Member 19/09/2 017 Kamal Mazari Board Member 19/09/2 017 Salah-Eddine Sabik Board Member 19/09/2 017 OGM ruling on the accounts of the fiscal year ending 2020 OGM ruling on the accounts of the fiscal year ending 2020 OGM ruling on the accounts of the fiscal year ending 2020 OGM ruling on the accounts of the fiscal year ending 2022 OGM ruling on the accounts of the fiscal year ending 2022 OGM ruling on the accounts of the fiscal year ending 2022 OGM ruling on the accounts of the fiscal year ending

19 Source: MED PAPER The MED PAPER Ordinary General Meeting, held in 2015, renewed the mandate of Mr. Mohsine Sefrioui as a Chief Executive Officer and Chairman of the Board. Following the departure of the three Board Members representing the interests of CDG Développement as a result of the sale of the entire shareholding in the Company, four new Board Members were co-opted at the Board Meeting held on 11 th August This decision was ratified by the EGM held on 19 th September

20 III.1. MED PAPER s financial position Income statement In MAD thousand Var. 14/ Var. 15/16 CAGR Turnover % % -15.6% Product inventory variation % % 47.4% Operating reversals; charge transfer n.a % n.a. Operating income % % -9.5% Purchases consumed (2) of materials and supplies % % -11.6% Other external charges % % -8.5% Duties and taxes % % -4.3% Staff costs % % -10.4% Other operating expenses n.a % n.a. Depreciation & Amortization % % -17.6% Operating income % % 5.3% Income from equity securities and other investment securities % 9 0.0% 0.0% Exchange gains % % -22.6% Interests and financial revenues n.a % n.a. Financial reversals; charge transfer % % 77.8% Financial products % % 4.3% Interest expenses % % -20.8% Exchange losses % % -10.5% Financial allocations % % 63.6% Financial expenses % % -18.9% Financial income % % 19.6% Current income % % 10.4% Non-current revenue n.s % n.s. Non-current expenses % % -29.4% Non-current income n.s % n.s. Pre-tax income % % 15.4% Corporate taxes % % -13.9% Net Income % % 15.3% Source: MED PAPER 20

21 III.2. MED PAPER s balance sheet The table below presents the evolution of MED PAPER's balance sheet over the period: In MAD thousand Var. 14/ Var. 15/16 CAGR Fixed assets % % -5.6% In % of total balance sheet 48.0% 51.0% 50.8% Fixed assets in non-value % % 1.4% Intangible assets % % 0.0% tangible assets % % -8.7% Financial fixed assets % % 0.0% Current assets % % -10.7% In % of total balance sheet 51.7% 48.5% 49.0% Inventory % % -25.2% Receivables % % -5.8% Translation-asset differences % % 63.3% Cash assets % % -38.9% In % of total balance sheet 0.3% 0.5% 0.1% Total Assets % % -8.3% Source: MED PAPER In MAD thousand Var. 14/ Var. 15/16 CAGR Equity % n.s. n.s. In % of total balance sheet 5.2% 0.2% -8.4% Share capital or personal % % 0.0% Issue, merger, contribution premiums % % 0.0% Legal reserve % % 0.0% Investment reserve % % 0.0% Volunteer reserve % % 0.0% Retained earnings % % 7.5% Net income for the fiscal year % % -15.3% Financial debts % % -3.3% In % of total balance sheet 33.2% 35.9% 36.9% Other financing debts % % -3.3% Current liabilities % % -6.9% In % of total balance sheet 27.9% 24.3% 28.8% Current liabilities debts % % -6.9% Other provisions for risks and charges % % 63.6% Translation-liability differences % % -66.5% Cash-liability % % 3.2% In % of total balance sheet 33.7% 39.6% 42.7% Total Liabilities % % -8.3% Source: MED PAPER 21

22 III.3. Cash-Flow Statement In MAD thousand Var. 14/ Var. 15/16 Self-financing capacity % % Disposals and reduction of fixed assets 0 0 n.a. 9 n.s. Total stable resources % % Acquisitions and capital increase % % Repayment of financing debts % % Non-value uses % % Total stable uses % % Variation in the need for global financing % % Cash position variation n.a % Net Cash % % Source: MED PAPER 22

23 MED PAPER s interim financial position IV.1. Income statement In MAD thousand 30/06/ /06/2017 Var. 16/17 Turnover % Product inventory variation n.a. Operating income % Purchases consumed (2) of materials and supplies % Other external charges % Duties and taxes % Staff costs % Other operating expenses 0 0 n.a. Depreciation & Amortization % Operating income % Income from equity securities and other investment securities 0 0 n.a. Exchange gains % Interests and financial revenues 0 0 n.a. Financial reversals; charge transfer % Financial products % Interest expenses % Exchange losses % Financial allocations 0 0 n.a. Financial expenses % Financial income % Current income % Income from disposal of fixed assets n.a. Other non-current revenue n.s. NBV of sold fixed assets n.a. Other non-current expenses % Non-current income n.a. Pre-tax income n.a. Corporate Taxes % Net Income n.a. Source: MED PAPER 23

24 IV.2. MED PAPER balance sheet In MAD thousand 31/12/ /06/2017 Var. 16/17 Fixed assets % In % of total balance sheet 50.8% 57.0% Fixed assets in non-value % Intangible assets % tangible assets % Financial fixed assets % Current assets % In % of total balance sheet 49.0% 42.9% Inventory % Receivables % Translation-asset differences % Cash assets % In % of total balance sheet 0.1% 0.1% Total Assets % Source: MED PAPER In MAD thousand 31/12/ /06/2017 Var. 16/17 Equity % In % of total balance sheet -8.4% -2.6% Share capital or personal % Issue, merger, contribution premiums % Legal reserve % Investment reserve % Volunteer reserve % Retained earnings % Net income for the fiscal year n.a. Financial debts % In % of total balance sheet 36.9% 23.5% Other financing debts % Current liabilities % In % of total balance sheet 28.8% 35.4% Current liabilities debts % Other provisions for risks and charges % Translation-liability differences % Cash-liability % In % of total balance sheet 42.7% 43.8% Total Liabilities % Source: MED PAPER 24

25 IV.3. Cash-Flow Statement In MAD thousand 30/06/ /06/2017 Var. 16/17 Self-financing capacity % Disposals and reduction of fixed assets n.a. Total stable resources n.a. Acquisitions and capital increase % Repayment of financing debts n.s. Non-value uses 0 0 n.a. Total stable uses n.s. Variation in the need for global financing % Cash position variation n.s. Net Cash % Source: MED PAPER 25

26 RISK FACTORS OF THE COMPANY 26

27 Environmental risk This risk is materialized by the possibility of a tightening of the regulatory environment in which the Company operates. At present, there is no specific environmental regulation in Morocco with regard to the paper industry, especially concerning the upgrading of its waste and the minimization of the impact of its waste on its environment. The standardization of the production process in the context of the environmental constraints applied in Europe could force the Company to make significant investments to comply with the legislation. Operational risk Operational risk is the degree of uncertainty associated with the assets generated by an investment and its ability to provide a return. In the case of MED PAPER, this risk is materialized in particular by the difficulty for the company of sourcing raw material, the difficulties encountered by the Company to recover its debts as well as the strong competition from which it suffers. In addition, the Company is experiencing difficulties in financing its activity, particularly for the supply of raw materials. In this context, the Company is negotiating with its banks to unblock the situation. Finally, it should be noted that the Company's production and processing equipment could hinder its ability to compete with products imported into Morocco due to its relative obsolescence. Risk related to the availability of waste paper (main input of packaging products) The company wants to increase its offering of packaging products and paper bags. Nevertheless, the financing difficulties and the lack of raw material (mainly waste paper), may limit MED PAPER's development forecasts. Risk related to the plastic bag segment Between 2015 and 2016, the company acquired the machines for making paper bags. However, the plastic bag has not completely disappeared limiting the demand for paper bags. In addition, other lines of bag products (like the woven and non-woven polypropylene bag) are available on the national market. These two factors mentioned above may limit the return on investment made by MED PAPER to gain market share in this segment. Customer risk The Company is confronted with the problem of unpaid debts which weakens its financial base and increases the tensions on its cash flow in a competitive environment. Risk linked to the evolution of raw material prices This risk covers the difficulties related to the importation of some of the inputs consisting mainly of pulp (especially long-fiber). Pulp is exposed to erratic variations in international markets. This volatility is likely to have an impact on the Company's storage policy, income and the management of its cash flow. Risk of dependence on a group of customers The Company generates a portion of its sales with wholesalers, semi-wholesalers and processors. In addition, the Company has historically realized a significant portion of its sales with Cosumar. 27

28 Currency risk In addition to exposure to fluctuations in raw materials (mainly paper pulp) denominated in dollars, the Company is exposed to the volatility between invoicing and payment currencies that may impact its income and financial situation. Demand risk National demand for print-writing paper is closely correlated with enrollment rates, literacy levels, and changes in household purchasing power. Situational cyclicality may lead in its wake to variations in this demand. Nevertheless, the low per capita print-writing consumption ratios recorded in Morocco contain the risk of a sharp drop in demand for products marketed by the Company. Competitive risk The competitive risk can be materialized by the arrival of a new competitor, by bringing together operators of the sector at the national level as well as by the erosion of the market shares held by the Company (MED PAPER) for lack of competitiveness by applied prices and / or because of insufficient quality of the products marketed. The Company is also exposed to aggressive competition from informal operators. These practices encouraged by the existence of customs barriers to entry should logically lose their meaning with the ongoing customs dismantling. From now on, the difference between the operators should essentially concern the quality of the products offered. Tax risk The Company has been the subject of three successive tax audits covering the 2014 and prior fiscal years, which resulted in notifications totaling approximately MAD 10 million excluding surcharges and late penalties. The management of the Company has rejected all of the adjustments notified by the tax authorities and has not recorded any corresponding provision. It has also initiated discussions with the said administration with a view to definitively settling these tax disputes. During the second half of 2017, the Company reached an amicable agreement with the tax authorities concerning the abandonment of a portion of the debt relating to tax adjustments through the payment of MAD 1.7 million. Negotiations are continuing to reach an amicable agreement on the remaining part. Risk of non-execution of the Business Plan The Company is in a difficult situation, particularly in terms of business, operations and finance. The uncertainty associated with the outlook is therefore higher and the effective achievements could deviate significantly from the forecasts. Labor risk A labor conflict has gained the Company following the sudden stop of the production and the damage of the machines. The management of MED PAPER has decided to dismiss the persons concerned and prosecute them for material damage and sabotage. The company may be forced to pay MAD 17 million in this dispute. This amount is not provisioned in the accounts of the Company. 28

29 Climate risk Climate risk is a risk linked to the vulnerability of the Company to variations in climate indices characterizing the Northern region (precipitation, floods, etc.). 29

30 DISCLAIMER The aforementioned information is only a part of the prospectus approved by the Moroccan Capital Market Authority (AMMC) under the reference No. VI/EM/003/2018 on the 6 th of March The AMMC recommends that the prospectus in French, made available to the public, be read in full. 30