Thrace Plastics and Commercial S A : Announcement of FY 2019 Financial Results

April 30, 2020

Announcement of FY 2019 Financial Results

The purpose of the current release is to present the Group's financial results for the fiscal year 2019 and to highlight the basic factors that contributed to such.

FINANCIAL RESULTS OF YEAR 2019

ATHEX:PLAT

Reuters:THRr.AT

Bloomberg: PLAT GA

The purpose of the current release is to present the Group's financial results for the fiscal year 2019 and to highlight the basic factors that contributed to such.

The major developments of the financial year 2019 are highlighted as following:

The sales volume of the Group amounted to 121.3 thousand tons, marginally reduced compared to the year 2018. In particular, the sales volume in Technical Fabrics Unit amounted to 90.3 thousand tons in year 2019 compared to 93.5 thousand tons in 2018 (-3.4%) whereas in Packaging Unit it settled at 35.7 thousand tons in 2019 compared to 34.4 thousand tons in 2018 (+3.6%). The changes in the Technical Fabrics Unit are mainly due to the closure of the woven mega sacks (FIBC) factory in Bulgaria and the reduction in sales of subsidiaries in Scotland and the United States. On the contrary, the rise in the Packaging Unit came mainly from the Greek market, due to an increase in sales volume in the food and paint industries.

The consolidated Turnover for the fiscal year 2019 amounted to € 327.8 million compared to € 322.7 million in 2018 (+1.6%)

The consolidated Gross Profit amounted to € 63.5 million compared to € 63.2 million in 2018. The reduction in Gross Profit margin was marginal, settling at 19.4% compared to 19.6% in 2018. The reduction in the gross profit margin was mainly due to the drop in the gross profit margin of the Group's subsidiary in Scotland, due to the internal restructuring of factories in order to prepare for the installation of the new needlepunch line, and also due to the increased competition in the UK market. The preparation for the relocation of the new line in Scotland has also resulted in a reduction in the relative production of the subsidiary in the United States.

The consolidated EBITDA for the fiscal year 2019 increased by 4.5% (€ 28.7 million compared to € 27.5 million in 2018). In addition, within the year 2019 there were expenses and income items that do not relate to the ordinary business activity of the Group and which affected accordingly the EBITDA level. In particular, the 'adjusted' EBITDA for the year 2019 amounted to € 30.6 million versus the corresponding 'adjusted' EBITDA of year 2018 which amounted to € 29 million, posting an increase of 5.6%.

The non-recurring expenses and income for the years 2019 and 2018 are analyzed as follows:

Non-Recurring Expenses for the Fiscal Year 2019
(amounts in EUR thousand)
€ 1,679	Impairments and provisions for indemnities at Thrace Linq *
€273	Internal reorganization in Thrace Ipoma - final termination of the (labor intensive) production process of woven mega sacks (FBIC) in Bulgaria
€549	Provisions for staff indemnities in the context of the internal restructuring of Don & Low Ltd**
Non-Recurring Income for the Fiscal Year 2019
€640	Profit from the sale of fixed assets at Don & Low Ltd in the context of its internal reorganization**

* The Group decided to discontinue the business activity of the above mentioned company within the year 2020 and to cover the market of Geosynthetic Fabrics in the United States through subsidiaries in Europe and its joint venture in the US Lumite Inc. For this reason, the company proceeded with the appropriate impairments and provisions.

** Don & Low LTD reduced its presence in Woven Technical Fabrics while it increased its production capacity in the Non-Woven Technical Fabrics. In this context, there were profits emerging from the sale of fixed assets (looms) as well as expenses relating to staff indemnities.

Specifically, a summary of the financial results of the Group for the financial year 2019 compared to the financial year 2018 is provided below:

(amounts in EUR million)	2019	2018	% Change
Consolidated Turnover	327.8	322.7	+1.6%
Consolidated Gross Profit	63.5	63.2	+0.5%
Consolidated EBITDA*	28.7	27.5	+4.5%
Adjusted Consolidated EBITDA*	30.6	29.0	+5.6%
Consolidated ΕΒΙΤ*	12.1	13.7	-11.6%
Consolidated EBT	8.3	10.0	-16.6%
Consolidated EATAM	3.7	7.7	-51.9%
Basic Earnings per Share (in Euro)	0.0850	0.1765	-51.8%

The total Equity on 31.12.2019 amounted to € 146.3 million compared to € 141.6 million on 31.12.2018 with the Net Debt standing at € 83.5 million compared to € 78.4 million on 31.12.2018. The ratio Net Debt / Total Equity settled at 0.57x compared to 0.55x on 31.12.2018.

Prospects and Outlook of the Group for the Financial Year 2020

The uncertainty in the broader macroeconomic and financial environment along with the volatile business climate as well as the effects of the spread of the COVID-19 pandemic, are risk factors that do not allow for reliable assessments regarding the Group's future performance. At the same time, the Management continues to monitor and assess these risk factors. Especially in relation to the effects of the pandemic and the potential recession it has already had on the local economies, the impact that it would have on the Group's financial statements cannot be accurately estimated. In any case, the Management evaluates the data on an ongoing basis in order to ensure that all necessary and possible measures and actions are taken in order to reduce the negative effects on the Group's business activity, as a result of this event.

In relation to the current financial conditions, the improved financial results of the first quarter of 2020, compared to the previous financial year, will increase the capability of limiting potential risks if they arise in the future.

Regarding the second quarter financial performance, the Group does not face significant impact from the adverse conditions due to the spread of the pandemic. This development is a result of the fact that the decreased product sales in sectors with limited activity (e.g. catering, tourism), are counterbalanced by the increased sales of products that demonstrate significantly increased demand, as they relate to the areas of personal health protection, hygiene and food packaging and for which demand is expected to remain high in the near future.

Maintaining the Group's strong capital structure and the necessary liquidity, combined with continuous monitoring of the operating parameters and the action plan developed in a timely manner, are necessary conditions to reduce the potential negative effects due to the spread of the pandemic and to ensure operational and business continuity. The Management of the Group takes all the necessary decisions and actions and continues to work towards this direction.

* Note

Alternative Performance Measures (APM): During the description of the developments and the performance of the Group, ratios such as the EBIT and the EBITDA are utilized.

EBIT (The indicator of earnings before the financial and investment activities as well as the taxes): The EBIT serves the better analysis of the Group's operating results and is calculated as follows: Turnover plus other operating income minus the total operating expenses, before the financial and investment activities. The EBIT margin (%) is calculated by dividing the EBIT by the turnover.

EBITDA (The indicator of operating earnings before the financial and investment activities as well as the depreciation, amortization, impairment and taxes): The EBITDA also serves the better analysis of the Group's operating results and is calculated as follows: Turnover plus other operating income minus the total operating expenses before the depreciation of fixed assets, the amortization of grants and the impairments, as well as before the financial and investment activities. The EBITDA margin (%) is calculated by dividing the EBITDA by the turnover.

Adjusted EBITDA (The adjusted indicator of operating earnings before the financial and investment activities as well as the depreciation, amortization, impairment and taxes): The adjusted EBITDA equals with the EBITDA excluding any extraordinary Expenses/Income.