An update of the investment plan contained in Strategy 2020

Due to the observed market trends and the resulting high rates of capacity utilisation, and due to a favourable outlook for further sales growth, the Management Board of Grupa Kęty S.A. has decided to supplement and submit to the Supervisory Board the investment plan for 2017-2020 contained in Strategy 2020. In relation to the approval of the requested amendments at the Supervisory Board meeting held on 12 October 2017, the Management Board presents the following information:

The scope of amendments:

  1. An increase in investment expenditure in the Extruded Products Segment by 35 million PLN for the construction of a new profile anodising line with environmental protection infrastructure. The project is to be implemented in 2018 and the start of production is scheduled in 2019.
  2. An increase in investment expenditure in the Flexible Packaging Segment by 110 million PLN for the construction of the second BOPP film production line in the plant in Oświęcim (the area of the Special Economic Zone). The project will be implemented in the period from 2017 to 2019 as part of the company’s zonal authorisation (current report dated 1 February 2016), the start of the production is scheduled in 2020, and the expected full capacity utilisation is planned in 2022 (180 million PLN of additional sales revenue assuming 100% capacity utilisation). In addition, in the project implementation period, i.e. from the fourth quarter of 2017 until the end of 2019, the company will recognise ca. 20 million PLN of a tax asset due to the operations in a special economic zone, which will increase net profit.
  3. Abandoning the project of the construction of new headquarters for the Aluminium Systems Segment, which will decrease the investment plan by 37 million PLN.

These changes will affect the basic financial objectives projected for 2020 as follows:

  1. An increase in sales revenue by 100 million PLN up to 3,357 million PLN
  2. An increase in EBITDA by 8 million PLN up to 514 million PLN
  3. An increase in EBIT by 1 million PLN up to 360 million PLN. The Management Board assumes that the main project affecting the changes in the forecasts, i.e. the new BOPP production line, will offer only 40% capacity utilisation in 2020 and, hence, there is only a slight increase in operating profit.
  4. A decrease in consolidated net profit by 2 million PLN to 263 million PLN due to a higher debt taking into account little impact on operating profit.

The said changes in basic financial parameters are stated based on the macroeconomic assumptions applied in the process of developing Strategy 2020.

Investment projects will be financed entirely with additional borrowings, e.g. bank loans.