The basic objectives of the strategy 2020

Due to the accomplishment of the majority of objectives to be implemented as part of the strategy for 2010-2015, the Management Board of Grupa Kęty S.A. decided to develop and submit to the Company’s Supervisory Board a new strategy for 2015-2020 (“Strategy 2020”). In relation to the approval of its basic objectives at the Board meeting held on 9 February 2015, the Management Board presents the following information:

Strategy objectives
The major objective of the strategy for 2015-2020 is to ensure stable growth of the company value for shareholders due to:

  • sustainable development leading to systematic increase in the generated profits and cash;
  • stable dividend policy;
  • creating the potential for future development in further periods;
  • maintaining high corporate governance standards.

Generated profits depend on the market position and the size of the organisation and these factors, in turn, depend on the attractiveness of the product offer and the effectiveness of the organisation operation. For this reason, business segments will place special emphasis on systematic development in the areas with high level of required competences and consistent increasing of the value added chain. Owing to high effectiveness accomplished mainly due to internal organisational measures and systematic upgrading of the machines and equipment base, the Capital Group intends to shape its product offer in such a way so as to safeguard the present leading position on the home market in the chief operational segments and vigorously grow sales on European markets.

Dividend policy
Also, the dividend policy will be modified. Owing to a very good financial situation and planned upholding of profitability, the Company’s Management Board decided to increase the dividend payment ratio to 60% of consolidated net profit.

Operational objectives and macroeconomic assumptions
Furthermore, by implementing the ambitious investment programme worth over 930 million PLN and systematically streamlining the processes in the organisation, the Management Board wants the Capital Group to be ready at the end of the time horizon of this strategy implementation for further challenges.

On the basis of adopted assumptions concerning the levels of the prices of raw materials and of exchange rates, particular segments are forecasting the following sales revenues:

  • Extruded Products Segment – 1,158 million PLN (+56%)
  • Aluminium Systems Segment – 953 million PLN (+37%)
  • Flexible Packaging Segment – 652 million PLN (+64%)
  • Building Services Segment – 200 million PLN (+40%)
  • Building Accessories Segment – 80 million PLN (+82%)

Having regard for the above, consolidated sales revenue of the Capital Group in 2020 should amount to 2,820 million PLN (+54%), operating profit should amount to 314 million PLN, operating profit plus depreciation (EBITDA) to 465 million PLN (+50%), and consolidated net profit to 264 million PLN (+50%).

The above forecasts have been prepared on the basis of the following macroeconomic assumptions:

average aluminium price (3M) – 1,900 USD/ton

average USD rate of exchange − 3.62 PLN

average EUR rate of exchange − 4.20 PLN

EUR/USD relation − 1.16

GDP growth for Poland – 3.4%

Investment plan
The Management Board assumes that, in the period subject to this strategy (2015-2020), capital expenditure will amount to ca. 930 million PLN, including:

  • Extruded Products Segment – 379 million PLN
  • Aluminium Systems Segment – 183 million PLN
  • Flexible Packaging Segment – 254 million PLN
  • Building Services Segment – 23 million PLN
  • Building Accessories Segment – 39 million PLN

This forecast does not include any possible additional expenditure on acquisitions, whose effects were also excluded from the forecast of sales and results.

In relation to the implemented investment programme and the planned dividend payment, the Capital Group’s debt will rise to ca. 570 million PLN in 2017 (ca. 470 million PLN in net terms) and ca. 370 million PLN in 2020 (ca. 130 million PLN in net terms).

Uncertainty risk and the frequency of the strategy progress evaluation
These strategy objectives, including the forecasts of future revenue and profits, have been established on the basis of a number of assumptions, expectations and projections and, as a result, are subject to uncertainty risk and may change due to both external and internal factors. The Company will assess the possibility of the implementation of Strategy 2020 and make any possible adjustments on an annual basis.