The Ergis Group after 1H 2016: slightly increased revenue, dividend pay-out and plans to launch another nanoERGIS film line

THE ERGIS GROUP AFTER H1 2016: SLIGHTLY INCREASED REVENUE, DIVIDEND PAY-OUT AND PLANS TO LAUNCH ANOTHER NANOERGIS FILM LINE

In H1 2016, the ERGIS Group, leading plastics processing company in Central and Eastern Europe, generated revenue of PLN 350.4 million, which represents a 1.4% increase relative to H1 2015. The Group recorded operating profit of PLN 20.8 million and net profit of PLN 14 million. H1 EBITDA was PLN 33.4 million.

The Group recorded a 5.81% growth in sales of its major product category, which is industrial packaging. Sales of soft PVC film and printed packaging grew by 8.94% and 6.45%, respectively.

Given the success of its key product which is multilayer nanoErgis film, the Group started building another line for the production of this film in the Oława plant. The launch is scheduled for the second half of 2017, with expenditure on this project not expected to exceed PLN 30 million.

In line with the Dividend Policy adopted by the Company, Ergis paid out PLN 0.16 per share to its shareholders, which is the highest dividend in the Group's history.

On 17 May, the Company started implementing a programme to repurchase its own shares which will be later cancelled. The Company intends to repurchase up to 5% shares.

FINANCIAL PERFORMANCE IN DETAILS

The following table shows the ERGIS Group's financial performance for H1 2016:

PLN '000	H1 2014	H1 2015	H1 2016	Change H12015/H12016
Revenue	335,720	345,444	350,390	+1.4%
Operating profit	18,955	24,274	20,823	-14.2%
Gross profit	15,904	24,292	17,286	-28.8%
EBITDA	30,242	36,019	33,420	-7.2%
Net profit	12,362	19,720	14,021	-28.9%

In H1 2016, the prices of strategic raw materials fluctuated. Plasticisers, PET and some polyethylene types were costed less than a year ago. On the other hand, PVC and some LLDPE types crucial for the Company's business have become more expensive. Thus, the Company believes the prices of strategic raw materials had no material bearing on the H1 2016 performance.

The Group's sales revenue rose by 5.81% in the major product group, which is industrial packaging, including stretch film and PET tapes manufactured in Oława, and by 6.45% in the printed packaging category which is manufactured by Flexergis in Nowy Sącz.

The Group's profitability fell slightly relative to H1 2015. In H1 2016, EBITDA was PLN 33.4 million (H1 2015: PLN 36 million). The difference is attributable to the exceptionally high performance in Q2 2016 . To note, H1 2014 EBITDA was PLN 30 million.

WHAT'S NEXT?

Given the steadily growing demand for multilayer nanoErgis film, the Group started building another line to manufacture this type of film in the Oława plant. The total expenditure on the line is expected not to exceed PLN 30 million. The line is due to be launched in the second half of 2017.

'I consider our performance in the first six months of the year satisfactory. We warned well in advance that we should expect slightly lower profitability in H1 bearing in mind that profitability in Q2 2015 significantly exceeded our quarterly average, thus creating a high base-level. It was highly unlikely that we would repeat that excellent performance in Q2 2016. We are happy about the further rapid growth in sales of industrial packaging, attributable to higher sales of PET tapes and multilayer stretch nanoErgis films recorded in H1. To capture this opportunity, we started building another line in Oława for the production of this film. We are sharing our success with the shareholders by paying out a dividend of PLN 0.16 per share, the highest in our history,' said Tadeusz Nowicki, President of ERGIS SA's Management Board.

ADDITIONAL INFORMATION

The ERGIS Group, listed at the Warsaw Stock Exchange, holds the leading position in the plastics processing sector in the Central and Eastern Europe. Out of its five manufacturing plants, four are situated in Poland and one in Germany. The Group's profile includes manufacturing of packaging for food (printed multilayer laminates, and PVC and PET-based barrier films and laminates) and industrial packaging (LLDPE stretch films and PET films). Moreover, ERGIS is a manufacturer of films for packaging pharmaceuticals, hydro-insulating films and PVC compounds. In 2015 the Group's revenue exceeded PLN 675 million. As of the end of June 2016, the Group employed more than 840 people.

Additional information is also available atwww.ergis.eu