Viohalco S A : Financial results for the six months ended 30 June 2019

20 19 FI RST HALF - YEA R

FI NANCIAL RE SULTS

REGULATED INFORMATION

INSIDE INFORMATION

FINANCIAL RESULTS FOR THE FIRST HALF YEAR 2019

Brussels, 26 September 2019 - Viohalco S.A. (Euronext Brussels: VIO, Athens Stock Exchange: BIO), hereafter "Viohalco" or "the Company", today announces its financial results for the first half year of 2019.

Improved operating profitability

H1 2019 highlights

• Consolidated revenue up 1% to EUR 2,216 million (H1 2018: EUR 2,186 million);
• Consolidated adjusted EBITDA (a-EBITDA) up 9% to EUR 157 million (H1 2018: EUR 144 million), with
  consolidated EBITDA, which includes the effect of metal prices, at EUR 139 million (H1 2018: EUR 170 million);
• Consolidated profit before income tax at EUR 17 million (H1 2018: EUR 46 million).

Revenue in Eur milion

% per segment

Aluminium

															Copper
		2,186	2,216		9% 2%
					10% 2%						Cables
	1,836					31%
									31%
1,522				20%
			H1 2019		22%	H1 2018					Steel
															Steel pipes
				13%		10%
					25%
							25%					Real estate, Resource recovery
H1 2016	H1 2017	H1 2018	H1 2019												& Other
	a-EBITDA in Eur million		% per segment										Aluminium
		144	157		9%										Copper
	143				10% 1%
117		16%		40%	23%						Cables
					H1 2019	H1 2018	40%				Steel
				18%				9%							Steel pipes
				17%									Real estate, Resource recovery &
H1 2016	H1 2017	H1 2018	H1 2019				17%
								Other

Overview

The first half year of 2019 was characterised by a combination of positive developments in several of Viohalco business segments, and challenges presented by a volatile global economy and metal price fluctuations.

In the aluminium segment, the companies took full advantage of the rising global demand, driven by the metal's strong sustainability, to increase sales volumes in fast-growing markets and products. In the copper segment, the downturn in the automotive industry had a significant impact on demand, especially for rolled products. Despite this trend, the companies managed to increase both market share and sales volume, leveraging their leadership in the copper tubes market and their increased production capacity. Meanwhile, performance in the steel segment reflected the ongoing political and economic turbulence and rising trade protectionism which had a negative impact on demand levels and metal prices. The steel pipes segment performed well throughout H1 2019. Following the award of significant projects, the cables segment reported a significant increase in revenue and profitability, driven primarily by high utilisation levels across all production units in the period. The real estate segment also witnessed a positive first half year, with the performance of key retail and hospitality assets exceeding expectations in terms of both rental income and footfall.

Looking ahead to the second half of the year, global economic conditions are expected to remain challenging. However, all Viohalco segments are well positioned to take advantage of the opportunities arising in their respective markets. Across the Viohalco companies, focus will be firmly on strengthening market positions

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through ongoing investment programmes, technological innovation and continuous operational efficiency improvements.

Financial overview
Summary consolidated statement of profit or loss
Amounts in EUR thousands	H1 2019	H1 2018
Revenue	2,216,242	2,185,828
Gross profit	176,543	191,439
EBITDA*	138,637	169,794
a-EBITDA*	157,167	144,246
EBIT*	68,743	100,972
a-EBIT*	87,274	75,423
Net finance cost	-51,063	-54,742
Profit before tax	17,282	45,947
Profit for the period	3,761	40,214
Profit / Loss (-) attributable to owners of the Company	462	37,688

*APM definitions have been slightly changed compared to 31/12/2018. For further details refer to Appendix.

Viohalco's consolidated revenue for H1 2019 increased by 1% year-on-year to EUR 2,216 million (H1 2018: EUR 2,186 million). This trend was driven by increased volumes in the aluminium rolling division, cables and copper segments, which offset low demand for steel and lithographic products. During the period, metal prices declined; specifically, the average price of aluminum decreased by 11.4%, copper by 4.5% and zinc by 10.4% compared to the same period last year.

Consolidated a-EBITDA increased by 9% to EUR 157 million in H1 2019 (H1 2018: EUR 144 million).

Net finance cost decreased to EUR 51 million (H1 2018: EUR 55 million), mainly due to credit spread reductions implemented gradually across all Viohalco companies during the last two years.

Viohalco's consolidated profit before income tax for the period was EUR 17 million, compared to EUR 46 million in H1 2018, affected by the metal prices and the global slowdown in the steel industry.

Summary consolidated statement of financial position
Amounts in EUR thousands	30/6/2019	31/12/2018
Fixed & intangible assets	2,060,070	1,989,868
Other non-current assets	72,200	67,224
Non-current assets	2,132,271	2,057,092
Inventory	1,094,174	1,142,309
Trade and other receivables (inc. contract assets)	712,726	668,633
Cash and cash equivalents	154,160	163,676
Other current assets	12,704	13,976
Current assets	1,973,763	1,988,594
Total assets	4,106,034	4,045,685
Equity	1,320,398	1,304,624
Loans and borrowings	827,397	896,806
Other non-current liabilities	166,264	172,160
Non-current liabilities	993,661	1,068,965
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Loans and borrowings	985,374	902,555
	770,250	739,391
Trade and other payables (inc. contract liabilities)
Other current liabilities	36,352	30,150
Current liabilities	1,791,976	1,672,096
Total equity and liabilities	4,106,034	4,045,685

Capital expenditure for the period amounted to EUR 123 million (H1 2018: EUR 77 million), largely driven by investment in the new four-stand tandem aluminium hot finishing mill, while depreciation and amortization for the period reached EUR 71 million.

Working capital decreased by 4% compared to year-end 2018, mainly as the result of lower inventory levels and metal prices.

Viohalco companies' net debt increased to EUR 1,659 million (2018: EUR 1,636 million), mainly due to recognition of lease liabilities upon adoption of IFRS 16 - Leases.

Performance by business segment

Amounts in		Revenue		EBITDA		a-EBITDA		EBIT			EBT
EUR
thousands
Segments		H1 2019		H1 2018		H1 2019		H1 2018		H1 2019		H1 2018		H1 2019		H1 2018		H1 2019			H1 2018
	Aluminium			683,658		685,304		58,479		66,362		62,309		57,551		32,961		37,444		24,270		26,431
	Copper		554,939		544,860		22,786		31,340		27,191		25,140		15,317		25,456		7,137		15,711
	Cables		294,241		222,202		25,720		10,709		28,466		12,936		17,838		3,894		6,325		-8,140
	Steel		449,232		469,815		17,821		46,308		25,239		33,320		-1,849		27,727		-16,260		11,930
	Steel pipes		195,458		220,968		13,643		14,274		13,788		14,274		8,596		9,556		2,265		4,946
	Real			4,248			3,835			2,885			2,212			2,885			2,212			673			68			-628			-648
	estate
	Resource			23,931			28,567			651			2,057			648			2,052			-771			685			-1,782			-430
	recovery
	Other			10,536			10,277			-3,350			-3,468			-3,359			-3,240			-4,023			-3,859			-4,045			-3,853
	activities
	Total		2,216,242		2,185,828		138,637		169,794		157,167		144,246		68,743	100,972		17,282		45,947

Performance by business segment

Aluminium

During H1 2019, the aluminium market witnessed stronger growth in packaging applications, while slowing automotive build rates adversely affected demand for aluminium flat rolled. Viohalco aluminium companies took advantage of favourable international market conditions by selectively increasing sales in most attractive products and markets. In H1 2019, revenue for the aluminium segment stood at EUR 684 million versus EUR 685 million in H1 2018, mainly as a result of lower metal prices and lower sales volumes in the lithographic segment. Profit before tax amounted to EUR 24.3 million (H1 2018: EUR 26.4 million), due to a metal loss of EUR 3.9 million incurred in H1 2019 versus a metal profit of EUR 8.8 million in H1 2018.

The Greek aluminium rolling division's (Elval) focus on delivering value-added product solutions, enabled it to further strengthen its position in the global aluminium industry and increase sales volumes by 4% to 159,000 tonnes. The segment's customer-centric approach broadened its existing customer base across all geographical regions, while further strengthening longstanding relationships with blue-chip customers in the packaging,

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transportation and industrial sectors. Additionally, the companies in the segment entered into new high- potential markets, aiming to drive new business and maximize sales potential. The segment's technical capabilities are expected to further advance following the commissioning of the Elval's new four-stand tandem hot finishing mill which is expected to be fully operational in Q2 2020. This investment, which forms part of the EUR 150 million investment programme, will more than double the hot rolling capacity at the Oinofyta facility, allowing the rolling division of the aluminium segment to meet the rising demand.

Regarding Bridgnorth Aluminium in the UK, market conditions were challenging for the company's key end-user customers in the lithographic segment, due to general economic conditions and pressure from Chinese competition, which adversely affected volumes compared to the previous year. In addition the company is exposed to risks associated with Brexit, and suffered some volume declines as a result.

There were a number of strategic developments in the extrusion unit of the aluminium segment. In the automotive sector, Etem concluded the spin-off of its extrusion and 'post-operations' businesses, and formed a joint venture with Gestamp for the production of extruded aluminium profiles. The extrusion business was subsequently selected for projects related to the production of battery boxes for electrical cars. In the architectural sector, Etem Greece significantly outperformed the market, thanks to its well-established distribution channels, while sales in Bulgaria remained stable. Finally, in Etem's industrial sector, where sales were broadly stable despite intense competition, Etem focused on improving delivery standards and special requirements.

Looking ahead, a key focus for the segment will be the continued evolution aimed at meeting fast-changing customer preferences, as the aluminium market becomes more oriented towards innovative, safe, durable, lightweight and sustainable material options.

Copper

Revenue in the copper segment amounted to EUR 555 million in H1 2019 versus EUR 545 million in H1 2018. Sales volumes grew by 3.4% year-on-year to 90,000 tonnes, owing primarily to the improved performance of flat rolled products and copper tubes, following the increase in annual production capacity (by 5,000 tonnes) at the Oinofyta plant.

Meanwhile, the downward trend of the copper prices resulted in a metal loss of EUR 4.5 million for the first six months of 2019, compared to a positive metal effect of EUR 6.1 million in the prior year period. As a result, profit before tax amounted to EUR 7.1 million (H1 2018: EUR 15.7 million).

Following the successful renegotiation of loan facilities across all companies, both in Greece and Bulgaria, financial expenses in the period were EUR 7.2 million, a year-on-year improvement of 18.2%, resulting in a reduction in the effective interest rate and an extension in the maturity of the loans.

Halcor's investment in the copper tubes mill was successfully completed at the end of 2018, increasing overall annual production capacity by 5,000 tonnes, while Sofia Med's development of a hot dip tinning line for strips broadened access to new products and markets with higher demand and value.

In H2 2019, market conditions are expected to be mixed. While demand for copper tubes is expected to slow, the copper tubes mill is operating near full capacity and is expected to continue to do so as the mill serves high- growth customers. Demand for copper and copper alloy rolled products is expected to remain weak during the remainder of the year and therefore the growth rate of sales of Sofia Med is likely to slow. Finally, efforts in the copper segment will be focused on driving continuous improvements in quality, expanding the segment's product offering and investing in value-added products.

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