Regulatory News

Revenue grew by 16% to EUR 486 million, supported by a strong execution of cables projects from the order backlog, as well as strong demand for cables products, along with increasing LME metal prices. On the other hand, demand in steel pipes segment faced challenges, as fossil fuel transportation projects have not yet rebounded from the recent crisis. The revenue in cables segment accelerated during Q2 2021 covering the gap in steel pipes and leading to a 13% increase over the previous quarter.

Adjusted EBITDA increased by 11% to approx. EUR 48 million as the successful execution of energy projects kept operational profitability at satisfactory levels, despite low utilization levels of the steel pipes plant. Conversely, EBITDA was influenced by metal price fluctuations and amounted to approx. EUR 39 million (3.4% y-o-y). The subsidiary companies continued to focus on value-added products and services growth and managed to maintain their margins despite price inflation in all major raw materials, throughout the year.

Net finance costs further decreased by EUR 2.6 million (-16% y-o-y) to EUR 14 million for the first half of 2021, due to both lower interest rates and lower average debt levels versus the comparable period.

Profit before income tax amounted to EUR 12.2 million, at nearly the same levels of H1 2020. Stronger sales in cables during Q2 2021 affected all profitability measures leading to an almost 50% increase in profit before tax compared to the first quarter of the year.

In contrast, profit after tax for the period increased significantly to EUR 11.6 million (EUR 8.1 million in H1 2020) reaching 2.4% of sales (against 1.9% in H1 2020), as Greek subsidiaries profited from a corporate tax rate reduction from 24% to 22% on their deferred tax liabilities.

The Group continued its investments mainly in the submarine cables production plant of Fulgor in Corinth, Greece. Total capital expenditure for the Group reached EUR20million in H1 2021, split between EUR 15.6 million for the cables and EUR 4.4 million for the steel pipes segment.

Total working capital increased significantly to EUR 135 million on June 30, 2021 (+34% vs. EUR 100 million on 31.12.2020). Such increase is due to higher raw material prices and the timing of milestone payments for projects in execution. The increase was, however, constrained through stricter working capital management, i.e. negotiation of better payment terms with supply chain partners as well as closer monitoring of raw material purchases where possible. Consequently, net debt increased to EUR 367 million on June 30, 2021, up by EUR 36 million from 2020 year-end level.

Cables

The cables segment’s results in the first six months depict a solid growth in the projects’ business, as orders awarded over recent years are executed smoothly, along with some volume growth in cables products. Consequently, all plants had a full production schedule throughout the semester leading to further growth in profitability.

Hellenic Cables continued its tendering efforts and succeeded to secure several awards for new projects in the offshore wind and interconnections markets, along with frame contracts from major TSOs. At the same time, a number of projects were successfully delivered, in full or partially, during this period:

• the1 78km-long submarin eand underground electrical interconnection between Crete and Peloponnese, one of the most demanding projects ever completed worldwide (the longest and deepest – 1000m – HVAC interconnection), was successfully installed and electrified in May;
•   the electrical tests of the 150kV high voltage submarine cable that connects Skiathos to the Greek National Transmission System were successfully completed early in the year;
•   the first deliveries of 66kV inter-array cables for the Seagreen offshore wind farm in the UK took place during the semester, while the production of the remaining quantities for the project continues;
•  the production for phase B of Hollandse Kust Zuid project in the Netherlands was also completed, with delivery of the two 220kV subsea cables completed in the second quarter of the year; and
•  the production for the submarine cables for Kafireas II Wind Farm interconnection with Greece’s mainland grid started during 2021, on schedule.

On the products business unit, sales volume increased by 16% in the first half of the year, signaling a demand upturn. This, along with a positive mix, further favored the entire segment’s profitability.

Thus, the cables segment exhibited a EUR 6.5 million increase in adjusted EBITDA, reaching EUR 42.0 million in H1 2021, up from EUR 35.7 million in H1 2020, with margins slightly lower, as revenue from products increased more than revenue from projects.

Corresponding profit before income tax reached EUR 16 million, compared to EUR 14.5 million in H1 2020, while net profit after tax followed the same trend and reached EUR 14.4 million (EUR 11.1 million in H1 2020).

As a final point, it is worth noting that the investment in Fulgor’s plant for the expansion of inter-array cables capacity is now almost completed. Capital expenditure for the segment reached EUR 15.6 million, out of which EUR 12.9 million concerned the aforementioned investments in Fulgor’s plant.

All figures and tables contained in these appendices have been extracted from the Condensed Consolidated Interim Financial Statements for the period ended 30 June 2021, which have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union and authorised for issue by the Board of Directors on 22 September 2021. The statutory auditor PwC Bedrijfsrevisoren BV has reviewed these Condensed Consolidated Interim Financial Statements and concluded that based on the review, nothing has come to the attention that causes them to believe that the Condensed Consolidated Interim Financial Statements are not prepared, in all material respects, in accordance with IAS 34, as adopted by the European Union. For the Condensed Consolidated Interim Financial Statements for the period ended 30 June 2021 and the review report of the statutory auditor, please refer to www.cenergyholdings.com.

Appendix C – Alternative performance measures

In addition to the results reported in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union, this press release includes information regarding certain alternative performance measures which are not prepared in accordance with IFRS (“Alternative Performance Measures” or “APMs”). The APMs used in this press release are: Earnings Before Interest and Tax (EBIT), Adjusted EBIT, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), Adjusted EBITDA and Net debt. Reconciliations to the most directly comparable IFRS financial measures are presented below.

We believe these APMs are important supplemental measures of our operating and financial performance and are frequently used by financial analysts, investors and other interested parties in the evaluation of companies in the steel pipes and cables production, distribution and trade industries. By providing these measures, along with the reconciliations included in this appendix, we believe that investors will have better understanding of our business, our results of operations and our financial position. However, these APMs shall not be considered as an alternative to the IFRS measures.

These APMs are also key performance metrics on which Cenergy Holdings prepares, monitors and assesses its annual budgets and long-range (5 year) plans. However, it must be noted that adjusted items should not be considered as non- operating or non-recurring.

EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and investors should not consider it in isolation, or as a substitute for analysis of the operating results as reported under IFRS and may not be comparable to similarly titled measures of other companies.

APM definitions remained unmodified compared to those applied as at 31 December 2020. The definitions of APMs are as follows:

EBIT is defined as result of the period (earnings after tax) before:

• income taxes,
• net finance costs

EBITDA is defined as result of the period (earnings after tax) before:

• income taxes,
• net finance costs
• depreciation and amortisation

a-EBIT and a-EBITDA are defined as EBIT and EBITDA, respectively, adjusted to exclude:

• metal price lag,
• impairment / reversal of impairment of fixed, intangible assets and investment property
• impairment / reversal of impairment of investments
• gains/losses from sales of fixed assets, intangible assets, investment property and investments,
• exceptional litigation fees and fines and,
• other exceptional or unusual items

Net Debt is defined as the total of:

• Long term loans & borrowings and lease liabilities,
• Short term loans & borrowings and lease liabilities,

Less:

• Cash and cash equivalents