Masterplast : Interim management statement

MASTERPLAST PLC.

INTERIM MANAGEMENT REPORT

26 October 2023

MASTERPLAST PLC.

Interim management report

2023

Third quarter

Consolidated, non-audited

According to International Financial and Reporting Standards (IFRS)

26 October 2023

MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

The main activity areas of Masterplast (later: "Group", "Masterplast", "Company"), founded in 1997, are production and sales of building insulation materials and systems in construction industry, complemented by the production and sale of healthcare textile and hygiene products. The international Group, which headquarter is based in Hungary, has its own active subsidiary companies in 10 European countries, where 8 different production plant units are operated. The Group represents itself with its construction industry products on thermal insulation system, heat, sound and water insulation, roofing and on dry construction market, furthermore the Company participates with hygiene products on healthcare market. The international and domestic manufacturing bases ensure competitiveness to deliver the products of the Group to the European markets and markets outside Europe, via its subsidiaries and partners. The aspects of sustainability, energy efficiency and environment protection are considered by Masterplast as high importance in the internal processes, as in production and innovation.

1. SUMMARY

The decline in the construction market continued in the third quarter, as a result of the lower demand the Company's revenue decreased by 30% compared to the base period. Weakening demand intensified competition, narrowed margins, the lower production capacities resulted in an increased unitcost and a slower (end-of-quarter)run-out of high-priced stocks. Adapting to the changed market conditions, the Company focused on reducing operating costs, optimizing production capacities and inventory levels, and on efficient energy cost management. The measures implemented have already significantly reduced operating losses and their impact will increase in the next quarter. As a result of all, the Company's EBITDA loss was EUR -439 thousand in the third quarter (-1.1% EBITDA ratio, cumulative -2,932 thousand euros, -2.6% EBITDA ratio) -2 493 thousand, -3,3% EBITDA margin), and is expected to close the fourth quarter with a positive EBITDA result. Favorable exchange rate effects for the Group improved the result, so the Company closed the third quarter with a loss after tax of EUR 598 thousand, and the loss after tax for the first nine months of the year was EUR 9 908 thousand. Due to the delay in building energy renovation programs, a wait-and-see attitude is common in the market, and low demand is expected at least until the start of these programs. However, the implemented efficiency measures, strict cost management and the run- out of raw materials purchased at high prices are already predicting positive EBITDA results from the fourth quarter. The last quarter's earnings will not expected to offset losses of recent quarters, the Company will not reach the profit stated in its previously published annual forecast. The Company will revise its 2023 forecast based on year- end data if it was necessary.

With the measures on the table to meet the EU energy policy objectives (REPowerEU plan; "Fit for 55%" package of measures), the Company's medium-term business outlook in the insulation market remains positive. According to the Company's updated medium-term profit forecast, Masterplast could return to its original growth path from 2024, and annual profit after tax could exceed EUR 30 million by 2026. Relying on these factors, the Company - with intention to maintain its current production capacities - continues to implement the intensive investment strategy that lays the foundation for the growth path, including the elements of stone and glass wool production projects launched together with co-investors.

Data in 1000 EUR	Q3 2023	Q3 2022	2023 YTD	2022 YTD
Sales revenues	38 301	55 029	113 715	164 136
EBITDA	-439	5 729	-2 932	19 363
EBITDA ratio	-1,1%	10,4%	-2,6%	11,8%
Profit/loss after taxation	-598	5 554	-9 908	17 031
Net income ratio	-1,6%	10,1%	-8,7%	10,4%

Source: consolidated non-audited report of the Group on 30th of September 2023 and non-audited report on 30th of September 2022 based on IFRS accounting rules, as well as the non-audited data from the Group's management information system

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

• Recent events - Russian-Ukrainian war, epidemic measures, energy crisis - resulted in high inflation and rising interest rates worldwide. All of this led to a narrowing of construction industry demand at the European level as of the last quarter of last year, both in the new construction market and in the renovation segment. the wait-and- see attitude is common on the market driven by the expiration of subsidized building renovation programs and the delay in the start of new programs. The supply chain difficulties typical of previous periods no longer exist, the supply of goods is not interrupted. As a result of sharp competition developed in the construction industry, prices have fallen significantly.
• In response to the changed circumstances, the Company's management developed an action plan for three areas. The decision-making and operational structure of the management was transformed. Effective headcount optimization reduced the Group's workforce by around 250 people and as part of further cost reduction plans, the defined goal is to achieve annual savings of EUR 2 million.
• The Group's sales revenue was EUR 38 301 thousand in Q3 2023, 30% lower than the base period.
• The revenue of the thermal insulation systems product group - representing the largest share (56%) and which mainly includes self-manufactured products - decreased by 25%, while that of roofing foils and accessories, also slef-manufactured, increased by 1%. Sales decreased in the Company's other product groups: dry construction system product group by 29%, heat, sound and water insulation materials by 38%, building industry accessories by 26% and industrial applications product group by 70% compared to last year's third quarter base.
• The Company's turnover increased in Poland (21%), Croatia (8%) and, despite the war situation, also in Ukraine (2%). In the most important Hungarian market, sales were 45% below the base level, which represents a significantly larger decline compared to the Company's other markets. Sales decreased in the Export market by 26%, by 23% in Romania, by 47% in Germany, by 4% in Italiy, by 16% in Serbia, by 23% in Slovakia and by 26% in North Macedonia.
• The margin was significantly below the value under the base period, due to lower sales revenue and lower utilisation of production capacities, as well as the impact of raw materials purchased at higher prices. Stocks of higher-priced raw materials ran out in the quarter under review, which predicts an improvement in margins in the coming periods.
• In line with demand trends, production outputs at Serbia's EPS fiberglass mesh production plants decreased compared to a year earlier. Due to the lower capacity utilization, the Company reduced the number of employees by approximately 210 people in its production facilities in Serbia. The output of the fleece production unit in Aschersleben also decreased compared to last year's base, where production has been suspended for shorter period due to reduced demand. At this plant, the German state provides partial wage compensation to the Company (Kurzarbeit) in order to compensate for lost incomes. The output of diffusion roofing foil production in Sárszentmihaly decereased, and it still generated loss. Due to low demand, only a small series of production took place in of healthcare finished products in the central site. In the Group's plant in Kál, the implementation of the equipment of the new EPS production line has been completed, but due to the drop in market demand, production in this plant is currently set to a single-shift work schedule. The XPS investment in Subotica and the new EPS investment in Italy have also been completed, where production can start in the last quarter, in preparation for serving the market needs that are expected to pick up next year.
• The mineral wool projects treated as prority are progressing addording to plan.The glass wool factory investment in Szerencs will be implemented in strategic cooperation with Selena FM S.A., with a 50%-50% share, and the Halmajugra rock wool factory investment also will be implemented jointly with a professional co-investor, Market Építő Zrt. The start-up of the factories is expected in the first half of 2025.
• The cost of materials and services - including the change in the self-manufactured inventories as well - were 25% below the base level in the first quarter.
• Despite the wage increases and thanks to headcount optimization measures, the Company's personnel expenses decreased by 15% in the third quarter of 2023 compared to the base period. At the end of September 2023, the Group employed 1 170 people, compared to its 1 536 employees at the end of the base period.

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

• In terms of other operating results, the Company recorded a loss of EUR 96 thousand compared to the profit of EUR 1 198 thousand in the last year.
• The Group's EBITDA in Q3 2023 was a loss of EUR 439 thousand (-1,1% EBITDA ratio) compared to EUR 5 729 thousand (10,4% EBITDA ratio) in the base period. Considering the first nine months of the year, the Group's EBITDA was a loss of EUR 2 932 thousand (-2.6% EBITDA) compared to a profit of EUR 19 363 thousand (11.8% EBITDA share) in the base period.
• Taking depreciation into account, the result of earnings before interest and taxes (EBIT) was a loss of EUR 2 065 thousand, compared to the base profit of EUR 4 358 thousand. The EBIT in the first three quarters of the year was a cumulative loss of EUR 7 596 thousand, compared to the profit of EUR 15 312 thousand in same period of last year.
• The Company's interest expenses increased moderately, and as a result of favorable exchange rate effects for the Group - weakening HUF foreign exchange rate - the unrealized exchange rate result from the revaluation of foreign currency-based receivables and liabilities was also accounted for in the third quarter of 2023. The Company has mostly HUF-based bonds with favorable fixed interest rates (~2,15%) and euro-based loans with variable interest rates (~2,85%), so the deteriorating interest rate environment has a moderate impact.
• As a result of all these effects, the Company's net profit in Q3 2023 was a loss of EUR 598 thousand, compared to a profit of EUR 5 554 thousand a year earlier. For the first nine months of the year, the Group's profit after tax was a loss of EUR 9 908 thousand compared to a profit of EUR 17 031 thousand in the base period.
• Due to the ongoing new CAPEX projects, the value of fixed assets at the end of September 2023 was EUR 132 734 thousand, EUR 33 164 thousand higher than at the end of the base period.
• The value of inventory was EUR 40 059 thousand at the end of September 2023, is 33% lower than the closing value of December 31, 2022, besides compared to the high base at the end of the third quarter, it decreased by EUR 27 489 thousand, by 41%, as a result of the measures introduced to optimise inventory levels. The Company will continue to operate at lower inventory levels in the coming quarters.
• The Company's accounts receivable closed at EUR 20 919 thousand at the end of September 2023, which is 25% and EUR 6 859 thousand lower compared to base period, with declined 30% revenue.
• The Group's cash balance was EUR 22 613 thousand at the end of September 2023, which is EUR 7 291 thousand higher than the balance at the end of the base period.

2. Business Prospects

Due to the unfavourable interest rate and inflation environment and to the wait-and-see attitude, the downturn is larger than expected both in the housing market and in the renovation segment, not only in Hungary but also internationally. The European Council and Parliament have agreed on a significant reduction of the energy efficiency targets for 2030, which all Member States will have to meet by renewing their buildings at a certain pace (REPowerEU plan; "Fit for 55%" package of measures). This will entail changes in the regulations and the launch of renovation programmes in the Member States, which will lead to a significant increase in demand for insulation in the medium term, but in the short term, due to the wait-and-see attitude of the market, no significant recovery in demand is expected.

In response to the subdued market conditions, the Company's focus has shifted to optimising operations, production and inventory levels, as well as conscious energy management. The Company has restructured its management operations more efficient, reviewed its processes and and launched significant headcount optimization and cost reduction program both in the field of production and operations. The measures taken have already resulted in improvement in EBITDA levels from the second quarter. Continued cost management in line with the level of sales and the run-out of raw materials previously purchased at higher prices are already projecting positive EBITDA production from the last quarter of the year. However, the last quarter's earnings will not expected to offset losses in recent quarters, the Company will not reach the profit stated in its previously published annual forecast. The Company will revise its 2023 forecast based on year-end data if it was necessary.

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

Based on the medium-term business prospects strengthened in the thermal insulation industrial market, the Company strives to maintain its current production capacities, strengthen its market positions, and continues to implement its investment strategy to support its growth path.

In recent years, the Group has made significant investments in production development. The Group has significantly increased its capacity in the production of fiberglass mesh and diffusion roofing foils, which enables it to serve the premium market with the highest quality standards. With three additional plants - one XPS and two EPS plants - to be launched in 2023, the Group's production capacity for thermal insulation materials has also been increased by orders of magnitude, opening up the possibility of further expansion in Western European markets. The completion of the fibre insulation material manufacturing projects launched from the source of the HUF 9.22 billion of stock market capital increase in October 2022 includes the potential to take a big step forward. The Company is working together with Market Építő Zrt. on the construction of a stone wool factory with an annual capacity of 35 000 tons in Halmajugra. To carry out the joint work, the Company acquired a 50% stake in MIP Zrt. on 9 June 2023, of which MARKET Építő Zrt. is the shareholder of MIP Zrt. with 50% ownership is Market Építő Zrt. For the production of glass wool, the Company had previously acquired PIMCO Ltd., a 4.3-hectare industrial area prepared for factory construction and an advanced glass wool manufacturing investment project are available, for the implementation of which a nonrefundable state subsidy of HUF 5,645 billion is provided by Hungarian Investment Promotion Agency. In June, the Company entered into a strategic cooperation with the Polish Selena FM S.A. Under the cooperation, the companies decided to continue the glass wool plant investment in Szerencs jointly with a 50-50% ownership. One of the main raw materials for the product is waste glass, which will be recycled during production according to the principles of circular economy. Both fibre insulation material plants will be equipped with environmentally friendly, modern electric furnace and production technology, which will be partially powered by renewable energy sources.

The company's vision is that by the second half of the decade, Masterplast will be the only insulation materials manufacturer in the Central and Eastern European region with significant manufacturing and market positions in both plastics and mineral insulation materials.

Masterplast's prospects are further strengthened by the module house business, which is receiving increasing attention. Masterplast Modulhouse - following the previous successful office building projects - has now started its first residential building construction project. The future of this technology is also promising from an environmental point of view, as manufacturing buildings under factory conditions eliminates on-site waste.

3. Presentation of the external economic and industrial environment

The external economic and industrial environment has a significant effect on the production and sale of the insulation and other construction materials, which are the main activities of the Masterplast. While the sale of the constructional and accessories products is mainly in relation with the new buildings market, the insulation related materials (primarily the heat insulation) depend on both the new building and home renovation markets.

Recent events - Russian-Ukrainian war, epidemic measures, energy crisis - resulted in high inflation and rising interest rates worldwide. All of this led to a narrowing of construction industry demand at the European level as of the last quarter of last year, both in the new construction market and in the renovation segment. the wait-and-see attitude is common on the market driven by the expiration of subsidized building renovation programs and the delay in the start of new programs. The supply chain difficulties typical of previous periods no longer exist, the supply of goods is not interrupted. As a result of sharp competition developed in the construction industry, prices have fallen significantly.

According to available statistical data, in Hungary, which has the most significant market of the Group, construction production fell by 4.7% in the first eight months of the year, and based on the situation at the end of August, the volume of contracts for the construction of buildings was 4% higher than a year ago, but the increase is mostly due to industrial buildings. Compared to last year's base period, which was boosted by home renovation subsidies, there was a slowdown in public investment, as well as a sharp slowdown in private investment in property development and

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

residential work. In addition to the loss of demand, the significant fall in sales prices further erode market participants' revenues. According to the assessment of the National Union of Building Contractors (ÉVOSZ), based on a survey of 150 building materials trading enterprises, the construction industry is being forced to take serious decisions, such as laying off skilled workers, closing shifts or even closing factories. Almost all actors expect something from the state: the resideintials are looking forward to new subsidies, projected in family housing and energy investments, while entrepreneurs are waiting a reduction in the bank base rate and investment incentive tenders. The state has already announced that if the funds expected from the EU for Hungary arrive, it will make a large-scale, complex renovation subsidy program available to everyone. It would be a big relief for the industry if the renovation programmes were launched.

In Romania, experts forecast GDP growth of around 2.5% and a decrease in the inflation rate to 7.1% in 2023. According to construction statistics for the first half of the year, construction production increased by 12%, which was realized mostly among industrial facilities, while the volume of construction work in residential and non-residential buildings decreased by 4.6%. Price competition has developed in the market relevant to the company's products, and the lack of skilled labour is also a major challenge for construction companies.

According to estimates for the third quarter, Poland's economic performance decreased compared to the previous year, but from the next quarter onwards, the picture outlined by experts is more favorable. The construction industry was slightly stimulated in the quarter by the government's fixed-rate home loan subsidy.

The German economy is estimated to be stagnating and the construction industry is lagging behind in terms of housing construction. The German chancellor announced a 14-point crisis plan to address the country's housing shortage, which includes, among other things, tax breaks related to construction and support for families building or buying homes.

The number of building permits and construction production have recently increased in Serbia. Serbia has decided to amend the Law on Planning and Construction. The Planning and Construction Act, which will enter into force in August of this year, brings modern solutions in the field of sustainable and energy-efficient construction and the digitization of the construction industry. In addition, they speed up building permit issuance procedures and make the permit issuance process more transparent in order to protect citizens and builders.

Construction industry players are also facing fierce competition in Slovakia, where the lack of skilled labour is also a problem. However, private sector orders are increasing and a renovation incentive programme is also on the horizon in Slovakia. The new building law, which will come into force from 2024, could help the sector, significantly by easing administrative burdens around permits.

Despite the ongoing war in Ukraine, GDP is on an increasing trend (estimated at +2%), with economic activities continuing in combat-free zones. In the first half of 2023, 61% more apartments were handed over than in the first half of 2022. Based on estimation, the number of buildings destroyed during the war is in the hundreds of thousands. Within the framework of a state program, a significant amount was allocated for new constructions and reconstructions. It is a difficulty that there is a shortage of skilled labour in the construction industry, as many of them are on the front lines protecting the territories of Ukraine.

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

4. Sales by main product groups Sales by main product groups:

Data in 1000 EUR	Q3 2023	Q3 2022	Index	2023 YTD	2022 YTD	Index
	(A)	(B)	(A/B-1)	(A)	(B)	(A/B-1)
Thermal insulation system	21 121	28 031	-25%	62 365	84 838	-26%
Roofing foils and accessories	6 969	6 904	1%	19 166	21 060	-9%
Dry construction system	2 761	3 903	-29%	9 398	14 913	-37%
Heat, sound and water insulation materials	3 553	5 722	-38%	10 154	15 906	-36%
Building industry accessories	1 254	1 700	-26%	3 658	4 717	-22%
Industrial applications	2 643	8 770	-70%	8 974	22 702	-60%
Total sales revenue	38 301	55 030	-30%	113 715	164 136	-31%
Contribution of product groups in percentage to the total sales revenue
Thermal insulation system	56%	50%	-	55%	51%	-
Roofing foils and accessories	18%	14%	-	17%	13%	-
Dry construction system	7%	7%	-	8%	9%	-
Heat, sound and water insulation materials	9%	10%	-	9%	10%	-
Building industry accessories	3%	3%	-	3%	3%	-
Industrial applications	7%	16%	-	8%	14%	-
Total sales revenue	100%	100%	-	100%	100%	-

Source: consolidated non-audited report of the Group on 30th of September 2023 and non-audited report on 30th of September 2022 based on IFRS accounting rules, as well as the non-audited data from the Group's management information system

Group sales revenue in Q3 2023 was EUR 38 301 thousand, which is -30% lower than in the base period. As a result of the recession in the industry.

Mainly due to the wait-and-see attitude of the renovation market, sales revenue of the thermal insulation system product group - representing the largest share (56%) and mainly includes self-manufactured products, fell by 25%. Within this product group, sales of adhesives and own-produced fiberglass mesh products were decreased slightly, while sales of other products were significantly down on a year earlier. Regarding regional data, sales of the product group increased in Poand, while sales in the other target countries decreased in the third quarter compared to the base.

Sales of roofing foils and accessories closed Q3 2023 at 1% above same period in 2022. In terms of markets, sales of roofing foils increased significantly in Poland, Serbia, Ukraine and in North-Macedonia, while in Croatia and in Germany it stagnated.

Third quarter sales of the dry construction systems product group fell 29% compared to the 2022 base. Drywall and drywall profile sales were both down year-on-year. Exept Italy, sales in all markets resulted in a decline across the product group.

Third quarter sales of the heat, sound and water insulation materials product group were 38% below the last year's base turnover. Within the product group, sales of mineral wool and foam foil all declined, waterproofing materials' stagnated compared to the base period. By market, sales increased in Serbia, while sales in the other countries decreased in the third quarter compared to the base.

In Q3 2023, sales of building industry accessories products were 26% below last year's base level. The Ukrainian markets saw an increase in sales, Polish and North- Macedonian markets stagnated, while sales in the other markets showed a decline in the product group.

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

In the industrial applications product group, sales closed 70% below the base level in Q3 2023. Sales of healthcare products, packaging products and non-strategic raw material trade all fell significantly

5. Sales by countries

The breakdown of the sales by countries shows the revenue realized in countries where Masterplast has its own subsidiary, regardless of which subsidiary has sold in the country. For countries where there is no subsidiary of the Group, sales are reported on the Export line.

Sales by countries:

Data in 1000 EUR	Q3 2023	Q3 2022	Index	2023 YTD	2022 YTD	Index
	(A)	(B)	(A/B-1)	(A)	(B)	(A/B-1)
Hungary	13 973	25 529	-45%	42 020	73 632	-43%
Export	3 791	5 109	-26%	12 295	14 933	-18%
Romania	3 769	4 911	-23%	10 470	13 774	-24%
Poland	3 475	2 874	21%	11 080	10 530	5%
Serbia	2 899	3 471	-16%	7 798	10 811	-28%
Germany	2 444	4 632	-47%	7 750	12 370	-37%
Ukraine	2 860	2 814	2%	6 362	5 353	19%
Italy	1 756	1 821	-4%	5 998	10 930	-45%
Slovakia	1 693	2 197	-23%	4 697	6 829	-31%
Croatia	1 277	1 179	8%	4 142	3 452	20%
North-Macedonia	364	493	-26%	1 103	1 522	-28%
Total sales revenue	38 301	55 030	-30%	113 715	164 136	-31%
Contribution of countries in percentage to the total sales revenue
Hungary	37%	48%		36%	45%
Export	10%	9%	-	11%	9%	-
Romania	10%	9%	-	9%	8%	-
Poland	9%	5%	-	10%	6%	-
Serbia	8%	6%	-	7%	7%	-
Germany	6%	8%	-	7%	8%	-
Ukraine	7%	5%	-	6%	3%	-
Italy	5%	3%	-	5%	7%	-
Slovakia	4%	4%	-	4%	4%	-
Croatia	3%	2%	-	4%	2%	-
North-Macedonia	1%	1%	-	1%	1%	-
Total sales revenue	100%	100%	-	100%	100%	-

Source: consolidated non-audited report of the Group on 30th of September 2023 and non-audited report on 30th of September 2022 based on IFRS accounting rules, as well as the non-audited data from the Group's management information system

In the Group's largest Hungarian market, sales decreased by 45% overall in Q3 2023 compared to base. Sales declined across all product groups. In the Hungarian market, high interest rates are not favourable for renovation and construction works, and instead of the home renovation subsidy, which ended at the end of last year, no new ones have been launched yet. The decline in turnover therefore reflects the wait-and-see behaviour of market demand, and the lag was further reinforced by the fall in prices.

Sales in export markets decreased by 26% in Q3 2023 compared to the same period last year. Sales of foofing foils increased, all other product groups were affected by downturn. In many export countries, third-quarter sales declined compared to the base quarter, while the Company achieved strong growth in several other markets, such as the Czech Republic, Turkey and Slovenia.

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MASTERPLAST NYILVÁNOSAN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG

Sales in the Polish market increased by 21% in Q3 2023. Thermal insulation systems, as well as sales of roofing folils and accessories also performed well. Sales revenue of building industry accessories stagnated, while sales of dry construction and heat, sound and water insulation materials product groups declined.

Sales in the Romanian market closed 23% lower in Q3 2023 compared to the base period, with a similar decline by product group.

Serbia's revenue declined by 16% compared to base in Q3 2023. Sales revenue from roofing foils and accessories, heat, sound and water insulation materials also increased significantly. At the same time, sales on the Serbian market in the other product groups decreased in the third quarter.

Sales on the German market decreased by 47% in the third quarter compared to the corresponding period last year. Sales revenue for the roofing foils stagnated. sales of dry constructions systems product group, sales of heat, sound and water insulation materials, as well as sales of medical raw materials all showed significant decreases.

In Ukraine, despite the war situation, third-quarter sales increased by 2% compared to that 2022 base. Given that sales activity in war-torn regions is still limited, the good sales result is mainly due to its performance in the western territories. Sales decreased in the product groups heat, sound and water insulation materials, thermal insulation systems and dry construction systems compared to a year earlier, while sales of roof foils and building industry accessories increased.

In Italy, sales fell by 4% compared to the third quarter of last year. In Italy, the majority of buildings are uninsulated, therefore new renovation programs is likely to be launched in the near future to meet the energy targets. The thermal insulation system product group accounts for the majority of sales on the Italian market.

Sales in the Slovak market fell by 23% compared to base in the third quarter of 2023. Sales revenue of the product groups both showed a decrease in the quarter under review compared to a year earlier.

Sales in the Croatian market increased by 8% in Q3 2023 compared to the same period last year. Through sales of roofing foils and healthcare products in the industrial applications product groups, the Company achieved strong growth in the Croatian market in the quarter under review, the turnover of the other product groups was below the base level.

In North Macedonia, which has the smallest share of sales, sales decreased by 26% compared to baseline. Sales revenue for the roofing foils and accessoriesproduct group increased significantly, while sales for industrial applications stagnated. In all other product groups, sales decreased relative to baseline.

In summary, the Company's revenue decreased by 30% compared to base in the third quarter. As a result of the industry recession, sales fell both in the thermal insulation materials product groups linked to the renovation market and in the product group also related to the market for new construction. Sales revenue in the industrial applications product group was also below base level. In terms of territorial distribution, sales increased in the Polish and Croatian markets, sales on the Ukrainian market stagnated, while turnover decreased in other countries, including exports, in the quarter under review.

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