Polyplex Thailand Public : Management Discussion and Analysis Yearly Ending 31 Mar 2022

23 May, 2022

Subject: Management Discussion and Analysis for the year ended 31 March 2022

To: Managing Director

The Stock Exchange of Thailand

1.Financial highlights for the quarter and year ended 31 March 2022

	Normalized* EBITDA (Million THB)		Normalized* EPS (THB / Share)
			4.00
5,000
								3.58
4,500			3.50
						3.29
4,000			3.00
3,500
			2.50
3,000
2,500			2.00
	4,795
2,000		4,221
		1.50
1,500
			1.00
1,000
					0.89	0.92
500	1,251	1,261	0.50
1,002		0.70
0			0.00
Q4 2020-21 Q3 2021-22	Q4 2021-22 FY 2020-21 FY 2021-22
Q4 2020-21	Q3 2021-22	Q4 2021-22	FY 2020-21	FY 2021-22

*Normalized for forex and derivative gain/(loss)

Key Financial Indicators for Q4 and FY 2021-22

Description	Unit of	Q4 2021-22	YoY	QoQ	FY 2021-22	YoY
	measure
Sales Volumes	MT	62,718	13.37%	1.5%	236,995	8.2%
(Film sales)
Sales Value	Million Baht	6,315	62.5%	10.1%	21,545	42.3%
Normalized	Million Baht	1,261	25.8%	0.8%	4,795	13.6%
EBITDA
Normalized	%	19.97%	582bps	185 bps	22.26%	562 bps
EBITDA margin
Normalized	THB/KG	20.11	THB 1.96	THB 0.13	20.23	THB 0.96
EBITDA/ Kg#
Normalized PAT	Million Baht	832	32.4%	3.8%	3,222	9.0%
Normalized EPS	Baht/ Share	0.92	32.4%	3.8%	3.58	9.0%

# Per Kg based on Qty of Films sales

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Polyplex (Thailand) Public Company Limited and its subsidiaries

Income statement (Audited)

For the year ended 31 March 2022

	Consolidated financial statements		% Inc/(Dec)
	(Unit: Baht)
	2021-22		2020-21
Revenues
Sales	21,544,822,587		15,144,387,625		42.26%
Exchange gains	351,774,157		1,243,596		28187%
Gain on derivatives	-		12,067,647
Other income	40,312,169		34,845,767		15.69%
Total revenues	21,936,908,913		15,192,544,635		44.39%
Expenses
Cost of sales	15,299,359,580		10,433,230,804		46.64%
Selling and distribution expenses	1,957,190,482		970,867,355		101.59%
Administrative expenses	538,743,902		507,304,059		6.20%
Loss on Derivatives	23,783,124		-
Total expenses	17,819,077,088		11,911,402,218		49.60%
Profit before finance cost and income tax expense	4,117,831,825		3,281,142,417		25.50%
Finance Income	19,899,239		23,445,201		-15.12%
Finance cost	(62,684,738)		(61,447,359)		2.01%
Profit before income tax expense	4,075,046,326		3,243,140,259		25.65%
Tax income/(expense)	(510,144,461)		(270,670,744)		88.47%
Reported Profit for the period	3,564,901,865		2,972,469,515		19.93%
Reported EBITDA for the period ( incl. finance income)	5,123,279,164		4,234,501,666		20.99%
Profit attributable to:
Equity holders of the Company	3,549,786,703		2,970,004,154		19.52%
Non-controlling interests of the subsidiary	15,115,162		2,465,361		513.10%
	3,564,901,865		2,972,469,515		19.93%
Basic earnings per share (Reported profit basis)
Profit attributable to equity holders of the Company	3.94		3.30		19.52%
Number of ordinary shares	900,000,000		900,000,000
Reported Profit attributable to Equity holders	3,549,786,703		2,970,004,154		19.52%
Add /(Less): Forex loss /(Forex Gain)	(327,991,033)		(13,311,243)		2364.02%
Normalized Profit after Tax	3,221,795,670		2,956,692,911		8.97%
Normalized EBITDA	4,795,288,131		4,221,190,423		13.60%
Basic earnings per share ( Normalized profit basis)
Profit attributable to equity holders	3.58		3.29		8.97%
Number of ordinary shares	900,000,000		900,000,000

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Performance Analysis (YoY)

• The year gone by witnessed the start-up of several new projects envisaged in the past 2 years. The start-up of BOPP film line project in Indonesia in December 2021, was completed within the Budgeted project cost, despite the delays and various other challenges arising from the Covid pandemic. The Company also managed to achieve full break even on this project within the first full quarter of operations. Apart from this major project, the Company has also commissioned the Twin Screw Extruder (TSE - Thin PET line modification) in Thailand and Turkey, Metallized Film line in Indonesia, PET recycling line at Ecoblue, Thailand and the Blown Film line in Turkey. While the BOPP line, Metallized film, Blown film and Recycling line are expected to also contribute to growth in top line, the TSE investment at Thailand and Turkey would enable the Company to further enhance the Specialty film sales and generate better EBIDTA in the coming years.
• Overall sales volumes have increased by 8.2% YoY, partly from new capacity start-up and also from better utilization of existing capacities. The Sales value has increased by about 42% YoY, due to higher volumes as also the increase in average sales realization owing mainly to the sharp increase in input raw material prices as also the spike in container freight rates compared to the previous year.
• Due to the THB depreciation YoY (average rate for the year Vs previous year) against Euro (about 5%), against USD (about 5%) and IDR (about 6%), there is a positive impact of currency fluctuation on the consolidation of the Turkey, USA and Indonesia subsidiary earnings this year.
• The overall increase in sales volumes and Improved margins in our core business of Thin films as well as some other businesses such as Thick film, Blown Film and other downstream businesses like Silicone Coated film (Saracote), has contributed to an overall improvement in normalized EBITDA. Apart from this, the contribution from sale of surplus PET resins is higher this year due to higher volumes and also at better margins and hence, contributed to the improvement in overall EBITDA. This is partially offset by lower sales volumes and contribution in some other businesses like Extrusion Coated films (Saralam) & CPP films
• There is an increase in other income mainly at Thailand which is due to higher Insurance Claims received.
• Increase in cost of sales is due to a sharp increase in the key raw material prices as well as overall higher sales volumes.
• Higher selling expenses were mainly due to significant increase in outbound freight expenses due to global shortage of containers pushing up freight rates. The Company is making all efforts to increase the selling prices to recover fully or partially the higher freight costs, based on delivery terms with the customers. Apart from higher freight, the Brokerage and Commission expenses have also been higher this year due to increase in unit selling prices.
• Higher admin expenses are mainly due to higher professional consultation fees, Covid related expenses, warehouse handling charges and depreciation charges.
• There is a significant increase in Exchange gain this year as compared to previous year. The exchange gains are mainly due to unrealized gain on restatements of Euro and USD loans in Indonesia and Euro Loans in USA on account of appreciation of IDR and USD against Euro currency and appreciation of IDR against USD currency (Closing exchange rate in March 22 Vs March 21) and exchange gain on operational assets at Thailand due to depreciation of THB against Euro and USD. This is partly offset by unrealized loss on restatement of Euro Loans at Thailand due to depreciation of THB against Euro.
• There is a reduction in Finance income mainly due to lower interest income in the Indonesia and Turkey subsidiary due to declining interest rates.
• Finance costs are higher due to higher debt levels at Thailand (working capital debt) and Indonesia (Term debt), including the interest on the bank loans disbursed for the BOPP project at Indonesia which was earlier capitalized to fixed assets until the Project commercial start-up in December 2021. The impact of higher borrowings is partly offset by lower interest rate compared to previous year.
• The higher tax expense is mainly due to the higher Current Tax expense and the net impact of Deferred Tax Accounting at Thailand and the subsidiaries in USA and Indonesia.

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ANALYSIS OF STATEMENT OF FINANCIAL POSITION

Polyplex (Thailand) Public Company Limited and its subsidiaries

Statement of financial position
As at 31 March 2022
	Consolidated financial statements
	(Unit:	Baht)
	31 March 2022		31 March 2021		% Inc/(dec)
	(Audited)		(Audited)
Assets
Current assets
Cash and cash equivalents	2,201,407,709		1,719,861,368		28.00%
Trade and other receivables	4,035,308,634		2,267,684,449		77.95%
Inventories	5,043,353,271		2,887,121,309		74.68%
Advance payments for purchases of goods	215,619,885		63,263,640		240.83%
Input tax refundable	142,657,999		191,658,485		-25.57%
Other current financial assets	72,051,992		151,396,070		-52.41%
Other current assets	93,183,914		91,902,435		1.39%
Total current assets
11,803,583,404		7,372,887,756		60.09%
Non-current assets
Restricted bank deposits	22,363,111		10,910,348		104.97%
Property, plant and equipment	12,904,704,338		11,720,628,345		10.10%
Deferred tax assets	73,711,077		15,961,194		361.81%
Goodwill	3,164,328		3,164,328
Other intangible assets	153,867		531,203		-71.03%
Advance payments for purchases of land & machinery	419,732,450		561,672,955		-25.27%
Other non-current financial assets	312,827,688		245,226,254		27.57%
Other non-current assets	21,641,159		98,351,955		-78.00%
Total non-current assets
13,758,298,018		12,656,446,582		8.71%
Total assets
25,561,881,422		20,029,334,338		27.62%

As at 31 March, 2022, there has been a 6.2% depreciation of THB against the USD (approx. THB 1.96/USD) and 1.3% depreciation against the Euro (approx. THB 0.47/Euro) and 6.9% depreciation against IDR (approx. THB 0.15 per 1000 Rupiah) as compared to the exchange rate on 31 March 2021. As a result, the translation of the Company's subsidiaries' Statement of Financial Position has resulted in net translation gains of Baht 295.12 million.

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Current assets:

• Current assets have gone up by Bt 4,435.5 million or 60.2% compared to March 2021.
• Increase in cash and cash equivalents is mainly due to net cash generated from operations.
• Increase in Trade Receivables is mainly due to higher sales volumes, increase in selling prices (in line with raw material price increase)
• Increase in Inventories is at Thailand as well as subsidiaries is due to higher stock of raw materials, process stocks, finished goods, Goods-in-transit and Stores & Spares partly due to increased size of operations. The higher input prices have also impacted the inventory valuation resulting in higher inventory values.
• Increase in advance payment for purchase of goods is mainly at the subsidiaries.
• Increase in Input tax refundable is mainly due to increase in VAT refund receivable at Thailand, partly offset by reduction in Input Tax refundable at the Indonesia subsidiary.
• Other current financial assets represent Derivative assets (MTM impact on the Forwards contracts) and Investments of surplus funds in Bonds and Bond funds. Reduction is mainly due to maturity of some investments during the year.
• Increase in Other current assets is mainly due to increase in Prepaid expenses at Thailand and the subsidiaries.
  Non-current assets:
• Non-Currentassets have gone up by Bt 1,097.1 million or 8.7% as compared to March 2021.
• The restricted bank deposit at the Indonesia subsidiary is in respect of a letter of guarantee issued by a local bank to a vendor
• Increase in Property Plant & Equipment (net block) is mainly due to the Project/ Normal CAPEX at Thailand and the subsidiaries partly offset by the depreciation charged during the year.
• Increase in Deferred tax asset is due to Deferred Tax adjustments at Thailand and on consolidation as per relevant accounting standard.
• Decrease in Advances for purchase of fixed assets is due to adjustment of advances against machinery delivery for ongoing projects at the subsidiaries partially offset by slightly higher advances at Thailand.
• Decrease in other non-current assets is mainly at Indonesia due to refund of long pending Input Tax refundable balance
• Non-currentfinancial assets refer to some investment of surplus funds by the Turkey subsidiary into financial instruments (mainly Bonds).

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