Thrace Plastics — Investing for the future

Thrace Group (ASE: PLAT)

Last close As at 22/06/2024

5.40

−0.04 (−0.74%)

Market capitalisation

EUR238m

More on this equity

Research: Industrials

Thrace Plastics — Investing for the future

Thrace continued to successfully service high medical sector demand and support customers elsewhere in the face of input cost pressures in H121. Cash generation has boosted balance sheet strength and Thrace plans to increase capex to enhance business capabilities and its sustainability credentials. With more normal trading (ie sharply lower medical sector demand) factored in for FY22 and beyond – including slightly raised estimates – the valuation does not look stretched and the outlook for cash generation should present further opportunities to enhance returns.

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Written by

Industrials

Thrace Plastics

Investing for the future

H121 results

General industrials

18 October 2021

Price

€7.03

Market cap

€307m

€1.17/£

Net cash (€m) at end-June 2021 (excluding lease liabilities)

14.6

Shares in issue

43.7m

Free float

34.8%

Code

PLAT

Primary exchange

Athens

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(8.7)

(3.0)

149.3

Rel (local)

(6.8)

(5.0)

77.5

52-week high/low

€8.69

€2.56

Business description

Thrace Plastics is an established international producer of technical fabrics (approaching three-quarters of FY20 EBIT) and packaging. Each division uses a number of manufacturing processes and produces a wide range of products from polymer materials, serving a diverse range of end-markets.

Next events

Q3/9M results

Date tbc

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Thrace Plastics is a research client of Edison Investment Research Limited

Thrace continued to successfully service high medical sector demand and support customers elsewhere in the face of input cost pressures in H121. Cash generation has boosted balance sheet strength and Thrace plans to increase capex to enhance business capabilities and its sustainability credentials. With more normal trading (ie sharply lower medical sector demand) factored in for FY22 and beyond – including slightly raised estimates – the valuation does not look stretched and the outlook for cash generation should present further opportunities to enhance returns.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS**
(c)

P/E
(x)

Yield**
(%)

12/19***

298.3

11.8

16.5

4.6

42.6

0.7

12/20

339.7

56.1

93.1

4.6

7.5

0.7

12/21e

401.2

82.5

143.1

4.6

4.9

0.7

12/22e

345.6

34.5

59.1

4.6

11.9

0.7

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. Estimates are for continuing operations only. **Before special dividends FY20 c 5.7c/share and H121 c 10.86c/share). ***Restated for continuing operations only, excluding Thrace Linq

Strong H121 profitability and cash generation

Q2 was another strong trading period for Thrace with sustained high levels of medical sector volumes and robust demand elsewhere contributing to excellent progress versus the first half of FY20, which was less influenced by COVID-19. The resulting EBIT uplift – to more than three times the H120 level – drove a strong cash flow performance and a period end net cash position of c €15m compared to c €32m net debt at the beginning of the year. A special 10.86c/share interim dividend was also declared on 30 September.

A positive view of the future

Managed rotation of volumes from medical into Thrace’s more traditional sectors and ongoing good management of input cost pressures will be important performance drivers over the coming 12 months. Thrace is clearly taking a positive view, having announced an enhanced capex programme consistent with its strategic objectives. Our increased FY21 estimates largely reflect Technical Fabric’s still high medical sector contribution. A modest uplift in the Packaging division’s EBIT and lower interest costs in all three years also contribute to the upgrades.

Valuation: Conservative view of future earnings

Thrace’s share price reached an all-time high of €8.69 in early September; after partly retracing to current levels, it is still up c 85% year to date. There is perhaps some market caution on the tail down in exceptional medical sector earnings; we believe that this is already reflected in our estimates. After a small uplift to our FY22 expectations from lower interest costs, Thrace is trading on an FY22e P/E of 11.9x and an EV/EBITDA (pre IFRS 16 basis, adjusted for pensions cash) of 5.0x. Our DCF analysis suggests that the current share price is factoring in long-term, steady state pre IFRS16 EBITDA of c €45m, which is c 25% below our FY23 estimate of c €62m (which itself would yield a share price of €10.11 using the same approach).

H121 results overview

Strong personal protective equipment (PPE) demand and robust sales into more traditional sectors continued into Q2, contributing to strong year-on-year increases in H121 group revenue (+ c 51%, including volume + c 9%) and EBIT (+ c 234%, or + c 245% on a continuing operations basis). Technical Fabrics saw the majority of the PPE benefit and substantially drove group progress, with volumes in other sectors understood to be stable overall at good levels. Another strong period for cash conversion saw a c €15m net cash position (pre IFRS 16) at the end of H1 and an increased capex budget in several areas has been flagged. We have raised our current year EPS estimate by c 18% with a marginal uplift in the following two years and expect to see further positive cash generation.

Exhibit 1: Thrace Group divisional and interim splits

Year end 31 December, €m

H120

H220

FY20

H121

% chg y-o-y

H121 vs H120

Group revenue

155.4

184.3

339.7

234.3

50.8%

Technical Fabrics

108.1

135.0

243.1

179.4

66.0%

Packaging

51.1

54.6

105.7

60.0

17.5%

Other

2.6

2.3

4.9

2.6

2.4%

Eliminations

(6.3)

(7.6)

(14.0)

(7.7)

21.7%

Gross profit

42.1

63.8

106.0

90.2

114.1%

Technical Fabrics

27.5

47.5

74.9

75.7

175.8%

Packaging

14.5

16.2

30.7

14.5

-0.3%

Other

0.5

(0.2)

0.3

(0.5)

N/M

Eliminations

(0.3)

0.3

0.0

0.5

N/M

EBITDA

26.7

49.8

76.5

72.8

172.3%

Technical Fabrics

16.4

37.9

54.3

63.2

285.6%

Packaging

10.3

12.5

22.8

10.6

2.8%

Other

0.1

(0.5)

(0.4)

(0.8)

N/M

Eliminations

0.0

0.0

(0.1)

(0.1)

N/M

Group operating profit

18.4

39.5

57.9

61.6

233.8%

Technical Fabrics

11.2

31.4

42.6

55.2

394.9%

Packaging

7.4

8.7

16.1

7.5

1.3%

Other

(0.1)

(0.6)

(0.7)

(1.0)

N/M

Eliminations

0.0

0.0

(0.1)

(0.1)

N/M

Gross margins%

27.1%

34.6%

31.2%

38.5%

11.4%

Technical Fabrics

25.4%

35.2%

30.8%

42.2%

16.8%

Packaging

28.4%

29.7%

29.1%

24.1%

-4.3%

EBITDA margins%

17.2%

27.0%

22.5%

31.1%

13.9%

Technical Fabrics

15.2%

28.0%

22.3%

35.2%

20.1%

Packaging

20.2%

22.8%

21.6%

17.7%

-2.5%

EBIT margins%

11.9%

21.4%

17.0%

26.3%

14.4%

Technical Fabrics

10.3%

23.3%

17.5%

30.8%

20.5%

Packaging

14.5%

16.0%

15.2%

12.5%

-2.0%

Source: Thrace Plastics, Edison Investment Research. Note: Adjusted for non-underlying items (impairment, redundancy costs and Linq property disposal profit).

Technical Fabrics: High demand sustained in Q2

Technical Fabrics is an international developer, manufacturer and distributor of technical fabrics, industrial yarns, fibres and composite materials used in a wide range of applications (including construction, infrastructure, PPE, landscaping, floorcoverings and agri/horticulture) produced mainly from polypropylene (PP) using a wide variety of different processes.

Divisional revenues rose by 66% y-o-y in H121, which was slightly ahead of the reported rate of progress in Q121 indicating that demand conditions continued at high levels in Q2. We now consider that the significant wave of demand for PPE that developed in 2020 only really started to do so towards the end of Q220, so the scale of the Q2/H121 favourable comparator is partly explained by this. As well as mix, firm pricing due to rising input costs also boosted top-line progress though we are unable to quantify this effect at a divisional level.

Thrace started FY21 with a favourable inventory position, which – along with the enriched mix described above – facilitated a record gross margin performance in Q1 (ie 43.6%). The H1 achieved gross margin of 42.2% indicates Q2 was still strong but slightly below Q1; this may partly reflect higher raw material pricing and possibly the effects of ramping up production from two relocated non-woven manufacturing lines.1 We note that opex also saw a step up in Q2 but was stable as a percentage of sales compared to Q1 and both periods compared favourably to H120 in this regard, reflecting positive operational gearing effects from higher levels of activity.

  During FY20, Thrace closed down its direct US manufacturing operation (Thrace Linq) and relocated it to existing factories in Europe: the spunbond line to Don & Low in Scotland and the needle-punch line to Xanthi in northern Greece.

The above features fed into a near fourfold (€44m) increase in divisional EBIT in H121. The company states that medical sector/PPE demand accounted for €40.4m in this division (and €40.9m in total). Although we do not have the H120 base figure – which would have included some pre-COVID-19 underlying revenue as well as initial COVID-19 generated demand – there appeared to be good year-on-year growth in profitability in non-medical sectors overall, in addition to the still very significant medical sector contribution.

Packaging: Margin challenges but profitability slightly ahead

The Packaging division is a European manufacturer of containers and packaging in both rigid and flexible form mainly using PP and polyethylene feedstock with injection moulding (including in mould labelling), blown film extrusion and thermoforming being the primary production processes.

This division again experienced double-digit year-on-year revenue growth in Q221 albeit not quite at the same level as the preceding quarter (Q1: +19.4%, Q2: +15.8%). In addition to higher selling prices driven by input cost pressures, we would expect there to have been some volume growth in this division also reflecting year-on-year capacity additions. (Capex is always in much smaller increments than in Technical Fabrics, reflecting the scale and nature of the injection moulding processes employed versus non-woven fabrics, for example.) We understand that there were no major mix variations across the core food/non-food product categories and no particular new trends have been noted by management. We should state that volumes supplied to the medical sector have historically been very small though there was a short-term spike around the middle of 2020 which makes the comparative period in FY21 a little more challenging.

As seen in Technical Fabrics, divisional margins were slightly lower in Q2 compared to Q1, but still very respectable for the half as a whole including 24.1% at the gross level and 12.5% for EBIT. Firstly, we think that the Q2/Q1 pattern again reflected the progressive work through of better-priced inventory at the start of the year to purchasing raw materials at prevailing spot prices before the period end. Secondly, the 2020 medical sector contribution referenced earlier (actually €3.2m EBIT for the year as a whole of the €16.1m group total) is likely to have included some Q220 benefit though we are unable to quantify this. Although the Q221 gross margin was below its prior year equivalent (Q121 was slightly ahead), excellent opex control meant that Thrace was able to report divisional EBIT marginally ahead of H120 in the first six months of FY21.

Strong cash generation and increased capex programme

As stated earlier, by the end of H1 Thrace had moved to a c €15m core net cash position (or c €11m on an IFRS 16 basis) compared to net debt of c €32m at the beginning of the year and c €6m at the end of Q1.

Operating cash flow throughout H121 was very strong at c €75m in total and this was almost double the level achieved in H120. Having discussed profitability earlier, the only additional point to note here is the working capital movement, which saw a c €1m Q1 inflow reverse in Q2 to a neutral position for H1 as a whole. These movements are consistent with the starting inventory position and the only material driver behind a slightly better operating cash flow outturn in Q1 versus Q2 overall.

As one would expect given the profit and cash generated over the last 12 months, net interest costs have tapered down while outflows relating to corporate taxation have increased accordingly. In underlying terms, gross capex was in line with the prior year at c €12m (and slightly lower in net terms after disposal proceeds), though H120 also benefited from the initial sale proceeds of the former Thrace Linq site in the United States (ie €9.4m), which did not recur. Dividends approaching c €7m were paid in H121 (H120: zero) following approval at the 21 May AGM. Other cash outflows of c €4m were dominated by IFRS 16 lease payments and we note that this was heavily skewed towards Q1, prior to a transfer to owned fixed assets.

Coming towards the end of a period of strategic investment in the wider business, net debt at the end of FY19 stood at c €74m. The sharp increase in profitability starting in FY20 boosted by unprecedented medical sector demand was sufficient to fund the end of the previous capex cycle and also start to lower group borrowings on hand. The latter trend has clearly continued in FY21 to date, and Thrace’s end H121 net cash position and ongoing cash generation credentials form the platform for the next strategic phase.

Cash flow outlook: Thrace management has outlined a planned incremental capex of c €26m, which we believe is likely to be spread over the next 18 months or so. This is in addition to normal existing business requirements, which we had previously modelled at €17.5m per annum, so this is a sizeable new commitment. Geographically, the lion’s share of the additional capex is to be made at group facilities at Xanthi in northern Greece (€21.4m) and the remainder at Don & Low in Scotland. Facilities in both locations are to benefit from investment in both land and building to improve factory layout and accommodate further growth as well as adding recycling capacity to accommodate both in-house and third-party post-use polymers. In addition, there are some site-specific differences, as follows:

Xanthi:

expand fibre production capacity for needle-punch materials, and

install solar PV capability (to 1.5MW capacity) to diversify.

Scotland:

install lamination equipment to produce multi-layer fabrics incorporating spunbond materials.

Consistent with the strategy overview in our previous note (on page 2), Thrace is clearly targeting further sustainable growth in its traditional core sector areas and we see the respective investments in spunbond and needle-punch processes as logical follow-ons to the relocation of US production lines in the prior year and in higher value-added complementary areas. In addition, investments in solar power and recycling enhance the company’s environmental, social and governance (ESG) credentials and improve business resilience.

After factoring in this increased capex evenly across FY21 and FY22 in our model, the current year portion is partly funded by improved FY21 profitability (see section below). We have assumed a working capital outflow in H221, but this is more than covered by the Linq property final receipt (as reported on 18 August). A special interim dividend (of €0.1086/share) was declared on 30 September and we expect the associated €4.75m cash to flow out in H2. Taken overall we expect a c €7m cash outflow in H221 to result in a c €7m net cash position at the year-end (pre IFRS 16) with material net inflows of €20m+ in the following two years. This cash performance and the resulting balance sheet funding position raises the question of prospective dividend payments. Thrace has a track record of engaging in material investment programmes and, provided attractive returns are seen to be available, we would not be surprised to see further plans of this nature over and above what we currently have factored in. For now then, we have assumed that cash dividend payments revert to historical levels, though we consider there to be clear upside risk to this, especially going into FY22 when the latest capex programme should be well advanced.

Migrating from strong medical sector earnings

As stated in the H121 report, management is anticipating a ‘gradual return of the traditional sales mix’ partly informed by ‘evidence of declining product demand for medical/PPE’ as well as increasing normalisation of trading in those sectors that were negatively affected by COVID-19 (eg hospitality, tourism). While we now expect a higher contribution from the medical/PPE sector in FY21 than before, we expect that it will start to tail down in the second half of the year compared to the levels seen in the first two quarters of the year. We have also trimmed Packaging profitability slightly in the current year only, acknowledging the expected temporary effect of higher input prices. There are no other material changes in our forecasts, save for lower interest cost expectations driven by the positive cash flow performance.

Exhibit 2: Thrace Group Edison estimates

EPS (c)

PBT (€m)

EBITDA* (€m)

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

2021e**

132.5

143.1

+8.0%

76.5

82.5

+7.8%

100.1

105.2

+5.1%

2022e

56.2

59.1

+5.1%

32.9

34.5

+4.9%

57.8

57.8

---

2023e

63.1

65.5

+3.9%

36.8

38.2

+3.7%

61.5

61.5

---

Source: Edison Investment Research. Note: Continuing operations. *IFRS 16 basis. **excludes Thrace Linq property disposal profit


Exhibit 3: Financial summary

€'ms

2016

2017

2018

2019

2019

2020

2021e

2022e

2023e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

restated*

 

 

 

 

Revenue

 

 

291.9

318.5

322.7

327.8

298.3

339.7

401.2

345.6

362.1

Cost of Sales

 

 

(225.5)

(251.6)

(259.5)

(264.2)

(236.8)

(233.8)

(263.3)

(258.7)

(270.6)

Gross Profit

 

 

66.4

66.9

63.2

63.5

61.5

106.0

137.9

86.9

91.5

EBITDA

 

 

35.2

30.1

29.0

30.6

30.8

76.5

105.2

57.8

61.5

Operating Profit (before GW and except.)

 

22.9

17.2

15.2

14.0

15.6

57.9

82.2

34.1

37.7

Intangible Amortisation

 

 

0

0

0

0

0

0

0

0

0

Exceptionals

 

 

0

0

(1)

(2)

0

(4)

6

0

0

Other

 

 

0

0

0

0

0

0

0

0

0

Operating Profit

 

 

22.9

17.2

13.7

12.1

15.6

53.9

88.4

34.1

37.7

Net Interest

 

 

(5.2)

(4.5)

(3.8)

(4.2)

(4.2)

(3.0)

(1.3)

(1.1)

(1.1)

Pension Net Finance Cost

 

 

(0.6)

(0.9)

(0.7)

(0.7)

(0.7)

(0.6)

(0.5)

(0.5)

(0.5)

Other / Associates

 

 

1.3

2.1

0.9

1.2

1.2

1.8

2.0

2.0

2.0

Profit Before Tax (norm)

 

 

18.3

13.8

11.5

10.2

11.8

56.1

82.5

34.5

38.2

Profit Before Tax (IFRS)

 

 

18.3

13.8

10.0

8.3

11.8

52.1

88.7

34.5

38.2

Tax

 

 

(5)

(3)

(2)

(4)

(4)

(11)

(19.8)

(8)

(9)

Profit After Tax (norm)

 

 

14

11

9

6

7

45

62.7

26

29

Profit After Tax (IFRS)

 

 

14

11

8

4

6

41

68.9

26

29

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

44.0

43.7

43.7

43.7

43.7

43.7

43.4

43.4

43.4

EPS - normalised (c)

 

 

30.4

24.1

21.0

12.8

16.5

93.1

143.1

59.1

65.5

EPS - IFRS (c)

 

 

30.4

24.1

17.7

8.5

8.5

85.5

157.4

59.1

65.5

Dividend per share (c)**

 

 

0.0

4.7

4.4

4.6

4.6

4.6

4.6

4.6

4.6

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

22.7

21.0

19.6

19.4

20.6

31.2

34.4

25.1

25.3

EBITDA Margin (%)

 

 

12.0

9.5

9.0

9.3

10.3

22.5

26.2

16.7

17.0

Operating Margin (before GW and except.) (%)

 

7.8

5.4

4.7

4.3

5.2

17.0

20.5

9.9

10.4

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

140.5

147.8

167.0

170.1

 

176.2

187.2

199.1

198.5

Intangible Assets

 

 

11.6

11.4

11.6

11.4

 

10.7

10.4

10.1

9.8

Tangible Assets

 

 

107.4

114.4

136.0

138.2

 

144.7

154.8

165.7

164.1

Other non Current Assets

 

 

21.5

22.0

19.5

20.6

 

20.8

22.0

23.3

24.6

Current Assets

 

 

149.0

156.9

153.2

153.2

 

166.0

172.9

184.0

212.7

Stocks

 

 

57.7

59.6

66.9

59.2

 

55.3

60.3

59.3

62.0

Debtors

 

 

50.6

57.3

53.6

57.4

 

56.9

63.2

54.4

57.0

Cash

 

 

31.1

30.6

22.8

22.1

 

40.8

38.6

59.6

83.0

Current Liabilities

 

 

(118.0)

(130.5)

(131.7)

(101.8)

 

(99.3)

(74.5)

(75.5)

(78.9)

Creditors & other current liabilities

 

 

(50.9)

(57.9)

(59.7)

(58.3)

 

(73.0)

(74.5)

(75.5)

(78.9)

Short term borrowings

 

 

(67.1)

(72.7)

(72.1)

(43.5)

 

(26.3)

0.0

0.0

0.0

Long Term Liabilities

 

 

(48.7)

(36.7)

(46.9)

(75.2)

 

(68.3)

(45.5)

(44.5)

(43.4)

Long term borrowings

 

 

(18.7)

(15.7)

(29.1)

(52.9)

 

(46.7)

(31.5)

(31.5)

(31.5)

Other long term liabilities

 

 

(30.0)

(21.0)

(17.7)

(22.3)

 

(21.6)

(14.0)

(13.0)

(11.9)

Net Assets

 

 

122.8

137.5

141.6

146.3

 

174.6

240.1

263.2

289.0

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

29.2

28.2

23.2

26.5

 

85.3

101.7

66.0

56.7

Net Interest

 

 

(5.3)

(4.6)

(4.7)

(4.2)

 

(3.0)

(1.6)

(1.1)

(1.1)

Minority Dividends

 

 

0.5

0.3

0.5

0.7

 

0.5

0.7

0.7

0.7

Tax

 

 

(4.7)

(4.3)

(4.3)

(2.6)

 

(3.6)

(19.8)

(8.3)

(9.2)

Capex

 

 

(17.7)

(21.4)

(32.1)

(21.0)

 

(27.8)

(25.4)

(30.0)

(17.5)

Acquisitions/disposals

 

 

(0.3)

(1.7)

(0.0)

(0.8)

 

0.0

0.0

0.0

0.0

Financing

 

 

(0.8)

(0.0)

0.0

0.0

 

(0.8)

(0.3)

0.0

0.0

Dividends

 

 

0.0

(0.0)

(2.0)

(1.9)

 

(4.5)

(11.4)

(2.0)

(2.0)

Net Cash Flow

 

 

0.9

(3.5)

(19.5)

(3.4)

 

46.2

43.9

25.3

27.7

Opening net debt/(cash)

 

 

42.4

54.7

57.8

62.2

 

74.3

32.2

(7.1)

(28.1)

Finance leases initiated

 

 

1.6

(4.2)

(3.2)

(4.8)

 

(4.4)

(4.4)

(4.4)

(4.4)

Other

 

 

(14.9)

4.6

2.1

(4.0)

 

0.2

(0.3)

0.0

0.0

Closing net debt/(cash)

 

 

54.7

57.8

78.4

74.3

 

32.2

(7.1)

(28.1)

(51.5)

IFRS16 leases

9.2

6.0

3.2

3.2

3.2

Source: Company accounts, Edison Investment Research. Note: FY19 onwards (including *restated for continuing operations only) is on an IFRS 16 basis and the opening net debt/(cash) position for FY19 has been restated accordingly. **Normalised dividends only (ie excludes declared special dividends: FY21 c 5.7c/share and H121 c 10.86c/share)

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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Thrace Plastics and prepared and issued by Edison, in consideration of a fee payable by Thrace Plastics. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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