The Group of "HELLENIC FABRICS S.A." for the first half-year period of 2006, according to the financial statements, which will be published on 30/08/2006, remains profitable and is showing further improvement of its capital structure and its liquidity.
Consolidated turnover for this period amounted to ευρώ 47.83 mln, from ευρώ 47.12 mln in the first half-year period of 2005, improved by 1,51%. The Group continues to be mainly export oriented with 76% of its sales originating from this activity. Consolidated profit before tax, interest and depreciation (EBITDA) amounted to ευρώ 5.87 mln, from ευρώ 9.06 mln in 2005, reduced by 35.24%. Profit before tax amounted to ευρώ 1.63 mln from ευρώ 4.79 mln in the correspondent period of 2005, while profit after tax amounted to ευρώ 1.59 mln versus ευρώ 3.21 mln in 2005, showing a decrease of 50.38%, attributable to ευρώ 1.11 mln to the parent company and ευρώ 0.48 mln to minority rights. Reduced profitability of the current period is due to a decline in the market of denim fabrics, which has already started from the last quarter of last year, after a period of constantly increasing demand during 2004 and the nine-month period of 2005. Such cyclical shifts in market demand periodically appear and are attributed to the creation of fabric inventory by apparel manufacturers and the time required to reduce it.
A recovery of the market is already noted, with an apparent improvement of denim sales in July 2006 in comparison with the corresponding month of last year.
The Group, having completed an important investment program in the dyeing and finishing departments, is ready to face upcoming demand with even more advanced fabric types. On a consolidated basis, total shareholders' equity amounted to ευρώ 83.16 mln from ευρώ 82.15 mln on 31/12/2005. The "Debt-equity" ratio amounted to 1.29 from 1.00 on 31/12/2005, showing an increase of 28.43%, while the liquidity ratio improved by 22.77%, from 1.64 last year to 2.01. The consolidated positive operating cash flow amounting to ευρώ 8.73 mln, assisted the liquidity and was used for the self-financing of investments in production activities amounting to ευρώ 2.24 mln and the reduction of its bank loans, which were lowered by ευρώ 7.76 mln. Total net loans of the Group at the end of the half-year period amounted to ευρώ 40 mln as compared to ευρώ 48 mln at the end of 2005, reduced by 16.5%. Finally the "Price to book value" ratio (P/BV) amounted to 0.48.
The Ordinary General Meeting of the 21st of June 2006, decided the contracting of a non-convertible bond loan, amounting to ευρώ 10 mln, which will be used for the replacement of the Company's long-term bank loans and the completion of the investment program. The same General Meeting, approved a dividend distribution of ευρώ 0.10 per share, increased by 11.1% as compared to last year.
"HELLENIC FABRICS S.A.", by expanding its activities, jointly participates along with the companies Hellenic Petroleum, Sovel of the Viohalco Group and Prima Holdings in the share capital of the company BIODIESEL S.A. The unit, with a production capacity of 100.000 tons of biodiesel per year and a budget of ευρώ 20 mln, will be created in the factory of Sovel in the area of Almyros Magnisia. It will consist of a distiller of natural oils, with a daily capacity of 300 tons, a distillation unit of glycerin, biodiesel production unit and auxiliary facilities, such as steam engines, biological process etc. This plant is expected to start its operations early 2008. The seed oil unit of "HELLENIC FABRICS S.A." is expected to supply the new company with raw material for the production of biodiesel, which is cottonseed oil.
In addition, the co-products of cottonseed oil are expected to be used in the production of thermal energy in its plant in Pella.
Company prospects for the remaining of the fiscal year are positive and it is expected that turnover will be increased with an improvement of profitability for the second half-year period, as compared to the first.