Huhtamaki India Ltd Management Discussions.

About Huhtamaki India Limited:

Huhtamaki is a global leader in sustainable packaging solutions, with more than a 100-year legacy and Nordic heritage. We believe in protecting food, people, and the planet. In India, our operations are supported by sixteen state-of-the- art, fully integrated manufacturing facilities with a skilled team contributing across the business functions by means of their expertise.

We believe that food packaging is essential. Thereby, we ensure hygiene and safety of food & beverages by fulfilling packaging needs that help in preserving the food and increase shelf life. It keeps food & beverages edible for longer. Thereby, reducing food waste while providing access to affordable food for consumers, wherever they are in the world. We also develop fit-for-purpose packaging integral to industries like health care, personal & home care, pet care and other nonfood solutions. To this end, we are material positive, choosing the right packaging materials based on their functionality and full-life cycle, making evidence-based decisions to drive the circular economy.

Our product portfolio also includes tube laminates, making us a partner of choice for beauty care, oral care and the pharma industry. We bring in innovation in design through our labeling solutions portfolio.

Packaging is about continuous innovation, and at Huhtamaki India, we constantly innovate. Our specialised technologies and capabilities include promotions and security solutions, digital printing solutions, specialised pouching solutions, Rotogravure cylinder and more. These enable us to gain a competitive edge and leverage our technological expertise in over 12 markets around the globe.

Economy

 

Global Economy

As the global economy recovers from the pandemic, theres still a great deal of uncertainty surrounding COVID-19 and its variant. This has led to higher inflation pressures in many countries. The world economy contracted by 3.1% in CY 2020, owing to the global outbreak of COVID-19. In comparison with the forecasts made by IMF in World Economic Outlook, July 2021, there was a downward revision in its projected global economic growth outlook for CY 2021. However, the estimates remained unchanged for CY 2022. The global economy is anticipated to grow by 5.9% in CY 2021 and 4.9% in CY 2022. The revision made for CY 2021 can be attributed to the downgrades in advanced economies and low-income developing countries.

The growth in global GDP in H1 CY 2021 was near-about what was expected and outruns for first-quarter global GDP were stronger than the anticipated rate. This was due to the continued resumption of economic activities amid the ongoing pandemic coupled with government policy reformations. However, the momentum weakened in the second quarter due to spike in COVID-19 cases in several emerging and developing economies and consequent disruptions in supply chain.

After a negative growth of 4.5% in CY 2020, the advanced economies are projected to grow by 5.2% in CY 2021. IMF revised down its forecast from 5.6% made in July 2021, largely due to the downgrade made for the United States on the back of large inventory drawdowns in Q2 CY 2021, partly reflecting the supply disruptions and softening consumption in the third quarter of CY 2021. The projections for the United States subsequently incorporate the infrastructure bill recently passed by the Senate and anticipated legislation to strengthen the social safety net. This is equivalent to about $4 trillion in spending over the next 10 years.

After contracting by -2.1% in CY 2020, emerging and developing economies is estimated to grow by 6.4% in CY 2021. This is a revised forecast from 6.3% made in July 2021 release and is backed by revised upgrades in most regions of the group. Projections for China are slightly revised down to 8% in CY 2021 following stronger than expected scaling back of public investment. While for India, the projections have remained unchanged at 9.5% growth in CY 2021. Apart from China and India, the emerging market and developing economies are revised down as the COVID-19 cases increased. Meanwhile, projections made in other regions have been slightly revised upwards in CY 2021.

 

Source:- https://www.worldbank.ora/en/news/press-release/2022/01/11/alobal-recoverv-economics-debt-commodity-inequality

Indian Economy

Indias economy grew by 8.4% year-on-year in Q2 of CY 2022. On a sequential basis (quarter-on-quarter basis), domestic economic output expanded by 10.4%. With the easing of lockdown restrictions across states along with the steady decline in COVID-19 cases and an increased pace of vaccination, a higher economic activity and output was recorded in the latest quarter.

With increasing signs of higher level of activity across sectors, theres an optimism regarding the strengthening of recovery in the domestic economy. Growth in industrial output remained unchanged, at 3.2% in October 2021, compared with 3.1% in the previous month. Negative growth in the capital and consumer goods segment limited growth in overall industrial output. Weakening of the base has contributed to a decreased momentum in industrial activity and brought it down from the double-digit growth witnessed during the first five months of CY 2021. Output in all sectors witnessed an improvement in November, except electricity, capital goods and consumer goods segment.

Demand and investments are yet to see a meaningful and durable pick-up. Improvements in these segments are expected to be limited, given that even before the pandemic, the domestic economy was grappling with low demand and a subdued investment climate. To add to this, domestic and external challenges still abound. The rise in price levels and the underlying threats as a result of COVID-19 virus and its strains could be a set-back/challenge for domestic as well as global recovery.

Outlook

The companies are expected to ramp up output amid a strengthening demand scenario which is expected to support manufacturing growth in the near term. Performance of the mining sector is expected to pick up with the resumption of mining activities that were impacted by extended monsoons. Thus, we could expect industrial output to gather momentum in the coming months. However, it would continue to be subdued with the waning of base-effect.

Given the uncertainties associated with the scale of economic recovery, the RBI is expected to maintain its focus on growth and continue with the accommodative monetary policy stance, even as it moves towards gradual normalisation of support. However, there are certain risks associated with the emergence of the Omicron Variant and renewed surge in COVID-19 infections across countries, globally. To add to this, there are headwinds from elevated global commodity prices, potential volatility in global financial markets with faster normalisation of monetary policy in advanced economies and prolonged global supply bottlenecks.

RBIs GDP Growth Outlook as on December 2021

Industry Overview Global Packaging Industry

Population growth and urbanisation are increasing trade and as a result, generating higher demand for packaging. Online trade is further increasing the need for packaging. Products that are being consumed on the go, leading to a higher demand for food-service packaging and different sizes of packaging.

As per industry estimates, the total global value of the packaging industry for CY 2019 is around USD 920 billion for CY 2019, and around USD 945-950 billion for CY 2020. The packaging demand is now forecasted to grow steadily at a CAGR of around 2.5-3 % to cross USD 1 trillion by CY 2024. Also, the flexible packaging market was around USD 110-115 billion globally during CY 2019 and is also expected to grow gradually.

Currently, Asia is the largest market and accounts for around 53.55% of world packaging consumption as of CY 2020. Europe and North America in second and third place with 21.64% and 10.25% respectively. Further, based on the per capita consumption of packaging, there is a huge growth in the Asia-Pacific region, especially for the packaging industry in India. The packaging market in the above mentioned regions is expected to grow in the range of 0.4% to 5.3% by CY 2022. Africa and Middle-east combined are set to grow at 5.3% whereas the Asia-Pacific region is anticipated to grow at 4.3%. Global segment wise breakup of packaging materials 2020

 

Indian Packaging Industry

With strong demographic factors such as increasing disposable income levels, rising consumer awareness and demand for processed food, the multinational giants taking rapid strides in the food, beverages, cosmetics & toiletries and pharmaceuticals space, it is expected to be the key drivers of packaging industry growth. These factors are forcing both packaging suppliers and end-user industry to shift from bulk packaging to retail, unit-level and small-sized packaging. Exploding retail growth and newly relaxed FDI investment norms in retail and other sectors augur well for packaging industry.

Packaging is among the high growth industries in India. The size of the Indian Packaging Sector was valued to be USD 73 billion in 2020 and is estimated to be USD 84 billion in 2021. According to the Packaging Industry Association of India (PIAI), the sector is growing at CAGR 22% to 25%. Over the last few years, packaging industry has been an important sector driving technology and innovation growth in the country and adding value to the various manufacturing sectors including agriculture and FMCG segments. Currently, Retail Market being the 5th largest sector of Indias economy, has reported steady growth over past several years and shows high potential for much expansion, particularly in the export market.

Indian Packaging Market

E: Estimated; F: Forecasted

The Indian Packaging Industry has made a mark with its exports comprising flattened-cans, printed sheets & components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery. While the imports include tinplate, coating & lining compounds and others. In India, the fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks. While the sector presents a lot of opportunity for larger players, there are several unattended challenges due to lack of regulatory clarity arising from multiple sectoral legislations. To meet more stringent packaging norms - laid down by the entry of global players such as Walmart - and rising consumer awareness on sustainable packaging, a shift to more sustainable materials and innovations is required. This requires investments in R&D and infrastructure.

Indian Flexible Packaging Industry

Flexible packaging refers to packages made of easy-to-mold materials and is one of the rapidly growing segments of the packaging industry. It includes paper, plastic film, foil, metalised or coated papers, and any combination of these packaging materials. It is used for preserving food items and extended shelf life. Thereby, protecting it from potentially damaging environmental factors such as light, oxygen, and moisture to retain a better taste and food quality. Such packaging is most- suitable for the smaller packs.

As compared to rigid plastic packaging, flexible packaging is lighter in weight, requires lesser space, and is easy-to-dispose. Flexible packaging is estimated at USD 13 billion for the year CY 2020 and is expected to reach USD 17-18 billion growing about 10-12% CAGR by CY 2025. Plastics, paper and metals are the key materials used in flexible packaging products, made from foil, paper sheet or laminated paper and plastic layers.

Plastic dominates the flexible packaging market because of their properties - to match the exact requirement of commodity to be packed and acts as a barrier to moisture Various applications of flexible packaging in the Food Industry include packaging of ready-to-eat food items, boil-in-bag pouches, and foods that are often transferred from freezer- to-microwave. The non-food applications include insulation, cosmetics and healthcare.

Metal packing is generally used in cans, paper is used in bags, envelopes and pouches, plastics is used in bulk bags and woven fabrics are used in industrial packaging.

Polymers are being widely used for flexible packaging. Polyethylene terephthalate (PET) is a highly valued packaging material because it is strong yet lightweight, non-reactive, economical, and shatterproof. Polypropylene (PP) is a thermoplastic polymer used in a wide variety of applications. High-impact polystyrene sheet (or HIPS sheet) is a very versatile material and provides a cost-effective route to the production of parts, for many industrial sectors.

The Plastic Film & Flexible Packaging Industry in India shows a cumulative growth of 9.91% in capacity of exports from 3,20,000 tons in CY 2016 to 5,08,000 tons in CY 2020.

The maximum import of Plastic Film & Flexible Packaging for the CY 2020 was from China (37%), followed by USA (18%), ahead of Thailand (7%) in terms of capacity.

India is one of the worlds biggest and fastest growing Flexible Packaging markets. The thin-PET film market size in India is currently estimated at around 525,000 tons per annum. During CY 2022, growth of 9-10% is expected, with similar growth in the Flexible Packaging Industry. The growth is expected to be driven by the population growth, urbanisation, improved quality of life, increasing environmental awareness and increasing consumerism.

User Industry

 

Retail Industry

India is the worlds fifth largest global destination in the retail space. It accounts for over 10% of the countrys Gross Domestic Product (GDP) and around 8% of the employment. The growth in the retail market is due to various factors, such as urbanisation, income growth and rising number of nuclear families. India is largely an unorganised retail market, comprising nearly 88% of the total retail sector.

Household Consumption

The household consumption in India is growing due to growth in nuclear families, enhancement in lifestyle, growth in purchasing power due to changes in income, and various other factors. The household consumption in India has increased from Rs. 35-45 trillion in CY 2010 to Rs. 130-135 trillion in CY 2020.

The revenue generation in Indias offline retail sector - also known as brick and mortar (B&M) retailers - is expected to increase by USD 1.39-2.77 billion in CY 2020.

COVID-19 Impact

The retail sales decreased by 3% for the first time in decades due to the pandemic. The Brick & Mortar suffered the most - with a downfall in their sales to nearly 4% - whereas the e-commerce industry rose by nearly 28%.

There is increased consumer awareness on hygiene and quality food product, leading to higher demand of packaged and redundant products. As per Retail Association of India-BCG Report, the Indian Packaged Staples Market is expected to grow at a CAGR of 9-10% during CY 2019-2024 to reach Rs. 1700-1800 billion by CY 2024. The details with respect to the same is given in the chart below:

Indian Packaged Staple Market (Rs. billion)

 

FMCG Industry

FMCG industry is the 4th largest sector in the Indian economy. Favourable demographics and rise in income level provided a boost to the FMCG market. From USD 110 billion in CY 2020, the FMCG market in India is expected to increase at a CAGR of 14.9% to reach USD 220 billion by CY 2025.

The FMCG market in Rural India is expected to show considerable growth driven by internet usage, digitalisation of economy, mobile phone users, growth in per capita income in Rural India and upgraded distribution channels of FMCG companies. The e-commerce segment is expected to contribute 11% to the overall FMCG sales by CY 2030.

Household and Personal Care is the leading segment, accounting for 50% of the overall market - includes oral care, hair care, skin care, cosmetics/deodorants, feminine hygiene, perfumes, paper products, fabric wash and household cleaners.

Key user segments of flexible packaging are: fresh & frozen foods, beverages, pharmaceuticals, snacks and confectionery, and dairy products. The utility of flexible packaging arises from properties of aroma retention, sealing & heat insulation and barrier against moisture and strength.

Food ordering

People used to order food from restaurants which involves proper packaging for maintaining the hygiene, quality, freshness of food, to avoid spoilage. Business during CY 2021 was impacted by the rise in COVID-19 infections and the resultant fear amongst people regarding outside food.

Food Services is a USD 65 billion market opportunity in India with online delivery reaching USD 4.2 billion. This is a highly unpenetrated market as compared to other countries. The key factors for the growth estimates are:

• Urbanisation and acceptance of online food delivery in Tier-1 and 2 cities

• Smartphone and internet adoption bringing in more users (expected to grow from 12% in CY 2019 to 19% in CY 2024)

• Number of internet users in India likely to reach 1 billion by CY 2025.

• High-estimated growth for online FMCG and grocery market

Pharmaceutical Industry

Besides Food & Beverage, Pharmaceuticals is also among the major users of packaging. Indias domestic pharmaceutical market is witnessing double digit growth. India is the largest provider of generic drugs globally and accounts for 20% of global generic drug exports (in terms of volume). India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.

The Domestic Pharmaceutical Industry includes a network of 3,000 drug companies and nearly 14,000 manufacturing units. As per the Indian Economic Survey 2021, the domestic pharma market is expected to grow three times in the upcoming decade. The domestic pharmaceutical market of India is estimated at USD 41 billion in CY 2021 and likely to reach USD 65 billion by CY 2024. It is expected to witness an expansion from nearly USD 120 million to USD 130 billion by CY 2030.

The Ayurveda sector of India reached USD 4.4 billion by the end of 2018. It is expected to grow at CAGR 16% until 2025. The generic drug market accounts for nearly 70% of the Indian Pharmaceutical Industry (in terms of revenue).

The Over-the-Counter (OTC) drug market of India has grown at an approximate CAGR of 16.3% to USD 7 billion during 2008-16. It is further expected to grow following higher penetration of chemists, especially in rural areas.

Indian pharmaceutical drugs are exported to more than 200 countries globally with USA as its major market. The Indian pharma export grew by around 19% to USD 24.4 billion in CY 2021 - the highest growth seen in last 8 fiscal years - as a result of strong demand in Indian Generic Medicines.

Indias Biotechnology Industry - comprising biopharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics - is expected grow at an average growth rate of around 30% a year, anticipated to gradually become USD 100 billion by CY 2025.

Pharmaceutical Packaging is now becoming a major part of the drug delivery system. Pharmaceutical companies rely more on packaging and labelling to protect and promote their products, increase patient compliance, and meet new regulations. Besides this, plastics have been gaining importance in the packaging of pharmaceutical goods due to properties such as barrier against moisture, high dimensional stability, strength, resistance to strain, low-water absorption, transparency, resistance to heat and flame, and many more.

E-commerce Industry

India is expected to become the worlds fastest growing e-commerce market, driven by sectoral robust investment and rapid increase in internet users. Several agencies expect higher growth in the Indian e-commerce segments. The major proportion of segment-wise breakup in the e-commerce retail comprises consumer electronics and apparels followed by food & grocery, jewellery and furniture among others.

The e-commerce sector is expected to grow at a CAGR 19% during CY 2020 to CY 2025. This growth in the sector will be driven by increased number of mobile users and higher internet connection. The e-commerce order volume in India rose by 36% in the last quarter of 2020, with Personal Care, Beauty and Wellness Segment being the largest contributor. The online shoppers in India are expected to reach 220 million by CY 2025 and the penetration of Online Retail Market is expected to reach 10.7% by CY 2024 from 4.7% in CY 2019.

The Government of India is planning to create a Billion Dollar Online economy by CY 2025 through its Digital India Campaign.

A growth in e-commerce is leading to higher demand for rigid packaging, such as cartons or corrugated boxes - used majorly for electronics products require - also considering risks of product damage due to poor road infrastructure.

When consumers order products online, they expect it to be delivered without any damage. For this, the retailers have to design quality packaging that is easy to transport and not too heavy or spacious. The increasing penetration of e-commerce among traditional retailers, like groceries & pharmacies, is also leading to higher demand for packaging.

Visually appealing packaging is another factor that positively affects online sales. If a package is designed attractively, the product is assumed to be of high quality. This is the reason why premium products are packaged in an attractive and consumer friendly manner. About 60% of consumers share the product

image on social media and may recommend the product to others, consecutively improves sales. Sellers have to be aware that improper packaging can lead to negative brand perception. Alongside quality, packaging cost is also important especially for an online seller. Thus, the demand for good quality and economic packaging is ever increasing. Adaptations and innovations in packaging help in enhancement of the economy fulfilling preservation and quality requirements.

Operational Overview

In 2021, Huhtamaki India reported revenue from operations (net of GST) of Rs. 26,252.8 million as against Rs. 24,627.0 million in 2020. The EBITDA (before exceptional items) of 2021 was Rs. 1,184.0 million as against Rs. 2,416.4 million in 2020. Revenue from operations registered a CAGR of 3.8% over the last five years. The average return on equity for 2021 is negative (3.2%) compared to 12.5% in 2020. Our market capitalisation as on December 31, 2021 stood at Rs. 17,203.9 million.

6.1 Revenue from Operations

Revenue from operations increased by 6.6% in 2021 as against 2020. Exports grew by 8.6% compared to previous year.

(Rs. million)

Year Turnover
2017 21,309.4
2018 23,690.7
2019 25,989.8
2020 24,627.0
2021 26,252.8

6.2. Operating Profit (EBITDA) and profit after tax (PAT)

Operating profit (EBITDA) before exceptional items witnessed a 51.0% reduction in 2021 as against 2020 mainly due to unprecedent increase in raw material prices. Loss after Tax stood at Rs. 226.9 million in 2021 as against Profit of Rs. 959.9 million in 2020.

6.3. Earnings per share (EPS) and dividend

The EPS before exceptional items for 2021 was Rs. 1.10 and after exceptional items was Rs. (3.0), as against Rs. 12.71 in 2020. We have proposed a dividend of Re.1 per equity share of face value of Rs. 2 each, for the year 2021.

6.4. Reserves and surplus, capital expenditure and fixed assets

At the end of the 2021, reserves and surplus were at Rs. 7,008.8 million as against Rs. 7,498.0 million at the end of 2020. Our fixed assets at the end of 2021 were at Rs. 5,799.3 million as against Rs. 5,771.5 million at the end of 2020.

Capital expenditure during 2021 was Rs. 776.4 million

6.5. Debt working and capital returns

Gross debt as at December 31, 2021 was Rs. 3,487.1 million compared to Rs. 2,477.9 million as at December 31, 2020, a Increase of 40.7% y-o-y

Net debt as on December 31, 2021 was Rs. 3,159.0 million as against Rs. 1,623.3 million on December 31, 2020. Increase in Debt is mainly to fund working capital requirements.

Key Information

(Rs. million)

Particulars Year
2020 2021
Inventory 2,287.8 3,475.0
Debtors 5,338.0 6,294.9
Current liabilities 6,322.5 8,219.9
Loans and advances 916.9 1,218.0
Cash flow from operations 1,693.4 (276.4)
Return on net worth (RoNW) (%) 12.5% (3.2%)
Return on capital employed (RoCE) (%) 14.2% (0.4%)

Focus Areas for CY 2022

Driving cost competitiveness by:

1. Controlling wastage through TPM

2. Manufacturing facilities for footprint optimisation and productivity improvement

3. RM buying efficiencies and improving S&OP process

4. Driving end-to-end transformation projects

5. Developing the ability to Care, Dare and Deliver among people

6. Leveraging digitalisation and analytics

Commercial excellence by:

1. Competitive pricing

2. Redefining sales strategy

3. Commercializing innovative ideas

4. Pushing sustainability

People

Workforce is crucial in maintaining quality and safety standards. We believe human resource is the primary driving force of the business. It is among the key interfaces of the Companys value creation process and hence, plays a vital role in writing the success story of the Company. The human resource functions strategy is focused on creating a future-ready workplace strengthening the Companys culture, building capabilities and nurturing careers. Our values enshrine employee satisfaction and we continue to set benchmark through our practices in the industry.

The Company currently employs approximately 2987 employees. With an aim to hire and retain good talent, we have revamped our hiring strategy and initiated various recruitment methodology comprising of a detailed stage-wise interview process. The process covers areas of relevant competency and role-based interviews. Our primary strategy for talent acquisition is to hire candidates with right competencies and at the right time to deliver upon our business strategy.

This includes promotion of internal talent and bringing fresh expertise from the industry and campus trainees.

The Company believes in creating workspaces that allow diverse set of people to contribute and thrive. This will continue to be our thrust area by responding to the changing needs of our customers and build a framework that leads to long lasting collaborative relationships. We celebrate diversity and promote equality by being inclusive of all. The reimagined approach to learning and development has helped in employee training and the new recruits on digital platform. Continual pursuit to connect with employees on a regular basis, open and transparent communication, progressive HR policies have improved retention and employee engagement level.

The focus on employee health & safety continued with setting up of Huhtamaki Machine Safety Standards at the plants, backed by a rigorous daily safety tour by the plant heads & safety officers, behaviour based safety campaigns, regimen of fire & mock drills, internal & inter plant safety audits, weekly EHS review meetings for safety related critical and constraints points and other Improvement initiatives.

Risk Management

At Huhtamaki India, we follow the Enterprise Risk Management (ERM) framework, which has the globally accepted COSO (Committee of Sponsoring Organisations) internal control integrated framework embedded in it. In compliance with the framework, we have charted a robust risk management policy that helps us take informed decisions in a dynamic business environment and minimise the risk of macro uncertainties.

The purpose of risk management is to identify potential events that may affect achievement of organisational strategy, business objectives and management of associated risks within the Companys risk appetite. The Board periodically assesses all facets of risks in the Companys operating landscape.

The key risks and opportunities arise from our ability to manage prices effectively in the presence of aggressive competition, increased raw material pricing, our capability to meet customer demand for technology and digital solutions, and our ability to benefit from the Group in terms of sales and sourcing. To manage threats and tap into opportunities, we execute involve cross-functional and cross-segment collaboration and active dialogue with the customers to develop ways to increase value and understand our competitive position.

Internal Controls

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance by recording and providing reliable financial and operational information, in compliance to applicable accounting standards and relevant statutes. Thereby, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies

The Audit Committee deliberated with the members of the management, considered the laid down systems and met internal and statutory auditors to ascertain their views on the internal financial control systems. The Audit Committee reviewed the control systems to be adequate and effective, The Committee keeps the Board of directors informed about their concerns, if any, on the financial control systems. However, the Company recognises that no matter how the internal control framework is, it has inherent limitations. Periodic audits and reviews ensure that such systems are updated on regular intervals. The Company has an independent Internal audit function with well-established risk management processes both at the business and corporate levels. The scope and authority of the Internal audit function is derived from the Internal audit Charter approved by the Audit Committee.

The Company has engaged a reputable external firm to support the Internal auditor for carrying out the Internal audit reviews. Reviews are conducted on an ongoing basis, through a comprehensive risk-based audit plan, approved by the Audit Committee at the beginning of each year. Considering the challenges of the ongoing pandemic, the reviews were conducted remotely leveraging on technology.

The Audit Committee meets on a half-yearly basis to review and discuss the Internal audit reports and follow-up action plans, considering the audit issues and compliance to the audit plan. The Chairperson of the Audit Committee has periodic one-on-one meetings with the Internal auditor to discuss any key concerns.

Cautionary statement

The report contains forward-looking statements that may be identified by their use of words such as plans, expects, will, anticipates, intends, projects, estimates or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the Companys strategy for growth, market position, expenditures and financial results are forward-looking statements. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised.