Financial performance
The Group’s financing structure is adjusted to its needs and enables it to implement key investment projects.
The Group’s financing structure is adjusted to its needs and enables it to implement key investment projects. The main objective is to ensure long-term financial security and full internal compatibility of all financing sources used by the Group.
- In 2017, the Grupa Azoty Group improved its operating performance
- Consolidated revenue was PLN 9,617,495m (up 7.3% year on year)
- EBITDA totalled PLN 1,186,886m (up 25.2% year on year)
- Consolidated net profit came in at PLN 488.826m (up 55.1% year on year)
- The Group also reported a good debt ratio level, with net debt/EBITDA at 0.3
- Economic value retained was PLN 427.97 thousand
* In 2013 adjusted for gain on bargin purchase of Grupa Azoty Puławy, Grupy Azoty Siarkopol, AIG and impairment loss on the polyoxymethylene plant.
In 2014 adjusted for impairment loss on the phthalic anhydride unit recognised.
In 2015 adjusted for impairment loss on the benzene derived c-non production unit, fat processing plant, and carbon disulfide plant.
In 2016 adjusted for estimated impairment loss recognised by AIG, impairment loss on the AIG field and fat processing plant.
In 2017 - fat processing plant.
Grupa Azoty Group’s strategic financial targets and actual performance:
Strategic target | 2017 actual | 2016 actual | |
---|---|---|---|
EBIT margin | 8% | 6.2% | 4.8% |
EBITDA margin | 14% | 12.3% | 10.6% |
ROCE margin | 10% | 6.1% | 4.7% |
ROE margin | 10% | 6.6% | 4.5% |
In 2017, the Group’s operating performance improved year on year, with consolidated revenue at PLN 9,617,495m, and EBITDA at PLN 1,186.886m. In 2017, the Group reported net profit of PLN 488,826m.
With higher revenue and a 6.5% drop in cost of sales, the Grupa Azoty Group delivered a 10.1% year-on-year improvement in gross profit. It was higher by PLN 197.44m relative to the previous year. Gross profit net of selling and distribution expenses and administrative expenses came in at PLN 728,439m, or PLN 162,845m more than in 2016.
Revenue
In 2017, the Group’s consolidated revenue was PLN 9,617,495m, having increased by 7.3% year on year.
EBIT by segment | Agro Fertilizers | Plastics | Chemicals | Energy | Other |
---|---|---|---|---|---|
External revenue | 5,027,929 | 1,419,092 | 2,788,768 | 230,126 | 151,580 |
Gross profit (loss) | 338,435 | 170,639 | 282,450 | (23,358) | (39,727) |
EBIT | 287,805 | 171,265 | 243,020 | (38,313) | (66,563) |
Source: Company data
The Group’s gross profit on sales of products in 2017 was driven primarily by the market situation in the Agro Fertilizers segment, which reported revenue increase of 1.2% year on year. Revenue increase was also achieved in the Plastics and Chemicals segments – of 26.9% and 14.3%, respectively. In other segments, revenues declined – by 4% in Energy and by 23.5% in Other Activities.
Revenue by segment
Source: Company data
* Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements
Revenue by segment
Source: Company data
* Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements
The shares of individual segments in total revenue changed slightly compared with 2016, with increased contributions from Plastics (2.2pp) and Chemicals (1.8pp), and a lower share of Agro Fertilizers (down 3.1pp), Energy (down 0.3pp) and Other Activities (0.6pp).
EBIT
The Group’s EBIT in 2017 came in at PLN 597,214m. In 2017, the balance of other income and other expenses was negative, at PLN (131,225)m, which had an adverse effect on EBIT. EBIT margin in 2017 was 6.2%, compared with 4.8% in the previous reporting period
EBITDA
In 2017, the Grupa Azoty Group earned a positive EBITDA of PLN 1,186,886m, compared with PLN 947,968m in 2016 (up 25.2% year on year). As a result, EBITDA margin grew to 12.3% in 2017, compared with 10.6% in the previous year.
In line with the Grupa Azoty Group’s strategy for 2013–2020 revised in May 2017, the Group’s strategic objective is to achieve EBITDA margin of 14%.
Consolidated financial information of the Grupa Azoty Group
Item | 2017 | 2016* | change | change % |
---|---|---|---|---|
Revenue | 9,617,495 | 8,966,804 | 650,691 | 7.3 |
Cost of sales | (7,457,734) | (7,004,483) | (453,251) | 6.5 |
Gross profit | 2,159,761 | 1,962,321 | 197,440 | 10.1 |
Selling and distribution expenses | (673,555) | (669,315) | (4,240) | 0.6 |
Administrative expenses | (757,767) | (727,412) | (30,355) | 4.2 |
Gross profit | 728,439 | 565,594 | 162,845 | 28.8 |
Net other expenses | (131,225) | (137,990) | 6,765 | (4.9) |
Zysk na działalności operacyjnej | 597,214 | 427,604 | 169,610 | 39.7 |
Net other expenses | (131,225) | (137,990) | 6,765 | (4.9) |
Operating profit | (36,824) | (10,698) | (26,126) | 244.2 |
Net finance income/(costs) | (36,824) | (10,698) | (26,126) | 244.2 |
Share of profit of equity-accounted investees | 16,015 | 15,170 | 845 | 5.6 |
Profit before tax | 576,405 | 432,076 | 144,329 | 33.4 |
Income tax | (87,579) | (116,833) | 29,254 | (2.0) |
Net profit | 488,826 | 315,243 | 173,583 | 55.1 |
EBIT | 597,214 | 427,604 | 169,610 | 39.7 |
Depreciation and amortisation | 589,627 | 520,364 | 69,308 | 13.3 |
EBITDA | 1,186,886 | 947,968 | 238,918 | 25.2 |
Source: Company data.
* Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements.
Structure of assets
In 2017, the Group’s assets rose to PLN 11,738.44m , that is by PLN 744,449m relative to the end of 2016. Year on year, the most significant changes in assets included:
- 69.2% increase in cash and cash equivalents,
- 6.6% increase in property, plant and equipment,
- 16.9% increase in inventories,
- 140% increase in other receivables,
- 6.5% increase in trade and other receivables,
- 56.3% decrease in other current financial assets,
- 17% decrease in intangible assets.
Consolidated statement of financial position (continued)
Assets | Note | as at Dec 31 2017 | as at Dec 31 2016* restated | as at Jan 1 2016* restated |
---|---|---|---|---|
Non-current assets | ||||
Property, plant and equipment | 10 | 6,779,748 | 6,360,626 | 5,640,815 |
Perpetual usufruct of land | 11 | 476,616 | 487,717 | 496,871 |
Investment property | 13 | 49,649 | 66,054 | 58,496 |
Intangible assets | 12 | 395,755 | 47, 683 | 496,897 |
Goodwill | 12.1 | 32,468 | 30,748 | 33,241 |
Shares | 14.1 | 14,690 | 13,346 | 14,730 |
Equity-accounted investees | 14.1 | 111,059 | 110,411 | 107,603 |
Other financial assets | 14.3 | 2,226 | 1,953 | , 827 |
Other receivables | 17 | 137,850 | 57,445 | 59,524 |
Deferred tax assets | 7.4 | 69,583 | 50,402 | 68,978 |
Other assets | 19 | 337 | 199 | - |
Total non-current assets | 8,069,981 | 7,655,038 | 6,975,982 | |
Current assets | ||||
Inventories | 15 | 1,003,214 | 858,043 | 958,769 |
Property rights | 16 | 18, 887 | 214,675 | 226,931 |
Derivative financial instruments | 28.5 | 2,284 | 8,435 | 4,174 |
Other financial assets | 14.3 | 253,684 | 580,849 | 492,587 |
Current tax assets | 24,248 | 3,750 | 2,156 | |
Trade and other receivables | 17 | 1,088,424 | 1,022,127 | 1,043,749 |
Cash and cash equivalents | 18 | 1,085,885 | 641,895 | 75,289 |
Other assets | 19 | 10,882 | 8,092 | 9,117 |
Assets held for sale | 10.1 | 10,555 | 691 | 3,123 |
Total current assets | 3,66, 063 | 3,338,557 | 3,494,895 | |
Total assets | 11,738,044 | 10,993,595 | 10,47, 877 |
*Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements
Structure of equity and liabilities
Year on year, the most significant changes in equity and liabilities included:
- 5.7% increase in equity,
- 14.1% increase in non-current liabilities under borrowings,
- 10.9% increase in trade and other payables,
- 58.4% decrease in other current financial liabilities.
Consolidated statement of financial position (continued)
Note | as at Dec 31 2017 | as at Dec 31 2016*restated | as at Jan 1 2016* restated | |
---|---|---|---|---|
Equity and liabilities | ||||
Equity | ||||
Share capital | 20.1 | 495,977 | 495,977 | 495,977 |
Share premium | 20.2 | 2,418,270 | 2,418,270 | 2,418,270 |
Hedging reserve | 20.3 | 15,407 | (7,105) | 65 |
Exchange differences on translating foreign operations | (233) | 2,319 | (39) | |
Retained earnings, including: | 3,926,338 | 3,553,237 | 3,341,794 | |
Net profit for the year | 456,663 | 301,870 | - | |
Equity attributable to owners of the parent | 6,855,759 | 6,462,698 | 6,256,067 | |
Non-controlling interests | 20.4 | 587,648 | 576,774 | 625,722 |
Total equity | 7,443,407 | 7,039,472 | 6,881,789 | |
Liabilities | ||||
Borrowings | 21 | 1,564,879 | 1,372,047 | 1,047,450 |
Other financial liabilities | 22 | 39,592 | 43,172 | 16,112 |
Employee benefit obligations | 24 | 336,781 | 321,209 | 326,968 |
Trade and other payables | 26 | 4,456 | 1,082 | 972 |
Provisions | 25 | 122 740 | 106,092 | 109,684 |
Government grants received | 27 | 90,585 | 68,431 | 47,036 |
Deferred tax liabilities | 7.4 | 177,588 | 191,291 | 181,998 |
Total non-current liabilities | 2,336,621 | 2,103,324 | 1,730,220 |
* Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements.
Note | Dec 31 2017 | Dec 31 2016* restated | as at Jan 1 2016* restated | |
---|---|---|---|---|
Borrowings | 21 | 70,209 | 52,034 | 118,880 |
Derivative financial instruments | 28.5 | - | 8,213 | 986 |
Other financial liabilities | 22 | 31,484 | 75,678 | 58,876 |
Employee benefit obligations | 24 | 42,316 | 39,917 | 33,167 |
Current tax liabilities | 8,916 | 30,553 | 18,986 | |
Trade and other payables | 26 | 1,769,199 | 1,595,231 | 1,577,196 |
Provisions | 25 | 29,805 | 39,341 | 45,686 |
Government grants received | 27 | 6,087 | 9,832 | 5,091 |
Total current liabilities | 1 958 016 | 1,850,799 | 1,858,868 | |
Total liabilities | 4,294,637 | 3,954,123 | 3,589 ,088 | |
Total equity and liabilities | 11,738,044 | 10,993,595 | 10,470,877 |
*Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements.
Operating cash flows
In 2017, the Group generated positive net cash from operating activities of PLN 1,114,225 thousand, relatively flat on the previous year. The amount mainly included net profit before depreciation and amortisation, impairment losses, and an increase in trade and other payables, as well as a decrease in inventories and trade and other receivables.
The consolidated statement of financial position should be read in conjunction with the notes to the full-year separate financial statements, which form their integral part. |
Net cash from operating activities was partly used to finance investment projects. The Grupa Azoty Group’s total capital expenditure in 2017 reached PLN 1,023m and was financed with internally generated funds, the corporate set of credit facilities (redistributable among the Group companies), loans granted by the National Fund for Environmental Protection and Water Management (NFOŚiGW) and the Provincial Fund for Environmental Protection and Water Management (WFOŚiGW), lease contracts and grants.
Consolidated statement of cash flows
Note | for the period Jan 1− Dec 31 2017 | for the period Jan 1− Dec 31 2016* restated | |
---|---|---|---|
Cash flows from operating activities | |||
Profit before tax | 576,405 | 432,076 | |
Adjustments for: | 703,765 | 596,498 | |
Depreciation and amortisation | 589,672 | 520,364 | |
Impairment losses | 4.10 | 77,981 | 60,368 |
Loss on investing activities | 10,860 | 13,438 | |
Loss on disposal of financial assets | - | 11 | |
Share of profit of equity-accounted investees | (16,015) | (15,170) | |
Interest, foreign exchange gains or losses | 41,802 | 16,244 | |
Dividends | (677) | (1,266) | |
Fair value loss on financial assets at fair value | 142 | 2,509 | |
1,280,170 | 1,028,574 | ||
(Increase)/Decrease in trade and other receivables | 33 | (80,423) | 19,255 |
(Increase)/Decrease in inventories | 33 | (121,063) | 112,587 |
Decrease in trade and other payables | 33 | 172,253 | 103,998 |
Decrease/(Increase) in provisions, prepayments and grants | 33 | 41,808 | (72,771) |
Other adjustments | (7,119) | (1,540) | |
Cash generated from operating activities | 1,285,626 | 1,190,103 | |
Income tax paid/(refunded) | (171,401) | (74,723) | |
Net cash from operating activities | 1,114,225 | 1,115,380 |
*Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements.
Note | for the period Jan 1−Dec 31 2017 | for the period Jan 1−Dec 31 2016* restated | |
---|---|---|---|
Cash flows from investing activities | |||
Proceeds from sale of property, plant and equipment, intangible assets and investment property | 6,624 | 4,155 | |
Acquisition of property, plant and equipment, intangible assets and investment property | (1,069,140) | (1,241,667) | |
Dividend received | 13,720 | 13,716 | |
Acquisition of other financial assets | (689,496) | (1,528,329) | |
Interest received | 1,002,100 | 1,427,693 | |
Government grants received | 22,218 | 17,486 | |
Dotacje | 1,120 | 350 | |
Loans advanced | (1,225) | (352) | |
Repayments of loans advanced | 1,446 | 3,255 | |
Other proceeds | 9,000 | 11,425 | |
Other disbursements | (5,589) | (10,705) | |
Net cash from investing activities | (709,222) | (1,302,973) | |
Cash flows from financing activities | |||
Dividends paid | (100,313) | (96,522) | |
Proceeds from borrowings | 332,634 | 268,864 | |
Payment of borrowings | (90,133) | (23,486) | |
Acquisition of non-controlling interests | - | (41,345) | |
Interest paid | (52,369) | (44,063) | |
Payment of finance lease liabilities | (13,238) | (15,469) | |
Other proceeds/(disbursements) | (22,091) | 25,664 | |
Net cash from financing activities | 54,490 | 73,643 | |
Total net cash flows | 459,493 | (113,950) | |
Cash and cash equivalents at beginning of period | 641,895 | 754,289 | |
Effect of exchange rate fluctuations on cash held | (15,503) | 1,556 | |
Cash and cash equivalents at end of period, including: | 1,085,885 | 641,895 | |
Restricted cash | 1,115 | 4,024 |
* Financial data restated in accordance with the information presented in Section 2.4 of the Supplementary information to the consolidated financial statements.
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In accordance with the parent’s dividend policy resulting from its updated strategy for 2013−2020, the parent decided not to set the lower limit for the dividend payout ratio and to maintain the upper limit at 60%.
In 2017, the parent distributed profit for 2016. The amount allocated for distribution as dividend was PLN 78,364m (i.e. PLN 0.79 per share), while the remaining part of profit was allocated for further implementation of the investment strategy. The dividend payout ratio was 35% (dividend amount/net profit).
Dividend for: | Dividend record date | Dividend payment date | Net profit | Total dividend amount | Dividend per share |
---|---|---|---|---|---|
2008 | 26.06.2009 | 1st part: Aug 31 2009 | PLN 61,935 thousand | PLN 39,898,749.42 | PLN 1.02 |
2nd part: Nov 6 2009 | |||||
2012 | 22.04.2013 | 24.05.2013 | PLN 250,692 thousand | PLN 148,793,226.00 | PLN 1.50 |
2013 | 18.06.2014 | 09.07.2014 | PLN 44,117 thousand | PLN 1,983 ,096.80 | PLN 0.20 |
2015 | 20.06.2016 | 11.07.2016 | PLN 209,055 thousand | PLN 83,324,206.56 | PLN 0.84 |
2016 | 04.08.2017 | 23.08.2017 | PLN 224,775 thousand | PLN 78,364,432.36 | PLN 0.79 |
2017 | 25.07.2018 | 08.08.2018 | PLN 354,793 thousand | PLN 123,994,355.00 | PLN 1.25 |
Source: Company data
[201-1 ] Direct economic value generated and distributed
Direct economic value generated and distributed | 2017 | 2016 |
---|---|---|
Direct value generated | PLN 9,935,458 | PLN 9,155,391 |
Net revenue and equivalents, including from related entities | PLN 9,885,258 | PLN 9,107,253 |
Other income | PLN 50,200 | PLN 48,138 |
Direct value distributed | PLN 9,545,621 | PLN 8,954,760 |
Costs of operations: | PLN 7,708,090 | PLN 7,235,054 |
- Operating expenses | PLN 7,457,734 | PLN 7,004,483 |
- Other expenses | PLN 181,425 | PLN 186,128 |
- Finance costs | PLN 68,931 | PLN 44,443 |
Salaries, wages and employee benefits | PLN 1,399,447 | PLN 1,299,753 |
Payments to providers of capital | PLN 100,313 | PLN 96,522 |
Payments to government | PLN 337,771 | PLN 323,431 |
Economic value retained | PLN 389,837 | PLN 200,631 |
The Group parent, Grupa Azoty S.A., commenced 2017 with a surge of its share price on the stock exchange, from PLN 63.80 to PLN 73 in January. Until the end of April, its stock traded at around PLN 70. In the period from May to early June, the price dropped to the year’s low of PLN 63.01, after which it rebounded to PLN 69. In late June and early July, after the European Bank for Reconstruction and Development reduced its equity interest in the company, the price fell to PLN 63.50. In July, the company shares recovered to nearly PLN 72, after which the price dropped to around PLN 65 for a short period in September, to grow again until early October, to the year’s high of close to PLN 79. From October to mid-November, it trended gradually down to approximately PLN 70. Towards the end of 2017, the downward trend continued, with temporary spikes to PLN 77 and PLN 74. At the close of the last trading session in 2017, the Grupa Azoty S.A. stock price was PLN 69.60.
Grupa Azoty S.A. share price in 2016–2017
Grupa Azoty Police started 2017 on the stock exchange with a trading price of PLN 22.80. At the beginning of the first quarter, the stock price rose slightly to PLN 23.60, which was the year’s high. From the end of January to February, it fell rapidly, to PLN 20.10, and in the last month of the first quarter moved in the range of PLN 21.15 – PLN 20.02. Throughout the second quarter, the price was relatively stable, within the range of PLN 19.99 – PLN 20.70. During the third quarter, it grew moderately to reach PLN 21.22, and in the fourth quarter stabilised at close to PLN 21. At the year end, the company’s stock traded at PLN 20.84.
Grupa Police S.A. share price in 2016–2017
As at December 29th 2017, Grupa Azoty Puławy’s stock traded at PLN 156.50, down 11.61% on the closing price from January 2nd 2017, which was PLN 177.05. Over the same period, the WIG index climbed 22.81%. The lowest price level, of PLN 151, was recorded on June 21st 2017, and the highest on January 11th 2017, at PLN 206. As at the end of December 2017, the company’s market capitalisation was PLN 2,991m.
Grupa Azoty Puławy S.A. share price in 2016–2017
The Grupa Azoty Group’s consolidated financial results are available to the public. As required by the applicable regulations, we make our accounts available to all stakeholders. Our financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union, which are consistent with the interpretations approved by the International Accounting Standards Board. The Group’s full consolidated financial statements are available on our website.