Our business – who we are, how we operate

Financial performance

The Group’s financing structure is adjusted to its needs and enables it to implement key investment projects.

Go to GRI STANDARD index
GRI Index:
S
[IR - Presentation of results]

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.

[102-7]
  • 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%
See expert comment on the grupa azoty group’s financial position in 2017

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.

Download data in xls

See how we delivered on our dividend policy
[201-1]

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
See how our shares performed on the stock exchange

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.

See our companies’ results

See notes to the financial statements

Our business – who we are, how we operate
Table of contents
The future