Key financial and economic data

Structure of separate assets, equity and liabilities

In 2016, the parent’s assets increased to PLN 6,443,256 thousand, i.e. by PLN 586,631 thousand relative to the end of 2015. As at December 31st 2016, non-current assets were PLN 5,632,399 thousand, and current assets were PLN 810,857 thousand.

Year on year, the most significant movements in assets in the reporting period included:

• a 29.7% increase in property, plant and equipment,
• a 12.0% increase in other financial assets,
• a 191.2% increase in cash and cash equivalents,
• a 9.3% decrease in inventories.
• a 10.3% decrease in trade receivables.

Structure of assets

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.

Year on year, the most significant movements in equity and liabilities in the reporting period included:

• a 3.1% increase in the parent’s equity,
• a 22.9% increase in non-current liabilities,
• a 24.7% increase in non-current liabilities under borrowings,
• a 16.8% decrease in trade and other payables,
• a 527.8% increase in current liabilities under borrowings.

Structure of equity and liabilities

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements

Structure of consolidated assets, equity and liabilities

In 2016, the Group’s assets rose to PLN 11,051,920 thousand, by PLN 556,846 thousand relative to the end of 2015. As at December 31st 2016, non-current assets were PLN 7,651,480 thousand, and current assets were PLN 3,400,440 thousand.

Year on year, the most significant movements in assets in the preorting period included:

• a 12.8% increase in property, plant and equipment,
• an 18.6% increase in other financial assets,
• a 14.0% increase in investment property,
• a 14.8% decrease in cash and cash equivalents,
• a 10.5% decrease in inventories.

Structure of assets

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.

Year on year, the most significant movements in equity and liabilities in the reporting period included:

• a 20.0% increase in non-current liabilities,
• a 31.0% increase in non-current liabilities under borrowings,
• a 56.2% decrease in current liabilities under borrowings.

Structure of equity and liabilities

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.

Separate financial ratios

Profitability ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.
Ratio formulas:
Gross profit margin = gross profit (loss) / revenue (statement of comprehensive income by function)
EBIT margin = EBIT / revenue
EBITDA margin = EBITDA / net revenue
Net profit margin = net profit (loss) / revenue
Return on assets (ROA) = net profit (loss) / total assets
Return on capital employed (ROCE) = EBIT / TALCL, that is EBIT / total assets less current liabilities
Return on equity (ROE) = net profit (loss) / equity
Return on non-current assets = net profit (loss) / non-current assets.

Liquidity ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.
Ratio formulas:
Current ratio = current assets / current liabilities
Quick ratio = (current assets–inventories–current prepayments and accrued income) / current liabilities
Cash ratio = (cash + other financial assets) / current liabilities.

Separate financial data

In 2016, Grupa Azoty S.A. earned a positive EBITDA of PLN 64,858 thousand and net profit of PLN 224,775 thousand. Year on year, EBITDA was lower by PLN 30,638 thousand while the net profit increased by PLN 15,720 thousand.

Separate financial data of Grupa Azoty S.A.

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3 to the separate financial statements.

With revenue down 12.2% year on year and lower cost of sales (down by 12.0%), Grupa Azoty S.A. reported gross profit on sales. Gross profit decreased by PLN 39,350 relative to 2015.
Despite the lower selling and distribution expenses, lower operating costs and only a slight increase in administrative expenses, the Group posted an operating loss. Finance income, which comprised mainly received dividends, ultimately contributed to the profit before tax.

Separate financial data by segment

EBIT by segment

Source: Company data

The Company’s profit on sales of products in 2016 was driven primarily by the market situation in the Agro Fertilizers and Plastics segments. Compared with the previous year, revenue decreased across all segments: by 16.8% in Agro Fertilizers, by 8.4% in Plastics, by 3.4% in Energy, and by 4.8% in Other Activities.

Revenue by segment

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.

Revenue by segment

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.

There were slight year-on-year movements in the segments’ shares in total revenue, with increased contributions from Plastics (2.2pp), Energy (0.1pp), and Other Activities (0.2pp), and a lower share of Agro Fertilizers (down 2.5pp).

Agro Fertilizers

In 2016, revenue in the Agro Fertilizers segment was PLN 694,659 thousand and accounted for 44.7% of the parent’s total revenue. Year on year, the segment’s revenue and its share in the parent’s revenue declined by 16.8% and 2.3pp, respectively.EBIT earned by the segment was positive. Sales on the domestic market accounted for approximately 70.3% of the segment’s revenue.

Plastics

In 2016, revenue in the Plastics segment was PLN 808,824 thousand and accounted for 52.1% of the parent’s total revenue. Year on year, the segment’s revenue decreased by 8.4%. More than 76.7% of the segment’s revenue was derived from sales on foreign markets. The segment’s loss before tax increased compared with 2015.

Energy

In 2016, revenue in the Energy segment was PLN 24,784 thousand and accounted for approximately 1.6% of the parent’s total revenue. Year on year, the segment’s revenue decreased by 3.4%. EBIT reported by the Energy segment was positive.

Other Activities

In 2016, revenue in the Other Activities segment was PLN 24,065 thousand, and accounted for 1.55% of the parent’s total revenue, having decreased by 26.9% relative to 2015. The segment’s EBIT was negative in 2016.

Consolidated financial ratios

Profitability ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.
Ratio formulas:
Gross profit margin = gross profit (loss) / revenue (statement of comprehensive income by function)
EBIT margin = EBIT / revenue
EBITDA margin = EBITDA / net revenue
Net profit margin = net profit (loss) / revenue
Return on assets (ROA) = net profit (loss) / total assets
Return on capital employed (ROCE) = EBIT / TALCL, that is EBIT / total assets less current liabilities
Return on equity (ROE) = net profit (loss) / equity
Return on non-current assets = net profit (loss) / non-current assets.

 Liquidity ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.
Ratio formulas:
Current ratio = current assets / current liabilities
Quick ratio = (current assets - inventories - current prepayments and accrued income) / current liabilities
Cash ratio = (cash + other financial assets) / current liabilities.

Changes in working capital*

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.

Operational efficiency ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements.
Ratio formulas:
Inventory turnover = inventories * 360 / cost of sales
Average collection period = trade and other receivables * 360 / revenue
Average payment period = trade and other payables * 360 / cost of sales
Cash conversion cycle = inventory turnover + average collection period - average payment period.

Debt ratios

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the consolidated financial statements
Ratio formulas:
Total debt ratio = total liabilities / total assets
Long-term debt ratio = non-current liabilities / total assets
Short-term debt ratio = current liabilities / total assets
Equity-to-debt ratio = equity / current and non-current liabilities
Interest cover ratio = (profit before tax + interest expense) / interest expense.

Segments’ consolidated financial information

EBIT by segment

Consolidated financial information

In 2016, the Group earned a positive EBITDA of PLN 1,005,783 thousand and net profit of PLN 375,152 thousand. Year on year, EBITDA decreased by PLN 303,432 thousand and the net profit decreased by PLN 303,067 thousand.

Structure of separate operating expenses

In 2016, the parent’s operating expenses were PLN 1,550,610 thousand, down by PLN 139,358 thousand year on year. The decrease was attributable to lower costs of raw materials and consumables used, taxes and charges, costs of services, and salaries and wages, including overheads and other benefits.

Operating expenses by nature of expense

Source: Company data
*Financial data restated in accordance with the information presented in Note 2.3.3 to the separate financial statements.

Other operating expenses

In 2016, other operating expenses, excluding raw materials and consumables used, accounted for 41.4% of total operating expenses, up from 38.8% in the corresponding period of 2015. The structure of other operating expenses changed only slightly relative to the comparative period.

Structure of other operating expenses (%)

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