Ratio analysis

Debt and financing ratios of the Group

In the period under review, the debt of the Group posed no threat to its going concern and capacity to meet liabilities on time. The ratio of net debt to EBITDA remained negative, the same as in 2016, due to negative net debt (cash exceeds interest-bearing liabilities), combined with an increase of EBITDA.

The debt to equity ratio decreased year on year in 2017 due to an increase in equity. The Group raised additional capital in 2017 through an issue of series D and E bonds. The issue of series D and E bonds started in 2016 but the GPW bonds were registered by KDPW in January 2017, which is when the liability under the series D and E bonds was recognised on the books. On 2 January 2017, series A and B bonds were redeemed, and so GPW’s debt remained stable. In March 2017, the subsidiary TGE took a bank loan of PLN 60 million to pay outstanding VAT liabilities. The loan was repaid in November 2017. The Group’s debt was unchanged at 31 December 2017.

Liquidity ratios

The current liquidity ratio was 7.3 as at 31 December 2017 compared to 2.1 as at 31 December 2016. The increase of the ratio was due to a decrease in current liabilities following the redemption of series A and B bonds and a decrease in other current liabilities including mainly VAT liabilities for 2011-2016. Non-current liabilities increased following the issue of series D and E bonds which are due for redemption in 2022. Consequently, the current liquidity ratio remained safe.

The coverage ratio of interest costs under the bond issue increased in 2017 year on year mainly due to the Group’s higher EBITDA. Consequently, the Group generated cash flows from operating activities which were several times higher than necessary to cover current liabilities under the bond issue.

Profitability ratios

The profitability ratios improved year on year in 2017 driven by a higher growth rate of operating profit and net profit compared to the growth rate of revenue, as reflected in the improving return and cost/income ratios as well as ROE and ROA of the Group.

Key financial indicators of GPW Group

  As at / For the 12-month period ended
 31 December 201731 December 201631 December 2015
Debt and financing ratios    
Net debt / EBITDA (for a period of 12 months)1), 2)(1.1)(1.1)(0.6)
Debt to equity3)30.3%33.1%34.3%
Liquidity ratios    
Current liquidity4)7.32.14.9
Coverage of interest on bonds5)29.324.323.5
Return ratios    
EBITDA margin6)60.3%59.1%54.9%
Operating profit margin7)52.3%50.8%46.8%
Net profit margin8)44.3%42.2%37.1%
Cost / income9)47.1%48.3%53.2%
ROE10)20.1%18.0%17.3%
ROA11)13.5%11.8%11.4%

1) Net debt = interest-bearing liabilities less liquid assets of GPW Group (as at balance-sheet date)

2) EBITDA = GPW Group operating profit + depreciation and amortisation (for a period of 12 months; net of the share of profit of associates)

3) Debt to equity = interest-bearing liabilities / equity (as at balance-sheet date)

4) Current liquidity = current assets / current liabilities (as at balance-sheet date)

5) Coverage of interest on bonds = EBITDA / interest on bonds (interest paid and accrued for a period of 12 months)

6) EBITDA margin = EBITDA / GPW Group revenue (for a period of 12 months)

7) Operating profit margin = GPW Group operating profit / GPW Group revenue (for a period of 12 months)

8) Net profit margin = GPW Group net profit / GPW Group revenue (for a period of 12 months)

9) Cost / income = GPW Group operating expenses / GPW Group revenue (for a period of 12 months)

10) ROE = GPW Group net profit (for a period of 12 months) / Average equity at the beginning and at the end of the last 12 month period

11) ROA = GPW Group net profit (for a period of 12 months) / Average total assets at the beginning and at the end of the last 12 month period

Source: Company