Ratio analysis

Debt and financing ratios of the company

In the period under review, the debt of the Company posed no threat to its going concern and capacity to meet liabilities on time. The ratio of net debt to EBITDA increased year on year in 2017 but remained negative due to negative net debt (cash exceeds interest-bearing liabilities). The debt to equity ratio increased modestly year on year in 2017 due to a decrease in equity as at 31 December 2017. Interest-bearing debt was unchanged year on year (PLN 245.5 million as at 31 December 2017 compared to PLN 246.3 million as at 31 December 2016).

Liquidity ratios

The current liquidity ratio was 8.2 as at 31 December 2017 compared to 1.9 as at 31 December 2016. The increase of the current liquidity ratio was due to an increase in non-current liabilities following the issue of series D and E bonds. The ratio was lower at 31 December 2016 due to reclassification of debt under series A and B bonds as current liabilities (maturity of the bonds on 2 January 2017).The coverage ratio of interest costs under the bond issue increased to 15.1 in 2017 compared to 12.0 in 2016. Consequently, the Company 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 EBITDA and EBIT improved year on year in 2017 driven by an increase of revenue and operating profit. The Company’s cost/income ratio decreased as the growth rate of revenue was much bigger than the growth rate of expenses in 2017. Return on assets (ROA) and return on equity (ROE) decreased due to a lower net profit in 2017 compared to the net profit of 2016. The net profit of the Company was lower in the absence of dividend payments from the subsidiary TGE.

Key financial indicators of GPW S.A.

  As at / For the 12-month period ended
  31 December 201731 December 201631 December 2015
Debt and financing ratios    
Net debt / EBITDA for 12 months1), 2)(0.04)(0.2)0.1
Debt to equity3)54.5%52.2%53.7%
Liquidity ratios    
Current liquidity4)8.21.912.5
Coverage of interest on bonds5)15.112.012.0
Return ratios    
EBITDA6)53.6%51.9%48.0%
Operating profit margin7)44.1%40.9%36.8%
Net profit margin8)33.9%66.2%50.5%
Cost / income9)54.0%57.0%62.8%
ROE10)15.0%25.0%21.2%
ROA11)9.2%15.5%13.2%

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

2) EBITDA = GPW operating profit + depreciation and amortisation (for a period of 12 months)

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 revenue (for a period of 12 months)

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

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

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

10) ROE = GPW 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 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