In 2015, Pelion generated consolidated revenue of
year on year (with
Natura Sp. z o.o.’s revenue excluded, the growth rate would be +5.4%).
Sales in the Wholesale and Retail segments went up by
(with Natura Sp. z o.o.’s revenue excluded, the Group’s retail sales would grow by 7.8%)
At the same time, the Polish market for wholesale distribution of pharmaceuticals to pharmacies
and hospitals expanded by approximately +7.1%(1)
The pharmaceutical wholesale market in Lithuania grew by +3.7%(2) in the period
(1) Source: 2015 Yearbook of IMS Health (2) Source: IMS Health, 2015
Revenue from sale of merchandise accounted for the largest part of the Group’s revenue. Revenue from sale of products and services represented 4.3% of total revenue and included mostly revenue from sale of marketing services, services related to the direct distribution of products of Astra Zeneca UK Limited, as well as transport and logistics services.
In 2015, the Polish companies of the Pelion Group sold merchandise almost entirely to customers in Poland. The Group’s Lithuanian and UK companies traded on their respective home markets. Their sales accounted for 9.2% of Pelion’s total revenue from sale of merchandise.
The Group’s offering is addressed to patients, pharmacies, hospitals and other wholesalers. Similarly to previous years, wholesale accounted for an overwhelming proportion of merchandise sales, representing 68.8% of total revenue, including wholesale to hospitals, which accounted for ca. 17% of Pelion’s total turnover.
The pharmaceutical wholesale distribution sector is subject to seasonality: higher sickness rates are reflected in higher sales in the first and fourth quarters of a year. To some extent Pelion mitigates the seasonality of sales by broadening the range of products available at pharmacies (cosmetics, simple medical equipment), and also by expanding its geographical reach (e.g. popular tourist destinations in summer months). Total revenue in Q1 and Q4 2015 accounted for approximately 51.0% of total revenue posted in 2015.
In 2015, relations with suppliers were mainly the responsibility of PGF S.A., PGF Urtica Sp. z o.o. and DOZ Spółka Akcyjna Direct Sp. k., which worked with several hundred suppliers, none of whom accounted for more than 10% of total purchases. PGF S.A., as a distribution centre operating through regional companies, provides pharmacies with access to every pharmaceutical product that has been approved for sale in Poland.
Gross profit includes the profit generated by Natura Sp. z o.o. and Natura Marketing Sp. z o.o. of PLN 153.5m.
Gross profit margin = gross profit/revenue
The y-o-y increase in distribution costs and administrative expenses by PLN 167.1m was attributable to incorporation into the Group of Natura Sp. z o.o. and Natura Marketing Sp. z o.o. in Q4 2014, which in 2015 added PLN 158.2m to distribution costs and administrative expenses (in 2014: PLN 29.1m).
SG&A ratio = (distribution costs and general and administrative expenses) / revenue
In 2015, the Group’s other income exceeded other expenses, which improved its operating profit by
(in 2014, net other income/expenses stood at PLN 16.9m).
Other income of PLN 104.6m was primarily attributable to the acquisition of control of Pharmena S.A., an associate (PLN 89.4m). Gain on disposal of non-financial non-current assets amounted to PLN 2.5m, including a PLN 5.1m gain on disposal of rights to manufacture a pharmaceutical, realised by the Eubioco Group. In 2015, the Eubioco Group generated revenue of PLN 43.6m and EBITDA of PLN 11.3m.
In 2014, gain on disposal of non-financial non-current assets was PLN 18.6m, which included a PLN 18.2m gain on disposal of a property located in Łódź under an operating sale-and-lease-back transaction. In 2015, other expenses included prospectus preparation costs of PLN 3.3m, written off on a one-off basis following the decision of the Management Board of Pelion’s subsidiary PGF S.A. to abandon the initial public offering of Polska Grupa Farmaceutyczna shares.
In 2015, net impairment losses on receivables amounted to PLN 6.9m. In 2014, net impairment losses on receivables amounted to PLN 11.0m, including PLN 5.8m of impairment loss recognised at UAB NFG.
Finance income included primarily interest received (accounting for 56% of the Group’s finance income), while finance costs consisted mainly of interest on financial liabilities (nearly 82% of finance costs).
NET FINANCE COSTS
In 2015, earnings per share were PLN 7.67, an increase of PLN 2.66 on 2014.
There were no major changes in the structure of assets in 2015 relative to the previous year, with current assets continuing to exceed non-current assets. As at December 31st 2015, current assets accounted for 62.6% of total assets (December 31st 2014: 64.8%). The key items of current assets were inventories and current receivables.
As at December 31st 2015, non-current assets accounted for 37.4% of total assets (December 31st 2014: 35.2%). The main items under non-current assets were goodwill (20.3% of total assets), property, plant and equipment (9.6% of total assets), deferred tax assets (2.0% of total assets) and intangible assets (3.3% of total assets). Non-current financial assets are primarily loans advanced and interest on loans, representing 0.8% of total assets.
As at December 31st 2015, current assets accounted for 62.6% of total assets (December 31st 2014: 64.8%). The key items of current assets were inventories and trade receivables. Working capital cycle as at December 31st 2015 was negative at -1 day, the same as at December 31st 2014.
As at the reporting date, the inventory cycle was 48 days and was shorter by two days than as at December 31st 2014. Inventories accounted for 32.3% of the Pelion Group’s assets, up 0.4pp year on year.
Inventory cycle = inventory as at December 31st 2015/ total revenue * 365 days
As at the end of 2015, trade and other receivables stood at PLN 735.4m, down by PLN 3.6m on December 31st 2014. Average collection period for trade and other receivables was 32 days as at December 31st 2015, down 3 days year on year.
Average collection period = trade and other receivables as at December 31st 2015/ total revenue * 365 days
Receivables from private pharmacies in Poland reached PLN 275.4m as at December 31st 2015 (including PLN 37.9m of past due receivables), having fallen by PLN 20.0m on the end of 2014. As at December 31st 2015, receivables due and payable accounted for 13.6% of all receivables from private pharmacies (December 31st 2014: 14.1%) and included over 60% of receivables past due by up to 30 days. Current financial assets of PLN 89.3m mainly included loans advanced and interest on loans (PLN 89.2m).
As at December 31st 2015, 19.9% of assets were financed with the Parent’s equity. Liabilities and non-controlling interests accounted for 80.1% of equity and liabilities, down by 1.5pp year on year.
Liabilities and provisions for liabilities (totalling PLN 2,723.1m) primarily included trade payables and other liabilities of PLN 1,865.9m, representing 54.6% of total equity and liabilities (December 31st 2014: 54.4%).
As at December 31st 2015, the average payment period was 81 days, down 5 days on December 31st 2014.
Average payment period = trade payables and other liabilities as at December 31st 2015 / total revenue * 365 days
As at December 31st 2015, liabilities under maturity reverse factoring agreements were PLN 208.6m (December 31st 2014: PLN 168.7m).
As at December 31st 2015, financial liabilities were PLN 570.8m (PLN 655.7m as at December 31st 2014), and included PLN 473.9m of non-current financial liabilities (13.9% of total equity and liabilities). As at the end of 2015, financial liabilities decreased by PLN 84.8m year on year, and represented 16.7% of total equity and liabilities (compared with 19.6% as at the end of 2014).
As at December 31st 2015, cash and cash equivalents fell by PLN 80.7m relative to December 31st 2014, while net debt decreased by PLN 4.1m, to PLN 384.5m at the end of 2015. The rise in EBITDA and slight reduction in debt contributed to lower debt ratios. Net debt/EBITDA ratio amounted to 1.9 (2014: 2.6). As at December 31st 2015, the net debt to equity ratio stood at 0.6, unchanged from December 31st 2014.
In 2015, the Group’s ability to meet its liabilities was not limited in any way. Similarly, no difficulties are expected in 2016 as regards timely payment of liabilities.
As at December 31st 2015, the liquidity ratios stayed flat relative to December 31st 2014:
In 2015, the Pelion Group generated positive cash flows from operating activities of PLN 122.4m, down by PLN 10.6m on 2014. Cash flows from investing activities were negative at PLN (55.9m). Cash flows from financing activities were also negative and stood at PLN (147.3m). In 2015, net cash flows were negative at
PLN -80.7m, and net cash at the end of the period stood at PLN 186.3m.
In 2015, there were no buybacks of shares. As at December 31st 2015, the Company held no treasury shares.
In 2015, Pelion operated a PLN 300m Note Issue Programme, under which long-term notes were issued. The value of notes issued under the programme was PLN 100m. The issued notes were not traded between the Group companies. As at December 31st 2015, the use of the Note Issue Programme, excluding related entities, comprised a total of PLN 100m of long-term notes maturing in November 2020.
The largest investments in property, plant and equipment were connected with the construction and modernisation of buildings and structures used by Pelion S.A. and other Group companies in their day-to-day operations, including extension of the logistics centre in Łódź. The investments were financed using internal and external sources of funding. Over the next 12 months, the Pelion Group intends to invest approximately PLN 78m in property, plant and equipment. These investments will primarily include extension and modernisation of logistics infrastructure, modernisation of buildings and structures, as well as purchase of IT hardware and software. In 2016, investments will be financed using internal and external sources of funding. There is no threat to the implementation of these plans.