In 2014, the Group delivered revenue of PLN 7,698.8m, which represents a 5.1% growth year on year (growth
would be +3.9% without incorporated on November, 1st 2014 Polbita Sp. z o.o.’s revenues). At the same time,
the Polish market for wholesale distribution of pharmaceuticals to pharmacies and hospitals expanded by
approximately 6.4%(1). The pharmaceutical wholesale market in Lithuania grew at a rate of 2.6% in the period(2).
Revenue from sale of merchandise accounted for the largest part of the Group’s revenue. Revenue from sales
of products and services represented 4.0% 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 2014, the Group was named one of TOP 3 largest wholesale distributors to pharmacies in Poland and
continued as the leader in the segment of sales to hospitals. In Q4 2014, the Group's share in the domestic
market of wholesale distribution to pharmacies was nearly 21%(2). A geographical analysis of the revenue
structure shows that in a few regions in Poland the Group is the leader in the wholesale of pharmaceuticals to
pharmacies.
With a market share of approximately 25%, Limedica is at the forefront of the wholesale pharmaceutical
distribution market in Lithuania. In the retail segment, the UAB NFG Group has a market share of
approximately 22% in terms of the number of operated pharmacies. If partner pharmacies are included, the
share is over 34%, which makes the UAB NFG Group the leader of the Lithuanian market.
(1 )- Source: 2014 Yearbook of IMS Health.
(2 )- Source: IMS Health, 2014.
In the twelve months of 2014, 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 national markets.
Their sales accounted for 9.4% of the Group’s total revenue from sale of merchandise.
Similarly to previous years, an overwhelming proportion of merchandise sales was wholesale, which
represented 72.5% of total revenue, including wholesale to hospitals, accounting for ca. 17% of Pelion's total
turnover.
The Group's gross profit was PLN 848.8m, down 1.1% on 2013. Gross profit includes the profit generated by
Polbita Sp. z o.o. and Polbita Marketing Sp. z o.o. of PLN 31.4m.
The gross profit margin was 11.0%, down by 0.7pp on 2013, mainly as a result of margin decrease following
change of the regulated wholesale margin on reimbursable drugs in Poland (approximately PLN 22m; down
0.3pp) and a drop in margin on other merchandise (approximately PLN 19.2m; down 0.2pp).
Gross profit margin = gross profit / revenue
Distribution costs and administrative expenses in 2014 totalled PLN 750.2m, up 5.5% on 2013, with the SG&A
ratio standing at 9.7%, the same as in the previous year.
The y-o-y increase in distribution costs and administrative expenses by PLN 39.2m was attributable to
incorporation into the Group of Polbita Sp. z o.o. and Polbita Marketing Sp. z o.o. in Q4 2014, which added PLN
29.1m to distribution costs and administrative expenses.
SG&A ratio = (distribution costs and general and administrative expenses) / revenue
In 2014, the Group’s other income exceeded other expenses, which improved its operating profit by PLN 16.9m
(in 2013, the Group recorded net other expenses of PLN 7.4m).
Other income of PLN 44.8m includes a PLN 18.2m gain from disposal of a property located in Łódź under an
operating sale-and-lease-back transaction, and a negative goodwill write-off of PLN 16.0m resulting from a
bargain purchase of Polbita Sp. z o.o. and Polbita Marketing Sp. z o.o. Other expenses include a PLN 8.8m
inventory write-down in the Retail segment, related to inventories unsold for over a year and their
conservative valuation in December 2014. In 2014, net impairment losses on receivables amounted to PLN
11.0m, including PLN 5.8m of impairment loss recognised at UAB NFG, described in the section on non-recurring events with a bearing on the Group’s performance. In 2013, net impairment losses on receivables
amounted to PLN 1.7m.
In 2014, the Group's EBITDA was PLN 151.5m, down PLN 23.8m year on year. The EBITDA margin was 2.0% and
was 0.4pp lower than in 2013.
During the period, the Pelion Group reported PLN 13.1m of finance income and PLN 41.7m of finance costs. Finance income primarily includes interest received (95% of finance income). 75% of finance cost is interest on liabilities.
|
2013 |
2014 |
|
Finance income |
11,5 |
13,1 |
|
Finance cost |
37,1 |
41,7 |
|
Gain on investments |
0,004 |
0,009 |
|
Net finance cost, including gain on investments |
25,6 |
28,7 |
|
In 2014, the Pelion Group's profit before tax was PLN 84.7m, and pre-tax margin reached 1.1%. Net profit for 2014 stood at PLN 55.9m, down 44.2% year on year (PLN 100.2m in 2013), and net margin was 0.7%, 0.7 pp higher than in 2013.
Non-recurring events with a material bearing on the Pelion Group’s performance in 2014In 2014, the EPS ratio was PLN 5.01, that is lower by PLN 3.87 in comparison to 2013.
2013 |
2014 |
Change 2014 /2013 |
||
Gross profit margin |
11,7% |
11,0% |
-0,7 pp |
|
EBITDA margin |
2,4% |
2,0% |
-0,4 pp |
|
EBIT margin |
1,9% |
1,5% |
-0,4 pp |
|
Pre-tax margin |
1,5% |
1,1% |
-0,4 pp |
|
Net margin |
1,4% |
0,7% |
-0,7 pp |
There were no major changes in the structure of assets in 2014 relative to the previous year, with current assets continuing to exceed non-current assets.
Item |
Dec 31 2013 |
Dec 31 2014 |
Non-current assets |
36,3% | 35,2% |
Current assets, including: |
63,7% |
64,8% |
- inventories |
31,2% |
31,9% |
- current receivables |
24,0% |
22,2% |
- cash and cash equivalents |
5,9% |
8,0% |
TOTAL ASSETS |
100,0% |
100,0% |
Equity attributable to owners of the parent |
21,6% |
18,4% |
Non-current liabilities |
14,2% |
18,9% |
Current liabilities |
63,9% |
62,5% |
Non-controlling interests |
0,3% |
0,2% |
TOTAL EQUITY AND LIABILITIES |
100,0% |
100,0% |
As at December 31st 2014, the share of non-current assets in the balance-sheet total was 35.2% (December 31st 2013: 36.3%). The main items under non-current assets were goodwill (17.6% of total assets), property, plant and equipment (9.5% of total assets), deferred tax assets (2.4% 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.
Current assetsAs at December 31st 2014, current assets accounted for 64.8% of total assets (December 31st 2013: 63.7%). The key items of current assets were inventories and trade receivables. The Pelion Group managed to maintain the negative working capital cycle of -9 days as at December 31st 2014, shorter by 1 day than as at December 31st 2013.
No. of days |
2013 |
2014 |
change |
2014* |
change |
|
Inventories cycle |
42 |
50 |
+8 |
47 |
+5 |
|
Average collection period |
33 |
35 |
+2 |
35 |
+2 |
|
Average payment period |
83 |
94 |
+11 |
92 |
+9 |
|
Working capital cycle |
-8 |
-9 |
-1 |
-10 |
-2 |
The carrying amount of inventories increased by PLN 209.2m year on year (from PLN 855.9m as at the end of
2013 to PLN 1,065.1m as at the end of 2014).
As at the reporting date, the inventory cycle was 50 days and was longer by eight days than as at December
31st 2013. The increase resulted from incorporation into the Group of Polbita Sp. z o.o., with inventories of PLN
81.7m as at December 31st 2014. With the newly incorporated subsidiary excluded, the Pelion Group's
inventory cycle would be 47 days.
Inventory cycle = inventory as at December 31st 2014/ total revenue * 365 days
As at the end of 2014, trade and other receivables stood at PLN 739.0m, up by PLN 84.5m over December 31st
2013. Average collection period for trade and other receivables was 35 days as at December 31st 2014, up 2
days year on year. With Polbita's receivables excluded (PLN 14.0m), the average collection period would be 35
days.
Average collection period = trade and other receivables as at December 31st 2014/ total revenue * 365 days
Receivables from private pharmacies in Poland reached PLN 295.4m as at December 31st 2014 (including PLN
41.6m of past due receivables), having grown PLN 51.1m on the end of 2013. As at December 31st 2014,
receivables due and payable accounted for 14.1% of all receivables from private pharmacies (December 31st
2013: 12.3%). Almost 70% of receivables due and payable were receivables past due by up to 30 days.
Current financial assets of PLN 82.2m mainly included loans advanced and interest on loans (PLN 81.8m).
As at December 31st 2014, 18.4% of assets were financed with the Parent's equity. Liabilities and non-controlling interests accounted for 81.6% of equity and liabilities, up by 3.2pp year on year.
Liabilities and provisions for liabilities
Liabilities and provisions for liabilities (totalling PLN 2,720.3m) primarily included trade payables and other
liabilities of PLN 1,988.5m, representing 59.5% of total equity and liabilities (December 31st 2013: 60.6%).
As at December 31st 2014, the average payment period was 94 days, up 11 days on December 31st 2013. As at
December 31st 2014, trade and other liabilities of Polbita totalled PLN 76.5m. With Polbita's liabilities excluded,
the Pelion Group's average payment period would be 92 days.
Average payment period = trade payables and other liabilities as at December 31st 2014 / total revenue * 365 days
As at December 31st 2014, financial liabilities amounted to PLN 655.7m (December 31st 2013: PLN 409.1m),
including non-current liabilities of PLN 614.9m (18.4% of total equity and liabilities).
As at the end of 2014, financial liabilities increased by PLN 246.6m year on year, and represented 19.6% of
total equity and liabilities (compared with 15.0% as at the end of 2013).
As at December 31st 2014, cash and cash equivalents grew by PLN 104.7m year on year, while net debt rose by
PLN 141.9m, to PLN 388.6m as at the end of 2014 (including Polbita's net debt of approximately PLN 99.6m).
The rise in net debt and lower EBITDA contributed to higher debt ratios. At 0.6, the net debt to equity ratio as
at December 31st 2014 was 0.2pp higher than as at December 31st 2013.
Net debt/EBITDA ratio amounted to 2.6 (2013: 1.4). With Polbita's debt excluded, the net debt to equity ratio
as at December 31st 2014 was 0.5, and the net debt/EBITDA ratio was 1.9.
In 2014, the Group's ability to meet its liabilities was not limited in any way. Similarly, no difficulties are expected
in 2015 as regards timely payment of liabilities.
Financial liabilities |
Dec 31 2013 |
% of total equity and liabilities |
Dec 31 2014 |
% of total equity and liabilities |
non-current |
371,6 |
13,6% |
614,9 |
18,4% |
current |
37,5 |
1,4% |
40,8 |
1,2% |
Total financial liabilities |
409,1 |
15,0% |
655,7 |
19,6% |
Cash and cash equivalents |
162,4 |
6,0% |
267,1 |
8,0% |
Net debt |
246,7 |
9,0% |
388,6 |
11,6% |
As at December 31st 2014, the liquidity ratios stayed flat relative to December 31st 2013:
Ratio |
Dec 31 2013 |
Dec 31 2014 |
Current ratio |
1,0 |
1,0 |
Quick ratio |
0,5 |
0,5 |
In 2014, the Pelion Group generated positive cash flows from operating activities of PLN 133.1m, down by PLN 27.4m on 2013. Cash flows from investing activities were negative at PLN (76.5m). Positive cash flows from financing activities stood at PLN 48.1m. In 2014, net cash flows reached PLN 104.7m, and cash at the end of the period stood at PLN 267.1m.
As part of its share buyback programme by December 31st 2014 Pelion S.A. repurchased a total of 1,737,199
own shares for PLN 81.5m, of which 1,467,017 shares with a par value of PLN 2.9m were cancelled in
2010 - 2013. In 2014, 230,321 shares with a total par value of PLN 0.5m were cancelled.
As at December 31st 2014, the Parent held 39,861 treasury shares, with a total par value of PLN 79.7 thousand,
acquired for cancellation. The shares represented 0.3564% of the share capital of Pelion S.A. and conferred the
right to 0.2181% of total voting rights at the General Meeting.
In 2014, the Company acquired 73,314 own shares with a par value PLN 2.0 per share, representing 0.6554%*
of the share capital of Pelion S.A. and conferring the right to 0.4011%* of total voting rights at the General
Meeting. The shares were acquired as part of the buyback programme, whereby the Company shares are
repurchased with a view to their cancellation, pursuant to the Resolution of the Annual General Meeting of
April 26th 2014.
*Calculated based on the number of shares and votes at the General Meeting following the registration of the share cancellation of June 27th 2014.
In 2014, the Pelion Group's capital expenditure was PLN 83.6m, including investments in property, plant and equipment of PLN 76.9m, investments in intangible assets of PLN 6.7m. 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 the construction of a new logistics centre in Łódź. The investments were financed using internal and external sources of funding.
Planned investments
Over the next 12 months, the Pelion Group intends to invest approximately PLN 40m in property, plant and
equipment. These investments will primarily include the extension and modernisation of logistics
infrastructure, modernisation of buildings and structures, as well as purchase of IT hardware and software. In
2015, investments will be financed using internal and external sources of funding. There is no threat to the
implementation of these plans.
As at the date of the financial statements, the Group does not have specific plans to make any material equity
investments. However, given the changes on the pharmaceutical market and the continued process of
streamlining the structure of the Pelion Group, the Group may resolve to make such additional equity
investments in the future, both in the retail and wholesale segment.
The Pelion Group's strategy is to strengthen the Group's position in all segments of the pharmaceutical market and build sustainable value on the capital market. The Group has consistently worked on enhancing the platform for all participants of the healthcare market. In its day-to-day operations, the Company strives to be a professional and innovative organisation, and in the coming years it will suport the Group companies in their search for innovative solutions by implementing novel projects, as well as developing websites and their mobile access functionalities.
The Pelion Group's strategy is to build a strong position on the pharmaceutical segment of the European health
care market and to create sustainable value on the capital market. In line with the key objectives of the
strategy, in 2014 new companies were incorporated into the Group, including Polbita Sp. z o.o., operator of the
Natura retail chain of beauty supply stores in Poland.
Pelion S.A. and its subsidiaries consistently seek to enhance a common platform for all participants of the
healthcare market. Across the entire range of its activities, extending from cooperation with manufacturers to
contacts with pharmacists and patients, they create and develop tools to streamline processes on the changing
pharmaceutical market. New and varied expectations of the pharmaceutical market's participants offer further
development and growth opportunities for the Group.
In the years to come, Pelion intends to build sustainable value on the capital market by implementing the
operating plans for its individual business lines. The plans rely on the following four pillars of Pelion's activities:
quality, customers, employees and responsibility.