Financial ratios

The Śnieżka Group

Group’s profitability ratios

In 2023, the Śnieżka Group generated higher margins than in the previous year at all profit levels, i.e.: net (an increase by 4.5%, to 9.7%), EBIT (an increase by 5.3%, to 14.1 %) and EBITDA (an increase by 5.2%, up to 18.6%).

The gross margin on sales was also higher (an increase of 6.4%, to 44.8%) – this is primarily the result of higher sales revenues (+8.3% y/y), with a simultaneous decrease in the cost of sales (-2.8% y/y).

In the reporting period, ROA ratios were also higher (as a result of a slight decrease in the average level of assets, while net profit doubled), as well as ROE (mainly due to higher net profit).

The Group’s profitability ratios

	for the period of 12 months ended as at 31 December 2023	for the period of 12 months ended as at 31 December 2022
EBIT margin in % (EBIT / Sales revenues) x 100%	14.1%	8.8%
EBITDA margin in % (EBITDA / Sales revenues) x 100%	18.6%	13.4%
Gross margin on sales in % (Gross profit on sales / Sales revenues) x 100%	44.8%	38.4%
Net profit (loss) in % (Net profit / Sales revenues) x 100%	9.7%	5.2%
Return on assets (ROA) * (Net profit / Total assets *) x 100%	10.1%	4.8%
Return on equity (ROE) ** (Net profit / equity – attributable to the shareholders of the parent company) x 100%	24.0%	12.1%

* Total net profit of the Group for the last four quarters divided by the average value of total assets of the Group at the end of the last 5 quarters.

Group’s liquidity and debt ratios

As at December 31, 2023, the total debt of the Group decreased by 5.2% (to 54.3%), which results from a decrease in liabilities compared to an increase in assets. An increase in the Equity-Asset-ratio with equity by 10.3% results from the increase in the value of equity capital in the face of a slight decrease in the value of fixed assets.

Compared to the previous year, the Group’s liquidity ratios improved. The leading current liquidity ratio increased from 1.0 to 1.2 – mainly due to a decrease in liabilities and a simultaneous increase in current assets.

The Śnieżka Capital Group manages its interest debt in a safe manner, assuming the optimal debt level of 1x EBITDA.

At the end of 2023, the Group’s net debt/EBITDA ratio was 1.38 compared to 2.66 a year earlier.

In 2023, the Group limited investment expenditure to the level necessary for effective operating activities (the investments are described in more detail in item 7.7 of the Report).

The Śnieżka Group’s liquidity and debt ratios

	31.12.2023	31.12.2022
Current liquidity ratio (Current assets / Short-term liabilities)	1.2	1.0
Quick liquidity ratio (Current assets – inventories)/Short-term liabilities	0.6	0.4
Cash liquidity ratio (Cash and cash equivalents / Short-term liabilities)	0.30	0.09
Total debt ratio (Total liabilities / Total assets) x 100%	54.3%	59.5%
Fixed-asset to equity-capital ratio (Equity/Fixed assets) x 100%	66.3%	56.1%

Group’s rotation ratios

In 2023, the Group’s cash conversion cycle shortened by 9,6 days. The inventory and receivables turnover cycle was shortened while the liabilities cycle was minimally extended.

The Śnieżka Group’s rotation ratios

	for the period of 12 months ended as at 31 December 2023	for the period of 12 months ended as at 31 December 2022
Inventory cycle (Inventory level x 360 /Cost of sales) in days	88.3	92.0
Receivables cycle (Trade and other receivables x 360 / Sales revenues) in days	24.7	29.7
Current liabilities cycle (Trade and other liabilities x 360 / Cost of sales) in days	77.1	76.2
Cash conversion cycle (Inventory cycle + receivable cycle – liability cycle) in days	35.9	45.5

FFIL ŚNIEŻKA SA

In 2023, FFiL Śnieżka SA generated better margins than the previous year at the level of: operating profit EBIT (by 8.3%), EBITDA (by 8.6%), net profit (by 7.6%).

In the reporting period gross margin increased by 8.3% to 31.0%. This is a derivative of the higher growth rate of revenues (+11.3% y/y) compared to the growth rate of cost of sales (-0.6% y/y).

In the current model, the profits from the sale of products generated by Śnieżka ToC (which is responsible for marketing and sales activities in the Group) are transferred to FFiL Śnieżka SA in the form of dividends. The Company, as year before, also received a dividend from the Hungarian company. In the reporting period, the total income of the Company from dividends amounted to PLN 45 670 thousand.

FFIL ŚNIEŻKA SA’s profitability ratios

	the period of 12 months ended as at 31 December 2021 2023	the period of 12 months ended as at 31 December 2022
EBIT margin in % (EBIT / Sales revenues) x 100%	19.7%	11.4%
EBITDA margin in % (EBITDA / Sales revenues) x 100%	24.1%	15.5%
Gross margin on sales in % (Gross profit on sales / Sales revenues) x 100%	31.0%	22.7%
Net profit (loss) in % (Net profit / Sales revenues) x 100%	12.2%	4.6%
Return on assets (ROA) * (Net profit / Total assets *) x 100%	8.1%	2.7%
Return on equity (ROE) (Net profit / equity**) x 100%	28.2%	10.4%

* Total net profit of the Group for the last four quarters divided by the average value of total assets of the Group at the end of the last 5 quarters.
** Total net profit attributable to the shareholders of the parent company for the last 4 quarters divided by the average value of equity attributable to shareholders of the parent company at the end of the last 5 quarters.

Company’s liquidity and debt ratios

At the end of 2023, the overall debt of the Company decreased by 5.2% to 68%. Fixed-asset to equity-capital ratio increased by 6.8%, which is a result of the increase in the level of equity.

Compared to the previous year, the Company’s current liquidity ratios slightly deteriorated (1.2 compared to 1.3 last year).
This is primarily the result of an increase in short-term liabilities.

The FFIL ŚNIEŻKA SA’s liquidity and debt ratios

	31.12.2023	31.12.2022
Current liquidity ratio (Current assets / Short-term liabilities)	1.2	1.3
Quick liquidity ratio (Current assets – inventories)/Short-term liabilities	0.6	0.7
Cash liquidity ratio (Cash and cash equivalents / Short-term liabilities)	0.00	0.01
Total debt ratio (Total liabilities / Total assets) x 100%	68.0%	73.2%
Fixed-asset to equity-capital ratio (Equity/Fixed assets) x 100%	40.6%	33.8%

Rotation ratios

In 2023, the Company’s cash conversion cycle was approximately 68,5 days, which accounts for its extension by 1 day compared to the previous year. This is vastly the result of shortening the liabilities cycle (by approx. 5,1 days), slower inventory turnover (by 4 days) and shortening the receivables cycle (by approx. 8,2 days). Since the change of the Group’s operating model, a significant part of the receivables of FFiL Śnieżka SA comes from Śnieżka ToC, which is related to the takeover of commercial contracts by it.

FFIL ŚNIEŻKA SA’s rotation ratios

	for the period of 12 months ended as at 31 December 2023	for the period of 12 months ended as at 31 December 2022
Inventory cycle (Inventory level x 360 /Cost of sales) in days	80.8	76.8
Receivables cycle (Trade and other receivables x 360 / Sales revenues) in days	46.0	54.2
Current liabilities cycle (Trade and other liabilities x 360 / Cost of sales) in days	58.2	63.4
Cash conversion cycle (Inventory cycle + receivable cycle – liability cycle) in days	68.5	67.6

Key financial performance of the Group

Seasonality