Våroćní Zpráva Za Rok 2016 the Company Report for The
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THE COMPANY 7Å30ė/¶;13«7"REPORT FOR THE;"30, YEAR 2016 CONTENTS 1| THE BASIC CHARACTERISTICS 6 2| The DEVELopment of SELected Indicators 9 3| The ManaGement Report 12 4| The Company’S Position; Research and DEVELopment 16 5| HUman ResoUrces and CommUnication 22 6| The InteGrated ManaGement System 27 7| ENVironmentaL Protection and Safety 29 8| The OWnership StrUctUre of BorsodChem Zrt. 33 ZÁKLADNÍ 1| CHARAKTERISTIKA THE BASIC 1|CHARACTERISTICS BorsodChem MCHZ, s.r.o., in its current form, continues hydrogenation lines for aniline production. Concurrently, in traditional chemical production that dates back to 1927. the company gradually discontinued the production At that time, the objective was to use the nearby source of sorbite, sulphuric acid, isopropylamine, nitrogen, oxygen, of coke gas to provide Czechoslovak production with argon, fertilisers and sodium nitrite, ammonia solution ammonia, nitric acid and artificial fertilisers before World and oxalic acid as a result of optimising the production War II, just like in surrounding European countries. portfolio. The production in a new plant started in 1928 with After 1990, the company underwent numerous the production of ammonia and ammonia sulphate. organisational and ownership changes. The joint-stock The production programme, originally focusing on the company “Moravské chemické závody” was formed production of fertilisers, was expanded and modernised in 1990 through the transformation of the state-owned after World War II. The production of formaldehyde plant. From 1 January 1999 to 26 April 2000, Moravské and urea-formaldehyde resins was launched and the chemické závody was a branch of Aliachem a.s. The processing of hydrogen for hydrogenation was expanded. current BorsodChem MCHZ, s.r.o., was formed on 27 Gradually, the production of cyclohexanone as a basic April 2000 by a split-off of the major part of the Moravské raw material for the production of nylon was developed. chemické závody branch from Aliachem a.s. The majority The company progressed from the production of fertilisers owner of BorsodChem MCHZ, s.r.o. was BorsodChem to the production of oxalic acid. Zrt. which increased its equity shareholding in 2006 and became the sole shareholder of BorsodChem MCHZ, Production of the current significant products of the s.r.o. In February 2011, the BorsodChem acquired a new company, i.e. aniline and cyclohexylamine, began in 1962 strategic owner – Wanhua Industrial Group. when the company constructed a pilot plant for such production. In 1971, the company launched operations At present, BorsodChem MCHZ, s.r.o. is fully integrated in a new phenol formaldehyde moulding material and resin into the multinational corporations. BorsodChem MCHZ, production plant. s.r.o. owns technologies and know-how for the production of key products which is able to develop further. The The most significant investment of the company so far – licence for the aniline production technology was sold the aniline block – was put into operation in 1985. The to Japan, where two large capacity units are currently aniline block was followed by a new production plant for successfully operated. More than one tenth of the cyclohexylamine and a new production plant for specialty worldwide aniline production is produced according to the amines in 1992. The production of hydrogen underwent BorsodChem MCHZ, s.r.o. licence. a major change – the low-temperature fission of coke gas was replaced by production using the steam power At present, the company is focusing on strengthening reforming of natural gas. Gradually, the aniline production its raw material relationships in the BorsodChem group capacity was increased to 165 kt per year, which was in accordance with the strategic plan of the investment enabled by the construction of another modern unit group to strengthen its position on the polyurethane of steam power reforming, an adiabatic nitrobenzene market. Concurrently, it keeps and develops a portfolio production unit and the construction of two modernised of small-scale special amine chemistry products. 6 BORSOdcheM MCHZ, s.r.o., OSTRAVA, THE COMPANY REPORT FOR THE YEAR 2016 BORSOdcheM MCHZ, s.r.o., OSTRAVA, THE COMPANY REPORT FOR THE YEAR 2016 7 THE DEVELOPMENT OF SELECTED 2|INDICATORS ECONOMIC RESULTS unit 2011 2012 2013 2014 2015 2016 thousand Total assets EUR 117,371 121,216 121,438 130,762 124,454 129,409 thousand Total revenues EUR 188,872 208,202 211,339 230,318 187,919 175,570 Earnings before interest, taxes, thousand depreciation and amortisation EUR 10,587 9,158 12,771 19,272 22,422 23,743 (EBITDA) Earnings before interest and taxes thousand 3,759 5,585 6,675 13,038 16,502 17,744 (EBIT) EUR thousand Profit before tax (PBT) EUR 1,338 3,939 5,112 13,047 16,001 16,484 thousand Profit after tax (PAT) EUR 963 3,071 4,004 10,535 13,075 13,192 SELECTED INDICATORS OF FINANCIAL ANALYSIS unit 2012 2013 2014 2015 2016 EBIT/SALES % 2.77 3.39 6.14 9.23 10.25 EBITDA/SALES % 5.91 6.58 8.76 12.45 13.64 ROE % 7.28 8.01 20.48 33.94 32.20 ROCE % 6.56 7.85 14.68 17.25 16.92 DEBT/EQUITY* 0.43 0.45 0.39 0.97 0.90 LIQUIDITY 1.90 2.34 2.65 3.05 0.86 * Payables controlling entity / Equity BORSOdcheM MCHZ, s.r.o., OSTRAVA, THE COMPANY REPORT FOR THE YEAR 2016 9 Zpráva vedení 3| spOlečNOsti registration. Projects aimed at increasing the reliability OUtlOOK FOR 2017 of production units, reducing the material intensity in THE MANAGEMENT production, increasing storage capacities, improving The plan for 2017 is based on a similar sales portfolio of logistics conditions in the company premises, as well as the company as in previous years. Sales of concentrated increasing production capacities for specialty amines and nitric acid to the parent company are not expected, it REPORT dicyclohexylamine most significantly contributed to the will only be produced for our own consumption. As in overall volume of expenditure. There were also projects 2016, we are expecting the maximum utilisation of aniline |FOR 2016 aimed at improving safety in the company premises. production capacities with the production volumes of other main products at similar levels as in 2016. The sales 3 Starting in 2013, our company was included in the second of aniline, dicyclohexylamine, diethyl oxalate and special phase of emission trading. The Ministry approved the amines are planned at the level of maximum production In 2016, the profit before tax of our company, a strongly For financing, the company needed working capital company's emission plan based on the values of previous capacity utilisation. Sales of cyclohexylamine are expected export-oriented company, reached EUR 16.5 million. lower by EUR 5.1 million compared to last year, mainly years and consequently also the reduction coefficient for to be at a similar or slightly lower level than in 2016. The entire year of 2016 was a stable period of lower due a decrease in inventory by EUR 2.7 million. The level the allocation of free allowances. After the implementation oil prices in global markets and also a period of rather of short-term trade receivables was very similar to last of investment projects aimed at reducing N2O emissions, In accordance with the investment policy of the holding, low, but gradually rising inflation in advanced European year's level. We recorded a slight year-on-year increase our company has a sufficient amount of these allowances new investment projects are planned to be implemented economies. Low oil prices in global markets prevented of EUR 0.5 million. Short-term trade payables increased without the need to purchase additional allowances prior in 2017. They include mainly the continuation of the an increase in prices of raw materials and the prices of slightly, specifically by EUR 2.9 million, due to the rising to submission. project aimed at reducing natural gas consumption in energy correlated to those of oil. The general economic input prices towards the end of the year. The balance hydrogen production, improving safety in the company situation in Europe was affected by two important political of advances received from customers increased year- premises and the reliability of production units, the waste aspects - the decision of the residents of the United on-year by EUR 0.6 million. They were paid for sales of water management system, improving our sales flexibility Kingdom in a referendum to leave the European Union goods that were not delivered to customers before the towards customers by increasing the cyclohexylamine and the expectations associated with the U.S. presidential end of the year. The balance of cash in bank accounts, storage capacities and increasing production capacities election. The permanently significantly stronger value of which is primarily related to the aforementioned payment in the specialty amines production area. Preparations for USD compared to other major currencies is an important of dividends, dropped by EUR 0.5 million year-on-year. the implementation of the largest future investment aimed factor. The operating profit of the company reached EUR On the contrary, the balance of receivables from the at improving the reliability of nitrobenzene production 17.7 million with total sales of EUR 175.6 million, which is parent company increased by EUR 7.1 million. This value will begin. Environmental protection projects aimed at EUR 12.5 million less than last year. Compared to last year, is largely represented by the balance in the cash-pooling further reductions in emissions, mainly odours, and at the the operating profit was substantially better, specifically by account at the end of the calendar year. cleanliness of waste water are also planned. EUR 1.2 million, which is 8% if expressed as a percentage.