Notes to individual items of the statement of income

Sales in fiscal 2022 amounted to € 1,324.7 million (previous year: € 979.6 million). This includes € 0.4 million (previous year: € 0.4 million) in sales proceeds from contractual obligations at the beginning of the reporting period. Revenues comprised € 1,186.9 million from the sale of goods and € 137.8 million from the provision of services, whereby the provision of services relates primarily to transport services.

The majority of revenues from the sale of goods relate to the manufacture and sale of chemical products, which are mainly recognized at a point in time. In total, sales recognized at a specific point in time amounted to € 1,296.4 million and sales recognized over a specific period of time totaled € 26.3 million. Group sales in the reporting segments are distributed across various geographical markets. For more information, please refer to the segment report under Note (17).

The total of other internal costs capitalized essentially derives from manufacturing costs in respect of work or assets capitalized, with any material intercompany profits eliminated. This item increased from € 8.8 million in the previous year to € 12.8 million in fiscal 2022.

The cost of purchased goods and services increased by € 203.5 million or 30.7 % year on year to € 865.7 million. The main reason for this was the sharp rise in raw material prices, which reached historic highs, partly as a result of supply chain problems. In addition, the European energy crisis led some suppliers to reduce capacities or temporarily shut down plants completely. The first full year of production at the silicon metal plant added to this increase, while ongoing optimization of the raw material mix and production processes and the associated reduction in raw material usage had a countervailing positive effect.

Personnel expenses increased by € 31.1 million or 27.6 %, from € 112.5 million in the previous year to € 143.6 million in fiscal 2022. This development was mainly due to a shortage of skilled workers coinciding with inflation-related pressure on payroll costs. In addition, there was an increase in variable remuneration components due to the very good annual results delivered by various subsidiaries and also by the PCC Group as a whole. The number of employees at the reporting date increased by 2.4 % from 3,311 to 3,391.

The companies of the PCC Group employed an average of 3,358 people in 2022 (previous year: 3,266), an increase of 92 or 2.8 % year on year.

The adjacent graphics show the breakdown of the number of employees by Group segment at the reporting date. The majority of the increase was attributable to the Trading & Services segment. In addition, the number of employees in the Logistics segment increased as the Intermodal Transport business unit experienced further expansion. The number of employees as of December 31, 2021 has been restated from the previous year’s report in line with the new segment structure.

The geographic distribution of the of employees as of the reporting date was as follows:

Other operating income increased by € 1.8 million from € 29.8 million in the previous year to € 31.6 million in the past fiscal year. The increase is mainly attributable to higher income from insurance reimbursements received following the fire at a tanker truck cleaning facility. In addition, income from costs recharged increased by € 2.9 million to € 3.3 million and income from the disposal of property, plant and equipment by € 2.5 million to € 3.6 million in fiscal 2022.

Countervailing the increase in total other operating income, the compensation payments received in the fiscal year in connection with CO₂ certificates decreased. These were paid by the Polish government in the amount of € 5.5 million in fiscal 2022 to offset price increases for CO₂ certificates and had amounted to € 10.2 million in the previous year.

Income from the sale of energy efficiency certificates amounted to € 1.7 million in the past fiscal year, also down on the previous year’s figure of € 3.0 million. These certificates were granted free of charge on application for particularly energysaving investments. All certificates not required to cover the Group’s own energy needs were sold.

As in the previous year, sundry other operating income is made up of various individual items that are not in themselves material.

In fiscal 2022, other operating expenses increased by € 22.6 million or 29.7 % from € 76.3 million to € 98.9 million.

As in the previous year, maintenance and repairs were the largest single item at € 23.2 million. The expenses were mainly attributable to the asset-intensive business activities of the chemical sites. The other taxes item includes all tax expenses apart from taxes on income. Domestic and foreign income taxes and deferred taxes are shown separately in the tax result and explained in Note (16). In the year under review, other taxes amounted to € 6.4 million, € 0.3 million higher than the previous year’s figure of € 6.1 million.

As in the previous year, the sundry other operating expenses item comprises various individual items that are not in themselves material. Research and development expenses for the year under review were recognized in the amount of € 14.3 million (previous year: € 5.1 million).

Due to the loss allocations exceeding the equity value of OOO DME Aerosol, Pervomaysky (Russia), the equity value for this company is shown as zero. The losses are carried forward in a sub-ledger and initially offset against future profits before a positive share of earnings is recognized in the consolidated statement of income. In the reporting year, a loss in the amount of the company’s positive pro-rata share of net income of € 0.8 million was reversed. As of December 31, 2022, the accumulated losses thus amounted to € 4.1 million (previous year: € 4.9 million).

The equity valuation of IRPC Polyol Company Ltd., Bangkok (Thailand), was uprated in the reporting year primarily due to the positive pro rata annual result of the company and amounted to € 2.2 million as of the reporting date (previous year: € 1.6 million). The other changes relate to foreign exchange effects.

The equity valuation of PCG PCC Oxyalkylates Sdn. Bhd., Kuala Lumpur (Malaysia), was downrated in the year under review by the negative pro rata net profit of the company and amounted to € 13.1 million at the reporting date (previous year: € 14.0 million).

PCC SE has provided guarantees to the financing banks of PCG PCC Oxyalkylates Sdn. Bhd. and OOO DME Aerosol. At the time of preparation of these financial statements, there is no expectation that these guarantees will be utilized.

Depreciation and amortization amounted to € 74.7 million in the past fiscal year (previous year: € 72.2 million). Amortization of intangible non-current assets related to industrial property rights and similar rights. No impairment losses were recognized on goodwill either in the year under review or in the previous year. Further information on goodwill can be found in Note (19). Impairment losses of € 1.5 million (previous year: € 4.5 million) were recognized on intangible assets, property, plant and equipment and right-of-use assets in fiscal 2022. A large part of this relates to property, plant and equipment in the Chlorine & Derivatives and Polyols & Derivatives segments. In the previous year, impairment losses mainly related to spare parts in the Chlorine segment and property, plant and equipment in the Logistics and Energy segments.

The result from interest income and interest expense increased by 25.5 % from € – 31.9 million in the previous year to € – 23.8 million in the past fiscal year. The individual items are listed in detail in the adjacent table.

As in the previous year, the largest single item was the interest payable on bonds, which at € 18.4 million was € 1.9 million lower year on year. Both the parent company of the PCC Group and several subsidiaries issue bonds for the purpose of financing capital expenditures and refinancing maturing liabilities. Note (32) provides a detailed presentation of the liabilities arising from bonds and their maturities. In accordance with IAS 23, interest incurred on investment projects that constitute qualifying assets is capitalized during their construction period. In the past fiscal year, interest expense of € 2.4 million (previous year: € 1.9 million) was capitalized. The financing cost rate was 4.6 % (previous year: 4.5 %). The weighted interest rate of all interest-bearing liabilities was 4.3 % in the year under review (previous year: 3.6 %).

Income and expenses from foreign currency translation are included in the financial result. Both gains and losses from foreign currency translation increased by a similar amount versus the previous year. Income from currency translation rose by € 35.6 million to € 66.7 million (previous year: € 31.1 million). Expenses from currency translation increased by € 34.4 million to € 64.6 million (previous year: € 30.2 million). The background to this is the exchange rate developments of the currencies of relevance to the PCC Group, essentially the Polish złoty and the US dollar. On balance, the result is positive at € 2.1 million, up € 1.2 million on the previous year’s figure of € 0.9 million.

Taxes on income comprise income taxes paid or owed in the individual countries and deferred taxes recognized through profit or loss. Taxes on income comprise trade tax, corporate income tax, solidarity surcharge and the corresponding foreign income taxes. Other taxes amounting to € 6.4 million (previous year: € 6.1 million) include property taxes, wealth taxes and other comparable types of tax. They are allocated to other operating expenses.

The effective tax rate of the PCC Group in the year under review was 25.3 % (previous year: 17.8 %). The relationship between the actual tax expense or income and that expected on the basis of the consolidated net income is shown in the following table. As in the previous year, the expected tax expense or income is based on a simplified income tax rate of 30 %.

Individual Group companies have tax losses that can be carried forward. The following table shows the timeframes in which tax loss carryforwards can be utilized and for which deferred taxes have been recognized. The amount changed by € –23.4 million compared with the previous year, mainly as a result of increased profits. Tax loss carryforwards on which no deferred taxes have been recognized amounted to € 191.5 million (previous year: € 131.2 million) and mainly arose at the Group holding company.