Analyzing a holding company (group of companies) during the transformation period: Methodology and algorithms (the PAO PhosAgro case)

Abstract

Subject. The article addresses the assessment of holding company's activities, considered as an ecosystem, the analysis of which includes not only the analysis of the business as a whole, but also of its member companies, taking into account internal relations and interactions. Objectives. The purpose is to develop and test a methodology for holding company analysis, using a Russian company case. Methods. The study employs general scientific principles and research methods, like abstraction, generalization of domestic authors’ approaches to the analysis of large business entities. Results. The developed methodology includes five stages: (1) accumulating information about all enterprises of the holding group as a whole, forming subgroups, calculating indicators of consolidated financial statements; (2) determining the structure of holding group’s key indicators distribution among subgroups, estimating cash flows within the group; (3) analyzing the operating, investing, and financing activities of subgroups; (4) calculating specific indicators that reflect the specifics of activities of the holding's subgroups and effectiveness of their functions; (5) forecasting, based on the analysis of the company's capitalization, identifying the key drivers of business capitalization, the growth rate of the group's free cash flow expected by the market, prospects for business development based on market expectations. Conclusions. Testing the methodology on PAO PhosAgro data showed that the group includes subgroups of companies, like holding, manufacturing, sales, servicing, non-manufacturing. Due to redomicilation, control over the group was moved to Russian jurisdictions, and key assets and financial results were concentrated in the holding and manufacturing companies. The analysis of business capitalization demonstrated that its key driver is product prices, the expected growth rate of the free cash flow of the business is insignificant. The group successfully adapts to environmental challenges and has prospects for further development.