Financial Position of Budimex Group
Key economic and financial data of the Budimex Group
The financial situation of the Budimex Group in 2014 is characterised by selected financial and economic data disclosed in the Statement of Financial Position and the Profit and Loss Account (broken down below together with the 2013 comparative data).
Consolidated statement of financial position of the Budimex Group
The main items of the Consolidated Statement of Financial Position of the Budimex Group as at 31 December 2014, compared to 31 December 2013, are presented in the table below:
| ASSETS (PLN thousand) | 31.12.2014 | 31.12.2013 | 1.01.2013 |
|---|---|---|---|
| transformed | |||
| Non-current (long-term) assets | |||
| Property, plant and equipment | 79 513 | 83 755 | 111 192 |
| Investment properties | 24 994 | 24 529 | 3 256 |
| Intangible assets | 4 494 | 4 106 | 2 992 |
| Goodwill of subsidiaries | 73 237 | 73 237 | 73 237 |
| Investments in equity accounted entities | 7 539 | 3 518 | 16 966 |
| Available-for-sale financial assets | 8 376 | 8 381 | 17 135 |
| Retentions for construction contracts | 27 923 | 24 804 | 19 202 |
| Trade and other receivables | 29 945 | 25 496 | 4 176 |
| Concession agreement receivables | 45 214 | 22 376 | - |
| Other financial assets | - | 692 | - |
| Deferred tax assets | 376 261 | 351 336 | 311 651 |
| Total non-current (long-term) assets | 677 496 | 622 230 | 559 807 |
| Current (short-term) assets | |||
| Inventories | 648 655 | 697 046 | 876 206 |
| Trade and other receivables | 495 364 | 540 221 | 410 897 |
| Retentions for construction contracts | 10 248 | 18 217 | 49 419 |
| Amounts due and receivable from customers under construction contracts | 172 548 | 146 630 | 227 490 |
| Current tax assets | 265 | 331 | 935 |
| Other financial assets | 19 800 | 3 295 | 5 724 |
| Cash and cash equivalents | 1 831 652 | 1 658 783 | 1 317 733 |
| 3 178 532 | 3 064 523 | 2 888 404 | |
| Non-current assets (disposal groups) classified as held for sale | 2 181 | - | - |
| Total current (short-term) assets | 3 180 713 | 3 064 523 | 2 888 404 |
| TOTAL ASSETS | 3 858 209 | 3 686 753 | 3 448 211 |
| EQUITY AND LIABILITIES (PLN thousand) | 31.12.2014 | 31.12.2013 | 1.01.2013 |
|---|---|---|---|
| transformed | |||
| EQUITY | |||
| Share capital | 145 848 | 145 848 | 145 848 |
| Share premium | 87 163 | 87 163 | 234 799 |
| Other reserves | 4 816 | 4 584 | 2 705 |
| Foreign exchange differences on translation of foreign operations | 5 326 | 5 101 | 2 190 |
| Retained earnings | 276 112 | 383 627 | 47 588 |
| Shareholders’ equity attributable to the shareholders of the Parent Company | 519 265 | 626 323 | 433 130 |
| Equity attributable to non-controlling interests | 3 244 | 18 852 | - |
| Total equity | 522 509 | 645 175 | 433 130 |
| LIABILITIES | |||
| Long-term liabilities | |||
| Loans, borrowings and other external sources of financing | 46 298 | 34 355 | 75 967 |
| Retentions for construction contracts | 176 116 | 161 347 | 161 143 |
| Provisions for long-term liabilities and other charges | 179 169 | 147 676 | 141 521 |
| Retirement benefits and similar obligations | 6 121 | 4 381 | 3 747 |
| Other financial liabilities | 4 925 | 226 | - |
| Total long-term liabilities | 412 629 | 347 985 | 382 378 |
| Current liabilities | |||
| Loans, borrowings and other external sources of financing | 21 402 | 19 729 | 17 718 |
| Trade and other liabilities | 1 117 743 | 1 374 915 | 1 449 202 |
| Retentions for construction contracts | 201 207 | 189 466 | 222 146 |
| Amounts due and payable to customers under construction contracts | 920 668 | 689 915 | 534 870 |
| Deferred income | 520 766 | 281 679 | 285 189 |
| Provisions for current liabilities and other charges | 111 598 | 120 126 | 116 060 |
| Current tax liability | 26 291 | 16 147 | 6 225 |
| Retirement benefits and similar obligations | 1 080 | 1 117 | 1 036 |
| Other financial liabilities | 2 316 | 499 | 257 |
| Total current liabilities | 2 923 071 | 2 693 593 | 2 632 703 |
| Total liabilities | 3 335 700 | 3 041 578 | 3 015 081 |
| TOTAL EQUITY AND LIABILITIES | 3 858 209 | 3 686 753 | 3 448 211 |
As at 31 December 2014, consolidated total assets increased by PLN 171,456 thousand compared to the end of December 2013, mainly due to a 8.9% (PLN 55,266 thousand) increase in non-current assets and a 3.7% (PLN 114,009 thousand) increase in current assets.
Non-current assets (long-term):
The change in non-current assets as at 31 December 2014 compared to 31 December 2013 was caused mainly by the following:
- decrease in the balance of property, plant and equipment by PLN 4,242 thousand, mainly due to depreciation charges in the amount of PLN 20,930 thousand. Capital expenditures of PLN 19,846 thousand were allocated towards property, plant and equipment,
- increased balance of receivables from a concession agreement by PLN 22,838 thousand as a result of completion of construction of an underground car park,
- increase in the balance of deferred income tax assets by PLN 24,925 thousand as a result of creation of assets in the amount of PLN 29,607 thousand, creation of the reserve in the amount of PLN 4,656 thousand and other changes in the amount of PLN (26) thousand.
Current assets (short-term):
In the same period, the value of current assets increased by PLN 114,009 thousand, mainly as a result of an increase in:
- amounts receivable from customers under construction contracts by PLN 25,918 thousand,
- balance of cash and cash equivalents by PLN 172,869 thousand,
with a simultaneous decrease in:
- balance of trade and other receivables by PLN 44,857 thousand,
- balance of inventories by PLN 48,391 thousand, mainly related to the development business.
Equity and liabilities:
On the equity and liabilities’ side, the main changes related to the following:
- an increase in the value of non-current liabilities by PLN 64,644thousand, mainly due to an increase in the balance of loans, borrowings and other external financing sources by PLN 11,943 thousand, with an increase in the balance of provisions for non-current liabilities by PLN 31,493 thousand and a simultaneous increase in liabilities under long-term retentions by PLN 14,769 thousand,
- increase in current (short-term) liabilities by PLN 229,478 thousand, of which major changes were related to the following:
- a decrease in trade and other liabilities by PLN 257,172 thousand,
- an increase in amounts due to customers under construction contracts by PLN 230,753 thousand,
- an increase in deferred income by PLN 239,087 thousand, mainly due to advance payments towards implemented contracts.
Consolidated Profit and Loss Account of the Budimex Group
| CONSOLIDATED PROFIT AND LOSS ACCOUNT | 01.01 - 31.12.2014 | 01.01 - 31.12.2013 | Change | Change % |
|---|---|---|---|---|
| restated | ||||
| Net revenue from sales of products, services, goods for resale and raw materials | 4 949 939 | 4 749 459 | 200 480 | 4,2% |
| Cost of products, services, goods for resale and raw materials sold | (4 517 259) | (4 354 043) | (163 216) | 3,8% |
| Gross profit on sales | 432 680 | 395 416 | 37 264 | 9,4% |
| Selling expenses | (27 660) | (28 364) | 704 | -2,5% |
| Administrative expenses | (177 743) | (162 917) | (14 826) | 9,1% |
| Other operating income | 60 191 | 44 181 | 16 010 | 36,2% |
| Other operating expenses | (40 150) | (109 122) | 68 972 | -63,2% |
| Profit on disposal of a subsidiary | - | 194 112 | (194 112) | -100,0% |
| Profit on operating activities | 247 318 | 333 306 | (85 988) | -25,8% |
| Finance income | 42 841 | 30 905 | 11 936 | 38,6% |
| Finance costs | (41 688) | (28 256) | (13 432) | 47,5% |
| Shares in net profits (losses) of subsidiary companies valued using equity method | (5 852) | (4 684) | (1 168) | 24,9% |
| Gross profit | 242 619 | 331 271 | (88 652) | -26,8% |
| Income tax | (48 681) | (29 971) | (18 710) | 62,4% |
| Net profit for the period | 193 938 | 301 300 | (107 362) | -35,6% |
| of which: | ||||
| attributable to the shareholders of the Company | 191 973 | 300 480 | (108 507) | -36,1% |
| attributable to non-controlling interests | 1 965 | 820 | 1 145 | 139,6% |
n 2014, the Budimex Group earned sales revenue of PLN 4,949,939 thousand, which represents an increase by 4.2% compared to the result for 2013.
Gross profit on sales in 2014 was PLN 432,680 thousand, while in the previous year it amounted to PLN 395,416 thousand. Hence, gross sales profitability in 2014 was 8.74% compared to 8.33% in 2013.
In accordance with the accounting policies adopted, when budgeted contract costs exceed the entire expected contract revenue, Group companies create provisions for expected contract losses and recognize them under “Amounts due and payable to customers under construction contracts” in the consolidated statement of financial position. As at 31 December 2014, the balance of provision for contract losses amounted to PLN 445,158 thousand. In 2014, the balance of the provision for contract losses increased by PLN 235,791 thousand.
Selling expenses decreased in the period of 12 months ended 31 December 2014 by PLN 704 thousand compared to the prior year, while administrative expenses are by PLN 14,826 thousand higher than expenses incurred in 2013. The share of selling and administrative expenses in total sales increased from 4.03% in 2013 to 4.15% in the current year.
Other operating income in 2014 amounted to PLN 60,191 thousand and included, among others, received compensations and liquidated damages in the amount of PLN 26,743 thousand, reversal of the provision for penalties and sanctions in the amount of PLN 9,699 thousand, reversal of the provision for litigation in the amount of PLN 12,116 thousand, reversal of impairment write-downs against receivables in the amount of PLN 5,740 thousand, reversal of write-downs for inventories in the amount of PLN 704 thousand and a write-off of overdue liabilities in the amount of PLN 1,753 thousand. Additionally, in 2014 Group companies disposed of property, plant and equipment and investment properties and reported a total gain on the disposal of PLN 694 thousand. The net value of the property, plant and equipment and investment properties sold in 2014 amounted to PLN 2,056 thousand. In 2014, the Budimex Group reported a gain of PLN 1,759 thousand from the adjustment of selling price of Budimex Danwood Sp. z o.o., a company sold in 2013.
Other operating expenses in the period of 12 months ended 31 December 2014 amounted to PLN 40,150 thousand, of which PLN 6,827 thousand related to impairment write-downs against receivables and PLN 637 thousand related to recognised impairment write-downs against inventories. The costs of recognised provisions for litigation amounted to PLN 3,691 thousand and the amount of PLN 12,324 thousand related to provisions for penalties and compensations. The value of compensations and liquidated damages charged to the Group result in 2014 was PLN 9,298 thousand. In 2014, the Group reported losses on valuation and realisation of FX Forward derivative instruments and currency options (concluded with a view to limiting the FX risk on foreign currency construction contracts) in the amount of PLN 2,627 thousand.
In 2014, the Group reported an operating profit of PLN 247,318 thousand, representing 5.00% of total sales revenue. In the previous year, the operating profit amounted to PLN 333,306 thousand, representing 7.02% of sales revenue (the operating profit included profit on disposal of a subsidiary in the amount of PLN 194,112 thousand).
In the 12-month period ended 31 December 2014, the Group reported a profit on financing activities of PLN 1,153 thousand, while in 2013 — a profit of PLN 2,649 thousand. Finance costs in 2014 represented, among others, interest costs of PLN 5,503 thousand, bank commissions paid by the Group companies on guarantees and loans of PLN 14,409 thousand paid by Group companies, cost of discounting long-term receivables and liabilities arising from guarantee deposits in the amount of PLN 16,932 thousand. In 2014, the Group also incurred a loss on valuation of interest rate swap derivative instrument contracts (concluded with a view to limiting the interest risk) in the amount of PLN 4,648 thousand. Finance income for 2014 comprised mainly interest in the amount of PLN 37,972 thousand, valuation receivables from a concession agreement in the amount of PLN 2,361 thousand and reversal of discounting of long-term receivables in the amount of PLN 2,380 thousand.
In 2014, the Group reported a gross profit of PLN 242,619 thousand, while in the previous year – a gross profit of PLN 331,271 thousand.
Income tax charge for 2014 was PLN 48,681 thousand, of which:
- current tax: PLN 73,371 thousand,
- deferred tax: PLN (24,690) thousand.
As at 31 December 2014, the Group recognised deferred tax assets in the amount of PLN 376,261 thousand, while as at 31 December 2013 the Group recognised deferred tax assets of PLN 351,336 thousand. Items of deferred tax asset of the Budimex Group reported in the Statement of Financial Position result mainly from the specific method of settlement of construction contracts, under which the moment of recognition of costs as incurred and revenue as earned is different from the tax and accounting perspective.
Net profit attributable to the shareholders of Budimex SA for 2014 was PLN 191,973 thousand, while the net profit attributable to the shareholders of Budimex SA for 2013 was PLN 300,480 thousand.
Net profit attributable to non-controlling interest for 2014 amounted to PLN 1,965 thousand. In the corresponding period of the previous year, the net profit attributable to non-controlling interest amounted to PLN 820 thousand.
Statement of Cash Flow
Cash and cash equivalents included in the Statement of Cash Flow comprise cash in hand and bank deposits which have a maturity period of 3 months or less and were not included under investing activities.
Included in cash of restricted use are mainly cash items representing:
- security for bank guarantees,
- amounts gathered on open housing escrow accounts,
- amounts on escrow and current accounts in the part due to partners executing construction contracts together with a Group company,
provided their maturity does not exceed 3 months.
The Budimex Group entered the year 2014 with cash on hand and cash at bank amounting to a total of PLN 1,658,783 thousand. For the purpose of the Statement of Cash Flow, this amount was reduced by the amount of cash of restricted use of PLN 69,185 thousand. Net cash flow for 2014 was positive and amounted to PLN 136,824 thousand. As at 31 December 2014, the Group’s reported cash balance was PLN 1,831,652 thousand, of which the cash of restricted use was PLN 104,962 thousand.
In 2014, the balance of cash from operating activities increased by PLN 486,062 thousand.
Cash flow from investing activities showed a negative balance of PLN 49,024 thousand which was mainly a result of acquisition of shares in subsidiaries and associates and loans granted.
Cash flow from financing activities for 2014 showed a negative balance which amounted to PLN 300,214 thousand and resulted mainly from the 2013 dividend payment.
