Key Economic and Financial Data of the Budimex Group

The financial situation of the Budimex Group in 2016 is characterised by selected items disclosed in the Statement of Financial Position and Profit and Loss Account (broken down below together with the 2015 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 2016, compared to 31 December 2015, are presented in the table below:

As at 31 December 2016, consolidated total assets increased by PLN 880 301 thousand compared to 31 December 2015, mainly due to a 4.4 per cent (PLN 35 729 thousand) increase in non-current assets and a 21.7 per cent (PLN 844 572 thousand) increase in current assets.

Non-current assets:

The change in the value of non-current assets as at 31 December 2016 compared to 31 December 2015 was caused mainly by the following:

• a decrease in the balance of investment properties, mainly as a result of the reclassification of a building plot with a value of PLN 38 403 thousand from investment properties to inventories by the development segment,
• a decrease in the balance of investments in equity accounted companies, primarily due to losses incurred by associated companies in the amount of PLN 2 272 thousand,
• an increase in the balance of deferred tax assets in the amount of PLN 4 053 thousand.

Current assets:

In the same period, the value of current assets increased by PLN 844 572 thousand, mainly as a result of an increase in:

• the balance of inventories by PLN 316 068 thousand, mainly as a result of an increased scale of development activities,
• the balance of trade and other receivables by PLN 96 162 thousand,
• the balance of cash and cash equivalents by PLN 302 008 thousand.

Equity and liabilities:

On the side of equity capital and liabilities the changes referred to:

• an increase in the balance of non-current liabilities by PLN 44 478 thousand, due to the increase in the balance of provisions for non-current liabilities by PLN 28 612 thousand, as well as, in the balance of long-term loans, borrowing and other external sources of financing by PLN 17 770 thousand,
• an increase in current liabilities by PLN 633 127 thousand, of which the greatest balance movements related to the following:
  • an increase in trade and other payables by the amount of PLN 384 976 thousand,
  • an increase in amounts due and payable to customers under construction contracts by PLN 112 699 thousand, which comprises an increase in recognised sales adjustment over the invoiced sales in relation to the estimation of long-term contracts in accordance with their advancement level by PLN 333 933 thousand and a decrease in the balance of provision for contract losses by PLN 221 234 thousand,
  • an increase in deferred revenue by PLN 105 569 thousand, mainly due to prepayments for performed construction contracts and payments on account of premises in development activities.

Consolidated Profit and Loss Account of the Budimex Group

 

In 2016, the Budimex Group earned sales revenue of PLN 5 572 290 thousand, which represents a 8.5 per cent increase compared to the revenue earned in 2015.

Gross profit on sales in 2016 was PLN 751 265 thousand, while in the previous year it was PLN 492 714 thousand. The gross sales profitability ratio for 2016 was therefore 13.5 per cent, while for 2015 it was 9.6 per cent.

In accordance with the adopted accounting policies, as soon as Group companies become aware of the fact that budgeted construction contract costs exceed the entire expected contract revenues, they create provisions for expected contract losses and recognise them in the consolidated statements of financing activities under “Amounts due and payable to customers under construction contracts”. As at 31 December 2016, the balance of the provision for contract losses amounted to PLN 408 455 thousand. In 2016, the balance of the provision for contract losses decreased by PLN 221 234 thousand.

Compared to the previous year, selling expenses increased in the twelve-month period ended 31 December 2016 by PLN 2 929 thousand, while administrative expenses were PLN 8 685 thousand higher than the expenses incurred in 2015. The share of the sum total of selling and administrative expenses in total sales revenue decreased from 4.3 per cent in 2015 to 4.2 per cent in the current year.

Other operating income in 2016 was PLN 46 451 thousand and comprised, among others, received compensations and liquidated damages in the amount of PLN 23 579 thousand, the reversal of provisions for penalties and sanctions in the amount of PLN 6 189 thousand, the reversal of provisions for litigation and compensations in the amount of PLN 2 765 thousand, the reversal of impairment write-downs against receivables and inventories in the amount of, respectively, PLN 4 257 thousand and PLN 1 958 thousand, as well as a write-off of overdue liabilities in the amount of PLN 2 545 thousand. In addition, in 2016, Group companies sold property, plant and equipment and earned a profit on those sales in the total amount of PLN 760 thousand. The net value of the property, plant and equipment sold in 2016 was PLN 172 thousand.

Apart from the above, in 2016, the Group also recorded a gain on the valuation of FX Forward derivative financial instruments and FX options (made with a view to limiting the FX risk on foreign currency construction contracts) in the amount of PLN 2 273 thousand.

Other operating expenses in the 12-month period ended on 31 December 2016 amounted to PLN 61 172 thousand, of which PLN 14 524 thousand related to impairment write-downs against receivables, PLN 4 067 thousand to recognised impairment write-downs against inventories and PLN 1 791 thousand to impairment write-downs against property, plant and equipment. The costs of recognised provisions for litigation amounted to PLN 236 thousand and recognised provisions for claims and compensations amounted to PLN 10 418 thousand. The value of compensations and liquidated damages charged to the Group in 2016 was PLN 23 934 thousand. The costs of court and enforcement charges and costs of litigation amounted to PLN 1 807 thousand. In addition, in 2016 the Group also incurred a loss on the realisation of FX Forward derivative financial instruments and FX options in the amount of PLN 2 600 thousand.

In 2016, the Group reported an operating profit of PLN 505 107 thousand, representing 9.1 per cent of total sales revenues. In the previous year, the Group reported an operating profit of PLN 292 218 thousand, representing 5.7 per cent of total sales revenues.

In the 12-month period ended 31 December 2016, the Group reported profit on financing activities in the amount of  PLN 8 570 thousand, while in 2015 a profit of PLN 8 010 thousand. Finance costs in 2016 represented, among others, interest costs of PLN 3 648 thousand, bank commissions on guarantees and loans of PLN 23 960 thousand paid by Group companies, and the cost of discounting long-term receivables and liabilities arising from guarantee deposits in the amount of PLN 6 362 thousand. In 2016, the Group also reported losses on the realisation of interest rate swap derivative financial instruments (made with a view to limiting the interest rate risk) in the amount of PLN 652 thousand and, at the same time, recorded a gain on the valuation of the said instruments in the amount of PLN 1 230 thousand. Finance income in 2016 represented mainly interest received in the amount of PLN 38 037 thousand and a valuation of receivables due to the concession agreement in the amount of PLN 2 907 thousand, as well as a reversal of long-term receivables discount amounting to PLN 355 thousand.  

In 2016, the Group reported a gross profit of PLN 511 405 thousand, while in the previous year a gross profit of PLN 296 801 thousand.

Income tax for 2016 was PLN 100 929 thousand, of which:

• current tax – PLN 105 020 thousand,
• deferred tax – PLN (4 091) thousand.

As at 31 December 2016, the Group recognised deferred tax assets in the amount of PLN 444 975 thousand, while as at 31 December 2015 the Group recorded deferred tax assets of PLN 440 922 thousand. Items of deferred income tax asset reported in the statement of financial position of the Budimex Group 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.

The net profit attributable to the shareholders of Budimex SA for 2016 was PLN 409 851 thousand, while the net profit attributable to the shareholders of Budimex SA for 2015 was PLN 235 846 thousand, which represents an increase by 73.8 per cent.

Net profit attributable to non-controlling interest for 2016 amounted to PLN 625 thousand. In the previous year, net profit attributable to non-controlling interest stood at PLN 674 thousand.

Consolidated Statement of Cash Flows of the Budimex Group

“Cash and cash equivalents” included in the Statement of Cash Flows comprise cash in hand,
demand deposits, and bank deposits which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Included in cash of restricted use are mainly cash items representing:

• security for bank guarantees,
• gathered at open housing escrow accounts,
• cash in escrow accounts and current accounts in the part due to partners performing construction contracts together with a company from the Group.

The Budimex Group entered 2016 with cash in hand and cash at bank amounting to a total of PLN 2 413 126 thousand. For the purpose of the Statement of Cash Flows, this amount was reduced by the amount of cash of restricted use of PLN 229 049 thousand. Net cash flow for 2016 was positive and amounted to PLN 339 472 thousand. As at 31 December 2016, the Group’s reported cash balance was PLN 2 715 134 thousand, of which cash of restricted use was PLN 191 101 thousand.

In 2016, the balance of cash from operating activities increased by PLN 611 502 thousand.

Cash flow from investing activities came out to a negative balance of PLN 48 930 thousand, which was mainly caused by the result of purchasing non-financial non-current assets and granting borrowings.

Cash flow from financing activities for 2016 showed a negative balance, which amounted to PLN 223 100 thousand and resulted mainly from the 2015 dividend payment.