GRI:
Factors influencing the financial result of the Budimex Group
During 2021 the Budimex Group generated net profit attributable to shareholders of the parent company at the level of PLN 971,603 thousand compared to PLN 459,465 thousand in the previous year (increase by 111.5%).
The Group’s financial result in 2021 was mainly determined by maintaining the assumed margin on construction contracts and sales of the real estate development segment.
| 2021 | 2000 (transformed) | Difference | ||
| in PLN thousand | in % | |||
| Sales revenues | 7,911,192 | 7,709,106 | 202.086 | 2.6% |
| Own cost of sales | -7,077,395 | -7,007,169 | -70.226 | 1% |
| Selling costs | -11.733 | -11.219 | -514 | 4.6% |
| General administrative expenses | -269.011 | -247.194 | -21.817 | 8.8% |
| Result on other operating activities | 34.032 | 3.909 | 30.123 | 770.6% |
| Profit (loss) from operating activities | 587.085 | 447.433 | 139.652 | 31.2% |
| Result on financing activities | -32.656 | -20.519 | -12.137 | 59.2% |
| Share in net profit (loss) of subsidiaries accounted for using the equity method | 67 | 145 | -78 | -53.8% |
| Profit (loss) before taxation | 554.496 | 427.059 | 127.437 | 29.8% |
| Income tax | -88.55 | -113.363 | 24.813 | -21.9% |
| Net profit (loss) from continued operations | 465.946 | 313.696 | 152.25 | 48.5% |
| Net profit (loss) from discontinued operations | 520.508 | 157.698 | 362.81 | 230.1% |
| Net profit, including: | 986.454 | 471.394 | 515.06 | 109.3% |
| - attributable to the shareholders of the parent company | 971.603 | 459.465 | 512.138 | 111.5% |
| from continued operations | 451.095 | 301.767 | 149.328 | 49.5% |
Commitments from borrowings and other external sources of financing in PLN thousand
Including share in net profit (loss) of subsidiaries accounted for using the equity method
Sales revenues
In 2021, sales revenues amounted to PLN 7,911,192 thousand, which is higher by PLN 202,086 thousand (by 2.6%) than in the previous year.
The main part of these was revenue from the construction segment. Excluding consolidation exclusions, they amounted to PLN 7,282,424 thousand, i.e. were by 3.4% lower than in the previous year. On the domestic market, sales of the Group’s construction segment amounted to PLN 6,939,086 thousand, i.e. decreased by 3.1%. The Group achieved worse results in the first half of 2021 (10.4% lower than in the first half of 2020), which resulted from, among other things: unfavourable weather conditions in the first quarter, as well as due to the pandemic period and the extended waiting period for obtaining a building permit on several significant orders from the road area and lower production in the general construction segment. In the second half of 2021, the construction segment performed better than in the corresponding period of 2020 (+2.3%).
In 2021, on the other hand, the services business segment achieved revenues 27.9% higher than in 2020, due to increased volumes in the waste management segment.
Gross sales profit and gross sales margin
In 2021, gross profit on sales amounted to PLN 833,797 thousand, which is PLN 131,860 thousand (by 18.8%) higher than in the previous year. The gross margin on sales amounted to 10.5%, while in the previous year it was at the level of 9.1%. The gross margin on sales of the construction segment was 8.8% and was 0.4 p.p. higher than in the previous year. In the conditions of sharp increase in prices of raw materials, it was possible thanks to the effective policy of securing prices of key assortments. On most projects the Budimex Group maintains the originally assumed contract margin.
In accordance with the adopted accounting principles, if the budgeted costs of performance of a construction contract exceed the total value of expected income, the Group companies, upon identification of this fact, create provisions for losses, presented in the consolidated statement of financial activities under “Provisions for losses on construction contracts”. At the end of 2021, these provisions amounted to PLN 514,787 thousand and were PLN 204,346 thousand higher than at the end of 2020.
For construction services, Group companies are required to provide guarantees for their services. At 31 December 2021, the Group had provisions for warranty repairs of PLN 617,609 thousand, which was PLN 26,131 thousand higher than in the previous year.
Selling and general administrative expenses
In 2021, the costs of sales amounted to PLN 11,733 thousand, i.e. increased by PLN 514 thousand (or 4.6%) compared to the previous year. On the other hand, general and administrative expenses were at the level of PLN 269,011 thousand, i.e. they were by PLN 21,817 thousand (or by 8.8%) higher compared to the previous year. The total ratio of selling costs and general and administrative expenses to sales revenue in 2021 was 3.5% (3.4% in the previous year).
Results of the other operating activities
In 2021, the Group’s result from other operating activities amounted to PLN 34,032 thousand against PLN 3,909 thousand. In 2020, the Group created significant allowances for receivables and inventories and created provisions for penalties and damages.
Detailed analytics of other operating income and other operating expenses are presented in note 33 of the consolidated financial statements.
Operating profit and EBITDA
In 2021, the Group’s operating profit amounted to PLN 587,085 thousand, compared to PLN 447,433 thousand in the previous year (an increase of 31.2%). The EBIT margin stood at 7.4%, up by 1.6 p.p. compared to 2020.
EBITDA (i.e. operating profit plus depreciation and amortisation) amounted to PLN 733,692 thousand, compared to PLN 584,957 thousand in the previous year (an increase of 25.4%). Thus, in 2021, the EBITDA margin reached 9.3% (7.6% in 2020).
Result of financing activities
In 2021, the Group’s loss on financing activities amounted to PLN 32,656 thousand, which was PLN 12,137 thousand higher than in the previous year. In 2020, the Group earned higher interest income on deposits in bank accounts and interest on discounts received and for late payment than in 2021.
Income tax
The burden of income tax on the Group’s result for 2021 amounted to PLN 88,550 thousand, of which: PLN 225,835 thousand was attributable to the current portion and PLN -137,285 thousand to the deferred portion.
As at 31 December 2021, the Group recognised deferred tax assets in the amount of PLN 642,373 thousand and deferred tax liabilities in the amount of PLN 830 thousand, while as at 31 December 2020 the Group recognised deferred tax assets in the amount of PLN 521,851 thousand and deferred tax liabilities in the amount of PLN 4,662 thousand.
The components of the statement of financial position due to deferred income tax in the Budimex Group result mainly from the specificity of settlements of construction contracts, where the moment of recognising cost as incurred and revenue as realised are different in tax and accounting terms
Net profit on discontinued operations
On the 22nd of February 2020 Budimex S.A. concluded a conditional sale agreement of 100% of shares in its subsidiary Budimex Nieruchomości Sp. z o.o. with the buyer, CP Developer S.ar.l. From the date of the conditional sale agreement the Budimex Group started to present the whole segment “real estate development and management” as discontinued operations in the consolidated financial statements according to the rules resulting from IFRS 5, as it considered that this was the moment when all conditions for such classification were met. On 24 May 2021, a disposal agreement was signed for the disposal of all shares in Budimex Nieruchomości Sp. z o.o. based in Warsaw to CP Developer S.ar.l. based in Luxembourg. The price for the shares was credited to the bank account of Budimex SA, hence the title to shares was transferred to CP Developer S.ar.l. with its registered office in Luxembourg. Budimex Group recognized in the consolidated financial statements for 2021 the net profit resulting from the settlement of the sale of developer activities in the amount of PLN 487,541 thousand.
Basic measures of profitability in %