DUNA HOUSE HOLDING NYRT. 2023.Q3 Quarterly report
30 November 2023
Table of contents
Executive summary…………………………..……………………………..…………………. | 3. |
Professione Casa cooperation………………………………………………………………… | 4. |
Consolidated financial statements …………………………………………………………. | 5-7. |
Clean core profits…………………………………..…….…………………………………… | 8-9. |
Revenue, EBITDA, operating income and profit after tax by country.…………..……...... 10.
Consolidated Cash-flow statement………………………………….………..……..…….... 11.
Accounting treatment of Hgroup……………………………………………………………... 12.
Segment report……………………………………………………………………………….. 13-22.
Statement in changes of equity……………………………………………………………... | 23. |
Annex 1.: time-series report of operational segments …………………………………… | 24. |
Declaration…………………………………………………………………………………….. | 25. |
2
EXECUTIVE SUMMARY- 2023 THIRD QUARTER
Quarterly results
Credit rating
Guidance 2023
Outlook in Italy
- Duna House Group (the "Group") had revenue of HUF 7.1 billion and EBITDA of HUF 710 million in the third quarter of 2023. Following turnaround in Q2, clean core consolidated EBITDA for Q3 stabilized at HUF 755 million, more than double the trough level of the first quarter of 2023.
- Italy generated an EBITDA of HUF 305 million, Hungarian operations generated an EBITDA of HUF 273 million, while in Poland the Group generated an EBITDA of HUF 133 million. Management sees a gradual improvement in trends in recent months following the turnaround in the Hungarian and Polish markets, while Italy was negatively impacted by the ongoing loan market decline and usual summer low-season (see page 15 for market specifics).
- In addition to the core activity, the Forest Hill handovers have slowed down as expected by management. The project generated revenue of HUF 315 million and gross profit of HUF 44 million in Q3 2023.
- The Group continues to sell its investment property portfolio under profile streamlining, with cash flows of HUF 480 million generated from the sale of two properties during the quarter.
- In November 2023, Scope Ratings conducted its annual review of the Group's bond ratings and confirmed the BB-/Stable rating of the Issuer and the BB- rating of the bonds.
- Meeting management's forecast is challenged by the year-on-year slowdown in Italy. Based on its latest forecasts, management expects clean core EBITDA to confidently and clean core profit after tax to expectedly exceed the lower end of guidance threshold.
- Despite the market slowdown since 2022, management sees a positive outlook for Italy in 2024 due to the Professione Casa agreement and ongoing efficiency measures.
3
PROFESSIONE CASA COOPERATION: A SIGNIFICANT MILESTONE
Details of the deal
Investment
Loan+insurance Cooperation
Real Estate
Cooperation
The Group purchased 10% ownership in Professione Casa.
Credipass and Medioinsurance subsidiaries of the Group are the exclusive loan brokerage and insurance providers to the clients of Professione Casa for 15 years.
The Group's whole current Italian real estate activity to be integrated into Professione Casa's network and additional angles of cooperation are being reviewed.
Benefits for Duna House Group
- Strategic cooperation with one of the largest real estate agencies of Italy.
- + EUR 2.0 million annual EBITDA expected from the financial brokerage activity - expected to be reached within 2-3 years.
- Saving EUR 500k annually from 2024 by closing the currently loss-making real estate activity
EUR 2.5 million
annual EBITDA-potential
4
Consolidated financial statements
CONSOLIDATED INCOME STATEMENT
Comments
Consolidated income statement | 2023 Q3 | 2022 Q3 | Variance | 2023 Q1-Q3 2022 Q1-Q3 | Variance | |||
(data in mHUF, except earnings per share) | (not audited)(not audited) | mHUF | % | (not audited)(not audited) | mHUF | % | ||
Net sales revenue | 7,137.7 | 8,385.0 | -1,247.3 | -15% | 23,704.2 | 21,325.9 | +2,378.3 | +11% |
Other operating income | 123.3 | 69.8 | +53.4 | +76% | 244.0 | 333.9 | -89.9 | -27% |
Variation in self-manufactured stock | 252.9 | 525.0 | -272.1 | -52% | 3,085.2 | 717.1 | +2,368.1 | +330% |
Consumables and raw materials | 33.9 | 57.1 | -23.2 | -41% | 101.0 | 177.7 | -76.7 | -43% |
Cost of goods and services sold | 313.0 | 541.6 | -228.6 | -42% | 1,108.9 | 1,653.4 | -544.5 | -33% |
Contracted services | 5,285.6 | 5,826.1 | -540.5 | -9% | 15,119.5 | 14,432.6 | +687.0 | +5% |
Personnel costs | 484.3 | 440.5 | +43.8 | +10% | 1,591.3 | 1,299.2 | +292.2 | +22% |
Other operating charges | 181.8 | 133.9 | +47.9 | +36% | 411.3 | 511.2 | -99.9 | -20% |
EBITDA | 709.6 | 930.6 | -221.1 | -24% | 2,531.0 | 2,868.6 | -337.6 | -12% |
Depreciation and amortization | 194.4 | 261.2 | -66.8 | -26% | 563.3 | 574.8 | -11.5 | -2% |
Depreciation of right-of-use assets | 102.1 | 70.2 | +32.0 | +46% | 294.1 | 163.2 | +130.9 | +80% |
Operating income (EBIT) | 413.0 | 599.3 | -186.3 | -31% | 1,673.7 | 2,130.7 | -457.0 | -21% |
Financial income | 222.9 | 227.4 | -4.5 | -2% | 1,413.8 | 477.1 | +936.7 | +196% |
Financial charges | 302.8 | 191.2 | +111.6 | +58% | 841.4 | 461.3 | +380.1 | +82% |
Share of the results of jointly controlled | -1.6 | 0.6 | -2.1 | -376% | 1.7 | 213.3 | -211.6 | -99% |
undertakings | ||||||||
Profit before tax from continuing operations | 331.6 | 636.0 | -304.4 | -48% | 2,247.7 | 2,359.7 | -112.0 | -5% |
Income tax expense | 67.9 | 73.8 | -6.0 | -8% | 410.5 | 379.2 | +31.4 | +8% |
Profit after tax from continuing operations | 263.7 | 562.2 | -298.5 | -53% | 1,837.1 | 1,980.6 | -143.4 | -7% |
Profit or loss after tax from a discontinued | -8.2 | 0.0 | -8.2 | -43.6 | 0.0 | -43.6 | ||
operations | ||||||||
Profit after tax | 255.6 | 562.2 | -306.6 | -55% | 1,793.6 | 1,980.6 | -187.0 | -9% |
Other comprehensive income | 451.0 | 1,140.9 | -689.9 | -60% | -222.8 | 1,591.2 | -1,814.0 | -114% |
Total comprehensive income | 706.6 | 1,703.1 | -996.5 | -59% | 1,570.8 | 3,571.8 | -2,001.0 | -56% |
attributable to | ||||||||
Shareholders of the Company | 685.6 | 1,429.3 | -743.7 | -52% | 1,557.8 | 3,186.8 | -1,629.0 | -51% |
Non-controlling interest | 21.0 | 273.8 | -252.8 | -92% | 13.0 | 385.0 | -372.0 | -97% |
Earnings per share (diluted) | 7.1 | 15.1 | -8.0 | -53% | 50.5 | 51.4 | -0.9 | -2% |
- The Company has changed the consolidation date of Hgroup S.p.a. in its fourth quarter 2022 report: it will be consolidated in its financial statements by capital consolidation in the first quarter of 2022 and by full consolidation in the second to fourth quarters of 2022. The details of the change are provided on page 12.
- The Group's quarterly revenue amounted to HUF 7.1 billion (-15% y/y), EBITDA closed at HUF 710 million (-24% y/y). Changes in EBITDA were influenced by unique factors, which are presented onpage 8, Clean core result.
- The change in self-manufactured stocks is due to the cost of the final settlement of the occupied flats of the 100% owned Forest Hill development project. During the quarter, delivery of the Forest Hill development apartments continued to be slower than expected, with the Group recognising revenue of HUF 315 million and inventory of HUF 266 million.
- Within depreciation and amortisation, the amortisation of intangible assets identified in connection with the acquisition of Hgroup (brand name, value of banking and agency contracts) amounted to HUF 108 million.
- During the quarter, the EUR/HUF exchange rate moved from 371.13 to 391.25, resulting in a net foreign exchange loss of HUF 96 million on foreign exchange items (Q3 2022: HUF 144 million foreign exchange gain), of which HUF 137 million net foreign exchange loss on Hgroup's deferred purchase price liability. In addition, it generated interest income of HUF 140 million in the quarter. Financial expenses included quarterly interest on the Duna House NKP Bond 2030/I and 2032/I bonds totalling HUF 111 million.
- The profit after tax for the third quarter of 2023 amounted to HUF 256 million. Clean core profit after tax amounted to HUF 561 million, HUF 70 million above than in the same period of 2022. The reconciliation of the Clean core results can be found on page 9.
- The other comprehensive income line shows the exchange rate changes on goodwill and equity of foreign subsidiaries recorded in HUF.
- Earnings per share are calculated by deducting from profit after tax the profit attributable to non- controlling interests.
6
CONSOLIDATED BALANCE SHEET
Consolidated balance sheet | 30 September 2023 | 31 December | Variance | |
data in mHUF | (not audited) | 2022 (audited) | mHUF | % |
Intangibles and Goodwill | 11 752,1 | 12 328,9 | -576,8 | -5% |
Investment property | 0,0 | 982,5 | -982,5 | -100% |
Property, plant | 1 674,0 | 1 787,1 | -113,0 | -6% |
Right-of-use asset | 1 653,3 | 1 540,9 | +112,3 | +7% |
Other | 1 202,9 | 1 309,3 | -106,4 | -8% |
Non-current assets | 16 282,3 | 17 948,7 | -1 666,4 | -9% |
Inventories | 2 662,0 | 6 059,1 | -3 397,1 | -56% |
Trade receivables | 2 604,3 | 3 229,8 | -625,5 | -19% |
Restricted cash | 0,5 | 92,6 | -92,1 | -99% |
Cash and cash equivalents | 7 104,8 | 10 646,4 | -3 541,5 | -33% |
Accruals | 1 151,2 | 911,2 | +240,0 | +26% |
Assets held for sale | 668,3 | 402,4 | +265,9 | +66% |
Other | 2 625,2 | 1 882,6 | +742,6 | +39% |
Current assets | 16 816,4 | 23 223,9 | -6 407,5 | -28% |
Total assets | 33 098,7 | 41 172,6 | -8 073,9 | -20% |
Share capital | 3 770,0 | 5 250,9 | -1 480,9 | -28% |
Borrowings | 14 154,0 | 14 463,9 | -309,8 | -2% |
Other non-current liabilities | 9 390,5 | 12 373,0 | -2 982,5 | -24% |
Non-current liabilities | 23 544,5 | 26 836,8 | -3 292,3 | -12% |
Borrowings | 303,5 | 357,0 | -53,6 | -15% |
Trade payables | 2 588,9 | 3 106,9 | -518,0 | -17% |
Deferrals | 694,4 | 731,8 | -37,4 | -5% |
Other liabilities | 2 197,4 | 4 889,2 | -2 691,8 | -55% |
Current liabilities | 5 784,2 | 9 084,9 | -3 300,7 | -36% |
Total equity and liabilites | 33 098,7 | 41 172,6 | -8 073,9 | -20% |
Comments
- Of the intangible assets and goodwill, HUF 9.1 billion was the value of intangible assets and goodwill identified in the Hgroup acquisition.
- The Group continued to sell its real estate portfolio, with a total of 2 properties sold during the quarter for HUF 480 million.
- The Group's inventory has decreased by HUF 3.4 billion since the end of the previous year as a result of the continued delivery of the Forest Hill apartments.
- The Group's cash position decreased by HUF 3.5 billion due to dividend payments.
- The Group's consolidated equity after dividend payments of HUF 3.7 billion stood at HUF 3.8 billion on 30 September 2023.
- Total debt liabilities amounted to HUF 14.5 billion at the end of the quarter, of which HUF 13.1 billion was interest-bearing debt from bonds and HUF 1.3 billion was bank loans of Hgroup in Italy. The Group's net external debt stood at HUF 7.4 billion at 30 September 2023, 2.5 times 12-month adjusted core EBITDA. In November 2023, Scope Ratings completed its annual review of the Group's bond ratings and affirmed the BB-/Stable rating of the Issuer and the BB- rating of the Bonds.
- Under other non-current liabilities, the Group has a lease liability and two deferred liabilities related to the HGroup acquisition: i) an earn-out liability of HUF 2.1 billion related to the acquisition of the 70% stake and ii) an expected option liability of HUF 4.0 billion for the buy-out of the remaining minority stake.
7
CLEAN CORE RESULT
data in million of HUF | 2023Q3 | 2022Q3 | Variance % |
EBITDA | 709,6 | 930,6 | -24% |
(-) MyCity EBITDA | 8,7 | 266,5 | -97% |
Core EBITDA | 700,9 | 664,1 | +6% |
(-) Costs related to before acquisition date | - | - | - |
(-) Result of portfolio appraisal | 14,3 | 25,6 | -44% |
(-) EBITDA of Realizza and Relabora | -46,8 | - | - |
(-) Audit cost related to past quarters | - | -46,0 | -100% |
(-) Tax correction of previous years | -21,3 | - | - |
(-) Acquisition costs | - | -27,9 | -100% |
Total core adjustments | 53,8 | 48,3 | +11% |
Cleaned core EBITDA | 754,6 | 712,5 | +6% |
data in million of HUF | 2023Q3 | 2022Q3 | Variance % |
Profit after tax | 263,7 | 562,2 | -53% |
(-) Profit after tax for MyCity | -48,6 | 138,5 | -135% |
Core PAT | 312,3 | 423,7 | -26% |
(-) Costs related to before acquisition date | - | - | - |
(-) Result of portfolio appraisal | 14,3 | 25,6 | -44% |
(-) Profit before tax of Realizza and Relabora | -48,5 | - | - |
(-) Result of foreign currency exchange | 40,6 | 144,3 | -72% |
(-) Result on Hgroup minority buyout | - | - | - |
(-) Hgroup EarnOut liability revaluation | -136,8 | - | - |
(-) Amortization of Hgroup intangibles | -107,9 | -170,5 | -37% |
(-) Tax correction of previous years | -34,6 | - | - |
(-) Acquisition costs | - | -27,9 | -100% |
Total core adjustments | 272,9 | 74,6 | +266% |
Tax effect of adjustments | -24,6 | -6,7 | +266% |
Cleaned core PAT | 560,7 | 491,5 | +14% |
2023 Q1-Q3 2022 Q1-Q3 Variance %
2 531,0 | 2 868,6 | -12% |
599,8 | 437,2 | +37% |
1 931,2 | 2 431,4 | -21% |
- | -8,1 | -100% |
91,2 | 64,1 | +42% |
-135,3 | - | - |
- | - | - |
-21,3 | - | - |
- | -125,9 | -100% |
65,4 | 69,9 | -6% |
1 996,6 | 2 501,3 | -20% |
2023 Q1-Q3 | 2022 Q1-Q3 | Variance % |
1 837,1 | 1 980,6 | -7% |
403,9 | 199,9 | +102% |
1 433,3 | 1 780,6 | -20% |
- | -8,1 | -100% |
91,2 | 64,1 | +42% |
-148,0 | - | - |
109,8 | 215,0 | -49% |
82,7 | - | - |
57,5 | - | - |
-320,3 | -332,6 | -4% |
-34,6 | - | - |
- | -125,9 | -100% |
161,7 | 187,5 | -14% |
-14,6 | -16,9 | -14% |
1 580,4 | 1 951,3 | -19% |
- For transparency purposes, the Group will disclose from the second quarter of 2019 "cleaned core" adjusted results categories, in which, in addition to the results of the MyCity property development business, it will further adjust for items deemed by management to be either unique or material to the Group's ongoing profit generation.
- In Q3 2023, the Group applied the following specific adjustments:
- A gain of HUF 14 million on the sale of investment and own- use properties,
- According to the agreement with ProfessioneCasa, the Italian real estate activities (Realizza and Relabora) will be taken over by ProfessioneCasa from January 2024, and the management considers them as discontinued activities (seeProfessione Casa cooperation on page 4),
- At the EBITDA level HUF 21 million HUF, at the after tax level HUF 35 million tax occurred in 2023 related to business year 2022,
- HUF 41 million exchange gain on revaluation of foreign currency and foreign currency denominated receivables and payables,
- HUF 137 million exchange loss on revaluation of earnout liabilities related to Hgroup acquisition,
- Recognised a scheduled depreciation of HUF 108 million on intangible assets (brand name, value of banking and agency contracts) included in the balance sheet related to the Hgroup acquisition. The maintenance of these assets does not involve any expenditure for the Group.
- The Group's clean core EBITDA amounted to HUF 755 million in Q3 2023 (+6% y/y).
- Duna House Group's clean core profit after tax amounted to HUF 561 million (+14% yoy).
8
EVOLUTION OF CLEAN CORE RESULTS
mHUF
Clean Core EBITDA and PAT
1,400
1,200
1,000
800
600
400
200
0
2019 | 2019 | 2019 | 2020 | 2020 | 2020 | 2020 | 2021 | 2021 | 2021 | 2021 | 2022 | 2022 | 2022 | 2022 | 2023 | 2023 | 2023 | ||
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||
EBITDA | PAT | ||||||||||||||||||
- Following the rebound in the second quarter of 2023, Duna House Group's adjusted core EBITDA and profit after tax stabilized in the third quarter.
- The Group's growth trajectory since its IPO was halted by the downturn in the Polish and Hungarian markets in the second half of 2022, but both markets returned to growth in 2023.
- In Italy, on the other hand, the negative impact of interest rate hikes is more persistent and 2023 is marked by a further market decline.
9
REVENUE, EBITDA, OPERATING AND AFTER TAX INCOME BY COUNTRY
in million HUF | Hungary | Poland | Czech Republic | Italy | Duna House Group | ||||||||||||||||
2023 Q3 | 2022 Q3 | 2023 Q3 | 2022 Q3 | 2023 Q3 | 2022 Q3 | 2023 Q3 | 2022 Q3 | 2023 Q3 | 2022 Q3 | ||||||||||||
Net sales revenue | 1 263,6 | 2 215,7 | 1 835,3 | 1 331,9 | 70,7 | 85,0 | 3 968,2 | 4 752,4 | 7 137,7 | 8 385,0 | |||||||||||
EBITDA | 272,5 | 533,0 | 133,1 | -52,4 | -0,7 | -13,0 | 304,6 | 463,1 | 709,6 | 930,6 | |||||||||||
Operating income | 175,6 | 467,2 | 89,8 | -70,6 | -6,1 | -13,0 | 153,7 | 215,7 | 413,0 | 599,3 | |||||||||||
Profit after tax | 37,5 | 358,3 | 111,2 | -56,3 | -5,8 | -13,5 | 112,7 | 273,6 | 255,6 | 562,2 | |||||||||||
Hungary | Poland | Czech Republic | Italy | Duna House Group | |||||||||||||||||
in million HUF | 2023Q1-3 | 2022Q1-3 | 2023Q1-3 | 2022Q1-3 | 2023Q1-3 | 2022Q1-3 | 2023Q1-3 | 2022Q1-3 | 2023Q1-3 | 2022Q1-3 | |||||||||||
Net sales revenue | 6 714,1 | 5 588,0 | 4 407,7 | 5 534,7 | 162,4 | 268,2 | 12 420,1 | 9 935,0 | 23 704,2 | 21 325,9 | |||||||||||
EBITDA | 1 297,5 | 1 507,1 | 98,2 | 97,3 | -11,6 | -13,2 | 1 147,0 | 1 277,3 | 2 531,0 | 2 868,6 | |||||||||||
Operating income | 1 044,7 | 1 305,5 | 0,6 | 43,6 | -22,4 | -13,2 | 650,7 | 794,8 | 1 673,7 | 2 130,7 | |||||||||||
Profit after tax | 1 421,7 | 1 273,5 | -5,9 | 26,6 | -18,5 | -16,2 | 396,3 | 696,7 | 1 793,6 | 1 980,6 |
- With the acquisition in Italy, the Group has repositioned itself on international markets. The Italian Hgroup accounted for 56% of the Group's revenue and 40% of EBITDA in the third quarter of 2023. Its share is lower compared to the other quarters of the year due to stronger summer seasonality The Italian operating profit figures were reduced by HUF 156 million in the quarter by the loss of discontinued real estate operations and amortisation of intangible assets (brand name, value of banking and agency contracts) identified in the acquisition according to IFRS 3. Technical note: the Company has made changes to the accounting treatment of the Italian Hgroup, details of which are described on page 12.
- In Hungary, the Forest Hill project transfers cause significant fluctuations in the consolidated accounts. The real estate development activity generated total revenues of HUF 315 million and quarterly EBITDA of HUF 9 million in Q3 2023, resulting in Hungarian core EBITDA of HUF 281 million. For comparison, in Q3 2022, EBITDA related to the Hungarian core activity amounted to HUF 267 million (+5% y/y).
- The Group's Polish subsidiaries' sales grew by 22% compared to the second quarter, while EBITDA jumped by 160%. Borrowing rules eased in early 2023, leading to a noticeable recovery in the depressed loan market. (see page 15for market specifics).
- The subsidiaries in the Czech Republic closed the quarter with a 17% decline in annual revenue and an EBITDA of HUF -6 million.
10
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Duna House Holding Nyrt. published this content on 30 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 December 2023 05:01:37 UTC.
