Mennica Polska S A : Mint of Poland reports Q1 2022 results

Mint of Poland reports Q1 2022 results

17 may 2022

The Mint of Poland Group has released its consolidated statements for the first quarter of this year. In the reported period, the Group generated consolidated sales revenues of PLN 460.6 million, up by PLN 181 million from a year earlier. At the same time, the consolidated net profit reached PLN 22.9 million, while the consolidated EBIDTA stood at PLN 30.5 million.

Due to the high base for comparison arising from the final sale of apartments in the "Mennica Residence II" project closed in the first quarter of 2021, the Mint of Poland Group recorded an overall year-on-year downturn in its profitability ratios in the first quarter of this year. In the reported period, the consolidated net profit amounted to PLN 22.9 million (vs. PLN 23.2 million in Q1 2021), while the consolidated result on sales stood at PLN 25.6 million (vs. PLN 37.9 million in Q1 2021), and the consolidated EBIDTA reached PLN 30.5 million (vs. PLN 40.0 million in Q1 2021).

- The lower overall profitability compared to the same period of the previous year is the result of a change in shares of individual segments' sales in the consolidated revenues. As a matter of fact, the highest rise in sales was recorded in the Mint Products segment, whose profit margins are lower than those of the Real Estate Development segment, in which a year earlier we reported the final sale of apartments in the "Mennica Residence II" project - says Artur Jastrząb, Member of the Management Board and CFO, Mennica Polska S.A.

During the reported period, the Group's sales revenue increased by nearly 65 per cent (PLN 460.6 million in Q1 2022 vs. PLN 279.3 million in Q1 2021), driven by the prosperity on the gold market.

Mint Products

In Q1 2022, the Mint Products segment revenues grew by nearly PL 236 million (PLN 410.9 million in Q1 2022 vs. PLN 175.1 million in Q1 2021). The Segment's result improved by PLN 14 million, from PLN 15.1 million in Q1 2021 to PLN 29.1 million in Q1 2022, while the EBITDA soared by almost 85 per cent (PLN 30.5 million in Q1 2022 vs. PLN 16.5 million in Q1 2021).

- Thanks to its attractive offer and the continued expansion of distribution channels, 1.2 tonnes of gold were sold by the Segment in the first three months of this year. In response to the high demand for gold in the first quarter of the year, we opened three new points of sale for our gold investment products (in Lublin, Katowice and Białystok) and a company shop in Wrocław - comments Katarzyna Budnicka, interim CEO and President of the Management Board, Director of Electronic Payments Division, Mennica Polska S.A.

In these challenging times, the Company's customers can count on continuous supply of gold regardless of market circumstances. The highest quality of products and reliability were appreciated by experts and Internet users who, for the second time, awarded the Mint of Poland with the title of "Alternative Investment Company of the Year 2021" in the Invest Cuffs Awards.

Moreover, the Mint of Poland has also further strengthened its position in international markets, in particular in South America. In the first quarter of this year, the Company won new contracts for production of circulation coins for Central Banks of Guatemala, Colombia and Dominican Republic, which will be performed in the current year and in the following year.

Electronic Payments

In the reported period, the Electronic Payments segment generated higher revenues (PLN 47.3 million in Q1 2022 vs. PLN 40.1 million in Q1 2021) and higher profit (PLN -0.7 million in Q1 2022 vs. PLN -3.9 million in Q1 2021). The Segment's Q1 2022 EBIDTA amounted to PLN 1.9 million (vs. PLN -0.3 m a year earlier).

- Higher revenues and results of the Electronic Payments segment in the first quarter of 2022 were driven by increased passenger traffic in public transport. This was due to the lifting of restrictions preventing the spread of the SARS-CoV-2 virus. For instance, sales in Bydgoszcz and Wrocław recovered to 90% of those before the pandemic. The Segment's performance also improved on the back of the extension of existing contracts in two major projects, the direct impact of which was lower depreciation with no additional investment - Interim CEO Katarzyna Budnicka says.

One of the priorities of the Electronic Payments Division, in addition to the continued growth of the footprint and the scope of operations, is to provide the most convenient and secure payment solutions for public transport users. In the reported period, the Mint of Poland received the Visa Ready certification in the MTT category 'Transit - Back Office'. This confirms that all the Company's services related to the performance of cashless payment transactions in public transport meet the strictest requirements of this world-leading international payment organisation. This applies to Visa's standards for security and convenience of use.

Real Estate Development

The Real Estate Development segment's Q1 2022 revenue reached PLN 2.4 million (vs. PLN 64 million a year earlier). In the reported period, the Segment's net result was PLN -5.5 million (vs. PLN 22.8 million in Q1 2021) while the Segment's EBIDTA was PLN -5 million (vs. PLN 23.5 million in Q1 2021). For the year-on-year comparisons, it is relevant that in Q1 2021 the sale of apartments in Stage II of the "Mennica Residence" project was finalised.

- At the end of the first quarter of 2022, we started to sign final agreements (in the form of notarial deeds) for the sale of apartments in Building S1 in the "Bulwary Praskie" project. In total, 142 flats have already been sold in the finished building. Moreover, as of 31 March 2022, 133 developer agreements and preliminary sales agreements were signed for apartments in Buildings S2-S3, R1 and R2-R3, which represents 41% of all apartments in the buildings that are now under construction - Interim CEO Katarzyna Budnicka adds.

Despite unfavourable market conditions in the reported period, 46 apartments, representing 14% of the total number of apartments, have been sold in Buildings S2-S3, R1, R2-R3.

THE IMPACT OF THE WAR IN THE UKRAINE ON THE MINT OF POLAND GROUP'S OPERATIONS

- Negative consequences of the war in Ukraine, in terms of impact on the Mint of Poland Group's financial performance, are largely set off by dynamically growing sales of gold investment products, which in times of uncertainty are very popular with customers. At the same time, almost 60% of all sales of investment gold at the Mint of Poland are our own products, on which the margin is higher than on products from foreign manufacturers that we also have in our offer - CFO Artur Jastrząb comments.

Mint Products

On the one hand, the war in Ukraine and the sanctions imposed on Russia have led to a complete cessation of sales to some countries. On the other hand, however, sales to the Ukrainian, Russian and Belarusian markets in 2021 accounted for only 0.3% of the Group's total revenue, 0.4% of the Mint Products Segment's revenue and 11.2% of the Segment's revenue from international sales.

Real Estate Development

Rising interest rates and restricted access to mortgages have had a material effect on the Real Estate Development segment in the reported period. In addition, due to the uncertainty related to fears of an escalation of the military conflict beyond the Ukraine's borders, a large number of potential purchasers of apartments decided to postpone their purchase decisions. However, despite these market challenges, the Mint of Poland successfully sold nearly 50 apartments in the first quarter of this year alone.