The Mint of Poland Group has released the results for the first two quarters of the year. Year over year, the Q1-Q2 2021 consolidated sales revenue grew by PLN 225 million to PLN 637.7 million while the Q1-Q2 2021 consolidated net profit was up by PLN 51 million to reach PLN 68.4 million. In the reported period, the Group's EBITDA stood at PLN 75.2 million.
In H1 2021, the Mint of Poland Group recorded year-to-year growth in consolidated revenues of over 54% (PLN 637.7 million in Q1-Q2 2021 vs. PLN 412.6 million in Q1-Q2 2020). In the reported period, the Group'snet sales grew by PLN 30.5 million to PLN 57.2 million (up from PLN 26.7 million in H1 2020) while the consolidated net profit rose by over PLN 51 million (from PLN 16.7 million to PLN 68.4 million y/y). After the first two quarters of 2021, the consolidated EBITDA amounted to PLN 75.2 million (vs. PLN 35.7 million in Q1-Q2 2020).
- Our strong performance in the first half of this year was mainly driven by the sustained high demand on the investment gold market. In response to the huge interest in gold, we opened our fifth stationary retail outlet as well as continued to develop sales through our online channels and in cooperation with external partners - says Grzegorz Zambrzycki, President of the Management Board and Managing Director, Mennica Polska S.A. - These robust results also reflect our commitment to engage in prospective property development projects. In the reported period, we booked the final sale of 119 apartments in Stage II of our 'Mennica Residence' project, so the revenues were recognized in our P&L.
The Group's H1 2021 financial results were cleared of extraordinary events and non-recurring items, including: a valuation gain on financial investment in ENEA shares as at balance sheet date of 30 June 2021 as well as profit on the sale of some ENEA shares (in total, PLN 17.8 million) and an unrealized gain on the sale of derivatives (PLN 0.8 million) along with the relevant income tax adjustments resulting from the foregoing.
Dividend policy continued
In H1 2021, the Mint of Poland Group confirmed the validity of its long-term development direction, both in terms of profits and liquidity. Thanks to the strong financial results generated in FY 2020, the Company was also able to uphold its dividend policy and pay dividend in the reported period.
- In the second quarter of this year, we were declared Poland's most dynamically growing company in 2020, outperforming - in terms of revenue growth - 49 contenders in the 'Polish Business Gazelles' ranking. I am more than pleased that, after such a challenging year, we could share the profits with our shareholders - CEO Grzegorz Zambrzycki comments.
The dividend paid from the FY 2020 profit was PLN 0.70 per share. On 24 June 2021, the Company transferred to its shareholders the first tranche of the dividend in the total amount of PLN 20,455 thousand. The second dividend tranche is scheduled for payment on 24 August 2021.
- The payment of dividend and more funds tied up in working capital led to a drop in short-term investments. Within the asset structure, the highest increase was recorded for receivables, which was mainly attributable to the execution of substantial production orders in the Mint Products segment - adds Artur Jastrząb, Member of the Management Board and CFO, Mennica Polska S.A. - At the end of the reported period, the overall debt ratio decreased on the back of the final sales of apartments in the 'Mennica Residence II' project following the execution of notarial deeds. This was due to the prepayments made by buyers, which had been recorded as current liabilities until the signing of final sales agreements, being shifted towards revenues.
In Q1-Q2 2021, the revenues in the core business segment grew by PLN 154.5 million, up by nearly 50% y/y (PLN 465.4 million in H1 2021 vs. PLN 310.9 million in H1 2020). The segment's result improved by PLN 2.5 million (PLN 32.8 million in H1 2021 vs. PLN 30.3 million in H1 2020), and the EBITDA inched up to PLN 35.5 million (vs. PLN 32.6 million in Q1-Q2 2020).
- The main factor driving the strong results generated in the main area of our business remained the situation on the gold market. In the first half of this year, the demand for gold bullion bars and coins produced by the Mint of Poland was record-high, reaching nearly 1.5 tons. Despite the persisting difficulties in the supply of the ore due to the pandemic, we maintain continuity of sales and continue to work on diversification of our sales channels - CEO Grzegorz Zambrzycki comments. - Also, we have been successful in consistently building and further strengthening our position in foreign markets in the production of circulation, collector and commemorative coins.
In foreign sales, the important projects executed by the Mint of Poland in H1 2021 included the orders made by the Bank of Costa Rica, the Central Bank of Paraguay and the Bank of the Dominican Republic. Since the beginning of the year, circulation coins in the amount of 110 million pieces have been produced for the Bank of the Republic Colombia. A newly acquired order is the production of silver and gold coins for the National Bank of Oman. Moreover, at the end of Q2 2021 nearly 1,580 silver and gold commemorative coins were sold to the Central Bank of Nicaragua, and the Central Bank of Bangladesh awarded the Mint of Poland an order for the production of 1,000 gold collector coins. Their sale is expected in the fourth quarter of this year.
In Q1-Q2 2021, the Electronic Payments segment's revenues were lower by PLN 6.4 million (down from PLN 88 million in H1 2020 to PLN 81.6 million in H1 2021). Also, the segment's result was marginally lower than a year earlier (PLN -7.6 million in H1 2021 vs. PLN -7.3 million in H1 2020). The segment's EBIDTA reached PLN -0.4 million.
- Looking at the results in the Electronic Payments segment, it is important to remember that the first two and a half months of last year were not yet negatively impacted by the COVID-19 pandemic - says Katarzyna Budnicka, Member of the Management Board responsible for Electronic Payments, Mennica Polska S.A. - Despite the adverse external conditions affecting all companies in our sector, we have continued to work on developing new projects based on our unique know-how. After the balance sheet date, the Mint of Poland won a tender for the lease and comprehensive maintenance of 553 mobile cashless ticket vending machines in Łódź. The contract awarded to us by the municipal public transport company MPK in Łódź encompasses the delivery, installation and start-up of the machines and maintenance of the system, including the machines and the central ticket sale system, in good working order for the following 48 months in return for a flat fee, regardless of the sales volumes.
In this context, it is worth noting that in the reported period the Mint of Poland once again successfully passed the annual audit to renew its PCI Data Security Standard (PCI DSS), Merchant Level 1, certification. This affirms the highest security of cashless transactions carried out in the Company's ticket vending machines.
Real Estate Development
In the first half of the year, the Real Estate Development segment's revenue soared by PLN 77.1 million (from PLN 13.6 million in H1 2020 to PLN 90.7 million in H1 2021). The revenue hike and the segment's better result (up from PLN 2 million to PLN 38.1 million y/y), is mainly attributable to the final sale of 119 apartments in the 'Mennica Residence II' project. In the reported period, the segment generated an EBIDTA of PLN 39.4 million (vs. PLN 3 million in H1 2020).
- The signing of notarial deeds for another 119 apartments in the 'Mennica Residence II' project not only allowed us to recognize substantial revenues for the segment, but also improved the segment's profitability in the first half of this year against the same period last year - CEO Grzegorz Zambrzycki explains. - Furthermore, in May we launched the sale of apartments in Stages II and III of the 'Bulwary Praskie' project. In total, 31 new development agreements were signed in the first half of the year for the building that is currently under construction. In the meantime, in the first quarter of the year we selected the general contractor for another four apartment buildings. Under the agreement with the general contractor, another 179 apartments will be built.
Recently, there has also been a new development concerning the segment's flagship project 'Mennica Legacy Tower', which was announced Europe's Best Real Estate Investment in the first quarter of this year. After the balance sheet date, the Management Board of Mennica Polska S.A. submitted an offer to purchase 50% of shares in the share capital of the SPV which is the direct owner of 'Mennica Legacy Tower'. As a result of the potential transaction, the Mint of Poland Group would become the owner of 100% of SPV's shares. The offer stands until 20 August 2021.