2011-03-21
More profits from operating activities
- In 2010 Hydrobudowa Polska achieved comparable income, but significantly lower profitability than in the record year 2009
- Cash flow from operating activities improved significantly
- GK HBP started 2011 with large order portfolio, which may soon become even larger.
As previously announced, the income of Hydrobudowa Polska in 2010 were similar to those achieved the year before. Despite the fact that after the first three quarters of the last year consolidated sales were higher compared to the same period in 2009, throughout the whole year achieving the record level from the previous year was unsuccessful. Severe winter, which occurred at the end of November, contributed to the fact and slowed or even stopped some construction works. As a result, GK HBP income in 2010 amounted to just over 1.58 billion PLN comparing to 1.67 billion PLN the year before, which is a decrease of 5.5%.
- Reported incomes reflect the advancement of construction works while, invoiced sales was much higher - indicates Jaroslaw Dusiło, vice president and financial director of Hydrobudowa Polska. - What is more, in the last quarter of the year we have strongly improved the collection of duties, which resulted in very positive higher cash flows from operating activities and significant reduction in long-term contract amounts due - adds the vice president.
Net cash flow from operating activities amounted in 2010 to over 77 million PLN compared to less than 36 million PLN the year before. Amounts due from construction contracts decreased as much as of 160 million PLN, with 435 million at the end of 2009, to 275 million PLN. The improvement also applies to other balance sheet items: systematically increases equity capital of the group - at the end of last year it amounted to over 447 million PLN (in part attributable to equity holders of the parent), that is 2.12 PLN per share.
Severe weather conditions, especially extremely snowy and cold winter in the entire first quarter and in the last month of the last year translated into a decline in profitability ratios. In order to avoid delays, particularly in contracts of strategic importance, in which untimely realisation would entail a multi-million penalties, it was necessary not only to incur additional costs associated strictly with the winter (such as snow clearing or reheating the construction sites), but also the additional and necessary to catch up with schedules (e.g. change in technology, working on three shifts).
- In the fourth quarter we verified the budgets of our agreements again, including agreements for the construction of stadiums in Gdańsk and Warsaw. The decrease in margins results also from the change of the sales structure. Today, more and more involved are the road contracts, and incomes from highway contracts at this stage are still recognized very conservatively, ie. with zero margin - explains Jaroslaw Dusiło.
As a result, in 2010, consolidated gross profit amounted to 101.5 million PLN, which means decrease of about 38 % in comparison with the previous year. Net profit amounted to just more than 36.5 million PLN against over 96 million in the record year 2009.
Lower profitability also results from higher general and administrative expenses incurred in the fourth quarter of the last year. They were related to the implementation of ERP management system and many quotes placed in the last months of the year. Finalisation of several multi-million tenders (including the construction of an underground train station at Łódź Fabryczna and construction of a tunnel under the Martwa Wisła in Gdańsk) is expected in the coming weeks.
At the end of 2010 the value of order portfolio of Hydrobudowa Polska exceeded 2.4 billion PLN, of which about 1.4 billion PLN is a part of 2011. These figures reflect a conservative approach, ie. do not take into account the value of orders that are currently in the final stage of negotiations, but only the contracts signed, and also do not include part of the work that falls within the consortium members outside of GK HBP.
Please find an attached press information about financial results for 2010