Stronger financial performance across the board – Mint of Poland concludes Q1 2021

13 may 2021

The Mint of Poland Group has concluded the first quarter of this year with very positive results. Compared to the corresponding period of the previous year, the Group recorded across-the-board growth in financial performance, excluding non-recurring and extraordinary items. The consolidated revenues rose by over PLN 87 million, the consolidated net profit was up by nearly PLN 21 million, while the EBITDA grew by PLN 27.5 million.

Stabilization and development

In the first quarter of 2021, the Mint of Poland Group significantly improved all financial results, cleared of extraordinary events and non-recurring items, on the corresponding period of the previous year. The growth was mainly due to markedly higher sales of investment products in the Mint Products segment and the revenues from the final sale of apartments in Stage II of the “Mennica Residence” project.

– The financial indicators reflect our stable position, which is proved by generating profits as projected. They also confirm the accuracy of our business decisions, including on building the strong foundations for our core business and on engaging in a number of promising ventures outside it – comments Grzegorz Zambrzycki, President of the Management Board and Managing Director, Mennica Polska S.A.

The Group’s sales revenue increased from PLN 191.9 million in Q1 2020 to PLN 279.3 million in Q1 2021. In the reported period, the consolidated EBITDA result stood at PLN 36.4 million (vs. PLN 12 million a year before), i.e. up by over 200%, and the consolidated net profit grew by PLN 39.6 million (PLN 23.2 million in Q1 2021 vs. PLN -16.4 million in Q1 2020).

– We delivered across-the-board performance improvement in the first quarter of 2021. Compared to the same period last year, our net profit grew by the hefty PLN 39.6 million. Excluding one-offs, in particular the revaluation write-down on the shares held in ENEA S.A., the net profit growth reached PLN 20.9 million – says Artur Jastrząb, Member of the Management Board and CFO, Mennica Polska S.A.At the end of the reported period, the ENEA share price was 2.8 per cent down on the closing price for 2020. Importantly, however, the share price started to recover after the balance sheet date. Consequently, the valuation of our shares at the moment of drawing up the Q1 report was well above the valuation from the end of last year, coming close to the average purchase price.

Mint Products

The Mint Products segment revenues rose by nearly PLN 47 million (from PLN 128.2 million in Q1 2020 to PLN 175.1 million in Q1 2021). The segment’s result improved by PLN 5.7 million to PLN 15.1 million in the reported period (from PLN 9.4 million a year before), and the EBITDA stood at PLN 16.5 million (vs. PLN 10.5 million in Q1 2020).

– The situation on the precious metals market was the biggest driver for the segment’s rising sales revenues, as well as its improved result. Our strong market position and diversified sales channels allow us to respond effectively to increased demand from both individual and institutional customers CEO Grzegorz Zambrzycki says.

Currently, the Mint of Poland sells gold bars and bullion coins via its own Internet platform, through a network of five stationary retail outlets located all around Poland – including two in Warsaw, one each in Krakow and Poznan plus one more store newly opened in Gdansk this January, as well as in PKO BP branches throughout the country.

Also, as part of the Group’s minting activities, an important event for the company in the first quarter of this year with a social rather than business dimension was the record amount of nearly PLN 142,000 raised for the Great Orchestra of Christmas Charity Foundation. This proud achievement was possible also thanks to the Mint of Poland’s exclusive online auctions, whose participants could bid for limited-edition commemorative medals minted in, and for two special site tours of, the Company’s factory.

Electronic Payments

In the reported period, the Electronic Payments segment generated lower revenues (down from PLN 57.9 million in Q1 2020 to PLN 40.1 million in Q1 2021) and a lower result (PLN -3.9m in Q1 2021 vs. PLN -1.7m in Q1 2020). The segment’s EBITDA amounted to PLN -0.3m (vs. PLN 1.9m last year).

– The COVID-19 pandemic and the ensuing restrictions on passenger mobility caused a wave of declines in public transport ticket sales for all operators in the market. However, in the second half of the year we are projecting a substantial rise in the frequency of public transport use, which along with the cost-cutting measures we took earlier will allow us to regain profitability of our projects – comments Katarzyna Budnicka, Member of the Management Board responsible for Electronic Payments, Mennica Polska S.A.

In the first quarter of this year, the Mint of Poland once again successfully passed the annual audit to renew its PCI Data Security Standard (PCI DSS), Merchant Level 1, certification. PCI DSS certification affirms compliance of cashless transactions carried out in the Company’s stationary ticket vending machines and smart and mobile ticket validators using its proprietary Open Payment System (OPS) with the highest industry security and data protection standards.

Real Estate Development

In the reported period, the Real Estate Development segment revenues grew by PLN 58.2 million to PLN 64 million (vs. PLN 5.8 million a year before). The strong growth in revenues and improvement of the segment’s result (from PLN -0.8 million in Q1 2020 to PLN 22.8 million in Q1 2021) is attributable to the finalized sale of another lot of apartments in the project “Mennica Residence II”. The execution of notarial deeds for a total of 94 apartments allowed the Group not only to book higher revenue in the segment, but also boosted its profitability on the same period of 2020. In the reported period, the segment generated EBITDA of PLN 23.5 million (vs. PLN -0.4 million in Q1 2020).

– In the first quarter of the year, the final notarial deeds for apartments with almost 4,500 m² of usable floor area were signedCEO Grzegorz Zambrzycki informs. – This year, we plan to start the process of executing final notarial deeds for the buyers of a total of 142 apartments in the first apartment building of “Bulwary Praskie”, which was completed and commissioned last year. Also, we expect that first apartments in this project will be handed over in the second quarter of this year.

In the reported period, the Mint of Poland also obtained building permits for the construction of another four apartment buildings in the project “Bulwary Praskie”, which is located in the Warsaw district of Żerań. At the end of March, a contract to build them was signed with the general contractor, FB Antczak.

– Under the agreement, four apartment buildings (R2, R3, S2, S3) with the total usable floor area of approx. 12,300 square metres, together with underground car parks and the auxiliary infrastructure, will be constructed. The obtaining of occupancy permits and the handover of these facilities should take place in the fourth quarter of next year Grzegorz Zambrzycki says.

From the beginning of its operations, it has been the ambition of the Mint of Poland’s real estate development segment to execute projects that go well beyond the national standards of quality. Its ability to deliver on its ambitions is confirmed by practice. In the reported period, the Company’s flagship project – “Mennica Legacy Tower” – was listed as the Best Real Estate Investment in Europe in the prestigious European Property Awards competition. Moreover, the Warsaw office complex, developed in cooperation with Golub GetHouse, was also earlier this year recognized in the Top Builder 2021 Awards, one of the most acclaimed competitions in the Polish construction sector. The organizers, the leading industry monthly Builder, listed the Mint of Poland among 62 most highly-recommended real estate companies in the “Investments” category.

Another new development concerning the project “Mennica Legacy Tower” that took place after the balance sheet date is the letter of intent concerning the boundary conditions for the acquisition of 50 per cent of shares in Mennica TOWERS GGH MT Sp. z o.o. S.K.A., the SPV, signed by Mennica Polska Spółka Akcyjna Tower S.K.A.

– The LOI is not a binding agreement. The decision on the acquisition is subject to the outcome of negotiations and the due diligence process – CEO Zambrzycki explains.

As a result of the potential transaction, the Mint of Poland Group would become the owner of 100% of shares in the share capital of the SPV, which is the direct owner of “Mennica Legacy Tower”.