Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- One United Properties SA (BSE:ONE, Financial) achieved sales and pre-sales of EUR 123.3 million in the first half of 2024.
- The company sold and pre-sold 422 apartments and commercial spaces, totaling 43,809 square meters.
- The rental portfolio saw significant growth, with 8,100 square meters of office space leased and pre-leased, and a 95% occupancy rate.
- Profit in the Residential segment increased by 7% to EUR 38.3 million, and profit in the Rental segment increased by 26% to EUR 11.6 million.
- The company has an additional EUR 331 million in cash to be collected by 2026 from contracts already signed.
Negative Points
- Revenues from the residential segment decreased by 14% compared to the same period last year.
- Administrative costs increased by 11% compared to the first half of 2023, totaling EUR 8.5 million.
- Operating activity results decreased by 19% due to a significant reduction in gains from investment property fair value adjustment.
- The company's cash position declined by 20% during the first half of the year.
- The equity saw a slight decrease due to dividend payments and other transactions, despite a net profit of EUR 40 million in Q2.
Q & A Highlights
Q: The income tax amounts to 13.5% in H1 financials, but the rate is 16%. What explains this difference?
A: (Valentin-Cosmin Samoila, CFO) The difference is due to various factors such as carryforward losses, deductible sponsorships, and previously non-allowed expenses now being tax-allowed. These elements impact the effective tax rate, making it different from the standard 16%.
Q: How is it possible that in Q2 One makes a net profit of EUR 40 million, but equity decreases?
A: (Valentin-Cosmin Samoila, CFO) The decrease in equity is due to dividends being deducted from equity during the annual shareholder meeting in April, along with other movements related to the stock option plan and share buybacks.
Q: Did anything significant change in the revenue recognition method for residential property sales in Q2?
A: (Valentin-Cosmin Samoila, CFO) No, the revenue recognition method remains the same. The lower recognition is due to the advanced stages of construction, which involve lower costs, and sales from new projects like One Lake District, where construction had not yet started by June 30.
Q: Can you provide an update on the development of like-for-like selling prices and cost inflation over the last 12 months?
A: (Victor Capitanu, Co-Founder, Executive Director) Costs have not increased in the last 12 months, but we expect a 5-10% annual increase long-term. Selling prices have increased by about 15% in some projects like One Lake District.
Q: How quickly do you think you will be able to deploy the proceeds from the capital increase?
A: (Victor Capitanu, Co-Founder, Executive Director) We plan to deploy the proceeds over the next 12 months to accelerate our entry into the premium affordable segment. Our strong cash flow could have funded this, but raising capital allows for faster implementation.
Q: Can you provide an update on the regulatory environment in Romania? Any recent or upcoming changes?
A: (Victor Capitanu, Co-Founder, Executive Director) There are no significant changes in the regulatory environment currently. The situation remains stable.
Q: Do you expect to continue raising equity in 2025 and 2026?
A: (Victor Capitanu, Co-Founder, Executive Director) No, we have a strong cash flow and expect to reach a tipping point in the next 2-3 years. We are well-capitalized for our current plans.
Q: Have you considered selling properties or discontinuing dividends instead of raising capital?
A: (Victor Capitanu, Co-Founder, Executive Director) Selling rental properties is a better alternative to raising equity, but it takes time. Discontinuing dividends is not preferred as many shareholders rely on them.
Q: How many apartments do you expect to sell in 2024 and 2025, and how many handovers?
A: (Victor Capitanu, Co-Founder, Executive Director) We do not provide precise estimates for apartment sales and handovers.
Q: Can you explain the gross margin drop in Q2 compared to Q1?
A: (Valentin-Cosmin Samoila, CFO) The drop is due to lower revenue recognition from the advanced stages of construction and fewer gains from the fair value adjustment of investment properties.
Q: Can you comment on the progress of the One Cotroceni Towers project and any issues with PUD and authorization?
A: (Victor Capitanu, Co-Founder, Executive Director) The project is progressing, but we decided to upgrade it for better profitability and attractiveness. The sector 5 city hall approved the plan, and we hope to start construction next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
