Quarterly Report on September 30,
2023
ELECTROMAGNETICA SA
CONTENTS: | PAGE: |
SEPARATE QUARTERLY REPORT FOR THE 3RD QUARTER | |
OF THE YEAR 2023 | 3 |
SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS | |
FOR THE 9-MONTH PERIOD ENDING ON SEPTEMBER 30, 2023 (UNAUDITED) | |
INTERIM SEPARATED STATEMENT OF PROFIT OR LOSS | |
AND OTHER CONPREHENSIVE INCOME | 14 |
INTERIM SEPARATED STATEMENT OF FINANCIAL POSITION | 15 |
INTERIM SEPARATED STATEMENT OF CASH FLOWS | 16 |
INTERIM SEPARATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY I | 17 |
EXPLANATORY NOTES | 19 |
ECONOMIC AND FINANCIAL INDICATORS IN ACCORDANCE WITH | |
ANNEX 13° OF THE FSA REGULATION 5/2018 | 28 |
1
ELECTROMAGNETICA SA
SEPARATED QUARTERLY REPORT FOR
THE 3RD QUARTER OF 2023
Separated financial results for the third quarter of the year 2023 (Q3 2023) compared to the third quarter of the year 2022 (Q3 2022)
(unaudited)
2
Separated Quarterly Report Q3 2023
Highlights of the 3-month period ended on September 30, 2023 (Q3 2023)
- Following internal management reviews, it identified for certain sale contracts of finished products and provision of services, the existence of clauses giving the right of return for unused products through resale or implementation in various projects. Moreover, Electromagnetica acted as a depositary of the products purchased by these customers by drawing up custody records and managing stocks on the company's premises.
- For the Q3/2023 quarterly report, the above corrections were made in respect of the sale of finished goods which under the contractual terms had a right of return or right to keep in custody. Thus, the last three years have been restated by adjusting the results for the derecognition of net income from these sales. The impact was a decrease in the result by RON 486 thousand for the current year, respectively RON 3,020 thousand for 2021 and RON 1,905 thousand for 2022. At the same time, the company recognized in the financial statements the inventories from custodianships and returns. Following the impairment analysis of all stocks, value adjustments were made in the amount of RON 5,954 thousand.
- Also, following the analysis of receivables, suspicions of fraud were raised for a contract for the sale of telemanagement implementation services, a contract that Electromagnetica admitted to have been partially implemented. For this contract, a provision with impact on the current result in the amount of RON 2,520 thousand was prudentially constituted, until the completion of the internal and external purchases requested by the Board of Directors of Electromagnetica S.A..
- The Company's turnover of RON 46,056 thousand in Q3/2023 is 27% lower than in Q3/2022, mainly due to the reduction in the level of income from licensed activities (from RON 31,593 thousand to RON 25,060) and income from non-licensed activities (from RON 31,712 to RON 20,996);
- The negative EBITDA result Q3/2023 is mainly affected by provisions for finished products and bad debt adjustments. Inventories have been adjusted to net probable value.
-
Regarding the licensed activities, the reduction in turnover in Q3/2023 compared to Q3/2022 was due to:
the introduction by GEO 119/2022 to amend and supplement GEO 27/2022 of the new contribution to the Energy Transition Fund starting in September 2022 led to the overcharging of trading activities
Reduction of electricity prices in Q3/2023 compared to Q3/2022;
Q3 | Q3 | Q1 -Q3 | Q1 -Q3 | ||||
Indicator | 2023 | 2022 | 2023 | 2022 | |||
Revenues from unlicensed activities (thousand RON) | 20,996 | 31,712 | 84,021 | 87,673 | |||
Revenues from licensed activities (thousand RON) | 25,060 | 31,593 | 68,795 | 85,212 | |||
Cifra de afaceri (thousand RON) | 46,056 | 63,305 | 152,815 | 172,885 | |||
EBITDA* (thousand RON) | -8,455 | 13,844 | 14,542 | 36,327 | |||
EBITDA marja (%) | -18.36% | 21.87% | 9.52% | 21.02% | |||
Net Result (thousand RON) | -9,977 | 5,609 | -1,546 | 23,492 | |||
Net Result per share (RON) | -0.0148 | 0.0083 | -0.0023 | 0.0347 |
*EBITDA represents profit before taxation, expense with interest, depreciation and impairment.
Compared to the same period last year the following aspects had implications on the company's outcome:
- adjustments for inventories up to the net probable value of completion in the amount of RON 5,954,068
- adjustment of doubtful debt RON 2,520,000.
3
Acquisitions
Supply sources are both from the external market (EU countries, China) and from the domestic market. They are selected and periodically evaluated based on criteria of technical performance, quality, commercial conditions, for each material there are alternative suppliers/producers, so that the security of supply does not depend on the relationship with a particular supplier.
There have been no syncopes in the supply process affecting the production flow, the supply of materials and components for all production segments, both for the own production of LED lighting fixtures and electric vehicle charging stations as well as for the assembly of ABB electrical fittings, has been carried out continuously and constantly mainly on the basis of firm projects contracted by the Sales department, and for export, on the basis of forecasts received from the export department.
For the production of electric vehicle charging stations, grouped supply of component kits facilitated smooth manufacturing. Already in the first quarter of 2023, we have seen a reduction in delivery times, especially for LED drivers where lead times are no longer more than 6-8 weeks compared to 16-20 weeks during 2022.
The logistics component has also seen a significant improvement, evidenced both by the reduction in transit times and the drop in prices for sea and air freight from China, which in previous years had reached alarming levels, returning to pre-pandemic rates in Q3.
In terms of purchase prices of raw materials and supplies, the first part of the year shows a softening of the upward trend, with a linear trend and even a slight decrease in the second quarter for certain categories of materials such as: galvanized and aluminium sheet, cast aluminium housings. The same linear trend was also seen in plastic granules, the small plus or minus variations were due to the price of oil on international markets.
The situation is not the same when it comes about processing services contracted in the country, as rising energy prices in the first part of the year and inflation kept prices high.
For the coming period, we plan to pay more attention to resource management, the main objective being to optimise material costs for electric vehicle charging stations and light fittings and to ensure timely and quality component requirements for the production sections.
Sales
Electromagnetica is a company operating in several areas, among the most important:
- Activities in the field of energy efficiency (production of LED lighting fixtures, systems and solutions);
- Rental of office space, industrial space, land and utilities supply;
- Production of electricity from renewable sources (produced in small hydroelectric power plants) and supply of electricity.
The company has used the nature of the regulatory environment as an aggregation criterion for segment reporting and has identified the following business segments for which separate reports ar prepared:
- Licensed activity - generation and supply of electricity
- Non-licensedactivity - industrial production and rental of premises
The aggregation criterion is based on the licence required to carry out certain activities and the conditions imposed by the licence, including the presentation of separate financial statements. Electricity generation and supply activities have been aggregated, taking into account that they represent an integrated process for part of their operations.
Unlicensed | % Total | Licensed | % Total | ||||||
Q1-Q3 2023 | activities | Company | activities | Company | Total Company | ||||
Net profit/loss | -7,534,560 | 10% | 5,988,000 | 0% | -1,546,560 | ||||
Total assets | 344,974,728 | 80% | 84,340,628 | 19% | 429,315,355 | ||||
Total liabilities | 46,093,391 | 83% | 9,469,781 | 17% | 55,563,162 | ||||
Customer revenue | 84,020,702 | 55% | 68,794,614 | 45% | 152,815,316 | ||||
Impairment and | |||||||||
depreciation | 6,710,095 | 81% | 1,557,269 | 19% | 8,267,365 |
4
Unlicensed | % Total | Licensed | % Total | Total | |||||
Q1-Q3 2022 | activities | Company | activities | Company | Company | ||||
Net profit/loss | -2,884,874 | 0% | 26,376,447 | 100% | 23,491,571 | ||||
of which: | |||||||||
Current activity | 1,244,940 | 26,376,447 | 27,621,387 | ||||||
Loss expropriation of | |||||||||
land | -4,129,814 | - | -4,129,814 | ||||||
Total assets | 371,582,152 | 82% | 84,067,329 | 18% | 455,649,481 | ||||
Total liabilities | 57,687,818 | 79% | 15,141,140 | 21% | 72,828,958 | ||||
Customer revenue | 87,672,794 | 51% | 85,212,001 | 49% | 172,884,794 | ||||
Interest income | 51,808 | 100% | - | n/a | 51,808 | ||||
Impairment and | 10,616,099 | 86% | 1,680,084 | 14% | 12,296,184 | ||||
depreciation | |||||||||
TURNOVER STRUCTURE Q1-Q3 2023 | TURNOVER STRUCTURE Q1-Q3 2022 | ||
RENTAL | |||
SPACES AND | PRODUCTION | RENTAL | |
UTILITIES | 42% | SPACES | PRODUCTION |
13% | AND… | 41% | |
ENERGY | ENERGY | ||
PRODUCTION | |||
PRODUCTION | |||
AND SUPLY | |||
AND SUPLY | |||
45% | |||
49% | |||
PRODUCTION STRUCTURE Q1-Q3 2023 | PRODUCTION STRUCTURE Q1-Q3 2022 | ||
Electric equipment | LED | Electric | |
22% | equipment | LED lighting | |
lighting | |||
fixture | |||
fixtures | |||
52% | |||
47% | |||
Miscelalaneous | Miscelaneous | ||
5% | |||
2% | |||
Railway | Railway | ||
traffic | traffic safety | ||
safety | elements | ||
elements | Electric | 7% | Electric |
8% | |||
vechicle | |||
vechicle | |||
charging | |||
Plastic injection and | charging | Plastic injection and | |
stations | |||
moulds | stations | moulds | |
8% | |||
9% | 12% | 12% | |
5
Products and services for increasing energy efficieny:
For over eight years, our company has invested significant resources in the research and production of LED lighting systems and electric vehicle charging stations.
Electromagnetica offers complete services in the field of intelligent lighting, from energy audit, technical projects, implementation of intelligent lighting systems, tailored to the specific needs of the beneficiary, from ignition points to intelligent management software of the intelligent lighting system, including photovoltaic systems for electricity production and storage. Thus, we can provide turnkey solutions for any type of project.
On the lighting side, we are currently working on projects financed by European and national programs POR and AFM.
In addition, Electromagnetica offers full warranty and post-warranty services, as well as maintenance services for lighting systems.
In the area of electric vehicle charging stations, Electromagnetica is the only manufacturer in Romania on all categories of charging stations, from low power AC to fast charge and ultra fast charge, integrating the complete chain of this field starting with charging stations design, their production in our company, the development of new functions of the Elmotion management software, charging stations installation and operation and ensuring their maintenance throughout Romania.
Currently, we operate 215 charging stations nationwide, manufactured by us and not only, as the platform is compatible with various types of charging stations on the market.
Regarding the rental activity, the rental rate decreased by 3% compared to the beginning of the year.
At the end of the reporting period, the rental rate was 88%, a satisfactory percentage for a declining rental market. We continue to take care of the normal maintenance of the buildings and services offered, without reducing the comfort and facilities offered to customers.
6
Q3 2023 | Q3 2022 | Q1-Q3 2023 | Q1-Q3 2022 | |||
46,055,293 | 63,304,794 | Revenues | 152,815,316 | 172,884,794 | ||
176,797 | 35,628 | Investment income | 855,894 | 541,880 | ||
-9,522,696 | 891,923 | Other net income and expences | -7,592,255 | 2,464,859 | ||
1,368,714 | 1,904,541 | Change in the stock of finished products and the | 8,278,749 | 10,649,682 | ||
production in progress | ||||||
1,443,872 | 1,046,148 | Activity performed by the entity capitalized | 2,199,191 | 1,488,797 | ||
-25,259,958 | -29,793,795 | Raw materials and consumables used | -78,896,434 | -93,574,905 | ||
-9,532,536 | -8,685,958 | Employees costs | -29,989,050 | -26,046,408 | ||
-2,763,245 | -6,872,987 | Depreciation and impairment expenses | -8,267,365 | -12,296,183 | ||
-13,651,877 | -14,740,569 | Other expenses | -40,858,290 | -29,687,634 | ||
-113,261 | -193,088 | Financial expenses | -387,633 | -986,345 | ||
-11,798,897 | 6,896,637 | Profit/Loss before tax | -1,841,876 | 25,438,538 | ||
1,822,324 | -1,287,241 | Profit tax | 295,317 | -1,946,967 | ||
-9,976,574 | 5,609,396 | Profit/Loss for the period | -1,546,560 | 23,491,571 | ||
The amount of 9,522,696 includes provisions for receivables and stocks amounting to RON 8,474,068. Provisions for the net probable value of stocks, old and slow-moving stocks amounted to RON 5,954,068 and the provision for doubtful debts was RON 2,520,000.
September 30, | December 31, | December 31, | |||
2023 | 2022 (restated) | 2021 (restated) | |||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment | 309,197,708 | 309,248,377 | 319,558,500 | ||
Investment property | 17,927,644 | 16,573,349 | 14,649,783 | ||
Intangible assets | 620,405 | 787,901 | 141,598 | ||
Investments in affiliated companies | 841,908 | 841,908 | 841,908 | ||
Other long-termnon-current assets | 6,676,169 | 9,920,728 | 14,540,480 | ||
Assets related to right-of-use | 1,735,938 | 2,160,053 | 1,433,898 | ||
Total non-current assets | 336,999,773 | 339,532,316 | 351,166,167 | ||
Current assets | |||||
Inventories | 22,627,504 | 26,996,318 | 22,084,910 | ||
Trade receivables | 52,411,198 | 64,461,720 | 64,293,688 | ||
Cash and cash equivalents | 13,022,878 | 10,713,669 | 2,923,410 | ||
Other current assets | 2,702,139 | 1,699,960 | 2,069,666 | ||
Current tax assets | 1,551,863 | 177,392 | 599,937 |
7
Total current assets | 92,315,582 | 104,049,060 | 91,971,612 | |||
Total assets | 429,315,355 | 443,581,376 | 443,137,779 | |||
EQUITIES AND LIABILITIES | ||||||
Equity | ||||||
Share capital | 67,603,870 | 67,603,870 | 67,603,870 | |||
Reserves and other of equity | 215,697,440 | 196,462,928 | 216,140,275 | |||
Retained earnings | 90,450,883 | 115,568,233 | 72,564,730 | |||
Total equity atributable to the company's | ||||||
shareholders | 373,752,193 | 379,635,031 | 356,308,876 | |||
Non-current liabilities | ||||||
Trade payable and other liabilities | 886,799 | 700,176 | 975,819 | |||
Subsidies for investments | 3,798,237 | 3,920,651 | 4,083,869 | |||
Deferred tax liabilities | 21,928,510 | 22,429,646 | 23,318,956 | |||
Leasing debts | 887,872 | 1,299,749 | 794,234 | |||
Total non-current liabilities | 27,501,418 | 28,350,222 | 29,172,878 | |||
Current liabilities | ||||||
Trade payables and other liabilities | 24,874,372 | 32,339,773 | 54,470,629 | |||
Subsidies for investments | 163,219 | 163,219 | 163,219 | |||
Provisions | 2,129,392 | 2,129,392 | 2,341,163 | |||
Current income tax liabilities | - | - | - | |||
Leasing payables | 894,761 | 893,792 | 681,015 | |||
Total current debts | 28,061,744 | 35,596,123 | 57,656,025 | |||
Total liabilities | 55,563,162 | 63,946,345 | 86,828,904 | |||
Total equity and liabilities | 429,315,355 | 443,581,376 | 443,137,779 |
In the light of recent events, the company's management has requested for the closing of the third quarter of 2023 a review of the bad debt situation.The contracts for the sale of finished products and provision of services revealed the existence of clauses favorable to customers (intermediaries) giving the right of return for products not capitalized through resale or implementation in various projects. Moreover, Electromagnetica acted as a depository of the products purchased by these customers by drawing up custody records and managing stocks on the company's premises.
In accordance with IAS 8, the last three years have been restated by adjusting the results for the derecognition of net revenue from these sales. The impact was a decrease of the result by RON 486,188 for the current year, respectively RON 3,020,076 for 2021 and RON 1,904,938 for 2022.
As a result of the income cancellation, stocks of finished products that were the subject of the respective transactions were replenished. In view of the age of these products, provisions have been made to update the stocks of finished products to a net realisable market value. Provisions for the net realisable value of stocks, old and slow-moving stocks were established in the amount of RON 5,954,068.
In addition, following the analysis of the receivables, suspicions of fraud were raised for a contract related to the sale of telemanagement implementation services, which Electromagnetica admitted to have been partially implemented. For this contract, a provision with impact on the current result has been prudentially constituted in the amount of RON 2,520,000, until the completion of the internal and external investigations requested by the Board of Directors of Electromagnetica S.A..
8
Q3 | Q3 | Q1-Q3 | Q1-Q3 | |||
2023 | 2022 | 2023 | 2022 | |||
Cash flows from operating activities: | ||||||
63,506,293 | 60,467,503 | Cash receipts from customers | 174,508,878 | 161,376,582 | ||
-37,560,836 | -31,119,988 | Payments to suppliers | -98,600,974 | -96,237,445 | ||
-10,475,891 | -8,503,691 | Payments to employees | -31,662,884 | -25,984,004 | ||
-10,147,712 | -2,795,383 | Other exploitation operations | -32,665,176 | -10,218,306 | ||
5,321,854 | 18,048,441 | Cash generated by/ (used in) operating activity | 11,579,844 | 28,936,827 | ||
- | -136,301 | Interest paid | -1,469 | -607,082 | ||
-539,670 | -348,597 | Income tax paid | -1,580,290 | -348,597 | ||
4,782,184 | 17,563,543 | Net cash generated by/ (used in) operating activities | 9,998,085 | 27,981,148 | ||
Cash flows from investment activities: | ||||||
-2,616,075 | -31,400 | Purchasing of tangible assets | -4,462,486 | -97,620 | ||
- | 17,000 | Proceeds from the sale of non-current assets | 24,490 | 50,300 | ||
140,479 | 31,342 | Interest received | 322,940 | 45,337 | ||
42,483 | - | Dividends received | 534,796 | 492,313 | ||
-2,433,114 | 16,942 | Net cash generated by/ (used in) investing activities | -3,580,260 | 490,330 | ||
Cash flows from financing activities:
-
-
-355,437
-22,021
-3,004,394
-3,381,852
-1,032,782
14,055,660
13,022,878
5,321,401 -14,822,142
-328,390
-25,118
-3,157
-9,857,406
7,723,080
2,533,306
10,256,386
Proceeds from loans
Cash repayments of borrowed amounts
Leasing paid
Leasing interest paid
Dividends paid
Net cash generated by/ (used in) financing activities
Net increase/decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
1,964,851 -1,964,851
-1,025,081
-73,446
-3,010,089
-4,108,616
2,309,209
10,713,669
13,022,878
31,357,916 -51,493,258
-921,018
-72,674
-9,468
-21,138,502
7,332,976
2,923,410
10,256,386
9
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ELECTROMAGNETICA SA published this content on 17 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 November 2023 18:39:04 UTC.