Shares in villa constructor Impact Bucharest lost about 2% during yesterday's trading session on the Bucharest Stock Exchange, after the company announced its profits for the first half were down. Impact said it recorded 81bn ROL (2 million euros) net profit in the first six months of the year, down 9% in nominal terms from the corresponding period of last year.
The company officials, however, say Impact has managed to conclude more contracts that it set out to, and they will have a positive influence on revenues in the second half, as well as at the beginning of next year.
Although higher than last year, the company's revenues were lower if compared with the forecasts made early this year. Impact's total revenues stood at 412bn ROL in H1, up 29% from H1, 2003, but 23% lower than set in the S&R budget. Total spending followed a similar pattern.
Impact's financials were filed under the International Accounting Standards that include the impact of deferred income tax. Impact's profit under the IAS stood at 89bn ROL last year, but the company at that time logged an 112bn ROL net profit under the Romanian Accounting Standards.
Impact's chairman and founder Ioan Popp blames the lower than expected financial results on the increase in labour costs and on the delay in securing construction permits. Personnel and subcontractor expenses were the fastest-growing expenses from all of those incurred by Impact, progressing by nearly 140% compared with the 53% average spending growth. This was due to the increase in the business volume, Popp explained. "The local elections froze the construction permit granting process, which caused problems for us," he added.
Impact's officials said there were other causes that sapped total profits, such as higher investments and the fluctuation of the design-related work force, which led to certain projects being delayed.
Impact, however, announced that the villa construction contracts sealed by the company in the first half reached 19.7 million euros, 175% more than in 2003 and 56% more than anticipated in the budget. These new contracts will not however be entered in the accounting records prior to their actual execution.
vlad.nicolaescu@zf.ro
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