DM KER Nyilvánosan Muködo Reszvenytársaság : Half-yearly Report

DM-KER Nyilvánosan Működő Részvénytársaság

2310 Szigetszentmiklós, Csepeli út 22.

Semi-annual report

1 January 2023 to 30 June 2023

IFRS Interim Financial Statements

unaudited

DM-KER Nyrt.

2310 Szigetszentmiklós, Csepeli út 22.

Tax number: 27048090-2-44

Company registration number: 13-10-041955

Statistical code: 27048090-4663-114-13

Table of Contents
1. Executive Summary	3
2. Introduction to DM-KER Nyrt	4
a) The Company's particulars	4
3. Interim IFRS financial statements	10
a) Statement of comprehensive income (Income statement)	10
b) Statement of financial position (Balance sheet)	11
c) Statement of changes in equity	13
d) Statement of cash flows	16
4. The basis of accounting	17
5. Accounting policy	17
6. Net sales revenue and other operating income	29
7. Goods and services sold	31
8. Operating expenses	31
9. Staff costs	32
10. Other expenses	32
11. Depreciation and impairment	32
12. Profit or loss from financial transactions	33
13. Tax liability	33
14. Other comprehensive income	33
15. Earnings per share	34
16. Property, plant and equipment	36
17. Intangible assets	37
18. Right-of-use assets	37
19. Other non-current assets	39
20. Cash and cash equivalents	39
21. Trade receivables	39
22. Other receivables, prepayments	40
23. Inventories	40
24. Corporate income tax assets	41
25. Equity	41
26. Share-based payments	42
27. Provisions for expected liabilities	43
28. Long-term loans and borrowings	43
29. Deferred tax liabilities	44
30. Non-current finance lease liabilities	44
31. Trade payables	44
32. Short-term loans and borrowings	45
33. Other tax liabilities	45
34. Other current liabilities	46
35. Current finance lease liabilities	46
36. Corporate income tax liabilities	46
37. Accruals	47
38. Segment information	48
a) Business units	48
b) Segment reporting	53
39. Financial instruments	55
40. Financial indicators	59
41. Risk management	60
42. Events in H1 2023	64
43. Events after the interim period	64
44. Statement	65

2

1. Executive Summary

The main environmental impacts in the first half of 2023 included the escalation of the war and, as a result, the drying up of EU funds and the economic slowdown due to political seasonality. The construction sector was characterised by a sharp decline in terms of both government projects and private construction projects. The cancellation of the majority of government projects and the high interest rate environment had an extremely negative impact on the machinery sales business.

As the key market sector of DM-KER Nyrt. is construction, the Company had to react quickly to these dramatic changes in its environment. For certain products, shortage in the market was replaced by oversupply in a matter of moments, causing both the number of units sold and the available margin to decline at the same time. The key to profitability is adapting rapidly, which is achieved through cost reduction and negotiations with suppliers. A factor that was to our advantage in this process was the fact that the market in Central and Eastern Europe had not yet experienced the negative trends. Therefore, our manufacturing partners were able to mitigate their risk by reallocating their production capacities to Hungary.

As a positive strategic decision of 2021 and 2022, there was a significant increase in inventory levels along with sales revenue. Runaway inflation, as well as the high interest rate environment that manifested itself through inventory financing, suddenly imposed a considerable burden on the Company because of the costs. Therefore, a key objective for the first half of the year was to radically reduce the previously inflated inventory levels, without making it impossible for the Company to operate. However, this caused substantial difficulties in a market that had shrunk significantly. The Company quickly implemented cost reduction measures and efficiency improvements in all areas. The fact that the Company managed to maintain its integrity even in a situation like this goes to show how competitive the Company is.

As our sales of new machinery declined, we began concentrating on our after-sales businesses. In order to expand our sales in the spare parts business, we strengthened our relationships with several partners from neighbouring countries, allowing us to achieve a significant increase in revenue in this area. This market environment has a positive impact on both the machinery rental business and the sale of second-hand machinery. In these areas, we began optimising the composition of our fleet and raising rental fees to market levels. The number of orders for our servicing business was also up during this period; therefore, we maintained the headcount of mechanics at the same level and implemented measures aimed at improving efficiency. As a result of the above, these business lines are instrumental in maintaining the Company's profitability.

As for our previously declared strategic objectives, we prepared and published an ESG report describing the Company's sustainability efforts. In addition to being committed to sustainable operations as individuals ourselves, this is an important milestone for the Company as well, being a key area of focus on the stock exchange.

data in thHUF	30/06/2023	30/06/2022
Net sales revenue	6 044 444	6 929 118
Depreciation and impairment	275 749	205 321
Earnings before interest and taxes (EBIT)	-116 954	396 163
Earnings before interest, taxes, depreciation and amortisation	158 795	601 484
(EBITDA)
Net profit or loss	14 219	201 585

3

1. 2. Introduction to DM-KER Nyrt.

2. The Company's particulars

DM-KER Nyrt. was established by way of a change in company form, with DM-KER Zrt. (and, prior to that, DM-KER Kft.) being its predecessor.

The closing financial statements of DM-KER Kft. for 31 August 2019 (due to its transformation by way of succession) constituted the basis for the preparation of the transformation balance sheets and inventories of assets and liabilities.

As part of the transformation, the Company's share capital was also increased against retained earnings, as a result of which the share capital increased to thHUF 500,000.

On 19 December 2019, the Company's registered capital increased further to thHUF 631,155 through private placement.

Company name	DM-KER Nyilvánosan Működő Részvénytársaság
Short name	DM-KER Nyrt.
Registered office	2310 Szigetszentmiklós, Csepeli út 22.
Phone number	[phone]
Central electronic contact information	[e-mail]
Website	www.dmker.hu
Company registration number	Cgj. 13-10-041955
Tax number	27048090-2-44
EU VAT number	HU27048090
Statistical code	27048090-4663-114-13
Duration of activities:	indefinite
Legal form of the Company	public company limited by shares
Date of the effective Statutes	26 April 2023
Principal activity	4663 Wholesale of mining, construction and civil engineering machinery
Financial year	identical to the calendar year
Jurisdiction	Hungarian
Share capital	HUF 631,155,000

Date of admission of the Company's ordinary shares on the Xtend platform of the Budapest Stock Exchange: 30

January 2020. Date of removal from the Xtend platform: 23 March 2022

Date of admission of the Company's ordinary shares in the Standard Market of the Equities section on the regulated market of the Budapest Stock Exchange: 24 March 2022

4

Place of publication of announcements:

In cases where the Company is required to issue announcements in accordance with the Civil Code, Act V of 2006 on Public Company Information, Company Registration and Dissolution Proceedings or Act CXX of 2011 on the Capital Market (hereinafter: "Capital Market Act") or any other statutory regulation, the Company complies with this requirement by publishing its announcements on the Company's website (www.dmker.hu), the website of the Budapest Stock Exchange (www.bet.hu) and, if expressly required under a statutory regulation, the website operated by the National Bank of Hungary (www.kozzetetelek.hu).

The Company's auditor:

CMT Consulting Kft

(Cgj.: 01-09-388885, 1074 Budapest, Vörösmarty utca 16-18. A épület, földszint 1/F)

Person responsible for the audit: Ferencné Móri

Contact details: 1163 Budapest, Somoskő u. 10. Chamber membership number: MKVK 003356

No fees were paid to the auditor during the financial year for other assurance services, tax advisory services or other non-audit services. We provide information on the fees paid to the auditor as requested by the Chamber of Hungarian Auditors.

Composition of share capital

The Company's share capital is HUF 631,155,000, consisting of 126,231,000 units of registered ordinary shares, each with a face value of HUF 5 per share.

Method of creation of the shares: dematerialised shares

ISIN code of the Shares: HU0000176722

Ownership structure

Holders of more than 5% of the Company's capital for the listed series, based on the declarations of the holders:

Name	Ownership share (%)
BF Trustee Kft	27,42
Intravirtus Kft	15,54
Ferenc Bátor	15,04
Sándor Megyeri	12,66
Széchenyi Alapok Kockázati Tőkealap Széchenyi Alapok Zrt	12,65

5