Good morning, ladies and gentlemen. Welcome to the conference of ATAL Group, presenting the results of ATAL Group after the first half of 2022. As usual, the conference will involve the President of Management Board of ATAL S.A., Zbigniew Juroszek, and Andrzej Biedronka-Tetla, the Financial Director, CFO. As usual, we will present in the first part a brief presentation of the results and operational achievements, as well as the financials of ATAL Group. After that, we will invite you to ask questions using the Q&A module at the bottom of the screen. I do encourage you to ask questions. Well, it is slightly different compared to the previous quarters, so most of the aspects not covered in the presentation will be covered during the Q&A session. Let's start the presentation then. Let us start with the operational activities.
As usual, operating activities, we will also present the branch offices in the seven largest Polish cities where we operate, and we currently have 38 projects in progress, 750 flats, and we are planning, actually in land which we have, we are planning 42 investments for 13,000 flats. In progress, we have 7,758. This is in the planned surface area is 720,000 sq m . We have seen quite a significant increase in June of the investments implemented, the investments in progress, and this is also a result of the new act on real estate development, new regulations which entered into force on the first of July.
This situation accelerated the launch of a part of the investments we had been planning and which would have started otherwise in the subsequent months. As a result of the purchase of quite a large amount of land, the number of projects in progress and planned and investments planned for the future increased. 720,000 sq m , this is, as I repeat, the surface area of planned investments. Now, well, this is the most urgent and interesting topic, I guess. We are starting the info on the sales of flats. Briefly, the results, and we will discuss them in detail during the Q&A session. In Q2, we signed 587 development preliminary developer contracts.
Together with Q1 of 2022, this is 1,340 contracts. This is down by 25% compared to the same period last year. Sales of flats compared to the competition. This is in 1,340 flats. We are again second among Polish developers. Our offer, the flats we offer, as a result of what I've just said, at the end of the first half of 2022, we had nearly 5,200 flats on offer. This is a significant increase compared to the previous periods. Here you can see this in the slide also compared to the first half of 2021 as a result of acceleration of developer investments and as a result of the entry into force of new regulations.
Handovers of flats, what is most interesting, for us in terms of the financials, we are talking about 1,784 flats handed over in the whole first half of 2022. The largest number, nearly 600 in Poznań. This was also in the second quarter. Followed by Wrocław and Kraków. Poznań comes first, as I mentioned. Now, handovers in the individual periods and compared to previous years, we have an 8% increase compared to the same period of 2021. 1,784 flats handed over in the first half of 2022.
This is the quantitative increase, whereas if we're talking about the increase in space in square meters, the difference is even larger because we handed over nearly 106,000 sq m of total surface area compared to 90.7 thousand square meters in the first half of 2021. New land. Now, I guess that this might come as a surprise, the amount which we allocated to land in the first half of 2022, because this is an absolute record-breaking amount in our activity. PLN 269 million dedicated to the purchase of land, which will allow us to build nearly 300,000 sq m of surface area of flats.
These items of land were purchased in the cities. You can see here on the right-hand side, the average purchase price of usable area was PLN 911 per square meter. The whole resource of land we had as at the 13th of June, we could implement projects for a total surface area of around 720,000 sq m . Dividend paid in July as a result of a resolution of the general meeting of shareholders adopted in June. The decision was made to pay PLN 232 million of dividend. This is 70% of profit of ATAL. That was PLN 6 per share.
The dividend rate was 17% actually, and the nominal amount was PLN 232.3 million, which accounted for 70% of the net result of ATAL S.A. The dividend paid was PLN 756 million . Now, handovers in 2022. Projects completed and in progress as at June 13th , 2022. The ones we completed, but also the ones we are planning to complete by the end of this year.
We have 3,357 flats, of which 91% at the end of June had been built and actually this gray area highlights the investments that have already been handed over or we've managed to obtain permits, use permits for them at the end of this June. Aleja Pokoju and Przystań Letnica, the lighter gray, obtained this but in the third quarter. As we see in this slide, there are plans to hand over further flats in the coming months, but not too many in the pipeline. This is around five investments which are supposed to be completed this year. Handovers in 2023, this is the potential.
The plan's around 2,923 flats and the contract rate is 55% the sales contracting. Now, the total potential for handovers of planned projects starting from 2024, we have in the year 2022 and going on, this is 58 development projects for 927,000 sq m of total surface area. This is 16,500 flats we're talking about. Now let's pass to the second part, the consolidated financials. We have PLN 875 million. This is a 34% increase. These are revenues from sale of products, goods and materials. This is PLN 226 million. This is the gross result of sale.
The net result, we see the profit per share, which is PLN 4.79. Net result is PLN 185.251 million. Now some details about consolidated financial results. 4% increase compared to the same period of last year. Net result, that was the revenues, 34% up. The net result 59% up. Gross margin on sales for the first half of 2022 up compared to the same period of last year to nearly 26%. Net margin up to 21%. This represents a 3.4 percentage point increase. Now some details about the margin in the subsequent quarters.
As you can see probably, margin in Q2 was just under 20% versus the first quarter when the margin was 32.7%. You can see this figure which requires some commentary. We've been talking about the average profitability in the short, medium and long-term period is planned at least 25%. The individual quarters may differ depending on which projects are simply handed over in the individual quarters. The fact that 20% was recorded here, just under 20% in Q2, well, this results from the way in which the handovers were distributed in that quarter. The net margin, similarly, it went down compared to Q1 to 16%.
However, as you may have seen in the previous slide, over the whole half of the year, gross margin was over 25%. Now, a look at the balance sheet, assets. Assets grew by 6%, mainly due to current assets, and we'll take a look at this in a while. Equity, there is a slight decrease due to the dividend paid. The individual items of liabilities, you can see them here. Now, the main items in the financial results report on the financial position, and here we have inventory, we have cash and equivalents. This is a particular area of interest for us because we have an increase up to PLN 602 million, and this all in million PLN.
Equity of over PLN 1.1 billion and liabilities over PLN 2 billion. As a result of the resolution on payment of dividend, the amount of dividend paid, PLN 230 million, was deducted from equity, and this fed, so to speak, liabilities because dividend was paid in July. Let's look at inventory, which is what we have in terms of housing estates. We have inventory work in progress, and this is PLN 2,017 million at the end of the first half of 2022. We can see an increase in finished products up to nearly PLN 400 million.
I would just like to point out that these are finished products which were mainly, actually contracted and handed over in Q3 as a result of the completion of a number of investments, last year. Those actually quite a few flats have not been handed over. 844 flats have not been handed over, surface area of over 52,000 sq m . This will only happen in Q3, so not before Q3, actually. Now, here, debt maturity structure. In September, just any day now, ATAL will redeem its bonds, which are still there to be redeemed. Next year, we will be left with PLN 240 million to be redeemed in two structures. This is spring and autumn. These are two stages, basically.
We also have PLN 133 million to be redeemed. Those ones actually acquired by the shareholder. Now equity. Equity, we have PLN 119 million, and we have prepayments from customers, PLN 835. We have corporate bonds acquired by the shareholder, and just a token amount of bank loans. Summing up, in the first half of the year, we started building nine projects. This is 1,872 flats. We launched the sales of 15 investments, actually, and 3,300 flats, and completed 11 investments. In the first half of the year, we also contracts for 1,300 and handed over 1,784 flats.
I guess this sums up this information. Now we will invite you to ask questions through the Q&A button at the bottom of the screen. We will actually leave you for a minute and we will give you a minute to ask questions, and we'll come back and answer these questions. Okay. We're back after a short break, and we will now read the questions and answer them. The first question. In yesterday's press release, the President of the Management Board said that the target for sales was around 2,500 flats.
Bearing in mind the sales in the first half of the year and the reported sales in July and August, approximately 120 flats a month, this implies that sales in the period from August to December would have to grow to the level of over 220 flats a month. What would have an influence on such a dynamic acceleration of sales at the end of the year? Well, generally, I would say. Well, this is what I can say answering this question. We reported this, you know, at the end of the first quarter, that this would be the estimated sales compared to last year, that it would be around 2,500. This was a release from years, you know, in April.
The situation is getting worse actually over this quarter, and our estimates are more like 2,000 now. I don't know if that was really stated so precisely in the press release, but our estimates say 2,000 now. Versus the 2,500 after Q1. As far as the sales are concerned, the worst period is now, July, August. In September, we see a slight improvement. However, we believe that the final quarter can be even better than Q3 in quantitative terms. Around 2,000, that's our current estimate. This is the current level we are estimating sales at. We are living at this day and age, we used to state really precise data, and we usually used to do better than the actual forecast.
We are dealing with the market we are dealing with today, and hence, our estimates are now. Next question. The level of net debt to equity, what is the level the company will record at the end of Q3 and Q4 2022 after dividend payment and bond redemption? Well, the level will be definitely close to the debt in Q1. The company, as you know, paid dividend, and it is redeeming bonds in September. While we reported loans with the main shareholder, so with the expected revenues, with the expected proceeds, which are supposed to be obtained in the second half of the year, the debt-to-equity ratio should be similar or slightly higher than at the end of the first quarter. Next question.
In the second half of the year, the offer of flats, will it continue to be expanded or will new projects be suspended? Well, ladies and gentlemen, currently the situation is as follows. We seek mainly to continue investments which have been started. Of course, there are our obligations under contracts concluded, and this is our priority. Oftentimes, housing estates are built in several stages, this is our next priority. When we have these multiple stages, we want to continue this and conclude these projects. The only revision would be when we have investments in totally new places. In that case, we might have a situation in which we, if we assume several investments, then simply the number might be smaller. The priority is to complete what we are building and what we have been doing.
The second priority is to continue further stages of already existing housing estates. Only finally, we assume a selective approach to newly launched investments. It all depends on the situation, on our financial capacities. You know that we have a very good financial standing, and it's healthy and will continue to be that over this year. We continue to have handovers. We have around PLN 600 million in own funds. Whatever the sales are, at least for a year, we will be able to pursue our strategy successfully. Should sales actually deteriorate, if sales continue to deteriorate in the future, we might have to reduce the number of projects from this. This is also possible. The delay in the handover of flats, what is it caused by?
Well, these are not delays which will result from problems. These are technical aspects actually. We sometimes, you know, decide to hand over at the start of the month or the end of the month. With large projects, for instance, in Q2, at the end of Q2 in Poznań, we had two investments, 300 flats each. It's simply not feasible technically to hand over 300 flats in one week, for instance. Obviously, apart from our own staff, there have to be also employees of the purchasers, and they have different dates. Technical aspects. Okay, in the context of the slowdown in the construction industry, mainly in closed structures, do we see a larger availability of subcontractors? Well, actually, this is a difficult economic situation now.
However, the availability of subcontractors is nevertheless very high. It's excellent, so we can afford some negotiations also. We can actually adopt a selective approach toward subcontractors in terms of the quality and in terms of the lead times. This is an excellent situation. We have plenty of subcontractors. Their number is actually growing in the market. Basically only big players are left who are still building. This is essentially one group and the other group, we're talking about repairs of bridges and road construction. Enclosed structures, strictly speaking, buildings, basically they are implemented, but cities not really small developers. Smaller developers have practically frozen their business basically.
The availability of subcontractors is really high, and there's no problem with that. Obviously, well, it's not about negotiating, you know, half of the rate or 30% of the rate, obviously, due to the availability, due to the high supply of employees. The costs are very high, it's not that we can negotiate half the rate. We simply have a wider gamut of those who are available. The prices of construction services are just similar for more or less a slight revision. Now another question. What kind of a gross margin on sales are we expecting in the second half of 2022? We repeat this as a mantra really that the average is 25% average in the period, but this second quarter, at least 25%.
Sorry, the second half of the year, I was saying 25% at least. We will out of the recent flats finished, we still have 844 flats to be handed over. These are mostly projects of a higher margin than 25%. About 100 flats with a lower margin, perhaps than 25%. The expected margin will definitely be even higher than 25%. Another question: What about sales in September? Is a big demand observed or is there a noticeable decrease in interest in flats? In terms of sales, what could the whole third quarter be compared to last quarter and to last year? Well, I've already touched upon this. In September, it's slightly better, the situation, compared to August, which doesn't mean that the main problem has been solved.
The main problem is availability of mortgage loans and the price of this credit basically. Here we don't have an influence on this. This part responsible to cash section, this is quite stable, right? The other part, let's call it semi-cash. Some people run their own business activity, and in some part they finance this with credit, and in some parts they pay cash because they have gathered some own funds. This is quite stable. This continues to be quite stable and there are those cases too.
The whole problem actually is. Well, we'll see whether a program will be developed of support for buyers, and maybe we'll see whether any attractive offers will be provided with a fixed interest rate for buyers, because this is actually something which has been in the minority. Some offers have been appearing, but they are rare. Either you know if the inflation goes down, banks will go down with the interest rates and the market will relaunch, or banks will find a different solutions. Hard to say what will happen. Maybe some policy will appear of support for banks. I've heard recently, over recent days, there's some proposed you know cheaper interest rates.
To be frank, with this idea, it would actually be most efficient and seamless to implement, but I don't know how realistic it will be. Because the question is what kind of part of the general public it would concern. This co-financing of the interest rate by the state is the quickest and the most effective and the best idea because it enters into force straight away and it's effective. The state, you know, it might not afford it. We'll see whether it happens. If a different program is implemented well, it will have an influence. This idea is better, but the question is whether it will be implemented and how.
These factors basically determine whether there will be a support program from the government concerning the interest rates or, you know, whether this idea will be implemented more rapidly in terms of some improvement of the offering of mortgage loans of credit. These factors basically will influence sales also next year. Probably this year the situation won't improve, and in the final quarter of 2022, usually the sales are slightly better at the end of the year. However, we're not assuming it will be great. Next question: At what level we currently see more or less the costs of construction per TSA? Well, that's around PLN 5,500-PLN 6,000 per square meter, not counting other costs, administrative expenses.
Please note, people used to pay less attention to that, but financial costs are huge. When a company does not have enough equity and well, free to use cash, basically liquidity, this becomes not very profitable for these, you know, small and medium-sized businesses. They are not freezing their activities because they are so afraid of the market. It's more the physical and unprofitability of running this business with this kind of cost of money, at about 12% or so, double-digit cost of money. This will be very hard for them to relaunch if money costs this much. This is not only the real estate development industry, but the whole business sector at large. They expect cheaper money, more affordable money.
Without significant own cash, this is totally unprofitable. Next question: I would like to ask about the influence of the Developer Guarantee Fund on your activity, including the market situation and the outlooks related to the cost of construction and the land bank which you have. Will it be gradually used or are some sites planned in a longer term perspective? I will answer the first part of the question about the Developer Guarantee Fund. Currently, we don't have any projects which we would be running on the basis of these regulations. We have not been paying the contributions to that fund yet. However, these what we get from the customers will be burdened by a 0.45% contribution. This is obviously another cost of running activity.
Whether this cost can be transferred to the end users, we'll see about that. Now the next part of the question about the market situation and the cost of construction and what are we planning. Well, yes, the construction costs increased at the start of the year. Actually, at the start of the previous year, when there was a huge surge in the cost of materials and the cost of production, really. The construction materials account for a huge part, a huge percentage of the whole cost. This increase is already a thing of the last year. Actually the increases in the cost of materials have stopped a bit. Some went down a bit.
Still, these are not reductions which would be helping us a lot. These are token reductions. More like sales promotion rather than a genuine price reduction. This results from a very simple thing, namely the costs of production of these construction materials with the current energy prices are simply much higher. Manufacturers of materials are facing the dilemma, namely whether it is best to produce at a loss or actually stop some of the activity. Well, this is about ceramic tiles for instance. This is very often based on this kind of, you know, calculation of cost and benefit, the lesser evil, really. We don't have a big opportunity to reduce the cost of acquisition of materials on our part.
These will be token reductions and rather limited reduction if this continues. Maybe the last part of the question whether the land bank will be used gradually and whether there are plans to use some land even further in the future. Well, we could say that we have to consider it case by case. Some of the land will be used in some near future and introduced in the offering. Some will be prepared for July, or sorry, for summer, January 2023. And for the years. Sorry, 2023, 2024, that is, for the whole of these two years. Over the last five years, the number of offers has been unprecedented, really, and these prices, you know, can be negotiated.
These tender procedures have not been. This has not been appearing. The situation was completely different last year. Land was sold at horrendous prices, especially new, less experienced players were there who would overpay for that land. Currently, they will have a problem in that. We have always been conservative in that respect, in terms of purchases, waiting for the right moment to come. This land bank it shows, you know, these three, four, five years. Well, one or two years ago, our purchases were very modest. We were often, you know, we faced the objection, "Why are you buying so little?" This is because the price is really boosted, and we didn't want to participate in that. Now it's different because the price is going down significantly. Next question.
How was the amount calculated, allocated to purchase of land individual years and in the first half of 2022, is calculated according to cash flow or according to the signed final contracts of purchase? Signed contracts of purchase. We have often emphasized it is conservative method of buying land. This is what we do, which allows us to be the sole owner of the land. Final contract of purchase signed. That's the answer to this question. The next question, this has already been said, but not directly. The decrease in gross margin in the second quarter, doesn't it mean that a negative trend is starting? No. At least 25%, I would like to reiterate this, before Q3, Q4, 2022, and this is much more profitable now.
This second quarter, as I said, there are two projects which really affected profitability. Q3, Q4 would be better. Now, a question about sales in Q3 that's already been answered. Which markets are currently appear best in terms of sales, and where do we have stagnation? Well, there are no better or worse markets. The situation is similar all over Poland. Actually, there are some more prestigious projects which have a slightly higher percentage of financial independence. There are some other projects which are slightly more economical in some perhaps more affordable places, and there's more mortgage financing there. There is a bigger problem there, but we don't really divide into better or worse, you know, cities, whether Poznań or Wrocław or Łódź is better. No, the situation is similar all over the place.
The problems with the cost of financing and availability and credit worthiness, really. What percentage of buyers use financing with credit? Well, it's negligible now. These are mostly customers who finances only with a part because they lacked a certain part of the price, so they have to finance a part of it with credit. This is generally negligible. What is the rate? What is the speed of introducing new projects into sales? How is it planned for the next quarters? We've already answered this a bit, but for the time being, there are no actual signs saying that, you know, out of five projects, we will only launch one. No, it's not like that. Where we have this offer building up, there we are slowing down.
In other places where we concluded, where we completed some previous projects, we enter there because we are still hoping that this situation will improve. We still under the assumption that it will improve. We see this as this outlook for the future and, you know, this potential inventory, which would be created, that we will be able to sell it in the years 2023, 2024, somehow. This is our prediction. Next question, answered in part, is the company reaffirming its target for sales of flats in the second half of 2022 at a similar level to first half of 2022 and the outlook for 2023?
Well, we've already answered this a bit, but we assume that the bad situation which we are currently facing, namely with the share of sales, you know, up to 150 flats, and we will probably have up to 200 in Q4, but this is half, 40%-50% less compared to what we should be selling. This situation should last until, you know, half next year. This is our assumption. You know that we have no influence on this, on inflation, on the war, on energy prices. These are the main factors now. No, I just have to speed up because there's a lot of questions. Bear in mind the current economic and political situation. Are there any thoughts, reflections on the changes in the dividend policy?
Well, generally, as you see now, the year 2021 to 2022, on all levels it looks very similar. Revenues, but also the net result, net profit not specials. For the time being, dividend policy has not changed, and the results for 2022 are quite similar to those for 2021. Basically the situation obviously changes, you know, 2023 might be different. What is the realistic level of handovers, FY 2022? Over 3,000, I believe we could take a look at the slide which shows the potential for handovers. The handovers we were planning there was 3,300. Next question about margin. We've already answered that. Next question. Are you talking about institutional clients, about package purchases?
What is the plan of selling flats in investment which are close to being finalized and the availability of unoccupied premises is still high? These are two aspects here, and I have to say that we are not talking with any institution that would buy wholesale. That was not our business model. Our business model is to be very close to the direct Polish customer. For the time being, this model has certain limitations in terms of mortgage financing, for instance, as you mentioned, but we are not changing our business model. We are not conducting such talks. The second part was that? About package sales and whether these flats which are still free, are we intending to sell them? Well, there's not a lot of them, actually.
We are selling in the same way as any other project. Sales, it's hard to sell now, but there's no difference. Could you comment on the current situation, the construction industry market, what are your challenges now, what are you struggling with, price of materials already covered, energy availability of employees? Do you see interest on the part of wealthier customers buying on a package basis? Well, in the summer period, this has decreased. It used to be better, but I don't know whether this is the question of exhaustion or depletion of certain potential, or maybe the summer holiday period is not conducive to transactions and so we need to look into that perhaps at the end of September or October.
Are you considering a reduction of pricing in the second half of 2022? Well, we are revising the price list on a systematic basis. A situation when the prices surge, we were very wary actually in terms of increasing prices. We seek to have stable pricing and we don't really make them surge. When there's a standstill, we don't make any sudden changes either. Nothing worse than abrupt changes in pricing, because then the customers don't really know what they should pay for a flat. We have these costs of production which are obviously rising, but we are calculating our margin, our costs, and then we get a price. These negotiations are at some level, very small level usually, but it is carefully calculated.
This is how we built our position and this is what we are sticking to for the time being. Now we'll join two questions. Do we see, in the land market, do we see secondhand offers? Other developers want to save their liquidity by selling land at a favorable price. Well, fortunately, it's not that because it would really not be favorable to anyone, whether we're talking about us or, well, in a better situation or others. No, there is no drastic, you know, takeover or anything because there was a good overall situation in the market. Even those who have been making mistakes, for instance, paying too much for certain things, they're not even in such a bad situation they would have to sell, but really.
This group of customers who have been running their pricing policy, well, badly, they are simply ceasing purchases of new land and selling some plots of land, but without major turbulence in their respective businesses. Okay. You could see in the slide that you have a record number of flats on offer. For how many quarters will this last at this level? Aren't you worried that this will really burden your balance sheet if the sales are poor? Well, we've already answered this in a way. This is one of the topics which we monitor on a daily basis, and the whole point is that, you know, not to have too many flats accumulated at a given time unsold, because this will burden the cost side of the balance sheet.
How to watch this, well, we constantly monitor it, and then we would have to provide additional financing if that were the case. This is an important question, we analyze it on a daily basis, and we have it under control for the time being. The high financial revenues in Q2 and the first half of 2022, what were they caused by? This is mainly discounting of prepayments, advanced payments, obtained from customers and here, financial revenues, strictly speaking from interest, is about 10% in revenues. Do developers want to influence the Financial Supervision Authority to mitigate the recommendation in terms of calculation of creditworthiness? Are there any steps made in that direction?
Well, I believe there have been even requests on the part of the board of the Association of Polish Developers. I don't know what the feedback was, but it will definitely help. According to you, Mr. President, what are the prices of flats in the primary market in the next four to six quarters, so a year and a half, 18 months? Well, we assume that the prices won't undergo significant change. In individual projects which had an initial high price in the market, there might be a change. The projects which were built more or less in our own way, that the costs are realistic. It's a realistic cost of purchase, of materials and contractors. They will be stable. They will neither rise nor fall.
Still individual projects will be there. These prices may go down slightly, but these won't be major decreases because the situation of those businesses is not that bad. They are not forced to do that. Inflation is constantly rising, so these businesses will seek, in my opinion at least, they will seek to kinda wait through this period to, you know, after some time to sell at the prices they wanted to sell at. That was the last question. Thank you very much, ladies and gentlemen, for your attention, and we do invite you to contact the investor relations department. The presentation from today's conference will be published on the corporate website of our company. Thank you very much. Thank you.