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Pro Kapital Council approved Consolidated Interim Report for III Quarter and 9 Months of 2021 (Unaudited)
MANAGEMENT REPORT
CEO summary
The third quarter of this year has been very dynamic, with amazing results in sales activities and exceeding expectations when signing presale agreements, but it has been also challenging in development activities due to changes in the construction market.
Real estate development
We have continued construction of Kindrali Houses and Kalaranna projects and are preparing project documentation for the following development phases in Tallinn. In September we started handing over apartments in two first buildings of Kalaranna project, where completion of eight buildings with the total of 240 apartments will be achieved step by step in four phases. Today we have reservations or presales concluded for all business premises and for 94% of apartments. This year we started construction of the new project Kindrali Houses in Kristiine City, where three building-complexes with the total of 195 apartments will be raised. In this project we had booked or presold more than half of the apartments before signing the construction agreement. Today 98% of the apartments have been booked or presold in Kindrali.
In Riga we are selling our luxury product River Breeze Residence and prepare technical project for the further development of Kliversala Residential Quarter - Blue Marine. We have received a building permit for City Oasis residential quarter with 326 apartments – a tranquil and green living environment in the city centre. We are ready to proceed with construction activities as soon as the market situation becomes more favourable. Unfortunately, the Latvian real-estate market differs significantly from its neighbouring countries Estonia and Lithuania. However, we are observing higher interest in luxury segment and in River Breeze project.
In 2019 we completed five buildings in Šaltinių Namai Attico project in Vilnius with 115 apartments. Today we have only 5 apartments unsold of which two apartments are furnished as showrooms for the following phase. We are preparing for the following phase with city villas and commercial building and plan to start the construction this year.
Our revenues from the sales of the real estate depend on completion of residential developments as revenues are recorded at the moment notary deeds of sale are concluded. In 2021 we have completed Ratsuri Houses project with 39 apartments and now we have started handing over exclusive homes in prime location of Kalaranna project.
Hotel operations
Last year had a significant impact on PK Parkhotel Kurhaus in Bad Kreuznach, Germany. Due to COVID-19 restrictions the hotel was closed almost half of the year in 2020 and from January till mid-June in 2021. The impact of COVID-19 has been 0.3 million euros in less hotel revenues in the first nine months of 2021 comparing to the last year. Although occupancy has increased this year, the average room rate has influenced revenues negatively. However, due to governmental support, the net result of nine months was better comparing to 2020.
A few years ago, we renovated half of the rooms and part of public spaces. We plan to continue with renovation works in the coming year and make relevant preparations.
In the following months we continue construction works of ongoing development projects and prepare to start with the following phases. Our real estate development is doing well, the Company is a going concern and we have an optimistic view for the future.
Paolo Michelozzi
CEO
Key financials
The total revenue of the Company in the first nine month of 2021 was 21 million euros, having increased by 55% compared to the reference period (2020 9M: 13.6 million euros). The total revenue of the third quarter was 12 million euros, which is 164% higher compared to the same period in 2020 (2020 Q3: 4.6 million euro).
The real estate sales revenues are recorded at the moment of handing over the premises to the buyer. Therefore, the revenues from sales of real estate depend on the completion of the residential developments. The real estate sales have been influenced by completion of Ratsuri Houses project, where all apartments were sold and handed over to new owners and start of handing over apartments in first two buildings of Kalaranna project. The Company has continued with sales of completed developments - River Breeze Residence in Riga and Šaltinių Namai Attico development in Vilnius and presales of ongoing development projects Kalaranna District and Kindrali Houses in Tallinn.
The gross profit in the first nine month of 2021 increased by 14% amounting to 6.1 million euros compared to 5.4 million euros during the same period in 2020. In the third quarter the gross profit figures were 3.4 million euros and 1.9 million euros respectively.
The operating result in the first nine months of 2021 has improved to 3.7 million euros profit comparing to 1.1 million euros profit during the same period in 2020. The operating result of the third quarter was 2.8 million euros profit comparing to 0.9 million euros profit in 2020.
The net result in the first nine months of 2021 was 22.4 million euros profit and in the third quarter 1.1 million euros profit, comparing to losses of 11.1 million euros and 3.2 million euros in the reference period respectively. The positive result of the reporting period was influenced by loss of control and derecognition of the subsidiary AS Tallinna Moekombinaat.
Cash generated from operating activities during the first nine months was 1.4 million euros comparing to -4.5 million euros used during the same period in 2020. In the third quarter of 2021 cash generated from operating activities was 5.2 million euros and 1.9 million euros were used during the same period in 2020.
Net assets per share on 30 September 2021 totalled to 0.63 euros compared to 1.07 euros on 30 September 2020.
Key performance indicators (including discontinued operations)
2021 9M | 2020 9M | 2021 Q3 | 2020 Q3 | 2020 12M | |
Revenue, th EUR | 21 108 | 13 615 | 12 066 | 4 562 | 19 234 |
Gross profit, th EUR | 6 103 | 5 371 | 3 442 | 1 880 | 6 775 |
Gross profit, % | 29% | 39% | 29% | 41% | 35% |
Operating result, th EUR | 3 712 | 1 136 | 2 836 | 885 | -43 108 |
Operating result, % | 18% | 8% | 24% | 19% | -224% |
Net result, th EUR | 22 463 | -11 085 | 1 122 | -3 183 | -59 456 |
Net result, % | 106% | -81% | 9% | -70% | -309% |
Earnings per share, EUR | 0.40 | -0.19 | 0.02 | -0.06 | -0.98 |
30.09.2021 | 30.09.2020 | 31.12.2020 | |
Total Assets, th EUR | 125 042 | 215 765 | 179 048 |
Total Liabilities, th EUR | 89 492 | 157 543 | 169 477 |
Total Equity, th EUR | 35 549 | 58 222 | 9 571 |
Debt / Equity * | 2.52 | 2.71 | 14.15 |
Return on Assets, % ** | 15% | -5,2% | -30.7% |
Return on Equity, % *** | 99.5% | -17.1% | -141.2% |
Net asset value per share, EUR **** | 0.63 | 1.03 | 0.23 |
*debt / equity = total debt / total equity
**return on assets = net profit/loss / total average assets
***return on equity = net profit/loss / total average equity
****net asset value per share = net equity / number of shares
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated interim statement of financial position
in thousands of euros | 30.09.2021 | Restated* | 31.12.2020 |
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 13 283 | 7 316 | 9 393 |
Current receivables | 1 458 | 1 422 | 1 797 |
Inventories | 67 811 | 53 405 | 58 352 |
Total current assets | 82 552 | 62 143 | 69 542 |
Non-current assets | |||
Non-current receivables | 23 | 4 417 | 3 517 |
Property, plant and equipment | 6 677 | 7 011 | 6 745 |
Right-of-use assets | 233 | 400 | 357 |
Investment property | 35 202 | 141 452 | 98 512 |
Intangible assets | 355 | 342 | 375 |
Total non-current assets | 42 490 | 153 622 | 109 506 |
TOTAL ASSETS | 125 042 | 215 765 | 179 048 |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Current debt | 530 | 78 032 | 107 581 |
Customer advances | 13 516 | 7 124 | 7 866 |
Current payables | 5 233 | 17 844 | 22 211 |
Tax liabilities | 656 | 225 | 458 |
Short-term provisions | 534 | 358 | 459 |
Total current liabilities | 20 469 | 103 583 | 138 575 |
Non-current liabilities | |||
Long-term debt | 64 708 | 50 793 | 27 255 |
Other non-current payables | 3 139 | 1 783 | 2 295 |
Deferred income tax liabilities | 1 133 | 1 230 | 1 170 |
Long-term provisions | 44 | 156 | 182 |
Total non-current liabilities | 69 024 | 53 962 | 30 902 |
TOTAL LIABILITIES | 89 493 | 157 545 | 169 477 |
Equity attributable to owners of the Company | |||
Share capital in nominal value | 11 338 | 11 338 | 11 338 |
Share premium | 5 661 | 5 661 | 5 661 |
Statutory reserve | 1 134 | 1 134 | 1 134 |
Revaluation reserve | 2 984 | 3 262 | 2 984 |
Retained earnings | -8 031 | 47 646 | 47 647 |
Profit/ Loss for the period | 22 463 | -10 672 | -55 678 |
Total equity attributable to owners of the Company | 35 549 | 58 369 | 13 086 |
Non-controlling interest | 0 | -149 | -3 515 |
TOTAL EQUITY | 35 549 | 58 220 | 9 571 |
TOTAL LIABILITIES AND EQUITY |
* See Note 2 for details regarding restatement.
Consolidated interim statements of profit and loss and other comprehensive income
in thousands of euros | 2021 | 2020 | 2021 | 2020 | 2020 12M |
CONTINUING OPERATIONS | |||||
Operating income | |||||
Revenue | 19 373 | 8 743 | 12 066 | 3 146 | 13 637 |
Cost of goods sold | -14 118 | -6 038 | -8 624 | -1 977 | -9 424 |
Gross profit | 5 255 | 2 705 | 3 442 | 1 169 | 4 213 |
Marketing expenses | -358 | -418 | -119 | -140 | -611 |
Administrative expenses | -3 549 | -3 171 | -1 086 | -1 054 | -4 372 |
Other income | 2 113 | 26 | 605 | 22 | 384 |
Other expenses | -56 | -14 | -6 | -3 | 2 876 |
Operating profit/ loss | 3 405 | -872 | 2 836 | -6 | 2 490 |
Financial income | 53 812 | 3 | 2 | 1 | 4 |
Financial expense | -29 474 | -4 095 | -1 722 | -1 279 | -5 419 |
Profit / loss before income tax | 27 743 | -4 964 | 1 116 | -1 284 | -2 925 |
Income tax | -23 | -211 | 6 | -132 | -354 |
Net profit / loss from continuing operations | 27 720 | -5 175 | 1 122 | -1 416 | -3 279 |
Profit from discontinued operations | -5 257 | -5 912 | 0 | -1 768 | -56 177 |
Net profit / loss for the period | 22 463 | -11 087 | 1 122 | -3 184 | -59 456 |
Attributable to: | |||||
Equity holders of the parent | 22 178 | -10 674 | 1122 | -3 120 | -55 678 |
Non-controlling interest | -285 | -413 | 0 | -64 | -3 778 |
Other comprehensive income, net of income tax | |||||
Items that will not be reclassified subsequently to profit or loss | |||||
Net change in properties revaluation reserve | 0 | 0 | 0 | 0 | -278 |
Total comprehensive income / loss for the year | 22 463 | -11 087 | 1 122 | -3 184 | -59 734 |
Attributable to: | |||||
Equity holders of the parent | 22 178 | -10 674 | 1 122 | -3 120 | -55 956 |
Non-controlling interest | -285 | -413 | 0 | -64 | -3 778 |
Earnings per share (continuing operations) € | 0.49 | -0.09 | 0.02 | -0.02 | -0.06 |
Earnings per share for the period € | 0.40 | -0.19 | 0.02 | -0.06 | -0.99 |
Consolidated interim statements of cash flows
in thousands of euros | 2021 | 2020 | 2021 | 2020 | 2020 12M |
Cash flows from operating activities | |||||
Profit/loss for the period | 22 463 | -11 085 | 1 113 | -3 183 | -59 456 |
Adjustments for: | |||||
Depreciation, amortisation of non-current assets | 282 | 311 | 88 | 102 | 416 |
Gain from disposal of investment property | -1 092 | 0 | 0 | 0 | 0 |
Loss from write-off of plant, property, equipment | 0 | 0 | 0 | 0 | 8 |
Change in fair value of property, plant, equipment | 0 | 0 | 0 | 0 | -16 |
Change in fair value of investment property | 0 | 0 | 0 | 0 | 43 127 |
Gain from derecognition of subsidiary | -53 808 | 0 | 0 | 0 | 0 |
Finance income and costs | 35 033 | 12 010 | 1 719 | 3 936 | 15 994 |
Changes in deferred tax assets and liabilities | -37 | -118 | 0 | -59 | -178 |
Other non-monetary changes (net amounts) | 1 537 | -3 118 | 0 | -3 114 | -3 110 |
Changes in working capital: | |||||
Trade receivables and prepayments | 3 806 | -2 049 | -513 | -1 069 | -1 514 |
Inventories | -9 460 | -12 373 | 156 | -8 023 | -13 011 |
Liabilities and prepayments | 2 800 | 11 870 | 2 736 | 9 522 | 10 025 |
Provisions | -138 | 29 | -38 | 10 | 59 |
Net cash used in operating activities | 1 387 | -4 523 | 5 261 | -1 878 | -7 656 |
Cash flows from investing activities | |||||
Payments for property, plant and equipment | -102 | -29 | -68 | -18 | -94 |
Payments for intangible assets | -13 | 0 | -8 | 0 | -43 |
Payments for investment property | -411 | -657 | -165 | -260 | -844 |
Proceeds from disposal of investment property | 2 000 | 0 | 0 | 0 | 0 |
Change in cash from derecognition of subsidiary | -182 | 0 | 0 | 0 | 0 |
Interests received | 2 | 2 | 0 | 0 | 1 |
Net cash used in investing activities | 1 294 | -684 | -241 | -278 | -980 |
Cash flows from financing activities | |||||
Net proceeds from secured bonds | 0 | 28 500 | 0 | 0 | 28 500 |
Redemption of convertible bonds | -337 | 0 | -253 | 0 | -33 |
Repurchase of non-convertible bonds | 0 | -28 003 | 0 | -3 | -28 000 |
Proceeds from borrowings | 18 497 | 7 689 | 6 086 | 4 832 | 14 410 |
Repayment of borrowings | -11 855 | -684 | -8 990 | -28 | -1 376 |
Repayment of lease liabilities | -129 | -130 | -42 | -46 | -135 |
Interests paid | -4 967 | -5 465 | -2 382 | -2 344 | -5 953 |
Net cash used/ generated by financing activities | 1 209 | 1 907 | -5 581 | 2 411 | 7 413 |
Net change in cash and cash equivalents | 3 890 | -3 300 | -561 | 255 | -1 223 |
Cash and cash equivalents at the beginning | 9 393 | 10 616 | 13 331 | 7 061 | 10 616 |
Cash and cash equivalents at the end of the period | 13 283 | 7 316 | 13 842 | 7 316 | 9 393 |
The full report can be found in the file attached.
Angelika Annus
Member of the Board
+372 614 4920
prokapital@prokapital.ee
Attachment
