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UPP Olaines OÜ consolidated unaudited financial results for Q3 and 9 months of 2021

·7-min read

MANAGEMENT REPORT FOR 9 MONTHS 2021

General information

UPP Olaines OÜ (hereafter ‘the Company’ and ‘the Group’ when referred together with subsidiaries) was established for the purpose of funding, acquiring and managing the real estate investment of Olaines Logistics Park: (buildings and land) located at “Šarlotes”, Olaines county, Olaines parish, Latvia, cadastre number 8080 003 0029, registered in the Land Register compartment No.5439 of the city of Olaine parish. The Company was established on 24.08.2017 and had no economic activity until 15.12.2017, when it acquired the cold storage warehouse Olaines Logistics Park.

The management board is aware of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s prospects for the period after the reporting period of these financial statements outside the course of its regular business activities.

UPP Olaines OÜ is operating based on going concern.

Financial commentary for the second quarter and nine months of 2021

Net operating income was 626 923 euros in 3Q 2021 (670 298 euros in 3Q 2020) and 1 864 577 euros for the nine months of 2021 (1 979 158 euros for 9 months of 2020). Operating profit was 542 929 euros in 3Q 2021 (635 253 euros in 3Q 2020) and 1 693 421 euros for the nine months of 2021 (1 863 48 euros for 9 months of 2020). Net income was 297 664 euros in 3Q 2021 (408 988 euros in 3Q 2020) and 950 756 euros for the nine months of 2021 (1 119 547 euros for 9 months 2020).

Decrease in net operating income for 9 months of 2021 was due to the changes in the lease agreements which the management also reflected upon in the 1Q 2021 commentary. In 3Q 2021 the Group made repairs in Olaine LC which had additional effect on 3Q and 9 months net operating income.

The Group paid a 49 715 euro fine issued by Būvniecības valsts kontroles birojs (State Construction Control Bureau of Latvia) which had a noticeable impact on net income for 3Q and 9 months.

Group received the fine because the Company’s subsdiary, SIA Olaines Logistics did not forward its’ 2020 energy balance to the Bureau in due time. In Latvia, companies which consume more than 500 000kWh of energy for two consecutive years, are consdered large energy consumers and must make energy efficiency investments, or pay energy efficiency fine calculated on the basis of electricity consumed. For companies such as SIA Olaines Logistics, who do not consume the electricity, but are forwarding (selling) bought electricity to ohter clients, there is a requirement to maintain a balance of the kWh-s bought and sold, and to forward annual balance to the Bureau before a due date. SIA Olaines Logistics failed to forward required balance for 2020 in due time because of changes which occurred in Group’s asset management team at that time. Furthermore, because of COVID travel restrictions we were not able to access SIA Olaines Logistics physical mail box, where noticies and reminders regarding the obligation to forward the balance were sent by the Bureau. As a result the Group became liable to pay energy efficiency fee for the full ~8 000MWh of electricity consumed in Olaines LC by the clients of SIA Olaines Logistics. SIA Olaines Logistics appealed to the Bureau several times and also appealed to the Ministry of Economics of Latvia to reduce the fine as it is completely out of proportions compared to the nature of violation and the fact that the SIA Olaines Logistics consumed 0kWh of electricity. However none of the appeals were considered by either inistitution because the due date for appealing was past, leaving the fine in force in full amount.

In 3Q 2021 the Group initiated investments to change all lightning in Olaine LC to LED lights, including outside premises lighting.

The company’s sole business activity is to collect rental revenue, manage the Olaine property and service its liabilities to lenders and investors. Liabilities include the subordinated bonds with a fixed interest rate and the investment loan which’ rate is also fixed with an interest rate swap agreement. On the revenue side the company earns stable triple-net rental income from reputable tenants, which is fixed with medium-term agreements but is subject to indexation. Due to the economically fixed nature of the company, there needs to be major event in the overall economy or in the company's business activities for them to have significant effect on the company’s financial results.

Key indicators of financial performance and position for 9 months 2021

(in EUR)

3Q 2021

3Q 2020

9 months 2021

9 months 2020

Net operating income

626 923

670 298

1 864 577

1 979 158

EBIT

542 929

635 253

1 693 421

1 863 489

Profit for the period

297 664

408 988

950 756

1 119 547


(in EUR)

30.09.2021

30.09.2020

Investment property

31 320 000

30 909 000

Interest-bearing loans

26 624 362

27 694 631

Interest-bearing loans less shareholder’s loan

23 682 334

24 746 331


9 months 2021

9 months 2020

Net profit margin, % (Total comprehensive income / Net operating income)

50,1%

56,6%

ROA (Net profit / Average fixed assets)

4,05%

4,83%

LTV (Interest-bearing loans less shareholder’s loan / Investment property)

75,6%

80,1%

DSCR (Operating profit / Loan principal and interest payments on interest-bearing loans)

1,1

1,2


Management board and supervisory board

The management board of UPP Olaines OÜ has one member: Marko Tali, the chairman of the board. The management board of Olaines Logistics SIA has also one member: Siim Sild, chairman of the board.

The supervisory board of UPP Olaines OÜ has three members: Mart Tooming, Tarmo Rooteman, Hallar Loogma.

No remuneration or other benefits have been allotted to the members of the management board and supervisory board of UPP Olaines OÜ. The member of board of Olaines Logistics SIA receives remuneration according to Latvian legislation.

There are no employees in the company besides the members of the management and supervisory board.


CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Condensed consolidated interim statement of comprehensive income

(in EUR)

Note

3Q 2021

3Q 2020

9 months 2021

9 months 2020

Net rental income

4

626 923

670 298

1 865 121

1 979 158

Net rental income

626 923

670 298

1 865 121

1 979 158

General and administrative expenses

(34 279)

(35 045)

(121 985)

(115 669)

Other operating expenses

(49 715)

0

(49 715)

0

Operating profit

542 929

635 253

1 693 421

1 863 489

Financial income / (cost)

(245 265)

(232 265)

(742 665)

(743 942)

Profit before income tax

297 664

402 988

950 756

1 119 547

Income tax

0

0

0

0

Profit for the periood

297 664

402 988

950 756

1 119 547

Total comprehensive income for the period

297 664

402 988

950 756

1 119 547


Condensed consolidated interim statement of financial position

(in EUR)

Note

30.09.2021

30.09.2020

Cash and cash equivalents

712 869

752 089

Trade and ohter receivables

231 037

317 024

Total current assets

943 906

1 069 113

Investment property

31 320 000

30 909 000

Total non-current assets

31 320 000

30 909 000

TOTAL ASSETS

32 263 906

31 978 113

Trade and ohter payables

505 591

383 036

Financial derivatives

224 155

407 502

Loans and borrowings

5

1 064 004

1 064 004

Total current liabilities

1 793 750

1 854 542

Loans and borrowings

5

25 560 358

26 630 627

Total non-current liabilities

25 560 358

26 630 627

TOTAL LIABILITIES

27 354 108

28 485 169

Share capital

2 500

2 500

Retained earnings

4 907 298

3 490 444

TOTAL EQUITY

4 909 798

3 492 944

TOTAL EQUITY AND LIABILITIES

32 263 906

31 978 113


UNITED PARTNERS

Siim Sild

Managing Director

+372 5626 0107

siim.sild@unitedpartners.ee

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