Published: 2018-08-23 11:00:00 CEST
Pro Kapital Grupp
Half Year financial report

Consolidated interim report for II quarter and 6 months of 2018 (unaudited)


Chairman’s summary

During the first half of the year Pro Kapital continued construction works of the new T1 Mall of Tallinn shopping and entertainment centre in Tallinn, which is the Company´s largest single-object development project. The Company is continuously carrying out negotiations to find suitable retail operators for the T1, either international or local. The T1 Mall of Tallinn is expected to be opened this autumn.

The Company continued the development of residential areas of Kristiine City in Tallinn, Kliversala in Riga and Šaltinių Namai in Vilnius.

In Tallinn, Kristiine City, the Company has completed five of ten Kristina Houses where 149 apartments out of 155 have been handed over to the clients. Following phase of Kristina Houses is currently ongoing with two buildings under development. Each building has 31 apartments. With active presale being carried out simultaneously to construction works, altogether 36 apartments have been presold. Presales have started also for the last set of three buildings of Kristina Houses in Sammu Street, construction of which is expected to commence this autumn. The Company completed renovation of Marsi 6 into a loft apartment building this spring. Being a very popular project in co-operation with Estonian designers, only 1 flat of 45 is still available for sale.

Kalaranna residential development projecting works in Tallinn are ongoing for obtaining the building permit. As the interest for the project is very high, we have started with initial reservations in July. We are proud to announce that 7 reservations have been already made.

The Company finished the construction works of prestigious River Breeze Residence in Kliversala, Riga, this spring. 6 out of 47 luxury apartments have already been handed over to the clients and two will be handed over in the nearest future. Sales for 39 apartments of River Breeze Residence is currently ongoing.  The Company is proceeding with other key projects in Riga. The following phase of Kliversala and Tallinas Residential Complex projecting works are ongoing, as well as the office complex in Zvaigznes Quarter.
In Vilnius the first stage of Šaltinių Namai development has been almost sold. Last year the construction works for the second stage residential buildings started and
74 preliminary agreements have been already signed. Four buildings of the second stage should be completed in the middle of 2019. The Company is interested in obtaining new attractive developments in the region, to start new projects after the completion of Šaltinių Namai.

Excellent results

At the end of the reporting period the Company recorded net revenue of 15.1 million euros, an increase of 150% as compared to 6.0 million euros in the same period in 2017. Revenues have increased in real estate segment due to completion of 3 apartment buildings in Tallinn and 1 in Riga as the revenues are recorded at the moment notary deed of sale is concluded. The net profit was 2.8 million euros profit for the first six months in 2018, which was 210% better as compared to 2.6 million euros loss during the same period in 2017. The Company is working on increasing its efficiency and results show significant improvement. For 2018 we foresee a positive year end result, which is influenced by completion of residential real estate developments in Tallinn and in Riga and opening of T1 Mall of Tallinn.

Overall loans from financial institutions were 48.9 million euros as at 30 June 2018. The loans from minority shareholders were 0.3 million euros. The Company had 10.2 million euros worth convertible bonds debt and 29.1 million euros worth non-convertible bonds debt at the end of reporting date.

As at 30 June 2018 there were 87 employees working in the Company, 44 of them were employed in the hotel and property maintenance business.

Paolo Michelozzi

Key figures

Total revenue was 15 065 thousand euros, which is an increase of 150% compared to the reference period (2017 6M: 6 024 thousand euros from continuing operations and 7 566 thousand euros including discontinued operations). Total revenue of the second quarter was 8 267 thousand euros comparing to 2 950 thousand euros from continuing operations in 2017 (3 952 thousand euros including discontinued operations). Revenues of the Company depend on completing residential developments, as sales revenues are recorded at the moment of handing over the premises. Improved results of 2018 were influenced by the completion of the 4th and 5th apartment buildings in the Kristina Houses development, renovation works of Marsi 6 in Tallinn and River Breeze Residence in Riga, as presales were turned into notarised sales transactions.
Gross profit was 5 033 thousand euros, which is an increase of 185% compared to the reference period (2017 6M: 1 768 thousand euros for continuing operations and 2 347 thousand euros including discontinued operations).  Gross profit of the second quarter was 3 229 thousand euros comparing to 954 thousand euros from continuing operations in 2017 (1 412 thousand euros including discontinued operations). Gross profit margin of continuing operations increased by 14%.
Operating result increased by 5 333 thousand euros (590%) compared to the reference period, totalling to operating profit of 4 429 thousand euros (2017 6M: loss of 904 thousand euros for continuing operations and loss of 524 thousand euros including discontinued operations). Operating profit of the second quarter was 3 742 thousand euros comparing to 379 thousand euros loss from continuing operations in 2017 (27 thousand euros loss including discontinued operations). Operating result includes profit from revaluation of Kalaranna project. The project was revalued in connection to reclassification from investment property into inventories. The increase in the value comparing to last year end valuation is related to change of input information in terms of volumes of construction of the project. Total impact from revaluation is 1 910 thousand euros.
Net result increased positively by 5 394 thousand euros (210%) compared to the reference period and totalling to positive result of 2 822 thousand euros (2017 6M: loss of 2 572 thousand euros for continuing operations and loss of 2 310 thousand euros including discontinued operations). Net profit of the second quarter was 2 940 thousand euros comparing to 1 170 thousand euros loss from continuing operations in 2017 (881 thousand euros loss including discontinued operations).
Cash generated from operating activities was 3 172 thousand euros (2017 6M: cash used in operating activities was 2 135 thousand euros).  In the second quarter cash generated from operating activities was 269 thousand euros comparing to 423 thousand euros during same period in 2017.
Net assets per share on 30 June 2018 totalled to 1.51 euros (30 June 2017: 1.43 euros).

 Continuing operationsContinuing and discontinued operations*
 2018 6M2017 6M2018 Q22017 Q22018 6M2017 6M2018 Q22017
Revenue, th EUR15 0656 0248 2672 95015 0657 5668 2673 952
Gross profit, th EUR5 0331 7683 2299545 0332 3473 2291 412
Gross profit, %33%29%39%32%33%31%39%36%
Operating result, th EUR 4 429-9043 742-3794 429-5243 742-27
Operating result, %29%-15%45%-13%29%-7%45%-1%
Net result, th EUR2 822-2 5722 940-1 1702 822-2 3102 940-881
Net result, %19%-43%36%-40%19%-31%36%-22%
Earnings per share, EUR0.05-0.050.05-0.020.05-0.030.05-0.02

*Comparable period includes discontinued hotel operations in Tallinn and Riga

Total Assets, th EUR197 777151 944175 158
Total Liabilities, th EUR 112 27374 52992 476
Total Equity, th EUR85 50477 41582 682
Debt / Equity 1.310.961.12
Return on Assets, % 1.5%-1.6%-0.3%
Return on Equity, % 3.4%-2.9%-0.6%
Net asset value per share, EUR 1.511.431.46


Consolidated interim statement of financial position

in thousands of euros30.06.201830.06.201731.12.2017
Current assets   
 Cash and cash equivalents6 7113 18110 317
 Current receivables3 1534 7374 888
 Inventories57 07829 52438 024
Total current assets66 94237 44253 229
Non-current assets   
 Non-current receivables354037
 Property, plant and equipment7 10118 1307 435
 Investment property  123 39096 038114 140
 Intangible assets309294317
Total non-current assets130 835114 502121 929
TOTAL ASSETS197 777151 944175 158
Current liabilities   
 Current debt  9 3197 3196 738
 Customer advances5 0705 2907 224
 Current payables12 5975 31610 091
 Tax liabilities116318132
 Short-term provisions7145170
Total current liabilities27 10918 38824 355
Non-current liabilities   
 Long-term debt  79 27350 58062 527
 Other non-current payables3 7382 1823 437
 Deferred income tax liabilities2 0033 3302 058
 Long-term provisions1504999
Total non-current liabilities85 16456 14168 121
TOTAL LIABILITIES112 27374 52992 476
Equity attributable to owners of the Company   
 Share capital in nominal value11 33810 85411 338
 Share premium5 6611 8165 661
 Statutory reserve1 0821 0821 082
 Revaluation reserve3 2629 4623 256
 Retained earnings59 94455 01760 369
 Loss for the period2 870-2 265-419
Total equity attributable to owners of the Company84 15775 96681 287
Non-controlling interest1 3471 4491 395
TOTAL EQUITY85 50477 41582 682

Consolidated interim statements of comprehensive income

in thousands of euros2018 6MAdjusted
2017 6M*
2018 Q2Adjusted
2017 Q2* 
2017 12M
Continuing operations:     
Operating income     
Revenue15 0656 0248 2672 95012 077
Cost of goods sold-10 032-4 256-5 038-1 996-7 516
Gross profit5 0331 7683 2299544 561
Marketing expenses-459-454-280-266-822
Administrative expenses-2 323-2 466-1 238-1 273-5 256
Other income2 2102732 0342284 114
Other expenses-32-25-3-22-800
Operating profit/ loss4 429-9043 742-3791 797
Financial income22116
Financial expense-1 661-1 657-802-810-3 352
Profit/ loss before income tax2 770-2 5592 941-1 188-1 549
Income tax52-13-118596
Profit/ loss from continuing operations2 822-2 5722 940-1 170-953
Profit from discontinued operations*02620289435
Profit/ loss for the period2 822-2 3102 940-881-518
Attributable to:     
Equity holders of the parent2 870-2 2652 966-854-419
Non-controlling interest-48-45-26-27-99
Other comprehensive income, net of income tax       
Income that will not be reclassified subsequently to profit       
Net change in properties revaluation reserve0000-4
Total comprehensive income for the year     
Attributable to:     
Equity holders of the parent2 870-2 2652 966-854-423
Non-controlling interest-48-45-26-27-99
Earnings per share from continuing operations (EUR)0.05-0.050.05-0.02-0.02
Earnings per share for the period (EUR)0.05-0.040.05-0.02-0.01

*2017 comparable information of the reporting period has been adjusted by separating discontinued operations from financial results and indicating them as a total net result on a separate line "profit from discontinued operations".

Consolidated interim statements of cash flows

in thousands of euros2018 6M 2017 6M2018 Q22017 Q2  2017 12M
Cash flows from operating activities     
Loss for the year2 822-2 3102 940-881-518
Adjustments for:     
  Depreciation, amortisation of non-current assets10435152176455
  Gain from disposal of property, plant, equipment-40140-3 045
  Change in fair value of property, plant, equipment0000-26
  Change in fair value of investment property-1 9100-1 9100-530
  Loss from disposal of shares of subsidiaries0000346
  Finance income and costs1 6591 7448018573 460
  Other non-monetary changes (net amounts)16 45612 89816 10931412 410
Changes in working capital:     
  Trade receivables and prepayments1 736-2601 306-167-408
  Inventories-19 054-15 380-17 590-2 438-23 880
  Liabilities and prepayments1 528997-1 3222 7496 556
  Provisions -110-175-129-187-101
Net cash used in/ generated by operating activities3 172-2 135269423-5 281
Cash flows from investing activities     
Payments for property, plant and equipment-90-141-33-43-281
Payments for intangible assets0-2400-52
Proceeds from disposal of property, plant, equipment3360006 651
Payments for investment property-22 186-9 057-12 896-4 972-24 772
Net cash from disposal of shares of subsidiaries00006 249
Interests received23126
Net cash used in by investing activities -21 938-9 219-12 928-5 013-12 199
Cash flows from financing activities     
Proceeds from increase of share capital00004 328
Dividend payment-8500000
Net changes related to non-controlling interests0000-480
Proceeds from bonds00001 446
Redemption of convertible bonds0-5390-17-773
Proceeds from borrowings22 51411 03415 0714 58428 260
Repayment of borrowings-4 755-324-2 704-156-7 048
Interests paid-1 749-1 702-1 222-1 135-3 318
Net cash generated by financing activities 15 1609 15311 1454 44022 415
Net change in cash and cash equivalents-3 606-2 201-1 514-1504 935
Cash and cash equivalents at the beginning of the period10 3175 3828 2253 3315 382
Cash and cash equivalents at the end of the period6 7113 1816 7113 18110 317

Allan Remmelkoor
Member of the Board
+372 614 4920


PKG Q2 2018 ENG.pdf