Published: 2018-11-22 12:30:00 CET
Pro Kapital Grupp
Quarterly report

Consolidated interim report for III quarter and 9 months of 2018 (unaudited)


Chairman's summary

I am proud to say, the flagship of our developments, T1 Mall of Tallinn, opened its doors in early November. Thus, I am first and foremost grateful to our team, who has done an outstanding work. Reflecting back on the nine months of 2018, this has been an extensive work with the largest single-object development project. I would, however, like to stress that a shopping mall is not a completed project, instead needs to be in continuous movement to foresee the expectations of the people. T1 Mall of Tallinn will continue to grow and open milestones step-by-step, which is very positive due to public attention it will receive prior to Holiday season this ongoing fourth reporting quarter. We have strategically left vacancy for attractive retail operators and intend to proceed negotiations during following periods.

In parallel with the development of the T1 Mall of Tallinn, we continued work with ongoing residential development projects in Tallinn, Vilnius and Riga. Pro Kapital is not merely developing buildings but entire communities, that bring new breathing into unique areas. According to our conservative strategy, all development projects are carried out in phases. This allows us to set up the pace according to the market needs.

One of the largest residential quarter developments in the Baltics is Kristiine City in Tallinn. We completed the renovation of Marsi 6 into a loft apartment building in spring 2018. Uniquely designed apartments have been incredibly popular amongst our customers and all lofts are sold. We have completed 5 of ten Kristina Houses and are proceeding with the following phases. The activity of sales of both Marsi 6 and Kristina Houses, is a clear demonstration of a great interest towards the new residential area.

Another outstanding development we are soon to start in Tallinn is Kalaranna Quarter, located at the heart of Tallinn at the waterfront. By this being a prime development property in Tallinn it expands on more than 6 hectares. We have learned a great interest towards the project, from the local but also from the Finnish market. Thus, we started the presale for the project in summer 2018. We expect to start the construction works in 2019.

In Riga, we are currently developing a unique residential quarter Kliversala, which is one of the very few residential spaces directly at the waterfront, with stunning views over the river Daugava to the old town of Riga. Like all our projects, Kliversala quarter will be completed in stages. In spring 2018 we finished construction works of the first phase – a prestigious River Breeze Residence. We are currently in the process of sales for luxurious apartments in the residence. Pro Kapital will continue with the development of following phases of Kliversala. In parallel we are proceeding with other major developments in Riga. Projecting works are ongoing for Tallinas Residential Complex and office complex in Zvaigznes Quarter.

Our prestigious large-scale development in Vilnius is a new quarter surrounded by nature in the most tranquil part of Vilnius Old Town on UNECSO heritage site. The first phase of the development of the residential quarter Šaltinių Namai has, to date, been almost sold. The construction works for the second stage of the residential buildings are ongoing and we are actively pursuing the sales. We expect to complete four buildings of the second stage during the second quarter of 2019. The Company is planning to obtain new attractive developments in Vilnius, aimed at starting new projects following the completion of Šaltinių Namai.

Excellent results during nine months

The Company has shown improved results for the nine months of 2018 due to the completion of development projects and intensive sales activity. At the end of the reporting period, the net revenue increased by 170% or by 13 million euros compared to the same period of 2017, reaching to 21 million euros. The net profit was 2 million euros compared to 2 million euros loss during the same period of 2017.

Overall loans from financial institutions were 60.3 million euros as at 30 September 2018. The loans from minority shareholders including interests were 0.5 million euros. The Company has 10.2 million euros worth convertible bonds debt and 28.3 million euros worth non-convertible bonds debt at the end of reporting date.

I am proud to acknowledge our team is remarkably stable. This allows me to say with full confidence that our inhouse competence can insure that the development projects are designed down to the last detail to deliver quality through the operations. As at
30 September 2018 there were 89 employees working in the Company, 44 of them were employed in the hotel and property maintenance business.

Paolo Michelozzi


Key performance indicators


Total revenue was 21.0 million euros, which is an increase of 170% compared to the reference period (2017 9M: 7.8 million euros from continuing operations and 9.8 million euros including discontinued operations). Total revenue of the third quarter was 6.0 million euros comparing to 1.8 million euros from continuing operations in 2017 (2.3 million 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 6.9 million euros, which is an increase of 172% compared to the reference period (2017 9M: 2.5 million euros for continuing operations and
3.3 million euros including discontinued operations).  Gross profit of the third quarter was 1.9 million euros comparing to 0.7 million euros from continuing operations in 2017 (1.0 million euros including discontinued operations).
Operating result increased by 5.5 million euros (739%) compared to the reference period, totalling to operating profit of 4.8 million euros (2017 9M: loss of 0.7 million euros for continuing operations and loss of 0.2 million euros including discontinued operations). Operating profit of the third quarter was 0.4 million euros comparing to 0.1 million euros from continuing operations in 2017 (0.3 million euros including discontinued operations). Operating result of nine months 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 1.9 million euros (Note 7).
Net result increased positively by 4.2 million euros (218%) compared to the reference period and totalling to positive result of 2.3 million euros (2017 9M: loss of 1.9 million euros for continuing operations and loss of 1.4 million euros including discontinued operations). Net loss of the third quarter was 0.5 million euros comparing to 0.7 million euros profit from continuing operations in 2017 (0.9 million euros profit including discontinued operations).
Cash generated from operating activities was 3.4 million euros (2017 9M: cash used in operating activities was -3.1 million euros).  In the third quarter cash generated from operating activities was 0.3 million euros comparing to 1.0 million euros during the same period in 2017.
Net assets per share on 30 September 2018 totalled to 1.50 euros (30 September 2017: 1.44 euros).

 Continuing operations
Continuing and discontinued operations
9  months
9 months
9  months
9  months
Revenue, th EUR 21 0437 7965 9781 77321 0439 8175 9782 251
Gross profit, th EUR 6 8922 5311 8597306 8923 3091 859962
Gross profit, % 33%32%31%41%33%34%31%43%
Operating result, th EUR 4 779-7483501074 779-222350302
Operating result, % 23%-10%6%6%23%-2%6%13%
Net result, th EUR 2 279-1 931-5436852 279-1 441-543870
Net result, % 11%-25%-9%39%11%-15%-9%39%
Earnings per share, EUR 0,04-0,04-0,010,010,04-0,03-0,010,02


Total Assets, th EUR 208 798158 854175 158
Total Liabilities, th EUR 123 83780 57092 476
Total Equity, th EUR 84 96178 28482 682
Debt / Equity 1,461,031,12
Return on Assets, % 1,2%-1,0%-0,3%
Return on Equity, % 2,7%-1,8%-0,6%
Net asset value per share, EUR 1,501,441,46




Consoldated interim statement of financial position


thousand euros
Current assets   
   Cash and cash equivalents7 0798 79310 317
   Current receivables4 0554 0544 888
   Inventories56 66133 80338 024
Total current assets
67 79540 65053 229
Non-current assets   
   Non-current receivables353937
   Property, plant and equipment7 1277 2607 435
   Investment property133 530104 608114 140
   Intangible assets311297317
Total non-current assets141 003112 204121 929
208 798158  854175 158
Current liabilities
   Current debt8 1845 5246 738
   Customer advances5 1716 3527 224
   Current payables11 6627 60210 091
   Tax liabilities181254132
   Short-term provisions642155170
Total current liabilities25 84019 88724 355
Non-current liabilities   
   Non-term debt91 17755 17262 527
   Other non-current payables4 6882 7863 437
   Deferred income tax2 0032 6352 058
   Long-term provisions1299099
Total non-current liabilities97 99760 68368 121
TOTAL LIABILITIES123 83780 57092 476
Equity attributable to the owners of the Company
   Share capital in nominal value
11 33810 85411 338
   Share premium5 6611 8165 661
   Statutory reserve1 0821 0821 082
   Revaluation reserve3 2623 2593 256
   Retained earnings59 94461 22060 369
   Profit/ loss for the period2 3201 374-419
Total equity attributable to the owners of the Company
83 60776 85781 287
Non-controlling interest1 3541 4271 395
TOTAL EQUITY84 96178 28482 682


Consolidated interim statements of comprehensive income

thousand euros
2018 9M Adjusted
2017 9M
2018 Q3Adjusted
2017 Q3
2017 12M
Operating income
Cost of goods sold
Gross profit
6 8922 5311 8597304 561
Marketing expenses
Administrative expenses
Other income
Other expenses
Operating profit/ loss4 779-7483501071 797
Financial income31399114406
Financial expense-2548-2581-887-882-3352
Profit/ loss before income tax2 234-1 930-536665-1 549
Income tax45-1-720596
Profit/ loss from continuing operations2 279-1 931-543685-953
Profit from discontinued operations04900185435
Profit/ loss for the period2 279-1 441-543870-518
 Attributable to:     
 Equity holders of the parent2 320-1 374-550891-419
 Non-controlling interest-41-677-21-99
Other comprehensive income, net of income tax
Income that will not be reclassified subsequent to profit     
Net chnage in properties revaluation reserve
Total comprehensive income for the year2 279-1 441-543870-522
Attributable to:     
 Equity holders of the parent2 320-1 374-550891-423
 Non-controlling interest-41-677-21-99
Earnings per share from continuing operations (EUR)
Earnings per share for the period (EUR)0,04-0,03-0,010,02-0,01


Consolidated interim statements of cash flows


thousand euros2018

Cash flows from operating activities     
Profit/ loss for the period
2 279-1 441-543870-518
Adjustment for:     
 Depreciation, amortisation of non-current assets15847554124-455
 Gain from disposal of property, plant and equipment-4-12740-1 247-3 045
  Gain from disposal of investment property-4180-41800
  Change in fair value of property, plant and equipment0000-26
  Change in fair value of investment property-1 910000-530
  Profit/loss from disposal of shares of subsidiaries0-1 4520-1 452346
  Finance income and costs2 5452 6458859013 460
  Other non-monetary changes (net amounts)16 82713 4012 79014212 410
Changes in working capital:     
  Trade receivables and prepayments842425-894685-408
  Inventories-18 637-19 659-2 001-4 279-23 880
  Liabilities and prepayments1 2464 189-2273 1926 556
Net cash used in/ generated by operating activities
3 430-3 1482581 013-5 281
Cash flows from investing activities     
Payments for property, plant and equipment
Payments for intangible assets-7-30-7-6-52
Proceeds from disposal of property, plant and equipment3366 65106 6516 651
Payments for investment property
-31 084-17 348.-8 898-8 291-24 772
Net cash from disposal of shares of subsidiaries06 23506 2356 249
Interests received34116
Nets cash used in/ generated by investing activities-30 918-4 642-8 9804 577-12 199
Cash flows from financing activities     
Proceeds from increase of share capital00004 328
Dividend payment8500000
Net changes related to non-controlling interests
Proceeds from the bonds01 44602821 446
Redemption of the bonds-643-773-643-234-773
Proceeds from borrowings
33 47419 27610 9608 24228 260
Repayment of borrowings-5 509-6 139-754-5 815-7 048
Interests paid
-2 222-2 129-473-427-3 318
Nets cash used in/ generated by financing activities24 25011 2019 0902 04822 415
Net change in cash and cash equivalents
-3 2383 4113685 6124 935
Cash and cash equivalents at the beginning of the period10 3175 3826 7113 1815 382
Cash and cash equivalents at the end of the period7 0798 7937 0798 79310 317

Allan Remmelkoor
Member of the Board
+372 614 4920


PKG Q3 2018 ENG.pdf