Published: 2019-03-15 19:15:00 CET
Baltic Horizon Fund / Northern Horizon Capital
Annual Financial Report

Baltic Horizon Fund Consolidated Audited Results for 2018

Management Board of Northern Horizon Capital AS has approved the audited financial results of Baltic Horizon Fund (the Fund) for the year 2018. The financial results remained unchanged compared to the preliminary disclosure on 15 February 2019.

Gross Asset Value (GAV)

In 2018, the GAV increased from EUR 215.8 million to EUR 260.9 million compared to the end of 2017. The increase is mainly related to new acquisitions during the year and the cash received from a subsequent bond issue in December. The Fund completed the acquisitions of the Postimaja Shopping Centre, LNK Centre and Meraki land plot and thus deployed most of the new capital raised in 2018.

Net Asset Value (NAV)

In 2018, the Fund NAV increased from EUR 107 million to EUR 109.8 million compared to the end of 2017. The increase is related to new equity raised and the Group’s operational performance over the year. The Fund raised EUR 2.4 million net equity during the February private placement and generated almost EUR 10.0 million in net profit. The Fund NAV increase was offset by a EUR 7.7 million dividend distribution to its unitholders and a EUR 0.9 million buy-back of own units.

Net Rental Income and Net Profit

In 2018, the net profit of the Group increased from EUR 9.4 million to EUR 10.0 million as compared to 2017. During the year, the Group recorded a EUR 2.0 million fair value gain (EUR 3.7 million during 2017).

Net rental income for 2018 rose 37.5% to EUR 14.8 million, as compared to EUR 10.8 million in 2017. The increase is related to new acquisitions (Vainodes I office building, Postimaja shopping centre and LNK Centre) that were made following the capital raisings at the end of 2017 and at the start of 2018 and bond subscriptions.

Annual Key Figures

Euro ‘00020182017Change (%)
    
Net rental income14,80410,76837.5%
Valuation gains/(loss) on investment properties2,0143,676(45.2%)
Operating profit14,07911,68420.5%
Net financing costs(2,781)(1,481)87.8%
Profit before tax11,29810,20310.7%
Net profit for the period9,990 9,444 5.8%
    
Weighted average number of units outstanding78,764,895162,270,69426.5%
Earnings per unit (EUR)0.13 0.15 (13.3%)


Euro ‘00031.12.201831.12.2017Change (%)
    
Investment property in use245,160189,31729.5%
Gross asset value (GAV)260,878215,78520.9%
    
Interest bearing loans140,50798,08743.2%
Total liabilities151,073108,80938.8%
    
Net asset value (NAV)109,805106,9762.6%
Number of units outstanding78,496,831177,440,6381.4%
Net asset value (NAV) per unit (EUR)1.3988 1.38141.3%
Loan-to-Value ratio (LTV)57.3%51.8% 
Average effective interest rate2.4%1.7% 
  1. The number of units excludes 255,969 units acquired by the Fund as part of the unit buy-back program.

Investment Properties Performance

During 2018, the average actual occupancy of the portfolio was 97.6% (2017: 96.6%). When all rental guarantees are considered, the effective occupancy rate is 98.0% (2017: 97.8%). Average direct property yield during 2018 was 6.8% (2017: 7.2%). The net initial yield for the whole portfolio for 2018 was 6.5% (2017: 6.8%). The decrease is related to the acquisition of new properties with lower yields.  

Property nameCityCountryMarket value1
Euro‘000
NLADirect property yield for 2018Net initial yield for 2018Occupancy rate for 2018
Duetto IVilniusLithuania16,3208,4987.3%6.7%100.0%2
Pirita SCTallinnEstonia10,0205,4277.3%8.1%100.0%2
Upmalas Biroji BCRigaLatvia25,73010,4587.2%7.0%100.0%
G4S HeadquartersTallinnEstonia17,2409,1797.7%7.1%100.0%
Europa SCVilniusLithuania41,10016,8566.3%5.8%94.8%
Domus Pro Retail ParkVilniusLithuania17,46011,2477.4%6.7%98.4%
Domus Pro OfficeVilniusLithuania7,4604,8317.7%6.9%95.9%
Meraki LandVilniusLithuania1,670----
Sky SCRigaLatvia5,3903,2548.2%7.5%99.3%
LinconaTallinnEstonia17,17010,8707.7%7.2%94.6%3
Vainodes IRigaLatvia21,2308,0526.9%6.7%100.0%
Postimaja & CC Plaza complexTallinnEstonia46,92017,8096.2%5.9%98.1%
LNK CentreRigaLatvia17,4507,4536.4%6.4%100.0%
Total portfolio  245,160113,9346.8%6.5%98.0%
  1. Based on the latest valuation as at 28 December 2018.
  2. Effective occupancy rate is 100% due to a rental guarantee. 
  3. Lincona Office Complex was fully occupied at the end of December 2018.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Euro ‘00020182017
(restated)*
   
Rental income15,86011,839
Service charge income2,7601,921
Cost of rental activities(3,816)(2,992)
Net rental income14,80410,768
   
Administrative expenses(2,813)(2,774)
Other operating income/(expenses)7414
Valuation gains/(loss) on investment properties2,0143,676
Operating profit14,079 11,684
   
Financial income847
Financial expenses(2,789)(1,528)
Net financing costs(2,781)(1,481)
   
Profit before tax11,298 10,203
Income tax charge(1,308)(759)
Profit for the period9,990 9,444
   
Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods
Net gains (losses) on cash flow hedges(1,013)273
Termination of interest rate swap agreement reclassified to profit or loss-57
Recognition of initial interest rate cap costs (33)(43)
Income tax relating to net gains (losses) on cash flow hedges97(49)
Other comprehensive income/(expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods(949)238
   
Total comprehensive income/(expense) for the period, net of tax9,041 9,682
   
Basic and diluted earnings per unit (Euro) 0.13 0.15

*In 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers, effective from 1 January 2018. As a result, the comparative figures for “service charge income” and “cost of rental activities” were adjusted. The adjustment did not have an impact on the Group’s equity.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Euro ‘00031.12.201831.12.2017
   
Non-current assets  
Investment properties245,160189,317
Derivative financial instruments989
Other non-current assets596146
Total non-current assets245,765 189,552
   
Current assets  
Trade and other receivables2,7341,568
Prepayments154108
Cash and cash equivalents12,22524,557
Total current assets15,113 26,233
Total assets260,878 215,785
   
Equity  
Paid in capital93,67391,848
Own units(335)-
Cash flow hedge reserve(1,005)(56)
Retained earnings17,47215,184
Total equity109,805 106,976
   
Non-current liabilities  
Interest bearing loans and borrowings140,40196,497
Deferred tax liabilities5,8445,206
Derivative financial instruments1,06988
Other non-current liabilities905859
Total non-current liabilities148,219 102,650
   
Current liabilities  
Interest bearing loans and borrowings1061,590
Trade and other payables2,3974,202
Income tax payable-14
Derivative financial instruments-15
Other current liabilities351338
Total current liabilities2,854 6,159
Total liabilities151,073 108,809
Total equity and liabilities260,878 215,785

For additional information please contact:

Tarmo Karotam
Baltic Horizon Fund manager
E-mail tarmo.karotam@nh-cap.com
www.baltichorizon.com

Baltic Horizon Fund is a registered contractual public closed-end real estate fund managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS. Distribution: Nasdaq Tallinn, Nasdaq Stockholm, GlobeNewswire, www.baltichorizon.com

This announcement contains information that the Management Company is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the above distributors, at 19:50 EET on 15 March 2019.

Attachments


BHF aastaaruanne 2018.pdf
BHF annual report 2018.pdf