Pro Kapital Council approved Consolidated Interim Report for II Quarter and 6 Months of 2019 (Unaudited) and made changes into Remuneration and Audit CommitteesMANAGEMENT REPORT Chairman’s summary (abbreviated) Our key focus is set on large-scale development projects of residential and commercial quarters in all Baltic capitals – Tallinn, Riga and Vilnius. With 25 years of experience and large portfolio we have a strong understanding of the market we operate in. Our current portfolio holds a number of prestigious residential and commercial development projects, either ongoing or upcoming. In addition, Pro Kapital has an extensive experience in developing and operating shopping malls. In November 2018, we opened a new generation shopping and entertainment centre - T1 Mall of Tallinn. T1 is located in one of the most fast-growing parts of Tallinn, which will be the future heart of Rail Baltica. The concept, but also architecture of T1 is unique across Baltics, with very wide selection of restaurants, cinema, entertainment centre amongst traditional shopping. As of April 2019, a Ferris Wheel on the rooftop of T1, a one of a kind across Europe, started welcoming guests. Following the opening, we have been in the progress of building a well-balanced mix of tenants which would complement the T1’s value proposition. The thoroughness and diversity of our business and portfolio is reflected by the stable improvement of our performance. The sales revenues during the first half-year have increased by 49% y-o-y, from 15.1 million euros in 2018 to 22.5 million euros during 2019. This result was strongly influenced by the active sales of Šaltiniu Namai Attico five new houses in Vilnius, Kristina Houses development in Tallinn, River Breeze Residence in Riga, but also rental revenues from T1, which we did not have in 2018. Our revenues from the sales of the real estate depend on the completion of the residential developments, as the revenues are recorded at the moment final notary deeds of sale are concluded and properties handed over to the buyer. As a result of the active sales, the operating result for the first half-year of 2019 was 5.1 million euros profit compared to 4.4 million euros profit during the same period in 2018. During the Q2 the operating result was 2.5 million euros profit in 2019 and 3.7 million euros profit in 2018. The operating result of 2018 was influenced by extraordinary gain from increase of value of investment property in amount of 1.9 million euros. Gross profit margin has increased by 3% during the first half-year y-o-y. Otherwise positive results were influenced by 3.5 million euros interest expenses related to T1 project, which in previous periods have been capitalized into cost of investment property. Consequently, the net result of the first half-year of 2019 was 276 thousand euros loss compared to 2.8 million euros profit during the same period in 2018. Paolo Michelozzi
CEO Key financials The total revenue of the Company for the reporting period of six months was
22.5 million euros, which is an increase of 49% compared to the reference period (2018 6M: 15.1 million euros). The total revenue of the second quarter was 12.1 million euros, an increase of 47% compared to 8.3 million euros during the same period in 2018. 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 of the Company depend on the completion of the residential developments. The improvement of the results of the second quarter was influenced by continuous active sales of Kristina Houses development in Tallinn, River Breeze Residence in Riga and the completion of five new buildings in Šaltinių Namai Attico development in Vilnius, where presales were partly realized in notarised sales transactions in June already and are continuing in the third quarter.
The gross profit for the reporting period of six months was 8.2 million euros and for the second quarter was 4.0 million euros. In the comparable period the gross profit figures were 5.0 million euros and 3.2 million euros respectively. Gross profit margin has increased by 3%.
The operating result for the reporting period of six months was 5.1 million euros profit comparing to 4.4 million euros profit during the same period in 2018. The operating result of the second quarter was 2.4 million euros comparing to 3.7 million euros in 2018. The operating result of 2018 was influenced by 1.9 million profit from increase of investment property value in the second quarter.
The net result for the reporting period of the six months was 0.3 million euros loss and 0.1 million euros loss for the second quarter. In the comparable period the net results were 2.8 million euros profit and 2.9 million euros profit respectively. The net result of the period was influenced negatively by 3.5 million euros of interest expenses in AS Tallinna Moekombinaat. The interests are recorded in finance cost instead of capitalization into investment property, which has been done during active development until 31 December 2018.
Cash generated in operating activities during the reporting period was 0.5 million euros comparing to 3.2 million euros of cash generated during same period in 2018. In the second quarter of 2019 cash generated in operating activities was 0.8 million euros and 0.3 million euros during the same period in 2018.
Net assets per share on 30 June 2019 totalled to 1.77 euros compared to 1.51 euros on 30 June 2018. Key performance indicators | | 2019 6M | 2018 6M | 2019 Q2 | 2018 Q2 | 2018 12M | | Revenue, th EUR | 22 512 | 15 065 | 12 140 | 8 267 | 27 991 | | Gross profit, th EUR | 8 179 | 5 033 | 4 037 | 3 229 | 9 576 | | Gross profit, % | 36% | 33% | 33% | 39% | 34% | | Operating result, th EUR | 5 121 | 4 429 | 2 477 | 3 742 | 21 483 | | Operating result, % | 23% | 29% | 20% | 45% | 77% | | Net result, th EUR | -276 | 2 822 | -163 | 2 940 | 18 056 | | Net result, % | -1% | 19% | -1% | 36% | 65% | | | | | | | | | Earnings per share, EUR | 0.00 | 0.05 | 0.00 | 0.05 | 0.30 |
| | 30.06.209 | 30.06.2018 | 31.12.2018 | | | | | | | Total Assets, th EUR | 248 972 | 197 777 | 245 112 | | Total Liabilities, th EUR | 148 510 | 112 273 | 144 374 | | Total Equity, th EUR | 100 462 | 85 504 | 100 738 | | Debt / Equity * | 1.48 | 1.31 | 1.43 | | | | | | | Return on Assets, % ** | -0.1% | 1.5% | 8.6% | | Return on Equity, % *** | -0.3% | 3.4% | 19.7% | | Net asset value per share, EUR **** | 1.77 | 1.51 | 1.78 |
*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 | 30.06.2019 | 30.06.2018 | 31.12.2018 | | ASSETS | | | | | Current assets | | | | | | Cash and cash equivalents | 4 102 | 6 711 | 7 040 | | | Current receivables | 2 856 | 3 153 | 2 928 | | | Inventories | 57 935 | 57 078 | 59 331 | | Total current assets | 64 893 | 66 942 | 69 299 | | Non-current assets | | | | | | Non-current receivables | 3 199 | 35 | 216 | | | Property, plant and equipment | 7 783 | 7 101 | 7 128 | | | Investment property | 172 757 | 123 390 | 168 145 | | | Intangible assets | 340 | 309 | 324 | | Total non-current assets | 184 079 | 130 835 | 175 813 | | TOTAL ASSETS | 248 972 | 197 777 | 245 112 | | | | | | | LIABILITIES AND EQUITY | | | | | Current liabilities | | | | | | Current debt | 39 788 | 9 319 | 10 328 | | | Customer advances | 4 932 | 5 070 | 5 707 | | | Current payables | 6 975 | 12 597 | 11 939 | | | Tax liabilities | 298 | 116 | 357 | | | Short-term provisions | 1 101 | 7 | 852 | | Total current liabilities | 53 094 | 27 109 | 29 183 | | Non-current liabilities | | | | | | Long-term debt | 92 360 | 79 273 | 112 009 | | | Other non-current payables | 1 118 | 3 738 | 1 039 | | | Deferred income tax liabilities | 1 827 | 2 003 | 2 004 | | | Long-term provisions | 111 | 150 | 139 | | Total non-current liabilities | 95 416 | 85 164 | 115 191 | | TOTAL LIABILITIES | 148 510 | 112 273 | 144 374 | | | | | | | 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 | 1 082 | 1 082 | | | Revaluation reserve | 3 262 | 3 262 | 3 262 | | | Retained earnings | 76 663 | 59 944 | 59 944 | | | Profit/ Loss for the period | -129 | 2 870 | 16 827 | | Total equity attributable to owners of the Company | 97 929 | 84 157 | 98 114 | | Non-controlling interest | 2 533 | 1 347 | 2 624 | | TOTAL EQUITY | 100 462 | 85 504 | 100 738 | | | | | | | TOTAL LIABILITIES AND EQUITY | 248 972 | 197 777 | 245 112 |
Consolidated interim statements of comprehensive income | in thousands of euros | 2019 6M | 2018 6M | 2019 Q2 | 2018 Q2 | 2018 12M | | CONTINUING OPERATIONS | | | | | | | Operating income | | | | | | | Revenue | 22 512 | 15 065 | 12 140 | 8 267 | 27 991 | | Cost of goods sold | -14 333 | -10 032 | -8 103 | -5 038 | -18 415 | | Gross profit | 8 179 | 5 033 | 4 037 | 3 229 | 9 576 | | | | | | | | | Marketing expenses | -294 | -459 | -152 | -280 | -1 336 | | Administrative expenses | -2 775 | -2 323 | -1 422 | -1 238 | -5 427 | | Other income | 50 | 2 210 | 23 | 2 034 | 18 839 | | Other expenses | -39 | -32 | -9 | -3 | -169 | | Operating profit | 5 121 | 4 429 | 2 477 | 3 742 | 21 483 | | | | | | | | | Financial income | 2 | 2 | 1 | 1 | 4 | | Financial expense | -5 572 | -1 661 | -2 815 | -802 | -3 473 | | Profit/ loss before income tax | -449 | 2 770 | -337 | 2 941 | 18 014 | | Income tax | 173 | 52 | 174 | -1 | 42 | | Profit/ loss for the period | -276 | 2 822 | -163 | 2 940 | 18 056 | | | | | | | | | Attributable to: | | | | | | | Equity holders of the parent | -129 | 2 870 | -86 | 2 966 | 16 827 | | Non-controlling interest | -147 | -48 | -77 | -26 | 1 229 | | | | | | | | | Total comprehensive income/ loss for the year | -276 | 2822 | -163 | 2940 | 18 056 | | Attributable to: | | | | | | | Equity holders of the parent | -129 | 2 870 | -86 | 2 966 | 16 827 | | Non-controlling interest | -147 | -48 | -77 | -26 | 1 229 | | | | | | | | | Earnings per share for the period (EUR) | 0.00 | 0.05 | 0.00 | 0.05 | 0.30 |
Consolidated interim statements of cash flows | in thousands of euros | 2019 6M | 2018 6M | 2019 Q2 | 2018 Q2 | 2018 12M | | Cash flows from operating activities | | | | | | | Profit/loss for the period | -276 | 2 822 | -163 | 2 940 | 18 056 | | Adjustments for: | | | | | | | Depreciation, amortisation of non-current assets | 194 | 104 | 100 | 52 | 214 | | Gain from disposal of property, plant, equipment | 0 | -4 | 0 | 14 | -4 | | Gain from disposal of investment property | 0 | 0 | 0 | 0 | -418 | | Change in fair value of property, plant, equipment | 0 | 0 | 0 | 0 | -13 | | Change in fair value of investment property | 0 | -1 910 | 0 | -1 910 | -17 995 | | Finance income and costs | 5 570 | 1 659 | 2 814 | 801 | 3 469 | | Changes in deferred tax assets and liabilities | -177 | -55 | -177 | -2 | -54 | | Other non-monetary changes (net amounts) | 50 | 16 456 | 20 | 16 109 | 15 458 | | Changes in working capital: | | | | | | | Trade receivables and prepayments | -959 | 1 736 | -2 531 | 1 306 | 1781 | | Inventories | 1 411 | -19 054 | 1 993 | -17 590 | -21 307 | | Liabilities and prepayments | -5 368 | 1 528 | -1 223 | -1 322 | -128 | | Provisions | 24 | -110 | 14 | -129 | -107 | | Net cash used/ generated in operating activities | 469 | 3 172 | 847 | 269 | -1 048 | | | | | | | | | Cash flows from investing activities | | | | | | | Payments for property, plant and equipment | -166 | -90 | -135 | -33 | -206 | | Payments for intangible assets | -25 | 0 | -24 | 0 | -24 | | Proceeds from disposal of property, plant, equipment | 0 | 336 | 0 | 0 | 336 | | Payments for investment property | -4 637 | -22 186 | -1 104 | -12 896 | -47 786 | | Proceeds from disposal of investment property | 0 | 0 | 0 | 0 | 1 000 | | Interests received | 2 | 2 | 1 | 1 | 4 | | Net cash used in investing activities | -4 826 | -21 938 | -1 262 | -12 928 | -46 676 | | | | | | | | | Cash flows from financing activities | | | | | | | Dividend payment | 0 | -850 | 0 | 0 | -850 | | Redemption of convertible bonds | 0 | 0 | 0 | 0 | -9 | | Redemption of non-convertible bonds | -300 | 0 | -300 | 0 | -640 | | Proceeds from borrowings | 13 388 | 22 514 | 5 818 | 15 071 | 56 923 | | Repayment of borrowings | -7 576 | -4 755 | -3 733 | -2 704 | -7 496 | | Repayment of lease liabilities | -85 | 0 | -49 | 0 | 0 | | Interests paid | -2 008 | -1 749 | -1 384 | -1 222 | -3 481 | | Deposited amount related to loan obligations | -2 000 | 0 | -2 000 | 0 | 0 | | Net cash generated by financing activities | 1 419 | 15 160 | -1 648 | 11 145 | 44 447 | | | | | | | | | Net change in cash and cash equivalents | -2 938 | -3 606 | -2 063 | -1 514 | -3 277 | | Cash and cash equivalents at the beginning | 7 040 | 10 317 | 6 165 | 8 225 | 10 317 | | Cash and cash equivalents at the end of the period | 4 102 | 6 711 | 4 102 | 6 711 | 7 040 |
The full report is in the file attached.
ELECTION OF COMMITTEE MEMBERS
Due to the changes in the Council of AS Pro Kapital Grupp (announced on 23 May 2019), the Council Members have decided to elect the members for the Committees as follows: - Emanuele Bozzone and Ernesto Preatoni were appointed as members of the Remuneration Committee; - Emanuele Bozzone and Petri Olkinuora were appointed as members of the Audit Committee.
Allan Remmelkoor
Member of the Board
+372 614 4920
prokapital@prokapital.ee
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