Pro Kapital Council approved Consolidated Interim Report for I Quarter and 3 Months of 2022 (Unaudited)

·8 min read
Pro Kapital Grupp
Pro Kapital Grupp

MANAGEMENT REPORT

CEO summary

The first quarter of 2022 has been an atypical one. The Ukraine war started in February caused some concerns due to the geopolitical risks perceived in the area. However, after the initial (and understandable) concerns, the markets showed a good resiliency from the demand side, and we have seen no drop in the real estate prices and in the interest shown by potential buyers of real estate assets. The construction market still poses some challenging issues, due to the increase in cost of materials caused by the complications related to Covid-19 and relative problems in the supply chain and the impossibility of obtaining materials from the regions affected by the war.

Real estate development

In Tallinn, we have continued construction of Kindrali Houses and Kalaranna projects. In the first quarter of 2022 we continued handing over apartments in Kalaranna project, where completion of eight buildings with the total of 240 apartments will be achieved. Today we are handing over apartments in the Kalaranna 8/3 and 8/4 buildings and we have reservations or presales concluded for all business premises and for 99% of apartments in this phase of the project.

Last year we started construction of the new project Kindrali Houses in Kristiine City, where three building-complexes with the total of 195 apartments will be raised. In this project we had booked or presold more than half of the apartments before signing the construction agreement. Today we have no apartments available in Kindrali Houses.  Two of the buildings are nearing completion end of May and June and the contractor is starting to hand over the apartments on the fourth week of May.

In Riga we are selling our ready luxury product River Breeze Residence and started the tendering process for the further development of Kliversala Residential Quarter - Blue Marine. We have received several offers from construction companies and are in the process of identifying the best option.

In Vilnius, we only have 4 unsold apartments in our Šaltiniu Namai Attico project (including one which serves as a showroom). The real estate market has had a great run in 2021 and we saw a great deal of interest for our luxury properties, achieving some of the highest prices per square meter in all the local market. We received some offers from the construction companies for the following phase of city villas and a commercial building and we aim to start construction works this summer.

Hotel operations

The Covid-19 pandemic had a strong impact on all the tourism sector, but luckily the German government has provided a great deal of support in terms of subsidies provided to PK Parkhotel Kurhaus in Bad Kreuznach.

We are in the process of renovation of the second half of the rooms (first half has been renovated 5 years ago), which will be completed by the end of the year. The works will also have the added benefit of converting an unused area into 7 standard rooms and creation of a luxurious suite with private sauna and terrace, which will greatly improve the overall prestige of the hotel.

We have signed a preliminary agreement to buy a 380 keys hotel in Sicily (Domina Zagarella Sicily), located near the biggest city of the island, Palermo. We are currently conducting an in-depth due diligence of the asset and we believe this may be a great opportunity to expand our portfolio.

We are satisfied with the results of the first quarter although they were influenced by one- time expenses in amount of 318 thousand euros related to change of the management. In the following months we plan on continuing the construction works of ongoing developments and prepare for the upcoming phases. The real estate development is going well, the market is strong, and we will continue implementing our strategy of creating long-term value for our shareholders and for the communities that we aim to develop in a sustainable, comfortable and aesthetically pleasing way.

Edoardo Preatoni
CEO

Key financials

The total revenue of the Company in the first quarter of 2022 was 7.9 million euros, having increased by 42% compared to the reference period (2021 3M: 5.6 million euros). The real estate sales have been influenced by handing over completed apartments in Kalaranna District.

The gross profit in the first quarter of 2022 increased by 61% amounting to 2.6 million euros compared to 1.6 million euros in 2021.

The operating result in 2022 has decreased to 989 thousand euros profit comparing to 1.8 million euros during the same period in 2021. Higher profit in 2021 was affected by one-time sales of investment property and related revenue.

The net result for the first three months of 2022 was 251 thousand euros loss, comparing to 377 thousand euros profit (continuing operations) in the reference period.

Cash used in operating activities during first quarter of 2022 was minus 3.1 million euros comparing to 1.3 million euros generated during the same period in 2021.

Net assets per share on 31 March 2022 totalled to 0.75 euros compared to 0.13 euros on 31 March 2021.

Key performance indicators

 

2022 3M

2021 3M

2021 12M

Revenue, th EUR

7 916

5 580

43 095

Gross profit, th EUR

2 558

1 591

10 576

Gross profit, %

32%

29%

25%

Operating result, th EUR

989

1 786

39 821

Operating result, %

12%

32%

28%

Net result, th EUR

-251

-2 112

29 757

Net result, %

-3%

-38%

69%

 

 

 

 

Earnings per share, EUR

0.00

-0.03

0.52


 

31.03.2022

31.03.2021

31.12.2021

Total Assets, th EUR

117 371

185 287

116 027

Total Liabilities, th EUR

74 779

177 829

73 184

Total Equity, th EUR

42 592

7 458

42 843

Debt / Equity *

1.76

23.84

1.71

 

 

 

 

Return on Assets, % **

-0.2%

0.2%

23.7%

Return on Equity, % ***

-0.6%

5.1%

113.5%

Net asset value per share, EUR ****

0.75

0.13

0.76

  
*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

31.03.2022

31.03.2021

31.12.2021

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

7 650

13 331

9 626

Current receivables

2 071

1 542

802

Inventories

59 360

61 481

57 533

Total current assets

69 081

76 354

67 961

Non-current assets

 

 

 

Non-current receivables

20

3 715

21

Property, plant and equipment

6 866

6 678

6 754

Right-of-use assets

173

357

202

Investment property

40 871

97 814

40 734

Intangible assets

360

369

354

Total non-current assets

48 290

108 933

48 065

TOTAL ASSETS

117 371

185 287

116 026

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Current debt

16 131

104 373

3 955

Customer advances

11 477

10 284

12 419

Current payables

7 253

24 011

7 297

Tax liabilities

116

1 280

1 143

Short-term provisions

714

471

713

Total current liabilities

35 691

140 419

25 527

Non-current liabilities

 

 

 

Long-term debt

37 909

33 425

46 455

Other non-current payables

20

2 638

20

Deferred income tax liabilities

1 134

1 151

1 133

Long-term provisions

25

196

48

Total non-current liabilities

39 088

37 410

47 656

TOTAL LIABILITIES

74 779

177 829

73 183

Equity attributable to owners of the Company

 

 

 

Share capital in nominal value

11 338

11 338

11 338

Share premium

1 748

5 661

1 748

Statutory reserve

0

1 134

0

Revaluation reserve

2 984

2 984

2 984

Retained earnings

26 773

-8 031

0

Profit/ Loss for the period

-251

-1 951

26 773

Total equity attributable
 to owners of the Company

42 592

11 135

42 843

Non-controlling interest

0

-3 677

0

TOTAL EQUITY

42 592

7 458

42 843

TOTAL LIABILITIES AND EQUITY

117 371

185 287

116 026

Consolidated interim statements of comprehensive income

in thousands of euros

2022 3M

2021 3M

2021 12M

CONTINUING OPERATIONS

 

 

 

Operating income

 

 

 

Revenue

7 916

5 580

43 095

Cost of goods sold

-5 358

-3 989

-32 519

Gross profit

2 558

1 591

10 576

 

 

 

 

Marketing expenses

-114

-125

-502

Administrative expenses

-1 449

-992

-5 592

Other income

0

1 332

35 616

Other expenses

-6

-20

-278

Operating profit/ loss

989

1 786

39 820

 

 

 

 

Financial income

1

1

6

Financial expense

-1 226

-1 393

-5 964

Profit / loss before income tax

-236

394

33 862

Income tax

-15

-17

10

Net profit / loss from continuing operations

-251

377

33 872

 

 

 

 

Profit from discontinued operations

0

- 2 489

-4 115

Net profit / loss for the period

-251

-2 112

29 757

 

 

 

 

Attributable to:

 

 

 

Equity holders of the parent

-251

-1 950

29 757

Non-controlling interest

0

-162

0

 

 

 

 

Total comprehensive income / loss for the year

-251

-2 112

29 757

Attributable to:

 

 

 

Equity holders of the parent

-251

-1 950

29 757

Non-controlling interest

0

-162

0

 

 

 

 

Earnings per share (continuing operations) €

0.00

0.01

0.60

Earnings per share for the period €

0.00

-0.03

0.52

Angelika Annus
CFO
+372 614 4920
prokapital@prokapital.ee

 

 

 

 

 

 

 

 

Attachment