Pro Kapital Council approved Consolidated Interim Report for II Quarter and 6 Months of 2023 (Unaudited)
August 15 2023 - 7:00AM
Pro Kapital Council approved Consolidated Interim Report for II
Quarter and 6 Months of 2023 (Unaudited)
MANAGEMENT REPORT
CEO summary
Q2 2023 marks as a continuation of the newly
started developments of AS Pro Kapital Grupp.
Real estate development
In Tallinn, the decision taken earlier in the
year on starting the construction and sales of Kalaranna 8 last
stage, has proven to be the right one. As a reminder, this last and
final stage consists of 4 residential buildings with 146 apartments
and 4 commercial units. Furthermore, the decision on taking
on the construction management in-house has proven to be the right
step. The general contractors to this date seem to be
suffering from the consequences of pandemic and the war and their
pricing is simply not competitive vis-à-vis smaller contractors
that we are able to engage directly. To date we have bought out the
excavation/retainage works, underground monolithic concrete works
and some smaller jobs the consequence of which has resulted in
considerable cost savings. During Q2 we completed the underground
excavation and retainage wall works and embarked on underground
concrete works which will last into Q4 this year. Kalaranna
1st stage construction is formally finished, all units delivered to
clients and the main activity there is property management by our
Pro Halduse OÜ and the management of warranty works, if
any. As of the end of Q2 we are totalling 39 total sales
executed (35 apartments and 4 commercial units). In
Kristiine City we are continuing the design and building permit
process for Tondi Street 53 aka “Dunte” project. It is worthy
to mention that we were able to acquire substantial concessions
from the State Landmark Preservation Committee in that we are
allowed to enlarge the ground floor windows on the back side of the
façade into floor to ceiling openings, allowing us to design much
more suitable residential units with much more insolation and
direct openings to small private terrasses. We are also
closely monitoring the market activity in order be ready to start
with Uus-Kindrali project which already has a building permit and
is shovel-ready. We have well above 500 inquiries waiting for a
signal to start.
In Riga we continue the sales of our luxury
product River Breeze Residence which has been awarded the Baltics
Prestige Award for its outstanding architecture. During Q2, 2023 we
signed 2 additional sales on top of the 4 sales in Q1. Overall, we
see an upwards trend in the real estate segment in Riga as it
pertains to our project. We hold a building permit for City
Oasis residential quarter, a project consisting of ca 330
apartments and 32 500 sqm GBA located in Tallinas iela– a tranquil
and green living environment in the city centre. We will be ready
to proceed with construction activities as soon as the market
situation becomes fit for such an ambitious and vast
project. Out of the three capitals (Tallinn, Riga, Vilnius),
Riga seems to have the most challenges in terms of overall market
conditions. However, our long-term outlook for the Latvian real
estate sector remains bullish.
In 2019 we completed five buildings in Šaltinių
Namai Attico project in Vilnius with 115 apartments. Today we
have only 2 apartments unsold, out of which one is a model unit.
During Q2, we finalized the preparatory works for the start of
construction the final phase with city villas (43 units) and a
residential-commercial building. We have signed an agreement
with a company providing construction project management services
that is currently in the stage of preparation works to start the
construction. The goal is to start the site mobilisation in
Q3. Despite the geopolitical situation, Vilnius market is
still quite active in the high-end segment and we look forward to
the next stage of our high-end development. The Company has
also expanded its land portfolio in Vilnius, purchasing a school
building in Naugarduko street for the price of 6.25 million euros.
The school will be converted into a high-end residential property,
consisting of circa 50 luxury apartments. An architectural
competition was carried out for the purpose, and the winning studio
has been in the process of designing and carrying out the building
permit process with the city. As things stand today, it is
our plan to start with the presales at the end of this year as well
as receiving the building permit at the beginning of 2024.
Hotel operations
After two difficult years, which clearly
affected the global sector of tourism because of the pandemic,
there seems to be a strong demand in the hotel industry. In
Bad Kreuznach we have reached a substantial operational break even,
despite the fact, that a large portion of the rooms were not
available to the public due to ongoing renovations. A few years
ago, we renovated half of the rooms and part of the common areas.
The renovations of the remaining rooms were completed by the end of
Q1 2023, and all the room count (116 units) is now available for
sale. We are seeing an increase in Average Daily Rate already and
also positive trends in outperforming against the budgeted
proforma. As of Q2 we see that every month the actual
performance is exceeding the budget and the trend is continuously
upwards. In July, the hotel received a 4-star rating which
hopefully allows us to boost the performance even further.
The Baltic real estate sector showed great
resilience throughout the pandemic period as well as during the
turbulent geopolitical period we live in, and we are confident that
we will manage to develop our pipeline of projects in line with the
market’s expectations, thus continuing to provide a stream of
high-quality properties to the local population. We are aware of
the challenging historical times we live in; we will need to be
fast to adapt to an ever-changing and fast paced world (especially
in regards of the construction works and the related challenges to
the supply chain and cost of materials), but we still have a very
positive outlook on the Baltic region and thus far the market has
been supporting our sentiment. The economic outlook for the
Baltic region is generally positive. The Baltic countries of
Estonia, Latvia, and Lithuania have experienced steady economic
growth in recent years, driven by a combination of factors such as
increasing foreign investment, a growing service sector, and
export-oriented manufacturing. The region has also benefited from
its proximity to Northern Europe and its membership in the European
Union, which has helped to boost trade and investment.
Although showing a dip in sales activity due to high inflationary
environment and increased lending rates, the end of Q2 is actually
showing signs of stabilisation. Statistics indicate that the salary
increase is slowly catching up with inflation rates, thus further
allowing the market to bounce back. All the positive
indicators above will not disappear despite the challenges that are
posed to the real estate sector by the global macroeconomic outlook
and the geopolitical turmoil caused by the war in
Ukraine. Overall, the future of real estate is exiting and
dynamic and we are constantly looking for innovative ways to stay
ahead of the curve and meet the evolving needs of our
customers. With a stance that embraces change and a vision
that transcends boundaries, we march ahead, fully cognizant of the
evolving global landscape and poised to seize every
opportunity.
Edoardo Preatoni CEO
Key financials
The total revenue of the
Company in first six months of 2023 was 16.1 million euros compared
to 31.2 million euros in the reference period. The total revenue of
the second quarter was 2.7 million euros compared to 23.3 million
euros in 2022. 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 depend on the completion of
the residential developments. The real estate sales of the
reference period have been influenced by handing over completed
apartments in Kalaranna District in Tallinn.
The gross profit for first half
year of 2023 has decreased by 52% amounting to 4.5 million
euros compared to 9.4 million euros in 2022. The gross profit in
the second quarter was 790 thousand euros compared to 6.8 million
euros in comparative period.
The operating result in six
months of 2023 was 1.5 million euros profit comparing to 6.4
million euros profit during the same period in 2022. The operating
result for second quarter was 658 thousand euros loss compared to
5.4 million euros profit in the second quarter of 2022.
The net result for the six
months of 2023 was 292 thousand euros loss, comparing to 4.1
million euros profit in the reference period. The net result of the
second quarter was 1.6 million euros loss compared to 4.4 million
euros profit in 2022.
Cash generated in operating
activities during first six months of 2023 was 9.5 million
euros comparing to 11.2 million euros during the same period in
2022. In the second quarter the cash used was 850 thousand euros
compared to 14.4 million euros generated in 2022.
Net assets per share on 30 June 2023 totalled
to 0.97 euro compared to 0.83 euros on 30 June 2022.
Key performance indicators
|
2023 6M |
2022 6M |
2023 Q2 |
2022 Q2 |
2022 12M |
Revenue, th EUR |
16
112 |
31
194 |
2
697 |
23
278 |
65
654 |
Gross profit, th EUR |
4
456 |
9
362 |
790 |
6
804 |
16
965 |
Gross profit, % |
28% |
30% |
29% |
29% |
26% |
Operating result, th EUR |
1
501 |
6
413 |
-658 |
5
424 |
17
657 |
Operating result, % |
9% |
21% |
-24% |
23% |
27% |
Net result, th EUR |
-292 |
4
106 |
-1
595 |
4
357 |
13
452 |
Net result, % |
-2% |
13% |
-59% |
19% |
20% |
|
|
|
|
|
|
Earnings per share, EUR |
-0.01 |
0.07 |
-0.03 |
0.08 |
0.24 |
|
30.06.2023 |
30.06.2022 |
31.12.2022 |
Total Assets, th EUR |
101
166 |
116
701 |
101
256 |
Total Liabilities, th EUR |
46
135 |
69
752 |
45
933 |
Total Equity, th EUR |
55
031 |
46
949 |
55
323 |
Debt / Equity * |
0.84 |
1.49 |
0.83 |
|
|
|
|
Return on Assets, % ** |
-0.3% |
2.8% |
12.4% |
Return on Equity, % *** |
-0.6% |
14.5% |
27.4% |
Net asset value per share, EUR **** |
0.97 |
0.83 |
0.98 |
*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 |
30.06.2023 |
30.06.2022 |
31.12.2022 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
17 474 |
15 208 |
10 589 |
Current receivables |
2 882 |
611 |
955 |
Prepaid expenses |
0 |
488 |
64 |
Inventories |
26 598 |
49 621 |
34 224 |
Total current
assets |
46 954 |
65 928 |
45 832 |
Non-current assets |
|
|
|
Non-current receivables |
13 |
1 519 |
2 016 |
Property, plant and equipment |
7 749 |
7 491 |
7 294 |
Right-of-use assets |
233 |
198 |
195 |
Investment property |
45 851 |
41 214 |
45 575 |
Goodwill |
262 |
262 |
262 |
Intangible assets |
104 |
89 |
82 |
Total non-current
assets |
54 212 |
50 773 |
55 424 |
TOTAL ASSETS |
101 166 |
116 701 |
101 256 |
LIABILITIES AND
EQUITY |
|
|
|
Current liabilities |
|
|
|
Current debt |
28 493 |
10 596 |
173 |
Customer advances |
2 322 |
11 330 |
1 659 |
Current payables |
3 909 |
7 924 |
4 626 |
Tax liabilities |
118 |
110 |
111 |
Short-term provisions |
20 |
585 |
5 |
Total current
liabilities |
34 862 |
30 545 |
6 574 |
Non-current liabilities |
|
|
|
Long-term debt |
10 064 |
38 028 |
38 184 |
Other non-current payables |
0 |
9 |
0 |
Deferred income tax liabilities |
1 134 |
1 136 |
1 130 |
Long-term provisions |
75 |
34 |
45 |
Total non-current
liabilities |
11 273 |
39 207 |
39 359 |
TOTAL LIABILITIES |
46 135 |
69 752 |
45 933 |
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 |
1 134 |
1 134 |
Revaluation reserve |
2 012 |
2 984 |
2 012 |
Retained earnings |
34 886 |
25 832 |
35 178 |
TOTAL EQUITY |
55 031 |
46 949 |
55 323 |
TOTAL LIABILITIES AND
EQUITY |
101 166 |
116 701 |
101 256 |
Consolidated interim statements of comprehensive
income
in thousands of euros |
2023 6M |
2022 6M |
2023 Q2 |
2022 Q2 |
2022 12M |
CONTINUING
OPERATIONS |
|
|
|
|
|
Operating income |
|
|
|
|
|
Revenue |
16 112 |
31 194 |
2 697 |
23 278 |
65 654 |
Cost of goods sold |
-11 656 |
-21 832 |
-1 907 |
-16 474 |
-48 689 |
Gross profit |
4 456 |
9 362 |
790 |
6 804 |
16 965 |
|
|
|
|
|
|
Marketing expenses |
-299 |
-237 |
-166 |
-123 |
-498 |
Administrative expenses |
-2 656 |
-2 658 |
-1 282 |
-1 209 |
-4 946 |
Other income |
0 |
8 |
0 |
8 |
6 278 |
Other expenses |
0 |
-62 |
0 |
-56 |
-142 |
Operating profit/
loss |
1 501 |
6 413 |
-658 |
5 424 |
17 657 |
|
|
|
|
|
|
Financial income |
88 |
2 |
68 |
0 |
3 |
Financial expense |
-1 876 |
-2 304 |
-1 002 |
-1 078 |
-4 211 |
Profit / loss before income
tax |
-287 |
4 111 |
-1 592 |
4 346 |
13 449 |
Income tax |
-5 |
-5 |
-3 |
11 |
3 |
Net
profit / loss for the period |
-292 |
4 106 |
-1 595 |
4 357 |
13 452 |
|
|
|
|
|
|
Other comprehensive income, net
of income tax |
|
|
|
|
|
Net change in asset revaluation
reserve |
0 |
0 |
0 |
0 |
-972 |
Total comprehensive
income |
-292 |
4 106 |
-1 595 |
4 357 |
12 480 |
|
|
|
|
|
|
Earnings per share for the period
€ |
-0.01 |
0.07 |
-0.03 |
0.08 |
0.24 |
The full report can be found in the file attached.
Angelika AnnusCFO+372 614 4920prokapital@prokapital.ee
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