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