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Manused
ProKapital-10001459911-en.pdf
ProKapital-10001459913-et.pdf
Keeleversioonid
Keel English
Valuuta
Pealkiri Consolidated Interim Report for IV Quarter and 12 Months of 2018 (Unaudited)
Tekst
MANAGEMENT REPORT

Chairman's summary

The  year 2018 has  been significant  for Pro  Kapital, with respect to reaching
important  milestones  in  the  operations  which  in  turn  is  demonstrated by
financial  performance of the  Company. We have  shown stable growth through our
business and continue to focus on improving our results.

Pro  Kapital aims to strengthen its position as one of the largest and strongest
real-estate  companies  in  the  Baltics,  with  more  than ever emphasis on all
aspects  of the business.  I'm especially glad  to highlight that  in the fourth
quarter  of 2018, Pro Kapital opened a one  of a kind shopping and entertainment
centre  T1 Mall  of Tallinn,  right at  the heart  of the  future transportation
centre  of Tallinn. This new  landmark will continue to  grow and is expected to
welcome  a unique ferris wheel to be installed  on the roof of the mall in early
spring of 2019.

As  of 19 November 2018, the  Company's shares are  traded on the Nasdaq Tallinn
Stock  Exchange  Main  List.  We  are  more  than ever dedicated in building new
communities  and aspire sharing our story with  investors as equally as with the
public.

Building new communities

Our  business  is  not  merely  about  building  houses  but establishing entire
communities  and improving  the living  environment. The  Company has nearly 25
years of experience identifying upcoming opportunities and thereby add new value
to the areas of development. One of the most significant ongoing developments in
Tallinn, the Kristiine City area, allows to expect increase in real-estate price
in the entire surrounding area. We develop in multiple phases and have completed
six  of ten Kristina Houses, in one of  the ongoing phases of the whole area. We
have  sold 155 new  homes in  five apartment  buildings and  completed the sixth
building  in  December  2018 with  8 flats  yet  to  be sold. Development of the
following  four Kristina Houses is currently  ongoing. With active presale being
carried  out simultaneously to construction works, altogether 43 apartments have
been presold.

Pro  Kapital is  in progress  with projecting  works for a prestigious Kalaranna
residential  and commercial  area, right  at the  border of  Tallinn's old town.
Kalaranna's  unique location just by  the bay of Tallinn  is making it as one of
the  most  exclusive  development  projects  in  town. As a result of increasing
interest  towards the project, we have started with initial reservations in July
2018. Although  we have  not yet  started the  construction nor  advertising, we
have, to date, made 76 reservations to residential premises in Kalaranna.

In  Riga, we are building  Kliversala residential area which  is a true sight to
see  in the city centre. The new living area is located right on the bank of the
Daugava river on the shore of Agenskalna bay. We finished the construction works
of  the  prestigious  River  Breeze  Residence  in spring 2018. We are currently
proceeding  with the sales  of remaining 37 luxury  apartments in the residence.
Following  the  completion  and  ongoing  sale  of River Breeze Residence, we're
proceeding  with the following  phase of Kliversala,  but also other development
projects.  Tallinas  residential  quarter  is  a  modern  combination of new and
restored  historical  buildings,  for  which  the  projecting works are ongoing.
Another  new area  development Zvaigznes  Quarter, for  which the  projecting is
ongoing  at this point in  time, represents a commercial  property for an office
complex and be built on the site of a former factory.

In  Vilnius, Pro Kapital is developing a Shaltini? Namai area, bordering with and
offering  a stunning view from the top-hill  to the historic old town. The first
phase  of  yhe  development  is  completed  and  almost  sold  out.  In 2017 the
construction works for the second stage of residential buildings, Shaltini? Namai
Attico,  started and  77 preliminary agreements  have been  already signed. Four
buildings  of Shaltini? Namai Attico development  are expected to be completed in
the  middle  of  2019. The  Company  is  looking  into  obtaining new attractive
developments  in  the  region,  to  start  new  projects after the completion of
Shaltini? Namai.

Continuous improvement in the financial results

The  completion of multiple development phases,  that have proven to attract the
market's  interest, is  clearly demonstrated  by good  financial results for the
reporting  period. At the end  of 2018, the Company recorded  net revenue of 28
million  euros, an increase of 99% as  compared to 14.1 million euros during the
same  period  in  2017. Revenues  have  increased  in real estate segment due to
completion of 4 apartment buildings in Tallinn and 1 in Riga as the revenues are
recorded  at the moment notary deed of sale is concluded. The net profit was 18
million euros, which was 18.5 million euros improvement comparing to 0.5 million
euros  loss during  the same  period in  2017. The net  result was significantly
influenced  by  increased  value  of  investment  property due to completion and
opening of T1 Mall of Tallinn.
We  are  continuously  focused  on  improving  the  efficiency.  The  Company is
exploring  opportunities to reduce  financial costs by  refinancing current debt
instruments.  We foresee stable growth in  revenues and operating results during
the upcoming periods.

As  at the end of 2018, the  Company's overall loans from financial institutions
were  83.3 million euros.  The loans  from the  minority shareholders  were 0.3
million  euros. The Company had 10.2 million  euros worth convertible bonds debt
and 28.5 million euros worth non-convertible bonds debt.

As  at 31 December 2018, there  were 89 employees working  in the Company, 40 of
them were employed by the hotel and property maintenance business.

Paolo Michelozzi
CEO

Key financials

The  total revenue of  the Company in  2018 was 28.0 million euros,  which is an
increase  of 99% compared to  12.1 million euros from  continuing operations and
14.1 million  euros including discontinued operations  during the same period in
2017. The  total revenue  of the  fourth quarter  of 2018 was  6.9 million euros
compared  to 4.3 million euros  during the same  period of 2017. 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 2018 was influenced by the completion of the 4(th), 5(th) and 6(th)
apartment  buildings in the  Kristina Houses development  in Tallinn, renovation
works  of Marsi  6 in Tallinn  and River  Breeze Residence  in Riga, as presales
realized in notarised sales transactions.
The  gross profit of  2018 was 9.6 million euros,  which is an  increase of 78%
compared  to 4.6 million euros  for continuing operations  and 5.4 million euros
including  discontinued  operations  during  the  same period in 2017. The gross
profit  of the  fourth quarter  of 2018 was  2.7 million euros  compared to 2.1
million euros during the same period in 2017.
The  operating result of 2018 increased by  19.1 million euros, totalling to the
operating  profit of 21.5 million euros compared  to profit of 1.8 million euros
for continuing operations and profit of 2.4 million euros including discontinued
operations  during 12 months of 2017. The operating profit of the fourth quarter
in  2018 was 16.7 million euros comparing to 1.2 million euros profit during the
same  period  in  2017. Operating  result  includes  profit  from revaluation of
investment  properties. Total  impact from  revaluation in  2018 is 18.0 million
euros (Note 7).
The  net result of  2018 increased by 18.5 million  euros, totalling to positive
result  of  18.0 million  euros  compared  to  the loss of 1.0 million euros for
continuing  operations  and  loss  of  0.5 million  euros including discontinued
operations  during 12 months  of 2017. The  net profit  of the fourth quarter in
2018 was 15.8 million euros compared to 0.9 million euros profit during the same
period in 2017.
Cash  used in  operating activities  was -1.0  million euros in 2018 compared to
-5.3  million euros  during 2017.  In  the fourth  quarter of  2018 cash used in
operating  activities was  -4.5 million  euros comparing  to -2.2  million euros
during same period in 2017.
Net  assets per  share on  31 December 2018 totalled  to 1.80 euros  compared to
1.46 euros on 31 December 2017.

                                                         |   Continuing and
                                                         |    discontinued
                          Continuing operations          |     operations
---------------------------------------------------------+---------------------
 in thousands of                2017 12M                 |             2017 12M
 euros           2018 12M        adjusted 2018 Q4 2017 Q4|2018 12M     adjusted
---------------------------------------------------------+---------------------
                                                         |
                                                         |
 Revenue           27 991          12 077   6 948   4 281|  27 991       14 098
                                                         |
 Gross profit       9 576           4 561   2 684   2 056|   9 576        5 380
                                                         |
 Gross profit, %      34%             38%     39%     48%|     34%          38%
                                                         |
 Operating                                               |
 result            21 467           1 797  16 688   1 155|  21 467        2 385
                                                         |
 Operating                                               |
 result, %            77%             15%    240%     27%|     77%          17%
                                                         |
 Net result        18 040            -953  15 761     922|  18 040         -518
                                                         |
 Net result, %        64%             -8%    227%     22%|     64%          -4%
                                                         |
                                                         |
 Earnings per                                            |
 share, EUR          0,30           -0,02    0,26    0,02|    0,30        -0,01

2017 12M adjusted - comparative information from the annual audited report 2017.

  in thousands of euros                 31.12.2018   31.12.2017
----------------------------------------------------------------


  Total Assets, th EUR                     245 105      175 158

  Total Liabilities, th EUR                144 383       92 476

  Total Equity, th EUR                     100 722       82 682

  Debt / Equity *                             1,43         1,12



  Return on Assets, % **                      8,6%        -0,3%

  Return on Equity, % ***                    19,7%        -0,6%

  Net asset value per share, EUR ****         1,78         1,46


   *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                                31.12.2018   31.12.2017
-------------------------------------------------------------------------------
  ASSETS

  Current assets

      Cash and cash equivalents                             7 040       10 317

      Current receivables                                   2 937        4 888

      Inventories                                          59 331       38 024
                                                     --------------------------
  Total current assets                                     69 308       53 229

  Non-current assets

      Non-current receivables                                 216           37

      Property, plant and equipment                         7 128        7 435

      Investment property                                 168 129      114 140

      Intangible assets                                       324          317
                                                     --------------------------
  Total non-current assets                                175 797      121 929

  TOTAL ASSETS                                            245 105      175 158



  LIABILITIES AND EQUITY

  Current liabilities

      Current debt                                         10 328        6 738

      Customer advances                                     5 716        7 224

      Current payables                                     11 939       10 091

      Tax liabilities                                         357          132

      Short-term provisions                                   852          170
                                                     --------------------------
  Total current liabilities                                29 192       24 355

  Non-current liabilities

      Long-term debt                                      112 009       62 527

      Other non-current payables                            1 039        3 437

      Deferred income tax liabilities                       2 004        2 058

      Long-term provisions                                    139           99
                                                     --------------------------
  Total non-current liabilities                           115 191       68 121

  TOTAL LIABILITIES                                       144 383       92 476



  Equity attributable to owners of the Company

      Share capital in nominal value                       11 338       11 338

      Share premium                                         5 661        5 661

      Statutory reserve                                     1 082        1 082

      Revaluation reserve                                   3 262        3 256

      Retained earnings                                    59 944       60 369

      Profit/ Loss for the period                          16 811         -419
                                                     --------------------------
  Total equity attributable to owners of the Company       98 098       81 287

  Non-controlling interest                                  2 624        1 395

  TOTAL EQUITY                                            100 722       82 682



  TOTAL LIABILITIES AND EQUITY                            245 105      175 158



Consolidated interim statements of comprehensive income

 in thousands of euros              2018 12M 2017 12M adjusted 2018 Q4  2017 Q4
-------------------------------------------------------------------------------
 CONTINUING OPERATIONS

 Operating income

 Revenue                              27 991            12 077    6 948   4 281

 Cost of goods sold                  -18 415            -7 516   -4 264  -2 210
                                   --------------------------------------------
 Gross profit                          9 576             4 561    2 684   2 071



 Marketing expenses                   -1 336              -822     -630    -186

 Administrative expenses              -5 427            -5 256   -1 390  -1 478

 Other income                         18 823             4 114   16 144     748

 Other expenses                         -169              -800     -120       0
                                   --------------------------------------------
 Operating profit                     21 467             1 797   16 688   1 155



 Financial income                          4                 6        1       3

 Financial expense                    -3 473            -3 352     -925    -817
                                   --------------------------------------------
 Profit/ loss before income tax       17 998            -1 549   15 764     341

 Income tax                               42               596       -3     582
                                   --------------------------------------------
 Profit/ loss from continuing
 operations                           18 040              -953   15 761     923



 Profit from discontinued
 operations                                0               435        0       0

 Profit/ loss for the period          18 040              -518   15 761     923



 Attributable to:

 Equity holders of the parent         16 811              -419   14 491     955

 Non-controlling interest              1 229               -99    1 270     -32



 Other comprehensive income,
 net of income tax

 Income that will not be
 reclassified
 subsequently to profit

 Net change
 in properties revaluation reserve         0                -4        0       3

 Total comprehensive income
 for the year                         18 040              -522   15 761     926

 Attributable to:

 Equity holders of the parent         16 811              -419   14 491     955

 Non-controlling interest              1 229               -99    1 270     -32



 Earnings per share
 from continuing operations (EUR)       0.30             -0.02     0.26    0.02

 Earnings per share for the period
 (EUR)                                  0.30             -0.01     0.26    0.02



Consolidated interim statements of cash flows

                                                      2017 12M
 in thousands of euros                       2018 12M adjusted 2018 Q4  2017 Q4
-------------------------------------------------------------------------------
 Cash flows from operating activities

 Profit/loss for the period                    18 040     -518   15 762     923

 Adjustments for:

   Depreciation, amortisation of non-current
 assets                                           214      455       56     -20

   Gain from disposal of property, plant,
 equipment                                         -4   -3 045        0       0

   Gain from disposal of investment property     -418        0        0       0

   Change in fair value of property, plant,
 equipment                                        -13      -26      -13     -26

   Change in fair value of investment
 property                                     -17 979     -530  -16 069    -530

   Loss from disposal of shares of
 subsidiaries                                       0      346        0       0

   Finance income and costs                     3 468    3 460      923     815

   Other non-monetary changes (net amounts)    15 345   12 410   -1 428    -683

 Changes in working capital:

   Trade receivables and prepayments            1 773     -408      931    -833

   Inventories                                -21 248  -23 880   -2 611  -4 221

   Liabilities and prepayments                   -119    6 556   -1 420   2 367

   Provisions                                    -107     -101     -609      23
                                            -----------------------------------
 Net cash used in operating activities         -1 048   -5 281   -4 478  -2 186



 Cash flows from investing activities

 Payments for property, plant and equipment      -206     -281      -40    -127

 Payments for intangible assets                   -24      -52      -17     -22

 Proceeds from disposal of property, plant,
 equipment                                        336    6 651        0       0

 Payments for investment property             -47 786  -24 772  -16 702  -7 424

 Proceeds from disposal of investment
 property                                       1 000        0    1 000       0

 Net cash from disposal of shares of
 subsidiaries                                       0    6 249        0       0

 Interests received                                 4        6        1       2
                                            -----------------------------------
 Net cash used in by investing activities     -46 676  -12 199  -15 758  -7 571



 Cash flows from financing activities

 Proceeds from increase of share capital            0    4 328        0   4 328

 Dividend payment                                -850        0        0       0

 Net changes related to non-controlling
 interests                                          0     -480        0       0

 Proceeds from bonds                                0    1 446        0       0

 Redemption of convertible bonds                 -649     -773       -6       0

 Proceeds from borrowings                      56 923   28 260   23 449   8 984

 Repayment of borrowings                       -7 496   -7 048   -1 987    -909

 Interests paid                                -3 481   -3 318   -1 259  -1 122
                                            -----------------------------------
 Net cash generated by financing activities    44 447   22 415   20 197  11 281



 Net change in cash and cash equivalents       -3 277    4 935      -39   1 524

 Cash and cash equivalents at the beginning
 of the period                                 10 317    5 382    7 079   8 793

 Cash and cash equivalents at the end of the
 period                                         7 040   10 317    7 040  10 317


2017 12M adjusted - comparative information from the annual audited report 2017.

Full report is in the file attached.

Allan Remmelkoor
Member of the Board
+372 614 4920
prokapital@prokapital.ee

Attachment

  * PKG Q4 2018 ENG (https://ml-eu.globenewswire.com/Resource/Download/85f7d80c-
    dcec-40aa-b720-8c1499d68999)