During 2018, the Group earned a free cash flow of EUR 3.151 million (12 months
of 2017: EUR 2.408 million). Following the deduction of Lithuanian income tax
expense and the calculation of the dividend income tax expense in Estonian and
Latvian companies, EfTEN Real Estate Fund III would be able to pay net dividends
according to the fund's dividend policy (80% from free cashflow as bruto
dividends) to the shareholders in the total amount of EUR 2.378 million (74
cents per share) from the profit earned in this year. However, the Group's cash
balance at the end of 2018 allows to pay more dividends than the dividend policy
establishes, which is why the Management Board of the Fund proposes to the
Council and to the General Meeting of Shareholders in the spring of 2019 to pay
a dividend of EUR 3.055 million (95 cents per share), which is 28% higher
dividend than sets the fund's the dividend policy. For the entire previous year,
the fund paid the shareholders a net dividend of 68 cents per share.
Financial overview
The consolidated sales revenue of EfTEN Real Estate Fund III AS for 12 months of
2018 was EUR 8.672 million (12 months of 2017: EUR 7.300 million), which
increased by 19% in a year. The Group's profit before revaluation of investment
properties, cost of performance fee, depreciation and financial income/-costs
and income tax expense in 2018 totalled EUR 6.763 million (12 months of 2017:
EUR 5.659 million), which increased by 19.5% in a year. The Group's net profit
for the same period amounted to EUR 6.299 million (12 months of 2017: EUR 6.574
million). The smaller net profit in 2018 is due to lower investment property
revaluation profit, which in the current year was EUR 1.562 million, but EUR
2.855 million last year.
The consolidated gross profit margin in the 12 months of 2018 was 96% (12 months
of 2017: 98%). Therefore, expenses directly related to management of properties
(incl. land tax, insurance, maintenance and improvement costs) accounted for 4%
(12 months of 2017: 2%) of the revenue. The Group's expenses related to
properties, marketing costs, general expenses, other income and expenses
accounted for 22.3% of the revenue in 2018. The respective indicator was 22.8%
in the 12 months of 2017.
As at 31.12.2018, the Group's total assets were in the amount of EUR 108.503
million (31.12.2017: 97.291 million), including fair value of investment
property, which accounted for 95% (31.12.2017: 91%) of the total assets.
During 2018, the net asset value of the share of EfTEN Real Estate Fund III AS
increased by 8.9%. From the 2017 profit, EUR 2.191 million (in spring 2017: EUR
1.503 million) was paid out in dividends in April 2018. Without the dividend
payment, the Fund's NAV would have increased by 13.7% in 2018. Return on
invested capital (ROIC) was 17.6% in the 2018 financial year (12 months of
2017: 21.6%).
In 2018, the Group entered into new loan contracts in the total amount of EUR
7.692 million in connection with the acquisition of new investment properties.
In addition, the subsidiary which owns the Saules Miestas shopping center in
Lithuania refinanced its loan, receiving EUR 1.8 million of additional funds
that the Group used for investments in new projects. As at the end December, the
average interest rate on Group's loan agreements (including interest swap
contracts) was 1.8% (31.12.2017: 1.73%) and the LTV (Loan to Value) ratio was
52% (31.12.2017: the same).
The dividend policy of EfTEN Real Estate Fund III AS provides that the Group
will pay out 80% of the free cash flow to shareholders as (gross) dividends in
each accounting year. In April 2018, EfTEN Real Estate Fund III AS paid the
shareholders (net) dividends in the amount of EUR 2.191 million (2017: EUR 1.5
million).
Real estate portfolio
The Group invests in commercial real estate with a strong and long-term tenant
base. At the end of 2018, the Group had 10 (31.12.2017: 8) commercial investment
properties with a fair value as at the balance sheet date of EUR 102.787 million
(31.12.2017: EUR 88.4 million) and acquisition cost of EUR 94.627 million
(31.12.2017: EUR 81.7 million).
After the balance sheet date, on 6 February, 2019, the Group's subsidiary EfTEN
Kolmas OÜ acquired the properties of ABC Motor's sales and service center on
Paldiski highway. The acquisition cost of the properties is EUR 3 million and a
loan agreement was entered into in the amount of EUR 1.8 million for the
acquisition.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
4th quarter 12 months
--------------------------
2018 2017 2018 2017
-------------------------------------------------------------------------------
EUR thousand
------- --------
Revenue 2,329 1,965 8,672 7,300
------- --------
Cost of services sold -135 -91 -319 -167
--------------------------
Gross profit 2,194 1,874 8,353 7,133
------- --------
------- --------
Marketing costs -103 -109 -435 -444
------- --------
General and administrative expenses -389 -361 -1,225 -1,556
------- --------
Gain / loss from revaluation of investment
properties 600 539 1,562 2,855
------- --------
Other operating income and expense -4 32 3 45
--------------------------
Operating profit 2,298 1,975 8,258 8,033
------- --------
------- --------
Finance costs -380 -189 -1,096 -691
--------------------------
Profit before income tax 1,918 1,786 7,162 7,342
------- --------
------- --------
Income tax expense -167 -510 -863 -768
--------------------------
Total comprehensive income for the financial period 1,751 1,276 6,299 6,574
-------------------------------------------------------------------------------
Earnings per share
------- --------
- Basic 0.54 0.42 1.96 2.39
------- --------
- Diluted 0.54 0.42 1.96 2.39
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31.12.2018 31.12.2017
--------------
EUR thousand
--------------
ASSETS
--------------
Cash and cash equivalents 4,859 8,133
--------------
Receivables and accrued income 673 641
--------------
Prepaid expenses 46 37
--------------
Total current assets 5,578 8,811
--------------
--------------
Long-term receivables 24 49
--------------
Investment property 102,787 88,390
--------------
Property, plant and equipment 114 37
--------------
Intangible assets 0 4
--------------
Total non-current assets 102,925 88,480
--------------------------
TOTAL ASSETS 108,503 97,291
-----------------------------------------------------------
--------------
LIABILITIES AND EQUITY
--------------
Borrowings 8,105 2,109
--------------
Derivative instruments 189 58
--------------
Payables and prepayments 1,019 1,848
--------------------------
Total current liabilities 9,313 4,015
--------------
--------------
Borrowings 44,743 43,667
--------------
Other long-term liabilities 457 360
--------------
Deferred income tax liability 3,496 2,864
--------------
Total non-current liabilities 48,696 46,891
--------------------------
Total liabilities 58,009 50,906
--------------
--------------
Share capital 32,225 32,225
--------------
Share premium 3,658 3,658
--------------
Statutory reserve capital 621 293
--------------
Retained earnings 13,990 10,209
--------------------------
Total equity 50,494 46,385
--------------------------
TOTAL LIABILITIES AND EQUITY 108,503 97,291
-----------------------------------------------------------
Marilin Hein
CFO
Phone 655 9515
E-mail: marilin.hein@eften.ee
Attachment
* EfTEN_Real_Estate_Fund_III_12months_IV quarter_interim_report_2018_ENG
(https://ml-eu.globenewswire.com/Resource/Download/660db579-cee0-4326-a938-
d673e17a8c84)
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