MANAGEMENT REPORT FOR 6 MONTHS OF 2019
General information
UPP Olaines OÜ (hereafter 'the Company') was established for the purpose of
funding, acquiring and managing the real estate investment of Olaines Logistics
Park: (buildings and land) located at "Sharlotes", Olaines county, Olaines
parish, Latvia, cadastre number 8080 003 0029, registered in the Land Register
compartment No.5439 of the city of Olaine parish. The Company was established on
24.08.2017 and had no economic activity until 15.12.2017, when it acquired the
cold storage warehouse Olaines Logistics Park.
The business performance is not affected by seasonal factors. The activities of
the Company have no environmental or social impact.
As the Company has been established solely for the purpose of funding, acquiring
and managing the property, no strategic changes in the business are planned.
The management board is aware of no trends, uncertainties, demands, commitments
or events that are reasonably likely to have a material effect on the Company's
prospects for the period after the reporting period of these financial
statements outside the course of its regular business activities.
UPP Olaines OÜ is operating based on going concern.
Management commentary for the reporting period
During Q2 2019 the company made 600,653 EUR in operating income and during the
first half of 2019 the operating income amounted to 1,244,800 EUR in total.
Compared to Q2 2018 the income has decreased by 6.6% and the semi-annual
operating income increased by 8.3% compared to the same period in 2018. The
company suffered a penalty in the amount of 15,000 EUR by Finantsinspektsioon
because it failed to publish the 2018 audited annual results in time, which had
minor effect on Q2 2019 results. The overall increase in semi-annual operating
profit is due to the transaction costs which occurred in the first half of 2018.
During Q2 2019 the company's financial expenses amounted to 413,416 EUR and
during first half of 2019 the financial expenses amounted to 790,090 EUR in
total. Compared to Q2 2018 the financial expenses have decreased by 40%, the
semi-annual financial expenses decreased by 19.7% compared to the same period in
2018. The decrease in financial expenses is related to the initial recognition
of interest rate swap which occurred in Q2 2018. In terms of cash flows the
servicing of obligations has remained on similar level throughout reporting
periods. The slight increase in repayments of obligations during first half of
2019 is due to the grace period in Q1 2018 during which the company did not
repay investment loan principal for three months.
The company's sole business activity is to collect rental revenue, manage the
Olaine property and service its liabilities to lenders and investors.
Liabilities include the subordinated bonds with a fixed interest rate and the
investment loan which' rate is also fixed with an interest rate swap agreement.
On the revenue side the company earns stable triple-net rental income from
reputable tenants, which is fixed with medium-term agreements but is subject to
indexation. Due to the economically fixed nature of the company, there needs to
be major event in the overall economy or in the company's business activities
for them to have significant effect on the company's financial results.
As of reporting date all regular business operations of the company are running
smoothly, including duly and timely collection of rental and utilities payments
from the tenants.
As of the end of Q2 2019, there is no vacancy in the premises.
Management board and supervisory board
The management board of UPP Olaines OÜ has one member: Marko Tali, the chairman
of the management board.
The supervisory board of UPP Olaines OÜ has three members: Mart Tooming, Tarmo
Rooteman, Hallar Loogma.
No remuneration or other benefits have been allotted to the members of the
management board and supervisory board.
There are no employees in the company besides the members of the management and
supervisory board.
Key indicators of financial performance and position for 6 months 2019
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(in EUR) Q2 2019 Q2 2018 6 months 2019 6 months 2018
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Net rental income 639,720 653,579 1,291,518 1,278,097
Operating profit 600,653 643,001 1,244,800 1,148,914
Profit for the
period 187,237 (50,226) 454,710 164,489
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(in EUR) 30.06.2019 31.12.2018
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Investment property 30,762,000 30,762,000
Interest-bearing loans 29,124,633 29,656,633
Interest-bearing loans less
shareholder loan 26,076,333 26,608,333
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6 months 2019
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Net profit margin (Total comprehensive income for the
period / Net rental income) 35%
ROA (Net profit for the period / Average total assets
for the period) 1.4%
DSCR (Operating profit / Loan principal and interest
payments on interest-bearing loans) 1.1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed consolidated interim statement of comprehensive income
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(in EUR) Note Q2 2019 Q2 2018 6 months 2019 6 months 2018
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Net rental income 5 639,720 653,579 1,291,518 1,278,097
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Net rental income 639,720 653,579 1,291,518 1,278,097
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General and
administrative expenses (24,067) (10,578) (31,718) (129,183)
Other income / (cost) (15,000) 0 (15,000) 0
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Operating profit 600,653 643,001 1,244,800 1,148,914
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Financial income /
(cost) (413,416) (693,227) (790,090) (984,425)
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Profit before income
tax 187,237 (50,226) 454,710 164,489
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Profit for the period 187,237 (50,226) 454,710 164,489
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Total comprehensive
income for the period 187,237 (50,226) 454,710 164,489
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Condensed consolidated interim statement of financial position
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(in EUR Note 30.06.2019 31.12.2018
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Cash and cash equivalents 598,495 426,691
Trade and other receivables 257,542 300,576
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Total current assets 856,037 727,267
Investment property 30,762,000 30,762,000
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Total non-current assets 30,762,000 30,762,000
TOTAL ASSETS 31,618,037 31,489,267
Trade and other payables 470,681 446,036
Financial derivatives 598,294 416,879
Loans and borrowings 6 1,064,000 1,064,004
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Total current liabilities 2,132,975 1,926,919
Loans and borrowings 6 28,060,633 28,592,629
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Total non-current liabilities 28,060,633 28,592,629
TOTAL LIABILITIES 30,193,608 30,519,548
Share capital 2,500 2,500
Retained earnings 1,421,929 967,219
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TOTAL EQUITY 1,424,429 969,719
TOTAL EQUITY AND LIABILITIES 31,618,037 31,489,267
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Siim Sild
Director
+372 5626 0107
siim.sild@unitedpartners.ee
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