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Ettevõte Baltic Horizon Fund / Northern Horizon Capital AS
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Kategooria Majandusaasta aruanne
Avaldamise aeg 20 märts 2020 20:45:00 +0200
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BalticHori-10003261791-en.pdf
BalticHori-10003261793-et.pdf
BalticHori-10003261794-et.pdf
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Pealkiri BALTIC HORIZON FUND CONSOLIDATED AUDITED RESULTS FOR 2019
Tekst
Management  Board  of  Northern  Horizon  Capital  AS  has  approved the audited
financial  results  of  Baltic  Horizon  Fund  (the Fund) for the year 2019. The
financial  results remained unchanged compared  to the preliminary disclosure on
14 February 2020.

Distributions to unitholders for 2019 Fund results
In  total, the Fund declared a cash distribution of EUR 11,309 thousand from the
operating  results of 2019 (EUR 2,449 thousand  from Q1 2019, EUR 2,624 thousand
from  Q2 2019, EUR  3,061 thousand from  Q3 2019 and  EUR 3,175 thousand from Q4
2019). Dividends  for the operating results of  2019 correspond to a gross yield
of  8.0% based on the closing price on  the Nasdaq Tallinn Stock Exchange at 31
December 2019.

Net profit and net rental income
In  2019, the Group recorded a  net profit of EUR  8.8 million, which was a down
12.0%, compared  to net  profit of  EUR 10 million  for 2018. The net profit was
largely  affected by the lower investment  property value gains during the year.
Portfolio  valuations largely remained at the same level as at the end of 2018.
Excluding  the effect  of valuation  gains (losses),  net profit  from operating
performance  grew by  36.1%. Net profit  was also  significantly impacted by the
increase  in net  rental income  and net  financing costs.  The increase  in net
financing costs arose from a higher average cost of financing. Earnings per unit
were EUR 0.09 (2018: EUR 0.13).

During  the year,  the Group  recorded a  net rental  income of EUR 19.2 million
compared  to EUR  14.8 million in  2018. The increase  was achieved  through new
acquisitions  that  were  made  following  the  capital  raisings  in  2019. The
acquisition  of  the  largest  asset  in  the  portfolio (Galerija Centrs) had a
significant  effect on  the Group's  net rental  income growth for 2019 and will
continue to have a positive impact on the net rental income in the future. On an
EPRA  like-for-like basis, portfolio rental income decreased by 1.6% compared to
2018 mainly  due to  Pirita and  Postimaja higher  vacancies and  concept change
preparations.

Portfolio  properties in  the office  segment contributed 50.8% (2018: 51.1%) of
net  rental  income  in  2019 followed  by  the retail segment with 43.8% (2018:
42.2%) and the leisure segment with 5.4% (6.7%).

During  the  year,  investment  properties  in  Latvia and Lithuania contributed
37.2% (2018:   51.1%) and   35.0% of   net  rental  income  respectively,  while
investment properties in Estonia contributed 27.8% (2018: 42.2%).

Gross Asset Value (GAV)
At  the end of 2019, the GAV increased  to EUR 371.7 million (31 December 2018:
EUR  260.9 million) which  was a  rise of  42.5% over the  year. The increase is
mainly  related to new acquisitions during the  year and the start of the Meraki
development project. The Fund completed the acquisitions of the Duetto II office
building, the Galerija Centrs Shopping Centre and the North Star Business Centre
and  thus deployed most of the new capital  raised in 2019. The Fund aims to use
the  remaining capital to finance the construction of the Meraki office building
in 2020.

Net Asset Value (NAV)
During  2019, the Fund NAV increased from EUR 109.8 million to EUR 152.5 million
as compared to the end of 2018. The increase is related to new equity raised and
the  Group's operational performance over  the year. The Fund  raised a total of
EUR  44.7 million net equity through private  placements in April, May, July and
October  and  generated  almost  EUR  8.8 million  in  net  profit. The Fund NAV
increase  was  offset  by  a  EUR  10.3 million  dividend  distribution  to  its
unitholders  and a negative cash flow hedge reserve movement of EUR 0.6 million.
At  31 December 2019, NAV  per unit  stood at  EUR 1.3451 (31 December 2018: EUR
1.3988), while  NAV per unit based on EPRA standards was EUR 1.4333 (31 December
2018: EUR 1.5101).

Investment properties
Baltic  Horizon Fund portfolio consists of 15 cash flow investment properties in
the  Baltic capitals  and investment  property under  construction on the Meraki
land  plot. At the end of 2019, the  appraised value of the Fund's portfolio was
EUR  358.9 million  (2018:  EUR  245.2 million).  Despite  some  NOI  increases,
valuations  were also  affected by  a decrease  in the  Baltic States' inflation
rates,  which are used for rent indexation, and an increase in the expected cost
of  debt, taken into account  in the valuation discount  rates. During the year,
the  Group  invested  EUR 0.7  million  of  capital  expenditure in the existing
property  portfolio and an additional EUR  0.7 million in the Meraki development
project.

Interest bearing loans and bonds
Interest  bearing  loans  and  bonds  increased  to EUR 205.8 million (2018: EUR
140.5 million)  which was a rise of  46.5% over the year. During 2019, the Group
received  external financing of  EUR 67.4 million (bank  loans and bonds), which
was used to further expand the Fund's investment portfolio.

Cash flow
Cash flow from core operating activities for the year 2019 amounted to EUR 16.4
million (2018: EUR 10.4 million). Cash flow for investments amounted to EUR 78.2
million  (2018: EUR  56.4 million). Investments  consisted of subsequent capital
expenditure and acquisitions of investment properties and the subsidiary Tampere
Invest SIA, which owns Galerija Centrs. Cash flow from financing activities rose
to  EUR 59.4 million  (2018: EUR  33.7 million). During  the year, the Fund drew
down several bank loans amounting to EUR 57.4 million and completed a subsequent
bond  subscription in an  amount of EUR  10 million. The proceeds  from the bank
loans, bond issue and issue of new units (EUR 44.7 million) were used to acquire
new  properties. The Group's total  cash balance at the  end of 2019 amounted to
EUR 9.8 million.

Key earnings figures

 EUR '000                                         2019          2018 Change (%)
-------------------------------------------------------------------------------
 Net rental income                              19,219        14,804      29.8%
-------------------------------------------------------------------------------
 Administrative
 expenses                                      (3,251)       (2,813)      15.6%
-------------------------------------------------------------------------------
 Other operating income                             26            74    (64.9%)
-------------------------------------------------------------------------------
 Valuation gains (losses) on investment
 properties                                    (2,064)         2,014   (202.5%)
-------------------------------------------------------------------------------
 Operating profit                               13,930        14,079     (1.1%)
-------------------------------------------------------------------------------
 Net financing
 costs                                         (4,713)       (2,781)      69.5%
-------------------------------------------------------------------------------
 Profit before tax                               9,217        11,298    (18.4%)
-------------------------------------------------------------------------------
 Income tax                                      (426)       (1,308)    (67.4%)
-------------------------------------------------------------------------------
 Net profit for the
 period                                          8,791         9,990    (12.0%)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Weighted average number of units
 outstanding (units)                        96,718,348 78,764,895(1)      22.8%
-------------------------------------------------------------------------------
 Earnings per unit
 (EUR)                                            0.09          0.13    (30.8%)
-------------------------------------------------------------------------------

Key financial position figures

 EUR '000                                  31.12.2019    31.12.2018 Change (%)
------------------------------------------------------------------------------
 Investment properties in use                 356,575       245,160      45.4%
------------------------------------------------------------------------------
 Investment property under
 construction                                   2,367             -          -
------------------------------------------------------------------------------
 Gross asset value (GAV)                      371,734       260,878      42.5%
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 Interest bearing loans and
 bonds                                        205,827       140,507      46.5%
------------------------------------------------------------------------------
 Total
 liabilities                                  219,216       151,073      45.1%
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 Net asset value (NAV)                        152,518       109,805      38.9%
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 Number of units outstanding
 (units)                                  113,387,525 78,496,831(1)      44.4%
------------------------------------------------------------------------------
 IFRS Net asset value (IFRS NAV) per
 unit (EUR)                                    1.3451        1.3988     (3.8%)
------------------------------------------------------------------------------
 EPRA Net asset value (EPRA NAV) per
 unit (EUR)                                    1.4333        1.5101     (5.1%)
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 Loan-to-Value ratio (%)                        57.3%         57.3%          -
------------------------------------------------------------------------------
 Average effective interest rate
 (%)                                             2.6%          2.4%          -
------------------------------------------------------------------------------

 1. The number of units excludes 255,969 units acquired by the Fund as part of
    the unit buy-back program.

During 2019, the average actual occupancy of the portfolio was 96.8% (2018:
97.6%). Taking into account all rental guarantees, the effective occupancy rate
was 97.5% (2018: 98.0%). Occupancy rate as of 31 December 2019 was 98.3%.
Average direct property yield during 2019 was 6.6% (2018: 6.8%). The net initial
yield for the whole portfolio for 2019 was 6.3% (2018: 6.5%). The decrease is
mainly related to the acquisition of new properties with lower yields (e.g.
Galerija Centrs) and weaker like-for-like performance of some of the retail
assets in Tallinn. The average rent rate for the whole portfolio for 2019 was
EUR 13.1 per sq. m.

Investment Properties Performance

                                Fair              Direct        Net   Occupancy
 Property name   Sector     value(1)      NLA   property    initial    rate for
                          (EUR '000) (sq. m.)   yield(2)   yield(3)        2019
-------------------------------------------------------------------------------
 Vilnius,
 Lithuania
-------------------------------------------------------------------------------
 Duetto I        Office       16,460    8,586       7.7%       7.1%   100.0%(4)
-------------------------------------------------------------------------------
 Duetto II       Office       18,935    8,674       7.1%       7.2%   100.0%(4)
-------------------------------------------------------------------------------
 Europa SC       Retail       40,711   16,856       6.6%       6.1%       95.9%
-------------------------------------------------------------------------------
 Domus Pro       Retail
 Retail Park                  16,670   11,247       7.3%       6.7%       98.0%
-------------------------------------------------------------------------------
 Domus Pro       Office
 Office                        7,740    4,831       8.7%       7.5%      100.0%
-------------------------------------------------------------------------------
 North Star      Office       20,092   10,550       6.8%       6.9%       97.9%
-------------------------------------------------------------------------------
 Meraki Land                   2,367        -          -                      -
-------------------------------------------------------------------------------
 Total Vilnius               122,975   60,744       7.2%       6.7%       98.0%
-------------------------------------------------------------------------------
 Riga, Latvia
-------------------------------------------------------------------------------
 Upmalas Biroji  Office
 BC                           24,198   10,458       7.2%       6.7%      100.0%
-------------------------------------------------------------------------------
 Vainodes I      Office       20,890    8,052       6.9%       6.9%      100.0%
-------------------------------------------------------------------------------
 LNK Centre      Office       17,000    7,453       6.3%       6.3%      100.0%
-------------------------------------------------------------------------------
 Sky SC          Retail        4,850    3,254       7.4%       6.9%       99.4%
-------------------------------------------------------------------------------
 Galerija Centrs Retail       76,409   20,022       6.3%       6.2%       96.0%
-------------------------------------------------------------------------------
 Total Riga                  143,347   49,239       6.6%       6.5%       99.0%
-------------------------------------------------------------------------------
 Tallinn,
 Estonia
-------------------------------------------------------------------------------
 Postimaja & CC  Retail
 Plaza complex                32,250    9,145       4.2%       4.5%       91.2%
-------------------------------------------------------------------------------
 Postimaja & CC  Leisure
 Plaza complex                15,150    8,664       8.7%       7.0%      100.0%
-------------------------------------------------------------------------------
 G4S             Office
 Headquarters                 17,550    9,179       7.3%       6.5%       94.3%
-------------------------------------------------------------------------------
 Lincona         Office       17,820   10,871       8.1%       7.3%       99.4%
-------------------------------------------------------------------------------
 Pirita SC       Retail        9,850    5,508       3.6%       4.4%       91.2%
-------------------------------------------------------------------------------
 Total Tallinn                92,620   43,367       5.9%       5.8%       95.7%
-------------------------------------------------------------------------------
 Total portfolio             358,942  153,350       6.6%       6.3%       97.5%
-------------------------------------------------------------------------------

 1. Based on the latest valuation as at 31 December 2019 and recognised right-
    of-use assets.
 2. Direct property yield (DPY) is calculated by dividing NOI by the acquisition
    value and subsequent capital expenditure of the property.
 3. The net initial yield (NIY) is calculated by dividing NOI by the market
    value of the property.
 4. Effective occupancy rate is 100% due to a rental guarantee.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 EUR '000                                                          2019    2018
-------------------------------------------------------------------------------


 Rental income                                                   20,776  15,860

 Service charge income                                            4,525   2,760

 Cost of rental activities                                      (6,082) (3,816)
-------------------------------------------------------------------------------
 Net rental income                                               19,219  14,804
-------------------------------------------------------------------------------


 Administrative expenses                                        (3,251) (2,813)

 Other operating income                                              26      74

 Valuation gains (losses) on investment properties              (2,064)   2,014
-------------------------------------------------------------------------------
 Operating profit                                                13,930  14,079
-------------------------------------------------------------------------------


 Financial income                                                     5       8

 Financial expenses                                             (4,718) (2,789)
-------------------------------------------------------------------------------
 Net financing costs                                            (4,713) (2,781)


-------------------------------------------------------------------------------
 Profit before tax                                                9,217  11,298

 Income tax charge                                                (426) (1,308)
-------------------------------------------------------------------------------
 Profit for the period                                            8,791   9,990
-------------------------------------------------------------------------------


 Other  comprehensive income that is  or may be reclassified to
 profit or loss in subsequent periods

 Net gains (losses) on cash flow hedges                           (595) (1,013)

 Recognition of initial interest rate cap costs                       -    (33)

 Income tax relating to net gains (losses) on cash flow hedges       44      97
-------------------------------------------------------------------------------
 Other  comprehensive income (expense), net  of tax, that is or
 may be reclassified to profit or loss in subsequent periods      (551)   (949)


-------------------------------------------------------------------------------
 Total comprehensive income for the period, net of tax            8,240   9,041
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Basic and diluted earnings per unit (EUR)                         0.09    0.13
-------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

  EUR '000                                 31.12.2019   31.12.2018
-------------------------------------------------------------------


  Non-current assets

  Investment properties                       356,575      245,160

  Investment property under construction        2,367            -

  Derivative financial instruments                 73            9

  Other non-current assets                         54          596
-------------------------------------------------------------------
  Total non-current assets                    359,069      245,765
-------------------------------------------------------------------


  Current assets

  Trade and other receivables                   1,794        2,229

  Prepayments                                     301          154

  Other current assets                            734          505

  Cash and cash equivalents                     9,836       12,225
-------------------------------------------------------------------
  Total current assets                         12,665       15,113
-------------------------------------------------------------------
  Total assets                                371,734      260,878
-------------------------------------------------------------------


  Equity

  Paid in capital                             138,064       93,673

  Own units                                         -        (335)

  Cash flow hedge reserve                     (1,556)      (1,005)

  Retained earnings                            16,010       17,472
-------------------------------------------------------------------
  Total equity                                152,518      109,805
-------------------------------------------------------------------


  Non-current liabilities

  Interest bearing loans and borrowings       205,718      140,401

  Deferred tax liabilities                      6,199        5,844

  Derivative financial instruments              1,728        1,069

  Other non-current liabilities                 1,298          905
-------------------------------------------------------------------
  Total non-current liabilities               214,943      148,219
-------------------------------------------------------------------


  Current liabilities

  Interest bearing loans and borrowings           414          106

  Trade and other payables                      3,171        2,397

  Income tax payable                                8            -

  Other current liabilities                       680          351
-------------------------------------------------------------------
  Total current liabilities                     4,273        2,854
-------------------------------------------------------------------
  Total liabilities                           219,216      151,073
-------------------------------------------------------------------
  Total equity and liabilities                371,734      260,878
-------------------------------------------------------------------

For more information, please contact:

Tarmo Karotam
Baltic Horizon Fund manager
E-mail tarmo.karotam@nh-cap.com
www.baltichorizon.com

The  Fund is a registered contractual public closed-end real estate fund that is
managed  by Alternative Investment Fund  Manager license holder Northern Horizon
Capital  AS. Both  the Fund  and the  Management Company  are supervised  by the
Estonian Financial Supervision Authority.

This announcement contains information that the Management Company is obliged to
disclose  pursuant  to  the  EU  Market  Abuse  Regulation.  The information was
submitted  for publication,  through the  agency of  the above  distributors, at
20:15 EET on 20 March 2020.