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Avaldamise aeg 18 nov 2022 14:40:00 +0200
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PKG_Q3_2022_ENG draft FINAL1.pdf
PKG_Q3_2022_EST draft_FINAL.pdf
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Pealkiri Pro Kapital Council approved Consolidated Interim Report for III Quarter and 9 Months of 2022 (Unaudited)
Tekst
MANAGEMENT REPORT

CEO summary

The  third quarter of 2022 continued the trend we have seen in Q2, with a strong
demand  for real estate assets in the Baltic countries (particularly Estonia and
Lithuania).

The  market  still  seems  resilient,  despite  the negative sentiment caused by
raising interest rates and an overall bearish outlook of the global economy.

Local  and international investors still  seem to have a  strong interest in the
Baltic area, especially in the premium properties segment.

After  a few months where it seemed  impossible to fix a price with construction
companies,  due to  the volatility  in the  market of construction materials and
supplies,  there seem to be an increasing will from the local contractors to get
back to work, even at the cost of partially absorbing the development risks, and
the fluctuations in the cost of materials.

Real estate development

In  Tallinn, we  have continued  construction of  Kindrali Houses  and Kalaranna
projects.

In  Q3 of  2022 we finalised  handing over  all of  the apartments  in Kalaranna
project, where completion of eight buildings with the total of 240 apartments is
now achieved.

This  first phase of the Kalaranna project has  been a major success, and we are
currently  working alongside some local construction companies, who are studying
the  tender package. Our intention is to  start the mobilisation of the site for
the  next  phase  of  Kalaranna  (four  building  for a total of 146 apartments)
somewhere between Q1 and Q2 2023.

In Kindrali Houses, we have started the process of notarising deals in the first
two buildings (black and white building), which have now reached completion. The
third  building (red building) is expected to  be completed by the end of 2022.
All  in  all,  these  three  buildings comprise 195 residential and 1 commercial
units, all of which are sold.

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.
The  tendering process has  taken longer since  the company has  decided to look
into  various  value  engineering  options  to  mitigate  the risk of increasing
construction costs.

In  Vilnius,  we  only  have  4 unsold  apartments  in our Shaltiniu 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. The construction tendering for the following phase of city villas
and  a commercial  building is  now at  its final  stage are we are expecting to
enter  into an agreement  with the winning  bidder within November-December this
year and start the construction works within the 1st quarter of 2023.

Hotel operations

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.

Since  the ongoing works, the hotel's available  inventory has been only at 50%
for  a good part of  2022. Despite this, in the  first 9 months it has reached a
substantial  operative break-even, thanks to  a) the MICE (Meetings, Incentives,
Conferences and Exhibitions) coming back after a long pause due to the pandemic,
and  b) an increase in the Average Daily Rate (ADR) which is currently at 89.12
euro  (September data), a  substantial increase when  compared to the 81.07 euro
rate of September 2021.

In  conclusion, we  are confident  in our  abilities to navigate these turbulent
times,  thanks to our experience and to the resilience of the Baltic markets. We
maintain  our position  to expand  our current  inventory, by making intelligent
bets  on what we feel like the  market may absorb, thus 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 nine months of 2022 was 61.6 million euros,
having  increased more than  three times compared  to the reference period (2021
9M: 19.4 million euros). The total revenue of the third quarter was 30.4 million
euros compared to 12.1 million euros in 2021.

The  gross profit for nine months of 2022 has increased three times amounting to
16.2 million  euros compared to  5.3 million euros in  2021. The gross profit in
the third quarter reached 6.8 million euros (2021 Q3: 3.4 million euros).

The  operating result in  nine months of  2022 has decreased to 12 million euros
profit  comparing  to  31.2 million  euros  profit  during  the  same  period in
2021.The operating  result of the third  quarter was 5.6 million euros comparing
to  2.8 million euros  in 2021. Higher  profit in  2021 was affected by one-time
sales  of  investment  property  and  related  revenue  and  by  the  results of
derecognition  of  AS  Tallinna  Moekombinaat  after  loss  of  control over the
subsidiary on 2 June 2021.

The  net  result  for  the  nine  months  of  2022 was 8.7 million euros profit,
comparing  to  22.5 million  euros  (continuing  operations  26.5 million euros)
profit  in the reference  period. The net  profit of the  third quarter was 4.5
million euros comparing to 1.1 million euros generated in 2021.

Cash  generated in  operating activities  during nine  months of  2022 was 25.8
million  euros comparing to 1.4 million euros during the same period in 2021. In
the  third quarter cash generated in operating activities was 14.6 million euros
comparing to 5.2 million euros in 2021.

Net assets per share on 30 September 2022 totalled to 0.91 euros compared to
0.63 euros on 30 September 2021.

Key performance indicators

                             2022 9M   2021 9M   2022 Q3   2021 Q3   2021 12M
------------------------------------------------------------------------------
  Revenue, th EUR             61 628    19 373    30 434    12 066     43 095

  Gross profit, th EUR        16 211     5 255     6 849     3 442     10 576

  Gross profit, %                26%       27%       23%       29%        25%

  Operating result, th EUR    11 990    31 152     5 577     2 836     39 820

  Operating result, %            19%      161%       18%       24%        92%

  Net result, th EUR           8 651    22 463     4 546     1 123     29 757

  Net result, %                  14%      116%       15%        9%        69%



  Earnings per share, EUR       0.15      0.40      0.08      0.02       0.52


                                        30.09.2022   30.09.2021   31.12.2021
-----------------------------------------------------------------------------
  Total Assets, th EUR                      99 731      125 042      116 026

  Total Liabilities, th EUR                 48 237       89 493       73 183

  Total Equity, th EUR                      51 494       35 549       42 843

  Debt / Equity *                             0.94         2.52         1.71



  Return on Assets, % **                      6.2%        14.8%        23.7%

  Return on Equity, % ***                    28.3%        99.5%       113.5%

  Net asset value per share, EUR ****         0.91         0.63         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                        30.09.2022 30.09.2021 31.12.2021
------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                        11 088     13 283      9 626

 Current receivables                               1 648      1 458        802

 Inventories                                      35 228     67 811     57 533
                                             ---------------------------------
 Total current assets                             47 964     82 552     67 961

 Non-current assets

 Non-current receivables                           2 017         23         21

 Property, plant and equipment                     7 901      6 677      6 754

 Right-of-use assets                                 229        233        202

 Investment property                              41 270     35 202     40 734

 Intangible assets                                   350        354        354
                                             ---------------------------------
 Total non-current assets                         51 767     42 490     48 065

 TOTAL ASSETS                                     99 731    125 042    116 026

 LIABILITIES AND EQUITY

 Current liabilities

 Current debt                                        368        530      3 955

 Customer advances                                 2 614     13 516     12 419

 Current payables                                  4 308      5 233      7 297

 Tax liabilities                                     958        656      1 143

 Short-term provisions                               662        534        713
                                             ---------------------------------
 Total current liabilities                         8 910     20 469     25 527

 Non-current liabilities

 Long-term debt                                   38 153     64 708     46 455

 Other non-current payables                            0      3 139         20

 Deferred income tax liabilities                   1 138      1 133      1 133

 Long-term provisions                                 36         44         48
                                             ---------------------------------
 Total non-current liabilities                    39 327     69 024     47 656

 TOTAL LIABILITIES                                48 237     89 493     73 183

 Equity attributable to owners of the Company

 Share capital in nominal value                   11 338     11 338     11 338

 Share premium                                     5 661      5 661      1 748

 Statutory reserve                                 1 134      1 134          0

 Revaluation reserve                               2 984      2 984      2 984

 Retained earnings                                21 726     -8 031          0

 Profit/ Loss for the period                       8 651     22 463     26 773
                                             ---------------------------------
 Total equity attributable
 to owners of the Company                         51 494     35 549     42 843

 TOTAL EQUITY                                     51 494     35 549     42 843

 TOTAL LIABILITIES AND EQUITY                     99 731    125 042    116 026

Consolidated interim statements of comprehensive income

 in thousands of euros                 2022 9M 2021 9M 2022 Q3 2021 Q3 2021 12M
-------------------------------------------------------------------------------
 CONTINUING OPERATIONS

 Operating income

 Revenue                                61 628  19 373  30 434  12 066   43 095

 Cost of goods sold                    -45 417 -14 118 -23 585  -8 624  -32 519
                                      -----------------------------------------
 Gross profit                           16 211   5 255   6 849   3 442   10 576



 Marketing expenses                       -345    -358    -108    -119     -502

 Administrative expenses                -3 743  -3 549  -1 085  -1 086   -5 592

 Other income                                9  29 860       1     605   35 615

 Other expenses                           -142     -56     -80      -6     -277
                                      -----------------------------------------
 Operating profit/ loss                 11 190  31 152   5 577   2 836   39 820



 Financial income                            2       5       1       2        6

 Financial expense                      -3 336  -4 556  -1 032  -1 722   -5 964
                                      -----------------------------------------
 Profit / loss before income tax         8 656  26 601   4 546   1 116   33 862

 Income tax                                 -5     -23       0       6       10
                                      -----------------------------------------
 Net profit / loss from continuing
 operations                              8 651  26 578   4 546   1 122   33 872



 Profit from discontinued operations         0  -4 115       0       0   -4 115

 Net profit / loss for the period        8 651  22 463   4 546   1 122   29 757



 Attributable to:

         Equity holders of the parent    8 651  22 463   4 546   1 122   29 757



 Total comprehensive income / loss for
 the year                                8 651  22 463   4 546   1 122   29 757

 Attributable to:

         Equity holders of the parent    8 651  22 463   4 546   1 122   29 757



 Earnings per share (continuing
 operations) EUR                            0.15    0.47    0.08    0.02     0.60

 Earnings per share for the period EUR      0.15    0.40    0.08    0.02     0.52

The full report can be found in the file attached.

Eve Kallast
Group Chief Accountant
+372 614 4920
prokapital@prokapital.ee