Pro Kapital Council approved Consolidated Interim Report for I Quarter and 3 Months of 2022 (Unaudited)

MANAGEMENT REPORT

CEO summary

The first quarter of 2022 has been an atypical one. The Ukraine war started in February caused some concerns due to the geopolitical risks perceived in the area. However, after the initial (and understandable) concerns, the markets showed a good resiliency from the demand side, and we have seen no drop in the real estate prices and in the interest shown by potential buyers of real estate assets. The construction market still poses some challenging issues, due to the increase in cost of materials caused by the complications related to Covid-19 and relative problems in the supply chain and the impossibility of obtaining materials from the regions affected by the war.

Real estate development

In Tallinn, we have continued construction of Kindrali Houses and Kalaranna projects. In the first quarter of 2022 we continued handing over apartments in Kalaranna project, where completion of eight buildings with the total of 240 apartments will be achieved. Today we are handing over apartments in the Kalaranna 8/3 and 8/4 buildings and we have reservations or presales concluded for all business premises and for 99% of apartments in this phase of the project.

Last year we started construction of the new project Kindrali Houses in Kristiine City, where three building-complexes with the total of 195 apartments will be raised. In this project we had booked or presold more than half of the apartments before signing the construction agreement. Today we have no apartments available in Kindrali Houses.  Two of the buildings are nearing completion end of May and June and the contractor is starting to hand over the apartments on the fourth week of May.

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.

In Vilnius, we only have 4 unsold apartments in our Šaltiniu 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. We received some offers from the construction companies for the following phase of city villas and a commercial building and we aim to start construction works this summer.

Hotel operations

The Covid-19 pandemic had a strong impact on all the tourism sector, but luckily the German government has provided a great deal of support in terms of subsidies provided to PK Parkhotel Kurhaus in Bad Kreuznach.

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.

We have signed a preliminary agreement to buy a 380 keys hotel in Sicily (Domina Zagarella Sicily), located near the biggest city of the island, Palermo. We are currently conducting an in-depth due diligence of the asset and we believe this may be a great opportunity to expand our portfolio.

We are satisfied with the results of the first quarter although they were influenced by one- time expenses in amount of 318 thousand euros related to change of the management. In the following months we plan on continuing the construction works of ongoing developments and prepare for the upcoming phases. The real estate development is going well, the market is strong, and we will continue implementing our strategy of 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 the first quarter of 2022 was 7.9 million euros, having increased by 42% compared to the reference period (2021 3M: 5.6 million euros). The real estate sales have been influenced by handing over completed apartments in Kalaranna District.

The gross profit in the first quarter of 2022 increased by 61% amounting to 2.6 million euros compared to 1.6 million euros in 2021.

The operating result in 2022 has decreased to 989 thousand euros profit comparing to 1.8 million euros during the same period in 2021. Higher profit in 2021 was affected by one-time sales of investment property and related revenue.  

The net result for the first three months of 2022 was 251 thousand euros loss, comparing to 377 thousand euros profit (continuing operations) in the reference period.

Cash used in operating activities during first quarter of 2022 was minus 3.1 million euros comparing to 1.3 million euros generated during the same period in 2021.

Net assets per share on 31 March 2022 totalled to 0.75 euros compared to 0.13 euros on 31 March 2021.

Key performance indicators

	2022 3M	2021 3M	2021 12M
Revenue, th EUR	7 916	5 580	43 095
Gross profit, th EUR	2 558	1 591	10 576
Gross profit, %	32%	29%	25%
Operating result, th EUR	989	1 786	39 821
Operating result, %	12%	32%	28%
Net result, th EUR	-251	-2 112	29 757
Net result, %	-3%	-38%	69%
Earnings per share, EUR	0.00	-0.03	0.52

	31.03.2022	31.03.2021	31.12.2021
Total Assets, th EUR	117 371	185 287	116 027
Total Liabilities, th EUR	74 779	177 829	73 184
Total Equity, th EUR	42 592	7 458	42 843
Debt / Equity *	1.76	23.84	1.71
Return on Assets, % **	-0.2%	0.2%	23.7%
Return on Equity, % ***	-0.6%	5.1%	113.5%
Net asset value per share, EUR ****	0.75	0.13	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	31.03.2022	31.03.2021	31.12.2021
ASSETS
Current assets
Cash and cash equivalents	7 650	13 331	9 626
Current receivables	2 071	1 542	802
Inventories	59 360	61 481	57 533
Total current assets	69 081	76 354	67 961
Non-current assets
Non-current receivables	20	3 715	21
Property, plant and equipment	6 866	6 678	6 754
Right-of-use assets	173	357	202
Investment property	40 871	97 814	40 734
Intangible assets	360	369	354
Total non-current assets	48 290	108 933	48 065
TOTAL ASSETS	117 371	185 287	116 026
LIABILITIES AND EQUITY
Current liabilities
Current debt	16 131	104 373	3 955
Customer advances	11 477	10 284	12 419
Current payables	7 253	24 011	7 297
Tax liabilities	116	1 280	1 143
Short-term provisions	714	471	713
Total current liabilities	35 691	140 419	25 527
Non-current liabilities
Long-term debt	37 909	33 425	46 455
Other non-current payables	20	2 638	20
Deferred income tax liabilities	1 134	1 151	1 133
Long-term provisions	25	196	48
Total non-current liabilities	39 088	37 410	47 656
TOTAL LIABILITIES	74 779	177 829	73 183
Equity attributable to owners of the Company
Share capital in nominal value	11 338	11 338	11 338
Share premium	1 748	5 661	1 748
Statutory reserve	0	1 134	0
Revaluation reserve	2 984	2 984	2 984
Retained earnings	26 773	-8 031	0
Profit/ Loss for the period	-251	-1 951	26 773
Total equity attributable  to owners of the Company	42 592	11 135	42 843
Non-controlling interest	0	-3 677	0
TOTAL EQUITY	42 592	7 458	42 843
TOTAL LIABILITIES AND EQUITY	117 371	185 287	116 026

Consolidated interim statements of comprehensive income

in thousands of euros	2022 3M	2021 3M	2021 12M
CONTINUING OPERATIONS
Operating income
Revenue	7 916	5 580	43 095
Cost of goods sold	-5 358	-3 989	-32 519
Gross profit	2 558	1 591	10 576
Marketing expenses	-114	-125	-502
Administrative expenses	-1 449	-992	-5 592
Other income	0	1 332	35 616
Other expenses	-6	-20	-278
Operating profit/ loss	989	1 786	39 820
Financial income	1	1	6
Financial expense	-1 226	-1 393	-5 964
Profit / loss before income tax	-236	394	33 862
Income tax	-15	-17	10
Net profit / loss from continuing operations	-251	377	33 872
Profit from discontinued operations	0	- 2 489	-4 115
Net profit / loss for the period	-251	-2 112	29 757
Attributable to:
Equity holders of the parent	-251	-1 950	29 757
Non-controlling interest	0	-162	0
Total comprehensive income / loss for the year	-251	-2 112	29 757
Attributable to:
Equity holders of the parent	-251	-1 950	29 757
Non-controlling interest	0	-162	0
Earnings per share (continuing operations) €	0.00	0.01	0.60
Earnings per share for the period €	0.00	-0.03	0.52

Angelika Annus
CFO
[phone]
[e-mail]

 

 

 

 

 

 

 

 

Attachment

• PKG_Q1_2022_ENG