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Published: 2022-08-18 08:00:00 CEST
Pro Kapital Grupp
Quarterly report

Pro Kapital Council approved Consolidated Interim Report for II Quarter and 6 Months of 2022 (Unaudited)


CEO summary

The second quarter of 2022 continued the trend we have seen in Q1, with a strong demand for real estate assets in the Baltic countries (particularly Estonia and Lithuania).

Our available inventory is mainly sold, but we can say (based on the expression of interest of our potential buyers for upcoming projects and on the activity of our competitors) that the volume of transactions and the prices have not been overly impacted by the geopolitical situation.

However, there has been a change in sentiment in the market, with analysts taking a more bearish approach due to the inflation which is happening in Europe and the consequent increase of interest rates from the banks.

The local real estate sector is coming from two years of great increase in prices, and we are aware that this market cycle will not last forever, however the most important indicators (interest in our upcoming developments and sale price in the secondary market for our already built properties) still show a healthy market.

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. For certain materials, the market seems to have found a new equilibrium and we are hopeful that as more time goes by, the more the construction market will find stability.

Real estate development

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

In Q2 of 2022 we continued handing over apartments in Kalaranna project, where completion of eight buildings with the total of 240 apartments will be achieved. We have reservations or presales concluded for all business premises and for 99% of apartments in this phase of the project, and we have currently 4 units left to be notarized.

The municipality issued the permit of use for the promenade (as well as took over the maintenance of the same as per the agreement signed between us) (https://news.err.ee/1608664387/gallery-tallinn-s-kalaranna-promenade-finally-officially-opened-to-public), and we are proud to see this community finally come to life. The promenade not only benefits the residents in our developments, but is also very much appreciated by the people who simply want to enjoy a nice walk with a sea view, surrounded by the beautiful architecture we have built.

In Kindrali Houses, we have started the process of notarising deals in the first two buildings (black and white building), which are expected to be completed by the fall of 2022. 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.

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 the construction works during the fall of 2022.

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 October. 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.

In May, we have hired a new General Manager, Mr. Klaus Brandstetter, who was a 20+ years experience in Starwood Hotels. We wish him the best of luck and we are confident we have picked the right person for the job.

Since the ongoing works, the hotel’s available inventory is only at 50%. Despite this, in the first 6 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 99.83 euro (June data), a substantial increase when compared to the 81.68 euro rate of June 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. Our aim is 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

Key financials

The total revenue of the Company in the first six months of 2022 was 31.2 million euros, having increased more than four times compared to the reference period (2021 6M: 7.3 million euros). The total revenue of the second quarter was 23.3 million euros compared to 1.7 million euros in 2021.

The gross profit for six months of 2022 has increased five times amounting to 9.3 million euros compared to 1.8 million euros in 2021. The gross profit in the second quarter reached 6.8 million euros (2021: 222 thousand euros).

The operating result in the first halfyear of 2022 has decreased to 6.4 million euros profit comparing to 28.3 million euros profit during the same period in 2021.The operating result of the second quarter was 5.4 million euros comparing to 26.5 million euros in 2021. Higher profit in 2021 was affected by one-time sales of investment property and related revenue and the results of derecognition of AS Tallinna Moekombinaat after loss of control over the subsidiary on 2 June 2021.

The net result for the first six months of 2022 was 4.1 million euros profit, comparing to 25.5 million euros profit (continuing operations) in the reference period. The net profit of the second quarter was 4.3 million euros comparing to 25.1 million euros generated in 2021.

Cash generated in operating activities during first six months of 2022 was 11.2 million euros comparing to 3.38 million euros used during the same period in 2021. In the second quarter cash generated in operating activities was 14.4 million euros and 5.2 million euros used respectively in 2021.

Net assets per share on 30 June 2022 totalled to 0.83 euros compared to 0.61 euros on 30 June 2021.

Key performance indicators

 2022 6M2021 6M2022 Q22021 Q22021 12M
Revenue, th EUR31 1947 30723 2781 72743 095
Gross profit, th EUR9 3621 8136 80422210 576
Gross profit, %30%25%30%25%25%
Operating result, th EUR 6 41328 3185 42426 53239 820
Operating result, %21%388%23%1 536%92%
Net result, th EUR4 10621 3424 34623 45429 757
Net result, %13%292%19%1 452%69%
Earnings per share, EUR0.070.380.080.440.52

Total Assets, th EUR116 701125 105116 026
Total Liabilities, th EUR 69 75290 67773 183
Total Equity, th EUR46 94934 42842 843
Debt / Equity *1.492.631.71
Return on Assets, % **2.8%12.8%23.7%
Return on Equity, % ***14.5%41.1%113.5%
Net asset value per share, EUR ****0.830.610.76

*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 interim statement of financial position

in thousands of euros30.06.202230.06.202131.12.2021
Current assets   
Cash and cash equivalents15 20813 8429 626
Current receivables1 099967802
Inventories49 62167 96757 533
Total current assets65 92882 77667 961
Non-current assets   
Non-current receivables1 5192321
Property, plant and equipment7 4916 6486 754
Right-of-use assets198266202
Investment property41 21435 03840 734
Intangible assets351354354
Total non-current assets50 77342 32948 065
TOTAL ASSETS116 701125 105116 026
Current liabilities   
Current debt10 5961 2623 955
Customer advances11 33013 07012 419
Current payables7 9244 882 7 297
Tax liabilities1101111 143
Short-term provisions585475713
Total current liabilities30 54519 80025 527
Non-current liabilities   
Long-term debt 38 02867 08546 455
Other non-current payables92 57720
Deferred income tax liabilities1 1361 1331 133
Long-term provisions348248
Total non-current liabilities39 20770 87747 656
TOTAL LIABILITIES69 75290 67773 183
Equity attributable to owners of the Company   
Share capital in nominal value11 33811 33811 338
Share premium5 6615 6611 748
Statutory reserve1 1341 1340
Revaluation reserve2 9842 9842 984
Retained earnings21 726-8 0310
Profit/ Loss for the period4 10621 34226 773
Total equity attributable
to owners of the Company
46 94934 42842 843
TOTAL EQUITY46 94934 42842 843

Consolidated interim statements of comprehensive income

in thousands of euros2022 6M2021 6M2022 Q22021 Q22021 12M
Operating income     
Revenue31 1947 30723 2781 72743 095
Cost of goods sold-21 832-5 494-16 474-1 505-32 519
Gross profit9 3621 8136 80422210 576
Marketing expenses-237-239-123-114-502
Administrative expenses-2 658-2 463-1 209-1 471-5 592
Other income829 255827 92335 616
Other expenses-62-48-56-28-278
Operating profit/ loss6 41328 3185 42426 53239 820
Financial income23016
Financial expense-2 304-2 835-1 078-1 442-5 964
Profit / loss before income tax4 11125 4864 34625 09233 862
Income tax-5-2911-1210
Net profit / loss from continuing operations4 10625 4574 35725 08033 872
Profit from discontinued operations0-4 1150-1 626-4 115
Net profit / loss for the period4 10621 3424 35723 45429 757
Attributable to:     
        Equity holders of the parent 4 10621 3424 35723 45429 757
Total comprehensive income / loss for the year4 10621 3424 35723 45429 757
Attributable to:     
        Equity holders of the parent4 10621 3424 35723 45429 757
Earnings per share (continuing operations) €0.070.450.080.440.60
Earnings per share for the period €0.070.380.080.410.52

The full report can be found in the file attached.

Eve Kallast
Group Chief Accountant
+372 614 4920