MANAGEMENT REPORT
Real Estate Development
In 2024, we are continuing the construction and sales activities of the last stage of Kalaranna 8, Tallinn. The final stage consists of 4 residential buildings with 146 apartments and 4 commercial units which, upon completion, brings the total count of the buildings to 12. In Q3 we are continuing with internal finishing works of the buildings and as per current conditions, we are meeting the schedule deadlines. We expect to deliver units from the first two buildings by the end of 2024, and complete the remaining two buildings by the first quarter of 2025. With respect to sales in Kalaranna, as of the publishing of this report, we have reached ca 46% threshold in presales and signed reservations. We deem this a success in today’s challenging market, especially so when our location warrants above average pricing.
In Kristiine City, we have continued the sales and construction activities of our new project Uus-Kindrali. By the end of Q2, 2024, we are nearly done with the foundation works and are starting the monolithic concrete works (framing and pouring structural walls/elements on -1 level). As of publishing this report, we have reached 34% in presales and reservations. The construction loan for this project is provided by AS LHV Pank.
In Riga, as of the publishing of this report, we have one unsold unit remaining in the River Breeze Residence, which has received the Baltics Prestige Award for exceptional architecture.
In Vilnius we have completed five residential buildings in Šaltinių Namai Attico project with 115 apartments in 2019. By the end of June 2024, we have only 2 apartments unsold, out of which one is a model unit. In September 2023 we started the construction of the final stage of Šaltinių Namai Attico with city villas (43 units) and a Residential-commercial building (15 units). As of July 2024, the construction is finishing up the 1st floor in the villas. In the commercial building we have achieved the topping out of the main structure with the final expected completion in Q2 2025.The loan contract for construction works was signed with Šiaulių bank in the beginning of May 2024. With respect to sales, we are currently at 25% sellout threshold while achieving record pricing in the market.
We are also continuing the permitting process for our most recent purchase in Naugarduko street. The building, previously a school, will be converted into a high-end residential property located on hill and opening to spectacular Vilnius old town views, consisting of circa 50 luxury apartments.
According to the current plan, we expect to receive the permit by the end of summer. Regarding the start of construction activities, the management has decided to begin the work in Q1, 2025.
Hotel operations
Following two challenging years that significantly impacted the global tourism sector due to the pandemic, there is now a notable resurgence in demand within the hotel industry. In 2023, the hotel achieved excellent results, and we are glad to report that the performance exceeds budgeted expectations also in Q2, 2024.
In 2024 special attention and focus is on MICE activities (Meetings, Incentives, Conferences and Exhibitions), aimed at increasing sales in the corporate segment.
The successes in the first six month of 2024, prove the effectiveness of our strategies, as each month's actual performance has exceeded the monthly budgets set for the year.
Conclusion
In closing, I am proud to highlight the substantial progress and milestones we have achieved in our real estate development projects and hotel operations throughout 2024. Our projects in Tallinn, Riga, and Vilnius have maintained steady progress and delivered impressive sales outcomes, showcasing our commitment to excellence and efficiency.
The resurgence in the hotel industry, driven by increased demand and successful MICE activities, has surpassed our expectations, further solidifying our position in the hospitality sector.
As we continue to navigate the evolving market dynamics, our focus remains on prudent financial management and operational excellence. We are confident that our diverse portfolio, coupled with our strategic initiatives, will ensure sustainable growth and reinforce our leadership in the real estate sector.
I extend my gratitude to our shareholders, employees, and partners for their unwavering support and dedication. Together, we are poised to embrace future opportunities and achieve continued success.
Edoardo Preatoni
CEO
Key financials
The total revenue of the Group in first six months of 2024 was 6.9 million euros compared to 16.1 million euros in first six months of 2023. The total revenue of the second quarter was 3.9 million euros compared to 2.7 million euros in 2023.
The real estate sales revenues are recorded at the point of time when legal title is transferred to the buyer. Therefore, the revenues from sales of real estate depend on the construction cycle and the completion of the residential developments.
In 2024, real estate revenue decreased compared to the previous year due to the completion of the final building of Kindrali Houses at the beginning of 2023, when the last apartments were sold and handed over to the customers. Currently, most of our completed properties have been sold out. While we continue construction on the final stage of Kalaranna District, we plan completing and delivering units from the first two buildings by the end of 2024, and completing the remaining two buildings by the first quarter of 2025.
The gross profit of first six months of 2024 has decreased by 46% amounting to 2.4 million euros compared to 4.5 million euros in 2023. The gross profit of the second quarter was 1.5 million euros compared to 790 thousand euros in 2023.
The operating result in the first six months was 860 thousand euros loss comparing to 1.5 million euros profit during the same period in 2023. The operating result of the second quarter was 201 thousand euros loss compared to 658 thousand euros loss in the second quarter of 2023.
The net result for the first six months of 2024 was 3 million euros loss, comparing to
292 thousand euros loss in the reference period. The net result of the second quarter was 1.3 million euros loss compared to 1.6 million euros loss in the same period of 2023.
Cash used in operating activities during first six months of 2024 was 4.5 million euros comparing to 9.5 million euros generated during the same period in 2023. Cash used in operating activities during second quarter was 2.8 million euros compared to 850 thousand euros used in the second quarter of 2023.
Net assets per share on 30 June 2024 totalled to 0.93 euros compared to 0.97 euros on 30 June 2023.
Key performance indicators
| 2024 6M | 2023 6M | 2024 Q2 | 2023 Q2 | 2023 12M | |
| Revenue, th EUR | 6 907 | 16 112 | 3 853 | 2 697 | 23 021 |
| Gross profit, th EUR | 2 423 | 4 456 | 1 535 | 790 | 7 028 |
| Gross profit, % | 35% | 28% | 40% | 29% | 31% |
| Operating result, th EUR | -860 | 1 501 | -201 | -658 | 2 963 |
| Operating result, % | -12% | 9% | -5% | -24% | 13% |
| Net result, th EUR | -3 040 | -292 | -1 340 | -1 595 | -900 |
| Net result, % | -44% | -2% | -35% | -59% | -4% |
| Earnings per share, EUR | -0.05 | -0.01 | -0.02 | -0.03 | -0.02 |
| 30.06.2024 | 30.06.2023 | 31.12.2023 | |
| Total Assets, th EUR | 109 695 | 101 166 | 107 237 |
| Total Liabilities, th EUR | 57 207 | 46 135 | 52 814 |
| Total Equity, th EUR | 52 488 | 55 031 | 54 423 |
| Debt / Equity * | 1.09 | 0.84 | 0.97 |
| Return on Assets, % ** | -2.9% | -0.3% | -0.08% |
| Return on Equity, % *** | -5.7% | -0.6% | -1.5% |
| Net asset value per share, EUR **** | 0.93 | 0.97 | 0.96 |
*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 | 30.06.2024 | 30.06.2023 | 31.12.2023 |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 8 576 | 17 474 | 17 065 |
| Current receivables | 1 481 | 2 544 | 1 411 |
| Prepaid expenses | 359 | 338 | 268 |
| Inventories | 44 550 | 26 598 | 35 563 |
| Total current assets | 54 966 | 46 954 | 54 307 |
| Non-current assets | |||
| Non-current receivables | 20 | 13 | 2 010 |
| Property, plant and equipment | 7 655 | 7 749 | 7 763 |
| Right-of-use assets | 495 | 233 | 365 |
| Investment property | 40 405 | 45 851 | 40 361 |
| Goodwill | 204 | 262 | 0 |
| Intangible assets | 3 615 | 104 | 96 |
| Total non-current assets | 52 394 | 54 212 | 50 595 |
| Assets held for sale | 2 335 | 0 | 2 335 |
| Total assets held for sale | 2 335 | 0 | 2 335 |
| TOTAL ASSETS | 109 695 | 101 166 | 107 237 |
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Current debt | 1 749 | 28 493 | 30 141 |
| Customer advances | 7 083 | 2 322 | 3 657 |
| Current payables | 6 235 | 3 909 | 4 911 |
| Tax liabilities | 175 | 118 | 161 |
| Short-term provisions | 8 | 20 | 11 |
| Total current liabilities | 15 250 | 34 862 | 38 881 |
| Non-current liabilities | |||
| Long-term debt | 40 676 | 10 064 | 12 695 |
| Other long term liabilities | 2 | 0 | 0 |
| Deferred income tax liabilities | 1 130 | 1 134 | 1 130 |
| Long-term provisions | 149 | 75 | 108 |
| Total non-current liabilities | 41 957 | 11 273 | 13 933 |
| TOTAL LIABILITIES | 57 207 | 46 135 | 52 814 |
| Equity attributable to owners of the Company | |||
| Share capital in nominal value | 11 338 | 11 338 | 11 338 |
| Share premium | 5 661 | 5 661 | 5 661 |
| Statutory reserve | 1 134 | 1 134 | 1 134 |
| Revaluation reserve | 2 092 | 2 012 | 2 092 |
| Retained earnings | 31 175 | 34 886 | 34 198 |
| Total equity attributable to the owners of the Company | 51 400 | 55 031 | 54 423 |
| Non-controlling interest | 1 088 | 0 | 0 |
| TOTAL EQUITY | 52 488 | 55 031 | 54 423 |
| TOTAL LIABILITIES AND EQUITY | 109 695 | 101 166 | 107 237 |
Consolidated interim statements of comprehensive income
| in thousands of euros | 2024 6M | 2023 6M | 2024 Q2 | 2023 Q2 | 2023 12M |
| CONTINUING OPERATIONS | |||||
| Operating income | |||||
| Revenue | 6 907 | 16 112 | 3 853 | 2 697 | 23 021 |
| Cost of goods sold | -4 484 | -11 656 | -2 318 | -1 907 | -15 993 |
| Gross profit | 2 423 | 4 456 | 1 535 | 790 | 7 028 |
| Marketing expenses | -485 | -299 | -263 | -166 | -705 |
| Administrative expenses | -2 790 | -2 656 | -1 465 | -1 282 | -5 440 |
| Other income | 19 | 0 | 17 | 0 | 2 099 |
| Other expenses | -27 | 0 | -25 | 0 | -19 |
| Operating profit/ loss | -860 | 1 501 | -201 | -658 | 2 963 |
| Financial income | 67 | 88 | 25 | 68 | 254 |
| Financial expense | -2 245 | -1 876 | -1 172 | -1 002 | -4 115 |
| Profit / loss before income tax | -3 038 | -287 | -1 348 | -1 592 | -898 |
| Income tax | -2 | -5 | 8 | -3 | -2 |
| Net profit / loss for the period | -3 040 | -292 | -1 340 | -1 595 | -900 |
| Other comprehensive income net of income tax: | |||||
| Net change in asset revaluation reserve | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income / loss for the year | -3 040 | -292 | -1 340 | -1 595 | -900 |
| Attributable to: | |||||
| The owners of the company | -3 023 | 0 | -1 323 | -1 595 | -900 |
| Non-controlling interests | -17 | 0 | -17 | 0 | 0 |
| Earnings per share for the period € | -0.05 | -0.01 | -0.02 | -0.03 | -0.02 |
The full report can be found in the file attached.
Ann-Kristin Kuusik
CFO
+372 614 4920
prokapital@prokapital.ee
Attachment
