AS PRO KAPITAL

ANNOUNCEMENT 

28.12.98

 

 

COMMENTARY TO THE AS PRO KAPITAL CONSOLIDATED FINANCIAL RESULTS 

09/98 

 

AS Pro Kapital 1998 9 months balance sheet, income statement 

and commentary to the financial results disclosed on 28.12.98 

via the stock exchange information system reflect both parent 

company’s and affiliated group’s consolidated unaudited 

results. On compiling the statements of the affiliated group, 

the results of the subsidiaries OÜ Nurmelin, OÜ Viruäri, OÜ 

Larvikk, OÜ Ermekta, AS Arco Kinnisvaraarendus, AS Pro Haldus 

and Latvian and Lithuanian subsidiaries were consolidated.

 

Pro Kapital current year 9 months consolidated operating profit 

was 11.8 million EEK, not considering the sales pre-contracts. 

10 million EEK of this sum were the net sales of the parent 

company, and 1.5 million EEK the net sales of AS Pro Haldus. 

 

Coming from the accounting principles of the affiliated group, 

the sale of the real estate objects is not reflected in the 

accounting reports of the group’s companies before the 

notarially attested sales contracts with the clients are made. 

Until signing the notarial contracts, the relationship between 

the companies and clients are regulated with the sales pre-

contracts. 

 

Within 9 months, the sales pre-contracts were made with the 

group’s clients in total value of approximately 100 million 

EEK. In addition to that, there are approximately 30 million 

EEK worth of sales pre-contracts valid from the year 1997. 

 

The moment and amount of making notarial contracts depends on 

finishing the real estate objects, registration of the land 

under the real estate objects, and preferences of different 

clients. Until signing the notarial sales contracts, the down 

payments of the clients for real estate objects are reflected 

on the liabilities side of the balance sheet as customer 

prepayments. As of 9 months 1998, the customer prepayments 

amounted to 78.4 million EEK, of which the prepayments to the 

parent company were 43.3 million EEK, prepayments to OÜ Ermekta 

12.3 million EEK and 22.8 million EEK to OÜ Viruäri.  

 

In order to support the above-mentioned, it is suitable to 

compare also the income statements of AS Pro Kapital as of 

30.09 1997 and 31.12.1997. Also in 1997, the main share of the 

operating profit was earned at the end of the financial year, 

when most of the notarial sales contracts to the rooms of the 

Pro Kapital Business Center on Narva road (Tallinn) were made. 

When the net sales of Pro Kapital were approximately 32 million 

EEK as of 30.09.1997, then the total turnover for the year was 

70 million EEK.

 

In cooperation with the auditors of KPMG Estonia, Pro Kapital 

is seeking for a reasonable solution to change the accounting 

methods before the end of the year 1998, in order to eliminate 

the difference between the accounting turnover and actual sales 

results.

 

On the consolidated balance sheet, the material non-current 

assets increased from 86 million EEK at the end of September 

1997 to 448 million EEK currently. The material non-current 

assets account consists of land and buildings in the amount of 

212 million EEK, other material assets in the amount of 3 

million EEK and capitalized unfinished construction works in 

the amount of 233 million EEK. 

 

Goodwill occurring on the purchase of the units of OÜ Viruäri 

in 1997 is reflected under the intangible assets in the 

residual value of 13.9 million EEK. Goodwill occurred due to 

the difference between the units’ accounting values coming from 

the balance sheet compiled in the context of the purchase price 

and purchase analysis of the units. According to the affiliated 

group’s accounting methods, goodwill is transferred to the 

expenses account within 5 years. 

 

The affiliated group’s 9 months loss in the amount of 19.5 

million EEK consists of the parent company’s loss in the amount 

of 15 million EEK, OÜ Nurmelin loss in the amount of 0.5 

million EEK, OÜ Larvikk loss in the amount of 0.7 million EEK, 

OÜ Viruäri loss in the amount of 0.8 million EEK, OÜ Ermekta 

loss in the amount of 0.2 million EEK, and Latvian and 

Lithuanian subsidiaries losses in the amount of 0.2 million 

EEK, and depreciation of goodwill in the amount of 2.4 million 

EEK. AS Pro Haldus earned from May to the end of September a 

profit of 0.3 million EEK. In accordance with the share 

purchase contract, the result of AS Pro Haldus is a subject for 

consolidation to the Pro Kapital affiliated group starting from 

May.

 

The losses of the parent company, OÜ Viruäri and OÜ Ermekta 

occurred mainly due to the above-described methods of 

reflecting the sales revenues and the fact that as of 9 months, 

the expenses of the parent company reflect the expenses of the 

whole affiliated group, since the subsidiaries have not yet 

received invoices for general expenses. As most of the 

subsidiaries are not 100% owned by Pro Kapital, the parent 

company bears now also the costs born by the minority 

shareholders of the subsidiaries. The respective corrections 

will be made to the consolidated income statement before the 

end of the current year. 

 

 

Ilona Saari

Financial Manager of Pro Kapital group

Tel. +372 614 4920