AS PRO KAPITAL

ANNOUNCEMENT

22.09.99

 

 

COMMENTARY TO H1 1999 CONSOLIDATED AND UNAUDITED FINANCIAL 

RESULTS OF AS PRO KAPITAL

 

The H1 1998 consolidated and unaudited balance sheet, income 

statement and commentary to the financial results of AS Pro Kapital 

published via the information system of the Tallinn Stock Exchange 

reflect the unaudited results of the group's parent company, which 

also includes unaudited results of subsidiaries (consolidated based 

on equity method); and the results of the group, which includes 

consolidated and unaudited results of subsidiaries.

 

Consolidated statements include the results of subsidiaries OÜ Nurmelin, 

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

OÜ Neotrust and Latvian and Lithuanian subsidiaries (based on equity 

method).

 

As of 1999, AS Pro Kapital and Pro Kapital group reflect their financial 

results according to the second income statement scheme provided by 

the Accounting Law of the Republic of Estonia, instead of the first 

scheme used earlier. Such transition proceeds from compatibility of the 

second scheme with the principal fields of activity of the company as 

well as the group, when reflecting the expenses and income. For 

comparability purposes, the data from previous periods are amended by 

grouping the income statement accounts in accordance with the new scheme.

 

The H1 1999 net sales of AS Pro Kapital amounted to 40.9 million EEK, 

of which the main part are proceeds from sale of real estate objects. 

In addition, the net turnover figure also includes rent income and sale 

of real estate development-related services. 

 

The H1 1999 net sales of Pro Kapital group amounted to 58  million EEK, 

including turnover of the parent company, rent income from Kristiine Keskus, 

turnover of OÜ Ermekta and administration services provided by AS Pro Haldus. 

 

OÜ Larvikk, OÜ Neotrust, AS Arco Kinnisvaraarendus and the subsidiaries 

operating in Latvia and Lithuania had no sales in H1 1999, due to the 

fact that these subsidiaries own real estate objects that are currently 

in development stage, and the preliminary sales contracts made with clients 

cannot be reflected on the account of net sales due to accounting principles 

used by the company.

 

In December 1998, the company changed the accounting principles used for 

reflecting preliminary sales contracts. The new accounting principles are 

described in detail in the commentary to the Q1 unaudited and consolidated 

financial statements.

 

Pursuant to the aforementioned new accounting principles, the preliminary 

contracts concluded by the parent company and subsidiaries (totaling 59 

million EEK) and the respective prepayments were not reflected in H1 1999 

net turnover figure, but on the balance sheet account of Customer Prepayments.

 

Compared to 1998, the income/expense structure indicates decrease in the parent 

company's administrative expenses (from 13.2 million EEK to 6.6 million EEK), 

and stable level of the group's administrative expense account regardless of 

expansion of the group's activities during the past year.

 

The group's marketing expenses were mainly related to advertising campaign of 

Ilmarise quarter in H1 1999.

 

In H1 the company earned financial income from sale of holding in OÜ Viruäri.

 

Compared to the previous accounting period, the group's financial expenses have 

increased due to increase in the relative share of bank loans among the corporate 

financing sources.

 

As of the H1 1999, both parent company and the group posted a loss (1.7 million EEK 

and 7 million EEK, respectively). The parent company was in loss mainly due to the 

fact that the parent company carried all management expenses. However, the company 

intends to invoice the management expenses to the subsidiaries in Q3, as a result 

of which also the minority shareholders of the group's companies would compensate 

for their share of management expenses. 

 

The loss posted by the group originates mainly from consolidation of the results 

of the subsidiaries, which own real estate objects under construction, and the 

sales contracts concluded with clients cannot yet be reflected on the account of 

net turnover, as the conditions determined by the accounting principles were not 

met.

 

Compared to 1998, the long-term financial investments of AS Pro Kapital have 

increased from 164 million EEK to 435 million EEK. Such increased was mainly due 

to additional investments made into subsidiaries, hence the long-term financial 

investments reflected on the group balance sheet have increased y-o-y only from 

35 million EEK to 67 million EEK. The volume of tangible assets has grown from 

352 million EEK to 582 million EEK, mainly due to additional investments into 

Kristiine Keskus and Ilmarise quarter.

 

In the course of the share issue ended on 31.03.1999, the company's share capital 

increased to 225 million EEK; total volume of the issue was 270 million EEK. 

The paid-in capital over par is reflected on the respective balance sheet account 

(minus share issue-related expenses).  

 

The parent's and group's deferred income tax liability, which proceeds from the 

difference between accounting amortization and tax amortization, is reflected on 

the account of long-term provisions.

 

 

Additional information:

Ilona Saari

Financial Director

Pro Kapital group

Tel. +372 61 44 920