AS PRO KAPITAL

ANNOUNCEMENT 

01.06.99

 

COMMENTARY TO THE Q1 1999 CONSOLIDATED AND UNAUDITED FINANCIAL RESULTS 

OF AS PRO KAPITAL 

 

The Q1 1998 consolidated and unaudited balance sheet, income statement 

and commentary to the financial results of AS Pro Kapital published via 

the information system of Tallinn Stock Exchange reflect the unaudited 

results of the group’s parent company, which also includes unaudited 

results of subsidiaries (based on equity method), and 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 the 

suitability of the second scheme to the principal fields of activity of 

the company as well as the group upon 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.

 

Q1 1999 net sales of AS Pro Kapital amounted to 36 million EEK, of 

which 34 million EEK are proceeds from the sale of real estate objects, 

1.7 million EEK rent income, and 0.3 million EEK sale of services 

related to real estate development. Other revenue amounted to only 70 

thousand EEK.

 

Q1 1999 net sales of Pro Kapital group amounted to 37 million EEK, 

including turnover of the parent company and 1.6 million EEK from sale 

of services related to real estate administration. Other revenue 

amounted to only 137 thousand EEK.

 

In December 1998, the company changed the accounting principles used 

for reflecting preliminary sales contracts. Compared with the Q1 1998 

reports, the current statements include on the account of net sales 

only the preliminary sales contracts corresponding with the following 

requirements:

- the building, which is the object of contract, is completed and 

accepted;

- the customer has accepted an object determined in a concrete 

preliminary contract;

- preliminary contract includes a provision for penalties for 

renouncement of contract, which accounts for considerable share of the 

cost of contract;

- customer has made payments in accordance with the payment schedule, 

and in such amount, that the last payment to be made is approximately 

equal to the penalty to be paid upon renouncement.

 

Pursuant to the above requirements, a few preliminary contracts 

concluded by the parent company and subsidiaries and the respective 

prepayments were not suitable to be reflected in Q1 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, and stable level of the 

group’s administrative expense account, even though expansion of the 

group’s activities during the past year.

 

Compared to previous accounting period, the group’s financial expenses 

have increased due to increase in the relative share of borrowings from 

local banks for corporate financing purposes.

 

Compared to 1998, both company and the group have earned profit in Q1 

1999 (parent -- 5 million EEK, group -- 0.9 million EEK). Relatively 

low profit earned 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 as net turnover components, since 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 81 million EEK to 285 million EEK. Compared to 

1998, the long-term financial investments reflected on the group 

balance sheet have increased from 7 million EEK to 43 million EEK and 

tangible assets from 255 million EEK to 496 million EEK.

 

Volume of the account of short-term borrowings of AS Pro Kapital has 

increased considerably from 5 million EEK to 250 million EEK, which 

originates from the reflection of the proceeds from the share issue 

ended on 31.03.99 on the aforementioned balance sheet account. Total 

volume of the issue was 270 million EEK and payment deadline 

16.04.1999. Increase in the share capital volume is registered in the 

Commercial Register. As of Q1 1999, the group’s short-term borrowings 

amounted to 322 million EEK, and included in addition to the 

aforementioned amounts also the share capital paid in by minority 

shareholders of OÜ Nurmelin, which is not yet registered. 

 

Volume of customers’ prepayments has decreased from the level of 23 

million EEK to 6 million EEK for the parent company, and from 28 

million EEK to 11 million EEK for the group, proceeding principally 

from the aforementioned changes in net sales accounting principles. 

 

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.

 

In the beginning of 1998, the company increased its share capital by 10 

million EEK via public issue of shares, issued at par value of 10 EEK 

and issue price of 30 EEK per share. The share premium is reflected on 

the balance sheet on the account of capital surplus, minus issue-

related expenses.  

 

 

Ilona Saari

Chief Financial Officer

Pro Kapital group

Tel. (372) 6144 920