Pro Kapital Council approved Consolidated Interim Report for III Quarter and 9 Months of 2024 (Unaudited)

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 the first 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 55% 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 Q3, 2024, we had completed 3 floors, had finished the public utility connections (water, sewage, heating) and have finished the works of the new public road connecting our project to city road infrastructure. As of publishing this report, we have reached 44% in presales and reservations. The construction loan for this project is provided by AS LHV Pank.

In Riga, by the end of the third quarter, we have sold out all units in the River Breeze Residence.

In Vilnius we have completed five residential buildings in Šaltinių Namai Attico project with 115 apartments in 2019. As of publishing this report, we have only 1 apartment unsold. 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 Q3, the construction of the city villa’s is finishing up the 3rd floor, so the structural part is ca 80% completed. In the residential-commercial building we have achieved the topping out of the main structure and the final expected completion is in Q2 2025. With respect to sales, we are currently at 25% sellout threshold while achieving record pricing in the market. The construction loan for this project is provided by Šiaulių bank.

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 the year and begin construction activities at the beginning of Q2, 2025.

Hotel operations

After two challenging years that significantly impacted the global tourism sector, we are now seeing a robust recovery in hotel demand. In 2023, our hotel achieved outstanding results, and we’re pleased to report that performance in 2024 continues to exceed budgeted expectations through Q3. If this positive momentum persists, we are on track to close the year with a record-breaking Gross Operating Profit (GOP).

Our focus in 2024 has been on expanding MICE (Meetings, Incentives, Conferences, and Exhibitions) activities to capture a larger share of the corporate market. The consistent monthly performance above budget during the first half of the year demonstrates the strength of our strategic approach and operational excellence.

Conclusion

In summary, 2024 has thus far been a year of significant achievements across our real estate development projects and hotel operations. Our projects in Tallinn, Riga, and Vilnius have advanced steadily, with impressive sales figures that reflect our commitment to quality and timeliness.

The strong rebound in the hospitality sector, particularly through our emphasis on MICE activities, has surpassed our expectations and underscores our competitive advantage. As we move forward, we are hopeful that geopolitical stability in the region will support continued growth and opportunity in our real estate ventures.

Amid evolving market conditions, we remain committed to prudent financial oversight and operational efficiency. We believe our diversified portfolio, along with well-executed strategies, will secure sustained growth and reinforce our leading position in the real estate sector.

I extend heartfelt thanks to our shareholders, employees, and partners for their steadfast support and dedication. Together, we are well-positioned to seize future opportunities and build on this year’s successes.

Edoardo Preatoni
CEO

Key financials

The total revenue of the Group in nine months of 2024 was 10.6 million euros compared to 20.0 million euros in nine months of 2023. The total revenue of the third quarter was 3.7 million euros compared to 3.9 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 the first 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 nine months of 2024 has decreased by 52% amounting to 2.9 million euros compared to 6.0 million euros in 2023. The gross profit of the third quarter was 433 thousand euros compared to 1.5 million euros in 2023.

The operating result in the nine months was 1.7 million euros loss comparing to 1.7 million euros profit during the same period in 2023. The operating result of the third quarter was 873 thousand euros loss compared to 167 thousand euros profit in the third quarter of 2023.

The net result for the nine months of 2024 was 4.1 million euros loss, comparing to

1.0 million euros loss in the reference period. The net result of the third quarter was 1.0 million euros loss compared to 732 thousand euros loss in the same period of 2023.

Cash used in operating activities during nine months of 2024 was 9.9 million euros comparing to 9.5 million euros generated during the same period in 2023. Cash used in operating activities during third quarter was 5.4 million euros compared to 59 thousand euros generated the third quarter of 2023.

Net assets per share on 30 September 2024 totalled to 0.91 euros compared to 0.96 euros on 30 September 2023.

Key performance indicators

	2024 9M	2023 9M	2024 Q3	2023 Q3	2023 12M
Revenue, th EUR	10 604	19 969	3 697	3 857	23 021
Gross profit, th EUR	2 856	6 000	433	1 544	7 028
Gross profit, %	27%	30%	12%	40%	31%
Operating result, th EUR	-1 731	1 667	-872	167	2 963
Operating result, %	-16%	8%	-24%	4%	13%
Net result, th EUR	-4 062	-1 025	-1 022	-732	-900
Net result, %	-38%	-5%	-28%	-19%	-4%

Earnings per share, EUR	-0.07	-0.02	-0.02	-0.01	-0.02

	30.09.2024	30.09.2023	31.12.2023
Total Assets, th EUR	113 614	100 674	107 237
Total Liabilities, th EUR	62 148	46 376	52 814
Total Equity, th EUR	51 466	54 298	54 423
Debt / Equity *	1.21	0.85	0.97

Return on Assets, % **	-3.8%	-1.0%	-0.08%
Return on Equity, % ***	-7.7%	-1.9%	-1.5%
Net asset value per share, EUR ****	0.91	0.96	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	30.09.2024	30.09.2023	31.12.2023
ASSETS
Current assets
Cash and cash equivalents	6 112	13 781	17 065
Current receivables	1 283	4 965	1 411
Prepaid expenses	275	0	268
Inventories	51 757	27 665	35 563
Total current assets	59 427	46 411	54 307
Non-current assets
Non-current receivables	19	12	2 010
Property, plant and equipment	7 639	7 819	7 763
Right-of-use assets	438	198	365
Investment property	40 493	45 874	40 361
Goodwill	204	262	0
Intangible assets	3 026	98	96
Total non-current assets	51 819	54 263	50 595
Assets held for sale	2 368	0	2 335
Total assets held for sale	2 368	0	2 335
TOTAL ASSETS	113 614	100 674	107 237
LIABILITIES AND EQUITY
Current liabilities
Current debt	1 750	28 581	30 141
Customer advances	8 204	3 048	3 657
Trade and other payables	6 059	3 236	4 911
Tax liabilities	241	253	161
Short-term provisions	9	5	11
Total current liabilities	16 263	35 123	38 881
Non-current liabilities
Long-term debt	44 585	10 027	12 695
Other long term liabilities	2	0	0
Deferred income tax liabilities	1 131	1 136	1 130
Long-term provisions	167	90	108
Total non-current liabilities	45 885	11 253	13 933
TOTAL LIABILITIES	62 148	46 376	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	30 186	34 153	34 198
Total equity attributable to the owners of the Company	50 411	54 298	54 423
Non-controlling interest	1 055	0	0
TOTAL EQUITY	51 466	54 298	54 423
TOTAL LIABILITIES AND EQUITY	113 614	100 674	107 237

Consolidated interim statements of comprehensive income

in thousands of euros	2024 9M	2023 9M	2024 Q3	2023 Q3	2023 12M
CONTINUING OPERATIONS
Operating income
Revenue	10 604	19 969	3 697	3 857	23 021
Cost of goods sold	-7 748	-13 969	-3 264	-2 313	-15 993
Gross profit	2 856	6 000	433	1 544	7 028

Marketing expenses	-773	-486	-288	-187	-705
Administrative expenses	-3 819	-3 860	-1 029	-1 204	-5 440
Other income	34	16	15	16	2 099
Other expenses	-29	-3	-3	-2	-19
Operating profit/ loss	-1 731	1 667	-872	167	2 963

Financial income	98	174	31	86	254
Financial expense	-2 411	-2 858	-165	-982	-4 115
Profit / loss before income tax	-4 044	-1 017	-1 006	-729	-898
Income tax	-18	-8	-16	-3	-2
Net profit / loss for the period	-4 062	-1 025	-1 022	-732	-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	-4 062	-1 025	-1 022	-732	-900
Attributable to:
The owners of the company	-4 012	-1 025	-990	-732	-900
Non-controlling interests	-50	0	-32	0	0
Earnings per share for the period €	-0.07	-0.02	-0.02	-0.01	-0.02