MANAGEMENT REPORT FOR 3 MONTHS 2020
General information
UPP Olaines OÜ (hereafter ‘the Company’ and ‘Group’ when referred together with subsidiaries) was established for the purpose of funding, acquiring and managing the real estate investment of Olaines Logistics Park: (buildings and land) located at “Šarlotes”, Olaines county, Olaines parish, Latvia, cadastre number 8080 003 0029, registered in the Land Register compartment No.5439 of the city of Olaine parish. The Company was established on 24.08.2017 and had no economic activity until 15.12.2017, when it acquired the cold storage warehouse Olaines Logistics Park.
The business performance is not affected by seasonal factors. The activities of the Company have no environmental or social impact.
As the Company has been established solely for the purpose of funding, acquiring and managing the property, no strategic changes in the business are planned.
UPP Olaines OÜ is operating based on going concern.
The impact of COVID-19 on the Company’s economic activity
The novel coronavirus outbreak started in early 2020 and caused a global economic downturn in March 2020. The COVID-19 also reached the Baltic states, causing border closures for foreign nationals, school closures and panic shopping for consumer stapels. The full effect of the economic downturn caused by the pandemic remains to be seen.
The Company’s economic activities for the reporting period have not been affected by the virus outbreak. The Management Board's best estimate is that, in the event that the outbreak of the virus and the resulting economic downturn do not materially worsen, the effect of these circumstances on the Company's financial performance will be moderate, due to the industry the Company's property leasing companies are operating in.
Financial commentary for the first quarter of 2020
Net rental income was 657 214 euros for the first quarter of 2020, which is in line with the net rental income of 649 713 euros for the first quarter of 2019.
Operating profit was 619 887 euros for the first quarter of 2020, decreased by 3.8% from 644 147 euros for the first quarter of 2019. The decrease in operating profit was caused by increased management costs.
Net income was 329 107 euros for the first quarter of 2020, increased by 23% from 267 473 euros for the first quarter of 2019. The increase in net income for the reporting period was caused by the reduced financial costs compared with first quarter of 2019, where the adjustments of fair value of the interest rate swap contract had a negative impact on the financial expenses.
Merger of SIA Olaines Logistics and SIA Olaines Logistics Parks
On January 22nd 2020 the subsidiaries SIA Olaines Logistics and SIA Olaines Logistics Parks were merged. The merger was planned and part of normal management of the business, referred to also in the note issue terms and conditions. The merger took somewhat longer due to the peculiarities of the Latvian legislation. The merger will further increase the efficiency of the Company’s operations and management. The new Group structure is found in Note 1.
Key indicators of financial performance and position for 3 months 2020
| (in EUR) | Q1 2020 | Q1 2019 | ||
| Net rental income | 657 214 | 649 713 | ||
| Operating profit | 619 887 | 644 147 | ||
| Profit for the period | 329 107 | 267 473 |
| (in EUR) | 31.03.2020 | 31.03.2019 |
| Investment property | 30 909 000 | 30 762 000 |
| Interest-bearing loans | 28 226 632 | 29 390 632 |
| Interest-bearing loans less shareholder loan | 25 278 332 | 26 342 332 |
| Q1 2020 | Q1 2019 | |
| Net profit margin (Total comprehensive income for the period / Net rental income) | 49% | 41% |
| ROA (Net profit for the period / Average total assets for the period) | 1,04% | 0,85% |
| DSCR (Operating profit / Loan principal and interest payments on interest-bearing loans) | 1,2 | 1,1 |
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed consolidated interim statement of comprehensive income
| (in EUR) | Note | Q1 2020 | Q1 2019 | ||
| Net rental income | 5 | 657 214 | 649 713 | ||
| Net rental income | 657 214 | 649 713 | |||
| General and administrative expenses | (37 327) | (5 566) | |||
| Operating profit | 619 887 | 644 147 | |||
| Financial income / (cost) | (290 780) | (376 674) | |||
| Profit before income tax | 329 107 | 267 473 | |||
| Income tax | 0 | 0 | |||
| Profit for the period | 329 107 | 267 473 | |||
| Total comprehensive income for the period | 329 107 | 267 473 |
Condensed consolidated interim statement of financial position
| (in EUR | Note | 31.03.2020 | 31.03.2019 |
| Cash and cash equivalents | 534 344 | 523 170 | |
| Trade and other receivables | 313 568 | 281 913 | |
| Total current assets | 847 912 | 805 083 | |
| Investment property | 30 909 000 | 30 762 000 | |
| Total non-current assets | 30 909 000 | 30 762 000 | |
| TOTAL ASSETS | 31 756 912 | 31 567 083 | |
| Trade and other payables | 379 344 | 450 946 | |
| Financial derivatives | 448 432 | 488 313 | |
| Loans and borrowings | 6 | 1 064 004 | 1 064 000 |
| Total current liabilities | 1 891 780 | 2 003 259 | |
| Loans and borrowings | 6 | 27 162 628 | 28 326 632 |
| Total non-current liabilities | 27 162 628 | 28 326 632 | |
| TOTAL LIABILITIES | 29 054 408 | 30 329 891 | |
| Share capital | 2 500 | 2 500 | |
| Retained earnings | 2 700 004 | 1 234 692 | |
| TOTAL EQUITY | 2 702 504 | 1 237 192 | |
| TOTAL EQUITY AND LIABILITIES | 31 756 912 | 31 567 083 |
More information:
Siim Sild
Director
+372 5626 0107
siim.sild@unitedpartners.ee
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