MANAGEMENT REPORT FOR 6 MONTHS 2021
General information
UPP Olaines OÜ (hereafter ‘the Company’ and ‘the 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 management board is aware of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s prospects for the period after the reporting period of these financial statements outside the course of its regular business activities.
UPP Olaines OÜ is operating based on going concern.
Financial commentary for the second quarter and six months of 2021
Net rental income was 638 000 euros in 2Q 2021 (651 646 euros in 2Q 2020) and 1 238 198 euros for the six months of 2021 (1 308 860 euros for 6 months of 2020). Operating profit was 588 383 euros in 2Q 2021 (608 349 euros in 2Q 2020) and 1 150 490 euros for the six months of 2021 (1 228 263 euros for 6 months of 2020). Net income was 349 591 euros in 2Q 2021 (328 545 euros in 2Q 2020) and 653 092 euros for the six months of 2021 (657 652 euros for 6 months 2020).
Decrease in net rental income and operating profit was due to the changes in the lease agreements which the management also reflected upon in the 1Q 2021 commentary. During the transition period, the premises subject to the changes in the lease agreements did not produce lease income for the period of two weeks. On top of the collection loss, the Group also made minor operational works and installed LED lights for the new tenant, which had additional impact on net rental income and operating profit.
Net income was not affected by these events compared to the previous reporting period. That is because the decrease in financial costs, which is due to the repaid principal in between the reporting periods, absorbed the loss of income and operational costs related to the changes in lease agreements. This also contributed to the higher net income in 2Q 2021 when compared to 2Q 2020.
The company’s sole business activity is to collect rental revenue, manage the Olaine property and service its liabilities to lenders and investors. Liabilities include the subordinated bonds with a fixed interest rate and the investment loan which’ rate is also fixed with an interest rate swap agreement. On the revenue side the company earns stable triple-net rental income from reputable tenants, which is fixed with medium-term agreements but is subject to indexation. Due to the economically fixed nature of the company, there needs to be major event in the overall economy or in the company's business activities for them to have significant effect on the company’s financial results.
Key indicators of financial performance and position for 6 months 2021
| (in EUR) | 2Q 2021 | 2Q 2020 | 6 months 2021 | 6 months 2020 | ||||||
| Net rental income | 638 000 | 651 646 | 1 238 198 | 1 308 860 | ||||||
| Operating profit | 588 383 | 608 349 | 1 150 492 | 1 228 263 | ||||||
| Profit for the period | 349 591 | 328 545 | 653 092 | 657 652 | ||||||
| (in EUR) | 30.06.2021 | 30.06.2020 | ||||||||
| Investment property | 31 320 000 | 30 909 000 | ||||||||
| Interest-bearing loans | 26 890 361 | 28 226 632 | ||||||||
| Interest-bearing loans less shareholder’s loan | 23 948 333 | 25 278 332 | ||||||||
| 6 months 2020 | 6 months 2020 | |||||||||
| Net profit margin, % (Total comprehensive income / Net rental revenue) | 52,8% | 50,2% | ||||||||
| ROA (Net profit / Average fixed assets) | 4,17% | 4,25% | ||||||||
| LTV (Interest-bearing loans less shareholder’s loan / Investment property) | 76,6% | 81,8% | ||||||||
| DSCR (Operating profit / Loan principal and interest payments on interest-bearing loans) | 1,1 | 1,2 | ||||||||
Management board and supervisory board
The management board of UPP Olaines OÜ has one member: Marko Tali, the chairman of the board. The management board of Olaines Logistics SIA has also one member: Siim Sild, chairman of the board.
The supervisory board of UPP Olaines OÜ has three members: Mart Tooming, Tarmo Rooteman, Hallar Loogma.
No remuneration or other benefits have been allotted to the members of the management board and supervisory board of UPP Olaines OÜ. The member of board of Olaines Logistics SIA receives remuneration according to Latvian legislation.
There are no employees in the company besides the members of the management and supervisory board.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed consolidated interim statement of comprehensive income
| (in EUR) | Note | 2Q 2021 | 2Q 2020 | 6 months 2021 | 6 months 2020 |
| Net rental income | 4 | 638 000 | 651 646 | 1 238 198 | 1 308 860 |
| Net rental income | 638 000 | 651 646 | 1 238 198 | 1 308 860 | |
| General and administrative expenses | (49 617) | (43 297) | (87 706) | (80 624) | |
| Operating profit | 588 383 | 608 349 | 1 150 492 | 1 228 236 | |
| Financial income / (cost) | (238 792) | (279 804) | (497 400) | (570 584) | |
| Profit before income tax | 349 591 | 328 545 | 653 092 | 657 652 | |
| Income tax | 0 | 0 | 0 | 0 | |
| Profit for the periood | 349 591 | 328 545 | 653 092 | 657 652 | |
| Total comprehensive income for the period | 349 591 | 328 545 | 653 092 | 657 652 |
Condensed consolidated interim statement of financial position
| (in EUR) | Note | 30.06.2021 | 30.06.2020 |
| Cash and cash equivalents | 707 233 | 555 735 | |
| Trade and ohter receivables | 213 135 | 392 830 | |
| Total current assets | 920 368 | 948 565 | |
| Investment property | 31 320 000 | 30 909 000 | |
| Total non-current assets | 31 320 000 | 30 909 000 | |
| TOTAL ASSETS | 32 240 368 | 31 857 565 | |
| Trade and ohter payables | 463 717 | 431 635 | |
| Financial derivatives | 274 156 | 434 250 | |
| Loans and borrowings | 5 | 1 064 004 | 1 064 004 |
| Total current liabilities | 1 801 877 | 1 929 889 | |
| Loans and borrowings | 5 | 25 826 357 | 26 896 627 |
| Total non-current liabilities | 25 826 357 | 26 896 627 | |
| TOTAL LIABILITIES | 27 628 234 | 28 826 516 | |
| Share capital | 2 500 | 2 500 | |
| Retained earnings | 4 609 634 | 3 028 549 | |
| TOTAL EQUITY | 4 612 134 | 3 031 049 | |
| TOTAL EQUITY AND LIABILITIES | 32 240 368 | 31 857 565 |
UNITED PARTNERS
Siim Sild
Managing Director
+372 5626 0107
siim.sild@unitedpartners.ee
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