Management Board of Northern Horizon Capital AS has approved the audited financial results of Baltic Horizon Fund (the Fund) for the year 2018. The financial results remained unchanged compared to the preliminary disclosure on 15 February 2019.

Gross Asset Value (GAV)

In 2018, the GAV increased from EUR 215.8 million to EUR 260.9 million compared to the end of 2017. The increase is mainly related to new acquisitions during the year and the cash received from a subsequent bond issue in December. The Fund completed the acquisitions of the Postimaja Shopping Centre, LNK Centre and Meraki land plot and thus deployed most of the new capital raised in 2018.

Net Asset Value (NAV)

In 2018, the Fund NAV increased from EUR 107 million to EUR 109.8 million compared to the end of 2017. The increase is related to new equity raised and the Group’s operational performance over the year. The Fund raised EUR 2.4 million net equity during the February private placement and generated almost EUR 10.0 million in net profit. The Fund NAV increase was offset by a EUR 7.7 million dividend distribution to its unitholders and a EUR 0.9 million buy-back of own units.

Net Rental Income and Net Profit

In 2018, the net profit of the Group increased from EUR 9.4 million to EUR 10.0 million as compared to 2017. During the year, the Group recorded a EUR 2.0 million fair value gain (EUR 3.7 million during 2017).

Net rental income for 2018 rose 37.5% to EUR 14.8 million, as compared to EUR 10.8 million in 2017. The increase is related to new acquisitions (Vainodes I office building, Postimaja shopping centre and LNK Centre) that were made following the capital raisings at the end of 2017 and at the start of 2018 and bond subscriptions.

Annual Key Figures

Euro ‘000 2018 2017 Change (%)
       
Net rental income 14,804 10,768 37.5%
Valuation gains/(loss) on investment properties 2,014 3,676 (45.2%)
Operating profit 14,079 11,684 20.5%
Net financing costs (2,781) (1,481) 87.8%
Profit before tax 11,298 10,203 10.7%
Net profit for the period 9,990 9,444 5.8%
       
Weighted average number of units outstanding 78,764,8951 62,270,694 26.5%
Earnings per unit (EUR) 0.13 0.15 (13.3%)

Euro ‘000 31.12.2018 31.12.2017 Change (%)
       
Investment property in use 245,160 189,317 29.5%
Gross asset value (GAV) 260,878 215,785 20.9%
       
Interest bearing loans 140,507 98,087 43.2%
Total liabilities 151,073 108,809 38.8%
       
Net asset value (NAV) 109,805 106,976 2.6%
Number of units outstanding 78,496,8311 77,440,638 1.4%
Net asset value (NAV) per unit (EUR) 1.3988 1.3814 1.3%
Loan-to-Value ratio (LTV) 57.3% 51.8%  
Average effective interest rate 2.4% 1.7%  
  1. The number of units excludes 255,969 units acquired by the Fund as part of the unit buy-back program.

Investment Properties Performance

During 2018, the average actual occupancy of the portfolio was 97.6% (2017: 96.6%). When all rental guarantees are considered, the effective occupancy rate is 98.0% (2017: 97.8%). Average direct property yield during 2018 was 6.8% (2017: 7.2%). The net initial yield for the whole portfolio for 2018 was 6.5% (2017: 6.8%). The decrease is related to the acquisition of new properties with lower yields.  

Property name City Country Market value1
Euro‘000
NLA Direct property yield for 2018 Net initial yield for 2018 Occupancy rate for 2018
Duetto I Vilnius Lithuania 16,320 8,498 7.3% 6.7% 100.0%2
Pirita SC Tallinn Estonia 10,020 5,427 7.3% 8.1% 100.0%2
Upmalas Biroji BC Riga Latvia 25,730 10,458 7.2% 7.0% 100.0%
G4S Headquarters Tallinn Estonia 17,240 9,179 7.7% 7.1% 100.0%
Europa SC Vilnius Lithuania 41,100 16,856 6.3% 5.8% 94.8%
Domus Pro Retail Park Vilnius Lithuania 17,460 11,247 7.4% 6.7% 98.4%
Domus Pro Office Vilnius Lithuania 7,460 4,831 7.7% 6.9% 95.9%
Meraki Land Vilnius Lithuania 1,670
Sky SC Riga Latvia 5,390 3,254 8.2% 7.5% 99.3%
Lincona Tallinn Estonia 17,170 10,870 7.7% 7.2% 94.6%3
Vainodes I Riga Latvia 21,230 8,052 6.9% 6.7% 100.0%
Postimaja & CC Plaza complex Tallinn Estonia 46,920 17,809 6.2% 5.9% 98.1%
LNK Centre Riga Latvia 17,450 7,453 6.4% 6.4% 100.0%
Total portfolio     245,160 113,934 6.8% 6.5% 98.0%
  1. Based on the latest valuation as at 28 December 2018.
  2. Effective occupancy rate is 100% due to a rental guarantee. 
  3. Lincona Office Complex was fully occupied at the end of December 2018.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Euro ‘000 2018 2017
(restated)*
     
Rental income 15,860 11,839
Service charge income 2,760 1,921
Cost of rental activities (3,816) (2,992)
Net rental income 14,804 10,768
     
Administrative expenses (2,813) (2,774)
Other operating income/(expenses) 74 14
Valuation gains/(loss) on investment properties 2,014 3,676
Operating profit 14,079 11,684
     
Financial income 8 47
Financial expenses (2,789) (1,528)
Net financing costs (2,781) (1,481)
     
Profit before tax 11,298 10,203
Income tax charge (1,308) (759)
Profit for the period 9,990 9,444
     
Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods
Net gains (losses) on cash flow hedges (1,013) 273
Termination of interest rate swap agreement reclassified to profit or loss 57
Recognition of initial interest rate cap costs (33) (43)
Income tax relating to net gains (losses) on cash flow hedges 97 (49)
Other comprehensive income/(expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods (949) 238
     
Total comprehensive income/(expense) for the period, net of tax 9,041 9,682
     
Basic and diluted earnings per unit (Euro)  0.13 0.15

*In 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers, effective from 1 January 2018. As a result, the comparative figures for “service charge income” and “cost of rental activities” were adjusted. The adjustment did not have an impact on the Group’s equity.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Euro ‘000 31.12.2018 31.12.2017
     
Non-current assets    
Investment properties 245,160 189,317
Derivative financial instruments 9 89
Other non-current assets 596 146
Total non-current assets 245,765 189,552
     
Current assets    
Trade and other receivables 2,734 1,568
Prepayments 154 108
Cash and cash equivalents 12,225 24,557
Total current assets 15,113 26,233
Total assets 260,878 215,785
     
Equity    
Paid in capital 93,673 91,848
Own units (335)
Cash flow hedge reserve (1,005) (56)
Retained earnings 17,472 15,184
Total equity 109,805 106,976
     
Non-current liabilities    
Interest bearing loans and borrowings 140,401 96,497
Deferred tax liabilities 5,844 5,206
Derivative financial instruments 1,069 88
Other non-current liabilities 905 859
Total non-current liabilities 148,219 102,650
     
Current liabilities    
Interest bearing loans and borrowings 106 1,590
Trade and other payables 2,397 4,202
Income tax payable 14
Derivative financial instruments 15
Other current liabilities 351 338
Total current liabilities 2,854 6,159
Total liabilities 151,073 108,809
Total equity and liabilities 260,878 215,785

For additional information please contact:

Tarmo Karotam
Baltic Horizon Fund manager
E-mail tarmo.karotam@nh-cap.com
www.baltichorizon.com

Baltic Horizon Fund is a registered contractual public closed-end real estate fund managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS. Distribution: Nasdaq Tallinn, Nasdaq Stockholm, GlobeNewswire, www.baltichorizon.com

This announcement contains information that the Management Company is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the above distributors, at 19:50 EET on 15 March 2019.

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