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Baltic Horizon Fund Consolidated Un-Audited Results for H1

News Desk 2018 · 2018-08-31T10:45:16-04:00

Baltic Horizon Fund Consolidated Un-Audited Results for H1 2018 Gross Asset Value (GAV) As of 30 June 2018, the GAV increased to EUR 248.2 million (EUR 234.5 million as at 31 March 2018). During Q2 2018, the Group completed acquisition of land next to the Domus Pro complex for a purchase price of EUR 1.7 million. Increase is also related to the issuing of EUR 30 million worth of bonds. Net Asset Value (NAV) In Q2 2018, the Fund NAV increased from EUR 109.0 million to EUR 109.3 million. The increase is related to the Group’s operational performance over the quarter. The Fund also made a EUR 1.9 million cash distribution to its unitholders (EUR 0.024 per unit). Net Profit In Q2 2018, the Fund earned a net profit of EUR 2,262 thousand (EUR 1,542 thousand during Q2 2017). The net result was positively affected by revaluation gains and the operational performance of the properties. During the quarter, the Group recognised a EUR 480 thousand revaluation gain. Net Operating Income (NOI) In Q2 2018, the Fund recorded a EUR 3.6 million NOI (EUR 2.7 million in Q2 2017). The increase is related to new acquisitions that were made following the capital raisings at the end of 2017 and the beginning of 2018 (Vainodes I and Postimaja shopping centre). Cash Distributions (dividends) The Fund declared a cash distribution of EUR 1,979 thousand (EUR 0.025 per unit) to the Fund unitholders for Q2 2018 results (EUR 1,900 thousand or EUR 0.024 per unit for Q1 2018). During Q2 2018, the Generated Net Cash Flow (GNCF) increased to EUR 2,267 thousand or EUR 0.029 per unit (EUR 2,125 thousand or EUR 0.027 per unit for Q1 2018). Quarterly Key Figures Euro ‘000Q2 2018Q2 2017 (restated)*Change (%)Rental income3,9582,94034.6%Service charge income60838259.2%Cost of rental activities(940)(640)46.9%Net rental income3,6262,68235.2% Expenses related to public offerings-(171)(100.0)%Administrative expenses(621)(499)24.4%Other operating income / (expenses)39-n/aValuation gains / (loss) on investment properties48033941.6%Operating profit3,5242,35149.9%Financial income22-%Financial expenses(716)(443)61.6%Net financing costs(714)(441)61.9% Profit before tax2,8101,91047.1%Income tax charge(234)(368)(36.4)%Profit for the period2,5761,54267.1% Weighted average number of units outstanding 79,157,094 58,004,44636.5%Earnings per unit (EUR)0.030.03-% *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. The impact is related to presentation changes in accordance with IFRS 15. Euro ‘00030.06.201831.12.2017Change (%) Investment property in use226,160189,31719.5%Gross asset value (GAV)248,241215,78515.0% Interest bearing loans129,90098,08732.4%Total liabilities138,920108,80927.7% Net asset value (NAV)109,321106,9762.2%Number of units outstanding79,157,09477,440,6382.2%Net asset value (NAV) per unit (EUR)1.38111.3814(0.02)%Loan-to-Value ratio (LTV)57.4%51.8% Average effective interest rate2.3%1.7% Investment properties PERFORMANCE as of 30 JUNE 2018 During Q2 2018, the average actual occupancy of the portfolio was 97.3% (Q1 2018: 97.4%). When all rental guarantees are considered, the effective occupancy rate is 97.6% (Q1 2018: 97.7%). Due to temporary vacancies the average direct property yield during Q2 2018 was 6.8% (Q1 2018: 6.9%). The net initial yield for the whole portfolio for Q2 2018 was 6.5% (Q1 2018: 6.4%). Property nameCityCountryMarket value1 Euro‘000NLADirect property yield2Net initial yield3Occupancy rate for Q2 2018Duetto IVilniusLithuania16,2408,3277.5%6.9%100.0%4Pirita SCTallinnEstonia10,9505,4007.4%8.2%100.0%4Upmalas Biroji BCRigaLatvia24,66010,6007.3%7.1%99.8%G4S HeadquartersTallinnEstonia16,9008,3637.7%7.0%100.0%Europa SCVilniusLithuania40,31016,9006.2%5.7%94.1%Domus Pro Retail ParkVilniusLithuania17,35011,2477.4%6.7%98.4%Domus Pro OfficeVilniusLithuania7,2904,7597.9%6.9%94.1%Domus Pro LandVilniusLithuania1,670----CC PlazaTallinnEstonia13,1908,6648.4%7.6%100.0%Sky SCRigaLatvia5,3603,2638.3%7.7%99.3%LinconaTallinnEstonia16,65010,8597.3%6.8%91.8%Vainodes IRigaLatvia21,6108,0527.0%6.9%100.0%PostimajaTallinnEstonia33,9809,1414.6%4.7%96.0%Total portfolio 226,160105,5756.8%6.5%97.6% Based on the latest valuation as at 30 June 2018.Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.Effective occupancy rate is 100% due to a rental guarantee. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Euro ‘000Q2 2018Q2 2017 (restated)*H1 2018H1 2017 (restated)* Rental income3,9582,9407,5645,667Service charge income6083821,193740Cost of rental activities(940)(640)(1,722)(1,199)Net rental income3,6262,6827,0355,208 Administrative expenses(621)(670)(1,261)(1,400)Other operating income / (expenses)39-4513Valuation gains / (loss) on investment properties480339480339Operating profit3,5242,3516,2994,160 Financial income22443Financial expenses(716)(443)(1,205)(775)Net financing costs(714)(441)(1,201)(732) Profit before tax2,8101,9105,0983,428Income tax charge(234)(368)(838)(936)Profit for the period2,5761,5424,2602,492 Other comprehensive income that is or may be reclassified to profit or loss in subsequent periodsNet gains (losses) on cash flow hedges(315)82(630)220Termination of interest rate swap agreement-57-57Recognition of initial interest rate cap costs(33)-(33)-Income tax relating to net gains (losses) on cash flow hedges34(23)79(40)Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods(314)116(584)237 Total comprehensive income for the period, net of tax2,2621,6583,6762,729 Basic and diluted earnings per unit (Euro)0.030.030.050.04 *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. The impact is related to presentation changes in accordance with IFRS 15. CONSOLIDATED STATEMENT OF FINANCIAL POSITION Euro ‘00030.06.201831.12.2017 Non-current assets Investment properties226,160189,317Derivative financial instruments5289Other non-current assets138146Total non-current assets226,350189,552 Current assets Trade and other receivables1,8201,568Prepayments224108Cash and cash equivalents19,84724,557Total current assets21,89126,233Total assets248,241215,785 Equity Paid in capital94,19891,848Cash flow hedge reserve(640)(56)Retained earnings15,76315,184Total equity109,321106,976 Non-current liabilities Interest bearing loans and borrowings129,79496,497Deferred tax liabilities5,4935,206Derivative financial instruments72988Other non-current liabilities846859Total non-current liabilities136,862102,650 Current liabilities Interest bearing loans and borrowings1061,590Trade and other payables1,6584,202Income tax payable-14Derivative financial instruments-15Other current liabilities294338Total current liabilities2,0586,159Total liabilities138,920108,809Total equity and liabilities248,241215,785 Additional information: Tarmo Karotam Baltic Horizon Fund manager E-mail tarmo.karotam@nh-cap.com www.baltichorizon.com The Fund is a registered contractual public closed-end real estate fund that is managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS. Distribution: Nasdaq, 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 16:40 EET on 31 August 2018. Attachment BHF semi-annual report H1 2018

Gross Asset Value (GAV)

As of 30 June 2018, the GAV increased to EUR 248.2 million (EUR 234.5 million as at 31 March 2018). During Q2 2018, the Group completed acquisition of land next to the Domus Pro complex for a purchase price of EUR 1.7 million. Increase is also related to the issuing of EUR 30 million worth of bonds.

Net Asset Value (NAV)

In Q2 2018, the Fund NAV increased from EUR 109.0 million to EUR 109.3 million. The increase is related to the Group’s operational performance over the quarter. The Fund also made a EUR 1.9 million cash distribution to its unitholders (EUR 0.024 per unit).

Net Profit

In Q2 2018, the Fund earned a net profit of EUR 2,262 thousand (EUR 1,542 thousand during Q2 2017). The net result was positively affected by revaluation gains and the operational performance of the properties. During the quarter, the Group recognised a EUR 480 thousand revaluation gain.

Net Operating Income (NOI)

In Q2 2018, the Fund recorded a EUR 3.6 million NOI (EUR 2.7 million in Q2 2017). The increase is related to new acquisitions that were made following the capital raisings at the end of 2017 and the beginning of 2018 (Vainodes I and Postimaja shopping centre).

Cash Distributions (dividends)

The Fund declared a cash distribution of EUR 1,979 thousand (EUR 0.025 per unit) to the Fund unitholders for Q2 2018 results (EUR 1,900 thousand or EUR 0.024 per unit for Q1 2018). During Q2 2018, the Generated Net Cash Flow (GNCF) increased to EUR 2,267 thousand or EUR 0.029 per unit (EUR 2,125 thousand or EUR 0.027 per unit for Q1 2018).

Quarterly Key Figures

Euro ‘000	Q2 2018	Q2 2017 (restated)*	Change (%)
Rental income	3,958	2,940	34.6%
Service charge income	608	382	59.2%
Cost of rental activities	(940)	(640)	46.9%
Net rental income	3,626	2,682	35.2%

Expenses related to public offerings	-	(171)	(100.0)%
Administrative expenses	(621)	(499)	24.4%
Other operating income / (expenses)	39	-	n/a
Valuation gains / (loss) on investment properties	480	339	41.6%
Operating profit	3,524	2,351	49.9%
Financial income	2	2	-%
Financial expenses	(716)	(443)	61.6%
Net financing costs	(714)	(441)	61.9%

Profit before tax	2,810	1,910	47.1%
Income tax charge	(234)	(368)	(36.4)%
Profit for the period	2,576	1,542	67.1%

Weighted average number of units outstanding	79,157,094	58,004,446	36.5%
Earnings per unit (EUR)	0.03	0.03	-%

*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. The impact is related to presentation changes in accordance with IFRS 15.

Euro ‘000	30.06.2018	31.12.2017	Change (%)

Investment property in use	226,160	189,317	19.5%
Gross asset value (GAV)	248,241	215,785	15.0%

Interest bearing loans	129,900	98,087	32.4%
Total liabilities	138,920	108,809	27.7%

Net asset value (NAV)	109,321	106,976	2.2%
Number of units outstanding	79,157,094	77,440,638	2.2%
Net asset value (NAV) per unit (EUR)	1.3811	1.3814	(0.02)%
Loan-to-Value ratio (LTV)	57.4%	51.8%
Average effective interest rate	2.3%	1.7%

Investment properties PERFORMANCE as of 30 JUNE 2018

During Q2 2018, the average actual occupancy of the portfolio was 97.3% (Q1 2018: 97.4%). When all rental guarantees are considered, the effective occupancy rate is 97.6% (Q1 2018: 97.7%). Due to temporary vacancies the average direct property yield during Q2 2018 was 6.8% (Q1 2018: 6.9%). The net initial yield for the whole portfolio for Q2 2018 was 6.5% (Q1 2018: 6.4%).

Property name	City	Country	Market value¹ *Euro‘000*	NLA	Direct property yield²	Net initial yield³	Occupancy rate for Q2 2018
Duetto I	Vilnius	Lithuania	16,240	8,327	7.5%	6.9%	100.0%⁴
Pirita SC	Tallinn	Estonia	10,950	5,400	7.4%	8.2%	100.0%⁴
Upmalas Biroji BC	Riga	Latvia	24,660	10,600	7.3%	7.1%	99.8%
G4S Headquarters	Tallinn	Estonia	16,900	8,363	7.7%	7.0%	100.0%
Europa SC	Vilnius	Lithuania	40,310	16,900	6.2%	5.7%	94.1%
Domus Pro Retail Park	Vilnius	Lithuania	17,350	11,247	7.4%	6.7%	98.4%
Domus Pro Office	Vilnius	Lithuania	7,290	4,759	7.9%	6.9%	94.1%
Domus Pro Land	Vilnius	Lithuania	1,670	-	-	-	-
CC Plaza	Tallinn	Estonia	13,190	8,664	8.4%	7.6%	100.0%
Sky SC	Riga	Latvia	5,360	3,263	8.3%	7.7%	99.3%
Lincona	Tallinn	Estonia	16,650	10,859	7.3%	6.8%	91.8%
Vainodes I	Riga	Latvia	21,610	8,052	7.0%	6.9%	100.0%
Postimaja	Tallinn	Estonia	33,980	9,141	4.6%	4.7%	96.0%
Total portfolio			226,160	105,575	6.8%	6.5%	97.6%

Based on the latest valuation as at 30 June 2018.
Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.
The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.
Effective occupancy rate is 100% due to a rental guarantee.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Euro ‘000	Q2 2018	Q2 2017 (restated)*	H1 2018	H1 2017 (restated)*

Rental income	3,958	2,940	7,564	5,667
Service charge income	608	382	1,193	740
Cost of rental activities	(940)	(640)	(1,722)	(1,199)
Net rental income	3,626	2,682	7,035	5,208

Administrative expenses	(621)	(670)	(1,261)	(1,400)
Other operating income / (expenses)	39	-	45	13
Valuation gains / (loss) on investment properties	480	339	480	339
Operating profit	3,524	2,351	6,299	4,160

Financial income	2	2	4	43
Financial expenses	(716)	(443)	(1,205)	(775)
Net financing costs	(714)	(441)	(1,201)	(732)

Profit before tax	2,810	1,910	5,098	3,428
Income tax charge	(234)	(368)	(838)	(936)
Profit for the period	2,576	1,542	4,260	2,492

Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods
Net gains (losses) on cash flow hedges	(315)	82	(630)	220
Termination of interest rate swap agreement	-	57	-	57
Recognition of initial interest rate cap costs	(33)	-	(33)	-
Income tax relating to net gains (losses) on cash flow hedges	34	(23)	79	(40)
Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods	(314)	116	(584)	237

Total comprehensive income for the period, net of tax	2,262	1,658	3,676	2,729

Basic and diluted earnings per unit (Euro)	0.03	0.03	0.05	0.04

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Euro ‘000	30.06.2018	31.12.2017

Non-current assets
Investment properties	226,160	189,317
Derivative financial instruments	52	89
Other non-current assets	138	146
Total non-current assets	226,350	189,552

Current assets
Trade and other receivables	1,820	1,568
Prepayments	224	108
Cash and cash equivalents	19,847	24,557
Total current assets	21,891	26,233
Total assets	248,241	215,785

Equity
Paid in capital	94,198	91,848
Cash flow hedge reserve	(640)	(56)
Retained earnings	15,763	15,184
Total equity	109,321	106,976

Non-current liabilities
Interest bearing loans and borrowings	129,794	96,497
Deferred tax liabilities	5,493	5,206
Derivative financial instruments	729	88
Other non-current liabilities	846	859
Total non-current liabilities	136,862	102,650

Current liabilities
Interest bearing loans and borrowings	106	1,590
Trade and other payables	1,658	4,202
Income tax payable	-	14
Derivative financial instruments	-	15
Other current liabilities	294	338
Total current liabilities	2,058	6,159
Total liabilities	138,920	108,809
Total equity and liabilities	248,241	215,785

Additional information:

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

The Fund is a registered contractual public closed-end real estate fund that is managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS.

Distribution: Nasdaq, 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 16:40 EET on 31 August 2018.

Attachment