Unaudited financial results of Hepsor AS for 12 months and
Hepsor AS unaudited financial results for 12 months and Q4 2021
The consolidated turnover of Hepsor AS for the 2021 financial year amounts to 15 million euros and its net income to 1.7 million euros (including 0.02 million euros attributable to the owners of the parent company). We expect revenue of 28 million euros in 2022 and net income of 3.3 million euros (including 3.1 million euros attributable to the owners of the parent company).
The company’s financial result in 2021 was lower than in 2020, mainly due to the cyclical nature of the business. The project development cycle lasts from 24 to 36 months and the turnover is only generated at the end of the cycle. As a result, more projects may complete in one year than another, and in 2021 fewer projects than usual have become ready for sale.
Henri Laks, member of Hepsor’s Management Board, stated that due to the cyclical nature of the business, Hepsor could also experience years in the future with fluctuating financial results, despite a solid development portfolio and a good project profitability. He said that as a result, financial results may be weaker or stronger compared to the previous or next fiscal year. Accordingly, management analyzes the company’s long-term financial results using three-year average financial data as a benchmark to neutralize cyclicality.
The company has set itself a target of 100 million euros in equity by 2030. To this end, the average annual return on capital should be around 20%. When assessing the return on capital in the coming years, it should be borne in mind that the additional capital raised through the public offering at the end of 2021 will be invested in projects in the first half of 2022, and this will have impact on financial results in approximately 24 months.
Hepsor acquired nine new development projects (five in Estonia and four in Latvia), adding nearly 70,000 square meters of new development volume. At the same time, Hepsor’s portfolio is not concentrated on a few individual projects; instead, it is divided between a large number of projects in terms of location and destination (residential vs commercial). While Hepsor had 19 different projects at the start of 2021, that number had grown to 26 by the end of the year. The Group considers that the composition of the portfolio is very good.
According to board member Henri Laks, management is satisfied with the 2021 financial year – a good foundation has been laid for growth in the periods ahead, including a strong portfolio, a motivated team and thousands of new shareholders on board.
Overview of financial results for 12 months and the 4th quarter of 2021
Group revenue in 2021 amounted to €15.0 million (compared to €38.8 million in 2020), including €8.0 million in the fourth quarter (€15.2 million euros in the fourth quarter of 2020). Compared to the previous period, turnover in 2021 decreased by 61.4%. The decline in revenue in 2021 is mainly due to the low number of completed projects, which resulted in fewer projects reaching the sales stage than in an average year.
The Group’s operating profit for 2021 amounts to 1.9 million euros (compared to 3.4 million euros in 2020). The operating margin is 12.6% (compared to 8.8% in 2020). The Group’s net profit for the year amounted to 1.7 million euros (compared to 3.8 million euros in 2020), of which losses attributable to the owners of the parent company amounted to 22 thousand euros (profit of 2.6 million euros in 2020), while the result attributable to minority interests amounts to 1.8 million euros (1.3 million euros in 2020).
The Group’s operating profit in the fourth quarter of 2021 was €1.5 million (compared to €1.6 million in the fourth quarter of 2020). Fourth quarter operating margin was 18.3% (compared to 10.9% in the fourth quarter of 2020). The increase in real estate market prices in 2021 compared to 2020 increased both the operating profit of development projects sold and the net profit margin. Net profit for the fourth quarter amounted to 1.6 million euros (compared to 1.8 million euros in the fourth quarter of 2020) and the net profit margin was 19.4% (11.9% in 2020) .
Although the margins of projects completed during the reporting period were higher than expected, the reporting year ended with a loss for the owners of the parent company. The main reasons are:
- Due to the cyclical nature of projects, very few projects were completed during the reference year.
- The share of the parent company in the projects completed during the year under review is below average compared to other projects developed by the parent company.
- Exceptional expenses related to the IPO of Hepsor AS shares for an amount of 205 thousand euros are included in operating expenses for the year under review. Total expenses incurred in connection with the listing and issuance of shares amounted to €650 thousand, of which €445 thousand was reflected in the consolidated income statement.
Consolidated statement of financial position (unaudited)
| in thousands of euros | Dec 31 2021 | Dec 31 2020 | ||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 10,889 | 4,207 | ||
| Customers and other debtors | 652 | 574 | ||
| Receivables on current loans | 2,388 | 776 | ||
| Inventories | 37,237 | 22,903 | ||
| Total current assets | 51,166 | 28,460 | ||
| Non-current assets | ||||
| Fixed assets | 229 | 492 | ||
| Financial investment | 402 | 0 | ||
| Investments in associates | 0 | 2 | ||
| Receivables on non-current loans | 3,408 | 1,371 | ||
| Other non-current receivables | 140 | 108 | ||
| Total non-current assets | 4,179 | 1,973 | ||
| Total assets | 55,345 | 30,433 | ||
| Liabilities and equity | ||||
| Current liabilities | ||||
| Loans and borrowings | 2,761 | 4,038 | ||
| Current rental debts | 123 | 174 | ||
| Deposits from customers | 1,164 | 769 | ||
| Suppliers and other creditors | 5,539 | 3,082 | ||
| Total current liabilities | 9,587 | 8,063 | ||
| Non-current liabilities | ||||
| Loans and borrowings | 25,602 | 12,122 | ||
| Non-current rental debts | 66 | 267 | ||
| Other non-current liabilities | 1,053 | 402 | ||
| Deferred tax liability | 0 | 60 | ||
| Total non-current liabilities | 26,721 | 12,851 | ||
| Total responsibilities | 36,308 | 20,914 | ||
| Equity | ||||
| Share the capital | 3,855 | 6 | ||
| Premium | 9,362 | 3,211 | ||
| Retained earnings | 5,820 | 6,302 | ||
| Total equity | 19,037 | 9,519 | ||
| included total equity attributable to owners of the parent company | 18,836 | 9,454 | ||
| included non-controlling interest | 201 | 65 | ||
| Total Liabilities and Equity | 55,345 | 30,433 |
Consolidated statement of profit and loss and other comprehensive income (unaudited)
| in thousands of euros | Q4 2021 | Q4 2020 | 2021 | 2020 Adjusted |
| Income | 8,015 | 15,158 | 14,961 | 38,771 |
| Cost of sales (-) | -6,111 | -13,299 | -11,902 | -34,687 |
| Gross profit | 1,904 | 1,859 | 3,059 | 4,084 |
| Marketing costs (-) | -94 | -42 | -271 | -93 |
| Administrative expenses (-) | -363 | -158 | -942 | -594 |
| Other exploitation products | 29 | 17 | 83 | 51 |
| Other operating expenses (-) | -ten | -31 | -49 | -37 |
| Operating profit of the year | 1,466 | 1,645 | 1,880 | 3,411 |
| Financial products | 174 | 141 | 321 | 917 |
| Financial expenses (-) | -194 | -30 | -512 | -364 |
| Profit before tax | 1,446 | 1,756 | 1,689 | 3,964 |
| Current income tax | 0 | -59 | -16 | -59 |
| Deferred income tax | 105 | 110 | 60 | -60 |
| Net profit for the year | 1,551 | 1,807 | 1,733 | 3,845 |
| Attributable to parent owners | 153 | 1,108 | -22 | 2,591 |
| Non-controlling interest | 1,398 | 699 | 1,755 | 1,254 |
| Other comprehensive income | ||||
| Changes related to change of ownership | 0 | 11 | 70 | -14 |
| Change in value of embedded derivatives with minority shareholders | -1,389 | -518 | -1,815 | -1,022 |
| Issue of shares | -445 | 0 | -445 | 0 |
| Business combinations between related parties | 0 | 0 | 0 | 25 |
| Other comprehensive income for the period | -283 | 1,300 | -457 | 2,834 |
| Attributable to parent owners | -292 | 1,107 | -467 | 2,605 |
| Non-controlling interest | 9 | 193 | ten | 229 |
| Earnings per share | ||||
| Basic (euros per share) | 0.04 | 0.29 | -0.01 | 0.86 |
| Diluted (euros per share) | 0.04 | 0.29 | -0.01 | 0.86 |
The interim report is attached to the current press release and is available on Hepsor’s website https://hepsor.ee/en/for-investors/stock/
The presentation of the interim report is available from:
https://hepsor.ee/wp-content/uploads/Hepsor_M1_22.02.2022_25fps.mp4
Kairi’s Tips
CFO
Hepsor AS
[email protected]
www.hepsor.ee
Attachments
-
Hepsor AS 2021 Q4 and 12-month half-year report