GROUP CEO'S REVIEW
The beginning of the year was dominated by the European Central Bank's benchmark
rate cut, aimed at bringing about economic revival. However, instead of relying
on factors that are outside of our control, we should continue to realize
completed and planned developments, assessing them realistically.
In the first quarter, we were mainly engaged in the preparation of the sale of
completed apartments of the Kodulahe development and the sale of Soodi 6
development. In addition, we have continued the construction works in Bulgaria
and the detailed planning procedure at Arcojärve. In the last three months, the
pace of sales has slowed down a little, which is why the sales revenue and
profit of Arco Vara Group are slightly lower than the plan.
Despite the lower-than-planned sales revenue, the Company's capitalisation
remains very good, as the equity to assets ratio is almost 60%. The Company's
current 4-quarter return on equity is also close to our target of 20%.
Arco Tarc's team continues construction works on the padel centre that is being
built at Helme 18, which is likely to benefit also from the predicted slight
decrease in the final construction price. The padel center is 100% covered by a
lease agreement and will be open for sports in the final quarter of the year.
Our Bulgarian team is also on track to continue with the construction and
development of the Botanica Lozen Residences. Approximately 40% of the
development which is expected to be completed in 9 months have been sold. In the
second quarter, we expect to be granted a building permit for the Stage 2 of the
Botanica Lozen development, which will enable us to start sale and construction
of the buildings, provided that the market situation is favourable.
Looking at the next quarter, our main challenge is the sale of already completed
homes in the Kodulahe and Kuldlehe buildings, which would provide confidence for
starting new construction activities. We also consider it critically important
to acquire a new property for development, which is extremely important in the
Company's view of the next five years in terms of the long-term nature of the
real estate business.
KEY PERFORMANCE INDICATORS
In Q1 2024, the group's sales revenue was 990 thousand euros, which is about
four times more than the sales revenue of the Q1 2023 of 253 thousand euros. The
sales revenue of Q1 2023 consisted mainly of the operation of the commercial
building in Madrid. In 2024, the Madrid commercial building is no longer part of
the group - in the Q1 2024 own real estate property was sold.
In Q1 2024, the group's operating loss (=EBIT) was 208 thousand euros and net
loss 349 thousand euros. In Q1 2024, the group had an operating loss of 184
thousand euros and net loss of 291 thousand euros.
In Q1 2024, 3 apartments and 1 commercial premise were sold. In Q1 2023, final
sales were formalized for only 1 parking space in the projects developed by the
group.
In the first 3 months of 2024, the group's debt burden (net loans) increased by
1,951 thousand euros up to the level of 10,559 thousand euros as of 31 March
2024. As of 31 March 2024, the weighted average annual interest rate of
interest-bearing liabilities was 7.8%. This is a decrease of 0.4 percentage
points compared to 31 December 2023.
OPERATING REPORT
The group's sales revenue was 990 thousand euros in Q1 2024 (Q1 2023: 253
thousand euros), including the sale of real estate in the group's own
development projects 927 thousand euros (7 thousand euros in Q1 2023).
Other sales revenue in 2024 mainly includes revenue from franchise fees of real
estate agencies in Estonia, Latvia and Bulgaria. Franchise fees for the Q1 2024
were 55 thousand euros, franchise revenues for the Q1 2023 were 53 thousand
euros.
In the most premium phase of Kodulahe, Rannakalda, a pavilion, 4 service areas
and 108 apartments (as three separate apartment buildings), many of which have a
sea view, have been completed. As of the publication date of the quarterly
report, 71 of the 113 plots have been sold.
A subsidiary of Arco Vara, Arcojärve OÜ (previously called Kolde OÜ), in 2021
signed an agreement for land acquisition beside Lake Harku, address Paldiski
road 124b, Tallinn. More than 35,000 m(2) of residential and commercial real
estate (GBA) is planned for development. The project is called Arcojärve. As of
31.03.2024, the total advance payment for the land is 4,978 thousand euros. The
subsidiary of Arco Vara is obliged to pay an additional 1,627 thousand euros for
the purchase of the land within three months from the establishment of the
detailed plan for the property by the Tallinn City Government, but no later than
30.04.2026. The start of the construction of the first stage is planned for the
end of 2024.
In the Kuldlehe project, a spacious and exclusive cluster house with 5 homes was
built in Pirita. The sale of the project has started.
The Botanica Lozen project foresees construction of 54 homes (houses) in three
stages. Construction and sales of the first 16 buildings have begun - the
private houses of the first phase will be completed by the end of 2024. By the
date of publication of the quarterly report, 6 out of 16 houses have been pre-
sold.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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In thousands of euros Q1 2024 Q1 2023
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Revenue from sale of own real estate 927 7
Revenue from rendering of services 63 246
Total revenue 990 253
Cost of sales -817 -86
Gross profit 173 167
Other income 0 22
Marketing and distribution expenses -70 -57
Administrative expenses -297 -315
Other expenses -14 -1
Operating loss -208 -184
Financial costs -141 -107
Loss before tax -349 -291
Net loss for the period -349 -291
Total comprehensive loss for the period -349 -291
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Earnings per share (in euros)
- basic -0.03 -0.03
- diluted -0.03 -0.03
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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In thousands of euros 31 March 2024 31 December 2023
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Cash and cash equivalents 734 1,472
Receivables and prepayments 5,486 5,798
Inventories 28,276 27,637
Total current assets 34,496 34,907
Receivables and prepayments 18 18
Investment property 341 20
Property, plant and equipment 203 221
Intangible assets 21 24
Total non-current assets 583 283
TOTAL ASSETS 35,079 35,190
Loans and borrowings 3,391 3,391
Payables and deferred income 2,931 4,013
Warranty provision 187 80
Total current liabilities 6,509 7,484
Loans and borrowings 7,902 6,689
Total non-current liabilities 7,902 6,689
TOTAL LIABILITIES 14,411 14,173
Share capital 7,272 7,272
Share premium 3,835 3,835
Statutory capital reserve 2,011 2,011
Other reserves 56 56
Retained earnings 7,494 7,843
Total equity attributable to owners of the
parent 20,668 21,017
TOTAL EQUITY 20,668 21,017
TOTAL LIABILITIES AND EQUITY 35,079 35,190
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Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630
www.arcovara.com
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