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Ettevõte Arco Vara AS
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Kategooria Juhtkonna vaheteadaanne või kvartaalne finantsaruanne
Avaldamise aeg 09 mai 2019 16:02:28 +0300
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Pealkiri Unaudited consolidated interim report for Q1 2019

In  Q1 2019, the group's  revenue was 1.1 million  euros, which is 28% less than
the  revenue of 1.5 million  euros from continuing  operations in Q1 2018. In Q1
2018, revenue  together with  the discontinued  service segment  was 2.1 million

In  Q1 2019, the group's  operating profit (=EBIT)  was 5 thousand euros and net
loss  112 thousand  euros.  In  Q1  2018, the  group had operating profit of 91
thousand euros from continuing operations (63 thousands in overall) and net loss
of 51 thousand euros.

In  Q1 2019, 7 apartments were  sold in projects  developed by the  group (in Q1
2018: 7 apartments and 1 land plot).

In  the Q1 of 2019, the group's debt burden (net loans) increased by 1.7 million
euros  up to the level of 15.9 million euros as of 31 March 2019. As of 31 March
2019, the  weighted average annual interest rate of interest-bearing liabilities
was  4.8%. This is a  decrease of 0.2 percentage  points compared to 31 December


Q1  neither overperformed nor underperformed  the expectations. Arco Vara earned
its  living from  rental and  facility management  fees of Madrid Blvd building,
from  license fees of its former service division,  and from the sale of some of
its  apartments in  Madrid Blvd  building. During  the quarter, the group's cost
base  decreased after the partial  repayment of the bank  loan related to Madrid
Blvd  building, and the  subsequent decrease of  loan interest rate and interest

The  main  challenge  of  the  group  continues  to  be the realization of Iztok
Parkside project, which is fully constructed and largely presold. The group must
be  the only  developer in  Bulgaria who  needs an  approval from  Government of
Bulgaria to transfer some land plots of few hundred square meters that are owned
by  two public institutions to a third public institution, which does not change
the  land's purpose. The use  of the land plots  has already been established by
planning documents and eternalized with an asphalt layer. In order to go through
the  legal process, more than 50 signatures  and stamps are needed, the majority
of which have been obtained by today. Unfortunately, forecasting the time needed
for  completing  such  process  is  extremely  difficult  and the management has
previously made mistakes in its time estimates.

Other developments have progressed as planned and three important decisions must
be made during Q2:

 a. Starting or not starting Stage III of Kodulahe project, depending on the
    construction price versus forecasted sales revenue. Recently, Arco Vara has
    raised the prices of the remaining apartments in Stage 2 of Kodulahe
 b. Starting or not starting Kodukalda project on Oa street in Tartu, depending
    on the same considerations.
 c. Receiving the construction permit and starting or not starting Botanica
    Lozen project, depending on the same considerations.

Residential  markets  in  both  Tallinn  and  Sofia are characterised by certain
overheating,  as demonstrated by rapid increases of land prices and construction
costs.  Although banks  continue to  lend for  real estate  purchases, there are
signs  of slowdown both in terms of the number of transactions and the number of
new  constructions started. Also the  consumers are delaying purchase decisions,
expecting  the prices  to fall.  Considering the  quality of  our land reserves,
which  do not have  to be developed  at any cost,  and minimised overhead, which
allow  us to  remain patient  before commencing  any new  projects, we are in no
hurry to start new development projects.

Thus,  as a summary  of Q1 and  outlook for Q2:  Arco Vara needs patience rather
than new capital or ideas or workforce.


The  revenue  of  the  group  totalled  1,051 thousand  euros  in Q1 2019 (in Q1
2018: 2,147 thousand  euros,  of  which  1,456 thousand  euros  from  continuing
operations),  including revenue from  the sale of  properties in the group's own
development  projects  in  the  amount  of  823 thousand euros in Q1 2019 (in Q1
2018: 1,310 thousand euros).

Most  of  the  other  revenue  of  the  group  consisted  of  rental income from
commercial  and office premises  in Madrid Blvd  building in Sofia, amounting to
172 thousand  euros in Q1 2019 (in Q1 2018: 124 thousand euros). In Q1 2019, all
office and commercial spaces together with parking places were rented out.

In  Q1 2019, the group had an operating profit of 5 thousand euros. In Q1 2018,
the group had an operating profit of 91 thousand euros.

In  Q1 2019, construction  works continued  for Stage  II of Kodulahe project, a
building  with 68 apartments and 1 commercial space.  The project is expected to
be  finalized by the end of 2019. By  the publishing date of the interim report,
58 apartments have been presold.

Design works for Stages III-V continued in Q2, scheduled to end in the summer of
2019. Under  favourable  market  conditions,  the  construction  of Stage III is
scheduled  to start in the  autumn of 2019 and the  joint construction of Stages
IV-V  in 2000. The apartment buildings will become ready for final sale in about
1,5 after the construction begins.

In  Q1,  design  works  of  Oa  street  plots  in Tartu were completed. The plan
foresees  construction of 4 smaller apartment  buildings under Kodukalda project
name. The construction is scheduled to start in the summer of 2019.

In  Iztok Parkside  project in  Sofia, construction  has been  completed. By the
publishing date of the interim report, presale agreements for 53 apartments have
been  concluded. Iztok  project consists  of three  apartment buildings with 67
apartments (7,070 square meters of apartments' sellable area).

In  Madrid Blvd building, out of  the 15 apartments previously used for offering
accommodation service, 10 have been sold as of the date of this report.

By the date of this report, design works of Botanica Lozen project near Sofia in
Bulgaria  have been essentially completed.  The project foresees construction of
179 homes  (apartments and houses), commercial  spaces and a kindergarten. Under
favourable  market  conditions,  construction  may  start  in the second half of
2019, possibly  divided  into  smaller  sub-stages.  Considering  the  nature of
terrain on a mountain slope, minimum construction period is 2 years.

As  of 31 March  2019 and the  date of  this report, 4 Marsili residential plots
remained unsold in Latvia.


  In thousands of euros                                      3m 2019   3m 2018

  Continuing operations

  Revenue from sale of own real estate                           823     1,310

  Revenue from rendering of services                             228       146

  Total revenue                                                1,051     1,456

  Cost of sales                                                 -815    -1,016

  Gross profit                                                   236       440

  Other income                                                    91         5

  Marketing and distribution expenses                            -85       -43

  Administrative expenses                                       -233      -316

  Other expenses                                                  -4       -10

  Gain on sale of subsidiaries                                     0        15

  Operating profit/loss                                            5        91

  Finance income and costs                                      -117      -114

  Profit before tax                                             -112       -23

  Net profit/loss from continuing operatsions                   -112       -23

  Net profit/loss from discontinued operations                     0       -28

  Net profit/loss for the period                                -112       -51

  Total comprehensive income/expense for the period             -112       -51

  Earnings per share from continuing operations (in euros)

  - basic                                                      -0.01      0.00

  - diluted                                                    -0.01      0.00
  Earnings per share (in euros)

  - basic                                                      -0.01     -0.01

  - diluted                                                    -0.01     -0.01


   In thousands of euros          31 March 2019   31 December 2018

  Cash and cash equivalents               1,644              2,327

  Investments                                 0                 69

  Receivables and prepayments               608                739

  Inventories                            19,145             17,482

  Total current assets                   21,397             20,617

  Receivables and prepayments                20                 25

  Investment property                    11,721             12,344

  Property, plant and equipment             287                267

  Intangible assets                         256                262

  Total non-current assets               12,284             12,898

  TOTAL ASSETS                           33,681             33,515

  Loans and borrowings                   12,792             12,547

  Payables and deferred income            4,092              3,982

  Total current liabilities              16,884             16,529

  Loans and borrowings                    3,908              3,985

  Total non-current liabilities           3,908              3,985

  TOTAL LIABILITIES                      20,792             20,514

  Share capital                           6,299              6,299

  Share premium                           2,285              2,285

  Statutory capital reserve               2,011              2,011

  Other reserves                            245                245

  Retained earnings                       2,049              2,161

  TOTAL EQUITY                           12,889             13,001

  TOTAL LIABILITIES AND EQUITY           33,681             33,515

Kristel Tumm
Arco Vara AS
Phone: +372 614 4662