Börsiteade
Q Vara
Kategooria
Juhtkonna vaheteadaanne või kvartaalne finantsaruanne
Manused
Kuupäev
18.03.2008 15:38:11
Pealkiri
Q Vara's financial results for the 12 months of 2007
Teade
According to Q Vara AS's bond issue terms' sub clause 13.3.2, Q Vara hereby
presents the consolidated unaudited financial results for the 12 months of
2007.
1. Management report
1.1. Sofia project
In the second half of 2007 Q Vara realized its Sofia project that was purchased
in 2006 when Q Vara invested 2 984 thousand euros. As a result of the sales
transaction Q Vara received altogether 5 937 thousand euros from loan
repayments and the sale of shares. The project's significant value increase
resulted from the market development but even more from the project volume
growth through the development activities. The project's sales decision was
based on a very good offer from the buyer and a high return on investment
resulting from that. The sales proceeds were used for partial repayment of high
yield loans from AS Gild Arbitrage and for financing Silukalni project's
construction works and Jonathan project's planning. The profit from the sale of
Sofia project is recorded under the financial expenses in the profit and loss
statement.
1.2. Sales and margins
Q Vara's consolidated sales revenues were 85 517 estonian kroons (hereinafter
“kroons”) in 2007 that was 35% more than in 2006. The largest part of the total
revenues was derived from AS Q Vara's sales revenues in Estonia (62 977
thousand kroons) that was followed by the SIA Q Estate's sales revenues in
Latvia (19 043 thousand kroons). The sales revenues of other group companies
were lower and formed the remainder. The gross profit from the sales in Estonia
was 18 283 thousand kroons but in Latvia there was a gross loss that amounted
13 991 thousand kroons. The 29% gross margin in Estonia was as expected but the
negative gross margin in Latvia was extraordinary. The results in Latvia were
influenced by ten apartments in Silukalni project that were sold in in 2005 but
that were finished and handed over in 2007 which caused the construction price
to exceed the sales price. Based on this Q Vara's management considered
seriously Silukalni project's inventory revaluation but after consulting the
auditors and construction specialists and receiving the updated construction
budget it decided that the revaluation is not necessary. More specifically the
decision was based on the decreased construction prices in Latvia.
1.3. Financial expenses
The 2007 results were significantly affected by financial expenses that
consisted of the interest expense of AS Gild Arbitrage's loan (19 917 thousand
kroons) and bond issue interest expense (8 616 thousand kroons). Still the net
financial result was positive as a result of the profit from the sale of Sofia
project. In the second half of 2007 the amount of AS Gild Arbitrage's loan was
reduced by repaying 36 739 thousand kroons and the remaining 47 253 thousand
kroon amount is expected to be repaid during 2008. The repayment of of AS Gild
Arbitrage's loan will reduce Q Vara's financial expenses significantly.
1.4. General development expense to sales revenue ratio
By the beginning of 2007 Q Vara was built up considering much higher growth and
larger development volume than 2007 actually brought. Because of the changes
that took place in the market and the decreased volume of simultaneously
developed projects the management of Q Vara started to reduce general
development expenses. The general development expenses are expected to be 30%
lower in 2008 than the same expenses were in 2007. Personnel and office
expenses were the main cost reduction areas.
1.5. Revenue expectation
The revenue expectation for 2008 is 200 - 250 million kroons from which the
conservative gross margin expectation is 20%. As a result of the increased
revenues and the cost reduction that was described in the last paragraph the
gross profit covers the group's general development expenses in 2008 again. The
revenue forecast is based on the fact that Q Vara has five projects
simultaneously in the sales phase - Kirsiaed and Terminal No. 11 in Estonia,
Silukalni and 365 in Latvia and Trophy in in Lithuania. All projects sell
products to different customer segments in different markets that creates wider
client base compared to 2007. The forecast also assumes very slow sales pace
which is derived from the actual sales figures of Kirsiaed in 2007. So actually
the company's internal goals exceed the forecasts presented above.
1.6. Trophy project
Q Vara's first project in Lithuania received the detail plan in the second half
of 2007 and the construction permit in the first quarter of 2008. The project's
construction is expected to begin in the second quarter of 2008 and the
construction period will be 12 months. In January 2008 the pre-sales was
launched and by March 6, 2008 already 6 appartments out of 31 were pre-sold at
the average price of 43 185 kroons per sqm. There are negotiations going on
with three additional clients. Considering that the marketing campaign has not
been launched yet the sales results have been very successful.
1.7. Maakri
During 2007 Maakri project went through significant developments. In addition
to the establishment of AS Maakri City in the first half of 2007 the initial
task for the architectural competition was finished in the fourth quarter. The
initial task was presented to the City of Tallinn that started to prepare the
competition. The initial task was based on the finished traffic analysis and
hydrogeological survey that both support more than 100 000 sqm development
volume in Maakri block. Q Vara's subsidiary OÜ Stansfield holds approximately
20% share of the whole land area in the Maakri Block. According to the
management's estimations the Maakri project's potential value in case of
positive developments significantly exceeds its current balance sheet value.
1.8. Terminal No. 11 project
Because of the banks' very conservative outlook in the Baltic countries Q Vara
began searching long-term financial investors into its development projects.
Terminal No. 11 was the first project that reached the detailed negotiations
phase and on March 3, 2008 Q Vara signed a letter of intent with a German
company HIH Global Invest GmbH for raising 73 383 thousand kroons of additional
capital into the project. The transaction structure as agreed in the LOI was
disclosed in Q Vara's stock exchange release on March 5, 2008. Q Vara is also
in negotiations with other investors with whome the company expects to start
cooperation on various new projects.
1.9. Cash flows
Managing the cash flows was difficult in 2007 because most of Q Vara's projects
were in the development (cost) phase. The additional pressure on cash flows was
generated by decreased demand in the real estate market and by the changes in
banks' financing policy. In order to strengthen the cash flows Q Vara decreased
general and financial expenses in 2007 and started raising project specific
long-term capital from financial investors. In 2008 also the increased sales
revenues will improve cash flows considerably.
2. Financial results
2.1. Operating revenues
Q Vara's consolidated operating revenues for the twelve months in 2007 amounted
120 494 thousand kroons (2006: 227 643 thousand kroons). The total amount
consisted of the following items: 85 517 thousand kroons from sales (2006: 63
231 thousand kroons), 31 306 thousand kroons from real estate investments'
revaluation (2006: 161 545 thousand kroons) and 3 671 thousand kroons from
other revenues (2006: 2 867 thousand kroons).
Lower operating revenues were the result of significantly smaller amount of
real estate investments' revaluation profit (compared to 2006 the real estate
investments' revaluation profit decreased by 130 239 thousand kroons) which in
the current market situation is a logical change. The company's management
estimates that as of the end of 2007 the fair values of Maakri and Terminal No.
11 projects significantly exceeded the balance sheet values but to be
conservative in the today's unclear market the management decided not to
revalue the projects.
2.2. Net result
Q Vara's consolidated net loss for the 12 months of 2007 was 17 920 thousand
kroons (2006 net profit: 79 831 thousand kroons). The main factors that caused
the negative net result were Silukalni project's gross loss, high financial
expenses and large general development expenses compared to the sales revenues.
Q Vara will improve considerably its net result as described in the following
previous paragraphs “Financial expenses”, “General development expenses to
sales revenue ratio” and “Revenue expectation”.
2.3. Loans
In the end of 2007 the outstanding amount of received short- and long-term
loans was 399 352 thousand kroons (2006: 305 105 thousand kroons). The increase
in the outstanding loan amount was caused mainly by the increased construction
loans of Terminal No. 11 and 365 projects.
2.4. Retained earnings
In the last quarter of 2007 Q Vara made several adjustments in the retained
earnings. Firstly the retained earnings were reduced by 52 000 thousand kroons
according to the capital reduction decision that was made in December 2006.
Secondly the retained earnings were reduced by 7 000 thousand kroons because
the final Pärnu mnt. project's sales price was reduced. The price reduction was
agreed with the buyers because the construction volume compared to the volume
on which the initial transaction price was based on was reduced by the planning
authorities. The remaining adjustments in the retained earnings were dividend
payments and correction of the previous periods' cost items.
2.5. Balance sheet
As a result of the retained earnings reduction and Q Vara's net loss from 2007,
the equity amount on the balance sheet amounted 223 663 thousand kroons. The
asset amount was 813 018 thousand kroons so the equity formed 27,5% of the
total assets. Q Vara's shareholder OÜ SLProductions intends to invest up to
three million euros of additional funds into the company through equity
investment or subordinated debt by the end of the third quarter 2008 to
increase the equity amount.
3. Q Vara's consolidated profit and loss statement for the 12 months of 2007
-------------------------------------------------------------
01.01.2007- 01.01.2006-
31.12.2007 31.12.2006
Unaudited Audited
thousand EEK thousand EEK
-------------------------------------------------------------
Operating revenues
Sales revenues 85 517 63 231
Change in RE investments' value 31 306 161 545
Other operating revenues 3 671 2 867
Total operating revenues 120 494 227 643
Operating expenses
Cost of construction -77 728 -63 789
Direct development costs -1 781 -8 950
Development overhead costs -43 168 -23 326
Marketing costs -10 410 -9 459
Administrative expenses -1 773 -1 940
Other operating expenses -6 135 -6 929
Total operating expenses -140 995 114 393
Operating profit -20 501 113 250
Financial income and expenses 3 255 -3 046
Pre-tax profit -17 246 110 204
Deferred income tax -165
Income tax from dividends -451 -10 787
Real estate tax -58 -59
Net profit (loss) -17 920 99 358
Mother company's shareholders' share -21 599 79 831
Minority share 3 679 19 527
-------------------------------------------------------------
-------------------------------------------------------------
01.01.2007- 01.01.2006-
31.12.2007 31.12.2006
Unaudited Audited
thousand EUR thousand EUR
-------------------------------------------------------------
Operating revenues
Sales revenues 5 466 4 041
Change in RE investments' value 2 001 10 325
Other operating revenues 235 183
Total operating revenues 7 701 14 549
Operating expenses
Cost of construction -4 968 -4 077
Direct development costs -114 -572
Development overhead costs -2 759 -1 491
Marketing costs -665 -605
Administrative expenses -113 -124
Other operating expenses -392 -443
Total operating expenses -9 011 -7 311
Operating profit -1 310 7 238
Financial income and expenses 208 -195
Pre-tax profit -1 102 7 043
Deferred income tax -11
Income tax from dividends -29 -689
Real estate tax -4 -4
Net profit (loss) -1 145 6 350
Mother company's shareholders' share -1 380 5 102
Minority share 235 1 248
-------------------------------------------------------------
5. Q Vara's consolidated balance sheet as of 31.12.2007
-------------------------------------------------------------
31.12.2007 31.12.2006
Unaudited Audited
thousand EEK thousand EEK
-------------------------------------------------------------
Current assets
Cash and cash equivalents 10 879 1 116
Accounts receivable 28 023 4 174
Short-term loans 21 572 74 334
Other short-term receivables 23 698 48 645
Interest receivables 3 297 6 677
Prepayments 2 247 25 908
Real estate for sale 437 686 216 043
Total current assets 527 402 376 897
Non-current assets
Long-term loans 0 5 760
Other long-term receivables 301
Associated companies 32 618 32 618
Real estate investments 242 423 338 250
Tangible and intangible assets 10 274 8 826
Goodwill 0 2 886
Total non-current assets 285 616 388 340
Total assets 813 018 765 237
-------------------------------------------------------------
Liabilities and equity
Current liabilities
Short-term loans 362 121 290 169
Capital lease liabilities 566 1 149
Customer prepayments 7 723 5 577
Accounts payable 28 953 22 163
Personnel related liabilities 2 942 2 650
Interest liabilities 17 727 14 164
Tax liabilities 1 432 0
Other short-term liabilities 23 781 0
Total current liabilities 445 245 335 872
Non-current liabilities
Long-term loans 37 231 14 936
Other long-term payables 0 90
Issued bonds 78 223 76 863
Capital lease liabilities 1 492 5 468
Deferred income tax 27 154 27 040
Total non-current liabilities 144 110 124 397
Total liabilities 589 355 460 269
Equity
Mother company's shareholders' equity
Share capital 181 511 73 511
Reserves 7 361 7 361
Unrealized exchange rate differences -1 362 177
Retained earnings -16 258 175 231
Mother company's shareholders' equity 171 252 256 280
Minority share 52 411 48 688
Total equity 223 663 304 968
Total liabilities and equity 813 018 765 237
-------------------------------------------------------------
-------------------------------------------------------------
31.12.2007 31.12.2006
Unaudited Audited
thousand EUR thousand EUR
-------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents 695 71
Accounts receivable 1 791 267
Short-term loans 1 379 4 751
Other current receivables 1 515 3 109
Interest receivables 211 427
Prepayments 144 1 657
Real estate for sale 27 973 13 808
Total current assets 33 707 24 090
Non-current assets
Long-term loans 0 368
Other long-term receivables 19
Associated companies 2 085 2 085
Real estate investments 15 494 21 618
Tangible and intangible assets 657 564
Godwill 0 184
Total non-current assets 18 254 24 819
Total assets 51 961 48 909
Liabilities and equity
Current liabilities
Short-term loans 23 144 18 545
Capital lease liabilities 36 74
Customer prepayments 494 357
Accounts payable 1 850 1 416
Personnel related liabilities 188 169
Other short-term liabilities 1 133 0
Interest liabilities 92 905
Tax liabilities 1 520 0
Total current liabilities 28 456 21 467
Non-current liabilities
Long-term loans 2 379 955
Other long-term liabilities 0 6
Issued bonds 4 999 4 912
Capital lease liabilities 95 349
Deferred income tax liabilities 1 735 1 728
Total non-current liabilities 9 210 7 950
Total liabilities 37 667 29 417
Equity
Mother company's shareholders' equity
Share capital 11 601 4 698
Reserves 470 470
Unrealized exchage rate differences -87 13
Retained earnings -1 039 11 197
Mother company's shareholders' equity 10 945 16 378
Minority share 3 350 3 114
Total equity 14 295 19 492
Total liabilities and equity 51 961 49 909
-------------------------------------------------------------
Additional information:
Meelis Šokman
Chairman of the management board
Q Vara AS
Phone: 668 1600