Börsiteade

Pealkiri

Unaudited consolidated interim report for Q4 and 12 months of 2024

Teade

GROUP CEO’S REVIEW

 The fourth quarter of 2024 marked a period of adjustment for Estonia's real estate market, with both residential and commercial sectors experiencing shifts in pricing and occupancy rates. Base interest rates were stable compare to the previous quarter and the declined Euribor had an impact on the whole market, showing in the results of Arco Vara for the second half of the year.

In the fourth quarter of 2024, Estonia's apartment market experienced an increase in transaction volumes compared to the same period in 2023, with a significant rise compared to the first six months of this year. We saw record sales in new developments in Tallinn during December 2024. In the fourth quarter of 2024, Arco Vara sold 7 apartments in Rannakalda, matching the number of apartments sold in the third quarter of 2024. This means that in the second half of 2024, we sold 14 apartments in Rannakalda, compared to 7 apartments in the first half of the year, reaching a turnover of €4.2 million. This indicates that the market has bottomed out, with activity beginning to pick up. The worst of the down cycle has passed, especially considering that transaction volumes in other sectors, such as commercial properties, have also started to increase slightly.

In the fourth quarter, our main efforts continued to focus on the Kodulahe residential area, with both projects - Rannakalda's ready apartments and Soodi 6 pre-sales - being a priority. We finished the fourth quarter with the following results: 87 out of 113 units sold in Rannakalda and 10 out of 66 units pre-sold in Soodi 6. The construction of Kodulahe's next stage (Soodi 6) has been postponed to the end of Q1 as we are awaiting the construction permit. Detailed planning of the last stage of Kodulahe, Lammi 6, is ongoing. For Lammi 6, we are planning approximately 175 apartments, the construction start of which is expected in approximately two years.

We are continuing the preparations for Arco Vara's next major project, Arcojärve, including all design aspects and additional values we will offer, as well as registering potential customers. So far, we have seen strong interest in this development, and we are putting our full effort into securing confirmation for the detailed planning of the project in the next couple of months. We plan to begin construction in the second half of 2025.

Our Bulgarian team has achieved 85% project readiness for Botanica Lozen, putting us on track to complete construction by the end of the first half of 2025. We closed 2024 on a positive note with two additional bookings, bringing the total to 9 houses sold out of 16. Interest in the Botanica Lozen project has grown significantly over the past few months, and we expect even greater interest in the coming months as the houses are completed with full landscaping. This aligns with the preferences of Bulgarian customers, who generally prefer to purchase nearly finished homes, in contrast to the Estonian market, where there is strong demand during the pre-sale stage.

Our team is very proud to have finished 2024 with a great achievement in the Kuldlehe project. We sold 2 boutique apartments out of the 5 in this luxury Merivälja location, reaching a turnover of €1.2 million.

In the fourth quarter of 2024, we saw signs of improvement, contributing to a more positive outlook. Looking ahead, Estonia's real estate market is expected to remain stable but cautious as we move into 2025. In 2024, the market showed signs of recovery, with transaction volumes gradually increasing, especially in the fourth quarter, driven by declining interest rates and improved activity in new developments. However, consumer confidence remained fragile, and economic growth was modest.

While moderate growth in transaction volumes and property prices is anticipated in the second half of 2025, significant market shifts are unlikely in the short term. Factors such as tax increases could put pressure on housing supply and influence market dynamics. Despite these challenges, the gradual easing of interest rates and stabilizing economic conditions are expected to support a slow but steady recovery.

Overall, the worst of the market downturn appears to be behind us, but the path to full recovery will be gradual. Broader market growth is expected to gain momentum by the end of 2025, supported by improving buyer sentiment, increased construction activity, and a more favorable financing environment.

The Arco Vara team's biggest challenge for the upcoming months and the first half of 2025 will be the sales of completed apartments at Kodulahe and Kuldlehe, with a market value of around €14 million. The focus until the end of this year and the beginning of 2026 is on selling the remaining houses at Botanica Lozen with a market value of around €8.4 million.

 

KEY PERFORMANCE INDICATORS

In Q4 2024, the group's sales revenue was 3,390 thousand euros, which is 14,297 thousand euros less than the sales revenue of the Q4 2023 of 17,687 thousand euros, because in Q4 2023, Kodulahe Rannakalda apartment building was completed. For the same reason, the group's sales revenue was 7,477 thousand euros for the 12 months of 2024 which is 2.5 times lower than the sales revenue of 18,339 thousand euros for the 12 months of 2023.

In Q4 2024, the group’s operating profit (=EBIT) was 225 thousand euros and net profit 220 thousand euros (in 12 months 2024: operating profit 68 thousand euros and net loss of 624 thousand euros). In Q4 2023, the group had operating profit of 4,594 thousand euros and net profit of 4,478 thousand euros. In 12 months 2023, the group had operating profit of 3,940 thousand euros and net profit of 3,550 thousand euros.

In Q4 2024, 9 apartments were sold, 23 apartments were sold in total in 12 months 2024. As of 31 of December 2024, 28 apartments were ready in stock. In Q4 2023, 63 apartments, 3 commercial premises and 3 land plots in Latvia were sold (same in 12 months 2023).

In the first 12 months of 2024, the group’s debt burden (net loans) increased by 4,887 thousand euros up to the level of 13,495 thousand euros as of 31 December 2024. As of 31 December 2024, the weighted average annual interest rate of interest-bearing liabilities was 8.7%. This is an increase of 0.5 percentage points compared to 31 December 2023.



OPERATING REPORT

The group's sales revenue was 3,390 thousand euros in Q4 2024 (Q4 2023: 17,687 thousand euros), including the sale of real estate in the group’s own development projects 3,273 thousand euros (17,567 euros in Q4 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 Q4 2024 were 74 thousand euros (in 12 months 273 thousand euros), franchise revenues for the Q4 2023 were 66 thousand euros (in 12 months 252 thousand euros).

In 2024, the pre-sale of the next stage of Kodulahe began: 62 apartments and 4 commercial premises in the form of three buildings will be built at Soodi 6. By the time this report is published, 8 apartments and 2 commercial premises have been presold. The homes are schedules to be completed in 2026.

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, 23 of the 113 are vacant.

A subsidiary of Arco Vara, Arcojärve OÜ, in 2021 signed an agreement for land acquisition beside Lake Harku, address Paldiski road 124b, Tallinn. More than 35,000 m2 of residential and commercial real estate (GBA) is planned for development. The project is called Arcojärve. As of 31.12.2024, 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 2025.

In the Kuldlehe project, an exclusive cluster house with 5 spacious homes was built in Pirita. By the date of publication of the quarterly report, 2 out of 5 apartments are vacant.

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 in Q2 2025. By the date of publication of the quarterly report, 9 out of 16 houses have been pre-sold.

Kerberon OÜ, a subsidiary of Arco Vara, developed a fully automatic padel venue with six indoor courts at Helme 18 with the help of the construction company Arco Tarc OÜ. The hall is rented out on a full lease agreement and is open to guests.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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 In thousands of euros                        12m 2024 12m 2023 Q4 2024 Q4 2023
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 Revenue from sale of own real estate            7,145   17,581   3,273  17,567

 Revenue from rendering of services                332      758     117     120

 Total revenue                                   7,477   18,339   3,390  17,687



 Cost of sales                                  -6,194  -12,212  -3,344 -12,003

 Gain/loss from inventory                          487     -528     487    -528

 Gross profit                                    1,770    5,599     533   5,156



 Other income                                        7      107       7      11

 Marketing and distribution expenses              -551     -387    -146    -119

 Administrative expenses                        -1,127   -1,387    -156    -463

 Other expenses                                    -31      -20     -13      -9

 Gain on investment property                         0       28       0      18

 Operating profit                                   68    3,940     225   4,594



 Financial costs                                  -640     -390      47    -116

 Profit/ loss before tax                          -572    3,550     272   4,478

 Income tax                                        -52        0     -52       0

 Net profit/ loss for the period                  -624    3,550     220   4,478



 Total comprehensive profit/ loss for the
 period                                           -624    3,550     220   4,478

 Attributable to owners of the parent             -624    3,550     220   4,478
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 Earnings per share (in euros)

 - basic                                         -0.06     0.34    0.02    0.43

 - diluted                                       -0.06     0.34    0.02    0.43
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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  In thousands of euros                       31 December 2024 31 December 2023
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 Cash and cash equivalents                               1,720            1,472

 Receivables and prepayments                             5,690            5,798

 Inventories                                            29,170           27,637

 Total current assets                                   36,580           34,907



 Receivables and prepayments                                18               18

 Investment property                                     2,296               20

 Property, plant and equipment                             622              221

 Intangible assets                                          52               24

 Total non-current assets                                2,988              283

 TOTAL ASSETS                                           39,568           35,190



 Loans and borrowings                                      234            3,391

 Payables and deferred income                            4,487            4,013

 Warranty provisions                                       127               80

 Total current liabilities                               4,848            7,484



 Loans and borrowings                                   14,981            6,689

 Total non-current liabilities                          14,981            6,689

 TOTAL LIABILITIES                                      19,829           14,173



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             27               56

 Retained earnings                                       6,594            7,843

 Total equity attributable to owners of the
 parent                                                 19,739           21,017

 TOTAL EQUITY                                           19,739           21,017

 TOTAL LIABILITIES AND EQUITY                           39,568           35,190
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Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630
www.arcovara.com

Attachment

ArcoVara_aruanne Q4 2024 ENG