Unaudited consolidated interim report for Q3 and 9 months of 2021
GROUP CEO’S REVIEW
The third quarter of 2021 brought exciting times in the history
of Arco Vara: not a single apartment that wouldn’t be pre-sold was
left, the share price showed record highs and the new share issue
was very successful.
At the moment, Arco Vara is constructing
Kodulahe Phase IV and Phase V houses in Merimetsa. Of the 72
apartments under construction, pre-sales of the last 5 vacant
apartments were just completed in the third quarter. The group has
thus guaranteed itself sales revenue of EUR 12 million from the
Kodulahe project until 2022. Construction is on schedule and within
budget.
We are currently tendering for the construction
of the next phase of Kodulahe – Rannakalda - and we plan to start
sales in a few weeks. The Rannakalda development consists of 3- and
4-storey apartment buildings with a total of 108 homes and 5
commercial spaces. What makes Rannakalda special is its location,
which is as close to the sea as possible, with only the pedestrian
walkway from Stroomi Beach to Rocca al Mare between the apartment
buildings and the sea. For the first time, we are also working in
this project with Enefit Volt, who within a pilot project is making
it possible to install an electric car charging station in every
parking space - a convenience that has not been possible before for
technical reasons.
By the time the report is published, we are also
able to share good news from Bulgaria. The design of Botanica Lozen
is in full swing and we hope to start construction in spring 2022.
The plan is to build a total of 54 detached houses in three phases,
ranging in size from 270 to 350 m2. There is a demand for spacious
homes in Bulgaria and the location of Lozen, with its pristine
natural surroundings, is perfect for this.
I am pleased that over the past year Arco Vara
has seen a strong increase in interest from both clients and
investors.
Arco Vara decided on 12 August to issue an
additional 1,000,000 new shares at a price of EUR 2.25 per share.
The issue was a success given that the volume of shares offered was
oversubscribed 4.84 times! At the same time, a number of other
share and bond issues were underway and the choice for investors to
invest their money is growing. This confirms our earlier belief
that people's appetite to invest is growing and that real ostate
development continues to be attractive – 6,116 new subscribers
participated in the Arco Vara share subscription! The target of
1,000 new investors was therefore significantly exceeded - the
number of Arco Vara shareholders has increased by nearly seven
times in the last year.
For now, we can enjoy the success, but we have
not forgotten to secure the back. Arco Vara's equity position is
strong and we can look to the future with confidence to deliver
volume and profitability growth to investors.
KEY PERFORMANCE INDICATORS
In Q3 2021, the group’s revenue was 613 thousand
euros, which is 8% more than the revenue of 569 thousand euros in
Q2 2021. In 9 months 2021, the group’s revenue was 11,283 thousand
euros, which is 2 times more than the revenue of 3,758 thousand
euros in 9 months 2020.
In Q3 2021, the group’s operating profit (=EBIT)
was 336 thousand euros and net profit 202 thousand euros (in 9
months 2021: operating profit 2,724 thousand euros and net profit
of 2,425 thousand euros). In Q3 2020, the group had operating loss
of 126 thousand euros and net loss of 228 thousand euros. In 9
months 2020, the group made operating profit of 49 thousand euros
and net loss of 277 thousand euros.
In Q3 2021, final sales were made only in
garages, but in 9 months a total of 63 apartments and a commercial
space were also sold. In Q3 2020, 2 apartments were sold (17
apartments and a land plot in Latvia in 9 months).
In the 9 months of 2021, the group’s debt burden
(net loans) increased by 973 thousand euros down to the level of
9,472 thousand euros as of 30 September 2021. As of 30 September
2021, the weighted average annual interest rate of interest-bearing
liabilities was 5.2%. This is an increase of 0.4 percentage points
compared to 31 December 2020.
OPERATING REPORT
The revenue of the group totalled 613 thousand
euros in Q3 2021 (in Q3 2020: 569 thousand euros,) and 11,283
thousand euros in 9 months 2021 (in 9 months 2020: 3,758 thousand
euros), including revenue from the sale of properties in the
group’s own development projects in the amount of 305 thousand
euros in Q3 and 10,441 thousand euros in 9 months 2021 (2020: 337
thousand euros in Q3 and 3,114 thousand euros in 9 months). 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 214 thousand euros in Q3 2021 and 608 thousand euros
in 9 months (2020: 178 thousand euros in Q3 and 488 thousand euros
in 9 months). By the time of publishing the present report, one
office space was vacant, but all commercial spaces, together with
parking places, were rented out. The free office space makes 11% of
the rented office and retail area.
One commercial space remains unsold in Stage II
of Kodulahe project in Merimetsa district in Tallinn. The house
received a usage permit in 2020.
In Q4 2020, construction finished in Stage III
of Kodulahe project, a residential building with 50 apartments at
Soodi 4. All apartments have been sold and the house has the usage
permit.
At the end of 2020, the joint construction of
Stages IV and V of Kodulahe started. Two 36-apartment residential
buildings at Pagi 3 and Pagi 5 are under construction. The
apartment buildings will become ready for final sale in the summer
of 2022. All 72 apartments have been presold.
Stages VI of Kodulahe project is waiting for
construction permit, design works are in process. The construction
of the Stage VI is scheduled to start in year 2021. The plan is to
build a pavilion, 4 commercial areas and 108 apartments, out of
which many have sea view. The apartment buildings will become ready
in about 2 years after the construction begins.
A subsidiary of Arco Vara, Aktsiaselts Kolde,
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
expected development period is 6 years with the start of
construction planned for 2023. The detailed plan sketch competition
of the project has ended, the detailed planning is in process.In Q2
2021, sales on the apartments of Oa street in Tartu ended, where 4
smaller apartment buildings with a total of 30 apartments were
built under the Kodukalda project name. In Q2 2021, Kodukalda
houses also received a usage permit.
In Iztok Parkside project in Sofia, the majority
of final sales of apartments started in December 2020, after
receiving a usage permit. By the publishing date of the interim
report, all apartments have been sold. As the apartments were
handed over a year later than promised due to bureaucratic
obstacles, 2 clients want compensation in the total amount of 40
thousand euros. As these apartment owners want compensation for
pain and suffering, but not to give up the apartments, the
obligation to pay compensation is not realistic and no reserve has
been formed for this purpose.
The last vision of the Botanica Lozen project
foresees construction of 54 homes (houses). The expected start time
of construction is the spring of 2022. Minimum construction period
is 2 years.
As of 30 September 2021, and the date of this
report, 4 Marsili residential plots remained unsold in Latvia.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In
thousands of euros |
9m 2021 |
9m 2020 |
Q3 2021 |
Q3 2020 |
|
|
|
|
|
Revenue from sale of own real
estate |
10,441 |
3,114 |
305 |
337 |
Revenue from rendering of
services |
842 |
644 |
308 |
232 |
Total
revenue |
11,283 |
3,758 |
613 |
569 |
|
|
|
|
|
Cost of sales |
-8,455 |
-2,981 |
-277 |
-440 |
Gross
profit |
2,828 |
777 |
336 |
129 |
|
|
|
|
|
Other income |
272 |
0 |
250 |
0 |
Marketing and distribution
expenses |
-109 |
-66 |
-44 |
-9 |
Administrative expenses |
-631 |
-654 |
-230 |
-239 |
Other expenses |
-58 |
-8 |
-18 |
-7 |
Gain on revaluation of
investment property |
422 |
0 |
0 |
0 |
Operating profit/
loss |
2,724 |
49 |
294 |
-126 |
|
|
|
|
|
Financial income and
costs |
-299 |
-326 |
-92 |
-102 |
Profit/ loss before
tax |
2,425 |
-277 |
202 |
-228 |
Net profit/ loss for
the period |
2,425 |
-277 |
202 |
-228 |
|
|
|
|
|
Total comprehensive income/ expense for the
period |
2,425 |
-277 |
202 |
-228 |
|
|
|
|
|
Earnings per share (in
euros) |
|
|
|
|
- basic |
0.26 |
-0.03 |
0.02 |
-0.03 |
-
diluted |
0.24 |
-0.03 |
0.02 |
-0.02 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In
thousands of euros |
30 September 2021 |
31 December 2020 |
|
|
|
Cash and cash equivalents |
1,358 |
2,200 |
Receivables and
prepayments |
691 |
1,344 |
Inventories |
17,417 |
14,960 |
Total current
assets |
19,466 |
18,504 |
|
|
|
Receivables and
prepayments |
5 |
5 |
Investment property |
9,910 |
9,564 |
Property, plant and
equipment |
160 |
22 |
Intangible assets |
99 |
136 |
Total non-current
assets |
10,174 |
9,727 |
TOTAL
ASSETS |
29,640 |
28,231 |
|
|
|
Loans and borrowings |
727 |
3,482 |
Payables and deferred
income |
2,745 |
3,308 |
Total current
liabilities |
3,472 |
6,790 |
|
|
|
Loans and borrowings |
10,103 |
7,217 |
Total non-current
liabilities |
10,103 |
7,217 |
TOTAL
LIABILITIES |
13,575 |
14,007 |
|
|
|
Share capital |
6,572 |
6,299 |
Unregistered share
capital |
0 |
273 |
Share premium |
2,285 |
2,285 |
Statutory capital reserve |
2,011 |
2,011 |
Retained earnings |
5,197 |
3,356 |
Total equity
attributable to owners of the parent |
16,065 |
14,224 |
TOTAL
EQUITY |
16,065 |
14,224 |
TOTAL LIABILITIES AND EQUITY |
29,640 |
28,231 |
Tiina MalmCFOArco Vara ASPhone: +372 614
4630www.arcovara.com
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