Arco Vara unaudited consolidated interim report for Q1 of 2023
GROUP CEO’S REVIEW
The thrombosis in the real estate market eased in the first
quarter of the year, as evidenced by the increased number of
inquiries and transactions compared to the fourth quarter of 2022.
The market is showing encouraging sign of improvement, but the
recovery is not yet sufficient to an active market. From the
viewpoint of Arco Vara, it is positive to see the strengthening of
consumer confidence and the banks' flexible terms and conditions
for new home loans.
Contrary to the cooling real estate market, our construction
team is exceeding expectations in terms of the time schedule of the
Kodulahe Rannakalda development. Based on the efficiency of Arco
Tarc, we have updated the sales and profit forecast for 2023 and
2024, increasing the profit forecast for 2023 by approximately EUR
2 million. According to the sales forecast, EUR 13.1 million is
already booked in home pre-sale contracts. We also updated the
forecast for the next financial year, reflecting the expected
extended sales period in Botanica Lozen Residences and
Kuldlehe.
In the first quarter of 2023, we started construction works at
Lehiku tee 11 on Kuldlehe boutique residences built in cooperation
with the general contractor Combicon OÜ. Five premium-class homes
should be completed within 12 months and the public sale started on
April 21. More information about the development is available at
www.kuldlehe.ee
Botanica Lozen Residences is in the active phase focusing on the
construction of foundations, retaining walls and utility lines. The
main challenge for the Bulgarian team of Arco Vara and the general
contractor is to stay on schedule as construction site is complex
and located on the hillside. Arco Vara has learned from the
development of Iztok Parkside, which is why a longer buffer period
for the handover of buildings has been included in the contracts.
By the time of publishing the report, in the first phase 1 out of
16 houses have been sold.
Key challenges in the sales process of Madrid BLVD have been
overcome, instilling confidence that the planned completion will
take place in the second quarter of this year. EUR 4.1 million from
the transaction will be allocated for the development of
residential real estate in Estonia and Bulgaria.
As a Group, we reached a new milestone in the first quarter of
2023, where we exceeded EUR 40 million in assets and we expect
growth in the coming quarters. With support by our team and
financials, Arco Vara continues with the target to provide 200
homes each year.
KEY PERFORMANCE INDICATORS
In Q1 2023, the group’s revenue was 253 thousand
euros, which is 16% less than the revenue of 302 thousand euros in
Q1 2022.
In Q1 2023, the group’s operating loss (=EBIT)
was 184 thousand euros and net loss 291 thousand euros. In Q1 2022,
the group had operating profit of 103 thousand euros and net profit
of 16 thousand euros.
In Q1 2023, one parking place was sold in
projects developed by the group. In Q1 2022, one land plot was sold
in Latvia.
In the 3 months of 2023, the group’s debt burden
(net loans) increased by 3,077 thousand euros up to the level of
17,739 thousand euros as of 31 March 2023. As of 31 March 2023, the
weighted average annual interest rate of interest-bearing
liabilities was 5.7%. This is an decrease of 0.1 percentage points
compared to 31 December 2022.
OPERATING REPORT
In the first quarter of 2023, no apartment buildings were
completed, therefore, the group's sales revenue was 253 thousand
euros (the same in the first quarter of 2022, sales revenue of 302
thousand euros).
Most of the other revenue of the group consisted of rental and
property management services income from commercial and office
premises in Madrid Blvd building in Sofia, amounting to 196
thousand euros in Q1 2023 (Q1 2022: 203 thousand euros). By the
time of publishing the present report, all ready for rent offices
were rented out, as were all commercial spaces, together with
parking places. 9% of the office area is in renovation.
The Madrid building is in an ongoing sales process, which is
expected to be completed in Q2 of 2023. There is no profit or loss
from the sale of the building in 2023 because the discounts were
recognized in 2022. The transaction is not reflected in the sales
revenue, as it is the sale of a real estate investment. The deal is
expected to free up 4.1 million euros worth of equity capital.
Arco Vara's own construction company Arco Tarc OÜ is the main
contractor for the most premium stage of Kodulahe - Rannakalda.
Under construction are a pavilion, 4 service areas and 108
apartments (in three separate apartment buildings), many of which
have sea views. The apartment buildings will be ready in the Q4
2023. As at the date of publishing the interim report, 45 units out
of the 113 have been presold.
A subsidiary of Arco Vara, Aktsiaselts Kolde, 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. The expected development period is 6
years with the start of construction planned for 2024.
Construction is underway in the Kuldlehe project. The plan is to
build a spacious and exclusive cluster house with 5 homes in Pirita
in 2023. 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 construction time of the whole project is
at least 2 years. By the date of publication of the quarterly
report, 1 out of 16 houses has been pre-sold.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
In
thousands of euros |
Q1 2023 |
Q1 2022 |
|
|
|
Revenue from sale of own real
estate |
7 |
31 |
Revenue from rendering of
services |
246 |
271 |
Total
revenue |
253 |
302 |
|
|
|
Cost of sales |
-86 |
-109 |
Gross
profit |
167 |
193 |
|
|
|
Other income |
22 |
194 |
Marketing and distribution
expenses |
-57 |
-44 |
Administrative expenses |
-315 |
-239 |
Other expenses |
-1 |
-1 |
Operating
profit/loss |
-184 |
103 |
|
|
|
Financial costs |
-107 |
-87 |
Profit/loss before
tax |
-291 |
16 |
Net profit/loss for
the period |
-291 |
16 |
Total comprehensive income/loss for
the period |
-291 |
16 |
|
|
|
Earnings per share (in
euros) |
|
|
- basic |
-0.03 |
0.00 |
-
diluted |
-0.03 |
0.00 |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
In thousands of euros |
31 March 2023 |
31 December 2022 |
|
|
|
Cash and cash equivalents |
2,213 |
3,427 |
Receivables and
prepayments |
4,165 |
4,387 |
Inventories |
26,340 |
22,511 |
Investment property for
sale |
9,050 |
9,050 |
Total current
assets |
41,768 |
39,375 |
|
|
|
Receivables and
prepayments |
18 |
18 |
Investment property |
2 |
82 |
Property, plant and
equipment |
271 |
284 |
Intangible assets |
39 |
46 |
Total non-current
assets |
330 |
430 |
TOTAL
ASSETS |
42,098 |
39,805 |
|
|
|
Loans and borrowings |
5,252 |
5,255 |
Payables and deferred
income |
4,402 |
3,681 |
Total current
liabilities |
9,654 |
8,936 |
|
|
|
Loans and borrowings |
14,700 |
12,834 |
Total non-current
liabilities |
14,700 |
12,834 |
TOTAL
LIABILITIES |
24,354 |
21,770 |
|
|
|
Share capital |
7,272 |
7,272 |
Share premium |
3,835 |
3,835 |
Statutory capital reserve |
2,011 |
2,011 |
Retained earnings |
4,626 |
4,917 |
Total equity
attributable to owners of the parent |
17,744 |
18,035 |
TOTAL
EQUITY |
17,744 |
18,035 |
TOTAL LIABILITIES AND EQUITY |
42,098 |
39,805 |
Tiina MalmCFOArco Vara ASPhone: +372 614
4630www.arcovara.com
- Q1 2023 report (unaudited)
- Q1 2023 overview
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