Unaudited consolidated interim report for Q3 and 9 months of 2023
GROUP CEO’S REVIEW
Summer is traditionally the low season in the real estate
market, but this year it did not apply to Arco Vara, as the third
quarter showed. Although interest rates remain high, Arco Vara has
been successful in pre-sales and the number of inquiries for our
homes has been growing throughout the year. However, in today’s
market the million-dollar-question is how to convert a larger
number of inquiries into sales.
In Kodulahe, we continued building and sales activities as
planned, which enables us to start delivering homes in our Kodulahe
Rannakalda development already by the time of the publication of
the report. We have therefore adjusted the sales revenue and profit
projections for 2023 according to the delivery schedule, when
according to our assumptions, 65 clients receive a new home. Final
sales of 48 units are planned for 2024.
Development of the Kodulahe area continues at Soodi 6, in the
framework of which an architectural contest was held to give the
quarter new value in the form of outdoor areas and exterior
appearance. The contest was won by architectural bureau APEX whose
solution for outdoor area connects the Stroomi beach area of the
Kodulahe development with the light traffic area of the Paldiski
road, focusing on the safety of road users and the compactness of
the walkways.
In addition, construction activities continue in Botanica Lozen,
where 3 private homes out of 16 have found a happy buyer. According
to the building schedule, the handover of the homes should take
place in the second half of 2024, including the start of the new
building phase of 24 homes.
The building of the Kuldlehe boutique residence continues as
planned, but it is still waiting for buyers. The unique homes,
located on a quiet cul-de-sac, will be completed in the first half
of 2024.
After the summer, markets have continued to get used to the
changed economic environment. This includes the real estate market,
as shown by lower than average transaction volume. However, Arco
Vara's balance sheet and equity ratio remain very strong, and the
rise in interest rates has not significantly affected our cash
flow. Building on this, we will continue to sell and market homes
as planned which should allow us to reach a profit of nearly EUR 3
million already this year.
KEY PERFORMANCE INDICATORS
In Q3 2023, the apartment buildings had not yet
reached the stage of completion, therefore, looking at the content
of the development work, the quarter is not comparable to the same
period last year. The group's sales revenue for the Q3 2023 was 145
thousand euros, which is several times less than the sales revenue
of the Q3 2022 of 5,232 thousand euros. In 9 months 2023, the
group’s revenue was 652 thousand euros, which is much less than the
revenue of 13,167 thousand euros in 9 months 2022.
In Q3 2023, the group’s operating loss (=EBIT) was
221 thousand euros and net loss 290 thousand euros (in 9 months
2023: operating loss 654 thousand euros and net loss of 928
thousand euros). In Q3 2022, the group had operating profit of 659
thousand euros and net profit of 556 thousand euros. In 9 months
2022, the group made operating profit of 1,785 thousand euros and
net profit of 1,506 thousand euros.
In Q3 2023, no final sale contracts were signed (1 parking space
was sold in 9 months). In Q3 2022, 31 apartments were sold in
projects developed by the group (in 9 months 2022, 72 apartments
and 1 land plot in Latvia).
In the 9 months of 2023, the group’s debt burden (net loans)
increased by 3,388 thousand euros up to the level of 21,477
thousand euros as of 30 September 2023. As of 30 September 2023,
the weighted average annual interest rate of interest-bearing
liabilities was 6.2%. This is an increase of 0.4 percentage points
compared to 31 December 2022.
OPERATING REPORT
In the Q3 2023, apartment buildings had not yet entered into
final sale contracts, therefore the group's sales revenue was 145
thousand euros (in Q3 2022, the sales revenue was 5,232 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 371
thousand euros in 6 months (2022: 406 thousand euros in 6 months).
The sale process of the Madrid building was completed in July 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. Equity capital worth 4.1 million euros was
released from the transaction.
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, 53 units out
of the 113 have been presold and 8 sold.
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. In Q2 2023, the next land purchase
prepayment of 1,626 thousand euros was paid, as of 30.09.2023, the
total advance payment for the said land is 4,978 thousand euros.
The start of the construction of the first stage is 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 private houses of the firat phase will
be completed by the end of 2024. By the date of publication of the
quarterly report, 3 out of 16 houses have been pre-sold.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In
thousands of euros |
9m 2023 |
9m 2022 |
Q3 2023 |
Q3 2022 |
|
|
|
|
|
Revenue from sale of own real
estate |
14 |
12,337 |
7 |
4,960 |
Revenue from rendering of
services |
638 |
830 |
138 |
272 |
Total
revenue |
652 |
13,167 |
145 |
5,232 |
|
|
|
|
|
Cost of sales |
-209 |
-10,665 |
-18 |
-4,282 |
Gross
profit |
443 |
2,502 |
127 |
950 |
|
|
|
|
|
Other income |
106 |
209 |
30 |
7 |
Marketing and distribution
expenses |
-268 |
-153 |
-91 |
-45 |
Administrative expenses |
-924 |
-764 |
-278 |
-251 |
Other expenses |
-11 |
-9 |
-9 |
-2 |
Operating
profit/loss |
-654 |
1,785 |
-221 |
659 |
|
|
|
|
|
Financial costs |
-274 |
-279 |
-69 |
-103 |
Profit/loss before
tax |
-928 |
1,506 |
-290 |
556 |
Net profit/loss for the
period |
-928 |
1,506 |
-290 |
556 |
Total comprehensive income/ loss for
the period |
-928 |
1,506 |
-290 |
556 |
|
|
|
|
|
Earnings per share (in
euros) |
|
|
|
|
- basic |
-0,09 |
0,14 |
-0,03 |
0,05 |
-
diluted |
-0,09 |
0,14 |
-0,03 |
0,05 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In thousands of euros |
30 September 2023 |
31 December 2022 |
|
|
|
Cash and cash equivalents |
916 |
3,427 |
Receivables and
prepayments |
5,972 |
4,387 |
Inventories |
36,600 |
22,511 |
Investment property for
sale |
0 |
9,050 |
Total current
assets |
43,488 |
39,375 |
|
|
|
Receivables and
prepayments |
18 |
18 |
Investment property |
2 |
82 |
Property, plant and
equipment |
239 |
284 |
Intangible assets |
28 |
46 |
Total non-current
assets |
287 |
430 |
TOTAL
ASSETS |
43,775 |
39,805 |
|
|
|
Loans and borrowings |
747 |
5,255 |
Payables and deferred
income |
5,814 |
3,681 |
Total current
liabilities |
6,561 |
8,936 |
|
|
|
Loans and borrowings |
20,731 |
12,834 |
Total non-current
liabilities |
20,731 |
12,834 |
TOTAL
LIABILITIES |
27,292 |
21,770 |
|
|
|
Share capital |
7,272 |
7,272 |
Share premium |
3,835 |
3,835 |
Statutory capital reserve |
2,011 |
2,011 |
Retained earnings |
3,365 |
4,917 |
Total equity
attributable to owners of the parent |
16,483 |
18,035 |
TOTAL
EQUITY |
16,483 |
18,035 |
TOTAL LIABILITIES AND EQUITY |
43,775 |
39,805 |
Tiina MalmCFOArco Vara ASPhone: +372 614 4630
www.arcovara.com
- ArcoVara_aruanne Q3 2023 ENG
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