Published: 2016-11-03 15:17:39 CET
Arco Vara
Quarterly report

Arco Vara AS unaudited consolidated interim report for the third quarter and 9 months 2016

General information

Arco Vara AS and other entities of Arco Vara group (hereafter together ‘the group’) are engaged in real estate development and services related to real estate. The group considers Estonia, Latvia and Bulgaria as its home markets. The group has two business lines: Service division and Development division.

The Service division is engaged in real estate brokerage, valuation, management and consulting as well as in short-term investment in residential real estate. The Service division offers to the group additional value by generating analytical data on market demand and supply, and behaviour of potential clients. Analytical data allows to make better decisions on real estate development: purchase of land plots, planning and designing, pricing end products, timing the start of construction.

The Development division develops complete living environments and commercial real estate. Fully developed housing solutions are sold to the end-consumer. In some cases the group also develops commercial properties until they start to generate cash flow for two possible purposes: for the support of the group’s cash flows or for resale. The group is currently holding completed commercial properties that generate rental income.

As of 30 September 2016, the group consisted of 23 companies, which is two less than at the end of year 2015. On 19 February 2016, the group’s subsidiary Fineprojekti OÜ was erased from Estonian Commercial Register, the liquidation process was started in 2014. The liquidation also resulted in derecognition of Romanian subsidiary Arco Capital Real Estate SRL from the group’s structure. In Q1 2016, the group’s interest in Bulgarian real estate fund Arco Real Estate Fund REIT was increased from 70% to 100% and the share capital of the fund was additionally increased by 77 thousand euros. In April 2016, the group sold its 100% subsidiary Arco BB EOOD in Bulgaria and in May 2016 the group purchased 100% subsidiary Iztok Parkside EOOD in Bulgaria. None of these transactions had significant impact on the group’s net assets.

 

Significant subsidiaries

Company name Location Segment Share capital (nominal value) Equity balance
at 30 Sept 2016
The group's interest
In thousands of euros          
Arco Manastirski EOOD Bulgaria Development 2,676 4,091 100%
Arco Invest EOOD Bulgaria Development 26,826 -501 100%
Iztok Parkside EOOD Bulgaria Development 1,433 1,234 100%
Arco Real Estate Fund REIT ¹ Bulgaria Development 332 298 100%
Kodulahe OÜ Estonia Development 3 -265 100%
Kerberon OÜ Estonia Development 5 1,259 100%
Marsili II SIA Latvia Development 1,524 954 100%
Arco Real Estate AS Estonia Service 42 -1,058 100%
Arco Real Estate SIA ¹ Latvia Service 1,905 31 70.6%
Arco Imoti EOOD Bulgaria Service 444 174 100%

¹ - Non-controlling interest in Arco Real Estate SIA equals to the group’s total non-controlling interest

 

Key Performance Indicators

   ·                     In Q3 2016, the group’s revenue was 1.3 million euros, which is 39% less compared to the revenue of 2.1 million euros in Q3 2015. Revenue of Development division amounted to 0.6 million euros in Q3, decreasing by 57% compared to Q3 2015. The revenue of Service division amounted to 0.8 million euros in Q3 2016, decreasing by 5.4% compared to Q3 2015. The group’s revenue of 8.4 million euros for the 9 months 2016 decreased by 1.4% compared to the same period of year 2015. The revenue of Development division decreased by 2.2% to 6.4 million euros for 9 months 2016 and the revenue of Service division amounted to 2.4 million euros in 9 months 2016, decreasing by 1.5% compared to 9 months 2015.

·                     In Q3 2016, the group’s operating loss (=EBIT) was 0.2 million euros and net loss 0.4 million euros. In Q3 2015, 0.3 million euros of operating profit and 0.2 million euros of net profit were earned. In 9 months 2016, the group’s operating profit (=EBIT) was 1.0 million euros and net profit was 0.5 million euros (in 9 months 2015: 1.4 million euros and 0.9 million euros, respectively). The group’s operating profit comes from Development division, amounting to 1.5 million euros for 9 months 2016 (in 9 months 2015: 1.6 million euros). The operating profit of Service division was practically at zero level in the first 9 months of both 2016 and 2015.

·                     As of 30 September 2016, the group’s debt burden has remained practically on the same level compared to the year-end 2015. Net loans have increased by 0.3 million euros in first 9 months 2016 up to the level of 12.3 million euros as of 30 September 2016. Total loans and borrowings amounted to 12.7 million euros on 30 September 2016, decreasing by 0.1 million euros during last 9 months. As of 30 September 2016, the weighted average annual interest rate of loans was 6.1%. This is an increase of 1.1 percentage points compared to 31 December 2015.

·                     In Q3 2016, 2 apartments and 2 land plots were sold in projects developed in the group (in Q3 2015, 12 apartments, one commercial space and one land plot were sold). In 9 months 2016, 75 apartments, 5 commercial spaces and 6 land plots have been sold (in 9 months 2015: 73 apartments, 6 commercial spaces and one land plot).

    9 months 2016 9 months 2015 Q3 2016 Q3 2015
In millions of euros          
Revenue          
Development   6.4 6.5 0.6 1.4
Service   2.4 2.4 0.8 0.9
Eliminations   -0.4 -0.4 -0.1 -0.1
Total revenue   8.4 8.5 1.3 2.2
           
Operating profit (EBIT)          
Development   1.5 1.6 0.0 0.4
Service   -0.1 0.1 0.0 0.0
Unallocated income and expenses   -0.5 -0.4 -0.2 0.0
Eliminations   0.1 0.1 0.0 0.0
Total operating profit/loss (EBIT)   1.0 1.4 -0.2 0.4
           
Finance income and expense   -0.5 -0.5 -0.2 -0.2
Net profit/loss   0.5 0.9 -0.4 0.2
           
Key ratios          
EPS (in euros)   0.08 0.15 -0.06 0.03
Diluted EPS (in euros)   0.07 0.14 -0.05 0.03
ROIC (rolling, four quarters)   0.3% 5.6%    
ROE (rolling, four quarters)   0.6% 13.9%    
ROA (rolling, four quarters)   0.3% 5.1%    

 

    30 Sept 2016 31 Dec 2015
In millions of euros      
Total assets, at period end   26.6 24.5
Invested capital, at period end   22.7 22.4
Net loans, at period end   12.3 12.0
Equity, at period end   10.0 9.6
       
Current ratio   3.22 3.22
Quick ratio   0.20 0.32
Financial leverage   2.67 2.54
Average loan term (in years)   1.2 1.7
Average annual interest rate of loans   6.1% 5.0%
Number of staff, at period end   185 178

 

Cash flows

      9 months 2016 9 months 2015   Q3 2016 Q3 2015
In millions of euros              
Cash flows from/used in operating activities     2.6 3.1   -1.0 -0.1
Cash flows from/used in investing activities     -2.0 -0.1   -1.1 0.0
Cash flows from/used in financing activities     -0.9 -3.5   1.6 0.3
Net cash flows     -0.3 -0.5   -0.5 -0.2
               
Cash and cash equivalents at beginning of period     0.7 1.7   0.9 1.0
Cash and cash equivalents at end of period     0.4 1.2   0.4 1.2

 

Revenue and net profit/loss from continuing operations                  
    Q1 2013 Q2 2013 Q3 2013 Q4 2013 Total 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016 Q2 2016 Q3 2016 Total 9M  2016
In millions of euros                                        
Revenue   1.7 3.5 3.5 2.0 10.7 1.1 1.1 1.2 5.8 9.2 4.4 2.1 2.1 2.1 10.7 5.1 2.1 1.2 8.4
Net profit/loss   0.0 1.4 0.1 2.0 3.5 0.4 -0.3 0.4 0.6 1.1 0.7 0.0 0.2 -0.4 0.5 1.1 -0.2 -0.4 0.5

FORMULAS USED

Earnings per share (EPS) = net profit attributable to owners of the parent / weighted average number of ordinary shares outstanding during the period
Diluted earnings per share (Diluted EPS) = net profit attributable to owners of the parent / (weighted average number of ordinary shares outstanding during the period + number of all potentially issued shares)
Invested capital = current interest-bearing liabilities + non-current liabilities + equity (at the end of period)
Net loans = current interest-bearing liabilities + non-current liabilities – cash and cash equivalents – short-term investments in securities (at the end of period)
Return on invested capital (ROIC) = past four quarters’ net profit / average invested capital
Return on equity (ROE) = past four quarters’ net profit / average equity
Return on assets (ROA) = past four quarters’ net profit / average total assets
Current ratio = current assets / current liabilities
Quick ratio = (current assets - inventory) / current liabilities
Financial leverage = total assets / equity
Number of staff at period-end = number of people working for the group under employment or authorization (service) contracts

 

Group Chief Executive’s review

 

Arco Vara Group has been pushing simultaneously one acceleration of restructured rental property, two constructions of residential developments, and three internal gear-shiftings in our brokerage and valuation units in our home markets.  The push is quite different from a walk in the park, one should rather compare it to an expedition through the desert.  All the ongoing push efforts consume money, before they start making money. As I have warned in previous quarterly reports, our following quarters will be humble.

Nevertheless, we should be clear on two things: first,  the period of push „through the desert“ must be over in Q3 2017 when we will start delivery of Kodulahe first stage apartments, and the Group must return to profitability again; and second,  despite my own nice explanation of what is happening, we underperformed in Q3. The net loss of 0.4 million euros was more than we ourselves expected.

We performed quite well with activities that are not yet visible in the balance sheet and income statement. That means, Kodulahe construction proceeded according to the schedule and current presales met our expectations. We intend to sell out 1st stage (more than 8,700 sqm GSA, 16 million euros expected revenue) by the end of 2017 and must start preparations for the 2nd stage soon. Iztok Parkside land acquisition and the detail plan process has also been completed as at the date of this report and we will proceed with a construction tender, with a view to start construction this year. In Q4, we also started presale of Iztok. Finally, we have made progress with several smaller development projects in Tallinn and Tartu, where we expect to have in our balance sheet sellable development products (attractive land with building rights) in the first half of 2017 or finalized consumer products (apartments or residential plots) in 2018. Our aim is still to double the revenue and net profit of Arco Vara (from 10 and 1 million to 20 and 2 millions, respectively) by the end of 2018.  

Areas where we did not perform well look like a bottom of a water bucket, with small holes in it. The revenue was smaller than expected and certain expenses bigger than expected. Normally, we need to sell for 2 million euros of goods and services in order to break even as a group. 

First, we failed to sign in new tenants into Madrid Blvd offices in Sofia, where we still have 4,100 sqm vacancy, and missed significant rental income as a result. As a reaction, we have adjusted the ask prices, as we prefer a busy house with lower rents to a not so busy house with high rents. We are also watching the construction progress of the nearby ‘Theater’ metro station, due in 2018, and expect it to improve the Madrid Blvd connectivity to the rest of the metropolis.

Second, our brokerage and valuation units in Estonia, Latvia and Bulgaria have not been making profit so far, without having work from Arco’s own development projects. The solution here is to change the way of thinking and redesign certain work processes, as the group is interested in autonomously profit-making units. Management buy-out of Latvian Arco Real Estate SIA, announced on 1 November, is part of that solution, as we could not agree on change. In Bulgaria and Estonia, we will continue with internal changes in work process and thinking.

Third, we sold less than expected from our own remaining stock of development products. The remaining stock in Madrid Blvd and Manastirski (both in Sofia), and Marsili (Riga) was worth approximately 1 million euros at the end of Q3. We should have sold for more than 600 thousand euros. On the other hand, the thin stock will be sold out in any case in the coming quarters, and there will be no additions to the stock before Q3 2017.

And finally, in Q3, we took some one-off marketing and administrative expenses which the management considered unavoidable, looking at the tightening competition both in Tallinn and in Sofia and then making forcefully space for Arco’s 2017-2018 products.

So all in all, we will continue on the selected course, and financial performance of the following three quarters will not look attractive until Q3 2017 and thereafter – the results of which are being written now and these look good. Until second half of 2017, the cash flows will be tense and some sales from the landbank, or debt issues, are possible. Then again, there is a lot we can pursue even before Q3 2017 and two of those things are getting in new tenants into Madrid Blvd and increasing our brokerage and valuation revenue in Estonia and Bulgaria. 


 

SERVICE DIVISION

In Q3 2016, revenue of the group’s service division was 806 thousand euros (in Q3 2015: 852 thousand euros), which included intra-group revenue of 76 thousand euros (in Q3 2015: 107 thousand euros). Service division revenue decreased by 1.5% in 2016 if 9 months periods were compared: 2,404 thousand euros in 9 months 2016 and 2,440 thousand euros in 9 months 2015. In 9 months 2016, revenue of service division from main services (real estate brokerage and valuation services) remained at the same level of the 9 months period of 2015 and dropped by 4% if third quarters are compared. Revenue from main services has increased in Estonian and Latvian brokerage agency and decreased in Bulgarian agency. The drop in the revenue of Bulgarian agency can be attributed to the decreased income from mediating the sales of the group’s own properties.

Revenue of real estate agencies from brokerage and valuation    
    9 months 2016 9 months 2015 Change, %   Q3 2016 Q3 2015 Change, %
In thousands of euros                
Estonia   1,036 963 8%   381 355 7%
Latvia   694 679 2%   226 243 -7%
Bulgaria   444 538 -17%   115 158 -27%
Total   2,174 2,180 0%   722 756 -4%

In 9 months 2016, Estonian and Latvian agencies have operated at a loss: 152 thousand euros and 18 thousand euros respectively (in 9 months 2015, losses of 68 thousand euros and 51 thousand euros respectively). Bulgarian agency had net loss of 17 thousand euros in 9 months 2016, but earned net profit of 137 thousand euros in 9 months 2015.

In addition to brokerage and valuation services, the service division also provides real estate management services and accommodation service in Bulgaria. The revenue from real estate management was 87 thousand euros in 9 months 2016, 75 thousand euros of which was intra-group revenue (in 9 months 2015: 104 thousand and 77 thousand euros, respectively). Revenue from accommodation services amounted to 104 thousand euros in 9 months 2016 (in 9 months 2015: 105 thousand euros).

The number of staff in service division increased to 172 employees in first nine months of 2016, up by 7 people  compared to year end 2015. The number of staff increased mainly in Bulgaria.

 

DEVELOPMENT DIVISION

In Q3 2016, revenue of development division totalled 586 thousand euros (in Q3 2015: 1,374 thousand euros) including revenue of 367 thousand euros (Q3 2015: 770 thousand euros) from the sale of properties in the group’s own development projects. In 9 months 2016, development division’s revenue amounted to 6,401 thousand euros, which is 143 thousand euros or 2.2% less compared to 9 months 2015. In 9 months 2016, the revenue from the sale of properties in the group’s own development projects reached 6,043 thousand euros (in 9 months 2015: 5,713 thousand euros).

Most of the other revenue of development division consists of rental income from commercial and office premises in Madrid Blvd building in Sofia, amounting to 89 thousand euros in Q3 2016 and 252 thousand euros in 9 months 2016 (in 2015: 234 thousand euros in Q3 and 708 thousand euros in 9 months). Rental income has decreased compared to previous year due to ending the rental agreement with anchor tenant in Q3 2015 and the renovation works of rental area in Q4 2015. The rental area that was previously rented out to one anchor tenant is now divided into 7 separate areas. Finding new tenants at the same level of rental fee has proved to be difficult. At the end of Q3 2016, a decision was taken to decrease rental income expectations and with the aim of renting out all rental areas by no later than the spring of 2017.

In 9 months 2016, operating profit of development division was 1,524 thousand euros, out of which 33 thousand euros were earned in Q3 (In 9 months 2015: 1,598 thousand euros, out of which 377 thousand euros in Q3).  

During Q3 2016, the construction of first stage apartment building (with 125 apartments and 5 commercial spaces) in the group’s biggest development project Kodulahe continued in Tallinn. In August, the requirements of self-financing set by the financing bank were fulfilled and credit limit in the total amount of 8.8 million euros was opened. By the publishing date of the interim report, presale agreements for 59 apartments and one commercial space have been concluded. The construction of the apartment building should be finished by summer 2017.

As of 30 September 2016, 20 apartments remained unsold in Madrid Blvd complex in Sofia. In Q3 2016, 2 apartments were sold. 15 apartments, out of all Madrid Blvd unsold apartments, are being rented out as accommodation service. Unsold 105 parking places are also rented out.

Four commercial spaces and a few parking places remained unsold in Manastirski Livadi project.

In May 2016, the group finalized the purchase of a company Iztok Parkside EOOD. As a result, the group’s development portfolio has gained new development project in Iztok district in Sofia. In September 2016, bank loan agreement was concluded to fully finance further development costs of the project in maximum amount of 4.9 million euros. By the date of publishing the interim report, detail plan for the project’s property has been established, presale of apartments has started and construction tender has been announced. Three apartment buildings with 68 apartments (7,070 square meters of apartments’ sellable area) will be built. The construction should start in Q4 2016 and apartment buildings should be completed by the end of 2017.

In third quarter, two Marsili residential plots were sold. 10 plots remained unsold in the project as of 30 September 2016.

As of 30 September 2016, 5 people were employed in development division, the same number as at the end of year 2015.

SUMMARY TABLE OF ARCO VARA’S ACTIVE PROJECTS AS OF 30 SEPTEMBER 2016

Project name Address Product main type Stage Area of plot(s) (m2) GSA / GLA (above grade) available or <future target>   No of units (above grade) available or <future target>
Manastirski D Manastirski, Sofia Apartments S5 - 372 4
Madrid Blvd  Madrid Blvd, Sofia Lease: Retail/Office S5/S6 - 7,350 20
Madrid Blvd  Madrid Blvd, Sofia Apartments S5/S6 - 2,060 20
Iztok Parkside Iztok, Sofia Apartments S3 2,470 7,070 68
Marsili residential plots Marsili, near Riga Residential plots S5 - 18,047 10
Marsili residential plots Marsili, near Riga Residential plots S2/S5 120,220 <120,220> <68>
Kodulahe, stage 1  Lahepea 7, Tallinn Apartments S4/S5 6,102 8,732 130
Kodulahe, stages 2-5 Lahepea, Soodi, Pagi streets, Tallinn Apartments S2 22,396 <13,300> <200>
Lehiku carpet building Lehiku 21,23 Tallinn Apartments S2 5,915 <1,100> <5>
Liimi Liimi 1b, Tallinn Lease: Office S2/S5 2,463 <6,500> 1

Note: Value presented inbetween < > means future target value as the project is in early (S1, S2) development stage and the building rights or the design have not been finished yet. The table does not reflect sellable or lettable volumes below grade including parking spaces and storages. The table does not provide complete overview of the group’s land bank.   

Description of stages

S1: Land plot acquired
S2: Building Rights Procedure
S3: Design and Preparation Works
S4: Construction
S5: Marketing and Sale
S6: Facility Management and/or Lease

 

PEOPLE

As of 30 September 2016, 185 people worked for the group (178 as of 31 December 2015). Employee remuneration expenses in the first 9 months of 2016 amounted to 2.1 million euros (in 9 months 2015: 1.9 million euros).

The remuneration of the member of the management board / CEO, and the members of the supervisory board of the group’s parent company including social security charges amounted to 82 thousand euros in 9 months 2016 (83 thousand euros in 9 months 2015).

 

MANAGEMENT BOARD AND SUPERVISORY BOARD

The management board of Arco Vara AS has one member. Since 22 October 2012, the member of the management board and chief executive officer of Arco Vara AS has been Tarmo Sild. The mandate of the CEO was extended by 3 years (until October 2018) by the supervisory board in September 2015.

The supervisory board of Arco Vara AS has 5 members. Since 10 February 2015, the supervisory board consists of Hillar-Peeter Luitsalu (the chairman), Allar Niinepuu, Rain Lõhmus, Steven Yaroslav Gorelik and Kert Keskpaik.

Additional information on key persons of Arco Vara is presented on company’s corporate web page www.arcorealestate.com.

 

DESCRIPTION OF THE MAIN RISKS

Strategic risk

Most of the group’s equity is invested into real estate development. The group is focused mainly on residential real estate development where development cycle lasts for years, starting from the acquisition of a land plot, moving on to detail planning, design and construction, and ending with the sale of end products to customers. The equity is invested mainly in the early phase of the cycle (purchase of land) on the assumption that there will be a demand for certain products in the future. Considering that the demand for development product is largely based on forecasts, the main risk for the group is investing equity into a development product for which there is no or too little demand in the future.

For mitigating the risk, the group: (i) invests equity into different development projects in different markets (in 2016, in Sofia and Tallinn), (ii) monitors current demand and supply in its home markets and (iii) makes efforts to narrow the time between making initial investment and selling the final product – by signing pre-agreements with clients, acquiring land without no or little upfront equity investment etc. 

Credit risk

The group’s credit risk arises mainly from two sources: real estate development activities and reliability of the banks where bank deposits are placed. In real estate transactions, much of of counterparty financing is arranged through banks, therefore co-operation with financing banks is used to mitigate counterparty risk. Further, not all cash and cash equivalents are held in the same banking group. As a result, the group considers credit risk to be substantially mitigated.

Liquidity and interest rate risks

The base currency of all of the group’s loan agreements is euro and the base interest rate is 3 or 6 months EURIBOR. As a result, the group is exposed to developments on international capital markets. The group does not use hedging instruments to mitigate its long-term interest rate risk. On 30 September 2016, the group’s interest-bearing liabilities amounted to 12.7 million euros (decreased by 0.1 million euros during 9 months 2016), out of which only 1.2 million euros is due within next 12 months. At the same time, the group’s cash and cash equivalents totalled 0.4 million euros as of 30 September 2016 (on 31 December 2015: 0.7 million euros). In 9 months 2016, interest payments on interest-bearing liabilities totalled 0.6 million euros (in 9 months 2015: 0.6 million euros). The group’s weighted average loan interest rate was 6.1% as of 30 September 2016. This is an increase by 1.1 percentage points compared to the end of year 2015. The reason for the increase is new borrowings raised in 2016, which bear above-average interest rate.

Currency risk

Purchase and sales contracts of provided services are mostly signed in local currencies: euros (EUR) or Bulgarian lev (BGN). Real estate sales are mostly nominated in euros, as a result of which the group’s assets and liabilities structure does not denote a significant currency risk. The group is not protected against currency devaluations. liquid assets are mostly held on demand or short-term deposits denominated in euros.


Share and shareholders

Arco Vara AS has issued a total of 6,117,012 ordinary shares with nominal value of 0.7 euros per share. The shares are freely traded on NASDAQ Tallinn stock exchange. The share price closed at 1.07 euros on 30 September 2016. The price has decreased by 7% within 9 months 2016 (closing price at the end of 2015 was 1.15 euros). During the period, the highest traded price per share was 1.15 euros and lowest price 1.01 euros. As of 30 September 2016, market capitalization of shares amounted to 6,545 thousand euros, P/E ratio of the share was 104 and P/B ratio 0.66 (at 31 December 2015: 7,035 thousand euros, 15.8 and 0.73, respectively). 

Structure of shareholders

As at 30 September 2016, Arco Vara had 1,519 shareholders (at 31 December 2015: 1,600) including 1,317 individuals as shareholders (at 31 December 2015: 1,381 individuals) who jointly owned 13.2% (at 31 December 2015: 12.7%) interest out of all Arco Vara shares. 

 

Major shareholders at 30 September 2016 No of shares Interest %
NORDEA BANK FINLAND PLC client 862,820 14.1%
AS Lõhmus Holdings 602,378 9.8%
Gamma Holding Investment OÜ 553,975 9.1%
Alarmo Kapital OÜ 500,188 8.2%
LHV PENSIONIFOND L 389,765 6.4%
FIREBIRD REPUBLICS FUND LTD 356,428 5.8%
HM Investeeringud OÜ 330,505 5.4%
FIREBIRD AVRORA FUND, LTD. 185,800 3.0%
LHV PENSIONIFOND XL 173,583 2.8%
AS LHV Pank 158,526 2.6%
Other shareholders 2,003,044 32.7%
Total 6,117,012 100.0%

 

Holdings of members of the management and supervisory boards (and related persons) on 30 September 2016 Position No of shares Interest %
Rain Lõhmus (AS Lõhmus Holdings) member of supervisory board 602,378 9.8%
Tarmo Sild ja Allar Niinepuu (Alarmo Kapital OÜ) member of management board/ member of supervisory board 500,188 8.2%
Hillar-Peeter Luitsalu (HM Investeeringud OÜ, related persons) chairman of supervisory board 369,259 6.0%
Kert Keskpaik (privately and through K Vara OÜ) member of supervisory board 202,171 3.3%
Steven Yaroslav Gorelik ¹ member of supervisory board 0 0.0%
Total   1,673,996 27.4%

¹ - Steven Yaroslav Gorelik is active as fund manager in three investment funds holding interest in Arco Vara (Firebird Republics Fund Ltd, Firebird Avrora Fund Ltd and Firebird Fund L.P) of 692,750 shares (total of 11.3% interest).


   

Condensed consolidated interim financial statements

Consolidated statement of comprehensive income
 

  Note   9 months 2016 9 months 2015   Q3 2016 Q3 2015
In thousands of euros              
Continuing operations              
Revenue from sale of own real estate     6,043 5,713   461 1,097
Revenue from rendering of services     2,395 2,842   826 1,001
Total revenue 2, 3   8,438 8,555   1,287 2,098
               
Cost of sales 4   -5,554 -5,433   -862 -1,264
Gross profit     2,884 3,122   425 834
               
Other income     35 70   7 47
Marketing and distribution expenses 5   -418 -359   -138 -125
Administrative expenses 6   -1,519 -1,373   -498 -428
Other expenses     -29 -32   -11 -6
Gain on sale of subsidiary     1 0   0 0
Operating profit/loss     954 1,428   -215 322
               
Finance income and costs 7   -459 -538   -163 -150
Net profit/loss from continuing operations     495 890   -378 172
               
Discontinued operations              
Profit/loss from discontinued operations     0 -13   0 0
               
Net profit/loss for the period     495 877   -378 172
   attributable to owners of the parent     500 892   -378 173
   attributable to non-controlling interests     -5 -15   0 -1
               
Total comprehensive income/expense for the period     495 877   -378 172
   attributable to owners of the parent     500 892   -378 173
   attributable to non-controlling interests     -5 -15   0 -1
               
Earnings per share (in euros) 8            
- basic     0.08 0.15   -0.06 0.03
    - diluted     0.07 0.14   -0.05 0.03

 

Consolidated statement of financial position

  Note   30 September 2016 31 December 2015
In thousands of euros        
Cash and cash equivalents     414 745
Receivables and prepayments 9   616 679
Inventories 10   15,525 12,818
Total current assets     16,555 14,242
         
Receivables and prepayments 9   11 0
Investment property 11   9,360 9,513
Property, plant and equipment     466 489
Intangible assets     248 229
Total non-current assets     10,085 10,231
TOTAL ASSETS     26,640 24,473
         
Loans and borrowings 12   1,164 2,345
Payables and deferred income 13   3,903 1,935
Provisions     81 146
Total current liabilities     5,148 4,426
         
Loans and borrowings 12   11,505 10,417
Total non-current liabilities     11,505 10,417
TOTAL LIABILITIES     16,653 14,843
         
Share capital     4,282 4,282
Share premium     292 292
Statutory capital reserve     2,011 2,011
Other reserves 8   298 298
Retained earnings     3,095 2,656
Total equity attributable to owners of the parent     9,978 9,539
Equity attributable to non-controlling interests     9 91
TOTAL EQUITY     9,987 9,630
TOTAL LIABILITIES AND EQUITY     26,640 24,473

    

Consolidated statement of cash flows

  Note   9 months 2016 9 months 2015   Q3 2016 Q3 2015
In thousands of euros              
Cash receipts from customers     12,282 10,945   2,647 2,250
Cash paid to suppliers     -7,133 -4,766   -2,948 -1,808
Other taxes paid and recovered (net)     -1,627 -2,305   -478 -270
Cash paid to employees     -894 -766   -258 -227
Other cash payments and receipts related to operating activities (net)    -73 24   -11 -9
NET CASH FROM/USED IN OPERATING ACTIVITIES     2,555 3,132   -1,048 -64
               
Payments made on purchase of tangible and intangible assets     -81 -137   -7 -38
Proceeds from sale of a subsidiary     1 0   0 0
Payments made on purchase of a subsidiary     -1,890 0   -1,050 0
Interest received     0 4   0 1
Other payments related to investing activities     -3 0   0 0
NET CASH USED IN INVESTING ACTIVITIES     -1,973 -133   -1,057 -37
               
Proceeds from loans received 12   3,285 1,385   2,214 515
Settlement of loans and borrowings 12   -3,378 -4,109   -380 -144
Interest paid     -621 -588   -230 -113
Dividends paid     -61 -61   0 0
Other payments related to financing activities     -138 -82   -10 0
NET CASH FROM/USED IN FINANCING ACTIVITIES     -913 -3,455   1,594 258
               
NET CASH FLOW     -331 -456   -511 157
               
Cash and cash equivalents at beginning of period     745 1,691   925 1,078
Increase in cash and cash equivalents     -331 -456   -511 157
Cash and cash equivalents at end of period     414 1,235   414 1,235

 

Consolidated statement of changes in equity

    Equity attributable to owners of the parent   Non-controlling interests   Total equity
    Share capital Share premium Statutory capital reserve Other reserves Retained earnings Total    
In thousands of euros                      
Balance as at 31 December 2014   4,282 292 2,011 179 2,250 9,014   36   9,050
Profit distribution   0 0 0 0 -61 -61   0   -61
Change in non-controlling interest   0 0 0 0 0 0   77   77
Total comprehensive income
for the period
  0 0 0 0 892 892   -15   877
Balance as at 30 September 2015   4,282 292 2,011 179 3,081 9,845   98   9,943
                       
Balance as at 31 December 2015   4,282 292 2,011 298 2,656 9,539   91   9,630
Profit distribution   0 0 0 0 -61 -61   0   -61
Change in non-controlling interest   0 0 0 0 0 0   -77   -77
Total comprehensive income
for the period
  0 0 0 0 500 500   -5   495
Balance as at 30 September 2016   4,282 292 2,011 298 3,095 9,978   9   9,987

 

         Kontaktinfo:
         Kristel Tumm
         CFO
         Arco Vara AS
         Tel: +372 614 4662
         kristel.tumm@arcovara.ee
         www.arcorealestate.com


AVG 2016 Q3 ENG.pdf