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Published: 2019-08-08 15:00:00 CEST
Arco Vara
Quarterly report

Unaudited consolidated interim report for Q2 and 6 months of 2019


In Q2 2019, the group’s revenue was 0.7 million euros, which is 106% more than the revenue of 0.3 million euros from continuing operations in Q2 2018. In Q2 2018, revenue together with the discontinued service segment was 1.1 million euros. In 6 months 2019, the group’s revenue was 1.7 million euros, which is 3% less than the revenue of 1.8 million euros in 6 months 2018.

In Q2 2019, the group’s operating loss (=EBIT) was 59 thousand euros and net loss 174 thousand euros (in 6 months 2019: operating loss 54 thousand euros and net loss of 286 thousand euros). In Q2 2018, the group had operating loss of 159 thousand euros from continuing operations (239 thousand in overall) and net loss of 351 thousand euros. In 6 months 2018, the group made operating loss of 176 thousand euros and net loss of 402 thousand euros.

In Q2 2019, 3 apartments were sold in projects developed by the group (in 6 months 2019 10 apartments). In Q2 2018, 1 apartment was sold (8 apartments and 1 land plot in 6 months).

In the 6 months of 2019, the group’s debt burden (net loans) increased by 1.7 million euros up to the level of 17.4 million euros as of 30 June 2019. As of 30 June 2019, the weighted average annual interest rate of interest-bearing liabilities was 4.7%. This is a decrease of 0.3 percentage points compared to 31 December 2018.


There is not much to be proud of in the results of the second quarter.

We are still stuck with Iztok Parkside where the construction is completed and more than 80% of the project is presold. The project’s book value as stock is more than 7 million EUR and expected sales revenue is about 9 million EUR. The good news at the bad game is that the customers still wish to receive their apartments and have not started to back out from their presale contracts. Since the Bulgarian bureaucracy machinery has not yet resolved the question which public institution owns the access streets, the delivery of apartments, as well as earning the revenue and profit have been delayed. We need to continue patiently and resiliently to resolve the problem and appreciate every single step that brings us closer to the end solution.

In Kodulahe project, construction of the second apartment block is on schedule and more than 85% of the sellable apartment area has been presold.  We expect sales revenue and profit in the fourth quarter. Commencement of construction of the third apartment block depends on reaching a satisfactory construction price.

In Lozen project, construction tender is going on and it is possible to commence construction in the fourth quarter provided that the construction price meets our expectations. Madrid Blvd occupancy rate is close to 100% and generates positive cashflow.

During 2019, the group will continue to seek an answer to two key questions: first, how to close the Iztok Parkside project as quickly and profitably as practically possible, and second, whether it is better to hold and push the real estate development projects further, or to seek alternative solutions in order to achieve at least 20% annual return on equity.


The revenue of the group totalled 695 thousand euros in Q2 2019 (in Q2 2018: 1,076 thousand euros, of which 337 thousand euros from continuing operations) and 1,746 thousand euros in 6 months 2019 (in 6 months 2018: 3,223 thousand euros, of which 1,793 thousand euros from continuing operations), including revenue from the sale of properties in the group’s own development projects in the amount of 440 thousand euros in Q2 and 1,263 thousand euros in 6 months 2019 (2018: 182 thousand euros in Q2 and 1,492 thousand euros in 6 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 178 thousand euros in Q2 2019 and 350 thousand euros in 6 months (2018: 128 thousand euros in Q2 and 252 thousand euros in 6 months). In Q2 2019, all office and commercial spaces together with parking places were rented out.

In Q2 and 6 months 2019, the group had an operating loss of 59 thousand euros and 54 thousand euros, respectively. In 2018, the group had an operating loss from continuing operations of 157 thousand euros in Q2 and 66 thousand euros in 6 months.

In Q1 2019, construction works continued in Stage II of Kodulahe project, a building with 68 apartments and 1 commercial space. The project is expected to be finalized by the end of 2019. By the publishing date of the interim report, 62 apartments have been presold.

Design works for Stages III-V of Kodulahe continued in Q2 and have been largely finished by now. Under favourable market conditions, the construction of Stage III is scheduled to start in the autumn of 2019 and the joint construction of Stages IV-V in 2000. The apartment buildings will become ready for final sale in about 1,5 years after the construction begins.

In Q2, construction tender began for building 4 smaller apartment buildings on Oa street plots in Tartu under the project name of Kodukalda. The construction is scheduled to start in the early autumn of 2019.

In Iztok Parkside project in Sofia, construction has been completed. By the publishing date of the interim report, presale agreements for 56 apartments have been concluded. Iztok project consists of three apartment buildings with 67 apartments (7,070 square meters of apartments’ sellable area).

In Madrid Blvd building, out of the 15 apartments previously used for offering accommodation service, 10 have been sold as of the date of this report.

In the Lozen project near Sofia in Bulgaria, design works have been completed and construction tender is in process. The project foresees construction of 179 homes (apartments and houses), commercial spaces and a kindergarten. Under favourable market conditions, construction may start in the second half of 2019, possibly divided into smaller sub-stages. Considering the nature of terrain on a mountain slope, minimum construction period is 2 years.

As of 30 June 2019 and the date of this report, 4 Marsili residential plots remained unsold in Latvia.


In thousands of euros6m 20196m 2018Q2 2019Q2 2018
Continuing operations    
Revenue from sale of own real estate1,2631,492440182
Revenue from rendering of services483301255155
Total revenue1,7461,793695337
Cost of sales-1,329-1,224-514-208
Gross profit417569181129
Other income9141036
Marketing and distribution expenses-153-68-68-25
Administrative expenses-382-576-149-260
Other expenses-27-47-23-37
Gain on sale of subsidiaries01500
Operating profit/loss-54-66-59-157
Financial income and expenses-232-226-115-112
Net profit/loss from continuing operations-286-292-174-269
Net loss from discontinued operations0-1100-82
Net loss for the period-286-402-174-351
Total comprehensive income/expense for the period -286-402-174-351
Earnings per share from continuing operations (in euros)    
- basic-0.03-0,03-0.02-0.03
- diluted-0.03-0,03-0.02-0,03
Earnings per share (in euros)    
- basic-0.03-0.05-0.02-0.04
- diluted-0.03-0.04-0.02-0.04


 In thousands of euros30 June 201931 December 2018
Cash and cash equivalents1,2772,327
Receivables and prepayments698739
Total current assets23,26120,617
Receivables and prepayments2025
Investment property11,46212,344
Property, plant and equipment388267
Intangible assets233262
Total non-current assets12,10312,898
TOTAL ASSETS35,36433,515
Loans and borrowings16,57512,547
Payables and deferred income4,6713,982
Total current liabilities21,24616,529
Loans and borrowings1,4033,985
Total non-current liabilities1,4033,985
Share capital6,2996,299
Share premium2,2852,285
Statutory capital reserve2,0112,011
Other reserves245245
Retained earnings1,8752,161
TOTAL EQUITY12,71513,001

Kristel Tumm
Arco Vara AS
Phone: +372 614 4662


AVG 2019 Q2 ENG.pdf