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Creating homes in a
smart way

...directly tapping the market’s pulse

2010


Group Chief Executive’s review

In the first half of 2010, a total of 53 apartments and plots were sold in the projects of Arco Vara - 43 in Estonia and 10 in Latvia. Our largest ever completely self-developed project Boulevard Residence Madrid in Sofia was granted a use permit at the end of June. We can now start signing real right contracts and transferring rental premises to clients. Our Development division continues completing apartments in the Bishumuiza-1 project in Riga and the Manastirski project in Sofia.

Improving sales of the past quarters have reduced the inventory balance significantly and construction prices continue to be favourable. Therefore, we have launched new developments in order to be ready for meeting the emerging market demand. The Group’s subsidiary AS Kolde and AS Merko Ehitus signed a contract for the construction and financing of the next phase of the Kodukolde development project. The new housing complex consists of four apartment buildings with 100 apartment units and 40 underground garage spaces with a gross enclosed area of 8,760 square metres. The first two buildings will be completed in spring 2011. We are pleased to report that construction has commenced and the number of pre-completion sales is exceeding all expectations

A detailed plan for the Paldiski mnt 80 property and its surrounding area was adopted in January. The plan foresees construction of a commercial building with a maximum gross enclosed area of 30,300 square metres.


The Service division has been able to cut its administrative expenses through carefully planned restructuring (47% down compared with the same period in 2009). Sales have also decreased but to a lesser extent (a 33% decline year-over-year). Six-month operating loss from current operations was 2.5 million kroons (0.2 million euros), a 68% improvement on the loss incurred in the same period last year. On the other hand, the number of staff has grown by 2% year-over-year, reflecting a slight recovery in the real estate market. We have reorganized work at some of the division’s smaller offices outside the capital by replacing the classical corporate office system with a home office one while keeping the full service offering. At other offices, we have adopted more cost efficient work procedures. The Service division intends to apply the measures that have yielded positive results in Estonia also in its other markets. This should allow increasing the service offering in the face of limited resources. The main focus of the division will be on Estonia, Latvia and Bulgaria.

Within the six-month period, the Construction division secured new contracts of 95.5 million kroons (6.1 million euros). The order backlog as at the reporting date amounted to 94.0 million kroons (8.0 million euros). The main customers continue to be the public sector and local governments. In addition to environmental and infrastructure projects, funds are being allocated to the education sector. It is worth mentioning that in the first half-year most of the construction revenue was external – the proportion of internally generated sales was minimal.


The Group’s gross profit for the first half-year, excluding inventory revaluations, amounted to 22.3 million kroons (1.4 million euros). Net loss excluding inventory revaluations and losses on the disposal of investments and other assets was 10.8 million kroons (0.7 million euros). The reduction of fixed costs in 2009 has had a positive effect on the Group’s performance in 2010 – compared with the same period last year administrative expenses have decreased by 17%.

We will continue monitoring our fixed costs. In addition to cost-cutting, it is important to optimise the costs in a manner that would support sales growth in the present market situation. One example of this is increasing the number of staff at the Service division while sustaining cost-cutting. To cover future fixed costs, we have started building and selling new real estate projects. In addition to developing the last phase of the Kodukolde project, we have entered into negotiations with the banks and potential business partners with a view to launching phase I of the Tivoli project (approximately 150 apartments) and securing a favourable financing scheme for it.

In the first half-year we adopted various measures for improving liquidity. We disposed of a number of smaller investment properties that were not under our complete control or otherwise did not fit our corporate strategy.

In addition, we extended the loans taken from Piraeus Bank Bulgaria for the development of the Madrid project in Sofia and SEB Pank for the Navigator and Tivoli projects in Tallinn of 360.7 million kroons (23.1 million euros) in aggregate. As a result, the maturity date of the loan taken for the Madrid project was deferred by three years from 2012 to 2015 and the one of the Navigator and Tivoli projects was changed for 15 October 2010.

In December 2009 the shareholders of Arco Vara AS decided to reduce the company’s share capital. A corresponding Commercial Registry entry took effect on 16 March 2010. The reduction of share capital has curbed the volatility of the share price, has allowed more effective pricing of the share on the stock exchange (through a decrease in the difference between the bid and ask prices) and has created new opportunities for further strengthening the capital structure.

Change in accounting for jointly controlled entities

The Group’s management has revised the policy for accounting for interests in jointly controlled entities. Previously, interests in jointly controlled entities were accounted for using proportionate consolidation. As from 1 January 2010, interests in jointly controlled entities are accounted for using the equity method. Management believes that the equity method provides a more faithful representation of the Group’s assets, liabilities and equity.

KEY PERFORMANCE INDICATORS

· In the first half-year, the Group generated revenue and other income of 139.1 million kroons (8.9 million euros), a 47% decrease year-over-year

· Operating loss amounted to16.0 million kroons (1.0 million euros), a 74% improvement year-over-year

· Net loss was 17.8 million kroons (1.1 million euros), an 82% improvement year-over-year

· Equity to assets ratio was 37.1% (HY1 2009: 45.7%). Return on equity was negative (HY1 2009: negative). Return on invested capital was negative (HY1 2009: negative)

· At the end of the first half-year, our order backlog (in the construction business) stood at 94.0 million kroons (6.0 million euros) compared with 142.6 million kroons (9.1 million euros) at the end of the first half of 2009

· In the first half of 2010 we sold a total of 53 apartments and plots (HY1 2009: 25).

EEK

EUR

HY1 2010

HY1 2009

Q2 2010

Q2 2009

HY1 2010

HY1 2009

Q2 2010

Q2 2009

In millions

Revenue and other income

139.1

263.5

71.1

173.3

8.9

16.8

4.5

11.1

Operating loss

-16.0

-62.6

-6.1

-45.4

-1.0

-4.0

-0.4

-2.9

Incl. net loss from the revaluation of investment properties and inventories

-5.6

-36.9

-2.3

-36.9

-0.4

-2.4

-0.1

-2.4

Loss before tax

-17.3

-96.3

-5.6

-78.7

-1.1

-6.2

-0.4

-5.0

Incl. net gain/loss from the disposal of financial assets

-2.4

0.0

1.3

0.0

-0.2

0.0

0.1

0.0

Net loss

-17.8

-97.1

-6.0

-79.5

-1.1

-6.2

-0.4

-5.1

EPS 1 (in kroons and euros)

-3.74

-20.34

-1.26

-16.65

-0.24

-1.30

-0.08

-1.06

Total assets at period end

1,166.1

1,600.7

74.5

102.3

Invested capital at period end

974.2

1,363.9

62.3

87.2

Net loans at period end

506.0

535.9

32.3

34.3

Equity at period end

432.2

732.1

27.6

46.8

Average loan term (in years)

1.5

1.5

1.5

1.5

Average interest rate of loans (per year)

6.1%

6.6%

6.1%

6.6%

ROIC (rolling, 4 quarters)

neg

neg

neg

neg

ROE (rolling, 4 quarters)

neg

neg

neg

neg

Number of staff at period end

153

244

153

244

REVENUE AND PROFIT

EEK

EUR

HY1 2010

HY1 2009

Q2 2010

Q2 2009

HY1 2010

HY1 2009

Q2 2010

Q2 2009

In millions

Revenue and other income

Service

13.7

20.2

7.2

9.5

0.9

1.3

0.5

0.6

Development

75.4

137.5

36.5

112.8

4.8

8.8

2.3

7.2

Construction

52.8

129.9

28.6

71.0

3.4

8.3

1.8

4.5

Eliminations

-2.8

-24.1

-1.2

-19.9

-0.2

-1.5

-0.1

-1.3

Total revenue and other income

139.1

263.5

71.1

173.4

8.9

16.8

4.5

11.1

Operating profit/loss

Service

-2.5

-7.8

-1.1

-2.6

-0.2

-0.5

-0.1

-0.2

Development

-3.4

-31.7

-0.7

-28.0

-0.2

-2.0

0.0

-1.8

Construction

0.3

-5.8

2.3

-2.4

0.0

-0.4

0.1

-0.2

Eliminations

-0.1

-1.6

-4.0

-1.6

0.0

-0.1

-0.3

-0.1

Unallocated expenses

-10.3

-15.7

-2.6

-10.8

-0.7

-1.0

-0.2

-0.7

Total operating loss

-16.0

-62.6

-6.1

-45.4

-1.1

-4.0

-0.5

-3.0

Interest income and expense

-4.2

-2.1

-2.2

-2.3

-0.3

-0.1

-0.1

-0.1

Other finance income and expense

2.8

-31.6

2.8

-31.0

0.3

-2.0

0.2

-2.0

Income tax expense

-0.4

-0.8

-0.4

-0.8

0.0

-0.1

0.0

-0.1

Net loss

-17.8

-97.1

-6.0

-79.5

-1.1

-6.2

-0.4

-5.2

In the first half of 2010, we did not perform any major asset revaluations. Most cuts have been made and managing and reducing costs has become a daily routine at all business units. For the time being, our main focus is on increasing sales, completing projects in progress and launching new ones, and improving liquidity by selling new projects and inventories.

Finance income and expense for the period were strongly influenced by exchange gain of 5.9 million kroons (0.38 million kroons) recognised for a US dollar-based receivable from AS Ühendatud Kapital. Despite a decrease in revenue and other income across all divisions, the Group has succeeded in reducing its operating loss by 74%.

CASH FLOWS

EEK

EUR

HY1 2010

HY1 2009

Q2 2010

Q2 2009

HY1 2010

HY1 2009

Q2 2010

Q2 2009

In millions

Cash flows from operating activities

1.7

-35.8

2.5

1.9

0.1

-2.3

0.2

0.1

Cash flows from investing activities

13.1

31.4

13.3

-3.3

0.8

2.0

0.8

-0.2

Cash flows from financing activities

-40.7

-54.6

-27.2

33.7

-2.6

-3.5

-1.7

2.2

Net cash flow

-25.9

-59.0

-11.4

32.3

-1.7

-3.8

-0.7

2.1

Cash and cash equivalents at beginning of period

64.7

156.1

50.5

64.7

4.1

10.0

3.2

4.1

Effect of movements in exchange rates

-2.8

-1.2

-3.1

-1.1

-0.1

-0.1

-0.2

-0.1

Cash and cash equivalents at end of period

36.0

95.9

36.0

95.9

2.3

6.1

2.3

6.1

In May 2010 Arco Vara AS redeemed commercial paper of 18.9 million kroons (1.2 million euros) before maturity.

There were no other exceptional loan settlements. Interest payments accounted for 16.7 million kroons (1.1 million euros) of the net outflow from financing activities. Scheduled principal payments and those related to inventory sales totalled 54.3 million kroons (3.5 million euros). The largest proportion of credit limits utilised during the period was related to the completion of the Madrid project which accounted for 37.1 million kroons (2.4 million euros) of the total.

The largest current liabilities to be settled in the next 12 months comprise:

· accrued loan principal of 158.7 million kroons (10.1 million euros) to be paid on the sale of reserved premises and in line with the settlement schedule of the Boulevard Residence Madrid project in Sofia;

· loans of 102.5 million kroons (6.6 million euros) related to the Tivoli and Laeva2 projects;

· a loan of 42.0 million kroons (2.7 million euros) related to the Bishumuiza-1 (BM-1) development project in Riga;

· a loan of 23.0 million kroons (1.5 million euros) related to the Kodukolde project;

· the scheduled current portion of a loan related to the Manastirski project of 15.8 million kroons (1.0 million euros).

We have been settling the loans related to the Kodukolde and Merivälja2 projects in Tallinn, the Bishumuiza-1 project in Riga and some cash flow generating projects (such as the entire loan of the Endpoint project) on a current basis. Most of the Group’s liabilities are denominated in euros.

SERVICE DIVISION

We are constantly monitoring the expenses so as to avoid a situation where expenses are growing faster than revenue. In line with this, we intend to terminate some contracts that are no longer beneficial for the division.

At the same time, we have signed a number of new contracts that have already shown their potential in both the second quarter and long-term perspective. In the first half of the year, one investment was sold and the sale of another was decided.

In connection with the revival of the housing market, we will step up our marketing campaign across Estonia until the end of the year. We will continue negotiations with a view to cooperating with other major housing and real estate developers and will hire new office managers and sales staff who would redouble our brokerage, valuation and marketing activities wherever we operate and would make our services and offices more visible for the customer.

In Estonia, we will put a lot of effort in helping the customers make decisions in the period preceding the adoption of the euro, i.e. in the current market situation, and offering a wide range of services and properties. In the first half-year, the number of properties brokered increased.

The division ended the reporting period with an operating loss of 2.5 million kroons (0.2 million euros). Compared with the first half of 2009, the number of brokerage transactions grew by 13% and the number of valuation reports issued rose by 23%. The number of transactions has increased also compared with the first quarter of 2010.

DEVELOPMENT DIVISION

In the first six months, a total of 53 apartments and plots were sold in Arco Vara projects. In Latvia, 5 apartments were sold in the Bishumuiza project and 5 residential plots in a project near Lake Mazais Baltezers. In Estonia, 25 apartments were sold in the Kodukolde project and 18 residential plots in the Merivälja project.

For building and financing the next phase in the Kodukolde project (100 apartments), we signed a contract with ASMerkoEhitus. Construction works have commenced and are proceeding according to schedule. Two out of the four buildings will be completed in spring 2011.

The Development division has acquired a property for building a nursery school in Harku rural municipality. We have signed a lease agreement with the local government and a construction and financing contract with YIT Ehitus AS.

The Boulevard Residence Madrid commercial and residential building in Sofia was granted a use permit in June. The permit allows us to start signing real right contracts and transferring the premises to clients.

We have also started negotiations with potential business partners and banks for starting the construction and financing of the Tivoli project.

The greatest risk for the Development division continues to be refinancing of the loans taken in connection with unimproved plots in Estonia.

Thanks to the stabilisation of the real estate market, the discounts that used to be common for promoting sales have ceased and in the case of some projects prices have also risen. At the end of June 2010, the Development division employed 26 people (30 June 2009: 28).

For further information on our projects, please refer to: http: //www.arcorealestate.com/development

CONSTRUCTION DIVISION

In addition to successful bids for environmental and infrastructure projects, the Construction division has also won some civil engineering contracts (mostly for the construction of educational establishments).

The largest new construction contracts secured by the division in the first half of 2010 comprise the new building of the Estonian Aviation Academy of 43.9 million kroons (2.8 million euros), Block 4 of Tallinn University of Technology, and the Paide academic building of the Järvamaa Education Centre.

Within six months, the division secured new contracts of 95.5 million kroons (6.1 million euros). At the end of the reporting period, the order backlog of the Construction division stood at 94.0 million kroons (6.0 million euros) against 80.0 million kroons (5.1 million euros) at the end of June 2009.

At the reporting date, the division employed 47 people (30 June 2009: 143 people). The headcount has decreased primarily through the sale of the investment in Arco Construction SIA in December 2009.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Condensed consolidated statement of comprehensive income

For the period ended 30 June 2010

Note

HY1 2010

HY1 2009

Q2 2010

Q2 2009

In EEK thousands

Revenue from rendering of services

65,713

138,418

37,006

67,882

Revenue from sale of goods

70,521

33,034

33,058

14,628

Total revenue

2

136,234

171,452

70,064

82,510

Cost of sales

3

-119,497

-272,676

-60,900

-186,682

Gross profit / loss

16,737

-101,224

9,164

-104,172

Other income

4

2,869

92,095

1,033

90,824

Distribution expenses

5

-2,493

-1,852

-1,510

-976

Administrative expenses

6

-30,384

-36,842

-13,171

-16,779

Other expenses

4

-2,687

-14,740

-1,629

-14,311

Operating loss

-15,958

-62,563

-6,113

-45,414

Finance income

7

9,079

28,906

4,153

17,140

Finance expenses

7

-10,445

-62,632

-3,613

-50,428

Loss before tax

-17,324

-96,289

-5,573

-78,702

Income tax expense

-431

-809

-423

-809

Loss for the period

-17,755

-97,098

-5,996

-79,511

Loss attributable to owners of the parent

8

-17,755

-96,448

-5,996

-79,721

Loss attributable to non-controlling interests

0

-650

0

210

Other comprehensive income

Exchange differences on translating foreign operations

182

762

21

749

Total other comprehensive income

182

762

21

749

Total comprehensive expense for the period

-17,573

-96,336

-5,975

-78,762

Total comprehensive expense attributable to:

Owners of the parent

-17,573

-95,686

-5,975

-78,972

Non-controlling interests

0

-650

0

210

-17,573

-96,336

-5,975

-78,762

Earnings per share (in EEK)

- Basic

-3.74

-20.34

-1.26

-16.65

- Diluted

-3.74

-20.34

-1.26

-16.65


Note

HY1 2010

HY1 2009

Q2 2010

Q2 2009

In EUR thousands

Revenue from rendering of services

4,200

8,847

2,365

4,338

Revenue from sale of goods

4,507

2,111

2,113

935

Total revenue

2

8,707

10,958

4,478

5,273

Cost of sales

3

-7,637

-17,427

-3,892

-11,931

Gross profit / loss

1,070

-6,469

586

-6,658

Other income

4

183

5,886

66

5,805

Distribution expenses

5

-159

-118

-97

-62

Administrative expenses

6

-1,942

-2,355

-842

-1,072

Other expenses

4

-172

-942

-104

-915

Operating loss

-1,020

-3,998

-391

-2,902

Finance income

7

580

1,847

265

1,095

Finance expenses

7

-668

-4,003

-231

-3,223

Loss before tax

-1,108

-6,154

-357

-5,030

Income tax expense

-28

-52

-27

-52

Loss for the period

-1,136

-6,206

-384

-5,082

Loss attributable to owners of the parent

8

-1,136

-5,556

-384

-5,292

Loss attributable to non-controlling interests

0

-650

0

210

Other comprehensive income

Exchange differences on translating foreign operations

12

49

1

48

Total other comprehensive income

12

49

1

48

Total comprehensive expense for the period

-1,124

-6,157

-383

-5,034

Total comprehensive expense attributable to:

Equity holders of the parent

8

-1,124

-6,115

-383

-5,047

Non-controlling interests

0

-42

0

13

-1,124

-6,157

-383

-5,034

Earnings per share (in EUR)

- Basic

-0.24

-1.30

-0.08

-1.06

- Diluted

-0.24

-1.30

-0.08

-1.06


Condensed consolidated statement of financial position

As at 30 June 2010

Note

30 June 2010

31 December 2009

31 December 2008

In EEK thousands

Cash and cash equivalents

36,021

64,724

156,061

Investments

0

0

40,416

Receivables

9

146,280

150,939

276,541

Prepayments

1,284

2,999

6,077

Inventories

10

573,770

754,805

827,237

Biological assets

0

0

3,680

Total current assets

757,355

973,467

1,310,012

Investments

17,762

17,853

216,025

Receivables

2,639

2,635

921

Investment property

11

377,559

219,129

157,367

Property, plant and equipment

12

10,006

10,545

41,664

Intangible assets

13

819

812

12,475

Total non-current assets

408,785

250,974

428,452

TOTAL ASSETS

1,166,140

1,224,441

1,738,464

Loans and borrowings

14

367,238

371,615

223,598

Trade and other payables

15

60,023

83,621

124,190

Deferred income

89,980

81,902

64,172

Provisions

41,963

43,571

37,999

Total current liabilities

559,204

580,709

449,959

Loans and borrowings

14

167,596

186,578

454,048

Other liabilities

6,037

6,278

1,418

Provisions

1,100

1,100

3,191

Total non-current liabilities

174,733

193,956

458,657

TOTAL LIABILITIES

733,937

774,665

908,616

Share capital

8

47,417

952,841

952,842

Share premium

0

0

712,514

Statutory capital reserve

31,463

31,463

31,463

Retained earnings / accumulated losses

353,323

-530,536

-866,593

Own shares

0

-3,992

-3,992

Total equity attributable to equity holders of the parent

432,203

449,776

826,234

Non-controlling interests

0

0

3,614

Total equity

432,203

449,776

829,848

TOTAL LIABILITIES AND EQUITY

1,166,140

1,224,441

1,738,464

Note

30 June 2010

31 December 2009

31 December 2008

In EUR thousands

Cash and cash equivalents

2,302

4,137

9,974

Investments

0

0

2,583

Receivables

9

9,349

9,647

17,674

Prepayments

82

192

388

Inventories

10

36,670

48,241

52,870

Biological assets

0

0

235

Total current assets

48,403

62,217

83,724

Investments

1,135

1,141

13,806

Receivables

169

168

59

Investment property

11

24,130

14,005

10,058

Property, plant and equipment

12

639

674

2,663

Intangible assets

13

52

52

798

Total non-current assets

26,125

16,040

27,384

TOTAL ASSETS

74,528

78,257

111,108

Loans and borrowings

14

23,471

23,750

14,290

Trade and other payables

15

3,836

5,344

7,937

Deferred income

5,751

5,234

4,101

Provisions

2,682

2,785

2,429

Total current liabilities

35,740

37,116

28,757

Loans and borrowings

14

10,711

11,924

29,019

Other liabilities

15

386

401

91

Provisions

70

70

204

Total non-current liabilities

11,167

12,395

29,314

TOTAL LIABILITIES

46,907

49,511

58,071

Share capital

8

3,030

60,897

60,897

Share premium

0

0

45,538

Statutory capital reserve

2,011

2,011

2,011

Retained earnings / accumulated losses

22,580

-33,907

-55,385

Own shares

0

-255

-255

Total equity attributable to equity holders of the parent

27,621

28,746

52,806

Non-controlling interests

0

0

231

Total equity

27,621

28,746

53,037

TOTAL LIABILITIES AND EQUITY

74,528

78,257

111,108

Condensed consolidated statement of cash flows

For the period ended 30 June 2010

EEK

EUR

Note

HY1 2010

HY1 2009

HY1 2010

HY1 2009

In thousands

Loss for the period

-17,755

-97,098

-1,135

-6,206

Interest income and interest expense

7

4,193

2,078

268

133

Gain/loss on sale of subsidiaries and interests in jointly controlled entities

1,377

0

88

0

Impairment losses on financial assets

7

134

2,526

9

161

Share of profits and losses of equity accounted investees

0

35,821

0

2,289

Depreciation, amortisation and impairment losses on property, plant and equipment and intangible assets

3, 6

906

2,497

58

160

Gain/loss on the sale of property, plant and equipment and intangible assets

0

-38

0

-2

Gain/loss on the sale of investment property

4

329

0

21

0

Change in the fair value of investment property and biological assets

4

11

-72,800

1

-4,653

Gain/loss on the revaluation of inventories

3

5,559

109,707

355

7,012

Exchange gains and losses

7

-5,783

-4,020

-370

-257

Income tax expense

-15

0

-1

0

Operating cash flow before working capital changes

-11,044

-21,327

-706

-1,363

Change in receivables and prepayments

12,714

-17,177

813

-1,098

Change in inventories

2,831

-56,569

181

-3,615

Change in biological assets

0

24,307

0

1,554

Change in payables and deferred income

-2,785

34,967

-178

2,235

NET CASH FROM / USED IN OPERATING ACTIVITIES

1,716

-35,799

110

-2,287

Acquisition of property, plant and equipment and intangible assets

-346

-1,578

-22

-101

Proceeds from sale of property, plant and equipment and intangible assets

0

2,056

0

131

Acquisition of investment property

-167

-5,678

-11

-363

Proceeds from sale of investment property

23,778

4,981

1,520

318

Acquisition of subsidiaries and interests in jointly controlled entities

0

-251

0

-16

Proceeds from sale of investments in subsidiaries and jointly controlled entities

105

0

7

0

Proceeds from sale of other investments

0

40,416

0

2,583

Loans granted

-10,447

-26,940

-668

-1,722

Repayment of loans granted

0

15,810

0

1,010

Interest received

165

2,587

11

165

NET CASH FROM INVESTING ACTIVITIES

13,088

31,403

837

2,005

Proceeds from loans received

60,618

94,944

3,874

6,068

Settlement of loans and finance lease liabilities

-84,677

-126,514

-5,412

-8,086

Interest paid

-16,684

-23,035

-1,067

-1,471

NET CASH USED IN FINANCING ACTIVITIES

-40,743

-54,605

-2,605

-3,489

NET CASH FLOW

-25,939

-59,001

-1,658

-3,771

Cash and cash equivalents at beginning of period

64,724

156,061

4,137

9,974

Net decrease in cash and cash equivalents

-25,939

-59,001

-1,658

-3,771

Effect of exchange rate fluctuations on cash held

-2,764

-1,178

-177

-75

Cash and cash equivalents at end of period

36,021

95,882

2,303

6,127


Whole report you can find here.


Arco Ehitus OÜ a 100% subsidiary of Arco Vara with joint partner Nordecon Infra AS signed a construction contract with AS Maardu Vesi and OÜ Loo Vesi. Nordecon Infra AS is the leading partner of contract. The contract is for the construction of water and sewage network that is connecting Tallinn with Muuga (town East of Tallinn) and other infrastructure works in Muuga and Jõelähtme borough (Iru and Uusküla villages).

The works include building and renovating pipelines in within approximately 25 kilometers and building of a new waste water pump with premises. One existing pressure control pump facility will be renovated and one new facility built additionally.

The value of the contract, including the buyer’s reserves, is 110.2 million kroons (7 million euros) excluding VAT. The distribution of contract revenues between partners will be agreed upon as works progress, but according to estimates is divided equally. The realization period for the works is 12 months starting from the signing of the contract.

Founded in 1992 Arco Vara is one of the leading property developers in the Baltic States. The main business of the company is property development, which is supported by the group's own property brokerage, valuation, construction and
property management units. The company has representative offices in 17 towns across Estonia, Latvia, Ukraine and Bulgaria. The Group employees ca 160 people.

1 EUR=15.6466

Lembit Tampere
Member of the Management Board
Arco Vara AS
Tel: +372 614 4630
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com/

 

 

 

Arco Vara AS stock exchange announcement included a mistake in heading (09.09.2010: Arco sold its claim against Ühendatud Kapital AS), an announcement with correct heading and the same content follows.

09.11.2010: Arco sold its claim against Ühendatud Kapital AS

Arco Investeeringute AS, a 100% subsidiary of Arco Vara AS, transferred its claim against Celia Crowd AS (former name Ühendatud Kapital AS) to AS EMF Invest.

The value of the transaction is 52,000,000 Estonian kroons (approx. 3,323,406 euro) as a result of which the group will earn an extraordinary profit in the amount of 18,875,000 Estonian kroons (approx. 1,206,332 euro). 
In 2008, Arco Investeeringute AS granted a loan of 10,000,000 USD to AS Sigma Real Estate Ltd. The loan was secured by AS Ühendatud Kapital. As the loan was not redeemed, Arco filed an appeal to the Court of Arbitration of the Estonian
Chamber of Commerce and Industry on 18.02.2009. Based on the judgement of the Court of Arbitration of 21.12.2009, Ühendatud Kapital AS was obliged to pay to Arco the principal amount of 10,000,000 USD, the interests in the amount of
906,666 USD, the fine for delay in the amount of 773,698.63 USD and the annual fine for delay of 8% calculated from 22.12.2009, which amounts to 705,73.30 USD as of 08.11.2010. Besides that, Ühendatud Kapital AS was obliged to indemnify
the costs of the Court of Arbitration in the amount of 1,099,417.20 Estonian kroons. As of 08.11.2010, the total claim amounts to 137,868,170 Estonian kroons (approx. 8,811,382 euro).

Arco has initiated several legal proceedings for calling in the claim, including filing for bankruptcy of Ühinenud Kapital AS that had become a company without assets in the meantime; also, Arco has contested several procedures of execution proceedings with the assets of Ühendatud Kapital AS. In total, Arco has 5 ongoing court proceedings related to Ühendatud Kapital AS. Considering the fact that most of the court proceedings have been in process for almost a year and that in most important proceedings, no decision of the court of first instance has been achieved, the proceedings will estimatedly another three to five years. Considering the fact that Ühendatud Kapital AS has become a company without assets in the meantime, it is not likely that the claim of Arco will be satisfied to a considerable extent during the bankruptcy proceeding.

In the Arco balance sheet, the 2009 claim against Celia Crowd AS has already been written down to a value of 3,000,000 USD (approx. 33,126,000 Estonian kroons, approx. 2,117,137 euro).
Considering the above, the Management Board of Arco deemed it economically reasonable to transfer the claim.

Established in 1992, Arco Vara is one of the leading property development companies in the Baltic countries. The main activity of the company is property development, supported by real estate brokerage and valuation, construction and
property management. The company has offices in 17 cities in Estonia, Latvia, Ukraine and Bulgaria. The group employs approx. 160 people.

1 EUR=15.6466 EEK

Lembit Tampere
Member of the Management Board
Arco Vara AS
Tel: +372 614 4630
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com/

 

 


Arco Ehitus OÜ, a 100% subsidiary of Arco Vara AS with joint partners Wesico Project OÜ and YIT Ehitus AS, signed an agreement to design and construct drinking water system and drainage pipe system of Jõgeva and Puurmanni parish,
basin of rivers Põltsamaa and Pedja.

Contract volume is 44,17 mln kroons (2,8 mln euros) excluding VAT.
The realization period for the works is 17 months.

Arco Vara is one of the leading property development companies in the Baltic countries. The main activity of the company is property development, supported by real estate brokerage and valuation, construction and property management.
The company has offices in 17 cities in Estonia, Latvia, Ukraine and Bulgaria.
The group employs approx. 160 people.

1 EUR=15.6466 EEK

Lembit Tampere
Member of the Management Board
Tel: +372 614 4630
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.arcorealestate.com


 INTERIM REPORT 3 QUARTER AND 9 MONTHS 2010

Group Chief Executive’s review

In the first nine months of 2010, a total of 80 apartments and plots were sold in the projects of Arco Vara - 60 in Estonia and 20 in Latvia. Our largest ever completely self-developed project Boulevard Residence Madrid in Sofia was granted a use permit at the end of June. Most of the commercial rental premises that were covered with preliminary contracts have already been transferred to customers and tenants have moved in. Since the reporting date we have also signed the first real right contracts on the apartments and have transferred the apartments to the customers. Our Development division continues completing apartments in the Bishumuiza-1 project in Riga and developing the Manastirski project in Sofia.

The increasing sales of the past few quarters have reduced the inventory balance significantly and construction prices continue to be favourable. Therefore, we have launched new developments in order to be ready to satisfy the emerging market demand. The Group’s subsidiary Kolde AS joined forces with AS Merko Ehitus for building and financing the next phase of the Kodukolde development project. The new housing complex will consist of four apartment buildings with 100 apartment units and 40 underground garage spaces with a gross enclosed area of 8,760 square metres. The first two buildings will be completed in spring 2011. We are pleased to report that construction is on schedule and pre-completion sales exceed all expectations. In addition, we are holding negotiations with potential business partners and banks with a view to starting the construction of the Tivoli project. Preparatory site work is underway and construction should commence in spring 2011.

A detailed plan for the Paldiski mnt 80 property and its surrounding area was adopted in January. The plan foresees construction of a commercial building with a maximum gross enclosed area of 30,300 square metres.

The Service division continues to benefit from administrative cost savings yielded by effective restructuring. Although sales have contracted too, this has happened at a slower pace. As a result, the division has been able to post its first post-crisis quarterly operating profit of 1.3 million kroons (0.08 million euros). The number of brokerage transactions has grown by 5% year-over-year and the number of valuation reports issued has increased by 23% although the number of brokers and appraisers has decreased by 18%.

The Service division intends to apply the measures that have yielded positive results and have justified themselves in Estonia also in other markets. This should allow increasing the service offering in the face of limited resources. The division will continue to focus its efforts on Estonia, Latvia and Bulgaria.

Within the nine-month period, the Construction division secured new contracts of 145 million kroons (9.3 million euros). At the reporting date, the order backlog amounted to 98.8 million kroons (6.3 million euros). The main customers continue to be the public sector and local governments. In addition to environmental and infrastructure projects, funds are being allocated to the education sector. It is worth mentioning that most of the construction revenue for the first nine months was external – the proportion of internally generated sales was negligible.

The year has seen significant quarterly improvement in most of the Group’s financial performance indicators - both revenue and gross profit have been growing steadily. All the divisions ended the third quarter with an operating profit. The Group’s third quarter operating profit was 5.4 million kroons (0.35 million euros). The reduction of fixed costs that began at the beginning of 2009 has had a positive impact also on the Group’s results for 2010. Management will continue monitoring fixed costs. Compared with the same period last year administrative expenses have shrunk by 24%.

It has again become important to optimise costs in a manner that would support sales growth in the present market situation. For this, we have started building and selling new real estate projects.

In the reporting period we adopted various measures for improving liquidity. We disposed of a number of smaller investment properties that were not under our complete control or otherwise did not fit the corporate strategy.

In addition, we extended the loans taken from Piraeus Bank Bulgaria for the development of the Madrid project in Sofia and SEB Pank for the Navigator and Tivoli projects in Tallinn of 360.7 million kroons (23.1 million euros) in aggregate. As a result, the maturity date of the loan taken for the Madrid project was deferred by three years from 2012 to 2015 and the term of the Navigator and Tivoli projects was extended until 31 January 2011.

In December 2009 the shareholders of Arco Vara AS decided to reduce the company’s share capital. A corresponding Commercial Registry entry took effect on 16 March 2010. The reduction of share capital has curbed the volatility of the share price, has allowed more effective pricing of the share on the stock exchange (through a decrease in the difference between the bid and ask prices) and has created new opportunities for further strengthening the capital structure.

After the reporting date, Arco Vara AS’ wholly-held subsidiary Arco Investeeringute AS transferred its claim against Celia Crowd AS (formerly Ühendatud Kapital AS) to AS EMF Invest for 52 million kroons (3.3 million euros). The transaction will improve the Group’s fourth quarter results with exceptional sales gain of 18.9 million kroons (1.2 million euros).

Change in accounting for jointly controlled entities

The Group’s management has revised the policy for accounting for interests in jointly controlled entities. Previously, interests in jointly controlled entities were accounted for using proportionate consolidation. As from 1 January 2010, interests in jointly controlled entities are accounted for using the equity method. Management believes that the equity method provides a more faithful representation of the Group’s assets, liabilities and equity.

KEY PERFORMANCE INDICATORS

· In the first nine months of 2010 the Group generated revenue and other income of 229.2 million kroons (14.6 million euros), a 37% decrease year-over-year

· Operating loss amounted to 10.5 million kroons (0.7 million euros), a 92% improvement year-over-year

· Net loss was 19.8 million kroons (1.3 million euros), a 95% improvement year-over-year

· Equity to assets ratio at period-end was 36.6% (9M 2009: 36.4%). Return on equity was negative (9M 2009: negative). Return on invested capital was negative (9M 2009: negative)

· At the end of the first nine months, our order backlog (in the construction business) stood at 98.8 million kroons (6.3 million euros) compared with 105.8 million kroons (6.8 million euros) at the end of nine months of 2009

· In the first nine months of 2010 we sold a total of 80 apartments and plots (9M 2009: 41)

EEK

EUR

9M 2010

9M 2009

Q3 2010

Q3 2009

9M 2010

9M 2009

Q3 2010

Q3 2009

In millions

Revenue and other income

229.2

361.4

90.1

97.8

14.7

23.1

5.8

6.3

Operating profit/loss

-10.5

-128.6

5.4

-66.0

-0.7

-8.2

0.3

-4.2

Incl. net loss from the revaluation of investment properties and inventories

-5.5

-95.5

0.1

-95.5

-0.3

-6.1

-0.1

-6.1

Loss before tax

-19.4

-367.4

-2.1

-271.1

-1.2

-23.5

-0.1

-17.3

Incl. net gain/loss from the disposal of financial assets

-2.4

-4.8

0.0

0.0

-0.2

-0.3

0.1

0.0

Net loss

-19.8

-368.6

-2.1

-271.5

-1.3

-23.6

-0.1

-17.4

EPS 1 (in kroons and euros)

-4.18

-77.72

-0.44

-57.38

-0.27

-4.97

-0.03

-3.67

Total assets at period end

1,173.7

1,265.5

75.0

80.9

Invested capital at period end

959.3

1,078.4

61.3

68.9

Net loans at period end

490.8

580.2

31.4

37.1

Equity at period end

430.1

460.1

27.5

29.4

Average loan term (in years)

2.0

1.5

2.0

1.5

Average interest rate of loans (per year)

6.1%

6.1%

6.1%

6.1%

ROIC (rolling, 4 quarters)

neg

neg

neg

neg

ROE (rolling, 4 quarters)

neg

neg

neg

neg

Number of staff at period end

142

246

142

246

REVENUE AND PROFIT

EEK

EUR

9M 2010

9M 2009

Q3 2010

Q3 2009

9M 2010

9M 2009

Q3 2010

Q3 2009

In millions

Revenue and other income

Service

21.7

28.7

7.9

8.5

1.4

1.8

0.5

0.5

Development

113.9

168.3

38.5

30.7

7.3

10.8

2.5

2.0

Construction

99.9

201.5

47.1

71.5

6.4

12.9

3.0

4.6

Eliminations

-6.2

-37.0

-3.4

-12.8

-0.4

-2.4

-0.2

-0.8

Total revenue and other income

229.3

361.5

90.1

97.9

14.7

23.1

5.8

6.3

Operating profit/loss

Service

-1.2

-9.1

1.3

-1.3

-0.1

-0.6

0.1

-0.1

Development

5.3

-93.4

8.7

-61.7

0.3

-6.0

0.6

-3.9

Construction

1.1

-2.9

0.8

2.9

0.1

-0.2

0.1

0.2

Eliminations

0.6

0.2

0.7

1.8

0.0

0.0

0.0

0.1

Unallocated expenses

-16.3

-23.4

-6.1

-7.7

-1.0

-1.4

-0.5

-0.5

Total operating profit/loss

-10.5

-128.6

5.4

-66.0

-0.7

-8.2

0.3

-4.2

Interest income and expense

-7.6

-11.9

-3.4

-7.5

-0.5

-0.8

-0.2

-0.5

Other finance income and expense

-1.3

-227.0

-4.1

-197.6

-0.1

-14.5

-0.3

-12.6

Income tax expense

-0.4

-1.2

0.0

-0.4

0.0

-0.1

0.0

0.0

Net loss

-19.8

-368.7

-2.1

-271.6

-1.3

-23.6

-0.2

-17.4

In the first nine months of 2010, we did not perform any major asset revaluations. Most cost cuts have been made and managing and reducing expenses is a daily routine at all units. For the time being, our main focus is on increasing sales, completing projects in progress and launching new ones, and improving liquidity by selling new projects and inventories.

Finance income and expense for the period were influenced the most by an exchange loss of 4.0 million kroons (0.26 million euros) incurred on a US dollar-based receivable from Ühendatud Kapital AS. Despite a decrease in revenue and other income across all divisions, all the divisions ended the third quarter with an operating profit and the Group’s nine month operating loss decreased by 92% year-over-year.

CASH FLOWS

EUR

9M 2010

9M 2009

Q3 2010

Q3 2009

9M 2010

9M 2009

Q3 2010

Q3 2009

In millions

Cash flows from operating activities

13.9

41.9

12.2

77.7

0.8

2.7

0.8

5.0

Cash flows from investing activities

21.2

-11.8

8.1

-43.3

1.4

-0.8

0.5

-2.7

Cash flows from financing activities

-61.5

-147.7

-20.8

-93.1

-3.9

-9.4

-1.3

-6.1

Net cash flow

-26.4

-117.6

-0.5

-58.7

-1.7

-7.5

0.0

-3.8

Cash and cash equivalents at beginning of period

64.7

156.1

0.0

0.0

4.1

10.0

0.0

0.0

Effect of movements in exchange rates

0.0

-0.4

2.8

0.8

0.1

0.0

0.2

0.0

Cash and cash equivalents at end of period

38.3

38.0

2.3

-57.9

2.5

2.5

0.2

-3.8

In May 2010 Arco Vara AS redeemed commercial paper of 18.9 million kroons (1.2 million euros) before maturity.

There were no other exceptional loan settlements in the first nine months of 2010. Interest payments accounted for 25.3 million kroons (1.6 million euros) of the net outflow from financing activities. Scheduled principal payments and those related to inventory sales totalled 78.2 million kroons (5.0 million euros). The largest proportion of credit limits utilised during the period was related to the completion of the Madrid project that accounted for 37.1 million kroons (2.4 million euros) of the total.

The largest current liabilities to be settled in the next 12 months comprise:

· accrued loan principal of 92.1 million kroons (5.9 million euros) to be paid on the sale of reserved premises and in line with the settlement schedule of the Boulevard Residence Madrid project in Sofia;

· loans of 102.5 million kroons (6.6 million euros) related to the Tivoli and Laeva2 projects;

· a loan of 37.5 million kroons (2.4 million euros) related to the Bishumuiza project;

· the scheduled current portion of a loan related to the Manastirski project of 23.8 million kroons (1.5 million euros).

We have been settling the loans related to the Kodukolde and Merivälja2 projects in Tallinn, the Bishumuiza-1 project in Riga and some cash flow generating projects (such as the entire loan of the Enerpoint project) on a current basis. Most of the Group’s liabilities are denominated in euros.

SERVICE DIVISION

We are constantly monitoring expenses so as to avoid a situation where expenses are growing faster than revenue.

In connection with the revival of the housing market, we will sustain an active marketing campaign in Estonia. In addition, we will continue partnering negotiations with other major housing and commercial real estate developers. Through effective cooperation during the first nine months of the year, the number of properties being brokered has increased.

In Estonia, we will focus on helping the customers make decisions in the period preceding the adoption of the euro, i.e. in the current market situation, and offering a wide range of services and properties.

Although the division ended the first nine months with an operating loss of 1.2 million kroons (0.08 million euros), the third quarter ended in an operating profit of 1.3 million kroons (0.08 million euros). The division last earned an operating profit in the third quarter of 2006. Compared with the same period in 2009, the number of brokerage transactions has grown by 5% and the number of valuation reports issued has increased by 23%.

DEVELOPMENT DIVISION

In the first nine months, a total of 80 apartments and plots were sold in Arco Vara projects. In Latvia, 14 apartments were sold in the Bishumuiza project and 6 residential plots in a project near Lake Mazais Baltezers. In Estonia, 35 apartments were sold in the Kodukolde project and 25 residential plots in the Merivälja project.

For building and financing the next phase in the Kodukolde project (100 apartments), we signed a contract with AS Merko Ehitus. Construction work has commenced and is on schedule. Two out of the four buildings will be completed in spring 2011.

The Development division has acquired a property for building a nursery school in Harku rural municipality. There is a lease agreement with the local government and a construction and financing contract with YIT Ehitus AS.

The Boulevard Residence Madrid commercial and residential building in Sofia was granted a use permit in June. Most of the commercial rental premises that were covered with preliminary contracts have already been transferred to customers and tenants have moved in. Since the reporting date we have also signed the first real right contracts on the apartments and have transferred the apartments to the customers. In addition, we are holding negotiations with potential business partners and banks for starting the construction and financing of the Tivoli project. Preparatory site work is underway and construction should commence in spring 2011.

The greatest risk for the Development division continues to be the refinancing of loans related to unimproved plots in Estonia although it seems that the local financing scene is also on its way to recovery.

The real estate market has stabilised, we no longer have to promote sales by lowering prices and in some projects prices have even seen a moderate increase. At the end of September 2010, the Development division employed 26 people (30 September 2009: 24).

For further information on our projects, please refer to: www.arcorealestate.com/development

CONSTRUCTION DIVISION

The Construction division is typically actively involved in environmental, infrastructure and civil engineering (mostly educational establishments related) projects.

The largest new construction contracts won by the division in the first nine months of 2010 comprise the new building of the Estonian Aviation Academy of 43.9 million kroons (2.8 million euros), Block 4 of Tallinn University of Technology, and the Paide Academic Building of the Järvamaa Education Centre.

Within nine months, the division secured new contracts of 145 million kroons (9.3 million euros). At the end of the reporting period, the order backlog of the Construction division stood at 98.8 million kroons (6.3 million euros) against 80.0 million kroons (5.1 million euros) at the end of 2009.

At the reporting date, the division employed 44 people (30 September 2009: 145 people). The headcount has decreased primarily through the sale of the investment in Arco Construction SIA in December 2009.

Condensed consolidated statement of comprehensive income

For the period ended 30 September 2010

Note

9M 2010

9M 2009

Q3 2010

Q3 2009

In EEK thousands

Revenue from rendering of services

133,505

206,502

59,984

68,084

Revenue from sale of goods

90,837

51,366

28,124

18,332

Total revenue

2

224,342

257,868

88,108

86,416

Cost of sales

3

-191,071

-370,544

-71,574

-97,868

Gross profit/loss

33,271

-112,676

16,534

-11,452

Other income

4

4,896

103,511

2,027

11,416

Distribution expenses

5

-3,395

-3,315

-902

-1,463

Administrative expenses

6

-42,422

-55,601

-12,038

-18,759

Other expenses

4

-2,867

-60,472

-180

-45,732

Operating profit/loss

-10,517

-128,553

5,441

-65,990

Finance income

7

9,907

15,751

827

238

Finance expenses

7

-18,765

-254,601

-8,329

-205,362

Loss before tax

-19,375

-367,403

-2,061

-271,114

Income tax expense

-465

-1,235

-34

-426

Loss for the period

-19,840

-368,638

-2,095

-271,540

Loss attributable to owners of the parent

8

-19,840

-368,528

-2,095

-272,080

Loss attributable to non-controlling interests

0

-110

0

540

Other comprehensive income/expense

Exchange differences on translating foreign operations

178

263

-5

-499

Total other comprehensive income/expense

178

263

-5

-499

Total comprehensive expense for the period

-19,662

-368,375

-2,100

-272,039

Total comprehensive expense attributable to:

Owners of the parent

-19,662

-368,265

-2,100

-272,579

Non-controlling interests

0

-110

0

540

-19,662

-368,375

-2,100

-272,039

Earnings per share (in EEK)

- Basic

-4.18

-77.72

-0.44

-57.38

- Diluted

-4.18

-77.72

-0.44

-57.38

For the period ended 30 September 2010

Note

9M 2010

9M 2009

Q3 2010

Q3 2009

In EUR thousands

Revenue from rendering of services

8,533

13,198

3,834

4,351

Revenue from sale of goods

5,806

3,283

1,797

1,172

Total revenue

2

14,339

16,481

5,631

5,523

Cost of sales

3

-12,212

-23,682

-4,574

-6,255

Gross profit/loss

2,127

-7,201

1,057

-732

Other income

4

313

6,616

130

730

Distribution expenses

5

-217

-212

-58

-94

Administrative expenses

6

-2,711

-3,554

-769

-1,199

Other expenses

4

-183

-3,865

-12

-2,923

Operating profit/loss

-671

-8,216

348

-4,218

Finance income

7

633

1,007

53

15

Finance expenses

7

-1,199

-16,272

-532

-13,125

Loss before tax

-1,237

-23,481

-131

-17,328

Income tax expense

-30

-79

-2

-27

Loss for the period

-1,267

-23,560

-133

-17,355

Loss attributable to owners of the parent

8

-1,267

-23,553

-133

-17,390

Loss attributable to non-controlling interests

0

-7

0

35

Other comprehensive income/expense

Exchange differences on translating foreign operations

11

17

0

-32

Total other comprehensive income/expense

11

17

0

-32

Total comprehensive expense for the period

-1,256

-23,543

-133

-17,387

Total comprehensive expense attributable to:

Equity holders of the parent

-1,258

-23,536

-135

-17,422

Non-controlling interests

0

-7

0

35

-1,258

-23,543

-135

-17,387

Earnings per share (in EUR)

- Basic

-0.27

-4.97

-0.03

-3.67

- Diluted

-0.27

-4.97

-0.03

-3.67

Condensed consolidated statement of financial position

As at 30 September 2010

Note

30 September 2010

31 December 2009

31 December 2008

In EEK thousands

Cash and cash equivalents

38,321

64,724

156,061

Investments

0

0

40,416

Receivables

9

155,440

150,939

276,541

Prepayments

1,370

2,999

6,077

Inventories

10

571,300

754,805

827,237

Biological assets

0

0

3,680

Total current assets

766,431

973,467

1,310,012

Investments

15,612

17,853

216,025

Receivables

2,870

2,635

921

Investment property

11

378,395

219,129

157,367

Property, plant and equipment

9,780

10,545

41,664

Intangible assets

575

812

12,475

Total non-current assets

407,232

250,974

428,452

TOTAL ASSETS

1,173,663

1,224,441

1,738,464

Loans and borrowings

12

299,004

371,615

223,598

Trade and other payables

13

74,370

83,621

124,190

Deferred income

97,077

81,902

64,172

Provisions

42,958

43,571

37,999

Total current liabilities

513,409

580,709

449,959

Loans and borrowings

12

222,970

186,578

454,048

Other liabilities

6,070

6,278

1,418

Provisions

1,100

1,100

3,191

Total non-current liabilities

230,140

193,956

458,657

TOTAL LIABILITIES

743,549

774,665

908,616

Share capital

47,417

952,842

952,842

Share premium

0

0

712,514

Statutory capital reserve

31,463

31,463

31,463

Retained earnings / accumulated losses

351,234

-530,537

-866,593

Own shares

0

-3,992

-3,992

Total equity attributable to equity holders of the parent

430,114

449,776

826,234

Non-controlling interests

0

0

3,614

Total equity

430,114

449,776

829,848

TOTAL LIABILITIES AND EQUITY

1,173,663

1,224,441

1,738,464

As at 30 September 2010

Note

30 September 2010

31 December 2009

31 December 2008

In EUR thousands

Cash and cash equivalents

2,449

4,137

9,974

Investments

0

0

2,583

Receivables

9

9,934

9,647

17,674

Prepayments

88

192

388

Inventories

10

36,513

48,241

52,870

Biological assets

0

0

235

Total current assets

48,984

62,217

83,724

Investments

998

1,141

13,806

Receivables

9

183

168

59

Investment property

11

24,184

14,005

10,058

Property, plant and equipment

625

674

2,663

Intangible assets

37

52

798

Total non-current assets

26,027

16,040

27,384

TOTAL ASSETS

75,011

78,257

111,108

Loans and borrowings

12

19,110

23,750

14,290

Trade and other payables

13

4,753

5,344

7,937

Deferred income

6,205

5,234

4,101

Provisions

2,746

2,785

2,429

Total current liabilities

32,814

37,116

28,757

Loans and borrowings

12

14,250

11,925

29,019

Other liabilities

388

400

91

Provisions

70

70

204

Total non-current liabilities

14,708

12,395

29,314

TOTAL LIABILITIES

47,522

49,511

58,071

Share capital

3,030

60,897

60,897

Share premium

0

0

45,538

Statutory capital reserve

2,011

2,011

2,011

Retained earnings / accumulated losses

22,448

-33,907

-55,385

Own shares

0

-255

-255

Total equity attributable to equity holders of the parent

27,489

28,746

52,806

Non-controlling interests

0

0

231

Total equity

27,489

28,746

53,037

TOTAL LIABILITIES AND EQUITY

75,011

78,257

111,108

Condensed consolidated statement of cash flows

EEK

EUR

For the period ended 30 September 2010

Note

9M 2010

9M 2009

9M 2010

9M 2009

In thousands

Loss for the period

-19,840

-368,638

-1,268

-23,560

Interest income and interest expense

7

7,589

11,851

485

757

Gain/loss on sale of subsidiaries and interests in jointly controlled entities

7

1,377

4,771

88

305

Gain/loss on other long-term investments

7

0

-2,685

0

-172

Impairment losses on financial assets

7

207

135,549

13

8,663

Share of profits and losses of equity accounted investees

1,463

87,424

94

5,587

Depreciation, amortisation and impairment losses on property, plant and equipment and intangible assets

3, 4 ,6

1,444

3,350

92

214

Gain/loss on the sale of property, plant and equipment and intangible assets

4

0

1,055

0

67

Gain/loss on the sale of investment property

4

332

-1,000

21

-64

Change in the fair value of investment property and biological assets

4, 11

-103

-39,562

-7

-2,528

Gain/loss on the revaluation of inventories

3

5,559

135,067

355

8,632

Exchange gains and losses

7

-1,778

1,940

-114

124

Income tax expense

465

0

30

0

Operating cash flow before working capital changes

-3,285

-30,878

-211

-1,975

Change in receivables and prepayments

-7,141

50,701

-456

3,240

Change in inventories

-2,022

67,724

-129

4,328

Change in biological assets

0

3,680

0

235

Change in payables and deferred income

26,348

-49,323

1,684

-3,152

NET CASH FROM OPERATING ACTIVITIES

13,900

41,904

888

2,676

Acquisition of property, plant and equipment and intangible assets

-493

-1,834

-32

-117

Proceeds from sale of property, plant and equipment and intangible assets

0

2,011

0

129

Acquisition of investment property

11

-3,725

-49,033

-238

-3,134

Proceeds from sale of investment property

11

24,530

2,971

1,568

190

Acquisition of subsidiaries and interests in jointly controlled entities

-500

-502

-32

-32

Proceeds from sale of investments in subsidiaries and jointly controlled entities

105

600

7

38

Proceeds from sale of other investments

0

29,383

0

1,878

Loans granted

-869

-946

-56

-60

Repayment of loans granted

51

4,217

3

271

Interest received

2,055

1,371

131

88

NET CASH FROM/USED IN INVESTING ACTIVITIES

21,154

-11,762

1,351

-749

Proceeds from loans received

60,749

40,390

3,883

2,581

Settlement of loans and finance lease liabilities

-96,968

-162,702

-6,197

-10,399

Interest paid

-25,258

-25,419

-1,614

-1,624

NET CASH USED IN FINANCING ACTIVITIES

-61,477

-147,731

-3,928

-9,442

NET CASH FLOW

-26,423

-117,589

-1,689

-7,515

Cash and cash equivalents at beginning of period

64,724

156,061

4,137

9,974

Net decrease in cash and cash equivalents

-26,423

-117,589

-1,689

-7,515

Effect of exchange rate fluctuations on cash held

20

-435

1

-28

Cash and cash equivalents at end of period

38,321

38,037

2,449

2,431


Whole report you can read here

 

 

Announcements released by Arco Vara

Tallinn, Estonia, 2010-12-13 14:28 CET (GLOBE NEWSWIRE) -- According to paragraph 135 section 4 of the Securities Market Act of Estonia we hereby inform that Arco Vara AS has released the following information through
the NASDAQ OMX Tallinn information system during 2009:

22.01.2009: Conclusion of agreement for the transfer of shares
27.02.2009: Delay in 12 month unaudited report release
03.03.2009: Fair value decreases and initial unaudited key figures of Arco Vara AS for 2008
09.03.2009: Transaction with related party
13.03.2009: IV QUARTER AND 12 MONTHS CONSOLIDATED INTERIM REPORT P(UNAUDITED)
17.03.2009: Arco Vara filed action against AS Ühendatud Kapital
25.03.2009: Subsidiary of Arco Vara signed a long-term lease contract with Austrian supermarket chain
31.03.2009: Arco Vara obtained building and navvying permits for Merivälja2
15.04.2009: Arco Investeeringute AS and Arco Vara Kinnistute AS merged
22.04.2009: Arco Vara AS audited annual report 2008
29.04.2009: INVITATION AND AGENDA OF THE GENERAL MEETING OF SHAREHOLDERS AND PROPOSALS MADE AT THE MEETING
06.05.2009: Court annulled the detailed plan of the project Tivoli
21.05.2009: Refinancing of Estonian Kroon nominated loans to Euro loans
21.05.2009: Refinancing of "Bišumuiža 1" and "Kodukolde" project loans
22.05.2009: INVITATION AND AGENDA OF THE NEW GENERAL MEETING OF SHAREHOLDERS AND PROPOSALS MADE
22.05.2009: Arco Vara Group increased its shareholding in development project „Bišumuiža 2" in Latvia
29.05.2009: FIRST QUARTER AND THREE MONTHS 2009 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
01.06.2009: Announcements released by Arco Vara
04.06.2009: Decisions of the annual general meeting of shareholders of Arco Vara AS
13.07.2009: Partial redemption of commercial papers
21.07.2009: Arco Vara Group increased its shareholding in Latvian subsidiary
19.08.2009: INVITATION AND AGENDA OF THE SPECIAL GENERAL MEETING OF SHAREHOLDERS AND PROPOSALS MADE AT THE MEETING AND EXPLANATION
26.08.2009: Division of Arco Vara Puukool OÜ
27.08.2009: Decisions of the special general meeting of shareholders of Arco Vara AS
28.08.2009: Interim report of second quarter and six months of 2009
01.09.2009: Change in Management Board of Arco Vara Group key subsidiary
04.09.2009: Changes in Management Board of Arco Vara AS
17.09.2009: Change in substantial shareholding
18.09.2009: National Court dissatisfied appeal of Arco Investeeringute AS
18.09.2009: Arco Vara AS sold shares of Arco Vara Puukool OÜ
08.10.2009: Arco Vara subsidiary concluded a long-term lease agreement in Bulgaria
22.10.2009: Arco Vara transferred holdings in 3 joint ventures and improved liquidity position
30.10.2009: Litigation about the Tivoli project detailed plan settled
19.11.2009 NOTICE CALLING EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
27.11.2009: Interim report 3 quarter and 9 months 2009
08.12.2009: Arco Vara AS sold shares of Arco Ukraina Valduste OÜ
11.12.2009 Resolutions of the Extraordinary General Meeting of Arco Vara AS
15.12.2009: Prolongation of "Ahtri 3" project loan
22.12.2009: Arco Investeeringute AS has won Ühendatud Kapital AS (with new name Celia Crowd AS) in the arbitration court.
29.12.2009: Arco Vara AS subsidary Arco Ehitus OÜ sold its shares of Arco Construction SIA

Up to the present date in 2010, Arco Vara AS has released the following information through NASDAQ OMX Tallinn information system:

22.01.2010: Arco Vara AS maliciously filed for bankruptcy
26.01.2010: Detailed plan for the property at Paldiski Street 80 enforced
29.01.2010: Arco Vara loans in Piraeus Bank Bulgaria refinanced to year 2015
26.02.2010: Fourth quarter and 12 months consolidated INTERIM REPORT
02.03.2010: Arco Vara and Merko Ehitus executed a contracting and financing contract
10.03.2010: Arco Investeeringut AS sold shares of Arco Vara Saare Kinnistud OÜ
16.03.2010: Court did not commence bankruptcy proceedings of Arco Vara AS
17.03.2010: Reduction of Arco Vara's share capital has finalized
16.04.2010: Prolongation of „Navigator" and „Tivoli" projects loans
19.04.2010: Arco Vara AS consolidated audited annual report 2009
21.04.2010: INVITATION AND AGENDA OF THE GENERAL MEETING OF SHAREHOLDERS AND PROPOSALS MADE AT THE MEETING
23.04.2010: Supervisory Board of Arco Vara AS granted procuration
13.05.2010: Decisions of Annual General Meeting of Shareholders Arco Vara AS
21.05.2010: Early redemption of commercial papers
26.05.2010: Indrek Porila has began another litigation against Arco Vara AS
28.05.2010: FIRST QUARTER AND THREE MONTHS 2010 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
28.06.2010: Authorisation for use was granted to project of Arco Vara in Sofia
05.08.2010: Explanation by Arco Vara to the information published this morning on entering
27.08.2010: INTERIM REPORT SECOND QUARTER AND SIX MONTHS 2010
15.09.2010: Construction contract
09.09.2010: Arco sold its claim against Ühendatud Kapital AS
09.11.2010 CORRECTION: 09.11.2010: Arco sold its claim against Ühendatud Kapital AS
23.11.2010: Arco Ehitus OÜ concluded a design and construction agreement
26.11.2010: INTERIM REPORT 3 QUARTER AND 9 MONTHS 2010


All the above listed announcements are available on the website of NASDAQ OMX Tallinn at:
http://www.nasdaqomxbaltic.com/market/?instrument=EE3100034653&list=2&currency=EEK&pg=details&tab=news
by selecting the respective start and end dates of the period in the search engine and on the corporate website of Arco Vara AS:
http://www.arcorealestate.com

Arco Vara AS

Lembit Tampere
Member of the Management Board
Arco Vara AS
Tel: +372 614 4630
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com/