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ARC1T - Arco Vara AS News Story

€1.6 -0.0  -0.6%

Last Trade - 16/04/21

Micro Cap
Market Cap £12.5m
Enterprise Value £19.8m
Revenue £12.2m
Position in Universe 504th / 795

Unaudited consolidated interim report for Q4 and 12 months of 2020

Thu 11th February, 2021 7:57am
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Arco Vara's fourth quarter of 2020 was largely spent on the realisation of
pre-sales. There were no significant setbacks in the process of handing over
nor final sales of the apartments, for which we had been prepared due to the
ongoing uncertainty in the field of healthcare.

The fourth quarter of 2020 was also spent in a positive light in terms of
project financing. The bonds issued by Arco Vara in December were
oversubscribed and the terms of development loans have improved. The company's
credibility with financial partners has increased.

We consider the issuance of authorisation of the use of Iztok Parkside, the
timely completion of Tartu Kodukalda and the start of the construction of the
next stage of the Kodulahe quarter to be important advances in the development
area in the fourth quarter.

In the Kodulahe quarter, we started the construction of stage IV and V, where
a total of 72 apartments have been designed. By the time of submitting the
report, during the two-month sales period, 33 apartments have binding
agreements. The fast pace of sales provides confidence that the offered real
estate meets the expectations of our customers and increases our desire for
further development of the Kodulahe region.

In the Kodulahe quarter, we also started to deliver the III stage homes to
customers. Thanks to favourable construction conditions and the operative work
of the project team, we handed over the keys of half of the homes two months
earlier than expected, in December 2020. The delivery of the remaining
apartments was carried out at the beginning of 2021.

The development of Tartu Kodukalda was completed according to plan, where 20
homes have been handed over by today, of which approximately 95% of the sales
revenue remained in 2020.

Bulgaria's Iztok Parkside apartment buildings received the long-awaited usage
permit, which enabled the sale of a total of 38 apartments by the end of 2020.
The remaining sales revenue of the project is expected in the first quarter of
2021. At the time of submitting the report, there are only 3 apartments in the
buildings without a pre-sale agreement.

The Madrid BLVD building has a tenant occupancy rate of around 95%, which
fluctuates due to the persistent COVID-19 restrictions in Bulgaria. Due to
local legislation, we have to take into account the temporary reduction of
some rental payments, but due to the different functions of the building, the
Arco Vara retail and office building is allowed to be open despite
restrictions on other shopping centres.

We consider the fourth quarter of Arco Vara successful. We have been able to
significantly increase the return on equity, which confirms the increase in
the company's efficiency. Arco Vara's ongoing developments are also moving
according to plan, which gives the company the confidence to start new
developments in both Estonia and Bulgaria.


In Q4 2020, the group’s revenue was 10,298 thousand euros, which is 5% less
than the revenue of 10,887 thousand euros in Q4 2019. In 12 months 2020, the
group’s revenue was 14,056 thousand euros, which is 7% more than the revenue
of 13,109 thousand euros in 12 months 2019.

In Q4 2020, the group’s operating profit (=EBIT) was 1,400 thousand euros
and net profit 1,289 thousand euros (in 12 months 2020: operating profit 1,449
thousand euros and net profit of 1,012 thousand euros). In Q4 2019, the group
had operating profit of 1,068 thousand euros and net profit of 848 thousand
euros. In 12 months 2019, the group made operating profit of 950 thousand
euros and net profit of 388 thousand euros.

In Q4 2020, 64 apartments were sold in projects developed by the group (in 12
months 2020 81 apartments and 1 land plot in Latvia). In Q4 2019, 70
apartments were sold (82 apartments in 12 months).

In the 12 months of 2020, the group’s debt burden (net loans) decreased by
2,951 thousand euros down to the level of 8,499 thousand euros as of 31
December 2020. As of 31 December 2020, the weighted average annual interest
rate of interest-bearing liabilities was 4.8%. This is an increase of 0.6
percentage points compared to 31 December 2019.


The revenue of the group totalled 10,298 thousand euros in Q4 2020 (in Q4
2019: 10,887 thousand euros) and 14,056 thousand euros in 12 months 2020 (in
12 months 2019: 13,109 thousand euros), including revenue from the sale of
properties in the group’s own development projects in the amount of 10,015
thousand euros in Q4 and 13,129 thousand euros in 12 months 2020 (2019: 10,665
thousand euros in Q4 and 12,152 thousand euros in 12 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
211 thousand euros in Q4 2020 and 699 thousand euros in 12 months (2019: 160
thousand euros in Q4 and 696 thousand euros in 12 months). The Q2 of 2020 and
Covid-19 brought changes in the economic situation of tenants. Several tenants
have been replaced during 2020, but surprisingly in a more favourable
direction for Arco Vara, that is why at the moment 95% of retail and office
spaces with the accompanying parking spaces are rented out.

In the II Stage of the Kodulahe quarter, which was completed at the end of
2019, commercial space remains unsold – the last apartment was sold in Q2
2020. In 2020, Lahepea 9 house received permit of use.

In Q4 2020, construction works ended in Stage III of Kodulahe quarter, where a
building with 50 apartments was finished at Soodi 4 Merimetsa. By the
publishing date of the interim report, 49 apartments have been sold and 1

In Q4 2020, the joint construction of Stages IV and V of Kodulahe started. Two
36-apartment residential buildings at Pagi 3 and Pagi 5 in Merimetsa are under
construction. The apartment buildings will become ready for final sale in
about 1,5 years. By the publishing date of the interim report, 16 apartments
of total 72 have been presold and 17 booked for waiting for notary.

In Q4 2020, final sales of Oa street plots in Tartu started, where 4 smaller
apartment buildings were constructed under the Kodukalda project name. By the
publishing time of the interim report, 20 of the 30 apartments have been sold
and 1 presold.

In Iztok Parkside project in Sofia, the majority of final sales of apartments
started in December 2020, after receiving an occupancy permit. By the
publishing date of the interim report, presale agreements for 3 apartments
have not been concluded. Iztok project consists of three apartment buildings
with a total of 67 apartments.

In the Lozen project near Sofia in Bulgaria, design works have been completed.
As the development was designed as a premium class product, it has been
decided to temporarily freeze the project and wait for the market to recover
from Covid-19. Under favourable market conditions, construction may start in
Q3 2021, divided into smaller sub-stages. The project foresees construction of
179 homes (apartments and houses), commercial spaces and a kindergarten.
Minimum construction period is 2 years.

In Q3 2020 a land plot without accounting value was sold in Latvia. As of 31
December 2020 and the date of this report, 4 Marsili residential plots
remained unsold in Latvia.


 In thousands of euros                       12m 2020  12m 2019  Q4 2020  Q4 2019  
 Revenue from sale of own real estate        13,129    12,152    10,015   10,665   
 Revenue from rendering of services          927       957       283      222      
 Total revenue                               14,056    13,109    10,298   10,887   
 Cost of sales                               -11,313   -11,295   -8,332   -9,654   
 Gross profit                                2,743     1,814     1,966    1,233    
 Other income                                10        137       10       46       
 Marketing and distribution expenses         -89       -96       -23      108      
 Administrative expenses                     -922      -777      -268     -239     
 Other expenses                              -273      -121      -265     -73      
 Loss on revaluation of investment property  -20       -7        -20      -7       
 Operating profit                            1,449     950       1,400    1,068    
 Financial income and costs                  -437      -562      -111     -220     
 Net profit for the period                   1,012     388       1,289    848      
 Total comprehensive income for the period   1,012     388       1,289    848      
 Earnings per share (in euros)                                                     
 - basic                                     0.11      0.04      0.14     0.09     
 - diluted                                   0.11      0.04      0.14     0.09     


 In thousands of euros          31 December 2020  31 December 2019  
 Cash and cash equivalents      2,200             870               
 Receivables and prepayments    1,344             544               
 Inventories                    14,960            15,807            
 Total current assets           18,504            17,221            
 Receivables and prepayments    5                 0                 
 Investment property            9,564             11,051            
 Property, plant and equipment  22                265               
 Intangible assets              136               217               
 Total non-current assets       9,727             11,533            
 TOTAL ASSETS                   28,231            28,754            
 Loans and borrowings           3,482             6,416             
 Payables and deferred income   3,308             3,135             
 Total current liabilities      6,790             9,551             
 Loans and borrowings           7,217             5,904             
 Total non-current liabilities  7,217             5,904             
 TOTAL LIABILITIES              14,007            15,455            
 Share capital                  6,299             6,299             
 Unregistered share capital     273               0                 
 Share premium                  2,285             2,285             
 Statutory capital reserve      2,011             2,011             
 Other reserves                 0                 245               
 Retained earnings              3,356             2,459             
 TOTAL EQUITY                   14,224            13,299            
 TOTAL LIABILITIES AND EQUITY   28,231            28,754            

Tiina Malm
Arco Vara AS
Phone: +372 614 4630

*     AVG 2020 Q4 ENG
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