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 | 9M | Q3 | Q3 | 9M | 9M | Q3 | Q3
|
| | | 2010 | 2009 | 2010 | 200 | 2010 | 2009 | 2010 | 2009 |
| | | | | | 9 | | | | |
--------------------------------------------------------------------------------
| In millions | | | | | | | | |
|
--------------------------------------------------------------------------------
| Revenue and | | 229. | 361. | 90.1 | 97. | 14.7 | 23.1 | 5.8 | 6.3
|
| other income | | 2 | 4 | | 8 | | | | |
--------------------------------------------------------------------------------
| Operating | | -10. | -128 | 5.4 | -66 | -0.7 | -8.2 | 0.3 | -4.2
|
| profit/loss | | 5 | .6 | | .0 | | | | |
--------------------------------------------------------------------------------
| Incl. net loss | | -5.5 | -95. | 0.1 | -95 | -0.3 | -6.1 | -0.1 | -6.1
|
| from the | | | 5 | | .5 | | | | |
| revaluation of | | | | | | | | | |
| investment | | | | | | | | | |
| properties and | | | | | | | | | |
| inventories | | | | | | | | | |
--------------------------------------------------------------------------------
| Loss before tax | | -19. | -367 | -2.1 | -27 | -1.2 | -23. | -0.1 | -17.3
|
| | | 4 | .4 | | 1.1 | | 5 | | |
--------------------------------------------------------------------------------
| Incl. net | | -2.4 | -4.8 | 0.0 | 0.0 | -0.2 | -0.3 | 0.1 | 0.0
|
| gain/loss from | | | | | | | | | |
| the disposal of | | | | | | | | | |
| financial | | | | | | | | | |
| assets | | | | | | | | | |
--------------------------------------------------------------------------------
| Net loss | | -19. | -368 | -2.1 | -27 | -1.3 | -23. | -0.1 | -17.4
|
| | | 8 | .6 | | 1.5 | | 6 | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
|
--------------------------------------------------------------------------------
| EPS 1 (in | | -4.1 | -77. | -0.4 | -57 | -0.27 | -4.9 | -0.03 | -3.67
|
| kroons and | | 8 | 72 | 4 | .38 | | 7 | | |
| euros) | | | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
|
--------------------------------------------------------------------------------
| Total assets at | | 1,17 | 1,26 | | | 75.0 | 80.9 | |
|
| period end | | 3.7 | 5.5 | | | | | | |
--------------------------------------------------------------------------------
| Invested | | 959. | 1,07 | | | 61.3 | 68.9 | |
|
| capital at | | 3 | 8.4 | | | | | | |
| period end | | | | | | | | | |
--------------------------------------------------------------------------------
| Net loans at | | 490. | 580. | | | 31.4 | 37.1 | |
|
| period end | | 8 | 2 | | | | | | |
--------------------------------------------------------------------------------
| Equity at | | 430. | 460. | | | 27.5 | 29.4 | |
|
| period end | | 1 | 1 | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
|
--------------------------------------------------------------------------------
| Average loan | | 2.0 | 1.5 | | | 2.0 | 1.5 | |
|
| term (in years) | | | | | | | | | |
--------------------------------------------------------------------------------
| Average | | 6.1% | 6.1% | | | 6.1% | 6.1% | |
|
| interest rate | | | | | | | | | |
| of loans (per | | | | | | | | | |
| year) | | | | | | | | | |
--------------------------------------------------------------------------------
| ROIC (rolling, | | neg | neg | | | neg | neg | |
|
| 4 quarters) | | | | | | | | | |
--------------------------------------------------------------------------------
| ROE (rolling, 4 | | neg | neg | | | neg | neg | |
|
| quarters) | | | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
|
--------------------------------------------------------------------------------
| Number of staff | | 142 | 246 | | | 142 | 246 | |
|
| at period end | | | | | | | | | |
--------------------------------------------------------------------------------
REVENUE AND PROFIT
| | EEK | EUR |
--------------------------------------------------------------------------------
| | | 9M | 9M | Q3 | Q3 | 9M | 9M | Q3 | Q3 |
| | | 201 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| | | 0 | | | | | | | |
--------------------------------------------------------------------------------
| In millions | | | | | | | | | |
--------------------------------------------------------------------------------
| Revenue and | | | | | | | | | |
| other income | | | | | | | | | |
--------------------------------------------------------------------------------
| Service | | 21. | 28.7 | 7.9 | 8.5 | 1.4 | 1.8 | 0.5 | 0.5 |
| | | 7 | | | | | | | |
--------------------------------------------------------------------------------
| Development | | 113 | 168. | 38.5 | 30.7 | 7.3 | 10.8 | 2.5 | 2.0 |
| | | .9 | 3 | | | | | | |
--------------------------------------------------------------------------------
| Construction | | 99. | 201. | 47.1 | 71.5 | 6.4 | 12.9 | 3.0 | 4.6 |
| | | 9 | 5 | | | | | | |
--------------------------------------------------------------------------------
| Eliminations | | -6. | -37. | -3.4 | -12. | -0.4 | -2.4 | -0.2 | -0.8 |
| | | 2 | 0 | | 8 | | | | |
--------------------------------------------------------------------------------
| Total revenue | | 229 | 361. | 90.1 | 97.9 | 14.7 | 23.1 | 5.8 | 6.3 |
| and other | | .3 | 5 | | | | | | |
| income | | | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | | | | | | | | | |
| profit/loss | | | | | | | | | |
--------------------------------------------------------------------------------
| Service | | -1. | -9.1 | 1.3 | -1.3 | -0.1 | -0.6 | 0.1 | -0.1 |
| | | 2 | | | | | | | |
--------------------------------------------------------------------------------
| Development | | 5.3 | -93. | 8.7 | -61. | 0.3 | -6.0 | 0.6 | -3.9 |
| | | | 4 | | 7 | | | | |
--------------------------------------------------------------------------------
| 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 | | -16 | -23. | -6.1 | -7.7 | -1.0 | -1.4 | -0.5 | -0.5 |
| expenses | | .3 | 4 | | | | | | |
--------------------------------------------------------------------------------
| Total operating | | -10 | -128 | 5.4 | -66. | -0.7 | -8.2 | 0.3 | -4.2 |
| profit/loss | | .5 | .6 | | 0 | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | | |
--------------------------------------------------------------------------------
| Interest income | | -7. | -11. | -3.4 | -7.5 | -0.5 | -0.8 | -0.2 | -0.5 |
| and expense | | 6 | 9 | | | | | | |
--------------------------------------------------------------------------------
| Other finance | | -1. | -227 | -4.1 | -197 | -0.1 | -14. | -0.3 | -12.6 |
| income and | | 3 | .0 | | .6 | | 5 | | |
| expense | | | | | | | | | |
--------------------------------------------------------------------------------
| Income tax | | -0. | -1.2 | 0.0 | -0.4 | 0.0 | -0.1 | 0.0 | 0.0 |
| expense | | 4 | | | | | | | |
--------------------------------------------------------------------------------
| Net loss | | -19 | -368 | -2.1 | -271 | -1.3 | -23. | -0.2 | -17.4 |
| | | .8 | .7 | | .6 | | 6 | | |
--------------------------------------------------------------------------------
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
| | | EEK | EUR |
-------------------------------------------------------------------------------
| | | 9M | 9M | Q3 | Q3 | 9M | 9M | Q3 | Q3 |
| | | 201 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| | | 0 | | | | | | | |
--------------------------------------------------------------------------------
| In millions | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flows from | | 13. | 41.9 | 12.2 | 77.7 | 0.8 | 2.7 | 0.8 | 5.0 |
| operating | | 9 | | | | | | | |
| activities | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flows from | | 21. | -11. | 8.1 | -43. | 1.4 | -0.8 | 0.5 | -2.7 |
| investing | | 2 | 8 | | 3 | | | | |
| activities | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flows from | | -61 | -147 | -20. | -93. | -3.9 | -9.4 | -1.3 | -6.1 |
| financing | | .5 | .7 | 8 | 1 | | | | |
| activities | | | | | | | | | |
--------------------------------------------------------------------------------
| Net cash flow | | -26 | -117 | -0.5 | -58. | -1.7 | -7.5 | 0.0 | -3.8 |
| | | .4 | .6 | | 7 | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | 64. | 156. | 0.0 | 0.0 | 4.1 | 10.0 | 0.0 | 0.0 |
| equivalents at | | 7 | 1 | | | | | | |
| beginning of | | | | | | | | | |
| period | | | | | | | | | |
--------------------------------------------------------------------------------
| Effect of | | 0.0 | -0.4 | 2.8 | 0.8 | 0.1 | 0.0 | 0.2 | 0.0 |
| movements in | | | | | | | | | |
| exchange rates | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | 38. | 38.0 | 2.3 | -57. | 2.5 | 2.5 | 0.2 | -3.8 |
| equivalents at | | 3 | | | 9 | | | | |
| end of period | | | | | | | | | |
--------------------------------------------------------------------------------
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 | Not | | 9M 2010 | 9M 2009 | | Q3 2010 | Q3 2009 |
| ended 30 September | e | | | | | | |
| 2010 | | | | | | | |
--------------------------------------------------------------------------------
| In EEK thousands | | | | | | | |
--------------------------------------------------------------------------------
| Revenue from | | | 133,505 | 206,502 | | 59,984 | 68,084 |
| rendering of | | | | | | | |
| services | | | | | | | |
--------------------------------------------------------------------------------
| Revenue from sale | | | 90,837 | 51,366 | | 28,124 | 18,332 |
| of goods | | | | | | | |
--------------------------------------------------------------------------------
| Total revenue | 2 | | 224,342 | 257,868 | | 88,108 | 86,416 |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Cost of sales | 3 | | -191,07 | -370,54 | | -71,574 | -97,868 |
| | | | 1 | 4 | | | |
--------------------------------------------------------------------------------
| Gross profit/loss | | | 33,271 | -112,67 | | 16,534 | -11,452 |
| | | | | 6 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Other income | 4 | | 4,896 | 103,511 | | 2,027 | 11,416 |
--------------------------------------------------------------------------------
| Distribution | 5 | | -3,395 | -3,315 | | -902 | -1,463 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Administrative | 6 | | -42,422 | -55,601 | | -12,038 | -18,759 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Other expenses | 4 | | -2,867 | -60,472 | | -180 | -45,732 |
--------------------------------------------------------------------------------
| Operating | | | -10,517 | -128,55 | | 5,441 | -65,990 |
| profit/loss | | | | 3 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Finance income | 7 | | 9,907 | 15,751 | | 827 | 238 |
--------------------------------------------------------------------------------
| Finance expenses | 7 | | -18,765 | -254,60 | | -8,329 | -205,362 |
| | | | | 1 | | | |
--------------------------------------------------------------------------------
| Loss before tax | | | -19,375 | -367,40 | | -2,061 | -271,114 |
| | | | | 3 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Income tax expense | | | -465 | -1,235 | | -34 | -426 |
--------------------------------------------------------------------------------
| Loss for the period | | | -19,840 | -368,63 | | -2,095 | -271,540 |
| | | | | 8 | | | |
--------------------------------------------------------------------------------
| Loss attributable | 8 | | -19,840 | -368,52 | | -2,095 | -272,080 |
| to owners of the | | | | 8 | | | |
| parent | | | | | | | |
--------------------------------------------------------------------------------
| Loss attributable | | | 0 | -110 | | 0 | 540 |
| to non-controlling | | | | | | | |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive | | | | | | | |
| income/expense | | | | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | | 178 | 263 | | -5 | -499 |
| translating foreign | | | | | | |
| operations | | | | | | |
--------------------------------------------------------------------------------
| Total other | | | 178 | 263 | | -5 | -499 |
| comprehensive | | | | | | | |
| income/expense | | | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | -19,662 | -368,37 | | -2,100 | -272,039 |
| expense for the period | | | 5 | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | | | | | |
| expense attributable to: | | | | | | |
--------------------------------------------------------------------------------
| Owners of the parent | | -19,662 | -368,26 | | -2,100 | -272,579 |
| | | | 5 | | | |
--------------------------------------------------------------------------------
| Non-controlling | | | 0 | -110 | | 0 | 540 |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| | | | -19,662 | -368,37 | | -2,100 | -272,039 |
| | | | | 5 | | | |
--------------------------------------------------------------------------------
| 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 | Not | | 9M 2010 | 9M 2009 | | Q3 2010 | Q3 2009 |
| ended 30 September | e | | | | | | |
| 2010 | | | | | | | |
--------------------------------------------------------------------------------
| In EUR thousands | | | | | | | |
--------------------------------------------------------------------------------
| Revenue from | | | 8,533 | 13,198 | | 3,834 | 4,351 |
| rendering of | | | | | | | |
| services | | | | | | | |
--------------------------------------------------------------------------------
| Revenue from sale | | | 5,806 | 3,283 | | 1,797 | 1,172 |
| of goods | | | | | | | |
--------------------------------------------------------------------------------
| 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 | 5 | | -217 | -212 | | -58 | -94 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Administrative | 6 | | -2,711 | -3,554 | | -769 | -1,199 |
| expenses | | | | | | | |
--------------------------------------------------------------------------------
| Other expenses | 4 | | -183 | -3,865 | | -12 | -2,923 |
--------------------------------------------------------------------------------
| Operating | | | -671 | -8,216 | | 348 | -4,218 |
| profit/loss | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| 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 | 8 | | -1,267 | -23,553 | | -133 | -17,390 |
| to owners of the | | | | | | | |
| parent | | | | | | | |
--------------------------------------------------------------------------------
| Loss attributable | | | 0 | -7 | | 0 | 35 |
| to non-controlling | | | | | | | |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| Other comprehensive | | | | | | | |
| income/expense | | | | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | | 11 | 17 | | 0 | -32 |
| translating foreign | | | | | | |
| operations | | | | | | |
--------------------------------------------------------------------------------
| Total other | | | 11 | 17 | | 0 | -32 |
| comprehensive | | | | | | | |
| income/expense | | | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | -1,256 | -23,543 | | -133 | -17,387 |
| expense for the period | | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | | | | | |
| expense attributable to: | | | | | | |
--------------------------------------------------------------------------------
| Equity holders of | | | -1,258 | -23,536 | | -135 | -17,422 |
| the parent | | | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | | | 0 | -7 | | 0 | 35 |
| interests | | | | | | | |
--------------------------------------------------------------------------------
| | | | -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 | Note | | 30 | 31 | | 31 |
| 2010 | | | Septembe | December | | December |
| | | | r 2010 | 2009 | | 2008 |
--------------------------------------------------------------------------------
| In EEK thousands | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | 38,321 | 64,724 | | 156,061 |
| equivalents | | | | | | |
--------------------------------------------------------------------------------
| 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 | | | 9,780 | 10,545 | | 41,664 |
| equipment | | | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | | 575 | 812 | | 12,475 |
--------------------------------------------------------------------------------
| Total non-current | | | 407,232 | 250,974 | | 428,452 |
| assets | | | | | | |
--------------------------------------------------------------------------------
| TOTAL ASSETS | | | 1,173,66 | 1,224,441 | | 1,738,464 |
| | | | 3 | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Loans and borrowings | 12 | | 299,004 | 371,615 | | 223,598 |
--------------------------------------------------------------------------------
| Trade and other | 13 | | 74,370 | 83,621 | | 124,190 |
| payables | | | | | | |
--------------------------------------------------------------------------------
| Deferred income | | | 97,077 | 81,902 | | 64,172 |
--------------------------------------------------------------------------------
| Provisions | | | 42,958 | 43,571 | | 37,999 |
--------------------------------------------------------------------------------
| Total current | | | 513,409 | 580,709 | | 449,959 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| 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 | | | 230,140 | 193,956 | | 458,657 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | | | 743,549 | 774,665 | | 908,616 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Share capital | | | 47,417 | 952,842 | | 952,842 |
--------------------------------------------------------------------------------
| Share premium | | | 0 | 0 | | 712,514 |
--------------------------------------------------------------------------------
| Statutory capital | | | 31,463 | 31,463 | | 31,463 |
| reserve | | | | | | |
--------------------------------------------------------------------------------
| Retained earnings / | | | 351,234 | -530,537 | | -866,593 |
| accumulated losses | | | | | | |
--------------------------------------------------------------------------------
| Own shares | | | 0 | -3,992 | | -3,992 |
--------------------------------------------------------------------------------
| Total equity | | | 430,114 | 449,776 | | 826,234 |
| attributable to equity | | | | | | |
| holders of the parent | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | | | 0 | 0 | | 3,614 |
| interests | | | | | | |
--------------------------------------------------------------------------------
| Total equity | | | 430,114 | 449,776 | | 829,848 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND | | | 1,173,66 | 1,224,441 | | 1,738,464 |
| EQUITY | | | 3 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| As at 30 September | Note | | 30 | 31 | | 31 |
| 2010 | | | Septembe | December | | December |
| | | | r 2010 | 2009 | | 2008 |
--------------------------------------------------------------------------------
| In EUR thousands | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | 2,449 | 4,137 | | 9,974 |
| equivalents | | | | | | |
--------------------------------------------------------------------------------
| 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 | | | 625 | 674 | | 2,663 |
| equipment | | | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | | 37 | 52 | | 798 |
--------------------------------------------------------------------------------
| Total non-current | | | 26,027 | 16,040 | | 27,384 |
| assets | | | | | | |
--------------------------------------------------------------------------------
| TOTAL ASSETS | | | 75,011 | 78,257 | | 111,108 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Loans and borrowings | 12 | | 19,110 | 23,750 | | 14,290 |
--------------------------------------------------------------------------------
| Trade and other | 13 | | 4,753 | 5,344 | | 7,937 |
| payables | | | | | | |
--------------------------------------------------------------------------------
| Deferred income | | | 6,205 | 5,234 | | 4,101 |
--------------------------------------------------------------------------------
| Provisions | | | 2,746 | 2,785 | | 2,429 |
--------------------------------------------------------------------------------
| Total current | | | 32,814 | 37,116 | | 28,757 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Loans and borrowings | 12 | | 14,250 | 11,925 | | 29,019 |
--------------------------------------------------------------------------------
| Other liabilities | | | 388 | 400 | | 91 |
--------------------------------------------------------------------------------
| Provisions | | | 70 | 70 | | 204 |
--------------------------------------------------------------------------------
| Total non-current | | | 14,708 | 12,395 | | 29,314 |
| liabilities | | | | | | |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | | | 47,522 | 49,511 | | 58,071 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Share capital | | | 3,030 | 60,897 | | 60,897 |
--------------------------------------------------------------------------------
| Share premium | | | 0 | 0 | | 45,538 |
--------------------------------------------------------------------------------
| Statutory capital | | | 2,011 | 2,011 | | 2,011 |
| reserve | | | | | | |
--------------------------------------------------------------------------------
| Retained earnings / | | | 22,448 | -33,907 | | -55,385 |
| accumulated losses | | | | | | |
--------------------------------------------------------------------------------
| Own shares | | | 0 | -255 | | -255 |
--------------------------------------------------------------------------------
| Total equity | | | 27,489 | 28,746 | | 52,806 |
| attributable to equity | | | | | | |
| holders of the parent | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Non-controlling | | | 0 | 0 | | 231 |
| interests | | | | | | |
--------------------------------------------------------------------------------
| Total equity | | | 27,489 | 28,746 | | 53,037 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| TOTAL LIABILITIES AND | | | 75,011 | 78,257 | | 111,108 |
| EQUITY | | | | | | |
--------------------------------------------------------------------------------
Condensed consolidated statement of cash flows
--------------------------------------------------------------------------------
| | | | EEK | | EUR |
--------------------------------------------------------------------------------
| For the period ended | Not | | 9M 2010 | 9M | | 9M 2010 | 9M 2009 |
| 30 September 2010 | e | | | 2009 | | | |
--------------------------------------------------------------------------------
| In thousands | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the period | | | -19,840 | -368,6 | | -1,268 | -23,560 |
| | | | | 38 | | | |
--------------------------------------------------------------------------------
| Interest income and | 7 | | 7,589 | 11,851 | | 485 | 757 |
| interest expense | | | | | | | |
--------------------------------------------------------------------------------
| Gain/loss on sale of | 7 | | 1,377 | 4,771 | | 88 | 305 |
| subsidiaries and | | | | | | | |
| interests in jointly | | | | | | | |
| controlled entities | | | | | | | |
--------------------------------------------------------------------------------
| Gain/loss on other | 7 | | 0 | -2,685 | | 0 | -172 |
| long-term investments | | | | | | | |
--------------------------------------------------------------------------------
| Impairment losses on | 7 | | 207 | 135,54 | | 13 | 8,663 |
| financial assets | | | | 9 | | | |
--------------------------------------------------------------------------------
| Share of profits and losses | | 1,463 | 87,424 | | 94 | 5,587 |
| of equity accounted | | | | | | |
| investees | | | | | | |
--------------------------------------------------------------------------------
| Depreciation, | 3, | | 1,444 | 3,350 | | 92 | 214 |
| amortisation and | 4 | | | | | | |
| impairment losses on | ,6 | | | | | | |
| property, plant and | | | | | | | |
| equipment and | | | | | | | |
| intangible assets | | | | | | | |
--------------------------------------------------------------------------------
| Gain/loss on the sale | 4 | | 0 | 1,055 | | 0 | 67 |
| of property, plant and | | | | | | | |
| equipment and | | | | | | | |
| intangible assets | | | | | | | |
--------------------------------------------------------------------------------
| Gain/loss on the sale | 4 | | 332 | -1,000 | | 21 | -64 |
| of investment property | | | | | | | |
--------------------------------------------------------------------------------
| Change in the fair | 4, | | -103 | -39,56 | | -7 | -2,528 |
| value of investment | 11 | | | 2 | | | |
| property and | | | | | | | |
| biological assets | | | | | | | |
--------------------------------------------------------------------------------
| Gain/loss on the | 3 | | 5,559 | 135,06 | | 355 | 8,632 |
| revaluation of | | | | 7 | | | |
| inventories | | | | | | | |
--------------------------------------------------------------------------------
| Exchange gains and | 7 | | -1,778 | 1,940 | | -114 | 124 |
| losses | | | | | | | |
--------------------------------------------------------------------------------
| Income tax expense | | | 465 | 0 | | 30 | 0 |
--------------------------------------------------------------------------------
| Operating cash flow before | | -3,285 | -30,87 | | -211 | -1,975 |
| working capital changes | | | 8 | | | |
--------------------------------------------------------------------------------
| Change in receivables and | | -7,141 | 50,701 | | -456 | 3,240 |
| prepayments | | | | | | |
--------------------------------------------------------------------------------
| Change in inventories | | | -2,022 | 67,724 | | -129 | 4,328 |
--------------------------------------------------------------------------------
| Change in biological | | | 0 | 3,680 | | 0 | 235 |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Change in payables and | | 26,348 | -49,32 | | 1,684 | -3,152 |
| deferred income | | | 3 | | | |
--------------------------------------------------------------------------------
| NET CASH FROM | | | 13,900 | 41,904 | | 888 | 2,676 |
| OPERATING ACTIVITIES | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | | -493 | -1,834 | | -32 | -117 |
| property, plant and | | | | | | | |
| equipment and | | | | | | | |
| intangible assets | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of | | | 0 | 2,011 | | 0 | 129 |
| property, plant and | | | | | | | |
| equipment and | | | | | | | |
| intangible assets | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | 11 | | -3,725 | -49,03 | | -238 | -3,134 |
| investment property | | | | 3 | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of | 11 | | 24,530 | 2,971 | | 1,568 | 190 |
| investment property | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | | -500 | -502 | | -32 | -32 |
| subsidiaries and | | | | | | | |
| interests in jointly | | | | | | | |
| controlled entities | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of | | | 105 | 600 | | 7 | 38 |
| investments in | | | | | | | |
| subsidiaries and | | | | | | | |
| jointly controlled | | | | | | | |
| entities | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sale of | | | 0 | 29,383 | | 0 | 1,878 |
| other investments | | | | | | | |
--------------------------------------------------------------------------------
| Loans granted | | | -869 | -946 | | -56 | -60 |
--------------------------------------------------------------------------------
| Repayment of loans | | | 51 | 4,217 | | 3 | 271 |
| granted | | | | | | | |
--------------------------------------------------------------------------------
| Interest received | | | 2,055 | 1,371 | | 131 | 88 |
--------------------------------------------------------------------------------
| NET CASH FROM/USED IN | | 21,154 | -11,76 | | 1,351 | -749 |
| INVESTING ACTIVITIES | | | 2 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from loans | | | 60,749 | 40,390 | | 3,883 | 2,581 |
| received | | | | | | | |
--------------------------------------------------------------------------------
| Settlement of loans | | | -96,968 | -162,7 | | -6,197 | -10,399 |
| and finance lease | | | | 02 | | | |
| liabilities | | | | | | | |
--------------------------------------------------------------------------------
| Interest paid | | | -25,258 | -25,41 | | -1,614 | -1,624 |
| | | | | 9 | | | |
--------------------------------------------------------------------------------
| NET CASH USED IN FINANCING | | -61,477 | -147,7 | | -3,928 | -9,442 |
| ACTIVITIES | | | 31 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| NET CASH FLOW | | | -26,423 | -117,5 | | -1,689 | -7,515 |
| | | | | 89 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | 64,724 | 156,06 | | 4,137 | 9,974 |
| equivalents at | | | | 1 | | | |
| beginning of period | | | | | | | |
--------------------------------------------------------------------------------
| Net decrease in cash | | | -26,423 | -117,5 | | -1,689 | -7,515 |
| and cash equivalents | | | | 89 | | | |
--------------------------------------------------------------------------------
| Effect of exchange | | | 20 | -435 | | 1 | -28 |
| rate fluctuations on | | | | | | | |
| cash held | | | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | 38,321 | 38,037 | | 2,449 | 2,431 |
| equivalents at end of | | | | | | | |
| period | | | | | | | |
--------------------------------------------------------------------------------
