News

Interim unaudited report, 9 months 2007

29.11.2007,

Financial highlights:

• Revenue and other income totalled 686.7 million kroons (43.9 million euros), a 
  solid 76.8% increase year-on-year
• Operating profit reached 112.3 million kroons (7.1 million euros), 55.0% up    
  year-on-year
• Net profit reached 264.1 million kroons (16.9 million euros), 4.8-fold increase
• Equity to assets ratio rose to 55.3% (9 months 2006: 31.1%) and return on equity
  improved to 31.2% (9 months 2006: 15.8%)
• Return on invested capital was 19.4 % (9 months 2006: 7.7%)
• Order backlog at period-end stood at 361 million kroons (23.1 million euros)
• In 9 months were sold or booked apartments or land plots 98 pieces.            

Comments from Arco's CEO Viljar Arakas: 

In Estonia and Latvia the sales of residential properties became more          
complicated in the third quarter. In Lithuania the situation is more favourable
compared to the rest of the Baltic region. Deal volumes have dropped, small    
players can't get refinancing on favourable terms and customers have postponed 
their purchasing decisions for a while.  This has also affected Arco's         
residential projects that are right now under construction in the Baltic's and 
continue to effect in short-term. In case of Arco, most of the residential     
pipeline in the Baltic's is planned to come to market after two to three years.
The value of these assets depends more on the purchasing power and market      
situation in the capital cities after two years.
                               
Demand for commercial spaces in the city centre hasn't decreased. Downtown     
A-category office- and retail vacancies are close to zero.  The situation      
increases the value of Arco's existing cash flow generating projects and creates
favourable conditions for the start of construction of Ahtri 3 and Laeva 2     
commercial projects in Tallinn in the next 12 months.
                          
Although the value of Arco's assets haven't increased in Q3 and the situation  
favours big and well capitalised developers, the focus of the group is in the  
Balkan region, where we already started the construction of 112 apartment      
project called “Madrid”.
                                                      
We are pleased on the results of our construction division that represents the 
success of restructuring that already started in 2006. 9 month EBIT has improved
almost 23.0 million kroons (1.5 million euros) and reached a level of 9.9      
million kroons (0.6 million euros). Loss-generating contracts have expired and 
in the new ones the construction price risk is more diversified among the client
and constructor
                                                               
In Q3 the funds of Explorer Property Fund - Baltic States AB, managed by Arco's
joint-venture with East Capital, were fully invested. It took two years of hard
work to close the portfolio. The asset volume in total is 3,129 million kroons 
(200 million euros) and the average entrance yield is 8.35%.                   

Please see the report on our corporate web-page HERE

Additional information:                                                        
Heigo Metsoja                                                                  
Investor Relations Manager                                                     
+372 6144 654                                                                  
heigo.metsoja@arcovara.ee                                                      
www.arcorealestate.com

 

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