News

22.10.2009: Arco Vara transferred holdings in 3 joint ventures and improved liquidity position

On 21 October, Arco Vara transferred its holdings in Tallinna Olümpiapurjespordikeskuse AS, Floriston Grupp OÜ and Arco Ärikeskuse OÜ to enterprises related to Marcel Vichmann and Olav Miil for a total of 172 MEEK (11 MEUR), of which 55 MEEK (3.5 MEUR) is the amount paid for the sales and 117 MEEK (7.5 MEUR) are the payables of the three transferred companies.

From the point of view of the group internal liquidity management, the control of financial means of joint ventures is limited and does not allow the Group to fully control its working capital. Due to preparations for the increase in market demand related to the revival of economy, the Group needs finances for financing new residential building projects in Tallinn.

In the above joint ventures, neither the detailed plans have not been approved yet nor the building rights required for the development activity established. For a period of 10 years following the exercise of building rights proceeding from the detailed plans to be approved for the plots belonging to the companies, Arco Vara will maintain the right to receive additional returns.

As a result of the transaction, the liabilities of the Group decrease by 117 MEEK (7.5 MEUR), assets will be reduced due to transfer of holding by 306 MEEK (19.6 MEUR). The total loss on the transaction amounts to 150 MEEK (9.6 MEUR).

Arco Vara has management service agreements with Floriston Grupp OÜ and Arco Ärikeskuse OÜ, and a loan agreement with Snowden OÜ (a 100% subsidiary of Floriston Grupp OÜ).

According to article 7.12 of the Tallinn Stock Exchange Requirements for Issuers, it is a substantial transfer.

It is not a transaction with a related person for the purposes of the article 7.9 of the Tallinn Stock Exchange Requirements for Issuers, and the members of Arco Vara Management Board and Supervisory Board do not have any other interest in the transactions.

Transferred companies

Tallinna Olümpiapurjespordikeskuse AS is operating in the field of lease and operation of its own or leased property; owners of the company are 50% Arco Investeeringute AS (a 100% subsidiary of Arco Vara) and 50% Regati Valduse OÜ. Manager of the company is Urmas Lind, members of the Supervisory Board: Heigo Metsoja, Veiko Taevere, Ivar Lindpere, Urmas Uustal, Aivar Tuulberg and Andres Toome

Floriston Grupp OÜ is operating in the field of lease and operation of its own or leased property; owners of the company are 50% Arco Vara AS and 50% Ärimaja AS. Manager of the company is Urmas Lind, the company has no Supervisory Board.

Arco Ärikeskuse OÜ is operating in the field of lease and operation of its own or leased property; owners of the company are 50% Arco Investeeringute AS and 50% Aberdeen OÜ. Manager of the company is Urmas Lind, the company has no Supervisory Board.

Cost and conditions of transactions

Arco Vara transferred 100% of its holdings in Tallinna Olümpiapurjespordikeskuse AS and Arco Ärikeskuse OÜ, which made up 50% of the holding or share capital of both companies, and 75% of its holding in Floriston Grupp OÜ, which made up 37.5% of the holding of the company. Arco Vara will maintain a 12.5% holding in Floriston Grupp OÜ.

The cost of the 50% sales of Tallinna Olümpiapurjespordikeskuse AS is 37.5 MEEK (2.4 MEUR) and the payment due dates are 22.10.2009 and 19.12.2009.

The cost of the 37.5% sales of Floriston Grupp OÜ is 5.5 MEEK (0.35 MEUR) and the payment due date is 22.10.2009.

The cost of the 50% sales of Arco Ärikeskuse OÜ is 12 MEEK (0.77 MEUR) and the payment due date is 27.11.2009.

The 50% Arco Vara holding in Arco Ärikeskuse OÜ is transferred at the consent of AS DnB Nord Bank.

The Arco Vara claim against Snowden OÜ (a 100% subsidiary of Floriston Grupp) in the amount of 30 MEEK (1.9 MEUR) will remain valid and combined mortgages will be established to the plots in the ownership of Snowden OÜ to guarantee the claim.

Economic results of companies to be transferred

Tallinna Olümpiapurjespordikeskuse AS

in EEK (thousands)					in EUR (thousands)
	2008	2007	2006	2008		2007	2006
Turnover	27 481	24 495	22 744	1 756		1 566	1 454
Net profit/loss	8 218	11 335	260 248	525		724	16 633
Dividends per share	0	0	0	0		0	0
Basic and diluted earnings/loss per share	0,22	0,3	0,55	0,014		0,019	0,035

Floriston Grupp OÜ

in EEK (thousands)					in EUR (thousands)
	2008	2007	2006	2008		2007	2006
Turnover	6 772	5 530	11 266	433		353	720
Net profit/loss	44 322	-93 430	203 526	2 833		-5 971	13 008
Dividends per share	0	0	0	0		0	0
Basic and diluted earnings/loss per share	22161	-46715	101763	1 416,346		-2 985,633	6 503,841

Arco Ärikeskuse OÜ

in EEK (thousands)					in EUR (thousands)
Arco Ärikeskuse OÜ	2008	2007	2006	2008		2007	2006
Turnover	13 288	13 477	12 821	849		861	819
Net profit/loss	-13 558	44 333	14 341	-867		2 833	917
Dividends per share	1 080	1 600	0	69		102	0
Basic and diluted earnings/loss per share	-6779	22167	7170	-433		1 416	458

Annual reports of disposed companies

TALLINNA OLÜMPIAPURJESPORDIKESKUSE AS	EEK	EEK	EUR	EUR
BALANCE SHEET 31.12	2008	2007	2008	2007

ASSETS
Current assets
Cash	8548 063	5072 799	546 321	324 211
Receivables	3969 629	1467 565	253 706	93 794
Deferred income	718 921	75 775	45 947	4 843
Total current assets	13 23 613	6616 139	84 594	422 848

Non-current assets
Investment property¹	511879 636	511879 636	32 715 071	32 715 071
Property, plant and equipment	250 980	321 073	16 041	20 520
Total non-current assets	512130 616	512200 709	32 731 112	32 735 592
TOTAL ASSETS	525367 229	518816 848	33 577 086	33 158 440

LIABILITIES AND EQUITY
Liabilities
Current liabilities
Loans and borrowings	4552 480	4456948	290 957	284 851
Liabilities	5605 586	2393 259	358 262	152 957
Deferred income	665 382	1032 707	42 526	66 002
Total current liabilities	10823 448	7882 914	691 744	503 810

Non-current liabilities
Long-term loan liabilities	65219 980	69772 460	4 168 316	4 459 273
Miscellaneous long-term liabilities	14 151	70 566	904	4 510
Total non-current liabilities	65243 131	69843 026	4 169 796	4 463 783
Total liabilities	76057 579	77725 940	4 860 965	4 967 593

Equity
Share capital	166192 000	166192 000	10 621 605	10 621 605
Own shares	-110000 000	-110000 000	-7 030 281	-7 030 281
Share premium	235	235	15	15
Statutory capital reserve	2842 529	2842 529	181 671	181 671
Retained earnings	390274 886	382056 144	24 943 111	24 417 838
Total equity	449309 650	441090 908	28 716 120	28 190 847
TOTAL LIABILITIES AND EQUITY	525367 229	518816 848	33 577 086	33 158 440

¹Arco Vara has assessed investment property on a more conservative basis and the 100% value of the Tallinna Olümpiapurjespordikeskuse AS property as of 31.12.2008 is 298,212,000 EEK (19,059,220 EUR).

²Supervisory Board signatures are missing on the Tallinna Olümpiapurjespordikeskuse AS 2008 annual report

TALLINNA OLÜMPIAPURJESPORDIKESKUSE AS	EEK	EEK	EUR	EUR
Income statement	2008	2007	2008	2007
		(adjusted)
Sales revenue	27481 299	24494 979	1 756 375	1 565 514
Other operating income	101 028	142 963	6 457	9 137
Goods, raw material, material and services	- 6203 161	-5328 498	-396 454	-340 553
Other operating costs	-780 261	-880 917	-49 868	-56 301
Personnel expenses	-3474986	-3404 273	-222 092	-217 573
Depreciation of fixed assets	-365 267	-310 573	-23 345	-19 849
Other operating expenses	-4431 030	-17 421	-283 194	-1 113
EBIT	12327 622	14696 260	787 879	939 262
Financial items	-4108 880	-3361 555	-262 605	-214 843
Profit / loss for the financial year	8218 742	11334 705	52 525	724 420

TALLINNA OLÜMPIAPURJESPORDIKESKUSE AS	EEK	EEK	EUR	EUR
Cash flow statement	2008	2007	2008	2007

Cash flows from operating activities
EBIT	12327 622	14696 260	787 879	939 262
Adjustment of EBIT	4716 173	310 573	301 418	19 849
Change in assets and prepayments	-3145 210	-264 569	-201 016	-16 909
Change in payables and prepayments	2788 587	53 687	178 223	3 431
Net cash used in operating activities	16687 172	14795 951	1 066 505	945 634

Cash flows from investing activity
Acquisition of intangible assets	-295 174	0	-18 865	0
Acquisition of investment property	- 4 354 504	-4679 636	-278 304	-299 083
Interest received	472 968	394 673	30 228	25 224
Net cash used in / from investing activities	- 4 176 710	- 4 284 963	-266 940	-273 859

Cash flow from financing activities
Proceeds from loans received	0	75000 000	0	4 793 374
Repayment of loans	- 4007 112	-2555 649	-256 101	-163 336
Repayment of financial lease principal	-451 474	-558 266	-28 854	-35 680
Purchase of own shares	0	-110000 000	0	-7 030 281
Interest paid	-4578 250	-3756 229	-292 604	-240 067
Net cash used in / from financing activities	-9036 836	-41870 144	-577 559	-2 675 990

NET CASH FLOW	3473 626	-31359 156	222 005	-2 004 215

Cash and cash equivalents at beginning of period	5072 799	36399 260	324 211	2 326 337
Decrease / increase in cash and cash equivalents	3473 626	-31359 156	222 005	-2 004 215
Effect of exchange rate fluctuations	1 638	33 695	105	2 154
Cash and cash equivalents at end of period	8548 063	5072 799	546 321	324 211

FLORISTON GRUPP OÜ	EEK	EEK	EUR	EUR
BALANCE SHEET 31.12	2008	2007	2008	2007

ASSETS
Current assets
Cash	7527 876	5814 964	481 119	371 644
Receivables	1350 012	1267 885	86 281	81 033
Deferred income	3 592	32 223	230	2 059
Inventories¹	52680 019	50915 109	3 366 867	3 254 069
Total current assets	61561 499	58030 181	3 934 497	3 708 805

Non-current assets
Non-current receivables	50186 470	67350 195	3 207 500	4 304 462
Investment property²	244306 876	259640 000	15 614 055	16 594 020
Total non-current assets	294493 346	326990 195	18 821 555	20 898 482
TOTAL ASSETS	356054 845	385020 376	22 756 052	24 607 287

LIABILITIES AND EQUITY
Current liabilities
Loans and borrowings	39762 785	145370 360	2 541 306	9 290 859
Liabilities	9215 938	5587 349	589 006	357 097
Deferred income	69 139	56 400	4 419	3 605
Total current liabilities	49047 562	151014 109	3 134 711	9 651 561

Non-current liabilities
Long-term loan liabilities	55974 721	27300 000	3 577 436	1 744 788
Miscellaneous long-term liabilities	76 740	72 740	4 905	4 649
Total non-current liabilities	56051 461	27372 740	3 582 341	1 749 437
Total liabilities	105099 023	178386 849	6 717 052	11 400 998

Equity
Holding	40 000	40 000	2 556	2 556
Statutory capital reserve	4 000	4 000	256	256
Retained earnings	250911 822	206589 527	16 036 188	13 203 477
Total equity	250955 822	206633 527	16 039 000	13 206 289
TOTAL LIABILITIES AND EQUITY	356054 845	385020 376	22 756 052	24 607 287

^1,2Arco Vara has assessed inventories and investment property on a more conservative basis and the 100% value of Floriston Grupp OÜ inventories as of 31.12.2008 is 7,932,401 kroons (506,973 EUR), and the value of investment property 162,456,000 kroons (10,382,830 EUR).

Floriston Grupp OÜ	EEK	EEK	EUR	EUR
Income statement	2008	2007	2008	2007

Sales revenue	6771 844	5530 330	432 800	353 453
Cost of sales	-1133 965	-1484 788	-72 474	-94 895
Gross profit	5637 879	4045 542	360 326	258 557
			0	0
Selling and distribution costs	0		0	0
Administrative expenses	-1277 572	-66 000	-81 652	-4 218
Other operating income	1 890	-1638 939	121	-104 747
Other operating expenses	-15924 227	749 461	-1 017 744	47 899
EBIT	-11526 030	-41874 480	-736 648	-2 676 267
Other financial items	55884 325	-54645 063	3 571 659	-3 492 456
Profit / loss before tax	44322 295	-93429 479	2 832 711	-5 971 232
Net profit of financial year	44322 295	-93429 479	2 832 711	-5 971 232

Floriston Grupp OÜ	EEK	EEK	EUR	EUR
Cash flow statement	2008	2007	2008	2007

Cash flows from operating activities
EBIT	44322 295	-93429 479	2 832 711	-5 971 232
Interest income and expense	-5198 069	11431 387	-332 217	730 599
Gains and losses from TEV sales	-668 503	-7312 172	-42 725	-467 333
Impairment of financial assets	-50516 783	15156 690	-3 228 611	968 689
Exchange gains and losses	5 895	9 065	377	579
Profit/loss from investment property revaluation	15333 124	41860 000	979 965	2 675 342
Change in assets and prepayments	-1891 255	32607 102	-120 873	2 083 974
Change in payables and prepayments	3482 685	423 505	222 584	27 067
Net cash used in operating activities	4869 389	746 098	311 211	47 684
			0	0
Cash flows from investing activity			0	0
Sales of subsidiaries	700 000	7366 500	44 738	470 805
Cash in subsidiaries sold	0	-51 536	0	-3 294
Proceeds from sale of other financial assets	81673 621	0	5 219 896	0
Interest received	344 427	238 017	22 013	15 212
Net cash used in / from investing activities	82718 048	7552 981	5 286 647	482 723
			0	0
Cash flow from financing activities			0	0
Proceeds from loans received	69325 471	1071 400	4 430 705	68 475
Repayment of loans and financial lease	-148849 440	-5154 691	-9 513 213	-329 445
Change in overdraft	0	- 7 173	0	-458
Interest paid	-6344 661	-8819 050	-405 498	-563 640
Net cash used in / from financing activities	-85868 630	-12909 514	-5 488 006	-825 068
			0	0
NET CASH FLOW	1718 807	-4610 435	109 852	-294 661
			0	0
Cash and cash equivalents at beginning of period	5814 964	10434 464	371 644	666 884
Decrease / increase in cash and cash equivalents	1718 807	-4 610 435	109 852	-294 661
Effect of exchange rate fluctuations	- 5 895	-9 065	-377	-579
Cash and cash equivalents at end of period	7527 876	5814 964	481 119	371 644

ARCO ÄRIKESKUSE OÜ	EEK	EEK	EUR	EUR
BALANCE SHEET 31.12	2008	2007	2008	2007

ASSETS
Current assets
Cash	216 682	473611	13 849	30 269
Receivables	557 219	659 516	35 613	42 151
Deferred income	9 655	8 831	617	564
Total current assets	783 556	1141 958	50 078	72 984

Non-current assets
Investment property¹	170614 604	189200 000	10 904 261	12 092 084
Property, plant and equipment	45 082	77 951	2 881	4 982
Total non-current assets	170659 696	189277 951	10 907 143	12 097 066
TOTAL ASSETS	171443 252	190419 909	10 957 221	12 170 050

LIABILITIES AND EQUITY
Current liabilities
Loans and borrowings	3821 000	3644 990	244 206	232 957
Liabilities	1110 065	975 067	70 946	62 318
Deferred income	42 500	42 500	2 716	2 716
Total current liabilities	4973 565	4662 557	317 869	297 992

Non-current liabilities
Long-term loan liabilities	99307 436	102699 913	6 346 902	6 563 721
Miscellaneous long-term liabilities	526 446	703 683	33 646	44 974
Total non-current liabilities	99833 882	103403 596	6 380 548	6 608 694
Total liabilities	104807 447	108066 153	6 698 417	6 906 686

Equity
Holding	90 000	90 000	5 752	5 752
Share premium	16335 900	16335 900	1 044 054	1 044 054
Statutory capital reserve	10 000	10 000	639	639
Retained earnings	50199 905	65917 856	3 208 359	4 212 919
Total equity	66635 805	82353 756	4 258 804	5 263 364
TOTAL LIABILITIES AND EQUITY	171443 252	190419 909	10 957 221	12 170 050

¹Arco Vara has assessed investment property on a more conservative basis and the 100% value of the Arco Ärikeskus property as of 31.12.2008 is 134,170,000 kroons (8,575,026 EUR).

ARCO ÄRIKESKUSE OÜ	EEK	EEK	EUR	EUR
Income statement	2008	2007	2008	2007

Sales revenue	13287 970	13477 139	849 256	861 346
Cost of sales	-869 582	-1505 520	-55 576	-96 220
Gross profit	12418 388	11971 619	793 680	765 126

Selling and distribution costs	-56 665	-107 400	-3 622	-6 864
Administrative expenses	-890 683	-466 481	-56 925	-29 814
Other operating income	458 081	39313 370	29 277	2 512 582
Other operating expenses	-18935 029	-17 919	-1 210 169	-1 145
EBIT	-7005 908	50693 189	-447 759	3 239 885
Other financial items	-5977 867	-5457 390	-382 055	-348 791
Profit / loss before tax	-12983 775	45235 799	-829 814	2 891 094
Income tax on dividends	-574 176	-902 564	-36 697	-57 684
Net profit of financial year	-13557 951	44333 235	-866 511	2 833 410

ARCO ÄRIKESKUSE OÜ	EEK	EEK	EUR	EUR
Cash flow statement	2008	2007	2008	2007

Cash flows from operating activities
EBIT	-7005 908	50693 189	-447 759	3 239 885
Adjustment of EBIT	18618 255	-39142 527	1 189 923	-2 501 663
Change in assets and prepayments	82 836	-89 828	5 294	-5 741
Change in payables and prepayments	-153 831	53 489	-9 832	3 419
Net cash used in operating activities	11541 352	11514 323	737 627	735 899

Cash flows from investing activity
Interest received	7 284	34 817	466	2 225
Net cash used in / from investing activities	7 284	34 817	466	2 225

Cash flow from financing activities
Repayment of loans and financial lease	-3216 467	-3339 018	-205 570	-213 402
Interest paid	-5993 474	-5461 451	-383 053	-349 050
Dividends paid	-2160 000	-3200 000	-138 049	-204 517
Income tax paid	-430 632	-902 564	-27 522	-57 684
Net cash used in / from financing activities	-11800 573	-12903 033	-754 194	-824 654

NET CASH FLOW	-251 937	-1353 893	-16 102	-86 530
			0	0
Cash and cash equivalents at beginning of period	473 611	1844 460	30 269	117 882
Decrease / increase in cash and cash equivalents	-251 937	-1 353 893	-16 102	-86 530
Effect of exchange rate fluctuations	-4 992	-16 956	-319	-1 084
Cash and cash equivalents at end of period	216 682	473 611	13 849	30 269

Extract of substantial loans taken by transferred companies

Company	Creditor	Due date	Amount as of 30.06.09
Floriston Grupp OÜ	Arco Vara AS	31.05.2012	10 384 000
Floriston Grupp OÜ	Arco Vara AS	23.05.2011	11 500 000
Floriston Grupp OÜ	Ärimaja AS	31.05.2012	10 384 000
Floriston Grupp OÜ	Ärimaja AS	23.05.2011	11 500 000
Floriston Grupp OÜ	Swedbank	26.06.2013	31 293 170
AS Tallinna Olümpiapurjespordikeskus	Swedbank	25.11.2015	66 404 784
Arco Ärikeskuse OÜ	DnB Nord Pank	25.10.2016	101 204 210