Published: 2014-02-17 16:17:14 CET
Arco Vara
Company Announcement

Arco Vara Ltd sold Arco Ehitus Ltd

Due to changes in group strategy Arco Vara discontinued construction activities (including environmental construction) as a core business line since the end of 2013.

Therefore Arco Vara Ltd sold 100% of shares of subsidiary company Arco Ehitus to Stratcorp Ltd on 14 of February 2014. Sale price of shares consists of two parts:

a)     At the transfer of ownership 10 thousand euros;

b)    Buyer will pay 30 per cent of proceeds of two legal disputes-with Ministry of Education and Research and with Loksa Haljastus Ltd. Dividend income tax will be paid on profeeds.

Manager of Group added,“ With sale of Arco Ehitus  Ltd. we have concluded an important step in reforming Arco Vara group into company focused solely on development of real estate and offering related services.“

The buyer, Stratcorp Ltd, is not related to Arco Vara Group and transaction is not considered as a transaction with a related party (according to NASDAQ OMX Tallinna Stock Exchange rules of "Requirements to Emitent.

According to sales agreement company will not continue under name of Arco Ehitus Ltd.

Sale of Arco Ehituse Ltd has significant influence on corporate results of Arco Vara . Most important financial data for , 31.12.2012.,31.12.2011 and 31.12.2010, are given below

Arco Ehitus Ltd. Profit statement 2012 2011 2010
Sales revenue 9 800 956 18 121 308 8 627 397
Cost of goods sold -9 319 294 -20 348 959 -8 063 435
Gross profit/loss 481 662 -2 227 651 563 962
Marketing expenses -80 -3 423 -971
Overhead expenses -942 601 -585 747 -901 326
Other revenue 204 398 8 849 27 677
Other expenses -14 947 -53 292 -11 129
Operating revenue-loss -271 568 -2 861 264 -321 787
Financial revenues and expenses -13 036 -87 686 -88 042
Net income/loss before taxes -284 604 -2 948 950 -409 829
Net income/loss -284 604 -2 948 950 -409 829

Arco Ehitus Ltd  has not paid dividends, common stock is 49 thousand  euros.

Liabilities of Arco Ehitusel are as of 31.12.2013 1980 thousand euro, including 432 thousand euros what is owned to parent company.  Company has total assets of ca 1049 thousand euros

The claims related to legal disputes are not included into assets , therefore company value is higly related to outcome of legal disputes.

Aim of buyer is to finish al leagal disputes with positive cash flow for company.

There are following legal disputes related to Arco Ehitus Ltd.

  Defendant/Debtor Plaintiff/Creditor Number of the proceeding Type of the proceeding Claim Status  
 
1. Arco Ehitus Ltd Merkton Ehitus Ltd (bankrupt) trustee in bankruptcy Peep Lillemäe 1 Action Claims to 1) establish that Arco Ehitus Ltd is a person connected with Merkton Ehitus Ltd (bankrupt) and 2) recover its performance of financial obligations to Arco Ehitus Ltd in the sum of 986 099,23 euros. Proceeding in process  
2. Arco Ehitus Ltd Uus Ehitus RC (bankrupt) trustee in bankruptcyHeikki Ojamaa 2 Action 1. Claim in the amount of 72 423,99 + interest Proceeding in process  
2. Claim in the amount of 43 261,16 + interest  
3. Arco Ehitus Ltd Estonian Republic (through the Ministry of Education and Research) 1 Action Claim in the amount of 507 961,59 euros+ contractual penalty in the amount of 4 078,01 euros + interest The actions were merged. Proceeding in process  
4. Estonian Republic (through the Ministry of Education and Research Arco Ehitus Ltd 1 Action Claim in the amount of 889 532 euros + interest  
5. Ltd Loksa Haljastus Arco Ehitus Ltd 1 Action Claim in the amount of 153 371,02 euros Proceeding in process  

Arco Vara has given warranties, mortgages and other collaterals related to Arco Ehitus Ltd in amount of 556 thousand euros . All collaterials are given related to construction warranty period ( 720 days). Last warranty ends in November 2015.

Member of management board of Arco Ehituse till sale was Evelin Kanter  and after sale new member of board is Kalev Sakjas.

 

         Marko Err
         Finantsjuht / CFO
         Arco Vara AS
         Jõe 2b, 10151 Tallinn, Estonia
         tel: +372 614 4503
         gsm: +372 529 5326
         e-mail: marko.err@arcovara.ee
         www.arcovara.ee