The revenue of Arricano Real Estate Plc (Cyprus), a management company and developer of a number of shopping and entertainment centers (SECs) in Ukraine, for January-June 2022 amounted to $13.2 million, which is 22% less than the results of the first half of 2021.
According to unaudited interim results for the six months of 2022, published on the London Stock Exchange on Friday, the group’s operating profit from core activities before revaluation of investment property decreased by 27% compared to the first half of 2021 to $8.7 million.
As of June 30, 2022, the average occupancy rate was 98.4% (2021: 99.5%).
“Our operations have been drastically affected by Russia’s military invasion of Ukraine. During four of the six months reviewed, the team and tenants operate under extremely stressful conditions, in which dedication, self-sacrifice and unconditional faith in our people and country are required to continue effective operations. Thanks to their often heroic efforts, we were able to continue our business during the first months of the crisis and are now well positioned to resume growth after the end of the war and to focus on our long-term goals,” Arricano CEO Anna Chubotina was quoted in the report as saying.
The revaluation of the investment property portfolio resulted in a loss of $91.1 million due to the multiple negative financial impact of the Russian invasion (for the first half of 2021 – $9 million).
The total value of the investment property portfolio decreased to $231.1 million, down 28.7% from the December 31, 2021 value of $323.9 million.
As of June 30, 2022, operating cash flow was $8.0 million, with the group’s cash balance of $12.6 million (December 31, 2021: $8.5 million).
Net asset value almost halved to $83.2 million as of June 30 from $163.8 million as of December 31, reflecting a portfolio revaluation.
According to the report, the number of visitors to the mall after the Russian invasion of Ukraine initially fell sharply. However, as the threat to Kyiv has receded, traffic has begun to recover, reflecting the return of people who migrated to safer parts of the country at the start of the war to their homes.
“We continue to see a positive trend of increasing monthly visitor numbers, which in turn has contributed to a partial resumption of sales and cash flow. The war has a significant impact on consumer behavior, resulting in a combination of reduced purchasing power and reduced consumer confidence, and this, in turn, turn, contributes to a reduction in sales. Compared to the same period last year, there was a decrease in revenue by 22%, but a positive trend has been observed since the end of the first half of the year,” Chubotin is quoted in the report.
Despite the events of the first half of the year, Arricano opened 19 new stores and establishments across the portfolio of shopping centers, including a mix of local and international brands: Ukrzoloto, Anabel Arto, Brand Shop, BraBraBra, Zolota Krajina, Provocator, Diverse, Yabloki, ODH , Sushi take out, Doner Market and Greek House. The total area of the opened stores is 988 sq. m. m.
As noted in the message, Arricano’s business is stable and trading activity has improved since the second half of the year.
“Given the ongoing Russian invasion of Ukraine, it is difficult to predict the future; however, the company is well positioned to recover to previous levels after the end of the war. Until that time, Arricano will continue to support all of its tenants, teams and the mall community,” Chubotina assured.
Arricano Real Estate Plc specializes in the construction of shopping and entertainment centers and is one of the leading developers in the Ukrainian real estate market. Owns and manages five shopping centers in the country with a total area of 147.6 thousand square meters. m: “RayON” and “Prospect” in Kyiv, “Solar Gallery” in Krivoy Rog, City Mall in Zaporozhye. The company also owns 49.9% in the Sky Mall (Kyiv) and land plots for the further construction of three facilities that are at the design stage. The company is also building the Kyiv SEC Lukianivka.
As of September-2022, the shareholders of Arricano Real Estate Plc are Retail Real Estate O.U. together with Dragon Capital Investments Limited, Deltamax Group O.U., Yuri Pold and Rauno Teder. The total stake in Teder is 70.86%.
