For Investors

In the reporting period from 1 January 2025 to 31 March 2025, the Group’s net turnover was EUR 2,142,293. Compared to the corresponding period in 2024, when turnover was EUR 2,558,808, this represents a decrease of approximately 16%. The primary driver of the decline was the discontinuation of rental activities in Estonia. Meanwhile, turnover in Latvia increased by 5% in 2025 compared to the same period in 2024, and in Lithuania, rental turnover grew by 6%. However, the growth in these markets was not sufficient to fully offset the decrease experienced in Estonia. Despite the decline in turnover, operating costs were reduced by 12% compared to Q1 2024, largely due to the cessation of rental operations in Estonia. As a result, the Group achieved an improved EBITDA of EUR 14,624, which represents a 22% increase year-on-year.

The Group reported a first-quarter loss of EUR 399,887, primarily attributed to the seasonal slowdown in rental activity typical for this period. Such downturns are common in the construction equipment rental industry, due to reduced construction activity and project delays during the first quarter. Despite these challenges, the Group anticipates that the losses will be offset by increased profitability in the subsequent quarters, aligning with industry trends where demand for rental equipment typically rises during the warmer months. In addition, a rental agreement concluded in March outside the Baltic region is expected to have a positive impact on the Group’s results throughout the remainder of 2025.

In anticipation of the peak rental season, the Group has strategically invested an additional EUR 1.1 million into fixed assets, enhancing its equipment fleet to meet the expected surge in demand. This proactive approach is designed to improve the fixed asset turnover ratio, a key metric indicating efficient utilization of assets to generate revenue. Taking into account these new fixed asset acquisitions, the Group anticipates an increase in rental income by the end of 2025, which is expected to provide significant EBITDA improvement for the full year. Concurrently, the Group is actively expanding its customer base through targeted marketing initiatives and strategic partnerships, aligning with industry practices that emphasize customer acquisition and retention to drive growth. These efforts are expected to contribute positively to the Group’s financial performance in the upcoming quarters.

Gints Vanags
SIA Arsenal Industrial, CE
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

Attachments: Arsenal results 2025Q1.pdf

AS “Reģionālā investīciju banka” (“RIB” or “the Bank”) today announces that it has approved a leasing facility of EUR 1 000 000 to SIA “Arsenal Industrial” for the acquisition of new construction equipment. The financing will enable Arsenal Industrial to expand its fleet of excavators and loaders, broadening its range of rental offerings and enhancing service capacity across the Baltic region.

Key transaction details:

• Lessor: AS Reģionālā investīciju banka
• Lessee: SIA Arsenal Industrial
• Facility size: EUR 1 000 000
• Purpose: Purchase of new construction machinery (excavators and loaders)

• Interest rate: 3.5% + 3-month EURIBOR (initial period: 2.143%)

From the Lessee:

Gints Vanags, CEO of SIA Arsenal Industrial, notes that over the past years the company has experienced strong growth in demand for machinery rental, driven by fluctuating project pipelines, non-standard assignments and rising purchase prices for new equipment. By leveraging RIB’s leasing solutions, Arsenal Industrial will acquire the latest-generation excavators and loaders, enabling customers to optimise processes and improve onsite efficiency.

RIB’s approach:

Aleksandrs Jakovļevs, Chairman of the Board at RIB, commented that the bank focuses on tailoring financing solutions to sector-specific needs and individual project requirements. “This deal underlines our commitment to supporting Latvian entrepreneurs: in Q1 2025 our leasing volumes to Latvian businesses increased by 25.3% year-on-year, as we continue to help clients grow their operations and realise their investment plans.”

Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

Overview of the Group’s operations

The Group, whose parent company is SIA “Arsenal Industrial” (hereinafter – the “Company”, together with its subsidiaries – the “Group”), is primarily engaged in the rental and sale of construction equipment and tools.

The Group’s objective is to provide high-quality products and services. To be an efficient group of companies that listens to client needs and offers appropriate solutions. To improve its operations to meet current and future demands. To be reliable business partners by ensuring quality customer service, building relationships with local entrepreneurs, and continuing to invest in the Group’s infrastructure. The Group’s strategic goal is to become the market leader in construction equipment rental and sales in major cities of Latvia and the Baltics. No active operations are currently being pursued in Poland.

Operations in the reporting year

The Group’s total net turnover for 2024 amounted to EUR 10 798 807. Compared to 2023, this represents a decrease of 3.2%. The decline was mainly driven by changes in the strategy of Arsenal Industrial OU – in 2024, a decision was made to focus on the sales segment and reduce the volume of rentals. Additionally, extra resources were allocated to transfer rental equipment from Arsenal Industrial OU to Arsenal Industrial SIA and Arsenal Industrial UAB, which caused a temporary reduction in turnover during the transition. Nevertheless, rental turnover in Latvia and Lithuania combined grew by 9.2% in 2024 compared to 2023. Meanwhile, sales turnover within the Group increased by 9.5% in 2024 compared to 2023, confirming a successful strategic focus on this segment.

The Group ended the reporting year with a loss of EUR 399,887. Compared to 2023, this is a decrease of EUR 1,074,155. This result is mainly due to a refinancing transaction carried out in the previous year, which reduced liabilities related to loans and accrued interest, thereby increasing the profit in 2023. Additional negative impact also resulted from the aforementioned changes in Arsenal Industrial OU’s operational strategy.

As of 31 December 2024, the Group had a positive equity of EUR 985 thousand. At the end of the reporting period, the Group’s current liabilities exceeded current assets by EUR 315 thousand.

In October 2024, a bondholders’ meeting was convened during which amendments to the general terms of the bonds (covenants) were presented and approved. Bondholders representing 76% of the total bond volume participated in the vote, and all voted in favor of the amendments.

Prospects and further development

The Group’s main objective is to provide quality service and supply customers with the necessary equipment and tools. The Group plans its development in accordance with market trends and is constantly seeking innovative solutions to improve and grow its operations.

Group management has prepared the budget and cash flow forecast for 2025, anticipating a positive operating cash flow. Based on these forecasts, the Group will have sufficient funds to ensure its continued operations and growth in 2025. The Group plans to invest EUR 2 million in new rental equipment and inventory, strengthening its market position and expanding service capacity. It is projected that the Group’s EBITDA in 2025 will reach EUR 1.8 million.

Group management believes it will be able to secure sufficient cash resources to continue its operations, considering the following factors:

• Current business trends indicate that the liquidity of the Group’s consolidated entities will have improved compared to the previous year;
• The Group will evaluate the future operations or liquidation of the subsidiary Arsenal Industrial SP.z.o.o., whose results in 2023 were insignificant. As all significant claims against the subsidiary have been provisioned, no additional losses are expected in the event of liquidation;
• The Group will also evaluate the future operational prospects of its Estonian subsidiary, Arsenal Industrial OU. In 2024, to improve the Group’s operational efficiency, the operations of the Estonian subsidiary were reduced, and all long-term assets were either sold or transferred to the parent company’s ownership.
•  The Group complies with the financial covenants set out in the bond issuance terms. As of 31 December 2024 and after the reporting period, all contractual financial covenants have been met;
•  Successful and supportive cooperation with long-term suppliers.

Considering the above, Group management believes that the 2024 financial statements have been justifiably prepared on a going concern basis. See also the “Going Concern” section in Appendix 2 of the financial statements. The Group will continue to invest in new equipment and tools, expanding its client base and market share while continuously monitoring the situation in Latvia and globally, as well as the demand for the Group’s services. With inflation gradually decreasing and the launch of new EU funding programs, the construction sector is expected to return to positive growth trends, increasing demand for the Group’s services.

Exposure to risks

The Group’s most significant financial instrument is the issue of registered bonds and a loan from a shareholder. The primary purpose of this financial instrument is to provide funding for the Group’s business activities, specifically the acquisition of rental construction equipment, to offer clients modern and high-quality equipment, tools, rental, and sales services. The Group is also exposed to several other financial instruments such as trade receivables, other debtors, liabilities to suppliers and contractors, and other creditors, which arise directly from its business activities. The Group regularly monitors financial risks to minimize their adverse impact on the Group’s financial position.

Market risk

Market risk arises when assets include instruments affected by market price fluctuations (fixed assets: construction rental equipment). To reduce market risk, the Group continuously studies the market, monitors market trends and competitor activities (price fluctuations, changes in demand and supply), and reviews sales prices.

Credit risk

The Group is exposed to credit risk in relation to trade receivables and cash and cash equivalents. The Group manages its credit risk by continuously assessing customer repayment history and setting payment terms individually. Additionally, the Group continuously monitors debtor balances to reduce the likelihood of bad debts..

Liquidity and cash flow risks

The Group is exposed to liquidity and cash flow risks. The Group ensures careful and deliberate planning of its cash flows to meet current obligations and monitors financial covenant requirements, forecasting compliance in a timely manner and/or taking corrective actions when necessary.

Interest rate risk

The Group is exposed to interest rate risk. To minimize this risk, the Group’s management issued bonds with a fixed interest rate. Based on the current agreement with the investment fund, management considers the risk of interest rate changes to be insignificant. However, since the existing financing is raised from non-bank financiers, interest rate stability is ensured through a high fixed interest rate.

Foreign currency risk

Based on the current structure of financial assets and liabilities held in foreign currencies, currency risk is not considered significant.

Events after the end of the reporting year

After the end of the reporting period, the company has acquired additional fixed assets amounting to EUR 1 million, which will contribute to additional turnover and improve the company’s financial indicators. In addition, refinancing of fixed assets has been carried out in the total amount of EUR 732 thousand. Further investments in fixed assets of approximately EUR 1 million are planned for 2025. A cooperation agreement has been signed with a new client in Germany, who will be using the company’s equipment throughout 2025, generating additional turnover of approximately EUR 200 thousand.

Except for the above, there have been no additional events that would have affected the financial position of the Concern on December 31, 2024 and would have been reflected in the financial report.

Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

In the reporting period from 1 January 2024 to 31 December 2024, the Group’s net turnover was EUR 10,775,685. Compared to the corresponding period in 2023, when turnover was EUR 11,151,828, there was a decrease of approximately 3%. The most significant factor contributing to the decline was a decrease in the Group’s turnover from rental services. In 2023, rental turnover was EUR 5,544,100, whereas in 2024, it decreased to EUR 4,902,932, marking a substantial decline. The decline in rental revenue was primarily driven by a downturn in Estonia, where rental activities were closed (€1,042,088 decrease compared to 2023). Meanwhile, rental turnover in Latvia increased by 14% in 2024 compared to 2023, and in Lithuania, both rental and sales turnover grew by 26% over the same period. However, the growth in these markets was not sufficient to offset the decline experienced in Estonia.

As anticipated in previous reports, the Group closed the year with losses amounting to EUR 427,477. The primary reason for this continued loss was the closure of the Estonian rental services, which led to restructuring costs, equipment transfers to Latvia and Lithuania, and related preparation, repairs, and re-registration expenses. This decision was driven by the weak market conditions in Estonia and the recognition of stronger growth and development opportunities in Latvia and Lithuania. Additionally, another contributing factor to the losses in 2024 was the long-term write-off of accounts receivable in Estonia. Due to these factors, the Group’s own equipment, which previously operated in Estonia, remained unavailable during the third and fourth quarters, necessitating a greater reliance on re-rented equipment. This resulted in lower EBITDA, as re-rent costs do not generate as high a return as the Group’s owned equipment.

Furthermore, the construction market’s low activity, rising sales force costs, and higher interest payments further contributed to financial strain. Although the Group expected a gradual improvement in financial results by focusing solely on the Latvian and Lithuanian markets, the full benefits of this transition are projected to materialize in 2025. Additionally, agreements were reached with key suppliers in the fourth quarter of 2024 regarding price reductions, which will allow the Group to sell with better margins, achieving improved returns from rental investments.

In October 2024, Arsenal initiated a bondholder vote to amend financial covenants, specifically the Interest Coverage Ratio and Net Debt Leverage Ratio. The voting concluded on 23 October 2024, with 76% of bondholders voting in favor of the amendments to the Terms of Issue. This adjustment is expected to provide greater financial flexibility as the Group moves forward.

Looking ahead to 2025, the Group anticipates an improvement in financial results as operations develop in Latvia and Lithuania, eliminating the previous costs associated with the Estonian rental services closure. Additionally, Estonia will continue sales operations in 2025 and work with other partners to maintain its presence in the market. In the first quarter of 2025, the Group will commence projects abroad, expected to generate additional revenue throughout the year and contribute to increased EBITDA. Furthermore, the Group plans to invest up to EUR 2 million in fixed assets in 2025, allowing for a greater substitution of re-rented equipment with owned assets, which will enhance profitability. These investments are projected to drive a 20% increase in rental turnover. Another key indicator of growth is the increasing number of new customers in Latvia and Estonia, which rose in 2024 compared to 2023 and is expected to continue growing in 2025. With these strategic adjustments, the Group forecasts an EBITDA increase to approximately EUR 2 million in 2025. This will lead to an improvement in financial ratios, reducing the Net Debt / EBITDA ratio to around 4.0.

Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

In the reporting period from 1 January 2024 to 30 September 2024, the Group’s net turnover was EUR 8 346 050. Compared to the corresponding period in 2023, it has increased by 5%. The largest impact was from an increase in the sales of goods by 36%. The Group’s rental income has decreased by 11%, compared to the last year, because while the rental equipment was transferred from Estonia to Latvia and Lithuania, due to the suspension of economic activities in Estonia, and its maintenance work, the equipment could not generate income. However, it is expected to generate more income next year and more than it did in Estonia. Rental income in Latvia increased by 17% which was facilitated by high demand for the Group’s products and good cooperation conditions with suppliers.

Similarly to previous years, the first three quarters of 2024 were completed with losses EUR 398 758. This year the losses are related to the reduction of the Group’s operations in Estonia, the transfer of equipment to Latvia and Lithuania, the preparation of equipment for work, repairs and re-registration. Due to these reasons, in the second and third quarters, the Group’s own equipment, that previously worked in Estonia, was not available for work and it was necessary to use much more re-rent equipment, which does not give as high a return on EBITDA as own equipment.

As with most construction services companies, the first half of the years earnings were negatively impacted by low activity in the construction market, rising sales force costs and higher interest payments. This reporting period ended with a net loss and a notably lower EBITDA than in the respective period last year. Starting from the fourth quarter, when the Group focuses on working only in the Latvian and Lithuanian markets, it will no longer generate costs in Estonia, and an improvement in the Group’s financial results is expected in 2025.

Arsenal initiated a bondholder voting on a proposal to amend the financial covenants – Interest Coverage Ratio and Net Debt Leverage Ratio – in October 2024. The bondholder’s voting closed on 23 October 2024 and 76% of bondholders voted “in favour” of the amendments to the Terms of Issue.

Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

SIA Arsenal Industrial, registration number: 40103815302 (hereinafter – Issuer), in accordance with Section 5.3. of the Terms of the Notes Issue (ISIN: LV0000860153) dated 28 November 2023 (hereinafter – Terms of the Issue) asked the Noteholders to grant their consent for amendments to the Terms of the Issue (hereinafter – the Application). The Application was published on 9 October 2024.

Unless it is defined otherwise in this announcement, the capitalized terms and expressions used in this application shall have the same meaning as assigned to them in the Terms of the Issue and amendments to the Terms of the Issue.

The Issuer hereby informs that the voting of the Noteholders has ended on 23 October 2024.

In order for the amendments to the Terms of the Issue become effective, the Issuer in accordance with Section 5.3. of the Terms of the Issue is obligated to receive a consent (waiver) from the Noteholders who altogether own at least 50% (fifty per cent) of the outstanding Notes issued (excluding Notes owned by the Issuer, direct and/or indirect shareholders and Related Parties from the total outstanding amount of Notes). The principal amount of the outstanding Notes with ISIN LV0000860153 is EUR 4 500 000.

The Issuer has counted the votes cast and determined that the voting resulted with 76% (i.e., the Noteholders holding the Notes with the principal amount EUR 3 429 000) of Noteholders voting “for” the amendments to the Terms of the Issue.

Consequently, it shall be decided that the Noteholders have accepted the amendments to the Terms of the Issue provided for in the Application, and the amendments to the Terms of the Issue have entered into force on the date of publication of this announcement.

The approved amendments to the Terms of the Issue are attached herewith.

The Issuer will transfer an amendment fee in the amount of 1 % (one per-cent) of the principal amount of the Notes held by each Noteholder who voted “for” the amendments. The payment will be made within 30 calendar days following this announcement of the amendments’ entry into force (until 22 November 2024).

The Issuer expresses its gratitude to all Noteholders who have cast their votes during the voting period.

Gints Vanags
SIA Arsenal Industrial, CEO

On October 15, 2024, Arsenal Industrial organized its investor webinar, during which Gints Vanags, Member of the Management Board, and Ģirts Milgrāvis, Chairman of the Supervisory Board of Arsenal Industrial presented the  initiated Noteholders voting and future business plans of the Issuer. 

The recording of the webinar is available here: https://www.youtube.com/watch?v=sniRlU4-r_w&list=PLeOLX3TaNx_9beN29GiSABM4b-SRJEhJ2 

To read more about the voting, please visit: https://view.news.eu.nasdaq.com/view?id=b9dcf74bb2952112ad7d7ebc2239c0946&lang=en&src=listed 

Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv

On 9 October 2024, the shareholder’s meeting of SIA Arsenal Industrial approved amendments to the Terms of the Notes Issue dated 28 November 2023 for the notes with the ISIN: LV0000860153, instigates a written procedure to obtain the Noteholders’ consent on amendments to the Terms of the Notes Issue.

Gints Vanags, a Member of the Management Board, and Ģirts Milgrāvis, Chairman of the Supervisory Board, invite all Noteholders to join the webinar on the initiated Noteholder’s voting and the future business plans of the Issuer. Webinar will take place on October 15 at 11 AM Baltic time. 

More information is at the provided link: https://view.news.eu.nasdaq.com/view?id=b9dcf74bb2952112ad7d7ebc2239c0946&lang=en&src=listed

Linda Veidemane
Mobile phone.: +371 20018346
Email: linda.veidemane@arsenalrent.com

SIA Arsenal Industrial informs that as of June 7, 2024, the following changes in the composition of the Council become effective:

• Kaspars Zuicens resigned as a Deputy chairperson of the Council;
• Eva Miķelsone was appointed as a Deputy chairperson of the Council.

For more information:
Gints Vanags
Mobile phone.: 26303848
Email: gints.vanags@arsenalrent.com

The decision of the Nasdaq Riga Management Board to list the bonds of construction equipment and tool rental company LLC Arsenal Industrial on the Nasdaq Riga alternative market First North has been announced today.

A total of 4,500 Arsenal Industrial bonds, carrying a face value of EUR 1,000 apiece and a coupon of 12% per year, have been added to the First North Bond List. The maturity date of the bonds is May 31, 2026.

A successful listing of the Arsenal Industrial bonds on the stock exchange not only lays a solid foundation for the company’s long-term development, but also marks the beginning of a new phase of strong growth for the company. According to the Group’s CEO Gints Vanags, the listing will provide the company with more development opportunities, strengthen its competitiveness and enable it to deliver higher and sustainable returns to shareholders and investors.

“We are glad to join Nasdaq Riga. We are witnessing a significant milestone in the development of Arsenal Industrial – after 10 years of work, 4.5 million worth of Arsenal Industrial bonds have been listed on First North. Over these years, we have successfully established a good reputation in the Latvian construction industry, putting into practice our mission statement “We have tried to be the fastest service provider offering not only construction equipment rental services but also equipment for sale”, which sets us apart from all other competitors operating in just one service segment. In 2023, we provided services to 3,500 active customers, most of them B2B construction companies. These companies signed more than 20,000 lease contracts with us last year,” says Vanags.

In the fourth quarter of 2023, the company achieved the highest turnover yet. The increase was 48% compared to the fourth quarter of 2022. This achievement is attributable to the Group’s employees, who were able to serve customers and offer them services at a competitive value for money ratio. In 2023, the Group made additional investments in the Group’s sales and after-sales divisions, which led to an increase in sales already in the fourth quarter of 2023.

Arsenal Industrial is a construction equipment rental and trading company registered in 2014. The Group currently operates in all three Baltic States. The Group aims to provide high-quality products and services and to be an efficient enterprise that listens to its customers’ needs and delivers on them. To be a stable business partner, providing high quality customer service, building partnerships with businesses and continuing to invest in the Group’s infrastructure.

For more information:
Gints Vanags
Mobile phone.: 26303848
Email: gints.vanags@arsenalrent.com

In the reporting period from 1 January 2024 to 31 March 2024, the Group’s net turnover was EUR 2 564 694. Compared to the corresponding period in 2023, it has increased by 29 %. The largest impact was from increase in the sales of goods (+95%), which was facilitated by high demand for the Group’s products and good cooperation conditions with suppliers.

«Similarly to previous years, the first quarter of 2024 was completed with losses EUR 371 228. Beginning of the year (winter) is a low season in rental business and it is common to have low profit or losses in this period. These losses will be recovered during the high season (summer). Most of our excavators are out in rental and we are looking for options how to increase our rental fleet to meet customer demand. » says Gints Vanags, CEO of the Group.

In the first quarter of 2024, the Group asked an independent valuator to perform a valuation of the Groups fixed assets. The valuation report showed that the market value of fixed assets is higher by EUR 1 186 763 than the book value in accounting. Based on this report, the fixed assets book value in accounting was increased by that difference on the Assets side of the Balance sheet and reserves of revaluated assets was increased on the EQUITY side of the Balance sheet. The Equity adjustment improved the financial covenant Capitalization ratio, which was not fulfilled in the fourth quarter of 2023 and if tested again, the Capitalization ratio would be 23%, which is higher by 8% than it was required in the fourth quarter of 2023.

The main activity of the Group, the Parent Company of which is SIA Arsenal Industrial (hereinafter- the Parent Company, together with daughter companies – “the Group”), is rent and sale of construction equipment and hand tools with complementary activities of transportation and technical services.

Currently, the Group works in all three Baltic countries. The Group’s goal is to provide products and services in high quality and to be an effective company that listens to the wishes of customers and implements them. To be a stable cooperation partner providing high quality customer service, establishing partnerships with entrepreneurs and continuing to invest in the Group’s infrastructure.

Gatis Meļņiks
SIA Arsenal Industrial, CFO
Mobile: + 371 26442812
E-mail: gatis.melniks@arsenalrent.com
www.arsenalnoma.lv