Group Operations
The principal activity of the Group, whose parent company is SIA “Arsenal Industrial” (hereinafter – the “Company”, together with its subsidiaries – the “Group”), is the rental of construction machinery and tools, as well as sale.
The Group’s objective is to provide high-quality products and services and to operate as an efficient group that listens to customer needs and offers appropriate solutions. The Group aims to continuously improve its operations to meet both current and future requirements, to be a reliable cooperation partner by ensuring high-quality customer service, establishing partnerships with local businesses, and continuing to invest in the Group’s infrastructure.
The Group’s strategic goal is to achieve a leading position in the construction machinery rental and sales sector in the largest cities of Latvia and the Baltic region. Currently, no active operations are carried out in Poland.
Group Performance During the Reporting Year
The Group’s total net turnover in 2025 amounted to EUR 11 216 502, representing an increase of 3.9% compared to 2024. The growth was primarily driven by a 9.6% increase in revenue from equipment rental and sub-rental, as well as an 11.9% increase in revenue from transport and service-related activities.
The Group closed the reporting year with a loss of EUR 59 053. Compared to 2024, the loss has decreased by EUR 340 834. This result is mainly attributable to investments made in business development and improvements in operational efficiency. At the same time, despite the negative financial result, the Group has achieved stable turnover growth and improved operational efficiency, creating a foundation for restoring profitability in the future.
As of 31 December 2025, the Group’s equity remained positive at EUR 1 405 thousand, representing an increase of 42.6% compared to 2024. The increase in equity was significantly influenced by the recognition of a long-term revaluation reserve following the revaluation of fixed assets during the reporting period, capital contributions made by shareholders, and the related share premium amounting to EUR 204 thousand.
In order to reduce costs and improve operational efficiency, the Group closed its rental point on Deglava Street (Riga) and its warehouse in Jelgava in December 2025.
Future Prospects and Development
The Group’s main objective is to provide high-quality service and ensure customers have access to the equipment and tools they require. The Group plans its development in line with market trends and continuously seeks innovative solutions to improve and expand its operations.
The Group’s management has prepared the budget for 2026, forecasting a positive cash flow from core operations. Based on these projections, the Group will have sufficient financial resources to sustain its operations and support growth in 2026. The Group will refinance its existing liabilities by attracting additional funding in the capital market, thereby maintaining a stable financial structure and ensuring business continuity.
The Group’s management believes it will be able to secure sufficient funds for continued operations, taking into account the following factors:
- It is assumed that the refinancing plan for the Group’s liabilities arising from bonds and bank borrowings will be successfully implemented;
- Current business trends indicate that the liquidity of the Group companies will improve compared to the previous year;
- The Group continues to develop its business model by purposefully strengthening the rental and sales segments, resulting in an increase in the volume of rental equipment and, consequently, rental income. These changes contribute to improved operational efficiency and a more stable revenue structure for the Group;
- Strong and supportive cooperation with long-term suppliers.
Taking the above into consideration, the Group’s management believes that the 2025 financial statements have been prepared on a going concern basis. See also the information in Note 2 to the financial statements “Going Concern.”
The Group will continue to invest in new equipment and tools, expanding its customer base and market share, while continuously assessing the situation in Latvia and globally, as well as the demand for the Group’s services. As inflation gradually decreases and activities under the new EU funding planning period commence, it is expected that the construction sector will return to positive growth rates and demand for the Group’s services will increase.
Exposure to Risks
The Group’s most significant financial instruments are a registered bond issuance and a loan from a shareholder. The primary purpose of these financial instruments is to provide financing for the Group’s operating activities, particularly for the acquisition of construction equipment for rental, ensuring customers receive modern and high-quality equipment, tools, and related rental and sales services. The Group is also exposed to several other financial instruments, such as trade receivables, other debtors, payables to suppliers and contractors, and other creditors, which arise directly from its operations. The Group regularly monitors financial risks with the aim of minimizing their adverse impact on its financial position.
Market Risk
Market risk arises when assets include instruments that are subject to market price fluctuations (fixed assets: construction equipment for rental). To mitigate market risk, the Group continuously monitors market conditions, follows industry trends and competitor activities (price fluctuations, changes in supply and demand), and regularly reviews its pricing.
Credit Risk
The Group is exposed to credit risk in relation to its trade receivables and cash and cash equivalents. The Group manages its credit risk by continuously evaluating customers’ payment history and setting individual payment terms for each customer. In addition, the Group continuously monitors outstanding receivables to reduce the risk of bad debts.
Liquidity and Cash Flow Risk
The Group is exposed to liquidity and cash flow risk. It ensures careful and prudent cash flow planning to meet its current liabilities and monitors compliance with financial covenants set out in financing agreements, forecasting in a timely manner the fulfillment of these criteria and/or the need for corrective actions. See also the section “Going Concern of the Group” in the Summary of Significant Accounting Policies, as well as the information provided in Notes 21, 22, 23, and 24 to the financial statements.
Interest Rate Risk
The Group is exposed to interest rate risk. To minimize this risk, the Group’s management has issued bonds with a fixed interest rate. Based on the currently concluded agreement with an investment fund, management considers the risk of interest rate changes to be insignificant. However, as the existing financing is obtained from non-bank lenders, interest rate stability is ensured through a relatively high fixed interest rate.
Currency Risk
Based on the current structure of the Group’s financial assets and liabilities denominated in foreign currencies, currency risk is not significant.
Events After the Reporting Period
The Group has announced a tender for raising capital and organizing a new bond issuance. Applications for the tender must be submitted by the end of April 2026. The Group’s management is confident that the tender will result in selecting an appropriate organizer for a new bond issuance, who will attract a sufficient number of bondholders to refinance the previous bond issue within the specified term.
The Group’s management is also confident regarding the refinancing of its bank loan.
In April 2026, the repayment term of a loan granted by a minority shareholder was extended until January 4, 2027.
Except for the above, no events have occurred between the balance sheet date and the date of signing the annual report that would affect the Group’s financial position as of December 31, 2025, or require disclosure in the notes to the financial statements.
As the bond maturity approaches, the Company has initiated preparatory work for its refinancing in the same market, envisaging the issuance of new bond.
Gints Vanags
SIA Arsenal Industrial, CEO
Mobile: + 371 26 303 848
E-mail: gints.vanags@arsenalrent.com
www.arsenalnoma.lv