Market announcement

Title

Arco Vara unaudited consolidated interim report for Q4 and 12 months of 2023

Message

GROUP CEO'S REVIEW

In spite of the times with low sunlight, the team of Arco Vara showed excellent
results in Q4. We got to enjoy the fruits of our extensive work and our
customers got acquainted with the high level of construction quality that Arco
Tarc provides. The delivery of homes at Kodulahe Rannakalda began in the
previous quarter, ensuring a quarterly profit of 4.5 million euros and over
17.5 million euros in sales revenue. Nearly 3 million euros' worth of new sales
were secured in Q4, indicating faith in the projects of Arco Vara.

In Q4, the construction activities in Kodulahe Kvartal reached a new milestone:
the construction works ended in Rannakalda and we delivered 66 homes. The number
of inquiries for the homes at Kodulahe Kvartal remained high during the final
quarter of the year, providing a sense of certainty that the 47 units with a
combined value of nearly 14.5 million euros will be sold in 2024.

The completion of the Rannakalda project also marked the end of the first
construction site of the building team of Arco Vara: we managed to exceed the
goals without compromising on quality. The next project of Arco Tarc will be
constructing a new sports building at Kolde avenue, where preparations have
already begun as at the issuance of this report. The new sports building will be
nearly 2,000 m(2) in area and open for everyone interested in trying their hand
at padel as early as at the end of 2024.

We also have good news from the Botanica Lozen Residences project in Bulgaria
where the majority of the 16 private homes have now reached their complete
height. As the project has progressed visually, the number of customers with
serious interest has also increased, shaping into preliminary sales amounting to
1.2 million euros in Q4. As at the end of 2023, five private homes have been
sold in the scope of the project, expected to be completed in Q4 of 2024.

Construction also continues according to schedule in the Kuldlehe development
project in Pirita. The homes there are still waiting for happy residents who are
welcome to their new homes starting from the end of Q1 of 2024.

The slow market has no impact on the design process of developments. We have
great anticipations for the projects currently in the planning stages, as we
would like to start the construction works at Soodi 6 as early as in the first
half of 2024 and the first stage of Arcojärve by the end of 2024.

In 2023, Arco Vara exceeded its goals. We reached the aim of 20% ROE and a
profit margin extraordinary in the field of real estate development. The company
holds a strong capital position both in terms of financial statistics and in the
form of our staff which will continue to carry our success in the upcoming
periods.



KEY PERFORMANCE INDICATORS

In  Q4  2023, the  group's  sales  revenue  was  17,687 thousand euros, which is
several  times more than the sales revenue of the Q4 2022 of 327 thousand euros.
In  12 months 2023, the group's revenue was 18,339 thousand euros, which is 36%
more than the revenue of 13,494 thousand euros in 12 months 2022.

In  Q4 2023, the group's  operating profit (=EBIT)  was 4,594 thousand euros and
net  profit  4,478 thousand  euros  (in  12 months 2023: operating profit 3,940
thousand  euros and net  profit of 3,550 thousand  euros). In Q4 2022, the group
had  operating loss of 723 thousand euros and net loss of 811 thousand euros. In
12 months  2022, the group made operating profit of 1,062 thousand euros and net
profit of 695 thousand euros.

In  Q4 2023, 63 apartments, 3 commercial premises in Estonia and 3 land plots in
Latvia  were  sold  -  same  for  12 months of 2023. In Q4 2022, only 12 parking
spaces were sold in projects developed by the group (additionally, 72 apartments
in Estonia and 1 land plot in Latvia in 12 months 2022).

In the 12 months of 2023, the group's debt burden (net loans) decreased by
6,054 thousand euros down to the level of 8,608 thousand euros as of 31 December
2023. As of 31 December 2023, the weighted average annual interest rate of
interest-bearing liabilities was 8.2%. This is an increase of 2.4 percentage
points compared to 31 December 2022.


OPERATING REPORT

The group's sales revenue was 17,687 thousand euros in Q4 2023 (Q4 2022: 327
thousand euros) and 18,339 thousand euros in 12 months (12 months 2022: 13,494
thousand euros), including the sale of real estate in the group's own
development projects in Q4 17,567 thousand euros and 17,581 thousand euros in
12 months (2022: 89 thousand euros in Q4 and 12,426 thousand euros in 12
months).

Most of the other revenue of the group consisted of rental and property
management services income from commercial and office premises in Madrid Blvd
building in Sofia, amounting to 371 thousand euros in 6 months (2022: 406
thousand euros in 6 months). The sale process of the Madrid building was
completed in July 2023. There was no profit or loss from the sale of the
building in 2023 because the discounts were recognized in 2022. The transaction
is not reflected in the sales revenue, as it is the sale of a real estate
investment. Equity capital worth 4.1 million euros was released from the
transaction.

Arco Vara's own construction company Arco Tarc OÜ is the main contractor for the
most premium stage of Kodulahe - Rannakalda. By the end of 2023, a pavilion, 4
service areas and 108 apartments (in three separate apartment buildings), many
of which have sea views, were completed. As at the date of publishing the
interim report, 69 units out of the 113 have been sold.

A subsidiary of Arco Vara, Aktsiaselts Kolde, in 2021 signed an agreement for
land acquisition beside Lake Harku, address Paldiski road 124b, Tallinn. More
than 35,000 m(2) of residential and commercial real estate (GBA) is planned for
development. The project is called Arcojärve. In Q2 2023, the next land purchase
prepayment of 1,626 thousand euros was paid, as of 31.12.2023, the total advance
payment for the said land is 4,978 thousand euros. The start of the construction
of the first stage is planned for 2024.

In the Kuldlehe project, a spacious and exclusive cluster house with 5 homes was
built in Pirita in 2023. The sale of the project has started.

The Botanica Lozen project foresees construction of 54 homes (houses) in three
stages. Construction and sales of the first 16 buildings have begun - the
private houses of the firat phase will be completed by the end of 2024. By the
date of publication of the quarterly report, 6 out of 16 houses have been pre-
sold.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

-------------------------------------------------------------------------------
 In thousands of euros                        12m 2023 12m 2022 Q4 2023 Q4 2022
-------------------------------------------------------------------------------


 Revenue from sale of own real estate           17,581   12,426  17,567      89

 Revenue from rendering of services                758    1,068     120     238

 Total revenue                                  18,339   13,494  17,687     327



 Cost of sales                                 -12,212  -10,913 -12,003    -248

 Gross profit                                    6,127    2,581   5,684      79



 Other income                                      107       67      11    -142

 Marketing and distribution expenses              -387     -249    -119     -96

 Administrative expenses                        -1,387   -1,118    -463    -354

 Other expenses                                    -20      -14      -9      -5

 Inventory write-down                             -528        0    -528       0

 Gain/loss on investment property                   28     -205      18    -205

 Operating profit/loss                           3,940    1,062   4,594    -723



 Financial costs                                  -390     -367    -116     -88

 Profit/loss before tax                          3,550      695   4,478    -811

 Net profit/loss for the period                  3,550      695   4,478    -811



 Total comprehensive income/ loss for the
 period                                          3,550      695   4,478    -811
-------------------------------------------------------------------------------

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 Earnings per share (in euros)

 - basic                                          0,34     0,07    0,43   -0,08

 - diluted                                        0,34     0,07    0,43   -0,08
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-------------------------------------------------------------------------------
  In thousands of euros                       31 December 2023 31 December 2022
-------------------------------------------------------------------------------


 Cash and cash equivalents                               1,472            3,427

 Receivables and prepayments                             5,798            4,387

 Inventories                                            27,637           22,511

 Investment property for sale                                0            9,050

 Total current assets                                   34,907           39,375



 Receivables and prepayments                                18               18

 Investment property                                        20               82

 Property, plant and equipment                             221              284

 Intangible assets                                          24               46

 Total non-current assets                                  283              430

 TOTAL ASSETS                                           35,190           39,805



 Loans and borrowings                                    3,391            5,255

 Payables and deferred income                            4,013            3,681

 Warranty reserv                                            80                0

 Total current liabilities                               7,484            8,936



 Loans and borrowings                                    6,689           12,834

 Total non-current liabilities                           6,689           12,834

 TOTAL LIABILITIES                                      14,173           21,770



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             56                0

 Retained earnings                                       7,843            4,917

 Total equity attributable to owners of the
 parent                                                 21,017           18,035

 TOTAL EQUITY                                           21,017           18,035

 TOTAL LIABILITIES AND EQUITY                           35,190           39,805
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Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630
www.arcovara.com