Market announcement

Title

Arco Vara unaudited consolidated interim report for Q1 of 2024

Message

GROUP CEO'S REVIEW

The beginning of the year was dominated by the European Central Bank's benchmark
rate cut, aimed at bringing about economic revival. However, instead of relying
on factors that are outside of our control, we should continue to realize
completed and planned developments, assessing them realistically.

In the first quarter, we were mainly engaged in the preparation of the sale of
completed apartments of the Kodulahe development and the sale of Soodi 6
development. In addition, we have continued the construction works in Bulgaria
and the detailed planning procedure at Arcojärve. In the last three months, the
pace of sales has slowed down a little, which is why the sales revenue and
profit of Arco Vara Group are slightly lower than the plan.

Despite the lower-than-planned sales revenue, the Company's capitalisation
remains very good, as the equity to assets ratio is almost 60%. The Company's
current 4-quarter return on equity is also close to our target of 20%.

Arco Tarc's team continues construction works on the padel centre that is being
built at Helme 18, which is likely to benefit also from the predicted slight
decrease in the final construction price. The padel center is 100% covered by a
lease agreement and will be open for sports in the final quarter of the year.

Our Bulgarian team is also on track to continue with the construction and
development of the Botanica Lozen Residences. Approximately 40% of the
development which is expected to be completed in 9 months have been sold. In the
second quarter, we expect to be granted a building permit for the Stage 2 of the
Botanica Lozen development, which will enable us to start sale and construction
of the buildings, provided that the market situation is favourable.

Looking at the next quarter, our main challenge is the sale of already completed
homes in the Kodulahe and Kuldlehe buildings, which would provide confidence for
starting new construction activities. We also consider it critically important
to acquire a new property for development, which is extremely important in the
Company's view of the next five years in terms of the long-term nature of the
real estate business.

 KEY PERFORMANCE INDICATORS

In  Q1 2024, the  group's sales  revenue was  990 thousand euros, which is about
four times more than the sales revenue of the Q1 2023 of 253 thousand euros. The
sales  revenue of  Q1 2023 consisted  mainly of  the operation of the commercial
building in Madrid. In 2024, the Madrid commercial building is no longer part of
the group - in the Q1 2024 own real estate property was sold.

In  Q1 2024, the group's  operating loss (=EBIT)  was 208 thousand euros and net
loss  349 thousand euros. In  Q1 2024, the group  had an operating  loss of 184
thousand euros and net loss of 291 thousand euros.

In  Q1 2024, 3 apartments and 1 commercial premise  were sold. In Q1 2023, final
sales  were formalized for only 1 parking space in the projects developed by the
group.

In  the first 3 months of 2024, the group's debt burden (net loans) increased by
1,951 thousand  euros up  to the  level of  10,559 thousand euros as of 31 March
2024. As  of  31 March  2024, the  weighted  average  annual  interest  rate  of
interest-bearing  liabilities  was  7.8%. This  is  a decrease of 0.4 percentage
points compared to 31 December 2023.

OPERATING REPORT

The group's sales revenue was 990 thousand euros in Q1 2024 (Q1 2023: 253
thousand euros), including the sale of real estate in the group's own
development projects 927 thousand euros (7 thousand euros in Q1 2023).
Other sales revenue in 2024 mainly includes revenue from franchise fees of real
estate agencies in Estonia, Latvia and Bulgaria. Franchise fees for the Q1 2024
were 55 thousand euros, franchise revenues for the Q1 2023 were 53 thousand
euros.

In the most premium phase of Kodulahe, Rannakalda, a pavilion, 4 service areas
and 108 apartments (as three separate apartment buildings), many of which have a
sea view, have been completed. As of the publication date of the quarterly
report, 71 of the 113 plots have been sold.

A subsidiary of Arco Vara, Arcojärve OÜ (previously called Kolde OÜ), 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. As of
31.03.2024, the total advance payment for the land is 4,978 thousand euros. The
subsidiary of Arco Vara is obliged to pay an additional 1,627 thousand euros for
the purchase of the land within three months from the establishment of the
detailed plan for the property by the Tallinn City Government, but no later than
30.04.2026. The start of the construction of the first stage is planned for the
end of 2024.

In the Kuldlehe project, a spacious and exclusive cluster house with 5 homes was
built in Pirita. 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 first 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                     Q1 2024   Q1 2023
--------------------------------------------------------------


  Revenue from sale of own real estate          927         7

  Revenue from rendering of services             63       246

  Total revenue                                 990       253



  Cost of sales                                -817       -86

  Gross profit                                  173       167



  Other income                                    0        22

  Marketing and distribution expenses           -70       -57

  Administrative expenses                      -297      -315

  Other expenses                                -14        -1

  Operating loss                               -208      -184



  Financial costs                              -141      -107

  Loss before tax                              -349      -291

  Net loss for the period                      -349      -291


  Total comprehensive loss for the period      -349      -291
--------------------------------------------------------------

--------------------------------------------------------------
  Earnings per share (in euros)

  - basic                                     -0.03     -0.03

  - diluted                                   -0.03     -0.03
--------------------------------------------------------------



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-------------------------------------------------------------------------------
  In thousands of euros                          31 March 2024 31 December 2023
-------------------------------------------------------------------------------


 Cash and cash equivalents                                 734            1,472

 Receivables and prepayments                             5,486            5,798

 Inventories                                            28,276           27,637

 Total current assets                                   34,496           34,907



 Receivables and prepayments                                18               18

 Investment property                                       341               20

 Property, plant and equipment                             203              221

 Intangible assets                                          21               24

 Total non-current assets                                  583              283

 TOTAL ASSETS                                           35,079           35,190



 Loans and borrowings                                    3,391            3,391

 Payables and deferred income                            2,931            4,013

 Warranty provision                                        187               80

 Total current liabilities                               6,509            7,484



 Loans and borrowings                                    7,902            6,689

 Total non-current liabilities                           7,902            6,689

 TOTAL LIABILITIES                                      14,411           14,173



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             56               56

 Retained earnings                                       7,494            7,843

 Total equity attributable to owners of the
 parent                                                 20,668           21,017

 TOTAL EQUITY                                           20,668           21,017

 TOTAL LIABILITIES AND EQUITY                           35,079           35,190
-------------------------------------------------------------------------------


Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630
www.arcovara.com