Market announcement

Title

Unaudited consolidated interim report for Q3 and 9 months of 2021

Message

GROUP CEO'S REVIEW

The third quarter of 2021 brought exciting times in the history of Arco Vara:
not a single apartment that wouldn't be pre-sold was left, the share price
showed record highs and the new share issue was very successful.

At the moment, Arco Vara is constructing Kodulahe Phase IV and Phase V houses in
Merimetsa.  Of the  72 apartments under  construction, pre-sales  of the last 5
vacant  apartments were just completed in the  third quarter. The group has thus
guaranteed  itself sales  revenue of  EUR 12 million  from the  Kodulahe project
until 2022. Construction is on schedule and within budget.

We  are currently tendering for the construction of the next phase of Kodulahe -
Rannakalda  -  and  we  plan  to  start  sales  in  a  few weeks. The Rannakalda
development consists of 3- and 4-storey apartment buildings with a total of 108
homes  and 5 commercial spaces.  What makes Rannakalda  special is its location,
which  is as close to the sea as possible, with only the pedestrian walkway from
Stroomi  Beach to Rocca al Mare between the apartment buildings and the sea. For
the first time, we are also working in this project with Enefit Volt, who within
a  pilot  project  is  making  it  possible  to install an electric car charging
station in every parking space - a convenience that has not been possible before
for technical reasons.

By  the time the report is  published, we are also able  to share good news from
Bulgaria.  The design of  Botanica Lozen is  in full swing  and we hope to start
construction  in spring 2022. The plan is to build a total of 54 detached houses
in  three phases, ranging  in size from  270 to 350 m(2). There  is a demand for
spacious  homes in Bulgaria and the location of Lozen, with its pristine natural
surroundings, is perfect for this.

I  am pleased that  over the past  year Arco Vara  has seen a strong increase in
interest from both clients and investors.

Arco  Vara decided on 12 August to issue an additional 1,000,000 new shares at a
price  of EUR 2.25 per share.  The issue was a  success given that the volume of
shares  offered was  oversubscribed 4.84 times!  At the  same time,  a number of
other share and bond issues were underway and the choice for investors to invest
their  money is growing. This confirms our earlier belief that people's appetite
to invest is growing and that real ostate development continues to be attractive
-  6,116 new subscribers participated  in the Arco  Vara share subscription! The
target  of 1,000 new investors was therefore significantly exceeded - the number
of Arco Vara shareholders has increased by nearly seven times in the last year.

For now, we can enjoy the success, but we have not forgotten to secure the back.
Arco  Vara's  equity  position  is  strong  and  we  can look to the future with
confidence to deliver volume and profitability growth to investors.

KEY PERFORMANCE INDICATORS

In  Q3 2021, the group's  revenue was 613 thousand  euros, which is 8% more than
the  revenue of  569 thousand euros  in Q2  2021. In 9 months  2021, the group's
revenue  was 11,283 thousand  euros, which  is 2 times  more than the revenue of
3,758 thousand euros in 9 months 2020.

In  Q3 2021, the group's operating profit (=EBIT) was 336 thousand euros and net
profit  202 thousand  euros  (in  9 months 2021: operating profit 2,724 thousand
euros  and  net  profit  of  2,425 thousand  euros).  In  Q3 2020, the group had
operating  loss of 126 thousand euros and net  loss of 228 thousand euros. In 9
months  2020, the group made operating profit  of 49 thousand euros and net loss
of 277 thousand euros.

In  Q3 2021, final sales were  made only in garages,  but in 9 months a total of
63 apartments  and a commercial  space were also  sold. In Q3 2020, 2 apartments
were sold (17 apartments and a land plot in Latvia in 9 months).

In  the 9 months of 2021, the group's debt  burden (net loans) increased by 973
thousand  euros down  to the  level of  9,472 thousand euros  as of 30 September
2021. As  of  30 September  2021, the  weighted  average annual interest rate of
interest-bearing  liabilities was  5.2%. This is  an increase  of 0.4 percentage
points compared to 31 December 2020.

OPERATING REPORT

The  revenue  of  the  group  totalled  613 thousand  euros  in  Q3  2021 (in Q3
2020: 569 thousand  euros,) and  11,283 thousand euros  in 9 months  2021 (in 9
months   2020: 3,758 thousand   euros),  including  revenue  from  the  sale  of
properties in the group's own development projects in the amount of 305 thousand
euros in Q3 and 10,441 thousand euros in 9 months 2021 (2020: 337 thousand euros
in Q3 and 3,114 thousand euros in 9 months).
Most  of  the  other  revenue  of  the  group  consisted  of  rental income from
commercial  and office premises  in Madrid Blvd  building in Sofia, amounting to
214 thousand  euros in  Q3 2021 and  608 thousand euros  in 9 months (2020: 178
thousand  euros  in  Q3  and  488 thousand  euros  in  9 months). By the time of
publishing  the present report, one office  space was vacant, but all commercial
spaces,  together with  parking places,  were rented  out. The free office space
makes 11% of the rented office and retail area.

One commercial space remains unsold in Stage II of Kodulahe project in Merimetsa
district in Tallinn. The house received a usage permit in 2020.

In   Q4  2020, construction  finished  in  Stage  III  of  Kodulahe  project,  a
residential  building with  50 apartments at  Soodi 4. All  apartments have been
sold and the house has the usage permit.

At  the  end  of  2020, the  joint  construction  of Stages IV and V of Kodulahe
started.  Two 36-apartment residential buildings at  Pagi 3 and Pagi 5 are under
construction.  The apartment buildings  will become ready  for final sale in the
summer of 2022. All 72 apartments have been presold.

Stages  VI of Kodulahe project is  waiting for construction permit, design works
are  in process. The construction of the Stage  VI is scheduled to start in year
2021. The  plan is to  build a pavilion,  4 commercial areas and 108 apartments,
out  of which many have  sea view. The apartment  buildings will become ready in
about 2 years after the construction begins.

A  subsidiary  of  Arco  Vara,  Aktsiaselts  Kolde, 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  expected  development  period  is  6 years  with the start of
construction  planned  for  2023. The  detailed  plan  sketch competition of the
project has ended, the detailed planning is in process.
In Q2 2021, sales on the apartments of Oa street in Tartu ended, where 4 smaller
apartment buildings with a total of 30 apartments were built under the Kodukalda
project name. In Q2 2021, Kodukalda houses also received a usage permit.

In  Iztok Parkside project in  Sofia, the majority of  final sales of apartments
started in December 2020, after receiving a usage permit. By the publishing date
of  the interim report,  all apartments have  been sold. As  the apartments were
handed  over a year later than promised due to bureaucratic obstacles, 2 clients
want  compensation in the total amount  of 40 thousand euros. As these apartment
owners  want  compensation  for  pain  and  suffering,  but  not  to give up the
apartments,  the obligation to pay compensation  is not realistic and no reserve
has been formed for this purpose.

The  last vision of the Botanica Lozen project foresees construction of 54 homes
(houses). The expected start time of construction is the spring of 2022. Minimum
construction period is 2 years.

As  of 30 September  2021, and the  date of  this report,  4 Marsili residential
plots remained unsold in Latvia.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

-------------------------------------------------------------------------------
 In thousands of euros                          9m 2021 9m 2020 Q3 2021 Q3 2020
-------------------------------------------------------------------------------


 Revenue from sale of own real estate            10,441   3,114     305     337

 Revenue from rendering of services                 842     644     308     232

 Total revenue                                   11,283   3,758     613     569



 Cost of sales                                   -8,455  -2,981    -277    -440

 Gross profit                                     2,828     777     336     129



 Other income                                       272       0     250       0

 Marketing and distribution expenses               -109     -66     -44      -9

 Administrative expenses                           -631    -654    -230    -239

 Other expenses                                     -58      -8     -18      -7

 Gain on revaluation of investment property         422       0       0       0

 Operating profit/ loss                           2,724      49     294    -126



 Financial income and costs                        -299    -326     -92    -102

 Profit/ loss before tax                          2,425    -277     202    -228

 Net profit/ loss for the period                  2,425    -277     202    -228



 Total comprehensive income/ expense for the
 period                                           2,425    -277     202    -228
-------------------------------------------------------------------------------

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

 - basic                                           0.26   -0.03    0.02   -0.03

 - diluted                                         0.24   -0.03    0.02   -0.02
-------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-------------------------------------------------------------------------------
 In thousands of euros                       30 September 2021 31 December 2020
-------------------------------------------------------------------------------


 Cash and cash equivalents                               1,358            2,200

 Receivables and prepayments                               691            1,344

 Inventories                                            17,417           14,960

 Total current assets                                   19,466           18,504



 Receivables and prepayments                                 5                5

 Investment property                                     9,910            9,564

 Property, plant and equipment                             160               22

 Intangible assets                                          99              136

 Total non-current assets                               10,174            9,727

 TOTAL ASSETS                                           29,640           28,231



 Loans and borrowings                                      727            3,482

 Payables and deferred income                            2,745            3,308

 Total current liabilities                               3,472            6,790



 Loans and borrowings                                   10,103            7,217

 Total non-current liabilities                          10,103            7,217

 TOTAL LIABILITIES                                      13,575           14,007



 Share capital                                           6,572            6,299

 Unregistered share capital                                  0              273

 Share premium                                           2,285            2,285

 Statutory capital reserve                               2,011            2,011

 Retained earnings                                       5,197            3,356

 Total equity attributable to owners of the
 parent                                                 16,065           14,224

 TOTAL EQUITY                                           16,065           14,224

 TOTAL LIABILITIES AND EQUITY                           29,640           28,231
-------------------------------------------------------------------------------


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