Börsiteade

Pealkiri

Arco Vara unaudited consolidated interim report for Q1 of 2023

Teade

GROUP CEO'S REVIEW

The thrombosis in the real estate market eased in the first quarter of the year,
as evidenced by the increased number of inquiries and transactions compared to
the fourth quarter of 2022. The market is showing encouraging sign of
improvement, but the recovery is not yet sufficient to an active market. From
the viewpoint of Arco Vara, it is positive to see the strengthening of consumer
confidence and the banks' flexible terms and conditions for new home loans.

Contrary to the cooling real estate market, our construction team is exceeding
expectations in terms of the time schedule of the Kodulahe Rannakalda
development. Based on the efficiency of Arco Tarc, we have updated the sales and
profit forecast for 2023 and 2024, increasing the profit forecast for 2023 by
approximately EUR 2 million. According to the sales forecast, EUR 13.1 million
is already booked in home pre-sale contracts. We also updated the forecast for
the next financial year, reflecting the expected extended sales period in
Botanica Lozen Residences and Kuldlehe.

In the first quarter of 2023, we started construction works at Lehiku tee 11 on
Kuldlehe boutique residences built in cooperation with the general contractor
Combicon OÜ. Five premium-class homes should be completed within 12 months and
the public sale started on April 21. More information about the development is
available at www.kuldlehe.ee (http://www.kuldlehe.ee)

Botanica Lozen Residences is in the active phase focusing on the construction of
foundations, retaining walls and utility lines. The main challenge for the
Bulgarian team of Arco Vara and the general contractor is to stay on schedule as
construction site is complex and located on the hillside. Arco Vara has learned
from the development of Iztok Parkside, which is why a longer buffer period for
the handover of buildings has been included in the contracts. By the time of
publishing the report, in the first phase 1 out of 16 houses have been sold.

Key challenges in the sales process of Madrid BLVD have been overcome,
instilling confidence that the planned completion will take place in the second
quarter of this year. EUR 4.1 million from the transaction will be allocated for
the development of residential real estate in Estonia and Bulgaria.

As a Group, we reached a new milestone in the first quarter of 2023, where we
exceeded EUR 40 million in assets and we expect growth in the coming quarters.
With support by our team and financials, Arco Vara continues with the target to
provide 200 homes each year.

KEY PERFORMANCE INDICATORS

In  Q1 2023, the group's revenue was  253 thousand euros, which is 16% less than
the revenue of 302 thousand euros in Q1 2022.

In  Q1 2023, the group's  operating loss (=EBIT)  was 184 thousand euros and net
loss  291 thousand euros.  In Q1  2022, the group  had operating  profit of 103
thousand euros and net profit of 16 thousand euros.

In Q1 2023, one parking place was sold in projects developed by the group. In Q1
2022, one land plot was sold in Latvia.

In the 3 months of 2023, the group's debt burden (net loans) increased by 3,077
thousand  euros up to the level of 17,739 thousand euros as of 31 March 2023. As
of  31 March 2023, the weighted average annual interest rate of interest-bearing
liabilities  was 5.7%. This is an decrease  of 0.1 percentage points compared to
31 December 2022.

OPERATING REPORT

In the first quarter of 2023, no apartment buildings were completed, therefore,
the group's sales revenue was 253 thousand euros (the same in the first quarter
of 2022, sales revenue of 302 thousand euros).

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 196 thousand euros in Q1 2023 (Q1 2022: 203
thousand euros). By the time of publishing the present report, all ready for
rent offices were rented out, as were all commercial spaces, together with
parking places. 9% of the office area is in renovation.

The Madrid building is in an ongoing sales process, which is expected to be
completed in Q2 of 2023. There is 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. The deal is expected to free up 4.1 million euros worth of equity
capital.

Arco Vara's own construction company Arco Tarc OÜ is the main contractor for the
most premium stage of Kodulahe - Rannakalda. Under construction are a pavilion,
4 service areas and 108 apartments (in three separate apartment buildings), many
of which have sea views. The apartment buildings will be ready in the Q4 2023.
As at the date of publishing the interim report, 45 units out of the 113 have
been presold.

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. The expected development period is
6 years with the start of construction planned for 2024.

Construction is underway in the Kuldlehe project. The plan is to build a
spacious and exclusive cluster house with 5 homes 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
construction time of the whole project is at least 2 years. By the date of
publication of the quarterly report, 1 out of 16 houses has been pre-sold.



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

---------------------------------------------------------------------
  In thousands of euros                            Q1 2023   Q1 2022
---------------------------------------------------------------------


  Revenue from sale of own real estate                   7        31

  Revenue from rendering of services                   246       271

  Total revenue                                        253       302



  Cost of sales                                        -86      -109

  Gross profit                                         167       193



  Other income                                          22       194

  Marketing and distribution expenses                  -57       -44

  Administrative expenses                             -315      -239

  Other expenses                                        -1        -1

  Operating profit/loss                               -184       103



  Financial costs                                     -107       -87

  Profit/loss before tax                              -291        16

  Net profit/loss for the period                      -291        16


  Total comprehensive income/loss for the period      -291        16
---------------------------------------------------------------------

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

  - basic                                            -0.03      0.00

  - diluted                                          -0.03      0.00
---------------------------------------------------------------------



CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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


 Cash and cash equivalents                               2,213            3,427

 Receivables and prepayments                             4,165            4,387

 Inventories                                            26,340           22,511

 Investment property for sale                            9,050            9,050

 Total current assets                                   41,768           39,375



 Receivables and prepayments                                18               18

 Investment property                                         2               82

 Property, plant and equipment                             271              284

 Intangible assets                                          39               46

 Total non-current assets                                  330              430

 TOTAL ASSETS                                           42,098           39,805



 Loans and borrowings                                    5,252            5,255

 Payables and deferred income                            4,402            3,681

 Total current liabilities                               9,654            8,936



 Loans and borrowings                                   14,700           12,834

 Total non-current liabilities                          14,700           12,834

 TOTAL LIABILITIES                                      24,354           21,770



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Retained earnings                                       4,626            4,917

 Total equity attributable to owners of the
 parent                                                 17,744           18,035

 TOTAL EQUITY                                           17,744           18,035

 TOTAL LIABILITIES AND EQUITY                           42,098           39,805
-------------------------------------------------------------------------------





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