Börsiteade

Pealkiri

2024 Annual Report of Arco Vara

Teade

GROUP CEO'S REVIEW

The year 2024 brought numerous challenges in the sector of real estate,
requiring companies to be flexible, exercise strategic planning, and adapt to
the changing market conditions. The real estate developer Arco Vara faced a
complicated economic environment where low consumer confidence and high interest
rates impacted the activity of the real estate market and the financial results
of the company.

The  greatest challenge  of the  first half  of the  year was  selling completed
apartments  in Kodulahe and Kuldlehe developments,  the market value of which is
nearly  14 million  euros.  Even  though  a  growth  appeared  in  the number of
transactions on the apartment market in the second half of the year, the overall
interest  in purchasing remained modest. In  addition, the start of construction
of  the next  stage of  Kodulahe (Soodi  6) was postponed  due to processing the
construction  permit, which  in turn  impacted the  project schedule  and future
revenue.

The  volatility  of  the  economic  environment  and high borrowing costs placed
pressure  on corporate profitability. Despite all this, we managed to maintain a
steady  and  clear  path  towards  increasing  future development volumes and to
continue development in line with our strategy. We may have ended the year 2024
with  a loss,  but our  focus remained  on ensuring long-term sustainability and
strategic management of investments.

Signs  of stabilisation were seen in the second  half of the year - the decrease
of  Euribor had a  positive effect on  the market and  the transaction volume of
apartments  grew in Q4 of 2024 compared to  both the same period of the previous
year  as well as the  first half of 2024. An  adjustment of pricing policies and
occupancy rates were also observed in both the residential market and commercial
real estate.

Arco  Vara continued to seek new  investments and develop existing projects. Our
focus  remained  on  developing  sustainability  and  expanding  the  life cycle
analysis  to  all  new  projects.  Our  promise "Build the future, create value"
guides all of our decisions and activities.

In  2024, we focused on developing quality residential environments, maintaining
a strong financial position, and flexible adjustment to market changes, in order
to ensure the sustainable growth and competitiveness of the company. Our mission
is creating modern, sustainable and desirable residential environments where the
customer can create their dream home.

Our  vision is to be  the first choice for  homebuyers. A 360-degree real estate
journey combining development, construction, sales, and customer service, allows
us  to offer the best homebuying experience  and homes with the best convenience
of use.

The  primary focus of Arco Vara is a satisfied customer - which will also remain
the  focus of  our daily  work in  the future.  Even though 2024 was the year of
adaptation and finding balance, we remain confident that our strategic direction
and  knowledgeable management  form a  strong basis  for future developments and
sustainable growth.

Our  main  goals  for  2025 are  to  complete  the  first stage of the Bulgarian
development,  sell the  completed apartments  in Kodulahe  and Kuldlehe,  and to
start  the  construction  at  Soodi  6. We  are  also  moving  forward  with the
development  of the Arcojärve project, hoping  to obtain the construction permit
as early as by the end of the year. In addition, we are looking for new projects
to  add to our portfolio in order  to increase development volume and strengthen
the position of the company on the real estate market.



KEY PERFORMANCE INDICATORS

The  group's revenue was 7,477 thousand euros,  which is 2.5 times less than the
revenue of 18,339 thousand euros in 2023.

In 2024, the Group's operating profit (=EBIT) was 68 thousand euros and net loss
624 thousand  euros. In 2023, the group  made operating profit of 3,940 thousand
euros and net profit of 3,550 thousand euros.

In  2024, 23 apartments were sold in projects developed by the group in Estonia.
In  2023, 66 apartments,  3 commercial  spaces  in  Estonia  and 3 land plots in
Latvia.

In  2024, the group's debt burden (net  loans) increased by 4,887 thousand euros
up  to the  level of  13,495 thousand euros  as of  31 December 2024. As  of 31
December  2024, the weighted  average annual  interest rate  of interest-bearing
liabilities  was 8.7%. This is an increase  of 0.5 percentage points compared to
31 December 2023.


OPERATING REPORT

The revenue of the Group totaled 7,477 thousand euros in 2024 (in 2023: 18,339
thousand euros), including revenue from the sale of properties in the Group's
own development projects in the amount of 7,145 thousand euros (in 2023: 17,581
thousand euros).

Other sales revenue in 2024 mainly includes revenue from franchise fees of real
estate agencies in Estonia, Latvia and Bulgaria. Franchise fees for 2024 were
273 thousand euros, franchise revenues for 2023 were 252 thousand euros.

In 2024, the pre-sale of the next stage of Kodulahe began: 62 apartments and 4
commercial premises in the form of three buildings will be built at Soodi 6. By
the time this report is published, 8 apartments and 2 commercial premises have
been presold. The homes are schedules to be completed in 2026.

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. 21 apartments were sold in the project in 2024.
As of the publication date of the quarterly report, 21 of the 113 are vacant.

A subsidiary of Arco Vara, Arcojärve 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. The start of the construction of
the first stage is planned for 2025.

In the Pirita Kuldlehe project, an exclusive cluster house with 5 spacious homes
was built in Pirita. By the date of publication of the quarterly report, 3 out
of 5 apartments are vacant.

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 in Q2 2025. By the date of
publication of the quarterly report, 9 out of 16 houses have been pre-sold.

Kerberon OÜ, a subsidiary of Arco Vara, developed a fully automatic padel venue
with six indoor courts at Helme 18 with the help of the construction company
Arco Tarc OÜ. The venuw has been given a long-term full lease and generates
rental income for the group from 2024.

After to the balance sheet, the group acquired a property with building permit
at Spordi 3a, 3b Kristiine Tallinn. The development will consist of two
buildings and 7,600 m(2) of residential real estate (gross building area) with
an underground parking lot. The buildings will have a total of 56 apartments,
several of which have a balcony or terrace. Pre-sales of Spordi 3a and 3b
apartments will begin in the Q2 2025, and homeowners will receive the keys by
the end of 2026. The buildings will be built by Arco Vara's construction company
Arco Tarc OÜ.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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  In thousands of euros                               2024      2023
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  Revenue from sale of own real estate               7,145    17,581

  Revenue from rendering of services                   332       758

  Total revenue                                      7,477    18,339



  Cost of sales                                     -5,707   -12,740

  Gross profit                                       1,770     5,599



  Other income                                           7       107

  Marketing and distribution expenses                 -551      -387

  Administrative expenses                           -1,127    -1,387

  Other expenses                                       -31       -20

  Gain on investment property                            0        28

  Operating profit                                      68     3,940



  Financial costs                                     -640      -390

  Profit/ loss before tax                             -572     3,550

  Income tax                                           -52         0

  Net profit/ loss for the period                     -624     3,550


  Total comprehensive profit/ loss for the period     -624     3,550

  Attributable to owners of the parent                -624     3,550
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  Earnings per share (in euros)

  - basic                                            -0.06      0.34

  - diluted                                          -0.06      0.34
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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  In thousands of euros                       31 December 2024 31 December 2023
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 Cash and cash equivalents                               1,720            1,472

 Receivables and prepayments                             5,690            5,798

 Inventories                                            29,170           27,637

 Total current assets                                   36,580           34,907



 Receivables and prepayments                                18               18

 Investment property                                     2,296               20

 Property, plant and equipment                             622              221

 Intangible assets                                          52               24

 Total non-current assets                                2,988              283

 TOTAL ASSETS                                           39,568           35,190



 Loans and borrowings                                      234            3,391

 Payables and deferred income                            4,487            4,013

 Warranty provisions                                       127               80

 Total current liabilities                               4,848            7,484



 Loans and borrowings                                   14,981            6,689

 Total non-current liabilities                          14,981            6,689

 TOTAL LIABILITIES                                      19,829           14,173



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             27               56

 Retained earnings                                       6,594            7,843

 Total equity attributable to owners of the
 parent                                                 19,739           21,017

 TOTAL EQUITY                                           19,739           21,017

 TOTAL LIABILITIES AND EQUITY                           39,568           35,190
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Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630
www.arcovara.com