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Pealkiri

Arco Vara unaudited consolidated interim report for Q1 of 2025

Teade

GROUP CEO'S REVIEW

The first quarter of 2025 continued the moderate recovery in Estonia's real
estate market that began at the end of 2024. Despite the generally cautious
economic sentiment, the market remained stable and showed the first credible
signs of revitalization. The continued decline of the Euribor, alongside
stabilizing inflation, contributed to increased transaction activity and
consumer interest, particularly within the residential segment.

The new development market in Tallinn remained active throughout the quarter.
Although no record-breaking sales were achieved, interest remained strong, and
price levels stabilized. In the Rannakalda development, Arco Vara sold four
additional apartments in Q1 2025, bringing the total number of units sold to 91
out of 113. The pre-sales in the Soodi 6 project continued at a calm pace, with
10 out of 66 apartments pre-sold by the end of the quarter. The building permit
process for the start of construction is in its final stage, with construction
expected to commence at the end of Q2 2025.

During the first quarter of 2025, Arco Vara acquired a new development site in
Tallinn on Spordi Street. The property, located in an attractive area suitable
for residential development, expands Arco Vara's project portfolio in sought-
after districts of Tallinn. Pre-sales for the project are scheduled to begin in
Q2 2025, with construction work planned to start toward the end of the same
quarter. Initial planning and preparatory works are currently underway.

The final stage of the Kodulahe development, located at Lammi 6, also made
progress. The detailed planning process continued, and in cooperation with the
district government, significant advances were made, allowing the project to
move forward. Construction is anticipated to start in approximately two years.

Preparatory work for Arco Vara's next major development, Arcojärve, is
progressing according to plan. Efforts are focused on developing design
solutions, enhancing the project's added value, and mapping out potential target
customer groups. The project has already attracted considerable interest, and
our primary goal is to secure the approval of the detailed plan in the coming
months. Construction is scheduled to begin at the end of 2025.

In Bulgaria, the local team brought the Botanica Lozen project even closer to
completion, reaching 95% readiness by the end of the quarter. The entire
development is expected to be finalized by the end of Q2 2025. Sales activity in
Botanica Lozen remained stable, with 9 of the 16 houses sold by quarter-end. The
project's appeal was further enhanced by the near-completion of landscaping
work, aligning well with the preferences of local buyers.

The Merivälja Kuldlehe development maintained its prestigious and exclusive
market position. Although no new transactions were recorded during the quarter,
interest in the apartments remained steady. Given the development's high market
value and unique location, full realization largely depends on overall market
confidence and the recovery of purchasing power among the target audience. To
date, 2 of the 5 apartments have been sold.

From a broader market perspective, the real estate sector continued on a
cautious yet positive trajectory. The number of transactions remained stable or
slightly increased compared to the previous quarter, suggesting that the most
severe economic challenges have likely passed. The gradual decline in interest
rates and renewed investor confidence provide a solid foundation for continued
strengthening of the real estate market in the second half of 2025.

Arco Vara's key near-term challenges remain consistent: achieving successful
sales in the Kodulahe and Kuldlehe projects in Estonia, and finalizing the sale
of the remaining homes in the Botanica Lozen development in Bulgaria. The main
focus of sales activity is on completed apartments and houses to ensure stable
cash flow and enable the successful launch of upcoming large-scale projects.

In summary, Q1 2025 was a period of stability and preparation, with the real
estate market moving quietly but steadily toward recovery.

KEY PERFORMANCE INDICATORS

In  Q1 2025, the group's  sales revenue was  1,706 thousand euros, which is 716
thousand euros more than the sales revenue of the Q1 2024 of 990 thousand euros.

In  Q1 2025, the group's operating profit (=EBIT) was 259 thousand euros and net
profit  103 thousand euros. In  Q1 2024, the group's  operating loss (=EBIT) was
208 thousand euros and net loss 349 thousand euros.

In  Q1 2025, 4 apartments were  sold. In Q1  2024, 3 apartments and 1 commercial
premise were sold. As of 31.03.2025, 24 apartments were ready in stock.

In  the first 3 months of 2025, the group's debt burden (net loans) increased by
1,960 thousand  euros up  to the  level of  15,455 thousand euros as of 31 March
2025. As  of  31 March  2025, the  weighted  average  annual  interest  rate  of
interest-bearing  liabilities  was  8.2%. This  is  a decrease of 0.5 percentage
points compared to 31 December 2024.

OPERATING REPORT

The group's sales revenue was 1,706 thousand euros in Q1 2025 (Q1 2024: 990
thousand euros), including the sale of real estate in the group's own
development projects 1,589 thousand euros (927 thousand euros in Q1 2024).

Other sales revenue in 2025 mainly includes revenue from franchise fees of real
estate agencies in Estonia, Latvia and Bulgaria. Franchise fees for the Q1 2025
were 65 thousand euros, franchise revenues for the Q1 2024 were 55 thousand
euros.

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. 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 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 2025.

In the 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 hall is rented out on a full lease agreement and is open to
guests.

In Q1 2025 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. The total investment in the project is 15 million euros.
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                             Q1 2025   Q1 2024
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  Revenue from sale of own real estate                1,589       927

  Revenue from rendering of services                    117        63

  Total revenue                                       1,706       990



  Cost of sales                                      -1,108      -817

  Gross profit                                          598       173



  Marketing and distribution expenses                   -69       -70

  Administrative expenses                              -270      -297

  Other expenses                                          0       -14

  Operating profit                                      259      -208



  Financial costs                                      -143      -141

  Profit/ loss before tax                               116      -349

  Income tax                                            -13         0

  Net profit/ loss for the period                       103      -349


  Total comprehensive profit/ loss for the period       103      -349

  Attributable to owners of the parent                  103      -349
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  Earnings per share (in euros)

  - basic                                              0.01     -0.03

  - diluted                                            0.01     -0.03
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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  In thousands of euros                          31 March 2025 31 December 2024
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 Cash and cash equivalents                               1,113            1,720

 Receivables and prepayments                             6,310            5,690

 Inventories                                            32,329           29,170

 Total current assets                                   39,752           36,580



 Receivables and prepayments                                18               18

 Investment property                                     2,296            2,296

 Property, plant and equipment                             605              622

 Intangible assets                                          57               52

 Total non-current assets                                2,976            2,988

 TOTAL ASSETS                                           42,728           39,568



 Loans and borrowings                                      235              234

 Payables and deferred income                            6,203            4,487

 Warranty provisions                                       115              127

 Total current liabilities                               6,553            4,848



 Loans and borrowings                                   16,333           14,981

 Total non-current liabilities                          16,333           14,981

 TOTAL LIABILITIES                                      22,886           19,829



 Share capital                                           7,272            7,272

 Share premium                                           3,835            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             27               27

 Retained earnings                                       6,697            6,594

 Total equity attributable to owners of the
 parent                                                 19,842           19,739

 TOTAL EQUITY                                           19,842           19,739

 TOTAL LIABILITIES AND EQUITY                           42,728           39,568
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Tiina Malm
CFO
Arco Vara AS
Phone: +372 614 4630

www.arcovara.com