Börsiteade

Pealkiri

INTERIM REPORT FOR THE SECOND QUARTER OF 2025 (UNAUDITED)

Teade

GROUP CEO'S REVIEW

The second quarter of 2025 marked a continuation of the cautious yet gradual
recovery in the real estate market. Market stability, the slow decline in
interest rates, and the downward trend of Euribor continue to provide a
favorable backdrop for development activities and growing buyer interest.
Throughout the quarter, Arco Vara remained focused on sales activities in
Estonia while making several important strides in strengthening its development
portfolio and implementing strategic adjustments.

One of the key milestones of the quarter was the acquisition of the Luther
Quarter property. Located in the heart of Tallinn, this site represents Arco
Vara's next flagship development project. The Luther Quarter has significant
potential to become a high-quality, multifunctional urban environment where
historical legacy meets modern architecture and sustainable living.

Our vision for the Luther development is to create a balanced and human-scale
environment that encompasses residential units, workplaces, cafes, culture, and
high-quality public spaces. A central green park is planned as an accessible
public space, contributing to a comprehensive and livable neighborhood.

We do not aim to simply construct buildings; our goal is to build a "city within
the city": a vibrant, 24/7 urban quarter where people can live, work, and spend
their leisure time. Tallinn needs more complete urban environments, self-
sustaining neighborhoods that also integrate naturally with the city's broader
fabric.

The acquisition of the Luther site has doubled the company's asset base and
strengthened equity while maintaining a balanced capital structure. Preparatory
work is ongoing, with construction scheduled to begin in the second quarter of
2026.

In the Rannakalda development, five additional apartments were sold during the
second quarter, indicating continued interest in new homes located in attractive
areas near Tallinn's city center. By the end of the quarter, a total of 97 out
of 113 apartments/commercial units in the project had been sold. The main
objective remains the full realization of the remaining units by the end of
2025.

In the Soodi 6 project, the long-anticipated building permit was obtained in
June. Five additional apartments were reserved during the quarter, and
construction officially commenced on June 30, 2025. The project continues to
appeal to young families, investors, and more discerning clients due to its
strong location and well-designed layouts.

Construction also began on the Spordi development in June. Pre-sales launched
successfully, with six apartments reserved during the quarter. Pre-sales will
continue through the end of July, with demand meeting expectations. The Spordi
project enhances Arco Vara's portfolio in the highly sought-after Kristiine
residential district, an area with limited new developments, where all essential
services, including schools, shops, public transportation, and leisure options,
are within walking distance. The development incorporates modern and smart
solutions to meet today's lifestyle needs.

The Arcojärve detailed plan is nearing its adoption phase, anticipated to occur
in 2025. This project plays a key role in Arco Vara's long-term strategy, laying
the groundwork for future urban developments.

In Bulgaria, the Botanica Lozen project has reached its final phase, with
landscaping works completed during the quarter.

In the Merivälja Kuldlehe development, one additional apartment was reserved.
Only two apartments remain available, both of which have active interest. The
project's exclusive nature and limited availability continue to position it
strongly within Tallinn's premium residential segment.

Key focus areas for Q3 include completion of sales for the remaining apartments
in Kuldlehe, the sale of at least six additional units in the Rannakalda
project, continued design and planning for the Luther development, and ongoing
construction activities in both the Spordi and Soodi 6 projects.

In summary, the second quarter of 2025 was marked by the achievement of several
important milestones for Arco Vara. The start of construction and receipt of
building permits in multiple projects, alongside the strategic acquisition of
the Luther Quarter, provide a solid foundation for the company's continued
growth in the Estonian real estate market.

KEY PERFORMANCE INDICATORS

The Group's sales revenue for the first six months of 2025 was EUR 3,093 thousand,
which  is EUR 1,160 thousand more than the  sales revenue for the first six months
of 2024.

The  operating profit (EBIT) for the first  half of 2025 amounted to EUR 265,000,
and  the net loss was EUR 43,000. In the first half of 2024, the Group recorded an
operating loss of EUR 310,000 and a net loss of EUR 687,000.
In  Q2  2025, five  apartments  were  sold  in  projects developed by the Group,
bringing  the total number of apartments sold in the first half of 2025 to nine.
As  of June 30, 2025, there were 17 completed apartments and one commercial unit
in  inventory. For comparison, in Q2  2024, three apartments were sold in Group-
developed  projects, and a total of seven  apartments were sold during the first
six  months of 2024. As of June 30, 2024, there were 44 completed apartments and
one commercial unit in inventory.

As of June 30, 2025, the Group's total assets had approximately doubled compared
to  June 30, 2024. The  main reason  for the  increase in  asset volume  was the
acquisition of new development projects, including the Luther Quarter and Spordi
3a/3b developments.

The  Group's loan burden (net loans) stood at EUR 33,261 thousand as of the end of
the  first six months of  2025, which is EUR 19,043 thousand  more compared to the
end of the same period in the previous year. The main reason for the increase in
loan  burden  was  the  acquisition  of  the Luther Quarter, which was partially
financed  with a bank  loan. The weighted  average interest rate  of the Group's
interest-bearing liabilities was 9.07% as of June 30, 2025.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

-------------------------------------------------------------------------------
 In thousands of euros              6 months 2025 6 months 2024 Q2 2025 Q2 2024
-------------------------------------------------------------------------------


 Revenue from sale of own real
 estate                                     2,853         1,797   1,264     870

 Revenue from rendering of services           240           136     123      74

 Total revenue                              3,093         1,933   1,387     943



 Cost of sales                             -2,069        -1,376    -961    -559

 Gross profit                               1,025           557     426     384



 Marketing and distribution
 expenses                                    -193          -219    -125    -149

 Administrative expenses                     -562          -631    -293    -335

 Other expenses                                -4           -16      -4      -2

 Operating profit                             265          -310       5    -101



 Financial costs                             -295          -377    -152    -236

 Profit/ loss before tax                      -30          -687    -147    -338

 Income tax                                   -13             0       0       0

 Net profit/ loss for the period              -43          -687    -146    -338



 Total comprehensive profit/ loss
 for the period                               -43          -687    -146    -338

 Attributable to owners of the
 parent                                       -43          -687    -146    -338
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 Earnings per share (in euros)

 - basic                                     0.00         -0.07   -0.01   -0.03

 - diluted                                   0.00         -0.07   -0.01   -0.03
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-------------------------------------------------------------------------------
  In thousands of euros                           June 30 2025 December 31 2024
-------------------------------------------------------------------------------


 Cash and cash equivalents                               1,388            1,720

 Receivables and prepayments                             5,775            5,690

 Inventories                                            68,930           29,170

 Total current assets                                   76,093           36,580



 Receivables and prepayments                                18               18

 Investment property                                     2,296            2,296

 Property, plant and equipment                             587              622

 Intangible assets                                          52               52

 Total non-current assets                                2,953            2,988

 TOTAL ASSETS                                           79,046           39,568



 Loans and borrowings                                      235              234

 Payables and deferred income                            6,910            4,487

 Warranty provisions                                       341              127

 Total current liabilities                               7,486            4,848



 Loans and borrowings                                   34,414           14,981

 Total non-current liabilities                          34,414           14,981

 TOTAL LIABILITIES                                      41,900           19,829



 Share capital                                          12,158            7,272

 Share premium                                          16,399            3,835

 Statutory capital reserve                               2,011            2,011

 Other reserves                                             28               27

 Retained earnings                                       6,551            6,594

 Total equity attributable to owners of the
 parent                                                 37,146           19,739

 TOTAL EQUITY                                           37,146           19,739

 TOTAL LIABILITIES AND EQUITY                           79,046           39,568
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Darja Bolshakova
CFO
Arco Vara AS
www.arcovara.com (http://www.arcovara.com)