Unaudited consolidated interim report for the second quarter and six months of 2024

Overview of the Group's CEO

The decline in activity in the real estate market after a sharp increase in interest in clean air has become a common occurrence, as clearly demonstrated by the results of the second quarter from Arco Vara. At the same time, a slight decrease in base loan rates has not yet had a noticeable impact on our business. Despite the low level of activity, our team has managed to continue sales within the Kodulahe Rannakalda project, and we have begun pre-sales for the next phase of the Kodulahe project. While three houses were sold in Rannakalda last quarter, at the time of this report, eight residential units and two commercial spaces have already been sold in the Soodi 6 project. The launch of construction for the next phase of Kodulahe is scheduled for the end of this year. We have also reached the initiation stage of the detailed plan for the final phase of the Kodulahe development – Lammi 6, where around 175 houses are planned to be built, with construction expected to start in about two years.

Work on the detailed plan for the new large project Arco Vara, Arcojärve, is approaching the approval stage. In this regard, we have started project work on the first phase and registered stakeholders. Our team in Bulgaria continues to develop the Botanica Lozen project, where approximately 40% of the total construction volume has been sold. We have seen a positive growth trend in interest; however, the main focus is on converting inquiries into sales, which has not yet reached the desired level of efficiency. The Arco Tarc team continues the construction of the padel center at Helme 18, which is scheduled for completion in the third quarter of this year. There is also a slight decrease in construction material prices, which will help increase the profitability of the leased properties throughout the lease term.

Our main tasks for the near future include the sale of completed properties at Kuldlehe and Kodulahe, which have a total volume of unsigned contracts amounting to approximately15 million eurosThe funds obtained from these projects can be redistributed to existing structures and new real estate assets.

Key financial indicators

In the second quarter of 2024, the group's revenue from sales amounted to943 thousand eurosthat is 3.7 times greater compared to254 thousand eurosfor the same period in 2023. In the first six months of 2024, the group's revenue reached1.933 million euroswhich represents a 3.8-fold increase compared to the figures507 thousand eurosfor the corresponding period of 2023. The group's operating loss for the second quarter of 2024 amounted to103 thousand eurosand the net loss is339 thousand eurosFor the first six months of 2024: operating loss —311 thousand euros, net loss —688 thousand eurosA year ago, in the second quarter of 2023, the company had an operating loss of249 thousand eurosand a net loss of347 thousand eurosIn the first six months of 2023, these indicators amounted to433and638 thousand eurosaccordingly.

In the second quarter of 2024, three apartments were sold, and a total of seven units were sold over the six months of 2024. As of June 30, 2024, there are available44 apartmentsand one commercial space. In the second quarter of 2023, the final sale was not completed (only one parking space was sold in six months) because there were no apartments ready for sale at that time.

Operational report

The group's revenue in the second quarter of 2024 amounted to943 thousand eurosFor comparison: in the second quarter of 2023 —254 thousand euros). From this amount, the income from the sale of real estate from our own projects amounted to870 thousand eurosIn 2023, there were no sales. The income in 2023 was generated from the operation of a commercial building in Madrid, which was sold in the same year. The remaining revenues for 2024 are mainly related to income from franchise management agencies in Estonia, Latvia, and Bulgaria. The franchise income in the second quarter of 2024 amounted to73 thousand euros (in six months — 128 thousand euros), while in the second quarter of 2023, the volume amounted to66 thousand euros (in six months — 119 thousand euros).

In the second quarter of 2024, preliminary sales for the next phase of Kodulahe began: construction is planned at Soodi 6.66 apartmentsand4 commercial premiseswithin three buildings. At the time of the report's publication, it has already been reserved8 apartmentsand2 commercial premisesThe completion of construction is expected by the end of 2025. In the most prestigious phase of Kodulahe, Rannakalda, the construction of the pavilion and four service areas has been completed.108 apartments (including three separate houses), many of which have a sea view. As of the time of the quarterly report publication, the following remain vacant.36 out of 113 objects.

The subsidiary of Arco Vara, Arcojärve OÜ, signed an agreement in 2021 to acquire a plot of land by Lake Harku at the address: Paldiski Highway.124b, TallinnThe area of the planned construction is more than35,000 m²residential and commercial real estate. The project is called Arcojärve, and as of June 30, 2024, the total advance payment for the land amounted to4,978 thousand eurosThe subsidiary of Arco Vara is required to pay additional fees.1,627 thousand eurosfor the acquisition of land within three months from the approval of the detailed plan by the government of Tallinn, but no later thanApril 30, 2026The start of the construction of the first phase is scheduled for 2025.

As part of the Kuldlehe project, a spacious and exclusive cluster house has been built on5 unitsIn Pirita. The sale of this project has begun. The Botanica Lozen project involves construction.54 houses (in three stages). Construction and sales of the first16 buildingsWe have started, the first group of houses will be completed by the end of 2024. At the time of the report's publication6 out of 16 housesalready pre-sold. The company Kerberon OÜ, a subsidiary of Arco Vara, is developing a fully automated padel center with six indoor courts at Helme 18, supported by the construction company Arco Tarc OÜ. The hall is fully booked and is scheduled to open its doors inthe 4th quarter of 2024.

Consolidated statement of comprehensive income

In the first 6 months of 2024, the revenue from real estate sales amounted to1.797 million eurosrevenue from services —136 thousand eurosThe total revenue amounted to1.933 million eurosThe selling expenses amounted to1.376 million eurosand the gross profit amounted to557 thousand eurosThe other income amounted to0.760 thousand eurosThe marketing and distribution expenses amounted to219 thousand eurosadministrative expenses —632 thousand eurosother expenses —17 thousand eurosThe operating loss amounted to311 thousand eurosfinancial expenses —377 thousand eurosthat led to a pre-tax loss of688 thousand eurosand the net loss for the period also in the amount of688 thousand euros.

Consolidated statement of financial position

As of June 30, 2024, the cash balance was1.504 million eurosaccounts receivable and advance payments —6.245 million euros, stocks —29.619 million eurosThe total current assets amount to37.368 million eurosThe debt obligations (loans) amount to3.391 million eurosaccounts payable —3.388 million eurosThe total amount of current liabilities is6.985 million eurosLong-term liabilities amounted to12.331 million eurosthe total amount of liabilities —19.316 million eurosCharter capital —7.272 million euros, other reserves amount to5.656 million eurosunallocated profit —6.531 million eurosThe total amount of capital belonging to the shareholders is —19.705 million eurosTotal assets and liabilities —39.021 million euros.