Hepsor

Annual Report • Feb 19, 2025

Hepsor AS consolidated unaudited interim report for Q4 2024 and twelve months

For the Group as a whole, 2024 was a moderately profitable year, despite the
ongoing economic downturn and interest rates which remained relatively high
during the year. Encouragingly, the bottom of the market in terms of transaction
activity remained backward-looking until 2023. Despite the market situation, a
significant number of new homes were handed over to customers in 2024, a large
number of new leases were signed, vacancy rates in both existing and new
commercial buildings were reduced, new investments were made in the Baltics and
in Canada. It would probably have been more profitable in the short term for the
Group to make fewer new investments, thereby saving on both interest and
overhead costs. However, the development project cycle is known to last at least
3-5 years, and therefore the Group has continued to invest and expand its
development portfolio in a forward-looking manner, even in a difficult economic
environment.

The Group's consolidated sales revenue for the 4th quarter of 2024 was
10.5 million euros (Q4 of 2023: 5.1 million euros) and the consolidated sales
revenue of the reporting year totaled 38.4 million euros (2023: 41.1 million
euros).

The Group's net profit for the 4th quarter was 1 million euros (Q4 2023: net
loss 1.3 million euros), incl. the net profit attributable to the owners of the
parent company was 0.6 million euros (Q4 2023: net loss 1.1 million euros) and
the Group's net profit in 2024 was 2.1 million euros (2023: 3.5 million euros).
The net profit attributable to the owners of the parent company in the reporting
year was 0.4 million euros (2023: 1.2 million euros).

Development projects under construction and available for sale

In 2024, we delivered 193 homes to customers, including 51 homes in the fourth
quarter. We delivered 165 homes to clients in Tallinn, and 28 homes in Riga.

In 2024, we began the construction of a commercial building StokOfiss 34 at
Ulbrokas 34, Riga.

In Tallinn, we began Hepsor's largest development project to date, the
construction and sale of the main building of the former Baltic Cotton Spinning
and Weaving Factory located at Manufaktuuri 5. The project is being developed in
stages. In the first stage, the construction of 152 new apartments is planned.

In Riga, construction continued on the 40 apartment Annenhof House development
project, the completion of which is planned for the beginning of 2025.

In the commercial building P113 Tervisemaja, owned by the affiliated company
Hepsor P113 OÜ, the signing of new rental contracts continued, and as at the end
of the reporting year 77% of the rental space was covered by contracts.

Based on the Group's business strategy, the Lembitu 4 property in Tallinn, which
is intended to be used for the construction of a hotel with approximately 110
rooms, was sold in Q4 2024. Freed-up capital was used to finance new
developments as well as to reduce interest costs at the Group level.

New projects in Tallinn and Riga

In September 2024, Hepsor acquired a new property in Tallinn, at Võistluse 7. It
is a sLender-type apartment building, designed by researchers-architects at the
Estonian Academy of Arts, built in the style of an early 20th century Lender
wooden house. The building will be constructed entirely of wood, with the
exception of the staircase in the centre of the building. At the heart of the
project is environmental preservation and the utilisation of green technology
solutions for climate resilience.

On 18 July 2024, Hepsor E18 SIA, a subsidiary of Hepsor Latvia OÜ, acquired a
property at Eizhenijas iela 18, in Riga. The plan is to develop two buildings
there with a total of 54 apartments.

In December, Hepsor Latvia OÜ signed an option agreement to acquire a 50% stake
in a real estate development company. The development company is planning to
build 103 new homes at Dzelzavas 74c, in Riga.

Hepsor in Canada

To date, Hepsor has invested in five development projects in Toronto. In
cooperation with business partners, the primary objective of the projects
acquired in Canada's largest city is to prepare a detailed plan and thereby
achieve building rights for a total of around 3,000 new rental apartments.

In 2024, Hepsor made three new investments in Canada:

• a development project consisting of seven properties at 17-29 Glenavy Avenue,
  in Toronto;

• a development project consisting of 11 properties in High Park, located in
  downtown Toronto;

• a development project consisting of 17 properties on Brownville Avenue, in
  Toronto.

Vision for the future

In 2025, we intend to begin the construction and sale of up to five new
development projects.

In Latvia, we are planning to begin the construction and sale of up to four
projects. In total, 147 new homes will be built and sold in three residential
projects. In the field of commercial buildings, we would like to begin the
construction of a stock-office type development project in the Veidema Quarter.

We will also be starting the next phase in the Manufaktuuri Quarter - the sale
and construction of 49 new homes at Manufaktuuri 12.

Nevertheless, the declining interest rate environment allows us to look to the
future with moderate optimism. The real estate business is a long process.
That's why we want to initiate and develop new projects, always analysing risks
and opportunities over market cycles.

The full consolidated unaudited interim report for the IV quarter and twelve
months of 2024 can be found on the Hepsor website:

https://hepsor.ee/en/for-investors/stock/reports-2/

Consolidated statement of financial position

in thousands of euros 31 December 2024 31 December 2023

Assets

Current assets

Cash and cash equivalents 6,249 7,604

Trade and other receivables 761 1,544

Current loan receivables 200 311

Inventories 64,141 77,439

Total current assets 71,351 86,898

Non-current assets

Property, plant and equipment 288 162

Intangible assets 2 4

Investment properties 7,980 0

Financial investments 6,424 2,005

Non-current loan receivables 2,428 1,729

Other non-current receivables 340 203

Total non-current assets 17,462 4,103

Total assets 88,813 91,001

Liabilities and equity

Current liabilities

Loans and borrowings 23,336 40,600

Current lease liabilities 52 40

Prepayments from customers 724 2,620

Trade and other payables 6,542 7,188

Total current liabilities 30,654 50,448

Non-current liabilities

Loans and borrowings 31,352 16,305

Non-current lease liabilities 162 29

Other non-current liabilities 4,635 2,058

Total non-current liabilities 36,149 18,392

Total liabilities 66,803 68,840

Equity

Share capital 3,855 3,855

Share premium 8,917 8,917

Reserve capital 385 385

Retained earnings 8,853 9,004

Total equity 22,010 22,161

incl. total equity attributable to owners of
the parent 20,912 20,993

incl. non-controlling interest 1,098 1,168

Total liabilities and equity 88,813 91,001

Consolidated statement of profit and loss and other comprehensive income

in thousands of euros 12M 2024 12M 2023 Q4 2024 Q4 2023

Revenue 38,397 41,135 10,542 5,087

Cost of sales (-) -31,635 -34,067 -8,011 -4,843

Gross profit 6,762 7,068 2,531 244

Marketing expenses (-) -898 -576 -295 -177

Administrative expenses (-) -1,802 -1,472 -460 -362

Other operating income 449 166 365 54

Other operating expenses (-) -179 -152 -143 -36

Operating profit (-loss) of the year 4,332 5,034 1,998 -277

Financial income 421 1,192 159 63

Financial expenses (-) -2,578 -2,746 -1,159 -1,084

Profit before tax 2,175 3,480 998 -1,298

Current income tax (-) -41 0 -41 0

Net profit (-loss) for the year 2,134 3,480 957 -1,298

 Attributable to owners of the parent          423    1,185     578  -1,087

 Non-controlling interest                    1,711    2,295     379    -211

Other comprehensive income (-loss)

Changes related to change of ownership -313 286 -389 36

Change in value of embedded derivatives with
minority shareholders -1,874 -2,053 -671 104

Exchange rate differences from foreign
entities -103 0 27 0

Other comprehensive income (-loss) for the
period -2,290 -1,767 -1,033 140

 Attributable to owners of the parent         -504      -58    -330     -70

 Non-controlling interest                   -1,786   -1,709    -703     210

Comprehensive income (-loss) for the period -156 1,713 -76 -1,158

 Attributable to owners of the parent          -81    1,127     248  -1,157

 Non-controlling interest                      -75      586    -324      -1

Earnings per share

Basic (euros per share)                       0.11     0.31    0.15   -0.28

Diluted (euros per share)                     0.11     0.31    0.15   -0.28

Henri Laks
Member of the Management Board
Phone: +372 5693 9114
e-mail: [email protected] (mailto:[email protected])

Hepsor AS (www.hepsor.ee (http://www.hepsor.ee)) is a developer of residential
and commercial real estate. The Group operates in Estonia, Latvia and Canada.
During our thirteen years of operation, we have created 2,076 homes and nearly
36,300 m(2) of commercial space. As the first developer in the Baltic countries,
Hepsor has implemented several innovative engineering and technical solutions
that make the buildings built by the company more energy-efficient and thus more
environmentally friendly. The company's portfolio includes a total of 24
development projects with a total area of 172,500 m(2).