Eastnine — Earnings Release 2017

Feb 16, 2018

Year-end Report ²⁰¹⁷ Q4

"Eastnine had a strong fourth quarter with record high results in Melon Fashion Group and increased property values in the portfolio. NAV per share increased by 7.9%."

Kestutis Sasnauskas

Key events during the quarter

• Net Asset Value (NAV) per share was SEK 103.9, or EUR 10.57, an increase of 7.9% from the third quarter¹.
• All segments increased in value; Real Estate direct by 6.9% following external valuations, Real Estate funds by 2.9%, and Other by 11.8% after strong performance by Melon Fashion Group (MFG) throughout the year.
• EUR 2.2m equity investment in 3Burės development. Divestments totalling EUR 13.1m refer to East Capital Baltic Property Fund II, EC Eastern Europe Small Cap Fund (prev. Deep Value) and EC Bering Ukraine Fund.
• Dividends from MFG and Baltic Property Fund II of EUR 1.6m in total.
• Strengthening of Eastnine's Baltic team with recruitment of Meelis Šokman as Head of Estonian operations.
• 774,815 shares were repurchased for a total of EUR 6.1m. ¹ Adjusted for share buybacks

Key events after the quarter

• The Board will propose to the AGM an ordinary dividend for 2017 of SEK 2.10 per share, with semi-annual payments. The dividend corresponds to 2.0% of NAV/share and a year-on-year dividend growth of 133%, and translates into EUR 0.21 per share.
• Eastnine expands its portfolio to Riga by acquiring A Class office property Alojas Business Centre and two adjacent properties for EUR 29,6m, adding 11,600 sqm leasable area and annual rental income of EUR 2.4m.
• Holdings in EC Global Frontier Markets Fund and EC Eastern Europe Small Cap Fund were sold for a total of EUR 6.0m.
• 388,844 shares were repurchased 1 Jan 15 Feb. Eastnine's holding represents 9.1% of all shares in the company.
• The team was further strengthened with Julius Niedvaras as Head of Lithuanian operations.

Key figures

		31 DEC 2017	30 SEP 2017	31 DEC 2016
NAV per share	EUR	10.57	9.79	9.67
NAV per share	SEK	103.9	94.5	92.6
Closing price per share	SEK	81.75	75.00	66.75
Total NAV	EURm	242.5	232.3	247.6
Market cap	EURm	206	193	196

		Q4 2017	Q4 2016	FY 2017	FY 2016
Net result	EURm	16.3	22.8	17.1	13.3
Earnings per share	EUR	0.70	0.88	0.70	0.49
NAV per share development	%	7.9	10.7	9.3	7.4
Investments	EURm	2.2	0.0	42.4	5.0
Divestments	EURm	13.1	90.6	24.9	117.4

1 EUR = 9.83 SEK on 31 Dec 2017. Source: Reuters

Transforming into a real estate company in the Baltics

Eastnine was listed on Nasdaq Stockholm in 2007, and was named East Capital Explorer until June 2017. The name change marked the ongoing strategic shift from a diversified Eastern European investment company to a Baltic real estate company with the aim of generating predictable cash flows as a long-term owner of attractive commercial A-class properties in the Baltic capitals. The strategic plan is to transform Eastnine into a real estate company by 2020.

Since 2016, Eastnine is transforming into a focused real estate company in the Baltics. The company's first investment there took place in 2012 and at the latest by 2020 the portfolio shall be fully transformed.

*Decision to transform the company

Long-term financial targets in Real Estate Direct

13-15% <65% >2.0x

Return on equity, over 5-year period

Loan-to-value ratio Interest service

coverage ratio

Dividend

Dividend shall correspond to at least 50% of profit from property management. During the build-up phase until 2020, the annual dividend shall be at least 2.0% of the net asset value per share at the preceding year-end.

Focused work and active pipeline is showing results

"In the beginning of February our efforts resulted in the agreement to acquire Alojas Biznesa Centrs. The acquisition will be the first for Eastnine in Riga, a market with a shortfall of modern office buildings"

Eastnine had a strong fourth quarter with record high results in Melon Fashion Group and increased property values in the portfolio. NAV per share increased by 7.9% (in EUR) and after the quarter-end, we signed an agreement to acquire our first office property in Riga.

During the quarter we continued to focus on potential acquisitions in the Baltics. In the beginning of February, we could announce the acquisition of Alojas Biznesa Centrs, an office property in Riga which has previously been Nordea's headquarters in Latvia, for EUR 29.6m. The acquisition, expected to be completed in February, will be the first for Eastnine in Riga, a market with a shortfall of modern offices. With this acquisition and delivery of the third tower of 3Burės later this year, we will have a property portfolio valued at EUR 153m and annual rental income capacity of EUR 11m, compared to EUR 6.5m as of today.

Operationally we had a solid quarter in Vilnius, with our properties being fully let after some tenant improvements,

which impacted the quarter's results. Market yields have compressed slightly during the past year, which is reflected in the external valuation of 3Burės. Combined with cash flows, the portfolio segment Real Estate Direct increased by 6.9% during the quarter and 11.2% for the full year, with an average loan-to-value below 40%. The segment Real Estate Funds showed a stable development with an increase of 2.9% during the quarter and 12.2% for the full year.

Melon Fashion Group, the largest holding outside of the real estate strategy, reached all-time high sales during the fourth quarter and finished the year with an EBITDA of RUB 1.5bn, 133% higher than the previous year. The year-end valuation corresponds to an EBITDA-multiple of 5.7x.

We propose to pay a dividend for 2017 of SEK 2.10/share, or 2.0% of NAV/share, in line with our new dividend policy.

Focus remains on the portfolio transformation and we continue working with the property pipeline and evaluating exit opportunities for other holdings.

Kestutis Sasnauskas, CEO

Earnings capacity

EURm	Pro forma	31 Dec 2017	2016	2015
Number of properties	4	2	1	1
Leasable area, k sqm	62.2	37.8	28.4	28.4
Rental income, EURm	10.9	6.5	4.4	4.4
Net operating income, EURm	9.1	5.0	3.9	4.0
Occupancy rate, %	97.8	97.0	95.1	99.3
WAULT, years	3.1	2.5	2.3	2.1
Loan-to-value ratio, %	44.1	30.3	56.4	60.6
Average interest, %	2.3	2.6	3.0	3.0
Direct yield, %	5.9	5.4	6.4	6.7
Property value, EURm	152.7	107.5	60.9	59.7
Property value, EUR per sqm	2,455	2,443	2,143	2,102

The table shows key figures of properties owned at the end of the period, based on performance over the last 12 months or estimates for properties held less than 12 months. The table provides an overview but is not a forecast.

Pro-forma adjustments:

• Closing of acquisition of Alojas Biznesa Centrs, expected in Q1 2018
• Delivery of 3Burės development, expected in Q3 2018
• New bank loan in Vertas raised in Q1 2018

Performance

EASTNINE AB 4 Year-end Report 2017

Our Portfolio

NET ASSET VALUE (NAV)	VALUE 31 DEC 2017 EURM	NAV/ SHARE EUR	% OF NAV	VALUE 30 SEP 2017 EURM	VALUE 31 DEC 2016 EURM	VALUE CHANGE JAN- DEC 2017 %¹	VALUE CHANGE OCT-DEC 2017 %¹
Real Estate Direct
3Burės	30.7	1.34	12.7	27.6	25.4	20.6	11.3
Vertas	29.9	1.30	12.3	29.7	0.0	2.6	0.7
3Burės development	13.6	0.59	5.6	10.0	5.0	12.0	12.2
Total Real Estate Direct	74.2	3.23	30.6	67.2	30.4	11.2	6.9
Real Estate Funds
East Capital Baltic Property Fund II	20.8	0.91	8.6	30.7	27.8	13.8	1.9
East Capital Baltic Property Fund III	16.2	0.71	6.7	15.5	8.8	9.1	5.0
Total Real Estate Funds	37.1	1.62	15.3	46.1	36.7	12.2	2.9
Total Real Estate	111.2	4.85	45.9	113.3	67.1	11.6	5.3
Other
Melon Fashion Group	48.6	2.12	20.0	39.6	42.9	18.0	22.8
East Capital Eastern Europe Small Cap Fund2	19.2	0.84	7.9	20.7	28.7	-4.7	2.3
East Capital Global Frontier Markets Fund	12.1	0.53	5.0	11.3	10.2	18.4	7.4
Komercijalna Banka Skopje	10.3	0.45	4.2	10.6	10.7	1.2	-3.2
Investments fully divested in 20173	0.0	0.00	0.0	1.3	7.2	-1.8	-0.2
Total Other	90.2	3.93	37.2	83.5	99.6	8.1	11.8
Total Portfolio	201.4	8.78	83.1	196.8	166.7	9.9	8.1
Cash and cash equivalents	41.1	1.79	17.0	38.2	83.5
Other assets and liabilities net	-0.1	0.00	0.0	-2.7	-2.7
Net Asset Value (NAV)	242.5	10.57	100.0	232.3	247.6	4 9.3	7.94

1. The value change calculation is adjusted for investments, divestments and distributions during the relevant period. i.e. it is the percentage change between: the ending value plus any proceeds from dividends or divestments during the period, divided by the starting value plus any added investment during the period

2. Previously named East Capital Deep Value Fund

3. Trev-2 Group sold in Q1 2017 for an amount of EUR 5.7m. East Capital Bering Ukraine Fund Class R sold in Q4 2017 for an amount of EUR 1.3m

4. NAV per share development

The number of shares used in NAV/share 31 Dec 2017 is 22,948,205 and is adjusted for repurchased shares held by the company (Note 6).

1 EUR = 9.83 SEK on 31 Dec 2017. Source: Reuters

Note that certain numerical information may not add up due to rounding

Investments and divestments

EURM	Q4 2017	Q4 2016	FY 2017	FY 2016
Vertas			29.1
3Burės development	2.2		7.2	0.3
East Capital Baltic Property Fund III			6.0	4.8
Total investments	2.2	-	42.4	5.0
East Capital Baltic Property Fund II	9.8		9.8
East Capital Eastern Europe Small Cap Fund	2.0	5.0	8.1	12.2
East Capital Bering Ukraine Fund Class R	1.3		1.3
Trev-2 Group			5.7
East Capital Global Frontier Markets Fund		2.0		21.6
Starman		83.6		83.6
Total divestments	13.1	90.6	24.9	117.4

Group Performance

Market

The global business cycle strengthened further in Q4, reaching the strongest and most synchronised momentum so far in this recovery. European growth accelerated in Q4 to 2.7% year-on-year. Full year growth in 2017 landed at 2.5%, the highest for more than a decade, and inflation continued to stay muted. The EUR was unchanged over the quarter versus the USD.

The Baltic economies continue to show strong GDP growth; Lithuania grew by 3.6% and Latvia by 4.2% in the fourth quarter, at somewhat lower rates than in the third quarter. Estonia has not yet published GDP growth for Q4, but grew by 4.2% in the third quarter. Growth in all three countries was driven by exports, construction, recovering investments and increased EU funding in infrastructure, as well as by consumption as a result of real wage growth and decreased unemployment rates. Inflation, affected by wage growth as well as food and energy prices, remains at around 3%.

In the Baltic property markets, yields have decreased slightly to around 6.25- 6.75% for prime office properties, but still have a significant gap compared to the Nordic capitals. Demand remains high and vacancies are low, pushing up average rents. Construction is picking up and several development projects are expected to be completed in the near future, which could momentarily affect rent levels.

In Russia, local demand continued to benefit from ruble strength and the overall uplift in market sentiment on the back of low inflation (1.3% in Q4 vs 2.8% in Q3 and 5.1% in Q4 2016), stronger oil price and expectations of public wage hike ahead of the presidential elections. The stronger business sentiment was confirmed by the Russian PMI manufacturing survey with a five-month high notation. Consumer confidence jumped in December to a 40-month high, and further upside is possible due to planned increase in public wages in January. At the same time, December retail sales growth accelerated to 3.1% yoy, one of the strongest readings since 2014, while real wage growth reached 4.6%.

The Group

With exception of Melon Fashion Group (MFG), the investment activities of Eastnine AB (publ) (the Company) are managed in the operating subsidiaries Baltic Cable Holding OÜ and East Capital Explorer Investments AB. The shares in MFG are held at Eastnine AB. Transactions in the operating subsidiaries and MFG are referred to as the investment activities in this report. Presentation currency is euro (EUR).

Results for the fourth quarter 2017

The net result for the fourth quarter was EUR 16.3m (EUR 22.8m), including value changes of shares in subsidiaries and associated companies of EUR 15.8m (EUR 23.4m), corresponding to earnings per share of EUR 0.70 (EUR 0.88).

Melon Fashion Group appreciated by EUR 9.0m. The underlying asset in rouble appreciated by EUR 9.6m because of improving profitability supported by stronger local currency and stable performance of new concepts, as well as decreased interest rates in Russia which results in a lower weighted average cost of capital (WACC). The translation from rouble to euro had a negative effect of EUR -0.6m.

Together with the appreciation of MFG, the main contributors to the change in value of shares in subsidiaries and associated companies in the Income statement for the period were fair value adjustments in Vertas of EUR 0.2m, 3Burės of EUR 3.1m, 3Burės development of EUR 1.5m, East Capital Baltic Property Fund II of EUR -0.1m, East Capital Baltic Property Fund III of EUR 0.8m, East Capital Eastern

Europe Small Cap Fund of EUR 0.5m, East Capital Global Frontier Markets Fund of EUR 0.8m and in Komercijalna Banka Skopje of EUR -0.3m.

Furthermore, dividends were received from East Capital Baltic Property Fund II of EUR 0.6m, and from Melon Fashion Group of EUR 1.0m.

In the investment activities, Eastnine invested EUR 2.2m in 3Burės development. Shares in East Capital Baltic Property Fund II were sold for a total amount of EUR 9.8m and in East Capital Eastern Europe Small Cap Fund for a total amount of EUR 2.0m. Furthermore, all the shares in East Capital Bering Ukraine Fund Class R were sold for EUR 1.3m.

The result for the period includes other income of EUR 0.2m (EUR 0.3m) from repayment of charged management fees in funds, and expenses of EUR 0.9m (EUR 1.1m), all of which refer to the Parent company. Net financial income and expenses was EUR +0.1m (EUR +0.2m).

Comparative numbers in parenthesis refer to the fourth quarter of 2016.

Change in NAV per share during the fourth quarter 2017, EUR

NAV/share increased by EUR 0.78/share, or 7.9%, in Q4 2017. Fair value gains in the Real Estate segments contributed EUR 0.24/share, the Other segment EUR 0.43/share and dividends from MFG and Baltic Property Fund II EUR 0.07/share. Buybacks contributed EUR 0.08/share, while other income and expenses was negative EUR -0.04/share.

Results for the period Jan-Dec 2017

The net result for the year was EUR 17.1m (EUR 13.3m), including value changes of shares in subsidiaries and associated companies of EUR 17.6m (EUR 16.9m), corresponding to earnings per share of EUR 0.70 (EUR 0.49).

Melon Fashion Group appreciated by EUR 5.7m. The underlying asset in rouble appreciated by EUR 8.7m because of improving profitability supported by stronger local currency and stable performance of new concepts, as well as decreased interest rates in Russia which results in a lower weighted average cost of capital (WACC). The translation from rouble to euro had a negative effect of EUR -2.9m.

Together with the appreciation of MFG, the main contributors to the change in value of shares in subsidiaries and associated companies in the Income statement for the period were fair value adjustments in Vertas of EUR 0.8m, 3Burės of EUR 5.2m, 3Burės development of EUR 1.5m, East Capital Baltic Property Fund II of EUR 2.8m, East Capital Baltic Property Fund III of EUR 1.4m, East Capital Eastern Europe Small Cap Fund of EUR -1.4m, East Capital Global Frontier Markets Fund of EUR 1.9m and in Komercijalna Banka Skopje of EUR -0.4m.

Furthermore, dividends were received from East Capital Baltic Property Fund II of EUR 1.1m, Komercijalna Banka Skopje of EUR 0.5m and from Melon Fashion

Group of EUR 2.0m. Eastnine acquired office property Vertas in Vilnius for EUR 29.1m and invested EUR 6.0m in East Capital Baltic Property Fund III and EUR 7.2m in 3Burės development. The holding in Trev-2 was sold for a total cash consideration of EUR 5.7m. Shares in East Capital Baltic Property Fund II were sold for a total amount of EUR 9.8m and in East Capital Eastern Europe Small Cap Fund for a total amount of EUR 8.1m. Furthermore, all the shares in East Capital Bering Ukraine Fund Class R were sold for EUR 1.3m.

The result for the period includes dividend from East Capital Explorer Investments AB of EUR 0.5m (redistribution of dividend from Komercijalna Banka Skopje, as mentioned above), other income of EUR 0.9m (EUR 0.7m) mainly from repayment of charged management fees in funds, and expenses of EUR 3.5m (EUR 4.5m), all of which refer to the Parent company. Net financial income and expenses was EUR +0.6m (EUR +0.1m).

Comparative numbers in parenthesis refer to January-December 2016.

Financial Position and Cash Flow Jan-Dec 2017

The Parent Company's equity ratio was 99.6 percent (99.3 percent).

The cash flow presented below only relates to transactions in the Parent Company. In May, an ordinary dividend for 2016 of SEK 0.90 per share, corresponding to EUR 0.09 per share, was paid out to the shareholders. The total amount of the dividend was EUR 2.3m (EUR 2.3m). In June, the Company received a dividend of EUR 0.5m (EUR 0.0m) from East Capital Explorer Investments AB and in December from Melon Fashion Group of EUR 1.0m (EUR 0.0m). In September and November, add-on investments amounting to EUR 4.2m was made in 3Burės development. During the period, Jan–Dec 2017, Eastnine repurchased a total of 2,656,258 shares for an amount equivalent to EUR 19.9m.

Cash and cash equivalent at the end of the period amounted to EUR 13.2m (EUR 30.3m), all of which refer to the Parent Company.

At the end of the period, cash and cash equivalents in the investment activities amounted to EUR 41.1m (EUR 83.5m). Please refer to the breakdown of values in subsidiaries and associated companies on pages 19-21 for more details regarding the investment activities.

Comparative numbers in parenthesis refer to 31 December 2016.

Commitments

On 10 July 2015, the Company announced a commitment to invest EUR 20m in total in East Capital Baltic Property Fund III. Of this, EUR 14.1m has been drawn down by the fund and the outstanding commitment on 31 December 2017 amounted to EUR 5.9m.

Real Estate Direct

Segment development

• The segment NAV increased by 6.9% October-December, and by 11.2% full-year, to EUR 74.2m. Total property value grew from EUR 99.6m in Q3 to EUR 107.5m in Q4, after external valuations of 3Burės and 3Burės development.
• The segment's combined annual average return is 13.2%, affected by the development project and the low LTV.
• Combined vacancy remained low at 3.0% in Q4, up from 1.9% in Q3, while average rent was unchanged at EUR 13.8 per sqm and month in Q4. Combined net operating income was EUR 0.9m in Q4 compared to EUR 1.3m in Q3, due to higher costs for tenant improvements and VAT settlement.
• The segment's combined LTV was 30.3% on 31 December. Vertas had no external financing at year-end but was refinanced in January 2018 with a bank loan of EUR 14m, corresponding to a LTV of 46.8%.
• In February, Eastnine announced the acquisition of A class office property Alojas Business Centre in Riga and two adjacent properties, one retail property and one smaller B class office building, for a total purchase price of EUR 29.6m.
• Please see p. 25 for more detailed consolidated property data.

EURm	Q4 2017	Q4 2016	FY 2017	FY 2016
Value change1 , %	6.9	1.0	11.2	9.1
Segment NAV	74.2	30.4	74.2	30.4
% of Eastnine's NAV	30.6	12.3	30.6	12.3
Investments	2.2	-	36.3	0.3
Divestments	-	-	-	-

¹ The value change calculation is adjusted for investments, divestments and distributions during the relevant period

Real Estate Direct

% of Eastnine's NAV

3Burės

3Burės development

3Burės

Eastnine's holding in the property, %	100
Property value, EURm	63.8
NAV, EURm	30.7
% of Eastnine's NAV	12.7
Value change Oct-Dec, %	11.3

The fair value of Eastnine's equity investment in the office property 3Burės, with a leasable area of 28,400 sqm located in the new business district of Vilnius, increased by 11.3% during the fourth quarter. The increase is the result of a 4.8% revaluation of the property, explained by somewhat lower yield levels, and of operating cash flows. The new property value is EUR 63.8m, corresponding to just over EUR 2,200 per leasable square meter. The loan-to-value amounted to 51%.

During the quarter, the vacancy rate in 3Burės temporarily increased from 1.7% to 4.0% while average rent was unchanged. Since the end of the quarter, the vacancy rate has again been reduced to 1.0%. Indexation of the majority of rental levels occurred in February.

The property's net operating income decreased for the full year due to major tenant customizations in 2017 and extraordinary income during the previous year, which affected comparability. Rental income increased by 2.4% and operational costs were reduced for the full year.

Learn more about 3Burės at www.3bures.lt

3Burės development

Eastnine's holding in the property, %	100
Property value, EURm	15.1
NAV, EURm	13.6
% of Eastnine's NAV	5.6
Value change Oct-Dec, %	12.2

The fair value change of Eastnine's equity investment in the development of the third tower in 3Burės, was 12.2% during the quarter, following an external revaluation of the property. After investments during the quarter of EUR 2.2m and contributions from the revaluation of EUR 1.5m, the property value at the end of the quarter amounted to EUR 15.1m. The development, which so far is financed by equity, will during 2018 be financed through bank loan. Loan-to-value will be approximately 65% when the development is finalized.

Construction continued according to plan without any delays. The property, which is expected to be completed by the end of 2018 with a leasable area of 12,800 sqm, is 98% pre-let to Swedbank and Visma. During the quarter discussions with a potential restaurant operator were initiated, to cover the remaining vacancy.

Vertas

Eastnine's holding in the property, %	100
Property value, EURm	28.5
NAV, EURm	29.9
% of Eastnine's NAV	12.3
Value change Oct-Dec, %	0.7

The fair value of Eastnine's equity investment in the office property Vertas, with a leasable area of 9,400 sqm, increased by 0.7% during the fourth quarter. The property value was kept unchanged. After implementing certain tenant changes and customizations during the quarter, the property was continued fully let with an unchanged average rent. Indexation of all rental levels occurred in January.

The property was financed with 100% equity at year-end, but has been refinanced through bank loan of EUR 14m in January 2018. This corresponds to a loan-to-value ratio of 46.8%.

Learn more about Vertas at www.vertas.lt

Real Estate Funds

Segment development

• The fair value of the segment increased by 2.9% October-December, and by 12.2% in the full year 2017, to EUR 37.1m. Combined annual average return is 10.5%.
• East Capital Baltic Property Fund II returned EUR 9.8m to Eastnine following its successful sale of GO9 shopping centre in Vilnius in the third quarter, and also paid a dividend of EUR 0.6m
• There are in total eight commercial properties in the two funds, seven of which are in Tallinn and one in Riga.

EURm	Q4 2017	Q4 2016	FY 2017	FY 2016
Value change1 , %	2.9	1.6	12.2	7.6
Segment NAV	37.1	36.7	37.1	36.7
% of Eastnine's NAV	15.3	14.8	15.3	14.8
Investments	-	-	6.0	4.8
Divestments	9.8	-	9.8	-

¹ The value change calculation is adjusted for investments, divestments and distributions during the relevant period

Real Estate Funds

% of Eastnine's NAV

East Capital Baltic Property Fund II

East Capital Baltic Property Fund III

East Capital Baltic Property Fund II

Eastnine's share of the fund, %	46
NAV, EURm	20.8
% of Eastnine's NAV	8.6
Value change Oct-Dec, %	1.9

The fair value of Eastnine's holding in East Capital Baltic Property Fund II increased by 1.9% during the fourth quarter and 13.8% during the full year 2017.

Following the successful exit of GO9 in the third quarter, corresponding to an IRR of 15%, the fund returned a total of EUR 9.8m to Eastnine in a share redemption. In addition, the fund paid a dividend of EUR 0.6m.

The Estonian property portfolio continues its operations according to plan, while the Deglava property in Riga remained closed. A property manager has been hired to assist in the search for new tenants and the redevelopment of the property.

The duration of East Capital Baltic Property Fund II is until 2019 with possible extension up to three years.

East Capital Baltic Property Fund III

Eastnine's share of the fund, %	27
NAV, EURm	16.2
% of Eastnine's NAV	6.7
Value change Oct-Dec, %	5.0

The fair value of Eastnine's holding in East Capital Baltic Property Fund III increased by 5.0% during the fourth quarter and by 9.1% during the full year 2017, as a result of operational profits and external revaluations of the two properties acquired during 2016, Hilton Hotel and Vesse Retail Centre.

The duration of East Capital Baltic Property Fund III is until 2023 with a possible two-year extension.

Other

Segment development

• The fair value of the segment increased by 11.8% October-December, and by 8.1% in the full year 2017, to EUR 90.2m. Combined average annual return is 2.1%.
• Melon Fashion Group continued to show improving results, with Q4 profit significantly above expectations. The fair value was consequently increased by 22.8%, reflecting the full-year 2017 outcome and somewhat lower WACC.
• EC Eastern Europe Small Cap Fund (former Deep Value) and EC Global Frontier Markets Fund gained in value, while the stock price of Komercijalna Banka Skopje declined slightly.
• Quarterly redemptions of Eastnine's holding in EC Eastern Europe Small Cap Fund continue as planned. EC Global Frontier Markets Fund remains in the portfolio as a liquid holding.

EURm	Q4 2017	Q4 2016	FY 2017	FY 2016
Value change1 , %	11.8	14.1	8.1	17.4
Segment NAV	90.2	99.6	90.2	99.6
% of Eastnine's NAV	37.2	40.2	37.2	40.2
Investments	-	-	-	-
Divestments	3.3	90.6	15.1	117.4

¹ The value change calculation is adjusted for investments, divestments and distributions during the relevant period

• Melon Fashion Group
• East Capital Eastern Europe Small Cap Fund
• East Capital Global Frontier Markets Fund
• Komercijalna Banka Skopje

Melon Fashion Group

Eastnine's holding in the company, %	36
NAV, EURm	48,6
% of Eastnine's NAV	20.0
Value change Oct-Dec, %	22.8

The fair value of Eastnine's holding in Melon Fashion Group (MFG) increased by 22.8% in Q4, reflecting the stronger-than-expected Q4 and full-year outcome, and a somewhat lower WACC due to lower interest rates.

MFG's Q4 sales grew by 28.3% to RUB 4.1bn, driven by 18% LFL in own retail network and strong growth in online and franchise segments. Low inflation, strengthened rouble and overall economic stabilization boosted consumer sentiment, reflected in store traffic and apparel spending. Love Republic, with its chic special occasion wear, traditionally benefits the most from winter holidays' shopping. This season's appealing collection and recovering consumer strength resulted in 20.0% LFL growth for the quarter. Befree and Zarina's comparable store sales were also strong at 18.0% and 15.2%, respectively. Combined 12M sales grew by 11.2% year-on-year to RUB 13.9bn.

Gross margin increased to 56.0% in Q4 2017 from 55.8% in Q4 2016, supported by the stronger rouble and by more commercial collections with lower reduction rates. Full year gross margin increased to 52.5% from 47.6% in 2016, while year-onyear gross profit increased by 28.9% in Q4 and 22.9% in 12M. EBITDA was RUB 667m compared to RUB 597m in Q4 2016. The corresponding EBITDA margin amounted to 16.4% vs 18.8% in Q4 2016. Full year EBITDA reached a record level of RUB 1.5bn corresponding to EBITDA margin of 10.9% and 133% year-on-year growth. FX impact was insignificant in both periods.

12M revenues through own and third-party online channels grew by 83% yearon-year and reached 6.7% share in total sales at year end compared to 4.1% a year ago.

The total number of stores decreased to 551 from 558 a year earlier, while endof-period selling area increased by approximately 12%. In 2017, MFG opened 26 new stores, relocated 48, and closed 44 stores with low potential. The franchising network grew by 11 new stores.

The brands continue developing its fast fashion segment with around 20% of production volume delivered through fast cycle within the current season. IT

investments made it possible to launch a new faster and more functional platform for brand web shops.

Learn more about Melon Fashion Group at www.melonfashion.ru/en

East Capital Eastern Europe Small Cap Fund

Eastnine's share of the fund, %	59
NAV, EURm	19.2
% of Eastnine's NAV	7.9
Value change Oct-Dec, %	2.3

The fair value of Eastnine's investment in the fund, previously named East Capital Deep Value Fund, increased by 2.3% during the fourth quarter and decreased 4.7% during the full year 2017. Eastnine divested fund shares corresponding to EUR 2.0m in the fourth quarter.

East Capital Global Frontier Markets Fund

Eastnine's share of the fund, %	20
NAV, EURm	12.1
% of Eastnine's NAV	5.0
Value change Oct-Dec, %	7.4

The value of Eastnine's holding in EC Global Frontier Markets Fund gained 7.4% during the fourth quarter and 18.4% during the full year 2017, while the MSCI Frontier Markets index increased by 4% during the quarter and 16% for the full year. By that, the fund overperformed its index for the third consecutive year.

Vietnam had a strong fourth quarter gaining 20% with a continued strong momentum to attract foreign capital. Thanks to favourable growth in the aviation sector, Airports Corporation of Vietnam and VietJet Aviation were two of the strongest performers gaining 62% and 32%, respectively. The Argentinian market also continued up, after President Macri won the mid-term elections and strengthened his position to initiate further pro-market reforms.

Komercijalna Banka Skopje

Eastnine's holding in the company, %	10
NAV, EURm	10.3
% of Eastnine's NAV1	5.0
Value change Oct-Dec, %	-3.2

1. Direct investment and through East Capital Eastern Europe Small Cap Fund

Komercijalna Banka Skopje's (KBS) shares decreased by 3.2% (in EUR) on the Macedonian exchange during the fourth quarter and increased by 1.2% during the full year 2017. KBS reported for the full year a net profit of MKD 820.6m, an increase of 5.3% year-on-year.

The macroeconomic environment in Macedonia is expected to be stable supported by low inflation, around 1.5-2%, and stable local currency compared to the euro. Economic growth is expected to be approximately 2.5-3% in 2018.

Learn more about Komercijalna Banka Skopje at www.kb.com.mk

Other information

Risks and uncertainties

The dominant risk in Eastnine's operations is commercial risk in the form of exposure to specific sectors, geographic regions or individual holdings and financial risk in the form of market risk, equity price risk, foreign exchange risk and interest rate risk. A more detailed description of Eastnine's material risks and uncertainties is provided in the Company's Annual Report 2016 on pages 60-61. An assessment for the coming months is provided in the Market comment on page 6.

In addition, through the business activities of the holdings, i.e. their offerings of products and services, within the respective sectors, the investments are also exposed to legal/regulatory risk and political risk, for example political decisions on public sector expenditures and industry regulations.

Organisational and investment structure

Eastnine AB (publ) is a Swedish investment company listed on Nasdaq Stockholm. Eastnine's business concept is to maximise risk-adjusted shareholder return by offering shareholders exposure to a portfolio of primarily real estate investments in the Baltic countries, mainly through direct ownership. Eastnine also holds other private equity and fund investments in Eastern Europe, that are expected to be divested within the next few years.

The Company is currently transitioning into a pure Baltic real estate company, with an aim to generate predictable cash flows by being a long-term owner of attractive commercial properties with stable tenants in prime locations in the Baltic capitals.

Eastnine has seven full-time employees in its Stockholm headquarters. For further information about the organizational and investment structure of the Company, please see the Company's latest Annual Report, under the section 'Corporate Governance'.

The CEO certifies that the year-end report presents a true and fair view of the Company's and the Group's operations, financial position and profits and describes the significant risks and uncertainties facing the Company and the Group.

Stockholm, 16 February 2018

Kestutis Sasnauskas Chief Executive Officer

Financial Statements

EASTNINE AB 15 Year-end Report 2017

Income Statement

EUR Thousands
		2017	2016	2017	2016
	Note	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec
Changes in fair value of subsidiaries and associated companies	2	17,583	16,931	15,829	23,400
Dividends received		1,497	-	997	-
Other income		892	691	183	331
Staff expenses		-2,262	-1,894	-716	-794
Other operating expenses		-1,259	-963	-185	-298
Items affecting comparability1		-	-1,604	-	-
Operating profit/loss		16,451 16,451	13,161 13,161	16,108	22,638
Financial income		749	203	199	181
Financial expenses		-115	-61	-53	12
Profit/loss before tax		17,085 17,085	13,303 13,303	16,253	22,831
Tax		-	-	-	-
NET PROFIT/LOSS FOR THE PERIOD2		17,085 17,085	13,303 13,303	16,253	22,831
Earnings per share, EUR
- Attributable to shareholders of the Parent Company		0.70	0.49	0.70	0.88

No dilutive effects during the periods

Advisory costs related to the termination of the Investment Agreement with East Capital

Net Profit/Loss for the period corresponds to Total Comprehensive income

Balance Sheet

EUR Thousands

		2017	2016
	Note	31 Dec	31 Dec
Assets
Shares in subsidiaries	3, 4	153,963	195,993
Shares in associated companies	4	48,613	-
Loans to group companies	4	25,100	20,900
Total non-current assets		227,676 227,676	216,893 216,893
Other short-term receivables		0	2
Accrued interest income	4	2,430	1,680
Accrued income and prepaid expenses		218	427
Cash and cash equivalent		13,168	30,338
Total current assets		15,816 15,816	32,447
Total assets		243,492 243,492	249,340
Equity
Share capital1		3,658	3,655
Other contributed capital/Share premium reserve2		277,425	299,613
Retained earnings2		-55,711	-69,014
Net profit/loss for the period2		17,085	13,303
Total equity		242,457 242,457	247,558
Current liabilities
Other liabilities		180	334
Accrued expenses and prepaid income		855	1,449
Total current liabilities		1,035 1,035	1,783 1,783
Total equity and liabilities		243,492 243,492	249,340

Restricted capital

Unrestricted capital

Statement of Changes in Equity

EUR Thousands		Other contributed capital/Share premium	Retained earnings incl. profit/loss for	Total equity shareholders in Parent
	Share capital	reserve	the year	company
Opening equity 1 January 2017	3,655 3,655	299,613 299,613 299,613	-55,711 -55,711 -55,711	247,558
Net profit/loss for the period	-	-	17,085	17,085
Total comprehensive income	-	-	17,085	17,085
Bonus issue	3	-3	-	-
Dividend to shareholders	-	-2,267	-	-2,267
Share buy-back	-	-19,920	-	-19,920
Closing equity 31 December 2017	3,658 3,658	277,425 277,425 277,425	-38,626 -38,626-38,626	242,457 242,457

EUR Thousands		Other contributed capital/Share premium	Retained earnings incl. profit/loss for	Total equity shareholders in Parent
	Share capital	reserve	the year	company
Opening equity 1 January 2016	3,654 3,654	318,920 318,920 318,920	-69,014 -69,014-69,014	253,561
Net profit/loss for the period	-	-	13,303	13,303
Total comprehensive income	-	-	13,303	13,303
Bonus issue	1	-1	-	-
Dividend to shareholders	-	-2,335	-	-2,335
Share buy-back	-	-16,971	-	-16,971
Closing equity 31 December 2016	3,655 3,655	299,613 299,613 299,613	-55,711 -55,711-55,711	247,558

Statement of Cash Flow

EUR Thousands

	2017	2016	2017	2016
	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec
Operating activities
Operating profit/loss	16,451	13,161	16,108	22,638
Changes in fair value of subsidiaries and associated companies	-17,583	-16,931	-15,829	-23,400
Cash flow from current operations before changes in working capital	-1,132 -1,132	-3,770 -3,770	279	-761
Cash flow from changes in working capital
Increase (-)/decrease(+) in other current receivables	210	-414	252	-59
Increase (+)/decrease(-) in other current payables	-747	1,272	-762	486
Cash flow from operating activities	-1,669 -1,669	-2,912 -2,912	-231	-335
Investing activities
Repayment of shareholder contributions	11,000	52,700	11,000	32,000
Aquisition of remaining shares in ECEX Holding SA	-	-2,000	-	-
Loan to group company	-4,200		-2,200	-
Cash flow from investing activities	6,800 6,800	50,700 50,700	8,800	32,000
Financing activities
Dividend to shareholders	-2,267	-2,335	-	-
Share buy-back	-19,920	-16,971	-6,088	-2,919
Cash flow from financing activities	-22,187 -22,187	-19,306 -19,306 -19,306	-6,088	-2,919
Cash flow for the period	-17,056 -17,056	28,482 28,482	2,481	28,746
Cash and cash equivalent at the beginning of the period	30,338	1,918	10,740	1,581
Exchange rate differences in cash and cash equivalents	-115	-61	-53	12
Cash and cash equivalent at the end of the period	13,168 13,168	30,338 30,338	13,168	30,338

Note 1 Accounting Principles

This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) 34 Interim Financial Reporting and applicable provisions in the Swedish Annual Accounts Act (Årsredovisningslagen). The interim report for the Parent company has been prepared in accordance with the Swedish Financial Reporting Board's standard RFR 2 and the Swedish Annual Accounts Act Chapter 9, Interim report. The parts of IFRSs and RFR 2 that are currently relevant for Eastnine AB lead to the same accounting. The two sets of financial statements are therefore presented together as a common single set of accounts.

As of 1 January 2014, Eastnine AB applies the investment entity consolidation exception in IFRS 10, which implies that all holdings are recognised at fair value through profit or loss. In assessing Eastnine AB, it has been concluded that the Company falls within the classification of an investment entity.

As of Q2 2017, Eastnine has changed its segment reporting to reflect the ongoing strategic shift. The new segments are Real Estate Direct, Real Estate Funds and Other. Comparable numbers for 2016 are restated according to the new segment reporting, see Note 2 Segment reporting. All other accounting principles applied in these interim financial statements are the same as those applied in the financial statements as at and for the year ended 31 December 2016.

Note 2 Segment Reporting

Eastnine AB classifies the Company's various segments based on the nature of the investments. Management monitors the holdings on the basis of fair value, and all holdings are reported at fair value through profit or loss. The value change of holdings held by the subsidiaries has been allocated to value changes, dividends received and other operating expenses that are directly attributable to the underlying investments in Real Estate Direct, Real Estate Funds and Other. All other revenues and expenses are classified as unallocated in the table below. As of Q2 2017, Eastnine has changed its segment reporting to reflect the ongoing strategic shift. Previously, the segment reporting was classified as Private Equity, Real Estate, Public Equity and Short-term Investment. Comparable numbers for 2016 are restated according to the new segment reporting.

EUR thousands	Real Estate	Real Estate
1 Jan – 31 Dec 2017	Direct	Funds	Other	Unallocated	Total
Changes in value of portfolio	6,695	4,140	5,699	-	16,534
Dividends received	-	1,067	990	-	2,057
Other operating expenses	-	-	-	-1,008	-1,008
Changes in fair value of subsidiaries and associated companies d companies	6,695 6,695	5,207	6,689	-1,008	17,583
Dividends received	-	-	1,497	-	1,497
Other income	-	52	666	175	892
Staff expenses	-	-	-	-2,262	-2,262
Other operating expenses	-	-	-	-1,259	-1,259
Operating profit/loss	6,695 6,695	5,259 5,259	8,851	-4,354	16,451
Financial income	749	-	-	-	749
Financial expense	-	-	-	-115	-115
Profit/loss before tax	7,444 7,444	5,259 5,259	8,851	-4,469	17,085
Assets	74,164 74,164	37,064 37,064	90,213	42,051	243,492

EUR thousands	Real Estate	Real Estate
1 Jan – 31 Dec 2016	Direct	Funds	Other	Unallocated	Total
Changes in value of portfolio	2,326	1,808	31,119	-	35,254
Dividends received	-	854	1,175	-	2,029
Other operating expenses (incl. management fees)	-172	0	-2,717	-447	-3,336
Items affecting comparability1	-935	-	-6,682	-9,400	-17,017
Changes in fair value of subsidiaries and associated companies d companies	1,219 1,219	2,662	22,896	-9,847	16,931
Other income	-	27	550	115	691
Staff expenses	-	-	-	-1,894	-1,894
Other operating expenses	-	-	-	-963	-963
Items affecting comparability2	-	-	-	-1,604	-1,604
Operating profit/loss	1,219 1,219	2,689 2,689	23,446	-14,193 -14,193 -14,193	13,161
Financial income	203	-	-	-	203
Financial expense	-	-	-	-61	-61
Profit/loss before tax	1,421 1,421	2,689 2,689	23,446	-61	13,303
Assets	30,419 30,419	36,656 36,656	99,631	82,634	249,340

Costs related to the transition and termination agreement with East Capital (Real Estate Direct and Unallocated), and carried interest related to the sale of Starman (Other)

= Advisory costs related to the termination of the Investment Agreement with East Capital

Note 3 Entities with ownership interests over 50 percent

The following entities, in which the ownership interest is over 50%, are not consolidated due to the consolidation exception for investment entities.

		Number of	Book value,	Ownership
Non consolidated entities 31 December 2017	Country	shares	EURt	capital
Baltic Cable Holding OÜ	Tallinn, Estonia	2,502	142,416	100%
UAB Portarera	Vilnius, Lithuania	9,500	74,164	100%
UAB 3Burės	Vilnius, Lithuania	100	30,674	100%
UAB Vertas	Vilnius, Lithuania	100	29,851	100%
UAB Solverta (3Burės development)	Vilnius, Lithuania	100	13,639	100%
East Capital Explorer Investments AB	Stockholm, Sweden	11,000	10,392	100%
ECEX Holding SA (under liquidation)	Bertrange, Luxembourg	100,000	1,155	100%

Note 4 Financial instruments

For a better understanding of the business, the information regarding financial instruments below is presented on a see-through basis as the fair value of the holdings in the subsidiaries. Shares and participations in the investment activities as well as the Company's holdings in subsidiaries are all valued at fair value.

Financial instruments not measured at fair value through profit and loss

For receivables and payables, the carrying amount is assessed to reflect fair value since the remaining maturity is generally short. This is also the case for cash and cash equivalent.

Calculation of fair value

The following summarises the main methods and assumptions applied in determining the fair values of the financial instruments in the balance sheet. Please refer to the Annual Report 2016 for more details on valuation policies used by Eastnine AB.

Loans to Group Companies, which are a part of 3Burės valuation, are monitored by management on a fair value basis. Changes in credit risk has not led to any significant fair value changes of the loans.

Fair value hierarchy

The fair value hierarchy has the following levels:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level of input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs requiring significant adjustment based on unobservable inputs, such measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the financial asset or liability.

Shares in subsidiaries and associated companies/financial instruments

In the Parent Company, financial instruments consist of shares in subsidiaries of EUR 154.0m, shares in accociated companies of EUR 48.6, loans to group companies of EUR 25.1m and cash and cash equivalent of EUR 13.2m. The carrying amount of these assets constitutes the fair value on the balance sheet date.

Shares in subsidiaries and associated companies,		Book value, EURt		Share of capital, %
including loans to group companies	Country	31 Dec 2017	31 Dec 2016	31 Dec 2017	31 Dec 2016
Baltic Cable Holding OÜ1	Tallinn, Estonia	142,416	-	100	-
Melon Fashion Group1	Saint Petersburg, Russia	48,613	-	36	-
Humarito Limited1	Nicosia, Cyprus	-	173,321	-	100
East Capital Explorer Investments AB	Stockholm, Sweden	10,392	10,808	100	100
ECEX Holding SA (under liquidation)	Bertrange, Luxembourg	1,155	11,864	100	100
UAB Portarera (loan)	Vilnius, Lithuania	25,100	20,900	100	100

Due to reorganisation in the group, shares in Melon Fashion Group was transferred from Humarito to Eastnine, while the remaining holdings were transferred to Baltic Cable Holding. Following the completion of the reorganisation, Humarito was sold to an independent service provider for a nominal consideration.

As the holdings in the subsidiaries are presented on a see-through basis, the tables below reflect the fair value hierarchy in the investment activities. The values of the shares in subsidiaries and associated companies, including loans to group companies, are directly and indirectly made up by the following assets:

EUR Thousands
31 December 2017					Other assets
Breakdown of values in subsidiaries and associated	Real Estate	Real Estate			and liabilities,
companies including loans to group companies	Direct	Funds	Other	Cash and bank	net	Total
Opening balance 1 January 2017	28,739 28,739	36,656 36,656	99,631	53,201	-1,334	216,893
Purchases/additions	36,300	6,033	1,324	-39,457	-	4,200
Divestments/Reductions	-	-9,765	-16,441	26,206	-	0
Other	-	-	-	-2,410	1,402	-1,008
Repaid shareholders contributions	-	-	-	-11,000	-	-11,000
Dividend received	-	-	-	1,917	640	2,557
Dividend paid to parent company	-	-	-	-500	-	-500
Changes in fair value recognised net in profit/loss	6,695	4,140	5,699	-	-	16,534
Closing balance 31 December 2017	71,734 71,734	37,064 37,064	90,213	27,957	708	227,676 227,676

EUR Thousands 31 December 2016 Total Opening balance 1 January 2016 27,641 30,077 185,927 8,593 -98 252,140 Movement of acrrued interest income to Parent company -1,477 - - - - -1,477 Purchases/additions 250 4,770 - -5,020 - 0 Divestments/Reductions - - -117,416 117,416 - 0 Other - - - -17,116 -1,236 -18,352 Repaid shareholders contributions - - - -52,700 - -52,700 Dividend received - - - 2,029 - 2,029 2,326 1,808 31,119 - - 35,254 28,739 36,656 28,739 36,656 99,631 53,201 -1,334 216,893 216,893 Closing balance 31 December 2016 Other assets and liabilities, net Cash and bank Changes in fair value recognised net in profit/loss Real Estate Funds Real Estate Direct Breakdown of values in subsidiaries and associated companies including loans to group companies Other

Real Estate Direct consists of holdings in 3Burės, 3Burės development and Vertas. Real Estate Funds consists of holdings in East Capital Baltic Property Fund II and East Capital Baltic Property Fund III. These holdings are valued internally or externally normally at year-end, and the fair value of the holdings is assessed on a quarterly basis.

Other consists of the holdings in Melon Fashion Group (MFG), the fair value of which is assessed on a quarterly basis, East Capital Eastern Europe Small Cap Fund with a majority of public holdings managed by East Capital, East Capital Global Frontier Markets Fund, Komercijalna Banka Skopje, which are publicly traded. These holdings are valued at fair value according to the valuation principles described on the previous page.

Holding	Class	Valuation method	Valuation assumptions
3Burės	Real Estate Direct	DCF	WACC 7.9%, Exit yield 6.75%
3Burės development	Real Estate Direct	DCF	WACC 7.2%, Exit yield 6.75%
Vertas	Real Estate Direct	Acquisition value
East Capital Baltic Property Fund II	Real Estate Funds	DCF	WACC 8-12%, Exit yield 6-8%
East Capital Baltic Property Fund III	Real Estate Funds	DCF	WACC 8-9%, Exit yield 7-8%
			Long-term growth 4.6%, Long term operating margin 11.5%, WACC
Melon Fashion Group	Other	DCF	16.1%. A 25% minority and liquidity discount is applied

Discounted Cash Flow model (DCF), weighted average cost of capital (WACC)

For the fair values of Real Estate Direct (3Burės and 3Burės development), Real Estate Funds and Other - reasonably possible changes at the reporting date to one of the significant unobservable inputs, provided other inputs constant, would have the following effects:

Effect in EUR thousands 31 December 2017		Real Estate Direct Profit or loss		Real Estate Funds Profit or loss
Sensitivity analysis	Increase	Decrease	Increase	Decrease
Weighted average cost of capital (WACC) (0.5% movement)	-1,472	1,529	-587	598
Exit yield (0.5% movement)	-2,495	2,892	-1,380	1,464

Effect in EUR thousands 31 December 2017	Other Profit or loss
Sensitivity analysis	Increase	Decrease
Long term growth rate (0.5% movement)	1,738	-1,593
Weighted average cost of capital (WACC) (0.5% movement)	-2,429	2,659
Long term operating margin (0.5% movement)	1,622	-1,621

The Eastnine's portfolio is presented on page 5 in this report, including information on fair value changes during the period. More information on the portfolio holdings can be found on pages 9 to 13 in this report.

The following table analyses, within the fair value hierarchy, the investments in the investment activities measured at fair value:

EUR thousands

31 December 2017			Total
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 3	balance
Real Estate Direct	-	74,164	74,164
Real Estate Funds	-	37,064	37,064
Other	41,601	48,613	90,213
Total	41,601 41,601	159,840 159,840 159,840	201,441 201,441

EUR thousands

31 December 2016			Total
Shares and participations in investment activities at fair value through profit or loss	Level 1	Level 3	balance
Real Estate Direct	-	30,419	30,419
Real Estate Funds	-	36,656	36,656
Other	49,592	50,039	99,631
Total	49,592 49,592	117,114117,114 117,114	166,706 166,706

Following investments are classified in:

Level 1 - East Capital Eastern Europe Small Cap Fund, East Capital Global Frontier Markets Fund and Komercijalna Banka Skopje

Level 3 - East Capital Baltic Property Fund II, East Capital Baltic Property Fund III, 3Burės, 3Burės development, Vertas and MFG

EUR thousands
31 December 2017	Real Estate	Real Estate
Changes in financial assets and liabilities in Level 3	Direct	Funds	Other	Total
Opening balance 2017	30,419 30,419	36,656 36,656	50,039	117,114
Purchases/additions	36,300	6,033	-	42,333
Divestments/Reductions	-	-9,765	-7,026	-16,791
Changes in fair value recognised net in profit/loss	7,444	4,140	5,600	17,184
Closing balance 31 December 2017	74,164 74,164	37,064 37,064	48,613	159,840 159,840

EUR thousands

31 December 2016	Real Estate	Real Estate
Changes in financial assets and liabilities in Level 3	Direct	Funds	Other	Total
Opening balance 2016	27,641 27,641	30,077 30,077	105,957 105,957105,957	163,675 163,675
Transfers out of level 31	-	-	-71,839	-71,839
Purchase/additions	250	4,770	-	5,020
Changes in fair value recognised net in profit/loss	2,529	1,808	15,921	20,258
Closing balance 31 December 2016	30,419 30,419	36,656 36,656	50,039	117,114 117,114

Starman was moved from level 3 to level 2 before the divestment was finalised; the unobservable input was not a significant part of the value of the holding.

EUR 16,408 thousands (EUR 20,258 thousands) of changes in fair value recognised net in profit/loss relate to investments still held at the end of the period.

Risks and uncertainties

For information about risks, uncertainties and information about the business environments and markets in which Eastnine invests, please see page 6 and 14. For a summary of the methods and assumptions used to determine fair value of the portfolio holdings please see Note 4 and in more detail on page 60 in the Annual Report of 2016. The effect of fluctuations in the major parameters on the value of the portfolio holdings is presented in the table below:

			Sensitivity analysis for market risks (EUR Thousands)
--	--	--	-------------------------------------------------------

31 December 2017		Effect on net
Risk factors	Change	profit/loss for the period
Fx EUR/RUB	+/- 10%	4,861
Fx EUR/USD	+/- 5%	1,498
Equity price	+/- 10%	19,901

Note 5 Related parties

On 31 December 2017, Eastnine AB had a related party relationship with its subsidiaries, Board members and employees.

Eastnine AB's management, Board members and their close relatives and related companies control 25.6 percent of voting rights in the Company.

Following the termination of the Investment Agreement between Eastnine and East Capital on 9 May 2016, all management fee payments to East Capital were halted, with the exception of the real estate funds East Capital Baltic Property Fund II and East Capital Baltic Property Fund III. As a consequence, during the period Jan-Dec 2017, the Company received repayments of EUR 0.7m (EUR 0.6m) regarding management fees originated in the other East Capital funds. Management fees originated in the real estate funds during the period Jan-Dec 2017 amounted to EUR 0.5m (EUR 0.4m).

The management fee for East Capital Baltic Property Fund II is 1.75 percent and the rebated management fee for East Capital Baltic Property Fund III is 1.25 percent. The carried interest for these funds is 20 percent, on the premise that a threshold value increase of 7 and 8 percent, respectively, per year has been achieved.

According to decision by the Board of Directors, the resigned CEO Mia Jurke received a compensation corresponding to six monthly salaries.

There have been no other material related party transaction during the year.

Due to reorganisation in the group, shares in Melon Fashion Group was transferred from Humarito Ltd to Eastnine AB, while the remaining holdings were transferred to Baltic Cable Holding OÜ. Following the completion of the reorganisation, Humarito Ltd was sold to an independent service provider for a nominal consideration.

Note 6 Repurchase of shares and dividend

On 20 May 2016, the Company launched a buyback program. As announced on 26 September 2017, buybacks may be carried out as long as the Eastnine share trades at a discount to its most recently reported Net Asset Value (NAV) per share in EUR. This is an alteration of the original program carried out since May 2016, whereby buybacks could not be made at a price higher than 80% of NAV per share.

At an Extraordinary General Meeting on 23 January 2017, the Meeting approved the Board of Directors' proposal to reduce the share capital by cancelling of 2,500,000 previously repurchased shares and to increase the share capital by way of a bonus issue. On 31 January 2017, the cancelling of 2,500,000 repurchased shares was executed. Further, in accordance with the decision at the Annual General Meeting on 15 May 2017, concerning cancellation of repurchased share and to carry out a bonus issue without issuing new shares, 845,530 shares were cancelled.

The Company repurchased a total of 2,656,258 shares during the period 1 January through 31 December 2017, corresponding to 10.7 percent of the Company's outstanding shares, at an average price of SEK 72.20 per share. After cancellation of shares, the Company has a total of 1,867,828 repurchased shares held in treasury, corresponding to 7.5 percent of outstanding shares.

The total number of shares outstanding in Eastnine as of 31 December 2017 amounted to 24,816,033. Adjusted for repurchased shares held in treasury, the number of shares outstanding amounted to 22,948,205. The weighted average number of shares outstanding for the reporting period was 24,334,377 adjusted for the repurchased shares.

Eastnine is transforming from a diversified Eastern European investment company, into a Baltic real estate company. The transformation is expected to be finalised by the end of 2020. Eastnine's dividend policy states that dividend shall correspond to at least 50% of profit from property management. During the build-up phase, the annual dividend shall be at least 2.0% of the net asset value at the preceding year-end.

At the Annual General Meeting 2017, it was resolved to pay an ordinary dividend for 2016 of SEK 0.90 per share, corresponding to EUR 0.09 per share and an increase of 12.5% from the previous year. Payment to shareholders was made in May 2017.

The Board will propose an ordinary dividend for 2017 of SEK 2.10, or EUR 0.21, per share, corresponding to 2.0% of NAV/share.

Note 7 Events occurring after the end of the quarter

The Company repurchased a total of 388,844 shares during the period 1 January - 15 February 2018, corresponding to 1.6 percent of the Company's outstanding shares, at an average price of SEK 86.2 per share.

Shares in East Capital Eastern Europe Small Cap Fund were sold for an amount equivalent to EUR 2.0m and in East Capital Global Frontier Markets Fund for EUR 4.0m.

Eastnine expands its portfolio to Riga by acquiring A Class office property Alojas Business Centre and two adjacent properties for EUR 29,6m, adding 11,600 sqm leasable area and annual rental income of EUR 2.4m. The transaction is expected to close during Q1 2018.

Note 8 Key Figures

Key figures	12m	9m	6m	3m	12m	9m	6m	3m
	2017	2017	2017	2017	2016	2016	2016	2016
Net asset value (NAV), EUR m	242	232	233	246	248	228	236	253
Equity ratio, %	99.6	99.2	99.3	99.2	99.3	99.4	99.7	99.8
Market capitalisation, SEK m	2,029	1,861	1,750	1,854	1,880	1,619	1,669	1,545
Market capitalisation, EUR m	206	193	182	193	196	168	177	169
Number of outstanding shares, m	22.9	23.7	24.3	25.0	25.6	26.1	27.0	28.2
Number of outstanding shares including
repurchased shares, m	24.8	24.8	24.8	25.7	28.2	28.2	28.2	28.5
Weighted average number of shares, m	24.3	24.7	25.0	25.4	27.0	27.4	28.0	28.2
Number of employees	7	7	8	8	9	9	5	4
Key figures per share	12m	9m	6m	3m	12m	9m	6m	3m
	2017	2017	2017	2017	2016	2016	2016	2016
Earnings per share, EUR	0.70	0.03	-0.11	0.11	0.49	-0.35	-0.27	-0.01
Dividend per share, EUR2	0.21	-	-	-	0.09	-	-	-
NAV, SEK	104	94	92	94	93	84	82	83
NAV, EUR	10.57	9.79	9.59	9.83	9.67	8.73	8.74	9.00
Share price, SEK1	81.75	75.00	70.50	72.25	66.75	57.50	59.25	54.25
Share price, EUR1	8.32	7.77	7.33	7.57	6.97	5.97	6.29	5.87
SEK/EUR	9.83	9.65	9.62	9.55	9.58	9.63	9.41	9.24

Not adjusted for share redemptions or dividend

Proposed dividend for 2017, SEK 2.10 per share corresponding to EUR 0.21 per share

Key Performance Data Real Estate Direct

EASTNINE AB 24 Year-end Report 2017

Property data

	2017			2016
SEGMENT RESULTS, EURM	Q4	Q3	Q2	Q1	Q4	Q3
Rental income	1.6	1.7	1.3	1.1	1.0	1.1
Property costs1	(0.5)	(0.2)	(0.1)	(0.2)	(0.2)	(0.1)
Management and administrative expenses	(0.3)	(0.1)	(0.2)	(0.1)	(0.3)	(0.0)
Other income and expenses	(0.0)	0.0	0.0	0.0	0.0	0.2
Net operating income	0.9	1.3	1.0	0.8	0.6	1.2
Surplus ratio, %	54	80	78	72	58	103
Net interest	(0.2)	(0.2)	(0.2)	(0.3)	(0.3)	(0.3)
Profit from property management	0.7	1.1	0.8	0.5	0.3	0.9
Changes in value of properties	4.5	0.0	0.0	0.0	1.1	0.0
Changes in value of derivatives	(0.2)
Profit before tax	4.9	1.1	0.8	0.5	1.4	0.9
Income tax
Deferred tax	(1.0)	(0.1)	(0.1)	(0.1)	(1.4)	0.0
Net profit	3.9	1.0	0.7	0.5	(0.0)	0.9
SEGMENT KEY FIGURES	Q4	Q3	Q2	Q1	Q4	Q3
Property-related
Number of properties	3	3	3	2	2	1
Income-producing properties	2	2	2	1	1	1
Development properties	1	1	1	1	1	0
Leasable floor space, k sq.m	50.6	50.6	50.6	41.2	41.2	28.4
Income-producing properties	37.8	37.8	37.8	28.4	28.4	28.4
Development properties	12.8	12.8	12.8	12.8	12.8	0.0
Floor space vacancy level2 , %	3.0	1.9	2.4	3.9	4.9	2.2
Average rent2 , EUR/ sq.m/ month	13.8	13.8	13.5	12.7	12.6	12.5
WAULT2 , years	2.5	2.4	2.6	2.3	2.3	2.1
Rental value, offices2 , EURm	6.3	6.3	6.1	4.3	4.3	4.3
Property value, EURm	107.5	99.6	98.1	68.3	66.8	64.8
Income-producing properties	92.4	89.4	89.4	60.9	60.9	59.7
Development properties	15.1	10.2	8.7	7.4	5.9	0.0
Land plots	0.0	0.0	0.0	0.0	0.0	5.1
Direct yield2,3, %	5.4	5.8	6.1	6.1	6.4	6.6
Financial
Return on equity, 12-month rolling, %	11.2	8.6	10.8	11.2	12.0	13.6
Equity ratio, %	66.1	64.5	63.5	47.2	44.4	45.1
Interest coverage ratio, multiple	4.7	6.1	4.7	3.1	2.3	4.4
Loan-to-value ratio, %	30.3	33.1	34.1	49.6	51.4	53.7
Average interest, %	2.6	2.6	2.6	3.0	2.9	3.0
Average capital tie-up period, years	5.8	6.1	6.3	6.6	6.8	2.6
Average fixed interest period, years	5.8	6.1	6.3	6.6	6.8	2.6
Gross debt, EURm	32.5	33.0	33.5	33.9	34.4	34.8
Long-term equity4 (EPRA), EURm	76.8	69.2	66.1	36.1	32.6	31.1
Equity, EURm	74.2	67.2	64.2	33.8	30.4	30.1

1 Including costs for tenant improvement

2 Income-producing properties

3 Net operating income including costs for tenant improvements for the last twelve months divided by property value

4 Excluding deferred taxes on property value surpluses and the fair value of financial derivates

	SQM
Telia	9,400
Visma	3,200
Citco	3,000
European Social Fund	2,100
Swedbank	1,800
Cobalt	1,400
Aviva	1,300
Delfi	1,300
Under development
Swedbank	8,900
Visma	3,800

Property value Largest tenants Lease term structure

Rental value by earliest break option, EURm

Definitions

Property related Key Figures Average interest

Interest expense divided by average interest-bearing debt for the period.

Average capital tie-up period

Average maturity of gross debt at end of period.

Average rent, EUR per sq.m

Rental income in relation to average leasable floor space.

Earnings capacity

Key figures of properties owned at the end of the period, based on performance over the last 12 months or estimates for properties held less than 12 months. The figures provide an overview but is not a forecast.

Floor space vacancy level

Unlet floor space in relation to total floor space.

Gross debt

Total interest-bearing debt at end of period.

Leasable floor space

Total floor space available for leasing.

Long-term equity (EPRA)

Reported equity including deferred taxes on property value surpluses and excluding the fair value of financial derivates.

Net operating income

Total revenues less property costs.

Profit from property management

Operating net, administration costs and net financial items.

Rental income

Charged rents, rent surcharges and rental guarantees less rent discount.

Rental value

Rental income and estimated market rent for vacant units.

Surplus ratio

Operating net in relation to total revenues.

WAULT

Average remaining lease term to maturity of the portfolio weighted according to contracted rental income (Weighted average unexpired lease term).

Financial Key Figures Debt/ equity ratio

Interest-bearing net debt in relation to equity.

EBIT

Operating profit after amortisation of goodwill/ acquisition-related surplus value and depreciation/ amortisation of noncurrent assets (Earnings before Interest and Tax).

EBITDA

Profit before depreciation, amortisation and impairment (Earnings before Interest, Tax, Depreciation and Amortisation).

Equity ratio Total equity as a percentage of total assets.

Fair value See market value.

Interest coverage ratio

Operating profit excluding financial expenses, in relation to financial expenses.

IRR (internal rate of return)

Annual average return on the invested amount calculated from the original investment, final selling amount and other capital flows, considering when in time these payments were made to or from Eastnine.

Loan-to-value ratio

Interest-bearing liabilities less cash in relation to fair value of the holdings.

Market value

The value of which a holding is assumed to be able to be sold for at a given time. Listed holdings at the bid quote on the balance sheet date. To establish the market value of unlisted holdings, various valuation methods are used as applicable.

NAV

The value of the Company's net assets, i.e. total assets less net debt.

NAV discount

The difference between net asset value (NAV) and market capitalisation in relation to NAV. If market cap is lower than NAV the shares are traded with a NAV discount; if market cap is higher, they are traded with a premium.

Net debt

Interest-bearing liabilities including pension liabilities, less cash, short-term investments and interest-bearing receivables.

Operating expenses

Expenses directly related to Eastnine's business.

Return on equity

Profit/ loss for the year as a percentage of average shareholders' equity.

Share-related Key Figures

Average number of outstanding shares

Registered number of shares less shares held by the Company.

Earnings per share

Net profit for the period attributable to equity holders of the Parent Company, divided by average number of shares outstanding during the year.

Equity per share

Shareholders' equity, attributable to equity holders of the Parent Company, divided by number of outstanding shares at the end of the period.

NAV per share

Net asset value per share in relation to the total number of registered shares on the balance sheet date (excluding repurchased shares).

Share buy-back

Purchasing of own shares on the stock market. Swedish companies have the option to own up to 10 percent of their own outstanding shares conditioned AGM approval.

Contact information

Kestutis Sasnauskas, CEO, +46 8 505 977 00 Lena Krauss, CFO, +46 73 988 44 66

Eastnine AB

Kungsgatan 35, Box 7214 SE-103 88 Stockholm, Sweden Tel: +46 8 505 977 00

www.eastnine.com

Financial information and calendar

EASTNINE AB 27 Year-end Report 2017

Annual report 2017 – March 2018 Annual General Meeting 2018 - 24 April 2018 Interim report Q1 2018 – 16 May 2018 Interim report Q2 2018 – 29 August 2018 Interim report Q3 2018 – 13 November 2018 Subscribe to financial reports and press releases directly to your e-mail on: www.eastnine.com or by sending an email to info@eastnine.com.

The information in this interim report is the information which Eastnine AB is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. It was released for publication at 08.00 a.m. on 16 February 2018