Eastnine — Interim / Quarterly Report 2018

Aug 29, 2018

Interim Report January – June ²⁰¹⁸ Q2

"Solid delivery in our property portfolio, and impressive underlying growth for MFG"

Kestutis Sasnauskas

Key events during the quarter

• Net Asset Value (NAV) per share was SEK 109.5, or EUR 10.48, a decrease of 1.5% during the quarter¹.
• Core segment Real Estate Direct increased in value by 2.2% and Real Estate Funds by 2.1%, while Other decreased by 3.0% due to currency translation of MFG as a result of weaker RUB.
• Divestment of the remaining holding in EC Global Frontier Markets Fund for EUR 3.7m.
• The AGM approved an ordinary dividend of SEK 2.10 per share with semi-annual payments of SEK 1.05 each, and a long-term share-based incentive plan for staff.
• Johan Ljungberg and Peter Wågström elected as new board members, replacing Lars O Grönstedt and Göran Bronner. Liselotte Hjorth was elected new Chairman.
• After 2,445,772 treasury shares were cancelled in May, buybacks continued with 206,300 shares repurchased at an average price of SEK 93.84/share, totalling EUR 1.9m.

¹ Adjusted for share buybacks

Key events after the quarter

• The construction of the third tower in 3Burės "3Burės Development", with 12,900 sqm fully leased office space, was commissioned in August. Tenants will gradually move in during September-December.
• Renewed buyback mandate until 30 September 2018, under which 237.660 shares were repurchased between 1 July and 27 August, at an average price of SEK 95.77.
• Given that Eastnine is today mainly an operational real estate company, it will as of Q3 2018 consolidate its financial reporting to include the directly owned real estate subsidiaries in the consolidated financial statements.

Key figures

		30 JUN 2018	31 MAR 2018	31 DEC 2017	30 JUN 2017
NAV per share	EUR	10.48	10.64	10.57	9.59
NAV per share	SEK	109.5	109.6	103.9	92.2
Closing price per share	SEK	93.6	87.60	81.75	70.5
Total NAV	EURm	232.3	238.1	242.5	232.9
Market cap	EURm	200	211	206	182

		Q2 2018	Q2 2017	6M 2018	6M 2017	FY 2017
Net result	EURm	0.6	-5.4	1.3	-2.7	17.1
Earnings per share	EUR	0.02	-0.22	0.06	-0.11	0.70
NAV per share development	%	-1.5	-2.5	-0.8	-0.9	9.3
Investments	EURm	0.0	29.1	33.1	32.4	42.4
Divestments	EURm	3.7	2.1	42.4	9.9	24.9

1 EUR = 10.44 SEK on 30 Jun 2018. 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 provider of sustainable prime office space 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

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.

Solid delivery in property segment and eyes set on new acquistions

"Our growing property portfolio continued to perform well with close-to-full occupancy in all properties"

The second quarter was characterized by solid delivery in our property portfolio, and impressive growth for our fashion retailer Melon Fashion Group in Russia.

After an active start to the year, with transaction volumes of EUR 72m in the first quarter, the second quarter was dedicated to our acquisition pipeline and the take-over of our newly acquired Riga properties. Our growing property portfolio continued to perform well and has, with over 99% occupancy, earned us a 12-month return on equity of 11.5%, with a low LTV of 35%. Next year we will face temporary vacancies in 3Burės, which we expect will enable rent uplifts after necessary tenant improvements are made.

The general development in the Baltics remains favourable for the real estate market. GDP growth remained robust in the quarter: +3.7% in Lithuania, driven by consumption and investments, and +5.1% in Latvia, supported by construction. Wages continue to grow rapidly across all countries. Although GDP growth remains important for the office

segment, even more important are productivity and wage growth for their effect on demographics and long-term office demand. The wage gap between the Baltics and Western Europe is narrowing. This will, over time, be crucial for slowing down and potentially reversing the migration of young people from the region.

In Russia, MFG's roll-out of its new store formats, coupled with store network optimisation and development of online sales, translated into strong overall performance. EBITDA improved 35% in the second quarter with sales growth of 25%, supported by 10% LFL growth, 12% selling space increase and a more than doubling of online sales. Although the fair value of MFG was unchanged in RUB terms, the weakening of the RUB in the wake of new US sanctions, reduced the EUR value of the holding. This consequently impacted our NAV/share, which, despite value increases in the core real estate segment, remained close to flat in both EUR and SEK during the quarter.

Kestutis Sasnauskas, CEO

Earnings capacity

	PRO	30 JUN
EURm	FORMA4	2018	2017	2016
Number of properties1	5	4	2	1
Leasable area, k sqm1	62.2	49.4	37.8	28.4
Rental income, EURm2	11.0	9.0	6.5	4.4
Net operating income, EURm2	9.5	7.6	5.0	3.9
Profit from property management2	8.0	6.3	4.2	2.8
Occupancy rate, %1	99.7	99.6	97.0	95.1
WAULT, years1	2.7	1.9	2.5	2.3
Loan-to-value ratio, %1, 3	43.2	37.2	30.3	56.4
Average interest, %1	2.3	2.3	2.6	3.0
Direct yield, %1,2	6.2	6.2	5.4	6.4
Property value, EURm1, 3	153.5	149.6	107.5	60.9
Property value, EUR per sqm1	2,468	2,486	2,443	2,143

The table shows 12-month key figures for properties owned at the end of each period, based on:

• Actuals for properties held during the entire 12-month period
• Annualized actuals for properties held shorter than the 12-month period, calculated from the time of acquisition

The table provides an overview but is not a forecast.

¹As of balance date, ²12-month rolling, ³Include 3Burės Development (all other key figures refer to investment properties only), ⁴ As if 3Burės Development had been completed

Performance

EASTNINE AB 4 Interim Report JAN-JUN 2018

Our Portfolio

						VALUE	VALUE
						CHANGE	CHANGE
	VALUE 30 JUN 2018	NAV/ SHARE	% OF	VALUE 31 MAR 2018	VALUE 31 DEC 2017	JAN- JUN 2018	APR- JUN 2018
NET ASSET VALUE (NAV)	EURM	EUR	NAV	EURM	EURM	%¹	%¹
Real Estate Direct
3Burės	32.0	1.44	13.8	31.4	30.7	4.3	2.0
Vertas2	17.1	0.77	7.3	16.0	29.9	4.1	6.7
3Burės development	13.4	0.60	5.8	13.6	13.6	-1.8	-1.4
Alojas Biroji	26.3	1.19	11.3	25.8	0.0	2.3	1.9
Alojas Kvartals	4.0	0.18	1.7	4.0	0.0	-0.4	0.5
Total Real Estate Direct	92.8	4.19	39.9	90.8	74.2	2.8	2.2
Real Estate Funds
East Capital Baltic Property Fund II	21.4	0.96	9.2	21.6	20.8	5.6	1.9
East Capital Baltic Property Fund III	20.4	0.92	8.8	19.9	16.2	3.7	2.3
Total Real Estate Funds	41.8	1.88	18.0	41.5	37.1	4.7	2.1
Total Real Estate	134.5	6.07	57.9	132.3	111.2	3.3	2.2
Other
Melon Fashion Group	45.2	2.04	19.4	47.5	48.6	-5.2	-3.0
Investments fully divested in 20183	0.0	0.00	0.0	3.7	41.6	1.9	-1,2
Total Other	45.2	2.04	19.4	51.2	90.2	-1.9	-2.9
Total Portfolio	179.7	8.11	77.4	183.5	201.4	1.3	0.8
Cash and cash equivalents	55.2	2.49	23.8	53.0	41.1
Other assets and liabilities net	-2.6	-0.12	-1.1	1.6	-0.1
Net Asset Value (NAV)	232.3	10.48	100.0	238.1	242.5	-0.84	4 -1.5

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. Vertas was refinanced with a bank loan of EUR 14.0m in Q1 2018. Equity consequently reduced by the same amount

3. East Capital Eastern Europe Small Cap Fund and Komercijalna Banka Skopje were sold in Q1 2018 for EUR 16.2m and EUR 13.9m, respectively. East Capital Global Frontier Markets Fund sold in Q1 and Q2 2018 for a total amount of EUR 12.3m.

4. NAV per share development

The number of shares used in NAV/share 30 June 2018 is 22,163,961 and is adjusted for repurchased shares held by the company (Note 6).

1 EUR = 10.44 SEK on 30 June 2018. Source: Reuters

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

Investments and divestments

EURM	Q2 2018	Q2 2017	6M 2018	6M 2017	FY 2017
Alojas Biroji	-	-	25.6	-	-
Alojas Kvartals	-	-	4.0	-	-
East Capital Baltic Property Fund III	-	-	3.5	-	6.0
Vertas	-	29.1	-	29.1	29.1
3Burės development	-	-	-	3.0	7.2
Total investments	-	29.1	33.1	32.1	42.4
East Capital Eastern Europe Small Cap Fund	-	2.1	16.2	4.2	8.1
Komercijalna Banka Skopje	-	-	13.9	-	-
East Capital Global Frontier Markets Fund	3.7	-	12.3	-	-
East Capital Baltic Property Fund II	-	-	-	-	9.8
Trev-2 Group	-	-	-	5.7	5.7
East Capital Bering Ukraine Fund Class R	-	-	-	-	1.3
Total divestments	3.7	2.1	42.4	9.9	24.9

Group Performance

Geographic breakdown, All segments % of NAV, excl. cash

Geographic breakdown, Real estate % of total Real Estate

Changed financial reporting in Q3 2018

It is Eastnine's assessment that the Company no longer falls within the IFRS classification of an investment entity, as a majority of its portfolio (excluding cash) now consists of directly owned real estate assets. As of 1 July 2018, Eastnine Group will consequently report consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries.

Until and including Q2 2018, Eastnine's financial statements refer to the parent company alone, while subsidiaries are recognised in profit and loss through changes in fair value. This change in status is accounted for prospectively, meaning that restated historic numbers will be provided on a pro forma basis only, with net results and equity being unchanged from previously reported numbers.

Market

Baltics

Second quarter economic growth in the Baltic states remained solid, largely fuelled by domestic demand as a result of wage growth and low unemployment and reflected in growing household consumption, construction and service sectors. External sectors, however, showed signs of slowdown in the wake of ongoing turbulence in the global trade environment. According to flash estimates, GDP in Latvia grew by 5.1% and in Lithuania by 3.7% y-o-y in Q2 2018. Estonia did not yet publish GDP growth for Q2 but grew by 3.6% in Q1 2018. According to Eurostat, June HICP annual inflation in Estonia was 3.9% (vs 2.9% in Mar), in Latvia 2.8% (2.3%), and in Lithuania 2.6% (2.5%). Inflation in the euro area was 2.0% in June, up from 1.3% in March.

According to IMF's latest forecasts for FY 2018, the Baltic economies are expected to grow at rates of 3.2-4.0% with inflation of 2.2-3.0%.

Prime office yields in the Baltic capitals are at around 6.25-6.50%, a slight decrease from a year ago, but still significantly higher than Nordic capitals. Prime office demand remains strong with low vacancies, pushing up average rents. Vilnius office market currently has the lowest vacancy among Europe's larger cities.

Russia

The economic and political landscape was in the second quarter dominated by the US sanctions overhang and President Putin's May decree announcing a spending plan of RUB 25 trillion over 2019-24, a third of which is above previously budgeted spending and expected to be funded by borrowing, taxes and pension reform.

May consumer statistics indicated retail sales acceleration in real terms to +3.0% from +2.4% in April, with non-food sales growth mainly unchanged. Real wages increased 7.2% while real disposable income showed a marginal uptick of +0.2% y-oy. Inflation remained broadly stable at +2.3%. The consumer confidence index remained flat q-o-q, indicating a stabilization from the trough in 2016. We treat this data as mainly supportive for MFG's business but acknowledge risks related to geopolitical developments as demonstrated by a drop in rouble value following new sanctions by the Trump administration.

The Group

With exception of Melon Fashion Group (MFG), the investment activities of Eastnine AB (publ) (the Parent Company) are managed in the operating subsidiary Eastnine Baltics OÜ. The shares in MFG are held in the Parent Company. 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 second quarter 2018

Comparative numbers in parenthesis refer to the second quarter of 2017. The net result for the second quarter was EUR 0.6m (EUR -5.4m), including value changes of shares in subsidiaries and associated companies of EUR 0.1m (EUR - 5.4m), corresponding to earnings per share of EUR 0.02 (EUR -0.22).

Melon Fashion Group was written down by EUR -2.4m, as a result of dividend payments during the quarter and a translation effect from rouble to euro. The underlying enterprise value in rouble was thereby kept unchanged.

Together with the write-down 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 3Burės of EUR 0.6m, Vertas of EUR 1.1m (of which property revaluation EUR 0.9m), 3Burės development of EUR -0.2m, Alojas Biroji of EUR 0.5m, East Capital Baltic Property Fund II of EUR -0.2m (as a result of EUR 0.6m dividend payment) and East Capital Baltic Property Fund III of EUR 0.5m.

Furthermore, dividends were received from East Capital Baltic Property Fund II of EUR 0.6m, and from Melon Fashion Group of EUR 0.9m. In the investment activities, Eastnine sold the remaining fund holdings in East Capital Global Frontier Markets Fund for a total amount of EUR 3.7m.

The result for the period includes other income of EUR 0.0m (EUR 0.2m) and expenses of EUR 0.9m (EUR 0.9m), all of which refer to the Parent Company. Net financial income and expenses was EUR +0.3m (EUR +0.1m).

Change in NAV per share during the second quarter 2018, EUR

NAV/share decreased by EUR 0.16/share, or -1.5%, in Q2 2018. Share buybacks contributed EUR 0.02/share, as own shares were bought at a discount to NAV, and dividend received contributed EUR 0.07/share. The two real estate segments contributed EUR 0.10/share in total, while dividend payment to shareholders, other investments, primarily the write down of MFG, and operating expenses had a combined negative impact of EUR 0.35/share.

Results for the period Jan-Jun 2018

Comparative numbers in parenthesis refer to Jan-Jun 2017.

The net result for the period was EUR 1.3m (EUR -2.7m), including value changes of shares in subsidiaries and associated companies of EUR 1.0m (EUR -2.3m), corresponding to earnings per share of EUR 0.06 (EUR -0.11).

Melon Fashion Group was written down by EUR -3.4m, as a result of dividend payments and translation effects from rouble to euro. The underlying enterprise value in rouble was kept unchanged.

Together with the write-down 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 3Burės of EUR 1.3m, 3Burės development of EUR -0.2m, Vertas of EUR 1.2m (of which revaluation of the property EUR 0.9m), Alojas Biroji of EUR 0.6m, East Capital Baltic Property Fund II of EUR 0.5m, East Capital Baltic Property Fund III of EUR 0.7m, Komercijalna Banka Skopje (sold during the year) of EUR 3.6m, East Capital Global Frontier Markets Fund of EUR 0.2m (sold during the year) and in East Capital Eastern Europe Small Cap Fund (sold during the year) of EUR -3.0m.

Furthermore, dividends were received from East Capital Baltic Property Fund II of EUR 0.6m, and from Melon Fashion Group of EUR 0.9m.

In the investment activities, Eastnine expanded its portfolio to Riga by acquiring office property Alojas Biroji, and adjacent retail property Alojas Kvartals for a total cash consideration of EUR 29.6m. Eastnine invested an additional EUR 3.5m in East Capital Baltic Property Fund III, as a drawdown on its commitment in conjunction with the fund's acquisition of P5 Industrial Park and Galleria Riga in Riga.

Eastnine sold the remaining fund holdings in East Capital Eastern Europe Small Cap Fund and East Capital Global Frontier Markets Fund for EUR 16.2m and EUR 12.3m, respectively. Eastnine also sold the entire holding in the Macedonian bank Komercijalna Banka Skopje for a total amount of EUR 13.9m.

The result for the period includes other income of EUR 0.1m (EUR 0.5m) from repayment of charged management fees in funds, and expenses of EUR 1.5m (EUR 1.7m), all of which refer to the Parent Company. Net financial income and expenses was EUR +0.6m (EUR +0.3m).

Financial Position and Cash Flow Jan-Jun 2018

Comparative numbers in parenthesis refer to 31 December 2017.

The Parent Company's equity ratio was 98.8 percent (99.6 percent).

The cash flow presented below only relates to transactions in the Parent Company. The AGM 2018 resolved to pay an ordinary dividend for 2017 of SEK 2.10, or EUR 0.21, per share, corresponding to 2.0% of NAV/share. The AGM also resolved that the dividend is to be distributed on two payment occasions of SEK 1.05 per share and dividend occasion. The first dividend payment was made on 2 May 2018. The second record date for the dividend is on 29 October 2018 and the payment will be on 1 November 2018. Total dividend amounts to EUR 4.5m (EUR 2.3m). In June, the Company received a dividend of EUR 0.9m (EUR 1.0m) from Melon Fashion Group. The Company also received repayment of shareholder's contributions from subsidiaries of EUR 11.5m (EUR 0.0m) in total. During the period, Jan–Jun 2018, Eastnine repurchased a total of 784,224 shares for an amount equivalent to EUR 6.9m.

Cash and cash equivalent at the end of the period amounted to EUR 14.7m (EUR 13.2m), all of which refer to the Parent Company. At the end of the period, combined cash and cash equivalents in the investment activities, including the Parent Company, amounted to EUR 55.2m (EUR 41.1m). Please refer to the breakdown of values in subsidiaries and associated companies on pages 18-20 for more details regarding the investment activities.

Commitments

Eastnine has a commitment to invest EUR 20m in East Capital Baltic Property Fund III. As at 30 June 2018, EUR 17.6m had been drawn down by the fund, of which EUR 3.5m in 2018. The remaining commitment amounted to EUR 2.4m.

Sustainability

Eastnine has intensified its sustainability efforts. Focus has been on integrating the Company's Environmental, Social and Governance (ESG) agenda, which complements the existing long-term engagements on property level where we consistently work with LEED certifications. Recent actions include a Supplier Code of Conduct, whistleblowing function, integrating ESG in due diligence audits and preparatory actions for GRI (Global Reporting Initiative) and GRESB (Global Real Estate Sustainability Benchmark) reporting. We are currently working on setting ESG targets and KPIs until 2030 and expect to have those in place by end-2018.

Real Estate Direct

Segment development

• The value change of the segment's NAV was +2.2% in April-June, and +2.8% in the period January-June 2018. Eastnine's average annual return on its investments in this segment is 11.8%, negatively affected by low leverage in the properties.
• Property value increased to EUR 149.6m, from EUR 107.5m at year-end 2017, following the acquisition of Alojas Biroji and Alojas Kvartals in Riga during Q1, and the revaluation of Vertas in Vilnius in Q2.
• Combined vacancy was 0.4% and average rent EUR 14.5 per sqm per month in Q2 2018, both unchanged from Q1.
• Combined net operating income was EUR 1.94m in Q2 2018 and EUR 3.33m in 6M 2018, an 83% increase from 6M 2017 due to acquisitions, but also to higher occupancy and rent levels in existing properties.
• The segment's combined loan-to-value (LTV) was 37.2% on 30 June 2018.
• Please see p. 24 for more detailed consolidated property data.

EURm	Q2 2018	Q2 2017	6M 2018	6M 2017	FY 2017
Value change1 , %	2.2	2.2	2.8	2.8	11.2
Segment NAV	92.8	64.2	92.8	64.2	74.2
% of Eastnine's NAV	39.9	27.6	39.9	27.6	30.6
Investments	-	29.1	29.6	32.1	36.3
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
• Vertas
• Alojas Biroji
• Alojas Kvartals

3Burės

Eastnine's shareholding in the property, %	100
Property value, EURm	63.9
NAV, EURm	32.0
% of Eastnine's NAV	13.8
Value change Apr-Jun, %	2.0

The office complex 3Burės, with a leasable area of 28,400 sqm in Vilnius CBD, remained virtually fully let during the second quarter, with a slight uptick in the average rent per sqm. We are actively working on new lettings for larger premises that will be temporarily vacated over the course of next year. Eastnine foresees that new leases for these premises will notably increase average rent, after necessary tenant improvements are made.

The fair value of the equity invested in the property increased by 2.0% during the quarter as a result of operating profits, but also includes a negative change in value of an interest rate swap. The property value remained at EUR 63.9m, with a loan-tovalue ratio of 49.5% at the end of the quarter.

3Burės Development

Eastnine's shareholding in the property, %	100
Property value, EURm	26.7
NAV, EURm	13.4
% of Eastnine's NAV	5.8
Value change Apr-Jun, %	-1.4

Construction of the third tower, which will comprise 12,900 sqm, continued without any delays during the quarter, and was commissioned in August. The premises will be gradually occupied during September-December. The property is fully leased to Swedbank and Visma.

The fair value of equity invested in the development decreased by 1.4% during the quarter mainly because of a negative change in value of an interest rate swap. The property value increased by EUR 7.0m during the quarter to EUR 26.7m, as a result of construction costs that were fully bank financed.

Vertas

Eastnine's shareholding in the property, %	100
Property value, EURm	29.5
NAV, EURm	17.1
% of Eastnine's NAV	7.3
Value change Apr-Jun, %	6.7

Vertas, with a leasable area of 9,400 sqm in central Vilnius, continued to be fully let also throughout the second quarter, with the average rent flat. In June, we completed the construction of a new lobby in the property.

The fair value of equity invested increased by 6.7% during the second quarter, including a revaluation gain from a 3.3% uplift in the property value, which now stands at EUR 29.5m, and a smaller negative contribution from a change in value of an interest rate swap. The loan-to-value ratio was 47% at the end of the quarter.

Alojas Biroji

Eastnine's shareholding in the property, %	100
Property value, EURm	25.5
NAV, EURm	26.3
% of Eastnine's NAV	11.3
Value change Apr-Jun, %	1.9

Alojas Biroji, the A class office property of 9,000 sqm including an adjacent B class property of 860 sqm, was acquired at the end of February. Since acquisition, we have spent most of the quarter on taking over management of the property and welcoming new tenants that will occupy most of the premises previously occupied by anchor tenant Luminor who is relocating. The remaining area has full rent compensation until July 2019. The property had no vacancy at the end of June, but vacancy will increase slightly during the third quarter.

The fair value of equity invested increased by 1.9% during the second quarter on the back of operating cash flow. The property is initially fully equity financed, with a property value of EUR 25.5m.

Alojas Kvartals

Eastnine's shareholding in the property, %	100
Property value, EURm	4.0
NAV, EURm	4.0
% of Eastnine's NAV	1.7
Value change Apr-Jun, %	0.5

We also took over management of Alojas Kvartals, a retail property of 1,800 sqm acquired together with Alojas Biroji, during the quarter. The property value of Alojas Kvartals, anchored by grocery store Rimi, is EUR 4.0m and is unleveraged. The fair value of invested equity increased by 0.5% during the quarter.

Real Estate Funds

Segment development

• The fair value change of the segment was +2.1% in April-June, and +4.7% in the period January-June, to EUR 41.8m. Eastnine's average annual return on its investments in this segment is 10.4%.
• At the end of June there were in total ten commercial properties in the two funds, seven of which were in Tallinn and three in Riga.

EURm	Q2 2018	Q2 2017	6M 2018	6M 2017	FY 2017
Value change1 , %	2.1	2.1	4.7	4.5	12.2
Segment NAV	41.8	37.9	41.8	37.9	37.1
% of Eastnine's NAV	18.0	16.3	18.0	16.3	15.3
Investments	-	-	3.5	-	6.0
Divestments	-	-	-	-	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, %	45
NAV, EURm	21.4
% of Eastnine's NAV	9.2
Value change Apr-Jun, %	1.9

The fair value of Eastnine's holding in East Capital Baltic Property Fund II increased by 1.9% in the second quarter 2018, and by 5.6% in the six-month period. The fund's semi-annual dividend amounted to EUR 0.6m for Eastnine's stake.

The Tallinn based portfolio, 92% of the fund, continued to perform well. The shopping center Mustamäe Keskus recorded an 18% increase in footfall, while both the Metro Plaza office property and the logistics property Rimi Logistics remained fully occupied. Deglava, the Riga based retail property, remained vacant until reopening. The fund has four properties, two logistics, one office and one retail, in Tallinn as well as one retail property in Riga.

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, %
NAV, EURm	20.4
% of Eastnine's NAV	8.8
Value change Apr-Jun, %	2.3

The fair value of Eastnine's holding in East Capital Baltic Property Fund III increased by 2.3% in the second quarter, and by 3.7% in the six-month period.

The fund made two acquisitions in Riga in April; the newly built and fully leased 13,700 sqm P5 Industrial Park, and the 24,300 sqm shopping center Galleria Riga in the city center with H&M, COS and Rimi, among others, as key tenants. Following these acquisitions, the fund has three properties in Tallinn, retail, hotel and logistics, as well as two properties in Riga, retail and logistics.

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

Other

Segment development

• The fair value change of the segment was -2.9% in April-June, and -1.9% in the period January-June. Segment NAV at the end of the quarter was EUR 45.2m.
• At the end of the quarter, the segment's only holding was Melon Fashion Group, after the remaining holding in East Capital Global Frontier Markets Fund was divested in April.
• Melon Fashion Group continued, as projected, to improve its operating performance in Q2 2018 with 25% sales growth and an EBITDA margin of 14.1%. The fair value was kept unchanged in RUB, resulting in a 3.0% decrease in EUR due to the RUB weakening.

EURm	Q2 2018	Q2 2017	6M 2018	6M 2017	FY 2017
Value change1 , %	-2.9	-6.8	-1.9	-4.2	8.1
Segment NAV	45.2	85.1	45.2	85.1	90.2
% of Eastnine's NAV	19.4	36.6	19.4	36.6	37.2
Investments	-	-	-	-	-
Divestments	3.7	2.1	42.4	9.9	15.1
1 The value change calculation is adjusted for investments, divestments and distributions during the relevant period

Other % of Eastnine's NAV

Melon Fashion Group

Melon Fashion Group

Eastnine's shareholding in the company, %	36
NAV, EURm	45.2
% of Eastnine's NAV	19.4
Value change Apr-Jun, %	-3.0

The fair value of Eastnine's holding in Melon Fashion Group (MFG) is unchanged from the year-end valuation in RUB but decreased in EUR by 3.0% in April-June and by 5.2% in January-June due to translation effect. In addition to the translation effect, the fair value of MFG was adjusted for a dividend payment of EUR 0.7m that Eastnine received in June.

In the second quarter of 2018, MFG's total sales increased by 25%, supported by 10.4% comparable sales growth, 12.3% selling space increase, and robust growth in the online channels. MFG's combined online sales via own web shop and third-party marketplaces grew by 126% and reached 9% of total sales in Q2 2018 compared to 5% in Q2 2017.

MFG's profitability continued to improve in Q2 2018 with an EBITDA margin of 14.1%, which is 100 bps above the level of Q2 2017 and the highest since 2013. Q2 and 6M EBITDA exceeded corresponding results last year by 35% and 72% respectively, with Love Republic remaining the most profitable brand. Comparability was not materially affected by currency.

MFG's Q2 2018 gross margin remained unchanged year-on-year at 54.4%, while 6M 2018 gross margin improved by 70 bps year-on-year to 50.7%.

The total number of stores at the end of Q2 was 550, one store less than at the beginning of the year. During the first six months of 2018, MFG opened 30 stores in the new format including 21 relocations, while 12 stores were closedand two stores were added in the franchise network. This resulted in an overall increase of the total selling area by 4% since year-end.

The roll-out of the new store format, search for optimal locations, development of online sales and ongoing upgrades of operational solutions have been management's key priorities in the past periods.

Learn more about Melon Fashion Group at www.melonfashion.com.

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, 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 2017 on pages 55-56. 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. the offering of premises in the real estate segments and the offering of products in the segment Other, are also exposed to legal, regulatory and political risk.

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 real estate fund investments, 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 provider of sustainable prime office space in the Baltics.

Eastnine has seven full-time employees in its Stockholm headquarters, and seven employees in its subsidiaries and the wholly-owned real estate operations. 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 Board of Directors and the CEO certifies that the interim 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, 29 August 2018

Liselotte Hjorth Chairman of the Board Kestutis Sasnauskas Chief Executive Officer Peter Elam Håkansson Board Member

Johan Ljungberg Board Member

Nadya Wells Board Member Peter Wågström Board Member

This report has not been subject to review by the Company's auditors

Financial Statements

EASTNINE AB 14 Interim Report JAN-JUN 2018

Income Statement

EUR Thousands
		2018	2017	2018	2017
	Note	Jan-Jun	Jan-Jun	Apr-Jun	Apr-Jun
Changes in fair value of subsidiaries and associated companies	2	1,035	-2,258	121	-5,361
Dividends received		930	500	930	500
Other income		119	477	32	236
Staff expenses		-880	-940	-588	-478
Other operating expenses		-582	-736	-264	-405
Operating profit/loss		622 622	-2,958 -2,958	230	-5,508
Financial income		683	363	343	182
Financial expenses		-40	-74	-19	-57
Profit/loss before tax		1,264 1,264	-2,670 -2,670	553	-5,383
Tax		-	-	-	-
NET PROFIT/LOSS FOR THE PERIOD1		1,264 1,264	-2,670 -2,670	553	-5,383
Earnings per share, EUR
- Attributable to shareholders of the Parent Company		0.06	-0.11	0.02	-0.22
No dilutive effects during the periods

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

Balance Sheet

EUR Thousands
		2018	2017	2017
	Note	30 Jun	31 Dec	30 Jun
Assets
Shares in subsidiaries	3, 4	146,927	153,963	193,735
Shares in associated companies	4	45,170	48,613	0
Loans to group companies	4	27,527	25,100	20,900
Total non-current assets		219,625 219,625	227,676 227,676 227,676	214,635 214,635
Other short-term receivables		50	0	2
Accrued interest income from group companies	4	683	2,430	2,043
Accrued income and prepaid expenses		76	218	436
Cash and cash equivalent		14,689	13,168	17,398
Total current assets		15,498 15,498	15,816 15,816	19,879
Total assets		235,123 235,123	243,492 243,492 243,492	234,513 234,513
Equity
Share capital1		3,660	3,658	3,658
Other contributed capital/Share premium reserve2		266,007	277,425	287,649
Retained earnings2		-38,626	-55,711	-55,711
Net profit/loss for the period2		1,264	17,085	-2,670
Total equity		232,305 232,305	242,457 242,457 242,457	232,927 232,927
Current liabilities
Other liabilities		2,381	180	193
Accrued expenses and prepaid income		437	855	1,393
Total current liabilities		2,817 2,817	1,035 1,035	1,587
Total equity and liabilities		235,123 235,123	243,492 243,492 243,492	234,513 234,513

Restricted capital

Statement of Changes in Equity

EUR Thousands	Share capital	Other contributed capital/Share premium reserve	Retained earnings incl. profit/loss for the year	Total equity shareholders in Parent company
Opening equity 1 January 2018	3,658 3,658	277,425 277,425	-38,626 -38,626 -38,626	242,457 242,457
Net profit/loss for the period	-	-	1,264	1,264
Total comprehensive income	-	-	1,264	1,264
Bonus issue	2	-2	-	-
Dividend to shareholders	-	-4,480	-	-4,480
Share buy-back	-	-6,936	-	-6,936
Closing equity 30 June 2018	3,660 3,660	266,007266,007 266,007	-37,362 -37,362 -37,362	232,305 232,305

EUR Thousands	Share capital	Other contributed capital/Share premium reserve	Retained earnings incl. profit/loss for the year	Total equity shareholders in Parent company
Opening equity 1 January 2017	3,655 3,655	299,613 299,613	-55,711 -55,711 -55,711	247,558 247,558
Net profit/loss for the period	-	-	-2,670	-2,670
Total comprehensive income	-	-	-2,670	-2,670
Bonus issue	3	-3	-	-
Dividend to shareholders	-	-2,267	-	-2,267
Share buy-back	-	-9,694	-	-9,694
Closing equity 30 June 2017	3,658 3,658	287,649 287,649	-58,381 -58,381 -58,381	232,927 232,927

Statement of Cash Flow

EUR Thousands

	2018	2017	2018	2017
	Jan-Jun	Jan-Jun	Apr-Jun	Apr-Jun
Operating activities
Operating profit/loss	622	-2,958	230	-5,508
Changes in fair value of subsidiaries and associated companies	-1,035	2,258	-121	5,361
Cash flow from current operations before changes in working capital	-413 -413	-700 -700	109	-147
Cash flow from changes in working capital
Increase (-)/decrease(+) in other current receivables	92	-9	53	-15
Increase (+)/decrease(-) in other current payables	-456	-196	-108	-498
Cash flow from operating activities	-778 -778	-905 -905	55	-660
Investing activities
Repayment of shareholder contributions	11,513	-	11,513	-
Cash flow from investing activities	11,513 11,513	- -	11,513	-
Financing activities
Dividend to shareholders	-2,240	-2,267	-2,240	-2,267
Share buy-back	-6,936	-9,694	-1,891	-5,281
Cash flow from financing activities	-9,176 -9,176	-11,961 -11,961	-4,131	-7,548
Cash flow for the period	1,559 1,559	-12,866-12,866 -12,866	7,438	-8,208
Cash and cash equivalent at the beginning of the period	13,168	30,338	7,270	25,663
Exchange rate differences in cash and cash equivalents	-40	-74	-19	-57
Cash and cash equivalent at the end of the period	14,689 14,689	17,398 17,398	14,689	17,398

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.

The same accounting principles are applied as in the annual report for the previous year. Notably, the new standards for financial instruments (IFRS 9) and revenue recognition (IFRS 15) have had no effect on how Eastnine recognises such items.

Since 1 January 2014, Eastnine AB have applied the investment entity consolidation exception in IFRS 10, which implies that all holdings, including subsidiaries, are recognised at fair value through profit or loss. In reassessing Eastnine AB, it has been concluded that the Company no longer falls within the classification of an investment entity, as a majority of the portfolio (excluding cash) now consists of directly owned real estate assets. As of 1 July 2018, Eastnine Group will consequently report consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries. This change in status is accounted for prospectively.

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.

EUR thousands	Real Estate	Real Estate
1 Jan – 30 Jun 2018	Direct	Funds	Other	Unallocated	Total
Changes in value of portfolio	2,196	1,246	-2,632	-	810
Dividends received	-	640	-	-	640
Other operating expenses	-	-	-	-415	-415
Changes in fair value of subsidiaries and associated companies d companies	2,196 2,196	1,886	-2,632	-415	1,034
Dividends received	-	-	930	-	930
Other income	-	41	79	-	119
Staff expenses	-	-	-	-880	-880
Other operating expenses	-	-	-	-582	-582
Operating profit/loss	2,196 2,196	1,927 1,927	-1,624	-1,878	621
Financial income	683	-	-	-	683
Financial expense	-	-	-	-40	-40
Profit/loss before tax	2,878 2,878	1,927 1,927	-1,624	-1,918	1,264
Assets	92,767 92,767	41,762 41,762	45,170	55,424	235,123 235,123

EUR thousands	Real Estate	Real Estate
1 Jan – 30 Jun 2017	Direct	Funds	Other	Unallocated	Total
Changes in value of portfolio	1,359	1,217	-4,637	-	-2,061
Dividends received	-	427	-	-	427
Other operating expenses	-	-	-	-624	-624
Changes in fair value of subsidiaries and associated companies d companies	1,359 1,359	1,644	-4,637	-624	-2,258
Dividends received	-	-	500	-	500
Other income	-	20	346	110	476
Staff expenses	-	-	-	-940	-940
Other operating expenses	-	-	-	-736	-736
Operating profit/loss	1,359 1,359	1,664 1,664	-3,791	-2,190	-2,958
Financial income	363	-	-	-	363
Financial expense	-	-	-	-74	-74
Profit/loss before tax	1,722 1,722	1,664 1,664	-3,791	-2,265	-2,670
Assets	64,241 64,241	37,873 37,873	85,136	47,264	234,513 234,513

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 30 June 2018	Country	shares	EURt	capital
Eastnine Baltics OÜ	Tallinn, Estonia	2,502	143,359	100%
UAB Eastnine Lithuania	Vilnius, Lithuania	9,500	62,468	100%
UAB 3Burės	Vilnius, Lithuania	100	32,001	100%
UAB Vertas	Vilnius, Lithuania	100	17,068	100%
UAB Solverta (3Burės development)	Vilnius, Lithuania	100	13,400	100%
Eastnine Latvia SIA	Riga, Latvia	100	30,299	100%
Alojas Biroji SIA	Riga, Latvia	100	26,290	100%
Alojas Kvartals SIA	Riga, Latvia	100	4,010	100%
Eastnine Investments AB	Stockholm, Sweden	11,000	3,568	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 2017 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 146.9m, shares in accociated companies of EUR 45.2m, loans to group companies of EUR 27.5m and cash and cash equivalent of EUR 14.7m. 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	30 Jun 2018	31 Dec 2017	30 Jun 2018	31 Dec 2017
Eastnine Baltics OÜ	Tallinn, Estonia	143,359	142,416	100	100
Melon Fashion Group	Saint Petersburg, Russia	45,170	48,613	36	36
Eastnine Investments AB	Stockholm, Sweden	3,568	10,392	100	100
UAB Eastnine Lithuania (loan)	Vilnius, Lithuania	27,527	25,100	100	100
ECEX Holding SA (liquidated in March 2018)	Bertrange, Luxembourg	-	1,155	-	100

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
30 June 2018					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 2018	71,734 71,734	37,064 37,064	90,213	27,957	708	227,676 227,676
Accrued interest expense converted to group loan	2,427	-	-	-	-	2,427
Purchases/additions	29,725	3,451	-	-33,176	-	0
Divestments/Reductions	-	-	-42,410	42,410	-	0
Repayment of loan from group companies	-14,000	-	-	14,000	-	0
Other	-	-	-	221	-636	-415
Repaid shareholders contributions	-	-	-	-11,513	-	-11,513
Dividend received	-	-	-	640	-	640
Changes in fair value recognised net in profit/loss	2,196	1,246	-2,632	-	-	810
Closing balance 30 June 2018	92,083 92,083	41,762 41,762	45,170	40,539	72	219,625 219,625

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	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

Real Estate Direct consists of holdings in 3Burės, 3Burės development, Vertas, Alojas Biroji and Alojas Kvartals. 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. MFG is 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	DCF	WACC 7.9%, Exit yield 6.50%
Alojas Biroji	Real Estate Direct	Acquisition value
Alojas Kvartals	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, Vertas 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 30 June 2018	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)	-2,523	2,619	-560	569
Exit yield (0.5% movement)	-3,703	4,287	-1,315	1,395

Effect in EUR thousands 30 June 2018	Other Profit or loss
Sensitivity analysis	Increase	Decrease
Long term growth rate (0.5% movement)	1,615	-1,480
Weighted average cost of capital (WACC) (0.5% movement)	-2,257	2,471
Long term operating margin (0.5% movement)	1,507	-1,506

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 12 in this report.

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

EUR thousands

30 June 2018			Total
Shares and participations in investment activities at fair value through profit or loss1	Level 1	Level 3	balance
Real Estate Direct	-	92,767	92,767
Real Estate Funds	-	41,762	41,762
Other	-	45,170	45,170
Total	- -	179,699 179,699	179,699

EUR thousands

31 December 2017 Real Estate Direct - 74,164 74,164 Real Estate Funds - 37,064 37,064 Other 41,601 48,613 90,213 Total 41,601 159,840 41,601 159,840159,840 201,441 201,441 Shares and participations in investment activities at fair value through profit or loss Level 1 Level 3 Total balance

Following investments are classified in:

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

EUR thousands
30 June 2018	Real Estate	Real Estate
Changes in financial assets and liabilities in Level 3	Direct	Funds	Other	Total
Opening balance 2018	74,164 74,164	37,064 37,064	48,613	159,840 159,840
Purchases/additions	29,725	3,451	-	33,176
Repayment of loan from group companies	-14,000	-	-	-14,000
Changes in fair value recognised net in profit/loss	2,878	1,246	-3,442	682
Closing balance 30 June 2018	92,767 92,767	41,762 41,762	45,170	179,699 179,699

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	117,114 117,114
Purchase/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

EUR 682 thousands (EUR 16,408 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 13. 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 55 in the Annual Report of 2017. 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)

30 June 2018		Effect on net
Risk factors	Change	profit/loss for the period
Fx EUR/RUB	+/- 10%	4,517
Fair value of the holdings	+/- 10%	17,902

Note 5 Related parties

On 30 June 2018, 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 29.1 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-Jun 2018, the Company received repayments of EUR 0.1m (EUR 0.4m) regarding management fees originated in the other East Capital funds. Management fees originated in the real estate funds during the period Jan-Jun 2018 amounted to EUR 0.2m (EUR 0.2m).

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.

The liquidation of the subsidiary ECEX Holding SA was completed in Q1 2018.

The Annual General Meeting (AGM) 2018 resolved to re-elect Board members Peter Elam Håkansson, Liselotte Hjorth and Nadya Wells, and to elect Johan Ljungberg and Peter Wågström as new members of the board and replacing Göran Bronner and Lars O Grönstedt. Liselotte Hjorth was is elected as chairman of the Board.

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

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. The AGM 2018 authorized the Board of Directors to continue with repurchase of own shares.

During the period 1 January through 30 June 2018, the Company repurchased a total of 784,224 shares, corresponding to 3.5 percent of the Company's outstanding shares, at an average price of SEK 88.39 per share. On 7 May 2018, a total of 2,445,772 previously repurchased shares were cancelled. On 30 June 2018, the Company had a total of 206,300 repurchased shares held in treasury, corresponding to 0.9 percent of outstanding shares.

The total number of shares outstanding in Eastnine as of 30 June 2018 amounted to 22,370,261. Adjusted for repurchased shares held in treasury, the number of shares outstanding amounted to 22,163,961. The weighted average number of shares outstanding for the reporting period was 22,453,671 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.

The AGM 2018 resolved to pay an ordinary dividend for 2017 of SEK 2.10, or EUR 0.21, per share, corresponding to 2.0% of NAV/share. The AGM also resolved that the dividend is to be distributed on two payment occasions of SEK 1.05 per share and dividend occasion. The first dividend payment was made on 2 May 2018. The second record date for the dividend is on 29 October 2018 and the payment will be on 1 November 2018.

Note 7 Events occurring after the end of the quarter

Since 1 January 2014, Eastnine AB have applied the investment entity consolidation exception in IFRS 10, which implies that all holdings, including subsidiaries, are recognised at fair value through profit or loss. In reassessing Eastnine AB, it has been concluded that the Company no longer falls within the classification of an investment entity, as a majority of the portfolio (excluding cash) now consists of directly owned real estate assets. As of 1 July 2018, Eastnine Group will consequently report consolidated financial statements of the parent company and its subsidiaries, including directly owned real estate subsidiaries. This change in status is accounted for prospectively, meaning that restated historic numbers will be provided on a pro forma basis only, with net results and equity being unchanged from previously reported numbers.

The Company repurchased a total of 237,660 shares during the period 1 July - 27 August 2018, corresponding to 1.1 percent of the Company's outstanding shares, at an average price of SEK 95.77 per share.

Note 8 Key Figures

Key figures	6m	3m	12m	9m	6m	3m	12m	9m
	2018	2018	2017	2017	2017	2017	2016	2016
Net asset value (NAV), EUR m	232	238	242	232	233	246	248	228
Equity ratio, %	98.8	99.7	99.6	99.2	99.3	99.2	99.3	99.4
Market capitalisation, SEK m	2,094	2,174	2,029	1,861	1,750	1,854	1,880	1,619
Market capitalisation, EUR m	200	211	206	193	182	193	196	168
Number of outstanding shares, m	22.2	22.4	22.9	23.7	24.3	25.0	25.6	26.1
Number of outstanding shares including
repurchased shares, m	22.4	24.8	24.8	24.8	24.8	25.7	28.2	28.2
Weighted average number of shares, m	22.5	22.6	24.3	24.7	25.0	25.4	27.0	27.4
Number of employees	7	7	7	7	8	8	9	9
Key figures per share	6m	3m	12m	9m	6m	3m	12m	9m
	2018	2018	2017	2017	2017	2017	2016	2016
Earnings per share, EUR	0.06	0.03	0.70	0.03	-0.11	0.11	0.49	-0.35
Dividend per share, EUR	-	-	0.21	-	-	-	0.09	-
NAV, SEK	109	110	104	94	92	94	93	84
NAV, EUR	10.48	10.64	10.57	9.79	9.59	9.83	9.67	8.73
Share price, SEK1	93.60	87.60	81.75	75.00	70.50	72.25	66.75	57.50
Share price, EUR1	8.96	8.50	8.32	7.77	7.33	7.57	6.97	5.97
SEK/EUR	10.44	10.30	9.83	9.65	9.62	9.55	9.58	9.63

Not adjusted for share redemptions or dividend

Key Performance Data Real Estate Direct

EASTNINE AB 25 Interim Report JAN-JUN 2018

Property data

SEGMENT RESULTS, EURM Q2 Q1 Q4 Q3 Q2 Q1 Rental income 2.30 1.99 1.63 1.66 1.33 1.09 Property costs1 -0.17 -0.14 -0.49 -0.24 -0.06 -0.20 Management and administrative expenses -0.21 -0.36 -0.25 -0.08 -0.22 -0.11 Other income and expenses 0.01 -0.10 0.00 0.00 0.00 0.00 Net operating income 1.94 1.39 0.89 1.33 1.04 0.78 Surplus ratio, % 84 70 54 80 78 72 Net interest -0.32 -0.28 -0.22 -0.22 -0.22 -0.25 Profit from property management 1.62 1.11 0.67 1.11 0.82 0.53 Changes in value of properties 0.95 4.45 Changes in value of derivatives -0.37 -0.13 -0.18 Profit before tax 2.19 0.98 4.95 1.11 0.82 0.53 Income tax Deferred tax -0.18 -0.13 -0.74 -0.09 -0.10 -0.07 Net profit 2.01 0.85 4.21 1.02 0.72 0.45 SEGMENT KEY FIGURES Q2 Q1 Q4 Q3 Q2 Q1 Property-related Number of properties 5 5 3 3 3 2 Income-producing properties 4 4 2 2 2 1 Development properties 1 1 1 1 1 1 Leasable floor space, k sq.m 62.3 62.3 50.7 50.6 50.6 41.2 Income-producing properties 49.4 49.4 37.8 37.8 37.8 28.4 Development properties 12.9 12.9 12.9 12.8 12.8 12.8 Floor space vacancy level2 , % 0.4 0.4 3.0 1.9 2.4 3.9 Average rent2 , EUR/ sq.m/ month 14.5 14.5 13.8 13.8 13.5 12.7 WAULT2 , years 1.9 2.2 2.5 2.4 2.6 2.3 Rental value, offices2 , EURm 8.6 8.6 6.3 6.3 6.1 4.3 Property value, EURm 149.6 141.8 107.5 99.6 98.1 68.3 Income-producing properties 122.8 122.0 92.4 89.4 89.4 60.9 Development properties 26.7 19.8 15.1 10.2 8.7 7.4 Land plots 0.0 0.0 0.0 0.0 0.0 0.0 Direct yield2,3, % 6.2 6.1 5.4 5.8 6.1 6.1 Financial Return on equity, 12-month rolling, % 11.5 10.9 11.2 8.6 10.8 11.2 Equity ratio, % 58.3 61.0 66.1 64.5 63.5 47.2 Interest coverage ratio, multiple 6.1 5.0 4.1 6.1 4.7 3.1 Loan-to-value ratio, % 37.2 35.3 30.3 33.1 34.1 49.6 Average interest, % 2.4 2.5 2.6 2.6 2.6 3.0 Average capital tie-up period, years 4.7 5.0 5.8 6.1 6.3 6.6 Average fixed interest period, years 4.7 5.0 5.8 6.1 6.3 6.6 Gross debt, EURm 55.6 50.0 32.5 33.0 33.5 33.9 Long-term equity4 (EPRA), EURm 96.2 93.6 76.8 69.2 66.1 36.1 Equity, EURm 92.8 90.8 74.2 67.2 64.2 33.8	2018		2017

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

Property value		Largest tenants			Lease term structure
			SQM
		Telia	9,400
		Visma	3,200	4,0
		Citco	3,000	3,0
		Luminor	2,600
		European Social Fund	2,100	2,0
		Swedbank	1,800	1,0
		Transact Pro	1,400
		Cobalt	1,400	0,0
		Under development
3 Bures Alojas Biroji	Vertas 3 Bures development	Swedbank	8,900
Alojas Kvartals		Visma	3,800

Rental value by earliest break option, EURm

Income-producing properties

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 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.

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 24 Interim Report JAN-JUN 2018

Interim report Q3 2018 – 15 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 29 August 2018