Trigon Property Development — Interim / Quarterly Report 2020

Feb 26, 2021

Interim report for the fourth quarter and 12 months of 2020 (unaudited)

Table of contents

BRIEF DESCRIPTION 3
MANAGEMENT REPORT 4
CONDENSED INTERIM REPORT 7
Management Board's declaration 7
Condensed statement of financial position 8
Condensed statement of comprehensive income 9
Condensed cash flow statement 10
Condensed statement of changes in equity 11
Notes to condensed interim report 12 Note 1 Accounting Principles Followed upon Preparation of the Interim Accounts 12 Note 2 Receivables and prepayments 12 Note 3 Investment property 12 Note 4 Payables and prepayments 14 Note 5 Equity 14 Note 6 Expenses related to investment property 14 Note 7 Administrative and general expenses 15 Note 8 Earnings per share 15 Note 9 Segment 15 Note 10 Related party transactions 15

Brief description

AS Trigon Property Development is a real estate development company.

AS Trigon Property Development currently owns one real estate development project involving a 21-hectare area in the City of Pärnu, Estonia. Commercial real estate is planned to be developed on this area.

The Company is listed on the Tallinn Stock Exchange. On November 6, 2012, the Listing and Surveillance Committee of NASDAQ OMX Tallinn decided to delist AS Trigon Property Development shares from the Main List starting from November 21, 2012, and to admit the shares simultaneously to trading in the Secondary List.

As at 31.12.2020 OÜ Pärnu Holdings owns 41.73% of the shares of Trigon Property Development AS directly and 17.88% through Nordic Fibreboard AS. The biggest shareholders of OÜ Pärnu Holdings are OÜ Stetind (46.99%) and Joakim Johan Helenius (46.44%) by the time of compiling these financial statements.

Business name:	AS Trigon Property Development
Address:	Pärnu mnt 18 Tallinn 10141
Commercial Registry no.:	10106774
Beginning of financial year:	1.1.2020
End of financial year:	31.12.2020
Beginning of interim period:	1.1.2020
End of interim period:	31.12.2020
Auditor:	PricewaterhouseCoopers AS
Phone:	+372 6679 200
Fax:	+372 6679 201
E-mail:	info@trigonproperty.com
Internet homepage:	www.trigonproperty.com

Management report

Overview of business areas

The main business activity of Trigon Property Development AS is real estate development. As at 31.12.2020, AS Trigon Property Development owned one development project with an area of 21 hectares in the City of Pärnu, Estonia. An industrial and logistics park is planned to be developed on this area. The Company's objective is to find companies willing to bring their business activities (industry, logistics) to the development project area of AS Trigon Property Development in Pärnu, which would add value to the land plots owned by the Company. The realisation of the value of the land is planned through the selling of land plots or through the development of real estate with the intention of creating a rental income-generating project.

In the third quarter of 2019 a 0.5-hectare property at the price of 75 000 euros was sold.

In the second quarter of 2020 a 0.7-hectare property at the price of 65 000 euros was sold.

In 2016, a new detailed planning was made for the property, under which the proportion of business property with respect to all the land has increased compared to the previous planning. New established detailed planning has also increased the flexibility regarding the partial selling of the property as compared to the previous detailed planning since the plots are smaller and there is flexibility to change the size of the plots as required.

Management

The law, the articles of association, decisions and goals stated by the shareholders and the Supervisory Board are followed in the managing the company. According to the Commercial Code, a resolution on the amendment of the articles of association shall be adopted, if at least two-thirds of the votes represented at the general meeting are in favour of the amendment.

Financial ratios

Statement of financial position	2020	2019
Total assets	2,497,679	2,193,388
Return on assets	13.93%	16.16%
Equity	2,491,354	2,143,461
Return on equity	13.96%	16.53%
Debt ratio	0.25%	2.28%
Net profit for the period	347,893	354,404
Share (31.12)	2020	2019
Closing price of the share	0.560	0.494
Earnings per share	0.07733	0.07877
Price-to-earnings (PE) ratio	7.24	6.27
Book value of the share	0.55	0.48
Price-to-book ratio	1.01	1.04
Market capitalisation	2,519,474	2,222,536

Return on assets = net profit / total assets Return on equity = net profit/ equity Debt ratio = liabilities / total assets Earnings per share = net profit/ number of shares Price-to-earnings (PE) ratio = closing price of the share / earnings per share Book value of the share = equity / number of shares Price-to-book ratio = closing price of the share / book value of the share Market capitalisation = closing price of the share * number of shares

Share

Since 5 June 1997, the shares of Trigon Property Development AS have been listed on the Tallinn Stock Exchange. Trigon Property Development AS has issued 4,499,061 registered shares, each with the book value of 0.511 euros. The shares are freely transferable, no statutory restrictions apply. There are no restrictions on transfer of securities to the company as provided by contracts between the company and its shareholders.

The share, with a price of 0.494 at the end of 2019, closed at 0.560 euros at the end of 2020. In 2020, a total of 101,083 shares were traded and the total sales amounted to 48,200 euros.

Share price and trading statistics on the Tallinn Stock Exchange from 01.01.2020 to 31.12.2020:

	Number of shareholders	% of shareholders	Number of shares	% of share capital
1-99	113	31.13%	2,822	0.06%
100-999	138	38.02%	45,410	1.01%
1 000-9 999	87	23.97%	236,162	5.25%
10 000-99 999	19	5.23%	582,723	12.95%
100 000-999 999	5	1.38%	1,754,304	38.99%
1 000 000-9 999 999	1	0.28%	1,877,640	41.73%
TOTAL	363	100%	4,499,061	100%

The distribution of share capital by the number of shares acquired as at 31.12.2020

List of shareholders with over 1% holdings as at 31.12.2020.

Shareholder	Number of shares	Ownership %
Pärnu Holdings OÜ	1,877,640	41.73
Nordic Fibreboard LTD OÜ	804,552	17.88
Madis Talgre	289,000	6.11
Harju KEK AS	224,000	4.98
M.C.E.Fidarsi OÜ	223,000	4.96
Kirschmann OÜ	213,752	4.75
James Kelly	99,004	2.20
Avraal AS	86,000	1.91
Suur Samm OÜ	64,692	1.44
Toivo Kuldmäe	49,231	1.09

Personal

AS Trigon Property Development had no employees as at 31 December 2020 and 31 December 2019. There were no labour costs in 2020 and 2019.

Description of main risks

Cash flow and fair value interest rate risk

As the Company has no significant interest-bearing assets and liabilities, its income and operating cash flows are substantially independent of changes in market interest rates. The change in market interest rates has indirect influence to the change of fair value of investment property, but the influence to the change of fair value of investment property is difficult to quantitatively evaluate.

Management and Supervisory Boards and auditor

Management board of AS Trigon Property Development has one member – Rando Tomingas.

Supervisory Board of AS Trigon Property Development has three members: Joakim Helenius, Torfinn Losvik and Alo Lepp.

Audits are carried out by PricewaterhouseCoopers AS.

Condensed interim report

Management Board's declaration

The Management Board confirms the correctness and completeness of the unaudited interim report of AS Trigon Property Development for the fourth quarter and 12 months of 2020 as set out on pages 4-16.

The Management Board confirms that to the best of their knowledge:

• 1. the accounting policies and presentation of information applied in the preparation of the condensed interim report are in compliance with International Financial Reporting Standards (IFRS) as adopted in the European Union.
• 1. the interim report presents a true and fair view of the financial position, the results of operations and cash flows of the Company;
• 1. the management report presents true and fair view of significant events that took place during the accounting period and their impact to financial statements and includes the description of major risks and doubts;
• 1. company is going concern.

Member of the Management Board Rando Tomingas

26.02.2021

Condensed statement of financial position

EUR	31.12.2020	31.12.2019
Cash	146,890	150,007
Receivables and prepayments (note 2)	789	7,381
Total current assets	147,679	157,388
Investment property (note 3)	2,350,000	2,036,000
Total non-current assets	2,350,000	2,036,000
TOTAL ASSETS	2,497,679	2,193,388
Payables and prepayments (note 4)	6,325	49,927
Total current liabilities	6,325	49,927
Total liabilities	6,325	49,927
Share capital at book value (note 5)	2,299,020	2,299,020
Share premium	226,056	226,056
Statutory reserve capital	287,542	287,542
Accumulated loss	-321,264	-669,157
Total equity	2,491,354	2,143,461
TOTAL LIABILITIES AND EQUITY	2,497,679	2,193,388

The notes to the condensed interim report presented on pages 12-16 are an integral part of this report.

Condensed statement of comprehensive income

EUR	IV Q 2020	IV Q 2019	12 M 2020	12 M 2019
Gain on sales of investment (note 3)	0	0	4,406	0
Expenses related to investment property (note 6)	-2,135	-2,155	-10,544	-11,621
Gross loss	-2,135	-2,155	-6,139	-11,621
Administrative and general expenses (note 7)	-8,818	-9,800	-20,576	-23,501
Changes in fair value of investment property (note 6)	374,594	389,526	374,594	389,526
Operating profit	363,641	377,571	347,879	354,404
			3 14
Net financial income (-expense)	4			8
NET PROFIT FOR THE PERIOD	363,645	377,574	347,893	354,412
TOTAL COMPREHENSIVE PROFIT	363,645	377,574	347,893	354,412
Basic earnings per share	0.08083	0.08392	0.07733	0.07877
Diluted earnings per share	0.08083	0.08392	0.07733	0.07877

The notes to the condensed interim report presented on pages 12-16 are an integral part of this report.

Condensed cash flow statement

EUR	12 M 2020	12 M 2019
Cash flows from operating activities
Operating profit for the period	347,879	354,404
Adjustments for: Change in fair value of investment property (note 6)	-374,594	-389,526
Operating loss before changes in working capital:	-26,715	-35,122
Change in receivables and prepayments related to operating activities (note 2)	6,592	4,189
Change in liabilities and prepayments related to operating activities (note 4)	-43,602	-41,014
Interests received	14	8
Total cash flows used in operating activities	-63,711	1,711
Cash flows from investing activities
Disposal of investment property (note 6)	60,594	75,000
Total cash flows from investing activities	60,594	75,000
CHANGE IN CASH BALANCE	-3,117	76,711
OPENING BALANCE OF CASH	150,007	73,296
CLOSING BALANCE OF CASH	146,890	150,007

The notes to the condensed interim report presented on pages 12-16 are an integral part of this report.

EUR	Share capital	Share premium	Statutory reserve capital	Accumulated loss	Total
Balance 31.12.2018	2 299 020	226 056	287 542	-1 023 569	1 789 049
Total comprehensive profit for the period	0	0	0	354 412	354 412
Balance 31.12.2019	2 299 020	226 056	287 542	-669 157	2 143 461
Total comprehensive profit for the period	0	0	0	347 893	347 893
Balance 31.12.2020	2 299 020	226 056	287 542	-321 264	2 491 354

Condensed statement of changes in equity

Additional information regarding the owners' equity is provided in note 5.

The notes to the condensed interim financial statements presented on pages 12-16 are an integral part of these financial statements.

Notes to condensed interim report

Note 1 Accounting Principles Followed upon Preparation of the Interim Accounts

General Information

The Company's main area of operations is real estate development.

Bases for Preparation

The accounting policies used for preparing the interim report of AS Trigon Property Development for the fourth quarter of 2020 are in accordance with International Financial Reporting Standards (IFRS) as adopted in the European Union. The presentation of the financial statements complies with the requirements of IAS 34 "Interim Financial Reporting". Interim financial statements should be read together with the annual report of last year. The accounting policies that have been used in the preparation of the condensed interim report are the same as those used in the annual report for the year ended 31 December 2019.

The financial statements have been prepared in euros (EUR).

Management estimates that AS Trigon Property Development is a going concern and the Company's interim report for the fourth quarter and 12 months of 2020 presents a true and fair view of the financial position, the results of operations and the cash flows of AS Trigon Property Development. This interim report has not been audited.

Note 2 Receivables and prepayments

EUR	31.12.2020	31.12.2019
Receivables	0	7,000
Tax prepayments	789	381
TOTAL	789	7,381

Note 3 Investment property

	EUR
Balance as of 31.12.2018	1,721,474
Sales of investment property	-75,000
Profit from change in fair value	389,526
Balance as at 31.12.2019	2,036,000
Sales of investment property	-60,594
Profit from change in fair value	374,594
Balance as at 31.12.2020	2,350,000

As at 31 December 2020, the Company owns one real estate development project involving a 21 hectare (31 December 2019: 21-hectare) area in the City of Pärnu, Estonia.

In June 2020 a 0.7-hectare property at the book value 60 thousand euros was sold which gain on sales of investment property was 5 thousand euros.

The expenses related to the management of investment property totalled 10,544 euros in 2020 and 11,621 euros in 2019 (note 6).

In 2016, a new detailed planning has been established for the property under which the proportion of business property in respect of all the land has increased compared to the previous planning. New established detailed planning has increased the flexibility for the partial selling of the property as compared to the previous detailed planning, the plots are smaller and there is the flexibility of changing the size of the plots, as required.

In the third quarter of 2019 a 0.5-hectare property at the price of 75,000 euros was sold.

In the second quarter of 2020 a 0.7-hectare property at the price of 65 000 euros was sold.

In 2020 the investment property was valued by the Management of the Company using the Discounted cash flow model Approach. Based on Discounted cash flow model Approach as of 31.12.2020 the Management of the Company evaluates of investment property in a fair value of 2,350,000 euros. In applying Discounted cash flow model Approach, the company has based on the best use of the investment property and inputs from market conditions (the discount rate, sales period). In consideration the known comparable transactions in Pärnu city and experience and cognition of the management, the possible average sales price is 19.11 EUR/m2. To evaluate the present value of the area as at 31.12.2020, the Management has estimated the sales period to be 4 years.

As at 31 December 2020, the evaluation resulted in a fair value of 2,350,000 euros.

According to IFRS 13, the valuation of fair value of real estate is considered level 3 investment. The main inputs are the sales price, the discount rate and the sales period in the discounted cash flow. Sensitivity of the main inputs to investment property fair value as of 31.12.2020:

Discount
rate		Sales price, EUR / m2
2 350 000	18.36	18.61	18.86	19.11	19.36	19.61	19.86
9.60%	2,390,000	2,430,000	2,460,000	2,490,000	2,520,000	2,560,000	2,590,000
10.40%	2,350,000	2,380,000	2,410,000	2,440,000	2,480,000	2,510,000	2,540,000
11.20%	2,300,000	2,330,000	2,370,000	2,400,000	2,430,000	2,460,000	2,490,000
12.00%	2,260,000	2,290,000	2,320,000	2,350,000	2,380,000	2,410,000	2,440,000
12.80%	2,220,000	2,250,000	2,280,000	2,310,000	2,340,000	2,370,000	2,400,000
13.60%	2,180,000	2,210,000	2,240,000	2,270,000	2,300,000	2,330,000	2,350,000
14.40%	2,140,000	2,170,000	2,200,000	2,220,000	2,250,000	2,280,000	2,310,000

Sales
period	EUR
+ 1 year	2,250,000
- 1 year	2,450,000

The property valuation is based on estimates, assumptions and historical experience adjusted with prevailing market conditions and other factors which management assesses to the best of its ability on an on-going basis. Therefore, based on the definition and taking into account that evaluation is based on a number of presumptions, which may not realize in assessed way, the valuation can be subject to significant adverse effects. This could lead to a significant change in the carrying amount of investment property in future periods. The fair value of the investment property, which is assessed using the described model is essentially dependent on whether this project could be accomplished and appropriate financing found in compliance with the presumptions made and schedule used in evaluation model.

EUR	31.12.2020	31.12.2019
Payables	407	1,594
Taxes payable	0	12,415
Other payables	5,918	5,918
Prepayments	0	30,000
TOTAL	6,325	49,927

Note 4 Payables and prepayments

Note 5 Equity

	Number of shares (pcs)	Share capital (EUR)
Balance 31.12.2019	4,499,061	2,299,020
Balance 31.12.2020	4,499,061	2,299,020

The share capital of AS Trigon Property Development amounts to 2,299,020 euros as at 31 December 2020 and 31 December 2019, which is divided into 4,499,061 ordinary shares with the book value of 0.511 euros. The minimum share capital stipulated in the articles of association is 675,000 euros and the maximum share capital is 2,700,000 euros. Each ordinary share grants one vote to its owner at the General Meeting of Shareholders and the right to receive dividends.

As at 31 December 2020 the accumulated losses amounted to -321,264 euros. As at 31 December 2019 the accumulated losses amounted to -669,157 euros.

As at 31 December 2020, the Company had 363 shareholders (31 December 2019: 350 shareholders) of which the entities with more than a 5% holdings were:

• Pärnu Holding OÜ with 1,877,640 (31.12.2019: 1,877,640) shares or 41.73% (31.12.2019: 41.73%)
• Nordic Fibreboard LTD OÜ with 804,552 (31.12.2019: 804,552) shares or 17.88% (31.12.2019: 17.88%)
• Madis Talgre with 289,000 (31.12.2019: 223,950) shares or 6.42% (31.12.2019: 4.98%).

Members of the Management Board and Supervisory Board did not own directly any shares of Trigon Property Development AS as at 31 December 2020 and 31 December 2019. Supervisory Board members Joakim Johan Helenius and Torfinn Losvik have indirect ownership through parent company OÜ Pärnu Holdings.

Note 6 Expenses related to investment property

EUR	IV Q 2020	IV Q 2019	12 M 2020	12 M 2019
Land tax	2,060	2,155	8,241	8,621
Evaluation	0	0	2,200	0
Project management	0	0	0	3,000
Other expenses	75	0	103	0
TOTAL (Note 3)	2,135	2,155	10,544	11,621

EUR	IV Q 2020	IV Q 2019	12 M 2020	12 M 2019
Security transactions and stock exchange fees	1,625	1,664	7,076	7,302
Advertising	0	0	384	1,874
Accounting service	810	810	3,240	3,240
Consulting	600	1,200	3,885	4,500
Auditing	5,700	5,700	5,700	5,700
Legal expenses	49	142	144	351
Other	34	284	147	534
TOTAL	8,818	9,800	20,576	23,501

Note 7 Administrative and general expenses

Note 8 Earnings per share

EUR	2020	2019
Basic earnings per share (basic EPS)	0.07733	0.07877
Diluted earnings per share	0.07733	0.07877
Book value of the share	0.55	0.48
Price to earnings ratio (P/E)	7.24	6.27
Closing price of the share of AS Trigon Property Development on Tallinn Stock Exchange	0.56	0.494

Basic earnings per share have been calculated on the basis of the net loss for the interim period and the number of shares.

Diluted earnings per share equal the basic earnings per share because the Company does not have any potential ordinary shares with the dilutive effect on the earnings per share.

Note 9 Segment

The Company operates in one business segment – property investments. Property investment division develops property in Estonia. The Company had no revenue in 2020 and 2019.

Note 10 Related party transactions

The following parties are considered to be related parties:

• Parent company Pärnu Holdings OÜ and owners of the parent company with significant influence;
• Members of the Management board, the Management Board and the Supervisory Board of AS Trigon Property Development and their close relatives;
• Entities under the control of the members of the Management Board and Supervisory Board.

The Company is listed in the secondary list of Nasdaq OMX Tallinn Stock Exchange. As at 31.12.2020 OÜ Pärnu Holdings owns 41.73 % of the shares of Trigon Property Development AS directly and 17.88% through Nordic Fibreboard AS. The biggest shareholders of OÜ Pärnu Holdings are OÜ Stetind (46.99%) and Joakim Johan Helenius (46.44%) by the time of compiling these financial statements.

In 2020 and 2019 no remuneration has been paid to the Management or Supervisory board. There are no potential liabilities to members of the Management Board or Supervisory Board.

In 2020 the Company bought services from the companies under the control of the Members of the Supervisory Board in the amount of 2,400 euros (2019: 2,400 euros). In 2020 the Company bought services from the owners of the parent company in the amount of 3,240 euros (2019: 3,240 euros). As at 31 December 2020 the amount of 240 euros was unpaid to the related parties (31.12.2019: 240 euros).