Trigon Property Development — Interim / Quarterly Report 2022

Nov 30, 2022

Interim report for the third quarter and 9 months of 2022 (unaudited)

Table of contents

MANAGEMENT REPORT 4 CONDENSED INTERIM REPORT7 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 Trade and other receivables 12 Note 3 Inventories 12 Note 4 Investment property 13 Note 5 Trade and other payables 14 Note 6 Equity 14 Note 7 Sales revenue 15	BRIEF DESCRIPTION 3
Note 8 Costs of goods sold 15 Note 9 Administrative and general expenses 15 Note 10 Earnings per share 16 Note 11 Segment 16 Note 12 Related party transactions 16

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 12.8-hectare area in the City of Pärnu, Estonia.

The Company is listed on the Tallinn Stock Exchange. On November 6, 2012, the Listing and Surveillance Committee of NASDAQ 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 30.09.2022 OÜ Pärnu Holdings owns 39.22% of the shares of Trigon Property Development AS directly and 17.88% through Nordic Fibreboard LTD OÜ. The biggest shareholders of OÜ Pärnu Holdings are OÜ Stetind (50%) and Joakim Johan Helenius (50%) 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:	1.1.2022
End of financial year:	31.12.2022
Beginning of interim period:	1.1.2022
End of interim period:	30.09.2022
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 30.09.2022, AS Trigon Property Development owned one development project with an area of 12.8 hectares in the City of Pärnu, Estonia. A commercial, industrial and logistics park is planned 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. As the main purpose of the company is to sell existing land plots, investment property was recognized as inventories. As of 31 January 2021, the investment property was reclassified to inventories in connection with commencement of development work consisting of road and communal infrastructure construction on the properties and the implementation of a specific sales strategy to sell the land plots to end-users. However, the company does not preclude the possibility of developing existing land into rental property if the opportunity arises. The Company does not have any plan to change or start a new business activity next year and will continue to sell of land plots the Company owns. In the first half of 2022, Kibuvitsa street has been completed, connecting Niidu and Kase streets that surround the company´s land plots.

In the first quarter of 2021, a 3.43-hectare property was sold for 824,040 euros (excluding VAT).

In the second quarter of 2021, a 0.89-hectare property was sold for 205,000 euros (excluding VAT).

In the third quarter of 2021, a 2.01-hectare property was sold for 604,080 euros (excluding VAT).

In the first quarter of 2022, a 0.53-hectare property was sold for 213,200 euros (excluding VAT).

In the second quarter of 2022, a 1.0-hectare property was sold for 401,280 euros (excluding VAT).

In 2016, a new detailed planning was made for the property, under which the proportion of commercial land in the entire property increased compared to the previous planning. The new established detailed planning increased the flexibility for partial sale of land plots, as compared to the previous detailed planning the plots were made smaller and the flexibility to change the size of the plots as needed was added.

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	9 M 2022	9 M 2021
Total assets	1,957,912	2,888,426
Return on assets	6.54%	10.33%
Equity	1,773,623	2,389,244
Return on equity	7.22%	12.49%
Debt ratio	9.41%	17.28%
Net profit for the period	128,097	298,307
Share (30.09)	9 M 2022	9 M 2021
Number of shares at period-end	4,499,061	4,499,061
Closing price of the share	0.978	1.000
Earnings per share	0.02847	0.06630
Book value of the share	0.39	0.53
Price-to-book ratio	2.48	1.88
Market capitalisation	4,400,082	4,499,061

Return on assets = net profit / total assets Return on equity = net profit/ equity Debt ratio = liabilities / total assets Earnings per share = net profit for the period/ number of shares 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 0.1 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 0.80 at the end of 2021, closed at 0.978 euros at the end of September 2022. In the first 9 months of 2022, a total of 294,337 shares were traded and the total sales amounted to 270,777 euros.

Share price and trading statistics on the Tallinn Stock Exchange from 01.01.2022 to 30.09.2022:

AS Trigon Property Development Interim report for the third quarter and 9 months of 2022 (unaudited)

	Number of shareholders	% of shareholders	Number of shares	% of share capital
1-99	569	55.68%	13,400	0.30%
100-999	320	31.31%	90,595	2.01%
1 000-9 999	105	10.27%	273,452	6.08%
10 000-99 999	21	2.05%	514,810	11.44%
100 000-999 999	6	0.59%	1,842,204	40.95%
1 000 000-9 999 999	1	0.10%	1,764,600	39.22%
TOTAL	1 022	100%	4,499,061	100%

The distribution of share capital by the number of shares acquired as at 30.09.2022

List of shareholders with over 1% holdings as at 30.09.2022.

	Number of
Shareholder	shares	Ownership %
Pärnu Holdings OÜ	1,764,600	39.22
Nordic Fibreboard LTD OÜ	804,552	17.88
Madis Talgre	354,900	7.89
Harju KEK AS	224,000	4.98
Kirschmann OÜ	201,752	4.48
M.C.E.Fidarsi OÜ	140,000	3.11
Avraal AS	117,000	2.60
James Kelly	87,745	1.95
Suur Samm OÜ	64,692	1.44
Toivo Kuldmäe	49,231	1.09

Personal

AS Trigon Property Development had no employees as at 30 September 2022 and 30 September 2021. There were no labour costs in the first 9 months of 2022 and 2021.

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 third quarter and 9 months of 2022 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

30.11.2022

Condensed statement of financial position

EUR	30.09.2022	31.12.2021	30.09.2021
Cash and cash equivalents	456,095	938,858	1,488,952
Trade and other receivables (note 2)	19,083	166,825	117,089
Inventories (note 3)	1,482,734	1,452,989	1,282,384
Total current assets	1,957,912	2,558,672	2,888,426
TOTAL ASSETS	1,957,912	2,558,672	2,888,426
Trade and other payables (note 5)	184,288	195,593	499,182
Total current liabilities	184,288	195,593	499,182
Total liabilities	184,288	195,593	499,182
Share capital at book value (note 6)	449,906	449,906	449,906
Share premium	226,056	226,056	226,056
Statutory reserve capital	287,542	287,542	287,542
Accumulated profit	810,119	1,399,575	1,425,740
Total equity	1,773,623	2,363,079	2,389,244
TOTAL LIABILITIES AND EQUITY	1,957,912	2,558,672	2,888,426

Condensed statement of comprehensive income

EUR	III Q 2022	III Q 2021	9 M 2022	9 M 2021
Gain on sales (note 7)	0	604,080	614,480	809,080
Costs of goods sold (note 8)	0	-358,766	-259,267	-433,080
Gross profit	0	245,314	355,213	376,000
Administrative and general expenses (note 9)	-18,689	-26,108	-59,424	-65,814
Changes in fair value of investment property	0	0	0	88,040
(note 4)
Other operating income	0	0	0	100
Operating profit/loss	-18,689	219,206	295,789	398,326
Financial income	12	41	57	86
PROFIT/LOSS BEFORE INCOME TAX	-18,677	219,248	295,846	398,411
Income tax expense (note 6)	-33,169	-100,104	-167,749	-100,104
TOTAL COMPREHENSIVE PROFIT/LOSS	-51,846	119,144	128,097	298,307
Basic earnings per share (note 10)	-0.01152	0.02648	0.02847	0.06630
Diluted earnings per share (note 10)	-0.01152	0.02648	0.02847	0.06630

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

Condensed cash flow statement

EUR	9 M 2022	9 M 2021
Cash flows from operating activities
Total comprehensive profit Adjustments for:	128,097	298,307
Change in fair value of investment property (note 4)	0	-88,040
Interest expense	-45	-86
Operating profit before changes in working capital:	128,052	210,181
Change in receivables and prepayments related to operating activities (note 2)	147,742	-118,284
Change in liabilities and prepayments related to operating activities (note 5)	-143,980	94,423
Change in inventories (note 3)	-29,745	331,616
Interests received	45	86
Total cash flows generated from/(used in) operating activities	102,114	518,022
Cash flows from investing activities
Disposal of investment property (note 4)	0	824,040
Total cash flows from investing activities	0	824,040
Cash flows from financing activities
Dividends paid (note 6)	-584,878	0
Total cash flows used in financing activities	-584 878	0
CHANGE IN CASH BALANCE	-482,763	1,342,062
OPENING BALANCE OF CASH	938,858	146,890
CLOSING BALANCE OF CASH	456,095	1,488,952

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

			Statutory
	Share	Share	reserve	Retained
EUR	capital	premium	capital	earnings/loss	Total
Balance 31.12.2020	2,299,020	226,056	287,542	-321,264	2,491,354
Total comprehensive profit	0	0	0	298,307	298,307
Reduction of share capital	-1,849,114	0	0	1,448,697	-400,417
Balance 30.09.2021	449,906	226,056	287,542	1,425,740	2,389,244
Total comprehensive profit	0	0	0	-26,166	-26,166
Balance 31.12.2021	449,906	226,056	287,542	1,399,575	2,363,079
Total comprehensive profit	0	0	0	128,097	128,097
Dividends declared	0	0	0	-717,553	-717,553
Balance 30.09.2022	449,906	226,056	287,542	810,119	1,773,623

Condensed statement of changes in equity

Additional information regarding the owners' equity is provided in note 6.

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

AS Trigon Property Development (The Company) is active in real estate development.

Bases for Preparation

The accounting policies used for preparing the interim report of AS Trigon Property Development for the third quarter of 2022 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 2021.

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 third quarter and 9 months of 2022 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.

EUR	30.09.2022	31.12.2021	30.09.2021
Trade receivables	0	130,571	85,939
Tax prepayments	19,083	36,254	31,151
TOTAL	19,083	166,825	117,089

Note 2 Trade and other receivables

Note 3 Inventories

	EUR
Balance as at 31.12.2020	0
Balance as at 30.09.2021	1,282,384
Inventories	170,605
Balance as at 31.12.2021	1,452,989
Inventories	29,745
Balance as at 30.09.2022	1,482,734

As of 31 January 2021, the investment property was reclassified to inventories in connection with commencement of development work consisting of road and route construction on the properties and the implementation of a specific sales strategy to sell the land plots to end-users. The fair value of investment property as at 31.01.2021 became the acquisition cost of inventories. No inventories were written down in the reporting period (note 4).

Note 4 Investment property

	EUR
Balance as at 31.12.2020	2,350,000
Profit from change in fair value	88,040
Sale of investment property	-824,040
Reclassification to inventories	-1,614,000
Balance as at 31.12.2021	0

In 2021, investment property was reclassified to inventories (see Note 3).

In January 2021, a 3.43-hectare property was sold for 824,040 euros.

In June 2020, a 0.7-hectare property was sold for 65,000 euros.

In 2016, a new detailed planning was made for the property, under which the proportion of commercial land in the entire property increased compared to the previous planning. The newly established detailed planning increased the flexibility for partial sale of land plots, as compared to the previous detailed planning the plots were made smaller and the flexibility to change the size of the plots as needed was added.

As at 31 December 2020, the investment property is recognised at fair value. As a result of the discounted cash flow assessment performed by the Management as at 31 December 2020, the Management estimated the fair value of the investment property at 2,350,000 euros. The discounted cash flow model approach was applied based on the best use of investment property and inputs based on market conditions (discount rate, sales period). Considering the known comparable transactions in Pärnu city and the experience and knowledge of the Management, the average market value of the appraised objects was 19.11 EUR/m2. In order to assess the present value of the real estate as at 31 December 2020, the Management estimated the sale period of the plots to be 4 years.

According to IFRS 13, the real estate recognised at fair value is considered to be a level 3 investment. For determining fair value, the most important inputs are the sales price, the discount rate and the period of discounted cash flows.

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

Sensitivity of the main inputs to investment property fair value as at 31.12.2020:

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 the 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	30.09.2022	31.12.2021	30.09.2021
Trade payables	754	3 610	426
Taxes payable (note 6)	34,512	100,104	100,104
Other payables	149,022	91,879	398,652
TOTAL	184,288	195,593	499,182

Note 5 Trade and other payables

*As of 30.09.2022 tax liability on dividends in the amount of 33,169 euros and declared dividends in the amount of 134,972 euros is recorded in the balance sheet(note 6).

Note 6 Equity

	Number of shares (pcs)	Share capital (EUR)
Balance 30.09.2021	4,499,061	449,906
Balance 31.12.2021	4,499,061	449,906
Balance 30.09.2022	4,499,061	449,906

The share capital of AS Trigon Property Development is 449,906 euros which is divided into 4,499,061 no par value shares with the book value of 0.1 euro. The minimum share capital stipulated in the articles of association is 400,000 euros and the maximum share capital is 1,600,000 euros. Each share grants one vote to its owner at the General Meeting of Shareholders and the right to receive dividends. All shares issued have been fully paid for.

On 04 June 2021, the Annual General Meeting adopted a resolution to reduce the share capital of the Company by 1,849,114 euros from 2,299,020 euros to 449,906 euros. Share capital was reduced by reducing book value of the shares by 0.411 euros per share. The reduction of share capital has registered in the Commercial register, on 10th of September 2021. In relation to reduction of share capital the corresponding payments to the shareholders by 0.089 euros per share were made by a total of 400,417 euros. And respective income tax paid was in amount of 100,104 euros in total (Note 5).

In second quarter of 2022, dividends were paid to the shareholders in the amount of 584,878 thousand euros, or 0.13 euros per share. Related income tax expense on dividends amounted to 134,580 euros.

In third quarter of 2022, dividends were declared to the shareholders in the amount of 134,972 thousand euros, or 0.03 euros per share. Related income tax expense on dividends amounted to 33,169 euros.

As at 30 September 2022, the retained earnings amounted to 810,119 euros. As at 31 December 2021, the accumulated losses amounted to 1,399,575 euros. The maximum possible income tax liability which would arise if all of the unrestricted equity were distributed as dividends is 202,530 euros.

As at 30 September 2022, the Company had 1 022 shareholders (31 December 2021: 763 shareholders) of which the entities with more than a 5% holdings were:

• Pärnu Holding OÜ with 1,764,600 (31.12.2021: 1,764,600) shares or 39.22% (31.12.2021: 39.22%)
• Nordic Fibreboard LTD OÜ with 804,552 (31.12.2021: 804,552) shares or 17.88% (31.12.2021: 17.88%)
• Madis Talgre with 354,900 (31.12.2021: 343,000) shares or 7.89% (31.12.2021: 7.62%).

Members of the Management Board and Supervisory Board did not own directly any shares of Trigon Property Development AS as at 30 September 2022 and 31 December 2021. Supervisory Board members Joakim Johan Helenius and Torfinn Losvik have indirect ownership through parent company OÜ Pärnu Holdings.

Note 7 Sales revenue

EUR	III Q 2022	III Q 2021	9 M 2022	9 M 2021
Gain on sales by operating activities
Sale of real estate	0	604,080	614,480	809,080
Total gain on sales	0	604,080	614,480	809,080

Note 8 Costs of goods sold

EUR	III Q 2022	III Q 2021	9 M 2022	9 M 2021
Land and buildings	0	358,766	259,267	433,080
TOTAL	0	358,766	259,267	433,080

Note 9 Administrative and general expenses

EUR	III Q 2022	III Q 2021	9 M 2022	9 M 2021
Security transactions and stock exchange fees	2,362	2,398	7,425	6,024
Advertising	696	0	1,392	696
Accounting service	810	810	2,430	2,430
Consulting (note 12)	4,350	7,320	26,690	14,080
Selling expenses	8,775	12,081	13,039	32,661
Auditing	0	0	20	20
Land tax	1,338	1,983	4,015	5,948
Legal expenses	323	1,492	4,212	3,852
Other	35	24	202	103
TOTAL	18,689	26,108	59,424	65,814

Note 10 Earnings per share

EUR	9 M 2022	9 M 2021
Weighted average number of shares	4,499,061	4,499,061
Basic earnings per share (basic EPS)	0.02847	0.06630
Diluted earnings per share	0.02847	0.06630
Book value of the share	0.39	0.53
Closing price of the share of AS Trigon Property Development on Tallinn Stock Exchange	0.978	1.000

Basic earnings per share have been calculated on the basis of the net profit for the 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 11 Segment

The Company operates in one business segment – sale of rale estate. The real estate sales division leases out land and develops real estate. The Management Board is responsible for allocating resources and evaluating the results of business segments. The Management Board monitors the Company's operations as one business segment, which is the sale of real estate. The internal reports submitted to the Management Board are prepared on the basis of the same accounting principles and in the form used in these financial statements.

Note 12 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´s shares are listed in the secondary list of Nasdaq Tallinn. As at 30.09.2022, OÜ Pärnu Holdings owns 39.22 % of the shares of Trigon Property Development AS directly and 17.88% through Nordic Fibreboard LTD OÜ. The biggest shareholders of OÜ Pärnu Holdings are OÜ Stetind (50%) and Joakim Johan Helenius (50%) by the time of compiling these financial statements.

In the first 9 months of 2022 and 2021 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 the first 9 months of 2022 the Company bought services from the companies under the control of the Members of the Supervisory Board in the amount of 4,230 euros (2021 9 M: 4,230 euros). As at 30 September 2022 the amount of 240 euros was unpaid to the related parties (30.09.2021: 240 euros).