Trigon Property Development — Interim / Quarterly Report 2021

Feb 28, 2022

Interim report for the fourth quarter and 12 months of 2021 (unaudited)

Table of contents

BRIEF DESCRIPTION 3
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
Note 2 Receivables and prepayments 12
Note 3 Inventories 12
Note 4 Investment property 12
Note 5 Payables and prepayments 14
Note 6 Equity 14
Note 7 Expenses related to investment property 14
Note 8 Administrative and general expenses 15 Note 9 Earnings per share 15
Note 10 Segment 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 14.3-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 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 31.12.2021 OÜ Pärnu Holdings owns 39.22% 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 (46.71%) and Joakim Johan Helenius (46.71%) 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:	1.1.2021
End of financial year:	31.12.2021
Beginning of interim period:	1.1.2021
End of interim period:	31.12.2021
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 31.12.2021, AS Trigon Property Development owned one development project with an area of 14.3 hectares in the City of Pärnu, Estonia. An 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. 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 first quarter of 2021 a 3.43-hectare property at the price of 824 040 (VAT not included) euros was sold.

In the second quarter of 2021 a 0.89-hectare property at the price of 205 000 (VAT not included) euros was sold.

In the third quarter of 2021 a 2.01-hectare property at the price of 604 080 (VAT not included) 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	2021	2020
Total assets	2,479,935	2,497,679
Return on assets	10.97%	13.93%
Equity	2,363,079	2,491,354
Return on equity	11.52%	13.96%
Debt ratio	4.71%	0.25%
Net profit for the period	272,142	347,893
Share (31.12)	2021	2020
Closing price of the share	0.800	0.560
Earnings per share	0.06049	0.07733
Price-to-earnings (PE) ratio	13.23	7.24
Book value of the share	0.53	0.55
Price-to-book ratio	1.52	1.01
Market capitalisation	3,599,249	2,519,474

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 0.1 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 0.56 at the end of 2020, closed at 0.80 euros euros at the end of 2021. In 2021, a total of 321,574 shares were traded and the total sales amounted to 297,389 euros.

Share price and trading statistics on the Tallinn Stock Exchange from 01.01.2021 to 31.12.2021:

The distribution of share capital by the number of shares acquired as at 31.12.2021

	Number of shareholders	% of shareholders	Number of shares	% of share capital
1-99	397	52.03%	9,143	0.20%
100-999	240	31.45%	68,766	1.53%
1 000-9 999	97	12.71%	253,088	5.63%
10 000-99 999	22	2.88%	555,160	12.34%
100 000-999 999	6	0.79%	1,848,304	41.08%
1 000 000-9 999 999	1	0.13%	1,764,600	39.22%
TOTAL	763	100%	4,499,061	100%

List of shareholders with over 1% holdings as at 31.12.2021.

	Number of
Shareholder	shares	Ownership %
Pärnu Holdings OÜ	1,764,600	39.22
Nordic Fibreboard LTD OÜ	804,552	17.88
Madis Talgre	343,000	7.62
Harju KEK AS	224,000	4.98
Kirschmann OÜ	201,752	4.48
M.C.E.Fidarsi OÜ	160,000	3.56
Avraal AS	115,000	2.56
James Kelly	97,994	2.18
Suur Samm OÜ	64,692	1.44
Toivo Kuldmäe	49,231	1.09
Invenio OÜ	47,727	1.06

Personal

AS Trigon Property Development had no employees as at 31 December 2021 and as at 31 December 2020. There were no labour costs in 2021 and 2020.

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 2021 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

28.02.2022

Condensed statement of financial position

EUR	31.12.2021	31.12.2020
Cash	938,858	146,890
Receivables and prepayments (note 2)	166,825	789
Inventories (note 3)	1,374,252	0
Total current assets	2,479,935	147,679
Investment property	0	2,350,000
Total non-current assets	0	2,350,000
TOTAL ASSETS	2,479,935	2,497,679
Payables and prepayments (note 5)	116,856	6,325
Total current liabilities	116,856	6,325
Total liabilities	116,856	6,325
Share capital at book value (note 6)	449,906	2,299,020
Share premium	226,056	226,056
Statutory reserve capital	287,542	287,542
Retained earnings /loss	1,399,575	-321,264
Total equity	2,363,079	2,491,354
TOTAL LIABILITIES AND EQUITY	2,479,935	2,497,679

Condensed statement of comprehensive income

EUR	IV Q 2021	IV Q 2020	12 M 2021	12 M 2020
Gain on sales (note 3)	0	0	1,633,120	0
Costs of goods sold (note 3)	0	0	-1,169,080	0
Gain on sales of investment property (note 4)	0	0	0	4,405
Gross profit	0	0	464,040	4,405
Administrative and general expenses (note 8)	-26,200	-8,818	-92,014	-20,576
Expenses related to investment property (note 7)	0	-2,135	0	-10,544
Changes in fair value of investment property	0	374,594	0	374,594
(note 4)
Other operating income	0	0	100	0
Operating profit/loss	-26,200	363,641	372,026	347,879
Net financial income	34	4	120	14
PROFIT/LOSS BEFORE INCOME TAX	-26,165	363,645	372,146	347,893
Income tax expense	-100,104	0	-100,104	0
NET PROFIT/LOSS FOR THE PERIOD	-126,269	363,645	272,042	347,893
TOTAL COMPREHENSIVE PROFIT/LOSS	-126,269	363,645	272,042	347,893
Basic earnings per share	-0.00582	0.08083	0.06049	0.07733
Diluted earnings per share	-0.00582	0.08083	0.06049	0.07733

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 2021	12 M 2020
Cash flows from operating activities
Operating loss for the period	272,142	347,878
Adjustments:
Profit from sale of investment property (note 4)	0	-4,405
Change in fair value of investment property (note 4)	0	-374,594
Interest charge	-120	0
Operating loss before changes in working capital:	272,022	-31,121
Change in receivables and prepayments related to operating activities (note 2)	-166,037	6,592
Change in liabilities and prepayments related to operating activities (note 5)	110,531	-43,602
Change in inventories (note 3)	975,748	0
Interests received	120	14
Total cash flows used in operating activities	1 192 385	-68 117
Cash flows from investing activities
Disposal of investment property (note 4)	0	65,000
Total cash flows from investing activities	0	65,000
Reduction of share capital	-400,417	0
Total cash flows from financing activities	-400,417	0
CHANGE IN CASH BALANCE	791,968	-3,117
OPENING BALANCE OF CASH	146,890	150,007
CLOSING BALANCE OF CASH	938,858	146,890

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

			Statutory
EUR	Share capital	Share premium	reserve capital	Retained earnings /loss	Total
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
Total comprehensive profit for the period	0	0	0	272,142	272,142
Reduction of share capital	-1,849,114	0	0	0	-1,849,114
Other changes	0	0	0	1,448,697	1,448,697
Balance 31.12.2021	449,906	226,056	287,542	1,399,575	2,363,079

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 2021 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 2020.

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 2021 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	31.12.2021	31.12.2020
Receivables	130,571	0
Tax prepayments	36,254	789
TOTAL	166,825	789

Note 3 Inventories

	EUR
Balance as at 31.12.2020	0
Inventories	1,374,252
Balance as at 31.12.2021	1,374,252

As of 1 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.

Note 4 Investment property

	EUR
Balance as of 31.12.2019	2,036,000
Sales of investment property	-60,594
Change in fair value of investment property	374,594
Balance as at 31.12.2020	2,350,000
Reclassification to inventories	-2,350,000
Balance as at 31.12.2021	0

As at 31 December 2021, the Company owns one real estate development project involving a 14.3-hectare area in the City of Pärnu, Estonia.

The expenses related to the management of investment property totalled 10,544 euros in 2020 (note 7).

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 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	31.12.2021	31.12.2020
Payables	3,610	407
Taxes payable	100,104	0
Other payables	13,142	5,918
TOTAL	116,856	6,325

Note 5 Payables and prepayments

Note 6 Equity

	Number of shares (pcs)	Share capital (EUR)
Balance 31.12.2020	4,499,061	2,299,020
Balance 31.12.2021	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 ordinary share grants one vote to its owner at the General Meeting of Shareholders and the right to receive dividends.

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.

As at 31 December 2021 the retained earnings amounted to 1,399,575 euros. As at 31 December 2020 the accumulated losses amounted to -321,264 euros.

As at 31 December 2021, the Company had 763 shareholders (31 December 2020: 363 shareholders) of which the entities with more than a 5% holdings were:

• Pärnu Holding OÜ with 1,764,600 (31.12.2020: 1,877,640) shares or 39.22% (31.12.2020: 41.73%)
• Nordic Fibreboard LTD OÜ with 804,552 (31.12.2020: 804,552) shares or 17.88% (31.12.2020: 17.88%)
• Madis Talgre with 343,000 (31.12.2020: 289,000) shares or 7.62% (31.12.2020: 6.42%).

Members of the Management Board and Supervisory Board did not own directly any shares of Trigon Property Development AS as at 31 December 2021 and 31 December 2020. Supervisory Board members Joakim Johan Helenius and Torfinn Losvik have indirect ownership through parent company OÜ Pärnu Holdings.

Note 7 Expenses related to investment property

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

EUR	IV Q 2021	IV Q 2020	12 M 2021	12 M 2020
Security transactions and stock exchange fees	2,372	1,625	8,397	7,076
Advertising	0	0	696	384
Accounting service	810	810	3,240	3,240
Consulting	7,620	600	54,361	3,885
Auditing	12,900	5,700	12,920	5,700
Land tax	1,983	0	7,931	0
Legal expenses	0	49	3,852	144
Other	514	34	617	147
TOTAL	26,200	8,818	92,014	20,576

Note 8 Administrative and general expenses

Note 9 Earnings per share

EUR	2021	2020
Basic earnings per share (basic EPS)	0.06049	0.07733
Diluted earnings per share	0.06049	0.07733
Book value of the share	0.53	0.55
Price to earnings ratio (P/E)	13.23	7.24
Closing price of the share of AS Trigon Property Development on Tallinn Stock Exchange 31.12	0.800	0.560

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 10 Segment

The Company operates in one business segment – property investments. Property investment division develops property in Estonia. The Company had no revenue in 2021 and 2020.

Note 11 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 31.12.2021 OÜ Pärnu Holdings owns 39.22 % 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 (46.71%) and Joakim Johan Helenius (46.71%) by the time of compiling these financial statements.

In 2021 and 2020 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 2021 the Company bought services from the companies under the control of the Members of the Supervisory Board in the amount of 2,400 euros (2020: 2,400 euros). In 2021 Company bought services from the owners of the parent company in the amount of 3,240 euros (2020: 3,240 euros). As at 31 December 2021 the amount of 240 euros was unpaid to the related parties (31.12.2020: 240 euros).