Market announcement

Title

Correction: Hepsor AS: 2022 II quarter and six months consolidated unaudited interim report

Message

The sections marked in bold have been corrected for correct contract type.

The consolidated revenues of Hepsor for the first six months of 2022 amounted to
4.0 million  euros (including  2.7 million euros  in Q2  2022) and a net loss of
0.3 million euros (including 0.3 million euros in Q2 2022).

The  sales of  development projects  still under  construction will  mostly take
place  in the second half of the year, and therefore the revenue and profit from
these projects will also be reflected in the results of the 3rd and 4th quarters
of  the year. The  Group's revenues and  profitability are directly dependent on
the  development cycle of the projects, which lasts about 24 to 36 months. Sales
revenue  is only generated at  the end of this  cycle. The number of projects as
well  as the revenues  and profitability may  significantly vary from quarter to
quarter  depending on the length and timing of the development cycle. Therefore,
some financial years or quarters may be weaker or stronger in terms of financial
results.  In evaluating the sustainability and the financial results of the real
estate  developer, the portfolio of the  development projects and the three-year
average  financial  results  are  the  best  criteria for evaluating the Group's
financial results.

The Group has generated revenues mainly from the sale of residential development
projects.  As of 25 July 2022, we have  sold 32 apartments in completed projects
in  Latvia (27 apartments as of the  end of Q2 2022), including 13 apartments in
the 4b Str?lnieku development project, 18 apartments in the 9 Balozhu development
project, and 1 apartment in the 24 ?genskalna development project.

As  of  date  of  the  current  report,  the Priisle Kodu development project, a
project  developed by the  Group's affiliate company  Hepsor N170 OÜ in Estonia,
has  reached the stage of  signing the real right  contracts. The Group's profit
share  will  be  reflected  in  the  financial  results  of the third and fourth
quarters of 2022. While contract under the law of obligations were signed at the
end  of  the  quarter  for  all  76 apartments  and  the commercial space in the
development  project, by  25 July, or after  the end  of the quarter, real right
contracts were already signed for 32 apartments.

Hepsor  currently has three residential  development projects under construction
in  Estonia and Latvia, with  a total of 304 new  apartments. To date, contracts
under  the law  of obligation  and booking  agreements have  been signed for 48
apartments  (52%) in the M?rupes D?rzs  (92 apartments) development project near
Riga.   The  sale  and  construction  of  Hepsor's  second  largest  residential
development project, Kuld?gas Parks (116 apartments) in Riga, is also proceeding
according  to the  plan, and  64 apartments (55%)  have been sold. Both projects
will  be completed in 2023. In Estonia, we continue with the construction of the
Paevälja Hoovimajad development project of two apartment buildings in two stages
with  a total of 96 apartments.  To date, contracts under  the law of obligation
have been concluded for 76 apartments (79%). The first phase of the project with
48 apartments  will be completed by the end of the year, the second phase in the
first quarter of next year.

In  July,  we  signed  a  14-million-euro  loan  agreement with LHV Pank AS, the
purpose  of  which  is  to  finance  the  construction  of  the  Ojakalda  Kodud
development project. There are 101 spacious family apartments in the three-tower
residential  building  on  the  border  of  Tallinn  and Harku. Our green way of
thinking is central to the development of the Ojakalda residential buildings: we
create an environmentally conscious and sustainable living environment. The pre-
sale  of the Ojakalda development project  has started and the construction will
begin in September 2022.

In  addition to the residential  development projects already under construction
and  available for sale, Hepsor also plans to start the construction of the next
phase  of the Manufaktuuri Kvartal with 160 new apartments in the second half of
2022. In Riga, we plan to start the Ra??a Dambis development project with 36 new
apartments.  In  2022, a  total  of  383 apartments  are  planned to be built in
Tallinn and Riga, including 128 in Riga. In addition, in May 2022, Hepsor signed
a  preliminary agreement for the  purchase of real estate  in the Imanta area of
Riga. About 40 apartments can be built on the property.

Three  commercial real  estate development  projects have  been completed or are
about  to be completed in Tallinn this year. Selver supermarket already operates
the  commercial space (leasable space approx.  1,500 m(2)) on the first floor of
the  11-storey commercial and residential property at 1 Priisle. Grüne Maja, the
office  building following the  green thinking concept,  has 80% of its leasable
space  covered by lease agreements, and the building itself is already in active
use.  We are actively continuing negotiations to lease the remaining 20%. At the
end  of the year, we  will hand over the  Büroo113 commercial building, which is
100% covered by lease agreements. The anchor tenant in this building is a clinic
with  a modern and innovative  concept. In the case  of Büro113, green solutions
(earth-heats-earth-cools,  energy-efficient  architecture,  very  good interior,
solar  energy, etc.) have been used for the first time in a city centre downtown
high-rise.  In  2022, a  stock-office  commercial  development  project  will be
completed at 30 Ulbrokas, Riga, which has also reached 100% occupancy.

In  June, we completed the  acquisition of the property  at 17A Gan?bu Dambis in
Riga.  The  property  has  13 buildings  of  different  commercial functionality
(leasable  area 8,200 m(2)) with occupancy of  about 81%. As a result, we expect
the share of rental income to increase in the third quarter of the year. In this
development project the demolished depreciated buildings will be replaced by new
commercial  premises including offices and stock-offices. In total, the property
will accommodate approximately 20,000 m(2) of leasable space.

As of the date of this report, the Group has a total of 25 development projects.
During  the reporting  year, the  ?genskalna and  Balozhu projects in Latvia were
completed and a development project in the Imanta area of Riga was acquired.

The management of Hepsor still forecasts a turnover of 28 million euros in 2022
and profit of 3.3 million euros (including 3.1 million euros attributable to the
owners of the parent company).

As  of this report, we  can say that despite  of the difficult global situation,
customers  are not  backing out  of contracts,  and contracts  under the  law of
obligations for new homes continue to be signed on the agreed terms. The sale of
new  apartments in  Riga projects  has exceeded  our expectations, and there are
only  20 unsold apartments in projects  currently under construction in Estonia.
Russia's  military invasion and attack on Ukraine's independence, which began on
24 February  2022, affects businesses and individuals around the world. Although
the  length,  impact  and  outcome  of  the  ongoing military conflict are still
unclear,  the  high  inflation  rate,  increased  energy prices, increase in the
Euribor  based on the European Central  Bank's monetary policy, and the increase
in  commodity and thus also construction prices are clearly felt. In view of the
next  two or three  quarters, the mentioned  factors will have  an impact on the
confidence of buyers of new homes.

Due  to global uncertainty,  the Group's management  is paying more attention to
the  risks associated  with taking  new projects  to the  sales and construction
phase.  Despite the above, the management of the Group has not halted any of the
current development projects, and according to current information, the sale and
construction of new projects mentioned above will start already in autumn 2022.

Consolidated statement of financial position

+----------------------------------------+------------+-----------+------------+
|         in thousands of euros          |30 June 2022|31 Dec 2021|30 June 2021|
+----------------------------------------+------------+-----------+------------+
|Assets                                  |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Current assets                          |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Cash and cash equivalents               |       4,361|     10,889|       1,277|
+----------------------------------------+------------+-----------+------------+
|Trade and other receivables             |         576|        652|         636|
+----------------------------------------+------------+-----------+------------+
|Current loan receivables                |         279|      2,388|         256|
+----------------------------------------+------------+-----------+------------+
|Inventories                             |      56,128|     37,237|      33,084|
+----------------------------------------+------------+-----------+------------+
|Total current assets                    |      61,344|     51,166|      35,253|
+----------------------------------------+------------+-----------+------------+
|Non-current assets                      |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Property, plant and equipment           |         260|        229|         410|
+----------------------------------------+------------+-----------+------------+
|Intangible assets                       |           3|          0|           0|
+----------------------------------------+------------+-----------+------------+
|Financial investments                   |           2|        402|           2|
+----------------------------------------+------------+-----------+------------+
|Non-current loan receivables            |       2,308|      3,408|        1,97|
+----------------------------------------+------------+-----------+------------+
|Other non-current receivables           |         380|        140|          99|
+----------------------------------------+------------+-----------+------------+
|Total non-current assets                |       2,953|      4,179|       2,481|
+----------------------------------------+------------+-----------+------------+
|Total assets                            |      64,297|     55,345|      37,734|
+----------------------------------------+------------+-----------+------------+
|Liabilities and equity                  |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Current liabilities                     |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Loans and borrowings                    |       2,472|      5,501|       4,393|
+----------------------------------------+------------+-----------+------------+
|Current lease liabilities               |          64|        123|          72|
+----------------------------------------+------------+-----------+------------+
|Prepayments from customers              |       2,453|      1,164|       1,238|
+----------------------------------------+------------+-----------+------------+
|Trade and other payables                |       3,959|      5,539|       1,967|
+----------------------------------------+------------+-----------+------------+
|Deferred income tax liability           |           8|          0|           0|
+----------------------------------------+------------+-----------+------------+
|Total current liabilities               |       8,956|     12,327|        7,67|
+----------------------------------------+------------+-----------+------------+
|Non-current liabilities                 |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Loans and borrowings                    |      34,641|     22,862|      19,169|
+----------------------------------------+------------+-----------+------------+
|Non-current lease liabilities           |          66|         66|         284|
+----------------------------------------+------------+-----------+------------+
|Other non-current liabilities           |       1,762|      1,053|        1,08|
+----------------------------------------+------------+-----------+------------+
|Deferred income tax liability           |           0|          0|          73|
+----------------------------------------+------------+-----------+------------+
|Total non-current liabilities           |      36,469|     23,981|      20,606|
+----------------------------------------+------------+-----------+------------+
|Total liabilities                       |      45,425|     36,308|      28,276|
+----------------------------------------+------------+-----------+------------+
|Equity                                  |            |           |            |
+----------------------------------------+------------+-----------+------------+
|Share capital                           |       3,855|      3,855|           6|
+----------------------------------------+------------+-----------+------------+
|Share premium                           |       8,917|      8,917|       3,211|
+----------------------------------------+------------+-----------+------------+
|Retained earnings                       |         6,1|      6,265|       6,241|
+----------------------------------------+------------+-----------+------------+
|Total equity                            |      18,872|     19,037|       9,458|
+----------------------------------------+------------+-----------+------------+
|incl.   total   equity  attributable  to|            |           |            |
|owners of the parent                    |      18,345|     18,904|        9,37|
+----------------------------------------+------------+-----------+------------+
|incl. non-controlling interest          |         527|        133|          88|
+----------------------------------------+------------+-----------+------------+
|Total liabilities and equity            |      64,297|     55,345|      37,734|
+----------------------------------------+------------+-----------+------------+


Consolidated statement of profit and loss and other comprehensive income

+----------------------------------------+-------+---------+-------+-----------+
|                                        |       |Adjusted |       |           |
|                                        |       |         |       |           |
|         in thousands of euros          |6M 2022| 6M 2021 |Q2 2022|Q2 2021    |
+----------------------------------------+-------+---------+-------+-----------+
|                                        |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
|Revenue                                 |  3,954|    3,874|  2,682|        985|
+----------------------------------------+-------+---------+-------+-----------+
|Cost of sales (-)                       | -3,752|    -3,29| -2,586|       -826|
+----------------------------------------+-------+---------+-------+-----------+
|Gross profit                            |    202|      584|     96|        159|
+----------------------------------------+-------+---------+-------+-----------+
|Marketing expenses (-)                  |   -173|     -100|    -78|        -52|
+----------------------------------------+-------+---------+-------+-----------+
|Administrative expenses (-)             |   -537|     -298|   -209|       -173|
+----------------------------------------+-------+---------+-------+-----------+
|Other operating income                  |     47|       43|     37|         23|
+----------------------------------------+-------+---------+-------+-----------+
|Other operating expenses (-)            |    -39|      -51|    -32|        -38|
+----------------------------------------+-------+---------+-------+-----------+
|Operating profit (-loss) of the year    |   -500|      178|   -186|        -81|
+----------------------------------------+-------+---------+-------+-----------+
|Financial income                        |    567|       76|     58|         43|
+----------------------------------------+-------+---------+-------+-----------+
|Financial expenses (-)                  |   -312|     -191|   -144|        -83|
+----------------------------------------+-------+---------+-------+-----------+
|Profit before tax                       |   -245|       63|   -272|       -121|
+----------------------------------------+-------+---------+-------+-----------+
|Current income tax                      |     -5|      -16|      0|        -16|
+----------------------------------------+-------+---------+-------+-----------+
|Deferred income tax                     |     -8|      -13|     -8|         -2|
+----------------------------------------+-------+---------+-------+-----------+
|Net profit for the year                 |   -258|       34|   -280|       -139|
+----------------------------------------+-------+---------+-------+-----------+
|    Attributable to owners of the parent|   -273|      -84|   -278|       -134|
+----------------------------------------+-------+---------+-------+-----------+
|    Non-controlling interest            |     15|      118|     -2|         -5|
+----------------------------------------+-------+---------+-------+-----------+
|                                        |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
| Other comprehensive income (-loss)     |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
|Changes related to change of ownership  |    135|        0|      0|          0|
+----------------------------------------+-------+---------+-------+-----------+
|Change  in value of embedded derivatives|       |         |       |           |
|with minority shareholders              |    -13|      -31|    -31|         59|
+----------------------------------------+-------+---------+-------+-----------+
|Other  comprehensive income  (-loss) for|       |         |       |           |
|the period                              |    122|      -31|    -31|         59|
+----------------------------------------+-------+---------+-------+-----------+
|    Attributable to owners of the parent|   -286|        0|   -200|          0|
+----------------------------------------+-------+---------+-------+-----------+
|    Non-controlling interest            |    408|      -31|    169|         59|
+----------------------------------------+-------+---------+-------+-----------+
|                                        |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
|Comprehensive  income  (-loss)  for  the|       |         |       |           |
|period                                  |   -136|        3|   -311|        -80|
+----------------------------------------+-------+---------+-------+-----------+
|    Attributable to owners of the parent|   -559|      -84|   -478|       -134|
+----------------------------------------+-------+---------+-------+-----------+
|    Non-controlling interest            |    423|       87|    167|         54|
+----------------------------------------+-------+---------+-------+-----------+
|                                        |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
|Earnings per share                      |       |         |       |           |
+----------------------------------------+-------+---------+-------+-----------+
|   Basic (euros per share)              |  -0.07|    -0.02|  -0.07|      -0.03|
+----------------------------------------+-------+---------+-------+-----------+
|   Diluted (euros per share)            |  -0.07|    -0.02|  -0.07|      -0.03|
+----------------------------------------+-------+---------+-------+-----------+

Anneli Simm
Head of Investor Relations
Phone: +372 5615 7170
e-mail: [email protected]

Hepsor  AS (www.hepsor.ee/en/ (http://www.hepsor.ee/en/)) is  one of the fastest
growing residential and commercial real estate developers in Estonia and Latvia.
Over  the  last  eleven  years  Hepsor  has  developed more than 1,400 homes and
23,000 m(2) of commercial space. Hepsor has been the first real estate developer
in  the Baltic States to implement  a number of innovative engineering solutions
that  make  the  buildings  we  construct  more  energy-efficient  and thus more
environmentally friendly. The company's portfolio is comprised of 25 development
projects with a total sellable space of 176,000 m(2).