Hepsor AS consolidated unaudited interim report for Q4 2024 and twelve months

For the Group as a whole, 2024 was a moderately profitable year, despite the ongoing economic downturn and interest rates which remained relatively high during the year. Encouragingly, the bottom of the market in terms of transaction activity remained backward-looking until 2023. Despite the market situation, a significant number of new homes were handed over to customers in 2024, a large number of new leases were signed, vacancy rates in both existing and new commercial buildings were reduced, new investments were made in the Baltics and in Canada. It would probably have been more profitable in the short term for the Group to make fewer new investments, thereby saving on both interest and overhead costs. However, the development project cycle is known to last at least 3–5 years, and therefore the Group has continued to invest and expand its development portfolio in a forward-looking manner, even in a difficult economic environment.

The Group's consolidated sales revenue for the 4th quarter of 2024 was
10.5 million euros (Q4 of 2023: 5.1 million euros) and the consolidated sales revenue of the reporting year totaled 38.4 million euros (2023: 41.1 million euros).

The Group's net profit for the 4th quarter was 1 million euros (Q4 2023: net loss 1.3 million euros), incl. the net profit attributable to the owners of the parent company was 0.6 million euros (Q4 2023: net loss 1.1 million euros) and the Group's net profit in 2024 was 2.1 million euros (2023: 3.5 million euros). The net profit attributable to the owners of the parent company in the reporting year was 0.4 million euros (2023: 1.2 million euros).

Development projects under construction and available for sale

In 2024, we delivered 193 homes to customers, including 51 homes in the fourth quarter. We delivered 165 homes to clients in Tallinn, and 28 homes in Riga.

In 2024, we began the construction of a commercial building StokOfiss 34 at Ulbrokas 34, Riga.

In Tallinn, we began Hepsor’s largest development project to date, the construction and sale of the main building of the former Baltic Cotton Spinning and Weaving Factory located at Manufaktuuri 5. The project is being developed in stages. In the first stage, the construction of 152 new apartments is planned.

In Riga, construction continued on the 40 apartment Annenhof House development project, the completion of which is planned for the beginning of 2025.

In the commercial building P113 Tervisemaja, owned by the affiliated company Hepsor P113 OÜ, the signing of new rental contracts continued, and as at the end of the reporting year 77% of the rental space was covered by contracts.

Based on the Group’s business strategy, the Lembitu 4 property in Tallinn, which is intended to be used for the construction of a hotel with approximately 110 rooms, was sold in Q4 2024. Freed-up capital was used to finance new developments as well as to reduce interest costs at the Group level.

New projects in Tallinn and Riga

In September 2024, Hepsor acquired a new property in Tallinn, at Võistluse 7. It is a sLender-type apartment building, designed by researchers-architects at the Estonian Academy of Arts, built in the style of an early 20th century Lender wooden house. The building will be constructed entirely of wood, with the exception of the staircase in the centre of the building. At the heart of the project is environmental preservation and the utilisation of green technology solutions for climate resilience.

On 18 July 2024, Hepsor E18 SIA, a subsidiary of Hepsor Latvia OÜ, acquired a property at Eiženijas iela 18, in Riga. The plan is to develop two buildings there with a total of 54 apartments.

In December, Hepsor Latvia OÜ signed an option agreement to acquire a 50% stake in a real estate development company. The development company is planning to build 103 new homes at Dzelzavas 74c, in Riga.

Hepsor in Canada

To date, Hepsor has invested in five development projects in Toronto. In cooperation with business partners, the primary objective of the projects acquired in Canada’s largest city is to prepare a detailed plan and thereby achieve building rights for a total of around 3,000 new rental apartments.

In 2024, Hepsor made three new investments in Canada:

– a development project consisting of seven properties at 17-29 Glenavy Avenue, in Toronto;

– a development project consisting of 11 properties in High Park, located in downtown Toronto;

– a development project consisting of 17 properties on Brownville Avenue, in Toronto.

Vision for the future

In 2025, we intend to begin the construction and sale of up to five new development projects.

In Latvia, we are planning to begin the construction and sale of up to four projects. In total, 147 new homes will be built and sold in three residential projects. In the field of commercial buildings, we would like to begin the construction of a stock-office type development project in the Veidema Quarter.

We will also be starting the next phase in the Manufaktuuri Quarter – the sale and construction of 49 new homes at Manufaktuuri 12.

Nevertheless, the declining interest rate environment allows us to look to the future with moderate optimism. The real estate business is a long process. That’s why we want to initiate and develop new projects, always analysing risks and opportunities over market cycles.

The full consolidated unaudited interim report for the IV quarter and twelve months of 2024 can be found on the Hepsor website:

https://hepsor.ee/en/for-investors/stock/reports-2/

Consolidated statement of financial position

in thousands of euros	31 December 2024	31 December 2023
Assets
Current assets
Cash and cash equivalents	6,249	7,604
Trade and other receivables	761	1,544
Current loan receivables	200	311
Inventories	64,141	77,439
Total current assets	71,351	86,898
Non-current assets
Property, plant and equipment	288	162
Intangible assets	2	4
Investment properties	7,980	0
Financial investments	6,424	2,005
Non-current loan receivables	2,428	1,729
Other non-current receivables	340	203
Total non-current assets	17,462	4,103
Total assets	88,813	91,001
Liabilities and equity
Current liabilities
Loans and borrowings	23,336	40,600
Current lease liabilities	52	40
Prepayments from customers	724	2,620
Trade and other payables	6,542	7,188
Total current liabilities	30,654	50,448
Non-current liabilities
Loans and borrowings	31,352	16,305
Non-current lease liabilities	162	29
Other non-current liabilities	4,635	2,058
Total non-current liabilities	36,149	18,392
Total liabilities	66,803	68,840
Equity
Share capital	3,855	3,855
Share premium	8,917	8,917
Reserve capital	385	385
Retained earnings	8,853	9,004
Total equity	22,010	22,161
incl. total equity attributable to owners of the parent	20,912	20,993
incl. non-controlling interest	1,098	1,168
Total liabilities and equity	88,813	91,001

Consolidated statement of profit and loss and other comprehensive income

in thousands of euros	12M 2024	12M 2023	Q4 2024	Q4 2023
Revenue	38,397	41,135	10,542	5,087
Cost of sales (-)	-31,635	-34,067	-8,011	-4,843
Gross profit	6,762	7,068	2,531	244
Marketing expenses (-)	-898	-576	-295	-177
Administrative expenses (-)	-1,802	-1,472	-460	-362
Other operating income	449	166	365	54
Other operating expenses (-)	-179	-152	-143	-36
Operating profit (-loss) of the year	4,332	5,034	1,998	-277
Financial income	421	1,192	159	63
Financial expenses (-)	-2,578	-2,746	-1,159	-1,084
Profit before tax	2,175	3,480	998	-1,298
Current income tax (-)	-41	0	-41	0
Net profit (-loss) for the year	2,134	3,480	957	-1,298
Attributable to owners of the parent	423	1,185	578	-1,087
Non-controlling interest	1,711	2,295	379	-211
Other comprehensive income (-loss)
Changes related to change of ownership	-313	286	-389	36
Change in value of embedded derivatives with minority shareholders	-1,874	-2,053	-671	104
Exchange rate differences from foreign entities	-103	0	27	0
Other comprehensive income (-loss) for the period	-2,290	-1,767	-1,033	140
Attributable to owners of the parent	-504	-58	-330	-70
Non-controlling interest	-1,786	-1,709	-703	210
Comprehensive income (-loss) for the period	-156	1,713	-76	-1,158
Attributable to owners of the parent	-81	1,127	248	-1,157
Non-controlling interest	-75	586	-324	-1
Earnings per share
Basic (euros per share)	0.11	0.31	0.15	-0.28
Diluted (euros per share)	0.11	0.31	0.15	-0.28

Henri Laks
Member of the Management Board
Phone: +372 5693 9114
e-mail: henri@hepsor.ee

Hepsor AS (www.hepsor.ee) is a developer of residential and commercial real estate. The Group operates in Estonia, Latvia and Canada. During our thirteen years of operation, we have created 2,076 homes and nearly 36,300 m² of commercial space. As the first developer in the Baltic countries, Hepsor has implemented several innovative engineering and technical solutions that make the buildings built by the company more energy-efficient and thus more environmentally friendly. The company's portfolio includes a total of 24 development projects with a total area of 172,500 m².