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's activity report 2022

The consolidated annual report for the financial year ended 31.07.2022 includes the consolidated financial indicators of Horticom OÜ (parent company) and its 100% subsidiaries Horticom SIA and Horticom UAB.

The main activity of Horticom OÜ is wholesale. We supply various garden goods sellers, vegetable, flower and berry growers, nurseries, flower shops and landscapers with gardening goods. Due to the activities of Horticom OÜ's clients, Horticom OÜ's activity and turnover are cyclical, with the majority of turnover being made in the spring season.

The year 2021 posed several challenges for Horticom OÜ. Firstly, the situation with the pandemic continued, which in the spring of 2021 forced a decision

By the government, where in March and April garden centers and construction stores were closed, or only partial limited sales took place in outdoor areas.

The impact of the pandemic on Horticom OÜ also manifested in the 2021-2022 supply chains, where most suppliers faced major challenges and were unable to keep up with demand recovery. The situation somewhat stabilized during 2021.

From the autumn of 2021 until the end of the financial year, in addition to the tensions in the supply chains due to the pandemic, the energy crisis began to affect the company's results. Although the change in energy costs does not have a significant share in the cost structure, its impact on the prices of goods from suppliers is very large. From the spring-summer of 2021, a large part of the suppliers raised the prices of goods several times. With the rise in energy prices, from the summer of 2021, the price increase of goods gained a new larger momentum. Horticom OÜ has binding contracts with mostly large clients, which did not allow to pass on the entire price increase. This resulted in a situation where the ratio of cost of goods to turnover changed and the company's operating profit significantly decreased. This trend has continued throughout the calendar year 2022.

The goal of Horticom OÜ is to invest in fixed assets annually, which supports the sustainable growth of the company. Although the economic environment of 2022 and 2023 offers many challenges, the management of Horticom OÜ plans to make various investments in the new season. The investments are mainly related to IT technical solutions, e-store in the B2B sector, development of plant material sales platform in the B2B direction, and it is very important to continue optimizing inventory and assortment. We also consider the development of the team important and plan several trainings for the staff.

The reasons listed certainly left a positive mark on the results of Horticom OÜ, although the operating profit fell and the company was unable to achieve its goals. Horticom OÜ looks at the long-term trend and does not make decisions that change direction based on one-year fluctuations, therefore our goal is to significantly renew the assortment in the 2022-2023 season, which offers new solutions and opportunities for our clients to achieve their goals. Through these steps, our long-term goal is to grow by an average of 10% per year.

The biggest challenge of the last two years has been optimizing supply chains, which will also be the main goal for the new financial year, as the energy crisis has posed several new challenges. The horticulture sector is a stable sector that provides assurance to look at the long horizon positively. Therefore, we make planned investments and aim to grow by 10% per year. The goal is to increase supply reliability by several percentage points to be a valuable and reliable partner to Horticom OÜ's clients.

The company's focus is still on digitizing various internal processes of the company, increasing the efficiency of e-channels and creating convenient e-platforms for our clients. There are several new e-solution providing solutions underway, which we plan to launch already in the autumn-winter season of 2022.

The 2021-2022 financial year can be summed up as a good financial year overall. Although the company was unable to achieve its goals, we can be satisfied with these results in the complex environment that has emerged. Several processes were updated.

The results of Horticom OÜ's subsidiaries were as expected, especially the subsidiary of Horticom OÜ in Lithuania, which achieved good results. Horticom

SIA's cash flow result improved, but due to restructuring, turnover in 2021 significantly decreased, but operating margins increased. This was a planned activity, as a result of which the company's operating margins improved in the 2021-2022 season. As structural changes took place in Horticom SIA, the year 2021 was mainly spent on implementing changes and settling in. The goal for the 2022-2023 season is to achieve a positive result in terms of operating profit.

The impact of exchange rate changes on Horticom OÜ's business activities is minimal. Capital lease interest rates are linked to EURIBOR; an increase in interest rates also affects Horticom, but the impact is expected to be small. The company's management assesses financial risks as minimal, as the proportion of liabilities to turnover and operating profit is low. The agreement between the owners is not to pay dividends.

The group's sales revenue amounted to 12.5 million euros, of which the parent company's share is 76.1% and the subsidiaries' share is 23.9% in total. Horticom OÜ's sales revenue was distributed as follows: (cid:127) sale of gardening goods and equipment to professional producers 34.8% (cid:127) wholesale to retail 65.2%

Some financial ratios for the ended financial year on a consolidated basis: 2022 2021