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's activity report 2022

BE Group OÜ (formerly BE Group AS) is primarily engaged in the wholesale and cutting services in the field of steel and other metal products, selling goods mainly from its warehouse in Maardu. In 2021, the company carried out a reorganization of its activities in Estonia and other Baltic countries, where a cross-border merger took place between BE Group OÜ, BE Group SIA (Latvia) and BE Group UAB (Lithuania), as a result of which BE Group OÜ became the merging entity. After the merger, business activities continued in Latvia and Lithuania through subsidiaries established there.

The company's turnover increased by 37.96% in 2022 compared to the previous year. In 2022, sales to the Estonian market accounted for 52.01% of total turnover (2021: 62.47%).

In 2022, several changes and challenges arose in the steel markets. In general, the steel industry had to deal with several setbacks, including unprecedented price increases for steel products and energy costs, and problems in the supply chain and availability of goods. One major impact on the European steel industry is the sanctions and counter-sanctions against Russia, which have particularly affected the Baltic countries, especially the steel and metal industries, as Russia has been one of their main import partners.

Sanctions have caused supply problems and higher prices, which in turn have affected companies' production and profitability. The financial result of the BE Group has not been significantly affected, as the proportion of materials imported from Russia in the range of goods sold has been minimal.

In addition, there have been changes in the demand for the steel industry in 2022. On the one hand, demand from manufacturers has increased as the global economy has recovered and technology industries have grown. Secondly, the war in Ukraine triggered a chain reaction of panic buyers, as all companies wanted to secure their production. Some industries, such as the construction sector, have suffered from low demand and cost structure. This has led to many companies going bankrupt.

During the period of preparation of the annual report, major banks operating in Estonia predicted a slight economic growth forecast of 0-0.2% for 2023.

Banks also predict high consumer price growth of 8.5-9.0% and unemployment growth of 7.0-7.5%. It is expected that the easing of pandemic-related problems and the recovery of the economy will continue.

In addition, high inflation and the constant rise in energy prices have raised many questions about future cost levels. The macroeconomic impacts in force at the time of preparing the report clearly indicate that the current difficult economic situation will certainly affect the company's future result, but considering the company's strong capitalization, professional team and group support, the company's management does not see critical risks to the continuity of business operations. According to the support letter issued by the parent company BE Group AB in 2023, the company's owners are ready to provide immediate financial support to the company in case of economic difficulties. As a result, the company's 2022 annual financial report has been prepared on the basis of continuing operations.

Financial indicator 2022 2021

Sales revenue (thousand EUR) 30 496 22 105

Turnover growth (%) 37,96 189,57

Net profit/ net loss (thousand EUR) -1 633 -25

Net profitability (%) -5,35 -0,11

Short-term liabilities coverage ratio (times) 2,29 2,07

Formulas used in the calculation of ratios: (cid:127) Turnover growth (%) = (sales revenue 2022 – sales revenue 2021)/ sales revenue 2021 * 100 (cid:127) Short-term liabilities coverage ratio (times) = current assets/short-term liabilities (cid:127) Net profitability (%) = net profit/sales revenue*100

Investments In 2022, investments were made totaling 59 777 euros (2021: 154 345 euros). Major investments were a new metal saw and conveyor.

No additional investments are planned for 2023.

Personnel

The average number of employees of BE Group OÜ in 2022 was 28 people (2021: 27 employees), of which 8 people worked in the branches in Latvia and Lithuania. Labor costs totaled 1 211 832 euros (2021: 1 100 833 euros).

Principles of financial instruments and hedging of financial risks

Due to the high level of equity and the group's readiness to provide credit if necessary, the company has a low liquidity risk. Credit risk is a rapidly increasing risk group in today's economic situation. With the constant rise in prices of materials and various types of energy, there is a constant risk that at some point end customers will no longer be able to buy the more expensive products from our company's customers. This significantly increases the risk of bad debts.