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's activity report 2022

The main activity of Viking Motors AS is the sale of KIA, Peugeot and Cadillac vehicles and the maintenance, repair and sale of spare parts for KIA, OPEL, Peugeot, Cadillac, SAAB, Corvette and Hummer vehicles.

In 2022, Viking Motors AS's sales revenue was 38,138 thousand euros (42,787 thousand euros in 2021) and the profit amounted to 862 thousand euros (in 2021, the profit was 803 thousand euros). In total, 1,064 new and 390 used vehicles were sold in 2022 (1,436 new and 520 used vehicles were sold in 2021). There are no significant seasonal fluctuations in the company's business activities.

According to the data available from the Statistics Estonia at the time of preparing the report, as a result of rapid price increase, the Estonian economy fell by 2.4% in the third quarter of 2022. According to Statistics Estonia, the strongest positive contribution to the economy in the third quarter came from professional, scientific and technical activities. The most negative contribution came from agriculture and energy and real estate activities. Wholesale and retail trade also had a slowing effect on the economy. According to the Bank of Estonia, the economy will grow mainly due to increasing government sector expenditures by 0.4% in 2023. In 2022, the consumer price index increased by 19.4% compared to the average of 2021 due to the explosive increase in energy prices.

The Bank of Estonia predicts a price increase of 9.3% for 2023. The total volume of retail sales in Estonia increased by 18.0% in 2022 according to Statistics Estonia. The wholesale and retail sale and repair of motor vehicles and motorcycles increased by 17.2% over the year. According to AMTEL, a total of 20,426 new passenger cars were sold in Estonia in 2022, which is 8.6% less than in 2021. However, in the last three months of the reporting year, the sale of new passenger cars increased by 11.6% mainly due to improved availability of cars. Consumer confidence in Estonia has been exceptionally low in the second half of 2022. According to the Bank of Estonia, the third quarter of 2021 saw a payout of more than one billion euros from the second pillar of the pension, which allowed customers to spend more. This also set a high comparison base, which consumers currently lack the strength to overcome.

2022 ended successfully for Viking Motors AS. The company achieved its set goals and ended the year with a record profit.

During the reporting year, the difficulties in delivering new cars continued, which in turn provided an opportunity to earn a higher profit margin. Fewer new cars were sold in pieces than the previous year, and therefore sales revenue was also below the previous year. Viking Motors AS's full-service rental service developed successfully, which customers have received well.

The delivery and availability of KIA vehicles was somewhat better than the availability of other brands represented by the company, but the share of electric and hybrid cars in sales was still marginal due to the deficit. With the sale of KIA vehicles, the company has secured a strong position among the top four in the Baltic car market, positioning itself in third place in Estonia. The most sold models were the KIA Sportage SUV and the KIA Ceed model family. In 2023, the KIA E-Niro electric car and the Peugeot 408 mid-class SUV are expected to be added to the selection of Viking Motors AS.

In order to increase energy and resource savings, operations will continue in accordance with the group-wide sustainability strategy of the parent company Tallinna Kaubamaja Grupp AS.

Viking Motors AS supported Estonian biathletes Kalev Ermits and Regina Ermits, tennis player Maria Lota Kaul and athlete Jander Heil.

The company's activities may involve several financial risks, the most significant of which are liquidity risk, credit risk and market risk (including exchange rate risk and interest rate risk). Financial risk management is within the competence of the company's management and includes risk identification, measurement and control of the effectiveness of hedging measures. The aim of financial risk management is to hedge financial risks and reduce the volatility of financial results. The company follows an internally established risk management strategy in managing financial risks. The supervisory board of the company supervises the measures taken by the management to hedge risks.

In order to effectively ensure the availability of sufficient financial resources to meet the obligations arising from the company's activities, a single group account of the company's parent company Tallinna Kaubamaja Grupp AS and its subsidiaries is used, which allows the members of the group account to use the financial resources of the group account within agreed limits. As of the end of the financial year, the company had free financial resources in the form of cash and bank accounts of 5 thousand euros (390 thousand euros in 2021). Working capital was negative 1,261 thousand euros as of December 31, 2022 (negative 255 thousand euros in 2021). Negative working capital is common in retail companies with a high inventory turnover. The company continues to have a strong daily business cash flow as a source to cover short-term liabilities.

In the opinion of the management, the company does not have a liquidity problem.

Credit risk is the risk that the company will incur a financial loss caused by the other party of the financial instrument, as the latter is unable to fulfill its obligations. The company is exposed to credit risks arising from business activities (mainly receivables) and investment activities, including deposits in banks and financial institutions. Due to the specifics of retail sales, the company is not exposed to significant credit risks. As of December 31, 2022, the maximum credit risk is expressed in the amount of receivables of 916 thousand euros (516 thousand euros on 31.12.2021).

Currency risk is the risk that the fair value of financial instruments or cash flows will fluctuate in the future due to exchange rate changes. As of the end of the reporting period, the company did not have significant financial assets and liabilities fixed in non-euro currencies.

Interest risk is such a risk where an increase in the interest rate may significantly affect the company's performance due to an increase in interest expenses to be paid on liabilities. The company's interest rate risk mainly arises from long-term floating interest rate loan obligations linked to EURIBOR. The 6-month EURIBOR rose to 2.693% by the end of the reporting year. According to economic analysts, EURIBOR may reach the level of 3% in 2023.

If the interest rates of floating rate financial liabilities had been 1 percentage point as of 31.12.2022