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's activity report 2022

Board address

Proekspert AS's field of activity continues to be the creation of digital solutions. According to the strategy updated in 2021, the company's focus is more narrowly directed to the creators of smart electronic devices in Northern Europe. We support our clients in device development, creation of cloud-based remote control solutions for devices, and development of value-creating services based on devices. In providing services, we combine software development, data analysis, and service design competencies.

There was a small change in the company's activities in 2022. We stopped providing maintenance services for SAP financial management software.

The decision was made with the aim of focusing the company's activities even more on services related to smart electronic devices. Since the share of this service in the company's turnover has remained below 2% in recent years, the termination of the service does not have a significant negative impact

on Proekspert AS's financial results.

The development activities in 2022 were mainly driven by the aim of implementing the updated strategy. In the first half of the year, the active renewal of the organizational structure continued, aligning the entire company with the implementation of the updated strategy. We also actively supplemented the business development team and updated sales processes, aiming business development activities more precisely at the selected target group. As a result, the share of work done for focus clients increased significantly during 2022. While in 2021 we earned over 40% of turnover from focus clients, in 2022 the share of work done for focus clients grew close to 60%. Also, more frequent contacts with the target group provide an opportunity to significantly increase the company's volume of activity in the coming years.

The business environment in the past financial year was somewhat more stable than in recent pandemic years, but still extremely volatile and complex. The war in Ukraine caused a short-term period of unrest in clients' activities at the beginning of the year, but this crisis did not cause significant suspension of development projects. The energy crisis that has evolved from the war has rather increased our focus clients' investments in the energy and heating and ventilation equipment sectors.

The exceptionally high inflation caused by the war in Ukraine increased pressure for both operating and personnel cost growth, which in turn put pressure on sales prices. During the year, we renewed the majority of client price agreements through a larger than usual price increase.

Looking to the future, we see that the pressure for cost growth is continuing, but it will not be possible to increase the service price at the same pace in the long term.

We can maintain profitability in the long term through more precise specialization, business model development, and increased efficiency.

Looking forward, the risk of some development projects being discontinued has increased in the context of a generally cooling economic environment. On the other hand, several of our focus clients operate in the energy production and heating and climate equipment sectors, where investments in product development have significantly increased due to the energy crisis. Therefore, we assess the risk of a decrease in the volume of activity in the coming years as small. Despite an optimistic view of the future, the company does not plan to make significant investments in fixed assets in the coming year, as our main investment needs are related to the creation of work environments. Before the pandemic years, we made significant investments in this area, but after the pandemic, the ways of working and the need for large investments have changed significantly. Since the company has no loan obligations and we mainly operate in the euro area, changes in exchange rates and interest rates do not affect our financial results

In conclusion, despite successive global crises, 2022 was still successful. The company is well aligned with the implementation of the strategy updated in 2021, and during 2022 it was possible to significantly increase the share of work directed at the focus client and create new contacts in the target group. As a result, the company's volume of activity grew by almost 10% in 2022, and the growth potential for 2023 and 2024 is even greater.

Revenues, expenses and profit - changes compared to the previous financial year

Indicator 2022 2021

Sales revenue 9% 2%

Cost of goods and services 60% 20%

Operating expenses 19% 3%

Personnel expenses 11% 0%

Profit before taxes -23% 20%