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's activity report 2022

General Information

The consolidated annual report reflects the financial indicators of Net Group OÜ (hereinafter: the parent company) and its subsidiaries Synerall AS, Synerall Finland Oy,

Synerall Sweden AB, Depowise OÜ and Net Group BV (together hereinafter referred to as: the Group).

Net Group OÜ is a company based on 100% Estonian capital, established in 1999. The main areas of activity are software development, IT consulting and project management, and the resale of products through subsidiaries Synerall and Depowise.

In 2022, the growth strategy approved last year was continued. In connection with this, further adjustments were made to the group's structure.

To support growth, it was decided to focus primarily on European markets. Therefore, it was decided to sell Net Group's stake in the Tanzanian subsidiary to local partners.

In order to create better opportunities for business development in Europe, a subsidiary Net Group BV was established in Belgium, which will aim to cover both the Belgian and Dutch market.

Synerall AS, which is a subsidiary of Net Group OÜ, in turn established a subsidiary in Sweden to start introducing the Synerall software platform to the market there.

The Group's activities are primarily focused on the Baltic States, Nordic and Western European markets.

Business Environment

Net Group OÜ operates in an economic environment characterized by strong wage pressure. In 2022, uncertainty was added to global markets, which in turn reduced customer activity. The aftermath of Covid had just passed when the war between Russia and Ukraine began, which in turn led to a sharp increase in energy prices in Europe. The aforementioned circumstances, along with the growth of Euribor, have led to instability in national economies and caution in making new investments in traditional industries.

In light of these global trends, Net Group OÜ decided to focus more on marketing its traditional value proposition (which is IT consulting and software development) in home markets (which we consider to be Estonia and Finland) and neighboring countries (other Europe). The aim is to maintain positions and seek development opportunities in wealthier markets with IT needs.

Annual Financial Results

Net Group OÜ's consolidated turnover grew by 10% in 2022, reaching a volume of 11.5 million. The Group's net profit for 2022 was 375,974 euros. 61% of the Group's turnover came from Estonia. Of the international markets, the share of the Finnish market was the largest, contributing 32% of turnover. Sales in other foreign markets were smaller.

Parent Company

Net Group OÜ's turnover was 8,940,826 euros (growth 15%) and net profit 192,789 euros. .

The results of the parent company Net Group OÜ in 2022 showed a small growth, but the profitability results were not as expected. Therefore, at the end of 2022, a decision was made to centralize management and sales activities and make operational processes more efficient. As a result of these changes, faster growth and an improvement in the profit margin are expected in 2023.

Subsidiaries

In the subsidiary Synerall AS, a 97% stake is held, 3% are Synerall AS's own shares. The aim of Synerall AS is to develop the customer management and billing product "Synerall" for energy companies and sell its licenses. Synerall AS's 2022 was very successful - sales revenue was 1,851,211 euros, the company's net profit was 223,625 euros.

In 2023, the development and sale of Synerall software will continue. The main goal for the next financial year is to increase the profitability of the company, which is ensured by the increase in monthly recurring revenues. Profitability growth is achieved through already concluded long-term contracts, investments made in previous years in Synerall product development and the company's highly qualified IT specialists.

Synerall AS owns a 100% stake in the Finnish company Synerall Finland Oy. The aim of the Finnish subsidiary is to focus on providing software development solutions to the energy sector. Synerall Finland Oy's 2022 was very successful - sales revenue was 2,650,588 euros, the profit for the financial year was 40,516 euros. In 2022, the focus on the Finnish market will continue with a focus on increasing the profitability of maintenance projects.

In June 2022, Synerall AS established a 100% owned Swedish subsidiary Synerall Sweden AB, whose aim is to offer Synerall software development solutions in Sweden and the Nordic countries. In 2022, the company had no sales revenue, the year ended with a loss of -5676 euros.

In the subsidiary Depowise OÜ, a 70% stake is held. The main area of activity of Depowise OÜ is to offer the software product Depowise to clients in the investment field - fund managers, fund administrators, Man Co-s and custodian banks. Depowise OÜ's 2022 was as planned - sales revenue was 872,797 euros, EBITDA 8,879 euros and net loss -10,760 euros. The goals of Depowise OÜ for 2023 are to make a breakthrough in the European Union, Switzerland and the United Kingdom. The focus for 2023 is on establishing a subsidiary in Luxembourg.