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's activity report 2022

Novatours OÜ (hereinafter referred to as the “company”) was registered on February 4, 2004. The parent company Novaturas AB, located in Lithuania, was established in 1999. The subsidiary Novatours

SIA was established in 2001.

The main activity of the Novaturas group is the organization and sale of excursions, holiday packages, accommodation and charter flights through travel agencies.

In 2022, the business volume of the Novaturas group continued to grow. In 2022, the company served a larger number of passengers - approximately 66 (2021: 51) thousand customers and earned sales revenue of 53.5 million (2021: 35 million) euros. The significant increase in fuel prices due to the Ukraine/Russia war had a negative impact on profitability in 2022.

The net profit for 2022 was 358 thousand euros (2021: 1 043 thousand euros). In 2022, the company employed 25 (2021: 21) employees. The wage cost was 663 thousand (2021: 395 thousand) euros. The increase in wage costs during the reporting period is due to the increase in the number of employees and also the generally increased rate of inflation.

The management did not receive any remuneration or other payments in 2022 and 2021.

Ratios 2022 2021

ROA: net profit / -assets *100% 2.25 8.83

ROE: net profit / equity *100% 5.02 15.37

Equity ratio: equity / assets *100% 44.92 57.47 For 2023, the company's management is aiming for stable income. It is expected that net profitability will remain in the range of 3-4%. The main travel destinations remain the same - in summer

Turkey and Greece and in the winter season Egypt, Spain. The company's strategy is to diversify revenues between different destinations, so as not to depend too much on any one of them.

Macroeconomic overview

According to the Bank of Estonia, the economy will shrink by 2.2% in 2023 and grow by 1.4% in 2024. Inflation will average 9.4% in 2023 and is forecast to fall to 3.4% in 2024. Private consumption will remain modest as real incomes continue to be under pressure, also influenced by the growth of Euribor. In this situation, the company expects modest growth in both the number of passengers served and revenues.

Investments

The company's management has not made investments in fixed assets in 2022 or 2023, except for a small amount of office equipment upgrades.

Seasonality of business

The travel business is divided into two seasons: the summer season, which usually starts in May and lasts until November, and the winter season, which starts in December and lasts until April.

Usually, about 70% of income is earned in the summer season and 30% in the winter season.

Risk management

The main risks of the company are as follows:

Risk associated with business partners - The company is obliged to pay an advance to suppliers for services ordered by customers e.g. (charter flights, bus trips, hotel accommodation). Therefore, the potential non-fulfillment or improper fulfillment of contractual obligations undertaken by the company and/or the insolvency of the company's main business partners, including mainly charter airlines, could have a significant negative impact on the company's operations, financial condition and financial results. To mitigate this risk, the company cooperates with several aviation partners, thereby creating natural competition among suppliers. The same rule applies to hotel service providers in markets where the number of passengers is significant (e.g. Turkey and Egypt).

Credit risk - The company's credit risk is relatively low as payment for the service must be made before the trip. In addition, the company has set credit limits for agents i.e. travel agencies, through which most of the sales take place. Their main goal is to ensure timely receipt of payments. If the credit limit is exceeded, the booking system automatically blocks sales. The company does not provide guarantees for third party obligations.

Currency risk - The company mainly settles in euros. Some costs, mainly flying to the destination and accommodation, are paid to the supplier in US dollars according to the supplier contract. For larger payments, currency risk is hedged with forward contracts, which are concluded at the group level.

Interest rate risk - All significant financial assets are linked to Euribor rates in accordance with group policy.

Liquidity risk - The group's policy is to maintain a sufficient cash balance to ensure continuity of operations in unforeseen circumstances. The company regularly assesses its future cash flows and has access to the group's credit line in case of temporary liquidity decline.