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's activity report 2022

Premia Tallinna Külmhoone AS (hereinafter also: the company or Premia TKH) is a company engaged in the production of ice cream and the wholesale of refrigerated goods, mainly operating in the Baltic States. The Premia TKH group (hereinafter: Premia group) includes the Lithuanian subsidiary AB Premia KPC and AS Premia FFL established in Latvia. Both business units belong 100% to the company.

Premia Tallinna Külmhoone AS (hereinafter also: Premia TKH) is part of the ice cream and dairy industry group known as Food Union Group (hereinafter also: group), whose sole shareholder is the company Food Union

Holding (CY) Company Limited registered in Cyprus.

The history of Premia TKH ice cream dates back to 1956 when ice cream production began in Tallinn. The company's most famous brands are Premia, Eriti Rammus, Väike Tom, Regatt and Vana Toomas. The most famous brand in the Latvian market is Klasika, and the most famous brands in the Lithuanian market are Klasika, Jocker and Bravo.

The company's branded ice creams do not contain preservatives, trans fats or artificial flavors and fragrances. More than half of the ice creams produced in Tallinn are exported to Latvia, Lithuania and Finland.

Overview of the company's business development, position and results

The most significant risks that the Estonian economy and the company faced in 2022 were related to geopolitical uncertainty. The war that broke out in Ukraine led to a rise in prices, paralyzed Estonia's economic growth and raised the prices of energy and other raw materials.

According to the latest data from Statistics Estonia, the Estonian economy fell by 2.4% in the third quarter of 2022 as a result of rapid price increases. The largest negative contributions were made by agriculture and rising energy prices. In 2022, the consumer price index rose by 19.4% compared to the average of 2021. In annual comparison, the price of electricity rose by 94.4%, gas by 123.8%, solid fuels by 73.5% and heat energy by 49.1%.

Inflation triggered by rising energy prices also affected other sectors in the second half of the year, which in turn led to a 19.9% increase in the production price of food and non-alcoholic beverages.

To reduce the negative impact of energy prices on the company's profitability, Premia TKH signed a fixed-price electricity contract with Eesti

Energia AS on June 1, 2022, which is valid until 2027.

The negative effects of rising energy and raw material costs have been mitigated by raising product prices in the first and fourth quarters of 2022.

Gas supply was also at risk, so it was decided to invest 40,000 euros to build a personal gas supply system in cooperation with Alexela. The system consists of a gas tank located on the company's territory and connected to the Alexela station via an underground pipeline. This allows the company to buy and store gas (both natural and liquefied gas) on its own territory and to be flexible in terms of gas consumption - the system can be switched back to natural gas within a few hours. In 2022, the price of liquefied gas was lower than that of natural gas, which allowed the company to reduce its costs.

In 2021-2022, the company invested a total of 403,669 euros in the development and implementation of a new management system.

The system is the latest solution from Microsoft Dynamics, based on cloud-based applications and allows the company more efficient process management and access to real-time data of all processes.

In 2021-2022, the company underwent an audit by an independent service provider BRCGS, as a result of which Premia TKH was awarded an international food safety certificate in October 2022.

The purpose of the International Food Safety Standard is to assess the compliance of products and processes with food safety and quality requirements. The IFS Food Standard applies to suppliers at all stages of food processing after agriculture. The standard meets the criteria of the Global Food Safety Initiative (GFSI).

Compliance with the standard's guidelines helps the company:  promote the development of a product safety culture, which helps to meet consumer demands and follow best practices in the field;  develop and manage a management system that better meets food quality and safety requirements and legal norms applicable in countries where finished products are consumed. This gives Premia TKH new opportunities to significantly increase exports at the expense of new markets already in 2023 and 2024;  create new tools in the company to improve food safety and means for more effective monitoring and measurement of compliance with food safety requirements;  facilitate the reduction of production waste, product recycling and recall.