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's activity report 2022

OÜ Artiston Real Estate is a company belonging to the Artiston Group, whose aim is to manage the group's forest real estate portfolio.

In the fiscal year 2022 – 2023, the volume of roundwood sold from the forests of OÜ Artiston Real Estate (hereinafter also the „Company“) increased by 4% and the Company's sales revenue increased by 46%. In the first half of the fiscal year, the price of roundwood continued to rise, which was accompanied by a doubling of the price of wood chips during the heating season. The average stumpage price increased by 35% compared to the previous period. Profit was generated from the sale of growing forest at a significantly higher stumpage price than the accounting price, from the revaluation of the Company's forest portfolio reserve at a higher stumpage price, and from the revaluation of the land portfolio.

The total area of the Company's real estate portfolio increased by 5.6% in the fiscal year. The area of forest land increased by 4.3% and the area of agricultural land by 10.1%. Land ownership was increased by investing additional loan and stumpage money received from the sale of growing forest into new properties. With the addition of purchased forest properties and the inventory of a significantly larger part (22.8%) of the forest land area in the fiscal year, the estimated forest reserve of the portfolio increased by 8.7%.

In the first half of the 2022-2023 fiscal year, the rise in roundwood prices that began in the previous fiscal year continued. The leader in price increase was still firewood, which temporarily cost more than pulpwood. The average selling price of assortments increased by 30% compared to the previous year. In the second half of the fiscal year, the demand for roundwood began to decline for most assortments, and the same happened with prices. The initial smooth price decline culminated in a sharp drop at the end of the fiscal year. The June stumpage money was already 28.5% lower than the average for the fiscal year.

The market for forest properties changed significantly during the fiscal year. In the first half of the fiscal year, the rise in property prices continued against the background of rising timber prices. Falling timber prices and a significant rise in interest rates stabilized the market for the second half of the year. By investing cash flow from high stumpage prices and loan capital in properties, the Company was able to generate the largest growth in its property portfolio in recent history in the 2022-2023 fiscal year. In addition to properties, the company also invested in the vehicle fleet, purchasing new Toyota Hiluxes for all employees.

The Company's main activities during the fiscal year: - buying properties in Lääne-Viru County; - planting a new generation of forest on clear-cut areas; - maintenance of young stands established in previous years; - sale of growing forest from clear-cut areas; - forest improvement works to improve the quality of forest land and access; - finding partners for the construction of wind turbines on properties located in wind areas.

OÜ Artiston Real Estate's sales revenue for the period 01.07.2022 – 30.06.2023 was 6,314,995 euros, for the period 01.07.2021 – 30.06.2022 the sales revenue was 4,316,817 euros. In the 2022/2023 fiscal year, the Company made a profit of 6,593,495 euros. The Company uses the discounted cash flow method to value biological assets. The profit was mainly generated from the revaluation of the forest portfolio and the increase in the price of forest and agricultural land.

No remuneration was paid to the members of the Management Board.

The Company continues to be in a very good economic and financial situation. The goal for the current fiscal year is to increase the area and reserve of the forest portfolio in the Company's core area and to conclude contracts with partners wishing to develop wind parks on all properties with wind energy production potential.

In the first quarter of the 2023-2024 fiscal year, the timber market has been very unstable. Holidays, work stoppages and maintenance breaks in industries have reduced demand. Prices have fallen even further compared to the end of the previous fiscal year. There is a lot of uncertainty and uncertainty in the local market due to the economic situation of the main target markets. We forecast a decline in the average price of all assortments for the 2023-2024 fiscal year compared to the previous fiscal year. Due to increased costs, the average stumpage price may fall by 30%.

Significantly fallen timber prices, high interest rates and a general economic downturn may lower the price of forest and agricultural properties, but not significantly, as there are still enough funds in the market that are desired