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's activity report 2022

Auroom OÜ was established in December 2019, but active economic activity began on April 1, 2021, when Thermory AS was divided.

The parent company transferred the production of ready-made saunas to the subsidiary OÜ Auroom, which is located in a separate production complex. Auroom OÜ production is located

in Tartu County, Kastre, and the sales department in Tallinn, Ülemiste City.

The main area of activity is the production and sale of ready-made saunas both in Estonia and abroad.

Like many other wood sector companies, the reporting year was challenging for Auroom OÜ and the general economic environment was unstable due to the energy crisis and Russia's military aggression against Ukraine.

The main keywords of the reporting year were increasing production efficiency. We implemented a new economic and production software and the entire company successfully adopted LEAN production principles.

An important step in increasing the reliability of foreign markets and customers is the ISO 9001:2015 quality management standard and the ISO 45001:2018 Occupational Health and Safety Management System standard issued to Auroom.

In addition, various projects were started using EAS support measures to focus on new markets and product development. We invested a lot in market visibility and participated in a total of five trade fairs related to saunas. The strategy for 2023-2025 is to continue expanding to new markets in Europe, Asia, and North and South America.

Financial ratios

Ratios for the economic activity results of 2022 and 2021: 2022 2021

EBITDA (EUR) -265 472 481 620

EBITDA margin -4.76% 8.62%

Asset turnover 1.50 1.66

The company's negative EBITDA result was mainly related to the full-scale war started by the Russian Federation in February 2022

against Ukraine, which caused a sharp demand and a drop in sales volume compared to 2021 in our main sales markets in Europe due to panic from rising energy prices. To better support sales, the company's website was updated and the company's image was changed from a cheaper subcontractor to a more Premium product maker. Marketing costs increased significantly in 2022, where a new sales support tool was also a virtual showroom for saunas. To expand sales areas, a total of five different fairs were attended in 2022. As a result of overcoming the energy crisis and recovering from the initial shock of the war in Ukraine, we forecast a recovery and growth in sales volumes in 2023 and a significant improvement in EBITDA level in connection with this.

Explanation of ratios:

EBITDA = earnings before taxes, interest, and depreciation

EBITDA margin = EBITDA / total revenue * 100%

Asset turnover = sales revenue / assets

The company's labor costs amounted to 1,940 thousand euros in 2022 (2021: 1,622 thousand euros). The company employed an average of 70 employees in 2022 (2021: 78 employees).

Investments

Auroom OÜ invested a total of 366 thousand euros in 2022. Mainly improvements to the production building, storage space, and equipment were made.

An important project during the reporting year can also be considered the creation of a virtual sample product environment for customers, which is a marketing channel for Auroom products, which everyone can enter the environment and modify the suitable product.

In 2021, the volume of investments was a total of 234 thousand euros. Improvements were made to the production building and equipment.

The planned volume of investments for 2023 is 100 thousand euros. The aim is to improve the working environment.

In 2022 and the previous financial year, there were no significant research and development projects and related expenditures.

Effects of the external environment and risks of economic activity

Managing risks associated with the company's business activities is an important and integral part of company management. Auroom OÜ is part of a group. The Group's Board regularly analyzes the risks and their mitigation of the Group's companies together with the management. The management identifies and assesses risks, prepares mitigation plans, and, if necessary, proposes the allocation of resources to deal with significant risks, promotes risk awareness, and brings risk management to processes and employees. According to the Group's risk management methodology, risk is defined as a future