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Consolidated Unaudited Interim Report of AS PRFoods for the 2nd quarter and 6 months of 2021/2022 financial year

Published: 2022-02-16 07:17:00 ET
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MANAGEMENT COMMENTARY

2021 is over and with it also marks the end of Finnish saga. As disclosed, we have sale agreement of 100% shares of Heimon Kala Oy. Even if to consider slight improvement in group operational EBITDA, it was clear that without consolidation it would have been challenging for Heimon Kala Oy to remain an independent company. Multiple management mistakes and constant sale of private label products below cost price, led to decision that selling Heimon Kala Oy is rational decision rather than to keep restructuring and recapitalizing the business. The origin of losses in Finland is the incompetence of Finnish management in 2020 and 2021 to price products and manage cost base. Private label prices offered at the end of 2020 and beginning to 2021 (the pricing cycle in Finland is 6 months forward), didn´t not match raw material prices. In summer 2021 then current management decided to increase production, that caused additional losses, as sales were below cost. After changing the management in fall, company took new direction that took into account real market situation (raw material price increases were record high end of 2021) and these changes have taken effect by now.

Even as we managed to improve group operational EBITDA by 25%, as again whole loss in Q2 and H1 originated from Finland. H1 2021 results per company compared to H1 2020

  • Redstorm OÜ  sales 1.493 keur, sales increased 504 keur yoy
  • Redstorm OÜ EBITDA 165 keur , EBITDA improved by 142 keur
  • Överumans Fisk AB sales 5 keur, sales decreased by  -1.474 keur. Sales decreased because we moved harvesting of fish to Q1 2022 from end of 2021 to getter better price for biomass
  • Överumans Fisk AB operational EBITDA  -70 keur, improved by  57 keur
  • Överumans Fisk AB EBITDA incl biomass revaluation was 588 keur, improved by 542 keur
  • Õverumans Fisk AB EBT was affected by SEK/EUR exhcange rate on inter-company loans, effect in 2021 – 36 keur, last year + 165keur
  • John Ross Jr /Coln Valley sales 6
  • Heimon Kala OÜ sales were 6,134 meur, decreasing 17% yoy ( we stopped fresh fish trading in Q2)
  • Heimon Kala OÜ EBITDA was -433 keur (-415 keur yoy) , negative result was attributable to Finnish sales
  • Heimon Kala Oy sales and results are presented in appendix of the report and also as appendix 2 in announcement of sale of Heimon Kala Oy.

1.3. We continue with new structure and PRFoods keeps owning fish farming units Överumans Fisk AB and Redstorm OÜ (Saaremere Kala AS is holding new farming permit applications, in future the licences will be transferred to operational units) and processing units Heimon Kala OÜ in Estonia and John Ross Jr/Coln Valley in Scotland.

We have followed previously agreed action plans to emerge from crisis:

  1. Reduce debt level – Sale of Finnish unit allows significantly to reduce group debt.
  2. Restructure completely, potentially sell or close units in Finland: Heimon Kala Oy share sale agreement has been signed and deal will close on 1.3
  3. Increase sales in retail in UK, EU and Estonia : mission accomplished.
  4. Strategic goal of group is on fish farming , as units that have been constantly profitable. The target is to achieve licence volume of 10,000 by 2023, that should give additional revenue of 45-50 million euros in future. From Swedish farms we estimate full 2022 harvest to be ca 1500 tons. Estonian farming licenses are realistic to be issued in 2022. If the permits will be issued only n second half of 2022, the full prodcttion volumes will be reached in 2024 not in 2023.

Companies financial costs have risen due to higher debt capital, while one must note that significant portion of debt is convertible or related to related parties, that can be converted together with interest, in order to support company’s equity. Majority shareholders have opened additional credit limit to the company. We believe that after PRFoods has demonstrated that it can operate with profit after sale of Finland, cost of capital for company will also decrease.

The effect of sale of Heimon Kala Oy will be published in Q1 2022 report after the sale on 1.3.

KEY RATIOS

INCOME STATEMENT 

mln EUR4Q 20213Q 20212Q 20211Q 20214Q 20203Q 20202Q 20201Q 2020
Sales15,314,214,714,21712,715,118,5
Gross profit2,20,80,30,92,51,20,72
EBITDA from operations0,8-0,8-1-0,50,6-0,3-0,10
EBITDA-0,30-0,7-0,70,7-0,5-0,1-0,9
EBIT-1-0,7-1,4-1,40-1,1-1-1,4
EBT-1,4-0,6-1,6-1,8-0,1-1,4-1,2-1,8
Net profit (-loss) -1,4-0,7-1,7-1,8-0,2-1,4-1,3-1,7
Gross margin 14,10%5,40%2,10%6,60%14,90%9,40%4,40%10,80%
Operational EBITDA margin5,20%-5,50%-7,00%-3,50%3,40%-2,60%-0,90%0,10%
EBITDA margin-2,10%-0,10%-4,80%-5,30%4,10%-3,80%-0,50%-4,60%
EBIT margin-6,40%-4,70%-9,30%-9,90%0,20%-8,80%-6,40%-7,80%
EBT margin-8,90%-4,60%-10,80%-12,50%-0,60%-11,30%-8,30%-9,80%
Net margin -9,10%-5,20%-11,60%-12,50%-1,20%-11,30%-8,40%-9,20%
Operating expense ratio15,10%16,30%15,40%15,60%15,60%18,20%14,00%14,30%

BALANCE SHEET

mln EUR31.12.202130.09.202130.06.202131.03.202131.12.202030.09.202030.06.2020
Net debt24,224,220,921,421,921,520,7
Equity14,914,915,817,618,618,519,8
Working capital-2,6-2,6-2,9-5-3,9-4,4-4
Assets565655,354,557,557,457,1
Liquidity ratio0,9x0,9x0,9x0,8x0,8x0,8x0,8x
Equity ratio 26,70%26,70%28,60%32,40%32,40%32,30%34,70%
Gearing ratio61,80%61,80%56,90%54,90%54,00%53,70%51,10%
Debt to total assets0,7x0,7x0,7x0,7x0,7x0,7x0,7x
Net debt to EBITDA op-14,3x-14,3x-16,9x-55,3x160,0x12,8x7,5x
ROE-26,70%-26,70%-28,70%-23,80%-21,90%-7,00%-9,10%
ROA-7,90%-7,90%-9,10%-8,40%-7,80%-2,40%-3,20%

Consolidated Statement of Financial Position

Thousand euros31.12.202131.12.202030.06.2021
ASSETS   
Cash and cash equivalents4989622 500
Receivables and prepayments4 4634 1533 512
Inventories4 5969 6275 691
Biological assets4 5233 7024 795
Total current assets14 08018 44416 498
    
Deferred tax assets382138
Long-term financial investments300232302
Tangible assets14 65515 96815 300
Intangible assets23 71522 84123 460
Total non-current assets38 70839 06239 100
TOTAL ASSETS52 78857 50655 598
    
EQUITY AND LIABILITIES   
Interest-bearing liabilities6 2759 6347 325
Payables and prepayments11 66612 46912 124
Government grants207212207
Total current liabilities18 14822 31519 656
    
Interest-bearing liabilities18 18013 25417 561
Payables and prepayments05960
Deferred tax liabilities1 8771 9121 861
Government grants662785746
Total non-current liabilities20 71916 54720 168
TOTAL LIABILITIES38 86738 86239 824
    
Share capital7 7377 7377 737
Share premium14 00714 19814 007
Treasury shares-390-390-390
Statutory capital reserve515151
Currency translation differences831-98559
Retained profit (loss)-8 883-3 246-6 723
Equity attributable to parent13 35318 25215 241
Non-controlling interest568392533
TOTAL EQUITY13 92118 64415 774
TOTAL EQUITY AND LIABILITIES52 78857 50655 598

Consolidated Statement of Profit or Loss And Other Comprehensive Income

Thousand euros2Q 2021/20222Q 2020/20216m 2021/20226m 2020/2021
Revenue15 29217 02929 49929 766
Cost of goods sold-13 139-14 496-26 572-26 033
Gross profit2 1532 5332 9273 733
     
Operating expenses-2 395-2 663-4 704-4 985
Selling and distribution expenses-1 668-1 809-3 249-3 367
Administrative expenses-727-854-1 455-1 618
Other income / expense114662137
Fair value adjustment on biological assets-7521186824
Operating profit (loss)-98334-1 647-1 091
Financial income / expenses-384-129-368-438
Profit (Loss) before tax-1 367-95-2 015-1 529
Income tax-17-101-109-105
Net profit (loss) for the period-1 384-196-2 124-1 634
     
Net profit (loss) attributable to:    
Owners of the Parent Company-1 242-190-2 160-1 592
Non-controlling interests-142-636-42
Total net profit (loss) for the period-1 384-196-2 124-1 634
     
Other comprehensive income (loss) that may subsequently be classified to profit or loss:    
Foreign currency translation differences384299272268
Total comprehensive income (expense)-1 000103-1 852-1 366
     
Total comprehensive income (expense) attributable to:    
Owners of the Parent Company-858109-1 888-1 324
Non-controlling interests-142-636-42
Total comprehensive income (expense) for the period-1 000103-1 852-1 366
     
Profit (Loss) per share (EUR)-0,030,00-0,06-0,04
     
Diluted profit (loss) per share (EUR)-0,030,00-0,06-0,04

Indrek Kasela

AS PRFoods

Member of the Management Board

Phone:+372 452 1470

investor@prfoods.ee

www.prfoods.ee

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