Management report
The first half of 2023 reflected ongoing work to diversify AS Linda Nektar's (The Company's) product and client portfolios by expanding more vigorously into the premium beverages segment. During H1, the Company experienced a challenging trading environment characterized by high inflation, input price volatility and pressure on discretionary spending among consumers for Linda Nektar's B2B customers. The Company's customers' rolling hedging, commodity and production cost increases therefore had a negative impact on revenues in the first half. This is expected to retain an influence during the second half of the reporting period.
From the point of view of business development, the Company's broader portfolio and higher level of service and quality have been recognized thus resulting in sales to previously untapped geographical markets and an expanded number of customers. The launch of new products by customers is a time-consuming activity that often requires years of preparatory work. Linda Nektar continues to be involved in several such projects.
The Company is continuing to develop new and innovative fermented products, including those in the low-and-no alcohol as well as ready to drink (RTD) segments. These particular sectors, as indicated in the 2022 12 month management commentary are expected to generate meaningful growth in coming years due to various consumer megatrends. Present production volumes allow for significant unexpected demand while ensuring positive operating cash flow at the same time.
The Company continuously invests in innovative technologies and processes at its factory to embrace energy efficiency and sustainability principles. This reduces resource consumption and supports the achievement of the Company's long-term business goals. In June 2023, Linda Nektar and AS Eesti Energia signed a contract to construct a solar park which is expected to provide the lion's share of energy requirements to the Kobela operations. The estimated time of completion is October 2023. The project will be implemented through the Rural Development Plan measure 4.2.6 'Investment Support' provided by the Agricultural Registers and Information Board (ARIB).
Financial review
In H1 2023 AS Linda Nektar (The Company's) unaudited turnover was EUR 1,436,642 This marked a decrease of 34.2% year-on-year (H1 2022: EUR 2,182,904). The first 6 months of 2023 generated a net profit of EUR 39,898 (H1 2022: EUR 363,296).
As of 30 June 2023, the Company's total assets came to EUR 3,955,492 (30.06.2022: EUR 4,181,841) marking a decrease of 5.4% year-on-year. Current assets amounted to EUR 1,458,883 (30.06.2022: EUR 1,980,750) or 36.9% of total assets. Fixed assets amounted to EUR 2,496,609 (30.06.2022: EUR 2,201,091) or 63.1% of the balance sheet total. The liabilities of AS Linda Nektar totalled EUR 305,270 (30.06.2022: EUR 321,109) and equity capital amounted to EUR 3,650,222 (30.06.2022: EUR 3,860,732).
On 14th of April 2023, AS Linda Nektar signed a loan agreement with Swedbank AS to finance its ongoing investment programme. The amount of the loan agreement is EUR 166,000 and the loan period is 2 years. The company will use this debt financing round for the construction of the solar farm in Kobela. As of 30 June 2023, there were loan commitments of EUR 46,900 for investments. Cash and cash equivalents came to EUR 319,198 (30.06.2022: EUR 694,213). The Company retains its conservative financial leverage policy. Operating cash flow for the first 6 months of 2023 was a positive EUR 220,457 (H1 2022: EUR 358,481).
A total of EUR 130,057 was invested into fixed assets (H1 2022: EUR 151,010). Depreciation costs for the first 6 months of 2023 amounted to EUR 180,414 (H1 2022: EUR 226,618). Some investments will be implemented through support provided by the Agricultural Registers and Information Board (ARIB) as part of Rural Development Plan measure 4.2.1 'Investment Support' for the extension of fermentation capacity. The subsidy will be paid out if the investment is implemented no later than September 2023. Assets acquired with the help of government grants are recorded in the balance sheet at net acquisition cost, i.e., the acquisition cost, less government grants received for the purpose of acquiring assets.
In H1 2023, the Company paid EUR 158,014 in dividends (H1 2022: EUR 158,014). The income tax cost on dividends was EUR 26,654 (H1 2022: EUR 27,584).
As of 30 June 2023, the Company had 15 employees, one Management Board Member, and four Supervisory Board Members. Labour costs for the first 6 months of 2023 (including taxes) amounted to EUR 260,043 (H1 2022: EUR 221,650).
Management's revenue guidance for the whole of 2023 was previously indicated to be at a relatively similar to 2022 (EUR 3.8m). In order to take a conservative view on account of most recent timing visibility of various new projects it has been decided to lower this to a range of EUR 2.9 - 3.2m (representing a 15-25% decrease).
Financial Ratios
| 2023 H1 | 2022 H1 | ||
| Current Ratio = Current Assets / Current Liabilities | x | 5.15 | 6.17 |
| Quick ratio = (Current Assets - Inventories) / Current Liabilities | x | 2.88 | 4.27 |
| Working Capital = Current Assets - Current Liabilities | 1,175,513 | 1,659,641 | |
| Equity Ratio = Total Equity / Total Assets*100 | % | 92.28 | 92.32 |
| Net Profit Margin= Net Profit / Sales Revenue*100 | % | 2.78 | 16.64 |
| Debt to Assets= Total Liabilities / Total Assets | x | 0.08 | 0.08 |
Statement of financial position
(In Euros)
| 30.06.2023 | 31.12.2022 | 30.06.2022 | |
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 319 198 | 294 451 | 694 213 |
| Receivables and prepayments | 496 448 | 515 099 | 675 334 |
| Inventories | 643 237 | 664 896 | 611 203 |
| Total current assets | 1 458 883 | 1 474 446 | 1 980 750 |
| Non-current assets | |||
| Receivables and prepayments | 68 | 45 | 6 |
| Property, plant and equipment | 2 480 150 | 2 647 768 | 2 196 030 |
| Intangible assets | 16 391 | 15 547 | 5 055 |
| Total non-current assets | 2 496 609 | 2 663 360 | 2 201 091 |
| Total assets | 3 955 492 | 4 137 806 | 4 181 841 |
| Liabilities and equity | |||
| Liabilities | |||
| Current liabilities | |||
| Loan liabilities | 25 000 | 0 | 0 |
| Payables and prepayments | 258 370 | 369 467 | 321 109 |
| Total current liabilities | 283 370 | 369 467 | 321 109 |
| Non-current liabilities | |||
| Loan liabilities | 21 900 | 0 | 0 |
| Total non-current liabilities | 21 900 | 0 | 0 |
| Total liabilities | 305 270 | 369 467 | 321 109 |
| Equity | |||
| Issued capital | 1 580 143 | 1 580 143 | 1 580 143 |
| Share premium | 617 517 | 617 517 | 617 517 |
| Statutory reserve capital | 93 629 | 80 084 | 80 084 |
| Retained earnings (loss) | 1 319 035 | 1 219 692 | 1 219 692 |
| Reporting period profit (loss) | 39 898 | 270 903 | 363 296 |
| Total equity | 3 650 222 | 3 768 339 | 3 860 732 |
| Total liabilities and equity | 3 955 492 | 4 137 806 | 4 181 841 |
Income statement
(In Euros)
| 2023 H1 | 2022 H1 | |
| Revenue | 1 436 642 | 2 182 904 |
| Changes in inventories of finished goods and work in progress | 35 625 | 237 031 |
| Raw materials and consumables used | -858 994 | -1 465 151 |
| Other operating expenses | -106 066 | -115 241 |
| Employee expenses | -260 043 | -221 650 |
| Depreciation and impairment loss (reversal) | -180 414 | -226 618 |
| Other expenses | -874 | -428 |
| Operating profit (loss) | 65 876 | 390 847 |
| Interest income | 676 | 33 |
| Profit (loss) before tax | 66 552 | 390 880 |
| Income tax expense | -26 654 | -27 584 |
| Reporting period profit (loss) | 39 898 | 363 296 |
Statement of cash flows
(In Euros)
| 2023 H1 | 2022 H1 | |
| Cash flows from operating activities | ||
| Operating profit (loss) | 65 876 | 390 847 |
| Adjustments | ||
| Depreciation and impairment loss (reversal) | 180 414 | 226 618 |
| Total adjustments | 180 414 | 226 618 |
| Changes in receivables and prepayments related to operating activities | 18 628 | -107 176 |
| Changes in inventories | 20 103 | -297 875 |
| Changes in payables and prepayments related to operating activities | -37 910 | 173 651 |
| Income tax refund (paid) | -26 654 | -27 584 |
| Total cash flows from operating activities | 220 457 | 358 481 |
| Cash flows from investing activities | ||
| Purchase of property, plant and equipment and intangible assets | -201 689 | -157 422 |
| Proceeds from government grants | 116 417 | 0 |
| Interest received | 676 | 33 |
| Total cash flows from investing activities | -84 596 | -157 389 |
| Cash flows from financing activities | ||
| Loans received | 46 900 | 0 |
| Dividends paid | -158 014 | -158 014 |
| Total cash flows from financing activities | -111 114 | -158 014 |
| Total cash flows | 24 747 | 43 078 |
| Cash and cash equivalents at beginning of period | 294 451 | 651 135 |
| Change in cash and cash equivalents | 24 747 | 43 078 |
| Cash and cash equivalents at end of period | 319 198 | 694 213 |
Statement of changes in equity
(In Euros)
| Issued capital | Share premium | Statutory reserve capital | Retained earnings (loss) | Total | |
| 31.12.2021 | 1 580 143 | 617 517 | 73 948 | 1 383 842 | 3 655 450 |
| Reporting period profit (loss) | 0 | 0 | 0 | 363 296 | 363 296 |
| Declared dividends | 0 | 0 | 0 | -158 014 | -158 014 |
| Changes in reserves | 0 | 0 | 6 136 | -6 136 | 0 |
| 30.06.2022 | 1 580 143 | 617 517 | 80 084 | 1 582 988 | 3 860 732 |
| Reporting period profit (loss) | 0 | 0 | 0 | -92 393 | -92 393 |
| 31.12.2022 | 1 580 143 | 617 517 | 80 084 | 1 490 595 | 3 768 339 |
| Reporting period profit (loss) | 0 | 0 | 0 | 39 898 | 39 898 |
| Declared dividends | 0 | 0 | 0 | -158 014 | -158 014 |
| Changes in reserves | 0 | 0 | 13 545 | -13 546 | -1 |
| 30.06.2023 | 1 580 143 | 617 517 | 93 629 | 1 358 933 | 3 650 222 |
Additional information:
Kadri Rauba
Member of Management Board
AS Linda Nektar
Address: Kobela, Antsla parish, 66407 Võrumaa, Estonia
Telephone: +372 785 5768
E-mail: info@lindanektar.ee
