Consolidated Unaudited Interim Report of AS PRFoods for the 2nd quarter and 6 months of 2023/2024 financial year
MANAGEMENT COMMENTARY
First half-year of PRFoods has ended. The major changes are related to the sale of its subsidiary Redstorm OÜ. Additionally, one fish farming license was sold for 2,5 million euros to the same buyer in November. The sale of Redstorm and the fish farming license resulted in a one-time loss for the Group totalling 0,3 million euros, while the transaction's impact, excluding goodwill, resulted in a one-time profit of 1,9 million euros. Due to the sale of Redstorm, the turnover decreased by over 25% in the second quarter and in the first half-year, totalling 5,4 million euros and 8,9 million euros respectively. The gross profit for the second quarter remained the same as the previous year at 1,6 million euros, despite lower turnover. EBITDA from operations in the second quarter decreased by 37.5% to 0,5 million euros. The decline in EBITDA compared to the previous year is due to higher sales and marketing expenses at the John Ross Jr unit and seasonally higher inventory purchases of fish for subsequent quarters.
The gross profit for the first half-year was 1,7 million euros, 19% less than the same period last year, directly attributable to the decrease in turnover due to the sale of the subsidiary Redstorm OÜ. EBITDA from operations for the first half-year was -0,2 million euros, influenced by the significant loss in Estonia in the first quarter. The loss in Estonia was affected by a non-compete clause in Finland, which has since expired, and its positive impact will be seen in the turnover and results for the third quarter ending on March 31st.
The net loss for the second quarter was 0,7 million euros, compared to a net loss of 0,1 million euros in the same period last year. This was influenced by one-time financial costs totaling 0,5 million euros, of which 0,3 million euros are related to the one-time non cash loss from the sale of Redstorm. At the beginning of 2024, the company completed a partial redemption of bonds amounting to 1.4 million euros.
The net loss for the first half-year was -1,4 million euros. The net profit for the first half-year of the previous year was 0,7 million euros, influenced by a one-time profit of 1,4 million euros from the sale of a subsidiary in Sweden.
The company's liquidity position has improved due to the sale of the subsidiary Redstorm OÜ, resulting in a reduction in both the volume of bonds and the repayment of the MES loan. The company's liquidity ratio was 1,5 at the end of the year.
John Ross Jr. continues to operate profitably (the company has never incurred an annual loss during its operations), but the results of Saare Kala Tootmine OÜ were below expectations, directly influenced by the non-compete clause and the discontinuation of our products' intermediation by our former Finnish partner. By now, we have resumed direct sales with our old customers, for whom the non-compete clause regarding direct sales expired at the end of 2023.
However, it should be noted that due to the economic downturn in Estonia and general consumer behavior, demand for fish products in Estonia has significantly decreased overall. Despite the decreased market conditions, Saare Kala Tootmine has managed to increase its market share at the expense of competitors. We predict that the consumption downturn will continue in Estonia and Finland in 2024.
Regarding John Ross Jr, we anticipate EBITDA growth compared to last year since their sales area is much broader and less dependent on a single market. However, we do not expect significant revenue growth for John Ross Jr. this year. Saare Kala Tootmine aims to end the second half-year with marginal profit, due to the return to the Finnish market since the beginning of the year.
The restructuring of management of PRFoods has also ended and as of March 31, PRFoods will continue with existing board members of Kristjan Kotkas and Timo Pärn. Timo has demonstrated in short time that despite the challenges in Estonia, he has accomplished in short period necessary changes in sales and production. Since the sale of fish farming business, the need of administration on group level has diminished and this allows also cost savings on group level. Indrek Kasela will transfer from board position to supervisory board after such decision is taken by PRFoods shareholders meeting.
KEY RATIOS
INCOME STATEMENT
| mln EUR unless indicated otherwise | 2Q 2023/2024 | 2022/2023 | 2Q 2022/2023 | 2021/2022 |
| Sales | 5,4 | 19,6 | 7,3 | 42,1 |
| Gross profit | 1,6 | 3,6 | 1,6 | 3,1 |
| EBITDA from operations | 0,5 | 0,3 | 0,8 | -1,7 |
| EBITDA | 0,5 | 0,3 | 0,8 | -2,1 |
| EBIT | -0,03 | -1,0 | 0,2 | -4,2 |
| EBT | -0,6 | 0,4 | -0,0 | -8,2 |
| Net profit (loss) | -0,7 | 0,3 | -0,1 | -8,2 |
| Gross margin | 29,7% | 18,3% | 22,1% | 7,4% |
| Operational EBITDA margin | 10,1% | 1,5% | 11,3% | -4,6% |
| EBITDA margin | 10,1% | 1,5% | 11,3% | -5,1% |
| EBIT margin | -0,6% | -5,1% | 2,9% | -9,9% |
| EBT margin | -10,4% | 2,0% | -0,5% | -19,5% |
| Net margin | -12,2% | 1,5% | -1,8% | -19,4% |
| Operating expense ratio | -30,1% | 24,0% | -18,9% | 17,1% |
BALANCE SHEET
| mln EUR unless indicated otherwise | 31.12.2023 | 30.06.2023 | 31.12.2022 | 30.06.2022 |
| Net debt | 15,9 | 16,7 | 17,7 | 24,7 |
| Equity | 6,4 | 8,3 | 7,5 | 8,1 |
| Working capital | 2,9 | 0,0 | 0,0 | -3,2 |
| Assets | 28,6 | 30,2 | 32,2 | 38,9 |
| Liquidity ratio | 1,5x | 1,0x | 1,0x | 0,7x |
| Equity ratio | 22,4% | 27,4% | 23,3% | 20,7% |
| Gearing ratio | 71,3% | 66,9% | 70,2% | 75,4% |
| Debt to total assets | 0,8x | 0,7x | 0,8x | 0,8x |
| Net debt to operating EBITDA | 21,4x | 55,8x | 21,4x | -14,5x |
| ROE | -9,1% | 4,1% | -1,7% | -68,5% |
| ROA | -2,3% | 1,0% | -0,4% | -17,3% |
Consolidated statement of Financial Position
| EUR '000 | 31.12.2023 | 31.12.2022 | 30.06.2023 |
| VARAD | |||
| Cash and cash equivalents | 580 | 386 | 394 |
| Receivables and prepayments | 5 790 | 5 016 | 2 118 |
| Inventories | 2 420 | 2 089 | 1 861 |
| Biological assets | 0 | 0 | 772 |
| Total current assets | 8 790 | 7 491 | 5 145 |
| Long-term financial assets | 372 | 304 | 381 |
| Tangible assets | 4 429 | 6 944 | 6 563 |
| Intangible assets | 14 983 | 17 443 | 18 157 |
| Total non-current assets | 19 784 | 24 691 | 25 101 |
| TOTAL ASSETS | 28 574 | 32 182 | 30 246 |
| EQUITY AND LIABILITIES | |||
| Interest-bearing liabilities | 1 805 | 2 777 | 2 111 |
| Payables and prepayments | 4 047 | 4 672 | 3 035 |
| Total current liabilities | 5 852 | 7 449 | 5 146 |
| Interest-bearing liabilities | 14 666 | 15 270 | 15 024 |
| Deferred tax liabilities | 1 434 | 1 644 | 1 466 |
| Government grants | 233 | 327 | 318 |
| Total non-current liabilities | 16 334 | 17 241 | 16 807 |
| TOTAL LIABILITIES | 22 186 | 24 690 | 21 953 |
| Share capital | 7 737 | 7 737 | 7 737 |
| Share premium | 14 007 | 14 007 | 14 007 |
| Treasury shares | -390 | -390 | -390 |
| Statutory capital reserve | 51 | 51 | 51 |
| Currency translation differences | 369 | 394 | 608 |
| Retained profit (-loss) | -15 386 | -14 605 | -13 981 |
| Equity attributable to parent | 6 388 | 7 194 | 8 032 |
| Non-controlling interest | 0 | 297 | 259 |
| TOTAL EQUITY | 6 388 | 7 491 | 8 292 |
| TOTAL EQUITY AND LIABILITIES | 28 574 | 32 182 | 30 246 |
Consolidated Statement of Profit or Loss and Other Comprehensive Income
| EUR '000 | 2Q 2023/2024 | 2Q 2022/2023 | 6m 2023/2024 | 6m 2022/2023 |
| Revenue | 5 445 | 7 300 | 8 856 | 11 910 |
| Cost of goods sold | -3 827 | -5 688 | -7 117 | -9 785 |
| Gross profit | 1 618 | 1 612 | 1 739 | 2 125 |
| Operating expenses | -1 642 | -1 379 | -2 509 | -2 493 |
| Selling and distribution expenses | -910 | -671 | -1 348 | -1 314 |
| Administrative expenses | -732 | -708 | -1 161 | -1 179 |
| Other income / expense | -11 | -21 | -20 | -68 |
| Fair value adjustment on biological assets | 0 | 0 | 358 | -170 |
| Operating profit (-loss) | -35 | 212 | -432 | -606 |
| Financial income / expenses | -535 | -245 | -842 | 1 447 |
| Profit (-loss) before tax | -569 | -33 | -1 274 | 841 |
| Income tax | -97 | -102 | -110 | -108 |
| Net profit (-loss) for the period | -666 | -135 | - 1 385 | 733 |
| Net profit (-loss) attributable to: | ||||
| Owners of the Parent Company | -708 | -210 | -1 382 | 668 |
| Non-controlling interests | 42 | 75 | -4 | 66 |
| Total net profit (-loss) for the period | -666 | -135 | -1 386 | 733 |
| Other comprehensive income (-loss) that may subsequently be classified to profit or loss: | ||||
| Foreign currency translation differences | -43 | 0 | -239 | -445 |
| Total comprehensive income (-expense) | -709 | -135 | -1 625 | 288 |
| Total comprehensive income (-expense) attributable to: | ||||
| Owners of the Parent Company | -751 | -210 | -1 621 | 223 |
| Non-controlling interests | 42 | 75 | -4 | 66 |
| Total comprehensive income (-expense) for the period | -709 | -135 | -1 625 | 288 |
| Profit (-loss) per share (EUR) | -0,02 | -0,01 | -0,04 | 0,02 |
| Diluted profit (-loss) per share (EUR) | -0,02 | -0,00 | -0,03 | 0,01 |
Indrek Kasela
AS PRFoods
Member of the Management Board
Phone:+372 452 1470
investor@prfoods.ee
www.prfoods.ee
