Background Information
AS Linda Nektar is an Estonian-based beverage company with origins in the 1940s. The company is providing fermented beverages for the drinks industry focusing on unpacked fruit wines under a Business-to-Business model. The company’s production facility is located in a logistically favourable position relative to the Baltic and Northern European markets.
Extensive R&D efforts have led to breakthroughs in the field of aroma stripping and recovery and this, along with the planned geographical expansion, will be the key focal points in the coming years.
The shares of Linda Nektar are admitted to trading on Nasdaq Baltic’s First North Market.
Report of activities
Management Report
The unaudited 12 month results for AS Linda Nektar (the ‘Company’) largely met management expectations for 2016. Through investments made into capacity expansion and additional demand from customers sales increased 34.9% y-o-y to EUR 3,719,405 for the 12 month period (0,5 % increase y-o-y to EUR 2,757,055 for 2015). Also from a geographical perspective there was increase in export sales during the course of the year.
The first industrial scale aroma batches have been produced (and shipped in January 2017), which attest to the successful functioning of the aroma recovery equipment which was installed into the Kobela premises during the second half of 2016. This achieves an important milestone for some of the Company’s ongoing research and development processes being undertaken during the past eight years.
The Company is continuing to explore new revenue avenues for its products geographically and has signed a framework agreement with German-based Symrise AG, a top 3 global supplier in the area of flavours and fragrances (F&F), to effect this.
With domestic industry trends becoming less certain, including the unexpected announcement of new excise taxes for Estonian consumers of alcoholic beverages as well as changes in alcohol-selling legislation, the Company is continuing to explore further growth opportunities in other markets. While immediate sales impacts are seen to be negligible at this stage, the second half of 2017 is far less certain. Prices of raw materials have also decreased for 2017. Therefore management considers it prudent to revise its 2017 EUR 5m revenue guidance to EUR 3.5-4.0m, while noting that profitability should stay within historical bounds.
The net profit for the financial year came to EUR 831,662, representing an 89,0% y-o-y increase (35,9 % y-o-y increase for 2015, to EUR 440,140)
Research and development work continues on the same level as in 2015 (all expensed), while key investments included construction and repair works (enabling further capacity from that available in late 2016, incorporating some PRIA-related grant support), purchases of production equipment for expanding and automating production as well as procurements in the aroma technology area developed by the enterprise. In total, EUR 988,772 were invested in property, plant and equipment (12 months 2015: EUR 913,371). Depreciation expenses in 2016 amounted to EUR 352,719 (12 months 2015: EUR 236, 806), which have increased due to the aforementioned investments. Development costs in 2016 amounted to EUR 116,062 (12 months 2015: EUR 190,725).
During the second half of the 2016 financial year, the ‘Development project of Linda Nektar production enterprises’ supported by Enterprise Estonia, was completed. As a result, the targeted financing previously recorded on the balance sheet as a short-term liability has been recorded as operating income.
In the first half of the year, the enterprise paid dividends for the performance of the 2015 financial year in the amount of 141,760 euros. The income tax expense entailed in the payment of dividends to the shareholders amounted to 35,440 euros. Further information on the 2016 dividend can be expected with the announcement of the calling of the Annual General Meeting.
As at 31 December 2016, the enterprise had 12 employees - 1 member of the management board and 3 supervisory board members. The salary expenses for the 12 months of 2016 (including taxes) were EUR 327,911 (12 months 2015: EUR 296,553). Labour costs have increased due to additional employees and salary increases, as well as the payment of performance-related pay.
The enterprise continues to be mainly focused on product and technology development as well as plans concerning the introduction of new aroma technology and the expansion of production.
Financial Ratios (2016 unaudited):
| 2016 | 2015 | ||
| Current Ratio = Current Assets/ Current Liabilities | x | 6.02 | 5.96 |
| Quick ratio = (Current Assets – Inventories) / Current Liabilities | x | 4.97 | 4.76 |
| Working Capital = Current Assets - Current Liabilities | 1 464 596 | 1 411 263 | |
| Equity Ratio = Total Equity / Total Assets | % | 93.66 | 92.70 |
| Net Profit Margin= Net Profit / Sales Revenue | % | 22.36 | 15.96 |
| Debt to Assets= Total Liabilities / Total Assets | x | 0.06 | 0.07 |
Kadri Rauba
CEO
Financial Statements
The report is prepared according to the Accounting Principles Generally Accepted in Estonia. The report follows same accounting principles that were used in the annual report. The report is compiled in euros (EUR).
Balance sheet
(In euros, 2016 unaudited)
| 31.12.2016 | 30.06.2016 | 31.12.2015 | |
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 1 103 517 | 744 903 | 991 984 |
| Receivables and prepayments | 346 529 | 689 917 | 364 401 |
| Inventories | 306 057 | 359 643 | 339 693 |
| Total current assets | 1 756 103 | 1 794 463 | 1 696 078 |
| Non-current assets | |||
| Receivables and prepayments | 517 | 0 | 0 |
| Property, plant and equipment | 2 697 075 | 2 367 273 | 1 996 019 |
| Intangible assets | 144 857 | 179 193 | 209 860 |
| Total non-current assets | 2 842 449 | 2 546 466 | 2 205 879 |
| Total assets | 4 598 552 | 4 340 929 | 3 901 957 |
| Liabilities and equity | |||
| Liabilities | |||
| Current liabilities | |||
| Payables and prepayments | 291 507 | 297 766 | 210 703 |
| Government grants | 0 | 155 857 | 74 112 |
| Total current liabilities | 291 507 | 453 623 | 284 815 |
| Total liabilities | 291 507 | 453 623 | 284 815 |
| Equity | |||
| Issued capital | 1 575 109 | 1 575 109 | 1 575 109 |
| Share premium | 617 517 | 617 517 | 617517 |
| Statutory reserve capital | 24 819 | 24 819 | 2 812 |
| Retained earnings (loss) | 1 257 938 | 1 257 938 | 981 564 |
| Annual period profit (loss) | 831 662 | 411 923 | 440 140 |
| Total equity | 4 307 045 | 3 887 306 | 3 617 142 |
| Total liabilities and equity | 4 598 552 | 4 340 929 | 3 901 957 |
Income statement
(In euros, 2016 unaudited)
| 2016 | 2016 H2 | 2015 | 2015 H2 | |
| Revenue | 3 719 405 | 1 605 745 | 2 757 055 | 1 310 753 |
| Other income | 155 857 | 155 857 | 8 016 | 8 016 |
| Changes in inventories of finished goods and work in progress | -29 499 | -48 141 | 64 209 | 27 465 |
| Raw materials and consumables used | -2 001 979 | -808 372 | -1 445 369 | -730 918 |
| Other operating expense * | -291 155 | -141 997 | -374 149 | -140 514 |
| Employee expense | -327 911 | -153 539 | -296 553 | -143 629 |
| Depreciation and impairment loss (reversal) | -352 719 | -184 872 | -236 806 | -129 109 |
| Other expense | -5 001 | -5 000 | -4 249 | -4 045 |
| Operating profit (loss) | 866 998 | 419 681 | 472 154 | 198 019 |
| Other financial income and expense | 104 | 57 | 261 | 31 |
| Profit (loss) before tax | 867 102 | 419 738 | 472 415 | 198 050 |
| Income tax expense | -35 440 | 0 | -32 275 | 0 |
| Annual period profit (loss) | 831 662 | 419 738 | 440 140 | 198 050 |
* Technology development costs 116,062 euros in 2016 (12 months 2015: 190,725 euros).
Statement of cash flows
(In euros, 2016 unaudited)
| 2016 | 2016 H2 | 2015 | 2015 H2 | |
| Cash flows from operating activities | ||||
| Profit (loss) | 866 998 | 419 681 | 472 154 | 198 019 |
| Adjustments | ||||
| Depreciation and impairment loss (reversal) | 352 719 | 184 872 | 236 806 | 129 109 |
| Other adjustments | -155 857 | -155 857 | 0 | 0 |
| Total adjustments | 196 862 | 29 015 | 236 806 | 129 109 |
| Changes in receivables and prepayments related to operating activities | 17 355 | 342 871 | -170 863 | 182 670 |
| Changes in inventories | 33 636 | 53 586 | -91 877 | -104 176 |
| Changes in payables and prepayments related to operating activities | 10 047 | -100 089 | 86 | -87 562 |
| Income tax refund (paid) | -35 440 | 0 | -32 275 | 0 |
| Proceeds from government grants * | 81 746 | 0 | 74 112 | 0 |
| Total cash flows from operating activities | 1 171 204 | 745 064 | 488 143 | 318 060 |
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment and intangible assets | -918 015 | -386 507 | -841 364 | -629 437 |
| Interest received | 104 | 57 | 261 | 31 |
| Total cash flows from investing activities | -917 911 | -386 450 | -841 103 | -629 406 |
| Cash flows from financing activities | ||||
| Proceeds from issuing shares | 0 | 0 | 820 002 | 0 |
| Dividends paid | -141 760 | 0 | -129 100 | 0 |
| Other cash outflows from financing activities | 0 | 0 | -56 056 | -56 056 |
| Total cash flows from financing activities | -141 760 | 0 | 634 846 | -56 056 |
| Total cash flows | 111 533 | 358 614 | 281 886 | -367 402 |
| Cash and cash equivalents at beginning of period | 991 984 | 744 903 | 710 098 | 1 359 386 |
| Change in cash and cash equivalents | 111 533 | 358 614 | 281 886 | -367 402 |
| Cash and cash equivalents at end of period | 1 103 517 | 1 103 517 | 991 984 | 991 984 |
* Instalment of the “AS Linda Nektar Development Project” of Enterprise Estonia
Statement of changes in equity
(In euros, 2016 unaudited)
| Issued capital | Share premium | Statutory reserve capital | Retained earnings (loss) | Total | |
| 31.12.2014 | 28 116 | 0 | 2 812 | 2 511 229 | 2 542 157 |
| Annual period profit (loss) | 0 | 0 | 0 | 440 140 | 440 140 |
| Issue of equity | 146 429 | 673 573 | 0 | 0 | 820 002 |
| Dividends paid | 0 | 0 | 0 | -129 100 | -129 100 |
| Changes in reservs | 0 | 0 | 0 | 0 | 0 |
| Other changes in equity | 1 400 564 | -56 056 | 0 | -1 400 564 | -56 056 |
| 31.12.2015 | 1 575 109 | 617 517 | 2 812 | 1 421 705 | 3 617 143 |
| 31.12.2015 | 1 575 109 | 617 517 | 2 812 | 1 421 705 | 3 617 143 |
| Annual period profit (loss) | 0 | 0 | 0 | 831 662 | 831 662 |
| Issue of equity | 0 | 0 | 0 | 0 | 0 |
| Dividends paid | 0 | 0 | 0 | -141 760 | -141 760 |
| Changes in reservs | 0 | 0 | 22 007 | -22 007 | 0 |
| Other changes in equity | 0 | 0 | 0 | 0 | 0 |
| 31.12.2016 | 1 575 109 | 617 517 | 24 819 | 2 089 600 | 4 307 045 |
* As of 31 December 2016 the Company had 50 shareholders.
Information prepared by: Kadri Rauba AS Linda Nektar Address: Kobela Borough, Antsla parish, 66407 Võru county, Estonia Phone: +372 785 5768 E-mail: info@lindanektar.ee
