Overview of the economic activities

Management commentary

PRFoods’ first amended financial year has ended. We kindly remind you that as we changed our accounting calendar, the last financial year extended to 18 months. Financial year that began on 01.07.2018 lasts 12 months as usual and ends 30.06.2019.

For PRFoods last financial year was ground-breaking. We acquired two companies, in Finland and in Great Britain, and as a result our revenues grew more than two times. The focus of our business stays the same and we concentrate on farming and processing salmonoids. Our product portfolio was extended primarily in premium processed fish and fresh fish trading. During the current financial year, we focus on achieving the synergies through reorganization of our operations and further efficiencies and significantly more aggressive marketing efforts.

PRFoods 2017/18 pro forma 18- month revenues were 154.6 million euros, EBITDA from operations was 7.3 million euros (EBITDA including biomass revaluation and one-offs was 6.0 million euros. One-offs were related to transactions costs). Net profit was 0.9 million euros.

18 months consolidated results are as follows:

  • Unaudited consolidated revenue 118.50 million euros, increase +71.07 million euros, i.e. +149.8%.
  • Gross margin 12.4%, decrease -1.9 percentage points.
  • Negative impact from revaluation of biological assets -0.52 million euros (12 months 2016: positive impact of

+2.26 million euros).

  • Effect of one-offs to the result -0.82 million euros (12 month 2016: negative influence -0.40 million euros).
  • EBITDA from operations +5.84 million euros, increase +5.09 million euros.
  • EBITDA +4.49 million euros, increase +1.88 million euros (without one-off effects EBITDA +5.32 million euros, increase +2.30 million euros).
  • The operating profit +1.84 million euros, increase +0.46 million euros (without one-off effects operating profit +2.67 million euros, increase +0.89 million euros).
  • Net profit +0.32 million euros, decrease -0.39 million euros (without one-off effects net profit +1.15 million euros, increase +0.03 million euros).

Although we are content with the results and they meet management’s expectations, we have to take into account the significant fluctuations in raw material prices. In the opinion of the management, the price of salmonoids remains at the same level in near- and mid-term perspective, as demand outstrips supply. As a result of this, we have undertaken a plan to increase substantially our Fish farming capacity and the target is to increase the capacity by 2-3 times from today’s capacity.

PRFoods balance sheet remains strong. Net Debt to EBITDA is 3 times, net debt stands at 18 million euros, equity is at 23.7 million euros.

2018 2 nd quarter results are summarized below:

  • Unaudited consolidated revenue 22.15 million euros, increase +9.08 million euros, i.e. +69.5%.
  • Gross margin 7.7%, increase +0.2 percentage points, i.e. +2.5%.
  • Positive impact from revaluation of biological assets +1.10 million euros (Q2 2017: positive effect +0.42 million euros).
  • Effect of one-offs to the result -0.51 million euros (12 month 2016: negative influence -0.21 million euros).
  • EBITDA from operations -0.23 million euros, decrease -0.36 million euros.
  • EBITDA +0.36 million euros, increase +0.02 million euros (without one-off effects EBITDA +0.87 million euros, increase +0.32 million euros).
  • The operating loss -0.13 million euros, increase -0.16 million euros (without one-off effects operating profit +0.38 million euros, increase +0.14 million euros).
  • Net loss -0.64 million euros, increase -0.51 million (without one-off effects net loss -0.13 million euros, increase -0.21 million euros.

2 nd quarter results are as expected. Change in raw material price was bigger than anticipated, and as result the profitability of fresh Fish trading was lower. The sale of fresh Fish was also lower in Finland due to the loss of major client. At the same time, we gained new clients in European Union and see significant growth in sales to Asia.

Management is content with financial year results. We would like to thank our clients and partners and hope to be an inspirational employer in our sector.

Quarterly presentation will be published on our website latest with annual report. 

KEY RATIOS

Income Statement, EUR mln Q2 2018 Q2 2017 18m 2017 12m 2017 12m 2016
Sales 22.1 13.1 118.5 73.6 47.4
Gross profit 1.7 1.0 14.7 10.5 4.0
EBITDA from operations -0.2 0.1 5.8 5.4 0.8
EBITDA 0.4 0.3 4.5 3.6 2.6
EBIT -0.1 0.03 1.8 1.9 1.4
EBT -0.5 -0.1 0.3 1.1 1.1
Net profit (-loss) -0.6 -0.1 0.3 1.3 0.7
Gross margin 7.7% 7.5% 12.4% 14.3% 8.5%
Operational EBITDA margin -1.0% 1.0% 4.9% 7.3% 1.6%
EBITDA margin 1.6% 2.6% 3.8% 4.8% 5.5%
EBIT margin -0.6% 0.2% 1.6% 2.6% 2.9%
EBT margin -2.0% -0.4% 0.3% 1.5% 2.4%
Net margin -2.9% -1.0% 0.3% 1.8% 1.5%
Operating expense ratio 11.7% 9.5% 10.4% 10.0% 10.1%
Balance Sheet, EUR mln 31.03.2018 31.03.2017 31.12.2017 31.12.2016
Net debt 18.1 1.0 16.6 0.3
Equity 23.7 22.7 24.7 23.8
Working capital 2.8 11.5 5.3 12.4
Assets 66.0 33.5 68.6 35.1
Liquidity ratio 1.1 2.3 1.2 2.4
Equity ratio 35.9% 67.8% 36.0% 67.9%
Gearing ratio 43.3% 4.1% 40.1% 1.2%
Net debt-to-EBITDA 3.0 1.6 3.1 0.4
ROE 5.6% 0.7% 1.3% 3.0%
ROA 2.6% 0.5% 2.5% 2.2%

Consolidated statement of financial position

EUR '000 30.06.2018 30.06.2017 31.12.2017 31.12.2016
ASSETS        
Cash and cash equivalents 5,961 4,088 6,491 4,374
Receivables and prepayments 4,912 2,694 8,982 4,056
Inventories 12,677 5,105 11,747 5,393
Biological assets 6,498 8,251 5,566 7,584
Total current assets 30,048 20,138 32,786 21,407
         
Deferred income tax 212 226 222 230
Long-term financial investments 134 102 102 103
Tangible fixed assets 12,730 7,019 13,225 7,285
Intangible assets 22,877 5,981 22,294 6,031
Total non-current assets 35,953 13,328 35,843 13,649
TOTAL ASSETS 66,001 33,466 68,629 35,056
         
EQUITY AND LIABILITIES        
Loans and borrowings 12,562 4,266 10,105 3,716
Payables 14,422 4,243 17,115 5,131
Government grants 216 170 306 162
Total current liabilities 27,200 8,679 27,526 9,009
         
Loans and borrowings 11,460 788 12,957 940
Deferred tax liabilities 2,436 758 2,267 747
Government grants 1,226 544 1,144 551
Total non-current liabilities 15,122 2,090 16,368 2,238
TOTAL LIABILITIES 42,322 10,769 43,894 11,247
         
Share capital 7,737 7,737 7,737 7,737
Share premium 14,007 14,007 14,007 14,007
Treasury shares -390 -390 -390 -256
Statutory capital reserve 48 48 48 12
Currency translation reserve 111 417 173 428
Retained profit (-loss) 2,151 878 3,096 1,881
Equity attributable to parent 23,664 22,697 24,671 23,809
Non-controlling interest 15 0 64 0
TOTAL EQUITY 23,679 22,697 24,735 23,809
TOTAL EQUITY AND LIABILITIES 66,001 33,466 68,629 35,056

Consolidated statement of profit or loss and other comprehensive income

EUR '000 Q2 2018 Q2 2017 18m 2017 12m 2017 12m 2016
Sales 22,149 13,066 118,499 73,610 47,429
Cost of goods sold -20,436 -12,081 -103,836 -63,075 -43,410
Gross profit 1,713 985 14,663 10,535 4,019
           
Operating expenses -2,591 -1,237 -12,336 -7,365 -4,785
  Selling and distribution expenses -1,900 -879 -8,797 -5,209 -3,346
  Administrative expenses -691 -358 -3,539 -2,156 -1,439
Other income/expenses -352 -138 40 240 -118
Fair value adjustment on biological assets 1,099 420 -524 -1,505 2,263
Operating profit (-loss) -131 30 1,843 1,905 1,379
Financial income 4 -5 10 4 2
Financial expenses -326 -80 -1,519 -802 -240
Profit (-loss) before tax -453 -55 334 1,107 1,141
Income tax -189 -73 -13 208 -426
Net profit (-loss) for the period -642 -128 321 1,315 715
           
Net profit (-loss) attributable to:          
Owners of the company -585 -128 306 1,251 715
Non-controlling interests -57 0 15 64 0
Total net profit (-loss) -642 -128 321 1,315 715
           
Other comprehensive income (-loss) that may subsequently be classified to profit or loss:          
Foreign currency translation differences -1 -11 -317 -255 -43
Total comprehensive income (-expense) -643 -139 4 1,060 672
           
Total comprehensive income (-expense) attributable to:          
Owners of the Company -586 -139 -11 996 672
Non-controlling interests -57 0 15 64 0
Total comprehensive income (-expense) for the period -643 -139 4 1,060 672
           
Profit (-loss) per share (EUR) -0.02 0.00 0.00 0.03 0.02
           
Diluted profit (-loss) per share (EUR) -0.02 0.00 0.00 0.03 0.02

Indrek Kasela AS PRFoods Member of the Management Board Phone: +372 452 1470 investor@prfoods.ee www.prfoods.ee

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