AS PRFoods unaudited consolidated interim report for the 4th quarter and 12 months of fiscal year 2020/2021

MANAGEMENT COMMENTARY

The most difficult year in the group’s history is over. We have been attacked on three fronts: on the one hand, the corona crises have caused a situation of drastic fall in prices and demand for fishery products, causing a drop in gross margin and sales. Second, we entered the crisis with very high leverage due to recent acquisitions and were forced by banks to aggressively reduce our loan portfolio. Thirdly, our former leadership of the Finnish unity was unwilling and unable to react to changes in the market, which caused us to accumulate problems there with a long-term effect. Dealing with the three crises simultaneously greatly increased our loss, as we were forced to make decisions, which would not have happened under normal circumstances.

As a result, this group’s sales decreased 25% to 58.7 million euros (78.7 million euros year-on-year).

As a final result, we had our first historic EBITDA loss of -1.24 million euros (2.75 million euros year-on-year) and a net loss of -5.1 million euros (- 1.9 million euros year-on-year).

The fourth quarter EBITDA was largely impacted by the fact that commodity prices suddenly increased due to the relaxation of Coroan restrictions, while the final prices of our products in the Finnish market were set in winter, when commodity prices were significantly lower. This caused a situation in the last quarter, where we sold some of our products below the COGS. In order to put an end to such a practice, we had to terminate our local CEO and notify customers of the termination of these contracts.

If something positive is found, the group’s operating cash flow was positive by 2 million euros and the total cash flow over the period improved by 0.51 million euros. We also reduced our net debt and significantly reduced the Company’s current liabilities. Our fish farming unit also performed better and was the backbone of our Scandinavian operations. Our biggest problem is that the Estonian government is delaying the decision to allow marine farming in Estonia, due to which we have not been able to earn significant additional income in the last period.

Our Scottish division was very courageous, and even though their sales and net profit fell by 30%, John Ross Jr still managed to post € 1.4 million in EBITDA. I would also like to thank our Estonian unit, which despite not knowing HoReCa, has managed to significantly increase sales in the retail sector every month.

The number of employees has decreased by around 10% on an annual basis, but it is evident that the cost base of the Finnish unit has not responded to the decline in sales and margins. In summary, we can say that the root cause of our problems is the Finnish trade division.

PRFoodsi’s action plan to get out of the crisis is:

  1. Decrease the level of overall debt thanks to positive EBITDA and strengthening of shareholders’ equity.

  2. Complete restructuring of the Finnish division, either through the sale or closure of loss-making business units. Completely eliminate all low-margin products from Finnish sales.

  3. Increase retail sales in UK and EU markets, including Estonia’s domestic market.

  4. The Group’s strategic orientation is fish farming, a division that is profitable each year. The objective is to achieve by 2023 a fish farming volume of 10,000 tonnes, ie an additional turnover of 45 to 50 million euros.

The Group’s financial situation is not easy. At the same time, it should be remembered that 11 million euros of bonds were issued solely for the refinancing of John Ross Jr. The acquisition and the results of John Ross Jr were not so strongly impacted, their cash -operational flow is very solid and they regularly pay dividends to parent company, so we find their leverage to be acceptable. Fish farming requires long term capital to feed fish and it is under construction.

Last year, we were forced to significantly reduce working capital funding by banks, which put a strain on the company’s finances. We have significantly reduced working capital requirements in operations, also through lower inventory. The most important thing is to restore profitability in an environment of declining sales and to restructure loss-making business units.

Having cut our teeth now for the second year of the corona crisis, we know that relying on outside help is not sustainable and that all the tough decisions need to be made as soon as possible. To our advantage, the fish market has started much stronger this year and is more predictable and the demand for our products is increasing. The only goal of the new fiscal year is profit and anything blocking our road to profitability must be eliminated.

KEY REPORTS

REVENUE STATEMENT

millions of euros

2Q 2021

1Q 2021

4Q 2020

3Q 2020

2Q 2020

1Q 2020

4Q 2019

3rd quarter 2019

Sales

14.7

14.2

17.0

12.7

15.1

18.5

25.4

19.3

Gross profit

0.3

0.9

2.5

1.2

0.7

2.0

4.3

2.6

Operating EBITDA

-1.0

-0.5

0.6

-0.3

-0.4

0.0

2.1

0.7

EBITDA

-0.7

-0.7

0.7

-0.5

-0.4

-0.9

1.4

1.5

BAII

-1.4

-1.4

0.0

-1.1

-1.0

-1.4

0.7

1.0

EBT

-1.6

-1.8

-0.1

-1.4

-1.2

-1.8

0.6

0.8

Net profit (-loss)

-1.7

-1.8

-0.2

-1.4

-1.3

-1.7

0.5

0.6

Gross margin

2.1%

6.6%

14.9%

9.4%

4.6%

10.8%

17.0%

13.4%

Operating EBITDA margin

-7.0%

-3.5%

3.4%

-2.6%

-2.6%

0.1%

8.4%

3.8%

EBITDA margin

-4.8%

-5.3%

4.1%

-3.8%

-2.6%

-4.6%

5.3%

7.6%

EBIT margin

-9.3%

-9.9%

0.2%

-8.8%

-6.4%

-7.8%

2.9%

5.0%

EBT margin

-10.8%

-12.5%

-0.6%

-11.3%

-8.1%

-9.8%

2.2%

3.9%

The net margin

-11.6%

-12.5%

-1.2%

-11.3%

-8.4%

-9.2%

2.0%

2.9%

Operating expense ratio

15.4%

15.6%

15.6%

18.2%

13.9%

14.3%

12.5%

13.4%

BALANCE SHEET

millions of euros

06/30/2021

03.31.2021

31.12.2020

30.09.2020

06/30/2020

03.31.2020

12/31/2019

Net debt

20.9

21.4

21.9

21.5

20.7

17.0

17.8

Equity

15.8

17.6

18.6

18.5

19.8

21.6

23.3

Working capital

-2.9

-5.0

-3.9

-4.4

-4.0

-2.5

-3.5

Assets

55.3

54.5

57.5

57.4

57.1

56.9

60.5

Liquidity rate

0.9x

0.8x

0.8x

0.8x

0.8x

0.9x

0.9x

Capital ratio

28.6%

32.4%

32.4%

32.3%

34.7%

37.9%

38.5%

Gear ratio

56.9%

54.9%

54.0%

53.7%

51.1%

44.0%

43.3%

Debt on total assets

0.7x

0.7x

0.7x

0.7x

0.7x

0.6x

0.6x

Net debt on op EBITDA

-16.9x

-55.3x

160.0x

12.8x

7.5x

5.3x

5.3x

DEER

-28.7%

-23.8%

-21.9%

-7.0%

-9.1%

-5.7%

-3.2%

ROA

-9.1%

-8.4%

-7.8%

-2.4%

-3.2%

-2.1%

-1.2%

Consolidated statement of financial position

Thousands of euros

06/30/2021

06/30/2020

ASSETS

Cash and cash equivalents

2500

2 276

Receivables and down payments

3 295

3,578

Inventories

5 691

7 884

Biological assets

4 795

4,249

Total current assets

16 281

17,987

Deferred tax

21

54

Long-term financial investments

302

232

Tangible fixed assets

15 236

16,179

Intangible assets

23,457

22,672

Total non-current assets

39,016

39,137

TOTAL ASSETS

55,297

57,124

LIABILITIES AND EQUITY

Loans and borrowing

6,396

10 611

Debts

12,530

11 132

Government grants

207

211

Total current liabilities

19,133

21 954

Loans and borrowing

16 988

12,368

Debts

723

190

Deferred tax liabilities

1,868

1,920

Government grants

746

873

Total non-current liabilities

20,325

15 351

TOTAL RESPONSIBILITIES

39,458

37 305

Share the capital

7 737

7 737

Sharing bonus

14,198

14,007

Own shares

-390

-390

Statutory capital reserve

51

51

Currency translation reserve

583

-366

Retained profit (-loss)

-6.682

-1 654

Equity attributable to the parent company

15,497

19,385

Non-controlling interest

342

434

EQUITY

15 839

19 819

TOTAL EQUITY AND LIABILITIES

55,297

57,124

Consolidated income statement and other comprehensive income

Thousands of euros

4Q 2020/2021

4Q 2019/2020

12 months 2020/2021

12 months 2019/2020

Sales

14,740

15 101

58,692

78,292

Cost of goods sold

-14,437

-14,412

-53 717

-68 710

Gross profit

303

689

4 975

9,582

Operating Expenses

-2 264

-2 107

-9,468

-10 509

Selling and distribution costs

-1 499

-1 387

-6.389

-7,060

Administrative expenses

-765

-720

-3,079

-3 449

Other income / expenses

146

211

309

519

Fair value adjustment on biological assets

441

239

311

-291

Operating profit (loss)

-1 374

-968

-3 873

-699

Financial income / expenses

-223

-254

-1,031

-1,062

Profit (loss) before tax

-1 597

-1 222

-4.904

-1 761

Income tax

-110

-47

-216

-134

Net profit (loss) for the period

-1707

-1 269

-5 120

-1,895

Net profit (loss) attributable to:

Company owners

-1 697

-1 254

-5.028

-1 718

Non-majority interests

-ten

-15

-92

-177

Total net profit (loss)

-1707

-1 269

-5 120

-1,895

Other excess income (losses) that may subsequently be classified in profit or loss:

Foreign currency translation differences

-100

-117

949

-152

Total comprehensive income (expense)

-1807

-1 386

-4,171

-2,047

Total comprehensive income (expense) attributable to:

Company owners

-1 797

-1 371

-4079

-1 870

Non-majority interests

-ten

-15

-92

-177

Total comprehensive income (expense) for the period

-1807

-1 386

-4,171

-2,047

Earnings (loss) per share (EUR)

-0.04

-0.03

-0.13

-0.04

Diluted earnings (loss) per share (EUR)

-0.04

-0.03

-0.13

-0.04

Indrek Kasela
AS PRFoods
Member of the Management Board
Telephone: +372 452 1470
[email protected]
www.prfoods.ee

Attachment

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *