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PRF: Consolidated Unaudited Interim Report of AS PRFoods for the 1st quarter and 3 months of 2019/2020 financial year

OVERVIEW OF ECONOMIC ACTIVITIES

PRFoods’ sales of 1st quarter 2019/2020 financial year was 19.3 million euros. Net profit 0.57 million euros, four times higher than Q3/2018. EBITDA 1.47 million euros, growth 31%.

MANAGEMENT COMMENTARY

We are happy to announce that based on the first quarter of the financial year (3rd quarter of 2019) the restructuring processes commenced within the Group during the last financial year, are demonstrating positive results.

The reporting period was characterized by a general decline in the prices of raw materials of fishery products, resulting in a fall in the prices of fish, fish fillets and smoked products. In spite of the approximately 5% price drop of the Group's main products, we were able to keep the total sales practically at the level of the last year. The third quarter sales for 2019 totalled 19.33 million euros (Q3 2018: 19.39 million euros).

The Group's consolidated EBITDA for the reporting period was 1.47 million euros, an increase of 31% compared to the same period last year, which was mainly affected by the gain from revaluation of biological assets by 0.85 million euros. Operating EBITDA (i.e. excluding one-offs and fish stock revaluation) was 0.73 million euros (Q3 2018: 1.06 million euros). Net profit was 0.57 million euros, almost four times higher than the net profit for the same period last year (Q3 2018: 0.14 million euros).

The Group's manufacturing and sales companies (Heimon Kala, John Ross Jr., Coln Valley Smokery, Trio Trading, Vettel) significantly improved their operational results compared to the same quarter last year; incl. exceeding the planned ones by ca 0.3 million euros in total. The decline in operating EBITDA compared to the previous year was attributable to the weaker performance of the Swedish fish farming unit (Överumans Fisk) due to the decline in the market price of fish, the recovery of which from its lowest level in the last three years is already noticeable.

We are optimistic about getting additional farming licences already in 2020. We will continue to make necessary preparations to increase the farming capacity which in turn would increase the quality raw material supply from our own Estonian fish farms.

PRFoods’ focus has been on improving cash flow from operating activities, which is reflected in Q3 2019 positive cash flow from operating activities in the amount of 1.3 million euros compared to 0.1 million euros in the same period last year. The Company's net debt was 19.9 million euros as at 30.09.2019 (30.09.2018: 21.9 million euros), which will decrease at the end of the year by repayments of investment loans and higher cash balance due to Christmas sales. As at 30.09.2019, the Group's working capital was negative by 3.0 million euros as current liabilities include liabilities to related parties in the amount of 4.1 million euros, which by their nature are long-term but due to accounting principles shall be reported as current.

We will continue to merge the business operations of the Estonian and Finnish companies and to create synergies, especially in product development and sales both in the domestic and export markets. The merger of the Finnish subsidiaries into one company is proceeding according to plan and Trio Trading Oy and Heimon Kala Oy will be merged into one company, which will continue under the name Heimon Kala Oy. In Estonia we have launched a Finnish-Estonian joint brand – Heimon Kala and for the first time in history we have successfully entered the local retail market with trout farmed in Saaremaa, Estonia.

Regarding the outbreak of listeria that hit the Estonian fishing industry, we can confirm that PRFoods companies have passed all additional controls successfully. The biggest role here is played by our internal quality and food safety controls in our companies, including the day-to-day controls in our own laboratories from the purchase of raw fish to the dispatch of the product from the factory.

The launch of John Ross Jr.'s renewed brand started at the end of the quarter and we expect significant growth in the UK market in the coming quarters.

In order to achieve our goals in the coming periods, the Group has engaged a strengthened management team of professionals. PRFoods team has done excellent job in developing our business and profitability. PRFoods’ balance sheet, production and customer base are strong, and we look optimistically towards future.

Big changes are always challenging for people in the company and I am very thankful that our team has enthusiastically embraced the changes and given their best.

KEY RATIOS

INCOME STATEMENT 

mln EUR 3Q 2019 2Q 2019 1Q 2019 4Q 2018 3Q 2018 2Q 2018 1Q 2018
Sales 19,3 21.5 18.1 26.7 19.4 22.1 22.7
Gross profit 2,6 2.1 2.1 4.7 3.0 1.8 2.4
EBITDA from operations 0,7 0.3 0.2 2.4 1.1 -0.2 0.7
EBITDA 1,5 0.3 -0.5 0.8 1.1 0.3 0.6
EBIT 1,0 -0.3 -1.0 0.2 0.6 -0.2 0.1
EBT 0,8 -0.4 -1.2 0.0 0.4 -0.5 -0.2
Net profit (-loss) 0,6 -0.6 -1.2 0.2 0.1 -1.1 -0.2
Gross margin 13,4% 9.8% 11.7% 17.7% 15.2% 7.9% 10.6%
Operational EBITDA margin 3,8% 1.4% 1.1% 9.1% 5.4% -1.1% 3.1%
EBITDA margin 7,6% 1.4% -2.5% 2.9% 5.8% 1.2% 2.5%
EBIT margin 5,0% -1.2% -5.6% 0.9% 3.0% -1.1% 0.2%
EBT margin 3,9% -2.0% -6.5% 0.1% 1.8% -2.3% -0.9%
Net margin 2,9% -3.0% -6.6% 0.8% 0.7% -5.1% -1.0%
Operating expense ratio 13,4% 11.7% 14.1% 11.2% 13.5% 12.0% 10.5%

BALANCE SHEET

mln EUR 30.09.2019 30.06.2019 31.03.2019 31.12.2018 30.09.2018 30.06.2018 31.03.2018
Net debt 19,9 20.5 18.7 20.0 21.9 18.1 16.7
Equity 22,8 21.9 23.3 24.2 24.1 23.3 24.3
Working capital -3,0 -3.1 -1.6 1.0 2.0 2.8 4.6
Assets 62,4 62.5 63.5 65.5 64.5 65.5 66.4
Liquidity ratio 0,9x 0.9x 0.9x 1.0x 1.1x 1.1x 1.2x
Equity ratio 36,5% 35.0% 36.7% 37.0% 37.4% 35.6% 36.6%
Gearing ratio 46,6% 48.3% 44.5% 45.2% 47.6% 43.7% 40.7%
Debt to total assets 0,6x 0.7x 0.6x 0.6x 0.6x 0.6x 0.6x
Net debt to EBITDA 5,4x 5.1x 5.4x 5.1x 3.8x 3.1x 2.6x
ROE -4,5% -6.5% -8.2% -4.0% 0.1% 0.2% 8.6%
ROA -1,6% -2.3% -3.0% -1.5% 0.0% 0.1% 4.1%

Consolidated Statement of Financial Position

Thousand euros 30.09.2019 30.09.2018 30.06.2019
ASSETS      
Cash and cash equivalents 2 327 2 788 2 583
Receivables and prepayments 3 941 4 219 5 300
Inventories 11 035 11 782 11 980
Biological assets 7 047 7 825 4 924
Total current assets 24 350 26 614 24 787
       
Deferred income tax 58 26 41
Long-term financial investments 202 134 202
Tangible fixed assets 14 536 14 528 14 535
Intangible assets 23 261 23 195 22 969
Total non-current assets 38 057 37 883 37 747
TOTAL ASSETS 62 407 64 497 62 534
       
EQUITY AND LIABILITIES      
Loans and borrowings 13 467 13 242 13 502
Payables 13 796 11 179 14 105
Government grants 126 242 234
Total current liabilities 27 389 24 663 27 841
       
Loans and borrowings 8 745 11 480 9 540
Payables 190 519 190
Deferred tax liabilities 2 192 2 426 2 010
Government grants 1 140 1 306 1 087
Total non-current liabilities 12 267 15 731 12 827
TOTAL LIABILITIES 39 656 40 394 40 668
       
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 48 51
Currency translation reserve 30 31 -214
Retained profit (-loss) 636 2 004 66
Equity attributable to parent 22 071 23 437 21 257
Non-controlling interest 680 666 609
TOTAL EQUITY 22 751 24 103 21 866
TOTAL EQUITY AND LIABILITIES 62 407 64 497 62 534

Consolidated Statement of Profit or Loss And Other Comprehensive Income

Thousand euros 3Q 2019 3Q 2018 12m 2018/2019 12m 2017/2018
Sales 19 329 19 393 85,727 94,871
Cost of goods sold -16 747 -16 437 -73,830 -81,694
Gross profit 2 582 2 956 11,897 13,177
         
Operating expenses -2 598 -2 623 -10,702 -10,007
  Selling and distribution expenses -1 792 -1 843 -7,499 -7,125
  Administrative expenses -806 -780 -3,203 -2,882
Other income / expense 128 167 83 -162
Fair value adjustment on biological assets 846 73 -1,744 -674
Operating profit (loss) 958 573 -466 2,334
Financial income/-expenses -203 -222 -776 -936
Profit (loss) before tax 755 351 -1,242 1,398
Income tax -185 -209 -230 -399
Net profit (loss) for the period 570 142 -1,472 999
         
Net profit (loss) attributable to:        
Owners of the company 513 99 -1 458 1,001
Non-controlling interests 57 43 -14 -2
Total net profit (loss) 570 142 -1,472 999
         
Other comprehensive income (loss) that may subsequently be classified to profit or loss:        
Foreign currency translation differences 315 24 -221 -410
Total comprehensive income (expense) 885 166 -1,693 589
         
Total comprehensive income (expense) attributable to:        
Owners of the Company 828 123 -1 679 591
Non-controlling interests 57 43 -14 -2
Total comprehensive income (expense) for the period 885 166 -1 693 589
         
Profit (loss) per share (EUR) 0,02 0,00 -0,04 0,02
         
Diluted profit (loss) per share (EUR) 0,02 0,00 -0,04 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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