PRF: Consolidated Unaudited Interim Report of AS PRFoods for 3rd quarter and 9 months of 2018/2019 financial year
Overview of the economic activities
Management commentary
We remind you that since we changed our financial year, the previous financial year was 18 months long. The current financial year that began on 01.07.2018 is of standard length and ends on 30.06.2019. The comparable data presented in the report stems from comparable periods: the 3rd quarter of the current financial year i.e. the 1st quarter of 2019 is compared to the 1st quarter of 2018, and 9 months of the financial year i.e. the period from 01.07.2018 till 31.03.2019 is compared to the period from 01.07.2017 till 31.03.2018.
PRFoods’ sales in Q3 of the financial year 2018/2019 were 18.1 million euros (same period previous year 22.7 million euros) and 9-months’ sales were 64.2 million euros (72.7 million euros). Decrease of sales is largely attributable to slower sales from Estonia to Finland and a decrease of trading revenue i.e. sales of raw fish in Finland.
At the same time the decrease of gross profit was substantially less. In Q3 of 2018/2019 gross profit was 2.1 million euros compared to 2.4 million euros last year. Hence, we managed to increase gross profit margin in Q3, but not yet achieve the required sales levels. 9-months gross profit was 9.8 million euros compared to 11.4 million euros last year.
The Group’s EBITDA in Q3 was -0.5 million euros (last year 0.6 million euros). 9-months’ EBITDA was 1.4 million euros compared to 4.1 million euros last year. EBITDA was negatively affected mainly by extraordinarily weak result from the Estonian unit, which continued to some extent into Q3.
The Group’s consolidation unit’s, Saaremere Kala’s EBITDA forecast for 2018/2019 full financial year is 4.3 million euros (this does not include expenses related to the Group’s holding company PRFoods).
2018/2019 financial year’s primary activities are mainly focussed on changing the product portfolio, and to exit lower margin products, which has caused significant decrease in comparable sales. Higher gross margins do not yet compensate for lost sales in overall profit. Only in April we managed to increase sales year-on-year basis. Also, a decrease in fish prices had a negative effect on biomass valuation (compared to last year, in Q3 the difference was -0.3 million euros, on 9-months basis -0.2 million euros).
When analysing the Group’s activities on country basis, we are happy to declare that our main Finnish unit, Heimon Kala, achieved 82% higher EBITDA in Q3 than last year. Trio Trading is still making loss both in Q3 and 9-months basis, and we have since launched a radical cost cutting programme there.
The biggest decrease in the performance comes from Estonia. The loss is mainly attributable to two causes: higher personnel costs and ca 1.5 million euros lower sales to Finland. We cannot be happy with the performance of Estonian unit. At the same time, the Estonian unit has managed to increase domestic sales by 700,000 euros, mainly to retail segment and bigger ship handlers.
In the UK, we finished the transfer of production from Coln Valley to Aberdeen in April, which will cause ca 200,000 euros extra costs for termination of Coln Valley factory rental agreement in Q4. At the same time, long-term savings amount to 500,000 euro over the next 7 years.
The Group’ balance sheet continues to be good, we have 6,2 million euros cash balance (last year same time 7.1 million euros).
In Q3 we launched a significant synergy and cost cutting programme. According to plans already realized, we have reduced thanks to the group synergies, costs in Trio Trading on annual basis by 480,000 euros. In Estonia similar measures amount presumably to 360,000 euros in annual savings. The Group’s target is to reduce costs in the next financial year by at least 1 million euros.
While we cannot be content with the speed of restructurings in our production and sales units, we have achieved positive developments in our fish farming unit. We expect additional farming licences from Sweden already this year. In Estonia, the authorities have started the official process for environmental impact analysis, which we hope to complete in 2019, so we could start preparing for new fish farms in Estonia already in 2020. In case of positive developments, we can increase our farming capacity by at least 5000 tons in coming years. We have also launched a project to study the feasibility of fish farms in Paldiski, Estonia.
By the end of 2018/2019 financial year, we have started synergy and cost optimisation programmes in all of the Group companies and in the next year we aspire to achieve significantly bigger sales compared to the current year.
3rd quarter of the financial year 2018/2019 (i.e., hereinafter 1st quarter of 2019) compared to the 1st quarter of 2018:
- Unaudited consolidated revenue 18.12 million euros, a decrease by 4.62 million euros, i.e. 20.3%.
- Gross margin 11.7% (1Q 2018: 10.6%).
- Negative impact from revaluation of biological assets 0.46 million euros (1Q 2018: negative impact 0.12 million euros).
- Negative effect of one-offs on the result 0.20 million euros (1Q 2018: negative impact 0.004 million euros).
- EBITDA from operations 0.21 million euros, a decrease by 0.49 million euros.
- EBITDA -0.45 million euros, a decrease by 1.03 million euros (without one-off effects EBITDA -0.25 million euros, a decrease by 0.83 million euros).
- Operating loss 1.01 million euros, a decrease by 1.07 million euros (without one-off effects operating loss 0.81 million euros, a decrease by 0.87 million euros).
- Net loss 1.20 million euros, an increase by 0.98 million euros. (without one-off effects net loss 0.99 million euros, an increase by 0.78 million euros).
9 months of the financial year 2018/2019 compared to 9 months of 2017/2018:
- Unaudited consolidated revenue 64.24 million euros, a decrease by 8.48 million euros, i.e. -11.7%.
- Gross margin 15.2% (9m 2017/2018: 15.7%).
- Negative impact from revaluation of biological assets 2.01 million euros (9m 2017/2018: negative impact 1.77 million euros).
- Negative effect of one-offs on the result 0.23 million euros (9m 2017/2018: negative impact 0.29 million euros).
- EBITDA from operations 3.69 million euros, a decrease by 2.51 million euros.
- EBITDA 1.45 million euros, a decrease by 2.70 million euros (without one-off effects EBITDA 1.68 million euros, a decrease by 2.75 million euros).
- Operating loss 0.21 million euros, a decrease by 2.78 million euros (without one-off effects operating profit 0.03 million euros, a decrease by 2.83 million euros).
- Net loss 0.83 million euros, a decrease by 2.96 million euros (without one-off effects net loss 0.60 million euros, a decrease by 3.01 million euros).
Quarterly presentation will be published on our website latest at 24th of May.
KEY RATIOS
| Income Statement, EUR mln | 1Q 2019 | 4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 | 4Q 2017 | 3Q 2017 |
| Sales | 18.1 | 26.7 | 19.4 | 22.1 | 22.7 | 32.0 | 18.0 |
| Gross profit | 2.1 | 4.7 | 3.0 | 1.8 | 2.4 | 6.6 | 2.5 |
| EBITDA from operations | 0.2 | 2.4 | 1.1 | -0.2 | 0.7 | 4.3 | 1.2 |
| EBITDA | -0.5 | 0.8 | 1.1 | 0.3 | 0.6 | 1.6 | 2.0 |
| EBIT | -1.0 | 0.2 | 0.6 | -0.2 | 0.1 | 1.0 | 1.5 |
| EBT | -1.2 | 0.0 | 0.4 | -0.5 | -0.2 | 0.8 | 1.3 |
| Net profit (-loss) | -1.2 | 0.2 | 0.1 | -1.1 | -0.2 | 1.2 | 1.1 |
| Gross margin | 11.7% | 17.7% | 15.2% | 7.9% | 10.6% | 20.5% | 13.6% |
| Operational EBITDA margin | 1.1% | 9.1% | 5.4% | -1.1% | 3.1% | 13.4% | 6.7% |
| EBITDA margin | -2.5% | 2.9% | 5.8% | 1.2% | 2.5% | 4.9% | 11.1% |
| EBIT margin | -5.6% | 0.9% | 3.0% | -1.1% | 0.2% | 3.1% | 8.5% |
| EBT margin | -6.5% | 0.1% | 1.8% | -2.3% | -0.9% | 2.5% | 7.3% |
| Net margin | -6.6% | 0.8% | 0.7% | -5.1% | -1.0% | 3.9% | 6.2% |
| Operating expense ratio | 14.1% | 11.2% | 13.5% | 12.0% | 10.5% | 9.3% | 11.1% |
| Balance Sheet, EUR mln | 31.03.2019 | 31.12.2018 | 30.09.2018 | 30.06.2018 | 31.03.2018 | 31.12.2017 |
| Net debt | 18.7 | 20.0 | 21.9 | 18.1 | 16.7 | 16.6 |
| Equity | 23.3 | 24.2 | 24.1 | 23.3 | 24.3 | 24.7 |
| Working capital | -1.6 | 1.0 | 2.0 | 2.8 | 4.6 | 5.3 |
| Assets | 63.5 | 65.5 | 64.5 | 65.5 | 66.4 | 68.6 |
| Liquidity ratio | 0.9x | 1.0x | 1.1x | 1.1x | 1.2x | 1.2x |
| Equity ratio | 36.7% | 37.0% | 37.4% | 35.6% | 36.6% | 36.0% |
| Debt to total assets | 44.5% | 45.2% | 47.6% | 43.7% | 40.7% | 40.1% |
| Gearing ratio | 0.6x | 0.6x | 0.6x | 0.6x | 0.6x | 0.6x |
| Net debt-to-EBITDA | 5.4x | 5.1x | 3.8x | 3.1x | 2.6x | 3.1x |
| ROE | -8.2% | -4.0% | 0.1% | 0.2% | 8.6% | 5.8% |
| ROA | -3.0% | -1.5% | 0.0% | 0.1% | 4.1% | 2.7% |
Consolidated statement of financial position
| EUR '000 | 31.03.2019 | 31.03.2018 | 30.06.2018 |
| ASSETS | |||
| Cash and cash equivalents | 6,219 | 7,128 | 5,960 |
| Receivables and prepayments | 4,252 | 5,773 | 4,706 |
| Inventories | 11,409 | 13,495 | 12,678 |
| Biological assets | 2,894 | 4,560 | 6,498 |
| Total current assets | 24,774 | 30,956 | 29,842 |
| Deferred income tax | 17 | 214 | 153 |
| Long-term financial investments | 135 | 102 | 134 |
| Tangible fixed assets | 14,842 | 12,896 | 12,764 |
| Intangible assets | 23,714 | 22,233 | 22,604 |
| Total non-current assets | 38,708 | 35,445 | 35,655 |
| TOTAL ASSETS | 63,482 | 66,401 | 65,497 |
| EQUITY AND LIABILITIES | |||
| Loans and borrowings | 14,598 | 11,615 | 12,562 |
| Payables | 11,563 | 14,521 | 14,254 |
| Government grants | 245 | 265 | 216 |
| Total current liabilities | 26,406 | 26,401 | 27,032 |
| Loans and borrowings | 10,296 | 12,229 | 11,487 |
| Payables | 388 | 0 | 0 |
| Deferred tax liabilities | 1,918 | 2,233 | 2,441 |
| Government grants | 1,198 | 1,216 | 1,226 |
| Total non-current liabilities | 13,800 | 15,678 | 15,154 |
| TOTAL LIABILITIES | 40,206 | 42,079 | 42,186 |
| 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 | 48 |
| Currency translation reserve | 556 | 112 | 7 |
| Retained profit (-loss) | 576 | 2,736 | 1,904 |
| Equity attributable to parent | 22,537 | 24,250 | 23,313 |
| Non-controlling interest | 739 | 72 | -2 |
| TOTAL EQUITY | 23,276 | 24,322 | 23,311 |
| TOTAL EQUITY AND LIABILITIES | 63,482 | 66,401 | 65,497 |
Consolidated statement of profit or loss and other comprehensive income
| EUR '000 | 1Q 2019 | 1Q 2018 | 9m 2018/2019 | 9m 2017/2018 | 18m 2017/2018 |
| Sales | 18,120 | 22,740 | 64,242 | 72,722 | 118,499 |
| Cost of goods sold | -15,999 | -20,332 | -54,447 | -61,299 | -103,811 |
| Gross profit | 2,121 | 2,408 | 9,795 | 11,423 | 14,688 |
| Operating expenses | -2,561 | -2,387 | -8,180 | -7,349 | -12,423 |
| Selling and distribution expenses | -1,775 | -1,695 | -5,702 | -5,201 | -8,841 |
| Administrative expenses | -786 | -692 | -2,478 | -2,148 | -3,582 |
| Other income / expense | -114 | 152 | 189 | 266 | -250 |
| Fair value adjustment on biological assets | -457 | -118 | -2,012 | -1,773 | -524 |
| Operating profit (-loss) | -1,011 | 55 | -208 | 2,567 | 1,491 |
| Financial income | 17 | 2 | 36 | 5 | 10 |
| Financial expenses | -189 | -258 | -643 | -671 | -1,034 |
| Profit (-loss) before tax | -1,183 | -201 | -815 | 1,901 | 467 |
| Income tax | -13 | -18 | -17 | 223 | -410 |
| Net profit (-loss) for the period | -1,196 | -219 | -832 | 2,124 | 57 |
| Net profit (-loss) attributable to: | |||||
| Owners of the company | -1,177 | -227 | -948 | 2,052 | 59 |
| Non-controlling interests | -19 | 8 | 116 | 72 | -2 |
| Total net profit (-loss) | -1,196 | -219 | -832 | 2,124 | 57 |
| Other comprehensive income (-loss) that may subsequently be classified to profit or loss: | |||||
| Foreign currency translation differences | 626 | -61 | 549 | -305 | -421 |
| Total comprehensive income (-expense) | -570 | -280 | -283 | 1,819 | -364 |
| Total comprehensive income (-expense) attributable to: | |||||
| Owners of the Company | -551 | -288 | -399 | 1,747 | -362 |
| Non-controlling interests | -19 | 8 | 116 | 72 | -2 |
| Total comprehensive income (-expense) for the period | -570 | -280 | -283 | 1,819 | -364 |
| Profit (-loss) per share (EUR) | -0.01 | -0.01 | -0.01 | 0.05 | -0.01 |
| Diluted profit (-loss) per share (EUR) | -0.01 | -0.01 | -0.01 | 0.05 | -0.01 |
Indrek Kasela
AS PRFoods
Member of the Management Board
Phone:
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