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PRFoods Consolidated Audited Annual Report 2021/2022

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PRFoods Consolidated Audited Annual Report 2021/2022

Management Commentary

The  2021/2022 financial year led  to major changes  in the corporate structure.
The  persistently loss-making Finnish unit, Heimon  Kala Oy, was disposed of. In
this  regard, PRFoods incurred  extraordinary losses of  EUR 2.3 million (Heimon
Kala  Oy operational loss  from last year  until sale of  business was  EUR -2.4
million.  In addition Saare Kala Tootmine OÜ incurred EUR -1.1 million loss form
sale  to Finland  of Heimon  Kala products.  Saaremere Kala OÜ additional losses
mostly related to Finland were EUR -0.5 million).
Överumans  Fisk  AB  was  also  disposed   after  the end of the financial year.
Following  the disposal  of these  business units,  the Group's  structure is as
follows:   fully owned subsidiaries  of 100% Saaremere Kala  AS (100% Saare Kala
Tootmine  OÜ (formerly Heimon Kala Eesti OÜ),  JRJ & PRF UK Ltd (holding company
of John Ross Jr. and Coln Valley)), daughter company Redstorm OÜ.
In addition, Saaremere Kala AS has applied for fish farming licences in Saaremaa
and  Hiiumaa, and once these  licences have been granted,  a new company will be
established for their use.
The  disposal of Heimon Kala  Oy also changed the  Group's sales structure, with
sales in Finland continuing to be outsourced through Kalaneuvos Oy.
The  company's debt  burden has  decreased significantly  since the  sale of the
business units. The remaining debt obligations are related to two loans from the
Rural Development Foundation (Maaelu Edendamise Sihtasutus) and bonds. All other
bank loans or major leasing arrangements  have been repaid.
The company's sustainability is ensured by improved economic performance. In the
current  financial year, both the UK unit  and the fish farming unit are already
profitable.  The results of  the fish processing  activities in Estonia have not
changed  compared to  the same  time last  year, but  owing to the significantly
reduced  cost  base  we  also  expect  a  return  to profitability in Saare Kala
Tootmine OÜ.
PRFoods  may dispose  of additional  significant assets  in order  to ensure the
fulfilment  of  its  debt  obligations  in  relation  to  the  changed  economic
activities.
The  development of fish farming activities in Estonia is expected to ensure the
Group's  long-term profitability,  which will  also enable  it to  service debts
under the existing structure.
The  Group is  also well  protected against  inflationary pressures.  To a large
extent,  it has been able to  pass cost increases on to  the prices of the final
products.  In addition, the company uses  to some extent renewable energy, which
allows  the Estonian unit  to be partially  independent of the  prices of energy
carriers. Moreover, fish farming is highly energy efficient, as there is no need
for external energy carriers to be used in the handling of sea cages.
In  terms of labour costs, there has  been a significant reduction in overheads,
in accordance with actual needs, and we will continue with cost savings into the
future.  Another high priority, however, is to restore the increase in the sales
of  products from  the Estonian  factory in  particular as,  due to the elevated
prices, the demand for final products has decreased to a very significant extent
in Estonia and Finland. At the same time, we can see better results in regard to
exports.  In 2022/2023, we will develop  joint portfolios and consolidated sales
offers  for the UK  and Estonian products,  which had not  materialised up until
now, as Finland and Estonia focused on private label products in previous years.
PRFoods  is  the  only  offshore  fish  farming  company  in  Estonia today. The
establishment  of marine  fish farms  in Estonia  is essential for the country's
food  security  and  environmental  sustainability.  This  is  also  foreseen in
Estonia's   national   agriculture   strategy.   The  blue  economy  contributes
significantly  to  reducing  the  environmental  burden  of  food production and
consumption,  and it ensures food security from the point of view of the country
as  a whole.  It also  has a  sizable impact  on the  creation of  high-paid and
skilled jobs at regional level.

Enclosed is link to the audited annual report :

PRF annual report 2021_2022 FINAL audited (http://ml-
eu.globenewswire.com/Resource/Download/fb6f56f4-2d2d-4b78-9f7d-f61f8e30a032)

KEY RATIOS OF THE GROUP

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 INCOME
 STATEMENT
 mln EUR     Formula /
 (unless     Comment
 stated
 otherwise)                 2021/ 2022 2020/ 2021 2019/ 2020 2018/ 2019  2017/2018

 Sales                            42,1       58,7       78,3       85,7       94,9

 Gross       Net sales -
 profit      Cost of goods
             sold                  3,1        5,0        9,6       11,9       13,2

 EBITDA from Profit before
 operations  one-offs and
             fair value
             adjustment on
             biological
             assets               -1,7       -1,2        2,8        4,0        6,0

 EBITDA      Profit (Loss)
             before
             financial
             income and
             costs, tax,
             depreciation
             and
             amortisation         -2,1       -1,3        1,9        1,7        4,4

 EBIT        Operating
             profit (loss)        -4,2       -3,9       -0,7       -0,5        2,3

 EBT         Profit (loss)
             before tax           -7,7       -5,0       -1,8       -1,2        1,4

 Net profit
 (-loss)                          -7,7       -5,2       -1,9       -1,5        1,0

 Gross       Gross profit /
 margin      Net sales            7,4%       8,5%      12,2%      13,9%      13,9%

 Operational EBITDA from
 EBITDA      operations/Net
 margin      sales               -4,1%      -2,1%       3,5%       4,7%       6,3%

 EBITDA      EBITDA /Net
 margin      sales               -5,1%      -2,1%       2,4%       2,0%       4,7%

 EBIT margin EBIT / Net
             sales               -9,9%      -6,6%      -0,9%      -0,5%       2,5%

 EBT margin  EBT / Net
             sales              -18,3%      -8,5%      -2,2%      -1,4%       1,5%

 Net margin  Net profit
             (loss) / Net
             sales              -18,2%      -8,8%      -2,4%      -1,7%       1,1%

 Operating   Operating
 expense     expenses / Net
 ratio       sales               17,1%      16,1%      13,4%      12,5%      10,5%

 BALANCE
 SHEET
 mln EUR     Formula /
 (unless     Comment
 stated
 otherwise)                 30.06.2022 30.06.2021 30.06.2020 30.06.2019 30.06.2018

 Net debt    Short- and
             long-term
             loans and
             borrowings -
             Cash                 24,7       22,4       20,7       20,5       18,1

 Equity                            8,6       15,8       19,8       21,9       23,3

 Working     Current assets
 capital     - Current
             liabilities          -2,7       -3,2       -4,0       -3,1        2,8

 Assets                           39,4       55,6       57,1       62,5       65,5

 Liquidity   Current assets
 ratio       / Current
             liabilities          0,8x       0,8x       0,8x       0,9x       1,1x

 Equity      Equity / Total
 ratio       assets              21,7%      28,4%      34,7%      35,0%      35,6%

 Gearing     Net debt /
 ratio       (Equity + Net
             debt)               74.3%      58,7%      51,1%      48,3%      43,7%

 Debt to     Total
 Asset       debt/Total
             assets               0,8x       0,7x       0,7x       0,7x       0,6x

 Net debt-   Net debt /
 to-EBITDA   EBITDA from
 from        operations
 operations                     -14,5x     -17,9x       7,5x       5,1x       3,0x

 ROE         Net profit
             (loss) /
             Average equity     -63,0%     -29,0%      -9,1%      -6,5%       4,3%

 ROA         Net profit
             (loss) /
             Average assets     -16.1%      -9,2%      -3,2%      -2,3%       2,0%
----------------------------------------------------------------------------------

* consolidating unit is a holding company and forms insignificant part of
operations of the Group, thus the consolidating unit's ratios are not presented

** before one-offs and fair value adjustment of bioassets

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