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Consolidated Unaudited Interim Report of AS PRFoods for the 2nd quarter and 6 months of

MANAGEMENT COMMENTARY

Second half of 2020 is characterized by continuation of COVID crisis. Salmon prices are 12-year low and compared to the same period last year, salmon prices are down 38% and rainbow trout is down by 22.5%. Adding to this global decrease in demand due to shutdown of HoReCa and you can call the situation as ?perfect storm". Companies who emerge from this crisis unscathed will be future winners. Arrival of vaccines is giving hope that we can see some normalization during 2nd half of 2021. 2022 will definitely be more profitable year in Fish farming as farmers can plan better the demand. Today's farming volumes were planned before crisis and therefore there is massive oversupply in the market and most Fish farmers operate either at loss or at break-even. John Ross Jr has shown extraordinary resilience in current crisis and is forecasted to end current financial year with similar result as to year before, gross margin of the business has risen over 50%. Estonian operations and cost base has been adjusted to the changed market situation. Unfortunately we cannot say the same about Finland and we plan to carry out significant restructuring of Finnish business during Q1.

The group ended Q4 already in profit, but due to significantly lower sales, our operational EBITDA margin was 3.4% compared to 8.4% year before (consolidated EBITDA margin 4.1% and 5.3% accordingly). Production cost base cannot be adjusted to such drastic market changes without bigger restructuring. Yet we have managed to decrease costs in Finnish unit by 75,000 euros per month from beginning of the year and see further avenues for decreasing costs. At the same time we cannot ignore the fact that sales need to be recovered, particularly in Finland.

The focus in the beginning of the year is to adjust cost base to the market situation, improving liquidity of the business and larger focus in Baltics and

Scandinavia on Fish farming which continues to be the most promising area in business. John Ross Jr has adjusted extremely well to the crisis and despite loss of some sales in first 6 months of current financial year, has increased its profitability due to lower raw material prices.

Thanks to lower cost base, we believe, that we will finish 2020/2021 II half and entire financial year with positive EBITDA.

KEY RATIOS

INCOME STATEMENT

+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ mln EUR								4Q 2020 3Q 2020 2Q 2020 1Q 2020 4Q 2019 3Q 2019 2Q 2019 1Q 2019
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Sales	17.0	12.7	15.1	18.5	25.4	19.3	21.5	18.1
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Gross profit	2.5	1.2	0.7	2.0	4.3	2.6	2.1	2.1
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBITDA from operations +--------------+-------+-------+-------+-------+-------+-------+-------+-------+	0.6	-0.3	-0.4	0.0	2.1	0.7	0.3	0.2
EBITDA	0.7	-0.5	-0.4	-0.9	1.4	1.5	0.3	-0.5
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBIT	0.0	-1.1	-1.0	-1.4	0.7	1.0	-0.3	-1.0
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBT	-0.1	-1.4	-1.2	-1.8	0.6	0.8	-0.4	-1.2
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Net profit (- loss)	-0.2	-1.4	-1.3	-1.7	0.5	0.6	-0.6	-1.2
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Gross margin	14.9%	9.4%	4.6%	10.8%	17.0%	13.4%	9.8%	11.7%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Operational EBITDA margin	3.4%	-2.6%	-2.6%	0.1%	8.4%	3.8%	1.4%	1.1%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBITDA margin	4.1%	-3.8%	-2.6%	-4.6%	5.3%	7.6%	1.4%	-2.5%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBIT margin	0.2%	-8.8%	-6.4%	-7.8%	2.9%	5.0%	-1.2%	-5.6%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ EBT margin		-0.6% -11.3%	-8.1%	-9.8%	2.2%	3.9%	-2.0%	-6.5%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Net margin		-1.2% -11.3%	-8.4%	-9.2%	2.0%	2.9%	-3.0%	-6.6%
+--------------+-------+-------+-------+-------+-------+-------+-------+-------+ Operating expense ratio +--------------+-------+-------+-------+-------+-------+-------+-------+-------+	15.6%	18.2%	13.9%	14.3%	12.5%	13.4%	11.7%	14.1%

BALANCE SHEET

mln EUR		$\mid$ 31.12.2020 $\mid$ 30.09.2020 $\mid$ 30.06.2020 $\mid$ 31.03.2020 $\mid$ 31.12.2019 $\mid$ 30.09.2019 $\mid$ 30.06.2019 $\mid$
Net debt	21.9	21.5	20.7	17.0	17.8	19.9	20.5
Equity	18.6	18.5	19.8	21.6	23.3	22.8	21.9
Working capital	$-3.9$	$-4.4$	$-4.0$	$-2.5$	$-3.5$	$-3.0$	$-3.1$
Assets	57.5	57.4	57.1	56.9	60.5	62.4	62.5
Liquidity ratio	0.8x	0.8x	0.8x	0.9x	0.9x	0.9x	0.9x
Equity ratio	$32.4$ ⁸	32.3%	34.7%	$37.9$ $ $	$38.5$ ⁸	36.5%	35.0%
Gearing ratio		$54.0$ ⁸ $53.7$ ⁸	51.1%		$44.0$ ⁸ $ $ $43.3$ ⁸	$46.6$ ⁸	48.3%
Debt to total assets	0.7x	0.7x	0.7x	0.6x	0.6x	0.6x	0.7x
Net debt to EBITDA op	160.0x	12.8x	7.5x	5.3x	5.3x	5.4x	5.1x
ROE	$-21.9$ $ $	$-7.0$ $ $	$-9.1%$	$-5.7%$	$-3.2$ $ $	$-4.5%$	$-6.5%$
ROA	$-7.8$	$-2.4%$	$-3.2%$	$-2.1$ $ $	$-1.2$ $ $	$-1.6%$	$-2.3%$

Consolidated Statement of Financial Position

Thousand euros			$31.12.2020$ $31.12.2019$ $30.06.2020$
ASSETS
Cash and cash equivalents	962 l	2 680	2 276
Receivables and prepayments	4,153	6,342	3,578

Inventories	9,627	9,104	7,884
Biological assets	3,702	4,354	4,249
Total current assets	18,444	22,480	17,987

Deferred income tax	21	66	54
Long-term financial investments	232	217	232
Tangible fixed assets	15,968	14,444	16,179
Intangible assets	22,841	23,286	22,672
Total non-current assets	39,062	38,013	39,137
TOTAL ASSETS	57,506	60,493	57,124

EQUITY AND LIABILITIES
Loans and borrowings	9,634	12,505	10,611
Payables	12,469	13,301	11,132
Government grants	212	188	211
Total current liabilities	22,315	25,994	21,954

Loans and borrowings	13,254	7,945	12,368
Payables	596	190	190
Deferred tax liabilities	1,912	2,070	1,920
Government grants	785	981	873
Total non-current liabilities	$16,547$	11,186	15,351
TOTAL LIABILITIES	38,862	37,180	37,305

Share capital	7,737	7,737	7,737
Share premium	14,197	$14,007$	$14,007$
Treasury shares	$-390$	$-390$	$-390$
Statutory capital reserve	51	51	51
Currency translation reserve	-98	167	-366
Retained profit (-loss)	$-3,246$	1,108	-1,654
Equity attributable to parent	18,252	22,680	19,385
Non-controlling interest	392	633	434
TOTAL EQUITY	18,644	23,313	19,819
TOTAL EQUITY AND LIABILITIES	57,506	60,493	57,124

Consolidated Statement of Profit or Loss And Other Comprehensive Income

Thousand euros		2Q 2020/2021 2Q 2019/2020	$6$ months 2020/2021	$6$ months 2019/2020
Sales	17,029	25,374	29,766	44,703
Cost of goods sold	$-14,496$	$-21,049$	$-26,033$	$-37,796$
Gross profit	2,533	4,325	3,733	6,907

Operating expenses	$-2,663$	$-3,169$	$-4,985$	$-5,767$
Selling and distribution expenses	$-1,809$	$-2,146$	$-3,367$	$-3,938$
Administrative expenses	$-854$	$-1,023$	$-1,618$	$-1,829$
Other income / expense	46	206	137	334

Fair value adjustment on biological assets	118	$-622$	24	224
Operating profit (loss)	34	740	$-1,091$	1,698
Financial income/- expenses	$-129$	$-190$	$-438$	$-393$
Profit (loss) before tax	$-95$	550	$-1,529$	1,305
Income tax	$-101$	$-54$	$-105$	$-239$
Net profit (loss) for the period	$-196$	496	$-1,634$	1,066

Net profit (loss) attributable to:
Owners of the company	$-190$	529	$-1,592$	1,042
Non-controlling interests	$-6$	$-33$	$-42$	24
Total net profit (loss)	$-196$	496	$-1,634$	1,066

Other omprehensive income (loss) that may subsequently be classified to profit or loss:
Foreign currency translation differences	169	66	268	381
Total comprehensive income (expense)	$-27$	562	$-1,366$	1,447

Total comprehensive income (expense) attributable to: +--------------------+------------+------------+---------------+---------------+
Owners of the Company +--------------------+------------+------------+---------------+---------------+	-21	595	-1,324	1,423
Non-controlling interests +--------------------+------------+------------+---------------+---------------+	-6	-33	-42	24
Total comprehensive income (expense) for the period +--------------------+------------+------------+---------------+---------------+	-27	562	-1,366	1,447
+--------------------+------------+------------+---------------+---------------+
Profit (loss) per share (EUR) +--------------------+------------+------------+---------------+---------------+	0.00	0.01	-0.04	0.03
+--------------------+------------+------------+---------------+---------------+
Diluted profit (loss) per share (EUR) +--------------------+------------+------------+---------------+---------------+	0.00	0.01	-0.04	0.03

Indrek Kasela

AS PRFoods

Member of the Management Board

Phone:+372 452 1470

[email protected]

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