PRFoods

Annual Report • Oct 31, 2024

PRFoods Consolidated Audited Annual Report 2023/2024

Management Commentary

The financial year 2023/2024 will go down in PRFoods' history as a year full of
changes. In the winter of 2023, we exited the rainbow trout farming business
located in Saaremaa through the sale of Redstorm OÜ. This exit from fish farming
was a necessary step to reduce the Group's debt burden and to focus on and
strengthen our core activities. To ensure the supply of local fish, a long-term
cooperation agreement has been signed with Redstorm OÜ for the resale and
processing of the fish they produce, to meet the needs of the Group's Estonian
fish processing unit. The collaboration between the two companies ensures that
the Group's production unit in Saaremaa can offer fish products made from
rainbow trout farmed in Estonia in its product range.

The year also brought changes to the Group's management structure. In the spring
of 2024, we completed changes in the parent company's management. The entire
Group has focused on improving the quality of management. Our Group companies
support each other, share knowledge and expertise, and strive to create greater
synergy to make the Group more efficient and profitable.

We take particular pride in the development of our Saaremaa unit. In 2024, we
are entering new export markets, such as Asia and North America. Additionally,
at the beginning of 2024, we re-entered the Finnish export market. We are proud
and grateful to our sales and production teams in Saaremaa, whose successful
efforts have demonstrated strong turnover growth in the Saaremaa unit. We
continue our efforts for growth, aiming to make the Saaremaa unit profitable as
well. There is still work to be done in building the Saaremaa unit, but we can
now see that the chosen strategy is starting to bear fruit.

We also recognize our UK unit, which, despite crises and the volatile situations
that accompany them, has maintained a positive profit margin. The Scottish
management has shown resilience, upholding the level of the region's most well-
known fish brand and their vision for development.

In the new financial year, the focus will be on mitigating liquidity risks
stemming from the Group's high debt burden. Although the Group has undergone
several restructuring efforts in recent years to improve cash flow, including
cost reductions, exiting unprofitable or low value-added businesses, and
reducing debt, the Group's debt burden and net debt remain high. We can confirm
that the new management team has a clear focus and strategy in place, having
learned from past decisions. To ensure the Group's operational sustainability
and protect the interests of PRFoods AS investors and all Group employees, the
Group's management plans to restructure its debt obligations. The Group's
management, together with the management of its subsidiaries, is committed to
finding a solution that meets the expectations of all stakeholders. At the same
time, the Group will continue its strategy to improve profitability in both
Estonia and the UK.

The Group's team is dedicated, crisis-experienced, and results-oriented. We
sincerely thank all Group employees for their commitment and our investors for
their trust and cooperation.

Going concern

The management draws attention to a significant issue that raises substantial
doubt about the Group's ability to continue as a going concern as of the
reporting date, which may prevent the Group from realizing its assets and
meeting its obligations in the normal course of business.

As of 30.06.2024, the Group's current liabilities amounted to 13,458 thousand
euros, exceeding current assets by 9,226 thousand euros. A significant portion
of the Group's current liabilities consists of interest-bearing debt obligations
totalling 10,899 thousand euros as of 30.06.2024. The most significant portion
of current liabilities consists of listed bonds with a carrying amount of 9,417
thousand euros. Given the redemption date of the listed bonds (22.01.2025), the
repayment of these bonds is associated with the greatest uncertainty,
considering the Group's high debt burden and the fact that, by the time of the
bond redemption, the Group does not have sufficient liquid assets to meet the
bond's maturity obligations. Therefore, in the management's view, the repayment
of short-term interest-bearing liabilities involves significant uncertainty.

To ensure the sustainability of the Group's operations and protect the interest
of PRFoods AS investors and all Group employees, the management plans to
restructure the liabilities. The restructuring plan will be presented to
bondholders within the fourth quarter of this calendar year.

Differences between the Q4 2023/2024 Report and the 12-Month Report

AS PRFoods published its Q4 2023/2024 and 12-month report on 30.08.2024. The net
loss for the reporting year presented in the interim report was 2,784 thousand
euros. In the audited annual report, the disclosed net loss is 4,673 thousand
euros, indicating that the final net loss increased by 68% compared to the net
loss presented in the quarterly report. The increase in the net loss is
primarily due to an impairment identified in the cash-generating unit in the
goodwill impairment test segment (United Kingdom). As a result of the impairment
test, the goodwill was assessed to be reduced by 1,897 thousand euros during the
reporting year, explaining the difference from the net loss results in the
quarterly report. The impairment was not reflected in the quarterly report
because, at the time of preparing the quarterly report, the market information
necessary to determine the fair value of the UK segment's cash-generating unit
had not yet been published. Therefore, the Group's management could not perform
the goodwill asset value test.

Key Ratios Of The Group

Consolidated statement of financial position

EUR '000 30.06.2024 30.06.2023

ASSETS

Cash and cash equivalents 203 394

Trade and other receivables 2,212 1,815

Prepayments 173 304

Inventories 1,644 1,860

Biological assets 0 772

Total current assets 4,232 5,145

Long-term financial investments 418 381

Tangible assets 4,164 6,563

Intangible assets 13,102 18,157

Total non-current assets 17,684 25,101

TOTAL ASSETS 21,916 30,246

EQUITY AND LIABILITIES

Interest-bearing liabilities 10,899 2,111

Trade and other payables 2,559 3,035

Total current liabilities 13,458 5,146

Interest-bearing liabilities 3,600 15,024

Deferred tax liabilities 1,420 1,466

Government grants 247 317

Total non-current liabilities 5,267 16,807

TOTAL LIABILITIES 18,725 21,953

Share capital 7,737 7,737

Share premium 14,007 14,007

Treasury shares -390 -390

Statutory capital reserve 51 51

Currency translation differences 439 609

Retained profit (loss) -18,653 -13,981

Equity attributable to parent 3,191 8,033

Non-controlling interest 0 260

TOTAL EQUITY 3,191 8,293

TOTAL EQUITY AND LIABILITIES 21,916 30,246

Consolidated statement of profit or loss and other comprehensive income

EUR '000 2023/2024 2022/2023

Revenue 17,086 19,578

Cost of goods sold -13,888 -16,004

Gross profit 3,198 3,574

Operating expenses -4,623 -4,693

Selling and distribution
expenses -2,663 -2,691

Administrative expenses -1,960 -2,002

Other income / expense -1,882 150

Operating profit (loss) -3,307 -970

Financial income / expenses -1,057 -1,210

Share of result of associates
and joint ventures 46 153

Profit (loss) from the sale of
the subsidiary -271 2,423

Profit (Loss) before tax -4,589 396

Income tax -84 -65

Net profit (loss) for the period -4,673 331

Net profit (loss) attributable
to:

Owners of the Parent Company -4,668 303

Non-controlling interests -4 28

Total net profit (loss) for the
period -4,673 331

Other comprehensive income
(loss) that may subsequently be
classified to profit or loss:

Foreign currency translation
differences -169 -231

Total comprehensive income
(expense) -4,842 101

Total comprehensive income
(expense) attributable to:

Owners of the Parent Company -4,837 73

Non-controlling interests -4 28

Total comprehensive income
(expense) for the period -4,842 101

Kristjan Kotkas Timo Pärn

Member of the Management Board Member of the Management Board

[email protected]
(mailto:[email protected])

www.prfoods.ee (http://www.prfoods.ee)