PRFoods

Quarterly Report • Aug 23, 2021

Company AS PRFoods

Type Company Release

Category Other corporate action

Disclosure time 23 Aug 2021 00:47:10 +0300

Attachments:

• PRF_interim_12m2020_2021.pdf (http://oam.fi.ee/en/download?id=5712)

• PRF_vahearuanne_12k2020_2021.pdf (http://oam.fi.ee/en/download?id=5713)

Currency

Title

Consolidated Unaudited Interim Report of AS PRFoods for the 4nd quarter and 12 months of

MANAGEMENT COMMENTARY

The most difficult year in the history of the group is over. We were attacked from three fronts: from one side, corona crises, caused a situation of drastic drop in prices and demand for fish products, causing drop in gross margin and sales. Secondly, we entered the crisis with very high leverage due to recent acquisitions and were forced by banks to reduce aggressively our loan portfolio. Third, our now-ex management in Finnish unit did not want and could not react to market changes, whereby we accumulated problems there with long-term effect. Dealing with all three criseses simulteanously increased significantly our loss, as we were forced to take decisions, that would have not happened under normal circumstances.

As a result of all this group's sales decreased by 25% to 58,7 million euros ( 78,7 million euros yoy).

As end result we had our first historical EBITDA loss of -1,24 million euros (2,75 million euros yoy) and net loss of -5,1 million euros (-1,9 million euros yoy).

Q4 EBITDA was largely impacted by the fact that raw material prices suddenly increased due to loosening of coroan restrictions, while our Finnish market product end prices were fixed in winter, when raw material prices were significantly lower. This caused a situation in last quarter, where we sold some of our products below COGS. In order to end such practice , we had to terminate our local CEO and notified clients of termination of such contracts.

If to find anything positiive, then group's cash flow from operations was positiive by 2 million euros and total cashflow over the periood improved by 0.51 million euros. We also reduced our net debt and reduced significantly short

term liabilities of the company. Also our fish farming unit posted a better result and was the backbone of our Scandinavian operations. Our biggest problem is that Estonian government is delaying decision to allow sea farming in Estonia, due to which we could not earn significant additional income from last periood.

Our Scottish division was very brave, and even though their sales and net profit decreased by 30%, John Ross Jr still managed to post 1,4 million euros EBITDA. I would also like to thank our Estonian unit, that despite the disappreance of HoReCa, managed to grow each month sales in retail significantly.

The number of employees decreased by ca 10% on annual basis, but obviously the cost base of Finnish unit did not respond to decrease in sales and margins. In summary, we can say that root cause of our problems is Finnish business division.

PRFoodsi action plan to overcome the crisis is:

• 1. Decrease overall debt level through positiive EBITDA and strengthening of equity base.
• 1. Completely restructure Finnish division, either through disposal or closure of loss-making business units. Eliminate totally all low margin products form Finnish sales.
• 1. Increase retail sales in UK, EU markets, including home market Estonia.
• 1. Group'strategic focus is on fish farming, as divisjon that has been profitable every year. Target is to reach by 2023 fish farming võlume of 10,000 tons, giving additional 45-50 million euros in sales.

Group's financial position is not easy. At the same time, we must remember that 11 million euros bonds have been issued solely for refinancing of John Ross Jr. Acquisition and John Ross Jr results have not been impacted so severly, their operational cash flow is very strong and they pay regularly dividends to parent company, therefore we find their leverage to be acceptable. Fish farming requires long term capital for fish feed and this is under works.

Last year we were forced to reduce significantly working capital financing through banks, which put strain on company's finances. We have reduced significantly working capital needs in operations, also through lower inventory. Most important is to restore profitability in the environment of lower sales and restructure loss-making business units.

Having cut our teeth now for second year in corona crisis, we know that it is not sustainable to rely on outside help and all tough decisions need to be taken sooner than later. For our advantage the fish market has started much stronger this year and is more predictable and demand for our products is growing. The only objective of new financial year is profit and everything that blocks our road to profitabilty must be eliminated.

KEY RATIOS

mln EUR								20 2021 1Q 2020 3Q 2020 3Q 2020 2Q 2020 4Q 2019 3Q 2019
Sales	14.7	14.2	17.0	12.7	15.1	18.5	25 . 4	19.3
Gross profit	0 . 3	0 . 9	2.5	1.2	0 . 7	2.0	4 . 3	2.6
EBITDA from operations	-1.0	-0.5	0.61	-0.3	-0.4	0.0	2 . 1	0 . 7
EBITDA	-0.7	-0.7	0 . 7	-0.5	-0.4	-0.9	1.4	1.5
EBIT	-1.4	-1.4	0.0	-1.1	-1.0	-1.4	0 . 7	1.0
EBT	-1.6	-1.8		-0.1 -1.4	-1.2	-1.8 --	0.6	0 . 8
Net profit ( — loss)	-1.7	-1.8	-0.2	-1.4	-1.3	-1.7	0.5	0.6
Gross margin	2.1%		6.6% 14.9%					9.4%
Operational EBITDA margin	-7.0%	-3.5%	3.4%	-2.6%	-2.6%	0.1%	8 . 4%	3 . 8%
EBITDA margin	-4.8% --	-5.3%		4.1%		-2.6%	5 . 3%	7 . 6%
EBIT margin	-9.3%	-9.9%	0 . 2%	-8.8%	-6.4%	-7.8%	2.9%	5 . 0%
EBT marqin	-10.8%	-12.5%	-0.6%	-11.3%	-8.1%	-9.8%	2 . 2%	3.9%
Net margin		-11.6% -12.5%		-1.2% -11.3%	-8.4%	-9.2%	2 . 0%	2 . 9%
Operating expense ratio 15.4% 15.6% 15.6% 18.2% 14.3% 12.5% 13.4%
BALANCE SHEET

INCOME STATEMENT

	. Калардар се продавата представительность продавления продавати продавати продавания продавания продавания продавания про			mln EUR 30.06.2021 31.12.2020 30.09.2020 30.06.2020 31.03.2020 31.12.2019
				Net debt
	Equity			18.5
Working

capital	-2.9	-5.01	-3.9	-4.4	-4.0	-2.5	-3.5
Assets	55.3	54.5	57.5	57.4	57.1	56.9	60.5
Liquidity ratio	0.9x	0 . 8x	0 . 8x	0 . 8x	0 . 8x	0.9x	0 . 9x
Equity ratio	28 . 6%	32.4%	32.4%	32.3%	34.7%	37.9%	38.5%
Gearing ratio	56.9%	54.9%	54.0%	53.7%	51 . 1%	44.0%	43.3%
Debt to total assets	0.7x	0.7x	0.7x	0.7x	0.7x	0.6x	0.6x
Net debt to EBITDA op	-16.9x	-55.3x	160.0x	12.8x	7 . 5x	5 . 3x	5.3x
ROE	-28.7%	-23.8%	-21.9%	-7.0%	-9.1%	-5.7%	-3.2%
ROA	-9.1%	-8.4%	-7.8%	-2.4%	-3.2%	-2.1%	-1.2%

Consolidated Statement of Financial Position

Thousand euros		30.06.2021 30.06.2020
ASSETS
Cash and cash equivalents	2,500	2,276
Receivables and prepayments	3,295	3,578
Inventories	5,691	7,884
Biological assets	4,795	4 , 249
Total current assets	16,281	17,987
Deferred income tax	21	54
Long-term financial investments	302	232

Tangible fixed assets	15,236	16,179
Intangible assets	23,457	22,672
Total non-current assets	39,016	39,137
TOTAL ASSETS	55,297	57,124
EQUITY AND LIABILITIES
Loans and borrowings	6,396	10,611
Payables	12,530	11,132
Government grants	207	211
Total current liabilities	19,133	21,954
Loans and borrowings	16,988	12,368
Payables	723	190
Deferred tax liabilities	1,868	1,920
Government grants	746	873
Total non-current liabilities	20,325	15 , 351
TOTAL LIABILITIES	39,458	37,305
Share capital	7 , 737	7,737
Share premium	14,198	14,007
Treasury shares	-390	-390
Statutory capital reserve	51	51
Currency translation reserve	583	-366
Retained profit (-loss)	-6,682	-1,654

Equity attributable to parent +---------------------------------+------------+------------+	15,497	19,385
Non-controlling interest +---------------------------------+------------+------------+	342	434
TOTAL EQUITY	15,839	19,819
+---------------------------------+------------+------------+ TOTAL EQUITY AND LIABILITIES	55,297	57,124
+---------------------------------+------------+------------+

Consolidated Statement of Profit or Loss And Other Comprehensive Income

+--------------------+------------+------------+---------------+---------------+ Thousand euros	4Q 2020/2021 4Q 2019/2020		12 months 2020/2021	12 months 2019/2020
+--------------------+------------+------------+---------------+---------------+ Sales	14,740	15,101	58,692	78,292
+--------------------+------------+------------+---------------+---------------+ Cost of goods sold +--------------------+------------+------------+---------------+---------------+	-14,437	-14,412	-53,717	-68,710
Gross profit +--------------------+------------+------------+---------------+---------------+	303	689	4,975	9,582
+--------------------+------------+------------+---------------+---------------+
Operating expenses +--------------------+------------+------------+---------------+---------------+	-2,264	-2,107	-9,468	-10,509
Selling and distribution expenses	-1,499	-1,387	-6,389	-7,060
+--------------------+------------+------------+---------------+---------------+ Administrative expenses	-765	-720	-3,079	-3,449
+--------------------+------------+------------+---------------+---------------+ Other income / expense	146	211	309	519
+--------------------+------------+------------+---------------+---------------+ Fair value adjustment on biological assets	441	239	311	-291
+--------------------+------------+------------+---------------+---------------+ Operating profit (loss)	-1,374	-968	-3,873	-699
+--------------------+------------+------------+---------------+---------------+ Financial income/- expenses	-223	-254	-1,031	-1,062
+--------------------+------------+------------+---------------+---------------+ Profit (loss) before tax	-1,597	-1,222	-4,904	-1,761

Income tax	-110	-47	-216	-134
Net profit (loss) for the period	-1 , 707	-1,269	-5 , 120	-1,895
Net profit (loss) attributable to:
Owners of the company	-1,697	-1 , 254	-5 , 028	-1 , 718
Non-controlling interests	-10	-15	-92	-177
Total net profit (	-1,707	-1,269	-5 , 120	-1 , 895
Other omprehensive income (loss) that may subsequently be classified to profit or loss:
Foreign currency translation differences	-100	-117	949	-152
Total comprehensive income (expense)	-1,807	-1 , 386	-4 , 171	-2,047
Total comprehensive income (expense) attributable to:
Owners of the Company	-1,797	-1,371	-4 , 079	-1,870
Non-controlling interests	-10	-15	-92	-177
Total comprehensive income (expense) for

the period +--------------------+------------+------------+---------------+---------------+	-1,807	-1,386	-4,171	-2,047
+--------------------+------------+------------+---------------+---------------+
Profit (loss) per share (EUR) +--------------------+------------+------------+---------------+---------------+	-0.04	-0.03	-0.13	-0.04
+--------------------+------------+------------+---------------+---------------+
Diluted profit (loss) per share (EUR) +--------------------+------------+------------+---------------+---------------+	-0.04	-0.03	-0.13	-0.04

Indrek Kasela AS PRFoods Member of the Management Board Phone: +372 452 1470 investor@prfoods.ee www.prfoods.ee