PRFoods Consolidated Audited Annual Report 2022/2023

PRFoods Consolidated Audited Annual Report 2022/2023

Management Commentary

2022/2023 financial year was first when PRFoods regained its profitability after COVID. This was achieved as a result of major restructuring of the group operations: Finland, our previous biggest operations, but continuously lossmaking unit, was sold off; Swedish fish farms and new licences had to be sold to deleverage the company. As a result, our sales were 19.6 million Euros last year compared to 42.1 year before. EBITDA from operations rose to 0.3 million Euros compared -1.7 million loss the year before. Net profit amounted to 0.3 million Euros, compared to 8.1 millionEuros loss year before.

Net debt was reduced from 24.7 to 16.7 million. Majority of group’s debt is on fixed interest rates; hence we have not been so severely affected by rise of interest rates. Nevertheless, the net debt level remains too high and in order to reduce it, group has undertaken several steps: massive costs reduction and disposal of further fish farming assets. While fish farming is very attractive future business line, the capital requirements to fully expand these activities are not realistic for PRFoods in short term. We continue to develop further fish farming licences for future potential.

High inflationary environment and volatile fish prices have affected significantly both domestic demand and export in 2022 and 2023. On very positive note, since the non-compete in Finland ends in 2024, we have already orders from Finland exceeding the total revenues of Estonian business from 2022-2023. In 2024 we will see also Estonian processing business turning to long waited profit. Fish prices have come down significantly during H2 2023 and this has already boosted demand for fish products.

As we stated before the instability of markets is new norm, but the business has shown capacity to adapt to various challenges. Our high leverage has been debilitating factor to develop the business in recent years, but slowly but surely the ship has turned and is on much better footing. We are particularly proud of our team’s persistence and professionalism- their efforts have been simply remarkable.

2023-2024 financial year will be year of fish processing and expanding to Finland and other markets. John Ross Jr continues to be one of the industry’s most profitable salmon smoker and Saare Kala has doubled its local sales under new management during last year and will see minimum 3x growth in sales in 2024 calendar year. Our cashflow is much more robust now thanks to further deleveraging of the company. On behalf of myself, I wish the group and its management all the best in taking the business to new level.