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
investor@prfoods.ee
www.prfoods.ee

Attachment

• AS PRFoods-audited-annual-report-ENG