Salacgriva, Latvia, 2017-04-28 15:19 CEST (GLOBE NEWSWIRE) --
MANAGEMENT REPORT
The types of activities performed by the Joint Stock Company “Brivais vilnis” (“the Company”) are processing and canning of fish and fish products, wholesale of food products, including fish, shellfish and mollusc, and other commercial activities classified nowhere else.
Year 2016 is the 25th year of operation since the Company was transformed into a Joint Stock Company.
The Company is a leader in product quality, we do not use genetically modified raw materials, synthetic food additives and flavour enhancers in the production.
In 2016 the Company produced a total of 10.4 million cans of various types (161) of canned fish products, including 4.6 million cans of sprat. 10.1 million cans were sold for EUR 5.4 million that is 25% less compared to the previous year.
Impact on decrease of sales volumes of the Company had the economic embargo stated by the Russia, devaluation of the Ukrainian hryvnia, decline in purchasing power of the Transcaucasian and Central Asian countries, as well as was affected by the tough competition in the canned fish sales market in Europe.
The financial result of the year 2016 is loss of EUR 664 368.
The financial result of the Company was affected by creation of fiscal year write-off and doubtful receivables reserves in amount of EUR 230 thousand and sales decline, as well as activities of competitors, reducing the sales prices and selling the canned fish below the cost in order to maintain the market segment.
Financial risks. The main financial risks related to the Company`s financial instruments are currency risk, interest rate risk, liquidity risk and credit risk.
Currency risk. Financial assets of the Company, subject to foreign currency risk include receivables. This is primarily due to the US dollar currency risk.
Interest rate risk. The Company is exposed to the interest rate risk mainly in relation to its short-term and long-term loans.
Credit risk. The Company is exposed to the credit risk through its trade receivables. The Company controls its credit risk by continuously assessing the credit history of customers and assigning credit terms on individual basis. In addition, the Company continuously controls the accounts receivables balances to minimize the possibility of bad debts.
Liquidity risk. The Company controls its liquidity risk through the bank credit granted and through the factoring.
In December, 2016 the Company temporarily stopped the production in order to realize the stock of produced canned fish. The Company restarted the production in February, 2017 in order to ensure fulfilment of orders to customers. The most of terminated employees were taken back to work in the Company.
At the end of reporting year liabilities of the Company are bigger than current assets for EUR , but short-term liabilities are less than current assets for EUR 1 339 073. The Board of the Company believes that the Company will be able to settle accounts with the short-term creditors in 2017. At the same time, the Board considers that taking into account the work done in expansion into new markets in 2015, 2016 and in the beginning of 2017, the Company will overcome the economic and financial difficulties and close the year 2017 without significant loss.
The Company`s goal is to continue to work on search of additional markets in 2017. In 2016, there is signed a contract with a distributor for sales of the products in the USA and in the first half of 2017 we are planning to carry out a regular supply to the US market. In the beginning of 2017, there is concluded a contract with a Japanese company for sales of the products in Japan and other Far East markets. At the same time is continued the work on development of new markets. The Company is ready to increase the export volumes in Ukraine and the Central Asia countries, as soon as the economic situation improves in the regions and the purchasing power increase.
Electronic form of the Corporate Governance Report for 2016 is available on the website of “NASDAQ RIGA” www.nasdaqbaltic.com.
Arnolds Babris
Chairman of the Board
