Management Report*
The sales revenue of AS Linda Nektar for the 12 months of 2017 amounted to EUR 2,463,309, representing a 33.8% decrease compared to the same period in 2016 (12 months 2016: EUR 3,719,405). The net profit for the financial year came to EUR 85,402, representing an 89.7% y-o-y decrease (12 months 2016: EUR 831,662).
The Company has been focusing its efforts on attracting new customers for its products outside of Estonia and notes that due to the nature of specific recipes required and customers’ future production planning this takes time. Geographical revenue concentration was reduced in 2017, with Estonia decreasing from 73.5% to 57.6% compared with 2016. The combined volume of products and services did not change dramatically compared to the previous year. However, important changes were made in the product mix in order to adjust to the changed market situation.
The tax increases created turbulence in the Estonian market. This included inventory build-up by wholesalers, price changes to consumers, increases in border trade etc.
As at 31.12.2017, the total assets of AS Linda Nektar were EUR 4,194,991 (12 months 2016: EUR 4,598,552), having decreased by 8.8% compared to 2016. Current assets made up EUR 1, 269,978 or 30.3% of the total assets (12 months 2016: EUR 1,756,103). The volume of fixed assets amounted to EUR 2,925,013 (12 months 2016: EUR 2,842,449) or 69.7% of the balance sheet total. The total liabilities of AS Linda Nektar amounted to EUR 100,012 (12 months 2016: EUR: 291,507) and the equity capital of the company decreased to EUR 4,094,979 (12 months 2016: EUR 4,307,045).
The Company does not have any financial debt. Operating cash flows for the 12 months of 2017 came to EUR 539,712 compared with EUR 1,171,204 in 2016. This reflects a larger proportional decline than revenues due to items of a fixed cost nature.
During 2017 the Company invested in property, plant and equipment a total of EUR 518,306 (12 months 2016: EUR 988,772). A part of the investments have been granted by government support from the Estonian Agricultural Registers and Information Board (ARIB), Estonian: PRIA. These sums have no direct income statement impact, however, they have the effect of reducing the ultimate cost of the investments at the end of the project. Depreciation expenses in 12 months of 2017 amounted to EUR 435,459 (12 months 2016: EUR 352,719), which have increased due to the investments.
Development costs in 12 months of 2017 amounted to EUR 23,034 (12 months 2016: EUR 116,062). These R&D costs have been recognised as expenses. The significant drop is mainly due to successfully completed investments in laboratory and analyzing equipment during 2016 and 2017.
During the 12 months of 2017, the enterprise paid dividends for the performance of the 2016 financial year in the amount of EUR 299,271 (12 months 2016: EUR 141,760). The income tax expense entailed in the payment of dividends to the shareholders amounted to EUR 74,818 (12 months 2016: EUR 35,440).
As at 31 December 2017, the enterprise had 13 employees, 1 member of the management board and 4 supervisory board members. The salary expenses for the 12 months of 2017 (including taxes) were EUR 325,851 (12 months 2016: EUR 327,911).
Management believes that due to changes in excise tax rates and ongoing fluctuations in the business environment, the situation in the Estonian market is still somewhat unclear. With this in mind, revenue guidance for the calendar year of 2018 is EUR 2.5m.
Financial Ratios:
| 2017 | 2016 | ||
| Current Ratio = Current Assets/ Current Liabilities | x | 12.70 | 6.02 |
| Quick ratio = (Current Assets – Inventories) / Current Liabilities | x | 9.23 | 4.97 |
| Working Capital = Current Assets - Current Liabilities | 1 169 966 | 1 464 596 | |
| Equity Ratio = Total Equity / Total Assets | % | 97.62 | 93.66 |
| Net Profit Margin= Net Profit / Sales Revenue | % | 3.47 | 22.36 |
| Debt to Assets= Total Liabilities / Total Assets | x | 0.02 | 0.06 |
* The full version of the Management report is attached to this announcement
Kadri Rauba
CEO
Financial Statements
The report is prepared according to the Accounting Principles Generally Accepted in Estonia. The report follows the same accounting principles that were used in the annual report. The report is compiled in Euros (EUR).
Statement of financial position
(In Euros, 2017 unaudited)
| 31.12.2017 | 30.06.2017 | 31.12.2016 | 30.06.2016 | |
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 720 494 | 689 422 | 1 103 517 | 744 903 |
| Receivables and prepayments | 202 220 | 337 545 | 346 529 | 689 917 |
| Inventories | 347 264 | 325 775 | 306 057 | 359 643 |
| Total current assets | 1 269 978 | 1 352 742 | 1 756 103 | 1 794 463 |
| Non-current assets | ||||
| Receivables and prepayments | 235 | 235 | 517 | 0 |
| Property, plant and equipment | 2 840 234 | 2 868 974 | 2 697 075 | 2 367 273 |
| Intangible assets | 84 544 | 111 271 | 144 857 | 179 193 |
| Total non-current assets | 2 925 013 | 2 980 480 | 2 842 449 | 2 546 466 |
| Total assets | 4 194 991 | 4 333 222 | 4 598 552 | 4 340 929 |
| Liabilities and equity | ||||
| Liabilities | ||||
| Current liabilities | ||||
| Payables and prepayments | 100 012 | 206 570 | 291 507 | 297 766 |
| Government grants | 0 | 0 | 0 | 155 857 |
| Total current liabilities | 100 012 | 206 570 | 291 507 | 453 623 |
| Total liabilities | 100 012 | 206 570 | 291 507 | 453 623 |
| Equity | ||||
| Issued capital | 1 575 109 | 1 575 109 | 1 575 109 | 1 575 109 |
| Share premium | 617 517 | 617 517 | 617 517 | 617 517 |
| Statutory reserve capital | 66 402 | 66 402 | 24 819 | 24 819 |
| Other reserves | 1 804 | 0 | 0 | 0 |
| Retained earnings (loss) | 1 748 745 | 1 748 745 | 1 257 938 | 1 257 938 |
| Financial period profit (loss) | 85 402 | 118 879 | 831 662 | 411 923 |
| Total equity | 4 094 979 | 4 126 652 | 4 307 045 | 3 887 306 |
| Total liabilities and equity | 4 194 991 | 4 333 222 | 4 598 552 | 4 340 929 |
Income statement
(In Euros, 2017 unaudited)
| 2017 | 2017 H2 | 2016 | 2016 H2 | |
| Revenue | 2 463 309 | 994 011 | 3 719 405 | 1 605 745 |
| Other income | 250 | 250 | 155 857 | 155 857 |
| Changes in inventories of finished goods and work in progress | 40 333 | 43 190 | -29 499 | -48 141 |
| Raw materials and consumables used | -1 362 934 | -592 018 | -2 002 135 | -808 527 |
| Other operating expense | -219 448 | -87 328 | -290 999 | -141 841 |
| Employee expense | -325 851 | -167 791 | -327 911 | -153 539 |
| Depreciation and impairment loss (reversal) | -435 459 | -223 823 | -352 719 | -184 872 |
| Other expense | -61 | -6 | -5 001 | -5 000 |
| Operating profit (loss) | 160 139 | -33 515 | 866 998 | 419 682 |
| Other financial income and expense | 81 | 38 | 104 | 57 |
| Profit (loss) before tax | 160 220 | -33 477 | 867 102 | 419 739 |
| Income tax expense | -74 818 | 0 | -35 440 | 0 |
| Financial period profit (loss) | 85 402 | -33 477 | 831 662 | 419 739 |
Statement of cash flows
(In Euros, 2017 unaudited)
| 2017 | 2017 H2 | 2016 | 2016 H2 | |
| Cash flows from operating activities | ||||
| Operating profit (loss) | 160 139 | -33 515 | 866 998 | 419 681 |
| Adjustments | ||||
| Depreciation and impairment loss (reversal) | 435 459 | 223 823 | 352 719 | 184 872 |
| Profit (loss) from sale of non-current assets | -250 | -250 | 0 | 0 |
| Other adjustments | 1 804 | 1 804 | -155 857 | -155 857 |
| Total adjustments | 437 013 | 225 377 | 196 862 | 29 015 |
| Changes in receivables and prepayments related to operating activities | 144 591 | 135 325 | 17 355 | 342 871 |
| Changes in inventories | -41 207 | -21 489 | 33 636 | 53 586 |
| Changes in payables and prepayments related to operating activities | -86 006 | -111 139 | 10 047 | -100 089 |
| Income tax refund (paid) | -74 818 | 0 | -35 440 | 0 |
| Proceeds from government grants | 0 | 0 | 81 746 | 0 |
| Total cash flows from operating activities | 539 712 | 194 559 | 1 171 204 | 745 064 |
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment and intangible assets | -623 795 | -163 775 | -918 015 | -386 507 |
| Proceeds from sales of property, plant and equipment and intangible assets | 250 | 250 | 0 | 0 |
| Interest received | 81 | 38 | 104 | 57 |
| Total cash flows from investing activities | -623 464 | -163 487 | -917 911 | -386 450 |
| Cash flows from financing activities | ||||
| Dividends paid | -299 271 | 0 | -141 760 | 0 |
| Total cash flows from financing activities | -299 271 | 0 | -141 760 | 0 |
| Total cash flows | -383 023 | 31 072 | 111 533 | 358 614 |
| Cash and cash equivalents at beginning of period | 1 103 517 | 689 422 | 991 984 | 744 903 |
| Change in cash and cash equivalents | -383 023 | 31 072 | 111 533 | 358 614 |
| Cash and cash equivalents at end of period | 720 494 | 720 494 | 1 103 517 | 1 103 517 |
Statement of changes in equity
(In Euros, 2017 unaudited)
| Issued capital | Share premium | Statutory reserve capital | Other reserves | Retained earnings (loss) | Total | |
| 31.12.2015 | 1 575 109 | 617 517 | 2 812 | 0 | 1 421 705 | 3 617 143 |
| Financial period profit (loss) | 0 | 0 | 0 | 0 | 831 662 | 831 662 |
| Declared dividends | 0 | 0 | 0 | 0 | -141 760 | -141 760 |
| Changes in reserves | 0 | 0 | 22 007 | 0 | -22 007 | 0 |
| 31.12.2016 | 1 575 109 | 617 517 | 24 819 | 0 | 2 089 600 | 4 307 045 |
| Financial period profit (loss) | 0 | 0 | 0 | 0 | 85 402 | 85 402 |
| Dividends paid | 0 | 0 | 0 | 0 | -299 271 | -299 271 |
| Changes in reserves | 0 | 0 | 41 583 | 1 804 | -41 584 | 1 803 |
| 31.12.2017 | 1 575 109 | 617 517 | 66 402 | 1 804 | 1 834 147 | 4 094 979 |
* As of 31 December 2017 the Company had 62 shareholders.
Additional information:
Kadri Rauba
Member of Management Board
AS Linda Nektar
Address: Kobela, Antsla parish, 66407 Võrumaa, Estonia
Telephone: +372 785 5768
E-mail: info@lindanektar.ee
