Aktsiaselts Linda Nektar : Interim Report for the six month period ended 30 June 2023 (unaudited)

Linda Nektar
Company Announcement Interim Report for the six month period ended 30 June 2023 (unaudited)

Management report

The first half of 2023 reflected ongoing work to diversify AS Linda Nektar's (The Company's) product and client portfoliosby expanding more vigorously into the premium beverages segment. During H1, the Company experienced a challenging trading environment characterized by high inflation, input price volatility and pressure on discretionary spending among consumers for Linda Nektar's B2B customers. The Company's customers' rolling hedging, commodity and production cost increases therefore had a negative impact on revenues in the first half. This is expected to retain an influence during the second half of the reporting period.

From the point of view of business development, the Company's broader portfolio and higher level of service and quality have been recognized thus resulting in sales to previously untapped geographical markets and an expanded number of customers.The launch of new products by customers is a time-consuming activity that often requires years of preparatory work. Linda Nektar continues to be involved in several such projects.

The Company is continuing to develop new and innovative fermented products, including those in the low-and-no alcohol as well as ready to drink (RTD) segments. These particular sectors, as indicated in the 2022 12 month management commentary are expected to generate meaningful growth in coming years due to various consumer megatrends. Present production volumes allow for significant unexpected demand while ensuring positive operating cash flow at the same time.

The Company continuously invests in innovative technologies and processes at its factory to embrace energy efficiency and sustainability principles. This reduces resource consumption and supports the achievement of the Company's long-term business goals. In June 2023, Linda Nektar and AS Eesti Energia signed a contract to construct a solar park which is expected to provide the lion's share of energy requirements to the Kobela operations. The estimated time of completion is October 2023. The project will be implemented through the Rural Development Plan measure 4.2.6 'Investment Support' provided by the Agricultural Registers and Information Board (ARIB).

Financial review

In H1 2023 AS Linda Nektar (The Company´s) unaudited turnover was EUR 1,436,642 This marked a decrease of 34.2% year-on-year (H1 2022: EUR 2,182,904). The first 6 months of 2023 generated a net profit of EUR 39,898 (H1 2022: EUR 363,296).

As of 30 June 2023, the Company's total assets came to EUR 3,955,492 (30.06.2022: EUR 4,181,841) marking a decrease of 5.4% year-on-year. Current assets amounted to EUR 1,458,883 (30.06.2022: EUR 1,980,750) or 36.9% of total assets. Fixed assets amounted to EUR 2,496,609 (30.06.2022: EUR 2,201,091) or 63.1% of the balance sheet total. The liabilities of AS Linda Nektar totalled EUR 305,270 (30.06.2022: EUR 321,109) and equity capital amounted to EUR 3,650,222 (30.06.2022: EUR 3,860,732).

On 14^th of April 2023, AS Linda Nektar signed a loan agreement with Swedbank AS to finance its ongoing investment programme. The amount of the loan agreement is EUR 166,000 and the loan period is 2 years. The company will use this debt financing round for the construction of the solar farm in Kobela. As of 30 June 2023, there were loan commitments of EUR 46,900 for investments. Cash and cash equivalents came to EUR 319,198 (30.06.2022: EUR 694,213). The Company retains its conservative financial leverage policy.Operating cash flow for the first 6 months of 2023 was a positive EUR 220,457 (H1 2022: EUR 358,481).

A total of EUR 130,057 was invested into fixed assets (H1 2022: EUR 151,010). Depreciation costs for the first 6 months of 2023 amounted to EUR 180,414 (H1 2022: EUR 226,618). Some investments will be implemented through support provided by the Agricultural Registers and Information Board (ARIB) as part of Rural Development Plan measure 4.2.1 'Investment Support' for the extension of fermentation capacity. The subsidy will be paid out if the investment is implemented no later than September 2023. Assets acquired with the help of government grants are recorded in the balance sheet at net acquisition cost, i.e., the acquisition cost, less government grants received for the purpose of acquiring assets.

In H1 2023, the Company paid EUR 158,014 in dividends (H1 2022: EUR 158,014). The income tax cost on dividends was EUR 26,654 (H1 2022: EUR 27,584).

As of 30 June 2023, the Company had 15 employees, one Management Board Member, and four Supervisory Board Members. Labour costs for the first 6 months of 2023 (including taxes) amounted to EUR 260,043 (H1 2022: EUR 221,650).

Management's revenue guidance for the whole of 2023 was previously indicated to be at a relatively similar to 2022 (EUR 3.8m). In order to take a conservative view on account of most recent timing visibility of various new projects it has been decided to lower this to a range of EUR 2.9 - 3.2m (representing a 15-25% decrease).

Financial Ratios

	2023 H1	2022 H1
Current Ratio = Current Assets / Current Liabilities	x	5.15	6.17
Quick ratio = (Current Assets - Inventories) / Current Liabilities	x	2.88	4.27
Working Capital = Current Assets - Current Liabilities		1,175,513	1,659,641
Equity Ratio = Total Equity / Total Assets*100	%	92.28	92.32
Net Profit Margin= Net Profit / Sales Revenue*100	%	2.78	16.64
Debt to Assets= Total Liabilities / Total Assets	x	0.08	0.08

Statement of financial position

(In Euros)

	30.06.2023	31.12.2022	30.06.2022
Assets
Current assets
Cash and cash equivalents	319 198	294 451	694 213
Receivables and prepayments	496 448	515 099	675 334
Inventories	643 237	664 896	611 203
Total current assets	1 458 883	1 474 446	1 980 750
Non-current assets
Receivables and prepayments	68	45	6
Property, plant and equipment	2 480 150	2 647 768	2 196 030
Intangible assets	16 391	15 547	5 055
Total non-current assets	2 496 609	2 663 360	2 201 091
Total assets	3 955 492	4 137 806	4 181 841
Liabilities and equity
Liabilities
Current liabilities
Loan liabilities	25 000	0	0
Payables and prepayments	258 370	369 467	321 109
Total current liabilities	283 370	369 467	321 109
Non-current liabilities
Loan liabilities	21 900	0	0
Total non-current liabilities	21 900	0	0
Total liabilities	305 270	369 467	321 109
Equity
Issued capital	1 580 143	1 580 143	1 580 143
Share premium	617 517	617 517	617 517
Statutory reserve capital	93 629	80 084	80 084
Retained earnings (loss)	1 319 035	1 219 692	1 219 692
Reporting period profit (loss)	39 898	270 903	363 296
Total equity	3 650 222	3 768 339	3 860 732
Total liabilities and equity	3 955 492	4 137 806	4 181 841

Income statement

(In Euros)

	2023 H1	2022 H1
Revenue	1 436 642	2 182 904
Changes in inventories of finished goods and work in progress	35 625	237 031
Raw materials and consumables used	-858 994	-1 465 151
Other operating expenses	-106 066	-115 241
Employee expenses	-260 043	-221 650
Depreciation and impairment loss (reversal)	-180 414	-226 618
Other expenses	-874	-428
Operating profit (loss)	65 876	390 847
Interest income	676	33
Profit (loss) before tax	66 552	390 880
Income tax expense	-26 654	-27 584
Reporting period profit (loss)	39 898	363 296

Statement of cash flows

(In Euros)

	2023 H1	2022 H1
Cash flows from operating activities
Operating profit (loss)	65 876	390 847
Adjustments
Depreciation and impairment loss (reversal)	180 414	226 618
Total adjustments	180 414	226 618
Changes in receivables and prepayments related to operating activities	18 628	-107 176
Changes in inventories	20 103	-297 875
Changes in payables and prepayments related to operating activities	-37 910	173 651
Income tax refund (paid)	-26 654	-27 584
Total cash flows from operating activities	220 457	358 481
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets	-201 689	-157 422
Proceeds from government grants	116 417	0
Interest received	676	33
Total cash flows from investing activities	-84 596	-157 389
Cash flows from financing activities
Loans received	46 900	0
Dividends paid	-158 014	-158 014
Total cash flows from financing activities	-111 114	-158 014
Total cash flows	24 747	43 078
Cash and cash equivalents at beginning of period	294 451	651 135
Change in cash and cash equivalents	24 747	43 078
Cash and cash equivalents at end of period	319 198	694 213

Statement of changes in equity

(In Euros)

	Issued capital	Share premium	Statutory reserve capital	Retained earnings (loss)	Total
31.12.2021	1 580 143	617 517	73 948	1 383 842	3 655 450
Reporting period profit (loss)	0	0	0	363 296	363 296
Declared dividends	0	0	0	-158 014	-158 014
Changes in reserves	0	0	6 136	-6 136	0
30.06.2022	1 580 143	617 517	80 084	1 582 988	3 860 732
Reporting period profit (loss)	0	0	0	-92 393	-92 393
31.12.2022	1 580 143	617 517	80 084	1 490 595	3 768 339
Reporting period profit (loss)	0	0	0	39 898	39 898
Declared dividends	0	0	0	-158 014	-158 014
Changes in reserves	0	0	13 545	-13 546	-1
30.06.2023	1 580 143	617 517	93 629	1 358 933	3 650 222

Additional information:

Kadri Rauba
Member of Management Board
AS Linda Nektar
Address: Kobela, Antsla parish, 66407 Võrumaa, Estonia
Telephone: [phone]
E-mail: [e-mail]

Attachments:
Interim Report_H1_2023_EN.pdf