Unaudited financial results of Nordic Fibreboard AS for the second quarter and 6 months of 2021
MANAGEMENT REPORT
NORDIC FIBREBOARD AS UNAUDITED RESULTS FOR SECOND QUARTER AND 6 MONTH OF 2021
Consolidated net sales for Q2 2021 were € 2.58 million (Q2 2020: € 2.48 million). The reason for the increase in sales revenue in Q2 2021 was the recovery in the construction sector, which led to increased demand for construction materials. Fibreboard sales revenue for Q2 2021 were € 2.51 million (Q2 2020: € 2.43 million). Real Estate Management sales, including the resale of utilities, in Q2 2021 were € 64 thousand, which was a 45% increase over the same period last year (Q2 2020: € 44 thousand). There was no sales from furniture retail in the Q2 2021, as Skano Furniture terminated its active operations at the beginning of 2020, when the last sales of the discount campaign took place, which generated sales revenue of € 8 thousand in the Q2 2020.
Group EBITDA for Q2 2021 was positive € 502 thousand (Q2 2020: € 347 thousand), of which the fibreboard division EBITDA was € 497 thousand (Q2 2020: € 342 thousand). We recorded extraordinary financial income of € 257 thousand in Q2 2021 from the shares we own in the listed property company Trigon Property Development AS due to its strong share price appreciation during Q2 2021. Group net profit for Q2 2021 was € 606 thousand (Q2 2020 net profit € 194 thousand).
We are in the process of liquidating Skano Furniture OÜ (our previous furniture retail unit) which led us to book a gain of € 485 thousand in write-off of intra-group liabilities in Q2 2021 (see table below, Profit by Business Segment) for Skano Furniture OÜ, such gain being mostly offset by corresponding loss of € 471 thousand in Group transactions.
DIVISIONAL REVIEW
Revenue by business segments
| € thousand | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 |
| Fibreboards production and sales | 2,513 | 2,426 | 5,269 | 5,517 |
| Real Estate Management | 64 | 44 | 153 | 113 |
| Furniture retail | 0 | 8 | 0 | 55 |
| Group transactions | 0 | 0 | 0 | (0) |
| TOTAL | 2,576 | 2,479 | 5,422 | 5,685 |
Profit by business segments
| € thousand | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 |
| EBITDA by business units: | ||||
| Fibreboards production and sales | 497 | 342 | 993 | 88 |
| Furniture retail | 485* | 8 | 474* | (39) |
| Real Estate Management | (9) | (1) | (1) | (3) |
| Group transactions | (471)* | (2) | (480)* | (9) |
| TOTAL EBITDA | 502 | 347 | 986 | 37 |
| Depreciation | (123) | (135) | (256) | (287) |
| TOTAL OPERATING PROFIT/ LOSS | 379 | 212 | 730 | (250) |
| Net financial costs | 227 | (18) | 427 | (90) |
| NET PROFIT/ LOSS | 606 | 194 | 1.157 | (340) |
* Includes other operating income from the write-off of intra-group liabilities in the retail sale of furniture in the Q2 of 2021 due to the liquidation of Skano Furniture OÜ in the amount of € 485 thousand.
**Includes financial income of € 257 thousand in Q2 of 2021 and € 482 thousand in the first 6 months of 2021, received from the revaluation of the shares of thereal estate development company Trigon Property Development AS owned by Nordic Fibreboard Ltd OÜ.
NORDIC FIBREBOARD LTD: Fibreboard production and sales
Fibreboard sales in Q2 2021 were € 2.51 million (2020: € 2.43 million). The reason for the increase in sales revenue was the general growth in the construction sector in 2021, which led to increased demand for construction materials. Increased demand has led to the Pärnu factory operating at full capacity, and us prioritising the orders from our key customers in the Nordic, Baltic, and Russia. Thus, customers in Asia, Middle East and Africa have had their orders postponed since we have not been able to offer them any boards due to our capacity being mainly dedicated for customers in our local markets.
EBITDA in Q2 2021 was € 497 thousand, which is an increase of 45% compared to the same period in last year (Q2 2020 € 342 thousand). The improvement has been achieved due to increased efficiency by achieving full machine utilisation in the Pärnu factory and a result of increased demand in the construction materials market.
Fibreboard net profit for Q2 2021 was € 603 thousand (Q2 2020: net profit € 195 thousand). The result includes the € 257 thousand upward value adjustment to Fibreboard’s shareholding in Trigon Property Development.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | € thousand | |||
| Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 | |
| European Union | 2,094 | 2,115 | 4,253 | 4,856 |
| Russia | 381 | 276 | 814 | 486 |
| Asia | 22 | 22 | 124 | 60 |
| Middle East | 0 | 6 | 0 | 45 |
| Africa | 0 | 0 | 46 | 34 |
| Other | 16 | 7 | 32 | 36 |
| TOTAL | 2,513 | 2,426 | 5,269 | 5,517 |
PÄRNU RIVERSIDE DEVELOPMENT: Real estate management
Pärnu Riverside Development owns the property located at Suur-Jõe 48 in Pärnu. The property has some rental tenants and rental income from real estate management, including the resale of utilities, was € 64 thousand in Q2 2021, (Q2 2020: € 44 thousand).
The real estate management EBITDA for Q2 2021 were negative € 9 thousand (Q2 2020: negative € 1 thousand). The real estate management net loss for Q2 2021 was € 9 thousand (Q2 2020: net loss € 1 thousand).
SKANO FURNITURE: Retail sales
Skano Furniture finished its activities on 31.01.2020, when it closed the last two furniture showrooms, thus the retail sale of furniture did not have any sales revenue in Q2 2021 (Q2 2020 sales revenue was € 8 thousand).
EBITDA for furniture retail for Q2 2021 were positive € 485 thousand, which was due to write-off of liabilities in the amount of € 489 thousand due to start of liquidation of Skano Furniture OÜ to the parent company and another company belonging to the same consolidation group (Q2 2020 EBITDA was positive € 8 thousand). The furniture retail net profit for Q2 2021 was € 485 thousand (Q2 2020 net profit was € 7 thousand).
STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 30.06.2021 the total assets of Nordic Fibreboard AS were € 8.1 million (30.06.2020: € 8.1 million). The liabilities of the company as of 30.06.2021 were € 4.3 million (30.06.2020: € 6.9 million), of which Group has payables amounted to € 0.5 million as at 30.06.2021 (30.06.2020: € 1.6 million) and borrowings of € 3.2 million as at 30.06.2021 (30.06.2020: € 4.5 million).
Receivables and prepayments amounted to € 1.0 million as at 30.06.2021 (30.06.2020: € 1.2 million). Inventories were € 0.5 million as of 30.06.2021 (30.06.2020: € 0.4 million). Fixed assets were € 6.6 million as of 30.06.2021 (€ 6.5 million as of 30.06.2020).
During 6M 2021, the Group’s cash flows from operating activities totalled cash inflow of € 110 thousand (6M 2020: cash inflow € 104 thousand). Investment activities resulted in cash outflows in amount of € 58 thousand during 6M 2021, compared to outflows in amount € 53 thousand during 6M 2020. Financing activities also resulted in cash outflows of € 40 thousand during 6M 2021 (6M 2020: cash outflow € 53 thousand). Net cash effect during 6M 2021 showed cash inflows of € 12 thousand, (6M 20120: cash outflows € 2 thousand).
OUTLOOK
NORDIC FIBREBOARD LTD
Demand for fibreboards continue to be strong, reflecting the growth in the building material market, as well as the growing awareness of the green credentials of soft density fibreboards, as produced by Nordic Fibreboard Ltd.
PÄRNU RIVERSIDE DEVELOPMENT
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. We expect the current detail planning application for residential development of the Suur-Jõe 48 landplot to be nearing its successful conclusion within the next few months.
PEOPLE
On the 30th of June 2021, the Group employed 93 people (compared to 97 people as of 30.06.2020). The average number of personnel in Q2 2021 was 93 (Q2 2020: 97 people).
For six months of 2021, wages and salaries with taxes amounted to € 1.0 million (six months 2020: € 1.1 million). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 110 thousand during 6M 2020 and € 104 thousand during 6M 2020.
FINANCIAL HIGHLIGHTS
| € thousand | ||||
| Income statement | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 |
| Revenue | 2,576 | 2,479 | 5,422 | 5,685 |
| EBITDA | 502 | 347 | 986 | 37 |
| EBITDA margin | 19% | 14% | 18% | 1% |
| Operating profit (EBIT) | 378 | 211 | 730 | (250) |
| Operating margin (EBIT margin) | 15% | 9% | 13% | (4%) |
| Net profit | 606 | 194 | 1,157 | (340) |
| Net margin | 24% | 8% | 21% | (6%) |
| Statement of financial position | 30.06.2021 | 31.12.2020 | 30.06.2020 | 31.12.2019 |
| Total assets | 8,140 | 7,650 | 8,077 | 9,045 |
| Return on assets | 14% | 14% | (4%) | (12%) |
| Equity | 3,805 | 2,648 | 1,222 | 1,542 |
| Return on equity | 30% | 41% | (28%) | (73%) |
| Debt-to-equity ratio | 53% | 65% | 85% | 83% |
| Share | 30.06.2021 | 31.12.2020 | 30.06.2020 | 31.12.2019 |
| Last Price* | 1.74 | 0.45 | 0.32 | 0.41 |
| Earnings per share | 0.26 | 0.24 | (0.08) | (0.31) |
| Price-earnings ratio | 6.77 | 1.89 | (4.26) | (1.32) |
| Book value of a share | 0.85 | 0.59 | 0.27 | 0.34 |
| Market to book ratio | 2.06 | 0.76 | 1.19 | 1.20 |
| Market capitalization, € thousand | 7,828 | 2,025 | 1,449 | 1,845 |
| Number of shares, piece | 4,499,061 | 4,499,061 | 4,499,061 | 4,499,061 |
EBITDA = Earnings before interest, taxes, depreciation and amortization
EBITDA margin = EBITDA / Revenue
Operating margin (EBIT margin) = Operating profit / Revenue
Net margin = Net profit / Revenue
Return on assets = Net profit / Total assets
Return on equity = Net profit / Equity
Debt-to-equity ratio = Liabilities / Total assets
Earnings per share = Net profit / Total shares
Price-earnings ratio = Last price / Earnings per share
Book value of a share = Equity / Total shares
Market to book ratio = Last price / Book value of a share
Market capitalization = Last price * Total number of shares
*http://www.nasdaqbaltic.com/
Consolidated statement of financial positions
| € thousand | 30.06.2021 | 31.12.2020 | 30.06.2020 | 31.12.2019 |
| Cash and cash equivalents (Note 2) | 38 | 26 | 5 | 7 |
| Receivables and prepayments (Note 3) | 977 | 794 | 1,175 | 1,394 |
| Inventories (Note 4) | 526 | 544 | 443 | 894 |
| Total current assets | 1,541 | 1,364 | 1,623 | 2,296 |
| Investment property (Note 5) | 1,136 | 1,134 | 1,125 | 1,121 |
| Financial assets at fair value through profit or loss (Note 8) | 933 | 451 | 414 | 397 |
| Property, plant and equipment (Note 6) | 4,527 | 4,695 | 4,902 | 5,212 |
| Intangible assets (Note 7) | 3 | 6 | 12 | 19 |
| Total non-current assets | 6,599 | 6,286 | 6,454 | 6,749 |
| TOTAL ASSETS | 8,140 | 7,650 | 8,077 | 9,045 |
| Borrowings (Notes 9) | 70 | 756 | 4,462 | 4,547 |
| Payables and prepayments (Notes 10) | 927 | 1,574 | 2,158 | 2,665 |
| Short-term provisions (Note 11) | 9 | 18 | 9 | 20 |
| Total current liabilities | 1,006 | 2,348 | 6,629 | 7,232 |
| Long-term borrowings (Notes 9) | 3,168 | 2,493 | 47 | 92 |
| Long-term provisions (Note 11) | 161 | 161 | 179 | 179 |
| Total non-current liabilities | 3,329 | 2,654 | 226 | 271 |
| Total liabilities | 4,335 | 5,002 | 6,855 | 7,503 |
| Share capital (at nominal value) (Note 12) | 450 | 450 | 2,699 | 2,699 |
| Share premium | 0 | 0 | 0 | 364 |
| Statutory reserve capital | 0 | 0 | 0 | 288 |
| Other reserves | 0 | 0 | 104 | 84 |
| Retained earnings (loss) | 3,355 | 2,198 | (1,582) | (1,894) |
| Total equity | 3,805 | 2,648 | 1,222 | 1,542 |
| TOTAL LIABILITIES AND EQUITY | 8,140 | 7,650 | 8,077 | 9,045 |
*The notes to the financial statements presented on pages 14 to 28 are an integral part of these consolidated financial statements.
Consolidated statement of profit or loss and other comprehensive income
| € thousand | Q2 2021 | Q2 2020 | 6M 2021 | 6M 2020 |
| Revenue (Note 14) | 2,576 | 2,479 | 5,422 | 5,685 |
| Cost of goods sold (Note 15) | 1,750 | 1,798 | 3,729 | 4,617 |
| Gross profit | 826 | 681 | 1,693 | 1,068 |
| Distribution costs (Note 16) | 298 | 306 | 640 | 733 |
| Administrative expenses (Note 17) | 142 | 129 | 314 | 304 |
| Other operating income (Note 19) | 1 | 1 | 3 | 2 |
| Other operating expenses (Note 19) | 8 | 35 | 12 | 283 |
| Operating profit (loss) | 379 | 212 | 730 | (250) |
| Finance income (Note 20) | 257 | 36 | 483 | 37 |
| Finance costs (Note 20) | 30 | 54 | 56 | 127 |
| PROFIT (LOSS) BEFORE INCOME TAX | 606 | 194 | 1,157 | (340) |
| NET PROFIT (LOSS) FOR THE PERIOD | 606 | 194 | 1,157 | (340) |
| Basic earnings per share (Note 13) | 0.13 | 0.04 | 0.26 | (0.08) |
| Diluted earnings per share (Note 13) | 0.13 | 0.04 | 0.26 | (0.08) |
*The notes to the financial statements presented on pages 14 to 28 are an integral part of these consolidated financial statements.
TORFINN LOSVIK
Chairman of the board
Phone: +372 56 99 0988
torfinn.losvik@nordicfibreboard.com
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