Management report
Consolidated net sales for Q3 2023 were € 2.33 million (Q3 2020: € 2.51 million), of which fibreboard sales accounted for € 2.27 million and real estate management for € 0.06 million. Fibreboard sales for Q3 2023 decreased with 8% compared to Q3 2020, the main reason being less production output due to longer maintenance period in Q3 2023. We had 2 week maintenance stop in Q3 2023, which we did not have in Q3 2020. Real estate management sales for Q3 2023 increased with 81% compared to Q3 2020 due to more rental tenants occupation in our property in Suur-Jõe 48, Pärnu. There was no sales revenue from furniture retail in both the Q3 2023 and the Q3 2020, the furniture retail company is in process of being liquidated at the time of publishing this report.
Group EBITDA for Q3 2023 was € 356 thousand (Q3 2020: € 366 thousand), of which the fibreboard division EBITDA was € 344 thousand (Q3 2020: € 370 thousand) and real estate management EBITDA of € 11 thousand (Q3 2020: € 1 thousand).
Group profit for Q3 2023, after depreciation and interest cost from group loans, was € 202 thousand (Q3 2020: € 179 thousand).
Group net profit for Q3 2023, after recording a loss of € 129 thousand from the revaluation of the Group’s shareholding in the Nasdaq listed real estate company Trigon Property Development AS (“TPD”), was € 73 thousand (Q3 2020: € 183 thousand, including a revaluation profit from the TPD shares of € 4 thousand). The financial impact for the first 9 months of 2023 from the group’s shareholding in TPD shows financial income of € 354 thousand from the revaluation profit of the TPD shares.
DIVISIONAL REVIEW
Revenue by business segments
| € thousand | € thousand | |||
| Q3 2023 | Q3 2020 | 9M 2023 | 9M 2020 | |
| Fibreboards production and sales | 2,270 | 2,477 | 7,539 | 7,994 |
| Real Estate Management | 65 | 36 | 218 | 148 |
| Furniture retail | 0 | 0 | 0 | 55 |
| Group transactions | 0 | 0 | 0 | (0) |
| TOTAL | 2,334 | 2,512 | 7,757 | 8,197 |
Profit by business segments
| € thousand | € thousand | |||
| Q3 2023 | Q3 2020 | 9M 2023 | 9M 2020 | |
| EBITDA by business units: | ||||
| Fibreboards production and sales | 344 | 370 | 1,337 | 458 |
| Real Estate Management | 11 | 1 | 10 | (2) |
| Furniture retail | 0 | (0) | 474 | (39) |
| Group transactions | 1 | (5) | (479) | (13) |
| TOTAL EBITDA | 356 | 366 | 1,341 | 403 |
| Depreciation | (123) | (135) | (380) | (422) |
| TOTAL OPERATING PROFIT/ LOSS | 232 | 231 | 962 | (19) |
| Net financial income/ costs | (159)* | (49) | 267* | (139) |
| NET PROFIT/ LOSS | 73 | 183 | 1,229 | (158) |
* Includes financial cost of € 129 thousand in Q3 of 2023 and financial income € 354 thousand in the first 9 months of 2023, received from the revaluation of the shareholding owned by the group in the real estate development company Trigon Property Development AS.
NORDIC FIBREBOARD LTD: FIBREBOARD SALE
The regional demand for construction materials, including the fibreboards produced in our Pärnu factory, has been very steady during Q3 2023. This resulted in our factory running at full capacity utilisation, and also had the effect of extending the delivery times for our products.
Fibreboard sales in Q3 2023 was € 2.27 million, a decrease of 8% from Q3 2020. The decline was only due to us having longer maintenance period during Q3 2023 than was the case in Q3 2020. Sales in our key north European markets remained steady while sales fell to customers elsewhere, this being due to us having to prioritise the orders from our local markets.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | € thousand | |||
| Q3 2023 | Q3 2020 | 9M 2023 | 9M 2020 | |
| European Union | 1,980 | 2,003 | 6,233 | 6,693 |
| Russia | 269 | 360 | 1,083 | 934 |
| Asia | 0 | 62 | 124 | 140 |
| Middle East | 13 | 10 | 13 | 55 |
| Africa | 0 | 8 | 46 | 96 |
| Other | 8 | 32 | 40 | 77 |
| TOTAL | 2,270 | 2,477 | 7,539 | 7,994 |
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 € 65 thousand in Q3 2023, (Q3 2020: € 36 thousand). The reason for the increase in sales revenue was the addition of tenants to the commercial space.
The real estate management EBITDA for Q3 2023 were positive € 11 thousand (Q3 2020: positive € 1 thousand). The real estate management net profit for Q3 2023 was € 11 thousand (Q3 2020: net profit € 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 Q3 2023 and in Q3 2020.
Skano Furniture OÜ is in the process of being liquidation at the time of publishing the reports.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 30.09.2023 the total assets of Nordic Fibreboard AS were € 8.3 million (30.09.2020: € 7.8 million). The liabilities of the company as of 30.09.2023 were € 4.4 million (30.09.2020: € 6.3 million), of which the Group has payables of € 0.6 million as at 30.09.2023 (30.09.2020: € 1.2 million) and borrowings of € 3.3 million as at 30.09.2023 (30.09.2020: € 4.5 million).
Receivables and prepayments amounted to € 1.1 million as at 30.09.2023 (30.09.2020: € 1.0 million). Inventories were € 0.4 million as of 30.09.2023 (30.09.2020: € 0.4 million). Fixed assets were € 6.6 million as of 30.09.2023 (€ 6.3 million as of 30.09.2020).
During 2020 9M, the group’s cash flows from operating activities totalled cash inflow of € 512 thousand (2020 9M: cash inflow € 115 thousand). Investment activities resulted in cash outflows in amount of € 243 thousand during 2023 9M, compared to outflows in amount € 39 thousand during 9M 2020. Financing activities also resulted in cash outflows of € 91 thousand during 9M 2023 (2020 9M: cash outflow € 79 thousand). Net cash effect during 2023 9M showed cash inflows of € 178 thousand, (2020 9M: cash outflows € 3 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.
Management is working on preparing the Pärnu based factory’s boiler house to meet the new emission requirements coming into force in 2024.
Preparations is also being undertaken in upgrading the company’s second factory, located in Püssi, so that the factory’s technical capabilities is adequate for possible restarting of the factory. The factory’s main energy source is gas, and the current high gas prices is therefore making it untenable to consider restarting this factory in the near future.
PÄRNU RIVERSIDE DEVELOPMENT
Management is considering the future of its real estate development subsidiary Pärnu Riverside Development, and has entered into an agreement with a brokerage firm whereby possible disposal of this subsidiary is being considered.
PEOPLE
On the 30th of September 2023, the Group employed 93 people (compared to 99 people as of 30.09.2020). The average number of personnel in Q3 2023 was 90 (Q3 2020: the average number of personnel was 94).
For nine months of 2023, wages and salaries with taxes amounted to € 1.5 million (nine months 2020: € 1.6 million). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 166 thousand during 9M 2023 and € 158 thousand during 9M 2020.
FINANCIAL HIGHLIGHTS
| € thousand | ||||
| Income statement | Q3 2023 | Q3 2020 | 9M 2023 | 9M 2020 |
| Revenue | 2,334 | 2,512 | 7,757 | 8,197 |
| EBITDA | 356 | 366 | 1,341 | 403 |
| EBITDA margin | 15% | 15% | 17% | 5% |
| Operating profit | 232 | 231 | 962 | (19) |
| Operating margin | 10% | 9% | 12% | (0%) |
| Net profit | 73 | 183 | 1,229 | (158) |
| Net margin | 3% | 7% | 16% | (2%) |
| Statement of financial position | 30.09.2021 | 31.12.2020 | 30.09.2020 | 31.12.2019 |
| Total assets | 8,301 | 7,650 | 7,753 | 9,045 |
| Return on assets | 15% | 14% | (2%) | (12%) |
| Equity | 3,878 | 2,648 | 1,414 | 1,542 |
| Return on equity | 32% | 41% | (11%) | (73%) |
| Debt-to-equity ratio | 53% | 65% | 82% | 83% |
| Share | 30.09.2021 | 31.12.2020 | 30.09.2020 | 31.12.2019 |
| Last Price* | 2.20 | 0.45 | 0.40 | 0.41 |
| Earnings per share | 0.55 | 0.24 | (0.05) | (0.31) |
| Price-earnings ratio | 4.02 | 1.89 | (7.79) | (1.32) |
| Book value of a share | 0.86 | 0.59 | 0.31 | 0.34 |
| Market to book ratio | 2.55 | 0.76 | 1.28 | 1.20 |
| Market capitalization, € thousand | 9,898 | 2,025 | 1,809 | 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 = 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 = Trailing twelve months (TTM) 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 shares
*http://www.nasdaqbaltic.com/
Consolidated statement of financial positions
| € thousand | 30.09.2021 | 31.12.2020 | 30.09.2020 |
| Cash and cash equivalents | 204 | 26 | 4 |
| Receivables and prepayments (Note 2) | 1,118 | 794 | 1,008 |
| Inventories (Note 3) | 390 | 544 | 410 |
| Total current assets | 1,712 | 1,364 | 1,423 |
| Investment property (Note 4) | 1,139 | 1,134 | 1,126 |
| Available-for-sale financial assets (Note 7) | 805 | 451 | 418 |
| Property, plant and equipment (Note 5) | 4,642 | 4,695 | 4,777 |
| Intangible assets (Note 6) | 3 | 6 | 10 |
| Total non-current assets | 6,589 | 6,286 | 6,331 |
| TOTAL ASSETS | 8,301 | 7,650 | 7,753 |
| Borrowings (Notes 8) | 36 | 756 | 4,436 |
| Payables and prepayments (Notes 9) | 1,002 | 1,574 | 1,674 |
| Short-term provisions (Note 10) | 4 | 18 | 4 |
| Total current liabilities | 1,042 | 2,348 | 6,114 |
| Long-term borrowings (Notes 8) | 3,220 | 2,493 | 47 |
| Long-term provisions (Note 10) | 161 | 161 | 179 |
| Total non-current liabilities | 3,381 | 2,654 | 226 |
| Total liabilities | 4,424 | 5,002 | 6,340 |
| Share capital (at nominal value) (Note 11) | 450 | 450 | 450 |
| Other reserves | 0 | 0 | 114 |
| Retained earnings (loss) | 3,428 | 2,198 | 850 |
| Total equity | 3,878 | 2,648 | 1,414 |
| TOTAL LIABILITIES AND EQUITY | 8,301 | 7,650 | 7,753 |
*The notes to the financial statements presented on pages 14 to 25 are an integral part of these consolidated financial statements
Consolidated statement of profit or loss and other comprehensive income
| € thousand | Q3 2023 | Q3 2020 | 9M 2023 | 9M 2020 |
| Revenue (Note 13) | 2,334 | 2,512 | 7,757 | 8,197 |
| Cost of goods sold (Note 14) | 1,721 | 1,892 | 5,451 | 6,508 |
| Gross profit | 613 | 620 | 2,306 | 1,689 |
| Distribution costs (Note 15) | 251 | 282 | 891 | 1,015 |
| Administrative expenses (Note 16) | 131 | 126 | 445 | 430 |
| Other operating income (Note 18) | 2 | 22 | 5 | 24 |
| Other operating expenses (Note 18) | 1 | 3 | 13 | 287 |
| Operating profit (loss) | 232 | 231 | 962 | (19) |
| Finance income (Note 19) | 0 | 4 | 354 | 21 |
| Finance costs (Note 19) | 159 | 52 | 87 | 160 |
| Profit (loss) before income tax | 73 | 183 | 1,229 | (158) |
| Net profit (loss) for the period | 73 | 183 | 1,229 | (158) |
| Basic earnings per share (Note 12) | 0.02 | 0.04 | 0.27 | (0.04) |
| Diluted earnings per share (Note 12) | 0.02 | 0.04 | 0.27 | (0.04) |
*The notes to the financial statements presented on pages 14 to 25 are an integral part of these consolidated financial statements.
TORFINN LOSVIK
Chairman of the board
Phone: +372 56 99 0988
[email protected]
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