Consolidated net sales for Q1 2020 were € 3.21 million, being a 2% decrease compared to the same period in 2019 from continued operations. Fibreboard sales increased by 7% to € 3.09 million due to new customers in the European Union within the display board and door core segments. Furniture retail sales revenue € of 47 thousand decreased by 88% in the Q1 2020 compared to the same period of the previous year, as Skano Furniture OÜ terminated its active operations and in the Q1 2020 the last sales of the discount campaign took place. Pärnu Riverside Development OÜ sales of real estate management in the Q1 2020 were € 68 thousand.
Nordic Fibreboard AS consolidated EBITDA were negative € 310 thousand for Q1 2020 (vs positive € 12 thousand Q1 2019 from continuing operations), whereby its Fibreboard division recorded negative EBITDA of € 255 thousand and the Furniture division negative EBITDA of € 47 thousand. The main reason for Fibreboard division’s large loss is attributed to the temporarily closure of the fibreboard production plant in Püssi, such closure taking place in March due to the sudden loss of orders from this factory’s main customer caused by the corona virus pandemic.
Net loss for Q1 2020 was € 534 thousand (Q1 2019: loss of € 202 thousand from continuing operations).
DIVISION REVIEW OF FIRST QUARTER
Revenue by business segments
| € thousand | Q1 2020 | Q1 2019 |
| Continued operations | ||
| Fibreboards production and sales | 3,091 | 2,893 |
| Furniture retail | 47 | 392 |
| Real Estate Management | 68 | 0 |
| Group transactions | (0) | (2) |
| TOTAL from continued operations | 3,206 | 3,284 |
| Discontinued operations | 0 | 545 |
| TOTAL | 3,206 | 3,829 |
Profit by business segments
| € thousand | Q1 2020 | Q1 2019 |
| Continued operations | ||
| EBITDA by business units: | ||
| Fibreboards production and sales | (255)* | 23 |
| Furniture retail | (47) | (22) |
| Real Estate Management | (2) | 0 |
| Group transactions | (6) | 12 |
| TOTAL EBITDA | (310) | 12 |
| Depreciation | 151 | 150 |
| TOTAL OPERATING PROFIT/ LOSS | (462) | (138) |
| Net financial costs | 72 | 64 |
| Income tax | 0 | 0 |
| NET PROFIT/ LOSS from continued operations | (534) | (202) |
| Net profit/loss from discontinued operations | 0 | (121) |
| TOTAL | (534) | (323) |
* Includes extraordinary expense of Püssi factory closure of 187 thousand euros, shown in the income statement under other operating expenses.
Nordic Fibreboard Ltd: FIBREBOARD sales
Fibreboard sales in Q1 2020 were € 3.09 million, which is 7% more than same period in 2019 (2019: € 2.89 million). We sold our products to customers in 21 countries during Q1 2020. We recorded sales of € 2.74 million to customers in the European Union, the increase from last year’s Q1 sales of € 2.09 million mainly coming from new customers in the European Union within the door core and display board segments. The corona virus pandemic led to substantial reduction in sales to customers in all other regions where we sell our fibreboards, these being Asia, Africa, Middle East, and Russia.
FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
| € thousand | ||
| Q1 2020 | Q1 2019 | |
| European Union | 2,741 | 2,093 |
| Russia | 211 | 328 |
| Asia | 38 | 164 |
| Africa | 35 | 143 |
| Middle East | 38 | 86 |
| Other | 29 | 80 |
| TOTAL | 3,091 | 2,893 |
SKANO FURNITURE: RETAIL SALES
Furniture retail sales in Q1 2020 were € 47 thousand, decrease 88% (2019 Q1 € 392 thousand) from same period last year. The decrease in sales revenue is due to the exit from the retail business. In 2019, Skano Furniture OÜ closed 4 stores and in the first quarter of 2020 the last two remaining stores. EBITDA for furniture retail for Q1 2020 were negative € 47 thousand (Q1 2019 EBITDA was negative € 22 thousand).
RETAIL SALES BY COUNTRIES
| € thousand | Number of stores | |||
| Q1 2020 | Q1 2019 | 31.03.2020 | 31.03.2019 | |
| Estonia | 47 | 256 | 0 | 4 |
| Latvia | 0 | 40 | 0 | 1 |
| Lithuania | 0 | 96 | 0 | 1 |
| TOTAL | 47 | 392 | 0 | 6 |
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 which resulted in rental income, ie sales, of € 68 thousand in Q1 2020. The company was established in Q2 2019. EBITDA for Q1 2020 were negative € 2 thousand.
STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT
As of 31.03.2020 the total assets of Nordic Fibreboard AS were € 8.5 million (31.03.2019: € 10.1 million). The liabilities of the company as of 31.03.2020 were € 7.5 million (31.03.2019: € 7.6 million), of which Group has borrowings of € 4.4 million as at 31.03.2020 (31.03.2019: € 4.7 million).
Receivables and prepayments amounted to € 1.4 million as at 31.03.2020 (31.03.2019: € 1.4 million). Inventories were € 0.5 million as of 31.03.2020 (31.03.2019: € 1.9 million). Fixed assets were € 6.6 million as of 31.03.2020 (€ 6.7 million as of 31.03.2019). The decrease in balance sheet volume in 2019 is due to the sale in September 2019 of the Group’s furniture production and wholesale subsidiary.
In 2020 Q1, the Group’s cash flows from operating activities totalled cash inflow of € 209 thousand (2019 Q1: cash inflow € 84 thousand). Investment activities resulted in cash outflows in amount of € 78 thousand in 2020 Q1, compared to outflows in amount € 28 thousand in Q1 2019. Financing activities also resulted in cash outflows of € 131 thousand in Q1 2020 (2019 Q1: cash outflow € 33 thousand). Net cash effect in 2020 Q1 shows cash outflow € 1 thousand (2019Q1: cash inflow € 24 thousand).
OUTLOOK
NORDIC FIBREBOARD LTD
The corona virus pandemic is still affecting the economy of the countries where the company is selling its fibreboards, and due to the extraordinary and unpredictable effect of this pandemic, we find it most difficult to foresee the future demand situation. However, we take some comfort that our customers in the Nordic and Baltic countries have so far not shown any signs of reducing their demand for our fibreboards.
PÄRNU RIVERSIDE DEVELOPMENT
We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu.
PEOPLE
On the 31st of March 2020, the Group employed 130 people (compared to 126 people as of 31.03.2019 from continuing operations). The average number of personnel in Q1 2020 was 127 (Q1 2019: 126 from continuing operations).
For three months of 2020, wages and salaries with taxes amounted to € 587 thousand (three months 2019: € 592 thousand from continuing operations). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 45 thousand in Q1 2020 and € 51 thousand in Q1 2019.
FINANCIAL HIGHLIGHTS
| € thousand | ||
| Income statement | Q1 2020 | Q1 2019 |
| Revenue | 3,206 | 3,284 |
| EBITDA | (310) | 12 |
| EBITDA margin | (10%) | 0% |
| Operating profit | (462) | (138) |
| Operating margin | (14%) | (4%) |
| Net profit | (534) | (202) |
| Net margin | (17%) | (6%) |
| Net profit/loss from discontinued operations | 0 | (121) |
| TOTAL NET PROFIT | (534) | (323) |
| Statement of financial position | 31.03.2020 | 31.03.2019 |
| Total assets | 8,475 | 10,147 |
| Return on assets | (6%) | (2%) |
| Equity | 1,017 | 2,587 |
| Return on equity | (52%) | (8%) |
| Debt-to-equity ratio | 88% | 75% |
| Share | 31.03.2020 | 31.03.2019 |
| Last Price* | 0.33 | 0.41 |
| Earnings per share | (0.12) | (0.07) |
| Price-earnings ratio | (2.78) | (5.74) |
| Book value of a share | 0.23 | 0.58 |
| Market to book ratio | 1.46 | 0.72 |
| Market capitalization, € thousand | 1,485 | 1,854 |
| Number of shares, piece | 4,499,061 | 4,499,061 |
DECLARATION OF THE MANAGEMENT BOARD
The management board has prepared the management report and the consolidated financial interim statements of Nordic Fibreboard AS for the first quarter 2020.
The management board confirms that the management report on pages 4-8 provides a true and fair view of the business operations, financial results and financial condition of the parent company and the entities included in consolidation.
The management board confirms that according to their best knowledge the consolidated financial interim report on pages 10-30 presents a fair view of the assets, liabilities, financial position and profit or loss of the issuer and the entities involved in the consolidation as a whole according to the International Financial Reporting Standards as they are adopted by the European Union and contains a description of the main risks.
Due to the negative results in Q1 2020, the Company’s equity does not meet the commercial code minimum requirements as of 31 March 2020. The management will convene an extraordinary general meeting of shareholders next week, where it is proposed to decrease the nominal share value from EUR 0.6 to EUR 0.06, in which case the equity will be in compliance with the minimum requirements in the commercial code.
Torfinn Losvik
Chairman of the Management Board
Ph: +372 56 990988
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