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Management report
NORDIC FIBREBOARD AS UNAUDITED results for fourth QUARTER and 12 months of 2020 Consolidated net sales for Q4 2020 were € 2.07 million from continuing operations (Q4 2019: € 3.23 million from continuing operations). The sales revenue of the Group`s main business segment, fibreboard, for Q4 2020 were € 2.01 million (Q4 2019: € 2.78 million). The main reason for this drop in sales was due to the closure of the Püssi factory in March 2020, which came about as a result of the loss of orders from customers within the display board industry caused by the COVID-19 pandemic. Furniture retail sales revenue for Q4 2020 were € 1 thousand, the decrease in sales (compared to Q4 2019: € 390 thousand) was due to the Group exiting the furniture retail segment earlier in year 2020, with some remaining stock sales taking place during 2020. Rental and property development sales, includes the resale of utilities, in Q4 2020 were € 64 thousand, remaining practically at the same level compared to the same period last year (Q4 2019: € 63 thousand). The Group reported consolidated EBITDA of € 137 thousand for Q4 2020 for its continuing operations (vs Q4 2019: EBITDA of € 141 thousand from continued operations). The EBITDA result for Q4 2019 includes one-off operating income of € 324 thousand from revaluation of its property subsidiary Pärnu Riverside Development, while the EBITDA result for the Q4 2020 includes one-off expense in the Group’s fibreboard subsidiary of € 38 thousand for the removal of previously used office building located at the fibreboard site in Pärnu. EBITDA of the main segment, fibreboard, was for Q4 2020 positive € 139 thousand (Q4 2019: negative € 119 thousand), after the above mentioned one-off building removal expense. The main reason for such improvement in the fibreboard business’ EBITDA are due to the improved efficiency of the fibreboard division. The closure of the Püssi fibreboard factory enabled us to switch the Püssi factory construction sector orders to our Pärnu factory, and we started a 4th shift in Pärnu in April 2020 as a result thereof. The Pärnu factory is now running continuously, except for a one-shift maintenance stop every month. This has led to increased machine utilisation, and gross margin for Nordic Fibreboard Ltd OÜ has therefore increased substantially, being 28% in Q4 2020 (from being 11% in Q4 2019). After depreciation and net financial costs, the Group’s net result for Q4 2020 from continuing operation was thus a profit of € 1,231 thousand (Q4 2019: a loss € 75 thousand from continuing operation). The reason for the change in profit is the refinancing of loans and overdrafts at the end of 2020, which generated a one-off financial income of € 1,237 thousand and the improvement of the efficiency of the aforementioned fibreboard division. Consolidated net sales for 12 months 2020 from continuing operations were € 10.27 million, which is a 23% decrease compared 2019 from continuing operations (2019: € 13.33 million from continuing operations). The decrease in sales revenue is due to the reduced production volume due the closure of the Püssi factory. Consolidated net profit for 12 months 2020 was € 1.07 million from continuing operations (2019: loss of € 1.13 million from continuing operations). The reasons for the large difference between the results of 2020 and 2019 are the previously mentioned extraordinary financial income from refinancing loans and overdrafts at the end of 2020 of 1.24 million euros, improving the efficiency of the Pärnu fibreboard factory in 2020, and the one-off loss incurred in 2019 when the Group exited its furniture wholesale business. DIVISION REVIEW Revenue by business segments
Profit by business segments
* Net financial costs in Q4 2020 (also 12M 2020) include extraordinary income € 1,237 thousand from loan refinancing. ** Net financial costs in 12M 2019 include extraordinary cost, loss from the sale of Skano Furniture Factory OÜ of € 540 thousand. NORDIC FIBREBOARD LTD: FIBREBOARD SALES The sales revenue of fibreboard decreased by 28% in the Q4 2020 compared to the same period in 2019 (€ 2.01 million in Q4 2020 versus € 2.78 million in Q4 2019). We sold our fibreboard products to customers in 17 countries during Q4 2020. Fibreboard sales for 12 months 2020 were € 10.00 million, which is 15% decrease from year 2019 sales of € 11.75 million. The main reason for the drop in sales was the loss of display board customers, boards for this sector was produced in the Püssi factory, which we closed in March 2020. However, sales to our customers within the construction sector in our main Northern European and Russian markets have been stable. Finland, our largest market accounted for 26% of total fibreboard sales this year (up from being 22% of total sales in 12M in 2019), Denmark is our second largest market, accounting for 22% of sales in the 12 months of 2020 (it has also increased compared to year 2019 when it accounted for 14% of sales). Sales in Estonia and Russia have remained at the same level as previous year, while we recorded sales decline in markets further afield mainly due to the negative effect in many such markets caused by the corona virus. The fibreboard EBITDA in Q4 2020 was positive € 139 thousand (Q4 2019 negative € 119 thousand), the full-year EBITDA of fibreboard 2020 was € 597 thousand (€ 68 thousand in 2019). The main reason for the improvement in EBITDA were due to increased efficiency by achieving full machine utilisation in the Pärnu factory in 2020. Fibreboard Q4 EBITDA of € 139 thousand was down from EBITDA levels achieved in Q2 2020 and Q3 2020 of respectively € 347 thousand and € 366 thousand mainly due to the annual two week maintenance stops which took place early October 2020 and end of December 2020, such two week maintenance stops normally takes place every July and December. This year’s October and December maintenance stops resulted in less production output during Q4 2020 compared to the previous two quarters when we did not have such long maintenance stops. FIBREBOARD SALES BY GEOGRAPHICAL SEGMENTS
SKANO FURNITURE: RETAIL SALES Furniture retail sales in Q4 2020 were € 1 thousand (2019 Q4 € 390 thousand). However, this business has been closed down, as earlier informed, and the sales recorded in 2020 was from some remaining stock. RETAIL SALES BY COUNTRIES
* Estonian stores were closed on 31.01.2020 and Latvian and Lithuanian stores were closed on 30.09.2019. PÄRNU RIVERSIDE DEVELOPMENT: REAL ESTATE MANAGEMENT Rental income, including the resale of utilities, was € 64 thousand in Q4 2020 (2019 Q4 € 63 thousand). The company’s expenses consist of operating expenses and expenses related to the ongoing detail plan project, which resulted in positive EBITDA of € 3 thousand for Q4 2020. EBITDA in Q4 2019 of € 322 thousand were heavily influenced by the increased revaluation of the property of € 327 thousand. Net profit in Q4 2020 were € 3 thousand (2019 Q4: profit € 300 thousand). The reason for the revaluation of the Pärnu Riverside development property was due to the change in the accounting policies for investment properties adopted at the end of 2019, where instead of the measured cost, investment properties were recognized in the balance sheet at fair value. Consolidated statement of financial position and cash-flow As of 31.12.2020 the total assets of Nordic Fibreboard AS were € 7.7 million (31.12.2019: € 9.1 million). The liabilities of the company as of 31.12.2020 were € 5.0 million (31.12.2019: € 7.5 million), of which the company has borrowings of € 3.2 million as at 31.12.2020 (31.12.2019: € 4.6 million). Receivables and prepayments amounted to € 0.8 million as at 31.12.2020 (31.12.2019: € 1.4 million). Inventories were € 0.5 million as of 31.12.2020 (31.12.2019: € 0.9 million). The fair value of financial assets (ie Trigon Property Development shares) increased from € 397 thousand as of 31.12.2019 to € 450 thousand as of 31.12.2020. Property, plant, equipment and intangibles were € 4.7 million as of 31.12.2020 (€ 5.2 million as of 31.12.2019). The decrease in the balance sheet volume in 2020 was affected by the closure of the Püssi factory. During 2020 twelve months, the Group’s cash flows from operating activities totalled € 165 thousand (2019 twelve months: € 516 thousand). Investment activities resulted in cash outflows in amount of € 89 thousand during 2020 twelve months, compared to outflows in amount € 153 thousand during twelve months 2019. Financing activities also resulted in cash outflows of € 58 thousand during twelve months 2020 (2019 twelve months: cash outflow € 410 thousand). Net cash effect during 2020 twelve months cash inflows of € 19 thousand, which compares to 2019 twelve months cash outflows of € 47 thousand. OUTLOOK NORDIC FIBREBOARD LTD The order book from our traditional customers in our largest markets in northern Europe remains strong, with increased demand from many of these markets. This has had the effect of us having to postpone orders from customers further afield. As a result of this improved demand picture, management is now considering measures for a possible reopening of Püssi factory during second half of this year. On the other hand, we are much aware of the continuing uncertainty surrounding the COVID-19 pandemic. We expect to have a more clear picture of the demand situation and the pandemic within the next few months. REAL ESTATE MANAGEMENT We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. PEOPLE On the 31st of December 2020, the Group employed 97 people (compared to 126 people as of 31.12.2019). The average number of personnel in Q4 2020 was 96 (Q4 2019: 125). For twelve months of 2020, wages and salaries with taxes amounted to € 2.0 million from continuing operations (twelve months 2019: € 2.5 million from continuing operations). Payments made to management board members of all group companies including all subsidiaries with relevant taxes were € 217 thousand in twelve months 2020 and € 173 thousand in twelve months 2019. FINANCIAL HIGHLIGHTS
EBITDA = Earnings before interest, taxes, depreciation and amortization Consolidated statement of financial positions
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements. Consolidated statement of profit or loss and other comprehensive income
*The notes to the financial statements presented on pages 15 to 32 are an integral part of these consolidated financial statements. TORFINN LOSVIK |
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