0GWU Skano Group As

MANAGEMENT REPORT

Consolidated net sales for Q3 2023 were € 1.79 million (Q3 2022: € 2.79 million). The main business area is Nordic Fibreboard Ltd, the production and wholesale of fibreboard, which recorded sales in Q3 2023 of € 1.78 million, (Q3 2022: € 2.78 million). The remaining business area is Pärnu Riverside Development, real estate management of the property owned in Suur-Jõe street in Pärnu, who recorded sales of € 11 thousand in Q3 2023 (Q3 2022: € 9 thousand).

The decline in Nordic Fibreboard's Q3 2023 sales revenue continues to be impacted by global economic uncertainty, which has led to a lack of confidence among end users of building materials, including the company's fiberboard. Nordic Fibreboard Ltd had sales of € 1.78 million in Q3 2023, down 12% from Q2 2023 and down 23% from Q1 2023, which shows that the decline in sales revenue is abating.

The consolidated EBITDA of Nordic Fibreboard for Q3 2023 was € 238 thousand, the EBITDA margin was 13% (Q3 2022: EBITDA was € 193 thousand and the EBITDA margin was 7%).  Compared to the Q3 2022 the Group`s gross margin increased from 19% to 27% in the Q3 2023, which indicates that the Group`s profitability in the Q3 2023 has increased compared to the same period last year.

Financial expenses for the Q3 2023 were € 79 thousand, of which € 55 thousand were loan interest costs and € 24 thousand were losses from the revaluation of Trigon Property Development (TPD) shares. Total financial income of € 49 thousand was recorded in Q3 2022, which consist of the profit from the revaluation of shares (TPD) in the amount of € 79 thousand and the interest expense of loan obligations in the amount of € 30 thousand.

Group`s consolidated net profit for Q3 2023 was € 37 thousand (Q3 2022: profit € 117 thousand).

DIVISIONAL REVIEW

Revenue by business segments

Profit by business segments

NORDIC FIBREBOARD LTD: Fibreboard production and sales

Fibreboard sales in Q3 2023 were € 1.78 million (Q3 2022: € 2.78 million). In Q3 2023, the main reason for the decrease in sales revenue compared to Q3 2022 was the loss of a key customer in Denmark, resulting in a loss of 30% of sales compared to Q3 2022. In addition, sales in Finland decreased by 50% in Q3 2023 compared to the same period in 2022. But as positive news, it has been possible to revive relations with former export customers and found new customers both in the Middle East and in the European Union, for example Bulgaria and France. As a result, sales to the Middle East, Asia, Africa and other regions have improved in Q3 2023 compared to Q3 2022. Sales to European Union countries have decreased in the 3rd quarter of 2023 compared to the 3rd quarter of 2022. However, if we look at the countries of the European Union separately, sales to Sweden and Latvia have increased, and sales in Estonia have remained at the same level.

The EBITDA of the fiberboard segment for the Q3 2023 was a positive € 246 thousand, which is a quarterly improvement compared to the EBITDA for the Q3 2022, which was a positive € 201 thousand, but when comparing EBITDA for the first nine months of 2023 with the 2022 with the same period, the drop is 66%. The reason for the decline was the too high fixed electricity price, which was signed with the electricity supplier at the end of 2022. The electricity contract was cancelled on 31.3.2023, and a new less onerous electricity contract came into force on 01.04.2023. 

Fibreboard sales by geographical segments

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 was € 11 thousand in Q3 2023, (Q3 2022: € 9 thousand).

The real estate management EBITDA for Q3 2023 were negative € 2 thousand and net loss € 2 thousand (Q3 2021: EBITDA negative € 6 thousand and net loss € 6 thousand).

STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT

As of 30.09.2023 the total assets of Nordic Fibreboard AS were € 8.9 million (30.09.2022: € 9.4 million). The liabilities of the company as of 30.09.2023 were € 4.4 million (30.09.2022: € 4.7 million), of which the Group has payables of € 0.9 million as at 30.09.2023 (30.09.2022: € 1.0 million) and borrowings of € 3.0 million as at 30.09.2023 (30.09.2022: € 3.1 million).

Receivables and prepayments amounted to € 0.8 million as at 30.09.2023 (30.09.2022: € 1.3 million). Inventories were € 1.0 million as of 30.09.2023 (30.09.2022: € 0.9 million). Fixed assets were € 7.1 million as of 30.09.2023 (€ 6.7 million as of 30.09.2022).

During 2023 9M, the Group’s cash flows from operating activities totalled cash inflow of € 472 thousand (2022 9M: cash inflow € 617 thousand). Cash outflows due to investment activities was € 215 thousand during 9M 2023, consisting of investments into production assets (9M 2022: cash outflow € 93 thousand). Cash outflows due to financing activities was € 213 thousand during 9M 2023 (9M 2023: cash outflow € 111 thousand). Net cash effect during 9M 2023 showed cash inflows of € 44 thousand, (2022 9M: cash inflows € 413 thousand).

OUTLOOK

Nordic Fibreboard Ltd

The overall demand picture continues to be challenging, and the short-term outlook remains uncertain due to headwinds coming from macro factors, such as increasing interest rates, global economic uncertainty, and the ongoing wars in Ukraine and in Israel. All have led to a construction/renovation market slowdown and a lack of confidence among end users of building materials, including the use of the company’s fibreboards.

Main operation issue remains the ongoing preparation of upgrading the company’s wood-based boiler house in Pärnu so to meet the new emission requirements coming into force in 01.01.2025.

Pärnu Riverside Development

We will continue to manage and develop the property on Suur-Jõe Street 48, Pärnu. A detail plan for the property has been completed, with the intention of converting the property into a private residential property.

Financial highlights

EBITDA = Earnings before interest, taxes, depreciation and amortizationEBITDA margin = EBITDA / RevenueOperating margin = Operating profit / RevenueNet margin = Net profit / RevenueReturn on assets = Net profit / Total assetsReturn on equity = Net profit / Equity Debt-to-total assets ratio = Liabilities / Total assetsEarnings per share = Trailing twelve months (TTM) net profit / Total sharesPrice-earnings ratio = Last price / Earnings per share Book value of a share = Equity / Total sharesMarket to book ratio = Last price / Book value of a shareMarket capitalization = Last price * Total shares*http://www.nasdaqbaltic.com/

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONS

*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

*The notes to the financial statements presented on pages 14 to 25 are an integral part of these consolidated financial statements.

Aigar KallasChairman of the BoardPhone: +372 5281299aigar.kallas@nordicfibreboard.com

Attachment

• NORDIC FIBREBOARD AS_Interim Report Q3 2023

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