Management report

In H2 2022 AS Linda Nektar’s (The Company´s) products experienced solid demand thus resulting in good volume performance. At the same time, external challenges from supply chain constraints, driven by the war in Ukraine led to higher input costs and negatively impacted profitability during the period. The inflationary pressures were led by rising energy costs while supply chain constraints causing momentarily fear for availability of certain raw materials on the market was rapidly driving prices.

For the full 12-month period of 2022 revenues were EUR 3.8m, largely in line with management’s guidance of EUR 3.6m, while net profitability improved by a couple of percentage points   to 7.15% (3.95% in 2021).

In the coming periods the Company strongly believes in the continuity of recognised megatrends in consumer behaviour. The demand for calorie-reduced and low-alcoholic fermented drinks is increasing in popularity. In addition, fermented ready to drink beverages (often known as RTD) are supported by the trend of premiumisation in the category. Consumers have a desire for natural ingredients, with fermentation seen as sustainable production. Premiumisation and innovative products are expected to drive growth in the low-and-no alcohol and RTD segments. The Company is well positioned with a focus on customised, high value-added ingredients for its customers which help them to create innovative fermented drinks. Together with its customers the Company seeks and expects growth in the customer base as well as geographical distribution.

Looking into 2023 the Baltic and Finnish markets, where the Company´s products are mainly delivered, the business environment remains challenging with an uncertain macro situation. High inflation and uncertainty among consumers can be expected to affect the purchasing power for certain goods, calling for a preparedness to undertake recipe and/or product changes.

At the end of 2022 the Company experienced a downward development in raw material prices, as the market prices of several agricultural commodities have fallen from record levels in the European market. At the same time, the transfer of more favourable commodity prices to production costs and consumer prices still takes time. Ukraine war developments bring, however, a shadow of uncertainty and volatility, and the circumstances can rapidly change.

Financial review

In 2022 AS Linda Nektar (The Company´s) unaudited turnover was EUR 3,786,852 (12 months 2021: EUR 3,110,589). This marked an increase of 21.7% year-on-year. The 12 months of 2022 generated a net profit of EUR 270,903 (12 months 2021: EUR 122,715).

As of 31 December 2022, the Company’s total assets came to EUR 4,137,806 (31.12.2021: EUR 3,809,320) marking an increase of 8.6% year-on-year. Current assets amounted to EUR 1,474,446 (31.12.2021: EUR 1,532,607) or 35.6% of total assets. Fixed assets amounted to EUR 2,663,360 (31.12.2021: EUR 2,276,713) or 64.4% of the balance sheet total. The liabilities of AS Linda Nektar totalled EUR 369,467 (31.12.2021: EUR 153,870) and equity amounted to EUR 3,768,339 (31.12.2021: EUR 3,655,450).

As of 31 December 2022, there were no loan commitments, while cash and cash equivalents came to EUR 294,451 (31.12.2021: EUR 651,135). The Company retains its conservative financial leverage policy.  Operating cash flow for the 12 months of 2022 was stable at EUR 552,831 (12 months 2021: EUR 560,581).

The Company continues to actively make investments into R&D in order to support future sales growth, improve production efficiency and promote the achievement of responsibility targets with regard to energy efficiency and carbon neutrality. During the period the Company was close to completing investments in new equipment lifting its technical levels, fermentation capacity, and degree of automation. The Company´s quality assurance system was also improved, achieving certification according to the FSSC 22000 standard. A total of EUR 821,626 was invested into fixed assets (12 months 2021: EUR 554,705). Some investments will be implemented through support provided by the Agricultural Registers and Information Board (ARIB). A subsidy of EUR 217,863.25 will be paid out if the granted investment project is implemented no later than September 2023.

The Company will also continue its investments into solar energy supply thus lowering its carbon footprint and energy related costs. In 2022 the Estonian Agricultural Registers and Information Board as part of the Rural Development Plan measure 4.2.6 ‘Investment Support’ granted EUR 66,938 for construction of a solar park. The subsidy will be paid out if the investment is implemented no later than November 2024.

Depreciation costs for the 12 months of 2022 amounted to EUR 435,004 (12 months 2021: EUR 399,020).

In 2022, the Company paid EUR 158,014 in dividends (12 months 2021: EUR 158,014). The income tax cost on dividends was EUR 27,584 (12 months 2021: EUR 28,514).

As of 31 December 2022, the Company had 14 employees, one Management Board Member and four Supervisory Board Members. Labour costs for the 12 months of 2022 (including taxes) amounted to EUR 476,525 (12 months 2021: EUR 431,138).

Management’s revenue guidance for the whole of 2023 is more or less similar to that achieved in 2022, hence EUR 3.8m.

 Financial Ratios

Statement of financial position

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Income statement

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Statement of cash flows

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Statement of changes in equity

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