The Interim Report and Interim Financial Statements for the six month period ended 30 June 2017 (unaudited)

Background Information

AS Linda Nektar is an Estonian-based beverage company with origins in the 1940s. The company is providing fermented beverages for the drinks industry focusing on unpacked fruit wines under a Business-to-Business model. The company’s production facility is located in a logistically favourable position relative to the Baltic and Northern European markets.

Extensive R&D efforts have led to breakthroughs in the field of aroma stripping and recovery and this, along with the planned geographical expansion, will be the key focal points in the coming years.

The shares of Linda Nektar are admitted to trading on Nasdaq Baltic First North Market.

Report of activities

Management Report

The sales revenue of AS Linda Nektar for the first six months of 2017 was 1,469,298 euros (first six months of 2016: 2,113,661 euros), showing a 30,5% y-o-y decrease. The Company completed the first half of the year with a net profit of 118,403 euros. The net profit of the same period of the previous year was 411,923 euros, reflecting a 71,2% y-o-y decrease.

The market is presently faced with a combination of a weak summer from a demand perspective due to weather considerations, while the Company´s customers are also absorbing the impact of rises in excise taxes previously announced by the Estonian government. Due to changes in excise tax rates and the consequent adjustments within the existing customer base, the management believes that revenue guidance for 2017 remains unclear; however, the estimate will be below the previously indicated EUR 3.5 – 4.0 m. 

There have been some interesting European beverages market developments within the Company’s sector. One of these is that light alcoholic drinks have also begun to be based on (cheaper) fermented glucose syrup instead of the traditional fruit base. The Company has the ability to produce both kinds of product for the drinks industry. It is important to note that overall consumption of beverages on our existing markets are not expected to change significantly. However, predicting the exact mix is not currently feasible due to ongoing changes in the business environment. 

The Company´s strategic aim remains to further develop its aroma technologies and related solutions. Part of this includes the recent completion of its product development and quality control facility to meet the high standards of global flavour purchasers and beverage producers. The focus is on helping its customers develop innovative product solutions to meet future consumption trends. A valuable tool in this context is international co-operation which the Company has been recently developing. In view of our pursuit to attract new customers, our production capacity can be significantly increased in a short period of time should such need arise. 

In total, 349,950 euros were invested in property, plant and equipment (first six months of 2016: 508,434 euros). Depreciation expenses in the first half of the year amounted to 211,716 euros (first six months of 2016: 167,848 euros) and development costs amounted to 22,440 euros (first six months of 2016: 88,159 euros).

As at 30 June 2017, the enterprise had 13 employees - 1 member of the management and 3 supervisory board members. The salary expenses of the first six months of 2017 (including taxes) were 158,186 euros (first six months of 2016: 174,372 euros). 

In the first half of the year, the enterprise paid dividends for the performance of the 2016 financial year in the amount of 299,271 euros (first six months of 2016: 141,760 euros). The income tax expense entailed in the payment of dividends to the shareholders amounted to 74,818 euros (first six months of 2016: 35,440 euros).

Kadri Rauba

CEO

Interim Financial Statements

The interim report is prepared according to the Accounting Principles Generally Accepted in Estonia. The interim report follows same accounting principles that were used in the annual report. Interim report is compiled in euros (EUR).

Balance sheet                                                                                                

(In euros)

Income statement

(In euros)

* Technology development costs 22,440 euros in the first half of 2017 (6 months 2016: 88,159 euros).

Statement of cash flows

(In euros)

*  2^nd and 3^rd instalment of the “AS Linda Nektar Development Project” of Enterprise Estonia 81,745 euros

Statement of changes in equity

(In euros)

 * As of 30 June 2017 the Company had 56 shareholders.

         Additional information:
         
         Kadri Rauba
         Member of Management Board
         AS Linda Nektar
         Address: Kobela, Antsla parish, 66407 Võrumaa, Estonia
         Telephone: +372 785 5768
         E-mail: info@lindanektar.ee