Fifax Plc’s Half-Year Report for January–June 2023: Aquaculture operations have restarted, the fish stock is growing

Fifax Plc, Half-Year Report, 25 August 2023 at 9.00 a.m. (EET)

This is a summary of Fifax Plc’s Half-Year Report for January – June 2023. The entire report is attached to this Company Announcement as a pdf file. The report is also available on Company's website at https://fifax.ax/en/investors/reports-and-presentations.

Fifax Plc’s Half-Year Report for January–June 2023 (unaudited)

Aquaculture operations have restarted, the fish stock is growing

Significant events in January–June 2023

• Aquaculture operations resumed in March 2023 when the hatching process for the first new egg batch was initiated.
• The company had no revenue (EUR 0.9 million).
• Operating loss for the period was EUR -3.3 million (EUR -5.2 million), including one-off items of EUR 0,6 million related to the rights offering and directed share issue.
• The loss for the financial period was EUR -3.6 million (EUR -5.5 million).
• The company raised EUR 5.2 million of new capital through its rights offering in March, and 25,756,168 new shares were registered in the Finnish Trade Register on 31 March 2023.
• The directed share issue in June boosted the company’s equity ratio, as a capital loan and the accrued capital loan interest totaling EUR 0.6 million were converted into equity and 2,736,640 new shares were registered in the Finnish Trade Register on 15 June 2023.
• The share issue enables the planned improvements and the restart of the first grow-out unit, which is progressing according to plans. Further financing is required to complete the restart of the entire production facility as planned.

The figures in brackets refer to the comparison period in 2022.

Samppa Ruohtula, CEO

During the first six months of 2023, we have focused on restarting fish farming. The fingerlings that hatched from the first batch of eggs we received in March are now growing in the fingerling unit, and we expect they can be moved to the first grow-out unit in the autumn. The next batches of eggs have been taken into the hatchery and first feed unit. At the same time, we are continuing to work on the improvement measures that technically enable us to further improve the level of biosecurity and that also contribute to increase the overall farming efficiency. The improvement measures and investments that are a part of the overall restart program have been scheduled successively for each of the facility’s units in alignment with the development of the fish stock, therefore, they will remain quite small in financial terms this year.

To date, we have for example expanded the premises and tank capacity of the hatchery and fingerling unit, as well as carried out a number of upgrades to water circulation and our water purification capacity, resulting in better water quality, higher biosecurity and improved growth. We have also initiated corresponding improvements in the first of our grow-out units, in order to be able to transfer the first fish batches there once the fingerlings have reached the appropriate size, and we will move ahead with other measures in line with the investment program to meet the needs of the growing fish stock.

Before the restart, we also developed our processes and routines, aiming to further develop our biosecurity and raise it to an even higher level. As part of our new routines, fish farming activities now run in three shifts on a 24/7 basis to ensure the eggs and fingerlings are monitored and looked after by our experts round the clock.

The collaboration with the Finnish Food Authority during the entire period managing the virus outbreak has been very good and has continued actively until the restart. Their role in financing the virus sanitation and via the compensation for the culled fish has been very important to the company during the operational break. In March, we carried out a rights offering to finance the first stage of the planned restart of operations, including the improvement investments that are planned for 2023. The offering was finally oversubscribed. We are thankful for the trust shown in us by our shareholders who participated in the offering and made the restart possible.

Despite the challenging market situation, the successful offering indicates confidence in the sector overall and its long-term opportunities. Both local and global megatrends support Fifax’s strategy, and the prospects for land-based farming as a future solution continue to grow stronger. For example, the record sea temperatures this summer are a concrete reminder of the risks that climate change imposes on conventional fish farming. Fifax’s technological and operational expertise of large-scale RAS farming, including the insights in biosecurity and management of production stops, is in international demand in the numerous RAS projects running across the world.

In the second half of 2023, we will continue as planned with our restart, the building up of our fish stock and our investments in improvement. We are also working with our customers, on our products and branding to ensure we are prepared for sales when deliveries begin, while also working with financing for the next stage of the restart process, when farming will be scaled up to the facility’s full capacity. In parallel with the restart process, we are working on establishing our new consulting operations to commercialize the globally unique know-how we have accumulated.

Key figures

FINANCIAL KEY FIGURES	Jan–Jun 2023(1)		Jan–Jun 2022(1)		Jan–Dec 2022
EUR thousand
Revenue	0		873		1,155
Operating profit (loss)	-3,321		-5,189		-7,299
Result for the financial period	-3,593		-5,541		-7,985
Earnings per share, undiluted and diluted (EUR)(2)	-0.09		-0.22		-0.31
Cash flow from operating activities	-2,287		-4,634		-5,869
Investments	-345		-476		-514
Cash at bank and in hand	3,505		3,270		985
Equity ratio %	79%		71%		74%
Average full-time employees	18		31		31
Salaries and compensations, total	838		1,138		2,109
Balance sheet total at the end of the period	22,136		24,976		20,711
Number of outstanding shares at the end of the period(3)	54,248,984		25,756,168		25,756,168
Weighted average number of outstanding shares during the period(3)	38,932,196		25,756,168		25,756,168
OPERATIONAL KEY FIGURES	Jan–Jun 2023(1)		Jan–Jun 2022(1)		Jan–Dec 2022
Fish stock at the beginning of the period, tonnes	0		315		315
Fish stock at the end of the period, tonnes(4)	2		331		0
Fish produced, HOG tonnes	0		192		229

1) Unaudited
2) There are no dilutive instruments, and therefore diluted and undiluted earnings per share are the same.
3) The number of outstanding shares at the end of the period and the calculation of the weighted average number of outstanding shares during the period exclude the 150,000 shares that the company holds.
4) Aquaculture operations began when the first batch of new eggs was received in March 2023, following the conclusion of the IHN decontamination measures at the facility at the beginning of the year. It takes roughly 18 months for fish to grow from egg to marketable size. Fingerlings from the first batch of eggs were moved to the fingerling unit in June.

Going concern and financing

Following the detection of the IHN virus at the company’s plant in June 2022, the facility was emptied of fish and decontamination measures were adopted. The measures were completed in early 2023. In March, aquaculture operations recommenced with the introduction of new egg batches in the hatchery. In parallel a rights issue was carried out to finance the first stage of the facility’s restart. Additional funds are required to successfully complete the facility’s restart and to finance the fish stock’s growth until the first batch reaches slaughter size in 2024 and thus the continued operations.

The demand for sustainably farmed fish is strong and continues to increase in Fifax’s target markets. Operations were developing well prior to the IHN outbreak: new direct channels to the retail channel had been established, price development was good, and customer feedback was very positive. While numerous RAS projects are currently underway across the world, few of them are yet operational. Therefore, there is international demand for Fifax’s technological and operational expertise in large-scale RAS farming. The virus outbreak has also provided the company with new insight and experience that are valuable in the sector. To date, the restarted operations have developed in line with plans and targets, and the planned improvements have so far progressed according to plans. The operational basis for the restart is therefore sound, and management therefore considers it reasonable to assume that sufficient financing will be possible to secure to complete the restart of operations and secure the continued operations as a going concern.

To secure continuity, the following measures have been adopted:

• In March, the company carried out a rights offering, raising EUR 5.2 million to finance the first stage of the restart process. The offering was oversubscribed by 9.3%.
• In June, the company carried out a directed share issue to convert short-term liabilities into equity, boosting the company’s equity ratio.
• The company has achieved cost savings by adjusting costs to match needs during the restart project.
• The company has prepared nutrient and carbon footprint calculations and established climate and environmental targets that are required to secure climate and environmental –focused financing.

In addition to these measures, additional funding is required for restarting operations and continuing as a going concern. In 2023–2024, the company plans to raise further financing in the form of both equity and debt capital in order to complete the restart project. The company estimates that the funding need to meet the mid-term targets is approximately EUR 10 million, that enable the completion of the re-start and ramp-up of operations and which also include several investments that improve productivity and profitability. The investments also support the achievement of environmental goals. As commitments concerning additional funding had not been obtained at the time this half-year report was published, there is a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.

Significant events after the period

There have been no significant events after the period.

Financial reporting

The company will publish a half-year report for the first six months of the year and a financial statements release and the financial statements for the full financial year, which is the calendar year.

The 2023 financial statements release, financial statements and the board of directors’ report will be published in week 10 (week starting 4 March 2024).

The half-year report for 1 January–30 June 2023 and the 2023 financial statements and board of directors’ report will be published via a company announcement and on the company’s website www.fifax.ax.

Webcast

A webcast will be held on 25 August 2023 at 12.30 pm Finnish time.

The webcast will be held in English and can be followed live at:

https://fifax.videosync.fi/2023-h1-results

The materials will be published separately at www.fifax.ax

A recording of the webcast will be made available on the company’s website. Personal data collected in connection with the webcast will not be used for any other purpose.

Additional information

CEO Samppa Ruohtula,
[phone],
[e-mail]

Certified advisor
Aktia Alexander Corporate Finance,
[phone].

Fifax in brief

Fifax’s vision is to be a forerunner in large-scale sustainable fish farming with a minimal impact on the environment, so that locally and sustainably produced fish can be enjoyed by its customers all year round.

Established in 2012, Fifax utilizes ultra-intensive Recirculating Aquaculture Systems (RAS) technology based on the principle of an almost completely closed water circulation within the facility, where the fish live in large land-based indoor tanks. Indoor tanks better safeguard against external factors, and the environmental impact and pollution from the facility is significantly lower when compared to traditional fish farming in water bodies.

FIFAX Plc’s shares have been listed in Nasdaq First North Growth Market Finland.

Attachments

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Fifax Abp Half Year Report 1 6 2023

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