Fifax Financial Statements Release 2023: Aquaculture operations have restarted, the fish stock is growing as planned

Fifax Plc, Financial Statements Release, 6 March 2024 at 9.00 am EET

Fifax Financial Statements Release 2023: Aquaculture operations have restarted, the fish stock is growing as planned

This is a summary of Fifax Plc’s Financial Statements Release. 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.

Significant events in January – December 2023

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

• Aquaculture operations resumed in March 2023 when the hatching process for the first new egg batch was initiated. The fish stock is growing as planned.
• The company had no revenue during the financial period (EUR 1.2 million).
• Operating loss for the period was EUR -6.7 million (EUR -7.3 million), including non-recurring items of EUR 0.7 million related to the rights offering, the private placement and conversion issue.
• The loss for the financial period was EUR -7.2 million (EUR -8.0 million).
• The company raised EUR 9 million of new capital during the financial period, EUR 5.2 million through its rights offering and EUR 3.8 million through the private placement in December. The company also carried out a conversion issue, which boosted the company’s equity ratio, as a capital loan and the accrued capital loan interest totalling EUR 0.6 million were converted into equity.
• In December, the company negotiated a restructuring of its EUR 3.8 million loan from financial institutions, including a grace period without amortisations up to October 2025.
• The assets raised during the year and the renegotiated loan terms enable most of the restart process to be carried through. Further financing is required to complete the restart of the entire production facility as planned.

Samppa Ruohtula, CEO

The restart of aquaculture operations at the Eckerö facility, underway since March 2023, is progressing according to plan, and we have reached the most critical targets for the year. The first batch of eggs has developed well, and at the time of writing this review, the largest individuals are reaching a size of 200 grams. The hatchery and fingerling units are in full production, and the first of our three grow-out units is filling up.

The first grow-out unit still accommodates the growing fish stock, but with absolute fish growth increasing as the fingerlings become larger, the unit will quickly fill up during the next few months. The fish stock has already grown from 59 tonnes at the year-end to 100 tonnes at the end of February 2024.To match growth, we will deploy the next two grow-out units as planned in order to achieve our full production capacity of approximately 3,200 tonnes per year.

The comprehensive virus decontamination of our facility, completed early last year, offered new unique insights that will help us raise the RAS farming biosecurity, process and technology standards. The source of the virus has not been identified; however, the uncertainty has contributed to making the critical review of the biosecurity of the facility and all potential entrance paths even more thorough. The facility’s emptying also enabled the implementation of such improvements that would not have been possible to implement without the emptying of water. We have also developed our processes and work routines, aiming for an increasingly higher level of security and stability. Positive results can already be seen in the farming process and growth.

We were able to resume operations thanks to the continued support shown by our shareholders and other financiers. Over the year, we raised gross proceeds totalling EUR 9 million in an oversubscribed rights offering in March and a private placement in December. We have also negotiated an extension until the end of 2026 and a grace period without amortisations up to October 2025 for our outstanding bank loans of EUR 3.8 million. These measures have already secured the main part of the financing we estimated to be needed to complete the restart and all the planned development investments in biosecurity and farming technology. Additional assets will be required to complete the restart and achieve the 2024 targets. The exact amount depends on how the fish continue to develop and when sales can resume. Our efforts to secure the financing will continue during the spring.

Land-based aquaculture is a new industry, and the long-term outlook remains promising. The global challenges facing food production – climate change, emissions and eutrophication, along with environmental risks related to fisheries and conventional fish farming – must be solved. The geopolitical development of recent years has also highlighted the importance of security of supply and locally produced food.

In early 2024, we focused on securing the fish stock’s growth and the ramp-up of the next grow-out unit. Meanwhile, we are preparing to resume sales in cooperation with our customers. We are also continuing the launch of our advisory business to help other projects in this new and growing industry succeed and contribute to responsible and sustainable food production worldwide.

Key figures

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

In 2023, the company successfully restarted operations at the facility after the facility had been emptied and decontaminated due to the IHN outbreak detected in June 2022. Aquaculture operations resumed in March with the introduction of the first batch of eggs in the hatchery and further farming stages. Several other egg batches have been received since. During 2023, the company raised a large share of the financing needed for the restart, for the build-up of the fish stock and to continue the investment programme that was initiated in 2023 and aims to improve biosecurity and farming technology. However, the company’s cash and cash equivalents at the time of publishing of this financial statements release are not sufficient to fund the restart of operations fully, and thus the company’s operations as a going concern. Additional funds are required to successfully complete the facility’s restart and to finance the fish stock’s growth and the operations during the restart phase, until the company can generate sufficient revenue. In addition, a degree of uncertainty remains as to when sales of the new fish stock can begin. With this background, the board has evaluated the assumption of going concern up to the date of publishing of this financial statements release.

Until the discontinuation of operations caused by IHN, the company was continuously delivering fish to its customers, and it had opened new direct channels with retailers. Customer feedback has been positive, and the price of salmon has developed favourably. As indicated by the inquiries received by the company, there is also an interest in ASC certified, environmentally farmed rainbow trout in other markets within the EU. In other words, the operational conditions for the restart of sales are very good.

The company’s management has prepared a financial forecast for the restart of operations, covering 18 months, including the continued building up of the fish stock and the completion of the planned investments aimed at further improving biosecurity and farming technology. The need for operational financing until the company can generate sufficient revenue to operate as a going concern is dependent on the fish stock developing as planned and on the timing of the sales restart. The management and the board of directors are continuing their efforts to secure the financing and operational conditions required.

The following measures have been adopted to finance the restart and secure continued operations:

• In March 2023, the company raised EUR 5.2 million in a rights offering.
• In December 2023, the company raised EUR 3.8 million in a private placement.
• In December, the company renegotiated the repayment plan for its loan of EUR 3.8 million (as per 31 December 2023) from financial institutions. Repayments will resume in October 2025, and the loan must be repaid in full in December 2026. No repayments will be made in 2024.
• In 2023, the company applied for and received EUR 0.2 million in investment grants from the European Maritime and Fisheries Fund for improvement investments related to the restart.
• In January, the company completed change negotiations to adjust its cost structure and workforce to match the needs for restarting operations.

As stated, the measures adopted are not sufficient to finance the operation until the company can finance the needs of the business through its own turnover. Negotiations on new loan financing are underway with financiers. Fifax has also in the beginning of 2024 applied for an investment grant from the European Maritime, Fisheries and Aquaculture Fund (previously, the European Maritime and Fisheries Fund) in relation to the first part of the improvement investments planned for 2024.

As commitments concerning additional funding had not been obtained on the date of publishing of this financial statements release, there is a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern. However, based on the measures to date, the management considers it reasonable to assume that adequate funding primarily in the form of loan capital and grants will be secured and has therefore decided to prepare the financial statements as a going concern.

Significant events after the period

There are no significant events to report.

The Board's Proposal for the Use of Distributable Funds

Distributable funds amount to EUR 17,596,442.95, of which losses for the financial period total EUR - 7,225,487.10. The board proposes to the annual general meeting that the loss for the financial year be transferred to retained losses and that no funds be distributed from distributable shareholders’ equity.

Annual General Meeting

Fifax Plc’s next annual general meeting will be held on Thursday 23 May 2024. The board will send out invitations to the meeting at a later date.

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 Annual Report (Financial Statements, Board of Directors Report and Auditor’s Report) for 2023 will be published during the week starting on 11 March 2024 (week 11) at the latest.

Half Year Financial Review for January–June 2024 is published on August 21, 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 6 March 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-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, +358 40 559 8812, samppa.ruohtula@fifax.ax

Certified advisor

The certified advisor is Aktia Alexander Corporate Finance, +358 50 520 4098

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.