FIFAX Plc’s Half-year report for January–June 2024 (unaudited): Fish stock is growing as planned and the company is preparing for the commercial launch

FIFAX Plc’s half-year report for January–June 2024 (unaudited): Fish stock is growing as planned and the company is preparing for the commercial launch

This is a summary of Fifax Plc’s Half-year Report. 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–June 2024

The figures in brackets refer to the comparison period in 2023.

• The fish stock is growing as planned, and the company is preparing for commercial launch during the second half of 2024.

• The company had no revenue (EUR 0 million).

• Operating loss was EUR -3.0 million (EUR -3.3 million).

• The loss for the financial period was EUR -3.3 million (EUR -3.6 million).

• In June 2024, the company raised EUR 0.5 million in the form of a convertible loan.

• After the period, the company has also signed a cooperation agreement with Kalavapriikki, a seafood company, which includes an advance payment of EUR 1.4 million, contributing to the financing required to complete the restart.

• Negotiations for further financing are underway. Further financing is required to complete the restart of the entire production facility as planned.

• The Company is in advanced negotiations on further debt financing. Related permission has been received from current lenders to obtain further debt financing up to the amount of EUR 2.5 million provided certain conditions are met.

Samppa Ruohtula, CEO

In the first half of 2024, activities at the Eckerö plant have increased steadily in line with the development of the fish stock. We have been regularly introducing new batches of eggs since the restart in March 2023. The fish stock grew from 59 tonnes at the end of the year to 337 tonnes at the end of June, and had at the time of publishing this report reached approximately 500 tons. The average weight in the tank housing the largest fish was more than 700 grams at the end of June, and more than 1kg at the time publishing.

The technical improvements following our plan for increased biosecurity, improved water quality and better growth have been implemented so that the technical capacity has been available at all times for the growing fish stock. Expansions to the first-feed and fingerling unit were deployed in the spring. In April, the first fish moved to the second grow-out unit, and by the end of June, a total of sixteen of the large grow-out tanks were in use and by mid-August, an additional six tanks had been deployed. The improvements aimed at deploying the third grow-out unit during the autumn have also been initiated, along with the preparations for resuming harvest and deliveries. To date, the development measures in both technology and work processes have had clearly positive results in areas such as water quality and growth parameters.

During the spring, we have also had the pleasure of being able to prepare for the upcoming sales launch, and have engaged in an active dialogue with our customers. In July, we also announced our new strategic partnership with the seafood company Kalavapriikki. The framework agreement covers 1,200 tonnes of gutted fish annually.

The company has been dependent on additional financing to carry out the restart, and financing will continue to be a focal point during the rest of this year. In June, we obtained EUR 0.5 million financing from certain shareholders in the form of a convertible loan and the company is currently engaging in advanced negotiations for further financing in the form of debt financing.

The market outlook for land-based aquaculture remains promising, and both local and global megatrends support Fifax’s strategy. Demand for salmonids is expected to increase faster than supply, and there is an ever greater need to develop more sustainable solutions. In the land-based sector, expectations are positive for a small group of global front runners, including Fifax, that are expected to reach volume deliveries during 2024–2025. Our advisory business, which we continue to develop in parallel with the Eckerö restart, aims at leveraging this front-runner experience and help the industry to expand further.

In the second half of 2024, we will continue to move as planned towards a full capacity fish stock and delivery level, and are also implementing the remaining improvement investments. We are also very excited to prepare for the re-start of sales, which we very much look forward to during the autumn.

Key figures

1)Unaudited
2)The potentially dilutive instruments consist of shares that could be converted under the terms and conditions of the convertible loan. As the company posted a loss, these instruments do not have a dilutive effect on the calculation of earnings per share. Therefore, earnings per share are the same for both undiluted and diluted.
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.
 

Calculation of key figures:
Earnings per share, undiluted (EUR) = Net result for the financial period/Weighted average number of outstanding shares during the period
Earnings per share, diluted (EUR) = Net result for the financial period/Weighted average number of outstanding shares during the period including (+) the number of any diluting shares
Investments = Investments in tangible and intangible assets as in the cash flow statement
Equity ratio % = (equity + equity-termed capital loans) / (total assets - prepayments received)

Going concern and financing

In 2024, the company has successfully continued the restart of operations at the facility after the facility was emptied and decontaminated due to the IHN outbreak detected in June 2022. The company has raised much of the financing needed for the restart and for building up the fish stock and continuing the investment programme initiated in 2023 to improve biosecurity and farming technology. However, the company’s cash and cash equivalents at the time of publication of this half-year report are not adequate for completing the restart and thus for the company's operations as a going concern. Additional funds are needed to complete the restart of the facility and to finance the growth of the fish stock and the operations during the start-up 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 which may also impact the funding requirement for the re-start phase. Furthermore, operating risks that relate to the farming, if they were to realise, could also create a need for further funding in order to secure the company’s prerequisites to continue operations as liquid funds are scarce.

Fifax’s fish holds very high quality, and have received very good feedback from customers already before the break in operations. The technical improvements made during the start-up phase have further strengthened growth and water quality. Demand for ASC-certified rainbow trout farmed in an environmentally friendly way continues to be very strong in both domestic and other markets within the EU, which the new framework agreement with Kalavapriikki and incoming enquiries also shows. In other words, the operational conditions for the restart of operations are very good.

The management has worked on the financing of the restart extensively during the last two years. A total of approximately 15 million euros was estimated to be needed to fully restart. The following measures were adopted in previous periods:

- 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 2023, the company renegotiated the amortisation plan for its loan of EUR 3.8 million (as per 31 December 2023) from financial institutions. According to the plan, 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.

- The company completed cooperation negotiations to adjust its cost structure and workforce to match the needs for restarting operations in January 2023.

- The company has prepared nutrient and carbon footprint calculations and established climate and environmental targets that are a prerequisite to obtain green and environmental financing.

During this reporting period the following measures have been adopted to finance the completion of the restart and to secure continued operations:

- In June 2024, the company obtained a convertible loan of EUR 0.5 million from certain shareholders.

- In July 2024, the company entered into a long-term framework agreement (off-take agreement) with Kalavapriikki which comprises the delivery of 1.2 million kg of gutted fish annually. The agreement includes advance payments of EUR 1.4 million that will be paid in instalments during the latter part of 2024.

- The company has also applied for investment grants from the European Maritime, Fisheries and Aquaculture Fund for improvement investments related to the restart.

- The Company is in advanced negotiations with certain potential lenders on obtaining new debt financing, and has obtained permission from current lenders to raise further debt financing up to the amount of EUR 2.5 million provided certain conditions are met.

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 depends on the fish stock developing as planned and on the time when sales can be resumed. The management and the board of directors are continuing their efforts to secure the financing and operational conditions required.

As commitments concerning additional funding had not been obtained on the date of the publication of this half-year report, 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 adopted to date and the ongoing negotiations, the management considers it reasonable to assume that adequate funding, primarily in the form of debt capital and investment grants, will be secured, and has therefore decided to prepare the financial statements as a going concern.

Significant events after the period

• In July, Fifax and the seafood company Kalavapriikki signed a long-term framework agreement that covers annual deliveries of 1,200 tonnes of cleaned fish. According to the framework agreement, Fifax will also receive an advance payment of EUR 1.4 million in several instalments.

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 2024 financial statements release, financial statements and board of directors' report will be published in the week starting on Monday 3 February 2025.

The half-year report for 1 January–30 June 2024 and the 2024 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 22 August 2024 at 10.00 am Finnish time, EEST.

The webcast will be held in English and can be followed live at: https://fifax.videosync.fi/2024-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, +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.