Vega Sea A/S

Management's review

Business reviewThe Group’s principal activity is developing, purchasing, processing, and distributing fish products - primarily salmon.The above-mentioned principal activity has been executed from the production facilities in Germany.The Group is focusing on delivering products to the Group’s customers in the right quality within the agreed delivery dates and at competitive prices that reflect the products’ high level of quality. The Group’s customers are global quality-conscious entities with strong focus on food safety.Furthermore, it is group policy to use considerable resources on product development, so that the Group can offer its customers products with high focus on quality, taste and product diversification. It is group policy to produce and develop environmentally friendly wrapping/packaging, that also needs to be consumer friendly. Thus, the development of new product categories is highly prioritized.As a natural and important part of the Group’s focus areas, we work intensively on improving efficiency while maintaining and improving the quality of our products. This is to ensure that the Group, always offer products that surpass every applicable standard for the industry. At the same time, we increasingly wish to offer traceability and support sustainability.Approx. 94% of the Group’s annual revenue is generated outside Scandinavia and based on the Group’s product range and high quality, dedicated efforts are made to strengthen our position in selected export areas.Cooperation with the Group’s customers, suppliers and other business partners is based on partnerships to create value for all parties involved and to ensure that the end customers get a unique product and taste experience.Continues improvement programs have been identified and executed, all of them supporting our focus on sustainability and strengthening Vega as being an attractive partner Delivering World Class Salmon Every Day.Financial reviewIn the year under review, the Group realized revenue of 1,314 mDKK, which is an increase of 22.7% from last financial year. The increase is largely an effect of the higher-than-normal fish prices especially in the spring 2022, as the total volume has increased 1% compared to 2020/21.The price for Head-On-Gutted (HOG) salmon has increased significantly during the second half of the financial year due to a drop in the worldwide supply of salmon. An average spot-price level in the first half of 5.7 EUR/KG was replaced by peaks at 12.8 EUR/KG and an average level at 9.4 EUR/KG in the second half. This extreme change in price levels resulted in less than expected demand from our customers, who lowered stock levels and postponed campaigns during this period.The annual result has again been impacted by COVID-19 with continuously extra expenses for daily COVID testing of all employees at the factory in Germany and having extra costs for protective equipment and clothing for our operational teams. The expenses of DK 3.6 million are included in note 3 as special items.Despite the positive result of 2.6 mDKK, the management does not consider the result satisfactory as it is beneath the expectations for the year. However, the deviations to expectations are solely related to the lower volume sold during the period with the extreme high fish prices and the additional costs related to COVID-19 and thus the result reflects a positive development in less waste and better efficiency in the operations compared to earlier years.The balance sheet total increased during the period with 40 mDKK to 326 mDKK which is due to the increase in inventories of 44 mDKK. The significantly higher price for salmon has had an increasing impact on the inventory of raw material and finished goods. In addition, increased prices and lead times for packing and support material in the current market conditions has increased the value of consumables as well.The increase of working capital of 32.7 mDKK due to the changed new level of purchase prices on material has for the main part been financed through increases in short-term debt to banks and subordinated loan from the parent company. Adjusted for the increase in working capital the cash flow from operations has been financing the investment level of 8 mDKK. The total changes in cash in 2021/22 was 0 mDKK.Equity as of 30 June 2022 amounted 65.6 mDKK because of a positive profit of the year of 2.6 mDKK and a negative impact from translation and hedging reserves of 2.3 mDKK (Equity as of 30. June 2021: 65.3 mDKK).Financial development – parent companyIn 2021/22 there was a cost level of 0.7 mDKK (2020/21: 0.8 mDKK). Profit for the year was 2.6 mDKK (2020/21: –1.0 mDKK). At the end of the financial year, the balance sheet total amounted to 141 mDKK (2020/21: 118 mDKK). Equity as of 30 June 2022 amounted to 66 mDKK (2020/21: 65 mDKK).