Annual report 2017 for FirstFarms A/S

FirstFarms A/S continues the implementation of the company's growth strategy. Agricultural production in Eastern Europe is in good development, the price on land increasing and the demand for pork is big.

Resume
The Board of Directors and Management of FirstFarms A/S has today reviewed and adopted the annual report for 2017.

2017: Turnover increasing by 46 percent and EBITDA almost doubled

FirstFarms realised a turnover of DKK 190.7 million, and an EBITDA of DKK 43.7 million. The EBIT result is DKK 17.1 million, and the pre-tax result is DKK 5.0 million. The EBIT-result is improved by DKK 19.9 million compared to 2016 and corresponds, exclusive correction of DKK 1.3 million of purchase price of the shares in Dan-Farm Holding A/S, to the announced expectations. In 2017, FirstFarms has successfully implemented pig production in the business model, and the company has achieved a satisfactory risk spread on milk, pig and crop production.  The result is as expected and isolated considered as acceptable and must be seen in connection with the challenges the drought in Eastern Europe has entailed. At the same time, the pig price decreased at the end of 2017 and thus caused a negative stock adjustment without influencing the result for 2017 significantly. The harvest yields have been as budgeted on the winter crops, whereas the spring crops in general have suffered a lot under the drought. Especially the maize yields have been negatively influenced in Slovakia and West Romania, whereas East Romania in general has managed as expected. In total, the yields have resulted in a negative impact of DKK 15 million compared to budget. In total, the sales prices for the crops per ton are on budget level. Delivered quantity of milk is unchanged compared to 2016. Thus, 23,1 million kg of milk was delivered from FirstFarms. The daily delivered milk at the end of 2017 is approx. 30 kg milk per milking cow with a competitive production price. The price of piglets and slaughter pigs has been as budgeted. 67,000 piglets are produced. In Hungary, two building sites is purchased, on which permission is applied for a project with 4,000 sows and a project with piglets. There is also applied for establishment of slaughter pig production on locations in Romania. There is a large demand for pork in Eastern Europe, where FirstFarms is established. Thus, FirstFarms sees great potential in expansions of the pig production. The purchase price of the shares in Dan-Farm Holding A/S is adjusted with DKK 1.3 million compared to the interim reports announced in 2017. This is due to the share price is increased from entering the agreement with the shareholders in Dan-Farm Holding A/S in November 2016 till closing in March 2017. The company has in December 2017 become aware of the accounting bearing hereof. It makes no change in the equity, but the purchase price becomes higher and thus the positive income from operation of recognised negative goodwill was DKK 1.3 million smaller than previous interim reports. In 2017, FirstFarms realised a cash flow from main activities of DKK 25.8 million compared to DKK 12.3 million in 2016. FirstFarms' negotiations with AP Pension about sale of land and buildings is interrupted. FirstFarms has unchanged a satisfactory cash resource and will continue the growth strategy. FirstFarms has a solid land portfolio of 6,176 hectares. The total value of land is conservatively estimated in the level of DKK 195 million compared to a booked value of DKK 120 million.

2018: Expectation

In 2018, FirstFarms expects an improved EBITDA and EBIT result. EBITDA is expected in the level of DKK 49-53 million and EBIT of DKK 22-26 million. In 2017, an EBITDA of DKK 43.7 million and EBIT of DKK 17.1 million is realised.

Earnings in 2018 are expected to be stable for milk- and pig production in EU, however challenged on the market prices.

The crop prices are expected to be on par with realised prices in 2017. There is expected a milk price of DKK 2.50 per kg, a price of DKK 11.50 per kg pork and basis piglet price (27 kg) of DKK 356 per piglet.

In 2018, FirstFarms will work on an expansion of pig production with more produced piglets and slaughter pigs and optimise the operation in the milk production. The field production is expected to be increased with a smaller area, and field plans are still altered to a larger part of autumn crops, so a warm summer will have less effect on the harvest yields.

Billund 27 March 2018

FirstFarms A/S

For further information:
Please visit our website www.firstfarms.com or
contact CEO Anders H. Nørgaard on telephone +45 75 86 87 87.

(2) Annual report 2017 (UK)
Annual report 2017


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Source: FirstFarms A/S via Globenewswire

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