Hofseth Biocare ASA: First Quarter 2016 Financial Report

During the first quarter, Hofseth BioCare continued to implement the company's new strategic plan and the expansion of the Midsund plant.
 
Hofseth BioCare ASA had operating revenues of NOK 5.4 million in the first quarter of 2016, in line with the first quarter of 2015.
 
Operating profit (EBIT) was negative NOK 25.5 million, compared to negative 18.6 million in the same quarter last year. The figure is influenced by write-downs and other effects of the strategic change.
 
Cash flow from operations was negative NOK 14.4 million, compared to positive 8.8 million in the corresponding quarter last year. Cash and cash equivalents was at MNOK 2.9 by the end of the period.
 
"The quarterly numbers reflect the turnaround project underway at Hofseth BioCare. The project is progressing according to plan. We are reducing existing inventory and preparing for a new start with improved production lines and higher volumes from July onwards," said Jon Olav Ødegård, CEO of Hofseth BioCare ASA.
 
After the end of the first quarter, Hofseth BioCare completed a private placement of NOK 23.6 million towards existing shareholders and external investors through issuance of 11.8 million new shares at a subscription price of NOK 2 per share. A repair issue will be executed after the annual general meeting.
 
Also in April, an agreement was signed with the leading sports retailer XXL for delivery of a variety of finished products for sale in Norway, Sweden and Finland. Deliveries to XXL start during the summer of 2016 and will be in stores immediately thereafter.
 
The company is currently expanding its Midsund hydrolysis facility to ramp up production from July. The rationale for this project is to optimize the organoleptic properties on ProGo®, significantly lower production cost on all products and be able to produce and pack PetGo(TM) and CalGo® in full scale.
Significantly lower production costs will facilitate high-volume sales to the feed and pet commodity market for improved revenues and cash flow from the third and fourth quarter. Sales in the feed market have already started and will in turn reduce storage and logistics costs.
 
The project also explores further changes and add-ons in the sales organization and management team for stronger sales power and focus on revenues.
 
The turnaround project represents a step change in the company's ability to capitalize on its world-leading product development and meet the strong demand for high-quality biomarine ingredients.
 
Please see HBC's Q1 2016 report attached.
 
For further information, please contact:
Jon Olav Ødegård, CEO of Hofseth BioCare ASA
Phone: +47 936 32 966
E-mail: joo@hofsethbiocare.no
 
About Hofseth BioCare:
Hofseth BioCare is a Norwegian biotech company that offers high-value ingredients and finished products for humans and pets. The company is founded on the core values of sustainability, traceability and optimal utilization of natural resources. Through an innovative hydrolysis technology, Hofseth BioCare is able to preserve the quality of salmon oil, proteins and calcium, prepared of fresh salmon off-cuts. Hofseth BioCare's objective is to contribute to the efficient use of marine resources and deliver quality products for ingredients and finished consumer products in the nutrition market.
 
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Q1 2016 Financial Report