Final Results

RNS Number : 9945B

Ukrproduct Group Ltd

25 April 2012

 



FINAL RESULTS FOR THE YEAR

ENDING 31 DECEMBER 2011

Ukrproduct Group Limited ("Ukrproduct" or the "Group") (AIM: UKR), one of the leading producers and distributors of branded dairy products in Ukraine, announces its audited consolidated IFRS results for the twelve months ending 31 December, 2011.  

Financial Highlights:

·      Revenue increased by 12% to GBP 50.5 m (2010: GBP 45.0 m)

·      Gross profit decreased by 5% to GBP 6.8 m ( 2010: GBP 7.2 m)

·      EBITDA declined by 29% to GBP 1.86 m (2010: GBP 2.6 m)

·      Tax increased to GBP 431 k (2010: GBP 103 k)

·      Profit after Tax declined to GBP 400 k (2010: GBP 1.094 m)

·      Dividend withheld in view of a major cost saving capital expenditure program

·      Year end cash balance stood at GBP 512 k (2010: GBP 676 k), sufficient to meet current obligations in the short and medium term

Operational Highlights:

·      Branded products showed a good performance with revenue increasing by 9% to GBP 34.7 m (2010: 31.8 m) and gross profit increasing by 4% to GBP 6.3 m (2010: GBP 6.0 m)

·      Strengthened the market leading position in packaged butter increasing the market share to 23% (22% in 2010)

·      Recovered leadership in processed cheese achieving market share of 16.3% (15.5% in 2010)

·      Distribution Services improved in terms of revenue and gross profit by 155% and 125% respectively. Especially driven by kvass sales

·      Profitability undermined by substantial energy costs increase and a 25% increase in raw milk prices mostly due to the changes in the milk subsidy regime

·      SMP remained subdued with the world trading environment and high input costs negating profit making opportunities reversing last year's profitability (revenue declined by 24.6% to GBP 7.5 m and the gross profit declined by 166% to minus GBP 457 k)

·      Tax charge increased substantially owing to new Tax Code

·      Launched the reconstruction of the plant in Starokostiantyniv under a loan facility provided by European Bank for Reconstruction and Development. A major cost saving project

·      Acquired LLC "Zhyvyi Kvass" a producer of "Arsenievsky" branded kvass, a traditional fermented beverage of which Ukrproduct was the exclusive distributor since September 2010

Sergey Evlanchik, CEO of Ukrproduct, commented:

 "The trading environment has remained challenging with unemployment accentuating the squeeze on consumer disposable incomes. Nevertheless, within this Ukrproduct succeeded in building its market positions and thereby sales and aggregate gross profit in core business - branded products, distribution services, export. However on the downside margins were severely curtailed by raw milk price/fuel inflation. SMP reversed profitability. The Tax Code change led to very sizeable increase in the charge.

Going forward there are robust plans to recover profitability. In the core business we plan to build on our momentum and further sales growth is planned. Margins will be key to this end, milk prices are stabilizing at a lower level and a major cost saving capital expenditure program is underway at Starokostiantyniv manufacturing plant. The kvass acquisition is an exciting opportunity. We now have total control over the manufacturing and marketing of this product and will lead to further enhancement of profitability. Meanwhile the financial year to date is showing good progress"

Conference call information

Ukrproduct management will host a conference call today at 10.30 am (London time) / 11.30 pm (CET) / 12.30 pm (Kiev Time) to present and discuss the unaudited interim results.

The dial-in numbers for the conference call are:

Standard International:  [phone]

UK Toll Free: 0808 109 0700

For the play-back or further information, please visit www.ukrproduct.com or contact:

Ukrproduct Group Ltd. Sergey Evlanchik Chief Executive Officer Tel: [phone] [e-mail] Allenby Capital (Broker) Jeremy Porter Tel: [phone] WH Ireland Limited (Nominated Adviser)                                                   Robin Gwyn                                                                                  Tel: [phone]

The summarised financial statements follow however the full text of the 2011 Annual Report, incorporating the 2011 Audited Financial Statements, is available in pdf form on the Company's website www.ukrproduct.com.

CONSOLIDATED INCOME STATEMENT
																					year ended							year ended
																					31 December 2011							31 December 2010
																					£ '000							£ '000
	Revenue																				50,524							45,020
	Cost of sales																				(43,725)							(37,866)
	GROSS PROFIT																				6,799							7,154
	Administrative expenses																				(2,855)							(2,899)
	Selling and distribution expenses																				(2,790)							(2,184)
	Other operating income / (expenses), net																				(183)							(502)
	PROFIT FROM OPERATIONS																				971							1,569
	Net finance costs																				(428)							(367)
	Effect of foreign currency translation																				288							(5)
	PROFIT BEFORE TAXATION																				831							1,197
	Income tax expenses																				(431)							(103)
	PROFIT FOR THE YEAR																				400							1,094
	Attributable to:
	Owners of the Parent																				410							1,104
	Non-controlling interests																				(10)							(10)
	Earnings per share:
	Basic																				1.00							2.69
	Diluted																				1.00							2.69

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
																					year ended							year ended
																					31 December 2011							31 December 2010
																					£ '000							£ '000
	PROFIT FOR THE YEAR																				400							1,094
	OTHER COMPREHENSIVE INCOME:
	Exchange differences on translation to the presentation currency																				(28)							351
	Gain on revaluation of property, plant and equipment																				-							4,112
	Income from changes in tax rates																				268							-
	Tax effect from change in revaluation reserve																				(62)							(1,028)
	OTHER COMPREHENSIVE INCOME, NET OF TAX																				178							3,435
	TOTAL COMPREHENSIVE INCOME FOR THE YEAR																				578							4,529
	Attributable to:
	Total for owners of the Parent																				588							4,539
	Total non-controlling interests																				(10)							(10)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
																					As at							As at
																					31 December 2011							31 December 2010
																					£ '000							£ '000
	ASSETS
	Non-current assets
	Property, plant and equipment																				17,173							12,263
	Intangible assets																				1,055							1,000
	Available for sale investments																				169							89
	Deferred tax assets																				50							248
																					18,447							13,600
	Current assets
	Inventories																				4,634							3,985
	Trade and other receivables																				6,906							5,605
	Current taxes																				404							1,094
	Other financial assets																				177							220
	Cash and cash equivalents																				512							676
																					12,633							11,580
	TOTAL ASSETS																				31,080							25,180
	EQUITY AND LIABILITIES
	Equity attributable to owners of the parent
	Share capital																				4,082							4,082
	Other reserves																				2,868							2,068
	Retained earnings																				12,367							12,817
																					19,317							18,967
	Non-controlling interests																				-							20
																					19,317							18,987
	Non-Current Liabilities
	Bank borrowings																				3,844							-
	Deferred tax liabilities																				881							1,434
																					4,725							1,434
	Current liabilities
	Bank borrowings																				3,514							2,938
	Trade and other payables																				3,165							1,715
	Current income tax liabilities																				108							68
	Other taxes payable																				251							38
																					7,038							4,759
	TOTAL EQUITY AND LIABILITIES																				31,080							25,180

CONSOLIDATED STATEMENT OF CASH FLOWS
																					year ended							year ended
																					31 December 2011							31 December 2010
																					£ '000							£ '000
	Cash flows from operating activities
	Profit before taxation for the year																				831							1,197
	Adjustments for:
	Exchange difference																				(288)							5
	Depreciation and amortisation																				890							1,068
	(Profit)/loss of disposal of property, plant and equipment																				(214)							74
	Impairment of trade receivables																				51							129
	Income from disposal of subsidiaries																				(18)							-
	Interest income																				(19)							(20)
	Interest expense																				447							387
	Increase in inventories																				(583)							(1,468)
	Increase in trade and other receivables																				(2,789)							(1,082)
	Increase in trade and other payables																				1,842							492
	Cash generated from operations																				150							783
	Interest received																				19							20
	Income tax paid																				(511)							(338)
	Net cash (used in) / generated by operating activities																				(342)							465
	Cash flows from investing activities
	Payments for property, plant and equipment																				(3,792)							(357)
	Proceeds from sale of property, plant and equipment																				422							16
	Purchase of available for sale investments																				-							(203)
	Purchase / sale of investments																				113							(24)
	Repayments of loans issued																				(222)							(139)
	Net cash used in investing activities																				(3,479)							(707)
	Cash flows from financing activities
	Own shares acquisition																				-							(58)
	Dividends paid																				(204)							(82)
	Interest paid																				(447)							(387)
	Increase in short term borrowing																				561							1,312
	Increase in long term borrowing																				3,707							-
	Net cash used in financing activities																				3,617							785
	Net (decrease) / increase in cash and cash equivalents																				(204)							543
	Effect of exchange rate changes on cash and cash equivalents																				40							(103)
	Cash and cash equivalents at the beginning of the year																				676							236
	Cash and cash equivalents at the end of the year																				512							676

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
										Attributable to owners of the parent																									Non-controlling interests				Total Equity
										Share capital £ '000					Share premium					Revaluation reserve			Retained earnings				Translation reserve				Total
															£ '000					£ '000			£ '000				£ '001				£ '000				£ '000				£ '000
As at 1 January 2010												4,107			4,588					1,333			11,744				(5,777)				14,568				30				14,598
Profit for the year																							1,104								1,104				(10)				1,094
Other comprehensive income
Gain on the revaluation of property, plant and equipment																				3,084											3,084								3,084
Currency translation differences																											351				351								351
Total  comprehensive income												-			-					3,084			1,104				351				4,539				(10)				4,529
Transactions with owners
Dividends paid																							(82)								(82)								(82)
Total transactions with owners												-			-					-			(82)				-				(82)				-				(82)
Depreciation on revaluation of non current assets																				(50)			50								-								-
Reduction of revaluation reserve																				(1)							1				-				-				-
Acquiring of shares (Note 22)												(25)			(33)																(58)								(58)
As at 31 December 2010												4,082			4,555					4,366			12,817				(5,426)				18,967				20				18,987
Profit for the year																							410								410				(10)				400
Other comprehensive income
Income from changes of tax rates																				206											206								206
Currency translation differences																											(28)				(28)								(28)
Total  comprehensive income												-			-					206			410				(28)				588				(10)				578
Transactions with owners
Dividends paid  (Note 28)																							(204)								(204)								(204)
Total transactions with owners												-			-					-			(204)				-				(204)				-				(204)
Depreciation on revaluation of property, plant and equipment																				(302)			302								-								-
Reduction of revaluation reserve																				(136)			102								(34)								(34)
Exclusion from Group (Note 2.1 (c))																							(1,060)								-				(10)				(10)
As at 31 December 2011												4,082			4,555					4,134			12,367				(5,454)				19,317				-				19,317

These financial statements were approved and authorised for issue by the Board of Directors on 24 April 2012.

Notes to the Consolidated Financial Statements

1.   Basis of Preparation

The financial information set out in this announcement has been prepared in accordance with the recognition and measurement principles of IFRS as endorsed for use in the European Union. The financial information set out in this announcement does not constitute the group's statutory accounts for the year ended 31 December 2011 or the year ended 31 December 2010 but is derived from the 2011 annual report and accounts. Statutory accounts for the years ended 31 December 2011 and 31 December 2010 have been reported on by the Independent Auditors. Statutory accounts for the year ended 31 December 2010 have been filed with the Companies Registry. The statutory accounts for the year ended 31 December 2011 will be delivered to the Registry in due course. 

The Independent Auditors' Reports on the Annual Report and Financial Statements for the year ended 31 December 2011 and for the year ended 31 December 2010 were unqualified, did not draw attention to any matters by way of emphasis, and were properly prepared in accordance with the Companies (Jersey) Law 1991 as amended.

2.   Change in accounting estimate

The Group changed its basis of depreciation from the reducing balance method for buildings and vehicles to the straight-line method of depreciation. The change was due to the requirements of the new Ukrainian Tax code. The Group also changed the method of depreciation for the production equipment other than cheese manufacturing equipment from reducing balance method to unit of production method. Management believes this method reflects better use of the Group's equipment. The effect of the changes in accounting estimates was to decrease depreciation by about GBP 498,843.

3.   Reclassification of delivery cost from the Group's manufacturing to trading enterprises

The Group changed the presentation of product delivery costs from the Group's manufacturing facilities to the trading enterprises. Starting from 1 January 2011 these costs have been included in the cost of sales of finished products. In previous periods these expenses were included within selling and distribution expenses. Management believes this provides a fair presentation of the Group's cost allocation as intercompany transportation expenses are related to cost of sales in accordance with IAS 2 "Inventories". The prior year comparative cost of GBP 517,000 has also been appropriately reclassified.

4.   Segmental Information

																				Branded products	Non-branded products	Distribution services	Un-allocated	Total
																				£ '000	£ '000	£ '000	£ '000	£ '000
Sales, Total																				76,623	11,497	18,641	-	106,762
Sales to internal customers																				41,929	4,027	10,283	-	56,238
Sales to external customers																				34,694	7,471	8,359	-	50,524
Gross profit																				6,287	(457)	969	-	6,799
Administrative expenses																				(1,825)	(286)	(265)	(479)	(2,855)
Selling and distribution expenses																				(2,377)	(77)	(296)	(39)	(2,790)
Other operating expenses																				(93)	-	-	(90)	(183)
Profit from operations																				1,992	(821)	408	(608)	971
Finance expenses, net																				-	-	-	(428)	(428)
Loss from exchange differences																				-	-	-	288	288
Profit before taxation																				1,992	(821)	408	(748)	831
Taxation																				-	-	-	(431)	(431)
Profit for the year																				1,992	(821)	408	(1,179)	400
Segment assets																				17,748	2,384	3,445	-	23,577
Unallocated corporate assets																				-	-	-	7,475	7,475
Unallocated deferred tax																				-	-	-	227	227
Consolidated total assets																				17,748	2,384	3,445	7,702	31,279
Segment liabilities																				1,885	-	646	-	2,531
Unallocated corporate liabilities																				-	-	-	8,550	8,550
Unallocated deferred tax																				-	-	-	881	881
Consolidated total liabilities																				1,885	-	646	9,431	11,962
Other segment information:
Depreciation and amortisation																				620	159	46	66	891
Capital expenditure																				1,068	2,523	78	93	3,762

SEGMENT INFORMATION (CONTINUED)
																		Branded products			Non-branded products		Distribution services		Un-allocated	Total
																		£ '000			£ '000		£ '000		£ '000	£ '000
Sales, Total																81,331					18,325	11,825		-		111,481
Sales to internal customers																49,503					8,412	8,546		-		66,461
Sales to external customers																31,828					9,913	3,279		-		45,020
Gross profit																6,033					693	428		-		7,154
Administrative expenses																(1,942)					(272)	(91)		(594)		(2,899)
Selling and distribution expenses																(1,954)					(61)	(105)		(64)		(2,184)
Other operating expenses																(125)					-	-		(377)		(502)
Profit from operations																2,012					360	232		(1,035)		1,569
Finance expenses, net																-					-	-		(367)		(367)
Loss from exchange differences																-					-	-		(5)		(5)
Profit before taxation																2,012					360	232		(1,407)		1,197
Taxation																-					-	-		(103)		(103)
Profit for the year																2,012					360	232		(1,510)		1,094
Segment assets																15,209					2,662	612		-		18,483
Unallocated corporate assets																-					-	-		6,449		6,449
Unallocated deferred tax																-					-	-		248		248
Consolidated total assets																15,209					2,662	612		6,697		25,180
Segment liabilities																1,027					79	147		-		1,253
Unallocated corporate liabilities																-					-	-		3,506		3,506
Unallocated deferred tax																-					-	-		1,434		1,434
Consolidated total liabilities																1,027					79	147		4,940		6,193
Other segment information:
Depreciation and amortisation																679					288	16		85		1,068
Capital expenditure																252					107	32		80		471

Sales by country (consignees)

year ended

Sales by country (consignees)

year ended

31 December 2011

31 December 2010

£ '000

£ '000

Ukraine

42,302

Ukraine

38,040

Holland

1,900

Singapore

2,377

Russia

1,659

Holland

1,529

Estonia

992

Germany

1,058

Azerbaijan

752

Turkey

676

Greece

514

Azerbaijan

383

Other countries

2,405

Other countries

957

Total

50,524

Total

45,020

The majority of the Group's assets and liabilities are in Ukraine. Sales to the countries in Europe represent sales to international traders of milk powders located in Europe. These traders consequently resell the milk powders to other countries worldwide.

The Group has no customers volume of sales to which exceeds 10% from the total amount.

5.   Earnings per share

Basic earnings per share has been calculated by dividing net profit attributable to the ordinary shareholders by the weighted average number of shares in issue.
																				year ended		year ended
																				31 December 2011		31 December 2010
																				£ '000		£ '000
Net profit attributable to ordinary shareholders																				410		1,104
Weighted number of ordinary shares in issue																				40,817,599		41,052,531
Basic earnings per share, pence																				1.00		2.69
Diluted average number of shares																				40,817,599		41,052,531
Diluted earnings per share, pence																				1.00		2.69

6.   Dividends

Due to the business circumstances dictating the prudence and cash conservation, the Board has decided not to pay a final dividend in respect of the year ended 31 December 2011.

 

END

 

 

FR SEFFALFESESL