5 Mar 2013 07:00
March 05, 2013
AVANGARDCO INVESTMENTS PUBLIC LIMITED
AUDITED FINANCIAL RESULTS FOR 2012
KYIV, UKRAINE - AVANGARDCO INVESTMENTS PUBLIC LIMITED (LSE: AVGR) (the «Company» or «AVANGARDCO IPL»), the largest producer of shell eggs and egg products in Ukraine and number one producer in Euroasia, today announces its audited financial results for the year ended 31 December 2012.
Financial highlights
§ Revenue increased by 13.7% year-on-yearto US$629.3 mln (2011: US$553.3 mln)
§ EBITDA was up by 13.8% year-on-year and reached US$279.8 mln (2011: US$245.8 mln), with EBITDA margin of 44.5%
§ Operating profit increased by 14.2% year-on-yearto US$264.5 mln (2011: US$231.5 mln), with an operating profit margin of 42%
§ Net profit for the year grew by 16.3% year-on-year to US$228.2 mln (2011: US$196.3 mln), with net profit margin increasing to 36.3% (2011: 35.5%).
Operational highlights
§ Total flock increased by 9.6% year-on-yearto 27.5 mln (2011: 25.1 mln). The number of laying hens grew by 11.2% year-on-year to 22.8 mln (2011: 20.5 mln)
§ Production of shell eggs was up by 5.6% to 6.287 bln (2011: 5.955 bln)
§ Sales of shell eggs to external clients increased by 7.4% year-on-year to 5.223 bln (2011: 4.862 bln)
§ The share of shell egg sales through modern retail chains (supermarkets) increased to 35% of total sales to external customers (2011: 30%)
§ The average selling price of eggs increased by 9.4% year-on-year and amounted to UAH 0.70 per unit, excluding VAT (`2011: UAH 0.64 per unit, excluding VAT)
§ The production of dry egg products grew by 15.6% year-on-year reaching 14.1 thousand tonnes (2011: 12.2 thousand tons), or 1,078 mln eggs in egg equivalent (2011: 1,053 mln eggs)
§ The average sale price of dry egg products increased by 0.7% year-on-year to US$8.11/kg (2011: US$8.05/kg).
Nataliya Vasylyuk, Chairwoman of the Board of Directors of AVANGARDCO IPL, commented:
"Avangardco IPL, the leading producer of shell eggs and egg products in Ukraine, has demonstrated once again the effectiveness of its development strategy and delivered a sustainable growth in its operating and financial results.
In the beginning of 2013 the Company introduced changes to its management and Board of Directors. Following my appointment as Chairwoman of the Board of Directors, Irina Marchenko and Irina Melnik became CEO and CFO of the Company, respectively.
In 2013, Avangardco IPL will continue to execute on its stated strategy to become the number one egg producer in the world."
Irina Marchenko, Chief Executive Officer of AVANGARDCO IPL, commented:
"In 2012, the Company achieved a revenue increase of 14%, coupled with a net profit increase of 16%, as well as continued to maintain its EBITDA at a high level of profitability. This was due to the growth in production in two main segments, expansion in its target markets and the increase in its sales prices.
Importantly, the Company's export revenues amounted to 20% of the Company's total revenue. In 2012, we expanded the Company's presence in global markets by selling high quality products and increasing customers' loyalty. In 2013, we plan to continue the Company's expansion into the new export markets and increase its presence in the existing markets.
In 2012, the Company continued to develop the presence of its branded and non-branded products in the retail network of supermarkets. At present the Company is working with all large supermarket chains in Ukraine. The share of egg sales through supermarkets' network has increased to 35% of total sales to third parties from 2% in 2009.
In 2012, the Company launched the first stage of production at "Avis" and "Chornobaivske" complexes, the largest projects of this kind in Eurasia.
The Company remains the leading producer of dry egg products in Ukraine. In response to the growing demand for processed egg products the Company is expanding its daily processing capacity at "Imperovo Foods" egg processing plant to 10 mln eggs."
Current Trading and Outlook
In 2013, the Company expects to continue expanding its production through the growth of poultry flock and putting into operation its new production facilities at "Avis" and "Chornobaivske". The Company will also continue to expand its customer base in Ukraine, paying special attention to retail channel and development of "Kvochka"-branded products. The Company plans to expand its presence in export markets and increase its market share in existing markets.
Financial Summary
Units | 2012 | 2011 | Change, % | |
Revenue | US$ '000 | 629,306 | 553,310 | 13.7% |
Gross Profit | US$ '000 | 258,537 | 223,775 | 15.5% |
Gross Profit Margin | % | 41.1% | 40.4% | 0.7% |
EBITDA | US$ '000 | 279,768 | 245,834 | 13.8% |
EBITDA Margin | % | 44.5% | 44.4% | 0.1% |
Operating Profit | US$ '000 | 264,484 | 231,504 | 14.2% |
Operating Margin | % | 42.0% | 41.8% | 0.2% |
Net Profit | US$ '000 | 228,233 | 196,294 | 16.3% |
Net Profit Margin | % | 36.3% | 35.5% | 0.8% |
In 2012, the Company's total revenue was up by 13.7% year-on-year to US$629.3 mln (2011: US$ 553.3 mln) due to the increase in production, sales through all distribution channels. The Company's revenues were positively impacted by the growth in selling price of shell eggs (9.4%) and egg products (0.7%), compared to the previous year.
The Company's export revenues increased by 21% year-on-year to US$127.8 mln (2011: US$105.6 mln), which equals to 20.3% of the Company's total revenue.
The Company's 2012 gross profit grew by 15.5% year-on-year to US$258.5 mln (2011: US$ 223.8 mln), with a gross profit margin of 41.1% (2011: 40.4%).
In 2012, EBITDA grew 13.8% year-on-year to US$279.8 mln (2011: US$245.8 mln), EBITDA margin stood at 44.5% due to the stable supply of grain feedstock and vertical integration of operations which allows the Company to control its costs at the each stage of production.
Net profit for the year increased by 16.3% year-on-year to US$228.2 mln (2011: US$196.3 mln), with profit margin growing to 36.3% (2011: 35.3%).
During 2012 general administrative expenses increased by 71.4% year-on-year to US$22.6 mln (2011: US$13.2 mln) as a result of increased labour costs following the growth in the minimum wage in Ukraine, the expansion of the workforce due to the growth of the business and the increase in legal and other consulting services costs provided by the third parties.
Distribution expenses grew by 99.8% year-on-year to US$20.1 mln (2011: US$10 mln), following the growth in transportation expenses, marketing and packaging expenses on the back of the successful growth in the distribution of "Kvochka"-branded and non-branded products through modern retail chains (supermarkets) and traditional store outlets.
In 2012, the Company generated net cash from operating activities of US$277.5 mln (2011: US$185.9 mln), following the increase in trade payables and the decrease in inventories and payments in advance.
Net cash used in investing activities was US$321 mln (2011: US$161.6 mln).
Net cash used in financing activities was US$16.5 mln (2011: US$24.5 mln).
The Company's net debt amounted to US$147.9 mln at the end of 2012 (2011: US$80.3 mln) due to the increase in short-term loans and the decrease in cash following the implementation of the Company's investment programme.
Segment review
Shell Egg Segment
Units | 2012 | 2011 | Change, % | |
Total Production | Pieces (mln) | 6,287 | 5,955 | 5.6% |
Total Sales to Third Parties |
Pieces (mln) | 5,223 | 4,862 | 7.4% |
Export | Pieces (mln) | 516 | 295 | 74.9% |
Average Sales Price | UAH (excl. VAT) | 0.70 | 0.64 | 9.4% |
In 2012, the production volume of shell eggs increased by 5.6% year-on-year to 6,287million units (2011: 5,955 million units) due to the increase in the number of laying hens.
Sales to external customers were up by 7.4% year-on-year to 5,223 million units (2011: 4,862 million units). The increase in sales was due to the continued expansion of sales channels, both in domestic and export markets. The share of shell eggs sales through retail chains (supermarkets) grew to 35% of total sales to third parties (2011: 30%).
In 2012, the Company increased its export volumes of shell eggs by 74.9% year-on-year to 516 mln units (2011: 295 mln units). The Company continued to develop its main exports markets in the Middle East and North Africa, Central and West Africa, and the CIS.
The average selling price of shell eggs was up by 9.4% year-on-year to 0.70 UAH per unit, excluding VAT (2011: 0.64 UAH per unit, excluding VAT) following the increase in selling prices in retail chains and wholesales channels.
During 2012 sales of packaged eggs under the umbrella brand "Kvochka" increased to 36.2 mln units (2011: 4.9 million units) following the expansion of sales channels. In the beginning of 2012 "Kvochka"-branded products were sold only in national retail chains, however, starting in September 2012 the Company began to supply regional retail chains and traditional format retail outlets through its network of distributors. As a result, at the end of the year the Company supplied its "Kvochka"-branded products to more than 2,200 retail outlets, including 1,200 retail chains' outlets and around 1,000 traditional format retail stores.
Egg Products Segment
Units | 2012 | 2011 | Change, % | |
Processed Shell Eggs | Pieces (mln) | 1,078 | 1,053 | 2.4% |
Total Production |
Thousand tonnes | 14.1 | 12.2 | 15.6% |
Average Sales Price | US$/kg (excl. VAT) | 8.11 | 8.05 | 0.7% |
During 2012 the volume of dry egg products increased by 15.6% year-on-year to 14.1 thousand tonnes (2011: 12.2 thousand tonnes) and of processed shell eggs by 2.4% to 1,078 mln units (2011: 1,053 mln units). "Imperovo Foods" plant was operating at full capacity.
In 2012, the Company exported its dry egg products to markets in the Middle East, North Africa and Asia.
At the end of 2012 the average sales price for dry egg products increased by 0.7% year-on-year to US$8.11 per kg (2011: US$8.05 per kg).
Investment Projects
The construction of twopoultry complexes for egg production, "Avis" and"Chornobaivske" in Khmelnytsky and Kherson regions, is going according to schedule.
As at December 31, 2012, the Company completed the construction and launched the first stage of the rearing site with the capacity of 1.581 mln heads and 1.608 mln heads at "Avis" and "Chornobaivske", respectively, and stageone of the laying hens site with the capacity 3.196 mln heads and 2.007 mln heads at "Avis" and "Chornobaivske", respectively. The Company also put into operation the first line of the second stage of the laying hens site with the capacity of 1.006 mln heads at "Avis". As at the December 31, 2012, these poultry complexes were operating at full capacity with a 100% homing of poultry flock. Further, the Company has completed the construction of the elevator with capacity of 56,000 tonnes at the "Avis" poultry complex.
"Imperovo Foods" Egg Processing Plant
At present the Company is implementing the first stage of its capacity upgrade from 3 million to 6 million shell eggs processing per day at the egg processing plant, LLC "Imperovo Foods".
To view the progress of the construction at "Avis" and "Chornobaivske" egg production complexes please visit: http://avangard.co.ua/rus/about/projects/
- The End -
There will be a conference call and webcast for analysts and investors today at 9.00 am US Eastern time, 14.00 pm UK time, 16.00 pm Kiev time and 18.00 pm Moscow time.
Name: Avangard Results
ID: 18357076
UK Free call | 0800 694 0257 |
Russia Free call | 8108 002 097 2044 |
USA | 1866 966 9439 |
UK Standard International | +44 (0) 1452 555 566 |
A live webcast of the presentation will be available at:
http://wcc.webeventservices.com/r.htm?e=592530&s=1&k=2C6AE1434D554A24F9F762A1CE4B10F3&cb=blank
Please register approximately 15 minutes prior to the start of the call.
###
For investor relations enquiries:
Alina Korniets AVANGARDCO IPL Acting Head of Investor Relations
phone.: +38 044 593 28 60 mob.: +38 067 664 49 99 e-mail: a.korniets@avangardco.ua
FTI Consulting London Larisa Millings
+44 20 72 69 72 16 |
FTI Consulting Moscow Oleg Leonov
+7 495 795 06 23 |
- The End -
Information for editors
Avangardco IPL is one of the largest agro-industrial companies in Ukraine, specializing in the production of eggs and egg products. Based on figures for the year 2012, the Company holds a 33% share of the Ukrainian egg market (53% of the industrial egg market) and an 88% share of the Ukrainian egg products market. As of 31 December 2012, the total poultry stock of the Company was 27.5 million heads. The Company's plants are located in 14 regions of Ukraine and the Autonomous Republic of Crimea. In 2012 the Company exported its products to 32 countries, generally to the Middle East, Asia and CIS. As of 31 December 2012, revenues amounted to US$629.3 mln (2011: US$553.3 mln) and EBITDA was US$ 279.8 mln (2011: US$245.8 mln).
The Company's shares, in the form of Global Depositary Receipts, have been traded on the London Stock Exchange since May 2010. Eurobonds of around $200 mln with a maturity on 29 October 2015 were included in the official list of the UK Listing Authority (UKLA) and admitted to trading on a regulated market of the London Stock Exchange since November 1, 2010.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2012
(in USD thousand, unless otherwise stated)
31 December 2012 | 31 December 2011 | |
ASSETS | ||
Property, plant and equipment | 920 072 | 512 697 |
Non-current biological assets | 46 724 | 44 304 |
Deferred tax assets | 1 966 | 1 922 |
Other non-current assets | 391 | 93 041 |
Total non-current assets | 969 153 | 651 964 |
Inventories | 177 886 | 202 279 |
Current biological assets | 56 889 | 58 916 |
Trade accounts receivable, net | 55 551 | 51 437 |
Prepaid income tax | 18 | - |
Prepayments and other current assets, net | 11 966 | 26 946 |
Taxes recoverable and prepaid | 102 567 | 76 298 |
Cash and cash equivalents | 204 298 | 237 814 |
Total current assets | 609 175 | 653 690 |
TOTAL ASSETS | 1 578 328 | 1 305 654 |
EQUITY | ||
Share capital | 836 | 836 |
Share premium | 201 164 | 201 164 |
Reserve capital | 115 858 | 115 858 |
Retained earnings | 899 357 | 673 909 |
Effect of translation into presentation currency | (68 135) | (67 761) |
Equity attributable to the owners of the Company | 1 149 080 | 924 006 |
Non-controlling interest | 18 115 | 15 333 |
Total equity | 1 167 195 | 939 339 |
LIABILITIES | ||
Long-term loans | 3 969 | 15 384 |
Long-term bond liabilities | 195 779 | 194 563 |
Deferred tax liabilities | 72 | 86 |
Deferred income | 5 047 | 5 351 |
Long-term finance lease | 1 283 | 3 830 |
Total non-current liabilities | 206 150 | 219 214 |
Short-term bond liabilities | 25 023 | 25 013 |
Current portion of non-current liabilities | 32 114 | 26 565 |
Short-term loans | 94 368 | 53 063 |
Trade payables | 24 435 | 17 894 |
Other accounts payable | 29 043 | 24 566 |
Total current liabilities | 204 983 | 147 101 |
TOTAL LIABILITIES | 411 133 | 366 315 |
TOTAL EQUITY AND LIABILITIES | 1 578 328 | 1 305 654 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2012
(in USD thousand, unless otherwise stated)
Year ended | ||
31 December 2012 | 31 December 2011 | |
Revenue | 629 306 | 553 310 |
Profit from revaluation of biological assets at fair value | 26 191 | 23 697 |
Cost of sales | (396 960) | (353 232) |
GROSS PROFIT | 258 537 | 223 775 |
General administrative expenses | (22 559) | (13 161) |
Distribution expenses | (20 056) | (10 035) |
Income from government grants and incentives | 305 | 318 |
Income from special VAT treatment | 46 484 | 38 037 |
Other operating income/(expenses), net | 1 773 | (7 430) |
PROFIT FROM OPERATING ACTIVITIES | 264 484 | 231 504 |
Finance income | 680 | 1 492 |
Finance costs | (36 936) | (33 106) |
Bargain purchase | - | 191 |
PROFIT BEFORE TAX | 228 228 | 200 081 |
Income tax credit/(expense) | 5 | (3 787) |
PROFIT FOR THE YEAR | 228 233 | 196 294 |
OTHER COMPREHENSIVE INCOME FOR THE YEAR: | ||
Effect of translation into presentation currency | (377) | (3 174) |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 227 856 | 193 120 |
PROFIT FOR THE YEAR ATTRIBUTABLE TO: | ||
Owners of the Company | 225 448 | 191 943 |
Non-controlling interests | 2 785 | 4 351 |
PROFIT FOR THE YEAR | 228 233 | 196 294 |
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: | ||
Owners of the Company | 225 074 | 189 424 |
Non-controlling interests | 2 782 | 3 696 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 227 856 | 193 120 |
Earnings per share, USD (basic and diluted) | 35 | 30 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2012
(in USD thousand, unless otherwise stated)
Year ended | ||
31 December 2012 | 31 December 2011 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Profit before income tax | 228 228 | 200 081 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 15 284 | 14 330 |
Change in allowance for irrecoverable amounts | 375 | 814 |
Other provisions | 134 | 293 |
Loss on disposal of current assets | 527 | - |
Loss on disposal of property, plant and equipment | 28 | 233 |
Impairment of current assets | 846 | 1 129 |
Other income | (2 054) | - |
Effect of fair value adjustments on biological assets | (26 191) | (23 697) |
Gains realised from accounts payable written-off | (861) | (26) |
Amortization of deferred income on government grants | (302) | (306) |
Loss from VAT government bonds sale | - | 32 |
Discount on long-term bonds amortization | 1 216 | 1 092 |
Bargain purchase | - | (191) |
Interest income | (680) | (1 492) |
Interest payable on loans | 32 176 | 30 849 |
Operating profit before working capital changes | 248 726 | 223 141 |
(Increase)/decrease in trade receivables | (4 082) | 3 282 |
Decrease in prepayments and other current assets | 14 573 | 14 061 |
Increase in taxes recoverable and prepaid | (26 269) | (20 291) |
Decrease/(increase) in inventories | 27 210 | (17 120) |
Increase in deferred income | (2) | (20) |
Decrease in other non-current assets | (34) | - |
Increase/(decrease) in trade payables | 7 402 | (5 297) |
Decrease in biological assets | 25 121 | 23 401 |
Decrease in finance leases | (2 553) | (802) |
Increase/(decrease) in other accounts payable | (2 615) | (15 456) |
Cash generated from operations | 287 477 | 204 899 |
Interest paid | (9 946) | (12 256) |
Income tax paid | (81) | (6 782) |
Net cash generated from operating activities | 277 450 | 185 861 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Payments and receipts - property, plant and equipment | (321 635) | (113 021) |
Payments for prepayments of property, plant and equipment | - | (32 613) |
VAT government bonds sale | - | 225 |
Acquisitions of subsidiary | - | (17 722) |
Interest received | 680 | 1 502 |
Net cash used in investing activities | (320 955) | (161 629) |
CONSOLIDATED STATEMENT OF CASH FLOWS (cont.)
For the year ended 31 December 2012
(in USD thousand, unless otherwise stated)
Year ended | ||
31 December 2012 | 31 December 2011 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
New loans received | 97 048 | 94 976 |
Repayment of loans | (61 603) | (38 056) |
Interest paid for bonds issued | (25 335) | (25 183) |
Proceeds from short-term bonds issued | - | (19) |
Blocked deposit | 6 380 | (7 174) |
Net cash generated from financing activities | 16 490 | 24 544 |
Net (decrease)/increase in cash | (27 015) | 48 776 |
Cash and cash equivalents at 1 January | 230 640 | 183 065 |
Effect from translation into presentation currency | (121) | (1 201) |
Cash and cash equivalents at 31 December | 203 504 | 230 640 |