Last checked at 5 Apr 2011 07:00
FOR IMMEDIATE RELEASE
5th April, 2011
FINAL RESULTS FOR THE YEAR
ENDING 31 DECEMBER 2010
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, 2010.
Financial Highlights:
·; Revenue of £45.0m, up 4.3% (2009 £43.2m) and Gross Profit of £7.7m, up 10.7% (2009 £6.9m)
·; Net Profit of £1.094m, up 5.1% (2009 £1.04m)
·; Basic Earnings per share of 2.69p versus 2.50p last year (up 7.6%)
·; Proposed Dividend per share of 0.50p per share versus 0.40p per share last year (up 25.0%)
·; Year end net cash of £0.676m versus £0.236m last year sufficient to meet current debt obligations in the short and medium term and access to additional banking facilities if required.
Operational Highlights:
·; Ukrainian economy beginning to recover with real GDP rising 4.2% (according to official statistics from GfK) in 2010 (2009 down 15%), consumer disposable incomes continuing to be squeezed
·; H2 2010 was particularly strong compared to H1 2010 which bodes well for a sustained recovery in 2011, with gross profit up 40.9% in the second half
·; Profitability improved significantly, from 15.4% in H1 2010 to 18.4% in H2 2010, with gross profit in Branded Goods - which accounts for over 70% of Group revenues - up 92% in H2
·; Branded Products - maintained market leadership in packaged butter, with marketing initiatives supporting a strong sales drive in middle and premium processed cheese markets
·; Skimmed Milk Powder - recorded better profits although later, rising EU exports and raw material prices were a challenge
·; Distribution services - network being leveraged for third party products, namely Kvass (fermented beverage) and imported frozen fish
·; Senior management team strengthened with new appointments of CFO, Director of Sales and Director of Marketing.
Sergey Evlanchik, CEO of Ukrproduct, commented:
"Despite a challenging economic environment in Ukraine, Ukrproduct achieved positive revenue and net profit growth in 2010. Our core strategic focus of adjusting the product mix to match changing consumer purchasing power, backed by strong sales and marketing initiatives, is beginning to pay off. Restoring profit margins will be helped by improving production efficiency and capital investment.
Thus although we expect the current pressure on Ukrainian consumer finances to be maintained we see plenty of potential for sales and profit growth through improving efficiency gains looking forwards. Also we are leveraging our existing business by expanding exports as well as our distribution services. I have every confidence that the new team will assist me in driving forward Ukrproduct's strategy of increasing sales and improving profitability."
Enquiries:
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| Local: (UK) | 0845 351 0340 |
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National free phone: (Ukraine) Participant Code | 0800 504 837 982592 |
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National free phone: (Luxembourg) | 800 26789 | ||||||||
The playback facility for the call will be available for ten days upon request using the same numbers.
The summarised financial statements follow, however the full text of the 2010 Annual Report, incorporating the 2010 Audited Financial Statements, is available in pdf form on the Company's website www.ukrproduct.com.
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CONSOLIDATED INCOME STATEMENT | |||||||||||||||||||||||||||||||||||||||
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Year ended | Year ended | ||||||||||||||||||||||||||||||||||||||
31 December 2010 | 31 December 2009 | ||||||||||||||||||||||||||||||||||||||
£ '000 | £ '000 | ||||||||||||||||||||||||||||||||||||||
Revenue | 45,020 | 43,167 | |||||||||||||||||||||||||||||||||||||
Cost of sales | (37,349) | (36,238) | |||||||||||||||||||||||||||||||||||||
GROSS PROFIT | 7,671 | 6,929 | |||||||||||||||||||||||||||||||||||||
Administrative expenses | (2,899) | (2,578) | |||||||||||||||||||||||||||||||||||||
Selling and distribution expenses | (2,701) | (2,601) | |||||||||||||||||||||||||||||||||||||
Other operating income / (expenses), net | (502) | 20 | |||||||||||||||||||||||||||||||||||||
PROFIT FROM OPERATIONS | 1,569 | 1,770 | |||||||||||||||||||||||||||||||||||||
Finance income / (expenses), net | (367) | (426) | |||||||||||||||||||||||||||||||||||||
Effect of foreign currency translation | (5) | (249) | |||||||||||||||||||||||||||||||||||||
PROFIT BEFORE TAXATION | 1,197 | 1,095 | |||||||||||||||||||||||||||||||||||||
Income tax expenses | (103) | (54) | |||||||||||||||||||||||||||||||||||||
PROFIT FOR THE YEAR | 1,094 | 1,041 | |||||||||||||||||||||||||||||||||||||
Attributable to: | |||||||||||||||||||||||||||||||||||||||
Equity holders of the Parent | 1,104 | 1,064 | |||||||||||||||||||||||||||||||||||||
Non-controlling interests | (10) | (23) | |||||||||||||||||||||||||||||||||||||
Earnings per share (pence): | |||||||||||||||||||||||||||||||||||||||
Basic | 2.69 | 2.50 | |||||||||||||||||||||||||||||||||||||
Diluted | 2.69 | 2.50 | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
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Year ended | Year ended | |||||||||||||||||||||||||||||||||||||||
31 December 2010 | 31 December 2009 | |||||||||||||||||||||||||||||||||||||||
£ '000 | £ '000 | |||||||||||||||||||||||||||||||||||||||
PROFIT FOR THE YEAR | 1,094 | 1,041 | ||||||||||||||||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME: | ||||||||||||||||||||||||||||||||||||||||
Exchange differences on translation to the presentation currency | 351 | (1,954) | ||||||||||||||||||||||||||||||||||||||
Gain from revaluation of property, plant and equipment | 4,112 | - | ||||||||||||||||||||||||||||||||||||||
Tax effect from change in revaluation reserve | (1,028) | - | ||||||||||||||||||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX | 3,435 | (1,954) | ||||||||||||||||||||||||||||||||||||||
TOTAL COMPREHENSIVE INCOME, NET OF TAX | 4,529 | (913) | ||||||||||||||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||||||||||
Equity holders of the Parent | 4,539 | (890) | ||||||||||||||||||||||||||||||||||||||
Non-controlling interests | (10) | (23) | ||||||||||||||||||||||||||||||||||||||
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
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As at | As at | ||||||||||||||||||||||||||||||||||||||||
31/12/2010 | 31/12/2009 | ||||||||||||||||||||||||||||||||||||||||
£ '000 | £ '000 | ||||||||||||||||||||||||||||||||||||||||
ASSETS |
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Non-current assets |
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Property, plant and equipment | 12,263 | 8,534 |
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Intangible assets | 1,000 | 1,065 |
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Available for sale investments | 89 | 86 |
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Deferred tax assets | 248 | 63 |
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13,600 | 9,748 | ||||||||||||||||||||||||||||||||||||||||
Current assets |
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Inventories | 3,985 | 2,445 |
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Trade and other receivables | 5,605 | 4,738 |
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Current taxes | 1,094 | 1,031 |
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Other financial assets | 220 | 79 |
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Cash and cash equivalents (excluding bank overdrafts) | 676 | 236 |
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11,580 | 8,529 | ||||||||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 25,180 | 18,277 |
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EQUITY AND LIABILITIES |
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Equity attributable to equity holders |
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Share capital | 4,082 | 4,107 |
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Other reserves | 2,068 | (1,283) |
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Retained earnings | 12,817 | 11,744 |
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18,967 | 14,568 | ||||||||||||||||||||||||||||||||||||||||
Non-controlling interests | 20 | 30 |
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18,987 | 14,598 | ||||||||||||||||||||||||||||||||||||||||
Non-Current Liabilities |
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Deferred tax liabilities | 1,434 | 459 |
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1,434 | 459 | ||||||||||||||||||||||||||||||||||||||||
Current liabilities |
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Bank loans and overdrafts | 2,938 | 1,581 |
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Trade and other payables | 1,715 | 1,575 |
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Taxes payable | 38 | 32 |
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Current income tax liabilities | 68 | 32 |
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4,759 | 3,220 | ||||||||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | 25,180 | 18,277 |
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CONSOLIDATED STATEMENT OF CASH FLOWS |
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Year ended | Year ended |
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31/12/2010 | 31/12/2009 |
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£ '000 | £ '000 |
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Cash flows from operating activities |
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Profit for the year | 1,094 | 1,041 |
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Adjustments for: | - | - |
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Exchange difference | 5 | 249 |
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Depreciation and amortisation | 1,068 | 1,405 |
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Loss / (profit) of disposal of property, plant and equipment | 74 | (7) |
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Bad debts expenses | 129 | - |
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Interest income | (20) | (1) |
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Interest expense | 387 | 427 |
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Income tax expense | 103 | 54 |
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Decrease / (increase) of inventories | (1,468) | 667 |
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Decrease / (increase) in trade and other receivables | (1,082) | (1,290) |
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(Decrease) / increase in trade and other payables | 492 | (194) |
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Cash generated from operations | 783 | 2,351 |
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Interest received | 20 | 1 |
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Income tax paid | (338) | (150) |
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Net cash generated by operating activities | 465 | 2,202 |
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Cash flows from investing activities | ||||||||||||||||||||||||||||||||||||||||
Payments for property, plant and equipment | (357) | (616) |
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Proceeds from sale of property, plant and equipment | 16 | 96 |
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Purchase of available for sale investments | (203) | - |
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Proceeds from sale of investments | (24) | 492 |
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Repayments / (proceeds) from loans issued | (139) | (50) |
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Net cash used in investing activities | (707) | (78) |
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Cash flows from financing activities | ||||||||||||||||||||||||||||||||||||||||
Own shares acquisition | (58) | (210) |
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Dividends paid | (82) | (253) |
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Interest paid | (387) | (427) |
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Net proceeds from short term borrowing | 1,312 | (1,461) |
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Net cash used in financing activities | 785 | (2,351) |
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Net increase in cash and cash equivalents | 543 | (227) |
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Effect of exchange rate changes on cash and cash equivalents | (103) | (228) |
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Cash and cash equivalents at the beginning of the year | 236 | 691 |
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Cash and cash equivalents at the end of the year | 676 | 236 |
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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 2010 or the year ended 31 December 2009 but is derived from the 2010 annual report and accounts. Statutory accounts for the years ended 31 December 2009 and 31 December 2010 have been reported on by the Independent Auditors. Statutory accounts for the year ended 31 December 2009 have been filed with the Companies Registry. The statutory accounts for the year ended 31 December 2010 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 2010 and for the year ended 31 December 2009 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
Starting from 01 January 2010 the Group applied a production method of depreciation for some items of cheese-making equipment. Management believes this method reflects more reliable information on consumption of economic benefits of these facilities as they are not operational at full capacity and are not influenced by moral depreciation. This change of the accounting estimate is applied prospectively. The impact of the revision of the depreciation method amounts to a decrease of GBP 313,958 in the depreciation accrued for 2010.
3. Segmental Information
Branded products | Skimmedmilk powder | Other | Un-allocated | Total | |||
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Year ended 31 December 2010 (GBP '000) | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | ||
Sales, Total | 81,331 | 17,081 | 13,069 | - | 111,481 | ||
Sales to internal customers | 49,503 | 8,412 | 8,546 | - | 66,461 | ||
Sales to external customers | 31,828 | 8,669 | 4,523 | - | 45,020 | ||
Gross profit | 6,550 | 703 | 418 | - | 7,671 | ||
Administrative expenses | (1,942) | (272) | (91) | (594) | (2,899) | ||
Selling and distribution expenses | (2,471) | (61) | (105) | (64) | (2,701) | ||
Other operating expenses | (125) | - | - | (377) | (502) | ||
Profit from operations | 2,012 | 370 | 222 | (1,035) | 1,569 | ||
Finance expenses, net | - | - | - | (367) | (367) | ||
Loss from exchange differences | - | - | - | (5) | (5) | ||
Profit before taxation | 2,012 | 370 | 222 | (1,407) | 1,197 | ||
Taxation | - | - | - | (103) | (103) | ||
Profit for the year | 2,012 | 370 | 222 | (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 | ||
Branded products | Skimmedmilk powder | Other | Un-allocated | Total | |||
SEGMENT INFORMATION (continued) | |||||||
31 December 2009 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | ||
Sales, Total | 72,757 | 28,177 | 8,138 | - | 109,072 | ||
Sales to internal customers | 42,893 | 16,151 | 6,861 | - | 65,905 | ||
Sales to external customers | 29,864 | 12,026 | 1,277 | - | 43,167 | ||
Gross profit | 6,480 | 267 | 182 | - | 6,929 | ||
Administrative expenses | (1,686) | (210) | (14) | (668) | (2,578) | ||
Selling and distribution expenses | (2,218) | (29) | (24) | (330) | (2,601) | ||
Other operating expenses | - | - | - | 20 | 20 | ||
Profit from operations | 2,576 | 28 | 144 | (978) | 1,770 | ||
Finance expenses, net | - | - | - | (426) | (426) | ||
Loss from exchange differences | - | - | - | (249) | (249) | ||
Profit before taxation | 2,576 | 28 | 144 | (1,653) | 1,095 | ||
Taxation | - | - | - | (54) | (54) | ||
Profit for the year | 2,576 | 28 | 144 | (1,707) | 1,041 | ||
Segment assets | 11,626 | 1,661 | 505 | - | 13,792 | ||
Unallocated corporate assets | - | - | - | 4,422 | 4,422 | ||
Unallocated deferred tax | - | - | - | 63 | 63 | ||
Consolidated total assets | 11,626 | 1,661 | 505 | 4,485 | 18,277 | ||
Segment liabilities | 933 | - | - | - | 933 | ||
Unallocated corporate liabilities | - | - | - | 2,287 | 2,287 | ||
Unallocated deferred tax | - | - | - | 459 | 459 | ||
Consolidated total liabilities | 933 | - | - | 2,746 | 3,679 | ||
Other segment information: | |||||||
Depreciation and amortisation | 989 | 280 | 10 | 126 | 1,405 | ||
Capital expenditure | 588 | 110 | 6 | 15 | 719 | ||
The unallocated corporate liabilities represent bank loans, overdrafts and accruals. | |||||||
The basis of pricing of the inter-segment transfers is the current market price at which the goods could be bought on the spot market externally but not lower than the full production costs plus the accompanying transport expenses. | |||||||
Secondary reporting format - geographical segments: | |||||||
Sales by country (consignees) | year ended | Sales by country (consignees) | year ended | |||||
31 December 2010 | 31 December 2009 | |||||||
£ '000 | £ '000 | |||||||
Ukraine | 38,040 | Ukraine | 30,827 | |||||
Holland | 2,377 | Singapore | 4,480 | |||||
Germany | 1,529 | Holland | 1,810 | |||||
Singapore | 1,058 | Germany | 1,366 | |||||
Kazakhstan | 676 | Turkey | 1,141 | |||||
Azerbaijan | 383 | Azerbaijan | 793 | |||||
Other countries | 957 | Other countries | 2,750 | |||||
Total | 45,020 | Total | 43,167 | |||||
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.
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The Group has no customers the volume of sales to which exceeds 10% of the total amount. | ||||||||
4. Earnings per share
Basic earnings per share have been calculated by dividing net profit attributable to the ordinary shareholders by the weighted average number of shares in issue.
Year ended 31 December 2010 | Year ended 31 December 2009 | |
£'000 | £'000 | |
Net profit attributable to ordinary shareholders | 1,104 | 1,064 |
Weighted number of ordinary shares in issue | 41,052,531 | 41,997,869 |
Basic earnings per share, pence | 2.69 | 2.50 |
Diluted average number of shares | 41,052,531 | 41,997,869 |
Diluted earnings per share, pence | 2.69 | 2.50 |
5. Dividends
As at April 1, 2011, the Board of Directors proposed a final dividend payment of 0.50 pence per ordinary share for the full year ended December 31, 2010 in the amount of GBP 210,000. If approved at the AGM, the final dividend will be paid on June 24, 2011 to the shareholders on the register as at May 20, 2011.
For further information on Ukrproduct please access www.ukrproduct.com