Final Results

RNS Number : 2890E

Ukrproduct Group Ltd

05 April 2011

 



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:

		Ukrproduct Sergey Evlanchik, CEO PBN Buchanan Laura Citron WH Ireland Limited Robin Gwyn Conference call for analysts and investors today 10.30am Tel: [phone] Tel: [phone] Tel: [phone]
			Local: (UK)	0845 351 0340
National free phone: (Ukraine) Participant Code				0800 504 837 982592
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.

CONSOLIDATED INCOME STATEMENT
																											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
																											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)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
																											As at							As at
																											31/12/2010							31/12/2009
																											£ '000							£ '000
	ASSETS
	Non-current assets
	Property, plant and equipment																										12,263							8,534
	Intangible assets																										1,000							1,065
	Available for sale investments																										89							86
	Deferred tax assets																										248							63
																											13,600							9,748
	Current assets
	Inventories																										3,985							2,445
	Trade and other receivables																										5,605							4,738
	Current taxes																										1,094							1,031
	Other financial assets																										220							79
	Cash and cash equivalents (excluding bank overdrafts)																										676							236
																											11,580							8,529
	TOTAL ASSETS																										25,180							18,277
	EQUITY AND LIABILITIES
	Equity attributable to equity holders
	Share capital																										4,082							4,107
	Other reserves																										2,068							(1,283)
	Retained earnings																										12,817							11,744
																											18,967							14,568
	Non-controlling interests																										20							30
																											18,987							14,598
	Non-Current Liabilities
	Deferred tax liabilities																										1,434							459
																											1,434							459
	Current liabilities
	Bank loans and overdrafts																										2,938							1,581
	Trade and other payables																										1,715							1,575
	Taxes payable																										38							32
	Current income tax liabilities																										68							32
																											4,759							3,220
	TOTAL LIABILITIES AND EQUITY																										25,180							18,277

CONSOLIDATED STATEMENT OF CASH FLOWS
																											Year ended							Year ended
																											31/12/2010							31/12/2009
																											£ '000							£ '000
	Cash flows from operating activities
	Profit for the year																										1,094							1,041
	Adjustments for:																										-							-
	Exchange difference																										5							249
	Depreciation and amortisation																										1,068							1,405
	Loss / (profit) of disposal of property, plant and equipment																										74							(7)
	Bad debts expenses																										129							-
	Interest income																										(20)							(1)
	Interest expense																										387							427
	Income tax expense																										103							54
	Decrease / (increase) of inventories																										(1,468)							667
	Decrease / (increase) in trade and other receivables																										(1,082)							(1,290)
	(Decrease) / increase in trade and other payables																										492							(194)
	Cash generated from operations																										783							2,351
	Interest received																										20							1
	Income tax paid																										(338)							(150)
	Net cash generated by operating activities																										465							2,202
	Cash flows from investing activities
	Payments for property, plant and equipment																										(357)							(616)
	Proceeds from sale of property, plant and equipment																										16							96
	Purchase of available for sale investments																										(203)							-
	Proceeds from sale of investments																										(24)							492
	Repayments / (proceeds) from loans issued																										(139)							(50)
	Net cash used in investing activities																										(707)							(78)
	Cash flows from financing activities
	Own shares acquisition																										(58)							(210)
	Dividends paid																										(82)							(253)
	Interest paid																										(387)							(427)
	Net proceeds from short term borrowing																										1,312							(1,461)
	Net cash used in financing activities																										785							(2,351)
	Net increase in cash and cash equivalents																										543							(227)
	Effect of exchange rate changes on cash and cash equivalents																										(103)							(228)
	Cash and cash equivalents at the beginning of the year																										236							691
	Cash and cash equivalents at the end of the year																										676							236

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	Skimmed milk powder	Other	Un-allocated	Total
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	Skimmed milk 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.
	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

 

END

 

 

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