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OJSC Cherkizovo Grp (CHE)

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Wednesday 31 March, 2010

OJSC Cherkizovo Grp

Final Results

RNS Number : 4637J
Open Joint Stock Co Cherkizovo Grp
31 March 2010
 



 

 

31 March 2010

 

 

Cherkizovo Group OJSC ("Cherkizovo" or "the Group" or "the Company")

 

Full year results for the Year Ended 31 December 2009

 

 

Moscow, 31 March 2010 - Cherkizovo Group (LSE: CHE), one of Russia's leading integrated and diversified meat producers, today announces full year results for the year ended 31 December 2009. 

 

Highlights

 

·     Outstanding financial performance and margin improvement despite the challenging economic environment and lower consumer spending throughout the year

 

·     Net income increased 96% on a rouble currency basis, and increased 54% to $120.2 million from $78.1 million for 2008

 

·     Adjusted EBITDA* increased 52% on a rouble currency basis, and 19% to $181.5 million from $152.3 million for 2008

 

·     Adjusted EBITDA* margin improved significantly to 18% from 13% in 2008

 

·     Gross profit increased 29% on a rouble currency basis, and increased 1% to $281.3 million for the year

 

·     Significant improvement in Group gross margin to 28% from 24% in 2008

 

·     Revenues increased 12% on a rouble currency basis year-on-year, and decreased 12% to $1,022.5 million from $1,166.4 million in 2008 driven by a 28% devaluation of the rouble

 

·     Net debt decreased 11% on a rouble currency basis, and decreased 13% to $445.2 million.

 

·     Net Debt/EBITDA ratio improved from 3.4 for 2008 to 2.5 for 2009

 

·     Cost of Debt remained flat at 4%.

 

Business Developments

 

·     Launch of two large-scale capacity increase projects at Bryansk and Penza poultry clusters - capacity is expected to increase by approximately 40% in 2012

·     Completion of Vertunovka parent stock facility at Penza production cluster

 



Sergey Mikhailov, Chief Executive Officer of Cherkizovo Group, said: 

 

"Our outstanding performance makes 2009 Cherkizovo's most profitable year to date, despite the particularly challenging macroeconomic environment. In constant currency terms, the Group almost doubled its Net Income, materially increased Adjusted EBITDA by 52% and improved EBITDA margin to 18%. Though there was a significant translation impact on the reported numbers owing to the dramatic depreciation of the rouble against the US dollar, the Group was still capable of demonstrating growth in reporting currency in EBITDA and Net Income. Moreover, our solid financial position enabled us to meet all of the Group's financial obligations during the year, including the repayment of our outstanding bond issue in June 2009.

 

Our successes in the Poultry division contributed significantly to the Company's overall Adjusted EBITDA margin improvement. The division achieved a record 35% Gross Margin and 26% Adjusted EBITDA Margin as the segment enjoyed a stable pricing environment and particularly low grain prices, as well as the continuing scale benefits from the integration of Chicken Kingdom. During 2009, Cherkizovo continued to invest for future growth in the sector; commencing two large investment projects at our Bryansk and Penza clusters, which are expected to increase the Group's poultry capacity by 40% once the sites are fully operational in 2012.

 

Our Pork division experienced an exceptional 38% growth in production volumes as our new farms neared full capacity in 2009. Moreover, the additional scale and stable pricing environment enabled us to sustain robust divisional margins for the third consecutive year. The efficiency and lower-cost production achieved at new farms positively influenced the overall Group profitability and we expect further improvements as we see accelerated volume growth this year.

 

In Meat Processing, we lowered our operating expenses by focusing efforts on operational restructuring. The year 2009 brought pressure on sales volumes in lower-priced, lower-margin products and we saw reduced consumption in some regions where the economy was more negatively impacted. However, during the course of the fourth quarter, we saw a stabilization in sales volumes in the division.

 

In 2009, the Company's vertically-integrated business model proved its strength and enabled Cherkizovo to achieve impressive performance in the face of a highly challenging operating environment. Our strong focus on operating efficiencies has driven significant margin improvement this year and strengthened our competitive position in the domestic market and looking ahead, we intend to capitalize on the momentum we achieved last year. Since the year end, we have already reached another milestone for the Group, with the proposed acquisition of two greenfield pork farms in the Penza and Lipetsk regions. We expect this acquisition, which continues our work in consolidating Russia's meat industry, to increase the Group's current capacity in the high-margin Pork division by almost 30% by 2012.

 

For the current year, we remain cautious about the effects of continuing pressure on Russian consumption, however, we expect the pricing environment to remain broadly favorable for Cherkizovo's products throughout the year. Russia still remains the biggest importer of meat in the world and the Russian government is targeting a substantial reduction in imports by 2012, which presents significant opportunities for Cherkizovo as the leading domestic producer. The Company will continue to leverage the benefits of improving efficiency and increasing capacity, particularly in our higher margin Pork and Poultry businesses, to take advantage of the opportunities in the market and M&A opportunities, and we remain confident that we will continue to deliver against our strategy in the course of the financial year."

 

- Ends -

 



For further information:

 

Investors/analysts/Russian media

 

Irina Ostryakova

Head of Communications

 

Cherkizovo Group OJSC

 

Tel. +7 495 788 3232

 

UK/international media






Tom Allison

Alex Money

 

Temple Bar Advisory (London)

Tel: +44 20 7002 1080

cherkizovo@templebaradvisory.com

 

 



Chief Executive's Review

 

Financial Overview

 

The table below summarizes the Group's very strong performance on a constant currency basis in 2009:

 

RUR, mln

FY 2009

FY 2008

Change

Sales

32,435.5

28,991.4

12%

Gross Profit

8,922.8

6,944.3

29%

Gross margin, %

28%

24%


Operating expenses

4,475.5

4,372.6

2%

Operating Income

4,447.3

2,571.7

73%

Operating Income margin, %

14%

9%


Net Income

3,812.2

1,941.3

96%

Adjusted EBITDA

5,757.9

3,786.4

52%

EBITDA margin, %

18%

13%






 

While the rouble results are extremely pleasing, on a reporting currency basis, there was a significant translation impact owing to the dramatic 28% depreciation of the average rouble US dollar exchange rate year on year. Accordingly, on a reported basis, sales decreased by 12% to US$1,022.5 million (2008: US$1,166.4 million). Gross profit increased 1% to US$281.3 million (2008: US$279.4 million). Efficiency gains helped contribute to a 20% reduction in operating expenses, and, as a result, operating margin increased to 14% from 9% for 2008. Net income increased 54% to $120.2 million (2008: US$78.1 million).

 

Adjusted EBITDA* increased 19% to US $181.5 million (2008: US$152.3 million) and adjusted EBITDA* margin improved significantly to 18% (2008: 13%), reflecting a robust operating performance by the Group in a tough environment.

 

Poultry Division

 

Sales volumes were broadly flat at approximately 184,300 tonnes from the comparable 2008 period, as the Group focused on improving the efficiency and scale of its production in the Poultry division. Prices for Cherkizovo Poultry sales increased 16% from 63.87 roubles per kg in 2008 to 74.33 roubles per kg in 2009 (excluding VAT). In US dollar terms, prices decreased by 9% from $2.57 per kg in 2008 to $2.34 per kg in 2009 (excluding VAT)*.

 

Total sales in the Poultry division decreased 7% to US $470.1 million (2008: US $505.2 million). Gross Profit increased 17% to US$162.7 million (2008: US$138.9 million) and the division achieved a record 35% Gross Margin (2008: 28%) due to a positive pricing environment supported by lower grain prices, as well as gains from measures implemented to improve efficiency.

 

Integration synergies from the acquisition of OJSC Kurinoe Tsarstvo (Chicken Kingdom) helped the division to reduce Operating expenses as a percentage of sales from 14% to 13%. As a result, the division increased its operating income by 47% to US$100.3 million (2008: US$68.4 million), and operating margin increased from 14% to 21% in the same period. Profit in the Poultry division increased by an impressive 73% to US$88.8 million (2008: US$51.3 million).

 

Adjusted EBITDA* increased 30% to US$121.5 million (2008: US$93.2 million), while Adjusted EBITDA* margin in the Poultry division in 2009 increased to 26% from 18% in 2008.

 

Pork Division

 

Sales volumes in the Pork division continue to be the driver of the Group's growth and they increased 38% in 2009 to approximately 53,800 tonnes compared to approximately 39,000 tonnes in 2008. Furthermore, we expect significant organic volume gains in 2010, also supported by the proposed acquisition of two greenfield pork production complexes which is expected to add almost 30% to the existing capacity of the Group.

 

In 2009 Pork division prices increased in rouble terms by 6%, from 68.36 roubles per kg in 2008 to 72.12 roubles per kg in 2009 (excluding VAT). In US dollar terms, prices decreased by 17% from $2.75 per kg of live weight in 2008 to $2.27 per kg of live weight in 2009 (excluding VAT).

 

Total sales in the pork division increased 24% to US$139.9 million (2008: US$112.5 million). Gross Profit increased 8% to US$51.2 million (2008: US$47.6 million) while Gross Margin decreased to 37% due to higher sales volumes coming in the second half of the year when pork prices were particularly pressured by increasing imports of live pork into Russia.

 

Operating expenses as a percentage of sales decreased to 6% from 7% in 2008, reflecting increasing economies of scale at the new farms. The division generated Operating Income of US$42.9 million (2008: US$39.3 million), while Operating Margin decreased to 31% (2008: 35%). Profit in the Pork division increased 1% to US$37.8 million (2008: US$37.5 million).

 

Adjusted EBITDA* generated by the division increased 14% to US$51.4 million (2008: US$45.1 million), and Adjusted EBITDA* Margin decreased to 37% (2008: 40%).

 

Meat Processing Division

 

Sales volumes decreased 10% to approximately 130,000 tonnes, due to decreased sales volumes of lower-priced, lower-margin products and lower consumption in some regions of Russia where the economy was more negatively impacted.

Average division prices increased by 10% from 103.86 roubles in 2008 to 113.80 roubles in 2009 (excluding VAT). In US dollar terms, the division's prices decreased by 14% from $4.18 per kg in 2008 to $3.59 per kg in 2009 (excluding VAT).

 

Sales in the Meat Processing division decreased 20% to US$460.2 million (2008: US $578.0 million).  Divisional Gross Profit decreased 28% to US$67.6 million (2008: US$93.3 million), while Gross Margin decreased from 16% to 15%, largely due to the increase in raw meat prices. However, Operating expenses as a percentage of sales, decreased to 13% from 15% in 2008, reflecting lower selling expenses and operational restructuring at production sites. The division loss was US$3.8 million in 2009.

 

Adjusted EBITDA* for the division decreased 22% to US$19.6 million (2008: US$25.2 million), and Adjusted EBITDA* margin remained unchanged at 4%.

 

Financial Position

 

The Group's Capital Expenditure on property, plant and equipment and maintenance amounted to US$128.5 million in 2009. Of the total, US$72.1 million was invested in Poultry division projects, mainly the completion of the Vertunovskaya production site, the capacity increase projects at Bryansk and Penza clusters, and the construction of the new slaughter facility in Penza. The Pork division received US$50.2 million investment for the completion of the Lipetsk and Tambov complexes and there was US$5.9 million of investment, primarily for capital maintenance, in the Meat Processing division.

 

Net Debt decreased 13% to $445.2 million from $512.3 million in 2008. As of 31 December 2009, total Debt was at US$484.1 million, while the structure of the debt portfolio changed in favour of long-term debt, which was approximately US$375.7 million or 78% of the debt portfolio, increasing from 58% of the debt portfolio at the end of 2008. Short-term debt was US$108.5 million, or 22% of the portfolio, decreasing from 42% at the end of 2008. Cost of Debt for 2009 remained at 4%. The portion of subsidized debt in the portfolio was 86%, increasing from 74% at end of 2008. Cash and cash equivalents totalled $39.0 million at 31 December 2009.

 

Subsidies

 

The Group received no direct Federal subsidies in 2009. The Group received regional direct subsidies that were offset against cost of sales in 2009 of US$1 million, and subsidies for interest reimbursement of US$28.0 million which offset interest expense.

 

Outlook

 

Cherkizovo made excellent progress in its 2009 operational performance, despite tough economic conditions and lower consumption and demonstrated excellent financial performance both in constant currency terms and reporting currency terms, despite the translation impact of the rouble's depreciation against the US dollar.

 

The Company's vertically integrated business model has proven its strength and versatility in adapting quickly to the changing market conditions. The Group's Poultry division continues to benefit from efficiency improvement and successful integration of the Poultry businesses and it will be supported by the expected capacity increases at the Bryansk and Penza clusters towards the end of the 2010. At the same time, the investment cycle in the Pork division is complete and we expect further significant production volume increases in 2010, including those from the contemplated acquisition of the two new farms announced in March 2010. Additionally, a broader commitment to preserve the Group's overall profitability in the face of a weaker consumption environment has resulted in an improvement in margin levels.

 

Despite the still soft economic conditions that have led to a general weakening of consumption patterns and pricing trends, the Company remains optimistic about broader consumption and pricing for its products throughout the year. The Group expects to continue to benefit from favourable grain prices and further capacity gains to deliver against our stated objectives in 2010.

 

 



*For price calculation in dollar terms the Company used the average exchange rate for 2009 of 31.7231 roubles per 1 US dollar: for 2008 the average rate was 24.8553 roubles per 1 US dollar.

 

*Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.

 

Adjusted Earnings before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA represents income before interest, income tax and minority interest, adjusted for certain other items as shown in the reconciliation in Appendix 1. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of our net revenues. Our adjusted EBITDA  may not be similar to adjusted EBITDA measures of other companies; is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our adjusted EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within our industry. Adjusted EBITDA is reconciled to our consolidated statements of operations in Appendix 1.

 

 

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Group. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid market change in our industry, as well as many other risks specifically related to the Group and its operations.

 

 

 

 

 

 

 



APPENDIX I: KEY DATA AND FIGURES

 

2009 Consolidated Selected Financial Data (US$000)

(in thousands of US dollars)

Meat-Processing

Pork

Corporate

assets/

expenditures

Interdivision

Combined

Total Sales

460 158

470 058

139 887

2 438

-

1 072 541

including other sales

3 693

55 816

17 634

-

-

77 143

including sales volume discount

(17 862)

(17 544)

-

-

-

(35 406)

Interdivision Sales

(307)

(22 881)

(24 462)

(2 434)

-

(50 084)

Sales to external customers (Sales)

459 851

447 177

115 425

4

-

1 022 457

% of Total sales

45%

44%

11%



100%

Cost of Sales

(392 590)

(307 352)

(88 657)

(2)

47 414

(741 187)

Gross profit

67 568

162 706

51 230

2 436

(2 670)

281 270

Gross margin

15%

35%

37%



28%

Operating expenses

(59 393)

(62 366)

(8 349)

(13 642)

2 670

(141 080)

Operating income

8 175

100 340

42 881

(11 206)

-

140 190

Operating margin

2%

21%

31%



14%

Other income and expenses, net

(141)

(1 888)

(196)

14 793

(12 182)

386

Interest expenses

(11 841)

(9 682)

(4 879)

(5 424)

12 182

(19 644)








Division profit / (loss)

(3 807)

88 770

37 806

(1 837)

-

120 932

Division profit margin

-1%

19%

27%



12%

Supplemental information:







Income Tax expense

973

(5 560)

1 716

(476)

-

(3 347)

Depreciation and amortisation expense

10 966

20 585

8 448

107

-

40 106

Loss on disposal of property, plant & equipment

503

605

100

-


1 208








 Adjusted EBITDA reconciliation







Division profit / (loss)

(3 807)

88 770

37 806

(1 837)

-

120 932

Add:







Interest expense

11 841

9 682

4 879

5 424

(12 182)

19 644

Interest income

(3 020)

(35)

(34)

(10 219)

12 185

(1 123)

Gain on early retirement of bonds

-

-

-

(1 077)

-

(1 077)

Reserve on loans receivable

2 128

-

-

285

-

2 413

Gain from debt forgiveness

(132)

(150)

(15)

(118)

-

(415)

Currency remeasurement loss/(gain), net

1 464

2 069

245

(3 613)

-

165

Other financial (income) & expense, net

(298)

3

-

(51)

(3)

(349)

Depreciation and amortization expense

10 966

20 585

8 448

107

-

40 106

Loss on disposal of property, plant & equipment

503

605

100

-

-

1 208

Adjusted EBITDA*

19 645

121 529

51 429

(11 099)

-

181 504

Adjusted EBITDA Margin*

4%

26%

37%



18%

 

 

Reconciliation between net division profit and consolidated income attributable to Group Cherkizovo


Total net division profit

120 932

Net (income) loss attributable to noncontrolling interests

(4 108)

Income taxes

3 347

Net income attributable to Group Cherkizovo

120 171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

CONSOLIDATED INCOME STATEMENT DATA

 

(in thousands of US dollars)

Year ended

31 December

2009

Year ended

31 December

2008




Sales

1 022 457

1 166 406

Cost of sales

(741 187)

(887 015)

Gross profit

281 270

279 391

Gross margin

28%

24%

Operating expenses

(141 080)

(175 923)

Operating Income

140 190

103 468

Operating margin

14%

9%

Income before tax and non-controlling interest

120 932

81 928

Net income attributable to Group Cherkizovo

120 171

78 105

Net profit margin

12%

7%




Weighted average number of shares outstanding

43 028 022

41 725 834

Earnings per share



Income (loss) from continuing operations

2.79

1.83

Loss from discontinued operations

-

0.04

Net income per share

2.79

1.87




Consolidated Adjusted EBITDA reconciliation*



Income before income tax and minority interest

120 932

81 928

Add:



Interest expense

19 644

22 725

Interest income

(1 123)

(1 965)

Gain on early retirement of bonds

(1 077)

-

Reserve on loans receivable

2 413

-

Gain from debt forgiveness

(415)

(1 019)

Currency remeasurement loss/(gain), net

165

1 596

Other financial (income) & expense, net

(349)

203

Depreciation expense

40 106

45 791

Loss on disposal of property, plant & equipment

1 208

822

Impairment of non-current assets

-

2 258

Consolidated Adjusted EBITDA

181 504

152 339

Adjusted EBITDA Margin

18%

13%

 

 



 

MEAT PROCESSING DIVISION INCOME STATEMENT DATA

 

(in thousands of US dollars)

Year ended

31 December

2009

Year ended

31 December

2008




Total Sales

460 158

578 045

Interdivision sales

(307)

(271)

Sales to external customers

459 851

577 774

Cost of sales

(392 590)

(484 748)

Gross profit

67 568

93 297

Gross margin

15%

16%

Operating expenses

(59 393)

(86 343)

Operating Income

8 175

6 954

Operating margin

2%

1%

Other income and expenses, net

(141)

74

Interest expenses

(11 841)

(14 777)

Division loss

(3 807)

(7 749)

Division profit margin

-1%

-1%




Meat processing division Adjusted EBITDA reconciliation**



Division profit/(loss)

(3 807)

(7 749)

Add:



Interest expense

11 841

14 777

Interest income

(3 020)

(1 490)

Reserve on loans receivable

2 128

-

Gain from debt forgiveness

(132)

(879)

Currency remeasurement loss/(gain), net

1 464

2 298

Other financial income & expense, net

(298)

(4)

Depreciation expense

10 966

17 261

Loss on disposal of property, plant & equipment

503

479

Impairment of non-current assets

-

481

Meat processing division Adjusted EBITDA

19 645

25 174

Adjusted EBITDA Margin

4%

4%

 

 

 

 



 

POULTRY PROCESSING DIVISION INCOME STATEMENT DATA

 

(in thousands of US dollars)

Year ended

31 December

2009

Year ended

31 December

2008




Total Sales

470 058

505 204

Interdivision sales

(22 881)

(19 859)

Sales to external customers

447 177

485 345

Cost of sales

(307 352)

(366 330)

Gross profit

162 706

138 874

Gross margin

35%

28%

Operating expenses

(62 366)

(70 498)

Operating Income

100 340

68 376

Operating margin

21%

14%

Other income and expenses, net

(1 888)

(2 477)

Interest expenses

(9 682)

(14 611)

Division profit

88 770

51 288

Division profit margin

19%

10%




Poultry division Adjusted EBITDA reconciliation**



Division profit/(loss)

88 770

51 288

Add:



Interest expense

9 682

14 611

Interest income

(35)

(144)

Gain from debt forgiveness

(150)

(140)

Currency remeasurement loss/(gain), net

2 069

2 761

Other financial income & expense, net

3

-

Depreciation expense

20 585

22 248

Loss on disposal of property, plant & equipment

605

779

Impairment of non-current assets

-

1 777

Poultry division Adjusted EBITDA

121 529

93 180

Adjusted EBITDA Margin

26%

18%

 

 

 

 

 



PORK PROCESSING DIVISION INCOME STATEMENT DATA

 

(in thousands of US dollars)

Year ended

31 December

2009

Year ended

31 December

2008




Total Sales

139 887

112 507

Interdivision sales

(24 462)

(9 224)

Sales to external customers

115 425

103 283

Cost of sales

(88 657)

(64 939)

Gross profit

51 230

47 568

Gross margin

37%

42%

Operating expenses

(8 349)

(8 293)

Operating Income

42 881

39 275

Operating margin

31%

35%

Other income and expenses, net

(196)

(102)

Interest expenses

(4 879)

(1 723)

Division profit

37 806

37 450

Division profit margin

27%

33%




Pork division Adjusted EBITDA reconciliation**



Division profit/(loss)

37 806

37 450

Add:



Interest expense

4 879

1 723

Interest income

(34)

-

Gain from debt forgiveness

(15)

-

Currency remeasurement loss/(gain), net

245

102

Depreciation expense

8 448

6 271

Loss on disposal of property, plant & equipment

100

(437)

Pork division Adjusted EBITDA

51 429

45 109

Adjusted EBITDA Margin

37%

40%

 

 

 

 

 

 

 

 

 

 

 

 



 

APPENDIX II:

 

consolidated income statements

For the YEARS ended 31 DECEMBER 2009 and 2008

 

(in thousands of US dollars) 

Year ended

31 December

2009

Year ended

31 December

2008




Sales

1 022 457

1 166 406

Cost of sales

(741 187)

(887 015)

Gross profit

281 270

279 391

Selling, general and administrative expenses

(139 872)

(172 843)

Impairment of non-current assets

-

(2 258)

Other operating expense

(1 208)

(822)

Operating Income

140 190

103 468




Other income, net

386

1 185

Interest expense, net

(19 644)

(22 725)

Income from continuing operations before tax

120 932

81 928




Income tax

3 347

(1 462)

Income from continuing operations

124 279

80 466




Loss from discontinued operations, net of tax

-

(4 000)

Discontinued operations, net of tax

-

4 599

Net Income

124 279

81 065

Less: Net income attributable to non-controlling interests

(4 108)

(2 960)

Net Income attributable to Group Cherkizovo

120 171

78 105

 




Amounts attributable to Group Cherkizovo:



Income from continuing operations, net of tax

120 171

76 508

Discontinued operations, net of tax

-

1 597

Net income

120 171

78 105

 

Weighted average number of shares outstanding

43 028 022

41 725 834

 

Earnings per share - basic and diluted:

US$

US$

Income from continuing operations attributable to Group Cherkizovo 

2.79

1.83

Discontinued operations attributable to Group Cherkizovo, net of tax

-

0.04

Net income attributable to Group Cherkizovo per share

2.79

1.87

 

 

 

 

 

 

 

 

 

 



 

APPENDIX III:

 

consolidated balance sheets

As of 31 dECEMBER 2009 AND 2008

 

(in thousands of US dollars)  

31 December
200
9

31 December
200
8 




ASSETS



Current assets:



Cash and cash equivalents

38 961

49 667

Trade receivables, net of allowance for doubtful accounts of 4 940 and of 3 259 as of 31 December 2009 and 2008, respectively

86 631

87 909

Advances paid, net of allowance for doubtful accounts of 1 634 and of 1 351 as of 31 December 2009 and 2008, respectively

31 200

29 660

Inventory

138 364

133 870

Loans receivable

5 199

8 303

Deferred tax assets

5 879

4 668

Other receivables, net of allowance for doubtful accounts of 1 394 and of 562 as of 31 December 2009 and 2008, respectively

16 308

28 356

Other current assets

22 858

26 398

Total current assets

345 400

368 831




Non-current assets:



Property, plant and equipment, net

754 720

685 205

Goodwill

8 677

8 548

Other intangible assets, net

41 889

43 210

Loans receivable, net of allowance of 2 531 and 0 as of 31 December 2009 and 2008, respectively

156

6 036

Deferred tax assets

2 182

579

Notes receivable, net

1 327

7 903

Other non-current receivables

5 146

-

VAT receivable

10 620

11 462

Total non-current assets

824 717

762 943




Total assets

1 170 117

1 131 774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

consolidated balance sheets (continued)

As of 31 DECEMBER 2009 and 2008

 

(in thousands of US dollars)  

31 December
200
9

31 December
200
8 




LIABILITIES AND EQUITY



Current liabilities:



Trade accounts payable

64 190

66 299

Short-term debt and current portion of finance leases

108 456

236 351

Tax related payables

10 889

7 561

Deferred tax liabilities

28

54

Payroll related liability

13 807

12 237

Advances received

5 563

3 810

Payables for non-current assets

6 532

11 285

Interest payable

2 448

2 713

Other payables

5 159

4 049

Total current liabilities

217 072

344 359




Non-current liabilities:



Long-term debt and finance leases

375 689

325 666

Deferred tax liabilities

27 057

28 594

Tax related payables

4 255

6 935

Payables to shareholders

632

929

Other liabilities

7

144

Total non-current liabilities

407 640

362 268

Total liabilities

624 712

706 627




Commitments and contingencies






Equity:



Share capital

15

15

Additional paid-in capital

289 213

289 146

Treasury shares

(496)

(496)

Other accumulated comprehensive loss

(71 039)

(64 551)

Retained earnings

297 035

176 864

Total shareholders' equity

514 728

400 978




Non-controlling interests

30 677

24 169




Total equity

545 405

425 147

Total liabilities and equity

1 170 117

1 131 774

 

 

 

 

 

 

 

 

 

 

 



APPENDIX IV:

 

consolidated cash flow statements

For the YEARS ended 31 DECEMBER 2009 and 2008

 

(in thousands of US dollars) 

Year ended
31 December 200
9

Year ended
31 December 200
8

 

 

 

Cash flows from operating activities:

 

 

Income from continuing operations

124 279

80 466

Adjustments to reconcile income from continuing operations to net cash from operating activities:

 

 

Impairment of non-current assets

-

2 258

Depreciation and amortisation

40 106

45 791

Bad debt expense (including allowance for non-current loans receivable of 2 413 and 0 as of 31 December 2009 and 2008)

10 022

3 681

Foreign exchange loss

165

1 596

Deferred tax benefit

(4 510)

(5 504)

(Reversal of) provisions related to unrecognised tax benefits (Note 18)

(2 366)

867

Share-based compensation expense

908

-

Other adjustments

80

(879)

 

 

 

Changes in operating assets and liabilities

 

 

Decrease in inventories

775

3 101

Increase in trade receivables

(5 760)

(18 414)

(Increase) decrease in advances paid

(2 531)

1 346

Decrease in value added tax receivable

490

7 226

Decrease (increase) in other current assets

6 729

(4 325)

Increase in trade accounts payable

214

5 744

Increase in taxes payable

3 057

2 287

Increase in other current payables

4 558

4 080

Net cash from operating activities associated with continuing operations

176 216

129 321

Net cash used in operating activities associated with discontinued operations

-

(1 101)

Total net cash from operating activities

176 216

128 220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

CONSOLIDATED CASH FLOW STATEMENTS (CONTINUED)

For the YEARS ended 31 DECEMBER 2009 and 2008

(in thousands of US dollars) 

Year ended
31 December 200
9

Year ended
31 December 200
8

 

 

 

Cash flows from (used in) investing activities:

 

 

Purchases of long-lived assets

(130 287)

(165 248)

Proceeds from sale of property, plant and equipment

855

1 028

Sale of consolidated entities net of cash surrendered

-

58

Acquisition of subsidiaries, net of 14 cash acquired (Note 23)

(2 140)

-

Sale of notes receivable

10 310

-

Purchases of notes receivable

(3 260)

(402)

Issuance of long-term loans

(901)

(1 968)

Repayment on long-term loans issued

784

1 342

Issuance of short-term loans

(17 950)

(7 098)

Repayments on short-term loans issued

21 100

56

Net cash flow used in investing activities associated with continuing operations

(121 489)

(172 232)

Net cash used in investing activities associated with discontinued operations

-

(143)

Total net cash used in investing activities

(121 489)

(172 375)

 

 

 

Cash flows from (used in) financing activities:

 

 

Proceeds from long-term loans

89 508

113 954

Repayment of long-term loans

(128 967)

(46 223)

Proceeds from long-term loans from related parties

1 004

149

Repayment of long-term loans from related parties

(85)

(1 025)

Purchase of treasury stock

-

(496)

Proceeds from short-term loans

90 733

273 951

Repayment of short-term loans

(115 279)

(330 665)

Proceeds from shares issued

-

82 340

Payments for services related to share issuance

-

(2 903)

Cash distributed to shareholders

(246)

(48)

Net cash (used in) from financing activities associated with continuing operations

(63 332)

89 034

Net cash from financing activities associated with discontinued operations

-

376

Total net cash (used in) from financing activities

(63 332)

89 410

Total cash (used in) from operating, investing and financing activities

(8 605)

45 255

 

 

 

Impact of exchange rate difference on cash and cash equivalents

(2 101)

(12 526)

 

 

 

Net increase (decrease) in cash and cash equivalents:

(10 706)

32 729

Cash and cash equivalents associated with continuing operations, at the beginning of
the period

49 667

16 859

Cash and cash equivalents associated with discontinued operations, at the beginning of
the period

-

79

Cash and cash equivalents associated with continuing operations, at the end of
the period

38 961

49 667

Cash and cash equivalents associated with discontinued operations, at the end of
the period

-

-

 

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

Income taxes paid

4 649

8 521

Interest paid

62 056

71 697

Property, plant and equipment acquired on account

6 532

11 285

Property, plant and equipment acquired under finance leases

599

6 494

 



 

Notes:

 

*Consolidated Adjusted EBITDA

 

Consolidated Adjusted EBITDA represents operating income plus depreciation and amortisation expense, loss on disposal of property, plant and equipment, unusual loss related to the privatization of a subsidiary and other items, which are expenses primarily related to financing, IPO and restructuring activities.

 

We present Adjusted EBITDA because we consider it an important supplemental measure of our operating performance. In particular, we believe Adjusted EBITDA provides useful information to securities analysts, investors and other interested parties because it is used in the "debt to EBITDA" debt incurrence financial measurement in certain of our financing arrangements.

 

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, and it should not be considered as an alternative to net profit as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited.

 

**Division Adjusted EBITDA

 

Division Adjusted EBITDA represents division operating income plus depreciation and amortisation expense, loss on disposal of property, plant and equipment, unusual loss related to the privatization of a subsidiary and other items, which are expenses primarily related to financing, IPO and restructuring activities.

 

We present Adjusted EBITDA because we consider it an important supplemental measure of our operating performance. In particular, we believe Adjusted EBITDA provides useful information to securities analysts, investors and other interested parties because it is used in the "debt to EBITDA" debt incurrence financial measurement in certain of our financing arrangements.

 

Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, and it should not be considered as an alternative to net profit as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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