Share Name Share Symbol Market Type Share ISIN Share Description
Ukrproduct Group Limited LSE:UKR London Ordinary Share GB00B03HK741 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 2.99p 2.00p 3.98p - - - 0 12:02:11
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Food Producers 36.9 0.1 0.2 13.0 1

Ukrproduct Group Ltd Final Results

27/06/2019 7:01am

UK Regulatory (RNS & others)


Ukrproduct (LSE:UKR)
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RNS Number : 6167D

Ukrproduct Group Ltd

27 June 2019

27 June 2019

UKRPRODUCT GROUP LIMITED

("Ukrproduct", the "Company" or, together with its subsidiaries, the "Group")

FINAL RESULTS FOR THE YEARED 31 DECEMBER 2018

NOTICE OF AGM

Ukrproduct Group Limited (AIM: UKR), one of the leading Ukrainian producers and distributors of branded dairy foods and beverages (kvass), today announces its audited results for the year ended 31 December 2018.

Copies of the 2018 Annual Report and Accounts, will shortly be posted to shareholders and will be available on the Company's website at www.ukrproduct.com. In addition, a Notice of Annual General Meeting ("AGM"), along with a Proxy Form, will shortly be posted to shareholders and will be available at the Company's website at www.ukrproduct.com.

The AGM will be held at the head office of the Company, 10th Floor, 39-41 Shota Rustaveli Street, 01033 Kyiv, Ukraine at 6.00 pm (Kyiv time) / 4.00 pm (London time) on 30 July 2019.

For further information contact:

 
   Ukrproduct Group Ltd 
   Jack Rowell, Non-Executive Chairman                 Tel: +380 44 232 9602 
   Alexander Slipchuk, Chief Executive                 www.ukrproduct.com 
    Officer 
   Strand Hanson Limited 
   Nominated Adviser and Broker                        Tel: +44 20 7409 3494 
    Rory Murphy, James Dance, Jack Botros               www.strandhanson.co.uk 
 

Ukrproduct Group Ltd is one of the leading Ukrainian producers and distributors of branded dairy products and kvass, a traditional fermented beverage. The Group's current product portfolio includes processed and hard cheese, packaged butter, skimmed milk powder (SMP) and kvass. Ukrproduct has built a range of recognisable product brands ("Our Dairyman", "People's Product", "Creamy Valley", "Molendam", "Farmer's") that are well known and highly regarded by consumers. Ukrproduct's securities are traded under the symbol "UKR" on AIM, a market operated by the London Stock Exchange.

Chairman and Chief Executive's Statement

Trading

During the year to 31 December 2018 ("FY 2018"), the Ukrainian economy showed moderate growth, accompanied by wage inflation, which has helped consumer confidence. Ukrproduct Group Ltd ("Ukrproduct", the "Company" or, together with its subsidiaries, "the Group") continued focusing on cash generation while aiming to address opportunities in export markets, beverages and B2B, as well as expanding its dairy business.

The Group reports improved revenue of approximately GBP36,9 million (approximately 1.3 billion UAH). Gross profit in UAH terms increased 4.3% to approximately 115 million UAH, however, in GBP terms, the negative impact of exchange rate differences resulted in a decrease of 2.5% to approximately GBP3.2 million.

The Group reports an operating profit of approximately GBP0.2 million (approximately UAH 6.2 million) in FY2018, compared with an operating profit of approximately GBP0.5 million (approximately UAH 16.2 million) in 2017.

Overall, for FY 2018, the Company reports net profit of approximately GBP0.1 million (approximately 2.7 million UAH) compared to a loss of approximately GBP1.1 million (approximately 40.6 million UAH) in 2017. Net profit for 2018 is lower than previously expected (as announced on 7 May 2019) as a result of increased operating expenses. Net profit for FY2018 included lower finance charges related to the outstanding debt with EBRD, although total finance expenses increased to approximately GBP0.5 million (approximately 16.2 million UAH) from approximately GBP0.4 million (approximately 15.1 million UAH) in 2017.

Overall, the Group reports that its sales volumes have grown by 4%, including sales of branded products in its key packaged butter and processed cheese segments. However, both export sales volumes and revenue decreased due to the worldwide contraction of skimmed milk powder prices. Although the Company continued to capitalise on its spare dairy processing capacity by acquiring new B2B partners, Ukrproduct's B2B gross profit slightly decreased in 2018. Whilst gross profit of branded products showed substantial growth, it was unfortunately offset by losses caused by the decline in both skimmed milk powder and butter prices.

Sales of beverages significantly increased as a result of the Group's targeted marketing initiatives and the introduction of new drinks.

Financial Position

As at 31 December 2018, Ukrproduct reports net assets of approximately GBP1.0 million (approximately 35.13 million UAH) and net current liabilities of approximately GBP0.03 million (approximately 1.05 million UAH), with cash balances of approximately GBP0.2 million (approximately 6.4 million UAH). During FY 2018, the Group met its outstanding obligations, including the EBRD loan repayments, which were paid on schedule in the amount of EUR0.52 million.

Outlook

Ukrproduct's strategy going forward is to generate cash by improving the profitability of its key dairy product and beverage segments and to further enhance its working capital position.

The Group expects to boost its sales volume and revenue in 2019 by launching new products in its key business areas, introducing new marketing activities and capitalising further on export opportunities.

 
 Jack Rowell                                                     Alexander Slipchuk 
 Non-Executive Chairman                                          Chief Executive Officer 
 

Ukrproduct Group

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARED 31 DECEMBER 2018

(in thousand GBP, unless otherwise stated)

 
                                                   Year ended    Year ended 
--------------------------------------------- 
                                                   31 December   31 December 
                                                       2018          2017 
                                                    GBP '000      GBP '000 
---------------------------------------------     ------------  ------------ 
 
 Revenue                                             36 928        30 525 
 Cost of sales                                      (33 751)      (27 267) 
                                                  ------------  ------------ 
 GROSS PROFIT                                         3 177         3 258 
 Administrative expenses                             (1 061)       (1 031) 
 Selling and distribution expenses                   (1 799)       (1 561) 
 Other operating expenses                             (131)         (156) 
                                                  ------------  ------------ 
 PROFIT FROM OPERATIONS                                186           510 
 Net finance expenses                                 (494)         (437) 
 Net foreign exchange gain (loss)                      398         (1 250) 
                                                  ------------  ------------ 
 PROFIT / (LOSS) BEFORE TAXATION                       90          (1 177) 
 Income tax expense                                     -            62 
                                                  ------------  ------------ 
 PROFIT / (LOSS) FOR THE YEAR                          90          (1 115) 
                                                  ============  ============ 
 Attributable to: 
 Owners of the Parent                                  90          (1 115) 
 Non-controlling interests                              -             - 
 
 Earnings per share: 
 Basic (pence)                                         0,23         (2,81) 
 Diluted (pence)                                       0,23         (2,81) 
 
 OTHER COMPREHENSIVE INCOME: 
 Items that may be subsequently reclassified 
  to profit or loss 
 Currency translation differences                      (8)          (113) 
 Items that will not be reclassified 
  to profit or loss 
 Gain on revaluation of property, plant 
  and equipment                                         -             - 
 Income tax in respect of revaluation 
  reserve                                               -             - 
                                                  ------------  ------------ 
 OTHER COMPREHENSIVE INCOME, NET OF 
  TAX                                                  (8)          (113) 
                                                  ------------  ------------ 
 TOTAL COMPREHENSIVE INCOME FOR THE 
  YEAR                                                 82          (1 228) 
                                                  ============  ============ 
 Attributable to: 
 Owners of the Parent                                  82          (1 228) 
 Non-controlling interests                              -             - 
 

Ukrproduct Group

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 December 2018

(in thousand GBP, unless otherwise stated)

 
                                               As at         As at 
-------------------------------------- 
                                            31 December   31 December 
                                                2018          2017 
                                             GBP '000      GBP '000 
--------------------------------------     ------------  ------------ 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                 6 420         6 288 
 Intangible assets                              524           543 
                                           ------------  ------------ 
                                               6 944         6 831 
 Current assets 
 Inventories                                   3 735         2 426 
 Trade and other receivables                   3 156         2 171 
 Current taxes                                  349           271 
 Other financial assets                         24            30 
 Cash and cash equivalents                      181           496 
                                           ------------  ------------ 
                                               7 445         5 394 
                                           ------------  ------------ 
 TOTAL ASSETS                                 14 389        12 225 
                                           ============  ============ 
 
 EQUITY AND LIABILITIES 
 Equity attributable to owners of the 
  parent 
 Share capital                                 3 967         3 967 
 Share premium                                 4 562         4 562 
 Translation reserve                         (14 902)      (14 894) 
 Revaluation reserve                           3 619         3 769 
 Retained earnings                             3 718         3 478 
                                           ------------  ------------ 
                                                964           882 
 Non-controlling interests                       -             - 
                                           ------------  ------------ 
 TOTAL EQUITY                                   964           882 
 Non-Current Liabilities 
 Bank loans                                    5 208         5 716 
 Long-term payables                             467           459 
 Deferred tax liabilities                       274           262 
                                           ------------  ------------ 
                                               5 949         6 437 
 Current liabilities 
 Bank loans                                    2 455         1 318 
 Trade and other payables                      5 008         3 565 
 Other taxes payable                            13            23 
                                           ------------  ------------ 
                                               7 476         4 906 
                                           ------------  ------------ 
 TOTAL LIABILITIES                            13 425        11 343 
                                           ------------  ------------ 
 TOTAL EQUITY AND LIABILITIES                 14 389        12 225 
                                           ============  ============ 
 

Ukrproduct Group

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AS AT 31 December 2018

(in thousand GBP, unless otherwise stated)

 
                                 Attributable to owners of the parent               Total   Non-con-trolling    Total 
                                                                                                interests       Equity 
                       Share      Share     Revaluation   Retained    Translation 
                       capital    premium     reserve      earnings     reserve 
-------------------  ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
                        GBP      GBP '000    GBP '000     GBP '000     GBP '000      GBP        GBP '000         GBP 
                        '000                                                         '000                        '000 
-------------------  ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
 
 As At 1 January 
  2017                 3 967      4 562        3 935        4 427      (14 781)     2 110          -            2 110 
 
 Loss for the                                                                        (1 
  year                   -          -            -         (1 115)         -         115)          -           (1 115) 
 Other 
 comprehensive 
 income 
 Currency 
  translation 
  differences            -          -            -            -          (113)      (113)          -            (113) 
                     ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
 Total 
  comprehensive                                                                      (1 
  income                 -          -            -         (1 115)       (113)       228)          -           (1 228) 
 
 Depreciation 
  on revaluation 
  of property, 
  plant and 
  equipment              -          -          (166)         166           -          -            -              - 
                     ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
 As At 31 December 
  2017                 3 967      4 562        3 769        3 478      (14 894)      882           -             882 
                     =========  =========  ============  ==========  ============  ======  =================  ======== 
 
 Profit for 
  the year               -          -            -           90            -         90            -             90 
 Other 
 comprehensive 
 income 
 Currency 
  translation 
  differences            -          -            -            -           (8)        (8)           -             (8) 
                     ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
 Total 
  comprehensive 
  income                 -          -            -           90           (8)        82            -             82 
 
 Depreciation 
  on revaluation 
  of property, 
  plant and 
  equipment              -          -          (150)         150           -          -            -              - 
                     ---------  ---------  ------------  ----------  ------------  ------  -----------------  -------- 
 As At 31 December 
  2018                 3 967      4 562        3 619        3 718      (14 902)      964           -             964 
                     =========  =========  ============  ==========  ============  ======  =================  ======== 
 

Ukrproduct Group

CONSOLIDATED STATEMENT OF CASH FLOWS

AS AT 31 December 2018

(in thousand GBP, unless otherwise stated)

 
                                                  Year ended    Year ended 
-------------------------------------------- 
                                                  31 December   31 December 
                                                      2018          2017 
                                                   GBP '000      GBP '000 
--------------------------------------------     ------------  ------------ 
 Cash flows from operating activities 
 Gain (loss) before taxation                          90          (1 177) 
 Adjustments for: 
 Exchange difference                                 (398)         1 250 
 Depreciation and amortisation                        523           553 
 Loss on disposal of non-current assets                4             8 
 Write off of receivables/payables                    21            (5) 
 Impairment of inventories                            72            82 
 Loss from disposal of subsidiaries                    -             - 
 Interest income                                       -             - 
 Interest expense on bank loans                       494           437 
                                                 ------------  ------------ 
 Operation cash flow before working 
  capital changes                                     806          1 148 
 Increase in inventories                            (1 380)        (653) 
 Decrease / (Increase) in trade and 
  other receivables                                 (1 096)         298 
 Increase in trade and other payables                1 437          473 
                                                 ------------  ------------ 
 Changes in working capital                         (1 039)         118 
                                                 ------------  ------------ 
 Cash (used in)/ generated from operations           (233)         1 266 
 Interest received                                     2             1 
 Income tax paid                                       1           (31) 
                                                 ------------  ------------ 
 Net cash (used in)/ generated from 
  operating activities                               (230)         1 236 
 
 Cash flows from investing activities 
 Purchases of property, plant and equipment 
  and intangible assets                              (181)         (93) 
 Proceeds from sale of property, plant 
  and equipment                                        -             1 
 Repayments of loans issued                            7           (15) 
                                                 ------------  ------------ 
 Net cash used in investing activities               (174)         (107) 
 
 Cash flows from financing activities 
 Interest paid                                       (421)         (378) 
 Decrease in short term borrowing                     901            - 
 Repayments of long term borrowing                   (459)         (259) 
                                                 ------------  ------------ 
 Net cash (used in)/ generated from 
  financing activities                                21           (637) 
 
 Net Increase / (decrease) in cash 
  and cash equivalents                               (383)          492 
 Effect of exchange rate changes on 
  cash and cash equivalents                           68           (171) 
                                                 ------------  ------------ 
 Cash and cash equivalents at the beginning 
  of the year                                         496           175 
 Cash and cash equivalents at the end 
  of the year                                         181           496 
                                                 ============  ============ 
 

These consolidated financial statements were approved and authorised for issue by the Board of Directors on 26 June 2019 and were signed on its behalf by Alexander Slipchuk.

Nature of Financial Information

The financial information contained in this announcement does not constitute statutory accounts as defined under section 113 of the Companies (Jersey) Law 1991 but has been extracted from the Group's 2018 statutory financial statements. It contained no statement under section 113B of the Companies (Jersey) Law 2011. The financial statements for 2018 will be delivered to the Registrar of Companies after adoption at the Company's Annual General Meeting.

EXTRACTS FROM NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   1.   Basis of preparation 

The consolidated financial statements have been prepared on a historical cost basis, except for significant items of property, plant and equipment which have been measured using revaluation model. The consolidated financial statements are presented in British Pounds Sterling (GBP) and all values are rounded to the nearest thousand (GBP000) except where otherwise indicated.

   2.   Going concern 

The consolidated financial statements have been prepared on the assumption that the Group is able to continue its operations on a going concern basis for the foreseeable future.

For the year ended 31 December 2018, net profit amounted to approximately GBP0.1 million (year ended 31 December 2017 net loss of approximately GBP1.1 million). As at 31 December 2018, the Group continued to breach certain loan covenant terms of its loan with European Bank for Reconstruction and Development ("EBRD").

These conditions indicate a significant uncertainty with regard to the Group's ability to continue its operations on a going concern basis.

According to the Company's management, the Group's ability to continue its operations on a going concern basis is permissible based on the following assumptions:

1. The Group received waivers from EBRD - in respect of the annual financial statements for 2018 and the first quarter of 2019 and the Board believes that EBRD will not demand accelerated repayment of the loan due to the breach of covenants;

2. The Group continues to repay the loan to EBRD according to the agreement and timely settled the last two tranches after the reporting date;

3. On 7 February 2018, the Company announced that it had entered into an agreement for a new loan facility with PJSC Creditwest Bank ("Creditwest Bank"), under which it could draw down up to UAH 65 million for refinancing purposes (to repay the OTP Bank Loan) as well as for financing working capital ("New Loan Agreement"). All amounts drawn down by the Group under the New Loan Agreement, together with interest accrued, is due to be repaid on 5 February 2021. The interest rate under the New Loan Agreement is fixed at 18% per annum. Any draw down under the facility is secured on appropriate collateral provided by the Group (real estate, equipment etc), including non-current assets located in Zhytomyr and equipment for production of Zhiviy Kvass. On 9 February 2018, the Group announced that it had drawn down UAH 32.3 million under the terms of the New Loan Agreement in order to fully repay all amounts outstanding to OTP Bank. Accordingly, the Group extinguished all outstanding liabilities to OTP Bank; and

4. The Group is planning to raise funding in H2 2019.

The Group's current strategy is to further expand its export sales worldwide with a focus on Asia and Africa. CIS markets also remain strategically important for the Group not least Kazakhstan where the Company increased its export volumes. Ukrproduct is also looking to expand domestic sales in Ukraine driven in part by the introduction of new products and rebranding. The Group continues to boost its dairy processing volumes via close cooperation with local farmers and cooperatives, thereby increasing its capacity utilization.

   3.   Bank Loans and Overdrafts 

On 7 February 2018, the Company announced that it had entered into an agreement for a new loan facility with PJSC Creditwest Bank ("Creditwest Bank"), under which it could draw down up to UAH 65 million for refinancing purposes (to repay the OTP Bank Loan) as well as for financing working capital ("New Loan Agreement"). All amounts drawn down by the Group under the New Loan Agreement, together with interest accrued, is due to be repaid on 5 February 2021. The interest rate under the New Loan Agreement is fixed at 18% per annum. Any draw down under the facility is secured on appropriate collateral provided by the Group (real estate, equipment etc), including non-current assets located in Zhytomyr and equipment for production of Zhiviy Kvass.

On 9 February 2018, the Group announced that it had drawn down UAH 32.3 million under the terms of the New Loan Agreement in order to fully repay all amounts outstanding to OTP Bank. Accordingly, the Group extinguished all outstanding liabilities to OTP Bank.

As at 31 December 2018 the Group has two loans: the loan from Creditwest Bank in the amount of 1 850 thousand GBP (in UAH 65,0 million) and the loan from EBRD in the amount of 5,813 thousand GBP (in EUR 6,439 thousand).

During 2018, the Group fulfilled its obligations under the EBRD loan in accordance with the agreement. The Group completed installments of payments and in accordance with an agreement between all parties, the payment of the tranche in December was postponed to subsequent periods.

Fixed assets with a net book value of GBP 4,872 thousand at 31 December 2018 (2017: GBP 4,829 thousand) were pledged as collateral.

Assets pledged as security for the EBRD loan include property and land in Starokonstantinov, equipment for dairy production and production of hard cheese, as well as trademarks.

 
    Bank       Currency     Type       Opening     Termination    Interest   Limit      As At          As at 
                                         date          date         rate              31 December    31 December 
                                                                                         2018           2017 
------------  ----------  --------  ------------  -------------  --------- 
                                                                              GBP      GBP '000       GBP '000 
                                                                              '000 
------------  ----------  --------  ------------  -------------  ---------  ------  -------------  ------------- 
 EBRD             EUR       Loan     31.03.2011     30.11.2024      5-7%     7 493      5 813          6 178 
                           Credit 
 OTP Bank         UAH        line    09.08.2011     09.02.2018     2,12%     1 139        -             856 
 Creditwest 
  Bank                     Credit 
  Ukraine         UAH        line    05.02.2018     05.02.2021     15,89%    1 850      1 850            - 
 Total                                                                                  7 663          7 034 
                                                                                    =============  ============= 
 

The average interest rate as at 31 December 2018 was 6,15% (2017: 5,27%).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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