AVANGARDCO INVESTMENTS PUBLIC LIMITED 30 March 2016
"AVANGARDCO IPL"), the largest producer of shell eggs and egg products in Ukraine and number one producer in Europe, announces its consolidated audited IFRS financial results for the fourth quarter and year ended 31 December 2015.
Consolidated revenue of US$53.7 mln, a decrease of 3% QoQ (Q3 2015: US$55.1 mln).
Gross profit of US$9.0 mln, an increase of 67% QoQ (Q3 2015: US$5.4 mln).
EBITDA decreased by 2% QoQ to US$12.9 mln (Q3 2015: US$13.2 mln).
Net loss of US$9.8 mln (Q3 2015: net profit of US$1.1 mln).
Financial Highlights for 2015Consolidated revenue amounted to US$229.9 mln, a decrease of 45% YoY (2014: US$419.6 mln).
Export sales revenue amounted to US$94.8 mln or 41% of the Company's consolidated revenue (2014: US$156.7 mln or 37% of the consolidated revenue).
Gross profit of US$22.1 mln, a decline of 82% YoY (2014: US$121.0 mln).
Operating loss amounted to US$87.1 mln (2014: operating profit of US$84.1 mln).
EBITDA loss of US$1.4 mln (2014: EBITDA US$129.5 mln).
Net loss amounted to US$158.4 mln (2014: net loss of US$26.9 mln).
Operational Highlights for 2015Production of shell eggs totalled 3,434 mln units, a decline of 46% YoY (2014: 6,306 mln units).
Sales of shell eggs to external clients amounted to 2,798 mln units, down by 35% YoY (2014: 4,288 mln units).
Export of shell eggs amounted to 421 mln units, a decline of 26% YoY (2014: 567 mln units).
The average sales price of shell eggs was UAH 1.22 per unit, excluding VAT, up by 58% YoY (2014: UAH
0.77 per unit, excluding VAT).
The production of dry egg products amounted to 9,057 tonnes, a decline of 58% YoY (2014: 21,323 tonnes).
Sales of dry egg products totalled 11,445 tonnes, down by 38% YoY (2014: 18,592 tonnes).
Export of dry egg products amounted to 8,929 tonnes, a decline of 42% YoY (2014: 15,453 tonnes)
As at 31 December 2015, the total poultry flock amounted to 13.6 mln hens, a decrease of 42% YoY (31 December 2014: 23.3 mln).
As at 31 December 2015, the number of laying hens amounted to 10.7 mln, down by 42% YoY (31 December 2014: 18.6 mln).
Irina Marchenko, Chief Executive Officer of AVANGARDCO IPL, commented:"In 2015, the ongoing military conflict combined with the unfavourable political environment and the bleak macroeconomic indicators continued to affect Ukraine and the Company. The country's investment climate showed no signs of improvement.
Amid these adverse conditions, AVANGARDCO IPL is seeking to implement its strategic plans, including to maintain its leading position in the domestic market and to increase its exports to improve forex revenue and
enhance awareness of its products worldwide. The worsening situation in the Middle East has encouraged us to seek new export markets, with the EU and Asia our primary target markets. We are going to compete for the world markets. We are also planning to improve our efficiency by using the full capacity of our new poultry complexes and by deploying a well-balanced procurement strategy. We will continue to streamline our production taking into account the needs of our domestic and external markets.
Despite the fact that the loss of facilities and sales in Crimea and Eastern Ukraine and low domestic demand negatively impacted the 2015 financial results, the Company hopes it will be able to overcome these difficulties and demonstrate sound operating and financial results in 2016, driven by an adjustment to our operations in response to current conditions. I am sure that our sustainable business model combined with the coordinated work of our team will help us to weather the current downturn and come out even stronger."
OutlookIn light of the ongoing political and economic uncertainty in Ukraine and low demand for shell eggs in the domestic market, the Company provides a conservative forecast for the current year. In 2016 the Company will focus on ensuring profitability and competitiveness of its business in the current challenging environment and the fulfillment of its financial obligations.
In this regard, the strategy for 2016 includes:
Containing the number of laying hens at 11.0 mln to prevent a surplus in the domestic shell egg market and to keep the average sales price high.
Expanding the Company's export market and sales volumes, by growing sales of egg products into the EU and the Far East which will also help to reduce dependency on the volatile situation in the Middle East.
Continuing to develop sales via all available distribution channels, focusing on increasing sales through supermarkets, and on new export opportunities in existing and new markets.
# # #The management team will host a conference call and webcast for investors and analysts on Wednesday, 30 March 2016 at 09.00 am New York time, 14.00 pm UK time, 16.00 pm Kiev and Moscow time.
Name:
AVANGARDCO FULL YEAR 2015 FINANCIAL RESULTS
ID:
73088617
UK Free call
0800 073 1340
Russia Free call
88007756818
USA
1866 434 1089
UK Standard International
+44 (0) 1452 569 393
A live webcast of the presentation will be available at: https://webconnect.webex.com/webconnect/onstage/g.php?MTID=ef08adfc1c24c02c1dbe3222d21037d51 Please register approximately 15 minutes prior to the start of the call.
Financial results for the year ended 31 December 2015 are available on the Company's website at: http://avangard.co.ua/eng/for-investors/financial-overview/financial-reports/annualreports/
Financial results overview # # #Units
Q4 2015*
Q3 2015*
Change
2015
2014
Change
Consolidated Revenue
US$ '000
53,716
55,152
(3%)
229,924
419,618
(45%)
Gross Profit/(Loss)
US$ '000
8,988
5,391
67%
22,125
120,981
(82%)
*recalculated at the average UAH/USD exchange rate for Q3 2015 and Q4 2015Gross Profit Margin
%
17%
10%
-
10%
29%
-
EBITDA
US$ '000
12,897
13,191
(2%)
(1,417)
129,497
-
EBITDA Margin
%
24%
24%
-
-
31%
-
Operating Profit/(Loss)
US$ '000
12,762
7,674
66%
(87,104)
84,116
-
Operating Margin
%
24%
14%
-
-
20%
-
Net Profit/(Loss)
US$ '000
(9,815)
1,080
-
(158,390)
(26,918)
-
Net Profit Margin
%
-
2%
-
-
-
-
.
Q4 2015Currency
31 December
2015
Weighted average for Q4 2015
30 September
2015
Weighted average for Q3 2015
US dollar to Ukrainian Hryvnia
24.001
22.849
21.528
21.722
In Q4 2015, the Company's consolidated revenue decreased by 3% QoQ to US$53.7 mln (Q3 2015: US$55.1 mln) as a result of lower sales of shell eggs and dry egg products. However, the decline was partially offset by the increase in the average sales price of shell eggs and egg products in dollar terms, due to the stable exchange rate of the Ukrainian hryvnia against major currencies in the fourth quarter and seasonal increase in the sales price of shell eggs.
In Q4 2015, gross profit rose by 67% QoQ to US$9.0 mln (Q3 2015: US$5.4 mln) due to the seasonal growth of the price of shell eggs and relatively stable cost per unit sold in dollar terms. Gross profit margin was 17% (Q3 2015: 10%).
In Q4 2015, EBITDA decreased by 2% QoQ to US$12.9 mln (Q3 2015: US$13.2 mln). In Q4 2015, operating profit rose by 66% QoQ to US$12.8 mln (Q3 2015: US$7.7 mln).
In Q4 2015, the Company reported a net loss of US$9.8 mln (Q3 2015: net profit of US$1.1 mln) resulting from exchange rate differences, as well as high financial costs associated with the restructuring of its Eurobonds.
2015Currency
31 December
2015
Weighted average for the year ended
31 December 2015
31 December
2014
Weighted average for the year ended 31 December 2014
US dollar to Ukrainian Hryvnia
24.001
21.829
15.769
11.910
In 2015, the Company's consolidated revenue decreased by 45% YoY to US$229.9 mln (2014: US$419.6 mln). This was attributed to two main factors: lower sales of shell eggs and dry egg products which were down by 35% and 38% respectively and the devaluation of the Ukrainian hryvnia against the US dollar.
In 2015, the Company's export revenues decreased by 40% YoY to US$94.8 mln (2014: US$156.7 mln) as a result of lower export sales of shell eggs and dry egg products. Despite this, the share of exports in the consolidated revenue grew to 41% (2014: 37%).
In the reporting period, the cost of sales in dollar terms fell by 33% YoY to US$209.2 mln (2014: US$314.0 mln) due to the devaluation of the Ukrainian Hryvnia against the US dollar. The cost of sales in Hryvnia terms increased
as the price of over 70% of its components is linked to other major currencies. The cost of services provided by third parties (utilities, warehouse lease, veterinary services, and transport costs) increased due to the devaluation of the Ukrainian Hryvnia against the US dollar and the tariff revision.
As a result of the decrease in consolidated revenue and the increase in the cost of sales per unit, the Company's gross profit was down by 82% to US$22.1 mln (2014: US$121.0 mln). Gross profit margin decreased to 10% (2014: 29%) as the cost of sales per unit rose at a faster pace than the sales price of products affected by the decrease in domestic demand.
In 2015, the loss from operating activities amounted to US$87.1 mln (2014: operating profit of $84.1 mln). This loss is largely attributed to a one-time write down of sub-standard raw material inventories and inventories of finished goods with an expired shelf life, provisions for doubtful debts and funds deposited with the Financial Initiative bank due to its insolvency to the total amount of US$108 mln.
This led to an EBITDA loss of US$1.4 mln (2014: EBITDA US$129.5 mln), which excludes the one-time write down of inventories and funds deposited with the Financial Initiative bank.
In 2015, the Company reported a net loss of US$158.4 mln (2014: net loss of US$26.9 mln) which includes FX losses of US$43.6 mln.
Cash flow and debt structure:As at 31 December 2015, net cash flow from operating activities decreased to US$1.2 mln (31 December 2014: US$41.2 mln) due to the reduced operating profit and an increase in accounts receivables since the beginning of the year and low cash inflow from a decrease in biological assets.
Net cash used in investing activities amounted to US$35.3 mln for maintenance capex (31 December 2014: US$76.9 mln).
Net cash used in financing activities was US$15.2 mln (31 December 2014: net cash received from financing activities US$13.4 mln).
As at 31 December 2015, net cash outflow amounted to US$49.3 mln (31 December 2014: US$22.3 mln). Cash and cash equivalents decreased to US$31.3 mln (31 December 2014: US$117.9 mln) as cash outflow from financing and investing activities exceeded the funds inflow from operating activities. This was further impacted by the written off funds deposited with the Financial Initiative bank.
As at 31 December 2015, the Company's total debt amounted to US$336.4 mln (31 December 2014: US$343.8 mln). Net debt amounted to US$305.0 mln (31 December 2014: US$225.9 mln).
Restructuring of Eurobonds:On 28 October 2015 AVANGARDCO IPL completed its restructuring deal and extended the maturity of its Eurobonds from 29 October 2015 to 29 October 2018. In addition to other amendments, the following changes on the coupon payment have been agreed:
The 5% coupon will be payable on 29 October 2015 (representing the semi-annual payment of the existing 10% coupon), with 2% to be paid in cash as a regular coupon payment and 3% to be paid as payment in kind ("PIK").
The 10% coupon will be payable semi-annually in arrears on 29 April and 29 October of each year, commencing 29 April 2016, but subject to the following PIK and cash payment provisions:
Interest payment date | PIK Interest % | Cash Interest % |
29.04.16 | 75 | 25 |
29.10.16 | 75 | 25 |
29.04.17 | 50 | 50 |
29.10.17 | 50 | 50 |
29.04.18 | 25 | 75 |
29.10.18 | 0 | 100 |
Avangardco Investments Public Ltd. issued this content on 30 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 30 March 2016 06:30:16 UTC
Original Document: http://avangard.co.ua/files/news/AVGR_FS_FY2015_ENG_final.pdf
