CEO Statement
The 2016 harvest year got off to a challenging start, as a result of a prolonged
autumn drought in Ukraine, which delayed the germination and development of the
winter crops. A mild year end period and a relatively early spring has helped to
mitigate the damage from the autumn conditions and adjustments to the planned
agronomic applications have been made, so as to be realistic to the winter crops
potential. Spring sowing started in good time and proceeded to plan in good
conditions through until mid-May when 90% of the spring crops had been
completed, high rainfall in the second half of May delayed sowing but conversely
benefited all crops. Investment in new technology last autumn for the
preparation of spring crop seedbeds has improved both the standard and
efficiency of sowing, whilst allowing us to continue to develop our `Low Till
technology`. On a small scale we are also evaluating some new crops, such as
dried peas, linseed, buckwheat and sugar beet, this to look to broaden the crop
rotation.
With the drop in oil prices we have seen to a degree a drop in some of our input
prices. Nitrogen fertiliser for example we have procured at 18% less per unit
than in 2015, agrochemicals are marginally lower in price and fuel today is also
10% cheaper. This is helpful in that forward cereal and oilseeds prices are
still at historically low values. Our focus this spring has been to restructure
the business in an effort to reduce and control all costs both operational and
administrative.
In the first quarter there was one significant divestment where 10.74% of the
shares held in Trigon Dairy Farming Estonia were sold for EUR 1.5 million. This
shows a transaction loss of -EUR 0.6 million and leaves Trigon Agri with a
39.24% shareholding in the business.
As of the date of this report, the sale process of the Rostov cluster is still
on-going. The assets and liabilities related to Rostov operations are already
shown as assets held for sale in the 1Q 2016 report. In preparation for the
Rostov sale a valuation write down of EUR 3.3 million has been included in the
first quarter figures. This reflects the anticipated transaction loss on the
divestment.
As reported earlier, in order to raise working capital for the business the
issue of the convertible bonds was authorized by the Board of Directors in
April, 2016. Following the authorization the bondholders have released EUR 1.5
million to Trigon Agri from the blocked account. The convertible bonds with a
total face value of EUR 6.0 million will be subscribed for with a EUR 6.0
million partial redemption of the outstanding bond principal. The convertible
bonds can be converted into 195 million new shares in Trigon Agri (equivalent to
approximately 60% of the shares and votes in Trigon Agri). Furthermore, the
bondholders meeting allowed Trigon Agri to take a bridge loan to provide the
finances required for the months of June and July, before the harvest sales cash
inflow commences.
2016 will continue to be a year of challenges, as the management continues with
the restructuring program. The changes being made now will put the business on a
good footing and enable it to grow in strength and move forward at pace.
Financial result of the Group
• Total revenue, other income, fair value adjustments and net changes
in inventory from continuing operations amounted to EUR 3.3 million (EUR 7.9
million in 1Q 2015). Decline of EUR 2.4 million resulted from the
deconsolidation of the Estonian milk business starting from 2Q 2015, while lower
gain of biological assets in Ukraine attributed EUR 0.9 million.
• Loss of EBITDA from continuing operations stood at EUR 1.8 million
(loss of EUR 0.8 million in 1Q 2015) resulting from Other (losses)/gains-net in
Ukraine as from 2016 only 15% of the accumulated VAT balance can be recorded on
the Income Statement of the agricultural companies.
• The Net loss was EUR 9.0 million (loss of EUR 8.3 million in 1Q 2015)
including a loss of EUR 3.3 million from discontinued operations related to
remeasurement of assets held for sale as part of the Rostov framework agreement.
Telephone conference details
A telephone conference will be held today, on May 31, 2016 at 10.00 CET.
Program:
Simon Boughton, CEO and Konstantin Kotivnenko, Executive Board member, will
present and comment upon the results. There will also be an opportunity to ask
questions.
To participate in the telephone conference, please call one of the following
numbers:
SE: +46 856 642 662
UK: +44 203 008 9806
FI: +35 898 171 0491
NO: +47 235 002 54
DK: +45 35 445 575
The presentation material will be available on www.trigonagri.com before the
telephone conference starts. A recording of the telephone conference will be
available afterwards on www.trigonagri.com.
Investor enquiries:
Mr. Simon Boughton, CEO of Trigon Agri A/S, Tel: +372 61 91500, E-mail:
mail@trigonagri.com
About Trigon Agri
Trigon Agri is an integrated soft commodities production, storage and trading
company with operations in Ukraine, Russia and Estonia. Trigon Agri’s shares are
traded on the main market of Nasdaq Stockholm.
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