print
26.06.2007
Upcoming bond issue by Agromat assigned uaBBB+ credit rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaBBB+ long-term credit rating to upcoming UAH100m 3-year issue of registered interest bonds (A and B series) by Agromat LLC (the Issuer or the Company). The company`s principal activity is wholesale and retail trade of plumbing fixtures and ceramic tiles. In the course of analysis Credit-Rating considered Issuer`s financial statements for 2002-2006 and 1Q2007 as well as other inside information furnished by the company.
A credit rating of uaBBB is an investment grade rating , indicating an ADEQUATE CAPACITY of an obligor to pay both interest and principal on the given debt liability in the Ukrainian financial market environment. This rating indicates a level of creditworthiness that is more susceptible to adverse changes in commercial, financial and economic conditions than debt obligations with higher investment grade ratings . The plus (+) or minus (-) modifier denotes rating`s relative status within major categories.
Factors maintaining a credit rating:
- The Issuer is one of the largest distributors of ceramic tiles in Ukraine (a 20% market share according to the results of 2006), demand for which has been increasing over the past years;
- The Issuer`s key operating indices increased during 2002-1Q2007: assets increased by 5.4x (to UAH 425.2m) and equity increased by 11.4x (to UAH 127.8m). According to the results of 2006, net sales amounted to UAH 358m or incresed by 4 times as compared to the same index of 2002. Net income amounted to UAH 42.7m or increased by 14.7 times as compared to the isame ndex of 2002;
- The Issuer had high profitability indices over the last two years: in 2006, the product profitability was 65.8%, return on sales was 11.9% and return on EBITDA was 35.3%.
Factors constraining a credit rating:
- As of March 31, 2007, total financial liabilities of the Issuer (UAH 150.8m) exceeded the equity capital`s volume (UAH 127.8m). The scheduled UAH 100m bond issue will intensify the debt load;
- Cash flow from operating activities had a negative value during 2005-2006 due to the significant increase of net circulating assets;
- If the Issuer has no clear development strategy, the company`s financial conditions will become worse due to an increase in the levels of competition in the distribution market for ceramic tiles.
Information on all the credit ratings, assigned in accordance with the Ukrainian National Scale, may be found in the REUTERS, BLOOMBERG and FTN MONITOR Information Systems
For further information, please contact:
Information and Analytic Department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
