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Settlement Plan among Agrokor Creditors Concluded within Statutory Deadline, Agrokor Group Generates Profits 10.5 per cent Higher than Budgeted

Over the first six months Konzum has outperformed budgeted profits by HRK 55m

Agrokor Monthly Report June 2018

The Agrokor Group published its 15th monthly report for the period between 11 June and 10 July, 2018. The report follows the development of the economic and financial situation within the Agrokor Group and outlines the realization of the Extraordinary Administration's  operating activities as well as the overall operations of Agrokor d.d. and a group of key companies.

The key event in the reporting period was the completion of the most important stage of the Extraordinary Administration Procedure at Agrokor related to the conclusion of the Settlement among the creditors. 

After 14 months of the procedure and six months of intensive negotiations between the creditors, the Settlement Plan voting hearing of Agrokor's creditors was held on 4 July, 2018. The Settlement Plan was voted in favor by 80.20 per cent of total claims, or HRK 27,075,097,019.27 out of the HRK 33,759,582,335.23 of total claims filed in the Extraordinary Administration Procedure.

The conclusion of the Settlement Plan voted in favor by the majority of creditors marks the accomplishment of the key objective of the Extraordinary Administration Procedure within the statutory deadline.

Attendees registered at the hearing represented around 450 of Agrokor's creditors with HRK 23.359bn of determined outstanding claims present. Entitled to vote at the hearing were all creditors with determined claims to the extent of the part of their claims still outstanding. Not entitled to vote were creditors whose claims were fully recovered and creditors to the extent of their claims having been partly recovered, as well as affiliates and subsidiaries subject to the Extraordinary Administration Procedure. Invited to the hearing were also creditors of challenged claims. With the consent of the Extraordinary Commissioner and the present creditors with voting rights, the right to vote was granted to present creditors with challenged claims holding HRK 8,433,348,110 of claims. 

After the Commercial Court published the Ruling confirming the Settlement Plan on 6 July, 2018, the deadline for filing suits expires on 23 July, 2018 inclusive. Once the Ruling by the High Commercial Court, expected during the course of October, becomes effective, the implementation of the Settlement Plan will start and is expected to last between three and six months.

The process in question is technically very demanding and consists of more than 70,000 steps – from founding mirror companies and transferring assets to them to transferring all types of contracts – employment, supplier and all business partner contracts. The new group and the mirror companies are planned to start operating early next year. However, the accomplishment of this goal primarily depends on when the Settlement Plan will become effective, which is completely in the hands of the court.

Along with the organization and control of the implementation preparation process, in the forthcoming period the Extraordinary Administration will additionally focus on the business operations of the companies, on increasing revenues, profitability and efficiency, in pursuance of the favorable trend recorded by the operations over the course of the period 1-5/2018.

In particular, the operating results of 16 companies from three business sectors included in Agrokor's monthly report have demonstrated a marked improvement in operating profits. EBITDA was 10.5 per cent higher than planned and amounted to HRK 449.4m at Agrokor Group level in May. At the same time, operating profits of the Retail and Wholesale sector over the same period have for the first time come out of the negative zone, recording a positive EBITDA of HRK 3.3m.   

It is particularly important to point out the operating results of Konzum, which has over the first six months generated operating profits of HRK 55m more than budgeted. At the same time, in a like-for-like comparison as against the year 2017, Konzum stores saw a 6.5 per cent higher footfall in May. The increased number of customers along with the average basket being 11 per cent bigger resulted in almost 20 per cent higher turnover than in May 2017. Such turnover has exceeded budget by almost 8 per cent, while the realized margin was almost 7 per cent higher than planned.  

In May the Food sector generated sales revenues at the level of HRK 2.9 bn and an operating result of HRK 381.3m, with EBITDA thus having outperformed budget by HRK 62.6m. Particularly worth noting are the frozen food and ice cream segment as well as the drinks segment, both having generated higher-than-budgeted operating profits.

The business operations of the Agriculture sector continued to be negatively affected by the drop in finisher and pork prices at the commodity exchanges in May. However, although revenues were  4.7 per cent lower than budgeted, the drop in EBITDA was stabilized by the increase in other activities.

The companies covered by the report generated almost HRK 8.7bn of unconsolidated revenues over the first five months, slightly lower than the planned HRK 8.9bn. However, individual Group companies have exceeded both planned and last year's revenues in May, indicating that the positive trend of growing revenues and stabilized operations has been maintained.