Trading and port logistics business ESV Group has released yet another dire set of full-year results. During the 12 months to 31st March 2010 the Ukraine-focussed business saw revenues plummet by 50% to £0.32 million on the back of a 30% fall in exports from the country – a move which had a harsh impact on volumes passing through its Kherson sea port. The sharp fall in the top line coupled with a massive £0.86 million loss on the $4 million (£2.6 million) November 2009 sale of its Jatropha plantations in Mozambique meant that losses per share increased by a staggering 325% to 0.17p.

There was better news on its balance sheet with the company holding net current assets of £0.58 million and £0.59 million in net assets. Even though year-end cash holdings only stood at £2,763 this position will be boosted as it receives the remaining $1.9 million (£1.2 million) payment for its Jatropha plantations in south-eastern Africa.

Worryingly, the outlook for the group’s activities is very concerning. Since the year-end a severe drought in Russia has triggered a ban on wheat exports in 2010. This comes alongside lower than anticipated grain output from Ukraine and the likelihood of quotas being imposed on corn exports.

These effects mean that volumes passing through its Kherson Terminal are set to remain weak, which bodes poorly for its prospects. In addition, the uncertain outlook for its activities means that management does not feel as though it is worth developing its Terneuzen tank terminal in the Netherlands. And so ESV Group hopes to dispose of these interests in order to recover some of its investment on the project. Furthermore, the business highlighted that it would seek shareholder approval to issue further shares enter into strategic partnerships in order to boost its capacity from its Kherson terminal.

Based on the current 0.175p mid-price ESV Group is capitalised at £1.8 million. This is a significant premium to year-end net assets of £0.59 million and in our opinion is a very rich valuation for a company which such a wide range of challenges to address. In the short-term the group’s focus is on keeping costs under control and with conditions in the markets worsening further since its year-end we see no justification for the present valuation. Sell.