TIDMUKR
RNS Number : 3606L
Ukrproduct Group Ltd
30 September 2016
FOR IMMEDIATE RELEASE September 30, 2016
UKRPRODUCT ANNOUNCES UNAUDITED INTERIM FINANCIAL RESULTS FOR THE
SIX MONTHSED 30 JUNE 2016
Kyiv, Ukraine - September 30, 2016 - Ukrproduct Group Limited
("Ukrproduct" or the "Group") (AIM: UKR), one of the leading
Ukrainian producers and distributors of branded dairy foods and
beverages (kvass), today announces its unaudited interim
consolidated IFRS financial results for the six months ended 30
June 2016.
KEY FIGURES
(Figures in brackets are for the six months ended and as at 30
June 2015 when the exchange rate was
32.41 UAH/GBP compared to 36.61 UAH/GBP in this reporting
period)
Total revenues decreased by 16% year on year to GBP 8.2 m (GBP
9.8 m), however in Ukrainian Hryvna the sales revenues decreased by
5%
Gross profit margin decreased to 9.2% (11.5%) resulting in gross
profit decrease by 33.0% to GBP 0.8 m (GBP 1.1 m) which in
Ukrainian Hryvna translated into a 25.0% decrease
Revenues in dairy branded products segment decreased by 12% year
on year to GBP 5.4 m (GBP 6.3m) and the gross profit increased by
9.3% year on year to GBP 0.6 m (GBP 0.6 m)
In kvass the revenues decreased by 23% year on year to GBP 0.4 m
(GBP 0.5 m) and gross profit down by 26 % year-on-year
Skimmed Milk Powder (SMP) revenues decreased by 34% to GBP 1.8
million (GBP 2.4 m) and gross profit decreased to GBP -0.1 m (GBP
0.2 m)
EBITDA decreased to GBP - 16 k (GBP 66 k)
Operating loss amounted to GBP -220 k (loss of GBP -221 k)
The negative effect of currency exchange differences amounted to
GBP 0.3 million (GBP 0.5 m)
Cash balance as at June 30, 2016 stood at GBP 277 k (GBP 50
k).
CEO's REPORT
During the first half of 2016 Ukrproduct continued to experience
the consequences of the storm in the Ukrainian economy in recent
years. A devalued currency, a geographically contracted market
place and consumers now pressured further by inflation provided a
challenging business environment.
The Group's response has been to adjust its focus to relevant
products, sales channels and customers providing acceptable margins
and ability to pay on time. Working capital has been released and
costs contained via improved productivity. Given the hryvnia
devaluation increased effort has been made to develop the export
business.
Trading
Volumes fell, though revenues fell only marginally in hryvnia
terms. Gross margins showed an improving trend but prices remained
constrained by competition and low consumer confidence and spending
power. Branded products, now subject to more emphasis, showed
improved revenues with the key categories of packaged butter,
spreads and processed cheese advancing. Private Label contracts
with only marginal profitability have been terminated. Those
retained reflect the quality demanded by the retailer and
commensurate margins.
The kvass beverage continued to make a good gross profit
contribution. Plans are in place to extend the offering in this
category with white kvass, uzvar and rose hip based healthy
drinks.
Skimmed milk powder is subject to the vagaries of world prices
which were not encouraging in this period. Milk prices trended
upwards on the world market from midsummer. However the Group's
spare spray drying capacities were utilized profitably for third
parties during the period.
The continued exchange rate depreciation has facilitated the
successful pursuit of export business not least to CIS countries,
Russian intervention notwithstanding. Further expansion has been
made into the North Africa region.
.
Finances
In the challenging trading environment hryvnia revenues have
held up to within 5% of same period 2015. However whilst management
efforts resulted in some improvement in gross margins, overall they
remained below the required level. Although the Group made
substantial progress in the second quarter, the first quarter
negative result was not fully offset.
Overheads were reduced but EBITDA struggled to remain positive.
This led to an operating loss which was accentuated by negative
exchange differences for the period.
Cash under such trading circumstances is very much in focus.
Along the lines mentioned the Company has adopted a trading model
to release cash not least from working capital to fulfill its
ongoing obligations. This importantly includes interest payments
due to EBRD under the terms of the more favourable loan
restructuring agreement signed by the end of June.
Outlook
The Group targets a return to profitability as the market place
continues to work towards stabilization. Our markets will however
remain competitive. Ukrproduct's strategy as detailed earlier is to
target segments with differentiated products and services. In
particular, pursuit of growth opportunities in beverages and export
and improving the cost and service efficiency of the supply chain.
Overhead reduction has included the remuneration of directors.
Underpinning this all is the need to continue to create positive
cash flows.
***
For further information, please visit www.ukrproduct.com or
contact:
Ukrproduct Group Ltd
Jack Rowell, Non-Executive Chairman Tel: +380 44 232 9602
Alexander Slipchuk, Chief Executive Officer www.ukrproduct.com
ZAI Corporate Finance Ltd.
Nominated Adviser and Broker Tel: +44 20 7060 2220
Peter Trevelyan-Clark, Jamie Spotswood www.zaicf.com
Ukrproduct Group Ltd is one of the leading Ukrainian producers
and distributors of branded dairy products and kvass, a traditional
fermented beverage. The Group's product portfolio includes
processed and hard cheese, packaged butter, skimmed milk powder
(SMP) and kvass. Ukrproduct has built a range of recognisable
product brands ("Our Dairyman", "People's Product", "Creamy
Valley", "Molendam", "Farmer's") that are well known and highly
regarded by consumers. The Group reported consolidated revenues of
approximately GBP 20.2 million for the twelve months ended December
31, 2015 and total assets of approximately 11.5 million as at that
date . Ukrproduct's securities are traded under the symbol "UKR" on
AIM, a market operated by the London Stock Exchange.
Some of the information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of the Group. You can
identify forward looking statements by terms such as "expect,"
"believe," "anticipate," "estimate," "intend," "will," "could,"
"may" or "might" the negative of such terms or other similar
expressions. These statements are only predictions and they may
differ materially from the actual events or results. We do not
intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in such
projections or forward-looking statements, including, among others,
general economic conditions, our competitive environment, risks
associated with operating in Ukraine, rapid technological and
market change in our industry, as well as many other risks
specifically related to the Group and its operations.
UKRPRODUCT GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE PERIODED 30 JUNE 2016 AND 2015
(in thousand GBP, unless otherwise stated)
==================================================================
Six months Six months
ended ended
30 June 30 June
2016 2015
GBP '000 GBP '000
Revenue 8 192 9 766
including of branded and SMP
products 7 642 8 791
Cost of sales (7 436) (8 642)
----------- -----------
Gross profit 756 1 124
Administrative expenses (388) (562)
Selling and distribution expenses (554) (733)
Other operating income/ expenses,
net (34) (50)
----------- -----------
Profit from operations (220) (221)
Finance expense, net (512) (340)
Effect of foreign currency
translation (346) (514)
----------- -----------
Profit before taxation (1 078) (1 075)
Income tax expense (20) (6)
----------- -----------
Profit for the Six months (1 098) (1 081)
Attributable to:
Equity holders of the Parent (1 098) (1 081)
Non-controlling interest - -
----------- -----------
(1 098) (1 081)
Earnings per share:
Basic (2,77) (2,72)
Diluted (2,77) (2,73)
UKRPRODUCT GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE PERIODED 30 JUNE 2016 AND 2015
(in thousand GBP, unless
otherwise stated)
============================== =========== ===========
Six months Six months
ended ended
30 June 30 June
2016 2015
GBP '000 GBP '000
Profit for the Six months (1 098) (1 081)
Other comprehensive income
Exchange differences on translation
to the presentation currency 233 (1 986)
----------- -----------
Other comprehensive income for the
Six months, net of tax 233 (1 986)
----------- -----------
Total comprehensive income for the
Six months, net of tax (865) (3 067)
Attributable to:
Equity holders of the Parent (865) (3 067)
Non-controlling interests - -
----------- -----------
(865) (3 067)
UKRPRODUCT GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016 AND 31 DECEMBER 2015 AND 30 June 2015
(in thousand GBP, unless otherwise
stated)
========================================== ============================== ============================= ==============================
As at As at As at
30 June 2016 31 December 2015 30 June 2015
GBP '000 GBP '000 GBP '000
ASSETS
Non-current assets
Property, plant and equipment 7 774 7 417 6 970
Intangible assets 628 596 725
Long-term
receivables - - 286
Deferred tax assets 6 45 1
Total non-current assets 8 408 8 058 7 982
------------------------------ ----------------------------- ------------------------------
Current assets
Inventories 2 383 1 496 2 381
Trade and other receivables 2 510 1 486 2 350
Current taxes 166 349 665
Other financial assets 16 11 91
Cash and cash equivalents 277 93 50
Total current assets 5 352 3 435 5 537
------------------------------ ----------------------------- ------------------------------
TOTAL ASSETS 13 760 11 493 13 519
============================== ============================= ==============================
Equity and liabilities
Equity attributable to equity holders
Share capital 3 967 3 967 3 967
Other reserves (6 813) (6 540) (7 794)
Retained earnings 5 062 5 654 8 327
Total equity attributable to equity holders of
the parent 2 216 3 081 4 500
------------------------------ ----------------------------- ------------------------------
Non-controlling interest - - -
------------------------------ ----------------------------- ------------------------------
Total equity 2 216 3 081 4 500
------------------------------ ----------------------------- ------------------------------
Liabilities
Non-Current Liabilities
Bank borrowings 2 692 3 206 3 751
Deferred tax liabilities 457 466 213
Total Non Current Liabilities 3 149 3 672 3 964
------------------------------ ----------------------------- ------------------------------
Current Liabilities
Bank borrowings 4 268 3 121 2 519
Trade and other payables 3 927 1 586 2 494
Current income tax liabilities 31 18 17
Other taxes payable 169 15 25
Total Current Liabilities 8 395 4 740 5 055
------------------------------ ----------------------------- ------------------------------
TOTAL LIABILITIES AND EQUITY 13 760 11 493 13 519
============================== ============================= ==============================
- - -
UKRPRODUCT GROUP LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 JUNE 2016 AND 2015
(in thousand GBP, unless otherwise stated)
=====================================================================================================
Six months ended Six months ended
30 June 2016 30 June 2015
GBP '000 GBP '000
Cash flows from operating
activities
Profit before taxation for
the six months (1 078) (1 075)
Adjustments for:
Exchange difference 346 514
Depreciation and
amortisation 206 288
Loss of disposal of
non-current assets 5 4
Impairment of trade 31 -
receivables
Disposal of subsidiaries (3) (4)
Interest income - (1)
Interest expense 512 341
Decrease / (increase) of
inventories (887) (851)
Decrease in trade and other
receivables (956) 479
Increase/ (decrease) in
trade and other payables 2 143 571
------------------------------
Cash generated from
operations 319 266
Interest received - 1
Income tax paid (8) (21)
------------------------------
Net cash generated by
operating activities 311 246
Cash flows from investing
activities
Payments for property,
plant and equipment (77) (130)
Proceeds from sale of
property, plant and
equipment 9 17
Repayments / (proceeds)
from loans issued (8) (13)
------------------------------ -------------------------------
Net cash used in investing
activities (76) (126)
Cash flows from financing
activities
Interest paid (182) (343)
Net proceeds / (repayments)
from short term borrowing (59) (20)
Repayments of investment - -
borrowing
------------------------------ -------------------------------
Net cash used in financing
activities (241) (363)
Net (decrease) / increase
in cash and cash
equivalents (6) (243)
------------------------------ -------------------------------
Effect of exchange rate
changes
on cash and cash
equivalents 190 78
------------------------------ -------------------------------
Cash and cash equivalents
at the beginning of the
six months 93 215
Cash and cash equivalents
at the end of the six
months 277 50
------------------------------ -------------------------------
- 0
UKRPRODUCT GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2016 AND 2015
(in thousand GBP,
unless otherwise
stated)
==================== ===
Attributable to equity holders Total Non-controlling Total Equity
attributable to interest
equity holders
of the parent
Share capital Share premium Merger reserve Revaluation Retained Translation
reserve earnings reserve
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
--------------- ------------------- --------------- ------------------ ---------------- ------------ ---------------- ---------------- --------------
As at 1 January 2015 3 967 4 562 - 3 453 9 358 (13786) 7 572 - 7 572
--------------- ------------------- --------------- ------------------ ---------------- ------------ ---------------- ---------------- --------------
Profit for the six
months (1 081) (1 081) - (108)
Other comprehensive
income (1 986) (1 986) (1986)
--------------- ------------------- --------------- ------------------ ---------------- ------------ ---------------- ---------------- --------------
Total comprehensive
income - - - - (1081) (1986) (3067) - (3067)
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
Depreciation on
revaluation
of non current assets (46) 46 - -
Reduction of
revaluation reserve (9) 4 (5) (5)
As at 30 June 2015 3 967 4 562 - 3 398 8 327 (15754) 4 500 - 4 500
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
Profit for the six
months (2825) (2825) - (2825)
Other comprehensive
income 913 460 1 373 1 373
--------------- ------------------- --------------- ------------------ ---------------- ------------ ---------------- ---------------- --------------
Total comprehensive
income - - - 913 (2825) 460 (1 452) - (1452)
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
Depreciation on
revaluation
of non current assets (40) 40 - -
Reduction of
revaluation reserve (79) 112 33 33
As at 31 December 2015 3 967 4 562 - 4 192 5 654 (15294) 3 081 - 3 081
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
Profit for the year (1098) (1 098) - (1098)
Other comprehensive
income (2) - 235 233 233
--------------- ------------------- --------------- ------------------ ---------------- ------------ ---------------- ---------------- --------------
Total comprehensive
income - (2) - - (1098) 235 (865) - (865)
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
Depreciation on
revaluation
of non current assets (83) 83 - -
Reduction of
revaluation reserve (7) 7 - -
Reclassified equity
items 416 (416) - -
As at 30 June 2016 3 967 4 560 - 4 102 5 062 (15475) 2 216 - 2 216
======================== =============== =================== =============== ================== ================ ============ ================ ================ ==============
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated financial statements have been prepared
in accordance with International Accounting Standard 34 Interim Financial
Reporting.
The interim financial statements are unaudited but have been reviewed by the auditors.
The unaudited condensed consolidated financial statements have been prepared
under the historical cost convention, except for revaluation of certain
properties.
The same accounting policies, presentation and methods of computation
have been followed in this unaudited condensed consolidated financial
statements as were applied in the preparation of the Group's financial
statements for the year ended 31 December 2015.
The comparatives for the six months ended 30 June 2015 are extracted from
the Group's consolidated financial statements for the year ended 31 December
2015. The auditor's report for those accounts was unqualified, but did
include references to an emphasis of matter in respect of the Group incurring
a loss during the year as well as the uncertainty surrounding the breach
of loan agreement with the European Bank for Reconstruction and Development
(the "EBRD").
Going concern
The unaudited condensed consolidated financial statements have been prepared on a going concern
basis which assumes that the Group will be able to meet its liabilities as they fall due,
for the foreseeable future.
The Group incurred a loss of GBP1,098k for the six months ended 30 June 2016. This is primarily
due to the volatile political and economic situation in Ukraine. This has resulted in a number
of challenges to the Group, including but not limited to the significant devaluation of the
local currency, the increase in raw milk prices and an overall fall in demand.
Despite the negative economical conditional in Ukraine the Group signed new terms in respect
of loan with EBRD. The previous sum of loan was divided on 2 tranches. Tranche A has maturity
date 01 December 2022 and interest is payable at a margin of 5% over EURIBOR per annum, tranche
B has maturity date 01 December 2024 and the rate at the higher of EURIBOR or 1% per annum
before 01 December 2022 and after this date before 01 December 2024 -at a margin of 5% over
EURIBOR per annum. First principal payment of the loan will be paid in accordance with new
schedule in the March 2017.
Based on the existence of these conditions, the condensed consolidated financial statements
have been prepared on a going concern basis, because management believes that it has employed
sufficient and appropriate measures to underpin its cost cutting strategy including but not
limited to: reconstruction of manufacturing facilities in Starokonstantinov location, decrease
in the number of subsidiaries and streamlining its business processes aimed to minimise non-value
adding activities and related costs etc. According to the new terms of the contract, interest
is paid in a timely manner.
2. Earnings per share
Basic earnings per share have been calculated by dividing net loss/profit
attributable to the ordinary shareholders (loss/profit for the year) by
the weighted average number of shares in issue.
Six months ended Six months ended
30 June 2016 30 June 2015
---------------------------- ----------------------------- --------------------------------
Net (loss) / profit attributable to ordinary
shareholders, GBP'000 (1 098) (1 081)
Weighted number of ordinary shares in issue 39 673 050 39 673 050
Basic earnings per share, pence (2,77) (2,72)
Diluted average number of shares 39 629 619 39 629 619
Diluted earnings per share, pence (2,77) (2,73)
--------------------------------------------- ----------------------------- --------------------------------
3. Approval of interim financial
statements
The unaudited condensed consolidated financial statements were approved
by the board of directors on 30 September 2016. A copy will shortly be
available on the Company's website at www.ukrproduct.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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