Ukrproduct Regulatory News (UKR)

25 Sep 2007 07:00

Ukrproduct Group Ltd25 September 2007 25 September 2007 Ukrproduct Group Ltd ("Ukrproduct Group" or the "Group") Unaudited interim results for the six months ended 30 June 2007 Ukrproduct Group is a leading Ukraine-based producer and distributor of brandeddairy foods. Consolidated results (figures for the six months ended 30 June 2006 inbrackets): • Net revenues increased by 26% to £21.9m (£17.4m) • Gross profit increased by 36% to £4.8m (£3.5m) • Profit before tax up 150% to £1.6m (£0.6m) • Profit after tax up 136% to £1.4m (£0.6m) • Basic earnings per share up to 3.3p (1.4p) • Interim dividend of 0.60p (0.1p) Iryna Yevets, CEO of Ukrproduct Group, commented: "Trading overall has been ahead of budget with the core product segments showingstrong progress. During this period, the Group made substantial progress in manyareas of the business, including the implementation of a programme for theimprovement of milk quality and accreditation of the Starkon Plant to HASSP(Health Approved Safety Standards Protection) and ISO 22000 standards. In processed cheese, the trends reported in the Spring and at the AGM in Junehave continued. The low-quality, low-cost domestic manufacturers have, in ouropinion, expended their financial and marketing resources beyond their means andconsumers have been returning to their normal pattern of quality preferences.The Group's ISO-certified Molochnik plant therefore proved its worth bydelivering a steady output of the Group's higher grade products. As a result,the processed cheese market achieved a certain equilibrium whereby overallvolume stabilised and market shares of the leading suppliers remained intact. Inaddition, with the advent of Autumn we are experiencing the usual seasonalupturn in trading performance, which is anticipated to continue until the end ofthe year. In packaged butter, although market share and volumes have stayed at roughlylast year's levels, gross margins on this product have improved by approximately1.5 percentage points in comparison to the first half of last year. Thisimprovement has resulted in additional profit generation for the Group. For theremainder of the year, we expect butter to continue as a stable profitablecategory with the possibility of increased sales during the pre-Christmas buyingperiod. Skimmed milk powder ("SMP") has continued to enjoy strong performance since thebeginning of the year. The Group managed to take full advantage of a combinationof expanded manufacturing capacity and very encouraging export prices. In thefirst half, we produced nearly 4,000 tonnes of SMP, which compared to 2,000tonnes in the first half of 2006. The subsequent increase in profit generatedfrom this product has been more than commensurate with the increase in saleswith gross profit almost quadrupling. In the second half, this positive trend iscontinuing. In addition, the quality of SMP produced by the Group was audited byNestle Ukraine and further confirmed by the UN World Food Programme ("WFP") asbeing in full compliance with WFP requirements. It is the quality of productthat allows the Group to obtain a premium to the typical prices of SMP suppliedfrom Ukraine. We are expecting this good performance to continue until at leastthe end of the year. Hard cheese, the new product in our range, is in its second month of production.Due to the maturation requirements (up to two months), only limited quantitiesof this product have been manufactured and sold. We are moving in line with ourstrategy of trial testing limited quantities via various non-retail channelsbefore we look to move the product to the shelves of supermarkets. So far,customer feedback regarding the quality and taste of this product has beenencouraging. We are looking forward to following through a strategy of gradualintroduction towards the end of the year. At the operating level, the Group remains cash generative, and the capitalexpenditure programme continues to plan. In the first half the Group increasedthe bank borrowing modestly in order to fund the completion of the hard cheeseplant and to finalise the seasonal forward storage - both of which are nowaccomplished. Subsequently, the levels of bank debt are being reduced, and thefinance costs are decreasing. We are pleased with the overall trading and performance of the Group. In thelight of the encouraging financial results, the Board has approved an interimdividend of 0.60 pence per share (0.1p in the first half of 2006) to theshareholders on record as at 5 October 2007 payable on 26 October 2007. TheBoard looks forward to presenting a further set of good figures at the end ofthe financial year." For further information: Ukrproduct GroupIryna Yevets, CEO, +38 044 502 8014Dmitry Dragun, CFO +44 7786 466 639 WH Ireland Limited +44 161 832 2174David Youngman CONSOLIDATED BALANCE SHEETAs at 30 June 2007 and 30 June 2006 30/06/2007 30/06/2006 Unaudited Unaudited £ '000 £ '000AssetsNon-current assets Property, plant and equipment (PPE) 11,635 9,055 Intangible assets 1,200 1,502 Financial assets 264 92 Deferred tax assets 104 28 Total non-current assets 13,203 10,677 Current assets Inventories 2,997 2,649 Trade and other receivables 4,159 3,662 Other financial assets 626 132 Cash and cash equivalents 679 370 Total current assets 8,461 6,813Total assets 21,664 17,490 Equity attributable to equity holders of the parent Share capital 4,121 4,121 Other reserves 3,992 5,311 Retained earnings 5,255 3,415 13,368 12,847 Minority interest 207 172Total equity 13,575 13,019 LiabilitiesNon-current Liabilities Long-term loans - 143 Deferred tax liability 791 730 Total non-current liabilities 791 873 Current liabilities Bank loans 3,260 1,098 Trade and other payables 2,812 2,351 Current portion of long term liabilities 1,051 106 Current tax liabilities 175 43 Total current liabilities 7,298 3,598 Total equity and liabilities 21,664 17,490 CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2007 and 30 June 2006 30/06/2007 30/06/2006 Unaudited Unaudited £ '000 £ '000 Revenue 21,924 17,395 Cost of sales (17,153) (13,891) Gross profit 4,771 3,504 Administrative expenses (1,341) (1,342)Selling and distribution costs (1,323) (1,275)Other operating expenses (291) (188) Profit from operations 1,816 699 Gain / (loss) from exchange rate differences (2) 25Finance costs (203) (79) Profit before tax 1,611 645 Tax expense (222) (57) Profit for the period 1,389 588 Attributable to:Equity holders of the parent 1,377 590Minority interest 12 (2) 1,389 588Earnings per share (Note 3)- Basic (pence) 3.3 1.4- Diluted (pence) 3.2 1.4 CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2006 and 30 June 2005 1/01/2007 to 1/01/2006 to 30/06/07 30/06/06 Unaudited Unaudited £ '000 £ '000 Operating activitiesProfit before tax 1,611 645Adjustments for: Foreign exchange losses 2 (25) Depreciation and amortisation 669 663 Loss on disposal of non-current assets 30 - Interest expense 203 79 Operating profit before changes in working 2,515 1,362 capital and provisions (Increase)/decrease in trade and other receivables (1,026) 742 (Increase)/decrease in inventories (442) 1,660 Increase/(decrease) in trade and other payables 1,016 188 Cash generated from operations 2,063 3,952 Interest paid (203) (79)Income tax paid (102) (185) Net cash flows from operating activities 1,758 3,688 Investing activitiesPurchases of PPE and investments (1,446) (1,760) Net cash used in investing activities (1,446) (1,760) Financing activitiesIssue of bonds and loans received 578 46Dividends paid (210) (206)Net proceeds from short term borrowings 177 (1,809)Loans repaid or issued (320) - Net cash generated by/(used in) financing activities 225 (1,969) Increase/(decrease) in cash and cash equivalents 537 (41) Cash and cash equivalents at the beginning of the period 159 453 Effect of exchange rate changes and restatements on cash and (17) (42)cash equivalents Cash and cash equivalents at the end of the period 679 370 NOTES 1. Accounting Policy Statement and Basis of Preparation The accounting policies used in preparation of the above statements are thoseused in preparing the annual financial results for the year ended 31 December2006 and are presented in a form consistent with that which will be adopted inthe next annual accounts (including accounting policies) having regard toaccounting standards applicable to such accounts. The accounting policies areexpected to remain the same for the Company in preparing its annual financialresults for the year ended 31 December 2007. 2. Segmental analysis Sales Sales Sales Sales Gross Gross Gross Gross H1 2007 H1 2006 H1 2007 H1 2006 Profit Profit margin margin £ 000 £ 000 % % H1 2007 H1 2006 H1 2007 H1 2006 £ 000 £ 000Cheese 5,241 6,927 25% 40% 1,255 1,487 23.9% 21.5%Butter 5,583 5,431 25% 31% 1,453 1,332 26.0% 24.5%SMP 9,906 3,280 45% 19% 1,914 452 19.3% 13.8%Services 266 459 1% 3% 69 99 25.9% 21.5%Third-Party 928 1,298 4% 7% 80 134 8.6% 10.4%Total 21,924 17,395 100% 100% 4,771 3,504 21.8% 20.1% 3. Earnings per share Basic earnings per share have been calculated by dividing the profit after taxattributable to ordinary shareholders by the weighted average number of sharesin issue during the period. Consolidated Consolidated Six months Six months ended 30 ended 30 June 2007 June 2006 Profit after tax attributable to ordinary shareholders (£'000) 1,377 590 Weighted average number of ordinary shares 41,214,953 41,214,953 Basic earnings per share (pence) 3.3 1.4 Number of ordinary shares granted under warrants and option 2,214,924 2,214,924agreements Diluted average number of ordinary shares 43,429,877 43,429,877 Diluted earnings per share (pence) 3.2 1.4 This information is provided by RNS The company news service from the London Stock Exchange