Ukrproduct Regulatory News (UKR)

19 Sep 2006 07:02

Ukrproduct Group Ltd19 September 2006 19 September 2006 Ukrproduct Group Ltd ("Ukrproduct Group", "UPG" or the "Company") Interim unaudited results for six months ended 30 June 2006 Ukrproduct Group is a leading Ukraine-based producer and distributor of brandeddairy foods. Consolidated results (figures for the six months ended 30 June 2005 inbrackets): • Net Sales stable at £17.4m (£17.3m) • Gross profit increased to £3.5m (£3.1m) • Operating cash flow down 14% to £1.36m (£1.56m) • Profit before tax down 46% to £0.65m (£1.2m) • Profit after tax down 44% to £0.59m (£1.05m) • Basic earnings per share down to 1.4p (2.5p) • Interim dividend of 0.1p (0.35p) Note: In 1H 2006, some of the transportation expenses were reclassified fromCost of Sales to Selling and Distribution Costs. The figures of 1H 2005 werealso reclassified and are presented in the comparable format. Iryna Yevets, CEO of Ukrproduct Group, commented: "As highlighted in the statement made to the market on 27 June, the performanceof the Group during the first six months of the year was impacted by Ukraine'strade negotiations with Russia and associated substantial cost inflation. Duringthe first half of the year, exports of hard cheese from Ukraine to Russia wereseverely restricted resulting in Ukrainian manufacturers reducing prices andreleasing excess products on to the Ukrainian market. As a result, the Groupsuffered from the overall downward price pressure. Alongside this, the increasein cost inflation, in particular, the prices of gas and electricity alsoresulted in major increases in costs of freight services, utilities and rents.As a consequence of these difficult trading conditions during the first half ofthe year, the Company continues to expect pre-tax profits for the full year 2006to be lower than in 2005." "Following the update on 27 June, the volumes and margins of packaged butter aswell as the production of skimmed milk powder and export sales have been in linewith expectations and we have continued to see a reduction in the excess stocksof hard cheese. Pricing pressure due to the restriction has also been reduced.The stabilisation of the political environment through the creation of acoalition government following the elections earlier this year has resulted inthe return of consumer confidence. This has benefited UPG through the increasein consumption trends for our products. The construction of the hard cheeseplant at Starkon remains on track with the intention that the plant becomesfully operational by the third quarter of 2007." "In view of the challenging trading in the first half and uncertain environmentin the second half of the year, the Board has proposed an interim dividend of0.1p. The dividend will be paid on 26 October 2006 to those shareholders on theregister at the close of business on 6 October 2006." "Going forward we will continue to focus on driving sales and margin growthwhilst improving the operational efficiency of the Company. We have reviewed thecost structure of the Group and implemented a cost cutting programme whereappropriate. Our core brands remain the cornerstone of the Company, and we willcontinue to position ourselves in the various segments that we operate in sothat we are able to explore future opportunities within the Ukrainian dairysector. From the information that is currently available, the Directors believethat the Group is holding its pre-eminent position in terms of market share.Accordingly, the directors believe that the Company will emerge successfullyfrom the current challenging circumstances." For further information: Ukrproduct Group +38 044 502 8014Iryna Yevets, CEO, and Dmitry Dragun, CFO Financial Dynamics +44 20 7831 3113Ben Foster/ Charles Watenphul Consolidated financial results of the Group (with 1H 2005 figures in brackets): • Net Sales stable at £17.4m (£17.3m) • Cost of sales down 2% to £13.9m (£14.2m). • Gross profit up 12% to £3.5m (£3.1m) • Gross margin increased to 20.1% (18.1%) • Administrative expenses increased 53% to £1.34m (£0.88). This increase is mainly due to increase in wages, as well as the new administrative expenses of the production plants acquired in the 2nd half of 2005 (Letichev and Zhmerinka). • Selling expenses up 37% to £1.27m (£0.9m). The main factor influencing this increase was the increased costs of transportation and wages. • Operating cash flow down 14% to £1.36m (£1.56m) • EBIT down 42% to £0.72m (£1.25m). Significant depreciation difference arose between the comparable periods due to the large capital expenditure in FY2005 and acquisition of production facilities during the 2nd half of 2005. • Profit before tax down 46% to £0.65m (£1.2m) • Profit after tax down 44% to £0.59m (£1.05m) • Basic earnings per share down to 1.4p (2.5p) CONSOLIDATED BALANCE SHEETAs at 30 June 2006 and 30 June 2005 30/06/2006 30/06/2005 Unaudited Unaudited £ '000 £ '000AssetsNon-current assets Property, plant and equipment (PPE) 9,055 6,945 Intangible assets 1,502 9 Investments 92 92 Deferred tax assets 28 41 Total non-current assets 10,677 7,087 Current assets Inventories 2,649 4,370 Trade and other receivables 3,662 3,481 Other financial assets 132 727 Cash and cash equivalents 370 1,264 Total current assets 6,813 9,842Total assets 17,490 16,929 Capital and reserves attributable to equity holdersof the company Share capital 4,121 4,121 Other reserves 4,757 4,642 Retained earnings 3,969 3,295 12,847 12,058 Minority interest 172 164Total equity 13,019 12,222 LiabilitiesNon-current Liabilities Long-term credits 143 44 Bonds 0 119 Promissory notes 0 5 Deferred tax liability 730 758 Total non-current liabilities 873 926 Current liabilities Bank loans and overdraft 1,098 859 Trade and other payables 2,351 2,787 Current portion of long term liabilities 106 0 Current tax liabilities 43 135 Total current liabilities 3,598 3,781 Total equity and liabilities 17,490 16,929 CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2006 and 30 June 2005 30/06/2006 30/06/2005 Unaudited Unaudited £ '000 £ '000 Revenue 17,395 17,309 Cost of sales (13,891) (14,170) Gross profit 3,504 3,139 Administrative expenses (1,342) (875)Selling and distribution costs (1,275) (930)Other operating income/(expenses) (188) (80) Profit from operations 699 1,254 Income / loss from exchange rate differences 25 0Finance income 0 41Finance costs (79) (95) Profit before tax 645 1,200 Tax expense (57) (147) Profit for the year 588 1,053 Attributable to:Equity holders of the parent 590 1,040Minority interest (2) 13 Earnings per share- Basic (pence) 1.4 2.5- Diluted (pence) 1.4 2.4 CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 June 2006 and 30 June 2005 1/01/2006 to 1/01/2005 to 30/06/06 30/06/05 Unaudited Unaudited £ '000 £ '000 Operating activitiesNet profit from ordinary activities 645 1,200Adjustments for: Foreign exchange losses (25) 0 Depreciation 663 308 Interest expense 79 95 Interest income 0 (41) Operating profit before changes in workingcapital and provisions 1,362 1,562 "-" Increase in trade and other receivables 742 (588) "-" Increase in inventories 1,660 (1,666) "+" Increase in trade and other payables 188 868 Cash generated from operations 3,952 176 Interest paid (79) (95)Interest received 0 41Income taxes paid/(refunded) (185) (179) Net cash flows from operating activities 3,688 (57) Investing activitiesPurchases of PPE (1,760) (2,234) Net cash used in investing activities (1,760) (2,234) Financing activitiesIssue of bonds and loans received 43 (1,054)Issue of ordinary shares 0 5,221Dividends paid (206) 0Net proceeds from short term borrowings (1,809) (321)Loans repaid (issued) 3 (461) Net cash generated by/(used in) financing activities (1,969) 3,385 Effect of exchange rate changes and restatements on cashand cash equivalents (42) (130) Increase/(decrease) in cash and cash equivalents (83) 964 Cash and cash equivalents at the beginning of the period 453 300 Cash and cash equivalents at the end of the period 370 1,264 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 December2005 and are expected to remain the same for the Company in preparing its annualfinancial results for the year ended 31 December 2006. 2. Segmental analysis Sales Share in Share in Gross Profit Gross Gross H1 2006 Sales Sales H1 2006 Margin Margin £ 000 H1 2006 H1 2005 £ 000 H1 2006 H1 2005Cheese 6,927 40% 42% 1,487 21.5% 23.8%Butter 5,431 31% 29% 1,332 24.5% 14.7%Milk Powders 3,280 19% 21% 452 13.8% 14.5%Services 459 3% 1% 99 21.5% 21.7%Other 1,298 7% 7% 134 10.4% 7.3%Total 17,395 100% 100% 3,504 20.1% 18.1% 3. Earnings per share Basic earnings per share have been calculated by dividing the net profitattributable 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 2006 June 2005 Net Profit attributable to ordinary shareholders (£'000) 590 1,040 Weighted average number of ordinary shares 41,214,953 41,214,953 Basic earnings per share (pence) 1.43 2.52 Number of ordinary shares granted under warrants and optionagreements 2,214,924 2,214,924 Fully diluted average number of ordinary shares 43,429,877 43,429,877 Fully diluted earnings per share (pence) 1.36 2.39 4. Dividend The Board proposes an interim dividend of 0.1p per ordinary share (0.35p in H12005). The dividend will be paid on 26 October 2006 to those shareholders on theregister at the close of business on 6 October 2006. This information is provided by RNS The company news service from the London Stock Exchange