Ukrproduct Regulatory News (UKR)

24 Sep 2008 07:00

Ukrproduct Group Limited ("Ukrproduct" or the "Group" or the "Company") (AIM:UKR), a leading producer and distributor of branded dairy products in Ukraine,today announced its unaudited consolidated IFRS financial results for the sixmonths ended June 30, 2008. FIRST HALF HIGHLIGHTS (Figures in brackets are for the six months ended or as at, 30 June 2007) -- Consolidated revenues up by 7.7% year on year to GBP 23.6 million (GBP 21.9 million) -- Revenues in branded products segment up by 50.6% year on year to GBP 16.3 million (GBP 10.8 million) -- Gross profit decreased by 3.0% year on year to GBP 4.6 million (GBP 4.8 million) with Gross margin of 19.6% (21.8%) -- Gross profit for branded products increased by 41.2% year on year to GBP 3.8 million (GBP 2.7 million) -- EBITDA declined by 18.6% year on year to GBP 2.0 million (GBP 2.5 million) with EBITDA margin of 8.6% (11.3%) -- Profit after tax decreased by 26.8% year on year to GBP 1.0 million (GBP 1.4 million) with profit margin of 4.3% (6.3%) -- Total assets up by 16.0% to GBP 25.1 million (GBP 21.7 million) Sergey Evlanchik, Chief Executive Officer of Ukrproduct, commented: "Ukrproducthas delivered strong growth in branded products' revenues and gross profits inthe first half of 2008. In line with our stated strategy we continue to focus onbranded products, including processed and hard cheeses, and packaged butter. Ourskim milk powder ("SMP") segment has reversed its highly positive trend in 2007and was impacted by price volatility in global dairy markets. Looking forward, we expect sales in our core branded products, soft cheese andpackaged butter, to continue growing at the same rate as in the first half.Sales in our new product segment, hard cheese, are expected to be robust in thesecond half as we continue to increase the production volume and receivepositive feedback from customers. Furthermore, Ukrproduct introduced a newpremium brand 'Molendam' for its cheeses and packaged butter to nationalsupermarket chains, and we expect this brand to compete successfully withimported dairy products. We anticipate global commodity pricing in skim milk powder to continue impactingour performance in this segment in the second half. In addition, importrestrictions on the Ukrainian hard cheese and SMP exports introduced by theRussian authorities in August may impact domestic pricing in the future. Ukrproduct's position in the domestic market and its key brands remains strong.We continue to invest in our core brand portfolio whilst exploring furthergrowth opportunities in the Ukrainian dairy sector." FINANCIAL REVIEW \* T(GBP thousands) 1H 2008 1H 2007 Year on Year Change------------------------------------------ ------------ --------------Revenue 23,612 21,924 7.7%Gross Profit 4,629 4,771 (3.0%)EBITDA 2,022 2,483 (18.6%)Profit after tax 1,017 1,389 (26.8%)Basic earnings per share 2.4 3.3 (26.4%)\* T Ukrproduct's consolidated revenues increased by 7.7% year on year or by GBP 1.7million in the first half of 2008. The Group's branded products segment,comprising cheeses and butter, generated 50.6% growth year on year and accountedfor 69.0% (49.4%) of total revenues. Segment market shares improved in line withvolume growth in branded products whilst prices kept pace with inflation. Thevolume growth was underpinned by a series of successful marketing and salesactivities targeting domestic national and regional retail chains and expansionof distribution network to include two new depot branches in Donetsk andDnipropetrovsk. Skim milk powder revenues declined by 38.9% year on year andcontributed 25.6% (45.9%) to total revenues. Furthermore, Ukrproduct launched anew product segment, hard cheese, in late 2007, which made a promisingcontribution to total revenues in the first half of 2008. In June 2008, Ukrproduct launched a new design of its major brand "NashMolochnik" (Our Dairyman). The design features provide better visuals aimed atreflecting market leading quality of the Group's most successful brand. TheGroup markets its cheese and butter products under this brand. In August 2008,the Group launched a new marketing campaign in Ukraine to promote this brand. In June 2008, Ukrproduct expanded its brand portfolio to include a new premiumbrand 'Molendam' for high-income consumers. The Group offered two types of hardcheese, Dutch and Gouda, and packaged butter under this brand to supermarketchains throughout Ukraine. \* T(GBP thousands) 1H 2008 1H 2007 Year on Year Change------------------ ---------------- ------------------ ---------------Revenue-- Branded 16,298 10,824 50.6%-- SMP 6,054 9,906 (38.9%)-- Other 1,260 1,194 5.5%Gross Profit-- Branded 3,823 2,708 41.2%-- SMP 645 1,914 (66.3%)-- Other 161 149 8.1%\* T Group gross profit decreased 3% year on year in the first half of 2008 withgross profit margin declining to 19.6% compared to 21.8% in the first half of2007 as a result of margin pressure in the skim milk powder segment. The grossprofit in branded products segment increased 41.2% year on year with grossprofit margin of 23.5% compared to 25.0% in the previous period as a result ofcosts associated with rollout of hard cheese. The change in product mixreflected the higher sales of branded products, however it was not sufficient tooffset the decrease in export prices of SMP and the rise in fuel and petrolcosts. Group EBITDA decreased 18.6% year on year in the first half of 2008 with EBITDAmargin of 8.6% compared to 11.3% in the previous period, as a result of thedecline in SMP prices. Depreciation and amortisation expense increased 12.5% year on year from GBP 0.67million to GBP 0.75 million following the launch of the hard cheese unit and theinstallation of a smoking chamber. Selling, distribution and administrative expenses increased by 15.2% year onyear from GBP 2.7 million to GBP 3.1 million, primarily as a result of the wageinflation and increase in marketing and distribution expenses. Profit after tax decreased 26.8% year on year. The Group's basic earnings pershare(1) (EPS) declined 29% year on year from 3.34 pence to 2.37 pence. Thediluted earnings per share declined 26% year on year from 3.17 pence to 2.33pence. In view of the Group's current trading performance and cash generation, theBoard has approved an interim dividend of 0.4 pence per share to theshareholders of record as at 3 October, 2008 payable on 25 October, 2008. Theshares will be quoted 'ex dividend' from 1 October 2008. Net cash generated from operating activities decreased by 43.9% year on year toGBP 1.10 million in the first half from GBP 1.96 million in the previous period. Net cash used in investing activities totalled GBP 0.9 million in the first halfof 2008, with GBP 0.9 million spent on capital expenditure compared to GBP 1.46million in the first half of 2007. The Group installed the hard cheese ripeningchamber and expanded its distribution network as well as the captive raw milkcollection zone. Net cash used in financing activities amounted to GBP 0.97 million in the firsthalf of 2008, compared to GBP 0.34 million generated for the correspondingperiod of 2007 following the repayment of GBP 0.21 million loan and redemptionof GBP 0.83 million local bond. The Group's cash balances stood at GBP 0.32 million as at June 30, 2008,compared to GBP 0.68 million as at June 30, 2007. The Group's net debt was GBP3.74 million as at June 30, 2008 compared to GBP 3.56 million as at June 30,2007. Conference call information Ukrproduct management will host a conference call today at 11 am (London time) /12 pm (CET) / 1 pm (Kiev Time) to present and discuss the first half results. \* TThe dial-in numbers for the conference call are:UK/International: +44 20 7190 1232 A replay will then be available for 7 days after the conference call. To access the replay, please dial: UK/International: +44 20 7190 5901 PIN number: 140653#\* T For further information, please visit www.ukrproduct.com or contact: \* TUkrproduct Group Ltd. Shared Value LimitedSergey Evlanchik Larisa Kogut-MillingsChief Executive Officer Investor RelationsTel: +38 044 502 8014 Tel. +44 (0) 20 7321 5010sergey.evlanchik@ukrproduct.com ukrproduct@sharedvalue.net WH Ireland Limited Metropol (UK) LimitedDavid Youngman Alexander SelegenevAdrian Kirk Guerman MikhailovTel: +44 161 832 2174 Tel: +44 207 439 6880\* T Ukrproduct Group Ltd is a leading Ukrainian producer and distributor of brandeddairy products. The Group's product portfolio includes processed and hardcheese, skimmed milk powder (SMP) and butter. Ukrproduct has built a range ofrecognisable product brands ("Our Dairyman", "People's Product", "CreamyValley", Molendam", "Farmer's") that are well known and highly regarded byconsumers. The Group has modern production facilities that comprise five dairyplants in western and central regions of Ukraine (Molochnik,Starokonstantinovskiy Dairy Plant, Krasilovskiy Dairy Plant, Zhmerinka Plant andLetichiv Dairy Plant) with a total annual integrated capacity of approximately70,000 tons of dairy products. With its own fleet of more than 120 vehicles,Ukrproduct has one of the largest logistics and distribution networks in Ukrainewhich covers the country's eight major cities. The Group reported total assetsof approximately GBP 25,128 million as at June 30, 2008 and consolidatedrevenues of approximately GBP 23,612 million for the first six months of 2008.Ukrproduct's securities are traded under the symbol "UKR" on AIM, a marketoperated by the London Stock Exchange. Some of the information in this press release may contain projections or otherforward-looking statements regarding future events or the future financialperformance of the Group. You can identify forward looking statements by termssuch as "expect," "believe," "anticipate," "estimate," "intend," "will,""could," "may" or "might" the negative of such terms or other similarexpressions. These statements are only predictions and they may differmaterially from the actual events or results. We do not intend to update thesestatements to reflect events and circumstances occurring after the date hereofor to reflect the occurrence of unanticipated events. Many factors could causethe actual results to differ materially from those contained in such projectionsor forward-looking statements, including, among others, general economicconditions, our competitive environment, risks associated with operating inUkraine, rapid technological and market change in our industry, as well as manyother risks specifically related to the Group and its operations. \* TUKRPRODUCT GROUPUNAUDITED CONSOLIDATED INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2008 AND 2007(Amounts in thousands of GBP) June 30, June 30, 2008 2007 unaudited unaudited ------------------------------------------------ ---------- ----------Revenue 23,612 21,924 Cost of Sales (18,983) (17,153) ---------- ----------Gross profit 4,629 4,771 Administrative expenses (1,561) (1,342)Selling and distribution expenses (1,499) (1,322)Other operating expenses (301) (291) ---------- ----------Profit from operations 1,268 1,816 Finance expense (216) (205) ---------- ----------Profit before taxation 1,052 1,611 Income tax expense (35) (222) ---------- ----------Profit for the period 1,017 1,389 Attributable to:Equity holders 1,014 1,377Minority interest (3) (12) ---------- ---------- Net Profit attributable to ordinary shareholders 1,014 1,377 Weighted average number of ordinary shares 42,817,849 41,214,953 Basic earnings per share (pence) 2.37 3.34 Number of ordinary shares granted under warrants and optionagreements 612,028 2,214,924 Diluted average number of ordinary shares 43,429,877 43,429,877 Diluted earnings per share (pence) 2.33 3.17------------------------------------------------ ---------- ----------\* T \* TUKRPRODUCT GROUPUNAUDITED CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2008 AND 2007(Amounts in thousands of GBP) June 30, June 30, 2008 2007 unaudited unaudited -------------------------------------------------- --------- ---------AssetsNon-Current AssetsProperty, plant and equipment 12,773 11,635Intangible assets 1,067 1,200Investments 112 264Deferred tax assets 75 104 --------- ---------Total non-current assets 14,027 13,203 Current assetsInventories 4,118 2,997Trade and other receivables 5,590 4,481Current taxes 1,077 304Cash and cash equivalents 316 679 --------- ---------Total Current assets 11,101 8,461 --------- ---------Total assets 25,128 21,664 Equity and liabilitiesEquity attributable to equity holdersShare capital 4,282 4,121Other reserves 5,046 3,992Retained earnings 7,904 5,255 --------- ---------Total equity attributable to equity holders of the parent 17,232 13,368Minority interest 141 207 --------- ---------Total equity 17,373 13,575 LiabilitiesNon-Current LiabilitiesDeferred tax liabilities 750 791 --------- ---------Total Non-Current Liabilities 750 791 Current LiabilitiesBank loans and overdrafts 3,361 3,260Bonds - 1,051Trade and other payables 3,535 2,770Taxes payables 60 42Current income tax liabilities 49 175Total Current Liabilities 7,055 7,298 --------- ---------Total equity and liabilities 25,128 21,664-------------------------------------------------- --------- ---------\* T \* TUKRPRODUCT GROUPUNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2008 AND 2007(Amounts in thousands of GBP) June 30, June 30, 2008 2007 unaudited unaudited -------------------------------------------------- --------- ---------Cash flows from operating activities Profit for the period 1,017 1,389 Adjustments for: Exchange difference (10) 2 Depreciation and amortisation 754 669 Loss on disposal of property, plant and equipment 2 30 Interest expense 216 203 Income tax expense 35 222 (Increase) / decrease in inventories 81 (442) (Increase) / decrease in trade and other receivables (1,043) (1,026) Increase / (decrease) in trade and other payables 167 1016 --------- ---------Cash generated from operations 1,219 2,063 Income tax paid (119) (102) --------- ---------Net cash generated by operating activities 1,100 1,961 Cash flows from investing activities Payments for property, plant and equipment (934) (1,462) Purchase of available-for-sale investments - (25) Proceeds from sale of property, plant and equipment 44 21 Proceeds from sale of available-for-sale investments 1 20 Loans issued to the third parties (14) (320) --------- ---------Net cash used in investing activities (903) (1,766) Cash flows from financing activities Proceeds from issue of shares 628 - (Repayments) / proceeds from issue of bonds (828) 578 Dividends paid (351) (210) Interest paid (216) (203) Net proceeds from short-term borrowing (205) 177 --------- ---------Net cash (used in) / generated by financing activites (973) 342 --------- ---------Net (decrease) / increase in cash and cash equivalents (776) 537 Effect of exchange rate changes and restatements on cash and cash equivalents 5 (17) Cash and cash equivalents at the beginning of the period 1,087 159Cash and cash equivalents at the end of the period 316 679-------------------------------------------------- --------- ---------\* T NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS Basis of preparation This financial information has been prepared using the recognition andmeasurement principles of International Accounting Standards, InternationalFinancial Reporting Standards and Interpretations adopted for use in theEuropean Union. The principal accounting policies used in preparing the interimresults are those the group expects to apply in its financial statement for theyear ended 31 December 2008 and are unchanged from those disclosed in thegroup's Annual Report and Consolidated Financial Statements 2007 for the yearended 31 December 2007. The financial information for the six months ended 30June 2008 and 30 June 2007 is not reviewed and unaudited and does not constitutethe group's statutory financial statements for those periods. (1) Basic EPS is calculated by dividing net profit attributable to ordinaryshareholders by the weighted average number of shares in issue during theperiod. Copyright Business Wire 2008