Share Name Share Symbol Market Type Share ISIN Share Description
Ukrproduct Group LSE:UKR London Ordinary Share GB00B03HK741 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.25p +5.88% 4.50p 3.50p 5.50p - - - 0 16:35:07
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Food Producers 20.2 -1.6 -3.7 - 1.84

Ukrproduct Group Ltd Interim results 2017

28/09/2017 4:46pm

UK Regulatory (RNS & others)


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TIDMUKR

RNS Number : 1528S

Ukrproduct Group Ltd

28 September 2017

FOR IMMEDIATE RELEASE September 28, 2017

UKRPRODUCT ANNOUNCES UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHSED 30 JUNE 2017

Kyiv, Ukraine - September 28, 2017 - Ukrproduct Group Limited ("Ukrproduct", "UPG" 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 2017.

KEY FIGURES

(Figures in brackets are for the six months ended and as at 30 June 2016 when the exchange rate was 36.61 UAH / GBP compared to 33.68 UAH /GBP in this reporting period)

Total revenues increased by 82% year on year to GBP 14.9 m (GBP 8.2 m).

In Ukrainian Hryvna this represents an increase of 67.8%.

Gross profit margin increased to 11.4% (9.2%) resulting from a gross profit increase of 124.4% to GBP 1.7 m (GBP 0.8 m). In Ukrainian Hryvna this represents an increase of 107.1%.

Kvass revenues have increased by 30.2% year on year to GBP 0.5 m (GBP 0.4 m) with gross profit in this area also increasing by 20.8% year-on-year.

Skimmed Milk Powder (SMP) revenues have increased by 127.2% to GBP 4.1 million (GBP 1.8m), however the gross profit in this area decreased to GBP -0.6 m (GBP -0.1 m).

EBITDA increased to GBP 696 k (GBP - 16 k) year on year.

Operating profit amounted to GBP 408 k (loss of GBP -220 k).

The negative effect of currency exchange differences amounted to GBP 0.2 million (GBP 0.3 m).

The cash balance as at June 30, 2017 stood at GBP 237 k (GBP 277 k).

CEO's REPORT

The business environment improved overall in the Ukraine as GDP increased by several points. Consumers became somewhat more positive as minimum wages were increased.

The dairy market place continues to be competitive.

Trading

Volumes & revenues increased substantially over the same period in 2016.

Branded sales improved overall, with the main categories of packaged butter improving and processed cheese sales leading the way. Hard cheese & spreads sales have remained consistent. Gross margins have more than doubled given the volumes & seasonal falling milk prices. Private label sales fell as low margin business was reduced. The kvass beverage sales improved, helped by a new cider product.

Export sales were even more buoyant given impetus by the exchange rate. Butter sales improved tenfold in volume & gross margin.

SMP continues to be a negative given low prices worldwide. The spray drying facility has been utilised for contract processing. Sales have improved & delivered a very strong profit contribution of GBP250k.

Finances

In the half year to June 2017 as stated, sales revenues increased substantially over last year. Gross margins advanced by over 2%.

EBITDA improved to 4.8% from negative. This led to profit from operations of GBP408k (GBP220k loss). After finance charges & tax, profit stood at GBP234k. A negative exchange difference of GBP230k leaves a net profit of GBP4k (GBP1,098k loss).

The move into profit was accompanied by a net increase in cash of GBP240k.

Repayments of the EBRD loan have commenced on schedule.

Outlook

The turnaround to a profit & related positive cash flow is encouraging. UPG has needed to reset its business in a competitive market place. This is a continuing process. UPG will seek to sustain operational improvement via a strategy of focusing on cash production, operating efficiency & building profitable sales with a competitive product/service offering.

***

For further information contact:

   Ukrproduct Group Ltd                                              Tel: +380 44 232 9602 
   Jack Rowell, Non-Executive Chairman                      www.ukrproduct.com 

Alexander Slipchuk, Chief Executive Officer

   ZAI Corporate Finance Ltd                                      Tel: +44 20 7060 2220 
   Nominated Adviser and Broker                                 www.zaicf.com 

John Treacy

This announcement contains information which was previously inside information for the purposes of

Article 7 of the Market Abuse Regulation EU Regulation 596/2014.

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 total assets of approximately GBP 13.0 million as at December 31, 2016 and consolidated revenues of approximately GBP 20.2 million for the twelve months ended December 31, 2016. 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.

The information contained within this announcement is considered to be inside information prior to its release as defined in Article 7 of the Market Abuse Regulation No. 596-2014 and is disclosed in accordance with the Company`s obligations under Article 17 of those Regulations

 
 UKRPRODUCT GROUP LIMITED 
 UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT 
 FOR THE PERIODED 30 JUNE 2017 AND 2016 
 (in thousand GBP, unless otherwise stated) 
================================================================== 
 
                                           Six months   Six months 
                                              ended        ended 
 
                                            30 June      30 June 
                                              2017         2016 
                                            GBP '000     GBP '000 
 
  Revenue                                    14 910       8 192 
  including of branded and SMP 
   products                                  13 637       7 642 
  Cost of sales                             (13 216)      (7 436) 
                                          -----------  ----------- 
  Gross profit                               1 694         756 
  Administrative expenses                     (482)        (388) 
  Selling and distribution expenses           (716)        (554) 
  Other operating income/ expenses, 
   net                                        (88)         (34) 
                                          -----------  ----------- 
  Profit from operations                      408          (220) 
  Finance expense, net                        (220)        (512) 
  Effect of foreign currency 
   translation                                (230)        (346) 
                                          -----------  ----------- 
  Profit before taxation                      (42)        (1 078) 
  Income tax expense                           46          (20) 
                                          -----------  ----------- 
  Profit for the Six months                    4          (1 098) 
  Attributable to: 
  Equity holders of the Parent                 4          (1 098) 
  Non-controlling interest                     -            - 
                                          -----------  ----------- 
                                               4          (1 098) 
  Earnings per share: 
  Basic                                       0,01        (2,77) 
  Diluted                                     0,01        (2,77) 
 
 
 
 
 
 
 UKRPRODUCT GROUP LIMITED 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE 
 INCOME 
 FOR THE PERIODED 30 JUNE 2017 AND 2016 
 (in thousand GBP, 
 unless otherwise stated) 
==============================            ===========  =========== 
 
                                           Six months   Six months 
                                              ended        ended 
 
                                            30 June      30 June 
                                              2017         2016 
                                            GBP '000     GBP '000 
  Profit for the Six months                    4          (1 098) 
  Other comprehensive income 
  Exchange differences on translation 
   to the presentation currency               (226)        233 
                                          -----------  ----------- 
  Other comprehensive income for the 
   Six months, net of tax                     (226)        233 
                                          -----------  ----------- 
  Total comprehensive income for the 
   Six months, net of tax                     (222)        (865) 
  Attributable to: 
  Equity holders of the Parent                (222)        (865) 
  Non-controlling interests                    -            - 
                                          -----------  ----------- 
                                              (222)        (865) 
 
 
 UKRPRODUCT GROUP LIMITED 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
 AS AT 30 JUNE 2017 AND 31 DECEMBER 2016 AND 30 JUNE 2016 
 (in thousand GBP, unless 
 otherwise stated) 
============================           ===  ===========  =========== 
 
                                               As at        As at 
                                              30 June         31 
                                                2017       December 
                                                             2016 
                                              GBP '000     GBP '000 
  ASSETS 
  Non-current assets 
  Property, plant and equipment              7 166        7 511 
  Intangible assets                          592          656 
  Deferred tax assets                        1            - 
  Total non-current assets                   7 759        8 167 
                                            -----------  ----------- 
  Current assets 
  Inventories                                2 375        1 855 
  Trade and other receivables                2 779        2 507 
  Current taxes                              473          230 
  Other financial assets                     32           18 
  Cash and cash equivalents                  237          175 
  Total current assets                         5 896        4 785 
                                            -----------  ----------- 
  TOTAL ASSETS                               13 655       12 952 
                                            ===========  =========== 
  Equity and liabilities 
  Equity attributable to equity 
  holders 
  Share capital                              3 967        3 967 
  Other reserves                              (6 600)      (6 284) 
  Retained earnings                          4 521        4 427 
  Total equity attributable to 
   equity holders of the parent                1 888        2 110 
                                            -----------  ----------- 
  Non-controlling interest                   -            - 
                                            -----------  ----------- 
  Total equity                                 1 888        2 110 
                                            -----------  ----------- 
  Liabilities 
  Non-Current Liabilities 
  Bank borrowings                            5 815        - 
  Long-term payables                         476          441 
  Deferred tax liabilities                   308          363 
  Total Non Current Liabilities              6 599        804 
                                            -----------  ----------- 
  Current Liabilities 
  Bank borrowings                            1 350        7 162 
  Trade and other payables                   3 774        2 854 
  Current income tax liabilities             16           10 
  Other taxes payable                        28           12 
  Total Current Liabilities                  5 168        10 038 
                                            -----------  ----------- 
  TOTAL LIABILITIES AND EQUITY               13 655       12 952 
                                            ===========  =========== 
                                                 -            - 
 
 
 UKRPRODUCT GROUP LIMITED 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 
 FOR THE PERIODED 30 JUNE 2017 AND 2016 
 (in thousand GBP, unless otherwise stated) 
===================================================================== 
 
                                          Six months      Six months 
                                             ended          ended 
 
                                         30 June 2017    30 June 2016 
                                           GBP '000        GBP '000 
  Cash flows from operating 
  activities 
  Profit/(Loss) before 
   taxation for the six months            (42)            (1 078) 
  Adjustments for: 
  Exchange difference                    230             346 
  Depreciation and 
   amortisation                          288             206 
  Loss of disposal of 
   non-current assets                    -               5 
  Impairment of trade 
   receivables                           5               31 
  Disposal of subsidiaries               -                (3) 
  Impairment of inventories              79              54 
  Interest income                        -               - 
  Interest expense                       220             512 
  Increase of inventories                 (441)           (941) 
  Increase in trade and other 
   receivables                            (520)           (956) 
  Increase in trade and other 
   payables                                  1 012          2 143 
                                        --------------  ------------- 
  Cash generated from 
   operations                                 831            319 
  Interest received                      -               - 
  Income tax paid                         (6)             (8) 
                                        --------------  ------------- 
  Net cash generated by 
   operating activities                       825            311 
  Cash flows from investing 
  activities 
  Payments for property, plant 
   and equipment                          (41)            (77) 
  Proceeds from sale of 
   property, plant and 
   equipment                             1               9 
  Repayments / (proceeds) from 
   loans issued                           (15)            (8) 
                                        --------------  ------------- 
  Net cash used in investing 
   activities                                 (55)           (76) 
  Cash flows from financing 
  activities 
  Interest paid                           (185)           (182) 
  Net proceeds / (repayments) 
   from short term borrowing             -                (59) 
  Repayments of investment                (176)          - 
  borrowing 
                                        --------------  ------------- 
  Net cash used in financing 
   activities                                (361)           (241) 
  Net (decrease) / increase in 
   cash and cash equivalents                  409             (6) 
                                        --------------  ------------- 
  Effect of exchange rate 
   changes 
   on cash and cash 
   equivalents                            (348)          190 
                                        --------------  ------------- 
  Cash and cash equivalents at 
   the beginning of the six 
   months                                          175             93 
  Cash and cash equivalents at 
   the end of the six months                  237            277 
                                        --------------  ------------- 
                                                              - 
 
 
 UKRPRODUCT GROUP LIMITED 
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 FOR THE PERIODED 30 JUNE 2017 AND 2016 
 (in thousand GBP, 
 unless otherwise stated) 
============================    ========  ========  ========  ============  =========  ============ 
 
                                                   Attributable to equity holders 
 
                                  Share     Share    Merger    Revaluation   Retained   Translation 
                                 capital   premium   reserve     reserve     earnings     reserve 
                                   GBP       GBP       GBP      GBP '000     GBP '000    GBP '000 
                                  '000      '000      '000 
                                --------  --------  --------  ------------  ---------  ------------ 
 
                                                                                            (15 
  As at 1 January 2016            3 967     4 562       -         4 192       5 654         294) 
                                --------  --------  --------  ------------  ---------  ------------ 
 
  Loss for the six months                                                     (1 098) 
  Other comprehensive 
   income                                    (2)                                            235 
                                --------  --------  --------  ------------  ---------  ------------ 
 
  Total comprehensive 
   income                           -        (2)        -           -         (1 098)       235 
 ============================   ========  ========  ========  ============  =========  ============ 
 
  Depreciation on revaluation 
   of non current assets                                           (83)         83 
  Reduction of revaluation 
   reserve                                                         (7)          7 
                                                                                            (15 
  As at 30 June 2016              3 967     4 560       -         4 102       4 646         059) 
 ============================   ========  ========  ========  ============  =========  ============ 
 
  Profit for the six 
   months                                                                      (386) 
  Other comprehensive 
   income                                     2                                             278 
                                --------  --------  --------  ------------  ---------  ------------ 
 
  Total comprehensive 
   income                           -         2         -           -          (386)        278 
 ============================   ========  ========  ========  ============  =========  ============ 
 
  Depreciation on revaluation 
   of non current assets                                          (165)        165 
  Reduction of revaluation 
   reserve                                                         (2)          2 
 
                                                                                            (14 
  As at 31 December 2016          3 967     4 562       -         3 935       4 427         781) 
 ============================   ========  ========  ========  ============  =========  ============ 
 
  Profit for the six 
   months                                                                       4 
  Other comprehensive 
   income                                     1                                 -          (227) 
                                --------  --------  --------  ------------  ---------  ------------ 
 
  Total comprehensive 
   income                           -         1         -           -           4          (227) 
 ============================   ========  ========  ========  ============  =========  ============ 
 
  Depreciation on revaluation 
   of non current assets                                           (90)         90 
  Reduction of revaluation                                          -           - 
   reserve 
  Reclassified equity                                                           -            - 
   items 
                                                                                            (15 
  As at 30 June 2017              3 967     4 563       -         3 845       4 521         008) 
 ============================   ========  ========  ========  ============  =========  ============ 
 
 

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 the 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 2016.

The preparation of the unaudited condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates.

The comparatives for the six months ended 30 June 2016 are extracted from the Group's consolidated financial statements for the year ended 31 December 2016. The auditor's report for those accounts was unqualified, but did include references to an emphasis of matter in respect of going concern due to the Group incurring a loss during the year as well as the uncertainty surrounding the breach of loan agreement convenants with the European Bank for Reconstruction and Development (the "EBRD") and the maturity of the external financing arrangements with OTP Bank falling due on 9 September 2017.

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 earned profit of 4 thousand GBP for the six months ended 30 June 2017. This is primarily due to increasing world prices for butter and increases in the volume of milk produced.

Despite the negative economic conditions in Ukraine the Group signed new terms in respect of the loan with EBRD with the loan being divided into Tranche A, with a maturity date 1 December 2022 and interest being payable at a margin of 5% over EURIBOR per annum, and Tranche B, with a maturity date 1 December 2024 and interest being payable at the higher of EURIBOR or 1% per annum upto 1 December 2022 and at a margin of 5% over EURIBOR per annum thereafter. Despite loan repayments being made as scheduled, the Group breached financial covenants as at 30 June 2017. The Board notified EBRD in advance of covenant breaches of the Loan and EBRD provided waivers in respect of the breached covenants dated 30 June 2017. The Group has also agreed an extension to the loan agreement with OTP bank for a further three months with the maturity date being 8 December 2017. It is management's intention to revise the terms of this loan prior to this date.

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: increasing volume of export sales and full production capacity.

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                      Six months 
                                                ended                           ended 
 
                                            30 June 2017                    30 June 2016 
                 --------------   -------------------------------  ----------------------------- 
 Net (loss) / profit 
  attributable to 
  ordinary shareholders, 
  GBP'000                                                       4                        (1 098) 
 Weighted number of ordinary 
  shares in 
  issue                                                39 673 050                     39 673 050 
 Basic earnings per share, 
  pence                                                      0,01                         (2,77) 
 Diluted average number of 
  shares                                               39 673 050                     39 629 619 
 Diluted earnings per share, 
  pence                                                      0,01                         (2,77) 
-------------------------------   -------------------------------  ----------------------------- 
 

3. Approval of interim financial statements

The unaudited condensed consolidated financial statements were approved by the board of directors on 29 September 2017. 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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