Synergy announces its 1H2016 financial results

Synergy PJSC (Synergy, Synergy Group of Companies, Group or Company) (MOEX: SYNG), the leading Russian spirits producer, announces consolidated financial results for 1H2016 prepared in accordance with the International Financial Reporting Standards (IFRS).

 Key financial indicators and major corporate events:

• The Company signed an unprecedented partner agreement with Bacardi for William Lawson's whiskey bottling at Traditsii Kachestva plant;
• Brands Belenkaya and Gosudarev Zakaz were once again included in one of the most influential ratings - Brand Champions 2016;
• The Group paid taxes in 1H in the amount of 11,521 mln. RUR (+16%), including excise in the amount of 9,055 mln. RUR (+23%).

Commenting on the Group's financial results, CEO Alexander Mechetin said, "In 1H Y2016 Synergy's key financial indicators demonstrated positive dynamics (due to a two-digit increase in the shipment of own and partners' products). The Group continued stepping up its leadership on the market keeping up a positive development trend. The Group's net revenue grew by 24%, gross profit increased by 25% and EBITDA by 11%. The growth of indicators was largely due to the improved situation on the market, which stabilized after the state had made major advancements in its struggle against shadow market. Another reason was the rate of excises, which remained unchanged this year. 

An overall growth of sales, the Group's proactive pricing policy, expanded share of the premium import operations and profitable export shipments in the structure of the Group's revenue were conducive to the increase of its net profit, which grew by 31%. The Group achieved 50% and 49% growth of the volume of imports and exports respectively. 

It is worth noting that the recent measures, including the introduction of the Unified State Automated Information System (USAIS) in the wholesale-retail sector, stiffening of responsibilities for the production of counterfeit items (including the seizure and destruction of equipment used by illegal producers), are expected to further improve the situation on the market. 

In addition, the adoprion of a new version of the "On Trade Law" establishing more straightforward rules of cooperation for producers and retail companies, is also expected to impact the industry in a positive way. The law set out the maximum (5%) discount, while outlawing other types of payments due to retail chains, including marketing and logistics, and introduced a new payment term reducing it from 45 to 40 days. 

In the reporting period, the Group followed the strategy of business diversification gradually expanding sales of own brands as well as of the brands of its key partners, while simultaneously upgrading and replenishing its unique portfolio of brands. Synergy also signed an unprecedented agreement with Bacardi for William Lawson’s whiskey bottling at the leading Traditsii Kachestva plant."

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