The Group's net profit increased by 79%

BELUGA GROUP announces consolidated financial results for 1H2017 prepared in accordance with the International Financial Reporting Standards (IFRS).

Key financial indicators and major corporate events:

	1H2017
Sales in volume terms	+8%
Net Revenue	-2%
Alcohol Segment Revenue	-4%
EBITDA	+2%
Net profit	+79%

·           Synergy Group became BELUGA GROUP in June 2017. The Group has entered a new global development stage, where it is necessary to ensure the integrity of its image among its target audiences, to "refresh" the corporate culture and to strengthen market positions;

·           Vodka Belenkaya - the brand number one in Russia, according to the Nielsen agency’s data;

·           Export of the Group has grown by 35%. The most significant achievement has been shown by the flagship brand of the Group’s portfolio - super-premium BELUGA vodka. For the first time export sales of the brand have exceeded its shipments in Russia;

·           Over the same period the Company increased the volume of its import operations. The distribution of import brands boosted by 34%;

·           The brands Belenkaya, Myagkov and Tsar were once again included in one of the most influential ratings - Brand Champions 2017;

·           The Group paid taxes in 1H2017 in the amount of 12,320 mln. RUR (+11%), including excise duty in the amount of 9,990 mln. RUR (+10%);

·           During the reporting period, BELUGA GROUP and global spirits Company WILLIAM GRANT & SONS signed an agreement to prolong their cooperation in Russia. The term of the exclusive contract is five years.

Commenting on the Group’s financial results, CEO Alexander Mechetin said, “In 1H2017 the Group continued sales increase of its own and partner products, taking up the top position in the market and keeping up the positive development trend, demonstrating the good dynamics of its incomes: the net profit grew by 79%, the operational profit increased by 4% and EBITDA by 2%.

A great influence on those indicators was largely done 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.

It is worth noting that the decrease of alcohol segment revenue based not on the economical matter, but it is the consequence of the change in the revenue/expenditure structure. Along with revenue decrease, the distributional expenses from operations in retail chains have also went down. Correspondingly, these changes do not influence operational profit. It is direct consequence of the "On Trade Law" new version adoption, which established more straightforward rules of cooperation for producers and retail companies. It is also expected to affect 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.

As for the volumes, the Company has increased sales by 8%, imports have increased by 34%, and exports – by 35% during 1H2017. These factors affected increasing of major operational profitability indicators, as well as growth of our operational effectiveness, active actions in development of our own distribution system and the progress achieved in an innovative brand marketing: including new brands launching, expansion and update of the existing product lines, entering  new categories”.

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