Sinergiya : Synergy announces its financial results for the full year 2016

05.04.2017Sales grew by 21% and amounted to 57,377 million roubles, net revenue showed a 17% increase and amounted to 35,903 million roubles, gross profit increased by 15% and amounted to 14,518 million roubles.

Synergy PJSC (Synergy, Synergy Group of Companies, Group, or Company) (MOEX: SYNG), one of the leading spirits producers in Russia, today announces audited consolidated financial results for the full year 2016 prepared in accordance with International Financial Reporting Standards (IFRS).

Key financial figures for the full year 2016 and major corporate events:

	2016
Shipments in volume terms	+18%
Net revenue	+17%
Alcohol segment revenue	+23%
Gross profit	+15%
Alcohol segment gross profit	+20%
EBITDA	+12%
Net profit	+14%
Net debt	+10%

· Beluga brand - absolute leader in the super premium category in Russia[1];

· 'Belenkaya' brand - No. 1 vodka in Russia[2];

· 'Myagkov' brand one of the leading brands in low premium segment;

· Overall sales of Beluga brand increased by 31%, export brand sales raised up to 36%;

· The Company has produced a unique limited series of vodka Beluga Epicure by Lalique, which is the result of cooperation between Beluga brand and Lalique, the legendary French manufacturer of crystal ware and jewellery;

· Synergy launched new brands: vodkas - 'Snow Crab' and 'Arkhangelskaya Severnaya'; the 'Captain's' line of tincture was extended;

· Synergy and Bacardi signed a strategic agreement for bottling and packaging of WILLIAM LAWSON'S whisky;

· The import operations increased by 44%;

· The Company signed long-term distribution agreements with Gallo Vineyards Inc. (Barefoot trademark), GWS, Domaine Barons de Rothschild, manufacturing a wide range of wine products.

Commenting on the financial results, Synergy's CEO Alexander Mechetin said: 'In 2016, the Company was strengthening its positions in the market, building up its leadership through organic growth and diversification of business, simultaneously increasing its operational efficiency. All these, along with the positive trends formed in the Russian spirits market, allowed Synergy to demonstrate significant growth of certain financial and operational figures.

The Company increased its net revenue by 17%, the alcohol segment revenue by 23% and gross profit by 15%, against an 18% increase in shipments in volume terms. One of the major factors that influenced the growth of performance of both our Company and the country's whole legal alcohol market was significant reduction of illegal producers share. It was mainly due to the government's active work for suppressing such activities. Moreover, we note gradual recovery of consumers' purchasing power that also positively influenced the Company's financial results.

Due to the measures aimed at increasing business performance, namely: reduction in operating expenses, particularly administrative costs; innovative restyling of products with a focus on import substitution of components; optimization of the production platform; in 2016, Synergy created a solid foundation to increase its profitability performance profile.

Currently, Synergy is taking the leading position on the market of distilled beverages, possessing a diversified portfolio consisting of leading brands, great and unique distribution platform, while being the No. 1 independent importer of premium spirits. It is worth pointing out that all these achievements would have been impossible without a professional team of talented and success-oriented employees.

Over the reporting period, guided the strategy of maximum diversification, the Company, continued active brand marketing development. A number of new brands were launched, including the innovation brands: Trinity liqueur and 'Snow Crab' vodka. Other novelty products include 'Arkhangelskaya Severnaya Vyderzhka' vodka. 'Captain's' tincture line was expanded. The Company has developed its flagship super-premium Beluga brand. Here, we expanded our presence through the unique and limited Beluga Epicure by Lalique series.

In 2016, the Company rapidly developed distribution of imported products from partner companies. According to the results of 2016, the Company's imports showed a 44% increase (665 thousand dcl).

We have signed exclusive contracts with new partners such as Gallo Vineyards Inc. GWS, Domaine Barons de Rothschild. Thanks to that, the Company has qualitatively widened the range of imported up-scale wines represented on the territory of Russia. Also should be noted the unique contract for national spirits market with one of the global leader Bacardi for bottling WILLIAM LAWSON'S whisky using Synergy's capacities.

Synergy continues its dynamic growth by increasing overall business efficiency, operating with confidence within most of the high revenue categories, winning new high positions in these categories, which has a positive impact on the profitability of its business and serves as direct evidence of its stability.'

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[1] In volume terms. According to IWSR data 2015.

[2] In volume and value terms. LLC Media Alliance calculation based in part on data reported by Nielsen through its Retail Index Service for the Vodka Category for the period (December 2015-November 2016) for Urban Russia market valid for March 2017. (Copyright © 2017,'Nielsen').