TIDMUKR
RNS Number : 8922N
Ukrproduct Group Ltd
28 September 2023
28 September 202 3
UKRPRODUCT GROUP LIMITED
("Ukrproduct", the "Company" or, together with its subsidiaries,
the "Group")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHSED 30 JUNE
202 3
Ukrproduct Group Limited (AIM: UKR), one of the leading
Ukrainian producers and distributors of branded dairy foods and
beverages (kvass), today announces its unaudited interim financial
results for the six months ended 30 June 202 3 .
The unaudited interim financial results for the six months ended
30 June 202 3 are available on the Company's website at
www.ukrproduct.com .
For further information contact:
Ukrproduct Group Ltd
Jack Rowell, Non-Executive Chairman Tel: +44 1534 814814
Alexander Slipchuk, Chief Executive www.ukrproduct.com
Officer
Strand Hanson Limited
Nominated Adviser and Broker Tel: +44 20 7409 3494
Rory Murphy, Richard Johnson www.strandhanson.co.uk
Chairman and Chief Executive Statement
Ukrproduct, one of the leading Ukrainian producers and
distributors of branded dairy foods and beverages (kvass), is
pleased to announce its interim results for the half year ended 30
June 2023 ("1H 2023") and outlook for the remainder of 2023.
2022 Half-Year Trading Update
Ukrproduct Group's consolidated revenue amounted to GBP18.3
million in the first half of 2023, the same as the half year ended
30 June 2022 ("1H 2022"). Whilst at the Group level, organic
revenue growth in local currency was 19.5%, achieved mainly by the
improvement of topline drivers, including volume, mix and price,
this was impacted by negative exchange rate effects of GBP3.6
million. On a nominal basis, total volumes of sales were 21% higher
in 1H 2023 than the prior period due to an increase in domestic
demand as well as the stabilization of exports, despite the effects
of the war in Ukraine.
In the period, sales of processed cheese and processed cheese
products amounted to GBP12.0 million which was 17.2% higher than
the 1H 2022. This was due to the increase of export sales as well
as the launch of new products in Ukraine.
In 1H 2023, sales of spreads amounted to GBP2.2 million, which
was 8.9% lower than 1H 2022 due to an increase in competition.
However, sales increased by 11.0% in local currency compared to 1H
2022. This was mainly due to rising prices.
Sales of butter in the period amounted to GBP1.5 million which
was 33.1% higher than 1H 2022, mainly due to the recovered domestic
demand and export sales.
Sales of kvass and other beverages grew by 81.3% in volume
amounting to GBP0.8 million compared to 1H 2022. This was due to
the sale of beverages covering the whole period of 1H 2023 and
active sales starting in April 2023 while in 1H 2022 sales were
completely eliminated and restored in May-June 2022 due to the
beginning of war in Ukraine.
The Group's gross profit in 1H 2023 decreased by 2.3% compared
to 1H 2022, to GBP3.2 million. This was mainly as a result of
marketing and trade marketing campaigns in response to local
competition.
In 1H 2023, the Group's administrative expenses and selling
expenses increased by 24.4% and 17.3% respectively, compared to 1H
2022. This was mainly due to salary increases, the significant
level of inflation in Ukraine in 2022-2023, growth in marketing
activities and resumption of fees for certain auxiliary services
which had been negotiated for provision on a complimentary basis
last year after the start of the full scale invasion. The major
factor behind the 97.7% reduction of the Group's other operating
expenses in 1H 2023 to GBP0.04 million was the impairment of trade
receivables relating to temporary occupied territories in 1H 2022
reflecting the direct impact of war.
EBITDA increased to GBP1.5 million in 1H 2023, up by 242.8%,
compared with GBP 0.45 million in the prior period.
Finance costs in 1H 2023 grew by 68.0% year on year, to GBP0.39
million, primarily driven by increased interest rates and
recognized additional interest expenses for the European Bank for
Reconstruction and Development ("EBRD") loan for the previous
periods. In June 2023, the EBRD increased the interest rate on the
loan retrospectively and charged additional interest from September
2021.
Financial position
As at 30 June 2023, Ukrproduct had net assets of GBP4.9 million
(including cash balances of GBP0.3 million) compared to GBP6.3
million (including cash balances of GBP0.3 million) as at 30 June
2022.
For the six months ended 30 June 2023, the Group continued to be
in breach of several provisions of the loan agreement with the
EBRD. The Company failed to repay Tranche A (aggregate EUR 2.1
million principal) before the maturity date of 1 December 2022 and
has missed interest payments since 1 March 2022. In June 2023 the
EBRD notified the Company about a recalculation and an increased
interest rate in respect of the aggregate EUR 3.4 million principal
and interest of Tranche B from 1 September 2021. The Company has
been negotiating with the EBRD since June 2021 to potentially
restructure the loan repayment and negotiations are ongoing. At
present, the EBRD has taken no action to accelerate repayment of
the loan.
Outlook for 202 3
The development of the business in the second half of 2023
remains highly uncertain due to the ongoing war in Ukraine.
However, Ukrproduct has a positive economic outlook for the next
six months running on the back of constant domestic demand, the
stable operation of the energy system, and improved inflation. Due
to developments of the domestic market the Group expects to
increase sales slightly. Higher costs for energy and logistics will
likely require further sales price increases in the quarters to
come.
Jack Rowell Alexander Slipchuk
Non-Executive Chairman Chief Executive Officer
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 202 3
(in thousand GBP, unless otherwise stated)
Note Six months Six months
ended ended
3 0 June 2023 30 June 2022
-------------- -------------
GBP '000 GBP '000
-------------- -------------
Revenue 9 18 273 18 278
Cost of sales (15 078) (15 009)
-------------- -------------
GROSS PROFIT 3 195 3 269
Administrative expenses (689) (554)
Selling and distribution expenses (1 305) (1 113)
Other operating expenses (35) (1 543 )
-------------- -------------
PROFIT FROM OPERATIONS 1 166 59
Net finance expenses (388) (231)
Net foreign exchange (loss) /
gain (124) 20
-------------- -------------
PROFIT / (LOSS) BEFORE TAXATION 654 (152)
Income tax expense (1) (45)
-------------- -------------
PROFIT/ (LOSS) FOR THE SIX MONTHS 653 (197)
============== =============
Attributable to:
Owners of the Parent 653 (197)
Non-controlling interests - -
Earnings per share from continuing
and total operations:
Basic (in pence) 10 1. 65 (0.50)
Diluted (in pence) 10 1. 65 (0.50)
OTHER COMPREHENSIVE INCOME:
Items that may be subsequently
reclassified to profit or loss
Currency translation differences (29 5 ) 506
OTHER COMPREHENSIVE INCOME, NET
OF TAX (295) 506
-------------- -------------
TOTAL COMPREHENSIVE INCOME FOR
THE SIX MONTHS 358 309
============== =============
Attributable to:
Owners of the Parent 358 309
Non-controlling interests - -
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 202 3
(in thousand GBP, unless otherwise stated)
Note As at As at As at
-----
30 June 31 December 30 June
202 3 20 22 20 22
----- --------- ------------ ---------
GBP '000 GBP '000 GBP '000
--------- ------------ ---------
ASSETS
Non-current assets
Property, plant and equipment 7 454 7 916 9 926
Intangible assets 583 681 842
8 037 8 597 10 768
Current assets
Inventories 6 3 463 4 296 4 556
Trade and other receivables 7 4 740 3 073 5 528
Current taxes 172 591 120
Other financial assets 34 35 43
Cash and cash equivalents 295 403 293
--------- ------------ ---------
8 704 8 398 1 0 540
--------- ------------ ---------
TOTAL ASSETS 16 741 16 995 21 308
========= ============ =========
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent
Share capital 4 282 4 282 4 282
Treasury shares (315) (315) (315)
Share premium 4 562 4 562 4 562
(15 83 (14 4 81
Translation reserve 2 ) (15 537) )
Revaluation reserve 5 901 6 005 6 182
Retained earnings 6 353 5 597 6 026
--------- ------------ ---------
4 951 4 594 6 256
------------
TOTAL EQUITY 4 951 4 594 6 256
Non-current Liabilities
Deferred tax liabilities 456 530 748
--------- ------------ ---------
456 530 748
Current liabilities
Bank loans 5 965 6 116 6 394
Short-term payables 447 493 448
Trade and other payables 4 724 5 162 7 032
Current income tax liabilities 39 48 154
Other taxes payable 159 52 276
--------- ------------ ---------
11 334 11 871 14 304
--------- ------------ ---------
TOTAL LIABILITIES 11 790 12 401 15 052
--------- ------------ ---------
TOTAL EQUITY AND LIABILITIES 16 741 16 995 21 308
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF C HANGES IN
EQUITY
FOR THE SIX MONTHSED 30 JUNE 202 3
(in thousand GBP, unless otherwise stated)
Attributable to owners of the parent
Share Share Share Revaluation Retained Translation Total Total
capital trasury premium reserve earnings reserve Equity
--------- --------- --------- ------------ ---------- ------------ -------- --------
GBP GBP GBP GBP '000 GBP GBP '000 GBP GBP
'000 '000 '000 '000 '000 '000
--------- --------- --------- ------------ ---------- ------------ -------- --------
As At 31
December 202 4 (315 (14 987
1 282 ) 4 562 6 348 6 057 ) 5 947 5 947
========= ========= ========= ============ ========== ============ ======== ========
Loss for the (197 (197 (197
six months - - - ) - ) )
Currency translation
differences - - - - 506 506 506
--------- --------- --------- ------------ ---------- ------------ -------- --------
Total comprehensive (197
income - - - ) 506 309 309
Depreciation
on revaluation
of property,
plant and
equipment - - (166 ) 166 - - -
--------- --------- --------- ------------ ---------- ------------ -------- --------
As At 30 4
June 202 2 282 (315) 4 562 6 182 6 026 (14 481) 6 256 6 256
========= ========= ========= ============ ========== ============ ======== ========
Profit for
the six months - - - - (607) - (607) (607)
Currency translation
differences - - - - - (1 056) (1 056) (1 056)
--------- --------- --------- ------------ ---------- ------------ -------- --------
Total comprehensive
loss - - - - (607) (1 056) (1 663) (1 663)
Depreciation
on revaluation
of property,
plant and
equipment - - - (177) 177 - - -
--------- --------- --------- ------------ ---------- ------------ -------- --------
As At 31
December 202 4
2 282 (315) 4 562 6 005 5 596 (15 537) 4 594 4 594
========= ========= ========= ============ ========== ============ ======== ========
Profit for
the six months - - - - 653 - 653 653
Currency translation
differences - - - - - (295) (295) (295)
--------- --------- --------- ------------ ---------- ------------ -------- --------
Total comprehensive
income - - - - 653 (295) 358 358
Depreciation
on revaluation
of property,
plant and
equipment - - - (104) 104 - - -
--------- --------- --------- ------------ ---------- ------------ -------- --------
As At 30 4 (15 8
June 202 3 282 (315) 4 562 5 901 6 353 32 ) 4 951 4 951
========= ========= ========= ============ ========== ============ ======== ========
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 20 2 3
(in thousand GBP, unless otherwise stated)
Six months Six months
ended ended
3 0 June 2023 30 June 2022
-------------- -------------
GBP '000 GBP '000
-------------- -------------
Cash flows from operating activities
Profit / (loss) before taxation 6 54 (152)
Adjustments for:
Exchange difference 124 (20)
Depreciation and amortization 370 387
Provision for bad debt 40 1 435
(Reversal of) / Impairment of inventories (48) 18
Interest expense on bank loans 392 232
-------------- -------------
Operating cash flow before working
capital changes 1 5 32 1 9 00
Increase in inventories 9 40 85
(Increase)/Decrease in trade and other
receivables (1 306) 5 96
Increase in trade and other payables (580) (2 653)
-------------- -------------
Changes in working capital ( 9 46) ( 1 97 2 )
-------------- -------------
Cash generated from operations 586 (7 2 )
Interest received 4 1
Income tax paid (16) 33
-------------- -------------
Net cash generated from operating activities 574 ( 38 )
Cash flows from investing activities
Purchases of property, plant and equipment
and intangible assets ( 254 ) (194)
Issuance of loans - (2)
-------------- -------------
Net cash used in investing activities ( 25 4) (196)
Cash flows from financing activities
Interest paid ( 152 ) (149)
Repayments of long term borrowing (4) -
-------------- -------------
Net cash used in from financing activities (1 56 ) (149)
Net increase/(decrease) in cash and
cash equivalents 164 (383)
Effect of exchange rate changes on cash
and cash equivalents (272) 364
-------------- -------------
Cash and cash equivalents at the beginning
of the six months 403 312
Cash and cash equivalents at the end
of the six months 295 293
============== =============
Ukrproduct Group
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 20 23
(in thousand GBP, unless otherwise stated)
EXTRACTS FROM NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU). The
condensed consolidated financial information in this half yearly
report has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting' (IAS 34), as
adopted by the EU, and the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority.
2. Going concern
Since the beginning of the full-scale military invasion of
Ukraine, neither the Group's critical facilities nor its
infrastructure has suffered any significant damage and the Group's
efforts have been focused on maintaining its operations to the full
extent. The Group's business processes are reorganized to adapt to
current challenges and ensure business continuity. In preparing
these financial statements, the Directors have assessed the Group's
ability to continue as a going concern. In making this assessment,
the Directors have considered the level of debt and the facilities
the Group have had available at 30 June 2023, and the Group's
forecast financial results for the 12 months subsequent to the date
of issue of these financial statements.
For the six months ended 30 June 2023, the Group continued to be
in breach of several provisions of the loan agreement with the
EBRD. The Company failed to repay Tranche A (aggregate EUR 2.1
million principal) before the maturity date of 1 December 2022 and
has missed interest payments since 1 March 2022 . In June 2023 the
EBRD notified the company about a recalculation and an increased
interest rate in respect of the aggregate EUR 3.4 million principal
and interest of Tranche B from September 2021 . The Company has
been negotiating with the EBRD since June 2021 to potentially
restructure the loan repayment and negotiations are ongoing. At
present, the EBRD has taken no action to accelerate repayment of
the loan.
Management acknowledges that future development of military
actions and their duration represent a single source of material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern and, therefore, the Group
may be unable to realize its assets and discharge its liabilities
in the normal course of business.
Taking into account the assessment of forecast for financial
results of the next 12 months and existing risks, the Group's
management believes that the Group is able to continue its
operations on a going concern basis .
Ukrproduct Group
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 202 3
(in thousand GBP, unless otherwise stated)
3. Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the
Group's companies are measured using the currency of the primary
economic environment in which the company operates ("the functional
currency"). For the companies operating in Cyprus and British
Virgin Islands, the functional currency is United States Dollars
("USD"). For the Parent company, which is located in Jersey, the
functional currency is Pound Sterling ("GBP"). For the companies
operating in Ukraine, the functional currency is Ukrainian Hryvnia
("UAH").
These condensed consolidated interim financial statements are
presented in the thousands of Pound Sterling ("GBP"), unless
otherwise indicated.
Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded by the
Group entities at their respective functional currency rates
prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency spot rate of
exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined.
The principal exchange rates used in the preparation of these
condensed consolidated interim financial statements are as
follows:
Currency 30 June Average 31 December 30 June Average
202 3 for the six 20 2 2 202 2 for the six
months ended months ended
(spot rate) 30 June (spot (spot rate) 30 June
202 3 rate) 2022
----------- -------------- -------------- ------------- -------------- --------------
UAH/GBP 46,28 45,08 44,00 35,55 37,72
UAH/USD 36,57 36,57 36,57 29,25 28,91
UAH/EUR 40,00 39,52 38,95 30,77 31,74
---------------- -------------- -------------- ------------- -------------- --------------
Ukrproduct Group
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 202 3
(in thousand GBP, unless otherwise stated)
4. Subsequent events
As of the date of this report, the war is ongoing in Ukraine.
The Group continues to operate. The management of the Group
controls all of its operations.
The duration and consequences of the war in Ukraine are
currently unclear. It is not possible to reliably estimate the
duration and severity of these consequences, as well as their
impact on the financial position and results of the Group in future
periods.
Russia terminated the "Black Sea Grain Initiative" on 18 July
2023. Therefore, the future possibilities for the Group to export
goods via Ukrainian Black Sea ports are uncertain.
There were no other events after the end of the reporting date,
which would have a material impact on the financial statements
5. Approval of interim statements
The unaudited condensed consolidated financial statements were
approved by the board of directors on 2 7 September 2023
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