TIDMUKR
RNS Number : 7984K
Ukrproduct Group Ltd
02 September 2019
September 2, 2019
UKRPRODUCT GROUP LIMITED
("Ukrproduct", the "Company" or, together with its subsidiaries,
the "Group")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHSED 30 JUNE
2019
Kyiv, Ukraine - September 2, 2019 - 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 financial
results for the six months ended 30 June 2019.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
For further information contact:
Ukrproduct Group Ltd
Jack Rowell, Non-Executive Chairman Tel: +380 44 232 9602
Alexander Slipchuk, Chief Executive Officer www.ukrproduct.com
Strand Hanson Limited
Nominated Adviser and Broker Tel: +44 20 7409 3494
Rory Murphy, James Dance, Jack Botros www.strandhanson.co.uk
Chairman and Chief Executive Statement
The Ukrainian economy grew modestly in the first half of 2019
year. Retail sales growth gained momentum in the second quarter of
2019, bolstered by rising wages, while favourable weather
conditions contributed to strong domestic demand towards the end of
the quarter. As a result, the Group`s operations improved
domestically. Signs of weakness continued to linger in the
industrial sector, where production contracted notably in June,
however, this had little impact on the trading of the Group.
Despite concerns regarding the global economy and the
uncertainty that the presidential and parliamentary elections in
Ukraine brought, the Board considers that the overall results of
the Group in first half of 2019 surpassed its expectations.
Trading
During the six months to 30 June 2019, revenue increased by 50%
compared to the previous period. The main drivers of revenue growth
were butter, beverages and processed cheese. The Company estimates
that Ukrproduct's butter market share in Ukraine has increased by
approximately 3% to 10.1% when comparing H1 2019 with H1 2018,
whilst market share in processed cheese and processed cheese
products has decreased by approximately 0.3% to 8.5% when comparing
H1 2019 with H1 2018. However, in the first half of 2019,
Ukrproduct became the top exporter of processed cheese in Ukraine.
Hard cheese sales decreased by 2%, whilst sales of bulk &
packaged spreads increased by 17%. Gross margins have increased
given both increased sales volumes and the seasonal fall in milk
prices in Ukraine. Sales of kvass beverage improved, driven by an
active marketing strategy and the launch of a new product
containing natural ingredients of juice and mint: Mojito.
Export sales increased due to rising export sales in
supplementary products, however, export sales of packaged butter
and spreads decreased overall. Skimmed milk products exports
continue to decline as a result of worldwide prices being lower
than domestic market prices.
The Group continues to expand export sales into non-dairy
products - beverages and other food commodities.
Financial Position
Overall, the aforementioned factors resulted in the sizeable
year-on-year increase in the Group's EBITDA and operating profit
for the first half of 2019. Operating cash-flow was substantially
improved during the period. In the first half of 2019, the Group`s
revenue increased significantly over the same period last year,
with average gross margin improving by 0.3%. The Group earned
profit after tax of GBP740 000 (approximately 25.8 million UAH) for
the period, which is an increase of GBP332 000 (approximately 11.6
million UAH) over the same period last year.
As at 30 June 2019, the Group had total liabilities of GBP 16.8
million (approximately 557.4 million UAH) and net assets of GBP 1.3
million (approximately 43.1 million UAH) with cash balances of GBP
0.2 million (approximately 6.6 million UAH). During the period, the
Company made an interest payment of EUR79 760 to EBRD.
Outlook
Ukrproduct continues to pursue growth opportunities in beverages
and export markets, whilst improving the cost and service
efficiency of the supply chain. Despite continuing political risks
in Ukraine, the Company is hopeful that its performance in the
first half of 2019 will continue throughout the remainder of the
year.
Jack Rowell Alexander Slipchuk
Non-Executive Chairman Chief Executive Officer
Statement of Management's Responsibilities
for preparation and approval of condensed consolidated interim
financial statements for the six months ended 30 June 2019
The directors are responsible for the preparation of the
condensed consolidated interim financial statements in accordance
with applicable Jersey law and other regulations and enactments in
force at the time. The Companies (Jersey) Law 1991 as amended
requires the directors to prepare financial statements for each
year in accordance with Generally Accepted Accounting
Principles.
The directors of the Group are responsible for preparing the
condensed consolidated interim financial statements which reflect
in all material aspects the financial position of the Group as at
30 June 2019, as well as the results of its activities, cash flows
and changes in equity for the six months then ended in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the European Union.
In preparing condensed consolidated interim financial statements
the Group's Management is responsible for:
- selecting appropriate accounting policies and their consistent application;
- making reasonable measurement and calculation;
- following principles of IFRS as adopted by the European Union
or disclosing all considerable deviations from IFRS in the notes to
condensed consolidated interim financial statements;
- preparing condensed consolidated interim financial statements
of the Group on the going concern basis, except for the cases when
such assumption is not appropriate.
The board of directors confirms that the Group has complied with
the abovementioned requirements in preparing its consolidated
interim financial statements.
The directors are also responsible for:
- implementing and maintaining an efficient and reliable system
of internal controls in the Group;
- keeping accounting records in compliance with the legislation
and accounting standards of the respective country of the Group's
registration;
- taking reasonable steps within its cognizance to safeguard the
assets of the Group;
- detecting and preventing from fraud and other
irregularities.
These condensed consolidated interim financial statements as at
30 June 2019 prepared in compliance with IFRS as approved by the
European Union are approved on behalf of the Group's Directors on
30 August 2019.
On behalf of the Directors:
30 August 2019
Management Statements
This statement is provided to confirm that, to the best of our
knowledge, the condensed consolidated interim financial statements
for the six months ended 30 June 2019, and the comparable
information, have been prepared in compliance with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board and as adopted by the European Union and
give a true, fair and clear view of Group's assets, financial
standing and net results.
On behalf of the Directors:
30 August 2019
Single Management Report
1. Operational and Financial Results
The following table sets forth the Group's results of operations
derived from the condensed consolidated interim financial
statements:
Six months Six months Changes
ended ended in
--------
30 June 2019 30 June 2018
------------- ------------- --------
GBP '000 GBP '000 %
------------- ------------- --------
Revenue 22 236 14 827 50%
Cost of sales (20 310) (13 583) 50%
------------- ------------- --------
GROSS PROFIT 1 926 1 244 55%
Administrative expenses (534) (534) 0%
Selling and distribution expenses (943) (842) 12%
Other operating expenses (53) (55) -4%
------------- ------------- --------
PROFIT / (LOSS) FROM OPERATIONS 396 (187) 312%
Net finance expenses (265) (231) 15%
Net foreign exchange gain 592 793 -25%
------------- ------------- --------
PROFIT BEFORE TAXATION 723 375 93
Income tax credit 17 33 -48%
------------- ------------- --------
PROFIT FOR THE SIX MONTHS 740 408 81%
============= ============= ========
Attributable to:
Owners of the Parent 740 408 81%
Non-controlling interests - -
Earnings per share:
Basic (pence) 1,86 1,03
Diluted (pence) 1,86 1,03
OTHER COMPREHENSIVE INCOME:
Items that may be subsequently
reclassified to profit or
loss
Currency translation differences (332) (170) 95%
Items that will not be reclassified
to profit or loss
Gain on revaluation of property, - -
plant and equipment
Income tax in respect of revaluation - -
reserve
------------- ------------- --------
OTHER COMPREHENSIVE INCOME,
NET OF TAX (332) (170) 95%
------------- ------------- --------
TOTAL COMPREHENSIVE INCOME
FOR THE SIX MONTHS 408 238 71%
============= ============= ========
Attributable to:
Owners of the Parent 408 238 71%
Non-controlling interests - -
Non-IFRS financial information
The Group's results are reported under International Financial
Reporting Standards (IFRS). However, the Group uses Non-IFRS
measures including Earnings before interest and taxes (EBIT) and
Earnings before interest, taxes, depreciation and amortisation
(EBITDA), which are used to measure segment performance. Non-IFRS
measures have not been subject to audit or review.
The Group uses EBIT and EBITDA as key measures of its
performance.
EBIT is an indicator of a company's profitability, calculated as
revenue less expenses, the latter excluding tax and interest. To
external users, EBIT provides information on the Group's ability to
generate earnings directly from its operations, disregarding its
cost of capital and the tax burden and thus making the Group's
results comparable to similar companies across the industry where
those companies may have varying capital structures or tax
environments. To the management, EBIT provides a performance
measure additionally adjusted for expenses that may be deemed fixed
(i.e. stemming from the given capital structure) or externally
imposed by the environment (i.e. the tax burden).
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
CONTINUING OPERATIONS
Net profit (loss) for the period 396 (187)
Interest expenses (265) (231)
Foreign currency exchange (loss)/gain,
net 592 793
----------------- -----------------
EBIT 723 375
================= =================
EBITDA is calculated as revenue less expenses, the latter
excluding tax, interest, depreciation and amortisation. Being a
proxy to the operating cash flow before working capital changes,
EBITDA is widely used as an indicator of a company's ability to
generate cash flows, as well as its ability to service debt.
Consequently, to the management EBITDA serves as a measure to
estimate financial stability of the Group. Besides, excluding the
effect of depreciation and amortisation along with cost of capital
and taxation provides to external users another measure comparable
to similar companies regardless of varying tax environments,
capital structures or depreciation accounting policies.
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
CONTINUING OPERATIONS
Net profit (loss) for the period 396 (187)
Depreciation and amortisation 278 258
----------------- -----------------
EBITDA 674 71
================= =================
Revenue
The Group's revenue from sales of finished products increased by
50% in the first half of 2019 in comparison with previous
period.
The most significant portion of the Group's revenue comes from
selling packaged butter and supplementary products, which
represented 57.2% in the first half of 2019 and 45.9% in first half
of 2018 of total revenue for the relevant periods.
Cost of sales
The Group's cost of sales increased to GBP 20.3 million in the
current period from GBP 13.6 million in previous period. The
following table sets forth the principal components of the Group's
cost of sales for the periods indicated:
Six months Six months Changes
ended ended in
--------
30 June 2019 30 June 2018
------------- ------------- --------
GBP '000 GBP '000 %
------------- ------------- --------
Raw materials 11 787 9 926 19%
Supplementary products 5 951 - 0%
Manufacturing overhead 1 016 858 18%
Fuel and energy supply 620 610 2%
Wages and salaries 552 462 19%
Transport 532 486 9%
Depreciation and amortization 135 103 31%
Other expenses 84 1 341 -94%
Adjustments (367) (203) 81%
------------- ------------- --------
20 310 13 583 50%
============= ============= ========
Gross profit/(loss)
The Group's gross profit increased to GBP 1.9 million in the
current period from GBP 1.2 million of gross profit in previous the
period.
Selling and distribution expenses
Selling and distribution expenses increased year-on-year to GBP
0.9 million in the current period from GBP 0.8 million in the
previous period, reflecting an increase in sales volume and
delivery costs in 2019.
Net foreign exchange gain
Foreign currency exchange, net decrease to a gain of GBP 0.6
million in the current period from a gain of GBP 0.8 million in the
previous period.
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
(in thousand GBP, unless otherwise stated)
Note Six months Six months
ended ended
30 June 2019 30 June 2018
------------- -------------
GBP '000 GBP '000
------------- -------------
Revenue 8 22 236 14 827
Cost of sales (20 310) (13 583)
------------- -------------
GROSS PROFIT 1 926 1 244
Administrative expenses (534) (534)
Selling and distribution expenses (943) (842)
Other operating expenses (53) (55)
------------- -------------
PROFIT / (LOSS) FROM OPERATIONS 396 (187)
Net finance expenses (265) (231)
Net foreign exchange gain 592 793
------------- -------------
PROFIT BEFORE TAXATION 723 375
Income tax credit 17 33
------------- -------------
PROFIT FOR THE SIX MONTHS 740 408
============= =============
Attributable to:
Owners of the Parent 740 408
Non-controlling interests - -
Earnings per share:
Basic (pence) 9 1,86 1,03
Diluted (pence) 9 1,86 1,03
OTHER COMPREHENSIVE INCOME:
Items that may be subsequently
reclassified to profit or loss
Currency translation differences (332) (170)
Items that will not be reclassified
to profit or loss
Gain on revaluation of property,
plant and equipment - -
Income tax in respect of revaluation
reserve - -
OTHER COMPREHENSIVE INCOME, NET
OF TAX (332) (170)
------------- -------------
TOTAL COMPREHENSIVE INCOME FOR
THE SIX MONTHS 408 238
============= =============
Attributable to:
Owners of the Parent 408 238
Non-controlling interests - -
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2019
(in thousand GBP, unless otherwise stated)
Note As at As at As at
-----
30 June 31 December 30 June
2019 2018 2018
----- --------- ------------ ---------
GBP '000 GBP '000 GBP '000
--------- ------------ ---------
ASSETS
Non-current assets
Property, plant and equipment 6 663 6 420 6 701
Intangible assets 504 524 523
Deferred tax assets - - 2
7 167 6 944 7 226
Current assets
Inventories 6 4 713 3 735 4 953
Trade and other receivables 5 555 3 156 3 602
Current taxes 484 349 279
Other financial assets 26 24 26
Cash and cash equivalents 227 181 116
--------- ------------ ---------
11 005 7 445 8 976
--------- ------------ ---------
TOTAL ASSETS 18 172 14 389 16 202
========= ============ =========
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent
Share capital 3 967 3 967 3 967
Share premium 4 562 4 562 4 562
Translation reserve (15 234) (14 902) (15 064)
Revaluation reserve 3 538 3 619 3 683
Retained earnings 4 539 3 718 3 972
--------- ------------ ---------
1 372 964 1 120
Non-controlling interests - - -
--------- ------------ ---------
TOTAL EQUITY 1 372 964 1 120
Non-current Liabilities
Bank loans 5 170 5 208 5 381
Long-term payables 463 467 456
Deferred tax liabilities 244 274 234
--------- ------------ ---------
5 877 5 949 6 071
Current liabilities
Bank loans 2 222 2 455 1 998
Trade and other payables 8 673 5 008 6 960
Current income tax liabilities - 13 16
Other taxes payable 28 - 37
--------- ------------ ---------
10 923 7 476 9 011
--------- ------------ ---------
TOTAL LIABILITIES 16 800 13 425 15 082
--------- ------------ ---------
TOTAL EQUITY AND LIABILITIES 18 172 14 389 16 202
========= ============ =========
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
(in thousand GBP, unless otherwise stated)
Attributable to owners of the parent Total Non-con-trolling Total
interests Equity
------ ----------------- --------
Share Share Revaluation Retained Translation
capital premium reserve earnings reserve
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
GBP GBP '000 GBP '000 GBP '000 GBP '000 GBP GBP '000 GBP
'000 '000 '000
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
As At 1 January
2018 3 967 4 562 3 769 3 478 (14 894) 882 - 882
Profit for
the six months - - - 408 - 408 - 408
Currency
translation
differences - - - - (170) (170) - (170)
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
Total
comprehensive
income - - - 408 (170) 238 - 238
Depreciation
on revaluation
of property,
plant and
equipment - - (86) 86 - - - -
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
As At 30 June
2018 3 967 4 562 3 683 3 972 (15 064) 1 120 - 1 120
========= ========= ============ ========== ============ ====== ================= ========
Loss for the
six months - - - (318) - (318) - (318)
Currency
translation
differences - - - - 162 162 - 162
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
Total
comprehensive
loss - - - (318) 162 (156) - (156)
Depreciation
on revaluation
of property,
plant and
equipment - - (64) 64 - - - -
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
As At 31 December
2018 3 967 4 562 3 619 3 718 (14 902) 964 - 964
========= ========= ============ ========== ============ ====== ================= ========
Profit for
the six months - - - 740 - 740 - 740
Currency
translation
differences - - - - (332) (332) - (332)
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
Total
comprehensive
income - - - 740 (332) 408 - 408
Depreciation
on revaluation
of property,
plant and
equipment - - (81) 81 - - - -
--------- --------- ------------ ---------- ------------ ------ ----------------- --------
As At 30 June
2019 3 967 4 562 3 538 4 539 (15 234) 1 372 - 1 372
========= ========= ============ ========== ============ ====== ================= ========
Ukrproduct Group
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2019
(in thousand GBP, unless otherwise stated)
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
Cash flows from operating activities
Profit before taxation 723 375
Adjustments for:
Exchange difference (592) (793)
Depreciation and amortisation 278 258
Loss on disposal of non-current assets 4
Write off of receivables/payables (1) 25
Impairment of inventories 78 102
Loss from disposal of subsidiaries - -
Interest income - (2)
Interest expense on bank loans 265 233
----------------- -----------------
Operating cash flow before working capital
changes 755 198
Increase in inventories (1 057) (2 629)
Increase in trade and other receivables (2 547) (1 471)
Increase in trade and other payables 3 873 3 629
----------------- -----------------
Changes in working capital 269 (471)
----------------- -----------------
Cash generated from / (used in) from
operations 1 024 (273)
Interest received - 2
Income tax paid (15) 5
----------------- -----------------
Net cash generated/ (used in) from operating
activities 1 009 (266)
Cash flows from investing activities
Purchases of property, plant and equipment
and intangible assets (124) (140)
Proceeds from sale of property, plant 5 -
and equipment
Repayments of loans issued - 5
----------------- -----------------
Net cash used in investing activities (119) (135)
Cash flows from financing activities
Interest paid (250) (182)
Decrease in short term borrowing (163) 510
Repayments of long term borrowing (162) (223)
----------------- -----------------
Net cash (used in)/ generated from financing
activities (575) 105
Net increase / (decrease) in cash and
cash equivalents 315 (296)
Effect of exchange rate changes on cash
and cash equivalents (269) (84)
----------------- -----------------
Cash and cash equivalents at the beginning
of the six months 181 496
Cash and cash equivalents at the end
of the six months 227 116
================= =================
Ukrproduct Group
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2019
(in thousand GBP, unless otherwise stated)
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
1. REPORTING ENTITY
Ukrproduct Group Limited ("the Company") is a public limited
liability company registered in Jersey with a registered office at
26 New Street, St Helier, Jersey, JE2 3RA, Channel Islands.
The Group's overall management and production facilities are
based in Ukraine, with the HQ in Kyiv. The Group commands leading
positions in the Ukrainian processed cheese and packaged butter
markets and owns a range of widely recognisable trademarks in
Ukraine, including "Nash Molochnik" (translated as Our Dairyman),
"Narodniy Product" (People's Product) "Molendam" and "Vershkova
Dolina" (Creamy Valley).
2. BASIS OF PREPARATION
(a) Statement of compliance
The unaudited condensed financial statements are prepared in
accordance with International Financial Reporting Standards (IFRSs)
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.
The interim financial statements are unaudited but have been
reviewed by the auditors.
The consolidated financial statements have been prepared on a
historical cost basis, except for significant items of property,
plant and equipment which have been measured using revaluation
model. The consolidated financial statements are presented in
British Pounds Sterling (GBP) and all values are rounded to the
nearest thousand (GBP000) except where otherwise indicated.
The accounting policies used and the methods of computation is
the same as those disclosed in the Group's recent annual
consolidated financial statements except for the adoption of new
and revised accounting standards as disclosed in Note 3.
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 Board has reviewed the Group's ongoing commitments for the
next twelve months and beyond.
The Board's review included the Group's strategic plans and
updated forecasts, capital position, liquidity and credit
facilities. Based on this review no material uncertainties that
would require disclosure have been identified in relation to the
ability of the Group to remain a going concern for at least the
next twelve months, from both the date of the Condensed
Consolidated Statement of Financial Position and the approval of
the Condensed Consolidated Financial Statements.
(a) Going concern
These condensed consolidated interim financial statements have
been prepared on a going concern basis, which envisages the
disposal of assets and the settlement of liabilities in the normal
course of business. The recoverability of Group's assets, as well
as the future operations of the Group, may be significantly
affected by the current and future economic environment. The Board
notified EBRD in advance of covenant breaches of the Loan during
the first half of 2019. EBRD noted that actual breach of covenants
is significantly improved when compared to the previous period and
EBRD has continued to not demand accelerated repayment. This
benefited the overall financial results for the Group, which
significantly increased and the Group generated positive cash flow
from operating activities totaling GBP 1.02 million. Accordingly,
Management believes that Group has reliable access to sources of
financing capable to support appropriate operating activity of
Group entities.
(b) Foreign currency translation
Functional and presentation currency
The Ukrainian Hryvnia is the currency of the primary economic
environment in which the majority of
the Group companies operate.
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 BVI the
functional currency is United States Dollars ("USD"). For the
Parent company which 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 for 31 December 30 June Average for
2019 the six months 2018 2018 the six months
ended ended
(spot rate) 30 June (spot rate) (spot rate) 30 June
2019 2018
---------- ------------- ---------------- ------------- ------------- ----------------
UAH/GBP 33,18 34,87 35,13 34,67 36,85
UAH/USD 26,17 26,94 27,69 26,19 26,76
UAH/EUR 29,73 30,45 31,71 30,57 32,42
(c) Reclassification
Where applicable, comparatives have been adjusted to present
them on the same basis as current period figures.
(d) Rounding of amounts
Amounts in this financial report have, unless otherwise
indicated, been rounded to the nearest thousand pounds.
3. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
IFRS 16 'Leases'
IFRS 16 replaced the existing standard IAS 17 'Leases' with
effect from 1 January 2019. Its objective is to ensure that lessees
and lessors provide relevant information in a manner that
faithfully represent lease transactions.
The Group elected to use the following practical expedients on
transition:
- Use of single discount rates to reflecting similar lease terms
and economic environments
- Recognition exemptions for lease contracts that at the
transition date have a remaining lease term of 12 months or
less
- Exclusion of initial direct costs from the measurement of the
right of use asset
- The use of hindsight in determining the lease term for
contracts containing options to extend or terminate the lease.
Recognition and measurement
The lease liability is recognised at the inception of a lease as
the present value of the fixed and certain variable lease payments,
plus any guaranteed residual values, any termination penalties if
the lease term assumes termination options will be exercised and
the purchase option value if it is reasonably certain that it will
be exercised.
Interest is accrued on the lease liability based on the discount
rate at commencement of the lease and is accounted for in finance
costs and subsequent payments are deducted from the lease
liability.
The right of use asset is initially measured as the value of the
lease liability, adjusted for any indirect costs incurred to obtain
the lease, restoration provisions and any lease payments made
before the commencement of the lease.
The right of use asset will be depreciated over the life of the
contract on a straight line basis.
Where the Group act as a lessor the lease will be classified as
a finance lease if it transfers substantially all the risk and
rewards incidental to ownership of the underlying asset, or
otherwise as an operating lease.
Nature and effect of adoption of IFRS 16
There are no significant impact on the Group's consolidated
financial statements.
IAS 19 'Employee Benefits'
An amendment to IAS 19: Plan Amendment, Curtailment or
Settlement issued by the IASB on 7 February 2018 was endorsed by
the European Union on 13 March 2019 and became effective from 1
January 2019. This requires a net defined benefit asset or
liability to be remeasured using the current assumptions and fair
value of plan assets at the time of the amendment. Current service
cost and net interest for the remainder of the period are
remeasured using the same assumptions and the same fair value of
plan assets.
No such event occurred during the 6 months period ended 30 June
2019.
IFRIC 23 'Uncertainty over tax income treatment'
IFRIC 23 'Uncertainty over tax income treatment' specifies how
to reflect the effect of uncertainty in accounting for income taxes
where it may be unclear how tax law applies to a particular
transaction or circumstance, or whether a taxation authority will
accept a tax treatment.
This interpretation has not had a material impact on the Group's
consolidated financial statements.
4. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
IFRS 17 'Insurance Contracts'
The International Accounting Standards Board (IASB) issued IFRS
17 'Insurance Contracts' in May 2017 to replace IFRS 4 'Insurance
Contracts' for annual reporting periods beginning, at the latest,
on or after 1 January 2021. It has subsequently published an
Exposure Draft (ED) proposing targeted amendments in response to
concerns and challenges raised by stakeholders, including a
proposal to defer the implementation of IFRS 17 by one year and to
extend the exemption from applying IFRS 9 'Financial Instruments'
for the same period.
It is expected that the deferral proposals will be approved and
incorporated into an amended IFRS 17 standard due to be issued
during 2020.
Draft legislation has been laid before Parliament to ensure that
IFRS as endorsed by the EU at the date of the UK leaving the EU
will be adopted for use in the UK as well as providing the
Secretary of State with the power to adopt and endorse IFRS for use
in the UK. It is expected that this power will be delegated to a UK
IFRS Endorsement Board. In the event that IFRS 17 has not been
endorsed by the EU by the time the UK leaves the EU, including any
transitional period or arrangements that may be agreed, then the UK
IFRS Endorsement Board will have responsibility for its
endorsement. This is being monitored closely.
Other pronouncements
There are a number of amendments to IFRS that have been issued
by the IASB that become mandatory during 2019 or in a subsequent
accounting period. The Group has evaluated these changes and none
have had, or are expected to have, a significant impact on the
consolidated financial statements.
5. ESTIMATES AND JUDGEMENTS
The preparation of the interim financial report requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
6. INVENTORY WRITE OFF TO NET REALISABLE VALUE
Inventories are measured at the lower of cost or net realisable
value.
The cost of inventories comprises all costs of purchase, costs
of conversion and other costs incurred in bringing the inventories
to their present location and condition.
The cost of work in progress and finished goods includes costs
of direct materials and labor and other direct productions costs
and related production overheads (based on normal operating
capacity).
The cost of inventories is assigned by using the FIFO
method.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
The Group periodically analyses inventories to determine whether
they are damaged, obsolete or slow-moving or if their net
realisable value has declined, and makes an allowance for such
inventories.
The loss from impairment of inventories amounted to:
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
Impairment of finished goods (78) (279)
7. RELATED PARTY TRANSACTIONS
A related party is a person or an entity that is related to the
reporting entity:
1. A person or a close member of that person's family is related
to a reporting entity if that person has control, joint control, or
significant influence over the entity or is a member of its key
management personnel.
2. An entity is related to a reporting entity if, among other
circumstances, it is a parent subsidiary, fellow subsidiary,
associate, or joint venture of the reporting entity, or it is
controlled, jointly controlled, or significantly influenced or
managed by a person who is a related party.
The Group enters into transactions with related parties in the
ordinary course of business.
Related parties comprise the Group's shareholders and companies
that are under control of the Group's shareholders.
All sales and purchases were with related parties under common
control of the ultimate beneficiaries of the Company.
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
Sales - -
Purchases - 42
Administrative expenses 7 7
Other operational incomes - -
Other operational expenses 3 -
----------------- -----------------
Balances due from/(to) related parties at each period end are
shown below.
Six months ended Six months ended
30 June 2019 30 June 2018
----------------- -----------------
GBP '000 GBP '000
----------------- -----------------
Trade debtors 15 -
Receivables and prepayments 25 26
Trade and other payables (11) (11)
Prepayments received (60) -
----------------- -----------------
8. SEGMENT INFORMATION
IFRS 8 requires segment information to be presented on the same
basis as that used by the Board for assessing performance and
allocating resources.
Segment information is presented in respect of the group's key
operating segments. The operating segments are based on the group's
management and internal reporting structure.
At 30 June 2019, the Group was organised into five main business
segments:
1) Branded products - processed cheese, hard cheese, packaged butter and spreads
2) Beverages - kvass, other beverages
3) Non-branded products - skimmed milk powder, other skimmed milk products
4) Distribution services and other -resale of third-party goods and processing services
5) Supplementary products - export trading activities with
non-dairy products. The Group has expanded export sales into
non-dairy products such as corn, protein meal and oil. These
operations make use of third party logistics services and are
financed by deferring payment for purchased products.
Branded Beverages Non-branded Distribution Supplementary Total
products products services products
and other
---------- ---------- ------------ ------------- -------------- -------
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
---------- ---------- ------------ ------------- -------------- -------
Sales 11 228 927 3 447 816 5 818 22 236
Gross profit 1 791 465 (690) 197 163 1 926
---------- ---------- ------------ ------------- -------------- -------
The segment results for the six months ended 30 June 2019 are as
follows:
The segment results for the six months ended 30 June 2018 are as
follows:
Branded Beverages Non-branded Distribution Supplementary Total
products products services products
and other
---------- ---------- ------------ ------------- -------------- -------
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
---------- ---------- ------------ ------------- -------------- -------
Sales 10 016 611 1 822 1 815 563 14 827
Gross profit 1 265 346 (829) 456 6 1 244
---------- ---------- ------------ ------------- -------------- -------
9. EARNINGS PER SHARE
The earnings per ordinary share are calculated by reference to
the profit attributable to the ordinary shareholders and the
weighted average number of shares in issue during the period.
Basic earnings per share are calculated by dividing the profit
attributable to the ordinary shareholders of the Parent Company by
the weighted average number of ordinary shares in issue during the
period, excluding ordinary shares purchased by various employee
share trusts and held as own shares.
Diluted earnings per share are calculated by dividing the profit
attributable to the ordinary shareholders of the Parent Company by
the diluted weighted average number of ordinary shares in issue
during the period, excluding ordinary shares purchased by various
employee share trusts and held as own shares.
Six months ended Six months ended
30 June 2019 30 June 2018
GBP '000 GBP '000
----------------- -----------------
Net profit attributable to ordinary
shareholders 740 408
Weighted number of ordinary shares in
issue 39 673 049 39 673 050
Basic earnings per share, pence 1,86 1,03
Diluted average number of shares 39 673 049 39 673 050
Diluted earnings per share, pence 1,86 1,03
10. SUBSEQUENT EVENTS
No subsequent events occurred after the reporting date.
11. APPROVAL OF INTERIM STATEMENTS
The unaudited condensed consolidated financial statements were
approved by the board of directors on 30 August 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR XFLFBKKFZBBB
(END) Dow Jones Newswires
September 02, 2019 02:00 ET (06:00 GMT)
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