30 September 2024
UKRPRODUCT GROUP LIMITED
("Ukrproduct", the "Company" or, together with its subsidiaries, the "Group")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 2024.
The unaudited interim financial results for the six months ended 30 June 2024 will shortly be made available on the Company's website at www.ukrproduct.com.
For further information, contact:
Ukrproduct Group Limited | |
Rinat Abdrasilov, Non-Executive Chairman | Tel: +44 1534 507000 |
Oleksandr Slipchuk, Chief Executive Officer | |
Strand Hanson Limited | |
Nominated Adviser and Broker Rory Murphy, Richard Johnson | Tel: +44 20 7409 3494 |
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 2024 ("1H 2024" or the "Period") and outlook for the remainder of 2024.
2024 Half-Year Highlights
Ukrproduct Group's consolidated revenue decreased by 8.9% to £16.6 million in the first half of 2024 compared to the half year ended 30 June 2023 ("1H 2023"). This decline in GBP was mainly due to a significant devaluation of the Ukrainian Hryvnia exchange rate during the Period. However, Ukrproduct's revenue in local currency was only marginally lower (0.3%) compared to 1H 2023. On a nominal basis, total volumes of sales were 6.4% lower in 1H 2024 than the prior period, due to increased competition in Ukraine, deteriorating financial conditions of some clients, and a focus on improving profitability.
In the processed cheese and processed cheese product category, sales amounted to £10.7 million, reflecting a revenue decrease of 2.2% in local currency compared with 1H 2023, with a 10.8% decrease in volume. This was mainly driven by the financial challenges among some clients and a shift of focus towards profitability.
In 1H 2024 butter sales amounted to £1.8 million, reflecting a revenue increase of 25.6% in local currency, compared with 1H 2023, with a growth in volume of 9.5%. The Group took a flexible approach by prioritizing key sales channels, such as retailers, major distributors and exports.
Sales of spreads decreased to £1.7 million in 1H 2024 compared with £2.2 million in the prior period. This constituted a decrease in sales of 14.1% in local currency and reduction of 13.1% in volume. The decrease was principally due to the increased competition in the market.
Sales generated from skimmed milk powder decreased by 14.2% in local currency to £0.5 million, compared with £0.5 million in the previous year. In terms of volume, skimmed milk powder sales decreased by 14.7%, which continues the decline seen in the previous period. Due to low prices for skimmed milk powder, the Group minimized its output of this product, opting instead to use semi-processed milk protein as an ingredient in the production of processed cheese.
Sales of kvass and other beverages amounted to £1.1 million in 1H 2024, representing a significant growth of 42.5% in local currency and a 13.1% increase in volume compared with the 1H 2023. This growth was due to a combination of price increases, launches of new products, expansion of sales distribution and favourable weather conditions for sales.
The Group's gross profit in 1H 2024 increased by 7.5% compared to 1H 2023, to £3.4 million, reflecting its focus on improving profitability.
In 1H 2024 the Group's administrative expenses increased by 15.7%, compared to 1H 2023. This was mainly due to attracting additional external consulting services, growth in bank charges and rising costs due to inflation. In 1H 2024 the Group's selling expenses decreased by 11.4% compared to 1H 2023. This was mainly due to a decrease in the expenses for transport services as a result of lower sales, lower marketing expenses as a result of transferring some marketing activities and replacing them with price discounts.
The Group's operations recorded an EBITDA of £1.8 million, representing a strong increase of 16.0% compared to 1H 2023. The Group's EBITDA margin improved from 8.4% to 10.7%.
Finance costs in 1H 2024 decreased by 13.1% to £0.3 million compared to 1H 2023 due to a significantly lower interest rate on the new commercial loan that the Group received in January 2024.
Net profit after tax increased by 37.4% to £0.9 million, compared to 1H 2023.
Financial position
As at 30 June 2024, Ukrproduct had net assets of £4.9 million, including £0.5 million in cash, compared to £5.0 million, including £0.3 million in cash, as at 30 June 2023.
For the six months ended 30 June 2024, the Group continued to be in breach of several provisions of the loan agreement with the European Bank for Reconstruction and Development ("EBRD"). The Groupfailed to repay Tranche A (in aggregate, EUR 2.1 million principal, equivalent to £1.8 million) by the maturity date of 1 December 2022, and has missed interest payments since 1 March 2022. In June 2023 the EBRD notified the Group about a recalculation and an increased interest rate in respect of the aggregate EUR 5.7 million (equivalent to £4.9 million) principal and interest of Tranche A and Tranche B, effective from 1 September 2021.
The Group has been negotiating with the EBRD since June 2021 to potentially restructure the loan repayment and active negotiations are ongoing but have been slowed down owing to the ongoing war in Ukraine. At present, the EBRD has taken no action to accelerate repayment of the loan. The Group resumed repayment of interest to EBRD starting from December 2023.
In January 2024, the Group fully repaid a previous working capital loan of UAH 63.8 million (GBP 1.3 million) and arranged a new facility of UAH 70.0 million (GBP 1.4 million), with the same Ukrainian bank, for general working capital purposes. The new facility has a significantly lower interest of 9% (against 20% on the repaid previous facility).
Outlook for 2024
The development of the business in the second half of 2024 remains highly uncertain due to the ongoing war in Ukraine. The Group continues to make every effort to navigate its strategy in a very challenging business environment, not least ensuring a stable power supply and responding to new challenges. In the next six months the Group expects to focus on maintaining existing production facilities, sustaining sales volumes and ongoing improvement of operational efficiency.
On 1 September 2024 Rinat Abdrasilov was appointed to the Board as independent Non-Executive Chairman.
Rinat Abdrasilov | Oleksandr Slipchuk |
Non-Executive Chairman | Chief Executive Officer |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
(in thousand GBP, unless otherwise stated)
| Note |
| Six months ended |
| Six months ended |
|
| 30 June 2024 | 30 June 2023 | ||
|
|
| £ '000 | £ '000 | |
|
|
|
|
|
|
Revenue | 9 | | 16 645 | | 18 273 |
Cost of sales | | | (13 211) | | (15 078) |
GROSS PROFIT |
|
| 3 434 | | 3 195 |
Administrative expenses | | | (797) |
| (689) |
Selling and distribution expenses | | | (1 156) | | (1 305) |
Other operating expenses | | | (10) | | (35) |
PROFIT FROM OPERATIONS |
|
| 1 471 | | 1 166 |
Net finance expenses | | | (337) |
| (388) |
Net foreign exchange loss | | | (159) | | (124) |
PROFIT BEFORE TAXATION |
|
| 975 | | 654 |
Income tax expense | | | (78) |
| (1) |
PROFIT FOR THE SIX MONTHS |
|
| 897 | | 653 |
Attributable to: |
|
|
|
|
|
Owners of the Parent | | | 897 | | 653 |
Non-controlling interests | | | - | | - |
| | | | | |
Earnings per share from continuing and total operations: | | | | | |
Basic (in pence) | 10 | | 2.26 | | 1.65 |
Diluted (in pence) | 10 | | 2.26 | | 1.65 |
| | | | | |
OTHER COMPREHENSIVE INCOME: | | | | | |
Items that may be subsequently reclassified to profit or loss | | | | | |
Currency translation differences | | | (489) | | (295) |
OTHER COMPREHENSIVE INCOME, NET OF TAX |
|
| (489) | | (295) |
TOTAL COMPREHENSIVE INCOME FOR THE SIX MONTHS |
|
| 408 | | 358 |
Attributable to: | | | | | |
Owners of the Parent | | | 408 | | 358 |
Non-controlling interests | | | - |
| - |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
(in thousand GBP, unless otherwise stated)
| Note |
| As at |
| As at |
| As at |
| 30 June 2024 | 31 December 2023 | 30 June 2023 | ||||
|
| £ '000 | £ '000 | £ '000 | |||
ASSETS | | | | | | | |
Non-current assets | | | | | | | |
Property, plant and equipment | | | 6 964 |
| 7 158 | | 7 454 |
Intangible assets | | | 415 |
| 501 | | 583 |
|
|
| 7 379 | | 7 659 |
| 8 037 |
Current assets |
|
|
| | | |
|
Inventories | 6 | | 3 734 |
| 2 783 | | 3 463 |
Trade and other receivables | 7 | | 5 124 |
| 5 400 | | 4 740 |
Current taxes | | | 680 |
| 471 | | 172 |
Other financial assets | | | 100 |
| 38 | | 34 |
Cash and cash equivalents | | | 474 |
| 436 | | 295 |
|
|
| 10 112 | | 9 128 |
| 8 704 |
TOTAL ASSETS |
|
| 17 491 | | 16 787 |
| 16 741 |
| | | | | | | |
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 |
Translation reserve | | | (16 475) |
| (15 986) | | (15 832) |
Revaluation reserve | | | 5 711 |
| 5 797 | | 5 901 |
Retained earnings | | | 7 177 | | 6 194 | | 6 353 |
|
|
| 4 942 | | 4 534 |
| 4 951 |
TOTAL EQUITY |
|
| 4 942 | | 4 534 |
| 4 951 |
Non-current Liabilities | | | | | | | |
Deferred tax liabilities | | | 354 |
| 392 | | 456 |
|
|
| 354 | | 392 |
| 456 |
Current liabilities | | | | | | | |
Bank loans | | | 5 840 |
| 5 777 | | 5 965 |
Short-term payables | | | 438 |
| 609 | | 447 |
Trade and other payables | | | 5 791 |
| 5 212 | | 4 724 |
Current income tax liabilities | | | 12 | | 64 | | 39 |
Other taxes payable | | | 114 | | 199 | | 159 |
|
|
| 12 195 | | 11 861 |
| 11 334 |
TOTAL LIABILITIES |
|
| 12 549 | | 12 253 |
| 11 790 |
TOTAL EQUITY AND LIABILITIES |
|
| 17 491 | | 16 787 |
| 16 741 |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
(in thousand GBP, unless otherwise stated)
| Attributable to owners of the parent |
|
|
| ||||||||
| Share capital | Treasury shares | Share premium | Revaluation reserve | Retained earnings | Translation reserve | Total | Non-con-trolling interests | Total Equity | |||
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | £ '000 | |||
|
|
|
|
|
|
|
|
|
| |||
As at 31 December 2022 | 4 282 | (315) | 4 562 | 6 005 | 5 596 | (15 537) | 4 593 | - | 4 593 | |||
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 June 2023 | 4 282 | (315) | 4 562 | 5 901 | 6 353 | (15 832) | 4 951 | - | 4 951 | |||
Loss for the six months | - | - | - | - | (263) | - | (263) | - | (263) | |||
Currency translation differences | - | - | - | - | - | (154) | (154) | - | (154) | |||
Total comprehensive loss | - | - | - | - | (263) | (154) | (417) | - | (417) | |||
Depreciation on revaluation of property, plant and equipment | - | - | - | (104) | 104 | - | - | - | - | |||
As at 31 December 2023 | 4 282 | (315) | 4 562 | 5 797 | 6 194 | (15 986) | 4 534 | - | 4 534 | |||
Profit for the six months | - | - | - | - | 897 | - | 897 | - | 897 | |||
Currency translation differences | - | - | - | - | - | (489) | (489) | - | (489) | |||
Total comprehensive income | - | - | - | - | 897 | (489) | 408 | - | 408 | |||
Depreciation on revaluation of property, plant and equipment | - | - | - | (86) | 86 | - | - | - | - | |||
As at 30 June 2024 | 4 282 | (315) | 4 562 | 5 711 | 7 177 | (16 475) | 4 942 | - | 4 942 | |||
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
(in thousand GBP, unless otherwise stated)
| Six months ended |
| Six months ended |
30 June 2024 | 30 June 2023 | ||
£ '000 | £ '000 | ||
Cash flows from operating activities | | | |
Profit before taxation | 975 | | 654 |
Adjustments for: | | | |
Exchange difference | 159 | | 124 |
Depreciation and amortization | 310 | | 370 |
Loss on disposal of non-current assets | (2) | | - |
(Reversal of) / Provision for bad debt | (7) | | 40 |
Impairment / (Reversal of impairment) of inventories | 269 | | (48) |
Interest income | (1) | | - |
Interest expense on bank loans | 339 | | 392 |
Operating cash flow before working capital changes | 2 042 |
| 1 532 |
(Increase) / Decrease in inventories | (1 220) | | 940 |
Decrease / (Increase) in trade and other receivables | 82 | | (1 306) |
Increase / (Decrease) in trade and other payables | 266 | | (580) |
Changes in working capital | (872) |
| (946) |
Cash generated from operations | 1 170 |
| 586 |
Interest received | 1 | | 4 |
Income tax paid | (149) | | (16) |
Net cash generated from operating activities | 1 022 |
| 574 |
| | | |
Cash flows from investing activities | | | |
Purchases of property, plant and equipment and intangible assets | (465) | | (254) |
Proceeds from sale of property, plant and equipment | 35 | | - |
Repayments of loans issued | (66) | | - |
Net cash used in investing activities | (496) |
| (254) |
| | | |
Cash flows from financing activities | | | |
Interest paid | (139) | | (152) |
Increase in short term borrowing | 1 418 | | - |
Repayments of short term borrowing | (1 309) | | - |
Repayments of long term borrowing | - | | (4) |
Net cash used in financing activities | (30) |
| (156) |
| | | |
Net increase in cash and cash equivalents | 496 |
| 164 |
Effect of exchange rate changes on cash and cash equivalents | (458) | | (272) |
Cash and cash equivalents at the beginning of the six months | 436 |
| 403 |
Cash and cash equivalents at the end of the six months | 474 |
| 295 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
(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 operational management and production facilities are based in Ukraine, with the headquarters 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 consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB), as adopted by the United Kingdom (collectively "IFRS"). 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 United Kingdom 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 condensed 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 accounting policies used and the methods of computation are 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 interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2023.
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.
(b) Going concern
In preparing this financial statement the Group has conducted an analysis of its ability to continue as going concern, taking into account the circumstances arising from the ongoing war in Ukraine and its impact on the financial position and results of the Group.
At the time of publication of this report, the war is ongoing and the significant general uncertainties inherent to the continued war, which began on 24 February 2022, remain. The Group's management has analyzed the observable impact of the war on its business as described below, and has taken the following actions in response to the current situation:
· For the period after the Russian invasion of Ukraine, more than 60 employees joined Ukrainian military forces and territorial defense. Personnel of production facilities and central office remained in their working area or worked remotely. While personnel-related challenges have been manageable so far, the anticipated escalation of conscription efforts in Ukraine heightens operational risks for the Group.
· No critical assets preventing the Group from continuing operations are damaged or located in the uncontrolled territories. The Group optimized utilization of production facilities to meet domestic demand and export orders.
· All of the Group's inventories are in good condition and are in safe storage.
· Export sales flow via Ukrainian ports was reduced significantly. Alternative export routes are greater in length and significantly more expensive in comparison with sea ones. Black Sea ports in Ukraine remain blocked for export activities.
· Due to the constant Russian shelling targeting vital Ukrainian energy infrastructure, the Group has mitigated the possible disruptions to its operations, by equipping its key assets with diesel generators.
The Group repaid a short-term loan of UAH 63.8 million (GBP 1.3 million) and signed a new facility with a Ukrainian bank for working capital needs in the amount UAH 70.0 million (GBP 1.4 million) in January 2024.
For the year ended 31 December 2023, the Group continued to be in breach of several provisions of the loan agreement with the EBRD. The Group failed to repay Tranche A (aggregate EUR 2.1 million principal, equivalent to £1.8 million) before the maturity date of 1 December 2022 and has missed interest payments since 1 March 2022. In June 2023, the EBRD notified the Group about a recalculation and an increased interest rate in respect of the aggregate EUR 5.7 million (equivalent to £4.9 million) principal and interest of Tranche A and Tranche B from 1 September 2021.
The Group 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. The Group reverted to the payment of interest for the long-term credit from the EBRD starting from December 2023.
Management acknowledges that future development of military actions and their duration represent a 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. Despite the material uncertainty relating to the war in Ukraine, management is continuing to take actions to minimize the impact to the Group and thus believes that the application of the going concern assumption for the preparation of these consolidated financial statements is appropriate.
(c) 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 2024 (spot rate) | | Average rate for the six months ended | | 31 December 2023 (spot rate) | | 30 June 2023 (spot rate) | | Average rate for the six months ended |
| | | | | ||||||
UAH/GBP | | 51,24 | | 49,35 | | 48,49 | | 46,28 | | 45,08 |
UAH/USD | | 40,54 | | 39,01 | | 37,98 | | 36,57 | | 36,57 |
UAH/EUR | | 43,35 | | 42,19 | | 42,21 | | 40,00 | | 39,52 |
(d) Reclassification
Where applicable, comparatives have been adjusted to present them on the same basis as current period figures.
3. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
Application of new standards
In general, the accounting policy is consistent with those applied in the prior reporting year. Some new standards and interpretations have become mandatory for adoption beginning on or after January 01, 2023. New and revised standards and interpretations, adopted by the Group for the first time as at January 01, 2023 are provided below.
Amendments to IAS 8 "Accounting policies, changes in accounting estimates and errors" - "Definition of Accounting Estimates"
These amendments introduce a definition of "accounting estimates". These amendments clarify the distinction between changes in accounting estimates and changes in the accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
Amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice Statement 2 - "Disclosure of Accounting Policies"
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 "Making Materiality Judgements", which provide guidance and examples, which assist entities in applying materiality judgements to accounting policy disclosures. The amendments aim to assist entities in providing accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their "significant" accounting policies with a requirement to disclose their "material" accounting policies and adding guidance on how entities should apply the concept of materiality in making decisions about accounting policy disclosures.
Amendments to IAS 12 "Income Taxes" - "Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction"
These amendments clarify that the exemption from initial recognition specified in the Art. 15 and 24 of the standard is not applied to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition (e.g., leases, decommissioning obligations).
4. 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.
5. 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 amount of impairment or reversal of impairment recognised in profit/loss amounted to:
| | Six months ended | | Six months ended |
| | 30 June 2024 | | 30 June 2023 |
| | £ '000 | | £ '000 |
(Impairment) / Reversal of impairment of finished goods | | (269) | | 48 |
6. PROVISION FOR BAD DEBT
The Group had to make an additional bad debt provision for receivables from customers who have been affected by the hostilities.
The amount of provision for bad debts recognised in profit/loss amounted to:
| | Six months ended | | Six months ended |
| | 30 June 2024 | | 30 June 2023 |
| | £ '000 | | £ '000 |
Reversal of provision / (Provision) for doubtful debts | | 7 | | (40) |
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.
The Group had no commercial relationships with the related parties in 1H 2024 except cash remuneration.
Details of the Directors' remuneration outlined below.
| Salary/fee | Bonus | Non-cash compensation | Total cash remuneration | ||||
| 1h2024 | 1h2023 | 1h2024 | 1h2023 | 1h2024 | 1h2023 | 1h2024 | 1h2023 |
| £ 000 | £ 000 | £ 000 | £ 000 | £ 000 | £ 000 | £ 000 | £ 000 |
Executive | | | | | | | | |
Oleksandr Slipchuk | 45.0 | 45.0 | - | - | - | - | 45.0 | 45.0 |
Sergey Evlanchik | 35.0 | 35.0 | - | - | - | - | 35.0 | 35.0 |
Yuriy Hordiychuk | 25.5 | 25.2 | - | - | - | - | 25.5 | 25.2 |
| 105.5 | 105.2 | - | - | - | - | 105.5 | 105.2 |
Non-Executive | | | | | | | | |
Jack Rowell | 21.1 | 22.5 | - | - | - | - | 21.1 | 22.5 |
General manager | | | | | | | | |
Yuriy Hordiychuk* | 4.5 | 4.8 | - | - | - | - | 4.8 | 4.8 |
*This relates to fees paid to Yuriy Hordiychuk for general management services under a separate contract to his service contract.
There were no guarantees given to or provided by the Group to related parties and vice versa.
The ultimate controlling owners and beneficiaries of the related parties were Mr. Oleksandr Slipchuk and Mr. Sergey Evlanchik.
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 2024, the Group was organized internally into four 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
| Branded products | Beverages | Non-branded products | Distribution services and other | Total |
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 |
| | | | | |
Sales | 13 855 | 1 061 | 554 | 1 175 | 16 645 |
Gross profit | 3 104 | 553 | (547) | 324 | 3 434 |
The segment results for the six months ended 30 June 2024 are as follows:
The segment results for the six months ended 30 June 2023 are as follows:
| Branded products | Beverages | Non-branded products | Distribution services and other | Total |
| £ '000 | £ '000 | £ '000 | £ '000 | £ '000 |
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|
|
|
| |
Sales | 15 768 | 815 | 789 | 901 | 18 273 |
Gross profit | 2 735 | 399 | (162) | 223 | 3 195 |
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 2024 | | 30 June 2023 | |
£ '000 | | £ '000 | |
Net profit attributable to ordinary shareholders | 897 |
| 653 |
Weighted average number of ordinary shares in issue | 39 673 049 | | 39 673 049 |
Basic earnings per share, pence | 2.26 | | 1.65 |
Diluted weighted average number of shares | 39 673 049 | | 39 673 049 |
Diluted earnings per share, pence | 2.26 | | 1.65 |
10. 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.
On 1 September 2024 Rinat Abdrasilov was appointed to the Board as independent Non-Executive Chairman.
There were no other material events after the end of the reporting date, which have a bearing on the understanding of the condensed consolidated interim financial statements.
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