12 August 2014

Food Empire - Recovering from Russia-Ukraine Crisis - August 2014

Income Statement


Balance Sheet




Cash Flow Statement



Performance Review

For 1H2014, the Group recorded a net loss of US$0.5 million as compared to a profit after tax of US$9.1 million in 1H2013 mainly due to the substantial depreciation of the currencies of its two largest markets, Russia and Ukraine.

The ongoing political uncertainty in two of the Group’s key markets, Russia and Ukraine, which began in late 2013 has escalated into an international crisis by March 2014. This resulted in a sharp devaluation of the Ukrainian Hryvnia against the US dollar due to the heightened economic uncertainty. The crisis has also hastened the weakening of the Russian Ruble against the US dollar during the period.

In 1H2014, the Russian Ruble weakened from 32.7 Ruble per US dollar on 31 December 2013 to 33.6 Ruble per US dollar on 30 June 2014. Over the same period, Ukrainian Hryvnia weakened from 8.24 Hryvnia to 11.85 Hryvnia per US dollar. As the Group is economically exposed to both markets, it is negatively affected by the revaluation of its outstanding trade receivables denominated in currencies other than the US dollar.

Apart from foreign exchange losses, the net loss was also due to the following: -

1) Staff costs increased due to higher salaries and higher headcount arising from newly acquired and newly set up companies.
2) One-off provision for staff compensation due to corporate restructuring.
3) Costs associated with investments in new markets.
4) Start-up costs associated with the Group’s upstream green-field projects.
For 2Q2014, the Group’s profit after tax was US$2.6 million compared to US$3.6 million in 2Q2013, a
decrease of 29.2%.


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