REG - Essentially Grp PLC - Interim Results for the 6 Months ended 30/6/2024
18/09/2024 17:00
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RNS Number : 7506E Essentially Group PLC 18 September 2024
18(th) September 2024
Essentially Group PLC
("Essentially" or the "Company")
Unaudited Interim Report For The Six Months Ended 30 June 2024
Essentially Group PLC (AQSE: ESSN), announces its interim results for the half
year ending 30 June 2024.
The following commentary relates to the Company and its operating
subsidiaries, namely Essentially Juices Manufacturing L.L.C ("EJM") and Best
of Latin Foodstuff Trading L.L.C ("BLF"), collectively the "Group".
Period Highlights
Cold Pressed Beverages
During the first six months of 2024, EJM witnessed strong growth in recurring
revenues, increasing by 12.7% compared to the corresponding period in 2023.
This growth was facilitated by the successful renegotiation of supplier terms
and the enhancement of procurement practices, which resulted in a 4% increase
in gross profit margins, rising to 55% despite a backdrop of inflationary
pressures in the fresh fruit and vegetable sector. Additionally, EJM's EBITDA
experienced a remarkable 218% surge from the previous year.
Our expanding relationship with key distribution partners yielded favourable
results, as the number of stores offering EJM's products expanded from 477 to
701, representing a 47% increase. In the first half of 2024, EJM produced
81,630 litres of cold pressed juices, bolstered by the launch of 8 new
beverages, which extended our range to 25 flavours.
The new product launches included a noteworthy strategic collaboration with
Sacred Glow Co., a leading supplement company also based in the UAE. This
partnership has led to the successful launch of a groundbreaking range of
co-branded collagen drinks, now available at premium retailers such as
Waitrose and Spinneys in the UAE, which we are proud to be entering for the
first time. The introduction of these innovative collagen drinks has already
garnered exceptional feedback.
Further in line with our innovative approach, EJM also introduced 3 seasonal
beverages for the holy month of Ramadan, which were well-received. EJM plans
to relaunch them in Ramadan in 2025 following further refinement of the
recipes.
Notably, EJM's commitment to quality had been recognised with the award of an
"A Grade" from the Dubai Municipalities Food Safety Department.
HPP Tolling Services
EJM's high pressure processing (HPP) tolling services experienced exceptional
growth, with revenues up 142% and the client base doubling year-on-year.
The products processed using HPP now include a diverse range including cold
pressed juice, soups, cold brew coffee and ready-to-eat oats. The future
pipeline looks promising, with an additional 5 clients exploring the use of
HPP for products such as Mexican salsas, QSR condiments, clean-label ice
creams and baby foods.
This expansion of interest for HPP covering a broader range of products
reflects the growing demand for health-focused, "better for you" products,
with further growth expected as existing clients scale their operations across
the UAE and begin exporting to regional markets such as the Kingdom of Saudi
Arabia.
Best of Latin Acquisition
Following the acquisition of BLF in May 2024, the integration of their
operations into EJM's Dubai headquarters has been completed, marking the
initial steps towards realising cost synergies through economies of scale. For
instance, a consolidated sales teams from both BLF and EJM have begun
cross-selling their respective products, which has proven critical in driving
further market penetration.
Although the initial savings have been modest, we expect further benefits to
materialise over the coming months as we consolidate certain activities
between the two operating subsidiaries (such as the corporate finance
function, distribution and deliveries, etc.).
The respective EJM and BLF teams have already commenced testing of new
ready-to-eat, clean label products, leveraging BLF's ability to source
products directly from farms and EJM's expertise in the clean label food and
beverage retail and hospitality sectors.
BLF itself has demonstrated strong growth in 2024, with sales volumes reaching
166,500kg between January and August, a 19% increase from the same period in
2023.
BLF's client base grew significantly with the addition of 18 new clients,
including Aldar Properties and restaurants from the Rikas Group, as well as
key upscale venues in the hospitality industry, further establishing BLF as a
key regional supplier of avocados and other Latin American products. This
expansion brings BLF's total number of clients to 160, reflecting a broad
market presence.
This growth is complemented by BLF's efforts in sustainability, achieving a
61% reduction in fresh produce waste, a testament to its commitment to
efficient supply chain management and environmental stewardship.
Post Period Highlights
In the post-period, EJM launched 4 new single-origin cold pressed juices in
1-litre formats, targeted at the modern trade sector, particularly appealing
to the weekly family shopper demographic.
Additionally, EJM appointed a full-time Marketing Manager with qualifications
and experience in nutrition. With several marketing functions internalised,
both EJM and BLF will benefit from specialised and industry-tested marketing
initiatives which should propel newly developed products.
Another major milestone was achieved with a private label agreement secured
with Fresh To Home, one of India's largest food distribution companies which
has previously been financed by Amazon and the US Government. This agreement
has facilitated Fresh To Home's expansion into the UAE market.
Chairman's Interim Report
I am very pleased to present to the shareholders (the "Shareholders") of
Essentially Group PLC the unaudited interim report of the Company and its
subsidiaries for the six months ended 30 June 2024 (the "Reporting Period").
The first half of 2024 has been marked by a productive operating environment
within the UAE. The regional food and beverage (F&B) market continues to
present significant opportunities, driven by rising consumer demand for
premium, health-focused products, alongside an evolving emphasis on
sustainability and self-sufficiency within the sector.
The UAE, already the second-largest F&B market in the GCC, remains a focal
point for international trade and innovation. Despite some consumer
consumption slowdowns observed in recent years, key segments, including
health-focused beverages and functional foods, are experiencing notable
growth. This shift is supported by strong domestic demand and robust
government-backed initiatives aimed at enhancing food security and
sustainability.
At the macro level, the UAE's economy continues to show resilience. Within the
3.4% GDP growth observed in Q1 2024, non-oil sector growth remains stable,
driven by tourism and hospitality, which have experienced a remarkable
resurgence. Tourist arrivals surged by 9% during the Reporting Period, which
has been a key factor in reinforcing the demand for high-quality F&B
offerings, particularly within premium hospitality venues. With hotel
occupancy rates exceeding 75% across all types of accommodations, the industry
has shown sustained recovery since the COVID-19 pandemic and subsequent
periods, which bodes well for consumer demand in F&B.
Within this context, the Company is well-positioned to leverage these trends,
particularly as health-conscious consumers increasingly prioritise
clean-label, additive-free products. The global shift toward functional
beverages and products that contribute to health and wellbeing has been
especially pronounced in the UAE, where a generally affluent and diverse
population, along with a substantial expatriate community, seeks premium
products that align with their lifestyles.
EJM's cold-pressed juices and functional beverages are uniquely suited to
capitalise on these trends. The Group's commitment to quality, transparency
and innovation continues to resonate with both local consumers and
international visitors.
In parallel, sustainability has become a cornerstone of the UAE's F&B
industry. This focus aligns well with the Group's operational strategy,
particularly with the integration of BLF, which brings expertise in sourcing
fresh produce directly from Latin America. BLF's supply chain capabilities are
not only improving operational efficiencies but also supporting our commitment
and initiatives to sustainability, reducing waste and enhancing the quality of
products that we offer to our clients.
Looking ahead, the UAE's food market is projected to grow at a compound annual
growth rate (CAGR) of almost 5% over the next five years, potentially reaching
USD 40.07 billion by the end of 2024. This growth, along with continued
government investments in agri-tech and sustainable food production, provides
a constructive landscape for the Company's growth.
With a subsidiary and product portfolio that emphasises health, nutrition and
sustainability, Essentially is well-positioned to capture significant market
share across both retail and hospitality channels.
Within this first half of 2024, the Company achieved significant revenue
growth, driven by both strong consumer demand for our premium cold-pressed
beverages and the expansion of our HPP services. Generally, our sustained
emphasis on ensuring profitability while maintaining high standards of product
quality and customer satisfaction has proven effective, resulting in an
enhancement of the Company's market awareness and customer satisfaction.
Overall, our ability to optimise supply chains, enhance product offerings and
leverage key partnerships resulted in a 218% increase in EJM's EBITDA compared
to the same period in 2023.
As we move into the second half of the year, we remain focused on continuing
with this trajectory, which we aim to achieve with the continued integration
of BLF, the development of further product lines and the completion of
agreements with additional growth in distribution channels. These strategic
focuses generate the positive outlook we predict for Q2 2024. With the
acquisition of BLF and the successful launch of collaborative products with
key local and international partners, we remain confident in our ability to
deliver sustained value to our Shareholders and achieve another record year of
profitability and market expansion.
ESSENTIALLY GROUP PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIOD TO 30 JUNE 2024
6-Month Period Ending 6-Month Period Ending 16-Month Period Ending
30 June 2024 30 June 2023 31 December 2023 Audited
Unaudited Unaudited
£ £ £
Revenue 919,663 593,164 1,592,664
Cost of Goods Sold (466,756) (285,683) (810,494)
Gross Profit 452,908 307,481 782,170
IPO Cost - - (339,465)
Operating Costs (488,531) (529,850) (940,115)
Profit/(Loss) Before Depreciation, Interest and Taxation (35,623) (222,369) (497,410)
Depreciation (131,973) (124,264) (330,677)
Profit/(Loss) Before Interest and Taxation (167,596) (346,633) (828,087)
Interest Expense (68,641) (53,542) (131,641)
Tax Expense - -
-
Net Profit/(Loss) (236,237) (400,175) (959,728)
Earnings Per Share - Basic - Pence (0.43) (0.78) (2.00)
Earnings Per Share - Diluted - Pence (0.43) (0.78) (2.00)
ESSENTIALLY GROUP PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
6-Month Period Ending 6-Month Period Ending 16-Month Period Ending
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited Audited
£ £ £
Assets
Current Assets
Cash & Cash Equivalent 103,041 89,027 300,915
Trade Receivable & Other Receivables 720,195 793,967 377,185
Inventory 151,872 22,651 32,216
Total Current Assets 975,109 905,645 710,316
Non-Current Asset
Property, Plant & Equipment 724,970 835,598 770,636
Intangible Asset 50,254 28 9,519
Goodwill 2,322,301 - -
Right of Use Asset 125,512 95,035 47,417
Total Non-Current Assets 3,223,037 930,661 827,572
Total Assets 4,198,146 1,836,306 1,537,888
Liabilities & Equity
Current Liabilities
Trade & Other Payables 1,068,170 449,212 614,276
Total Current Liabilities 1,068,170 449,212 614,276
Non-Current Liabilities
Bank Loan 516,088 59,465 168,119
Other Borrowings 700,000 700,000 700,000
Provision for Gratuity 52,034 19,547 19,010
Lease Liability 123,948 104,872 -
Total Non-Current Liabilities 1,392,340 883,884 887,129
Equity
Share Capital 55,005 51,300 51,300
Share Premium 637,700 648,700 637,700
Merger Relief Reserve 1,941,295 - -
Share Based Payment Reserve 17,664 - 17,644
Accumulated Reserve (1,056,993) (2,313,663) (2,651,590)
Capital Contribution 142,965 2,116,873 1,981,409
Total Equity 1,737,636 503,210 36,483
Total Equity and Liabilities 4,198,146 1,836,306 1,537,888
ESSENTIALLY GROUP PLC
GROUP CASHFLOW STATEMENT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2023
6-Month Period Ending 6-Month Period Ending 16-Month Period Ending
30 June 2024 30 June 2023 31 December 2023
Unaudited Unaudited Audited
£ £ £
Cash Flow From Operating Activities
Loss For The Period (236,237) (400,175) (959,728)
Adjustments for :
Provision for Employees' End of Service 5,977 5,444 13,784
Depreciation for Property, Plant and Equipment 76,745 75,493 191,143
Depreciation for Right of Use Asset 55,228 48,771 127,674
Finance Cost 33,734 87,873 117,878
Non-Cash IPO and Legal Fees - 50,000 232,663
Share Based Payment Reserve - - 17,644
Operating Loss Before Working Capital Changes (64,553) (132,594) (258,942)
(Increase) / Decrease in Trade and Other Receivables (26,904) (450,810) (11,236)
(Increase) / Decrease in Inventory 12,053 (542) (8,921)
Increase / (Decrease) in Trade Payables and Other Payables (90,366) 50,997 137,075
Cash Generated From / (Used In) Operating Activities (169,770) (532,949) (142,072)
Finance Cost Paid (30,797) (18,819) (45,848)
Net Cash Generated From / (Used In) Operating Activities (200,567) (551,768) (187,920)
Cash Flow From Investing Activities
Property, Plant & Equipment (53,197) (10,016) (132,939)
Net Cash Generated From / (Used In) Investing Activities (53,197) (10,016) (132,939)
Cash Flows From Financing Activities
Net Movement in Interest Bearing Loan & Borrowings 83,799 (17,458) 184,162
Share Capital - 801 784
Share Premium - 599,199 374,071
Capital Contribution - 47,250 (99,194)
Lease payments (66,504) (57,187) (142,663)
Net Cash Generated From Financing Activities 17,295 572,605 317,160
Net Increase/(Decrease) in Cash & Cash Equivalent (236,468) 10,821 (3,651)
Effects of Exchange Rates on Cash 4,090 377 (37,969)
Cash and Cash Equivalent at Beginning of Period 335,419 77,829 342,535
Cash and Cash Equivalent at the End of Period 103,041 89,027 300,915
ESSENTIALLY GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
SIX-MONTH PERIOD TO 30 JUNE 2024
1. General Information
Essentially Group PLC is a listed public limited company (Aquis: ESSN)
incorporated in the UK and registered in England and Wales (Company Number
14299324). The Company's registered office is at Eastcastle House, 27 - 28
Eastcastle Street, London W1W 8DH.
2. Basis of Preparation
The interim consolidated financial statements of Essentially Group PLC are
unaudited condensed financial statements for the six months ended 30th June
2024 (the "Interim Statements"). The Interim Statements do not constitute
statutory financial statements within the meaning of section 434 of the
Companies Act 2006.
A copy of the audited financial statements for the period ended 31st
December 2023 for Essentially Juices Manufacturing LLC and Best of Latin
Foodstuff Trading LLC, the principal operating companies of the Group is
available in which the auditor's opinion on those financial statements was
unqualified and did not draw attention to any matters by way of an emphasis of
matter paragraph. These Interim Statements have been prepared based on the
accounting policies and the accrual basis of accounting and expected to apply
for the financial year to 31st December 2024 based on the recognition and
measurement principles adopted International Financial Reporting Standards
(IFRS), in accordance with the provisions of the Companies Act 2006,
applicable to companies reporting under IFRS.
The Interim Statements have been prepared under the historical cost
convention. The Group's presentation and functional currency is £ Sterling.
The Interim Statements do not include all of the information required for full
annual financial statements and do not comply with all the disclosures in IAS
34 'Interim Financial Reporting. Accordingly, whilst the Interim Statements
have been prepared in accordance with IFRS, they cannot be construed as being
in full compliance with IFRS. The preparation of financial statements in
conformity with United Kingdom adopted IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies. The
accounting policies adopted are consistent with those followed in the
preparation of the Group's annual financial statements for the period ended
31st December 2023.
3. Basis of Consolidation
The Interim Statements incorporate the assets and liabilities of Essentially
Group PLC as at 30th June 2024 and the result of all subsidiaries for the
period then ended, save that the results of BLF are only included for the
period commencing from the date of acquisition,10 May 2024. Essentially Group
PLC and its subsidiaries together are referred to in these financial
statements as the "Group". For the Reporting Period, BLF's contribution to the
revenue was £267,052 and to the net profit was £2,605.
Subsidiaries are all those entities over which the Company has control.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Company. Intercompany transactions, as well as balances and
unrealised gains stemming from transactions among entities within the Group
are removed. Where required, the accounting policies of subsidiaries have been
adjusted to align with the policies adopted by the Group to maintain
consistency.
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