The ongoing Russia-Ukraine war is expected to have a negative effect on Food Empire’s financial performance and position in relation to its businesses in Russia and Ukraine for the FY2022 ending Dec 31.
The group made the announcement via an SGX filing on March 24 after its auditors at Ernst & Young made an unqualified audit opinion on its financial statements for the FY2021.
While the food and beverage (F&B) industry, in which the group operates in is not part of any of the restricted business activities or impacted by the international sanctions, the group believes that its businesses in both Russia and Ukraine will take a hit after the continued conflict.
“In Ukraine, physical damage to public infrastructures and properties, disruption to supply chains and massive human displacement have resulted in the temporary suspension of business activities. The country is under martial law and many cities are operating under wartime conditions, which could lead to potential future impairment on the group’s assets if the conflict persists,” reads the statement released by the group.
In Russia, international sanctions have resulted in disruption in logistics and supply chains, in which the group may have to look for alternative solutions to keep productions running smoothly.
In addition, Food Empire is economically exposed to the US dollar, in which a sharp devaluation of the Russian ruble will adversely impact its financial performance and position.
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“The group may also face heightened credit risks, higher working capital requirements and issues with currency remittance due to sanctions against its financial system,” continues the statement.
In the FY2021, Russia and Ukraine, which are two of the group’s major markets, accounted for around 45% of its total revenue.
Shares in Food Empire closed 0.5 cent higher or 1.05% up at 48 cents on March 24.
