RSM Global



RSM IFRS Listed Practical Interim Limited Company Number 01234567 Interim Report - 31 December 2018These model accounts are illustrative only, contain general information, are not intended to be comprehensive and may not address specific events or circumstances. We make no representation as to their accuracy, compatibility or fitness-for-purpose.The model accounts should be viewed as broad guidance only. Accordingly, neither RSM International Limited, nor any of its member firms accept any responsibility to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, from any action or decision taken (or not taken) in reliance on the material in these model accounts, whether such loss is caused by negligence or otherwise. The provision of these model accounts does not constitute professional advice. Please contact your local RSM adviser to discuss these matters in the context of your particular circumstances.RSM is the brand used by a network of independent accounting and consulting firms, each of which practices in its own right. The network is not itself a separate legal entity of any description in any jurisdiction.The network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 50 Cannon Street, London EC4N 6JJ.The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug.? RSM International Association, 2019TOC \f x Statement of profit or loss and other comprehensive income PAGEREF _Toc256000006 \h 2Statement of financial position PAGEREF _Toc256000007 \h 4Statement of changes in equity PAGEREF _Toc256000008 \h 6Statement of cash flows PAGEREF _Toc256000009 \h 7Notes to the financial statements PAGEREF _Toc256000010 \h 8Independent auditor's review report to the members of RSM IFRS Listed Practical Interim Limited PAGEREF _Toc256000011 \h 22General information The financial statements cover RSM IFRS Listed Practical Interim Limited as a consolidated entity consisting of RSM IFRS Listed Practical Interim Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Internationaland currency units, which is RSM IFRS Listed Practical Interim Limited's functional and presentation currency. RSM IFRS Listed Practical Interim Limited is a listed public company limited by shares, incorporated and domiciled in Internationaland. Its registered office and principal place of business are: Registered officePrincipal place of business10th Floor5th FloorUniversal Administration BuildingRSM Business Centre12 Highland Street247 Edward StreetCityvilleCityville The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 February 2019. TC "Statement of profit or loss and other comprehensive income"\f xRevenue3233,357 218,571 Share of profits of associates accounted for using the equity method41,616 1,437 Other income5692 192 Interest revenue calculated using the effective interest method543 272 Net gain on derecognition of financial assets at amortised cost50 - ExpensesChanges in inventories(660)(782)Raw materials and consumables used(68,486)(65,559)Employee benefits expense(112,431)(110,862)Depreciation and amortisation expense(10,570)(10,181)Impairment of receivables(256)(98)Other expenses(17,612)(16,088)Finance costs6(1,119)(1,726) Profit before income tax expense25,124 15,176 Income tax expense(7,159)(4,169) Profit after income tax expense for the half-year17,965 11,007 Other comprehensive incomeItems that will not be reclassified subsequently to profit or lossGain on the revaluation of equity instruments at fair value through other comprehensive income, net of tax35 - Items that may be reclassified subsequently to profit or lossCash flow hedges transferred to profit or loss, net of tax- (2)Cash flow hedges transferred to inventory in the statement of financial position, net of tax(1)(5)Net change in the fair value of cash flow hedges taken to equity, net of tax(3)(12)Foreign currency translation(157)(98) Other comprehensive income for the half-year, net of tax(126)(117) Total comprehensive income for the half-year17,839 10,890 Profit for the half-year is attributable to:Non-controlling interest71 114 Owners of RSM IFRS Listed Practical Interim Limited17,894 10,893 17,965 11,007 Total comprehensive income for the half-year is attributable to:Non-controlling interest71 114 Owners of RSM IFRS Listed Practical Interim Limited17,768 10,776 17,839 10,890 CentsCentsBasic earnings per share12.18 7.73 Diluted earnings per share12.18 7.73 TC "Statement of financial position"\f xAssetsCurrent assetsCash and cash equivalents26,136 22,258 Trade and other receivables713,420 13,782 Contract assets82,458 - Inventories39,525 40,185 Financial assets at fair value through profit or loss360 - Other93,935 3,152 85,834 79,377 Non-current assets classified as held for sale106,000 - Total current assets91,834 79,377 Non-current assetsReceivables145 135 Investments accounted for using the equity method34,192 32,576 Financial assets at fair value through other comprehensive income170 - Investment properties46,900 46,900 Property, plant and equipment121,253 129,690 Intangibles12,170 12,357 Deferred tax9,860 8,877 Other112,308 1,260 Total non-current assets226,998 231,795 Total assets318,832 311,172 LiabilitiesCurrent liabilitiesTrade and other payables20,004 19,468 Contract liabilities122,269 - Borrowings6,114 4,475 Derivative financial instruments122 116 Income tax6,701 4,497 Employee benefits8,352 8,270 Provisions3,494 3,362 Other132,130 3,352 49,186 43,540 Liabilities directly associated with assets classified as held for sale4,000 - Total current liabilities53,186 43,540 Non-current liabilitiesBorrowings20,823 21,630 Deferred tax4,617 3,318 Employee benefits11,149 10,975 Provisions1,475 1,325 Total non-current liabilities38,064 37,248 Total liabilities91,250 80,788 Net assets227,582 230,384 EquityIssued capital182,953 182,953 Reserves3,276 3,402 Retained profits23,990 26,737 Equity attributable to the owners of RSM IFRS Listed Practical Interim Limited210,219 213,092 Non-controlling interest17,363 17,292 Total equity227,582 230,384 Issued?RetainedNon-controllingTotal equitycapitalReservesprofitsinterestConsolidatedCU'000CU'000CU'000CU'000CU'000TC "Statement of changes in equity"\f xBalance at 1 July 2017182,678 3,625 15,310 17,107 218,720 Profit after income tax expense for the half-year--10,893 114 11,007 Other comprehensive income for the half-year, net of tax-(117)--(117)Total comprehensive income for the half-year-(117)10,893 114 10,890 Transactions with owners in their capacity as owners:Dividends paid (note 14)--(11,744)-(11,744)Balance at 31 December 2017182,678 3,508 14,459 17,221 217,866 Issued?RetainedNon-controllingTotal equitycapitalReservesprofitsinterestConsolidatedCU'000CU'000CU'000CU'000CU'000Balance at 1 July 2018182,953 3,402 26,737 17,292 230,384 Adjustment for change in accounting policy (note 1)--1,396 -1,396 Balance at 1 July 2018 - restated182,953 3,402 28,133 17,292 231,780 Profit after income tax expense for the half-year--17,894 71 17,965 Other comprehensive income for the half-year, net of tax-(126)--(126)Total comprehensive income for the half-year-(126)17,894 71 17,839 Transactions with owners in their capacity as owners:Dividends paid (note 14)--(22,037)-(22,037)Balance at 31 December 2018182,953 3,276 23,990 17,363 227,582 TC "Statement of cash flows"\f xCash flows from operating activitiesReceipts from customers254,020 237,416 Payments to suppliers and employees(222,236)(214,235)31,784 23,181 Interest received543 272 Other revenue2,123 1,691 Interest and other finance costs paid(1,119)(1,726)Income taxes paid(5,266)(4,231)Net cash from operating activities28,065 19,187 Cash flows from investing activitiesPayments for investments(510)- Payments for property, plant and equipment(8,072)(1,524)Proceeds from disposal of investments80 - Proceeds from disposal of property, plant and equipment1,511 250 Net cash used in investing activities(6,991)(1,274) Cash flows from financing activitiesProceeds from borrowings10,000 - Dividends paid14(22,037)(11,744)Repayment of borrowings(5,168)(12,294)Net cash used in financing activities(17,205)(24,038) Net increase/(decrease) in cash and cash equivalents3,869 (6,125)Cash and cash equivalents at the beginning of the financial half-year22,258 10,371 Effects of exchange rate changes on cash and cash equivalents9 5 Cash and cash equivalents at the end of the financial half-year26,136 4,251 TC "Notes to the financial statements"\f xTC "Note 1. Significant accounting policies"\f nNote 1. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting', as appropriate for for-profit oriented entities. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2018. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below. New or amended Accounting Standards and Interpretations adoptedThe consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: IFRS 9 Financial InstrumentsThe consolidated entity has adopted IFRS 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. IFRS 15 Revenue from Contracts with CustomersThe consolidated entity has adopted IFRS 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. Impact of adoptionIFRS 9 and IFRS 15 were adopted using the modified retrospective approach and as such comparatives have not been restated. The impact of adoption on opening retained profits as at 1 July 2018 was as follows: 1 July 2018CU'000Allowance for expected credit losses (IFRS 9)(824)Contract assets (IFRS 15)294 Customer acquisition and fulfilment costs (IFRS 15)2,848 Right of return assets and refund liabilities (IFRS 15)(324)Tax effect on the above adjustments(598)Impact on opening retained profits as at 1 July 20181,396 The impact of the new Accounting Standards compared with the previous Accounting Standards on the current reporting period is as follows: NewPreviousDifferenceCU'000CU'000CU'000Revenue233,357 233,786 (429)Interest revenue calculated using the effective interest method543 -543 Raw materials and consumables used(68,486)(68,539)53 Employee benefits expense(112,431)(113,585)1,154 Depreciation and amortisation expense(10,570)(9,550)(1,020)Impairment of receivables(256)(164)(92)Other expenses(17,612)(17,767)155 Profit before income tax expense25,124 24,760 364 Income tax expense(7,159)(7,050)(109)Profit after income tax expense17,965 17,710 255 Trade and other receivables13,420 14,336 (916)Contract assets2,458 -2,458 Other current assets3,935 3,180 755 Deferred tax assets9,860 9,289 571 Other non-current assets2,308 1,260 1,048 Contract liabilities2,269 -2,269 Other current liabilities2,130 3,412 (1,282)Deferred tax liabilities4,617 3,339 1,278 Net assets227,582 225,931 1,651 Revenue recognitionThe consolidated entity recognises revenue as follows: Revenue from contracts with customersRevenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability. Sale of goodsRevenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. Rendering of servicesRevenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate. InterestInterest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenueOther revenue is recognised when it is received or when the right to receive payment is established. Trade and other receivablesTrade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Contract assetsContract assets are recognised when the consolidated entity has transferred goods or services to the customer but where the consolidated entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. Customer acquisition costsCustomer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a contract with a customer and are expected to be recovered. Customer acquisition costs are amortised on a straight-line basis over the term of the contract. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are not otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a contract where the contract term is less than one year is immediately expensed to profit or loss. Customer fulfilment costsCustomer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate directly to the contract or specifically identifiable proposed contract; (ii) the costs generate or enhance resources of the consolidated entity that will be used to satisfy future performance obligations; and (iii) the costs are expected to be recovered. Customer fulfilment costs are amortised on a straight-line basis over the term of the contract. Right of return assetsRight of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the inventory was previously carried prior to sale, less expected recovery costs and any impairment. Investments and other financial assetsInvestments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or lossFinancial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive incomeFinancial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assetsThe consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. Contract liabilitiesContract liabilities represent the consolidated entity's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity has transferred the goods or services to the customer. Refund liabilitiesRefund liabilities are recognised where the consolidated entity receives consideration from a customer and expects to refund some, or all, of that consideration to the customer. A refund liability is measured at the amount of consideration received or receivable for which the consolidated entity does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected value methodology. TC "Note 2. Operating segments"\f nNote 2. Operating segments Identification of reportable operating segmentsThe consolidated entity is organised into three operating segments based on differences in products and services provided: computer manufacturing, computer retailing and computer distribution. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. Other segments represent the investment property holdings and rental income of the consolidated entity. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. Types of products and servicesThe principal products and services of each of these operating segments are as follows:Computer manufacturingthe manufacture and wholesaling of computers and components in InternationalandComputer retailingthe retailing of computers and components predominately in InternationalandComputer distributionthe freight and cartage of computers and components to customers in Internationaland Intersegment transactionsIntersegment transactions were made at market rates. The computer retailing operating segment purchases finished goods from the computer manufacturing operating segment and pays for freight costs to the computer distribution operating segment. Intersegment transactions are eliminated on consolidation. Intersegment receivables, payables and loansIntersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation. Operating segment information ComputerComputerComputerOthermanufacturingretailingdistributionsegmentsTotalConsolidated - 31 Dec 2018CU'000CU'000CU'000CU'000CU'000RevenueSales to external customers13,233 216,423 1,848 -231,504 Intersegment sales101,008 -4,453 -105,461 Total sales revenue114,241 216,423 6,301 -336,965 Other revenue---1,853 1,853 Total segment revenue114,241 216,423 6,301 1,853 338,818 Intersegment eliminations(105,461)Unallocated revenue:Interest revenue543 Total revenue233,900 EBITDA8,393 26,011 1,804 62 36,270 Depreciation and amortisation(10,570)Interest revenue543 Finance costs(1,119)Profit before income tax expense25,124 Income tax expense(7,159)Profit after income tax expense17,965 AssetsSegment assets155,823 119,731 21,405 -296,959 Intersegment eliminations(15,568)Unallocated assets:Cash and cash equivalents18,551 Ordinary shares530 Land and buildings8,500 Deferred tax asset9,860 Total assets318,832 LiabilitiesSegment liabilities41,390 38,249 6,861 -86,500 Intersegment eliminations(15,568)Unallocated liabilities:Provision for income tax6,701 Bank loans9,000 Deferred tax liability4,617 Total liabilities91,250 ComputerComputerComputerOthermanufacturingretailingdistributionsegmentsTotalConsolidated - 31 Dec 2017CU'000CU'000CU'000CU'000CU'000RevenueSales to external customers12,169 202,924 1,787 -216,880 Intersegment sales95,711 -1,404 -97,115 Total sales revenue107,880 202,924 3,191 -313,995 Other revenue---1,691 1,691 Total segment revenue107,880 202,924 3,191 1,691 315,686 Intersegment eliminations(97,115)Unallocated revenue:Interest revenue272 Total revenue218,843 EBITDA5,991 19,337 469 1,014 26,811 Depreciation and amortisation(10,181)Interest revenue272 Finance costs(1,726)Profit before income tax expense15,176 Income tax expense(4,169)Profit after income tax expense11,007 TC "Note 3. Revenue"\f nNote 3. Revenue Consolidated31 Dec 201831 Dec 2017CU'000CU'000Revenue from contracts with customersSale of goods229,656 215,093 Rendering of services1,848 1,787 231,504 216,880 Other revenueRent from investment properties1,812 1,655 Other revenue41 36 1,853 1,691 Revenue233,357 218,571 Disaggregation of revenueThe disaggregation of revenue from contracts with customers is as follows: ComputerComputerComputermanufacturingretailingdistributionTotalConsolidated - 31 Dec 2018CU'000CU'000CU'000CU'000Major product linesLaptops6,699 179,980 1,646 188,325 Desktops2,106 23,614 202 25,922 Components 4,428 12,829 -17,257 13,233 216,423 1,848 231,504 Geographical regionsInternationaland11,478 191,632 1,848 204,958 Neighbourland1,147 18,364 -19,511 Rest of the World608 6,427 -7,035 13,233 216,423 1,848 231,504 Timing of revenue recognitionGoods transferred at a point in time13,233 216,423 -229,656 Services transferred over time--1,848 1,848 13,233 216,423 1,848 231,504 IFRS 15 was adopted using the modified retrospective approach and as such comparatives have not been provided for disaggregation of revenue. TC "Note 4. Share of profits of associates accounted for using the equity method"\f nNote 4. Share of profits of associates accounted for using the equity method Consolidated31 Dec 201831 Dec 2017CU'000CU'000Share of profit - associates1,616 1,437 TC "Note 5. Other income"\f nNote 5. Other income Consolidated31 Dec 201831 Dec 2017CU'000CU'000Net gain on disposal of property, plant and equipment422 192 Insurance recoveries270 - Other income692 192 TC "Note 6. Expenses"\f nNote 6. Expenses Consolidated31 Dec 201831 Dec 2017CU'000CU'000Profit before income tax includes the following specific expenses:Cost of salesCost of sales142,226 138,991 Finance costsInterest and finance charges paid/payable1,119 1,726 Net foreign exchange lossNet foreign exchange loss9 4 Rental expense relating to operating leasesMinimum lease payments18,399 17,437 Write off of assetsInventories269 56 TC "Note 7. Current assets - trade and other receivables"\f nNote 7. Current assets - trade and other receivables Consolidated31 Dec 201830 Jun 2018CU'000CU'000Trade receivables14,344 13,785 Less: Allowance for expected credit losses (30 Jun 2018: Provision for impairment of receivables)(991)(50)13,353 13,735 Other receivables60 43 Interest receivable7 4 13,420 13,782 Allowance for expected credit lossesThe consolidated entity has recognised a loss of CU256,000 in profit or loss in respect of the expected credit losses for the half-year ended 31 December 2018. The ageing of the receivables and allowance for expected credit losses provided for above are as follows: Expected credit loss rateCarrying amountAllowance for expected credit losses31 Dec 201831 Dec 201831 Dec 2018Consolidated%CU'000CU'000Not overdue1% 7,719 77 0 to 3 months overdue5% 4,129 206 3 to 6 months overdue10% 1,607 161 Over 6 months overdue50% 1,094 547 14,549 991 TC "Note 8. Current assets - contract assets"\f nNote 8. Current assets - contract assets Consolidated31 Dec 201830 Jun 2018CU'000CU'000Contract assets2,458 - ReconciliationReconciliation of the written down values at the beginning and end of the current and previous financial half-year are set out below:Opening balance- - Additions7,672 - Cumulative catch-up adjustments1,531 - Transfer to trade receivables(6,745)- Closing balance2,458 - TC "Note 9. Current assets - other"\f nNote 9. Current assets - other Consolidated31 Dec 201830 Jun 2018CU'000CU'000Accrued revenue- 2,214 Prepayments1,110 873 Security deposits65 65 Customer acquisition costs1,417 - Customer fulfilment costs672 - Right of return assets671 - 3,935 3,152 TC "Note 10. Current assets - non-current assets classified as held for sale"\f nNote 10. Current assets - non-current assets classified as held for sale Consolidated31 Dec 201830 Jun 2018CU'000CU'000Land6,000 - The vacant land situated at 22 Smith Street, Cityville is currently for sale and is expected to be sold within five months from the reporting date through an auction process. The proposed development of a head office building on the site has been abandoned and the land is now surplus to requirements. The land is not allocated to an operating segment. TC "Note 11. Non-current assets - other"\f nNote 11. Non-current assets - other Consolidated31 Dec 201830 Jun 2018CU'000CU'000Security deposits1,260 1,260 Customer acquisition costs564 - Customer fulfilment costs484 - 2,308 1,260 TC "Note 12. Current liabilities - contract liabilities"\f nNote 12. Current liabilities - contract liabilities Consolidated31 Dec 201830 Jun 2018CU'000CU'000Contract liabilities2,269 - ReconciliationReconciliation of the written down values at the beginning and end of the current and previous financial half-year are set out below:Opening balance- - Payments received in advance2,435 - Cumulative catch-up adjustments174 - Transfer to revenue - performance obligations satisfied in previous periods(208)- Transfer to revenue - other balances(132)- Closing balance2,269 - Unsatisfied performance obligationsThe aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was CU3,891,000 as at 31 December 2018 (CUnil as at 30 June 2018) and is expected to be recognised as revenue in future periods as follows: Consolidated31 Dec 201830 Jun 2018CU'000CU'000Within 6 months1,482 - 6 to 12 months1,128 - 12 to 18 months874 - 18 to 24 months407 - 3,891 - TC "Note 13. Current liabilities - other"\f nNote 13. Current liabilities - other Consolidated31 Dec 201830 Jun 2018CU'000CU'000Accrued expenses1,143 2,261 Revenue received in advance- 1,091 Refund liabilities987 - 2,130 3,352 TC "Note 14. Equity - dividends"\f nNote 14. Equity - dividends Dividends paid during the financial half-year were as follows: Consolidated31 Dec 201831 Dec 2017CU'000CU'000Final dividend for the year ended 30 June 2018 (31 Dec 2017: 30 June 2017) of 15 cents (31 Dec 2017: 8 cents) per ordinary share22,037 11,744 On [date] the directors declared an interim dividend for the year ending 30 June 2019 of 5 cents per ordinary share to be paid on [date], a total estimated distribution of CU7,346,000 based on the number of ordinary shares on issue as at [date]. TC "Note 15. Fair value measurement"\f nNote 15. Fair value measurement Fair value hierarchyThe following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement dateLevel 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectlyLevel 3: Unobservable inputs for the asset or liability Level 1Level 2Level 3TotalConsolidated - 31 Dec 2018CU'000CU'000CU'000CU'000AssetsOrdinary shares at fair value through profit or loss360 --360 Ordinary shares at fair value through other comprehensive income--170 170 Investment properties--46,900 46,900 Land and buildings--58,500 58,500 Total assets360 -105,570 105,930 LiabilitiesForward foreign exchange contracts-122 -122 Total liabilities-122 -122 Level 1Level 2Level 3TotalConsolidated - 30 Jun 2018CU'000CU'000CU'000CU'000AssetsInvestment properties--46,900 46,900 Land and buildings--58,500 58,500 Total assets--105,400 105,400 LiabilitiesForward foreign exchange contracts-116 -116 Total liabilities-116 -116 Assets and liabilities held for sale are measured at fair value on a non-recurring basis. There were no transfers between levels during the financial half-year. The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. Valuation techniques for fair value measurements categorised within level 2 and level 3Unquoted investments have been valued using a discounted cash flow model. The basis of the valuation of investment properties is fair value. The investment properties are revalued annually based on independent assessments by a member of the [NAME] having recent experience in the location and category of investment property being valued. Valuations are based on current prices in an active market for similar properties of the same location and condition, subject to similar leases and takes into consideration occupancy rates and returns on investment. The basis of the valuation of land and buildings is fair value. The land and buildings were last revalued on 30 June 2017 based on independent assessments by a member of the Internationaland Property Institute having recent experience in the location and category of land and buildings being valued. The directors do not believe that there has been a material movement in fair value since the revaluation date. Valuations are based on current prices for similar properties in the same location and condition. Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates. Level 3 assets and liabilitiesMovements in level 3 assets and liabilities during the current financial half-year are set out below: Ordinary shares at fair value?InvestmentLand andthrough OCIpropertiesbuildingsTotalConsolidatedCU'000CU'000CU'000CU'000Balance at 1 July 2018-46,900 58,500 105,400 Gains recognised in other comprehensive income50 --50 Additions200 --200 Disposals(80)--(80)Balance at 31 December 2018170 46,900 58,500 105,570 The level 3 assets and liabilities unobservable inputs and sensitivity are as follows: ??Range?DescriptionUnobservable inputs(weighted average)SensitivityOrdinary shares at fair value through other comprehensive incomeGrowth rate2.5% to 3.5% (3.0%)0.25% change would increase/decrease fair value by CU5,000Discount rate8.0% to 11.0% (9.5%)1.00% change would increase/decrease fair value by CU14,000Investment propertiesRental yield7.5% to 9.0% (8.5%)0.75% change would increase/decrease fair value by CU352,000Rental growth1.25% to 2.0% (1.75%)0.25% change would increase/decrease fair value by CU117,000Long-term vacancy rate5.0% to 9.0% (7.5%)0.75% change would increase/decrease fair value by CU276,000Discount rate4.0% to 6.0% (5.25%)0.5% change would increase/decrease fair value by CU57,000Land and buildingsRental yield6.0% to 8.0% (7.5%)0.75% change would increase/decrease fair value by CU440,000Discount rate5.0% to 7.0% (6.25%)0.5% change would increase/decrease fair value by CU61,000 TC "Note 16. Contingent liabilities"\f nNote 16. Contingent liabilities During the financial half-year there was a work related accident involving a member of staff. Although the investigation is still in progress, the directors are of the opinion, based on independent legal advice, that the consolidated entity will not be found to be at fault and any potential compensation will be adequately covered by the consolidated entity's insurance policy. Accordingly, no provision has been provided within these financial statements. The consolidated entity has given bank guarantees as at 31 December 2018 of CU3,105,000 (30 Jun 2018: CU2,844,000) to various landlords. TC "Note 17. Events after the reporting period"\f nNote 17. Events after the reporting period Apart from the dividend declared as disclosed in note 14, no other matter or circumstance has arisen since 31 December 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. [This page has intentionally been left blank for the insertion of page one of the independent auditor's review report]TC "Independent auditor's review report to the members of Pinnacle IFRS Listed Practical Interim Limited"\f x [This page has intentionally been left blank for the insertion of page two of the independent auditor's review report] ................
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