RNS Number:3643U
ASBISc Enterprises PLC
04 April 2007
Embargoed for 7.00am, Wednesday 4 April 2007
ASBISc Enterprises Plc
Full-year results for the twelve months to 31 December 2006
Record revenue and profits in maiden (first) full-year results as a listed
company
ASBISc Enterprises Plc ("ASBIS" or the "Group"), a leading distributor of
computer components in high growth emerging markets in Central and Eastern
Europe and the Former Soviet Union, announces its maiden full-year results,
following its listing on AIM in October 2006.
ASBIS has completed a successful year of trading with revenues for the year to
31 December 2006 at a record level and in excess of US$1 billion. As a result,
profits for the year were slightly ahead of market expectations.
Financial highlights
* Revenue up 7.5% at US$1.01bn (2005: US$930.39m)
* Profit from operations up 30.1% at US$16.08m (2005: US$12.30m)
* Profit before taxation up 36.9% at US$12.76m (2005: US$9.32mm)
* Basic earnings per share from continuing operations up 13.9% at 19.7
cents (2005: 17.3 cents)
* Total cash and equivalents at 31 December 2006 of US$13.25m (US$
US$12.18m as at 31 December 2005)
* Proposed final dividend of 2.0 cents per share (2005: 2.0 cents per
share)
Siarhei Kostevitch, Chief Executive of ASBIS, commented:
"We are very happy to report these record results for the first time as a listed
Company and we look forward to progressing our strategy of further developing
our core distribution business alongside our own brand and white label products.
"Looking ahead, we are focused on enhancing the mix of products sold with a view
to building margins against a tightly managed cost base. While we anticipate
that the markets in which we operate will remain competitive and subject to
price pressure, we expect to be able to continue the growth in market share we
achieved in the last financial year. We also expect to maintain our market
leading position based on the strength of our existing infrastructure, our
delivery capabilities and our ability to rapidly introduce new products and
services - including innovative online services- to our growing customer base.
"The markets in which we operate are strong and growing and remain significantly
underdeveloped, which presents the Group with compelling opportunities for
expansion. With a focus on working to enhance profitability, we view the year
ahead with confidence."
For further information, please contact:
ASBISc Enterprises Plc 00 357 25 857 000
Siarhei Kostevitch, Chief Executive
Marios Christou, Chief Financial Officer
Costas Tziamalis, Investor Relations
Seymour Pierce Limited 020 7107 8000
David Newton/ Parimal Kumar
Financial Dynamics 020 7831 3113
Harriet Keen / Richard Mountain
Notes to Editors
ASBIS is based in Cyprus and specialises in the distribution of IT components,
Blocks and Peripherals and a growing range of own brand IT and digital
equipment. Established in 1995, its operations extend to Central and Eastern
Europe, the Baltic States, the former Soviet Union, the Middle East and North
Africa.
In addition to distributing products from IT industry manufacturers, the Group
has also developed, and is selling, products via two private label brands,
Prestigio, which supplies laptops, LCD TVs and monitors, digital media centres,
storage devices and subsystems and Canyon which primarily targets retail chains
with IT and consumer electronic peripherals and accessories such as networking
products, MP3 players, speakers and other products. The Group also offers White
Label products to enable its biggest local customers to create their own brand
with generic and exclusive designs.
The Company listed on AIM in October 2006 and its ticker is ASB.L.
Chairman's statement
We are pleased to report another year of growth in sales and profits with a good
performance from all our lines of business. In particular, it was pleasing to
see very good progress in the Group's own brand ranges (Canyon and Prestigio)
where margins are measurably higher than the traditional business. In addition,
operational gearing has been strong as sales have built on the Group's
established and efficient infrastructure across its wide spread of geographic
markets.
I have been impressed with both the quality and commitment of the Group's
management team which has proved itself responsive and efficient in exploiting
new opportunities in the market place as they have arisen over the last year.
I am pleased to welcome Paul Swigart as a Non-Executive Director who joined the
Group on its admission to AIM in October 2006. Paul is the founder and
controlling partner of Steep Rock Capital, an investment company established in
May 2006. Previously, Paul was a partner at United Financial Group, a brokerage
and London Stock Exchange market maker for a leading Russian investment bank.
The Company has good governance structures in place and the Group's Audit,
Nominations and Remuneration committees are established and functioning well.
The continued hard work and commitment of all of our employees has helped to
drive the strong performance achieved in the last year and I would like to thank
them for their contribution and commitment to the success of the business.
We remain focused on driving the positive performance of the business, supported
by the continuing growth of the markets in which we operate, and to capitalising
on the opportunities we see for product expansion to deliver enhanced value to
shareholders.
Operational and Financial Review
For the twelve months to 31 December 2006, the Group reported revenue up 7.5% on
the prior year period at US$1.01bn (2005: US$930.39m); profit from operations up
30.1% at US$16.08m (2005: US$12.30m); profit before taxation up 36.9% at
US$12.76m (2005: US$9.32m); and basic earnings per share from continuing
operations up 13.9% at 19.7 cents (2005: 17.3 cents). The Group maintained its
strong cash position with total cash and equivalents at 31 December 2006 of
US$13.25m, slightly ahead of the prior year end total of US$12.18m as at 31
December 2005.
The Board is proposing a final dividend of 2.0 cents per share, maintained at
the same level as the prior year.
The growth in revenue achieved was underpinned by the Group's continued strong
relationships with its supplier base including industry leading manufacturers
such as Intel, AMD, Hitachi, Seagate, Samsung, and the addition of new suppliers
across its key geographic markets.
In addition, as previously announced, the Group has seen encouraging growth in
the percentage of Group sales achieved from its two higher margin, own brand
products lines, Prestigio (flat panel displays and LCD technologies) and Canyon
(consumer electronic peripherals and accessories).
One of the key continuing trends in our market is pressure on pricing,
especially in consumer equipment, where the Group's margins are maintained
principally through the introduction of new products and upgrades. The
consequent impact on margins was partially offset by the significant increase in
the number of units sold in the last year, with an increase in unit sales of
some 40% to more than 16 million SKUs. In addition, importantly, the proportion
of sales from our higher margin, own brand products also increased by
approximately 20% on the prior year level.
Strategy and Outlook
We remain committed to our strategy of further developing our core distribution
business alongside our own brand and white label products.
Looking ahead, we are focused on enhancing the mix of products sold with a view
to building margins against a tightly managed cost base. While we anticipate
that the markets in which we operate will remain competitive and subject to
price pressure, we expect to be able to continue the growth in market share we
achieved in the last financial year. We also expect to maintain our market
leading position based on the strength of our existing infrastructure, our
delivery capabilities and our ability to rapidly introduce new products and
services - including innovative online services- to our growing customer base.
The markets in which we operate are strong and growing and remain significantly
underdeveloped which presents the Group with compelling opportunities for
expansion. With a focus on working to enhance profitability, we view the year
ahead with confidence.
ASBISC ENTERPRISES PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
Note US$ US$
Revenue 2 1.008.794.597 930.389.282
Cost of sales (961.101.730) (892.020.384)
Gross profit 47.692.867 38.368.898
Selling expenses (17.290.825) (13.225.005)
Administrative expenses (14.318.319) (12.839.668)
Profit from operations 16.083.723 12.304.225
Financial income 3 142.271 226.636
Financial expenses 3 (3.850.106) (3.558.489)
Other income 4 383.238 340.542
Goodwill written off, net - (13.620)
Profit on disposal of subsidiary - 18.349
Profit before taxation 6 12.759.126 9.317.643
Taxation 7 (1.688.816) (939.380)
Profit after taxation 11.070.310 8.378.263
Listing expenses written off 5 (1.597.310) -
Minority interest 20 - (55.959)
Profit attributable to members 9.473.000 8.322.304
Cents Cents
Earnings per share
Basic and diluted from continuing operations 26 19,7 17,3
ASBISC ENTERPRISES PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
ASSETS Note US$ US$
Current assets
Inventories 2 46.177.803 58.701.878
Trade receivables 8 148.790.371 110.971.092
Other current assets 9 4.726.356 4.020.441
Current taxation 7 - 76.446
Cash and cash equivalents 21 27.927.606 25.106.038
Total current assets 227.622.136 198.875.895
Non-current assets
Property, plant and equipment 10 7.161.929 6.663.640
Investments 14 99.580 90.000
Intangible assets 11 1.268.250 1.443.225
Total non-current assets 8.529.759 8.196.865
Total assets 236.151.895 207.072.760
LIABILITIES AND EQUITY
Liabilities
Current liabilities
Trade payables 117.453.360 114.276.334
Other current liabilities 15 22.960.319 20.532.449
Current taxation 7 278.181 -
Short-term obligations under finance lease 18 144.527 87.446
Bank overdrafts and short term loans 16 34.377.172 20.315.429
Total current liabilities 175.213.559 155.211.658
Non-current liabilities
Long term liabilities 17 666.058 746.556
Long-term obligations under finance lease 18 74.715 146.614
Deferred tax liability 7 44.997 8.295
Total non-current liabilities 785.770 901.465
Total liabilities 175.999.329 156.113.123
Equity
Share capital 19 9.600.000 9.600.000
Share premium 8.138.039 8.138.039
Reserves 42.414.527 33.221.598
Total equity 60.152.566 50.959.637
Total liabilities and equity 236.151.895 207.072.760
ASBISC ENTERPRISES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
Share Foreign
Share premium Retained exchange
capital account earnings reserve Total
US$ US$ US$ US$ US$
Balance at 1 January 2005 9.600.000 8.138.039 24.209.243 1.285.301 43.232.583
Profit for the year after
minority interest - - 8.322.304 - 8.322.304
Exchange difference arising
on consolidation - - - (595.250) (595.250)
Balance at 31 December 2005
and 1 January 2006 9.600.000 8.138.039 32.531.547 690.051 50.959.637
Profit for the year after
minority interest - - 9.473.000 - 9.473.000
Excess of net assets
transferred to the group
compared to the purchase
consideration paid for the
acquisition of subsidiary
companies (note 13) - - 37.681 - 37.681
Payment of dividend - - (960.000) - (960.000)
Exchange difference arising
on consolidation - - - 642.248 642.248
Balance 31 December 2006 9.600.000 8.138.039 41.082.228 1.332.299 60.152.566
The reserves shown above at 31 December 2006 were readily distributable up to
the amount of US$29.939.460 which represents the retained earnings of the
company. The remaining amount of US$11.142.768 represents the earnings retained
of the subsidiary companies of the group. The share premium account is available
for distribution only in the form of issue of bonus shares.
ASBISC ENTERPRISES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
Note US$ US$
Profit for the year before tax and minority interest 12.759.126 9.317.643
Adjustments for:
Exchange difference arising on consolidation 117.254 (194.627)
Listing expenses written off 5 (1.597.310) -
Depreciation 10 1.133.232 1.097.413
Amortisation of intangible assets 11 710.085 602.464
Interest received 3 (115.831) (131.672)
Interest paid 3 1.620.161 1.209.602
Impairment of goodwill - 13.620
Profit from disposal of subsidiary company - (18.349)
Profit from the sale of property, plant and equipment and
intangible assets
4 (11.546) (28.969)
Operating profit before working capital changes 14.615.171 11.867.125
Decrease/(increase) in inventories 13.284.743 (13.367.497)
Increase in trade receivables (37.604.098) (27.000.766)
(Increase)/decrease in other current assets (558.828) 185.182
Increase in trade payables 1.949.308 29.089.280
Increase in other current liabilities 2.427.870 1.501.052
Cash (outflows)/inflows from operations (5.885.834) 2.274.376
Taxation paid, net 7 (1.272.515) (1.170.817)
Interest paid 3 (1.620.161) (1.209.602)
Net cash outflows from operating activities (8.778.510) (106.043)
Cash flows from investing activities
Interest received 3 115.831 131.672
Purchase of property, plant and equipment 10 (1.104.675) (1.461.008)
Purchase of intangible assets 11 (526.349) (457.677)
Net cash outflow from sale of subsidiary company - (43.900)
Payments to acquire investments in subsidiaries 13 (21.047) -
Increase in investments (9.580) -
Net cash acquired from acquisition of subsidiaries 13 430.963 -
Proceeds from sale of property, plant and equipment and
intangible assets
54.435 129.280
Net cash outflows from investing activities (1.060.422) (1.701.633)
Cash flows from financing activities
Repayments of long term loans and long term obligations
under finance lease
(152.397) (226.668)
Proceeds/(repayment) of short term loans and short-term
obligations under finance lease
12.023.147 (1.300.669)
Dividends paid 27 (960.000) -
Net cash inflows/(outflows) from financing activities 10.910.750 (1.527.337)
Net increase/(decrease) in cash and cash equivalents 1.071.818 (3.335.013)
Cash and cash equivalents at beginning of the year 21 12.178.623 15.513.636
Cash and cash equivalents at end of year 21 13.250.441 12.178.623
ASBISC ENTERPRISES PLC
PARENT COMPANY INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
Notes US$ US$
Revenue 2 677.957.298 641.440.870
Cost of sales (660.727.505) (627.412.100)
Gross profit 17.229.793 14.028.770
Selling expenses (4.732.931) (3.889.714)
Administrative expenses (4.500.234) (3.560.852)
Profit from operations 7.996.628 6.578.204
Financial income 3 107.420 160.092
Financial expenses, net 3 (1.037.216) (784.257)
Other income 4 666.130 229.179
Diminution in value of investment 12 - (421.175)
Profit before taxation 6 7.732.962 5.762.043
Listing expenses written off 5 (1.597.310) -
Taxation 7 (788.154) (323.848)
Profit after taxation and listing expenses 5.347.498 5.438.195
ASBISC ENTERPRISES PLC
PARENT COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
Note US$ US$
ASSETS
Current assets
Inventories 2 17.180.904 26.661.793
Trade receivables 8 68.317.656 45.812.182
Other current assets 9 29.777.383 39.887.654
Cash and cash equivalents 21 17.525.996 15.051.522
Total current assets 132.801.939 127.413.151
Non-current assets
Property, plant and equipment 10 2.001.983 2.155.891
Intangible assets 11 1.119.607 1.351.401
Investment in subsidiary companies 12 2.714.977 2.769.202
Investment in fellow subsidiary company 14 90.000 90.000
Total non-current assets 5.926.567 6.366.494
Total assets 138.728.506 133.779.645
LIABILITIES AND EQUITY
Liabilities
Current liabilities
Trade payables 79.397.927 73.575.902
Other current liabilities 15 5.742.900 12.571.600
Taxation 7 196.096 8.552
Deferred tax liability 7 74.294 71.006
Bank overdrafts and short term loans 16 5.639.790 4.262.584
Total current liabilities 91.051.007 90.489.644
Equity
Share capital 19 9.600.000 9.600.000
Share premium 8.138.039 8.138.039
Reserves 29.939.460 25.551.962
Total equity 47.677.499 43.290.001
Total liabilities and equity 138.728.506 133.779.645
ASBISC ENTERPRISES PLC
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
Share Share Retained
capital premium earnings Total
US$ US$ US$ US$
Balance at 1 January 2005 9.600.000 8.138.039 20.113.767 37.851.806
Profit of the year - - 5.438.195 5.438.195
Balance at 31 December 2005 and 1
January 2006 9.600.000 8.138.039 25.551.962 43.290.001
Profit for the year - - 5.347.498 5.347.498
Payment of dividend - - (960.000) (960.000)
Balance at 31 December 2006 9.600.000 8.138.039 29.939.460 47.677.499
The retained earnings of US$29.939.460 shown above at 31 December 2006 are all
distributable. The share premium account is available for distribution in the
form of issue of bonus shares.
ASBISC ENTERPRISES PLC
PARENT COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2006 2005
Note US$ US$
Profit for the year before tax 7.732.962 5.762.043
Adjustments for:
Provision for diminution in value of investment - 421.175
Listing expenses written off 5 (1.597.310) -
Depreciation 10 311.247 302.050
Amortisation of intangible assets 11 582.505 475.386
Interest received 3 (107.420) (94.514)
Interest paid 3 449.037 416.591
Profit on sale of subsidiary company 4 - (156.398)
Loss/(profit) from the sale of property, plant and
equipment and intangible assets
4 529 (15.218)
Operating profit before working capital changes 7.371.550 7.111.115
Decrease/(increase) in inventories 9.480.889 (3.944.750)
Increase in trade receivables (22.505.474) (15.600.149)
Decrease/(increase) in other current assets 10.110.271 (3.260.961)
Increase in trade payables 5.822.025 7.075.014
(Decrease)/increase in other current liabilities (6.828.700) 9.726.011
Cash inflows from operations 3.450.561 1.106.280
Taxation paid, net 7 (597.322) (119.995)
Exchange loss on taxation 7 - 36.422
Interest paid 3 (449.037) (416.591)
Net cash inflows from operating activities 2.404.202 606.116
Cash flows from investing activities
Interest received 3 107.420 94.514
Purchase of property, plant and equipment (157.867) (250.738)
Proceeds from sale of subsidiary company - 176.798
Purchase of intangible assets (350.936) (422.551)
Proceeds from sale of property, plant and equipment and
intangible assets
224 31.127
Net decrease/(increase) in investment in subsidiary
companies
54.225 (393.285)
Net cash outflows from investing activities (346.934) (764.315)
Cash flows from financing activities
Dividend paid (960.000) -
Proceeds from short term loans 3.536.534 -
Net cash inflows from financing activities 2.576.534 -
Net increase/(decrease) in cash and cash equivalents 4.633.802 (158.019)
Cash and cash equivalents at beginning of the year 21 11.788.938 11.946.957
Cash and cash equivalents at end of year 21 16.422.740 11.788.938
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
1. Incorporation and principal activities
Asbisc Enterprises Plc was incorporated in Cyprus on 9 November 1995 with
limited liability. The group's and the company's principal activity is the
trading and distribution of computer hardware and software. The ultimate holding
company of the group is K.S. Holdings Limited, a company incorporated in Cyprus.
On 4th September 2006 by a special resolution passed at an extraordinary general
meeting of the shareholders of the company, the company's name was changed from
Asbisc Enterprises Limited to Asbisc Enterprises Plc.
On 25th October 2006 the company was listed at the Alternative Investment Market
(AIM) of the London Stock Exchange (LSE).
2. Summary of significant accounting policies
Basis of preparation
The accompanying financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the
European Union (EU) and International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board (IASB). The accompanying
financial statements comply with both these reporting frameworks because at the
time of their preparation all applicable IFRSs issued by the IASB have been
adopted by the EU through the endorsement procedure established by the European
Commission. In addition, the accompanying financial statements have been
prepared in accordance with the requirements of the Cyprus Companies Law,
Cap.113.
Adoption of new and revised International Financial Reporting Standards
In the current year, the group has adopted all of the new and revised Standards
and Interpretations issued by the International Accounting Standards Board
(IASB) and the International Financial Reporting Interpretations Committee
(IFRIC) of the IASB that are relevant to its operations and effective for annual
reporting periods beginning on 1 January 2006. The adoption of these new and
revised Standards and Interpretations has resulted in no significant changes to
the group's accounting policies.
At the date of authorisation of these financial statements, the following
Standards and Interpretations were in issue but not yet effective:
* Amendment to Presentation of Financial Statements - Effective for annual periods beginning on
IAS1 Capital Disclosures or after 1 January 2007
* IFRS 7 Financial Instruments Effective for annual period beginning on
Disclosures or after 1 January 2007
* IFRS 8 Operating Segments Effective for annual periods beginning on
or after 1 January 2009
* IFRIC7 Applying the Restatement Approach under Effective for annual periods beginning on
IAS29 Financial Reporting in or after 1 March 2006
Hyperinflationary Economies
* IFRIC 8 Scope of IFRS 2 Effective for annual periods beginning on
or after 1 May 2006
* IFRIC 9 Reassessment of Embedded Derivatives Effective for annual periods beginning on
or after 1 June 2006
* IFRIC 10 Interim Financial Reporting and Effective for annual periods beginning on
Impairment or after 1 November 2006
* IFRIC11 IFRS2 Group and Treasury Share Transactions Effective for annual periods beginning on
or after 1 March 2007
* IFRIC12 Service Concession Arrangements Effective for annual periods beginning on
or after 1 January 2008
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Adoption of new and revised International Financial Reporting Standards
(continued)
The directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
statements of the group except IFRIC 8 - Scope of IFRS2. The Board of Directors
are currently considering the implementation of a share option scheme. The
intended scheme has not yet been approved by the Board of Directors. The Board
of Directors are currently considering the possible impact on the financial
statements of the group.
Accounting convention
The financial statements have been prepared under the historical cost convention
and a summary of the significant accounting policies adopted by the company and
the group is as follows:
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the company and entities (including special purpose entities)
controlled by the company (its subsidiaries). Control is achieved when the
company has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities.
The results of the subsidiary companies that are acquired during the
year are included in the consolidated Income Statement from the date of
acquisition and cease to be consolidated from the date control ceases, or to the
extent that their disposal is foreseeable such that they will be held for less
than one year from the balance sheet date.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with those used by
other members of the group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Minority interests in the net assets (excluding goodwill) of
consolidated subsidiaries are identified separately from the group's equity
therein. Minority interest consists of the amount of those interests at the
date of the original business combination and the minority's share of changes in
equity since the date of the combination.
Losses applicable to the minority in excess of the minority's interest
in the subsidiary's equity are allocated against the interest of the group
except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using
the purchase method. The cost of the business combination is measured as the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the group in
exchange for control of the acquiree, plus any costs directly attributable to
the business combination. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition under IFRS 3
Business Combinations are recognized at their fair values at the acquisition
date, except for non-current assets (or disposal groups) that are classified as
held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, which are recognized and measured at fair value less
costs to sell.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Business combinations (continued)
Goodwill arising on acquisition is recognized as an asset and
initially measured at cost, being the excess of the cost of the business
combination over the group's interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognized. If, after
reassessment, the group's interest in the net fair value of the acquiree's
identifiable assets, liabilities and contingent liabilities exceeds the cost of
the business combination, the excess is recognized immediately in profit or
loss.
The interest of minority shareholders in the acquiree is initially
measured at the minority's proportion of the net fair value of the assets,
liabilities and contingent liabilities recognized.
Business combinations involving entities under common control
A business combination involving entities or businesses under common
control is a business combination in which all of the combining entities or
businesses are ultimately controlled by the same party or parties both before
and after the business combination, and that control is not transitory. A group
of individuals shall be regarded as controlling an entity when, as a result of
contractual arrangements, they collectively have the power to govern its
financial and operating policies so as to obtain benefits from its activities.
Therefore, a business combination is outside the scope of IFRS3 when
the same group of individuals has, as a result of contractual arrangements,
ultimate collective power to govern the financial and operating policies of each
of the combining entities so as to obtain benefits from their activities, and
that ultimate collective power is not transitory.
The excess between the carrying value of the net assets transferred and
the consideration paid, is recognized directly to equity.
Subsidiary Companies
In the individual accounts of the company, investments in subsidiary
companies are presented at cost less provision for permanent diminution in
value.
Investments
Investments are stated at cost less provision for permanent diminution
in value.
Goodwill
Goodwill arising on the acquisition of a subsidiary or a jointly
controlled entity represents the excess of the cost of acquisition over the
group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities of the subsidiary or jointly controlled entity
recognized at the date of acquisition. Goodwill is initially recognized as an
asset at cost and is subsequently measured at cost less any accumulated
impairment losses.
For the purpose of impairment testing, goodwill is allocated to each
of the group's cash-generating units expected to benefit from the synergies of
the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash-generating
unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognized for
goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or a jointly controlled entity, the
attributable amount of goodwill is included in the determination of the profit
or loss on disposal.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated
depreciation. Depreciation is provided at rates calculated to write off the cost
less the estimated residual value of property, plant and equipment on a
straight-line basis over their estimated useful economic lives as follows:
Buildings 33 years
Leasehold property Over the remaining period of the right for
usage of the land
Motor vehicles 5 years
Furniture, fittings and office equipment 10 years
Computer hardware 5 years
Warehouse machinery 3 - 5 years
Depreciation is not provided on land.
Intangible assets
Intangible assets consist of computer software, patents and licences which are
stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is provided at rates calculated to write off the cost less the
estimated residual value of the assets using the straight line method as
follows:
Computer software 3 - 5 years
Patents and licences 3 years
Repairs and maintenance
Expenditure for repairs and maintenance of property, plant and
equipment and costs associated with maintenance of computer software programmes
are recognised as an expense as incurred.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the group and the company reviews the carrying
amounts of its assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the group and the company estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent basis of allocation is identified.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Impairment (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the impairment loss
is treated as a revaluation increase.
Accounting for financial guarantee contracts
The IASB has also amended IAS39 Financial Instruments: Recognition and
Measurement to require certain financial guarantee contracts issued by the group
to be accounted for in accordance with that Standard. Financial guarantee
contracts that are accounted for in accordance with IAS39 are measured initially
at their fair values, and subsequently measured at the higher of:
* the amount of the obligation under the contract, as determined in
accordance with IAS37 Provisions, Contingent Liabilities and Contingent Assets;
and
* the amount initially recognised less, where appropriate, cumulative
amortisation recognised in accordance with the revenue recognition policies as
set out below.
The Directors of the company have considered the amendments of IAS 39 Financial
Instruments: Recognition and Measurement and have assessed the impact on the
financial statements. The possibility of having to exercise their obligation
under the guarantee contracts is remote and thus does not meet the initial
recognition criteria in accordance with IAS37.
Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year.
Taxable profit differs from profit reported in the income statement because it
excludes items of income or expenses that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
group's liability for current tax is calculated using the tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally
recognized for all taxable temporary differences, and deferred tax assets are
generally recognized for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities
are not recognized if the temporary differences arise from goodwill or from the
initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
Taxation (continued)
Deferred tax liabilities are recongized for taxable temporary
differences associated with investments in subsidiaries and associates, and
interest in joint ventures except where the group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments
and interest are only recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the
temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability is settled or the
asset realised, based on tax rates ( and tax laws ) that have been enacted or
substantially enacted by the balance sheet date. The measurement of deferred
tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the group expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the group intends to settle its current tax assets and liabilities on a net
basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in
profit or loss, except when they relate to items credited or debited directly to
equity, in which case the tax is also recognised directly in equity, or where
they arise from the initial accounting for a business combination. In the case
of a business combination, the tax effect is taken into account in calculating
goodwill or in determining the excess of the acquirer's interest in the net fair
value of the acquiree's identifiable assets, liabilities and contingent
liabilities over cost.
Foreign currencies
The individual financial statements of each group entity are presented
in the currency of primary economic environment in which the entity operates
(its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each entity are expressed in
United States Dollars (US$), which is the functional currency of the company and
the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities,
transactions in currencies other than the entity's functional currency (foreign
currencies) are recorded at the rates of exchange prevailing at the dates of the
transactions. At each balance sheet date, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at the balance sheet date.
Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the date when the fair
value was determined. Non-monetary items are measured in terms of historical
costs in a foreign currency are not retranslated.
Exchange differences are recognised in the profit and loss in the
period in which they arise.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Foreign currencies (continued)
For the purpose of presenting consolidated financial statements, the
assets and liabilities of the group's foreign operations are expressed in United
States Dollars using exchange rates prevailing at the balance sheet date. Income
and expense items are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during the period, in which case
the exchange rates at the date of the transactions are used. Exchange
differences arising, if any, are classified as equity and transferred to the
group's translation reserve. Exchange differences arising on the retranslation
of the opening net assets of the group's foreign operations are shown as a
movement in the foreign exchange reserve. Such exchange differences are
recognised in profit or loss in the period in which the foreign operation is
disposed of.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign operation
and translated at the closing rate.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
accrual basis to the profit and loss account using the effective interest method
and are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Inventories
Inventories comprise finished IT components which are stated at the lower of
cost and net realizable value. Cost is determined on the basis of standard cost
method and comprises the cost of acquisition plus any other costs that are
incurred to bring the stock items to their present location and condition. Net
realizable value represents the estimated selling price for inventories less all
cost necessary to make the sale.
Trade and other receivables
Trade and other receivables are stated at nominal value less provision
for any amounts that are considered to be irrecoverable.
Trade payables
Trade payables are not interest bearing and are stated at their nominal
value.
Provisions
A provision is recognized in the balance sheet when the company and the group
has a legal or constructive present obligation as a result of a past event, it
is probable that an outflow of economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the balance sheet date, taking into
account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flow estimated to settle the present
obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, the receivable is recognized as an
asset if it is virtually certain that the reimbursement will be received and the
amount of the receivable can be measured reliably.
Warranties
Provisions for warranty costs are recognized at the date of sale of the relevant
products, at the directors' best estimate of the expenditure required to settle
the company's and the group's obligation.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Revenue recognition
Revenue represents amounts invoiced to customers in respect of sales of
goods during the year and is stated net of trade discounts, rebates, customer
returns and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognised when all the following
conditions are satisfied:
* the group and the company has transferred to the buyer the significant
risks and rewards of ownership of the goods;
* the group and the company retains neither continuing managerial
involvement to the degree usually associated with ownership nor effective
control over the goods sold;
* the amount of revenue can be measured reliably;
* it is probable that the economic benefits associated with the
transaction will flow to the entity; and
* the costs incurred or to be incurred in respect to the transaction can
be measured reliably.
Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholder's
right to receive payment has been established.
Interest revenue is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount.
Leasing
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee. All
other leases are classified as operating leases.
Finance Leases
Assets held under finance leases are initially recognised as assets of
the group at their fair value at the inception of the lease or, if lower, at the
present value of the minimum lease payments. The corresponding liability to the
lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of
the lease obligation so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly to
profit or loss, unless they are directly attributable to qualifying assets, in
which case they are capitalised. Contingent rentals are recognised as expenses
in the periods in which they are incurred.
Operating leases
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except where another systematic basis
is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Contingent rentals arising under operating leases are
recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating
leases, such incentives are recognised as a liability. The aggregate benefit of
incentives is recognised as a reduction of rental expense on a straight-line
basis, except where another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
2. Accounting policies (continued)
Borrowing costs
All borrowing costs are recognised in the income statement in the
period in which they are incurred.
Cash and cash equivalents
The company considers all short-term highly liquid instruments with
maturities of 3 months or less to be cash equivalents.
Comparative figures
Where necessary, comparative figures have been restated to coincide
with current year's financial statements.
Critical judgements in applying the entity's accounting policies and key sources
of estimation uncertainty
Revenue recognition
In making its judgment, management considered the detailed criteria for the
recognition of revenue from the sale of goods as set out in IAS18 Revenue and,
in particular, whether the group and the company had transferred to the buyer
the significant risks and rewards of ownership of the goods. The management are
satisfied that the significant risks and rewards have been transferred and the
recognition of the revenue in the current year is appropriate.
Warranty provisions
Warranty provisions represent the group's and the company's best estimate of the
liability as a result of the warranties granted on certain products and is based
on past experience and industry averages for defective products.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash-generating units to which goodwill has been allocated. The value
in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in
order to calculate present value.
3. Financial expense, net 2006 2005
The Group US$ US$
Interest income 115.831 131.672
Interest on taxation - 65.578
Other financial income 6.629 29.386
Exchange gain 19.811 -
142.271 226.636
Bank interest 1.620.161 1.209.602
Bank charges 609.832 590.544
Interest to suppliers 228.212 -
Factoring charges 1.125.496 950.165
Other financial expenses 22.998 31.420
Other interest 241.471 216.257
Exchange loss - 557.887
Interest on taxation 1.936 2.614
(3.850.106) (3.558.489)
Net (3.707.835) (3.331.853)
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
3. Financial expense, net (continued)
2006 2005
The Company US$ US$
Interest income 107.420 94.514
Interest on taxation - 65.578
107.420 160.092
Bank interest 441.652 390.606
Bank charges 234.854 195.744
Interest to suppliers 228.212 -
Factoring charges 11.159 53.980
Cash incentive bonus - 108.754
Interest on taxation 1.936 2.614
Exchange loss 112.018 6.574
Other interest 7.385 25.985
(1.037.216) (784.257)
Net (929.796) (624.165)
4. Other income 2006 2005
The Group US$ US$
Profit on disposal of property, plant and equipment 11.546 28.969
Bad debts recovered 77.360 46.422
Other income 294.332 265.151
383.238 340.542
2006 2005
The Company US$ US$
Other income 16.659 57.563
Dividends received 650.000 -
Profit on disposal of subsidiary - 156.398
(Loss)/profit on disposal of property, plant and equipment (529) 15.218
666.130 229.179
5. Listing expenses written off
On 25th October 2006, the company was listed on the Alternative Investment Market of the London Stock
Exchange. In the process of listing the company's shares on the Alternative Investment Market, certain
costs were incurred which have been expensed to the income statement. These expenses are of a
non-recurring nature and are costs incurred which are directly attributable to the company's listing.
6. Profit before taxation 2006 2005
The Group US$ US$
Profit before taxation is stated after crediting:
(a) Depreciation 1.133.232 1.097.413
(b) Amortisation of intangible assets 710.085 602.464
(c) Auditors' remuneration 630.681 573.307
2006 2005
The Company US$ US$
The profit before taxation is stated after charging:
(a) Depreciation 311.247 302.050
(b) Amortisation of intangible assets 582.505 475.386
(c) Auditors' remuneration 233.243 207.185
(d) Directors' remuneration - executive 562.709 400.200
(e) Directors' remuneration - non-executive 21.000 -
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
7. Taxation
2006 2005
The Group US$ US$
(Debit)/credit balance 1 January (76.446) 158.611
Provision for the year 1.622.736 932.416
Underprovision of prior years 4.406 3.344
Amounts paid, net (1.272.515) (1.170.817)
Credit/(debit) balance 31 December 278.181 (76.446)
The taxation charge of the group comprises corporation tax charge in Cyprus on
the taxable profits of the company and those of its subsidiaries which are
subject to tax in Cyprus and corporation tax in other jurisdictions on the
results of the foreign subsidiary companies.
Until 31 December 2002, International Business Companies ("IBCs") in Cyprus were
taxed at 4,25% on their taxable income. In July 2002 the House of
Representatives in Cyprus enacted a new tax legislation that came into effect
from 1 January 2003. According to this new tax law, there will no longer be a
distinction between local companies and International Business Companies. The
taxable profits of all Cyprus companies will be taxed at the rate of 10%. IBCs
which had income from their activities during the year ended 31 December 2001
could elect to be taxed in accordance with the transitional provisions of
taxation. These provisions state that such companies may elect to be taxed at
4,25% on their taxable income until 31 December 2005 but they will not enjoy
certain tax exemptions offered by the new law. In addition, such companies will
not be subject to defence contribution.
The directors had elected for the company to be taxed under the transitional
rules at the rate of 4,25% until 31 December 2005. However, the other Cyprus
resident companies of the group were taxed at the rate of 10%. In the current
year all Cyprus resident companies of the group are taxed at 10%.
Dividends received by Cyprus companies are exempt from Corporation Tax. They
are also exempt from Special Defence Contribution provided certain conditions
are met.
Dividends received by a Cyprus resident company from another Cyprus resident
company are exempt from Special Defence Contribution. Dividends received by a
Cyprus resident company from a non resident company are exempt from Special
Defence Contribution if more than 1% of the shares of the non resident company
are held by the Cyprus resident company. This exemption does not apply and the
dividends are subject to 15% Defence Contribution if the foreign company paying
the dividends
(a) carries on more than 50% investment activities giving rise to investment
income; and
(b) the foreign tax burden on its profits is significantly lower than the
Cyprus tax burden (in practice lower than 5%).
Dividends paid by a Cyprus Resident company to its non resident shareholders
(companies or individuals tax resident outside Cyprus) would not be subject to
withholding tax in Cyprus, regardless of the existence of a Treaty between
Cyprus and the country of residence of the shareholders.
The consolidated taxation charge for the year consists of the following:
2006 2005
US$ US$
Provision for the year 1.622.736 932.416
Underprovision of prior years 3.344
4.406
Deferred tax charge 61.674 3.620
Charge for the year 1.688.816 939.380
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
7. Taxation (continued)
The charge for taxation is based on the group's profits for the year as adjusted
for tax purposes. The reconciliation of the charge for the year is as follows:
2006 2005
US$ US$
Income assessed to tax in Cyprus at 10% 8.320.449 1.786.130
Income assessed to tax in Cyprus at 4,25% - 5.762.043
Income subject to overseas Tax 2.841.367 1.769.470
Accounting profit 11.161.816 9.317.643
Corporation tax thereon at the applicable rate
of 10%
832.045 178.613
Corporation tax thereon at the applicable rate
of 4,25%
- 244.887
Tax on income not taxable in determining taxable
profit
(9.427) (9.302)
Temporary differences 7.887 683
Tax on non-allowable expenses 179.458 29.051
Additional tax 10% 31.486 12.547
1.041.449 456.479
Special contribution to defence fund 35.631 6.558
Underprovision of prior years 4.406 3.344
Deferred tax charge 61.674 3.620
Tax on income subject to overseas tax 545.657 469.379
Taxation charge for the year 1.688.817 939.380
2006 2005
The Company US$ US$
Credit/(debit) balance 1 January 8.552 (225.745)
Underprovision of prior years - 36.682
Provision for the year 784.866 281.188
Amount paid (597.322) (119.995)
Exchange loss - 36.422
Credit balance 31 December 196.096 8.552
The charge for taxation is based on the company's profits for the year as adjusted for tax purposes.
The reconciliation of the accounting result to the taxation charge for the year is as follows:
2006 2005
US$ US$
Accounting profit before taxation and after write off of listing
expenses
6.135.652 5.762.043
Corporation tax thereon at the applicable rate of 10%/4,25% 613.565 244.887
Tax effects of:
Tax on income not taxable in determining taxable profit (74.427) (9.302)
Temporary differences 8.113 868
Tax on non allowable expenses 179.451 29.051
Additional tax (10%) 22.533 9.126
749.235 274.630
Special contribution to defence fund 35.631 6.558
Underprovision of prior years - 36.682
Deferred tax liability 3.288 5.978
788.154 323.848
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
7. Taxation (continued)
The taxation charge for the year consists of the following:
2006 2005
US$ US$
Provision for the current year 749.235 274.630
Special contribution to defence fund 35.631 6.558
Deferred tax charge 3.288 5.978
Underprovision of prior years - 36.682
788.154 323.848
Deferred tax 2006 2005
The Group US$ US$
Deferred tax liability:
The deferred tax liability relates to excess of capital
allowances over depreciation 44.997 8.295
The Company
Deferred tax liability:
The deferred tax liability relates to excess of capital
allowances over depreciation 74.294 71.006
8. Trade receivables
2006 2005
The Group US$ US$
Trade receivables 150.948.946 112.407.759
Allowance for doubtful debts (2.158.575) (1.436.667)
148.790.371 110.971.092
2006 2005
The Company US$ US$
Trade receivables 68.543.529 46.003.204
Allowance for doubtful debts (225.873) (191.022)
68.317.656 45.812.182
9. Other current assets 2006 2005
US$ US$
The Group
Other debtors and prepayments 2.070.308 1.823.852
VAT and other taxes refundable 1.878.527 1.115.769
Loan due from fellow subsidiary 118.096 110.000
Loans advanced 24.165 164.120
Advances to suppliers 114.802 404.416
Employee floats 137.511 74.427
Deposits 199.612 327.857
Amount due from ultimate holding company 63.205 -
Amount due from executive directors 120.130 -
4.726.356 4.020.441
2006 2005
The Company US$ US$
Other debtors and prepayments 875.001 828.624
Loan due from fellow subsidiary 118.096 110.000
Loans advanced to employees 22.000 98.640
Amount due from subsidiary companies 27.212.930 37.837.890
Loans due from subsidiary companies 1.310.737 1.012.500
VAT refundable 55.284 -
Amount due from executive directors 120.130 -
Amount due from ultimate holding company 63.205 -
29.777.383 39.887.654
The directors consider that the carrying amount of other current assets of the
group and the company approximate their fair value.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
10. Property, plant and equipment
The Group Land Furniture
and Warehouse and Office Motor Computer
buildings machinery fittings equipment vehicles hardware Total
Cost US$ US$ US$ US$ US$ US$ US$
At 1 January 2005 4.351.697 98.257 603.161 953.990 1.494.579 2.677.497 10.179.181
Foreign exchange
difference on
opening balances (170.674) (12.638) (28.375) (80.102) (126.640) (174.379) (592.808)
Additions 553.851 - 100.008 183.741 289.434 333.974 1.461.008
Disposals - - (8.379) (17.561) (205.065) (65.763) (296.768)
Disposal of - - (3.950) (5.706) (10.807) (16.973) (37.436)
subsidiary
At 1 January 2006 4.734.874 85.619 662.465 1.034.362 1.441.501 2.754.356 10.713.177
Foreign exchange
difference on
opening balances 349.604 13.544 49.217 89.571 154.027 194.770 850.733
Additions from the
acquisition of
subsidiary - 44.427 1.601 1.194 61.314 4.488 113.024
Additions 63.544 - 251.445 138.828 265.711 385.147 1.104.675
Disposals - - (1.955) (33.631) (158.180) (113.950) (307.716)
At 31 December 2006 5.148.022 143.590 962.773 1.230.324 1.764.373 3.224.811 12.473.893
Accumulated depreciation
At 1 January 2005 329.440 27.330 269.118 464.603 818.464 1.515.965 3.424.920
Foreign exchange
difference on
opening balances (12.187) (3.514) (14.757) (39.763) (47.424) (116.026) (233.671)
Charge for the year 145.234 20.021 70.021 130.368 248.456 483.313 1.097.413
Disposals - - (3.036) (7.303) (174.119) (36.742) (221.200)
Elimination on
disposal of
subsidiary - - (2.211) (1.567) (9.339) (4.808) (17.925)
At 1 January 2006 462.487 43.837 319.135 546.338 836.038 1.841.702 4.049.537
Foreign exchange
difference on
opening balances 34.037 6.400 23.474 64.590 83.092 147.882 359.475
Charge for the year 142.418 31.545 85.436 131.714 243.163 498.956 1.133.232
On acquisition of
subsidiary - 14.068 114 131 19.149 1.085 34.547
Disposals - - (1.822) (31.513) (123.861) (107.631) (264.827)
At 31 December 2006 638.942 95.850 426.337 711.260 1.057.581 2.381.994 5.311.964
Net book value
31 December 2006 4.509.080 47.740 536.436 519.064 706.792 842.817 7.161.929
31 December 2005 4.272.387 41.782 343.330 488.024 605.463 912.654 6.663.640
The Company Land Furniture
and and Office Motor Computer
buildings fittings equipment vehicles hardware Total
Cost US$ US$ US$ US$ US$ US$
At 1 January 2005 1.550.918 230.772 130.459 275.159 1.019.398 3.206.706
Additions - 36.919 57.401 - 156.418 250.738
Disposals - (557) (186) (23.985) (4.925) (29.653)
At 1 January 2006 1.550.918 267.134 187.674 251.174 1.170.891 3.427.791
Additions - 22.367 21.597 34.150 79.753 157.867
Disposals - (107) (325) - (285) (717)
At 31 December 2006 1.550.918 289.394 208.946 285.324 1.250.359 3.584.941
Accumulated depreciation
At 1 January 2005 130.833 92.362 49.121 187.859 533.336 993.511
Charge for the year 46.998 24.525 14.754 30.544 185.229 302.050
On disposals - (225) (93) (20.387) (2.956) (23.661)
1 January 2006 177.831 116.662 63.782 198.016 715.609 1.271.900
Charge for the year 46.998 28.241 19.228 28.228 188.552 311.247
On disposals - (41) (148) - - (189)
At 31 December 2006 224.829 144.862 82.862 226.244 904.161 1.582.958
Net book value
31 December 2006 1.326.089 144.532 126.084 59.080 346.198 2.001.983
31 December 2005 1.373.087 150.472 123.892 53.158 455.282 2.155.891
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
11. Intangible assets
Computer Patents &
software licences Total
The Group US$ US$ US$
Cost
At 1 January 2005 3.408.065 146.767 3.554.832
Foreign exchange difference on opening balances (120.615) - (120.615)
Additions 383.790 73.887 457.677
Disposals (74.072) - (74.072)
Disposal of subsidiary (3.080) - (3.080)
At 1 January 2006 3.594.088 220.654 3.814.742
Foreign exchange difference on opening balances 94.014 - 94.014
Additions 415.402 110.947 526.349
Disposals (5.821) - (5.821)
At 31 December 2006 4.097.683 331.601 4.429.284
Accumulated amortisation
At 1 January 2005 1.896.203 7.089 1.903.292
Foreign exchange difference on opening balances (84.004) - (84.004)
Charge for the year 553.607 48.857 602.464
Disposals (49.328) - (49.328)
Elimination on disposal of subsidiary (907) - (907)
At 1 January 2006 2.315.571 55.946 2.371.517
Foreign exchange difference on opening balances 85.253 - 85.253
Charge for the year 560.638 149.447 710.085
Disposals (5.821) - (5.821)
At 31 December 2006 2.955.641 205.393 3.161.034
Net book value
31 December 2006 1.142.042 126.208 1.268.250
31 December 2005 1.278.517 164.708 1.443.225
The Company
Computer Patents &
software licences Total
Cost US$ US$ US$
At 1 January 2005 2.463.915 146.162 2.610.077
Additions 349.888 72.663 422.551
Disposals (13.412) - (13.412)
At 1 January 2006 2.800.391 218.825 3.019.216
Additions 344.532 6.404 350.936
Disposals (279) - (279)
At 31 December 2006 3.144.644 225.229 3.369.873
Accumulated amortisation
At 1 January 2005 1.189.439 6.485 1.195.924
Charge for the year 426.665 48.721 475.386
Disposals (3.495) - (3.495)
At 1 January 2006 1.612.609 55.206 1.667.815
Charge for the year 497.002 85.503 582.505
Disposals (54) - (54)
At 31 December 2006 2.109.557 140.709 2.250.266
Net book value
31 December 2006 1.035.087 84.520 1.119.607
31 December 2005 1.187.782 163.619 1.351.401
The cost of computer software includes an amount of US$1.347.544 for two computer software programmes for
which the useful economic life is estimated to be five years and its amortisation is calculated on a
straight line basis over five years.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
12. Investment in subsidiary companies 2006 2005
The Company US$ US$
Shares at cost of acquisition or written down value 2.714.977 2.769.602
Balance at 1 January 2.769.202 2.817.492
Net increase of share capital - 393.285
Diminution in value of investment - (421.175)
Liquidation proceeds / disposal of subsidiary (Note a) (54.225) (20.400)
Balance at 31 December 2.714.977 2.769.202
Note a: The subsidiary under liquidation as at 31 December 2006 was:
Percentage of
participation
Country of disposed 2006
incorporation % US$
Subsidiary Company
Asbis Fin OY Finland 100 54.225
The liquidation proceeds represent 100% recovery of the cost of the investment.
At the year end the company held a participation in the following subsidiaries:
Percentage of
Country of participation
Subsidiary Company incorporation %
Asbis Ukraine Limited Ukraine 100
ISA Hardware Limited * Ukraine 100
Asbis PL Sp.zo.o. Poland 100
AS Asbis Baltic Estonia 100
Asbis Romania S.R.L. Romania 100
Asbis Cr d.o.o. Croatia 100
Asbis YU d.o.o. Serbia 100
Asbis Hungary Limited Hungary 100
Asbis Bulgaria Limited Bulgaria 100
Asbis CZ, spoI.s.r.o. Czech Republic 100
UAB Asbis Vilnius Lithuania 100
Asbis Slovenia d.o.o. Slovenia 100
Asbis Middle East FZE United Arab
Emirates 100
Asbis SK sp.l sr.o. Slovakia 100
Asbis Europe BV Netherlands 100
Asbis Limited Ireland 100
ZAO Automatic Systems of Business Control-Minsk Belarus 100
ISA Hardware Limited - Group (Note a) Cyprus 100
OOO 'Asbis' -Moscow Russia 100
Asbis Nordic AB Sweden 100
Asbis Morocco Limited Moroco 100
* held by Asbis Ukraine Limited
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
12. Investment in subsidiary companies (continued)
Note a: The ISA Hardware Limited Group held a direct or indirect participation in the following
subsidiaries:
Percentage of
Country of participation
Subsidiary Company incorporation %
Warranty RU Limited Russia 100
Comptizon Ltd British Virgin 100
Islands
ISA Hardware s.r.o. Czech Republic 100
ISA Hardware d.o.o. Croatia 100
ISA Hardware Hungary Commercial Limited Liability Co Hungary 100
ISA Hardware International SRL Romania 100
ISA Hardware s.r.o. Slovakia Slovakia 100
ISA Hardware d.o.o. Beograd Serbia 100
ISA Hardware s.r.o. Slovenia Slovenia 100
ISA Hardware SP.Z.O.O. Poland 100
Prestigio Technologies (Cyprus) Ltd Cyprus 100
Prestigio Europe s.r.o. Czech Republic 100
Prestiogio Limited Russia 100
Prestigio Ukraine Limited Ukraine 100
Canyon Technology Ltd Hong Kong 100
Canyon Technology B.V. Netherlands 100
The principal activity of the group and the company is the trading and
distribution of computer hardware and software.
13. Acquisitions
The Group
During the year a subsidiary company acquired 100% of the share capital of Prestigio Europe spol
s.r.o. and Prestigio LLC Russia. As this transaction was considered by the directors a business
combination of entities under common control, the provisions of IFRS 3 "Business Combinations" have
not been applied. Instead the assets and liabilities of the entities acquired have been recorded in
the group's consolidated financial statements at their carrying values. The excess between the
carrying value of the net assets transferred and the consideration paid, which relates to the
profits generated by the above subsidiaries prior to the date of acquisition of US$37.681 has been
transferred directly to equity.
The net carrying value of underlying separately identifiable assets and liabilities transferred to
the group during the year were as follows:
2006
US$
Tangible assets 78.474
Inventories 760.668
Receivables 215.181
Other receivables 147.087
Payables and accruals (1.227.718)
Loans payable (345.927)
Cash and cash equivalents 430.963
Net identifiable assets and liabilities 58.728
Excess of group's interest in net assets acquired (37.681)
Total purchase consideration 21.047
Net cash inflow arising on transfer:
Total purchase consideration (21.047)
Cash and cash equivalents transferred 430.963
Net cash inflow 409.916
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
13. Acquisitions (continued)
The Group (continued)
The excess between the carrying value of the net assets transferred to the group and the consideration paid
is analysed as follows:
US$
Acquisition of:
Prestigio Europe spol s.r.o. 11.062
Prestigio LLC Russia 26.619
37.681
14. Investments
Country of Percentage of
incorporation participation 2006 2005
US$ US$
The Group
Shares at cost of acquisition
Investments held in fellow
subsidiaries
E-Vision Limited Cyprus 18% 90.000 90.000
Other Investments
Asekol s.r.o Czech Republic 9,09% 9.580 -
99.580 90.000
The Company US$ US$
Shares at cost of acquisition
E-Vision Limited Cyprus 18%
(Note a) 90.000 90.000
Note a: The remaining 82% is held by the ultimate holding company KS Holdings Limited.
15. Other current liabilities 2006 2005
The Group US$ US$
Factoring creditors (Note (a)) 9.670.740 9.450.317
Salaries payable and related costs 605.448 625.255
VAT payable 4.265.374 3.899.737
Amount due to directors - executive 53.366 66.217
Amounts due to directors - non-executive 21.000 -
Non-trade accounts payable 3.228.154 2.964.343
Accruals and deferred income 5.116.237 3.526.580
22.960.319 20.532.449
Note (a): The group enjoyed as at 31 December 2006 factoring facilities of US$25.030.728 (2005: US$
19.436.440). These factoring facilities are secured as mentioned in note 16.
2006 2005
The Company US$ US$
Salaries payable and related costs 85.737 74.878
Amount due to subsidiary companies 1.589.396 9.565.421
Amount due to directors - executive 53.366 66.217
Amounts due to directors - non-executive 21.000 -
Non-trade accounts payable 632.880 714.740
Accruals and deferred income 3.360.521 1.787.866
VAT payable - 362.478
5.742.900 12.571.600
The directors consider that the carrying amount of other current liabilities of the group and the
company approximate their fair value.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
16. Bank overdrafts and short-term loans 2006 2005
The Group US$ US$
Bank overdrafts - Note 21 14.677.165 12.927.415
Bank short term loans 19.494.450 7.213.490
Current portion of long term loans 205.557 174.524
34.377.172 20.315.429
The group, as at 31 December 2006 enjoyed the following financing facilities with banks in the countries
that the company and its subsidiaries are operating:
- overdraft facilities of US$16.590.934
- short term loans/revolving facilities US$19.819.699
- bank guarantee facilities of US$4.210.843
The group had for the year 2006 cash lines (overdrafts, loans and revolving facilities) and factoring
lines. The weighted average cost of debt (cash lines and factoring lines) for 2006 was 9,0% (2005: 8,1%)
The factoring, overdraft and revolving facilities as well as the loans granted to the company and
its subsidiaries by their bankers are secured by:
- First floating charge over all assets of the company for a total amount of US$4.000.000
- Second floating charge on the whole undertaking including the company's uncalled capital,
goodwill and book debts for US$2.000.000 plus interest
- Mortgage on 1/4 of the property registered in the name of Diamond Properties Ltd (Vendor of the
property for the company's head office premises acquired in Limassol) for the amount of
US$1.800.000 and assignment of the sales contract between Diamond Properties Ltd and the
company
- Mortgage on land and buildings that the group owns in the Czech Republic and Belarus for the
amount of US$1.100.000
- Charge over receivables and inventories
- Corporate guarantees and, in some cases, by also cross guarantees by all group companies to the
extent of facilities granted
- Assignment of fire insurance policy
- Pledged deposits of US$3.885.064
- Personal guarantees of the Chairman and Chief Executive Officer
2006 2005
The Company US$ US$
Bank overdrafts - Note 21 1.103.256 3.262.584
Bank short term loans 4.536.534 1.000.000
5.639.790 4.262.584
The company, as at 31 December 2006 enjoyed the following financing facilities from its bankers:
- overdraft facilities of US$4.576.600
- revolving / short term loan facilities US$4.500.000
- bank guarantee facilities US$2.745.728
The overdraft, revolving and factoring facilities granted to the company are secured by:
- First floating charge over all assets of the company for a total amount of US$4.000.000
- Second floating charge on the whole undertaking including the company's uncalled capital,
goodwill and book debts for US$2.000.000 plus interest
- Mortgage on 1/4 of the property registered in the name of Diamond Properties Ltd (Vendor of the
property for the company's head office premises acquired in Limassol) for the amount of
US$1.800.000 and assignment of the sales contract between Diamond Properties Ltd and the
company
- Pledge of inventories
- Pledged deposits of US$2.823.945
- Personal guarantees of the Chairman and Chief Executive Officer
The company had for the year 2006 cash lines (overdrafts and revolving facilities) with average cost for
the year 2006 of 7,6% (2005: 6,8%)
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
17. Long term liabilities 2006 2005
The Group US$ US$
Bank loans 612.602 568.596
Other long term liabilities 53.456 177.960
666.058 746.556
The bank loans are secured as described in Note 16.
18. Finance leases 2006 2005
US$ US$
Obligation under finance lease 219.242 234.060
Less: Amount payable within one year (144.527) (87.446)
Amounts payable within 2-5 years inclusive 74.715 146.614
19. Share capital
2006 2005
US$ US$
Authorised
63.000.000 (2005: 48.000.000) shares of US$ 0,20 each 12.600.000 9.600.000
Issued, called-up and fully paid
48.000.000 (2005: 40.000.000) ordinary shares of US$ 0,20 each 9.600.000 8.000.000
- (2005 8.000.000) preference shares of US$ 0,20 each - 1.600.000
9.600.000 9.600.000
On 4 September 2006 by a special resolution passed at an extraordinary general meeting of the
shareholders of the company it was decided:
a) to increase the authorised share capital from 48.000.000 shares of US$0,20 each to 63.000.000 shares
of US$0,20 each
b) to convert the 8.000.000 preference shares of US$0,20 each to 8.000.000 ordinary shares of US$0,20
each.
20. Minority interest
Minority interest represents the participation of shareholders outside the group in the subsidiary
companies as follows:
Country of
incorporation Percentage of participation
2006 2005
% %
OOO "Elko Computers" - Minsk Belarus - 40
2006 2005
US$ US$
Balance at 1 January - 49.150
Exchange difference arising on the conversion of foreign
subsidiaries
- 525
Minority interest during the year
000 "Elko Computers" - Minsk - 55.959
Minority interest on disposal - (105.634)
Balance at 31 December - -
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
21. Cash and cash equivalents 2006 2005
The Group US$ US$
Cash at bank 27.927.606 25.106.038
Bank overdrafts - Note 16 (14.677.165) (12.927.415)
13.250.441 12.178.623
The cash at bank balances include an amount of US$ 3.885.064 (2005: US$3.804.178) which represents pledged
deposits.
The Company 2006 2005
US$ US$
Cash at bank 17.525.996 15.051.522
Bank overdrafts - Note 16 (1.103.256) (3.262.584)
16.422.740 11.788.938
The cash at bank balances include an amount of US$ 2.823.945 (2005: US$ 2.820.289) which represents
pledged deposits.
22. Commitments and contingencies
As at 31 December 2006 the group and the company were committed in respect of purchases of
inventories of a total cost value of US$ 13.543.819 (2005: US$ 4.733.707) which were in transit at
31 December 2006 and delivered in January 2007. Such inventories and the corresponding liability
towards the supplier have not been included in these financial statements since, according to the
terms of the purchase, title of the goods had not passed to the company as at the year end.
As at 31 December 2006 the group and the company were contingently liable in respect of bank guarantees of
US$4.210.843 which the group had extended mainly to vendors as at 31 December 2006 (company US$2.745.728)
in order to secure the group's and company's liabilities towards its vendors which are reflected in the
financial statements under trade payables.
As at 31 December 2006 the company was contingently liable for the amount of US$37.4 million in respect of
corporate guarantees given to financial institutions as security for financing facilities granted to the
subsidiary companies. The liabilities of the subsidiary companies covered by the said corporate guarantees
are reflected in note 16 of the financial statements.
As at 31 December 2006 the group and the company had no other legal commitments and contingencies.
23. Related party transactions and balances
The holding company of the group is K.S. Holdings Limited, a company incorporated in Cyprus.
Transactions between the company and its subsidiaries have been eliminated on consolidation. In the
normal course of business, the group and the company undertook during the year on an arm's-length
basis transactions with the fellow subsidiary company E-Vision Limited and its subsidiaries as
follows:
2006 2005
The Group and the Company US$ US$
E-Vision purchase of services and computer software 570.000 587.120
Interest income 8.096 7.190
Related party balances 2006 2005
US$ US$
Loan due from fellow subsidiary company (note 9)
E-Vision Limited 118.096 110.000
Included in non trade accounts payable (note 15)
E-Vision Limited - 18.500
The loan receivable from E-Vision Limited is unsecured and bears interest at 3 months Libor + 2% per
annum.
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
24. Related party transactions and balances (continued)
The Company
In the normal course of business, the company undertook during the year on an arm's-length basis
transactions with its subsidiary companies as follows:
Amounts owed by Amounts owed to
Sales of goods Purchases of goods related parties related parties
2006 2005 2006 2005 2006 2005 2006 2005
US$ US$ US$ US$ US$ US$ US$ US$
Subsidiary
companies
244.510.693 258.740.952 16.697.767 18.442.074 27.212.930 37.837.890 1.589.396 9.565.421
2006 2005
US$ US$
Loans due from subsidiary companies (note 9) 1.310.737 1.012.500
The loans due from subsidiary companies consist of 3 loans, 2 of which are interest free and one loan
bearing interest at 6% per annum.
Transactions and balances of key management
2006 2005
US$ US$
Directors' remuneration - executive 562.709 400.200
Directors' remuneration - non executive 21.000 -
583.709 400.200
Amount due to directors - executive 53.366 66.217
- non executive 21.000 -
74.366 66.217
Amounts due from directors (note 9) 120.130 -
25. Personnel expenses and average number of employees
The Group
2006 2005
US$ US$
Salaries and other benefits 15.249.975 12.832.872
The average number of employees was 788 649
The Company 2006 2005
US$ US$
Salaries and other benefits 3.074.077 3.093.705
The average number of employees was 99 96
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
26. Earnings per share
2006 2005
US$ US$
Profit for the year attributable to members 9.473.000 8.322.304
Weighted average number of shares for the purposes of basic
and diluted earnings per share
48.000.000 48.000.000
Cents Cents
Basic and diluted earnings per share 19,7 17,3
27. Dividends
2006 2005
US$ US$
Final proposed dividend 960.000 960.000
The Board of Directors propose the payment of a final dividend of US$0,02 per share for the year ended 31
December 2006 (total proposed dividend - US$960.000) which will be submitted for approval at the
forthcoming annual general meeting. The proposed dividend for the year 2006 has not been recognized as a
liability as at 31 December 2006 in accordance with revised IAS10 - Post Balance Sheet Events, where
proposed dividends are recognized in the Income Statement and in the Balance Sheet of the company after
their approval at the annual general meeting.
The proposed dividend for the year 2005 was approved at the 2006 annual general meeting of the company
and was paid during the year.
28. Segmental reporting
The group operates in a single segment of the distribution of IT components in a number of
geographical regions.
The following table produces an analysis of the group's sales by geographical market, irrespective of
the origin of the goods.
Sales revenue by geographical market
2006 2005
US$ US$
Former Soviet Union 491.246.643 453.459.232
Eastern Europe 342.540.983 313.126.344
Western Europe 88.783.690 84.898.710
Middle East & Africa 68.656.262 54.865.258
Other 17.567.019 24.039.738
Total revenue 1.008.794.597 930.389.282
ASBISC ENTERPRISES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
(Expressed in United States Dollars)
29. Financial risk factors
The group's activities expose it to interest rate risk, credit risk, liquidity risk and currency
risk arising from the financial instruments it holds. The risk management policies employed by the
group to manage these risks are discussed below:
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to
changes in market interest rates. The group's income and operating cash flows are substantially
independent of changes in market interest rates. The group has no significant interest-bearing
assets and it borrows at variable rates. The group's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
Credit risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the
amount of future cash inflows from financial assets on hand at the balance sheet date. The group
has no significant concentrations of credit risk. The group has credit insurance policies in place
and also implemented internal policies to ensure that sales of products are made to customers with
an appropriate credit history and monitors on a continuous basis the ageing profile of its
receivables.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match.
An unmatched position potentially enhances profitability, but can also increase the risk of losses.
The group has procedures with the object of minimising such losses such as maintaining sufficient
cash and other highly liquid current assets and by having available an adequate amount of credit
facilities.
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in
foreign exchange rates. Currency risk arises when future commercial transactions and recognised
assets and liabilities are denominated in a currency that is not the group's functional currency.
Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
30. Events after the balance sheet date
No significant events occurred after the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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