Interim / Quarterly Report • Sep 24, 2021
Interim / Quarterly Report
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UNAUDITED FINANCIAL STATEMENTS Period from 1 January 2021 to 30 June 2021
PAGE
| Board of Directors and other officers | |
|---|---|
| Unaudited statement of profit or loss and other comprehensive income | $\mathcal{L}$ |
| Unaudited statement of financial position | 3 |
| Unaudited statement of changes in equity | $\overline{4}$ |
| Unaudited cash flow statement | 5 |
| Notes to the unaudited financial statements | $6 - 27$ |
Board of Directors:
Alexandros Sinos Serafeim Charalampidis Stephanos Kazantzis Evangelos Drympetas Gloria Chrysafi
Company Secretary:
Independent Auditors:
Gloria Chrysafi
C&N Auditors Ltd CERTIFIED PUBLIC ACCOUNTANTS - CY 10 Yianni Kranidioti 2nd Floor Office 201 1065 Nicosia, Cyprus
Anna City Court Block B, Flat 301
Registered office:
Registration number:
HE 304867
3015 Limassol Cyprus
Laiou 6
$\mathbf{1}$
| Note | 30/06/2021 € |
30/06/2020 € |
|
|---|---|---|---|
| Revenue Cost of sales |
8 | 162,599 (79, 069) |
197,982 (97, 847) |
| Gross profit | 83,530 | 100,135 | |
| Other operating income Selling and distribution expenses Administration expenses Other expenses |
12,268 (2, 118) (110, 346) (1,940) |
40,000 (1, 465) (121, 915) (8, 486) |
|
| Operating (loss)/profit | (18, 606) | 8,269 | |
| Finance costs | (3, 618) | (7,700) | |
| (Loss)/profit before tax | (22, 224) | 569 | |
| Tax | (890) | ||
| Net loss for the period/year | (22, 224) | (321) | |
| Other comprehensive income | $\,$ | ||
| Total comprehensive income for the period/year | (22, 224) | (321) |
The notes on pages 6 to 27 form an integral part of these financial statements.
$\overline{2}$
| Note | 2021 € |
2020 € |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment Right-of-use assets Other asset (describe) |
9 10 14 |
7,806 12,735 83,505 |
8,803 12,736 83,505 |
| 104,046 | 105,044 | ||
| Current assets | |||
| Trade and other receivables Non-pledged financial assets at fair value through profit or loss |
13 | 1,057,119 51,710 |
1,683,255 |
| Cash at bank and in hand | 15 | 31,220 | 101,343 |
| 1,140,049 | 1,784,598 | ||
| Total assets | 1,244,095 | 1,889,642 | |
| EQUITY AND LIABILITIES | |||
| Equity Share capital Accumulated losses |
16 | 600,000 (330, 886) |
600,000 (308, 662) |
| Total equity | 269,114 | 291,338 | |
| Non-current liabilities | |||
| Lease liabilities | 17 | 11,839 | |
| 11,839 | |||
| Current liabilities | |||
| Trade and other payables | 18 | 957,012 | 1,569,136 |
| Lease liabilities Current tax liabilities |
17 19 |
12,134 5,835 |
11,494 5,835 |
| 974,981 | 1,586,465 | ||
| Total liabilities | 974,981 | 1,598,304 | |
| Total equity and liabilities | 1,244,095 | 1,889,642 |
On 24 September 2021 the Board of Directors of AEONIC SECURITIES C.I.F. PLC authorised these financial statements for issue.
AEON. AEON. $\overline{C}$ n . . . . . . . . . . . $......$ . . . . PLC Alexandros Sinos Director Director $\star$
. . . . . . . . . . . . . Serafeim Charalampidis
The notes on pages 6 to 27 form an integral part of these financial statements.
| Share capital € |
Accumulated losses € |
Total € |
|
|---|---|---|---|
| Balance at 1 January 2020 | 600,000 | (266, 405) | 333,595 |
| Comprehensive income Net loss for the year Total comprehensive income for the year |
(321) (321) |
(321) (321) |
|
| Balance at 31 December 2020 | 600,000 | (266, 726) | 333,274 |
| Balance at 31 December 2020/ 1 January 2021 | 600,000 | (308, 662) | 291,338 |
| Comprehensive income Net loss for the period Total comprehensive income for the period |
(22, 224) (22, 224) |
(22, 224) (22, 224) |
|
| Balance at 30 June 2021 | 600,000 | (330, 886) | 269,114 |
Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defence at the rate of 17% will be payable on such deemed dividend to the extent that the shareholders for deemed dividend distribution purposes at the end of the period of two years from the end of the year of assessment to which the profits refer, are Cyprus tax residents and domiciled. From 1 March 2019, the deemed dividend distribution is subject to a 1,70% contribution to the General Healthcare System, increased to 2,65% from 1 March 2020, with the exception of April 2020 until June 2020 when the 1,70% rate was applicable. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.
The balance of accumulated losses as at 30 June 2020 is not in accordance with the balance of the accumulated losses as at 1st of January 2021 as the net profit of the second semester of 2020 which amounts to €41,936 is not included.
The notes on pages 6 to 27 form an integral part of these financial statements.
| Note | € | 2020 € |
|
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| (Loss)/profit before tax Adjustments for: |
(22, 224) | 569 | |
| Depreciation of property, plant and equipment | 9 | 997 | 8,596 |
| Depreciation of right-of-use assets | 10 | 29,701 | |
| Unrealised exchange loss | 789 | ||
| Profit from the sale of property, plant and equipment | (5, 168) | ||
| Fair value losses on financial assets at fair value through profit or loss | 2,908 | ||
| Interest income | (2,997) | ||
| Interest expense | 314 | 1,628 | |
| (20, 913) | 36,026 | ||
| Changes in working capital: | |||
| Decrease/(increase) in trade and other receivables | 626,136 | (607, 104) | |
| (Increase)/decrease in financial assets at fair value through profit or loss | (51,710) | 5,451 | |
| (Decrease)/increase in trade and other payables | (612, 124) | 591,635 | |
| Cash (used in)/generated from operations | (58, 611) | 26,008 | |
| CASH FLOWS FROM INVESTING ACTIVITIES Payment for purchase of financial assets at fair value through other comprehensive income |
5,000 | ||
| Payment for purchase of other assets | 14 | (3,318) | |
| Proceeds from disposal of property, plant and equipment | 9 | 22,997 | |
| Interest received | 2,997 | ||
| Net cash generated from investing activities | 27,676 | ||
| CASH FLOWS FROM FINANCING ACTIVITIES Payments of leases liabilities |
(11, 199) | (15,786) | |
| Unrealised exchange (loss) | (789) | ||
| Interest paid | (314) | (1,628) | |
| Net cash used in financing activities | (11, 513) | (18, 203) | |
| Net (decrease)/increase in cash and cash equivalents | (70, 124) | 35,481 | |
| Cash and cash equivalents at beginning of the period/year | 101,343 | 65,862 | |
| Cash and cash equivalents at end of the period/year | 15 | 31,219 | 101,343 |
The notes on pages 6 to 27 form an integral part of these financial statements.
The Company AEONIC SECURITIES C.I.F. PLC (the "Company") was incorporated in Cyprus on 19th of April 2012 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. Its registered office is at Laiou 6, Anna City Court Block B, Flat 301, 3015 Limassol, Cyprus.
The Company is a Cyprus Investment Firm ("C.I.F") and in accordance with the license no.177/12 granted by the Cyprus Securities and Exchange Commission ("CySEC") on 4 September 2012.
The principal activities of the company comprise the provision of investment services, including reception and transmission of orders in relation to one or more financial instruments and execution of orders on behalf of clients in relation to one or more financial instruments.
In addition, the Company provides ancillary services, which comprise the safekeeping and administration of financial instruments, including custondianship and related services, advice to undertakings on capital structure, industrial strategy and related matters and advice and services related to mergers and the purchase of undertakings, foreign exchange services where these are connected to the provision of investment services, services related to underwriting, and investment services and activities as well as ancillary services where these are connected to the provision of investment or ancillary services.
The Cypriot economy has recorded positive growth in 2017 and 2018 after overcoming the economic recession of recent years. The overall economic outlook of the economy remains favourable, however there are still downside risks emanating from the still high levels of non-performing loans, the public debt ratio, as well as possible deterioration of the external environment for Cyprus.
This operating environment may have a significant impact on the Company's operations and financial position. Management is taking necessary measures to ensure sustainability of the Company's operations. However, the future effects of the current economic situation are difficult to predict and Management's current expectations and estimates could differ from actual results.
The Company's Management is unable to predict all developments which could have an impact on the Cyprus economy and consequently, what effect, if any, they could have on the future financial performance, cash flows and financial position of the Company.
On the basis of the evaluation performed, the Company's management has concluded that no provisions or impairment charges are necessary. The Company's Management believes that it is taking all the necessary measures to maintain the viability of the Company and the smooth conduct of its operations in the current business and economic environment.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113. The financial statements have been prepared under the historical cost convention as modified by the revaluation of, and financial assets and financial liabilities at fair value through profit or loss and through other comprehensive income.
During the current period the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2021. This adoption did not have a material effect on the accounting policies of the Company.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented in these financial statements unless otherwise stated.
Revenue represents the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes); the transaction price. The Company includes in the transaction price an amount of variable consideration as a result of rebates/discounts only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the Company's experience with similar contracts and forecasted sales to the customer.
The Company recognises revenue when the parties have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations, the Company can identify each party's rights and the payment terms for the goods or services to be transferred, the contract has commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a result of the contract), it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer and when specific criteria have been met for each of the Company's contracts with customers.
The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customer's ability and intention to pay that amount of consideration when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimates are reflected in the statement of profit or loss and other comprehensive income in the period in which the circumstances that give rise to the revision become known by Management.
The Company assesses whether contracts that involve the provision of a range of goods and/or services contain one or more performance obligations (that is, distinct promises to provide a service) and allocates the transaction price to each performance obligation identified on the basis of its stand-alone selling price. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer (that is the good or service is capable of being distinct) and the Company's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the good or service is distinct within the context of the contract).
Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company recognises revenue when it transfers control of a product or service to a customer.
Revenue from rendering of services is recognised over time while the Company satisfies its performance obligation by transferring control over the promised service to the customer in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined based on the actual labour hours spent relative to the total expected labour hours.
Commission income is recognised on an accruals basis in accordance with the substance of the relevant agreements.
Work executed is recognised in the accounting period in which the work is carried out by reference to completion of the specific transaction assessed on the basis of the actual work executed provided as a proportion of the total work to be carried out.
Interest income is recognised on a time-proportion basis using the effective interest method.
Interest expense and other borrowing costs are charged to profit or loss as incurred.
Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Euro $(\epsilon)$ , which is the Company's functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date.
Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is calculated on the straight-line method so as to write off the cost of each asset to its residual value over its estimated useful life. The annual depreciation rates used are as follows:
| $\frac{0}{0}$ | |
|---|---|
| Motor vehicles | 20 |
| urniture, fixtures and office equipment | 10 |
| Computer Hardware | 20 |
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its recoverable amount.
Expenditure for repairs and maintenance of property, plant and equipment is charged to profit or loss of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Company. Major renovations are depreciated over the remaining useful life of the related asset.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Costs that are directly associated with identifiable and unique computer software products controlled by the Company and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Subsequently computer software is carried at cost less any accumulated amortisation and any accumulated impairment losses. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognised as a capital improvement and added to the original cost of the computer software. Costs associated with maintenance of computer software programs are recognised as an expense when incurred. Computer software costs are amortised using the straight-line method over their useful lives, not exceeding a period of three years. Amortisation commences when the computer software is available for use.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non financial assets, other than goodwill, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
The Company classifies its financial assets in the following measurement categories:
The classification and subsequent measurement of debt financial assets depends on: (i) the Company's business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. On initial recognition, the Company may irrevocably designate a debt financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
For investments in equity instruments that are not held for trading, the classification will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention ("regular way" purchases and sales) are recorded at trade date, which is the date when the Company commits to deliver a financial instrument. All other purchases and sales are recognised when the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
The Company assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost and FVOCI and exposure arising from loan commitments and financial guarantee contracts. The Company measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of profit or loss and other comprehensive income within "net impairment losses on financial and contract assets. Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item.
Debt instruments carried at amortised cost are presented in the statement of financial position net of the allowance for ECL. For loan commitments and financial quarantee contracts, a separate provision for ECL is recognised as a liability in the statement of financial position.
For debt instruments at FVOCI, an allowance for ECL is recognised in profit or loss and it affects fair value gains or losses recognised in OCI rather than the carrying amount of those instruments.
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
For trade receivables and contract assets, including trade receivables and contract assets with a significant financing component, and lease receivables the Company applies the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognised from initial recognition of the financial assets.
For all other financial instruments that are subject to impairment under IFRS 9, the Company applies general approach - three stage model for impairment. The Company applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1.
Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter ("12 Months ECL"). If the Company identifies a significant increase in credit risk ("SICR") since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any ("Lifetime ECL"). Refer to note 6, Credit risk section, for a description of how the Company determines when a SICR has occurred. If the Company determines that a financial asset is creditimpaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company's definition of credit impaired assets and definition of default is explained in note 6, Credit risk section.
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial assets.
Financial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
Financial assets are written-off, in whole or in part, when the Company exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
The Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Company assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Company derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss in profit or loss.
For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL.
These amounts generally arise from transactions outside the usual operating activities of the Company. They are held with the objective to collect their contractual cash flows and their cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
Trade receivables are also subject to the impairment requirements of IFRS 9. The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. See note 6. Credit risk section.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company, and a failure to make contractual payments for a period of greater than 180 days past due.
Financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.
An exchange between the Company and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. (In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.)
If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners and is recognised directly to equity.
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premium relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Company and the costs can be measured reliably.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Company has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Company. Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss.
Ordinary shares are classified as equity.
At the date of approval of these financial statements, standards and interpretations were issued by the International Accounting Standards Board which were not vet effective. Some of them were adopted by the European Union and others not yet. The Board of Directors expects that the adoption of these accounting standards in future periods will not have a material effect on the financial statements of the Company.
The Company is exposed to interest rate risk, credit risk, liquidity risk, currency risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Company to manage these risks are discussed below:
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Company's income and operating cash flows are substantially independent of changes in market interest rates as the Company has no significant interest-bearing assets. The Company is exposed to interest rate risk in relation to its non-current borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company's Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at amortised cost, at fair value through other comprehensive income (FVOCI) and at fair value through profit or loss (FVTPL), favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and contract assets as well as lease receivables. Further, credit risk arises from financial quarantees and credit related commitments.]
Credit risk is managed on a group basis. For banks and financial institutions, the Company has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of ['C'].
If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, Management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. [Individual credit limits and credit terms are set based on the credit quality of the customer in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
The Company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
These policies enable the Company to reduce its credit risk significantly.
The Company has the following types of financial assets that are subject to the expected credit loss model:
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
Impairment losses are presented as net impairment losses on financial and contract assets within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
The Company considers the probability of default upon initial recognition of the asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the financial asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. Especially the following indicators are incorporated:
Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors. No significant changes to estimation techniques or assumptions were made during the reporting period.
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment.
The Company has decided to use the low credit risk assessment exemption for investment grade financial assets. Management consider 'low credit risk' for listed bonds to be an investment grade credit rating with at least one major rating agency. Other instruments are considered to be low credit risk when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
A default on a financial asset is when the counterparty fails to make contractual payments within 90 days of when they fall due.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company categorises a debt financial asset for write off when a debtor fails to make contractual payments greater than 180 days past due. Where debt financial assets have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
The Company's exposure to credit risk for each class of (asset/instrument) subject to the expected credit loss model is set out below:
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables (including those with a significant financing component, and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 or 1 January 2021 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.
(ii) Impairment of financial assets (continued)
The average credit period on sales of goods is 60 days. No interest is charged on outstanding trade receivables.
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime ECL.
There were no significant trade receivable and contract asset balances written off during the period that are subject to enforcement activity.
For receivables from related parties lifetime ECL was provided for them upon initial application of IFRS 9 until these financial assets are derecognised as it was determined on initial application of IFRS 9 that it would require undue cost and effort to determine whether their credit risk has increased significantly since initial recognition to the date of initial application of IFRS 9.
For any new loans to related parties, which are not purchased or originated credit-impaired financial assets, the impairment loss is recognised as 12-month ECL on initial recognition of such instruments and subsequently the Company assesses whether there was a significant increase in credit risk.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at 30 June 2021 and 31 December 2020:
The Company does not hold any collateral as security for any receivables from related parties.
There were no significant receivables from related parties written off during the period that are subject to enforcement activity.
The Company assesses, on a group basis, its exposure to credit risk arising from cash at bank. This assessment takes into account, ratings from external credit rating institutions and internal ratings, if external are not available.
Bank deposits held with banks with investment grade rating are considered as low credit risk.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at 30 June 2021 and 31 December 2020:
The ECL on current accounts is considered to be approximate to 0, unless the bank is subject to capital controls. The ECL on deposits accounts is calculated by considering published PDs for the rating as per Moody's and an LGD of 40-60% as published by ECB.
The Company does not hold any collateral as security for any cash at bank balances.
There were no significant cash at bank balances written off during the period that are subject to enforcement activity.
(iii) Financial assets at fair value through profit or loss
The primary purpose of these instruments is to ensure that funds are available to a borrower as required. Guarantees which represent irrevocable assurances that the Company will make payments in the event that a counterparty cannot meet its obligations to third parties, carry the same credit risk as loans receivable. Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans or quarantees. With respect to credit risk on commitments to extend credit, the Company is potentially exposed to loss in an amount equal to the total unused commitments, if the unused amounts were to be drawn down. The Company monitors the term to maturity of credit related commitments, because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.
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 Company 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 committed credit facilities.
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 Company's measurement currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US Dollar and the Euro. The Company's Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
Capital includes equity shares and share premium, convertible preference shares and loan from parent company.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Company's overall strategy remains unchanged from last year.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
The Company has an enforceable extension option in relation to... [provide details of the arrangement, extension option, pricing etc]. The group has assessed whether the extension option is reasonably certain to exercise by considering [list considerations] and has concluded that it is/is not reasonably certain to exercise
The Company initially estimates and recognises amounts expected to be payable under residual value guarantees as part of the lease liability. Typically, the expected residual value at lease commencement is equal to or higher than the guaranteed amount, and so the Company does not expect to pay anything under the guarantees.
At the end of each reporting period, the expected residual values are reviewed to reflect actual residual values achieved on comparable assets and expectations about future prices.
When measuring expected credit losses the Company uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
Critical judgements in applying the Company's accounting policies
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in note 6, Credit risk section.
The impairment test is performed using the discounted cash flows expected to be generated through the use of non-financial assets, using a discount rate that reflects the current market estimations and the risks associated with the asset. When it is impractical to estimate the recoverable amount of an asset, the Company estimates the recoverable amount of the cash generating unit in which the asset belongs to.
Intangible assets are initially recorded at acquisition cost and are amortized on a straight line basis over their useful economic life. Intangible assets that are acquired through a business combination are initially recorded at fair value at the date of acquisition. Intangible assets with indefinite useful life are reviewed for impairment at least once per year. The impairment test is performed using the discounted cash flows expected to be generated through the use of the intangible assets, using a discount rate that reflects the current market estimations and the risks associated with the asset. When it is impractical to estimate the recoverable amount of an asset, the Company estimates the recoverable amount of the cash generating unit in which the asset belongs to.
The Board of Directors assesses the useful lives of depreciable assets at each reporting date, and revises them if necessary so that the useful lives represent the expected utility of the assets to the Company. Actual results, however, may vary due to technological obsolescence, mis-usage and other factors that are not easily predictable.
The Company derives its revenue from contracts with customers for the transfer of goods and services over time and at a point in time in the following major product lines.
| 2021 | 2020 |
|---|---|
| € | |
| 1,800 | $\sim$ |
| 160,799 | 197,982 |
| 162,599 | 197,982 |
| Motor | Furniture, vehicles fixtures and office equipment |
Total | |
|---|---|---|---|
| € | € | € | |
| Cost Balance at 1 January 2020 Disposals |
68,493 (25, 475) |
32,622 | 101,115 (25, 475) |
| Balance at 31 December 2020/1 January 2021 | 43,018 | 32,622 | 75,640 |
| Balance at 30 June 2021 | 43,018 | 32,622 | 75,640 |
| Depreciation Balance at 1 January 2020 Charge for the period On disposals |
44,360 6,304 (7,646) |
21,526 2,293 |
65,886 8,597 (7,646) |
| Balance at 31 December 2020/ 1 January 2021 | 43,018 | 23,819 | 66,837 |
| Charge for the period | 997 | 997 | |
| Balance at 30 June 2021 | 43,018 | 24,816 | 67,834 |
| Net book amount | |||
| Balance at 30 June 2021 | 7,806 | 7,806 | |
| Balance at 31 December 2020 | 8,803 | 8,803 |
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
| 2021 | 2020 |
|---|---|
| € | |
| $\qquad \qquad$ | 17,829 |
| 5.168 | |
| 22,997 | |
| Land and buildings € |
Total € |
|
|---|---|---|
| Cost Balance at 1 January 2020 Additions |
118,803 (46, 666) |
118,803 (46, 666) |
| Balance at 31 December 2020/ 1 January 2021 | 72,137 | 72,137 |
| Adjustment due to amendment rental agreement | (29, 701) | (29, 701) |
| Balance at 30 June 2021 | 42,436 | 42,436 |
| Depreciation Balance at 1 January 2020 Charge for the period |
29,701 29,700 |
29,701 29,700 |
| Balance at 31 December 2020/ 1 January 2021 | 59,401 | 59,401 |
| Balance at 30 June 2021 | 29,701 | 29,701 |
| Net book amount | ||
| Balance at 30 June 2021 | 12,735 | 12,735 |
| Balance at 31 December 2020 | 12,736 | 12,736 |
| Amounts recognised in profit and loss: | ||
| 2021 € |
2020 | |
| Depreciation expense on right-of-use assets | 29,700 | |
| Interest expense on lease liabilities | (295) | (2,215) |
| 11. Intangible assets | ||
| Computer software € |
||
| Cost Balance at 1 January 2020 |
13,591 | |
| Balance at 31 December 2020/ 1 January 2021 | 13,591 | |
| Balance at 30 June 2021 | 13,591 | |
| Amortisation Balance at 1 January 2020 |
13,591 | |
| Balance at 31 December 2020/ 1 January 2021 | 13,591 | |
| Balance at 30 June 2021 | 13,591 | |
| Net book amount | ||
| Balance at 30 June 2021 | ||
| 2021 | 2020 | |
|---|---|---|
| € | ||
| Balance at 1 January | $\blacksquare$ | 5,000 |
| Additions | $\overline{\phantom{a}}$ | (5,000) |
| Balance at 30 June/31 December | ÷ |
These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, Management of the Company have elected to designate these investments in equity instruments as at FVTOCI as they believe that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Company's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.
On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings.
On disposal of these debt investments, any related balance within the FVOCI reserve is reclassified to profit or loss.
| 2021 | 2020 | |
|---|---|---|
| Trade receivables | 1,010,232 | € 1,635,084 |
| Receivables from own subsidiaries (Note 21.1) | 3,456 | 3,456 |
| Shareholders' current accounts - debit balances (Note 21.2) | 3,894 | 3,894 |
| Deposits and prepayments | 2,023 | 3,900 |
| Other receivables | 19,916 | 20,169 |
| Refundable VAT | 17,598 | 16,752 |
| 1,057,119 | 1,683,255 |
The Company does not hold any collateral over the trading balances.
The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.
The exposure of the Company to credit risk and impairment losses in relation to trade and other receivables is reported in note 6 of the financial statements.
| 2021 | 2020 |
|---|---|
| € | |
| 83,505 $\overline{\phantom{a}}$ |
80,187 3.318 |
| 83,505 | 83.505 |
Cash balances are analysed as follows:
| 2021 | 2020 | |
|---|---|---|
| € | ||
| Cash at bank and in hand | 31,220 | 101,343 |
| 31,220 | 101,343 |
The exposure of the Company to credit risk and impairment losses in relation to cash and cash equivalents is reported in note 6 of the financial statements.
| 2021 Number of shares |
2021 € |
2020 Number of shares |
2020 € |
|
|---|---|---|---|---|
| Authorised Ordinary shares of $E1$ each |
1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 |
| Issued and fully paid Balance at 1 January |
600,000 | 600,000 | 600,000 | 600,000 |
| Balance at 30 June/31 December | 600,000 | 600,000 | 600,000 | 600,000 |
| The present value of minimum | ||||
|---|---|---|---|---|
| Minimum lease payments | lease payments | |||
| 2021 | 2020 | 2021 | 2020 | |
| € | € | |||
| Not later than 1 year | 12,000 | 12,134 | 11,494 | |
| Later than 1 year and not later than 5 years | 12,000 | 11,839 | ||
| 24,000 | 12,134 | 23,333 | ||
| Future finance charges | 12,134 | (667) | ||
| Present value of lease liabilities | 12,134 | 23,333 | 12,134 | 23,333 |
All lease obligations are denominated in Euro.
The fair values of lease obligations approximate to their carrying amounts as presented above.
The Company's obligations under leases are secured by the lessors' title to the leased assets.
| 2021 | 2020 € |
|
|---|---|---|
| Trade payables | 912,455 | 1,543,415 |
| Social insurance and other taxes | 4,630 | 4,790 |
| Accruals | 6,258 | 5,498 |
| Other creditors | 20,830 | 14,623 |
| Defence tax on rent payable | 12,839 | 810 |
| 957,012 | 1,569,136 |
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.
| 2021 | 2020 |
|---|---|
| € | |
| 5,835 | 5,835 |
| 5,835 | 5,835 |
The Cypriot economy has recorded positive growth in 2017 and 2018 after overcoming the economic recession of recent years. The overall economic outlook of the economy remains favourable, however there are still downside risks emanating from the still high levels of non-performing loans, the public debt ratio, as well as possible deterioration of the external environment for Cyprus.
This operating environment may have a significant impact on the Company's operations and financial position. Management is taking necessary measures to ensure sustainability of the Company's operations. However, the future effects of the current economic situation are difficult to predict and Management's current expectations and estimates could differ from actual results.
The Company's Management is unable to predict all developments which could have an impact on the Cyprus economy and consequently, what effect, if any, they could have on the future financial performance, cash flows and financial position of the Company.
On the basis of the evaluation performed, the Company's management has concluded that no provisions or impairment charges are necessary. The Company's Management believes that it is taking all the necessary measures to maintain the viability of the Company and the smooth conduct of its operations in the current business and economic environment.
The Company is controlled by Alexandros Sinos, incorporated in Cyprus, which owns 61% of the Company's shares, which corresponds to 365,500 shares.
The following transactions were carried out with related parties:
| Name | Nature of transactions | 2021 | ZUZU € |
|---|---|---|---|
| Aeonic Investments Ltd | Finance | 3.456 | 3.456 |
| 3,456 | 3,456 | ||
| 2021 | 2020 |
|---|---|
| 3.894 | 3.894 |
| 3,894 | 3,894 |
The directors'/shareholders' current accounts are interest free, and have no specified repayment date.
The Company had no contingent liabilities as at 30 June 2021.
The Company had no capital or other commitments as at 30 June 2021.
There were no material events after the reporting period, which have a bearing on the understanding of the financial statements.
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