Interim Report • Sep 1, 2017
Interim Report
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For the six months ended 30 June 2017
| Page | |
|---|---|
| Board of Directors and other officers | 1 |
| Declaration of the Members of the Board of Directors and the person responsible for the preparation of the condensed consolidated interim financial statements |
$\overline{2}$ |
| Interim Management Report | 3 & 4 |
| Independent Auditors' Report on review of condensed consolidated interim financial statements |
5 & 6 |
| Condensed consolidated statement of profit or loss and other comprehensive income |
7 |
| Condensed consolidated statement of financial position | 8 |
| Condensed consolidated statement of changes in equity | 9 |
| Condensed consolidated statement of cash flows | 10 |
| Notes to the condensed consolidated interim financial statements | $11 - 29$ |
Board of Directors
Konstiantyn Melodkovets - Executive Director, CEO Denys Molodkovets - Executive Director, CFO
Audit Committee
Denys Molodkovets - Head of Committee
Konstiantyn Molodkovets
Remuneration Committee
Konstiantyn Molodkovets - Head of Committee
Denys Molodkovets
Secretary
Independent Auditors
Registered Office
Boomer Secretarial Limited 3 Michael Koutsofta Str. 3031, Limassol Cyprus
KPMG Limited
3 Michael Koutsofta Str. 3031, Limassol Cyprus
In accordance with article 9 sections $(3)(c)$ and $(7)$ of the Transparency Requirements (Securities for Trading on a Regulated Market) Law of 2007 (the "Law"), we, the Members of the Board of Directors and the person responsible for the preparation of the condensed consolidated interim financial statements of KDM Shipping Public Limited (the "Company") for the six months ended 30 June 2017, confirm that to the best of our knowledge:
a) the condensed consolidated interim financial statements presented on pages 7 to 29:
Members of the Board of Directors:
| Konstiantyn Molodkovets | |
|---|---|
| Denys Molodkovets |
Person responsible for the preparation of the condensed consolidated interim financial statements of the Company for the six months ended 30 June 2017: $\curvearrowleft$
| Denys Molodkovets | |
|---|---|
Nicosia, 31 August 2017
The Board of Directors of KDM Shipping Public Limited (the "Company") presents to the members its interim management report together with the unaudited condensed consolidated interim financial statements of the Company and of its subsidiaries (together with the Company referred to as "the Group") for the six months ended 30 June 2017).
The Group's sales revenue for the first half of 2017 consisted mainly from freight segment and grain trading operations since ship repair segment did not contribute much to total revenue of the Group.
The Group's sales revenue from its freight segment is generated mainly from the transportation services for dry bulk cargoes, including such commodities as grain, metal products, cement, and other materials along the Black, Azov. Mediterranean and Caspian Sea regions' shipping routes.
The freight sales revenue for the first half of 2017 increased by approximately 10% compared to the corresponding previous period but this is not a substantial change as general market condition remained the same as in first half of 2016. As a result of management's cost-cutting efforts, cost of freight has decreased by 22%, which resulted in gross profit in the current period as compared to a loss in first half of 2016.
Grain trading segment sales revenue has decreased by approximately 40% due to the slow sales in first half of 2017, however net profit for the segment did not have such a negative impact. Gross profit for the corresponding previous period had an increase of 42%, as a result of an increase in the segment's gross margin by 3%.
Ship repair segment's revenue has also showed negative tendency. Difficult political and economical situation have significantly cut the order book, main customers as of now are Ukrainian ship owners with minor repairs. While both gross loss and costs for the segment have decreased by 37% and 67%, respectively, revenues have also decreased, by 77%.
Overall, performance of the Group remain low due to a large number of economical and political issues in the region of operation. It is management's belief that freight segment will improve its performance in the second half of 2017 after the implementation of new strategy that is aimed at cost cutting and profit enhancement.
The main risks and uncertainties faced by the Group and the steps taken to manage these risks, are described in note 17 to the condensed consolidated interim financial statements.
The ongoing political and economic instability in Ukraine which commenced at the end of 2013 and led to a deterioration of state finances, volatility of financial markets, illiquidity on capital markets, higher inflation and devaluation of the national currency against major foreign currencies has continued in 2016 and 2017, though to a lesser extent as compared to 2014 and 2015.
Inflation rate in Ukraine during 2016 reduced to 12% (as compared to 43% in 2015), while GDP returned to growth of 1% (after 9% decline in 2015). Devaluation of Ukrainian Hryvnia during 2016 has been moderate. In 2016 the National Bank of Ukraine ("NBU") has made certain steps to ease the currency control restrictions introduced in 2014 and 2015.
The final resolution and the effects of the political and economic crisis are difficult to predict but may have further severe effects on the Ukrainian economy.
The uncertain economic conditions in Ukraine have affected the cash flow forecasts of the Group's management in relation to the impairment assessment for financial and non-financial assets. The Group's management has assessed whether any impairment provisions are deemed necessary for the Group's financial assets carried at amortised cost by considering the economic situation and outlook at the end of the reporting period.
Although, Group's management considers that all necessary actions are being performed to maintain financial stability of the Group in current situation, continuation of crisis may adversely affect results and financial position of the Group, but it is currently impossible to estimate the effect. These consolidated financial statements reflect current management estimation of Ukrainian business environment influence on the financial position of the Group. Situation development may differ from management expectations. These financial statements were not adjusted to reflect events after the reporting period.
Disclosed in note 16 to the condensed consolidated interim financial statements.
By order of the E ectors.
Denys Molodkovets Director, CFO
Nicosia, 31 August 2017
KPMG Limited Chartered Accountants 14 Esperidon Street, 1087 Nicosia, Cyprus P.O. Box 21121, 1502 Nicosia, Cyprus T: +357 22 209000, F: +357 22 678200
5
We have reviewed the accompanying condensed consolidated statement of financial position of KDM Shipping Public Limited (the "Company") and its subsidiary companies (together with the Company referred to as "the Group") as at 30 June 2017, the condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the sixmonth period then ended, and notes to the interim financial information ("the condensed consolidated interim financial statements"). Management is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We draw attention to notes $2(d)$ and $2(f)$ to the condensed consolidated interim financial statements, which describe the political and social unrest and regional tensions in Ukraine. The impact of the events referred to in notes 2(d) and 2(f) about the continuing economic and political crisis in Ukraine and their final resolution cannot be determined and may adversely affect the Ukrainian economy and the operations of the Group and its ability to meet its obligations as they fall due.
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements as at 30 June 2017 are not prepared, in all material respects, in accordance with IAS 134 Interim Financial Reporting.
Maria A, Papacosta, FCCA Certified Public Accountant and Registered Auditor for and on behalf of
KPMG Limited Certified Public Accountants and Registered Auditors 14 Esperidon Street 1087 Nicosia Cyprus
31 August 2017
$\sim$
$\overline{\phantom{a}}$
| Note | 30 June 2017 USD'000 |
30 June 2016 USD'000 |
|
|---|---|---|---|
| Continuing operations | |||
| Revenue | 8714 | 13576 | |
| Cost of sales | (8495) | (13835) | |
| Gross profit / (loss) | 219 | (259) | |
| Other operating income | 6 | 2 1 0 3 | 47 |
| Selling and distribution expenses | (49) | ||
| Administrative expenses | (188) | (227) | |
| Other operating expenses | 7 | (363) | (1917) |
| Profit/(loss) from operating activities | 1 771 | (2, 405) | |
| Finance income | 21 | 1 | |
| Finance costs | (68) | ||
| Net finance income / (expenses) | 21 | (67) | |
| Profit/(loss) before taxation | 1792 | (2472) | |
| Taxation | (1) | 37 | |
| Profit/(loss) from continuing operations | 1791 | (2435) | |
| Discontinued operation | |||
| Loss from discontinued operation, net of tax | 5 | (170) | |
| Profit/(loss) for the period | 1791 | (2605) | |
| Other comprehensive income | |||
| Items that are or may be reclassified subsequently to profit or loss | |||
| Effect from translation into presentation currency | 719 | 39. | |
| Total comprehensive income | 2510 | (2.566) | |
| Profit/(loss) attributable to: | |||
| Owners of the Company | 1680 | (2610) | |
| Non-controlling interests | 111 | ||
| 1 791 | (2.605) | ||
| Total comprehensive income attributable to: | |||
| Owners of the Company | 2 3 9 9 | (2563) | |
| Non-controlling interests | 111 | (3) | |
| 2510 | (2.566) | ||
| Profit/(loss) per share | |||
| Basic and fully diluted profit/(loss) per share (cent) | 15 | 0,19 | (0.28) |
| Profit/(loss) per share - Continuing operations | |||
| Basic and fully diluted profit/(loss) per share | 15 | 0.19 | (0.26) |
The notes on pages 11 to 29 are an integral part of these condensed consolidated interim financial statements.
$\frac{1}{2}$
$\hat{r}$
$\lambda$
$\overline{\mathcal{L}}$
$\bar{\bar{z}}$
$\overline{\phantom{a}}$
| Note | 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
|---|---|---|---|
| Assets | |||
| Vessels, property, plant and equipment | 8 | 8 6 6 0 | 8957 |
| Trade and other receivables | 11 | 1 509 | |
| Non-current assets | 10 169 | 8957 | |
| Inventories | 10 | 538 | 76 |
| Trade and other receivables | 11 | 7138 | 6036 |
| Cash and cash equivalents | 21 270 | 23 490 | |
| Current assets | 28 9 46 | 29 602 | |
| Total assets | 39 115 | 38 559 | |
| Equity | |||
| Share capital | 12 | 118 | 118 |
| Share premium | 23 570 | 23 570 | |
| Retained earnings | 27 335 | 25 655 | |
| Foreign currency translation reserve | (17700) | (18419) | |
| Equity attributable to owners of the Company | 33 323 | 30 924 | |
| Non-controlling interests | (791) | (902) | |
| Total equity | 32 532 | 30 022 | |
| Liabilities | |||
| Deferred tax liabilities | 495 | 485 | |
| Other long-term liabilities | 39 | 39 | |
| Non-current liabilities | 534 | 524 | |
| Loans and borrowings | 13 | 2063 | 4 1 4 6 |
| Short-term notes | 29 | 29 | |
| Trade and other payables | 14 | 3957 | 3838 |
| Current liabilities | 6 0 4 9 | 8013 | |
| Total liabilities | 6583 | 8537 | |
| Total equity and liabilities | 39.115 | 38 559 |
On 31 August 2017, the Board of Directors of KDM Shipping Public Limited approved and authorised for issue these condensed consolidated interim financial statements.
eee V . . . . . . . . . . . . . . . . . . . . ............
Konstiantyn Molodkovets Director, CEO
.
.............. Denys Molodkovets Director, CFO
The notes on pages 11 to 29 are an integral part of these condensed consolidated interim financial statements.
| Attributable to owners of the Company | |||||||
|---|---|---|---|---|---|---|---|
| Share capital premium | Share | Foreign currency translation reserve |
Retained earnings |
Total | Non- controlling interests |
Total equity |
|
| USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |
| Balance at 1 January 2016 | 118 | 23 570 | (17480) | 33 853 | 40 061 | 31 | 40 092 |
| Comprehensive income Loss for the period Effect from translation into presentation currency |
47 47 |
(2610) (2610) |
(2610) 47 (2, 563) |
5 (8) (3) |
(2605) 39 (256) |
||
| Total comprehensive expense | 118 | 23 570 | (17.433) | 31 243 | 37 498 | 37526 | |
| Balance at 30 June 2016 Balance at 1 January 2017 |
118 | 23 570 | (18419) | 25 655 | 30 924 | (902) | 30 022 |
| Comprehensive income Loss for the period Effect from translation into presentation currency Total comprehensive expense |
719 719 |
1680 1680 |
1680 719 2 3 9 9 |
111 111 |
1 791 719 2510 |
||
| Balance at 30 June 2017 | 118 | 23 570 | (17, 700) | 27 335 | 33 323 | (791) | 32.532 |
$\tilde{\phantom{a}}$
The notes on pages 11 to 29 are an integral part of these condensed consolidated interim financial statements.
i.
| Note | 30 June 2017 USD'000 |
30 June 2016 USD'000 |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Loss for the period | 1791 | (2605) | |
| Adjustments for: | |||
| Depreciation of vessels, property, plant and equipment | 8 | 367 | 585 |
| Provision for impairment of receivables | 11 | 1 3 4 6 | |
| Payables written-off | (2000) | ||
| Impairment charge - assets held for sale | 394 | ||
| Interest income | (21) | (1) | |
| Discount of notes issued | 3 | ||
| Taxation | (1) | 107 | |
| Exchange differences | (103) | 177 | |
| Cash flows from operations before working capital changes | 33 | 6 | |
| Decrease in inventories | 10 | (462) | 4050 |
| Increase in trade and other receivables | $\mathbf{11}$ | (2183) | (2959) |
| Increase in trade and other payables | 14 | 119 | 264 |
| Cash flows (used in)/from operations | (2493) | 1361 | |
| Tax paid | |||
| Net cash flows (used in)/from operating activities | (2493) | 1361 | |
| Cash flows from investing activities | |||
| Payment for acquisition of vessels, property, plant and equipment | 8 | (62) | |
| Proceeds from disposal of vessels, property, plant and equipment | 8 | 6 | |
| Interest received | |||
| Net cash flows from/(used in) investing activities | 6 | (61) | |
| Cash flows from financing activities | |||
| Proceeds from non-bank loans | 13 | 39 | 206 |
| Repayment of non-bank loans | 13 | (122) | |
| Net cash flows (used in)/from financing activities | (83) | 206 | |
| Net (decrease)/increase in cash and cash equivalents | (2570) | 1506 | |
| Cash and cash equivalents at the beginning of the period | 23 490 | 19864 | |
| Effect of translation into presentation currency | 350 | (276) | |
| Cash and cash equivalents at the end of the period | 21 270 | 21 094 |
The notes on pages 11 to 29 are an integral part of these condensed consolidated interim financial statements. ×
$\ddot{\phantom{a}}$
$\sim$
$\hat{I}$
$\overline{a}$
$\overline{\phantom{a}}$
KDM Shipping Public Limited (the "Company") was incorporated in Cyprus on 2 December 1999 as a private limited liability company under the Cyprus Companies Law, Cap. 113. Its registered office is at 3 Michael Koutsofta Str., 3031, Limassol, Cyprus. The Company is currently listed on the main market of Warsaw Stock Exchange.
The Company was initially established under the name V.S. Marine Engineering Services Limited. On 21 December 2011, the Company was re-registered as a public limited company and changed its name to KDM Shipping Public Limited.
These condensed consolidated interim financial statements for the six months ended 30 June 2017 comprise the Company and its subsidiaries (together with the Company referred to as the "Group").
During 2016, the Group has discontinued its passenger transportation segment. Other principal activities of the Group remained the same as in the previous period, and are cargo freight, ship repair and trading in grain, corn, oil and barley.
The Group's subsidiaries country of incorporation, their principal activities and effective ownership percentage are disclosed in note 9 to the condensed consolidated interim financial statements.
On 9 August 2012, the shares of the Company were admitted on the regulated market of the Warsaw Stock Exchange. On 11 June 2013, following the second public offering 2 000 000 new shares subscribed at issue price of PLN 30 per share.
The parent company of the Group is KDM Shipping Public Limited, with an issued share capital of 9 296 000 ordinary shares with nominal value of EUR 0.01 per share. The shares were distributed as follows:
| 30 June 2017 | 31 December 2016 | ||||
|---|---|---|---|---|---|
| Owner | Number of | Ownership | Number of | Ownership | |
| shares | Interest | shares | Interest | ||
| % | % | ||||
| Konstiantyn Molodkovets | 5 100 000 | 54,86 | 5 100 000 | 54,86 | |
| (KM Management Limited) | |||||
| Denys Molodkovets | 1 197 321 | 12,88 | 1 197 321 | 12,88 | |
| (Denhold Management Limited) | |||||
| Oleksyi Veselovskyy (1) | 200 000 | 2,15 | 200 000 | 2,15 | |
| Konstantin Anisimov | ٠ | ||||
| Liudmila Molodkovets | ۰ | ||||
| Iurii Molodkovets | |||||
| Public | 2 798 676 | 30,11 | 2798676 | 30,11 | |
| 9 296 000 | 100,00 | 9 296 000 | 100,00 |
(1) Since Mr. Veselovskyy passed away on 25 March 2012, these Shares in the Issuer constitute a part of estate to be transferred to heirs of Mr. Veselovskyy. The heir(s) will enter into possession of the Shares not earlier than after 6 months from the date of death, while the title to the shares will have passed to the relevant heir(s) as of the date of death.
These interim financial statements as at and for the six months ended 30 June 2017 have been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting", and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2016 ('last annual financial statements'). They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.
These interim financial statements were authorised for issue by the Company's Board of Directors on 31 August 2017.
These interim financial statements have been prepared under the historical cost convention.
In preparing these interim financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgments made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.
A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are reported to the Board of Directors.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
If the inputs used to measure the air value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the relevant notes.
Main operating activities of the Group are not carried out in Ukraine; however, the Group's performance is affected by the development of the political situation in Ukraine and Russia. Laws and other regulatory acts affecting the activities of entities in Ukraine may be subject to changes during short periods of time. As a result, assets and operating activity of the Group may be exposed to the risk in case of any unfavourable changes in political and economic environment.
The ongoing political and economic instability in Ukraine which commenced at the end of 2013 and led to a deterioration of state finances, volatility of financial markets, illiquidity on capital markets, higher inflation and devaluation of the national currency against major foreign currencies has continued in 2016 and 2017, though to a lesser extent as compared to 2014 and 2015.
Inflation rate in Ukraine during 2016 reduced to 12% (as compared to 43% in 2015), while GDP returned to growth of 1% (after decline in 2015). Devaluation of Ukrainian Hryvnia during 2016 has been moderate. In 2016 the National Bank of Ukraine ("NBU") has made curtain steps to ease the currency control restrictions introduced in 2014 and 2015. Current restrictions are effective until rescinded by the NBU. The banking system remains fragile due to its weak level of capital, low asset quality caused by the economic situation, national currency devaluation, changing regulations and other factors.
The final resolution and the effects of the political and economic crisis are difficult to predict but may have further severe effects on the Ukrainian economy.
The uncertain economic conditions in Ukraine have affected the cash flow forecasts of the Group's management in relation to the impairment assessment for financial and non-financial assets. The Group's management has assessed whether any impairment provisions are deemed necessary for the Group's financial assets carried at amortised cost by considering the economic situation and outlook at the end of the reporting period.
Although, Group's management considers that all necessary actions are being performed to maintain financial stability of the Group in current situation, continuation of crisis may adversely affect results and financial position of the Group, but it is currently impossible to estimate the effect. These consolidated financial statements reflect current management estimation of Ukrainian business environment influence on the financial position of the Group. Situation development may differ from management expectations. These financial statements were not adjusted to reflect events after the reporting period.
The functional currency of most of the companies of the Group is US Dollar ("USD"). Transactions in currencies other than the functional currency of the Group's companies are treated as transactions in foreign currencies. The Group's management decided to use USD as the presentation currency for financial and management reporting purposes for the convenience of its principal users. Exchange differences arising from the translation to presentation currency are classified as equity and transferred to foreign currency translation reserve.
The exchange rates used in the preparation of these condensed consolidated interim financial statements are as follows:
| Currency | 30 June 2017 | Weighted average for the 6 months ended 30 June 2017 |
2016 | 31 December Weighted average for the 6 months ended 30 June 2016 |
|---|---|---|---|---|
| UAH/USD | 26,0417 | 26,7380 | 27,1739 | 25,4578 |
| RUB/USD | 58,8235 | 57,8035 | 61,3497 | 70,2583 |
These condensed consolidated interim financial statements have been prepared under the going concern basis, which assumes the realisation of assets and settlement of liabilities in the course of ordinary economic activity. Renewals of the Group's assets, and the future activities of the Group, are significantly influenced by the current and future economic environment in Ukraine. The Board of Directors and Management are closely monitoring the events in the current operating environment of the Group described in note 2 (d) to the condensed consolidated interim financial statements and has assessed the current situation and there is no indication of adverse effects while at the same time are taking all the steps to secure Group's short and long-term viability. To this effect, they consider that the Group is able to continue its operations as a going concern and that it will be able to meet its obligations as they fall due.
As from 1 January 2017, the Group adopted all changes to International Financial Reporting Standards (IFRSs) as adopted by EU which are relevant to its operations. This adoption did not have a material effect on the financial statements of the Group.
The following Standards, Amendments to Standards and Interpretations have been issued but are not yet effective for annual periods beginning on 1 January 2017. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these Standards early.
The Board of Directors expects that the adoption of these interim financial reporting standards in future periods will not have a material effect on the financial statements of the Group.
The accounting policies applied in these interim financial statements are the same as those applied in the Group's last annual financial statements as at and for the year ended 31 December 2016.
A reportable segment is a separable component of a business entity that produces goods or provides services to individuals (or groups of related products or services) in a particular economic environment that is subject to risks and generate revenues other than risks and income of those components that are peculiar to other reportable segments.
As disclosed in the annual consolidated financial statements for the year ended 31 December 2016, management discontinued its passenger transportation segment in August 2016. The Group's remaining three reportable segments are freight, ship repair and grain trading.
Analysis of the Group's reportable segments is as follows:
| 30 June 2017 | Freight USD'000 |
Ship repair USD'000 |
Grain USD'000 |
Total USD'000 |
|---|---|---|---|---|
| External revenues | 1652 | 78 | 6984 | 8714 |
| Inter-segment revenue | ||||
| Cost of sales | (1507) | (157) | (6831) | (8495) |
| Gross profit/(loss) | 145 | (79) | 153 | 219 |
| Expenses | 1552 | (52) | 52 | 1 552 |
| Other material non-cash items | ||||
| Impairment loss | ||||
| Loss from operating activities | 1697 | (131) | 205 | 1771 |
| Net finance cost | 21 | 21 | ||
| Loss before tax | 1697 | (131) | 226 | 1792 |
| Tax | (1) | (1) | ||
| Net profit/(loss) for the period | 696 | (131) | 226 | 1791 |
| Non-current assets | 4792 | 4 2 9 6 | 9088 | |
| Current assets | 22 461 | 732 | 6834 | 30 027 |
| Total assets | 27 253 | 5028 | 6.834 | 39 115 |
| Non-current liabilities | 43 | 491 | 534 | |
| Current liabilities | 4 1 0 1 | 660 | 288 | 6 0 4 9 |
| Total liabilities | 4 1 4 4 | 151 | L 288 | 6583 |
| 30 June 2016 | Freight USD'000 |
Ship repair USD'000 |
Passenger transportation (Discontinued) USD'000 |
Grain USD'000 |
Total USD'000 |
|---|---|---|---|---|---|
| Revenue | 1.505 | 345 | 60 | 11.726 | 13.636 |
| Cost of sales | (1.935) | (470) | (39) | (11.431) | 13.875) |
| Gross (loss)/profit | (430) | (125) | 21 | 295 | (239) |
| Expenses | (1.596) | (154) | (48) | ۰ | (1.798) |
| Operating expenses | |||||
| Impairment charge of vessels, | |||||
| property, plant and equipment | (394) | (394) | |||
| Operating (loss)/profit | (2.026) | (279) | (421) | 295 | (2.431) |
| Net finance cost | (65) | (2) | (67) | ||
| (Loss)/profit before taxation | (2.091) | (281) | (421) | 295 | (2.498) |
| Taxation | 37 | (144) | (107) | ||
| Net (loss)/profit for the period | (2.091) | (244) | (565) | 295 | (2.605) |
| Freight USD'000 |
Ship repair USD'000 |
Grain USD'000 |
Total USD'000 |
|
|---|---|---|---|---|
| As at 31 December 2016 | ||||
| Non-current assets | 4 5 3 4 | 4 4 2 3 | 8957 | |
| Current assets | 24 793 | 114 | 4 6 9 5 | 29 602 |
| Total assets | 29.327 | 4537 | 4695 | 38 559 |
| Non-current liabilities | 33 | 491 | 524 | |
| Current liabilities | 1 204 | 5 0 7 5 | 734 | 8013 |
| Total liabilities | L 237 | 5566 | 734 | 8537 |
| For the six months ended 30 June 2017 USD'000 |
For the six months ended 30 June 2016 USD'000 |
|
|---|---|---|
| Total profit/(loss) before tax for reportable segments | 1.791 | (2.605) |
| Elimination of discontinued operations | 565 | |
| Profit/(loss) before tax | 2.040 |
$\sim$
The impairment loss was recognised in relation to Freight, Ship Repair and Passenger transportation segments which is analysed as follows:
| 31 December 2016 USD'000 |
|
|---|---|
| Vessels, property, plant and equipment | |
| Freight | (2.878) |
| Passenger transportation | (394) |
| Impairment loss |
In the light of the deterioration of the activities of the ship repair and passenger transportation services, due to the political and economic environment in the Ukraine, the management estimated the recoverable amount of the related segments.
The recoverable amount of the segments was based on external valuation received for vessels, property, plant and equipment and on management assumption for the rest. The external valuators method used was the value in use.
In August 2016, management discontinued its passenger transportation segment. The Group sold LLC Riverest Tur, the segment operating company, and all related assets. The related assets were previously classified as held-for-sale in the interim financial statements for the six months ended 30 June 2016.
In June 2016, management committed to a plan to sell the passenger transportation segment. As at 30 June 2016, this segment was presented as a disposal group held for sale. The sale was completed in August 2016.
As at 30 June 2016, the disposal group comprised assets of USD 1 814 thousand less liabilities of USD 314 thousand detailed as follows:
| 30 June 2016 USD'000 |
|
|---|---|
| Vessels, property, plant and equipment | 1720 × |
| Inventories | 13 |
| Cash and cash equivalents | |
| Trade and other receivables | 78 |
| Trade and other payables | (120) |
| Deferred tax liabilities | (194) |
| 1 500 |
An impairment loss of USD 394 thousand writing down the carrying amount of the disposal group to its fair value less costs to sell has been included in other operating expenses.
Results of discontinued operation are as follows:
| 30 June 2016 USD'000 |
||
|---|---|---|
| Revenues | 60 (47) |
|
| Expenses Loss before tax |
(26) | |
| Tax | (144) | |
| Loss from discontinued operation, net of tax | (170) | |
| OTHER OPERATING INCOME 6. |
30 June 2017 USD'000 |
30 June 2016 USD'000 |
| Income from derecognition of liability (note 13) Income from foreign exchange difference |
2000 103 |
|
| Total other operating income | 2 1 0 3 |
i.
| 30 June 2017 USD'000 |
30 June 2016 USD'000 |
|
|---|---|---|
| Loss from foreign exchange difference | 168 | |
| Impairment of vessels, property, plant and equipment | 394 | |
| Provision for impairment of receivables | 1 3 4 3 | |
| Fines and penalties | ||
| Sundry expenses | 363 | 8 |
| Total other operating expenses | 363 | 1917 |
For the six months ended 30 June 2017
| 30 June 2017 | Land and buildings |
Vessels | Plant and equipment |
Vehicles | Furniture and fittings |
Other | Total |
|---|---|---|---|---|---|---|---|
| USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |
| Cost | |||||||
| Balance at 1 January 2017 | 5 4 4 0 | 14 29 6 | 991 | 20 | 45 | 72 | 20 864 |
| Additions | |||||||
| Disposals | (5) | (5) | |||||
| Exchange differences | 91 | 16 | 107 | ||||
| Balance at 30 June 2017 | 5531 | 14 29 6 | 1 007 | 15 | 45 | 72 | 20 966 |
| Depreciation and impairment losses | |||||||
| Balance at 1 January 2017 | 2974 | 8 5 0 5 | 310 | 9 | 42 | 67 | 11907 |
| Depreciation for the period | 66 | 270 | 27 | 365 | |||
| On disposals | (1) | (1) | |||||
| Exchange differences | 32 | 3 | 3,5 | ||||
| Balance at 30 June 2017 | 3072 | 8775 | 340 | 8 | 43 | 68 | 12 3 06 |
| Carrying amounts | |||||||
| Balance at 30 June 2017 | 2459 | 5521 | 667 | 8 6 6 0 |
Net book value of vessels used to secure the Group's bank loans is disclosed in note 13.
$\cdot$
$\overline{\phantom{a}}$
For the six months ended 30 June 2017
ngo
| 31 December 2016 | Land and | Vessels | Plant and | Vehicles | Furniture and fittings |
Other | Total |
|---|---|---|---|---|---|---|---|
| buildings USD'000 |
USD'000 | equipment USD'000 |
USD'000 | USD'000 | USD'000 | USD'000 | |
| Cost | 44 | 71 | 21 975 | ||||
| Balance at 1 July 2016 | 5 4 3 2 | 15 459 | 951 | 18 | 27 | ||
| Additions | 27 | ||||||
| Disposals | (1058) | (1) | (1059) | ||||
| Exchange differences | (105) | 13 | (79) | ||||
| Balance at 31 December 2016 | 5440 | 14 29 6 | 991 | 20 | 45 | 72 | 20864 |
| Depreciation and impairment losses | |||||||
| Balance at 1 July 2016 | 2914 | 5499 | 284 | 8 | 40 | 65 | 8810 |
| Depreciation for the period | 58 | 476 | 25 | 561 | |||
| On disposals | (350) | (350) | |||||
| Impairment charge | 2878 | 2878 | |||||
| Exchange differences | |||||||
| Balance at 31 December 2016 | 2974 | 8 5 0 5 | 310 | g | 42 | 67 | 11 907 |
| Carrying amounts | |||||||
| Balance at 31 December 2016 | 2466 | 5791 | 681 | 8957 |
As at 31 December 2016 management carried out an impairment assessment of its transport vessels. As a result, impairment charge of USD 2 878 thousand was recognised in profit or loss for the year ended 31 December 2016.
$\cdot$
Ä,
For the six months ended 30 June 2017
| 30 June 2016 | Land and buildings |
Vessels | Vessels under |
Plant and equipment |
Vehicles | Furniture and fittings |
Other | Total |
|---|---|---|---|---|---|---|---|---|
| USD'000 | USD'000 | construction USD'000 |
USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |
| Cost | ||||||||
| Balance at 1 January 2016 | 5 630 | 15 5 79 | 3 1 8 2 | 993 | 56 | 64 | 76 | 25 580 |
| Additions | 40 | 20 | 62 | |||||
| Disposals | ||||||||
| Exchange differences | (194) | (6) | (42) | (33) | (3) | (2) | (2) | (282) |
| Reclassification to assets held for sale | (4) | (114) | (3180) | (29) | (35) | (18) | (5) | (3385) |
| Balance at 30 June 2016 | 5432 | 15 4 59 | 951 | 18 | 44 | 71 | 21 975 | |
| Depreciation and impairment losses | ||||||||
| Balance at 1 January 2016 | 2943 | 5 0 7 5 | 1 196 | 270 | 15 | 55 | 67 | 9621 |
| Depreciation for the period | 71 | 478 | 29 | 4 | $\overline{2}$ | A | 585 | |
| On disposals | ||||||||
| Reclassification to assets held for sale | (51) | (1196) | (6) | (11) | (16) | (3) | $(1\ 283)$ | |
| Exchange differences | (100) | (3) | (9) | (1) | (113) | |||
| Balance at 30 June 2016 | 2914 | 5499 | 284 | 8 | 40 | 65 | 8810 | |
| Carrying amounts | ||||||||
| Balance at 30 June 2016 | 2518 | 9960 | 667 | 13 165 |
In June 2016 management decided to dispose of its passenger transportation segment. Impairment charge of USD 394 thousand was recognised in profit or loss.
Net carrying amount of passenger vessels was reclassified as asset
$\overline{\phantom{a}}$
$\overline{\phantom{a}}$
$\lambda$
The details of the subsidiaries are as follows:
| Name | Country of incorporation |
Principal activities | 30 June 2017 Effective holding % |
31 December 2016 Effective holding $\frac{9}{6}$ |
|---|---|---|---|---|
| KD Shipping Co. Limited Inc. | Panama | Bareboat charterer of vessels |
100,00 | 100,00 |
| LLC Danapris | Ukraine | Ukrainian holding company |
99,84 | 99,84 |
| LLC Capital Shipping Company | Ukraine | Ship owner, safety and technical license |
99,57 | 99,57 |
| LLC Hylea-Servise | Ukraine | Ship repair services Management |
99,57 | 99,57 |
| Infoland Incorporated | Panama | services | 100,00 | 100,00 |
| LLC First Kherson Shipbuilding Yard (formerly LLC Kuybyshev KSRY) |
Ukraine Russian |
Ship repair services | 100,00 | 100,00 |
| LLC Marine Management | Federation Marshall |
Ship operator | 100,00 | 100,00 |
| Bemax Marketing LTD | Islands Marshall |
Dormant | 100,00 | 100,00 |
| Intention Development LTD | Islands Marshall |
Dormant | 100,00 | 100,00 |
| Promo Ring LTD | Islands Marshall |
Dormant | 100,00 | 100,00 |
| Star Value LTD | Islands Marshall |
Dormant | 100,00 | 100,00 |
| Terra Empire LTD | Islands Marshall |
Dormant | 100,00 | 100,00 |
| Unlimited Mark LTD | Islands Marshall |
Dormant | 100,00 | $-100,00$ |
| KD Bulk | Islands Marshall |
Dormant | 100,00 | 100,00 |
| KD Cargo | Islands Marshall |
Dormant | 100,00 | 100,00 |
| KD Logistics | Islands Marshall |
Dormant | 100,00 | 100,00 |
| KD Maritime | Islands | Dormant | 100,00 | 100,00 |
| Mak Agro Grains Cereals and Legumes Trading LLC |
United Arab Emirates |
Commodities trader | 51,00 | 51,00 |
In August 2016 the Group sold its stake in LLC Riverest Tur since management has decided to discontinue the passenger transportation segment.
The Representative office of KDM Shipping Co Limited has been established without the right to conduct commercial activity in Ukraine.
In September 2016, the Group acquired a 51% stake in share capital of MAK Agro Grains Cereals and Legumes Trading LLC, a commodities trading company.
LLC Capital Shipping Company, LLC Danapris and LLC Hylea-Servise are in the process of liquidation.
Group subsidiaries incorporated in Marshall Islands are dormant companies and will be liquidated.
| 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
|---|---|---|
| Fuel | 52 | 64 |
| Materials | 5 | 11 |
| Work in progress | 481 | |
| Total inventories | 538 | 76 |
| TRADE AND OTHER RECEIVABLES 11. |
||
| 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
| Trade receivables | 1 730 | 1678 |
| Less: Provision for impairment of trade receivables | ||
| Trade receivables - net | 1 730 | 1678 |
| Receivables from directors/owners | 1 0 8 1 | |
| Prepayments | 6 0 45 | 5 3 5 4 |
| Less: Provision for prepayments | (1975) | (2198) |
| VAT recoverable | 113 | 120 |
| Other receivables | 1653 | 1082 |
| Total trade and other receivables | 8647 | 6036 |
| Non-current portion | 1 509 | |
| Current portion | 7138 | 6 0 3 6 |
| Total trade and other receivables | 8647 | 6 0 3 6 |
| 12. SHARE CAPITAL |
30 June 2017 Number of shares |
30 June 2017 USD'000 |
31 December 2016 Number of shares |
31 December 2016 USD'000 |
|---|---|---|---|---|
| Authorised Ordinary shares of USD 0,01 each (EUR 0,01 each) |
20 000 000 | 265 20 000 000 | 265 | |
| Issued and fully paid | ||||
| Balance at 30 June and 31 December | 9 296 000 | 118 | 9296000 | 118 |
The owners of the parent company as at 30 June and 31 December are as follows:
| 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
|---|---|---|
| Konstiantyn Molodkovets | 65 | 65 |
| Denys Molodkovets | 15 | 15 |
| Oleksyi Veselovskyy | 2 | 2 |
| Public | 36 | 36 |
| 118 | 118 |
On 11 June 2013, the Company issued 2 000 000 new shares following the second public offering. The offer price for each Company's share was established at PLN 30 (USD 9,31/EUR 7,34) and the investors subscribed for 2 000 000 shares of the Company which represent 21,5% of the total issued share capital.
As a result of the above, the ordinary share capital increased to USD 118 thousand and is divided into 9 296 000 ordinary shares of EUR 0,01 each and share premium of USD 23 570 thousand net of transaction costs.
| 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
|---|---|---|
| Short-term liabilities | ||
| Non-bank loans | 63 | 146 |
| Bank loans (Note) | 2000 | 4 0 0 0 |
| Total loans and borrowings | 2 063 | 4 1 4 6 |
Bank loans are secured by mortgage against the vessels with net book value of USD 2 222 thousand (31 December 2016: USD 2 549 thousand).
Interest rates are as follows:
30 June 2017 31 December 2016
Bank loans
3M Libor + 10,5% 3M Libor + 10,5%
Note:
The Group has derecognised one of its bank loans amounted to USD 2 000 thousand following a Court Decision ruled in Ukraine. The effect of this derecognition was recognised in profit or loss as part of other operating income (note 6).
| 30 June 2017 |
31 December 2016 |
|
|---|---|---|
| USD'000 | USD'000 | |
| Trade payables | 965 | 2514 |
| Advances received | 1 503 | 41 |
| Other accounts payable | 827 | 560 |
| Salaries contributions and other related taxes | 308 | 367 |
| Payable to directors/owners | 83 | 85 |
| Other taxes payable | 24 | 24 |
| Deferred income | 4 | |
| Interest payable | 243 | 243 |
| Total trade and other payables | 3957 | 3838 |
The calculation of earnings/(loss) per share for the six months ended 30 June 2017 and 30 June 2016 was based on the profit/(loss) attributable to ordinary owners and the weighted number of ordinary shares outstanding as follows:
| 30 June 2017 |
30 June 2016 |
|
|---|---|---|
| USD'000 | USD'000 | |
| Profit/(loss) for the period from continuing operations Loss for the period from discontinued operation |
1791 | (2435) (170) |
| Profit/(loss) for the period | 791 | (2.605) |
| Number of ordinary shares: | 30 June 2017 '000' |
30 June 2016 '000 |
| Weighted average number of ordinary shares | 9 2 9 6 | 9296 |
| Total basic and fully diluted earnings/(loss) per share (USD) | 0,19 | (0, 28) |
| Basic and fully diluted loss per share (USD) – Continuing operations | 0,19 | (0, 26) |
There are no options or instruments convertible into new shares and so basic and diluted earnings per share are the same.
The majority of the Company's share capital is held by Konstiantyn Molodkovets who owns 54,86% and Denys Molodkovets who owns 12,88%. During the six months ended 30 June 2017 30,11% of the Company's share capital is traded at the Warsaw Stock Exchange and is held by both institutional and retail investors.
In the ordinary course of its business, the Group has engaged and continue to engage in transactions with both related and unrelated parties.
For the purposes of these interim financial statements, parties are considered to be related if one party has the ability to control the other party, is under common control, or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
According to these criteria the related parties of the Group are divided into the following categories:
A. Key management;
B. Companies whose activities are significantly influenced by the Group's owners.
$- -$
$- - -$
For the six months ended 30 June 2017
Salary costs of key management for the six months ended 30 June 2017 and 2016 were as follows:
| 30 June 2017 USD'000 |
30 June 2016 USD'000 |
|
|---|---|---|
| Salaries | 30 | 30 |
| Contributions to pension funds | ||
| Total | 34 | |
| Number of key management personnel was as follows: | ||
| 30 June 2017 |
31 June 2016 |
|
| Number of key management personnel, persons | 20 |
$\sim$
$\overline{\phantom{a}}$
$\ddot{\phantom{a}}$
Companies whose activities are significantly influenced by the Group's owners:
| 30 June 2017 USD'000 |
30 June 2016 USD'000 |
|
|---|---|---|
| Revenue | 607 | |
| Administrative expenses | (34) | (22) |
| Other operating (expenses)/income | (9) | |
| Total | (34) | 576 |
| (iii) Amounts receivable from directors/owners | ||
| 30 June | 31 December | |
| 2017 | 2016 | |
| USD'000 | USD'000 | |
| Receivable from directors/owners | 1.081 | |
| (iv) Amounts payable to directors/owners | ||
| 30 June | 31 December | |
| 2017 | 2016 | |
| USD'000 | USD'000 | |
| Payable to directors/owners | 161 | 167 |
| 30 June 2017 USD'000 |
31 December 2016 USD'000 |
|
|---|---|---|
| Advances received | 456 | $\blacksquare$ |
| Non-bank loans | 63 | 146 |
| Total |
The Group is exposed to the following risks resulting from the use of financial instruments: credit risk, liquidity risk and market risk including foreign currency risk and interest rate risk of fair value.
For the six months ended 30 June 2017 USD 2 028 thousand (30 June 2016: USD 4 904 thousand) or 23% (30 June 2016: 36%) from the Group's revenue refers to the sales transactions carried out with one of the Group's clients.
Other aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the last annual financial statements as at and for the year ended 31 December 2016.
There were no material events after the reporting period, which affect the condensed consolidated interim financial statements as at 30 June 2017.
On 31 August 2017, the Board of Directors of KDM Shipping Public Limited approved and authorised for issue, these condensed consolidated interim financial statements for issue.
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