ASBISc Enterprises P lc
INTERIM REPORT
FOR THE SIX MONTHS
ENDED 3 0 JUNE 201 8
Limassol, 8 August 201 8
2
TABLE OF CONTENTS
Page
PART I ADDITIONAL INFORMATI ON 4
PART II FINANCIAL STATEMENTS 2 2
3 DIRECTORS’ REPORT ON THE COMPANY ’S AND GROUP’S OPERATIONS
We have prepared this report as required by Paragraph 60 section 2 of the Regulation of the Ministry of Finance
dated 2 9 March 20 18 on current and periodic information to be published by issuers of securities and conditions of
recognition of information required by the law of non - member country as equal .
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
In this six month repor t all references to the Company apply to ASBISc Enterprises Plc and all references to the
Group apply to ASBISc Enterprises Plc and its consolidated subsidiaries. Expressions such as "we", "us", "our"
and similar apply generally to the Group (including its particular subsidiaries, depending on the country discussed),
unless from the context it is clear that they apply to the Company alone.
Financial and Operating Data
This six - month report contains financial statements of, and financial info rmation relating to the Group. In particular,
this six - month report contains our interim consolidated financial statements for the six months ended 30 June
201 8 . The financial statements appended to this six - month report are presented in U.S. dollars and h ave been
prepared in accordance with International Accounting Stand ard (" IAS ") 34 .
The functional currency of the Company is U.S. dollars. Accordingly, transactions in currencies other than our
functional currency are translated into U.S. dollars at the ex change rates prevailing on the applicable transaction
dates.
Certain arithmetical data contained in this six - month report, including financial and operating information, have
been subject to rounding adjustments. Accordingly, in certain instances, the sum of the numbers in a column or a
row in tables contained in this six - month report may not conform exactly to the total figure given for that column or
row.
Currency Presentation
Unless otherwise indicated, all references in this six month report to "U.S. $" or "U.S. dollars" are to the lawful
currency of the United States; all references to "€" or the "Euro" are to the lawful currency of the member states of
the European Union that adopt the single currency in accordance with the EC Treaty, which means the Treaty
establishing the European Community (signed in Rome on 25 March 1957), as amended by the Treaty on
European Union (signed in Maastricht on 7 February 1992) and as amended by the Treaty of Amsterdam (signed
in Amsterdam on 2 October 1997) and includes, for this purpose, Council Regulations (EC) No. 1103/97 and No.
974/98; and all references to "PLN" or "Polish Zloty" are to the lawful currency of the Republic of Poland.
All references to U.S. dollars, Polish Zloty, Euro and other cur rencies are in thousands, except share and per
share data, unless otherwise stated.
FORWARD - LOOKING STATEMENTS
This six - month report contains forward - looking statements relating to our business, financial condition and results
of operations. You can find m any of these statements by looking for words such as "may", "will", "expect",
"anticipate", "believe", "estimate" and similar words used in this six - month report. By their nature, forward - looking
statements are subject to numerous assumptions, risks and un certainties. Accordingly, actual results may differ
materially from those expressed or implied by the forward - looking statements. We caution you not to place undue
reliance on such statements, which speak only as of the date of this six - month report.
The c autionary statements set out above should be considered in connection with any subsequent written or oral
forward - looking statements that we or persons acting on our behalf may issue. We do not undertake any obligation
to review or confirm analysts’ expect ations or estimates or to release publicly any revisions to any forward - looking
statements to reflect events or circumstances after the date of this six - month report.
4 Part I Additional information
1. Overview
ASBISc Enterprises Plc is one of the leading distributors of Information Technology ("IT") products in
Europe, Middle East and Africa (“EMEA”) Emerging Markets: Central and Eastern Europe, the Baltic
States, the Former Soviet Union, the Middle East and Afr ica, combining a broad geographical reach
with a wide range of products distributed on a "one - stop - shop" basis. Our main focus is on the
following countries: Slovakia, Poland, Czech Republic, Romania, Croatia, Slovenia, Bulgaria, Serbia,
Hungary, Middle Ea st countries (i.e. United Arab Emirates, Iraq , Qatar and other Gulf states), Russia,
Belarus , Kazakhstan and Ukraine .
The Group distributes IT components (to assemblers, system integrators, local brands and retail) as
well as A - branded finished products li ke desktop PCs, laptops, servers, and networking to SMB and
retail. Our IT product portfolio encompasses a wide range of IT components, blocks and peripherals,
and mobile IT systems. We currently purchase the majority of our products from leading internat ional
manufacturers, including Apple, Intel, Advanced Micro Devices ("AMD"), Seagate, W estern Digital,
Samsung, Microsoft, Toshiba, Dell, Acer, Lenovo and Hitachi. In addition, a significant part of our
revenue is comprised of sales of IT products under ou r private labels, Prestigio and Canyon .
ASBISc commenced business in 1990 in Belarus and in 1995 we incorporated our holding Company in
Cyprus and moved our headquarters to Limassol. Our Cypriot headquarters support, through two
master distribution centre s (located in the Czech Republic and the United Arab Emirates), our network
of 31 warehouses located in 24 countries. This network supplies products to the Group's in - country
operations and directly to its customers in approximately 60 countries .
The Com pany’s registered and principal administrative office is at Diamond Court, 43 Kolonakiou
Street, Ayios Athanasios, CY - 4103 Limassol, Cyprus .
2. Executive summary for the three and six month periods ended June 30 th
, 201 8
During Q2 201 8 and H1 201 8 the Company ’s results improved significantly as compared to the
corresponding periods of 201 7 . The Company has managed to increase its revenues by 65,2 % in Q2
2018 and 69.4% in H1 2018 which is considered to be a beyond expectations achievement. As a
result, net prof it after taxation in Q2 and H1 201 8 was enormously increased as compared to the
corresponding periods of 201 7 . Thus, h aving seen H1 201 8 results, the Directors believe that in the
remain der of the year the Company is expected to continue its strong performance and deliver the
forecasted results.
The principal events of the three - month period ended June 30 th
, 201 8 , were as follows:
In Q2 201 8 r evenues in creased by 6 5.2 % to U.S.$ 462,884 from U.S.$ 280,130 in Q2 201 7 .
In Q2 201 8 g ross profit in creased by 3 5.2 % to U.S.$ 20, 417 from U.S.$ 15,102 in Q2 201 7 .
In Q2 201 8 g ross profit margin was at 4.4 1 % as compared to 5.39 % in Q2 201 7 .
In Q2 201 8 s elling expenses in creased by 64.3 % to U.S.$ 11,909 from U.S.$ 7,247 in Q2 201 7 .
In Q2 201 8 a dministrative expenses in creased by 19.6 % to U.S.$ 4,713 from U.S.$ 3,942 in Q2
201 7 .
In Q2 201 8 EBITDA amounted to U.S.$ 4,412 as compared to U.S.$ 4,469 in Q2 201 7 .
The Company finished Q 2 201 8 with a n et profit after tax amounting to U.S.$ 1,236 , a 168 .3 %
growth compared to U.S.$ 461 in Q2 201 7 .
5 The f ollowing table presents revenues breakdown by regions in the three - month period ended
June 30 th
, 201 8 and 201 7 respectively (in U.S.$ thousand) :
Region Q2 201 8 Q2 20 1 7 Change %
Former Soviet Union
225, 050 128,954 75%
Central and Eastern Europe
123, 060 91,340 35%
Middle East and
Africa
63, 991 37,225 72%
Western Europe
40, 445 20,489 97%
Other
10, 338 2,122 387%
Grand Total 462, 884 280,130 65%
The principal events of the six month period ended June 30 th
, 2 01 8 , were as follows:
Revenues in creased by 69.4 % to U.S.$ 966,187 from U.S.$ 570,331 in H1 201 7 .
G ross profit in creased by 42,8 % to U.S.$ 43,182 from U.S.$ 30,241 in H1 201 7 .
Gross profit margin amounted to 4.47 % as compared to 5 . 3 0 % in H1 201 7 .
Selling expenses in creased by 62.6 % to U.S.$ 22,964 from U.S.$ 14,120 in H1 201 7 .
Administrative expenses in creased by 34.8 % to U.S.$ 11,084 from U.S.$ 8,221 in H1 201 7 .
EBITDA amounted to U.S.$ 10,377 as compared to U.S.$ 8,985 in H1 201 7 .
As a result t he Company increased its n et profit after tax by 191,7 % to U.S.$ 2,9 49 as compared to
U.S.$ 1,011 in H1 201 7 .
The f ollowing table presents revenues breakdown by regions in the six month periods ended
June 30 th
, 20 1 8 and 20 1 7 respectively (in U.S.$ thousand) :
Region H1 201 8 H1 201 7 Change %
Former Soviet Union
477, 034 268,691 78%
Central and Eastern Europe
283, 074 182,653 55%
Middle East and Africa
110, 980 73,622 51%
Western Europe
75, 6 20 41,624 82%
Other
19, 479 3,742 421%
Grand Total 966, 187 570,331 69%
6
3. Summary historical financial data
The following data sets out our summary historical consolidated financial information for the periods
presented. You should read the information in conjunction with the interim condensed consolidated
financial statements and results of operations contained elsewhere in this interim report.
For your convenience, certain U.S. $ amounts as of and for the three and six months ended 30 June
20 1 8 and 20 1 7 , have been converted into Euro and PLN as follows:
Individual items of the statement of financial position – based at average exchange rates
quoted by the National Bank of Poland for a given balance sheet date December 31 st
, 201 7 ,
that is: 1 US$ = 3,4813 PLN and 1 EUR = 4,1709 PLN and June 30 th
, 201 8 , that is: 1 US$ =
3,7440 PLN and 1 EUR = 4,3616 PLN .
Individual items in the income statement and statement of cash flows – based at exchange
rates representing the arithmetic averages of the exchange rates quoted by the National Bank
of Poland for t he last day of each month i n a given period 1 January to 30 June 20 1 8 , that is :
1 US$ = 3,5 192 PLN and 1 EUR = 4,239 5 PLN and 1 January to 30 June 201 7 , that is : 1 US$
= 3,8964 PLN and 1 EUR = 4,2474 PLN .
Individual items in the income statement and statement of cash flows f or separate Q2 201 8
and Q2 201 7 – based at exchange rates representing the arithmetic averages of the exchange
rates quoted by the National Bank of Poland for the last day of each month in a giv en period
1 April t o 30 June 20 1 8 , that is : 1 US$ = 3,6503 PLN and 1 EUR = 4,3005 PLN and 1 April to
30 June 201 7 , that is : 1 US$ = 3, 7704 PLN and 1 EUR = 4,20 57 PLN .
Period from Period from
1 January to 30 June 20 1 8 1 January to 3 0 June 201 7
USD PLN EUR USD PLN EUR
Revenue 966,1 87 3,400 , 221 802, 04 3 570,331 2,222,239 523,200
Cost of sales (923,005) (3,2 48,255 ) (766, 197 ) (540,090) (2,104,407) (495,458)
Gross profit 43,18 2 151 , 96 7 35, 84 6 30,241 117,832 27,742
Selling expenses (22,964) (80, 815 ) (19, 063 ) (14,120) (55,016) (12,953)
Administrative expenses (11,084) (39, 007 ) (9, 201 ) (8,222) (32,034) (7,542)
Profit from operations 9,133 32, 141 7, 581 7,900 30,782 7,247
Financial expenses (7,811) (27, 489 ) (6, 484 ) (6,656) (25,936) (6,106)
Financial income 2,252 7, 925 1, 869 483 1,880 443
Other gains and losses 155 545 129 (443) (1,725) (406)
Profit before taxation 3,730 13, 127 3, 096 1,284 5,001 1,177
Taxation (781) (2, 749 ) (648 ) (272) (1,061) (250)
Profit after taxation 2,949 10, 378 2, 448 1,011 3,940 928
Attributable to:
Non - controlling interest 7 25 6 (11) (42) (10)
Equity holders of the parent 2,942 10,354 2,442 1,022 3,981 937
USD
(cents) PLN
(grosz) EUR
(cents) USD
(cents) PLN
(grosz) EUR
(cents)
Basic and diluted earnings per share
from continuing operations 5.30 18.65 4.40 1.84 7.17 1.69
7
USD PLN EUR USD PLN EUR
Net cash outflows from operating
activities (53,677) (188,901) (44,558) (18,865) (73,505) (17,306)
Net cash outflows from investing
activities (1,330) (4,681) (1,104) (820) (3,197) (753)
Net cash inflows/(outflows) from
financing activities 5,009 17,628 4,158 5,789 22,556 5,311
Net decrease in cash and cash
equivalents (49,997) (175,950) (41,503) (13,896) (54,146) (12,748)
Cash at the beginning of the
period 45,933 161,648 38,130 6,537 25,470 5,997
Cash at the end of the period (4,064) (14,302) (3,374) (7,360) (28,675) (6,751)
As at 30 June 20 1 8 As at 31 December 201 7
USD PLN EUR USD PLN EUR
Current assets 406,227 1,520,914 348,705 495,568 1,725,221 413,633
Non - current assets 28,312 106,000 24,303 28,356 98,716 23,668
Total assets 434,539 1,626,914 373,009 523,923 1,823,933 437,300
Liabilities 341,218 1,277,520 292,902 429,455 1,495,062 358,451
Equity 93,321 349,394 80,107 94,468 328,871 78,949
Period from Period from
1 April to 30 June 20 1 8 1 April to 30 June 201 7
USD PLN EUR USD PLN EUR
Revenue 462,884 1,689,650 392,896 280,130 1,056,202 251,136
Cost of sales (442,467) (1,615,123) (375,566) (265,028) (999,262) (237,597)
Gross profit 20,417 74,527 17,330 15,102 56,940 13,539
Selling expenses (11,909) (43,471) (10,108) (7,247) (27,323) (4,497)
Administrative expenses (4,713) (17,204) (4,000) (3,942) (14,862) (3,534)
Profit from operations 3,794 13,849 3,220 3,914 14,755 3,508
Financial expenses (3,757) (13,714) (3,189) (3,086) (11,636) (2,767)
Financial income 1,342 4,899 1,139 296 1,114 265
Other gains and losses 127 464 108 (511) (1,927) (458)
Profit before taxation 1,506 5,497 1,278 612 2,307 549
Taxation (270) (986) (229) (151) (570) (136)
Profit after taxation 1,236 4,512 1,049 461 1,736 413
Attributable to:
Non - controlling interests 16 58 14 (13) (51) (12)
Equity holders of the parent 1,219 4,450 1,035 474 1,787 425
USD
(cents) PLN
(grosz) EUR
(cents) USD
(cents) PLN (grosz) EUR
(cents)
Basic and diluted earnings per share
from continuing operations 2 .20 7.30 1.70 0.85 3.22 0.77
USD PLN EUR USD PLN EUR
Net cash inflows/(outflows)
from operating activities (7,753) (28,301) (6,581) 10,814 40,775 9,695
Net cash outflows from investing activities (617) (2,252) (524) (446) (1,680) (400)
Net cash inflows/(outflows)
from financing activities 2,756 10,060 2,339 6,220 23,453 5,577
8
4. Organi z ation of ASBIS Group
The following table presents our corporate structure as at 30 June 20 1 8 :
Company Consolidation Method
ASBISC Enterprises PLC Mother company
Asbis Ukraine Limited (Kiev, Ukraine ) Full (100% subsidiary)
Asbis PL Sp.z.o.o (Warsaw, Poland) Full (100% subsidiary)
Asbis Poland Sp. z o.o. (Warsaw, Poland) Full (100% subsidiary)
Asbis Romania S.R.L (Bucharest, Romania) Full (100% subsidiary)
Asbis Cr d.o.o (Zagreb, Croatia) Full (100% subsidiary)
Asbis d.o.o Beograd (Belgrade, Serbia) Full (100% subsidiary)
Asbis Hungary Commercial Limited (Budapest, Hungary) Full (100% subsidiary)
Asbis Bulgaria Limited (Sofia, Bulgaria) Full (100% subsidiary)
Asbis CZ,spoI.s.r.o (Prague, Czech Republic) Full (100% subsidiary)
UAB Asbis Vilnius (Vilnius, Lithuania) Full (100% subsidiary)
Asbis Slovenia d.o.o (Trzin, Slovenia) Full (100% subsidiary)
Asbis Middle East FZE (Dubai, U.A.E) Full (100% subsidiary)
Asbis SK sp.l sr.o (Brat islava, Slovakia) Full (100% subsidiary)
Asbis Limited (Charlestown, Ireland) Full (100% subsidiary)
FPUE Automatic Systems of Business Control (Minsk, Belarus) Full (100% subsidiary)
E.M. Euro - Mall Ltd (former ISA Hardware Limited – Group) (Limassol, Cyprus) Full (100% subsidiary)
OOO ‘ Asbis’ - Moscow (Moscow, Russia) Full (100% subsidiary)
Asbis Morocco Limited (Casablanca, Morocco) Full (100% subsidiary)
EUROMALL CZ s.r.o. (formerly ISA Hardw are s.r.o.) (Prague, Czech Republic) Full (100% subsidiary)
S.C. EUROMALL 2008 S.R.L (formerly ISA Hardware International S.R.L) (Bucharest, Romania) Full (100% subsidiary)
ISA Hardware s.r.o Slovakia (Bratislava, Slovakia) Full (100% subsidiary)
Prestigio Plaza Sp. z o.o in liquidation (Warsaw, Poland) Full (100% subsidiary)
Prestigio Plaza Ltd (formerly Prestigio Technologies) (Limassol, Cyprus) Full (100% subsidiary)
Perenio IoT spol. s.r.o. (Prague, Czech Republic) Full (100% subsidiary)
Asbis Kypros Ltd (Limassol, Cyprus) Full (100% subsidiary)
Asbis TR Bilgisayar Limited Sirketi (Istanbul, Turkey) Full (100% subsidiary)
SIA “ASBIS LV” (Riga, Latvia)
Full (100% subsidiary)
Asbis d.o.o . (former Megatrend d.o.o.) (Sarajevo, Bosnia Herzegovina) Full (90% ownership)
ASBIS Close Joint - Stock Company (former CZAO ASBIS) (Minsk, Belarus) Full (100% subsidiary)
ASBIS Kazakhstan LLP (Almaty, Kazakhstan) Full (100% subsidiary)
Euro - Mall SRO (Bratislava, Slovakia) Full (100% subsidiary)
Prestigio China Corp. (former AOSBIS TECHNOLOGY (SHENZHEN) CORP.) (Shenzhen,China) Full (100% subsidiary)
ASBIS DE GMBH, (Munchen, Germany) Full (100% subsidiary)
EUROMALL BULGARIA EOOD (Sofia, Bulgaria) Full (100% subsidiary)
Advanced Systems Company LLC (Riyadh, Kingdom of Saudi Arabia) Full (100% subsidiary)
SHARK Computers a.s. (merged with SHARK ONLINE a.s.) (Bratislava, Slovakia) Full (100% subsidiary)
E - vision Production Unitary Enterprise (Minsk, Belarus) Full (100% subsidiary)
ASBIS CLOUD Ltd (Moscow, Russia) Full (100% subsidiary)
ASBIS SERVIC Ltd (Kiev, Ukraine) Full (100% subsidiary)
I ON Ltd (Kiev, Ukraine) Full (100% subsidiary)
ASBC MMC LLC (Baku, Azerbaijan) Full (65.85 % subsidiary)
9
5. Changes in the structure of the Company
During the six months ended June 30 th
, 201 8 ASBIS ESTONIA AS and PRESTIGIO PLAZA NL BV
have both been liquidated, being dormant companies .A subsidiary company named Prestigio Europe
spol. s.r.o . (Prague, Czech Republic) changed its name to Perenio IoT spol. s.r.o.
6. Discussion of the difference of the Company's results and published forecasts
On March 29 th, 2018 the Company announced its official financial forecast for 2018. Having seen H 1
2018 results, we fully sustain our forecasts that assume revenues between US$ 1,80 billion and 1,90
billion and net profit after tax between US$ 9 and US$ 10 million. Should the C ompany’s management
consider it necessary, and given the continuation of the stron g trend in H1 2018, we might come out to
the market with an updated forecast.
7. Information on dividend payment
In the six month period ended 30 June 201 8 following the Board of Directors’ recommendation and the
Annual General Meeting of Shareholders resolution , a dividend of U.S.$ 0.0 6 per share has been paid
out on Ju ne 1 2 th
, 2018 . The Dividend record date was May 17 t h
, 201 8 .
8. Shareholders possessing more than 5% of the Company's shares as of the date of the
publication of the interim report
The following table presents shareholders possessing more than 5% of the Company’s shares as of
the date of publication of this report, according to our best knowledge. The information included in the
table is based on the information received from the shareho lders pursuant to Art. 69, sec. 1, point 2 of
the Act on Public Offering, conditions governing the introduction of financial instruments to organized
trading and public companies.
Name Number of shares % of share capital Number of votes % of votes
Siarhei Kostevitch 20,443, 127 36,83% 20,443, 127 36,83%
indirectly through KS Holdings Ltd
20,401, 361 36,76% 20,401, 361 36,76%
directly
41, 766 0,08% 41, 766 0,08%
Noble Funds TFI 2,866, 299 5,16% 2,866, 299 5,16%
ASBISc Enterprises Plc (buy - back
program) 13, 389 0,02% 13, 389 0,02%
Free - float 32,177, 185 57,98% 32,177, 185 57,98%
TOTAL 55,500, 000 100% 55 500 000 100%
Below we present the changes in the number of shares possessed by major shareholder s d uring the
period between May 9 th
2018 ( the date of the publication of the Interim Report for Q1 2018 ) and date of
this report:
O n May 15th, 2018 the Company has received from NOBLE Funds Towarzystwo Funduszy
Inwestycyjnych S.A. acting on behalf of managed investment funds - Noble Funds Otwarty Fundusz
Inwestycyjny Otwarty ( UCITS ) , Open Finance Fundusz Inwestycyjny Otwarty (UCITS)
Specjalistyczny Fundusz Inwestycyjny Otwarty (AIF) and Noble Fund Opportunity FIZ (AIF) ("Funds")
notification that total share of these Funds moved above the thr eshold of 5% of the total voting rights of
the Company. According to the notification, the increase above the 5% threshold in the Company
followed transactions conducted in the regulated market on May 14th ,2018. According to the
notification, before the abovementioned change of share the Funds had 2,756,299 Company's shares
that were equal to 4,97% in the Company's share capital and had 2,756,299 votes from these shares,
10 that were equal to 4,97% of total number of votes. According to the notification, as of May 15th 2018
the Funds held 2,866,299 of the Company's shares, equal to 5,16% in the Company's share capital
and had 2,866,299 votes from these shares, equal to 5,16% of total number of votes .
9. Changes in the number of shares owned by the me mbers of t he Board of Directors
During the period between May 9 th
, 201 8 (the date of the publication of the Interim Report for Q1 201 8 )
and August 8 th
, 201 8 (date of this report) there were no changes in the number of shares possessed by
the members of the Board of Directors .
The table below presents the number of shares held by the members of the Board of Directors as of
the date of this report. The information included in the table below is based on information received
from members of our Management Board :
Name Number of Shares % of the share capital
Siarhei Kostevitch (directly and indirectly) 20,443,127 36.83%
Constantinos Tziamalis 555,000 1.00%
Marios Christou 463,061 0.83%
Yuri Ulasovich 210,000 0,38%
Demos Demo u 0 0%
Chris Pavlou 0
0%
__________
Siarhei Kostevitch holds ASBIS shares as a shareholder of KS Holdings Ltd.
The m embers of the Board of Directors do not have any rights to the Company’s shares .
10. Changes in the members of managing bodies
T he Company’s Annual General Meeting of Shareholders held on May 8 th
, 201 8 has re - elected Marios
Christou, Yuri Ulasovich and Siarhei Kostevich. to the Board of Directors. T here were no other
changes in the members of the Company’s Board of D irectors during H1 201 8 .
11. Significant administrative and court proceedings against the Company
Neither the Company nor any of the members of our Group are involved in any significant proceedings
before a court, competent body or a body of public administration concerning payables or debt of the
Company or its subsidiaries .
12. Related party transactions
During the six months ended June 30 th
, 201 8 n either the Company nor any of the members of our
Group have conclude d any material related party transaction , other than market conditions .
13. Information on guarantees granted to third parties
The total corporate guarantees the Company has issued , as at June 30th 2018 to support its
subsidiaries’ local financing, amounted to U.S.$ 161,006 . The total bank guarantees and letters of
credit raised by the Group (mainly to Group suppliers) as at June 30th, 2018 was U.S. $ 24,950 – as
per note number 16 t o the financial statements.
14. Information on changes in conditional commitments or conditional assets, occurred since
the end of last fiscal year
N o changes in conditional commitments or conditional assets, occurred since the end of the last fiscal
year .
11 15. Other i nformation important for the assessment of our personnel, economic and financial
position, as well as our financial results
In the three and six month period ended June 30 th
, 201 8 , the Company’s results of operations have
been affected and are expected to continue to be affected by a number of factors. These factors are
presented in brief below:
The in - country crisis affecting our major markets, gross profit and gross profit margin
Throughout the years of operation, the Company has from time to time suffered from specific in -
country problems, emanating from the deterioration of sp ecific countries’ financial situation, due to a
number of issues including but not limited to the political instability. W e need to monitor any
developments, react fast and weather every risk showing up in specific market to secure our results.
The C ompan y needs to keep in mind that different in - country problems might arise at any time and
affect our operations. Despite the fact that we have improved our procedures, we cannot be certain
that all risks are mitigated .
Currency fluctuations
The Company’s reporting currency is the U.S. dollar. About 40% of the Company’s revenues are
denominated in U.S. dollars, while the balance is denominated in Euro, Ruble and other currencies,
some of which are pegged to the Euro. Since most of the Company’ s trade payable balances are
denominated in U.S. dollars (about 80%), the Company is exposed to foreign exchange risk that
remains a crucial risk factor that might affect the Group’s results in the future. Although the problem still
persists and will persi st as the Euro and other Eastern European currencies fluctuate in a steep
manner against the U.S. dollar, the Group has adopted hedging strategies to tackle this problem and
this has been successful despite large volatility of some currencies. Especially, and given the fact that
our FSU business is growing, the risk of devaluation of currencies of countries like Kazakhstan,
Belarus and Ukraine, might cause significant losses to the group. The management believe s that
hedging is very important in our industry and we shall continue enhancing it going forward, by adopting
to new market realities and finding solutions to hedge all exotic currencies in the region
Competition and price pressure
The IT distribution industry is a highly competitive market, particul arly with regards to products
selection and quality, inventory, price, customer services and credit availability and hence is open to
margin pressure from competitors and new entrants. The Company competes at the international level
with a wide variety of distributors of varying sizes, covering different product categories and geographic
markets. In particular, in each of the markets in which the Company operates it faces competition from:
1. International IT and CE distributors with presence in all major markets we operate
2. Regional IT and CE distributors who cover mostly a region but they are quite strong
3. Strong l ocal distributors who focus mostly on a single market but they are very strong
4. International IT and m obile p hones brokers, who sell opportunistically in any region and/or
country
Competition and price pressures from market competitors and new market entrants may lead to
significant reductions in the Company’s sales prices. Such pressures may also lead to a loss of market
share in certa in of the Group's markets. Price pressures can have a material adverse effect on the
Company’s profit margins and its overall profitability, especially in view of the fact that its gross profit
margins, like those of most of its competitors, are low and se nsitive to sales price fluctuations.
This was also visible in the first two quarters of 2018, where the G roup had to sacrifice some of its
g ross profit margin in order to gain market share against competitors.
12 Low gross profit margins
The Company’s business is both traditional distribution of third party products and own brand. This
allows the Company to deliver healthier gross profit margins when conditions are favourable. However,
the own brand business, has been significantly affecte d by new entrants and the margins have been
lowered.
In the traditional distribution business, the Company’s gross profit margins, like those of other
distributors of IT products, are low and the Company expects that in the distribution arm of its busines s
they will remain low in the foreseeable future. Increased competition arising from industry consolidation
and low demand for certain IT products may hinder the Company’s ability to maintain or improve its
gross margins. A portion of the Company’s operati ng expenses is relatively fixed, and planned
expenditures are based in part on anticipated orders that are forecasted with limited visibility of future
demand. As a result, the Company may not be able to reduce its operating expenses as a percentage
of rev enue in order to mitigate any reductions in gross margins in the future.
In an effort to increase gross margins, the Company has developed its own brand business, that allows
for higher gross profit margins. It has also invested in VAD Business Unit which is also expected to
bring higher gross profit margins. It is very important for the C ompany to address all risks associated
with these business lines and avoid negative surprises which might lead to significant losses .
Inventory obsolescence and price e rosion
The Company is often required to buy components and finished products according to forecasted
requirements and orders of its customers and in anticipation of market demand. The market for IT
finished products and components is characterized by rapid changes in technology and short product
shelf life, and, consequently, inventory may rapidly become obsolete. Due to the fast pace of
technological changes, the industry may sometimes face a shortage or, at other times, an oversupply
of IT products. As th e Company increases the scope of its business and, in particular, of inventory
management for its customers, there is an increasing need to hold inventory to serve as a buffer in
anticipation of the actual needs of the Company’s customers. This increases t he risk of inventory
becoming devalued or obsolete and could affect the Company’s profits either because prices for
obsolete products tend to decline quickly, or as a result of the need to make provisions for write - offs. In
an oversupply situation, other d istributors may elect to proceed with price reductions in order to
dispose of their existing inventories, forcing the Company to lower its prices to stay competitive. The
Company’s ability to manage its inventory and protect its business against price eros ion is critical to its
success.
A number of the Company’s most significant contracts with its major suppliers contain advantageous
contract terms that protect the Company against exposure to price fluctuations, defective products and
stock obsolescence.
Cr edit risk
The Company buys components and finished products from its suppliers on its own account and
resells them to its customers. The Company extends credit to some of its customers at terms ranging
from 21 to 90 days or, in a few cases, to 120 days. The Company’ s payment obligations towards its
suppliers under such agreements are separate and distinct from its customers' obligations to pay for
their purchases, except in limited cases where the Company’s arrangements with its suppliers require
the Company to resel l to certain resellers or distributors. Thus, the Company is liable to pay its
suppliers regardless of whether its customers pay for their respective purchases. As the Company’s
profit margin is relatively low compared to the total price of the products so ld, in the event where the
Company is not able to recover payments from its customers, it is exposed to a financial liquidity risk.
The Company has in place credit insurance which covers such an eventuality for approximately 6 5 %
of its revenue.
Despite al l efforts to secure our revenues, certain countries remained non - insured (
Belarus) therefore is very important for us to ensure that we find other sources of securities which help
us minimizing our credit risk. The Group Directors, have decide d to enhance risk management
13 procedures. These do not guarantee that all issues will be avoided, however granted the Company
with confidence that is in a position to weather any possible major credit issue that may arise.
Worldwide financial environment
The world’s financial crisis has eased throughout the last few years. Following partial recovery, the
Company has undertaken certain efforts to benefit from this recovery both in revenues and profitablity.
The revised strategy and adaptation to the new env ironment, i.e., by rebuilding our product portfolio,
has paid off in terms of increased market share and sales.
However, there are many uncertainties about the world economy following turmoils in diferent
countries, volatility of currencies and fragility of demand in many markets. Additionally, from time to
time, unpredictable situations may happen in selected markets. However, with the experience we have
gained, the management strongly believe that the Company is much more flexible and better prepared
to weather any obstacles that may arise due to worldwide financial environment.
Seasonality
Traditionally the IT distribution industry in which the Company operates experiences high demand
during the months prior to and leading up to the Christmas and New Year holiday period. In particular,
IT distributors’ demand tends to increase in the period starting from September till the end of the year.
Development of own brand business
The Company’s strategy is to focus more on profitability than on revenues, thus we continue to develop
the own brand business that allows for higher gross profit margins. This includes the development of
smartphones, tablets and other product lines that are sold under Prestigio and Canyon brands in all
regions of the Company’s operati ons. The Company has also invested in a third own brand - Perenio ,
which is expected to start delivering results after Q3 2018.
In order to keep quality under control and get the maximum possible gross profit margins, the
Company’s Directors have decided to go under a back - to - back scheme. This implies that orders are
placed with ODMs, only if they are in advance confirmed by customers.
The Company is undertaking a number of quality control measures to mitigate this risk, but given the
volumes and the large amount of factories used to produce these products, these controls might not be
sufficient. Moreover, competition has already been in tensified and the Company may not be able to
sustain its profitability levels.
Warranty c laims from own brand products
The own brand business requires us to put extra efforts to avoid any problems with quality of devices.
Despite all our efforts, we have noticed significant returns on specific models produced in the recent
past, though this situation has much improved in the course of H 1 2018.
This risk has negatively affected our results in the past when certain ODMs have not honored their
contractual ob ligations on products with epidemic failure. The Group is undertaking all possible steps
towards ensuring proper compensation of past expenses. In the same time, in an effort to avoid such
problems in the future, a much more scrutinized selection of suppli ers is currently in place, which
however, does not guarantee 100% elimination of the risk of warranty losses.
High cost of debt
The distribution business entails a higher need for cash available to support growth. The Group has
managed to raise cash from various financial institutions, however in certain cases the cost of this
financing is expensive. The Company has already negotia ted improved terms with some of its supply -
chain financiers and is currently undertaking certain extra steps to further lower cost of financing.
However, the sanctions imposed to Russia and tensions related to the Ukrainian crisis have resulted in
signific antly increased cost of financial facilities in these countries and this may limit our efforts to
further decrease our average cost of debt. In the course of H 1 2018 we have experienced a stable cost
of financing in the F.S.U. and this is reflected in our overall financial cost.
14 Results of Operations
Three and s ix month periods ended 30 June 201 8 compared to the three and six month periods
ended 30 June 20 1 7
Revenues: Our revenues in H1 201 8 increased significantly as compared to H1 201 7 and we
expect this upward trend to continue in H2 201 8 .
In Q2 201 8 revenues increased by 65.2 % to U.S.$ 462,884 from U.S.$ 280,130 in Q2 201 7 .
In H1 201 8 revenues increased by 69.4 % to U.S.$ 966,187 from U.S.$ 570,331 in H1 201 7 .
Gross profit: Gross profit has in creased significantly both in Q2 201 8 and H 1 201 8 compared to
t he corresponding periods of 201 7 .
In Q2 201 8 gross profit increased by 35.2 % to U.S.$ 20,417 from U.S.$ 15,102 in Q2 201 7 .
In H1 201 8 gross profit increased by 42.8 % to U.S.$ 43,182 from U.S.$ 30,241 in H1 201 7 .
Gross profit margin has stabilized at levels above 4.4 % .
In Q2 201 8 gross profit margin decreased slightly to 4.41 % from 5. 39 % in Q2 201 7 .
In H1 201 8 gross profit margin decreased slightly to 4.47 % from 5. 3 0% in H1 201 7 .
15 Selling expenses largely comprise of salaries and benefits paid to sales employees (sales,
marketing and logistics departments), marketing and advertising fees, commissions, and traveling
expenses. Selling expenses usually grow together (but not in - line) with growing sales and, most
importantly, gross profit.
In Q2 201 8 selling expenses increased by 64.3 % to U.S.$ 11,909 from U.S.$ 7,247 in Q2 201 7 .
In H1 201 8 selling expenses increased by 62.6 % to U.S.$ 22,964 from U.S.$ 14,1 20 in H1 201 7 .
Administrative expenses largely comprise of salaries and wages of administration personnel and
rent expense.
In Q2 201 8 administrative expenses in creased by 19.6 % to U.S.$ 4,713 from U.S.$ 3,942 in Q2
201 7
In H1 2018 administrative expenses increased by 34.8 % to U.S.$ 11,084 from U.S.$ 8,222 in H1
201 7 .
EBITDA i n Q2 201 8 EBITDA amounted to U.S.$ 4,412 as compared to U.S.$ 4,469 in Q2 201 7 .
However, in H1 201 8 EBITDA amounted to U.S.$ 10,377 as compared to U.S.$ 8,985 in H1 201 7 .
Net profit : As a result of growth in r evenues, increased gross profit and stable expenses, the
Company closed both Q2 201 8 and H1 201 8 with strong growth in net profit .
In Q2 201 8 net profit after tax amounted to U.S.$ 1,236 , a 168.3 % growth compared to U.S.$ 461
in Q2 201 7 .
In H1 201 8 net profit after tax grew by 191.7 % while it has amounted to U.S.$ 2,949 as compared
to U.S.$ 1,011 in H1 201 7 .
Sales by regions and countries
The F.S.U. and the CEE regions traditionally contribute the majority of revenues. This has not changed
in Q2 and H1 201 8 . However, our focus on the F.S.U. region has allowed it to continue its very good
performance and show an impressive 75 % and 78 % growth in Q2 201 8 and H1 201 8 respectively.
Following that, the F.S.U. share in our total revenues grew to 49.37 % in H1 201 8 from 47.11 % in H1
201 7 .
Our focus on F.S.U. region, did not affect sales in other regions where we have experienced equal ly
strong growth rates. Sales in the Central and Eastern Europe region increased by an impressive 55%
as well as MEA region (increase by 51%) in H1 2018 as compared to H 1 2017 . We have also
significantly improved our sales in Western Europe ( by 82 % ) in H1 20 18 as compared to H1 2017 .
16 Country - by - country analysis confirms the excellent growth rates the Group was able to achieve in all
major countries of operations . Growth in F.S.U. has arisen from a continuous improvement in Russia
(+ 58 % in Q2 201 8 and + 55 % in H1 201 8 ) , Ukraine ( + 110 % in Q2 201 8 and + 117 % in H1 201 8 ) ,
Kazakhstan (+ 34 % in Q2 201 8 and + 66 % in H1 201 8 ) and Belarus (+ 69 % in Q 2 201 8 and + 86 % in H1
201 8 ).
At the same time, the increase in Slovakia (+ 35 % in Q2 2018 and + 29 % in H1 2018) was combined
with a 10 % growth in Q2 2018 and a 25 % growth in H1 2018 in the Czech Republic a nd a 34 %
increase in Romania in Q2 2018 and 28% increase in H1 2018. The MEA result is mainly determined
by our revenues in UAE (+ 97 % in Q2 201 8 and + 69 % in H1 201 8 ).
The table s below provide a geographical breakdown of sales for the three and six month periods
ended June 30 th
, 201 8 and 201 7 .
Q2 201 8 Q2 20 1 7
U.S. $
thousand % of total
revenues U.S. $
thousand % of total
revenues
Former Soviet Union
225, 050 48. 62% 128,954 46.03%
Central and Eastern Europe
123, 060 26. 59% 91,340 32.61%
Middle East and Africa
63, 991 13. 82% 37,225 13.29%
Western Europe
40, 445 8. 74% 20,489 7.31%
Other
10, 338 2. 23% 2,122 0.76%
Total 462, 884 100% 280,130 100%
H1 201 8 H1 201 7
U.S. $
thousand % of total
revenues U.S. $
thousand % of total
revenues
Former Soviet Union
477, 034 49. 37% 268,691 47.11%
Central and Eastern Europe
283, 074 29. 30% 182,653 32.03%
Middle East and Africa
110, 980 11. 49% 73,622 12.91%
Western Europe
75, 6 20 7. 83% 41,624 7.30%
Other
19, 479 2. 02% 3,742 0.66%
Total 966,187 100% 570,331 100%
Revenue breakdown – Top 10 countries in Q2 201 8 and Q2 201 7 (in U.S. Dollar thousand )
Q2 201 8 Q2 201 7
Country Sales Country Sales
1. Russia
84,474 Russia
53,433
2. Ukraine
57,853 Slovakia
30,820
3. United Arab Emirates
49,006 Kazakhstan
29,067
4. Slovakia
41,527 Ukraine
27,532
5. Kazakhstan
38,841 United Arab Emirates
24,864
17 6. Belarus
23,109 Czech Republic
15,800
7. Czech Republic
17,340 Belarus
13,705
8. The Netherlands
16,420 Romania
10,983
9. Romania
14,750 The Netherlands
10,893
10. Hungary
10,138 Bulgaria
6,310
11. Other
109,425 Other
56,723
TOTAL 462,884 TOTAL 280,130
Revenue breakdown – Top 10 countries in H1 201 8 and H1 201 7 (in U.S. Dollar thousand)
H1 20 1 8 H1 201 7
Country Sales Country Sales
1. Russia
175,156 Russia
113,106
2. Ukraine
129,151 Slovakia
62,580
3. United Arab Emirates
84,406 Ukraine
59,611
4. Slovakia
81,018 Kazakhstan
56,615
5. Kazakhstan
93,863 United Arab Emirates
49,981
6. Belarus
51,770 Czech Republic
31,392
7. Czech Republic
39,223 Belarus
27,838
8. The Netherlands
37,777 Romania
24,324
9. Romania
31,174 The Netherlands
21,640
10. Hungary
19,233 Bulgaria
12,902
11. Other
223,41 4 Other
110,343
TOTAL 966,18 7 TOTAL 570,331
Sales by product lines
Q2 2018 and H1 2018 results have proven that ASBIS Group has no issue in significantly raising its
revenues when the markets are stable. During Q2 2018 and H 1 2018 , almost all major product lines of
the Group have significantly grown as compared to Q2 2017 and H1 2017.
The chart below indicates the trends in sales per product line:
Growth in H1 201 8 sales was driven by sales of smartphones, CPUs, HDD, laptops, SSDs and other
smaller product lines, while sales of typical components were relatively stable year - on - year.
18 R evenues from CPUs increased by 2. 48 % in Q2 201 8 and by 9. 9 6 % in H1 2018 . R evenues from
HDDs decreased by 7.35 % in Q2 201 8 and increased by 18.31 % in H1 2018. In Q2 2018 revenues
from software increased by 31.94% and 11.13% in Q2 and H1 of 2018. Revenues from laptops and
SSds increased respectively by 38.94% and 10.22% in Q2 2018 and by 42.06% and 48.67% in H1
2018.
Finaly, smart phones , which is the key driver of sales growth, increased by 179.27 % in Q2 201 8 and by
170.94 % in H1 201 8 .
From ” O ther ” product lines, the Company has noticed a positive trend for H1 201 8 in mainboards and
VGA cards ( + 182.8 % ) , accessories and multimedia (+88.4%) and memory modules (+ 6 2 .6 %) .
The table below sets a breakdown of revenues, by product lines , for Q 2 201 8 and Q 2 201 7 :
Q 2 201 8 Q 2 201 7
U.S. $
thousand % of total
revenues U.S. $
thousand % of total
revenues
Smartphones 190,736 41.21% 68, 297 24.38%
Central processing units (CPUs) 46,929 10.14% 45, 792 16.35%
Hard disk drives (HDDs) 27,580 5.96% 29, 767 10.63%
PC - mobile (laptops) 28,378 6.13% 20, 425 7.29%
SSD 16,569 3.58% 15, 033 5.37%
Tablets 15,999 3.46% 9, 724 3.47%
Software 11,343 2.45% 8, 597 3.07%
Other 125,350 27.08% 82, 495 29.45%
Total revenue 462,884 100% 280, 130 100%
H1 201 8 H1 201 7
U.S. $
thousand % of total
revenues U.S. $
thousand % of total
revenues
Smartphones 369,896 38.28% 136,521 23.94%
Central processing units (CPUs) 104,896 10.86% 95,392 16.73%
Hard disk drives (HDDs) 69,609 7.20% 55,835 9.79%
PC - mobile (laptops) 61,930 6.41% 43,595 7.64%
SSD 47,931 4.96% 32,240 5.65%
Software 19,683 2.04% 17,710 3.11%
Tablets 34,737 3.60% 19,790 3.47%
Other 257,50 5 26.65% 169,24 8 29.68%
Total revenue 966,18 7 100% 570,33 1 100%
L iquidity and Capital Resources
The Company has in the past funded its liquidity requirements, including ongoing operating expenses ,
capital expenditures and investments, for the most part, through operating cash flows, debt financing
and equity financing. Cash flow in Q2 and H1 2018 has been impacted by revenue growth and a
dividend payout. The management team will focus on generat ing a positive cash flow from operations
for the full year , despite high growth in revenues.
19 The following table presents a summary of cash flows for the six months ended June 30 th
, 20 1 8 and
20 1 7 :
Six months ended June 30 th
201 8 201 7
U.S. $
Net cash outflows from operating activities (53,677)
(18,865)
Net cash outflows from investing activities (1,330)
(820)
Net cash inflows/(outflows) from financing activities
5,009
5,789
Net decrease in cash and cash equivalents (49,997)
(13,896)
Net cash outflows from operations
Net cash outflows from operations amounted to U.S. $ 53,677 for the six months ended June 30 th
,
201 8 , as compared to outflows of U.S. $ 18,865 in the corresponding period of 201 7 . This is mainly
attributed to much increased revenues ,partly compensated by improved working capital utilization.
The Company expects cash from operations to turn positive for the year 201 8 .
Net cash outflows from investing activities
Net cash outflows from investing a ctivities was U.S. $ 1,330 for the six months ended June 30 th
, 201 8 ,
as compared to outflows of U.S. $ 820 in the corresponding period of 201 7 . These outflows mainly
relate to on - going investments for fixed assets (such as computers, furniture etc.) .
Net cash in flows from financing activities
Net cash in flows from financing activities was U.S. $ 5,009 for the six months ended June 30 th
, 201 8 ,
as compared to in flows of U.S.$ 5,789 for the corresponding period of 201 7 .
Net de crease in cash and cash equivalents
As a result of higher revenues and improved working capital utilization, cash and cash equivalents
have decreased by US$ 49,997 , as compared to a decrease of US$ 13,896 in the corresponding
period of 2017.
16. Factors which may affect our results in the future
Political and economic stability in Europe and our regions
The markets the Group operates into, have traditionally shown a vulnerability in political and economic
environment. The weak economies in the F.S.U. region and certain politically driven events in all
markets, are considered by the management as a crucial external factor, which might adversely affect
our results, in the short term.
Having seen the recent improvement in F.S.U. and other regions, we do believe to be able to further
benefit from the work done during the tough times. What is more important, we develop more markets
of this region with new product lines and our revenues and profitability benefit from that. W e will
continue this strategy and focus more on our core regions and strengths, to maximize profits and take
advantage of market changes .
The Group’s ability to increase revenues and market share while focusing on profits
The diversified geographic coverage of the Group’s revenues ensures that we do mitigate the risk o f
lower sales in a particular country with the possibility of higher sales in a number of other countries.
20 Russia, Ukraine and Kazakhstan are currently the markets that lead in terms of revenue. W e need to
ensure that we adapt quickly to any changes that m ay occur in these markets and reinforce our
strategy to fully diversify our sales.
The F.S.U. and CEE regions are expected to continue having the leading share in our revenues
breakdown. This follows the focus of the Group to its strong competencies and fu rther development of
the product portfolio at these market places. We do expect the positive trend in revenues in these
regions to continue throughout the remainder of the 2018.
Despite all measures taken by the Company, the possibility of a decrease in de mand and sales in a
particular country cannot be excluded in the future. Such a situation may limit overall growth. It is of
extreme importance for the Company to prepare its structure to offset such a situation with higher sales
in other markets. This mea ns both a constant upgrade of the product portfolio and close relations with
customers to gain more market share from weaker competitors .
The Group’s ability to increase gross profit margins
The Group’s ability to increase its gross profit margin is of a very big importa nce. The decrease
observed in H1 2018 as compared to the corresponding period of 2017 was a result of the high
margins in comparable periods of the previous year , the efforts to gain additional market share in
certain territories and some l arge volume transactions but with low margin to certain customers in H 1
2018. The pace of growth in gross profit margins is hard to estimate, as the margins may remain under
pressure due to enhanced competition together with lower demand in a number of markets. It is of
extreme importance for the Group to manage its stock level and refine its product portfolio in order to
achieve optimum gross profit margins.
The Directors believe that the Group will be able to sustain and increase its gross profit margi ns for the
remainder of 2018.
Currency volatilities
The multi - currency environment that the Group operates in exposes its financial results to steep
currency fluctuations. W e have been successfully shielded by our hedging policy in the course of H1
2018. Therefore, the hedging strategy should be followed and further improved without any exception
for H2 2018 .
Ability of the Group to control expenses
Selling expenses in Q2 and H1 201 8 increased as compared to Q2 and H1 201 7 as a result of
increased reven ues and gross profit and investments made in human capital in all region s of our
operations . This i s expected to allow us to benefit in the next quarters of 201 8 from stronger market
position . Increased expenses in H1 2018 were expected and budgeted for, however further i ncrease
will follow due to expected increase in profitability.
Ability to further develop the Group’s product portfolio, both third party and own brands
Because of its size, geographical coverage and good relationship with vendors, the Com pany has
managed to build an extensive product portfolio. It is crucial for the Company to continue refining its
product mix constantly by adding new product lines with higher gross (and net) profit margins to boost
its profitability .
Ability to cover warranty claims from customers
The own brand business requires us to be very careful with quality as it may affect both consumer
satisfaction and our expenses. Since we do not manufacture the devices ourselves, we have built
increased warranty provisions a nd signed separate agreements with our suppliers to cover us against
warranty losses of such products. We have much improved our procedures and this has covered us to
21 a large extend . Therefore, we have not faced any spe cific problems in this area in H 1 2 018 .H owever,
we need to be constantly overlooking and analyzing the situation to avoid any possible looses.
17. Information about important events that occurred after the period ended on June 30 th
, 201 8
and before this report release
According to our best knowledge , in the period between June 30 th
, 201 8 and August 8 th
, 201 8 no
events have occurred that could either affect the C ompany ’s operations or its financial stability.
22 Part II Financial Information
The financial information of ASBISc Enterprises Plc presented as a part of this report is as follows:
R eport and Condensed Consolidated Interim Financial Statemen ts
for the period ended 30 June 20 1 8
Contents Page
Board of Directors r epresentations 1
Declaration by the members of the Board of Directors and the Company
officials responsible for the drafting of the condensed consolidated interim
financial statements 2
Independent A uditors’ review r eport 3
Condensed consolidated interim statement of profit and loss 4
Condensed consolidated interim statement of comprehensive income
5
Condensed consolidated interim statement of financial position 6
Condensed consolidated interim statement of changes in equity 7
Condensed consolidated interim statement of cash flows 8
Notes to the condensed consolidated interim financial statements 9 - 2 2
ASBISC ENTERPRISES PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
ASBISC ENTERPRISES PLC
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
CONTENTS PAGE
Board of Directors representations 1
Declaration by the members of the Board of Directors and the Company officials responsible
for the drafting of the condensed consolidated interim financial statements 2
Independent Auditors’ review report 3
Condensed consolidated interim statement of profit or loss 4
Condensed consolidated interim statement of other comprehensive income 5
Condensed consolidated interim statement of financial position 6
Condensed consolidated interim statement of changes in equity 7
Condensed consolidated interim statement of cash flows 8
Notes to the condensed consolidated interim financial statements 9 - 2 2
ASBISC ENTERPRISES PLC
1
BOARD OF DIRECTORS REPRESENTATIONS
In accordance with the requirements of the Ordinance of the Minister of Finance dated March 2 9 th
, 20 18 on
current and periodical information published by issuers of securities and on the conditions of recognizing as
equivalent the information required by the laws of non - EU Member States, the Board of Directors of ASBISC
ENTERPRISES PLC hereby represents tha t:
- to its best knowledge, the semi - annual condensed consolidated financial statements and the comparative
data have been prepared in accordance with the applicable accounting policies and that they give a true, fair
and clear reflection of the group’s financial position and its financial result, and that the semi - annual
Director’s Report on operations gives a true view of the group’s development, achievements, and position,
including description of basic risks and threats;
Limassol, August 7 th
, 2018
ASBISC ENTERPRISES PLC
2
DECLARATION BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE COMPANY
OFFICIALS RESPONSIBLE FOR THE DRAFTING OF THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(In accordance with the provisions of Law 190(I)/2007 on Transparency Requirements)
In accordance with Article 9, sections (3c) and (7), of the Transparency Requirements (Traded Securities in
Regulated Markets) Law 190 (1) / 2007 we, the members of the Board of Directors and the company offic ials
responsible for the drafting of the condensed consolidated interim financial statements of Asbisc Enterprises
Plc (the “company”) and its subsidiaries (the “group”) f or the period ended 30 June 2018 , confirm to the best
of our knowledge that:
a) the c ondensed consolidated interim financial statements for the period ended 30 June 201 8 which
are presented on pages 4 to 2 2 :
(i) have been prepared in accordance with the International Financial Reporting Standards and
requirements of the section (4), and
(ii) give a true and fair view of the assets and liabilities, the financial position and the profit or loss of the
company and the undertakings included in the consolidation, taken as a whole, and
b) the Board of Directors’ report provides a fair review of the developments and the performance of the
business and the position of the company’s and the undertakings included in the consolidation, taken as a
whole, together with a description of the principal risks and uncertainties that they face.
Members of the Board of Directors:
Siarhei Kostevitch (Cypriot)
Chairman and Chief Executive Officer
………………………………………………………
Marios Christou (Cypriot)
Executive Director
………………………………………………………
Constantinos Tziamalis (Cypriot)
Executive Director
………………………………………………………
Yuri Ulasovich (Cypriot)
Executive Director
………………………………………………………
Demos Demou (Cypriot)
Non - Executive Director
………………………………………………………
Christakis Pavlou (Cypriot)
Non - Executive Director
………………………………………………………
Financial Controller responsible for the drafting of the financial statements
Loizos Papavassiliou (Cypriot)
Financial Controller
………………………………………………………
Limassol, 07 August, 2018
ASBISC ENTERPRISES PLC
3
INDEPENDENT AUDITORS’ REPORT ON THE REVIEW OF THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL INFORMATION
TO THE BOARD OF DIRECTORS OF ASBISC ENTERPRISES PLC
Introduction
We have reviewed the accompanying condensed consolidated interim financial statements of Asbisc Enterprises PLC and its
subsidiaries (the “group”) on pages 4 to 2 2 which comprise the condensed consolidated interim statement of financial position
of the group as at 30 June 2018, and the condensed consolidated interim statements of profit or loss, comprehensive income ,
changes in equity and cash flows of the group for the six month period then ended and notes to the interim financial informat ion
(the “Condensed Consolidated Interim Financial Information”). Management is responsible for the preparation and fair
presenta tion of this Condensed Consolidated Interim Financial Information in accordance with the International Accounting
Standard 34
“Interim Financial Reporting” . Our responsibility is to express a conclusion on this Condensed Consolidated Interim
Financial Info rmation based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”. A review of interim fin ancial 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Condensed
Consolidated Interim Financial Information as at and for the six months ended 30 June 2018 is not prepared, in all material
respects, in accordance with IAS 34
“Interim Financial Reporting”.
Certified Public Accountants and Registered Auditors
KPMG Center,
No.11, 16th June 1943 Street,
3022 Limassol,
Cyprus.
Limassol, 7 August 2018
ASBISC ENTERPRISES PLC
4
CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS
F OR THE PERIOD ENDED 30 JUNE 2018
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
Note US$ US$
Revenue 4,23 966,186,846 570,331,364
Cost of sales (923,004,528) (540,090,151)
Gross profit 43,182,318 30,241,213
Selling expenses (22,964,494) (14,119,701)
Administrative expenses (11,084,411) (8,221,470)
Profit from operations 9,133,413 7,900,042
Financial income 7 2,252,398 482,539
Financial expenses 7 (7,810,500) (6,656,410)
Other gains and losses 5 154,758 (442,698)
Profit before tax
6 3,730,069 1,283,473
Taxation 8 (780,862) (272,381)
Profit for the period
2,949,207 1,011,092
Attributable to:
Equity holders of the parent 2,942,337 1,021,732
Non - controlling interests 6,870 (10,640)
2,949,207 1,011,092
US$ cents US$ cents
Earnings per share
Basic and diluted from continuing operations 5.30 1.84
ASBISC ENTERPRISES PLC
5
CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER
COMPREHENSIVE INCOME F OR THE PERIOD ENDED 30 JUNE 2018
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Profit for the period 2,949,207 1,011,092
Other comprehensive (loss)/ income
Exchange difference on translating foreign operations (631,615) 1,697,343
Reclassification adjustments relating to foreign operations liquidated in the
period (118,01 8 ) 7,193
Other comprehensive (loss)/ income for the period
(749,63 3 ) 1,704,536
Total comprehensive income for the period
2,199,57 4 2,715,628
Total comprehensive income attributable to:
Equity holders of the parent 2,205,027 2,706,548
Non - controlling interests (5,45 3 ) 9,080
2,199,57 4 2,715,628
ASBISC ENTERPRISES PLC
6 CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINAN CIAL
POSITION AS AT 30 JUNE 2018
As at
30 June
2018 As at
31 December
2017
Notes US$ US$
ASSETS
Non - current assets
Property, plant and equipment 9 24,207,957 24,533,220
Intangible assets 10 3,366,558 3,164,273
Financial assets at fair value through other comprehensive income 11 11,794 11,794
Goodwill 2 7 406,897 418,589
Deferred tax assets 20 318,310 227,615
Total non - current assets 28,311,516 28,355,491
Current assets
Inventories 12 156,956,582 144,980,373
Trade receivables 13 185,560,962 238,192,248
Other current assets 14 16,708,778 18,127,273
Derivative financial asset 2 5 868,854 373,302
Current taxation 8 533,829 493,119
Cash at bank and in hand 2 6 45,598,420 93,401,246
Total current assets 406,227,425 495,567,561
Total assets 434,538,941 523,923,052
EQUITY AND LIABILITIES
Equity
Share capital 1 5 11,100,000 11,100,000
Share premium 23,518,243 23,518,243
Retained earnings and other components of equity 58,416,900 59,541,873
Equity attributable to owners of the parent 93,035,143 94,160,116
Non - controlling interests 286,218 307,690
Total equity
93,321,361 94,467,806
Non - current liabilities
Long term borrowings 17 109,651 169,324
Other long term liabilities 18 487,378 369,341
Deferred tax liabilities 20 57,427 60,072
Total non - current liabilities 654,456 598,737
Current liabilities
Trade payables 180,794,725 253,021,109
Short term borrowings 16 117,925,476 136,491,999
Other current liabilities 2 1 41,102,225 38,083,176
Derivative financial liability 2 4 80,030 739,587
Current taxation 8 660,668 520,638
Total current liabilities
340,563,124 428,856,509
Total liabilities 341,217,580 429,455,246
Total equity and liabilities 434,538,941 523,923,052
The financial statements were approved by the Board of Directors on 7 August 201 8 .
.................................... ....................................
Constantinos Tziamalis Marios Christou
Director Director
ASBISC ENTERPRISES PLC
7 CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
F OR THE P ERIOD ENDED 30 JUNE 2018
Attributable to the owners of the parent
Share capital Share
premium Treasury
stock Translation
of foreign
operations Retained
earnings Total Non
controlling
interests Total
US$ US$ US$ US$ US$ US$ US$ US$
Balance at 1 January 2017 11,100,000 23,518,243 (14,234) (13,340,843) 64,464,342 85,727,508 167,361 85,894,869
Profit /(loss) for the pe riod 1 January 2017 to 30 June
2017 - - - - 1,021,732 1,021,732 (10,640) 1,011,092
Other comprehensive income for the period 1
January 2017 to 30 June 2017 - - - 1,684,816
- 1,684,816 19,720 1,704,536
D ividend declared - - - - (1,665,000) (1,665,000) - (1,665,000)
Minority interest on establishment of new subsidiary - - - - - - 196,000 196,000
Balance at 30 June 2017 11,100,000 23,518,243 (14,234) (11,656,027) 63,821,074 86,769,056 372,441 87,141,497
Prof it/(loss) for the period 1 July 2017 to 31
December 2017 - - - - 5,934,089 5,934,089 (36,471) 5,897,618
Other comprehensi ve income for the period 1 July
2017 to 31 December 2017 - - - 1,456,984 - 1,456,984 10,86 0 1,467,84 4
Minority interest on establishment of new subsidiary - - - - - - (39,140) (39,140)
Share - based payments - - (13) - - (13) - (13)
Balance at 31 December 2017 11,100,000 23,518,243 (14,247) (10,199,043) 69,755,163 94,160,116 307,690 94,467,806
Profit for the p eriod 1 January 2018 to 30 June 2018 - - - - 2,942,337 2,942,337 6,870 2,949,207
Other comprehensive loss for the period 1 January
2018 to 30 June 2018 - - - (737,31 0 ) -
(737,31 0 ) ( 12,32 3 ) (749,633)
D ividend declared (3,330,000) (3,330,000) - (3,330,000)
Acquisition of shares from non - controlling interests
(note 29 ) - - - - - - (16,019) (16,019)
Balance at 30 June 2018
11,100,000 23,518,243 (14,247) ( 10,936,35 3 ) 69,367,500 93,035,14 3 286,2 1 8 93,321,36 1
ASBISC ENTERPRISES PLC
8 CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
F OR THE PERIOD ENDED 30 JUNE 2018
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
Note US$ US$
Profit for the period before tax and minority interest 3,730,069 1,283,473
Adjustments for:
Exchange difference arising on consolidation (463,583) 786,740
Depreciation of property, plant and equipment 9 752,078 727,713
Amortization of intangible assets 10 491,775 357,494
Impairment losses on intangible assets and goodwill 5 - 560,420
Profit from the sale of property, plant and equipment and intangible assets 5 (24,038) (28,591)
Provision for bad debts and receivables written off 72,026 1,462,848
Bad debts recovered 5 (49,365) (7,950)
Provision for slow moving and obsolete stock (710,673) 642,638
Interest received 7 (84,812) (15,624)
Interest paid 7 2,039,117 1,960,779
Operating profit before working capital changes 5,752,594 7,729,940
( Increase )/decrease in inventories (11,265,535) 11,054,133
Decrease in trade receivables 52,608,625 51,508,253
Decrease/(increase) in other current assets 922,942 (384,918)
Decrease in trade payables (72,226,384) (69,194,478)
Increase/(d ecrease ) in other current liabilities 2,359,492 (4,869,942)
Increase in other non - current liabilities 118,037 26,632
Decrease in factoring creditors (29,160,115) (12,620,576)
Cash outflows from operations (50,890,344) (16,750,956)
Interest paid 7 (2,039,117) (1,960,779)
Taxation paid, net 8 (747,451) (153,114)
Net cash outflows from operating activities (53,676,912) (18,864,849)
Cash flows from investing activities
Purchase of intangible assets 10 (705,152) (427,750)
Purchase of property, plant and equipment 9 (733,531) (566,762)
Proceeds from sale of property, plant and equipment and intangible assets 24,038 158,513
Interest received 7 84,812 15,624
Net cash outflows from investing activities (1,329,833) (820,375)
Cash flows from financing activities
Payment of final dividend (3,330,000) -
Repayments of long term loans and long term obligations under finance
lease (59,673) (220,446)
Proceeds of short term borrowings and short term obligations under finance
lease 8,399,136 6,009,358
Net cash inflows from financing activities
5,009,463 5,788,912
Net decrease in cash and cash equivalents (49,997,282) (13,896,312)
Cash and cash equivalents at beginning of the period 45,933,196 6,536,849
Cash and cash equivalents at end of the period 26 (4,064,086) (7,359,463)
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
9 1. Incorporation and principal activities
ASBISC Enterprises Plc was incorporated in Cyprus on 9 November 1995 with limited liability. These condensed
consolidated interim financial statements (“interim financial s tatements”) as at and for the six months ended 30 June
2018 comprise the interim fin ancial statements of the Company and its subsidiaries (together referred to as the
“ Group ”). The Group ’s and the Company 's principal activity is the trading and distribution of computer hardware and
software. The main shareholder of the Company is K.S. Hol dings Limited, a company incorporated in Cyprus.
The Company is listed on the Warsaw Stock Exchange since 30th October 2007.
2. Basis of preparation
(a) Statement of compliance
These interim financial statements have been prepared in accordance with I AS 34 Interim Financial Reporting . They do
not include all the information required for a complete set of IFRS financial statements and they should be read in
conjunction with the audited financial statements for the year end ed 31 December 2017 . However, s elected explanatory
notes are included to explain events and transactions that are significant to an understanding of the changes in financial
position and performance of the Group since the last annual consolidated financial statements as at and for the y ear
ended 31 December 2017 .
This is the first set of Group’s financial statements where IFRS 15 and IFRS 9 have been applied. Changes to significant
accounting policies are described in note 3.
These interim financial statements were authorized for issu e by the Company ’ s Board of Directors on 7 August 201 8 .
(b) Use of judgments and estimates
Preparing the interim financial statements requires Management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.
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 yea r ended 31 December 2017 , except for new significant
judgements and key sources of estimation uncertainty related to the application of IFRS 15 and IFRS 9, which are
described in Note 3.
3. Significant accounting policies
Except as described below, t he accounting policies adopted for the preparation of the condensed consolidated interim
financial statements for the six months ended 30 June 2018 are consistent with those followed for the preparation of the
annual financial statements for the year 2017 . The changes in accounting policies are also expected to be reflected in the
Group’s consolidated financial statements as at and for the year ending 31 December 2018.
The Group has initially adopted IFRS 15 and IFRS 9 from 1 January 2018. A number of othe r new standards are effecti ve
from 1 January 2018 but they do not have to have a material effect on the Group’s financial statements.
A.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes comprehensive fra mework for determining whether, how m uch and when revenue is
recognised. It replaces IAS 18 Revenue and related interpretations. There was no material impact on the Group’s
interim statement of financial position as at 30 June 2018, its interim statement of profit or loss and other
comprehens ive income and its interim statement of cash flows for the six months ended 30 June 2018 . Accordingly,
the information presented for year ended 31 December 2017, has not been restated.
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
10
B. IFRS 9 Financial Instruments
IFRS 9 sets out requirements for recognizing and measuring financial assets, financial liabilities and some contracts
to buy or sell non - financia l items. This standard replaces
IAS 39 Financial Instruments: Recognition and
Measurement.
The details of the new significant accounting policies and the nature and effect of the changes to previous accounting
policies are set out below.
i.
Classification and measurement of financial assets and financial liabilities
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial
liabilities , but it eliminates the previous IAS 39 categories for financial assets of held to maturity, loans and
receivables and available for sale. However, although there is a reclassification impact on the financial statements
there is no monetary impact, as follows:
In thousands of US$ Original classification
under IAS 39 New cla ssification under
IFRS 9 Original carrying amount
under IAS 39 New carrying amount
under IFRS 9
Financial assets
Financial assets at fair
value through other
comprehensive income Available - for - sale FVOCI – equity
instrument 12 12
Trade receivables Loans and receivables Amortised costs 185,561 185,561
Derivative financial asset Fair value – hedging
instrument Fair value – hedging
instrument 869 869
Cash at bank and in hand Loans and receivables Amortised cost 45,598 45,598
Total financial assets 232,040 232,040
ii.
Impairment of financial assets – impact of the new impairment model on trade receivables
The Group has calculated the expected credit losses related to trade receivables and determined that the application
of IFRS9’s impairment requirements at 1 January 2018 does not have a material effect on the financial statements.
The IFRS9 loss allowances were measured on the lifetime expected credit losses basis that result from the possible
default events over the expected life of the rece ivable.
4. Effects of seasonality
The Group 's revenue and consequently its profitability are significantly lower during the first half of the year. The
seasonality is driven by increased household expenditure during the Christmas period as well as the commencement of
the academic period during the second half of the year resulting in a positive effect on demand for the Group 's
products.
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
11 5. Other gains and losses
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Profit on disposal of property, plant and equipment 24,038 28,591
Other income 52,766 42,426
Bad debts recovered 49,365 7,950
Rental income 28,589 38,755
Impairment loss on goodwill - (560,420)
154,758 (442,698)
6. Profit before tax
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Profit before tax is stated after charging :
(a) Amortization of intangible assets (Note 10) 491,775 357,494
(b) Depreciation (Note 9) 752,078 727,713
(c) Auditors' remuneration 192,830 179,485
(e) Directors’ remuneration – executive (Note 28) 303,730 175,019
(e) Directors’ remuneration – non - executive (Note 28) 1,210 1,094
7. Financial expense, net
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Financial income
Interest income 84,812 15,624
Other financial income 1,937,740 359,133
Net exchange gain 229,846 107,782
2,252,398 482,539
Financial expense
Bank interest 2,039,117 1,960,779
Bank charges 934,398 621,515
Derivative charges 355,559 462,912
Factoring interest 2,843,985 2,769,108
Factoring charges 155,675 151,787
Other financial expenses 202,032 87,440
Other interest 1,279,734 602,869
7,810,500 6,656,410
Net (5,558,102) (6,173,871)
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
12 8. Tax
As at
30 June
2018 As at
31 December
2017
US$ US$
Payable/(receivable) balance 1 January 27,519 (328,631)
Provision for the period/year 876,874 1,407,137
Exchange difference on retranslation (34,09 1 ) 22,327
Amounts paid, net ( 747,451 ) (1,058,514)
Under/(o ver ) provision of prior year periods 3,988 (14,800)
Net payable balance 30 June /31 December 126,839 27,519
As at
30 June
2018 As at
31 December
2017
US$ US$
Tax receivable (533,829) (493,119)
Tax payable 660,668 520,638
Net
126,839 27,519
The consolidated taxation charge for the period consists of the following:
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Provision for the period 876,874 329,290
Over provision of prior years 3,988 (2,831)
Deferred tax credit (Note 20) ( 100,000 ) (54,078)
Charge for the period 780,862 272,381
The taxation charge of the Group comprises corporation tax charge in Cyprus on the taxable profits of the Company and
those of its subsidiaries which are subject to tax in Cyprus and corporation tax in other jurisdictions on the results of the
foreign subsidiary companies.
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
13 9. Property, plant and equipment
Land and
buildings Computer
hardware Warehouse
machinery Motor
vehicles Furniture and
fittings Office
equipment Total
US$ US$ US$ US$ US$ US$ US$
Cost
At 1 January 2017 23,785,847 6,035,737 374,861 2,021,169 2,332,396 2,711,637 37,261,647
Additions 137,566 521,513 34,056 361,777 116,820 231,999 1,403,731
Disposals (324,448) (142,665) - (204,671) (42,385) (53,812) (767,981)
Foreign exchange difference on retranslation 1,605,806 369,770 419 115,263 171,423 156,594 2,419,275
At 31 December 2017 25,204,771 6,784,355 409,336 2,293,538 2,578,254 3,046,418 40,316,672
Additions 163,752 286,584 7,020 188,519 30,947 56,709 733,531
Disposals (41,393) (362,840) - (81,317) - (50,903) (536,453)
Foreign exchange difference on retranslation (375,331) (112,466) (97) (38,143) (37,682) 18,019 (545,700)
At 30 June 2018 24,951,799 6,595,633 416,259 2,362,597 2,571,519 3,070,243 39,968,050
Accumulated depreciation
At 1 January 2017 3,764,457 4,828,142 155,331 1,445,151 1,842,977 2,016,051 14,052,109
Charge for the year 312,896 593,243 41,191 236,821 136,545 198,944 1,519,640
Disposals (231,574) (142,665) - (204,671) (42,385) (53,812) (675,107)
Foreign exchange difference on retranslation 263,877 283,424 408 83,57 8 133,993 121,530 886,8 10
At 31 December 2017 4,109,656 5,562,144 196,930 1,560,879 2,071,130 2,282,713 15,783,452
Charge for the period 175,303 256,026 23,024 129,177 44,086 124,462 752,078
Disposals (41,393) (362,840) - (81,317) - (50,903) (536,453)
Foreign exchange difference on retranslation (70,757) (140,653) (97) (30,951 ) (24,085) 27,559 (238,98 4 )
At 30 June 2018
4,172,809 5,314,677 219,857 1,577,788 2,091,131 2,383,831 15,760,093
Net book value
At 30 June 2018
20,778,990 1,280,956 196,402 784,809 480,388 686,412 24,207,957
At 31 December 2017 21,095,115 1,222,211 212,406 732,659 507,124 763,705 24,533,220
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
14 10. Intangible assets
Computer
software Patents and
licenses Total
US$ US$ US$
Cost
At 1 January 2017 8,200,717 2,501,126 10,701,843
Additions 842,599 85,392 927,991
Disposals/ write - offs (117,752) (114,184) (231,936)
Foreign exchange difference on retranslation 69,329 42,816 112,145
At 31 December 2017 8,994,893 2,515,150 11,510,043
Additions 202,241 502,911 705,152
Disposals/ write - offs (127,801) (90,689) (218,490)
Foreign exchange difference on retranslation (18,768) (6,357) (25,125)
At 30 June 2018
9,050,565 2,921,015 11,971,580
Accumulated amortization
At 1 January 2017 6,209,056 1,501,202 7,710,258
Charge for the year 433,275 282,789 716,064
Disposals/ write - offs (117,752) (55,329) (173,081)
Foreign exchange difference on retranslation 66,388 26,141 92,529
At 31 December 2017 6,590,967 1,754,803 8,345,770
Charge for the period 353,007 138,768 491,775
Disposals/ write - offs (127,801) (90,689) (218,490)
Foreign exchange difference on retranslation (12,345) (1,688) (14,033)
At 30 June 2018 6,803,828 1,801,194 8,605,022
Net book value
At 30 June 2018 2,246,737 1,119,821 3,366,558
At 31 December 2017 2,403,926 760,347 3,164,273
11. Financial assets at fair value through other comprehensive income
The details of the investments are as follows:
Name
Country of
incorporation
Participation
% Cost
US$ Impairment
US$ As at
30 June
2018
US$ As at
31 December
2017
US$
Investments held in related companies
E - Vision Ltd Cyprus 18% 90,000 (90,000) - -
Other investments
Asekol s.r.o. Czech Republic 9.09% 9,580 - 9,580 9,580
Regnon S.A. Poland 0.01% 2,214 - 2,214 2,214
101,794 (90,000) 11,794 11,794
(i) The remaining 82% is held by the main shareholder of the Company , KS Holdings Limited.
(ii) The above available for sale investments are private equity investments with no quoted market price.
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
15 12. Inventories
As at
30 June
2018 As at
31 December
2017
US$ US$
Goods in transit 21,507,604 17,217,879
Goods held for resale 139,433,308 132,491,293
Provision for slow moving and obsolete stock (3,984,330) (4,728,799)
156,956,582 144,980,373
As at 30 June 2018, inventories pledged as security for financing purposes amounted to US$ 48,390,000 (2017: US$
38,357,000).
Movement in provision for slow moving and obsolete stock :
For the six
months ended
30 June
2018 For the year
ended
31 December
2017
US$ US$
On 1 January 4,728,799 7,128,737
Provisions for the period/year 1,116,360 403,105
Provided stock written off (1,827,033) (2,904,799)
Exchange difference (33,795) 101,756
On 30 June /31 December 3,984,331 4,728,799
13. Trade receivables
As at
30 June
2018 As at
31 December
2017
US$ US$
Trade receivables 191,570,149 244,427,686
Allowance for doubtful debts (6,009,187) (6,235,438)
185,560,962 238,192,248
As at 30 June 2018 , receivables of the Group that have been assigned as security for financing purposes amounted to
US$ 88,924,000 (2017: US$ 113,886 ,000).
Movement in provision for doubtful debts:
For the six
months ended
30 June
2018 For the year
ended
31 December
2017
US$
US$
On 1 January 6,235,438 7,714,943
Provisions for the period/year 3,040,803 3,856,736
Amount written - off as uncollectible (2,968,777) (5,963,311)
Bad debts recovered (49,365) (11,906)
Exchange difference (248,912) 638,976
On 30 June /31 December 6,009,187 6,235,438
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
16
14. Other current assets
As at
30 June
2018 As at
31 December
2017
US$
US$
Deposits and advances to service providers 557,979 539,913
Employee floats 140,075 47,573
VAT and other taxes refundable 6,274,742 7,727,844
Other debtors and prepayments 9,735,982 9,811,943
16,708,778 18,127,273
15. Share capital
As at
30 June
2018 As at
31 December
2017
US$ US$
Authorized
63,000,000 (201 7 : 63,000,000) shares of US$ 0.20 each 12,600,000 12,600,000
Issued and fully paid
55,500,000 (201 7 : 55,500,000) ordinary shares of US$ 0.20 each 11,100,000 11,100,000
16. Short term borrowings
As at
30 June
2018 As at
31 December
2017
US$ US$
Bank overdrafts (Note 26) 49,662,506 47,468,050
Current portion of long term loans 268,200 298,609
Bank short term loans 31,257,501 22,819,311
Short term obligations under finance leases (Note 19) 57,631 66,276
Total short term debt
81,245,838 70,652,246
Factoring creditors 36,679,638 65,839,753
117,925,476 136,491,999
Summary of borrowings and overdraft arrangements
The Group had, for the period ending 30 June 2018, cash lines (overdrafts, loans and revolving facilities) and factoring
lines.
As at 30 June 2018 the Group enjoyed fact oring facilities of US$ 1 30,177 , 000 (31 December 2017 US$ 139,661,000 ).
In addition, as at 30 June 201 8 , the Group had the following financing facilities with banks in the countries that the
Company and its subsidiaries are operating:
overdraft lines o f US$ 78 , 381 ,000 (31 December 201 7 : US$ 75,791,000 )
short term loans/re volving facilities of US$ 3 8 , 251 ,000 (31 December 2017 : US$ 36,322,000 )
bank guarantee s and lette rs of credit of US$ 21 , 950 , 000 (31 December 2017 : US$ 22,633,000 )
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
17
The Weighted Average Cost of Debt (cash lines and factori ng lines) for the period was 7. 5 % (for 201 7: 9.3 %).
The factoring, overdraft and revolving facilities as well as the loans granted to the C ompany and its subsidiaries by their
bankers are secured by:
Floating charges over all assets of the Company
Mortgage on land and buildings that the Group owns in Cyprus, Czech Republic, Belarus, Middle East,
Bulgaria, Slovakia and Ukraine
Charge over receivables and inventories
Corporate g uarantees to the extent of facilities granted to subsidiary companies
Assignment of insurance policies
Pledged deposits of US$ 17 , 746 ,000 (31 December 2017 : US$ 17, 583 ,000 )
17. Long term borrowings
As at
30 June
2018 As at
31 December
201 7
US$ US$
Bank loans 94,337 156,825
Long term obligations under finance leases (Note 19) 15,314 12,499
109,651 169,324
18. Other long term liabilities
As at
30 June
2018 As at
31 December
2017
US$ US$
Pension provision
487,378 369,341
19. Finance leases
As at
30 June
2018 As at
31 December
2017
US$ US$
Obligation under finance lease 72,945 78,775
Less: Amount payable within one year (57,631) (66,276)
Amounts payable within 2 - 5 years inclusive 15,314 12,499
20. Deferred tax
For the six
months ended
30 June
2018 For the year
ended
31 December
2017
US$ US$
Debit balance on 1 January (167,543) (856,909)
Deferred tax (credit)/ charge for the period/ year (Note 8) (100,000) 711,890
Exchange difference on retranslation 6,6 60 (22,524)
At 30 June /31 December (260,883 ) (167,543)
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
18
20. Deferred tax (continued)
As at
30 June
2018 As at
31 December
2017
US$ US$
Deferred tax assets (318,310) (227,615)
Deferred tax liabilities 57,427 60,072
Net deferred tax assets (260,883) (167,543)
21. Other current liabilities
As at
30 June
2018 As at
31 December
2017
US$ US$
Salaries payable and related costs 1,057,840 1,176,671
VAT payable 4,310,973 8,822,098
Accruals and deferred income 29,141,467 23,176,940
Non - trade accounts payable 2,670,38 6 2,327,162
Provision for warranties 3, 921,559 2,580,305
41,102,22 5 38,083,176
22. Commitments and contingencies
As at 30 June 2018 the Group was committed in respect of purchases of inventories of a total cost value of US$
6,203 , 000 (31 December 201 7 : US$ 2, 218,000 ) which were in transit at 30 June 2018 and delivered in July 201 8 . Such
inventories and the corresponding liability towards the suppliers have not been included in these financial statements
since, according to the terms of purchase , title of the goods has not passed to the Group at period end.
As at 30 June 2018 the Group was contingently liable in respect of bank guarantees and letter s of credit of US$
21,950 ,000 (31 December 2017 : US$ 22,633,000 ) which the Group has extended mainly to its suppliers.
As at 30 June 2018 the Group had no other capital or legal commitments and contingencies.
23. Operating segments
1.1 Reportable segments
The Group mainly operates in a single industry segment as a distributor of IT products. The Group ’s operating segments
are based on geographic location, and the measure of segment profit is profit from operations. The Group operates in
four principal geographical areas – Former Soviet Union, Central Eastern Europe, Western Europe and Middle East &
Africa
1.2 Segment revenues
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Former Soviet Union 477,033,752 268,690,675
Central Eastern Europe 283,073,776 182,652,797
Middle East & Africa 110,980,341 73,622,383
Western Europe 75,619,614 41,623,681
Other 19,479,363 3,741,828
966,186,846 570,331,364
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
19
1.3 Segment results
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Former Soviet Union 5, 174 , 478 3,986,779
Central Eastern Europe 2,758,485 3,134,745
Middle East & Africa 676,695 510,700
Western Europe 237,239 221,399
Other 286,51 6 46,419
Profit from operations 9,133,41 3 7,900,042
Net financial expenses (5,558,102) (6,173,871)
Other gains and losses 154,758 (442,698)
Profit before taxation
3,730,070 1,283,473
1.4 Segment capital expenditure (CAPEX)
As at
30 June
2018 As at
31 December
2017
US$ US$
Central Eastern Europe 12,121,916 12,502,008
Former Soviet Union 4,544,809 4,372,717
Middle East & Africa 3,004,473 3,084,118
Unallocated 8,310,214 8,157,239
27,981,412 28,116,082
1.5 Segment depreciation and amortization
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Central Eastern Europe 334,870 344,699
Former Soviet Union 208,492 178,543
Middle East & Africa 96,272 99,456
Unallocated 604,219 462,509
1,243,853 1,085,207
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL S TATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018
20
1.6 Segment assets As at
30 June
2018 As at
31 December
2017
US$ US$
Former Soviet Union 203,525,256 232,984,691
Central Eastern Europe 132,900,694 177,942,005
Western Europe 28,913,915 34,503,594
Middle East & Africa 33,608,272 45,286,320
Total 398,948,137 490,716,610
Assets allocated in capital expenditure (1.4) 27,981,412 28,116,082
Other unallocated assets 7,609,392 5,090,360
Consolidated assets 434,538,941 523,923,052
For the purposes of monitoring segment performance and allocating resources between segments only assets were
allocated to the reportable segments. As the Group liabilities are mainly used jointly by the reportable segments, these
were not allocated to each segment.
1.7 Geographical information
Since the Group’s operating segments are based on geographical location and this information has been provided above
(1.2 – 1.6) no further analysis is included.
1.8. Information about major custom ers
During 2018 , none of the Group’s customers accounted for more than 8 % of total sales (31 December 2017: 7%) ; it is
of strategic importance for the Group not to rely on any single customer.
24. Derivative financial liability
As at
30 June
2018 As at
31 December
201 7
US$ US$
Derivative financial liabilities carried at fair value through profit or loss
Foreign currency derivative contracts
80,030 739,587
25. Derivative financial asset
As at
30 June
2018 As at
31 December
2017
US$ US$
Derivative financial assets carried at fair value through profit or loss
Foreign currency derivative contracts 868,854 373,302
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 June 2018
21 26. Cash and cash equivalents
As at
30 June
2018 As at
31 December
2017
US$ US$
Cash at bank and in hand 45,598,420 93,401,246
Bank overdrafts (Note 16) (49,662,506) (47,468,050)
(4,064,086) 45,933,196
The cash at bank and in hand balance i ncludes an amount of US$ 17,746 , 000 (31 December 201 7 : US$ 17,818,000 )
which represents pledged deposits against financial facilities granted and margin accounts for foreign exchange hedging .
27. Goodwill
As at
30 June
2018 As at
31 December
2017
US$ US$
At 1 January 418,589 1,255,204
Goodwill written off (note ii) - (1,172,924)
Foreign exchange difference on retranslation (11,692) 336,309
At 30 June /31 December (note i)
406,897 418,589
(i) The capitalized goodwill represents goodwill arising from the business combinations of the following subsidiaries:
As at
30 June
2018 As at
31 December
2017
US$ US$
ASBIS d.o.o. (BA) (formerly Megatrend D.O.O. Sarajevo) 406,897 418,589
406,897 418,589
(ii) The write - off of goodwill relates to the business combinations of the following subsidiaries:
As at
30 June
2018 As at
31 December
2017
US$ US$
SHARK Computers a.s. - (1,172,924)
28. Transactions and balances of key management
For the six
months ended
30 June 2018 For the six
months ended
30 June 2017
US$ US$
Director's remuneration - executive (Note 6) 303,730 175,019
Director's remuneration - non - executive (Note 6) 1,210 1,094
304,940 176,113
ASBISC ENTERPRISES PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 June 2018
22 29. Business combinations
Acquisiti ons of subsidiaries to 30 June 2018
During the period, the group has acquired the remaining 15% of the share capital of ASBIS Cloud Ltd.
Name of entity
Type of operations Date acquired % acquired % owned
ASBIS Cloud Ltd Information Technology 9 February 2018 15% 100%
Dispo sals of subsidiaries to 30 June 201 8
During the period the following group’s subsidiary went into liquidation. No gain or loss arose on the event.
Name of disposed entity Type of operations Date liquidated % liquidated
OU ASBIS Estonia Informa tion Technology 29 November 2017 100%
Prestigio Plaza NL BV Information Technology 3 January 2018 100%
ASBIS UK Information Technology 30 April 2018 100%
Acquisitions of subsidiaries to 31 December 2017
During the period , the g roup has acquired 100% of the share capital of I ON LTD and ASBIS SERVIC Ltd , 65 .85 % of ASBC
LLC and 85% of ASBIS Cloud Ltd .
Name of entity Type of operations Date acquired % acquired % owned
I ON LTD Information Technology 04 April 2017 100% 100%
ASBC MMC Information Technology 08 May 2017 65. 85 % 65.85 %
ASBIS SERVIC LTD Warranty Services 04 July 2017 100% 100%
ASBIS Cloud Ltd Information Technology 27 July 2017 100 % 85%
Disposals of subsidiaries to 31 December 2017
During the period the group’s subsidiary Shark Online a.s. went into liquidation. Loss of US$ 12,461 arose on the event.
In addition, on 31 March 2017 the Group decreased the share capital of Asbis Vilnius UAB by US$ 22,316.
Name of disposed entity Type of operations Date liquidated % liquidated
Shark Online a .s . Informa tion Technology 01 January 2017 100%
30. Fair values
Financial instruments comprise financial assets and financial liabilities. Financial assets mainly consist of bank balances,
receivables and investments. Financial liabilities mainly consist of trade payables, factoring balances, bank overdrafts
and loans. The Directors consider that the carrying amount of the Company ’s/group’s financial instruments approximate
their fair value at the reporting date. Financial assets and financial liabilities carried at fair value through profit or lo ss
represent foreign cu rrency derivative contracts categorized as a Level 2 (inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from
prices).
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