28 Sep 2018 12:54
Company Registration Number: 01698076
WORLD TRADE SYSTEMS PLC
Unaudited half yearly condensed consolidated financial report as at 30 June 2018
TABLE OF CONTENTS
INTRODUCTION AND KEY HIGHLIGHTS
BOARD STATEMENT
PRINCIPAL RISKS AND UNCERTAINTIES
RESPONSIBILITY STATEMENT
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTHS ENDED 30 JUNE 2018
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AT 30 JUNE 2018
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTHS ENDED 30 JUNE 2018
NOTES TO THE CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018
INTRODUCTION AND KEY HIGHLIGHTS
The unaudited half yearly condensed and consolidated financial statements of World Trade Systems plc (the "Company") have been prepared using IAS 34, Interim Financial Reporting, as adopted by the European Union. This half yearly financial report is consistent with the policies and presentation applied to the latest published annual financial statements of the Company as at 31 December 2017, prepared in accordance with IAS 1 Presentation of Financial Statements, and should be read in conjunction.
The presentation currency of World Trade Systems plc is the same as that of its functional currency the Pound Sterling (£) as per IAS 21, The Effects of Changes in Foreign Exchange Rates.
Key Highlights
Ø Turnover of £6.29 million (6 months ended 30 June 2017: £10.14 million)
Ø Operating loss of £0.99 million (6 months ended 30 June 2017: Profit of £2.17 million)
Ø Cash and cash equivalents of £670,000 at 30 June 2018 (31 December 2017: £2.17 million)
BOARD STATEMENT
World Trade Systems plc (the 'Company') and its Chinese trading subsidiary, Shimao (Suzhou) Biotechnology Co. Ltd ('WTS China' and collectively referred to as the 'Group') has faced a tough operating environment in the first half of 2018. Although the health food market is huge in China the competition is getting stronger. Market competition has resulted in declined sales and profit. The Group reported a net loss of £1.01 million the six months ended 30 June 2018 (30 June 2017: net profit £1.86 million).
Trading Activities and Prospects
During the half year to 30 June 2018, WTS China has continued to place emphasis on event sales while diversifying into new commercial stores. WTS China has also started to diversify its strategy from selling health food products to exploring opportunities in the provision of healthcare services. The Group sees the aging population and rising standard of living in China as a huge market opportunity for entering the health services market. With improved wealth, the people are more willing to spend in healthcare services such as medical check-up, cosmetology, sanatorium retreat, nursing care, spas and gyms. Well-being is becoming a lifestyle in China. The Group is actively researching and exploring the various opportunities in this segment.
The Group continues to deploy resources in the international market. The Group aims to identify new products and services in the international market and introduce them to the Chinese market.
The Company is currently listed on the premium segment of the main market on the London Stock Exchange with its shares suspended from trading. The Company is actively working towards resuming trading of its shares on the London Stock Exchange, which will be subject, inter alia, to approval by shareholders.
Results
For the six month period ended 30 June 2018, the Group reported sales revenue of £6.29 million (30 June 2017: £10.14 million), a 37.9% decline compared with the same period last year. The decline in revenue is mainly due to increasing competition and a shift in management focus from healthcare products to services.
Event sales and marketing has been very effective in driving market attention and sales. However, there are increasing numbers of similar events organised by competitors and new market entrants, especially in Eastern and Southern China. Many of these competitors have strong financial backing from private equity funds and have been very aggressive in their marketing and promotion strategies, consequently, attracting customers from WTS China.
With similar costs spent on event sales, the declined sales have resulted in declined gross profit and margin. Gross profit decreased by £3.42 million, or 83.7%, from £4.09 million for the six months ended 30 June 2017 to £665,000 for the six months ended 30 June 2018. The fall in gross profit was mainly due to the decrease in sales described above while incurring similar marketing costs (cost of sales). Gross profit margins therefore decreased from 40.3% for the six months ended 30 June 2017 to 10.6% for the six months ended 30 June 2018.
Despite the fall in profitability, the Group has performed credibly in the competitive market space. The Group has made continued progress in building new sales channels. The Directors expect the current challenging market conditions, reflected in declining sales combined with cost pressure, to continue in the near term. In the face of these pressures, the Group will continue to focus on advertising and promoting brand awareness while seeking to build its international image and developing healthcare services as a new revenue stream.
I remain positive about the outlook of our business and industry. I would like to thank our staff for their hard work and commitment.
Chen Shao
Executive Director
18 August 2018
PRINCIPAL RISKS AND UNCERTAINTIES
Principal risks and uncertainties remaining during the next six months
We operate in a constantly changing economic and social environment that presents risks, some of which are driven by factors we are unable to control or predict. The key risks and uncertainties facing the Company in the remaining six months of the financial year are described below and include measures we are taking to mitigate these risks.
WTS China specific risks remaining during next six-months:
Risk | Mitigation |
The ability to grow sales and build on existing success whilst managing incentive payments. | WTS China hopes to expand its market reach to achieve continued sales growth by; market penetration achieved by entering new geographical areas.diversifying to different product areas in the health food sector. Ongoing R&D and co-operations with international companies will allow for new products to be developed.the sales team closely monitoring incentive payments through regular discussions with sales managers. Increased sales incentives paid to distributors are being based on set thresholds calculated taking into account a number of qualitative factors. WTS China hopes to maintain the checks and balances to ensure that the incentive payments can be reduced over a period of time without adversely affecting sales. WTS China continuing to invest considerably in staff training and team building in order to mitigate these risks and to ensure that staff are fully aware of the factors to be applied in determining their incentive payments
|
Execution risks in launching and operating an e-commerce platform and commercial store roll out. WTS China does not have prior experience of these sales channels and there are risks of cannibalisation and alienating the distributors by competing with them. | In order to avoid channel conflicts or cannibalisation, we plan to develop an integrated channel strategy. This will enable the Company and distributors to use multiple channels to reach end users. The e-commerce platform has been through a thorough testing period to ensure it is fit for purpose before going live. A phased launch will focus its e-commerce strategy initially as a productivity tool for the distributors so as to mitigate the risks outlined above.
|
WTS China's products are manufactured by a third-party. We assume raw material and manufacturing costs will remain at the current level, but any change could have a significant effect on profitability.
| We have factored for inflation of 3% for raw material costs and 7% for manufacturing costs as a mitigate in determining total costs while deciding the sales strategy. |
WTS China has recognised revenue of £6,290,000 during first six months of 2018. Distributors have the right to return goods if the end customers are dissatisfied with the products.
| The Group has estimated that, based on extrapolation using past experience, the return rate to be 2.2%.
|
Operating in the Chinese market, WTS China is exposed to various in-country risks including; × Counterfeiting: successful brands are more susceptible to counterfeiting than the UK. × Taxation and trade: as a company operating in China, WTS China will avoid import taxes that affect companies operating outside of China. × Economy and politics: both Chinese politics and the economy have behaved unpredictably in the past. The environment appears stable at present but there are potential risks from rapid social change including social inequality, social costs, geopolitical tensions.
|
Management has detailed experience of working in China and meet regularly to discuss these risks and ensure that the Group is able to respond appropriately. The Group will closely monitor the external environment in China to ensure it is proactively planning and strategising based on any predicted changes in the political, economic or social environment. |
The Group's specific risks remaining during next six-months:
Risk | Mitigation |
As a small but growing company it needs to continue to attract and retain experienced employees with the relevant skills and experience to satisfy its capacity and capability requirements which will increase over time with listing and the increasing business development opportunities being pursued.
| The Company is committed to focusing on employee satisfaction in order to improve employee retention and make it a more attractive place to work. This includes organising more regular team building events, non-financial rewards, flexible working policies and clearer lines of reporting. |
Managing communication between UK and China is vital in overcoming the language and time differences. | By continuing high level control of procedures and systems in the remainder of this year we hope to mitigate this risk. Some UK managerial staff are contracted to spend a certain proportion of their time working in China in order to improve communications and ensure controls and systems are implemented consistently in both countries. The UK head office employs multilingual staff.
|
RESPONSIBILITY STATEMENT
The Disclosure and Transparency Rules (DTR) of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Financial Report (the "Report").
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements, for the period ended 30 June 2018, have been prepared in accordance with the applicable International Accounting Standard (IAS) 34 "Interim Financial Reporting" as adopted by the EU and give a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4 R; and
(b) the Report includes a fair review of the information required by:
(i) DTR 4.2.7R, being an indication of important events that have occurred during the first six-months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six-months of the year; and
(ii) DTR 4.2.8R, being related party transactions that have taken place in the first six-months of the current financial year and that may have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.
The Report was approved by the Board on 18 August 2018 and the above responsibility statement signed by order of the Board.
Chen Shao
Executive Director
18 August 2018
The Directors at the date of this half-yearly financial report are:
Robert Lee Non-Executive Chairman
Shao Chen Executive Director
AKM Ismail Executive Director
Ellen Lu Non-Executive Independent Director
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTHS ENDED 30 JUNE 2018
Notes
Revenue Cost of sales
Gross profit
Administrative expenses
Profit/(loss) from operations
Finance costs
Finance Income
Profit/ (loss) before tax
Income tax expense 6
Profit/(loss) after tax
Other comprehensive income items that will or may be reclassified to profit or loss: Exchange differences on translation of foreign operations
Profit/(loss) for the period and total comprehensive income attributable to Equity owners of the parent
Earnings per share Basic and diluted earnings/ (loss) per ordinary share 4
|
6 months ended 30 June 2018 (Unaudited)
£'000
6,290 (5,625)
665
(1,651)
(986)
(24)
-
(1,010)
-
(1,010)
19
(991)
(11.32p) |
6 months ended 30 June 2017 (Unaudited)
£'000
10,136 (6,049)
4,087
(1,921)
2,166
-
218
2,384
(522)
1,862
(50)
1,812
21.27p
|
12 months ended 31 December 2017 (Audited)
£'000
19,621 (14,080)
5,541
(3,705)
1,836
(95)
241
1,982
(605)
1,377
(26)
1,351
15.73p
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
Notes
Assets
Non-Current Assets Property, plant and equipment 11 Investment property Intangible assets 12 Long term trade and other receivables 13
Current Assets Inventories Trade and other receivables Cash and cash equivalents
Total Assets
Current liabilities Trade and other payables Current tax liabilities 6
Non-current liabilities Loans and borrowings 3
Total liabilities
Net assets/(liabilities)
Equity Share capital 5 Capital contribution reserve Currency translation reserve Retained earnings
Total retained/ (deficit) of equity attributable to equity holders | 6 months ended 30 June 2018 (Unaudited) £'000
1,009 40 17 2,751 3,817
9 502 670 1,181
4,998
(3,841) - (3,841)
(1,275)
(5,116)
(118)
4,378 97 (6) (4,587)
(118)
| 6 months ended 30 June 2017 (Unaudited) £'000
1,124 40 5 71 1,240
100 610 2,147 2,857
4,097
(1,020) (545) (1,565)
(1,247)
(2,812)
1,285
4,378 29 (49) (3,073)
1,285
| 12 months ended 31 December 2017 (Audited) £'000
1,088 40 4 293 1,425
38 658 2,172 2,868
4,293
(2,120) (43) (2,163)
(1,257)
(3,420)
873
4,378 97 (25) (3,577)
873
|
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AT 30 JUNE 2018
(Unaudited)
| Share capital £'000 | Capital contribution reserve £'000 | Currency translation reserve £'000 | Retained Earnings £'000 | Total equity £'000 |
At 1 January 2018 | 4,378 | 97 | (25) | (3,577) | 873 |
Comprehensive income for the year |
|
|
|
|
|
Profit for the period | - | - | - | (1,010) | (1,010) |
Exchange difference | - | - | 19 | - | 19 |
Total comprehensive income for the year | - | - | 19 | (1,010) | (991) |
Contributions by and distributions to owners |
|
|
|
|
|
Transaction with owners in their capacity as owners | - | - | - | - | - |
Balance at 30 June 2018
| 4,378 | 97 | (6) | (4,587) | (118) |
(Unaudited)
| Share capital £'000 | Capital contribution reserve £'000 | Currency translation reserve £'000 | Retained Earnings £'000 | Total equity £'000 |
At 1 January 2017 | 4,378 | 168 | 1 | (4,954) | (407) |
Comprehensive income for the year |
|
|
|
|
|
Profit for the period | - | - | - | 1,862 | 1,862 |
Exchange difference | - | - | (50) | - | (50) |
Total comprehensive income for the year | - | - | (50) | 1,862 | 1,812 |
Contributions by and distributions to owners |
|
|
|
|
|
Transaction with owners in their capacity as owners | - | (139) | - | 19 | (120) |
Balance at 30 June 2017
| 4,378 | 29 | (49) | (3,073) | 1,285 |
(Audited)
| Share capital £'000 | Capital contribution reserve £'000 | Currency translation reserve £'000 | Retained Earnings £'000 | Total equity £'000 |
At 1 January 2017 | 4,378 | 168 | 1 | (4,954) | (407) |
Comprehensive income for the year |
|
|
|
|
|
Profit for the period | - | - | - | 1,377 | 1,377 |
Exchange difference | - | - | (26) | - | (26) |
Total comprehensive income for the year | - | - | (26) | 1,377 | 1,351 |
Contributions by and distributions to owners |
|
|
|
|
|
Transaction with owners in their capacity as owners | - | (71) | - | - | (71) |
Balance at 31 December 2017
| 4,378 | 97 | (25) | (3,577) | 873 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX-MONTHS ENDED 30 JUNE 2018
Operating activities
Net cash received/(used) in operating activities
Cash flows received/(used) in operating activities
Investing activities Purchase of property, plant and equipment Disposal of fixed assets Purchase Intangible assets and other long-term assets
Net cash received/(used) in investing activities
Financing activities Proceeds from loans Interest paid on loans
Cash flows from financing activities
Net change in cash and cash equivalents from continuing operations
Cash and cash equivalents at beginning of period
Effect of exchange rate changes on cash and cash equivalent
Cash and cash equivalents at end of period | 6 months ended 30 June 2018 (Unaudited) £'000
(1,496)
(1,496)
(8) 11 (13)
(10)
- -
-
(1,506)
2,172
4
670
| 6 months ended 30 June 2017 (Unaudited) £'000
(10)
(10)
(191) 83 -
(108)
- -
-
(118)
2,265
-
2,147
| 12 months ended 31 December 2017 (Audited) £'000
150
150
(343) (4) 129
(218)
2 (11)
(9)
(77)
2,265
(16)
2,172
|
NOTES TO THE CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018
1. Reporting entity
World Trade Systems Plc ("the Company") is a company registered and domiciled in the United Kingdom. The Company owns 100% of Shimao (Suzhou) Biotechnology Co. Ltd ("WTS China"). WTS China was established in June 2016 for the purpose of carrying on a new business of supplying high-quality health food products to the Chinese consumer market.
This condensed consolidated interim financial report is neither audited nor reviewed by the auditors and was approved by the Board and the Audit Committee on 18 August 2018. Copies of the interim financial report will be available upon request from the Company's principal place of business at First Floor, Lexham House, 14 Hill Avenue, Amersham HP6 5BWand the Company's website at www.worldtradesytemsplc.com.
The financial information for the six-month period ended 30 June 2018 set out in this interim report does not constitute statutory accounts, as defined in Section 434 of the Companies Act 2006.
The Company's statutory financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies. The auditor's report on the statutory financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006.
2. Basis of preparation
These condensed consolidated unaudited interim financial statements are for the six-month period ended 30 June 2018. They have been prepared in accordance with IAS34 Interim Financial Reporting and do not include all of the information required for the full annual financial statements.
These condensed consolidated interim financial statements have been prepared under the historical cost convention and in accordance with the accounting policies adopted in the Company's last annual financial statements for the year ended 31 December 2017. The accounting policies have been applied consistently throughout these condensed financial statements.
3. Loans and borrowings
Loan from related parties
As at 30 June 2018, the amount due to Kudrow Finance Limited, a shareholder of the Group was £847,000 (31 December 2017: £836,000). The loan is interest free, unsecured and repayment date has been extended to 31 December 2020. The loan has been discounted using a market rate of 3%.
Prior to 1 July 2017, the loans carried interest at the rate of 3% per annum. Kudrow has waived the interest with effect from 1 July 2017.
In order to support the re-listing process, Kudrow has agreed to the following:
· total loans outstanding will not incur interest;
· the intention (but without any obligation) is for the loan to be converted to shares upon the proposed re-listing.
Other loans
As at 30 June 2018, other loans amounting £428,000 (31 December 2017: £421,000). The loans are unsecured, interest bearing at a rate of 1% per annum and repayable in 2019.
4. Profit per ordinary share has been calculated as follows:
| 6 months to 30 June 2018 | 6 months to 30 June 2017 | 12 months to 31 December 2017 |
Profit/ (Loss) attributable to ordinary shareholders (£'000) | (991) | 1,862 | 1,377 |
Weighted average number of shares | 8,753,867 | 8,753,867 | 8,753,867 |
Earnings/ (loss) per share - basic and diluted (pence) | (11.32) | 21.27 | 15.73 |
5. Called up share capital
Allotted, Called up and fully paid | At 30 June 2018 | At 30 June 2017 | At 31 December 2017 | |||
Number | £000 | Number | £000 | Number | £000 | |
Ordinary shares of 1p each | 8,753,867 | 88 | 8,753,867 | 88 | 8,753,867 | 88 |
Deferred shares of 49p each | 8,753,867 | 4,290 | 8,753,867 | 4,290 | 8,753,867 | 4,290 |
|
| 4,378 |
| 4,378 |
| 4,378 |
The deferred shares do not entitle the holder to payment of any dividend or other distribution or to receive notice of or attend or vote at any General Meeting of the company or on a return of capital to the repayment of the amount paid on such deferred shares until after repayment of the capital paid up on the ordinary shares together with payment of £1,000,000 on each ordinary share and the Deferred Shares shall not be capable of transfer at any time other than with the consent of the Directors.
6. Taxation
There is no taxation charge in respect of the holding company for the six-months ended 30 June 2018 and 30 June 2017 as the Company is still carrying unutilised tax losses.
At this report date, the Group and Company had unused tax losses as follows:
| At 30 June 2018 £000 | At 30 June 2017 £000 | At 31 December 2017 £000 |
Reconciliation of carried forward tax losses: Profit/(Loss) arising during the period Losses brought forward Unutilised tax losses carried forward |
(203)(1,838) (2,041)
|
296(1,951) (1,655)
|
113(1,951) (1,838)
|
A deferred tax asset has not been recognised in respect of these losses. Should the losses be utilised in the future the estimated value of the deferred tax asset not recognised, at a standard rate of 19%, is £388,000 (as at 30 June 2017: £314,000 and 31 December 2017: £349,000). In future the standard tax rate will reduce to 17%.
7. Related party transactions
Loan from Kudrow Finance Limited
At 30 June 2018, loan for related party was £847,000 (31 December 2017: £836,000). See note 3 Loans and Borrowings for further details.
Directors' transactions
Robert Lee, the Non-Executive Chairman, is the principal of Robert Lee Law Offices. Robert Lee is also a Director and owner of Proclass Limited, a company incorporated in the British Virgin Islands that provides company secretarial and nominee services. Proclass has been the sole corporate director of Kudrow since September 2004. A balance of £35,232.63 was due to Robert Lee Law Offices but was waived on 21 February 2018.
8. Financial Instruments
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.
• Trade and other receivables
Trade and other receivables are measured at fair value on initial recognition, and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
• Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
• Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
• Borrowings
Borrowings are recognised initially at fair value, net of direct issue costs. Finance costs are accounted for on an accruals basis and are charged to profit or loss using the effective interest method.
• Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting its liabilities. Equity instruments issued by the parent Company are recorded as the proceeds received net of direct issue costs.
• Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include those investments having short holding term (normally will be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be measured reliably and have low risks of change.
The Company has no financing facility with its bankers and is financed by the consulting fee it charges its wholly owned subsidiary in China. The Board monitors cash flows, cash balances and on-going forward requirements on a monthly basis.
The Company had cash on deposit with its bankers of £59,000 as at 30 June 2018 (31 December 2017: £194,000). At the Group level, the cash position was at a healthy £670,000.
9. Dividend policy
The Directors take a prudent approach to making dividend payments and will make payments only when it is commercially viable to do so, subject to the availability of distributable equity reserves.
10. Operating segment
As the Group sells only healthcare products in China, management deems that to be the only operating segment.
11. Property, plant and equipment
| Leasehold improvement £'000 | Fixtures and fittings £'000 | Plant and machinery £'000 | Computer equipment £'000 | Motor vehicles £'000 | Assets under construction £'000 |
Total £'000 |
Cost |
|
|
|
|
|
|
|
At 1 January 2018 | 189 | 53 | 134 | 40 | 405 | 399 | 1,220 |
Additions | - | 7 | - | 1 | - | - | 8 |
Disposal | - | - | - | - | (36) | - | (36) |
FX Movement | 3 | 1 | 2 | 1 | 6 | 5 | 18 |
At 30 June 2018 | 192 | 61 | 136 | 42 | 375 | 404 | 1,210 |
|
|
|
|
|
|
|
|
Accumulative depreciation |
|
|
|
|
|
| |
At 1 January 2018 | 65 | 6 | 11 | 14 | 36 | - | 132 |
Additions | 33 | 3 | 7 | 7 | 20 | - | 70 |
Disposal | - | - | - | - | (4) | - | (4) |
FX Movement | 1 | - | - | 1 | 1 | - | 3 |
At 30 June 2018 | 99 | 9 | 18 | 22 | 53 | - | 201 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
At 30 June 2018 | 93 | 52 | 118 | 20 | 322 | 404 | 1,009 |
At 1 January 2018 | 124 | 47 | 123 | 26 | 369 | 399 | 1,088 |
12. Intangible assets
|
|
| Patents £000 |
At 1 January 2018 |
|
| 4 |
Additions |
|
| 13 |
Charge for the year |
|
| - |
FX Movement |
|
| - |
At 30 June 2018 |
|
| 17 |
13. Long term trade and other receivables
|
| At 30 June 2017 £000 | At 31 December 2017 £000 |
Prepayment |
| 140 | 293 |
Advance to 3rd party |
| 2,611 | - |
|
| 2,751 | 293 |
The Advance to 3rd party is unsecured, interest free and repayable on demand.
14. Financial instruments' fair value measurement
The Group considers that the carrying amount of its financial assets and financial liabilities are a reasonable approximation of their fair value.
Financial assets and financial liabilities measure at fair value in the statement of financial position are grouped into one of the three Levels of a fair value hierarchy. The fair value hierarchy has the following levels:
· Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
· Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
· Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value measurements have been categorised in their entirety at Level 1.
The Group will review this categorisation periodically in line with our interim and annual accounting reporting. This will determine when transfers between level 1 and level 2 are deemed to have occurred.
The group interest charges on loans and borrowings are based on the fair value of 3% p.a.