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Adoption of IFRS 9 and IFRS 15 for Interim Financial Statements

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Adoption of IFRS 9 and IFRS 15for Interim FinancialStatements


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No party should rely on the contents of this publication without first obtaining advice from a qualified professional person.

The publisher, and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done, by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.

Disclaimer

This publication is provided on the terms and understanding that i) the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and ii) the publisher is not engaged in rendering legal, accounting, professional or other advice or services.

Without limiting the generality of the above, no author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor.

Contents

1. Introduction.................................................................................................................................................... 2

2. Illustrative Financial Statements.................................................................................................................... 2

3. Explanatory booklets..................................................................................................................................... 2

4. Editorial articles and social media commentary............................................................................................. 2

5. IFRS SYSTEM Software............................................................................................................................... 2

6. Trigger points................................................................................................................................................. 3

7. Impact on the adoption of IFRS 9 and IFRS 15 for Interim Financial Statements......................................... 3

8. Conventions used in the example................................................................................................................. 3

9. Example........................................................................................................................................................ 4

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This publication is a complimentary resource provided by IFRS SYSTEM Pty Limited and its related entities and is intended to assist those who are dealing with the adoption of IFRS 9 and IFRS 15 for Interim Financial Statements.


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Introduction

The resources fall into the following three broad categories:

This booklet is part of a series of complimentary resources that we make available to professionals involved in the preparation, oversight or audit of statutory accounts.

• Illustrative Financial Statements• Explanatory booklets• Editorial articles and social media commentary

Illustrative Financial Statements

IFRS SYSTEM’s Illustrative Financial Statements are an invaluable statutory accounts production resource. Available in PDF and Word formats, the Illustrative Financial Statements are updated to reflect the International Financial Reporting Standards (IFRS) as at 30 June and 31 December each year.

If you would like to know more about IFRS SYSTEM Software please visit .www.ifrssystem.com

We acknowledge that IFRS SYSTEM resources are prepared from our point of view, which is just one of many. However, after many years, and many hundreds of financial statements prepared, we know our process works and we are proud to share it.

If you would like to suggest a topic for us to consider or comment on, add to, or even challenge anything in this booklet, please email us at [email protected].

Editorial articles and social media commentary

Many of the complimentary resources we provide are a by-product of our efforts to develop and deliver the world’s best statutory accounts production software.

We don’t create booklets for every circumstance, just those that a) we think are important and b) issues that people are finding challenging. Our explanatory booklets can be downloaded from https://ifrssystem.com/resources.

Our explanatory booklets fill this gap. These booklets cover a range of issues such as ‘Constructing of financial statements’, ‘The impact on disclosures when changing the basis of preparation’ and ‘The impact on disclosures arising from changes to the Accounting Standards’.

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ease and confidence. You can subscribe to this resource using the following link

Explanatory booklets

IFRS SYSTEM articles, posts and tips can be found in a range of accounting publications and social media sites.

We build IFRS SYSTEM Software so that users don’t need to worry about the complexities associated with changing the basis of preparation from one period to the next, or worrying about how disclosures are effected by changes to the Accounting Standards.

Whilst illustrative financial statements are very helpful, they can be like a map that shows only the destination (or end result). What they don’t show is ‘how to get there’ or ‘how things have changed’.

IFRS SYSTEM Software

The Illustrative Financial Statements are produced as part of our testing and quality assurance processes, while the explanatory booklets can come from our research with preparers, auditors and regulators.

These practical and clear examples cover a wide range of reporting scenarios and can be used with


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Trigger points

The following are some potential trigger points that would suggest that IFRS 15 'Revenue from Contracts with Customers' impacts your Interim Financial Statements:

The following are some potential trigger points that would suggest that IFRS 9 'Financial Instruments'impacts your Interim Financial Statements:

• Assets in the latest Annual Report included 'Available-for-sale financial assets' and 'Held-to-maturity investments'. If still held, these would be reclassified to another investment category, such as 'Financial assets at fair value through other comprehensive income'

The following is a summary of the new disclosures (where applicable):

• Bad debt / impairment of receivables expense in previous periods, indicating that the expected credit losses on receivables needs to be applied

• 'Accrued revenue' is now reclassified into 'Contract

assets’

• 'Revenue received in advance' and 'Deferred revenue' is now reclassified into 'Contract liabilities’

Impact on the adoption of IFRS 9 and IFRS 15 for Interim Financial Statements

• Consider if any 'Accrued expenses' should be reclassified into 'Contract liabilities'

• Statement of profit or loss and other comprehensive income: 'Interest revenue calculated using the effective interest method' (expanded description) moved from the notes to the face of the statement

• Statement of profit or loss and other comprehensive income: new income items on the face of the statement for 'Net gain on derecognition of financial assets at amortised cost', 'Net gain on remeasurement from reclassification of financial assets at amortised cost to fair value' and 'Net gain transferred from other comprehensive income on reclassification of financial assets'

• Statement of profit or loss and other comprehensive income: new other comprehensive items for 'Gain/(loss) on the revaluation of equity instruments at fair value through other comprehensive income' (will not be reclassified) and 'Gain/(loss) on the revaluation of financial liabilities at fair value through other comprehensive income' (may be reclassified)

• Statement of financial position: new classifications for 'Contract assets', 'Financial assets at fair value through other comprehensive income' and 'Contract liabilities'

• Notes to the financial statements - Significant accounting policies: include IFRS 9 and IFRS 15into the new or amended Accounting Standards and Interpretations adopted

• Notes to the financial statements - Other liabilities: new item for 'Refund liabilities'

• Notes to the financial statements - Other assets: new items for 'Customer acquisition costs', 'Customer fulfilment costs' and 'Right of return assets'

• Notes to the financial statements - Contract assets: new note including a reconciliation

• Notes to the financial statements - Revenue: new disclosures for disaggregation of revenue

Conventions used in the example

• Content that is not impacted by IFRS 9 or IFRS 15 is presented as on a clear backgroundblack text

• Notes to the financial statements - Contract liabilities: new note including a reconciliation and a breakdown of unsatisfied performance obligations

• Notes to the financial statements - Trade and other receivables: new disclosures for allowance for expected credit losses

• Notes to the financial statements - Restatement of comparatives: disclose the impact on the comparatives and consider changing the note name to Restatement of comparatives - adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers’

For illustrative purposes the conventions that apply to the following example are:

• Content that has been added or changed as a consequence of IFRS 9 or IFRS 15 is presented as green text on a grey shaded background

• The placeholder pages reserved for the management report and the independent auditor’s review report have been intentionally omitted

• Notes to the financial statements - Significant accounting policies: new accounting policies for revenue recognition, trade and other receivables, contract assets, customer acquisition costs, customer fulfilment costs, right of return assets, investments and other financial assets, contract liabilities and refund liabilities


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Pinnacle IFRS Interim UK PLC

Company Number 01234567

Interim Report -

30 June 2018


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Pinnacle IFRS Interim UK PLCDirectors' responsibilities statement30 June 2018

1

The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial half-year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the consolidated entity and the profit or loss of the consolidated entity for that half-year.

In preparing these financial statements, the directors are required to:

● select suitable accounting policies and then apply them consistently;

● make judgements and accounting estimates that are reasonable and prudent;

● state whether International Financial Reporting Standard IAS 34 'Interim Financial Reporting' has been followed, subject to any material departures disclosed and explained in the financial statements; and

● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the consolidated entity will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the consolidated entity's transactions and disclose with reasonable accuracy at any time the financial position of the consolidated entity and enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the consolidated entity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.


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Pinnacle IFRS Interim UK PLCContents30 June 2018

2

Statement of profit or loss and other comprehensive income 3Statement of financial position

5 Statement of changes in equity

7 Statement of cash flows

8 Notes to the financial statements

9 Independent auditor's review report to the members of Pinnacle IFRS Interim UK PLC

26

General information

The financial statements cover Pinnacle IFRS Interim UK PLC as a consolidated entity consisting of Pinnacle IFRS Interim UK PLC and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Pound sterling, which is Pinnacle IFRS Interim UK PLC's functional and presentation currency.

Pinnacle IFRS Interim UK PLC is a listed public company limited by shares, incorporated and domiciled in the United Kingdom. Its

registered office and principal place of business are:

Registered office

Principal place of business

10th Floor

5th Floor

Universal Administration Building

Pinnacle Business Centre

12 Highland Street

247 Edward Street

London EC1

London EC1

The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 August 2018.


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Pinnacle IFRS Interim UK PLCStatement of profit or loss and other comprehensive incomeFor the half-year ended 30 June 2018

ConsolidatedNote 30 Jun 2018 30 Jun 2017

£'000

£'000

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

3

Revenue

4

233,357

218,931

Share of profits of associates accounted for using the equity method

5

1,616

1,437 Other income

6

692

192 Interest revenue calculated using the effective interest method

543

272 Net gain on derecognition of financial assets at amortised cost

50

-

Expenses

Changes in inventories

(660)

(782)Raw materials and consumables used

(68,486)

(65,515)Employee benefits expense

(112,431)

(109,130)Depreciation and amortisation expense

(10,570)

(10,979)Impairment of receivables

(256)

(262)Other expenses

(17,612)

(15,960)Finance costs

7

(1,119)

(1,726)

Profit before income tax expense

25,124

16,478

Income tax expense

(7,159)

(4,560)

Profit after income tax expense for the half-year

17,965

11,918

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Gain on the revaluation of equity instruments at fair value through other comprehensive income, net of tax

35

-

Items that may be reclassified subsequently to profit or loss

Cash flow hedges transferred to profit or loss, net of tax

-

(2)Cash flow hedges transferred to inventory in the statement of financial position, net of tax

(1)

(5)Net change in the fair value of cash flow hedges taken to equity, net of tax

(3)

(12)Foreign currency translation

(157)

(98)

Other comprehensive income for the half-year, net of tax

(126)

(117)

Total comprehensive income for the half-year

17,839

11,801


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adoption of IFRS 9 'Financial Instruments' and

Pinnacle IFRS Interim UK PLCStatement of profit or loss and other comprehensive incomeFor the half-year ended 30 June 2018

ConsolidatedNote 30 Jun 2018 30 Jun 2017

£'000 £'000

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

4

Profit for the half-year is attributable to:

Non-controlling interest

71

114 Owners of Pinnacle IFRS Interim UK PLC

17,894

11,804

17,965

11,918

Total comprehensive income for the half-year is attributable to:


71


17,768

11,687

17,839

11,801

Pence

Pence

Basic earnings per share

12.18

8.37 Diluted earnings per share

12.18

8.37

Refer to note 2 for detailed information on Restatement of comparatives -

IFRS 15 'Revenue from Contracts with Customers'.


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Pinnacle IFRS Interim UK PLCStatement of financial positionAs at 30 June 2018

Consolidated

Note

30 Jun 2018

31 Dec 2017

£'000

£'000

The above statement of financial position should be read in conjunction with the accompanying notes

5

Assets

Current assets

Cash and cash equivalents

26,136

22,258 Trade and other receivables

8

13,420

12,958 Contract assets

9

2,458

2,508 Inventories

39,525

40,185 Financial assets at fair value through profit or loss

360

-Other

10

3,935

3,444

85,834

81,353 Non-current assets classified as held for sale

11

6,000

-Total current assets

91,834

81,353

Non-current assets

Receivables

145

135 Investments accounted for using the equity method

34,192

32,576 Financial assets at fair value through other comprehensive income

170

-Investment properties

46,900

46,900 Property, plant and equipment

121,253

129,690 Intangibles

12,170

12,357 Deferred tax

9,860

9,407

Other 12

2,308

2,220

Total non-current assets

226,998 233,285

Total assets

318,832 314,638

Liabilities

Current liabilities Trade and other payables 20,004 19,468 Contract liabilities 13 2,269 2,135 Borrowings 6,114 4,475 Derivative financial instruments 122 116 Income tax

6,701

4,497

Employee benefits

8,352

8,270 Provisions

3,494

3,362

Other 14

2,130

2,159

49,186

44,482

Liabilities directly associated with assets classified as held for sale

4,000

-Total current liabilities

53,186

44,482

Non-current liabilities

Borrowings

20,823

21,630 Deferred tax

4,617

4,446 Employee benefits

11,149

10,975 Provisions

1,475

1,325 Total non-current liabilities

38,064

38,376

Total liabilities

91,250

82,858

Net assets

227,582

231,780


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Pinnacle IFRS Interim UK PLCStatement of financial positionAs at 30 June 2018

Consolidated

Note

30 Jun 2018

31 Dec 2017

£'000

£'000

The above statement of financial position should be read in conjunction with the accompanying notes

6

Equity

Issued capital

182,953

182,953 Reserves

3,276

3,402 Retained profits

23,990

28,133 Equity attributable to the owners of Pinnacle IFRS Interim UK PLC

210,219

214,488 Non-controlling interest

17,363

17,292

Total equity

227,582

231,780

Refer to note 2 for detailed information on Restatement of comparatives -

adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers'.

___________________________

___________________________

Daniel Example

Elizabeth Example

Director

Director

23 August 2018


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Pinnacle IFRS Interim UK PLCStatement of changes in equityFor the half-year ended 30 June 2018

The above statement of changes in equity should be read in conjunction with the accompanying notes

7

Issued

Retained

Non-controlling

Total equity

capital

Reserves

profits

interest

Consolidated

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2017

182,678

3,625

15,310

17,107

218,720

Adjustment for change in accounting policy (note 2)

-

-

326

-

326

Balance at 1 January 2017 -

restated

182,678

3,625

15,636

17,107

219,046


-

-

11,804

114

11,918 Other comprehensive income for the half-year, net of tax

-

(117)

-

-

(117)


-

(117)

11,804

114

11,801

Transactions with owners in their capacity as owners:

Dividends paid (note 15)

-

-

(11,744)

- (11,744)

Balance at 30 June 2017

182,678

3,508

15,696

17,221 219,103

Issued

Retained

Non-controlling

Total equity capital Reserves profits interest Consolidated £'000 £'000 £'000 £'000 £'000

Balance at 1 January 2018 182,953 3,402 26,737 17,292 230,384

Adjustment for change in accounting policy (note 2)

- -

1,396

-

1,396

Balance at 1 January 2018 -

restated

182,953

3,402

28,133

17,292

231,780

Profit after income tax expense for the half-year -

-

17,894

71

17,965


-

(126)

-

-

(126)


-

(126)

17,894

71

17,839

Transactions with owners in their capacity as owners:

Dividends paid (note 15)

-

-

(22,037)

-

(22,037)


182,953

3,276

23,990

17,363

227,582


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Pinnacle IFRS Interim UK PLCStatement of cash flowsFor the half-year ended 30 June 2018

Consolidated

Note

30 Jun 2018

30 Jun 2017

£'000

£'000

The above statement of cash flows should be read in conjunction with the accompanying notes

8

Cash flows from operating activities

Receipts from customers

231,777

217,416 Payments to suppliers and employees

(199,796)

(194,235)

31,981

23,181 Interest received

540

272 Other revenue

2,123

1,691 Interest and other finance costs paid

(1,119)

(1,726)Income taxes paid

(5,163)

(4,231)

Net cash from operating activities

28,362

19,187

Cash flows from investing activities

Payment for purchase of business, net of cash acquired

19

(8,072)

-Payments for investments

(510)

-Payments for property, plant and equipment

(297)

(1,524)Proceeds from disposal of investments

80

-

Proceeds from disposal of property, plant and equipment

1,511

250

Net cash used in investing activities

(7,288)

(1,274)

Cash flows from financing activities

Proceeds from borrowings 10,000 -Dividends paid 15 (22,037) (11,744)Repayment of borrowings (5,168) (12,294)

Net cash used in financing activities (17,205) (24,038)

Net increase/(decrease) in cash and cash equivalents 3,869 (6,125)Cash and cash equivalents at the beginning of the financial half-year

22,258

10,371

Effects of exchange rate changes on cash and cash equivalents

9

5

Cash and cash equivalents at the end of the financial half-year

26,136

4,251


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Pinnacle IFRS Interim UK PLCNotes to the financial statements30 June 2018

9

Note 1. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 30 June 2018 have been prepared in accordance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting' and the Companies Act 2006, as appropriate for for-profit oriented entities.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these

financial statements are to be read in conjunction with the annual report for the year ended 31 December 2017.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

IFRS 9 Financial Instruments

The consolidated entity has adopted IFRS 9 from 1 January 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12- month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.

IFRS 15 Revenue from Contracts with Customers

The consolidated entity has adopted IFRS 15 from 1 January 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

The impact on the financial performance and position of the consolidated entity from the adoption of these Accounting Standards is detailed in note 2.

Going concern

The financial statements have been prepared on a going concern basis as there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.


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Note 1. Significant accounting policies (continued)

10

Revenue recognitionThe consolidated entity recognises revenue as follows:

Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it

is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.

Sale of goods

Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery.

Rendering of services Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate.

Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been

grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

Contract assets

Contract assets are recognised when the consolidated entity has satisfied the performance obligations in the contract and either has not recognised a receivable to reflect its unconditional right to consideration or the consideration is not due. Contract assets are treated as financial assets for impairment purposes.

Customer acquisition costs

Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a contract with a customer and are expected to be recovered. Customer acquisition costs are amortised on a straight-line basis over the term of the contract.


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11

Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are not otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a contract where the contract term is less than one year is immediately expensed to profit or loss.

Customer fulfilment costs

Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate directly to the contract or specifically identifiable proposed contract; (ii) the costs generate or enhance resources of the consolidated entity that will be used to satisfy future performance obligations; and (iii) the costs are expected to be recovered. Customer fulfilment costs are amortised on a

straight-line basis over the term of the contract.

Right of return assets

Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the inventory was previously carried prior to sale, less expected recovery costs and any impairment.

Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on

their classification. Classification is determined based on both the

business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.

Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated

entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.

Impairment of financial assets

The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.


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12

Contract liabilities

Contract liabilities are recognised

when a customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration (whichever is earlier), before the consolidated entity has transferred the goods or services to the customer. The liability is the consolidated entity's obligation to transfer goods or services to a customer from which it has received consideration.

Refund liabilities

Refund liabilities are recognised where the consolidated entity receives consideration from a customer and expects to refund some, or all, of that consideration to the customer. A refund liability is measured at the amount of consideration received or receivable for which the consolidated entity does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected value methodology.

Note 2. Restatement of comparatives -

adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from

Contracts with Customers'

Adoption of IFRS 9 'Financial Instruments'

The consolidated entity has adopted IFRS 9 from 1 January 2018, using the full retrospective method of adoption and comparatives have been restated.

The investment classifications 'Available-for-sale financial assets' and 'Held- to-maturity investments' are no longer used and 'Financial assets at fair value through other comprehensive income' was introduced. There were no investments held in these categories as at 31 December 2017.

'Interest revenue' is no longer included in the 'Revenue' note and is now shown separately on the face of the statement of profit or loss and other comprehensive income, resulting in a reclassification of £272,000 for the half-year ended 30 June 2017.

The consolidated entity

has applied the simplified approach to measuring expected credit losses, resulting in an additional impairment expense of £164,000 (and a total impairment expense of £262,000) for the half-year ended 30 June 2017 and an additional allowance for expected credit losses of £824,000 and an additional deferred tax asset of £247,000 as at 31 December 2017.

Adoption of IFRS 15 'Revenue from Contracts with Customers'

The consolidated entity has adopted IFRS 15 from 1 January 2018, using the retrospective method

of adoption (with the exemption of hedge accounting), resulting in the following restatement of comparatives for the statement of financial position as at 31 December 2017:

● Contract assets of £2,508,000 were recognised (reclassified from accrued revenue of £2,214,000 and recognised

additional revenue from rendering of services of £294,000)

● Customer acquisition costs of £1,791,000 (current assets of £1,274,000 and non-current assets of £517,000) were

recognised (reclassified from employee benefits expense of £1,884,000 and from other expenses of £194,000 and opening retained earnings adjustment of £877,000; less amortisation recognised of £1,164,000)

● Customer fulfilment costs of £1,057,000 (current assets of £614,000 and non-current assets of £443,000) were recognised (reclassified from employee benefits expense of £1,112,000 and from other expenses of £114,000 and opening retained earnings adjustment of £518,000; less amortisation recognised of £687,000)

● Right of return assets of £618,000 were recognised (resulting in a reduction in raw materials and consumables used of £618,000) and corresponding refund liabilities of £942,000 were recognised (resulting in a reduction in revenue of £942,000)

● Deferred tax asset increased by £283,000 (as

a result of the tax effect on refund liabilities)

● Contract liabilities of £2,135,000 were recognised (reclassified from accrued expenses of £1,523,000 and revenue received in advance of £612,000)

● Deferred tax liability increased by £1,128,000 (as a result of the tax effect on contract assets, capitalised costs and right of return assets)


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adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' (continued)

13

Corresponding adjustments were also made as at 30 June 2017, resulting in the following restatement of comparatives for the statement of profit or loss and other comprehensive income for the half-year ended 30 June 2017:

● Sale of goods revenue reduced by £18,000 (as a result of the recognition of refund liabilities)

● Rendering of services revenue increased by £378,000 (as a result of the recognition of contract assets)

● Raw materials and consumables used reduced by £44,000 (as a result of the recognition of right of return assets)● Employee benefits expense reduced by £1,732,000 (as a result of

the capitalisation of customer acquisition costs and customer fulfilment costs)

● Depreciation and amortisation expense increased by £798,000 (as a result of the amortisation of customer acquisition costs and customer fulfilment costs)

● Other expenses reduced by £128,000 (as a result of the capitalisation of customer acquisition costs and customer fulfilment costs)

● Income tax expense increased by £440,000

The impact on the statement of profit or loss and other comprehensive income and statement of financial position is as follows:

Statement of profit or loss and other comprehensive income

Consolidated

30 Jun 2017

30 Jun 2017 £'000

£'000

£'000

Extract

Reported Adjustment

Restated

Revenue 218,843 88 218,931

Interest revenue calculated using the effective interest method - 272 272

Expenses Raw materials and consumables used (65,559) 44 (65,515)Employee benefits expense (110,862) 1,732 (109,130)Depreciation and

amortisation expense

(10,181)

(798)

(10,979)

Impairment of receivables

-

(262)

(262)Other expenses

(16,186)

226

(15,960)

Profit before income tax expense

15,176

1,302

16,478

Income tax expense

(4,169)

(391)

(4,560)


11,007

911

11,918


(117)

-

(117)


10,890

911

11,801

Profit for the half-year is attributable to:


114

-


10,893

911

11,804

11,007

911

11,918

Total comprehensive income for the half-year is attributable to:


114

-


10,776

911

11,687

10,890

911

11,801


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adoption of IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' (continued)

14

Pence

Pence

Pence

Reported

Adjustment

Restated

Basic earnings per share

7.73

0.64

8.37 Diluted earnings per share

7.73

0.64

8.37

Statement of financial position at the beginning of the earliest comparative period

Retained profits as at 1 January 2017 were restated by £326,000, as result of expected credit losses, capitalised customer acquisition costs, capitalised customer fulfilment costs, right of return assets and refund liabilities; as described above.

Statement of financial position at the end of the earliest comparative period

Consolidated

31 Dec 2017

31 Dec 2017

£'000

£'000

£'000Extract

Reported

Adjustment

Restated

Assets

Current assets

Trade and other receivables

13,782

(824) 12,958

Contract assets

-

2,508

2,508 Other 3,152 292 3,444 Total current assets 79,377 1,976 81,353

Non-current assets Deferred tax 8,877 530 9,407 Other 1,260 960 2,220 Total non-current assets 231,795 1,490 233,285

Total assets

311,172

3,466

314,638

Liabilities

Current liabilities

Contract liabilities

-

2,135

2,135 Other

3,352

(1,193)

2,159 Total current liabilities

43,540

942

44,482

Non-current liabilities

Deferred tax

3,318

1,128

4,446 Total non-current liabilities

37,248

1,128

38,376

Total liabilities

80,788

2,070

82,858

Net assets

230,384

1,396

231,780

Equity

Retained profits

26,737

1,396

28,133

Total equity

230,384

1,396

231,780


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15

Note 3. Operating segments

Identification

of reportable operating segments

The consolidated entity is organised into three operating segments based on differences in products and services provided: computer manufacturing, computer retailing and computer distribution. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

Other segments represent the investment property holdings and rental income of the consolidated entity.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

The information reported to the CODM is on a monthly basis.

Types of products and services

The principal products and services of each of these operating segments

are as follows:

Computer manufacturing

the manufacture and wholesaling of computers and components in the United KingdomComputer retailing

the retailing of computers and components predominately in the United Kingdom

Computer distribution

the freight and cartage of computers and components to customers in the United Kingdom

Intersegment transactions

Intersegment transactions were made at market rates. The computer retailing operating segment purchases finished goods from the computer manufacturing operating segment and pays for freight costs to the computer distribution operating segment. Intersegment transactions are eliminated on consolidation.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.


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Note 3. Operating segments (continued)

16

Operating segment information

Computer

Computer

Computer

Other

manufacturing

retailing

distribution

segments

Total

Consolidated -

30 Jun 2018

£'000

£'000

£'000

£'000

£'000

Revenue

Sales to external customers

13,233

216,423

1,848

-

231,504 Intersegment sales

101,008

-

4,453

-

105,461

Total sales revenue

114,241

216,423

6,301

-

336,965

Other revenue

-

-

-

1,853 1,853

Total segment revenue

114,241

216,423

6,301

1,853

338,818 Intersegment eliminations

(105,461)

Unallocated revenue:

Interest revenue 543 Total revenue 233,900

EBITDA 8,393 26,011 1,804 62 36,270 Depreciation and amortisation (10,570)Interest revenue 543 Finance costs (1,119)Profit before income tax expense

25,124

Income tax expense

(7,159)Profit after income tax expense

17,965

Assets

Segment assets

155,823

119,731

21,405

-


(15,568)Unallocated assets:


18,551 Ordinary shares

530 Land and buildings

8,500 Deferred tax asset

9,860 Total assets

318,832

Liabilities

Segment liabilities

41,390

38,249

6,861

-


(15,568)Unallocated liabilities:

Provision for income tax

6,701 Bank loans

9,000 Deferred tax liability

4,617 Total liabilities

91,250


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Note 3. Operating segments (continued)

17

Computer

Computer

Computer

Other

manufacturing

retailing

distribution

segments

TotalConsolidated -

30 Jun 2017

£'000

£'000

£'000

£'000

£'000

Revenue

Sales to external customers

12,169

202,906

2,165

-

217,240 Intersegment sales

95,711

-

1,404

-

97,115 Total sales revenue

107,880

202,906

3,569

-

314,355 Other revenue

-

-

-

1,691

1,691 Total segment revenue

107,880

202,906

3,569

1,691


(97,115)Unallocated revenue:

Interest revenue

272 Total revenue

219,203

EBITDA

5,991

21,059

847

1,014

28,911 Depreciation and amortisation

(10,979)Interest revenue

272 Finance costs

(1,726)Profit before income tax expense

16,478

Income tax expense

(4,560)Profit after income tax expense

11,918

Note 4. Revenue

Consolidated 30 Jun 2018 30 Jun 2017 £'000 £'000

Revenue from contracts with customers Sale of goods 229,656 215,075 Rendering of services 1,848 2,165

231,504

217,240

Other revenue Rent from investment properties

1,812

1,655

Other revenue

41

36

1,853

1,691

Revenue

233,357

218,931


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Note 4. Revenue (continued)

18

Disaggregation of revenue

The disaggregation of revenue from contracts with customers is as follows:

Computer

Computer

Computer

manufacturing

retailing

distribution

TotalConsolidated -

30 Jun 2018

£'000

£'000

£'000

£'000

Major product lines

Laptops

6,699

179,980

1,646

188,325 Desktops

2,106

23,614

202

25,922 Components

4,428

12,829

-

17,257

13,233

216,423

1,848

231,504

Geographical regions

United Kingdom

11,478

191,632

1,848

204,958 Ireland

1,147

18,364

-

19,511 Rest of the World

608

6,427

-

7,035

13,233

216,423

1,848

231,504

Timing of revenue recognition

Goods transferred at a point in time

13,233

216,423

-

229,656

Services transferred over time

-

-

1,848

1,848

13,233

216,423

1,848 231,504

Computer

Computer

Computer

manufacturing retailing distribution Total

Consolidated - 30 Jun 2017 £'000 £'000 £'000 £'000

Major product lines Laptops 6,057 165,426 1,878 173,361 Desktops 2,421 26,783 287 29,491 Components 3,691 10,697 - 14,388

12,169

202,906

2,165 217,240

Geographical regions United Kingdom

10,807

183,007

2,165

195,979

Ireland

955

15,328

-

16,283 Rest of the World

407

4,571

-

4,978

12,169

202,906

2,165

217,240

Timing of revenue recognition

Goods transferred at a point in time

12,169

202,906

-

215,075 Services transferred over time

-

-

2,165

2,165

12,169

202,906

2,165

217,240


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19

Note 5. Share of profits of associates accounted for using the equity method

Consolidated

30 Jun 2018

30 Jun 2017

£'000

£'000

Share of profit -

associates

1,616

1,437

Note 6. Other income

Consolidated

30 Jun 2018

30 Jun 2017

£'000

£'000

Net gain on disposal of property, plant and equipment

422

192 Insurance recoveries

270

-

Other income

692

192

Note 7. Expenses

Consolidated

30 Jun 2018

30 Jun 2017

£'000

£'000

Profit before income tax includes the following specific expenses:

Cost of sales

Cost of sales

142,226

138,991

Finance costs

Interest and finance charges paid/payable

1,119

1,726

Net foreign exchange loss Net foreign exchange loss 9 4

Rental expense relating to operating leases Minimum lease payments 18,399 17,437

Write off of assets

Inventories

269

56

Note 8. Current assets -

trade and other receivables

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Trade receivables

14,344

13,735 Less: Allowance for expected credit losses

(991)

(824)

13,353

12,911

Other receivables

60

43 Interest receivable

7

4

13,420

12,958


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page 24



trade and other receivables (continued)

20

Allowance for expected credit losses

The consolidated entity has recognised a loss of £256,000 (30 Jun 2017: £262,000) in profit or loss in respect of the expected credit losses for the half-year ended 30 June 2018.

The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

Expected credit loss rate

Carrying amount

Allowance for expected credit losses

30 Jun 2018

31 Dec 2017

30 Jun 2018

31 Dec 2017

30 Jun 2018

31 Dec 2017Consolidated

%

%

£'000

£'000

£'000

£'000

Not overdue

1%

1%

7,719

7,904

77

79 0 to 3 months overdue

5%

5%

4,129

3,951

206

198 3 to 6 months overdue

10%

10%

1,607

1,207

161

121 Over 6 months overdue

50%

50%

1,094

851

547

426

14,549

13,913

991

824


contract assets

Consolidated

30 Jun 2018

31 Dec 2017 £'000

£'000

Contract assets 2,458 2,508

Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial half-year are set out below:

Opening balance 2,508 2,875 Additions

5,164

4,788

Cumulative catch-up adjustments

1,531

1,374 Transfer to trade receivables

(6,745)

(6,529)

Closing balance

2,458

2,508


other

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Prepayments

1,110

873 Security deposits

65

65 Customer acquisition costs

1,417

1,274 Customer fulfilment costs

672

614 Right of return assets

671

618

3,935

3,444


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21


non-current assets classified as held for sale

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Land

6,000

-

The vacant land situated at 22 Smith Street, Parramatta NSW is currently for sale and is expected to be sold within five months from the reporting date through an auction process. The proposed development of a head office building on the site has been abandoned and the land is now surplus to requirements. The land is not allocated to an operating segment.

Note 12. Non-current assets -

other

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Security deposits

1,260

1,260 Customer acquisition costs

564

517

Customer fulfilment costs

484

443

2,308

2,220

Note 13. Current liabilities -

contract liabilities

Consolidated 30 Jun 2018 31 Dec 2017 £'000 £'000

Contract liabilities 2,269 2,135

Reconciliation

Reconciliation of the written down values at the beginning and end of the current and previous financial half-year are set out below:

Opening balance

2,135

1,974

Payments received in advance

1,441

1,473 Cumulative catch-up adjustments

174

249 Transfer to revenue -

included in the opening balance

(1,141)

(1,236)Transfer to revenue -

performance obligations satisfied in previous periods

(208)

(178)Transfer to revenue -

other balances

(132)

(147)

Closing balance

2,269

2,135


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contract liabilities (continued)

22

Unsatisfied performance obligations

The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting

period was £3,891,000 as at 30 June 2018 (£3,507,000 as at 31 December 2017) and is expected to be recognised as revenue in future periods as follows:

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Within 6 months

1,482

1,344 6 to 12 months

1,128

1,032 12 to 18 months

874

817 18 to 24 months

407

314

3,891

3,507


other

Consolidated

30 Jun 2018

31 Dec 2017

£'000

£'000

Accrued expenses

1,143

1,217

Refund liabilities

987

942

2,130

2,159

Note 15. Equity -

dividends

Dividends paid during the financial half-year were as follows:

Consolidated 30 Jun 2018 30 Jun 2017

£'000 £'000

Final dividend for the year ended 31 December 2017 (30 Jun 2017: 31 December 2016) of 15 pence (30 Jun 2017: 8 pence) per ordinary share

22,037

11,744

On [date] the directors declared an interim dividend for the year ending 31 December 2018 of 5 pence per ordinary share to be paid on [date], a total estimated distribution of £7,346,000 based on the number of ordinary shares on issue as at [date]. The financial effect of dividends declared after the reporting date are not reflected in the 30 June 2018 financial statements and will be recognised in subsequent financial reports.


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23

Note 16. Fair value measurement

Fair value hierarchy

The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability

Level 1

Level 2

Level 3

Total

Consolidated -

30 Jun 2018

£'000

£'000

£'000

£'000

Assets

Ordinary shares at fair value through profit or loss

360

-

-

360 Ordinary shares at fair value through other comprehensive income

-

-

170

170 Investment properties

-

-

46,900

46,900 Land and buildings

-

-

58,500

58,500 Total assets

360

-

105,570

105,930

Liabilities

Forward foreign exchange contracts

-

122

-

122 Total liabilities

-

122

-

122

Level 1

Level 2

Level 3

Total

Consolidated - 31 Dec 2017 £'000 £'000 £'000 £'000

Assets Investment properties - - 46,900 46,900 Land and buildings - - 58,500 58,500 Total assets - - 105,400 105,400

Liabilities

Forward foreign exchange contracts

-

116

-

116 Total liabilities

-

116

-

116

Assets and liabilities held for sale are measured at fair value on a non-recurring basis.

There were no transfers between levels during the financial half-year.

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Valuation techniques for fair value measurements categorised within level 2 and level 3

Unquoted investments have been valued using a discounted cash flow model.

The basis of the valuation of investment properties is fair value. The investment properties are revalued annually based on independent assessments by a member of the [NAME] having recent experience in the location and category of investment property being valued. Valuations are based on current prices in an active market for similar properties of the same location and condition, subject to similar leases and takes into consideration occupancy rates and returns on investment.


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Note 16. Fair value measurement (continued)

24

The basis of the valuation of land and buildings is fair value. The land and buildings were last revalued on 31 December 2016 based on independent assessments by a member of the [NAME] having recent experience in the location and category of land and buildings being valued. The directors do not believe that there has been a material movement in fair value since the revaluation date. Valuations are based on current prices for similar properties in the same location and condition.

Derivative financial instruments have been

valued using quoted market rates. This valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific estimates.

Level 3 assets and liabilities

Movements in level 3 assets and liabilities during the current financial half-year are set out below:

Ordinary shares at fair

value

Investment

Land and

through OCI

properties

buildings

TotalConsolidated

£'000

£'000

£'000

£'000

Balance at 1 January 2018

-

46,900

58,500

105,400

Gains recognised in other comprehensive income

50

-

-

50 Additions

200

-

-

200

Disposals

(80)

-

-

(80)


170

46,900

58,500 105,570

The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:

Range Description Unobservable inputs (weighted average) Sensitivity

Ordinary shares at fair value through other comprehensive income

Growth rate

2.5% to 3.5% (3.0%)

0.25% change would increase/decrease fair value by £5,000

Discount rate

8.0% to 11.0% (9.5%)


Investment properties

Rental yield

7.5% to 9.0% (8.5%)


Rental growth

1.25% to 2.0% (1.75%)


Long-term vacancy rate

5.0% to 9.0% (7.5%)


Discount rate

4.0% to 6.0% (5.25%)


Land and buildings

Rental yield

6.0% to 8.0% (7.5%)


Discount rate

5.0% to 7.0% (6.25%)


Note 17. Contingent liabilities

During the financial half-year there was a work related accident involving a member of staff. Although the investigation is still in progress, the directors are of the opinion, based on independent legal advice, that the consolidated entity will not be found to be at fault and any potential compensation will be adequately covered by the consolidated entity's insurance policy. Accordingly, no provision has been provided within these financial statements.

The consolidated entity has given bank guarantees as at 30 June 2018 of £3,105,000 (31 Dec 2017: £2,844,000) to various landlords.


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25

Note 18. Related party transactions

On [date] the consolidated entity commenced a new marketing contract with BE Promotions Limited (director-related of Brad Example). During the financial half-year ended 30 June 2018 payments of £256,118 for marketing services were made. The transactions were made on normal commercial terms and conditions and at market rates.

Note 19. Business combinations

On [date] Pinnacle Delserve Limited, a subsidiary of Pinnacle IFRS Interim UK PLC, acquired 100% of the ordinary shares of Pinnacle CompCarrier Limited (formerly known as CompCarrier Limited) for the total consideration transferred of £8,230,000. This is a freight business and operates in the computer distribution division of the consolidated entity. It was acquired to better utilise the existing computer distribution division administrative function. The goodwill of £408,000 represents the expected synergies from merging this business with the computer distribution division and eliminating third party freight costs. The acquired business contributed revenues of £2,467,000 and profit after tax of £305,000 to the consolidated entity for the period from [date] to 30 June 2018. If the acquisition occurred on 1 January 2018, the full half-year contributions would have been revenues of £2,951,000 and profit after tax of £364,000. The values identified in relation

to the acquisition of CompCarrier are final as at 30 June 2018.

Details of the acquisition are as follows:

Fair value

£'000


3 Trade receivables

822

Prepayments

106 Plant and equipment 6,060 Customer contracts 1,250 Deferred tax asset 449 Trade payables (364)Deferred tax liability (375)Employee benefits (129)

Net assets acquired

7,822

Goodwill

408

Acquisition-date fair value of the total consideration transferred

8,230

Representing:

Cash paid or payable to vendor

8,230

Acquisition costs expensed to profit or loss

182

Cash used to acquire business, net of cash acquired:

Acquisition-date fair value of the total consideration transferred

8,230 Less: cash and cash equivalents

(3)Less: payments made in prior periods

(155)

Net cash used

8,072

Note 20. Events after the reporting period

Apart from the dividend declared as disclosed in note 15, no other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.


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