Equity

9(c) Other reserves

IAS1(79)(b)
(i) Nature and purpose of other reserves 6,7
Revaluation surplus – property, plant and equipment
IAS16(77)(f) The property, plant and equipment revaluation surplus is used to record increments and decrements on
the revaluation of non-current assets. In the event of a sale of an asset, any balance in the reserve in
relation to the asset is transferred to retained earnings, see accounting policy note 25(r) for details.

Financial assets at FVOCI

IFRS9(B5.7.1) The group has elected to recognise changes in the fair value of certain investments in equity securities
in OCI, as explained in note 7(c). These changes are accumulated within the FVOCI reserve within
equity. The group transfers amounts from this reserve to retained earnings when the relevant equity
securities are derecognised.
IFRS9(B5.7.1A) The group also has certain debt investments measured at FVOCI, as explained in note 7(c)(iv). For
these investments, changes in fair value are accumulated within the FVOCI reserve within equity. The
accumulated changes in fair value are transferred to profit or loss when the investment is derecognised
or impaired.
IAS1(106)(d),(108)
The table below shows how the FVOCI reserve relates to equity securities and debt investments:
2020 2019
Debt Equity Total Debt Equity Total
CU’000 CU’000 CU’000 CU’000 CU’000 CU’000

As at 1 January (70) 606 536 90 1,083 1,173

Transfer to retained earnings - (646) (646) - 548 548

Deferred tax - 194 194 - (164) (164)
Net amount transferred - (452) (452) - 384 384
Revaluation – gross 118 632 750 (228) (1,230) (1,458)
Deferred tax (35) (190) (225) 68 369 437
Impairment 8 - 8 - - -
Deferred tax (2) - (2) - - -
Other comprehensive income 89 442 531 (160) (861) (1,021)
At 31 December 19 596 615 (70) 606 536

Hedging reserves
IFRS9(6.5.11)(d)(i)
The hedging reserve includes the cash flow hedge reserve and the costs of hedging reserve, see note
12(b) for details. The cash flow hedge reserve is used to recognise the effective portion of gains or
losses on derivatives that are designated and qualify as cash flow hedges, as described in note 25(p).
Amounts are subsequently either transferred to the initial cost of inventory or reclassified to profit or
loss as appropriate.
IFRS9(6.5.15)(b) The group defers the changes in the forward element of forward contracts and the time value of option
contracts in the costs of hedging reserve. These deferred costs of hedging are included in the initial
cost of the related inventory when it is recognised, see note 25(p) for further details.

Share-based payments 8
The share-based payments reserve is used to recognise:
• the grant date fair value of options issued to employees but not exercised
• the grant date fair value of shares issued to employees
• the grant date fair value of deferred shares granted to employees but not yet vested
• the issue of shares held by the VALUE IFRS Employee Share Trust to employees.
Transactions with non-controlling interests
This reserve is used to record the differences described in note 25(b)(v) which may arise as a result of
transactions with non-controlling interests that do not result in a loss of control.
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income, as described in note 25(d), and accumulated in a separate reserve within
equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

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 Equity

9(d) Retained earnings

IAS1(106)(d) Movements in retained earnings were as follows:
2019
2020 * Restated *
Notes CU’000 CU’000

Balance 1 January 34,503 20,205

Net profit for the period 32,626 26,123

IAS1(106)(d)(ii) Items of other comprehensive income recognised
directly in retained earnings
Remeasurements of post-employment benefit
obligations, net of tax 8(h) 83 (637)
Reclassification of gain on disposal of equity
instruments at fair value through other
comprehensive income, net of tax 7(c)(iii) 452 (384)
Dividends 13(b) (22,923) (11,038)
Transfer from share capital on buy-back of
preference shares 9(a) 143 -
Depreciation transfer, net of tax 9(c) 224 234
Balance 31 December 45,108 34,503

* The amounts disclosed are after the restatement for the correction of the error disclosed in note 11(b).

Equity

Share premium
IAS1(79)(a) IAS 1 requires disclosure of the par value of shares (if any), but does not prescribe a particular
form of presentation for the share premium. VALUE IFRS Plc is disclosing the share premium
in the notes. However, local company laws may have specific rules. For example, they may
require separate presentation in the balance sheet.
Treasury shares
IAS32(33) IAS 32 states that treasury shares must be deducted from equity and that no gain or loss shall
be recognised on the purchase, sale, issue or cancellation of such shares. However, the
standard does not specify where in equity the treasury shares should be presented. VALUE
IFRS Plc has elected to present the shares in ‘other equity’, but they may also be disclosed as
a separate line item in the balance sheet, deducted from retained earnings or presented in a
specific reserve. Depending on local company law, the company may have the right to resell
the treasury shares.

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 Equity

Equity

Other reserves
IAS1(106)(d) An entity shall present, either in the statement of changes in equity or in the notes, for each
accumulated balance of each class of other comprehensive income a reconciliation between
the carrying amount at the beginning and the end of the period, separately disclosing each item
of other comprehensive income and transactions with owners. See also commentary
paragraphs 2 and 3 to the statement of changes in equity.
IAS1(92),(94) Reclassification adjustments relating to components of other comprehensive income must also
be disclosed, either in the statement of comprehensive income or in the notes. VALUE IFRS
Plc has elected to make both disclosures in the notes.
IAS1(7),(95) Reclassification adjustments are amounts reclassified to profit or loss in the current period that
were recognised in other comprehensive income in the current or previous periods. They arise,
for example, on disposal of a foreign operation and when a hedged forecast transaction affects
profit or loss.
Nature and purpose
IAS1(79)(b) A description of the nature and purpose of each reserve within equity must be provided either
in the balance sheet or in the notes. This applies to each reserve, including general reserves,
capital profits reserves and any others in existence.
In providing a description of the nature and purpose of the reserves, it would be appropriate to
refer to any restrictions on their distribution or any other important characteristics. In the
case of:
IAS16(77)(f) (a) the property, plant and equipment revaluation surplus: there is a specific requirement to
disclose any restrictions on the distribution of the balance to shareholders
IAS38(124)(b) (b) the amount of the revaluation surplus that relates to intangible assets: there is a specific
requirement to disclose the balance at the beginning and end of the period, indicating the
changes during the period and any restrictions on the distribution of the balance to
shareholders.
Transfer from share-based payments reserve to share capital on exercise of options
The accounting standards do not distinguish between different components of equity. Although
IFRS 2 Share-based Payment permits entities to transfer an amount from one component of
equity to another on the vesting or exercise of options, there is no requirement to do so.
VALUE IFRS Plc has established a share-based payments reserve but does not transfer any
amounts from this reserve on the exercise or lapse of options. However, the credit could also
be recognised directly in retained earnings or share capital. The treatment adopted may
depend on the tax and company laws applicable in the relevant jurisdictions. Entities with
significant share-based payment transactions should explain their policy.
Disclosures not illustrated: not applicable to VALUE IFRS Plc
The following requirements are not illustrated in this publication as they are not applicable to
VALUE IFRS Plc:
Issue not illustrated Relevant disclosures or references
IAS1(80) Entities without share capital Disclose information equivalent to that
required by paragraph 79(a) of IAS 1.
IAS1(136A),(80A) Puttable financial instruments Various disclosures, see paragraphs 136A
and 80A of IAS 1 for details.
IAS1(138)(d) Limited life entities Disclose length of the entity’s life.
IFRIC19(11) Entity has issued equity instruments to Disclose any gain or loss recognised as
extinguish financial liabilities separate line item in profit or loss or in the
notes.

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 10 Cash flow information
10(a) Cash generated from operations 1
2020 2019
Note CU’000 CU’000

Profit before income tax from:

Continuing operations 51,086 39,675
Discontinued operations 15 1,111 570
IAS7(18)(b),(20) Profit before income tax including discontinued operations 52,197 40,245
Adjustments for:
Depreciation and amortisation 5(c) 12,540 9,518
Impairment of goodwill 4 2,410 -
Write-off of assets destroyed by fire 4 1,210 -
Non-cash employee benefits expense – share-based payments 2,156 1,353
Net (gain)/loss on sale of non-current assets (1,620) 530
Gain on disposal of engineering division 15 (760) -
Fair value adjustment to investment property 8(c) (1,350) (1,397)
Fair value adjustment to derivatives (11) 621
Fair value (gains)/losses on non-current financial assets at fair
value through profit or loss 7(d) (120) -
Share of profits of associates and joint ventures 16(e) (340) (355)
Gain on derecognition of contingent consideration payable 14 (135) -
Gain on remeasurement of contingent consideration receivable 15 (130) -
Dividend income and interest classified as investing cash flows (3,558) (4,549)
Finance costs – net 5(d) 5,875 5,450
Net exchange differences 604 479
Change in operating assets and liabilities, net of effects from
purchase of controlled entity and sale of engineering division:
(Increase) in trade receivables (6,470) (4,647)
Decrease/(increase) in contract assets 1,258 (1,220)
(Increase) in inventories (1,340) (1,832)
Decrease/(increase) in financial assets at fair value through profit
or loss 465 (1,235)
Decrease in other operating assets 87 5,202
Increase/(decrease) in trade creditors 1,429 (36)
Increase in contract liabilities 457 870
Increase in other operating liabilities (251) (46)
Increase in other provisions 1,215 574
Cash generated from operations 65,818 49,525

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 Cash flow information

IAS7(43)
10(b) Non-cash investing and financing activities 2,3
2020 2019
CU’000 CU’000
Acquisition of retail store furniture and fittings from lessor as lease
incentive (note 8(a)) - 950

Non-cash investing and financing activities disclosed in other notes are:

• acquisition of right-of-use assets – note 8(b)
• partial settlement of a business combination through the issue of shares – note 14
• deferred settlement of part proceeds of the sale of the engineering division – note 15
• dividends satisfied by the issue of shares under the dividend reinvestment plan – note 13(b), and
• options and shares issued to employees under the VALUE IFRS Employee Option Plan and
employee share scheme for no cash consideration – note 21.

10(c) Net debt reconciliation 4-8

This section sets out an analysis of net debt and the movements in net debt for each of the periods
presented.
Net debt 2020 2019
CU’000 CU’000

Cash and cash equivalents 55,083 30,299

Liquid investments (i) 11,300 10,915
Borrowings (including overdraft) (97,515) (84,595)
Lease liabilities (11,501) (11,291)
Net debt (42,633) (54,672)

Cash and liquid investments 66,383 41,214

Gross debt – fixed interest rates (65,327) (55,736)
Gross debt – variable interest rates (43,689) (40,150)
Net debt (42,633) (54,672)

Liabilities from financing activities Other assets

IAS7(44A)-44E) Cash/ Liquid
bank invest-
Borrowings Leases Sub-total overdraft ments (i) Total
CU’000 CU’000 CU’000 CU’000 CU’000 CU’000
Net debt as at
1 January 2019 (80,056) (9,629) (89,685) 21,573 10,370 (57,742)
Cash flows (1,911) 1,338 (573) 6,260 1,235 6,922
New leases - (3,000) (3,000) - - (3,000)
Foreign exchange adjustments (420) - (420) 216 - (204)
Other changes (ii) 42 - 42 - (690) (648)

Net debt as at
31 December 2019 (82,345) (11,291) (93,636) 28,049 10,915 (54,672)

Cash flows (12,569) 1,942 (10,627) 24,632 (465) 13,540

New leases - (2,152) (2,152) - - (2,152)
Foreign exchange adjustments (31) - (31) (248) 15 (264)
Other changes (ii) 80 - 80 - 835 915

Net debt as at
31 December 2020 (94,865) (11,501) (106,366) 52,433 11,300 (42,633)

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 Cash flow information

10(c) Net debt reconciliation 4-7

(i) Liquid investments comprise current investments that are traded in an active market, being the
group’s financial assets held at fair value through profit or loss.
(ii) Other changes include non-cash movements, including accrued interest expense which will be
presented as operating cash flows in the statement of cash flows when paid.

Cash flow information

Reconciliation to cash generated from operations

Entities that use the direct method for their statement of cash flows will not need to disclose a
reconciliation from profit or loss to their operating cash flows. Appendix B shows the cash flow
statement for VALUE IFRS Plc prepared using the direct method.
Non-cash investing and financing activities – information to be disclosed
IAS7(43) Investing and financing transactions that do not require the use of cash or cash equivalents
shall be disclosed in a way that provides all the relevant information about the investing and
financing activities.
IAS7(44) Other examples of transactions or events that would require disclosure under paragraph 43 of
IAS 7 include the following:
(a) acquisitions of assets by assuming directly related liabilities, such as purchase of a
building by incurring a mortgage to the seller
(b) conversion of debt to equity.
Net debt reconciliation
IAS7(44A) Entities must explain changes in their liabilities for which cash flows have been, or will be
classified as financing activities in the statement of cash flows. While the standard does not
prohibit including other assets or liabilities in the reconciliation, entities shall separately identify
IAS7(44E) the changes in liabilities arising from financing activities where they have chosen to do so, as
illustrated in note 10(c).
IAS7(44D),(BC19) IAS 7 is also flexible in terms of how the information required by paragraph 44A is presented.
Specifically, entities do not need to provide a reconciliation from opening to closing balances
but could provide the information in other ways.
IFRS IC Update However, in 2019, the IFRS Interpretations Committee (IFRS IC) published an agenda decision
September 2019
that identified areas on which entities should focus when preparing this disclosure. It also
emphasised the need for entities to consider carefully the disclosure and disaggregation
requirements in IAS 1 and IAS 7.
The agenda decision further noted that an entity which complies with the requirements in IAS 7
by preparing a tabular reconciliation should provide:
(a) A reconciliation of changes in liabilities from financing. If an entity also choses to define,
and reconcile a different ‘net debt measure, this does not remove the requirement for the
entity to identify and reconcile the changes in its liabilities arising from financing activities.
(b) Separate disclosure of changes in liabilities arising from financing activities from the
changes in any other assets or liabilities.
(c) Information that enables users to link the items included in the reconciliation to the
opening and closing balance in the statement of financial position.
(d) Appropriate disaggregation, for example by presenting separately material reconciling
items and not aggregating dissimilar items.
(e) Additional disclosure, where necessary to explain the items in the reconciliation.
IAS7(44C) Changes in financial assets must be included in the disclosure if the cash flows from those
financial assets were, or future cash flows will be, included in cash flows from financing
activities. This could apply, for example, to assets that hedge liabilities arising from financing
activities.

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