Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
COMPANY INFORMATION
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MILI HEALTHCARE LIMITED
CONTENTS
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MILI HEALTHCARE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present the Strategic Report for the year ended 31 December 2022.
2022 was a challenging year for the consumer market in Ukraine, which is where the Company undertakes its sales operations. The full-scale Russian military invasion lead not only to painful territorial and human losses in the country, but also to a steep economic decline on the market. As a result, the Company’s sales dropped by 22% from $12.5m in 2021 to $9.7m in 2022.
The Company had to implement a set of actions aimed at improving resource planning, adapting the sales strategy, creating safe working conditions and analysing threats and opportunities in response to newly raised challenges. Stock levels were maintained at a sufficient level to cover the existing demand and take into account the new logistical challenges for delivery. Both debtors and creditors reduced by the end of the reporting period compared to previous year, with debtors reducing from $6.5m to $4.7m and creditors reducing from $6.5m to $5.3m. As a result of its effective management of working capital, the Company managed to avoid any cash gaps and finished the year with a positive cash flow as cash at bank increased from $1.5m in 2021 to $2.3m. Overall, the Company proved to be consumer and market oriented, flexible in response to the unstable environment and demonstrating intentions for resilient activities during the reporting period.
The unprovoked aggression of the Russian Federation in Ukraine, which commenced in 2014, escalated to an unprecedented level in early 2022 as it launched a full-scale invasion of the sovereign territory of Ukraine.
The attacks by the Russian military forces in the East and South and launching of missile strikes throughout the country have caused enormous damage to the infrastructure of Ukraine, forced millions of people to leave the country and has resulted in thousands of Ukrainian lives being lost. Here are the main challenges to Ukraine posed by this escalation of the conflict: ~110 000 sq. km or ~18% of the territory is occupied. ~15 million people have had to leave their homes and flee abroad or to other cities looking for shelters. ~5,000 pharmacies have been destroyed or closed. ~37 billion UAH or ~27% of the potential pharmaceutical market has been lost in 2022. However, Ukraine has managed to stop the aggressor, fix the frontline, and set up an effective air defense system. About 40% of the occupied territories have now been liberated. Ukrainian refugees have started to return from abroad to their homes. This altogether allowed some recovery for the economy in the second half of 2022 and businesses were able to renew their usual activities after taking special measures in order to adapt to the situation. The impact of the Russian invasion of Ukraine continues to pose the great risk and uncertainty to the Company, given that its activities are focused on the Ukrainian pharmaceutical market. To mitigate the risks special measures were taken to: push the sales efforts within the most active and safe Central and Western regions of Ukraine; provide safe and convenient work conditions for the employees; re-arrange the logistics of its supply chains and improve stock management; seek new products for sales promotion; and continue to offer high quality and unique products to the evolving market.
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MILI HEALTHCARE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
This responsive and quick risk management by the Company has allowed it to maintain its business activities within an uncertain environment.
The Company mitigates the risk of trading debtors getting overdue and eventual cash collection through introduction of effective credit policy and relevant procedures of internal control. The credit rating of every customer gets constantly monitored as well as their liquidity capacity. The Company also considers insuring its credit risk and/or concluding forward contracts with the local banks. The Company has historically been reliant on equity finance only. However, the shareholders of the Company are considering the different options of debt financing available on international markets. Financial key performance indicators The key financial performance indicator used for measuring the performance of the Company is the net sales turnover and its dynamics. The Company appraises the net sales turnover by the “sale in” and “sale out” approach. Actual sales to distributors represent the “sale in” figure and amounted to $9.7m in 2022 (2021: $12.5m) with a 22% decrease compared to previous period. The scope of purchases from pharmacies made by the end consumers at retail prices is the “sale out” figure, which reached the point of $11.2m in 2022 (2021: $14.1m) and a 21% decrease compared to 2021. These figures in the first half of 2023 are: - Sale in: $5.73m (22% increase on the respective period in 2022) - Sale out: $6.8m (21% increase on the respective period in 2022)
Striving to increase the market share and offer a wide range of products the Company’s key indicator is a number of products present on Ukrainian pharmaceutical market. In 2022 Mili Healthcare Limited was present with 24 products on the market (2021: 22) and is expected to reach 26 items in 2023.
Among those, Vormil, Lactovit Forte and Milistan are the leading brands and Respibron, Ismigen and Mili Nosik are unique offers to the market. The Company also monitors the market share of each product in its niche. For instance, Vormil owned 42% of the market in 2021 and its share increased to 45.3% in 2022. The Company also monitors its rating according to the market research systems. Thus, according to the Pharmstandard data Mili Healthcare Limited took the 76 place out of 480 pharmaceutical companies operating on the Ukrainian market in 2021 and shifted 66 position among 391 companies in 2022. It further moved up to 61 in the first half of 2023.
This report was approved by the board and signed on its behalf.
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MILI HEALTHCARE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Company manufactures its products on a contractual basis involving the globally renowned manufacturers (manufacturing sites): Venus Remedies, Mepro Pharmaceuticals, Windlas Healthcare, Lallemand Pharma International, etc. The Company maintains a centralised management of production and distribution of the healthcare system’s products, including medicinal products and dietary supplements, medical devices, medical equipment, medicines, etc. The functions of the last stage of the value-adding chain (direct distribution of products) are performed by the full-line distributors to which the Company supplies its pharmaceutical products. The contracts for the pharmaceutical products’ supply, including the delivery into the territory of Ukraine, are concluded directly by the Company.
The Representative Office is a separate structural division of Mili Healthcare Limited (the resident of the United Kingdom of Great Britain and Northern Ireland). The Representative Office is not a legal entity; it carries out the economic activities in the name and on behalf of the Company. The Representative Office was registered by the Ministry of Economy and European Integration of Ukraine on March 14, 2002, its registration number is PI-2906.
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MILI HEALTHCARE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Representative Office carries out business activities in the name and on behalf of the Company. The Representative Office performs its functions in accordance with the legislation of Ukraine. The legal status, main tasks, functions and rights of the Representative Office are determined by the Representatives Capacity and the Power of Attorney issued annually by the Company to the Director of the Representative Office.
The main activity of the Representative Office is collection and provision of information on the medicinal products supplied by the Company to Ukraine and, in particular, the medical representation and pharmacovigilance activities. The activity of the Representative Office is financed by the Company by providing it with the special-purpose financing. The Representative Office is not directly involved in the development and distribution of the medicinal products and performs only the limited functions related to the medical representation, providing the information on the medicinal products, and pharmacovigilance.
The profit for the year, after taxation, amounted to $251,988 (2021 - $105,064).
No dividends have been paid during the year (2021: $Nil).
The directors who served during the year were:
The full-scale Russian invasion of Ukraine became the most dangerous threat to the economic activities of the Company, all of which are carried out in Ukraine. In order to reduce its negative impact, emergency steps were taken which allowed the Company to stabilise the situation and build a solid ground for further business activities.
The Company concentrated its sales promotional efforts in the regions that showed a positive increase in sales, namely the Central and Western regions of Ukraine. Work with distributors was focused on the 3 main ones: BADM, Optima and Venta, which remained credible customers. The Company solved the logistics problem posed by the Russian invasion of Ukraine, by delivering goods by air to EU cities and from there delivering by road to Ukraine. As a result the risk of product stocks held at distributor warehouses and warehouses of pharmacy chains were decreased. The Company made every effort to protect its employees from the dangers of war. They received the Company's support in relocation to safe regions for comfortable and safe work. Measures were taken to provide an autonomous power supply and uninterrupted internet access points to the Company's employees. These actions enabled the Company to stabilise the situation, maintain sales at an appropriate level, continue generating positive cashflows and develop a new strategy. As a result of the above the Company's cashflow forecasts show it will be able to pay its liabilities as they fall due for a period of at least 12 months from the date of signing of these financial statements and therefore it is considered appropriate to prepare the financial statements on a going concern basis.
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MILI HEALTHCARE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Providing patients with vital drugs became one of the Company's priorities in 2022, which will continue for 2023. Mili Healthcare Limited provides a number of registered drugs, as part of its portfolio, for cancer patients, namely Bleonco, Vincristinum-Mili, Vizgem, Dacarbazinum, Carboplatinum, Neotaxelum, Cytarabinum. Due to purchases made by the Ministry of Health of Ukraine under state programs, following its budgetary tendering processes, products worth $3 million have been delivered to oncology clinics in 2022 by the Company. Sales to the oncology clinics of Ukraine in the first half of 2023 amounted to $4.3 million, which proves it to be an attractive prospect for the future.
In order to participate in budgetary tenders, the Company was integrated into the Prozorro market system - this helps hospitals quickly buy vital medicines during the war. In order to sell in this electronic catalogue, the Company registered on the E-Tender platform. In the middle of 2022, Mili Healthcare Limited agreed with the leading manufacturer of oncology drugs, Shilpa, to co-operate. As a result of this co-operation, despite all the difficulties and risks, in 2023 the Company started the production of drugs under our brand for the Ukrainian market, which the Company intends to sell through the Prozorro market. In 2023, through the system of budget tenders, it is planned to sell drugs for cancer patients, such as Bleonco, Vincristinum-Mili, Vizgem, Dacarbazinum, Carboplatinum, Neotaxelum, Cytarabinum, in the amount of about $4 million. The pharmaceutical market of Ukraine is expected to grow by 21.5% in 2023. Mili Healthcare Limited plans to increase the number of products it has on the market to 26 and to achieve sales of 2.6m packages for an estimated $14.05m "sale out" figure in 2023. Mili Healthcare’s sales in the first half of 2023 amounted to $6.8 million, which is 24.1% more than in the first half of 2022. Among more than 350 pharmaceutical companies, Mili Healthcare holds the 61st position in the Ukrainian market, with its 0.4% share. In the foreseeable future the Company expects to gain positive results and maintain a fluent financial position.
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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MILI HEALTHCARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MILI HEALTHCARE LIMITED
We have audited the financial statements of Mili Healthcare Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Emphasis of matter - going concern
We draw attention to note 2.2 in the financial statements which discloses the measures taken by the Company to adapt to the war in Ukraine, which is where the Company's activities are carried out, and the subsequent asessment by the directors that as a result the Company continues to be a going concern. Our opinion is not modified in respect of this matter.
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MILI HEALTHCARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MILI HEALTHCARE LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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MILI HEALTHCARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MILI HEALTHCARE LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements for pharmaceutical businesses, including local customs regulations in Ukraine governing the distribution of pharmaceutical products, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006, income tax, payroll tax and sales tax. We evaluated management's incentives and opportunties for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to incorrect cut-off of revenue and management bias in accounting estimates such as stock provisions. Audit procedures performed by the engagement team included:
∙inspecting correspondence with regulators and tax authorities;
∙discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations, and fraud;
∙evaluating management's controls designed to prevent and detect irregularities;
∙identifying and testing journals;
∙reviewing the cut-off of revenue either side of the year-end to ensure correct recognition within the appropriate financial year; and
∙challenging assumptions and judgements made by management in their critical accounting estimates,
particularly in respect of their estimate of the provision for obsolete stock.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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MILI HEALTHCARE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MILI HEALTHCARE LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditors
10 Queen Street Place
EC4R 1AG
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MILI HEALTHCARE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
REGISTERED NUMBER: 04303458
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 29 form part of these financial statements.
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MILI HEALTHCARE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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MILI HEALTHCARE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Mili Healthcare Limited is a legal entity registered and operating under the laws of the United Kingdom of Great Britain and Northern Ireland (registration number: 04303458). It is a private company, limited by share capital, incorporated and domiciled in England and Wales. The registered office is: Chartfield House, Castle Street, Taunton, Somerset, TA1 4AS.
The principal activity of the Company is the centralised management and distribution of the healthcare system's products, including medicinal products and dietary supplements, medical devices, medical equipment and medicines. The Company has its Representative Office at 33 Tarasa Shevchenka Boulevard, Kiev, Ukraine, which is a separate structural division of Mili Healthcare Limited (the resident of the United Kingdom of Great Britain and Northern Ireland). The Representative Office is not a legal entity; it carries out the economic activities in the name of and on behalf of the Company. The Representative Office was registered by the Ministry of Economy and European Integration of Ukraine on March 14, 2002, its registration number is PI- 2906. The main activity of the Representative Office is collection and provision of information on the medicinal products supplied by the Company to Ukraine and, in particular, the medical representation and pharmacovigilance activities. The activity of the Representative Office is financed by the Company by providing it with the special-purpose financing.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The full-scale Russian invasion of Ukraine became the most dangerous threat to the economic activities of the Company, all of which are carried out in Ukraine. In order to reduce its negative impact, emergency steps were taken which allowed the Company to stabilise the situation and build a solid ground for further business activities.
The Company concentrated its sales promotional efforts in the regions that showed a positive increase in sales, namely the Central and Western regions of Ukraine. Work with distributors was focused on the 3 main ones: BADM, Optima and Venta, which remained credible customers. The Company solved the logistics problem posed by the Russian invasion of Ukraine, by delivering goods by air to EU cities and from there delivering by road to Ukraine. As a result the risk of product stocks held at distributor warehouses and warehouses of pharmacy chains were decreased. The Company made every effort to protect its employees from the dangers of war. They received the Company's support in relocation to safe regions for comfortable and safe work. Measures were taken to provide an autonomous power supply and uninterrupted internet access points to the Company's employees. These actions enabled the Company to stabilise the situation, maintain sales at an appropriate level, continue generating positive cashflows and develop a new strategy. As a result of the above the Company's cashflow forecasts show it will be able to pay its liabilities as they fall due for a period of at least 12 months from the date of signing of these financial statements and therefore it is considered appropriate to prepare the financial statements on a going concern basis.
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Financial instruments are recognised in the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
The Company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable and loans from banks and other third parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration, expected to be paid or received.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Impairment of stock The Company holds a significant level of stock as at year end totalling $1,367,562 (2021: $1,298,051). At each financial year end, the Company recognises an impairment provision against stock. The provision recognised is set at a fixed percentage based on the time left until stock reaches it's use-by date, which is based on management's best estimate of the level of such products that will not be sold before their use-by-date. This is a judgemental matter and there is a degree of estimation uncertainty as the actual level of unsold stock by its use-by-date may differ to that estimated by management when recognising provisions against stock. The total impairment provision recognised against stock as at 31 December 2022 is $440,602 (2021: $215,057). Revenue recognition and allowance for doubtful receivables The Company recognises revenue generally at the time of delivery and when collection of the resulting receivable is reasonably assured. When the Company considers that the criteria for revenue recognition are not met for a transaction, revenue recognition is delayed until such time as collectability is reasonably assured. Payments received in advance of revenue recognition are recorded as deferred income. At each reporting date, the Company evaluates the recoverability of trade receivables and records allowances for doubtful receivables based on experience. These allowances are based on, amongst other things, a consideration of actual collection history. The actual level of receivables collected may differ from the estimated levels of recovery, which could impact operating results positively or negatively.
The whole of the turnover is attributable to the supply of pharmaceutical products to customers in Ukraine.
Analysis of turnover by country of destination:
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
10.Taxation (continued)
On 1 April 2023 the main rate of corporation tax in the UK increased from 19% to 25%.
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
17.Share capital (continued)
Share premium account
Profit and loss account
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MILI HEALTHCARE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The ultimate controlling party is O Lytovska.
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