auditis daskvna 2012

7/29/2019 auditis daskvna 2012

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Microfinance Organization

Easycred Georgia LLC

Consolidated Financial Statements

for the year ended 31 December 2012


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Contents

Independent Auditors Report .......................................................... ............................................................ 3

Consolidated statement of comprehensive income ...................................................................................... 4

Consolidated statement of financial position ............................................................................................... 5Consolidated statement of cash flows ......................................................... ................................................. 6

Consolidated statement of changes in equity ............................................................................................... 7

Notes to the consolidated financial statements ............................................................................................ 8


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Microf inance Organization Easycred Georgia LLC

Consolidated Statement of Financial Position as at 31 December 2012

The consolidated statement of financial position is to be read in conjunction with the notes to, and forming part of, the

consolidated financial statements.5

Notes

2012

GEL000

2011

GEL000

ASSETS

Cash and cash equivalents 10 208 140

Loans to customers 11 7,133 6,119

Investment property 12 398 -

Property, equipment and intangible assets 13 679 564

Deferred tax asset 9 33 17

Other assets 14 619 306

Total assets 9,070 7,146

LIABILITIES

Loans and borrowings 15 3,858 2,912

Dividends payable 230 -

Income tax payable 46 3

Other liabilities 16 110 78

Total liabilities 4,244 2,993

EQUITY

Charter capital 17 3,653 3,213

Retained earnings 1,173 940

Total equity 4,826 4,153

Total liabilities and equity 9,070 7,146


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Consolidated Statement of Cash Flows for the year ended 31 December 2012

The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the


Notes

2012

GEL000

2011

GEL000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year 1,173 941

djustments for:

Impairment losses/(recovery) 122 (30)

Net foreign exchange loss 19 128

Depreciation and amortization 55 56

Loss on disposal of property and equipment 19 8

Gain on disposal of repossessed assets (5) (13)

Interest income (2,435) (2,024)

Interest expense 454 329

Fee and commission income (518) (319)

Fee and commission expense 2 8

Income tax expense 218 180

Increase in operating assets

Loans to customers (1,049) (1,680)

Other assets (410) (202)

Increase/(decrease) in operating liabilities

Other liabilities (5) 33

Interest and fees and commissions received 2,852 2,309

Interest and fees and commissions paid (437) (332)

Income tax paid (191) (321)

Cash flows used in operations (136) (929)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property and equipment (197) (95)

Proceeds from sale of property and equipment 8 14

Acquisition of investment property (398) -

Proceeds from sale of repossessed assets 93 33

Cash flows used in investing activities (494) (48)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment of dividends (270) (199)

Proceeds from borrowings 1,248 1,376

Repayment of borrowings (322) (215)

Cash flows from financing activities 656 962

Net increase/(decrease) in cash and cash equivalents 26 (15)

Effect of changes in exchange rates on cash and cash equivalents 42 (10)

Cash and cash equivalents as at the beginning of the year 140 165

Cash and cash equivalents as at the end of the year 10 208 140


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Consolidated Statement of Changes in Equity for the year ended 31 December 2012

The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the


Charter

capital

Retained

earnings

Total

equity

GEL000 GEL000 GEL000

Balance as at 1 January 2011 2,313 1,098 3,411

Total comprehensive income

Profit for the year - 941 941

Total comprehensive income for the year - 941 941

Transactions with owners, recorded directly in equity

Increase in charter capital 900 (900) -

Dividends declared and paid - (199) (199)

Total transactions with owners 900 (1,099) (199)

Balance as at 31 December 2011 3,213 940 4,153

Balance as at 1 January 2012 3,213 940 4,153

Total comprehensive income

Profit for the year - 1,173 1,173

Total comprehensive income for the year - 1,173 1,173

Transactions with owners, recorded directly in equity

Increase in charter capital 440 (440) -

Dividends declared and paid - (270) (270)

Dividends declared but not paid - (230) (230)

Total transactions with owners 440 (940) (500)

Balance as at 31 December 2012 3,653 1,173 4,826


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Notes to, and forming part of, the consolidated financial statements for the year ended 31 December 2012

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1 Background(a) Organisation and operations

Microfinance Organization Easycred Georgia LLC (the Company) was established on21 November 2008 to provide sustainable lending services to those individual entrepreneurs who

are not able to access credit facilities through the conventional banking system. The Companyhelps in the development of the economy of Georgia by providing credit to very small

entrepreneurs to grow their businesses and improve their economic situation.

The Company was registered by the National Bank of Georgia on 20 February 2009. The legaladdress of the Company is 64 Mitskevich Street, Tbilisi, Georgia.

On 29 November 2011 the Company established a subsidiary, Easycred Capital LLC (togetherthe Group), an asset management company with 100% ownership.The Group structure is as follows:

Country of Ownership %

Name incorporation Principal activities 2012 2011

Easycred Capital LLC Georgia Asset management 100% 100%

(b) ShareholdersThe Groups immediate and ultimate parent company is Laponeto Commercial LLC and the

ultimate controlling party is Elena Papachristodoulou Psintrou.

As at 31 December 2012 and 2011 the Groups shareholders were as follows:

2012

Ownership interest, %

2011

Ownership interest, %

Laponeto Commmercial LLC 51.0% 51.0%

Laerti Zubadalashvili 25.0% 25.0%

Kakhaber Kakhiani 15.0% 15.0%

Nodar Daushvili 9.0% 9.0%

100.0% 100.0%

Related party transactions are detailed in note 21.

(c) Georgian business environmentThe Groups operations are located in Georgia. Consequently, the Group is exposed to theeconomic and financial markets of Georgia which display characteristics of an emerging market.The legal, tax and regulatory frameworks continue development, but are subject to varyinginterpretations and frequent changes which together with other legal and fiscal impedimentscontribute to the challenges faced by entities operating in the Georgia. The consolidatedfinancial statements reflect managements assessment of the impact of the Georgian businessenvironment on the operations and the financial position of the Group. The future business

environment may differ from managements assessment.


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2 Basis of preparation(a) Statement of compliance

The accompanying consolidated financial statements are prepared in accordance with

International Financial Reporting Standards (IFRS).

(b) Basis of measurementThe consolidated financial statements are prepared on the historical cost basis.

(c) Functional and presentation currencyThe functional currency of the Company and its subsidiary is the Georgian Lari (GEL) as,being the national currency of Georgia, it reflects the economic substance of the majority ofunderlying events and circumstances relevant to them.

The GEL is also the presentation currency for the purposes of these consolidated financial

statements.

Financial information presented in GEL is rounded to the nearest thousand.

(d) Use of estimates and judgmentsThe preparation of consolidated financial statements in conformity with IFRSs requires

management to make judgments, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets, liabilities, income and expenses. Actualresults could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimates are revised and in anyfuture periods affected.

Information about significant areas of estimation uncertainty and critical judgments in applying

accounting policies relating to loan impairment is described in note 11loans to customers.

3 Significant accounting policiesThe accounting policies set out below are applied consistently to all periods presented in theseconsolidated financial statements, and are applied consistently by Group entities.

(a) Basis of consolidation(i ) Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has thepower, directly or indirectly, to govern the financial and operating policies of an entity so as to

obtain benefits from its activities. The financial statements of subsidiaries are included in the

consolidated financial statements from the date that control effectively commences until the datethat control effectively ceases.


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(ii) Transactions eliminated on consoli dationIntra-group balances and transactions, and any unrealised gains arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements.

(b) Foreign currencyTransactions in foreign currencies are translated to GEL at exchange rates at the dates of the

transactions. Monetary assets and liabilities denominated in foreign currencies at the reportingdate are retranslated to GEL at the exchange rate at that date. The foreign currency gain or loss

on monetary items is the difference between amortised cost in the functional currency at thebeginning of the period, adjusted for effective interest and payments during the period, and theamortised cost in foreign currency translated at the exchange rate at the end of the reporting

period. Non-monetary items that are measured in terms of historical cost in a foreign currencyare translated using the exchange rate at the date of the transaction. Foreign currency differences

arising on retranslation are recognised in profit or loss.

(c) Cash and cash equivalentsCash and cash equivalents include notes and coins on hand, unrestricted balances and calldeposits held with banks with maturities of three months or less from the acquisition date that

are subject to insignificant risk of changes in their fair value. Cash and cash equivalents arecarried at amortised cost in the consolidated statement of financial position.

(d)

Financial instruments

(i ) ClassificationLoans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market, other than those that the Group:

intends to sell immediately or in the near term upon initial recognition designates as at fair value through profit or loss upon initial recognition designates as available-for-sale or, may not recover substantially all of its initial investment, other than because of credit

deterioration.

(ii) RecognitionFinancial assets and liabilities are recognized in the consolidated statement of financial positionwhen the Group becomes a party to the contractual provisions of the instrument.

(ii i) MeasurementA financial asset or liability is initially measured at its fair value plus transaction costs that aredirectly attributable to the acquisition or issue of the financial asset or liability.

Subsequent to initial recognition, financial assets, comprising loans and receivables aremeasured at at amortized cost using the effective interest method.

All financial liabilities are measured at amortized cost.


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(iv) Amortised costThe amortised cost of a financial asset or liability is the amount at which the financial asset orliability is measured at initial recognition, minus principal repayments, plus or minus thecumulative amortisation using the effective interest method of any difference between the initialamount recognised and the maturity amount, minus any reduction for impairment. Premiums anddiscounts, including initial transaction costs, are included in the carrying amount of the relatedinstrument and amortized based on the effective interest rate of the instrument.

(v) Fair value measurement principlesFair value is the amount for which an asset could be exchanged, or a liability settled, between

knowledgeable, willing parties in an arms length transaction on the measurement date.

When available, the Group measures the fair value of an instrument using quoted prices in anactive market for that instrument. A market is regarded as active if quoted prices are readily andregularly available and represent actual and regularly occurring market transactions on an armslength basis.

If a market for a financial instrument is not active, the Group establishes fair value using avaluation technique. Valuation techniques include using recent arms length transactionsbetween knowledgeable, willing parties (if available), reference to the current fair value of otherinstruments that are substantially the same, discounted cash flow analyses and option pricingmodels. The chosen valuation technique makes maximum use of market inputs, relies as little aspossible on estimates specific to the Group, incorporates all factors that market participantswould consider in setting a price, and is consistent with accepted economic methodologies forpricing financial instruments. Inputs to valuation techniques reasonably represent marketexpectations and measures of the risk-return factors inherent in the financial instrument.

The best evidence of the fair value of a financial instrument at initial recognition is thetransaction price, i.e., the fair value of the consideration given or received, unless the fair valueof that instrument is evidenced by comparison with other observable current market transactionsin the same instrument (i.e., without modification or repackaging) or based on a valuationtechnique whose variables include only data from observable markets. When transaction price

provides the best evidence of fair value at initial recognition, the financial instrument is initially

measured at the transaction price and any difference between this price and the value initiallyobtained from a valuation model is subsequently recognised in profit or loss on an appropriatebasis over the life of the instrument but not later than when the valuation is supported wholly byobservable market data or the transaction is closed out.

(vi) Gains and losses on subsequent measurementFor financial assets and liabilities carried at amortized cost, a gain or loss is recognized in profitor loss when the financial asset or liability is derecognized or impaired, and through theamortization process.


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(vii)DerecognitionThe Group derecognises a financial asset when the contractual rights to the cash flows from thefinancial asset expire, or when it transfers the financial asset in a transaction in which

substantially all the risks and rewards of ownership of the financial asset are transferred or inwhich the Group neither transfers nor retains substantially all the risks and rewards of ownershipand it does not retain control of the financial asset. Any interest in transferred financial assetsthat qualify for derecognition that is created or retained by the Group is recognised as a separateasset or liability in the statement of financial position. The Group derecognises a financial

liability when its contractual obligations are discharged or cancelled or expire.

The Group writes off assets deemed to be uncollectible.

(viii)OffsettingFinancial assets and liabilities are offset and the net amount reported in the consolidatedstatement of financial position when there is a legally enforceable right to set off the recognisedamounts and there is an intention to settle on a net basis, or realise the asset and settle theliability simultaneously.

(e) Property, equipment and intangible assets(i ) Owned assets

Items of property and equipment are stated at cost less accumulated depreciation and impairmentlosses. Acquired intangible assets are stated at cost less accumulated amortisation andimpairment losses.

Where an item of property and equipment comprises major components having different usefullives, they are accounted for as separate items of property and equipment.

(ii) Leased assetsAll leases are operating leases and the leased assets are not recognized in the consolidatedstatement of financial position.

(ii i) Depreciati on and amorti zationDepreciation and amortization is charged to profit or loss on a straight-line basis over the

estimated useful lives of the individual assets. Depreciation commences on the date ofacquisition or, in respect of internally constructed assets, from the time an asset is completed andready for use. Land is not depreciated.

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquireand bring to use the specific software.

The estimated useful lives are as follows:

- buildings 20 years- intangible assets 5 years- other 3 years


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(f) Investment propertyInvestment property is property held either to earn rental income or for capital appreciation orfor both, but not for sale in normal course of business, or for the use in production or supply ofgoods or services or for administrative purposes. Investment property is measured at cost lessaccumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of investment property.Cost includes the cost of materials and direct labour, and any other costs directly attributable tobringing the asset to working condition for its intended use.

When the use of a property changes such that it is reclassified as property and equipment, its fairvalue at the date of reclassification becomes its cost for subsequent accounting.

(g) Repossessed assetsThe Group recognises repossessed assets in the consolidated statement of financial positionwhen it has the full and final settlement rights to the collateral, and when it is entitled to retainany excess proceeds from the realisation of the collateral.

Repossessed assets are measured at the lower of the carrying amount and the fair value less coststo sell. At initial recognition repossessed assets are measured based on the value of the defaultedloan, including expenditure incurred in the process of collateral foreclosure. Fair value less coststo sell is the estimated selling price of the collateral in the ordinary course of business, less therelated selling costs. Subsequent to initial recognition, repossessed assets are reviewed for heldfor sale classification criteria and are reclassified accordingly when the criteria are met.

Repossessed assets are included in other assets.

Gains and losses on disposal of repossessed assets are recognised net in other operatingincome in profit or loss.

(h) Impairment(i ) F inancial assets carr ied at amortized cost

Financial assets carried at amortized cost consist principally of loans and other receivables(loans and receivables). The Group reviews its loans and receivables to assess impairment on aregular basis. A loan or receivable is impaired and impairment losses are incurred if, and only if,there is objective evidence of impairment as a result of one or more events that occurred after theinitial recognition of the loan or receivable and that event (or events) has had an impact on theestimated future cash flows of the loan that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by aborrower, breach of loan covenants or conditions, restructuring of a loan or advance on termsthat the Group would not otherwise consider, indications that a borrower or issuer will enterbankruptcy, the disappearance of an active market for a security, deterioration in the value ofcollateral, or other observable data relating to a group of assets such as adverse changes in the

payment status of borrowers in the group, or economic conditions that correlate with defaults inthe group.


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The Group first assesses whether objective evidence of impairment exists individually for loans

and receivables that are individually significant, and individually or collectively for loans andreceivables that are not individually significant. If the Group determines that no objectiveevidence of impairment exists for an individually assessed loan or receivable, whethersignificant or not, it includes the loan in a group of loans and receivables with similar credit riskcharacteristics and collectively assesses them for impairment. Loans and receivables that are

individually assessed for impairment and for which an impairment loss is or continues to berecognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on a loan or receivable has been incurred,the amount of the loss is measured as the difference between the carrying amount of the loan orreceivable and the present value of estimated future cash flows including amounts recoverablefrom guarantees and collateral discounted at the loan or receivables original effective interest

rate. Contractual cash flows and historical loss experience adjusted on the basis of relevantobservable data that reflect current economic conditions provide the basis for estimatingexpected cash flows.

In some cases the observable data required to estimate the amount of an impairment loss on a

loan or receivable may be limited or no longer fully relevant to current circumstances. This maybe the case when a borrower is in financial difficulties and there is little available historical datarelating to similar borrowers. In such cases, the Group uses its experience and judgement toestimate the amount of any impairment loss.

All impairment losses in respect of loans and receivables are recognized in profit or loss and areonly reversed if a subsequent increase in recoverable amount can be related objectively to an

event occurring after the impairment loss was recognised.

When a loan is uncollectable, it is written off against the related allowance for loan impairment.The Group writes off a loan balance (and any related allowances for loan losses) whenmanagement determines that the loans are uncollectible and when all necessary steps to collectthe loan are completed.

(ii) Non f inancial assetsOther non financial assets, other than deferred taxes, are assessed at each reporting date for anyindications of impairment. The recoverable amount of non financial assets is the greater of theirfair value less costs to sell and value in use. In assessing value in use, the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset. For an assetthat does not generate cash inflows largely independent of those from other assets, therecoverable amount is determined for the cash-generating unit to which the asset belongs. Animpairment loss is recognised when the carrying amount of an asset or its cash-generating unitexceeds its recoverable amount.

All impairment losses in respect of non financial assets are recognized in profit or loss andreversed only if there has been a change in the estimates used to determine the recoverableamount. Any impairment loss reversed is only reversed to the extent that the assets carryingamount does not exceed the carrying amount that would have been determined, net of

depreciation or amortisation, if no impairment loss had been recognised.


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(i) Charter capitalCharter capital is classified as equity. Incremental costs directly attributable to the issue ofordinary shares are recognised as a deduction from equity, net of any tax effects.

The ability of the Group to declare and pay dividends is subject to the rules and regulations ofthe Georgian legislation.

Dividends are reflected as an appropriation of retained earnings in the period when they aredeclared.

(j) TaxationIncome tax comprises current and deferred tax. Income tax is recognised in profit or loss exceptto the extent that it relates to items of other comprehensive income or transactions with

shareholders recognised directly in equity, in which case it is recognised within othercomprehensive income or directly within equity.

Current tax expense is the expected tax payable on the taxable income for the year, using taxrates enacted or substantially enacted at the reporting date, and any adjustment to tax payable inrespect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and the amounts used for taxation purposes.Deferred tax is not recognised for the temporary differences on the initial recognition of assets orliabilities that affect neither accounting nor taxable profit and temporary differences related toinvestments in subsidiaries where the parent is able to control the timing of the reversal of thetemporary difference and it is probable that the temporary difference will not reverse in theforeseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporarydifferences when they reverse, based on the laws that have been enacted or substantively enactedby the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits

will be available against which the temporary differences, unused tax losses and credits can be

utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the relatedtax benefit will be realised.

(k) Income and expense recognitionInterest income and expense are recognised in profit or loss using the effective interest method.

Loan origination fees, loan servicing fees and other fees that are considered to be integral to theoverall profitability of a loan, together with the related transaction costs, are deferred and

amortized to interest income over the estimated life of the financial instrument using theeffective interest method.

Other fees, commissions and other income and expense items are recognised in profit or losswhen the corresponding service is provided.

Dividend income is recognised in profit or loss on the date that the dividend is declared.


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Payments made under operating leases are recognised in profit or loss on a straight-line basis

over the term of the lease. Lease incentives received are recognised as an integral part of thetotal lease expense, over the term of the lease.

(l) New standards and interpretations not yet adoptedA number of new standards, amendments to standards and interpretations are not yet effective asat 31 December 2012, and are not applied in preparing these consolidated financial statements.Of these pronouncements, potentially the following will have an impact on the financial positionand performance. The Group plans to adopt these pronouncements when they become effective.

Amendments to IFRS 7Financial Instruments: Disclosures - Offsetting Financial Assets andFinancial Liabilities contain new disclosure requirements for financial assets and liabilities

that are offset in the statement of financial position or subject to master netting arrangementsor similar agreements. The amendments are effective for annual periods beginning on orafter 1 January 2013, and are to be applied retrospectively. The Group has not yet analysedthe likely impact of the new standard on its financial position or performance.

IFRS 9 Financial Instruments will be effective for annual periods beginning on or after1 January 2015. The new standard is to be issued in phases and is intended ultimately toreplace International Financial Reporting Standard IAS 39 Financial Instruments:Recognition and Measurement. The first phase of IFRS 9 was issued in November 2009 andrelates to the classification and measurement of financial assets. The second phase regardingclassification and measurement of financial liabilities was published in October 2010. Theremaining parts of the standard are expected to be issued during 2013. The Group recognisesthat the new standard introduces many changes to the accounting for financial instrumentsand is likely to have a significant impact on the consolidated financial statements. Theimpact of these changes will be analysed during the course of the project as further phases ofthe standard are issued. The Group does not intend to adopt this standard early. The Group

has not yet analysed the likely impact of the new standard on its financial position orperformance.

IFRS 10 Consolidated Financial Statements will be effective for annual periods beginningon or after 1 January 2013. The new standard supersedes IAS 27 Consolidated and SeparateFinancial Statements and SIC-12 Consolidation Special Purpose Entities. IFRS 10introduces a single control model which includes entities that are currently within the scope

of SIC-12. Under the new three-step control model, an investor controls an investee when itis exposed, or has rights, to variable returns from its involvement with that investee, has theability to affect those returns through its power over that investee and there is a link betweenpower and returns. Consolidation procedures are carried forward from IAS 27 (2008). Whenthe adoption of IFRS 10 does not result in a change in the previous consolidation or non-consolidation of an investee, no adjustments to accounting are required on initial application.

When the adoption results in a change in the consolidation or non-consolidation of aninvestee, the new standard may be adopted with either full retrospective application fromdate that control was obtained or lost or, if not practicable, with limited retrospectiveapplication from the beginning of the earliest period for which the application is practicable,which may be the current period. Early adoption of IFRS 10 is permitted provided an entity

also early-adopts IFRS 11, IFRS 12, IAS 27 (2011) and IAS 28 (2011). The Group has not

yet analysed the likely impact of the new standard on its financial position or performance.
http://www.iasplus.com/en/standards/standard47http://www.iasplus.com/en/standards/standard47


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IFRS 13Fair Value Measurementwill be effective for annual periods beginning on or after1 January 2013. The new standard replaces the fair value measurement guidance containedin individual IFRSs with a single source of fair value measurement guidance. It provides arevised definition of fair value, establishes a framework for measuring fair value and sets outdisclosure requirements for fair value measurements. IFRS 13 does not introduce newrequirements to measure assets or liabilities at fair value, nor does it eliminate thepracticability exceptions to fair value measurement that currently exist in certain standards.The standard is applied prospectively with early adoption permitted. Comparative disclosureinformation is not required for periods before the date of initial application. The Group hasnot yet analysed the likely impact of the new standard on its financial position orperformance.

Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assetsand Financial Liabilities do not introduce new rules for offsetting financial assets andliabilities; rather they clarify the offsetting criteria to address inconsistencies in theirapplication. The Amendments specify that an entity currently has a legally enforceable rightto set-off if that right is not contingent on a future event; and enforceable both in the normalcourse of business and in the event of default, insolvency or bankruptcy of the entity and all

counterparties. The amendments are effective for annual periods beginning on or after1 January 2014, and are to be applied retrospectively. The Group has not yet analysed the

likely impact of the new standard on its financial position or performance.

VariousImprovements to IFRSs have been dealt with on a standard-by-standard basis. Allamendments, which result in accounting changes for presentation, recognition or

measurement purposes, will come into effect not earlier than 1 January 2013. The Group hasnot yet analysed the likely impact of the improvements on its financial position or

performance.

4 Net interest income2012

GEL000

2011

GEL000

Interest income

Loans to customers 2,434 2,024

Placements with banks 1 -

2,435 2,024

Interest expense

Loans and borrowings (454) (329)

1,981 1,695

Included within various line items under interest income for the year ended 31 December 2012 isa total of GEL 575 thousand (2011: GEL 369 thousand) accrued on impaired or overdue

financial assets.


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5 Fee and commission income2012

GEL000

2011

GEL000

Settlement fees 509 316

Other 9 3

518 319

6 Impairment (losses)/recovery2012

GEL000

2011

GEL000

Loans to customers (122) 30

7 Personnel expenses2012

GEL000

2011

GEL000

Employee compensation 677 512

8 Other general administrative expenses2012

GEL000

2011

GEL000

Depreciation and amortization 55 56

Professional services 46 82

Rent 30 27

Transportation 21 19

Communications and information services 15 23

Advertising and marketing 14 6

Utilities 11 6

Security 8 7

Taxes other than on income 7 5

Office supplies 5 3

Other 123 46

335 280


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9 Income tax expense2012

GEL000

2011

GEL000

Current year tax expense 234 180

Deferred taxation movement due to origination and reversal of temporary

differences (16) -

Total income tax expense 218 180

In 2012, the applicable tax rate for current and deferred tax is 15% (2011: 15%).

Reconciliation of effective tax rate for the year ended 31 December:

2012

GEL000 %

2011

GEL000 %

Profit before tax 1,391 1,121

Income tax at the applicable tax rate 209 15% 168 15%

Non-deductible costs 9 1% 12 1%

218 16% 180 16%

(a) Deferred tax asset and liabilityTemporary differences between the carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for taxation purposes give rise to net deferred tax assetsas at 31 December 2012 and 2011.

Movements in temporary differences during the years ended 31 December 2012 and 2011 arepresented as follows.

2012

GEL000

Balance

1 January 2012

Recognised

in profit or loss

Balance

31 December 2012

Loans to customers 17 18 35Property, equipment and intangible assets (1) (5) (6)

Loans and borrowings - 4 4

Other liabilities 1 (1) -

17 16 33

2011

GEL000

Balance

1 January 2011

Recognised

in profit or loss

Balance

31 December 2011

Loans to customers 21 (4) 17

Property, equipment and intangible assets (4) 3 (1)

Other liabilities - 1 1

17 - 17


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10 Cash and cash equivalents2012

GEL000

2011

GEL000

Petty cash 196 128

Bank balances

- rated BB- 5 7

- rated B+ - 3

- rated B 3 -

- not rated 4 2

Total cash and cash equivalents 208 140

No cash and cash equivalents are restricted, impaired or past due.

11 Loans to customers2012

GEL000

2011

GEL000

Commercial loans loans to small businesses 203 353

Loans to individuals

Loans collateralized by real estate 5,386 4,433

Consumer loans 1,717 1,388Auto loans 60 56

Total loans to individuals 7,163 5,877

Gross loans to customers 7,366 6,230

Impairment allowance (233) (111)

Net loans to customers 7,133 6,119

Movements in the loan impairment allowance by classes of loans to customers for the yearended 31 December 2012 are as follows:

Commercial loans

GEL000


GEL000

Total

GEL000

Balance at the beginning of the year 26 85 111

Net (recovery) charge (7) 129 122

Balance at the end of the year 19 214 233

Movements in the loan impairment allowance by classes of loans to customers for the year

ended 31 December 2011 are as follows:

Commercial loans

GEL000


GEL000

Total

GEL000

Balance at the beginning of the year 20 121 141

Net charge (recovery) 6 (36) (30)Balance at the end of the year 26 85 111


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(a) Credit quality of loans to customersThe following table provides information on the credit quality of loans to customers as at31 December 2012:

Gross loans

Impairment

allowance Net loans

Impairment

allowance to

gross loans,

GEL000 GEL000 GEL000 %

Commercial loans

Loans without individual signs of impairment 115 (1) 114 0.9%

Overdue or impaired loans:

- overdue more than 90 days 88 (18) 70 20.5%

Total impaired loans 88 (18) 70 20.5%

Total commercial loans 203 (19) 184 9.4%


Loans collateralized by real estate

- not overdue 4,661 (47) 4,614 1.0%

- overdue less than 30 days 54 (3) 51 5.6%

- overdue 30-89 days 349 (17) 332 4.9%

- overdue 90-179 days 131 (13) 118 9.9%

- overdue 180-360 days 161 (32) 129 19.9%


Total loans collateralized by real estate 5,386 (118) 5,268 2.2%

Consumer loans

- not overdue 1,172 (12) 1,160 1.0%


- overdue 30-89 days 47 (2) 45 4.3%

- overdue 90-179 days 85 (9) 76 10.6%

- overdue 180-360 days 284 (56) 228 19.7%


Total consumer loans 1,717 (95) 1,622 5.5%

Auto loans

- not overdue 60 (1) 59 1.7%

Total auto loans 60 (1) 59 1.7%

Total loans to individuals 7,163 (214) 6,949 3.0%

Total loans to customers 7,366 (233) 7,133 3.2%


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22

The following table provides information on the credit quality of the loans to customers as at

31 December 2011:

Gross loans

Impairment

allowance Net loans

Impairment

allowance to

gross loans,

GEL000 GEL000 GEL000 %

Commercial loans

Loans without individual signs of impairment 255 - 255 -

Overdue or impaired loans:

-overdue less than 90 days 32 - 32 -

- overdue more than 90 days and less than1 year 54 (22) 32 40.7%

- overdue more than 1 year 12 (4) 8 33.3%

Total impaired loans 98 (26) 72 26.5%

Total commercial loans 353 (26) 327 7.4%


Loans collateralized by real estate

- not overdue 4,076 - 4,076 -


- overdue 30-89 days 42 (2) 40 4.8%

- overdue 90-179 days 85 (6) 79 7.1%

- overdue 180-360 days 182 (50) 132 27.5%

Total loans collateralized by real estate 4,433 (60) 4,373 1.4%

Consumer loans

- not overdue 1,236 - 1,236 -

- overdue less than 30 days 38 - 38 -

- overdue 30-89 days 31 (1) 30 3.2%

- overdue 90-179 days 9 - 9 -

- overdue 180-360 days 65 (17) 48 26.2%

- overdue more than 360 days 9 - 9 -

Total consumer loans 1,388 (18) 1,370 1.3%

Auto loans

- not overdue 24 - 24 -

- overdue 30-89 days 4 - 4 -

- overdue 90-179 days 7 - 7 -

- overdue 180-360 days 18 (6) 12 33.3%


Total auto loans 56 (7) 49 12.5%

Total loans to individuals 5,877 (85) 5,792 1.4%

Total loans to customers 6,230 (111) 6,119 1.8%


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23

(b) Key assumptions and judgments for estimating the loan impairment(i ) Commercial l oans

Loan impairment results from one or more events that occurred after the initial recognition of theloan and that have an impact on the estimated future cash flows associated with the loan, andthat can be reliably estimated. Loans without individual signs of impairment do not haveobjective evidence of impairment that can be directly attributed to them.The objective indicators of loan impairment include the following:

overdue payments under the loan agreement significant difficulties in the financial conditions of the borrowerThe Group estimates loan impairment for commercial loans based on an analysis of the futurecash flows for impaired loans and based on its past loss experience for portfolios of loans forwhich no indications of impairment has been identified.

In determining the impairment allowance for commercial loans, management makes the

following key assumptions:

1.0% historical loss rate for loans without individual signs of impairment based on theGroups past loss experience;

a delay of 36 months in obtaining proceeds from the foreclosure of collateral for loans withindividual signs of impairment.

Changes in these estimates could effect the loan impairment provision. For example, to the

extent that the net present value of the estimated cash flows differs by one percent, theimpairment allowance on commercial loans as at 31 December 2012 would be GEL 2 thousandlower/higher (2011: GEL 3 thousand lower/higher).

(ii) Loans to individualsThe Group estimates loan impairment for loans to individuals based on its past historical lossexperience on each type of loan. The significant assumptions used by management in

determining the impairment losses for loans to retail customers include:

loss migration rates are constant and can be estimated based on the historic loss migrationpattern for the past 24 months for loans collateralized by real estate, auto loans and other

consumer loans; loans to individuals overdue for more than 180 days are allocated 15%-50% probability of

loss.

The significant assumptions used in determining the impairment losses for loans to individualsinclude the following loan loss rates:

- Loans collateralized by real estate2.2% (2011: 1.4%)- Consumer loans5.5% (2011: 1.3%)- Auto loans1.7% (2011: 12.5%)Changes in these estimates could effect the loan impairment provision. For example, to the

extent that the net present value of the estimated cash flows differs by three percent, theimpairment allowance on loans to individuals as at 31 December 2012 would beGEL 208 thousand lower/higher (2011: GEL 174 thousand lower/higher).


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24

(c) Analysis of collateral and other credit enhancements(i ) Commercial l oans

The following tables provides information on collateral and other credit enhancements securingcommercial loans, net of impairment, by types of collateral:

31 December 2012

GEL000

Loans to customers,

carrying amount

Fair value of collateral

for collateral

assessed as of loan

inception date

Loans without individual signs of impairment

Precious metals 82 82

Real estate 32 32

Total loans without individual signs of impairment 114 114

Overdue or impaired loans

Real estate 29 29


Total overdue or impaired loans 70 70

Total commercial loans 184 184

31 December 2011

GEL000Loans to customers,

carrying amount


for collateral

assessed as of loaninception date

Loans without individual signs of impairment


Real estate 122 122

Motor vehicles 1 1

Total loans without individual signs of impairment 255 255

Overdue or impaired loans

Real estate 40 40


Total overdue or impaired loans 72 72

Total commercial loans 327 327

The tables above are presented on the basis of excluding overcollateralization.

The recoverability of loans which are neither past due nor impaired is primarily dependent onthe creditworthiness of the borrowers rather than the value of collateral, and the Group does not

necessarily update the valuation of collateral as at each reporting date.

The Group has loans, for which fair value of collateral was assessed at the loan inception dateand it was not updated for further changes. Information on valuation of collateral is based onwhen this estimate was made, if any.

For loans secured by multiple types of collateral, collateral that is most relevant for impairmentassessment is disclosed.


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25

(ii) Loans to individualsLoans collateralized by real estate are secured by the underlying housing real estate. TheGroups policy is to issue loans collateralized by real estate with a loan-to-value ratio of amaximum of 50%.

The following tables provides information on collaterals of the loans collateralized by real estate,net of impairment:

31 December 2012

GEL000

Loans to customers,

carrying amount


for collateral

assessed as of loan

inception date

Not overdue loans 4,614 4,614

Overdue loans 654 654

Total loans collateralized by real estate 5,268 5,268

31 December 2011

GEL000

Loans to customers,

carrying amount


for collateral

assessed as of loan

inception date

Not overdue loans 4,076 4,076

Overdue loans 297 297

Total loans collateralized by real estate 4,373 4,373

The table above is presented on the basis of excluding overcollateralization.

For certain loans the Group updates the appraised values of collateral obtained at inception ofthe loan to the current values considering the approximate changes in property values. TheGroup may also obtain a specific individual valuation of collateral at each reporting date wherethere are indications of impairment.

For impaired or overdue loans collateralized by real estate management believes that the fairvalue of collateral is at least 100% of the carrying amount of the loans at the reporting date.

Auto loans are secured by the underlying cars. For impaired or overdue auto loans managementbelieves that the amount of loans or its parts, collateral fair value coverage is 100% of the

amount of the loans at the reporting date.

Consumer loans are mostly secured by underlying precious metals. For consumer loans with anet carrying amount of GEL 196 thousand (2011: GEL 329 thousand), which are neither pastdue nor impaired, there is no collateral or it is impracticable to determine the fair value of thecollateral. For impaired or overdue consumer loans with a net carrying amount of GEL 290thousand (2011: GEL 53 thousand) there is no collateral or it is impracticable to determine thefair value of the collateral. Per management estimates recoverability of these loans is primarilydependent on the creditworthiness of the borrowers rather than the collateral. For remainingconsumer loans with a net carrying amount of GEL 1,136 thousand (2011: GEL 988 thousand)

management estimates that the fair value of underlying collateral is at least equal to theircarrying amounts.


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(ii i) Repossessed col lateralDuring the year ended 31 December 2012, the Group obtained certain assets with the carryingamount of GEL 427 thousand (2011: GEL 254 thousand) by taking possession of collateral forloans to customers. As at 31 December 2012 the repossessed collateral comprise real estate withthe carrying amount of GEL 426 thousand (2011: GEL 233 thousand), respectively and preciousmetals with carrying amount of GEL 84 thousand (2011: nil), see note 14.

The Groups policy is to sell these assets as soon as it is practicable.

(d) Industry and geographical analysis of the loan portfolioLoans to customers were issued primarily to customers located within Georgia who operate in

the following economic sectors:

2012

GEL000

2011

GEL000

Loans to individuals 6,949 5,792

Manufacturing 29 -

Trade 11 100

Service 10 220

Agriculture - 7

Other 134 -

7,133 6,119

(e) Significant credit exposuresAs at 31 December 2012 and 2011 no individual loan balances or groups of connectedborrowers balances exceed 10% of equity.

(f) Loan maturitiesThe maturity of the loan portfolio is presented in note 18(d), which shows the remaining period

from the reporting date to the contractual maturity of the loans. Due to the short-term nature ofthe loans issued by the Group, it is likely that many of the loans will be prolonged at maturity.

Accordingly, the effective maturity of the loan portfolio may be significantly longer than theterm based on contractual terms.


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28

13 Property, equipment and intangible assetsGEL000 Land and buildings Intangible assets Other Total

Cost

Balance at 1 January 2012 518 23 145 686

Additions 101 31 65 197

Disposals (15) (88) (103)

Balance at 31 December 2012 604 54 122 780

Depreciation and amortization


Depreciation and amortization forthe year 12 5 38 55

Disposals - (76) (76)


Carrying amount

At 31 December 2012 559 38 82 679

Land and buildings Intangible assets Other Total


Additions 58 - 57 115

Disposals - - (29) (29)

At 31 December 2011 518 23 145 686

Depreciation and amortization


Depreciation and amortization forthe year 12

440 56

Disposals - - (7) (7)


Carrying amountsAt 31 December 2011 485 12 67 564

At 1 January 2011 439 16 72 527

Land and buildings with the carrying amount of GEL 184 thousand are pledged under loans andborrowings (see note 15).


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29

14 Other assets2012

GEL000

2011

GEL000

Accounts receivables 82 37

Total other financial assets 82 37

Repossessed assets 510 233

Prepayments 27 34

Materials and supplies - 2

Total other non-financial assets 537 269

Total other assets 619 306

15 Loans and borrowingsThis note provides information about the contractual terms of interest-bearing loans andborrowings, which are measured at amortized cost. For more information about exposure tointerest rate, foreign currency and liquidity risk, see note 18.

2012

GEL000

2011

GEL000

Non-current liabilities

Secured bank loans

791 608Unsecured loans from individuals 200 16

991 624

Current liabiliti es

Secured bank loans 1,867 1,910

Unsecured loans from individuals 1,000 378

2,867 2,288

3,858 2,912


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30

(a) Terms and debt repayment scheduleTerms and conditions of outstanding loans were as follows:

31 December 2012 31 December 2011

GEL000 Currency

Nominal

interest

rate

Year of

maturity

Face

value

Carrying

amount

Face

value

Carrying

amount

Secured bank loan USD 12% 2013 1,112 1,112 134 134

Secured bank loan USD 16% 2014 237 237 235 235

Secured bank loan USD 16% 2015 95 95 - -



Secured bank loan EUR 12% 2013 755 755 239 239

Secured bank loan EUR 12% 2015 133 133 - -

Secured bank loan USD 12% 2012 - - 988 988



Secured bank loan EUR 12% 2012 - - 562 562

Secured bank loan EUR 10% 2012 - - 132 132

Secured loans fromindividuals USD 12%-24% 2013 792 792 - -

Secured loans from

individuals USD 18% 2014 175 175 16 16

Secured loans fromindividuals EUR 18% 2013 111 111 - -

Secured loans from

individuals EUR 18% 2014 25 25 - -

Secured loans from

individuals GEL 18% 2013 97 97 - -

Secured loans from

individuals USD 12%-24% 2012 - - 303 303

Secured loans from

individuals EUR 14%-18% 2012 - - 75 75

3,858 3,858 2,912 2,912

Bank loans are secured by the following:

land and buildings with the carrying amount of GEL 184 thousand, located on 64 Mitskevichstreet, Tbilisi, Georgia, the Groups head office;

repossessed assets with the carrying amount of GEL 52 thousand located in Tbilisi, Georgia; term deposit of the shareholder of the Group.Loans from individuals are secured by the assets of the Group, including precious metals and realestate.


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31

16 Other liabilities2012

GEL000

2011

GEL000

Accounts payable 57 5

Total other financial liabilities 57 5

Prepayments received 49 63

Other taxes payable 4 10

Total other non-financial liabilities 53 73

Total other liabilities 110 78

17 Equity(a) Charter capital

Charter capital represents the nominal amount of capital in the founding documentation of theGroup.

On 25 January 2012 the owners of the Group made a decision to declare dividends of GEL 400thousand and on 31 August 2012 the owners decided to increase the declared dividends toGEL 500 thousand and to transfer balance of the retained earnings as at 31 December 2011 to thecharter capital of the Group with a corresponding increase in the ownership percentage of owners

in proportion to their holdings as at date of the decision.

(b) DividendsIn accordance with Georgian legislation the Groups distributable reserves are limited to thebalance of retained earnings as recorded in the Groups statutory consolidated financial statementsprepared in accordance with IFRSs. As at 31 December 2012 the Group had retained earnings ofGEL 1,173 thousand (2011: GEL 940 thousand).

On 25 January 2012, the Group declared dividends of GEL 400 thousand and on 31 August 2012the owners decided to increase the declared dividends to GEL 500 thousand. The dividends in the

amount of GEL 270 thousand were paid to the shareholders during 2012.


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32

18 Risk managementManagement of risk is fundamental to the business of banking and is an essential element of theGroups operations. The major risks faced by the Group are those related to market risk, creditrisk and liquidity risk.

(a) Risk management policies and proceduresThe risk management policies aim to identify, analyse and manage the risks faced by the Group,to set appropriate risk limits and controls, and to continuously monitor risk levels and adherenceto limits. Risk management policies and procedures are reviewed regularly to reflect changes inmarket conditions, products and services offered and emerging best practice.

The Supervisory Board has overall responsibility for the oversight of the risk managementframework, overseeing the management of key risks and reviewing its risk management policiesand procedures as well as approving significantly large exposures.

Management is responsible for monitoring and implementation of risk mitigation measures andmaking sure that the Group operates within the established risk parameters. The Chief ExecutiveOfficer (CEO) is responsible for the overall risk management and compliance functions, ensuringthe implementation of common principles and methods for identifying, measuring, managing andreporting both financial and non-financial risks. The CEO reports directly to the SupervisoryBoard.

(b) Market riskMarket risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risk comprises currency risk, interest raterisk and other price risks. Market risk arises from open positions in interest rate, currency andequity financial instruments, which are exposed to general and specific market movements andchanges in the level of volatility of market prices.

The objective of market risk management is to manage and control market risk exposures withinacceptable parameters, whilst optimizing the return on risk.

Overall authority for market risk is vested with management. Market risks are approved by

management.

(i ) I nterest rate r iskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market interest rates. The Group is exposed to the effects offluctuations in the prevailing levels of market interest rates on its financial position and cash

flows. Interest margins may increase as a result of such changes but may also reduce or createlosses in the event that unexpected movements occur.


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34

(ii) Currency ri skThe Group has assets and liabilities denominated in several foreign currencies.

Currency risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in foreign currency exchange rates. Although the Group hedges itsexposure to currency risk, such activities do not qualify as hedging relationships in accordancewith IFRS.

The following table shows the currency exposure structure of financial assets and liabilities as at31 December 2012:

GEL USD EUR Total

GEL000 GEL000 GEL000 GEL000

ASSETS

Cash and cash equivalents 31 152 25 208

Loans to customers 55 6,669 409 7,133

Other financial assets 13 69 - 82

Total assets 99 6,890 434 7,423

LIABILITIES

Loans and borrowings 97 2,737 1,024 3,858

Dividends payable 230 - - 230

Other financial liabilities 13 44 - 57

Total liabilities 340 2,781 1,024 4,145

Net position (241) 4,109 (590) 3,278

The following table shows the currency structure of financial assets and liabilities as at31 December 2011:

GEL USD EUR Total

GEL000 GEL000 GEL000 GEL000

ASSETS

Cash and cash equivalents 13 108 19 140

Loans to customers 34 5,649 436 6,119

Other financial assets 10 20 7 37

Total assets 57 5,777 462 6,296

LIABILITIES

Loans and borrowings - 1,904 1,008 2,912

Other financial liabilities 5 - 0 5

Total liabilities 5 1,904 1,008 2,917

Net position 52 3,873 (546) 3,379


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35

A weakening of the GEL, as indicated below, against the following currencies at 31 December

2012 and 2011 would have increased (decreased) profit or loss by the amounts shown below. Thisanalysis is on net of tax basis and is based on foreign currency exchange rate variances that theGroup considered to be reasonably possible at the end of the reporting period. The analysisassumes that all other variables, in particular interest rates, remain constant.

GEL000 2012 2011

10% appreciation of USD against GEL 349 329

10% appreciation of EUR against GEL (50) (46)

A strengthening of the GEL against the above currencies at 31 December 2012 and 2011 wouldhave had the equal but opposite effect on the above currencies to the amounts shown above, onthe basis that all other variables remain constant.

(c) Credit riskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financialinstrument fails to meet its contractual obligations. The Group has policies and procedures for the

management of credit exposures including guidelines to limit portfolio concentration and theestablishment of a Credit Committee, which actively monitors credit risk. The credit policy isreviewed and approved by the Supervisory Board.

The credit policy establishes:

procedures for review and approval of loan credit applications methodology for the credit assessment of borrowers methodology for the evaluation of collateralIndividual loan credit applications are originated by the relevant loan officers. Analysis reports arebased on a structured analysis focusing on the customers business and financial performance. TheCredit Committee reviews the loan credit application on the basis of submission by the loanofficers. The loan credit application and the report are then independently reviewed by the CEO.

The Group continuously monitors the performance of individual credit exposures and regularly

reassesses the creditworthiness of its customers. The review is based on the customers mostrecent financial information and other information submitted by the borrower, or otherwiseobtained by the Group.

The maximum exposure to credit risk is generally reflected in the carrying amounts of financialassets on the consolidated statement of financial position. The impact of possible netting of assetsand liabilities to reduce potential credit exposure is not significant.

The maximum exposure to credit risk from financial assets at the reporting date is as follows:

2012

GEL000

2011

GEL000

ASSETS

Loans to customers 7,133 6,119

Bank balances 12 12

Other financial assets 82 37

Total maximum exposure 7,227 6,168


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36

For the analysis of collateral held against loans to customers and concentration of credit risk in

respect of loans to customers refer to note 11.

(d) Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting obligations associatedwith its financial liabilities that are settled by delivering cash or another financial asset. Liquidityrisk exists when the maturities of assets and liabilities do not match. The matching and orcontrolled mismatching of the maturities and interest rates of assets and liabilities is fundamentalto liquidity management. It is unusual for financial institutions ever to be completely matchedsince business transacted is often of an uncertain term and of different types. An unmatchedposition potentially enhances profitability, but can also increase the risk of losses.

The Group maintains liquidity management with the objective of ensuring that funds will beavailable at all times to honor all cash flow obligations as they become due. The liquidity policy isreviewed and approved by management.

The Group seeks to actively support a diversified and stable funding base comprising long-term

and short-term loans from banks and other financial institutions, accompanied by diversifiedportfolios of highly liquid assets, in order to be able to respond quickly and smoothly tounforeseen liquidity requirements.

The liquidity management practice includes the following:

projecting cash flows by major currencies and considering the level of liquid assets necessaryin relation thereto

maintaining a diverse range of funding sources managing the concentration and profile of debts maintaining debt financing plans maintaining liquidity and funding contingency plansThe following tables show the undiscounted cash flows on financial liabilities on the basis of their

earliest possible contractual maturity. The total gross outflow disclosed in the tables is thecontractual, undiscounted cash flow on the financial liability.

The maturity analysis for financial liabilities as at 31 December 2012 is as follows:

GEL000

Demandand less

than

1 month

From

1 to 3

months

From

3 to 6

months

From

6 to 12

months

More

than

1 year

Totalgross

amount

outflow

Carrying

amount

Non-derivative liabilities

Loans and borrowings 166 349 172 2,700 837 4,224 3,858

Dividends payable 230 - - - - 230 230

Other financial liabilities 49 8 - - - 57 57

Total liabilities 445 357 172 2,700 837 4,511 4,145


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37

The maturity analysis for financial liabilities as at 31 December 2011 is as follows:

GEL000

Demand

and less

than

1 month

From

1 to 3

months

From

3 to 6

months

From

6 to 12

months

More

than

1 year

Total

gross

amount

outflow

Carrying

amount


Loans and borrowings 843 74 1,093 455 697 3,162 2,912

Other financial liabilities 5 - - - - 5 5

Total liabilities 848 74 1,093 455 697 3,167 2,917

The table below shows an analysis, by expected maturities, of the amounts recognised in thestatement of financial position as at 31 December 2012:

GEL000

Demand

and less

than

1 month

From

1 to 3

months

From

3 to 6

months

From

6 to 12

months

More than

1 year

No

maturity Total

Non-derivative assets

Cash and cash equivalents 208 - - - - - 208

Loans to customers 716 700 960 1,870 2,887 - 7,133

Investment property - - - - - 398 398

Property, equipment andintangible assets - - - - - 679 679

Deferred tax asset - - - - - 33 33Other assets 66 11 26 6 - 510 619

Total assets 990 711 986 1,876 2,887 1,620 9,070


Loans and borrowings 121 247 85 2,614 791 - 3,858

Dividens payable 230 - - - - - 230

Income tax payable 46 - - - - - 46

Other liabilities 52 8 48 2 - - 110

Total liabilities 449 255 133 2,616 791 - 4,244

Net position 541 456 853 (740) 2,096 1,620 4,826


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The outstanding balances and average interest rates as at 31 December 2012 and 2011 for

transactions with the members of the Management Board are as follows:

2012

GEL000

Average interest

rate, %

2011

GEL000

Average interest

rate, %

Consolidated statement of financial

osition

Loans to customers - - 6 18%

Loans and borrowings - - (3) 17%

Amounts included in profit or loss in relation to transactions with the members of theManagement Board for the year ended 31 December are as follows:

2012

GEL000

2011

GEL000

rofit or loss

Interest income - 1

(c) Transactions with other related partiesOther related parties include close family members of key management personnel.The outstanding balances and the related average interest rates as at 31 December 2012 and 2011with other related parties are as follows.

2012

GEL000

Average

interest rate, %

2011

GEL000

Average

interest rate, %

Consolidated statement of financial

osition

Loans and borrowings 56 18% 23 18%

22 Events subsequent to the reporting dateOn 21 January 2013 the following decisions were made by the owners of the Group regarding

distribution of retained earnings:

pay dividends of GEL 700 thousand from the profit for the period ended 31 December 2012; after payment of dividends transfer the remaining profit for the year ended 31 December 2012

to the charter capital of the Group with a corresponding increase in the ownership percentageof owners in proportion to their holdings as at the date of decision.

In 2013 up to the issue date of these financial statements, dividends of GEL 175 thousand werepaid to owners of the Group.

On 7 March 2013 the Group amended its charter and the shareholder structure changed. The

shareholding of Laponeto Commercial LLC of 51% was transferred to Laerti Zubadalashvili and

Documents

auditis daskvna 2012