easycred 2013 ifrs fs _ final for issue
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8/9/2019 Easycred 2013 IFRS FS _ Final for Issue
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Microfinance Organization
Easycred Georgia LLC
Consolidated Financial Statements
for the year ended 31 December 213
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Contents
Independent Auditors Report.......................................................................................................
Consolidated statement of profit or loss and other comprehensive income..................................
Consolidated statement of financial position................................................................................
Consolidated statement of cash flows...........................................................................................
Consolidated statement of changes in equity................................................................................
Notes to the consolidated financial statements.............................................................................
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!nde"endent #$ditors% &e"ort
To the Supervisory oard
!icrofinance "rgani#ation $asycred %eorgia &&C
'e have audited the accompanying consolidated financial statements of !icrofinance
"rgani#ation $asycred %eorgia &&C (the )Company*+ and its su,sidiary (the )%roup*+- which
comprise the consolidated statement of financial position as at / 0ecem,er 12/- and the
consolidated statements of profit or loss and other comprehensive income- changes in equity
and cash flows for the year then ended- and notes- comprising a summary of significant
accounting policies and other e3planatory information.
Managements Responsibility for the onsolidated Financial Statements
!anagement is responsi,le for the preparation and fair presentation of these consolidated
financial statements in accordance with International 4inancial Reporting Standards- and for
such internal control as management determines is necessary to ena,le the preparation of
consolidated financial statements that are free from material misstatement- whether due to fraud
or error.
Auditors Responsibility
"ur responsi,ility is to e3press an opinion on these consolidated financial statements ,ased on
our audit. 'e conducted our audit in accordance with International Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform the
audit to o,tain reasona,le assurance a,out whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to o,tain audit evidence a,out the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditors 5udgment- including the assessment of the ris6s of material misstatement of the
consolidated financial statements- whether due to fraud or error. In ma6ing those ris6assessments- the auditor considers internal control relevant to the entitys preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances- ,ut not for the purpose of e3pressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasona,leness of accounting estimates
made ,y management- as well as evaluating the overall presentation of the consolidated
financial statements.
KPMG Georgia LLC, a company incorporated under the Laws ofGeorgia, a member rm of the KPMG network of independent
rms aliated with KPMG nternational Cooperati!e "#KPMGnternational$%, a &wiss entity'
KPMG Georgia LLC
(, )esiki &treet,
*bilisi, ++-,
Georgia
*elephone .//0 "12%
2/103/0
4a5 .//0 "12%
2/1061
nternet www'kpmg'ge
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'e ,elieve that the audit evidence we have o,tained is sufficient and appropriate to provide a,asis for our audit opinion.
Opinion
In our opinion- the consolidated financial statements present fairly- in all material respects- the
financial position of the %roup as at / 0ecem,er 12/- and its financial performance and its
cash flows for the year then ended in accordance with International 4inancial Reporting
Standards.
78!% %eorgia &&C19 0ecem,er 12/:
KPMG Georgia LLC, a company incorporated under the Laws ofGeorgia, a member rm of the KPMG network of independent
rms aliated with KPMG nternational Cooperati!e "#KPMGnternational$%, a &wiss entity'
KPMG Georgia LLC
(, )esiki &treet,
*bilisi, ++-,
Georgia
*elephone .//0 "12%
2/103/0
4a5 .//0 "12%
2/1061
nternet www'kpmg'ge
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Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Profit or Loss and Other Comprehensie !ncome
for the year ended "# $ecember %"
'otes
213
GEL%
212
GEL%
Interest income : 1-;99 1-:
otal assets 11()12 )(0
L!#!L!!ES
&oans and ,orrowings /9 9-91: -;>+
Assets held for sale (1
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Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Profit or Loss and Other Comprehensie !ncome
for the year ended "# $ecember %"
'otes
213
GEL%
212
GEL%
8roceeds from sale of property and equipment :< ;
Acquisition of investment property @ (>;+8roceeds from sale of repossessed assets /= >
Cash flo>s $sed in inesting actiities
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Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in )*uity for the year ended "# $ecember %"
Charter ca"ital &etained earnings otal e7$ity
GEL% GEL% GEL%
alance as at 1 ?an$ary 212 -1/ >:2 :-/ith o>ners( recorded directly in e7$ity
Increase in charter capital ::2 (::2+ @
0ividends declared and paid @ (1=2+ (1=2+
0ividends declared ,ut not paid @ (12+ (12+
otal transactions >ith o>ners -- ith o>ners( recorded directly in e7$ity
Increase in charter capital := (:=+ @
0ividends declared and paid @ (/;+ (/;+
0ividends declared ,ut not paid @ (;1+ (;1+
otal transactions >ith o>ners -03
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
1 acAgro$nd. The legal
address of the Company is 9: !its6evich Street- T,ilisi- %eorgia.
"n 1> Novem,er 12// the Company esta,lished a su,sidiary- $asycred Capital &&C (together
the )%roup*+- an asset management company with /22 ownership.
The principal su,sidiaries are as follows?
O>nershi" B
'ame Co$ntry of incor"oration .rinci"al actiities 213 212
$asycred Capital &&C %eorgia Asset management /22 /22
(,+ Shareholders
As at / 0ecem,er 12/ and 12/1 the %roups shareholders were as follows?
213
O>nershi" interest( B
212
O>nershi" interest( B
&aerti Du,adalashvili =9.2 1
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
The legal- ta3 and regulatory framewor6s continue development- ,ut are su,5ect to varying
interpretations and frequent changes which together with other legal and fiscal impediments
contri,ute to the challenges faced ,y entities operating in %eorgia. The consolidated financial
statements reflect managements assessment of the impact of the %eorgian ,usiness environment
on the operations and the financial position of the %roup. The future ,usiness environment may
differ from managements assessment.
2 asis of "re"aration
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
I4RS /1$isclosure of !nterests in Other )ntities (see (ii++
I4RS /Fair -alue Measurements(see (iii++
Presentation of !tems of Other Comprehensie !ncome(Amendments to IAS /+ (see (iv++
Financial !nstruments( $isclosures . Offsetting Financial Assets and Financial Liabilities
(Amendments to I4RS =+(see (v++
The nature and the effect of the changes are e3plained ,elow.
i Subsidiaries, including structured entities
As a result of adoption of I4RS /2- the %roup changed its accounting policy with respect to
determining whether it has control over and consequently whether it consolidates its investees.
I4RS /2 introduces a new control model that is applica,le to all investees- including structured
entities. See notes (a+ and (ii+.
In accordance with the transitional provisions of I4RS /2- the %roup reassessed the control
conclusion for its investees as at / Banuary 12/. The %roup determined that its consolidated
group structure remained unchanged under I4RS /2- and as a result- the consolidated financial
statements are unaffected.
ii Disclosure of interests in other entities
The new standard contains disclosure requirements for entities that have interests in su,sidiaries-
5oint arrangements- associates and unconsolidated structured entities. Interests are widely defined
as contractual and non@contractual involvement that e3poses an entity to varia,ility of returns
from the performance of the other entity. The e3panded and new disclosure requirements aim to
provide information to ena,le the users to evaluate the nature of ris6s associated with an entitys
interests in other entities and the effects of those interests on the entitys financial position-
financial performance and cash flows. The adoption of I4RS /1 has no impact on the disclosures
in the consolidated financial statements.
iii Fair value measurement
I4RS / esta,lishes a single framewor6 for measuring fair value and ma6ing disclosures a,out
fair value measurements- when such measurements are required or permitted ,y other I4RSs. In
particular- it unifies the definition of fair value as the prices at which an orderly transaction to sell
an asset or to transfer a lia,ility would ta6e place ,etween mar6et participants at the measurement
date. It also replaces and e3pands the disclosure requirements a,out fair value measurements in
other I4RSs- including I4RS =Financial !nstruments( $isclosures/
As a result- the %roup adopted a new definition of fair value- as set out in note (d+(v+. Thechange had no significant impact on the measurements of assets and lia,ilities. Eowever- the
%roup included new disclosures in the consolidated financial statements that are required under
I4RS / and provided comparative information for new disclosures.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
iv resentation of items of other com!rehensive income
As a result of the amendments to IAS /- the %roup modified the presentation of items of other
comprehensive income in its consolidated statement of profit or loss and other comprehensive
income- to present separately items that would ,e reclassified to profit or loss in the future from
those that would never ,e. Comparative information is also re@presented accordingly.
The adoption of the amendment to IAS / has no impact on the recognised assets- lia,ilities or
comprehensive income.
v Financial instruments" Disclosures # Offsetting financial assets and financialliabilities
Amendments to I4RS =Financial !nstruments( $isclosures . Offsetting Financial Assets and
Financial Liabilities introduced new disclosure requirements for financial assets and lia,ilities
that are offset in the statement of financial position or su,5ect to master netting arrangements or
similar agreements. As the %roup is not setting off financial instruments in accordance with IAS
1 and does not have relevant offsetting arrangements- the amendment does not have an impact
on the %roup.
3 Significant acco$nting "olicies
The accounting policies set out ,elow are applied consistently to all periods presented in these
consolidated financial statements- and are applied consistently ,y %roup entities- e3cept as
e3plained in note 1(e+- which addresses changes in accounting policies.
(a+ asis of consolidation
$i% Subsidiaries
Su,sidiaries are investees controlled ,y the %roup. The %roup controls an investee when it is
e3posed to- or has rights to- varia,le returns from its involvement with the investee and has the
a,ility to affect those returns through its power over the investee. In particular the %roup
consolidates investees that it controls on the ,asis of de facto circumstances. The financial
statements of su,sidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
$ii% &ransactions eliminated on consolidation
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Intra@group ,alances and transactions- and any unrealised gains arising from intra@group
transactions- are eliminated in preparing the consolidated financial statements. Fnrealised gains
arising from transactions with associates are eliminated to the e3tent of the %roups interest in the
enterprise. Fnrealised gains resulting from transactions with associates are eliminated against the
investment in the associate. Fnrealised losses are eliminated in the same way as unrealised gains
e3cept that they are only eliminated to the e3tent that there is no evidence of impairment.
(,+ Foreign c$rrency
Transactions in foreign currencies are translated to %$& at e3change rates at the dates of the
transactions. !onetary assets and lia,ilities denominated in foreign currencies at the reporting
date are retranslated to the functional currency at the e3change rate at that date. The foreigncurrency gain or loss on monetary items is the difference ,etween amortised cost in the functional
currency at the ,eginning of the period- ad5usted for effective interest and payments during the
period- and the amortised cost in foreign currency translated at the e3change rate at the end of the
reporting period. Non@monetary items that are measured in terms of historical cost in a foreign
currency are translated using the e3change rate at the date of the transaction. 4oreign currency
differences arising on retranslation are recognised in profit or loss.
(c+ Cash and cash e7$ialents
Cash and cash equivalents include notes and coins on hand- unrestricted ,alances and call
deposits held with the ,an6s with maturities of three months or lessfrom the acquisition date that
are su,5ect to insignificant ris6 of changes in their fair value. Cash and cash equivalents are
carried at amortised cost in the consolidated statement of financial position.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
(d+ Financial instr$ments
$i% Classification
Loans and receiables are non@derivative financial assets with fi3ed or determina,le payments
that are not quoted in an active mar6et- other than those that the %roup?
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 availa,le@for@sale or-
may not recover su,stantially all of its initial investment- other than ,ecause of credit
deterioration.
$ii% 'ecognition
4inancial assets and lia,ilities are recogni#ed in the consolidated statement of financial position
when the %roup ,ecomes a party to the contractual provisions of the instrument.
$iii% Measurement
A financial asset or lia,ility is initially measured at its fair value plus transaction costs that are
directly attri,uta,le to the acquisition or issue of the financial asset or lia,ility.
Su,sequent to initial recognition- financial assets- comprising loans and receiva,les- are
measured at amorti#ed cost using the effective interest method.
All financial lia,ilities are measured at amorti#ed cost.
$iv% (mortised cost
The amortised cost of a financial asset or lia,ility is the amount at which the financial asset or
lia,ility is measured at initial recognition- minus principal repayments- plus or minus the
cumulative amortisation using the effective interest method of any difference ,etween the initial
amount recognised and the maturity amount- minus any reduction for impairment. 8remiums and
discounts- including initial transaction costs- are included in the carrying amount of the related
instrument and amorti#ed ,ased on the effective interest rate of the instrument.
$v% Fair value measurement !rinci!les
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
4air value is the price that would ,e received to sell an asset or paid to transfer a lia,ility in an
orderly transaction ,etween mar6et participants at the measurement date in the principal- or in its
a,sence- the most advantageous mar6et to which the %roup has access at that date. The fair value
of a lia,ility reflects its non@performance ris6.
'hen availa,le- the %roup measures the fair value of an instrument using quoted prices in an
active mar6et for that instrument. A mar6et is regarded as active if transactions for the asset or
lia,ility ta6e place with sufficient frequency and volume to provide pricing information on an
ongoing ,asis.
'hen there is no quoted price in an active mar6et- the %roup uses valuation techniques that
ma3imise the use of relevant o,serva,le inputs and minimise the use of uno,serva,le inputs. The
chosen valuation technique incorporates all the factors that mar6et participants would ta6e into
account in pricing transaction.
The ,est evidence of the fair value of a financial instrument at initial recognition is normally the
transaction price- i.e.- the fair value of the consideration given or received. If the %roup
determines that the fair value at initial recognition differs from the transaction price and the fair
value is evidenced neither ,y a quoted price in an active mar6et for an identical asset or lia,ility
nor ,ased on a valuation technique that uses only data from o,serva,le mar6ets- the financial
instrument is initially measured at fair value- ad5usted to defer the difference ,etween the fair
value at initial recognition and the transaction price. Su,sequently- that difference is recognised
in profit or loss on an appropriate ,asis over the life of the instrument ,ut no later than when the
valuation is supported wholly ,y o,serva,le mar6et data or the transaction is closed out.
$vi% Gains and losses on subse)uent measurement
4or financial assets and lia,ilities carried at amorti#ed cost- a gain or loss is recogni#ed in profit
or loss when the financial asset or lia,ility is derecogni#ed or impaired- and through the
amorti#ation process.
$vii% Derecognition
The %roup derecognises a financial asset when the contractual rights to the cash flows from the
financial asset e3pire- or when it transfers the financial asset in a transaction in which
su,stantially all the ris6s and rewards of ownership of the financial asset are transferred or in
which the %roup neither transfers nor retains su,stantially all the ris6s and rewards of ownership
and it does not retain control of the financial asset. Any interest in transferred financial assets that
qualify for derecognition that is created or retained ,y the %roup is recognised as a separate asset
or lia,ility in the consolidated statement of financial position. The %roup derecognises a financial
lia,ility when its contractual o,ligations are discharged or cancelled or e3pire.
The %roup writes off assets deemed to ,e uncollecti,le.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
(f+ !nestment "ro"erty
Investment property is property held either to earn rental income or for capital appreciation or for
,oth- ,ut not for sale in normal course of ,usiness- or for the use in production or supply of goods
or services or for administrative purposes. Investment property is measured at cost less
accumulated depreciation and impairment losses.
Cost includes e3penditure that is directly attri,uta,le to the acquisition of investment property.
Cost includes the cost of materials and direct la,our- any other costs directly attri,uta,le to
,ringing the assets to wor6ing condition for its intended use.
'hen the use of a property changes such that it is reclassified as property and equipment- its fair
value at the date of reclassification ,ecomes its cost for su,sequent accounting.
(g+ #ssets held for sale or distrib$tion
Non@current assets- or disposal groups comprising assets and lia,ilities- that are e3pected to ,e
recovered primarily through sale or distri,ution rather than through continuing use- are classified
as held for sale or distri,ution.
Such assets- or disposal group- are generally measured at the lower of their carrying amount and
fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill-
and then to the remaining assets and lia,ilities on pro rata ,asis- e3cept that no loss is allocated to
inventories- financial assets- deferred ta3 assets or employee ,enefit assets or investment
property- which continue to ,e measured in accordance with the %roups other accounting
policies. Impairment losses on initial classification as held for sale or distri,ution and su,sequent
gains or losses on remeasurement are recognised in profit or loss. %ains are not recognised in
e3cess of any cumulative impairment loss.
8roperty- plant and equipment once classified as held for sale or distri,ution are not amortised or
depreciated.
(h+ &e"ossessed assets
The %roup recognises repossessed assets in the consolidated statement of financial position when
it has the full and final settlement rights to the collateral- and when it is entitled to retain any
e3cess proceeds from the realisation of the collateral.
Repossessed assets are measured at the lower of the carrying amount and the fair value less costs
to sell. At initial recognition repossessed assets are measured ,ased on the value of the defaulted
loan- including e3penditure incurred in the process of collateral foreclosure. 4air value less coststo sell is the estimated selling price of the collateral in the ordinary course of ,usiness- less the
related selling costs. Su,sequent to initial recognition- repossessed assets are reviewed for held
for sale classification criteria and are reclassified accordingly when the criteria are met.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Repossessed assets are included in other assets.
%ains and losses on disposal of repossessed assets are recognised net in )other operating income*
in profit or loss.
(i+ !m"airment
The %roup assesses at the end of each reporting period whether there is any o,5ective evidence
that a financial asset or group of financial assets is impaired. If any such evidence e3ists- the
%roup determines the amount of any impairment loss.
A financial asset or a group of financial assets is impaired and impairment losses are incurred if-
and only if- there is o,5ective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset (a loss event+ and that event (or events+ has had
an impact on the estimated future cash flows of the financial asset or group of financial assets that
can ,e relia,ly estimated.
",5ective evidence that financial assets are impaired can include default or delinquency ,y a
,orrower- ,reach of loan covenants or conditions- restructuring of financial asset or group of
financial assets that the %roup would not otherwise consider- indications that a ,orrower or issuer
will enter ,an6ruptcy- the disappearance of an active mar6et for a security- deterioration in the
value of collateral- or other o,serva,le data relating to a group of assets such as adverse changes
in the payment status of ,orrowers in the group- or economic conditions that correlate with
defaults in the group.
$i% Financial assets carried at amortized cost
4inancial assets carried at amorti#ed cost consist principally of loans and other receiva,les (loans
and receiva,les+. The %roup reviews its loans and receiva,les to assess impairment on a regular
,asis.
The %roup first assesses whether o,5ective evidence of impairment e3ists individually for loans
and receiva,les that are individually significant- and individually or collectively for loans and
receiva,les that are not individually significant. If the %roup determines that no o,5ective
evidence of impairment e3ists for an individually assessed loan or receiva,le- whether significant
or not- it includes the loan or receiva,le in a group of loans and receiva,les with similar credit
ris6 characteristics and collectively assesses them for impairment. &oans and receiva,les that are
individually assessed for impairment and for which an impairment loss is or continues to ,e
recognised are not included in a collective assessment of impairment.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
If there is o,5ective evidence that an impairment loss on a loan or receiva,le has ,een incurred-
the amount of the loss is measured as the difference ,etween the carrying amount of the loan or
receiva,le and the present value of estimated future cash flows including amounts recovera,le
from guarantees and collateral discounted at the loan or receiva,les original effective interest
rate. Contractual cash flows and historical loss e3perience ad5usted on the ,asis of relevant
o,serva,le data that reflect current economic conditions provide the ,asis for estimating e3pected
cash flows.
In some cases the o,serva,le data required to estimate the amount of an impairment loss on a
loan or receiva,le may ,e limited or no longer fully relevant to current circumstances. This may
,e the case when a ,orrower is in financial difficulties and there is little availa,le historical data
relating to similar ,orrowers. In such cases- the %roup uses its e3perience and 5udgment to
estimate the amount of any impairment loss.
All impairment losses in respect of loans and receiva,les are recogni#ed in profit or loss and are
only reversed if a su,sequent increase in recovera,le amount can ,e related o,5ectively to an
event occurring after the impairment loss was recognised.
'hen a loan is uncollecta,le- it is written off against the related allowance for loan impairment.
The %roup writes off a loan ,alance (and any related allowances for loan losses+ when
management determines that the loans are uncollecti,le and when all necessary steps to collect
the loan are completed.
$ii% +on financial assets
"ther non financial assets- other than deferred ta3es- are assessed at each reporting date for any
indications of impairment. The recovera,le amount of non financial assets is the greater of their
fair value less costs to sell and value in use. In assessing value in use- the estimated future cash
flows are discounted to their present value using a pre@ta3 discount rate that reflects current
mar6et assessments of the time value of money and the ris6s specific to the asset. 4or an asset
that does not generate cash inflows largely independent of those from other assets- the
recovera,le amount is determined for the cash@generating unit to which the asset ,elongs. An
impairment loss is recognised when the carrying amount of an asset or its cash@generating unit
e3ceeds its recovera,le amount.
All impairment losses in respect of non financial assets are recogni#ed in profit or loss and
reversed only if there has ,een a change in the estimates used to determine the recovera,le
amount. Any impairment loss reversed is only reversed to the e3tent that the assets carrying
amount does not e3ceed the carrying amount that would have ,een determined- net of
depreciation or amortisation- if no impairment loss had ,een recognised.
(5+ Charter ca"ital
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Charter capital is classified as equity. Incremental costs directly attri,uta,le to the issue of
ordinary shares are recognised as a deduction from equity- net of any ta3 effects.
The a,ility of the %roup to declare and pay dividends is su,5ect to the rules and regulations of the
%eorgian legislation.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
$i% Dividends
The a,ility of the %roup to declare and pay dividends is su,5ect to the rules and regulations of the
%eorgian legislation.
0ividends are reflected as an appropriation of retained earnings in the period when they are
declared.
(6+ a/ation
Income ta3 comprises current and deferred ta3. Income ta3 is recognised in profit or loss e3cept
to the e3tent that it relates to items of other comprehensive income or transactions withshareholders recognised directly in equity- in which case it is recognised within other
comprehensive income or directly within equity.
Current ta3 e3pense is the e3pected ta3 paya,le on the ta3a,le income for the year- using ta3 rates
enacted or su,stantially enacted at the reporting date- and any ad5ustment to ta3 paya,le in
respect of previous years.
0eferred ta3 is recognised in respect of temporary differences ,etween the carrying amounts of
assets and lia,ilities for financial reporting purposes and the amounts used for ta3ation purposes.
0eferred ta3 is not recognised for the temporary differences on the initial recognition of assets or
lia,ilities that affect neither accounting nor ta3a,le profit and temporary differences related to
investments in su,sidiaries where the parent is a,le to control the timing of the reversal of the
temporary difference and it is pro,a,le that the temporary difference will not reverse in the
foreseea,le future.
The measurement of deferred ta3es reflects the ta3 consequences that would follow the manner in
which the %roup e3pects- at the end of the reporting period- to recover or settle the carrying
amount of its assets and lia,ilities.
0eferred ta3 is measured at the ta3 rates that are e3pected to ,e applied to the temporary
differences when they reverse- ,ased on the laws that have ,een enacted or su,stantively enacted
,y the reporting date.
A deferred ta3 asset is recognised only to the e3tent that it is pro,a,le that future ta3a,le profits
will ,e availa,le against which the temporary differences- unused ta3 losses and credits can ,e
utilised. 0eferred ta3 assets are reduced to the e3tent that it is no longer pro,a,le that the related
ta3 ,enefit will ,e realised.
(l+ !ncome and e/"ense recognition
11
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Interest income and e3pense are recognised in profit or loss using the effective interest method.
&oan origination fees- loan servicing fees and other fees that are considered to ,e integral to the
overall profita,ility of a loan- together with the related transaction costs- are deferred and
amorti#ed to interest income over the estimated life of the financial instrument using the effective
interest method.
"ther fees- commissions and other income and e3pense items are recognised in profit or loss
when the corresponding service is provided.
0ividend income is recognised in profit or loss on the date that the dividend is declared.
8ayments made under operating leases are recognised in profit or loss on a straight@line ,asis
over the term of the lease. &ease incentives received are recognised as an integral part of the total
lease e3pense- over the term of the lease.
(m+ 'e> standards and inter"retations not yet ado"ted
A num,er of new standards- amendments to standards and interpretations are not yet effective as
at / 0ecem,er 12/- and are not applied in preparing these consolidated financial statements.
"f these pronouncements- potentially the following will have an impact on the financial position
and performance. The %roup plans to adopt these pronouncements when they ,ecome effective.
I4RS > Financial !nstruments will ,e effective for annual periods ,eginning on or after
# 0anuary %/ 2he ne3 standard is to be issued in phases and is intended ultimate ly to
replace International 4inancial Reporting Standard IAS > Financial !nstruments(
Recognition and Measurement. The first phase of I4RS > was issued in Novem,er 122> and
relates to the classification and measurement of financial assets. The second phase regarding
classification and measurement of financial lia,ilities 3as published in Octo,er 12/2. The
remaining parts of the standard are e3pected to ,e issued during 12/. The %roup recognises
that the new standard introduces many changes to the accounting for financial instruments
and is li6elyto hae a significant impact on the consolidated financial statements. The impact
of these changes will ,e analysed during the course of the pro5ect as further phases of the
standard are issued. The %roup does not intend to adopt this standard early.
Amendments to IAS 1 Financial !nstruments( Presentation . Offsetting Financial Assetsand Financial Liabilities do not introduce new rules for offsetting financial assets and
lia,ilitiesG rather they clarify the offsetting criteria to address inconsistencies in their
application. The Amendments specify that an entity currently has a legally enforcea,le right
to set@off if that right is not contingent on a future eventG and enforcea,le ,oth in the normal
course of ,usiness and in the event of default- insolvency or ,an6ruptcy of the entity and all
counterparties. The amendments are effective for annual periods ,eginning on or after /
Banuary 12/:- and are to ,e applied retrospectively.
Harious !mproements to !FRS are dealt with on a standard@,y@standard ,asis. All
amendments- which result in accounting changes for presentation- recognition or
measurement purposes- will come into effect not earlier than / Banuary 12/:. The %roup has
not yet analysed the li6ely impact of the improvements on its financial position orperformance.
1
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
- 'et interest income
213
GEL%
212
GEL%
!nterest income
&oans to customers 1-;9< 1-::
an6 ,alances / /
2(*,, 2(-3+
!nterest e/"ense
&oans and ,orrowings
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
213
GEL%
212
GEL%
Advertising and mar6eting 9< /:8rofessional services 9 :9
0epreciation and amorti#ation ; 2
Transportation 11 1/
Communications and information services /: /ance 'et loans
!m"airment
allo>ance to
gross loans(
GEL% GEL% GEL% B
Commercial loans
&oans without individual signs of impairment 12/ (1+ />> /.2
"verdue or impaired loans?
@overdue less than >2 days :2 (/+ > 1.2 days and less than / year /< (1+ / /.
@ overdue more than / year .;
Total overdue or impaired loans //1 (12+ >1 /=.>
otal commercial loans 313 n loans )-* /. days /1 (/+ // ;.
@ overdue >2@/=> days / (1+ // /
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Gross loans
!m"airment
allo>ance 'et loans
!m"airment
allo>ance to
gross loans(
GEL% GEL% GEL% B
#$to loans
@ not overdue 92 (/+ /.=
otal a$to loans ,
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
loss migration rates are constant and can ,e estimated ,ased on the historic loss migration
pattern for the past 1: months for loans collaterali#ed ,y real estate- auto loans and other
consumer loansG
loans to individuals overdue for more than /;2 days are allocated /
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
31 December 212
GEL%Loans to c$stomers(
carrying amo$nt
Fair al$e of collateral
for collateral
assessed as of loanince"tion date
&oans without individual signs of impairment
8recious metals ;1 ;1
Real estate 1 1
Total loans without individual signs of impairment //: //:
"verdue or impaired loans
Real estate 1> 1>
8recious metals :/ :/
Total overdue or impaired loans =2 =2
otal commercial loans 1*- 1*-
The ta,les a,ove e3cludes overcollaterali#ation.
The %roup has loans- for which fair value of collateral was assessed at the loan inception date
and it was not updated for further changes. Information on valuation of collateral is ,ased on
when this estimate was made- if any.
4or loans secured ,y multiple types of collateral- collateral that is most relevant for impairment
assessment is disclosed.
The recovera,ility of loans which are neither past due nor impaired is primarily dependent on the
creditworthiness of the ,orrowers rather than the value of collateral- and the %roup does not
necessarily update the valuation of collateral as at each reporting date.
$ii% Loans to individuals
&oans collaterali#ed ,y real estate are secured ,y the underlying housing real estate. The %roups
policy is to issue loans collaterali#ed ,y real estate with a loan@to@value ratio of a ma3imum of
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
31 December 212
GEL%Loans to c$stomers(
carrying amo$nt
Fair al$e of collateral
for collateral
assessed as of loanince"tion date
Not overdue loans :-9/: :-9/:
"verdue loans 9
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
$iii% 'e!ossessed collateral
0uring the year ended / 0ecem,er 12/- the %roup o,tained certain assets ,y ta6ing possession
of collateral for loans to customers with a net carrying amount of %$& :9 thousand. As at
/ 0ecem,er 12/ and 12/1- the repossessed collateral comprises?
213
GEL%
212
GEL%
Real estate 92< :19
8recious metals > ;:
otal re"ossessed collateral ,1- +1
The %roups policy is to sell these assets as soon as it is practica,le.
(r+ !nd$stry and geogra"hical analysis of the loan "ortfolio
&oans to customers were issued primarily to customers located within %eorgia who operate in the
following economic sectors?
213
GEL%
212
GEL%
&oans to individuals ;-/=> 9->:>
Service /
Trade 1 //
"ther 91 /:
*(-0 0(133
(s+ Significant credit e/"os$res
As at / 0ecem,er 12/ and 12/1 no individual loan ,alances or groups of connected ,orrowers
,alances e3ceed /2 of equity.
(t+ Loan mat$rities
The maturity of the loan portfolio is presented in note (d+- which shows the remaining period
from the reporting date to the contractual maturity of the loans. 0ue to the short@term nature of
the loans issued ,y the %roup- it is li6ely that many of the loans will ,e prolonged at maturity.
Accordingly- the effective maturity of the loan portfolio may ,e significantly longer than the term
,ased on contractual terms.
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
12 #ssets held for sale
In 12/ management committed to sell land and ,uildings of %$& 1; @
Reclassification to property- equipment and intangi,le assets (>;+ @
alance at / 0ecem,er @ 3)*
As at / 0ecem,er 12/1 the investment property represented the construction wor6s done on a
new hotel ,uilding. 4ollowing the managements decision to operate the newly constructed hotel
themselves- in 12/ the ,alance was transferred from investment property to property and
equipment.
1- .ro"erty( e7$i"ment and intangible assets
GEL%
Land and
b$ildings
Constr$ction
in "rogress
!ntangible
assets Other otal
Costalance at / Banuary 12/ 92: @ + @ (1>+ @ (:;+
Transfer from investment property < 9 @ @ >;
alance at 31 December 213 )2 ,,3 2+ 13* 1(0-,
De"reciation and amortization
alance at / Banuary 12/ :< @ /9 :2 /2/
0epreciation and amorti#ation for the
year19 @ < = ;
0isposals @ @ (+ @ (+
alance at 31 December 213 01 @ 1* -0 13,
Carrying amo$nt#t 31 December 213 *-) ,,3 0 )1 1(,1
9
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
GEL%
Land and
b$ildings
Constr$ction
in "rogress
!ntangible
assets Other otal
Cost
alance at / Banuary 12/1 =
0isposals (/
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
1+ Other assets
213
GEL%
212
GEL%
"ther receiva,les 2
Fnsecured loans from individuals 122
1()++ 2(13
Current liabilities
Secured ,an6 loans /-/: =
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
>
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
(u+ erms and debt re"ayment sched$le
Terms and conditions of outstanding loans were as follows?
31 December 212 31 December 212
GEL% C$rrency
'ominal
interest
rate
6ear of
mat$rity
Face
al$e
Carrying
amo$nt
Face
al$e
Carrying
amo$nt
Secured ,an6 loan FS0 /1 12/:
Secured ,an6 loan FS0 /1 12/22 thousand and the %$& := thousand is unpaid charter capital.
(w+ Diidends
In accordance with %eorgian legislation the %roups distri,uta,le reserves are limited to the
,alance of retained earnings as recorded in the %roups statutory consolidated financial statements
prepared in accordance with I4RSs. As at / 0ecem,er 12/ the %roup had retained earnings of
%$& 92; thousand (12/1? %$& /-/= thousand+.
"n 1/ Banuary 12/- the %roup declared dividends of %$& =22 thousand. The dividends in the
amount of %$& /; thousand were paid to the shareholders during 12/.
:/
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
1) &isA management
!anagement of ris6 is fundamental to the microfinance ,usiness and is an essential element of the
%roups operations. The ma5or ris6s faced ,y the %roup are those related to mar6et ris6- credit ris6
and liquidity ris6.
(3+ &isA management "olicies and "roced$res
The ris6 management policies aim to identify- analyse and manage the ris6s faced ,y the %roup- to
set appropriate ris6 limits and controls- and to continuously monitor ris6 levels and adherence to
limits. Ris6 management policies and procedures are reviewed regularly to reflect changes in
mar6et conditions- products and services offered and emerging ,est practice.
The Supervisory oard has overall responsi,ility for the oversight of the ris6 management
framewor6- overseeing the management of 6ey ris6s and reviewing its ris6 management policies
and procedures as well as approving significantly large e3posures.
!anagement is responsi,le for monitoring and implementation of ris6 mitigation measures and
ma6ing sure that the %roup operates within the esta,lished ris6 parameters. The Chief $3ecutive
"fficer (C$"+ is responsi,le for the overall ris6 management and compliance functions- ensuring
the implementation of common principles and methods for identifying- measuring- managing and
reporting ,oth financial and non@financial ris6s. The C$" reports directly to the Supervisory
oard.
(y+ MarAet risA
!ar6et ris6 is the ris6 that the fair value or future cash flows of a financial instrument will fluctuate
,ecause of changes in mar6et prices. !ar6et ris6 comprises currency ris6- interest rate ris6 and
other price ris6s. !ar6et ris6 arises from open positions in interest rate- currency and equity
financial instruments- which are e3posed to general and specific mar6et movements and changes in
the level of volatility of mar6et prices.
The o,5ective of mar6et ris6 management is to manage and control mar6et ris6 e3posures within
accepta,le parameters- whilst optimi#ing the return on ris6.
"verall authority for mar6et ris6 is vested with management. !ar6et ris6s are approved ,y
management.
$i% -nterest rate ris.
:1
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Interest rate ris6 is the ris6 that the fair value or future cash flows of a financial instrument will
fluctuate ,ecause of changes in mar6et interest rates. The %roup is e3posed to the effects of
fluctuations in the prevailing levels of mar6et interest rates on its financial position and cash flows.
Interest margins may increase as a result of such changes ,ut may also reduce or create losses in
the event that une3pected movements occur.
:
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
-nterest rate ga! analysis
Interest rate ris6 is managed principally through monitoring interest rate gaps A summary of the
interest gap position for ma5or financial instruments is as follows?
GEL %Demand
and less
than 1 month
From
1 to 3
months
From
3 to , months
From
, to 12
months
More than
1 year Carrying
amo$nt
31 December 213
ASS$TS
&oans to customers/-::= ;:2 ;19 /-;= -:;: ;-:=2
&IAI&ITI$S
&oans and ,orrowings
1;; >2 =:: 1->:< /-=/= 9-91:
1(1+) / -;
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
$ii% Currency ris.
The %roup has assets and lia,ilities denominated in several foreign currencies.
Currency ris6 is the ris6 that the fair value or future cash flows of a financial instrument will
fluctuate ,ecause of changes in foreign currency e3change rates. Although the %roup hedges its
e3posure to currency ris6- such activities do not qualify as hedging relationships in accordance with
I4RS.
The following ta,le shows the currency e3posure structure of financial assets and lia,ilities as at
/ 0ecem,er 12/?
GEL 5SD E5& otal
GEL% GEL% GEL% GEL%
#SSES
Cash and cash equivalents 92
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
GEL 5SD E5& otal
GEL% GEL% GEL% GEL%
L!#!L!!ES
"ther ,orrowed funds >= 1-== /-21: -;
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Individual loan credit applications are originated ,y the relevant loan officers. Analysis reports are
,ased on a structured analysis focusing on the customers ,usiness and financial performance. The
Credit Committee reviews the loan credit application on the ,asis of su,mission ,y the loanofficers. The loan credit application and the report are then independently reviewed ,y the C$".
The %roup continuously monitors the performance of individual credit e3posures and regularly
reassesses the creditworthiness of its customers. The review is ,ased on the customers most recent
financial information and other information su,mitted ,y the ,orrower- or otherwise o,tained ,y
the %roup.
The ma3imum e3posure to credit ris6 is generally reflected in the carrying amounts of financial
assets on the consolidated statement of financial position. The impact of possi,le netting of assets
and lia,ilities to reduce potential credit e3posure is not significant.
The ma3imum e3posure to credit ris6 from financial assets at the reporting date is as follows?
213
GEL%
212
GEL%
#SSES
an6 ,alances and call deposits /;: /1
&oans to customers ;-:=2 =-/
"ther financial assets
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
The %roup see6s to actively support a diversified and sta,le funding ,ase comprising long@term
and short@term loans from ,an6s and other financial institutions- accompanied ,y diversified
portfolios of highly liquid assets- in order to ,e a,le to respond quic6ly and smoothly to unforeseen
liquidity requirements.
The liquidity management practice includes the following?
pro5ecting cash flows ,y ma5or currencies and considering the level of liquid assets necessary
in relation thereto
maintaining a diverse range of funding sources
managing the concentration and profile of de,ts
maintaining de,t financing plans
maintaining liquidity and funding contingency plans
The following ta,les show the undiscounted cash flows on financial assets- lia,ilities and credit@
related commitments on the ,asis of their earliest possi,le contractual maturity. The total gross
inflow and outflow disclosed in the ta,les is the contractual- undiscounted cash flow on the
financial lia,ility.
The maturity analysis for financial assets and lia,ilities as at / 0ecem,er 12/ is as follows?
GEL%
Demand and
less than
1 month
From
1 to 3
months
From
3 to ,
months
From
, to 12
months
More
than
1 year
otal
gross
amo$nt
o$tflo>
Carrying
amo$nt
'on@deriatie liabilities
&oans and ,orrowings
9< /-2=; >1 -/9< /-;;> =-:1> 9-91:
0ividends paya,le
;1 @ @ @ @ ;1 ;1
"ther financial lia,ilities
// @ @ @ @ // //
otal liabilities
0+* 1(0* )32 3(1,+ 1(**) 0(*22 0(10
The maturity analysis for financial assets and lia,ilities as at / 0ecem,er 12/1 is as follows?
:>
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
GEL%
Demand and
less than
1 month
From
1 to 3
months
From
3 to ,
months
From
, to 12
months
More
than
1 year
otalgross
amo$nt
o$tflo>
Carrying
amo$nt
'on@deriatie liabilities
&oans and ,orrowings /99 :> /=1 1-=22 ;= :-11: -;
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
GEL%
Demand and
less than1 month
From
1 to 3months
From
3 to ,months
From
, to 12months
More
than1 year 'omat$rity otal
"ther assets :2; @ @ @ @ 9/: /-211
otal assets 2(3 *- *2, 2(12+ 3(-*- 2(330 11()12
'on@deriatie liabilities
&oans and ,orrowings 1;; >2 =:: 1->:< /-=/= @ 9-91:
0ividends paya,le ;1 @ @ @ @ @ ;1
Income ta3 paya,le 9: @ @ @ @ @ 9:
"ther lia,ilities /2; @ @ @ @ @ /2;
otal liabilities *-2 )3 0-- 2()-+ 1(010 @ 0(10*
'et "osition 1(-+* 92 /-;=2 1-;;= @ =-/
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
GEL%
Demand Hnd
less than1 month
From
1 to 3months
From
3 to ,months
From
, to 12months More than1 year 'omat$rity otal
Investment property
@ @ @ @ @ >; >;
8roperty- equipment and
intangi,le assets
@ @ @ @ @ 9=> 9=>
0eferred ta3 asset
@ @ @ @ @
"ther assets
99 // 19 9 @
otal assets
)) 011 )*, 1(*0, 2(**0 1(,2 )(0
'on@deriatie liabilities
&oans and ,orrowings
/1/ 1:= ;< 1-9/: =>/ @ -;
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
213
GEL%
212
GEL%otal liabilities 0(10* -(2--
&ess cash and cash equivalents (::
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
21 Contingencies
(a,+ !ns$rance
The insurance industry in %eorgia is in a developing state and many forms of insurance protection
common in other parts of the world are not yet generally availa,le. The %roup does not have full
coverage for its premises and equipment- ,usiness interruption- or third party lia,ility in respect of
property or environmental damage arising from accidents on its property or relating to operations.
Fntil the %roup o,tains adequate insurance coverage- there is a ris6 that the loss or destruction of
certain assets could have a material adverse effect on operations and financial position.
(ac+ Litigation
In the ordinary course of ,usiness- the %roup is su,5ect to legal actions and complaints.
!anagement ,elieves that the ultimate lia,ility- if any- arising from such actions or complaints will
not have a material adverse effect on the financial condition or the results of future operations.
(ad+ a/ation contingencies
The ta3ation system in %eorgia continues to evolve and is characterised ,y frequent changes in
legislation- official pronouncements and court decisions- which are sometimes contradictory andsu,5ect to varying interpretation ,y different ta3 authorities. Ta3es are su,5ect to review and
investigation ,y a num,er of authorities who have the authority to impose severe fines- penalties
and interest charges.
These circumstances may create ta3 ris6s in %eorgia that are su,stantially more significant than in
other countries. !anagement ,elieves that it has provided adequately for ta3 lia,ilities ,ased on its
interpretations of applica,le %eorgian ta3 legislation- official pronouncements and court decisions.
Eowever- the interpretations of the relevant authorities could differ and the effect on the financial
position- if the authorities were successful in enforcing their interpretations- could ,e significant.
22 &elated "arty transactions
(ae+ Control relationshi"s
The party with ultimate control over the %roup is &aerti Du,adalashvili.
(af+ ransactions >ith the members of the S$"erisory oard and the Management
oard
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
Total remuneration included in personnel e3penses for the years ended / 0ecem,er 12/ and
12/1 is as follows?
213
GEL%
212
GEL%
$mployee compensation 33- 20)
These amounts include cash and non@cash ,enefits in respect of the mem,ers of the oard of
0irectors and the !anagement oard.
(ag+ ransactions >ith other related "arties
"ther related parties include close family mem,ers of 6ey management personnel.
The outstanding ,alances and the related average interest rates as at / 0ecem,er 12/ and 12/1
with other related parties are as follows.
213
GEL%
#erage
interest rate( B
212
GEL%
#erage interest
rate( B
Consolidated statement of financial
"osition
&oans and ,orrowings 1< /;
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Microfinance Organization Easycred Georgia LLC
+otes to, and forming part of, the consolidated financial statements for the year ended "# $ecember %"
!anagement ,elieves that estimated fair value of financial assets and lia,ilities appro3imates their
carrying amounts. The principles for determining fair values is disclosed in note d(v+.
The estimated fair values of all financial assets and lia,ilities are calculated using discounted cash
flow techniques ,ased on estimated future cash flows and discount rates for similar instruments at
the reporting date.
The following assumptions are used ,y management to estimate the fair values of financial
instruments?
discount rates of 19@1> are used for discounting future cash flows from loans to customers
(12/1? @
top related