View
218
Download
0
Category
Preview:
Citation preview
7/29/2019 EasyCred 2011 Financial statement 2011
1/36
Microfinance Organization
Easycred Georgia LLC
Consolidated Financial Statements
for the year ended 31 December 2011
7/29/2019 EasyCred 2011 Financial statement 2011
2/36
Microfinance Organization Easycred Georgia LLC
Contents
Independent Auditors Report ....................................................................................................... 3Consolidated statement of comprehensive income ........................................................................ 4
Consolidated statement of financial position ................................................................................. 5
Consolidated statement of cash flows ............................................................................................ 6
Consolidated statement of changes in equity ................................................................................. 7
Notes to the consolidated financial statements .............................................................................. 8
7/29/2019 EasyCred 2011 Financial statement 2011
3/36
7/29/2019 EasyCred 2011 Financial statement 2011
4/36
7/29/2019 EasyCred 2011 Financial statement 2011
5/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Financial Position as at 31 December 2011
The consolidated statement of financial position is to be read in conjunction with the notes to, and forming part of, the
financial statements.
5
Notes
2011
GEL000
2010
GEL000
ASSETS
Cash and cash equivalents 10 140 165
Loans to customers 11 6,119 4,676
Property, equipment and intangible assets 12 564 527
Deferred tax asset 9 17 17
Other assets 13 306 145
Total assets 7,146 5,530
LIABILITIES
Loans and borrowings 14 2,912 1,932
Income tax payable 3 144
Other liabilities 15 78 43
Total liabilities 2,993 2,119
EQUITY 16
Charter capital 3,213 2,313
Retained earnings 940 1,098
Total equity 4,153 3,411
Total liabilities and equity 7,146 5,530
7/29/2019 EasyCred 2011 Financial statement 2011
6/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Cash Flows for the year ended 31 December 2011
The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the
financial statements.
6
Notes
2011
GEL000
2010
GEL000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 941 899
Adjustments for:
Impairment (recovery)/losses (30) 141
Net foreign exchange loss/(gain) 128 (103)
Depreciation and amortization 56 47
Loss on disposal of property and equipment 8
Gain on disposal of repossessed assets (13) -
Interest income (2,024) (1,664)
Interest expense 329 207
Fee and commission income (319) (178)
Fee and commission expense 8 10
Income tax expense 180 159
(Increase)/decrease in operating assets
Loans to customers (1,680) (1,799)
Other assets (202) (136)
Increase/(decrease) in operating liabilities
Other liabilities 33 10
Interest and fees and commissions received 2,309 1,737
Interest and fees and commissions paid (332) (217)
Income tax paid (321) (72)
Cash flows used in operations (929) (959)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (95) (26)
Proceeds from sale of property and equipment 14 -
Proceeds from sale of repossessed assets 33
Cash flows used in investing activities (48) (26)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividends (199) -
Proceeds from borrowings 1,376 1,003
Repayment of borrowings (215) -
Cash flows from financing activities 962 1,003
Net (decrease)/increase in cash and cash equivalents (15) 18
Effect of changes in exchange rates on cash and cash equivalents (10) -
Cash and cash equivalents as at the beginning of the year 165 147
Cash and cash equivalents as at the end of the year 35 140 165
7/29/2019 EasyCred 2011 Financial statement 2011
7/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the
financial statements.
7
Charter capital
Retained
earnings Total equity
GEL000 GEL000 GEL000
Balance as at 1 January 2010 2,313 199 2,512
Total comprehensive income
Profit for the year - 899 899
Total comprehensive income for the year - 899 899
Balance as at 31 December 2010 2,313 1,098 3,411
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 paid - (199) (199)
Total transactions with owners 900 (1,099) (199)
Balance as at 31 December 2011 3,213 940 4,153
7/29/2019 EasyCred 2011 Financial statement 2011
8/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
8
1 Background(a) Organisation and operations
Microfinance Organization Easycred Georgia LLC (the Company) and its subsidiaries (the
Group) was established on 21 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 Group helps 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 Group was registered by the National Bank of Georgia on 20 February 2009. The legal
address of the Group is 64 Mitskevich Street, Tbilisi, Georgia.
On 29 November 2011 the Group established a subsidiary, Easycred Capital LLC, an asset
management company with 100% ownership. As at 31 December 2011, Easycred Capital LLC
had no transactions or balances.
The principal subsidiaries of the Group are as follows:
Ownership %
Name Country of incorporation Principal activities 2011 2010
Easycred Capital LLC Georgia Asset management 100% -
Shareholders
The Groups immediate and ultimate parent company is Laponeto Commmercial LLC and the
ultimate controlling party is Elena Papachristodoulou Psintrou.
As at 31 December 2011 and 2010 the Groups shareholders were as follows:
2011
Ownership interest, %
2010
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% 100%
Related party transactions are detailed in note 20.
(b) Business environmentGeorgian business environment
The Groups operations are primarily located in Georgia. Consequently, the Group is exposed to
the economic and financial markets of Georgia which display characteristics of an emerging
market. The conflict between Georgia and the Russian Federation has created additional
uncertainty in the environment. The legal, tax and regulatory frameworks continue development,
but are subject to varying interpretations and frequent changes which together with other legal and
fiscal impediments contribute to the challenges faced by entities operating in the Georgia. The
consolidated financial statements reflect managements assessment of the impact of the Georgianbusiness environment on the operations and the financial position of the Group. The future
business environment may differ from managements assessment.
7/29/2019 EasyCred 2011 Financial statement 2011
9/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
9
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 national currency of Georgia is the Georgian Lari (GEL), which is the Groups functional
currency and the currency in which these consolidated financial statements are presented.
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 of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results could differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimates are revised and in any future periods
affected.
Information about significant areas of estimation uncertainty and critical judgments in applying
accounting policies is described in note 11, loan impairment estimates.
(e) Changes in accounting policies and presentationWith effect from 1 January 2011, the Group changed its accounting policies in the following
areas:
With effect from 1 January 2011, the Group retrospectively applied a revised version of IAS24 (issued in 2009) Related Party Disclosures. This change has not had a significant impact
on the related party disclosures;
With effect from 1 January 2011, the Group retrospectively applied limited amendments toIFRS 7 Financial Instruments: Disclosures issued as part ofImprovements to IFRSs 2010.
These amendments mainly relate to disclosures on collateral and other credit enhancements,
as well as to renegotiated assets that would otherwise be past due or impaired.
7/29/2019 EasyCred 2011 Financial statement 2011
10/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
10
3 Significant accounting policiesThe accounting policies set out below are applied consistently to all periods presented in these
consolidated financial statements, and are applied consistently by the Group, except as explained
in note 2(e), which addresses changes in accounting policies.
(a) Basis of consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the
power, 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 date
that control effectively ceases.
(ii) Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised gains arising from intra-group
transactions, 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 reporting
date 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 the
beginning of the period, adjusted for effective interest and payments during the period, and the
amortised 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 currency are
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 comprise cash balances, call deposits and higly liquid investments with
maturities at initial recognition of three months or less.
(d) Financial instruments(i) Classification
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that 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.
7/29/2019 EasyCred 2011 Financial statement 2011
11/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
11
Loans and borrowings are non-derivative financial liabilities with fixed or determinable payments
that are not quoted in an active market.
(ii) RecognitionFinancial assets and liabilities are recognized in the consolidated statement of financial position
when the Group becomes a party to the contractual provisions of the instrument. All regular way
purchases of financial assets are accounted for at the settlement date.
(iii) MeasurementA financial asset or liability is initially measured at its fair value plus transaction costs that are
directly attributable to the acquisition or issue of the financial asset or liability.
Subsequent to initial recognition, financial assets, comprising loans and receivables, are measured
at amortized cost, using the effective interest method.
All financial liabilities are measured at amortized cost.
(iv) Amortised costThe amortised cost of a financial asset or liability is the amount at which the financial asset or
liability is measured at initial recognition, minus principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between the initial
amount recognised and the maturity amount, minus any reduction for impairment. Premiums and
discounts, including initial transaction costs, are included in the carrying amount of the related
instrument 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 armss length transaction on the measurement date.
When available, the Group measures the fair value of an instrument using quoted prices in an
active market for that instrument. A market is regarded as active if quoted prices are readily and
regularly available and represent actual and regularly occurring market transactions on an arms
length 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 transactions between
knowledgeable, willing parties (if available), reference to the current fair value of other
instruments that are substantially the same, discounted cash flow analyses and option pricing
models. The chosen valuation technique makes maximum use of market inputs, relies as little as
possible on estimates specific to the Group, incorporates all factors that market participants would
consider in setting a price, and is consistent with accepted economic methodologies for pricing
financial instruments. Inputs to valuation techniques reasonably represent market expectations 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 the transaction
price, i.e., the fair value of the consideration given or received, unless the fair value of thatinstrument is evidenced by comparison with other observable current market transactions in the
same instrument (i.e., without modification or repackaging) or based on a valuation technique
7/29/2019 EasyCred 2011 Financial statement 2011
12/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
12
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 initially obtained from a
valuation model is subsequently recognised in profit or loss on an appropriate basis over the lifeof the instrument but not later than when the valuation is supported wholly by observable 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 profit or
loss when the financial asset or liability is derecognized or impaired, and through the amortization
process.
(vii)DerecognitionThe Group derecognises a financial asset when the contractual rights to the cash flows from the
financial 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 in
which the Group neither transfers nor retains substantially all the risks 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 by the Group is recognised as a separate asset
or liability in the consolidated 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 consolidated statement
of financial position when there is a legally enforceable right to set off the recognised amounts
and there is an intention to settle on a net basis, or realise the asset and settle the liability
simultaneously.
(e) Property, equipment and intangible assets(i) Owned assets
Items of property and equipment are stated at cost less accumulated depreciation and impairment
losses.
Where an item of property and equipment comprises major components having different useful
lives, 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 consolidated
statement of financial position.
7/29/2019 EasyCred 2011 Financial statement 2011
13/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
13
(iii) DepreciationDepreciation 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 of acquisition. Land is not depreciated.The estimated useful lives are as follows:
- buildings 20 years- intangible assets 5 years- other 3 years
(f) Repossessed assetsThe Group recognises repossessed assets in the statement of financial position when it has the full
and final settlement rights to the collateral, and when it is entitled to retain any excess 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 measuredbased on the value of the defaulted loan, including expenditure incurred in the process of
collateral foreclosure. Fair value less costs to sell is the estimated selling price of the collateral in
the ordinary course of business, less the related selling costs. Subsequent to initial recognition,
repossessed assets are reviewed for held for sale classification criteria and are reclassified
accordingly when the criteria are met.
Repossessed assets are included in other assets.
(g) Impairment(i) Financial assets carried 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 a regular
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 the initial
recognition of the loan or receivable and that event (or events) has had an impact on the estimated
future cash flows of the loan that can be reliably estimated.
Objective evidence that financial assets are impaired can include default or delinquency by a
borrower, breach of loan covenants or conditions, restructuring of a loan or advance on terms that
the Group would not otherwise consider, indications that a borrower or issuer will enter
bankruptcy, 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 in
the group.
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 and
receivables that are not individually significant. If the Group determines that no objective
evidence of impairment exists for an individually assessed loan or receivable, whether significant
or not, it includes the loan in a group of loans and receivables with similar credit risk
characteristics 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 be
recognised are not included in a collective assessment of impairment.
7/29/2019 EasyCred 2011 Financial statement 2011
14/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
14
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 or
receivable and the present value of estimated future cash flows including amounts recoverable
from guarantees and collateral discounted at the loan or receivables original effective interestrate. Contractual cash flows and historical loss experience adjusted on the basis of relevant
observable data that reflect current economic conditions provide the basis for estimating expected
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 may be the
case when a borrower is in financial difficulties and there is little available historical data relating
to similar borrowers. In such cases, the Group uses its experience and judgement to estimate the
amount of any impairment loss.
All impairment losses in respect of loans and receivables are recognized in profit or loss and are
only reversed if a subsequent increase in recoverable amount can be related objectively to anevent 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) when
management determines that the loans are uncollectible and when all necessary steps to collect the
loan are completed.
(ii) Non financial assetsOther non financial assets, other than deferred taxes, are assessed at each reporting date for any
indications 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 cash
flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate cash inflows largely independent of those from other assets, the recoverable
amount is determined for the cash-generating unit to which the asset belongs. An impairment loss
is recognised when the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount.
All impairment losses in respect of non financial assets are recognized in profit or loss and
reversed only if there has been a change in the estimates used to determine the recoverable
amount. Any impairment loss reversed is only reversed to the extent that the assets carrying
amount does not exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, if no impairment loss had been recognised.
(h) Charter capitalCharter capital is classified as equity.
Dividends are reflected as an appropriation of retained earnings in the period when they are
declared.
7/29/2019 EasyCred 2011 Financial statement 2011
15/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
15
(i) TaxationIncome tax comprises current and deferred tax. Current tax expense is the expected tax payable on
the taxable income for the year, using tax rates enacted or substantially enacted at the reportingdate, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of
assets 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 or
liabilities in a transaction that is not a business combination and that affect neither accounting nor
taxable profit. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by 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 beutilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the
same taxable entity, or on different tax entities, but they intend to settle curent tax laibilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.
(j) 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 the
overall 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 the effective
interest method.
Other fees, commissions and other income and expense items are recognised in profit or loss
when the corresponding service is provided.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease.
(k) New standards and interpretations not yet adoptedA number of new standards, amendments to standards and interpretations are not yet effective as
at 31 December 2011, and are not applied in preparing these consolidated financial statements. Of
these pronouncements, potentially the following will have an impact on the financial position and
performance. The Group plans to adopt these pronouncements when they become effective.
IFRS 9 Financial Instruments will be effective for annual periods beginning on or after 1January 2015. The new standard is to be issued in phases and is intended ultimately to replace
International Financial Reporting Standard IAS 39 Financial Instruments:Recognition and
Measurement. The first phase of IFRS 9 was issued in November 2009 and relates to the
classification and measurement of financial assets. The second phase regarding classification
and measurement of financial liabilities was published in October 2010. The remaining parts
7/29/2019 EasyCred 2011 Financial statement 2011
16/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
16
of the standard are expected to be issued during 2012. The Group recognises that the new
standard introduces many changes to the accounting for financial instruments and is likely to
have a significant impact on Groups consolidated financial statements. The impact of these
changes will be analysed during the course of the project as further phases of the standard areissued. The Group does not intend to adopt this standard early.
IFRS 13 Fair Value Measurementwill be effective for annual periods beginning on or after1 January 2013. The new standard replaces the fair value measurement guidance contained in
individual IFRSs with a single source of fair value measurement guidance. It provides a
revised definition of fair value, establishes a framework for measuring fair value and sets out
disclosure requirements for fair value measurements. IFRS 13 does not introduce new
requirements to measure assets or liabilities at fair value, nor does it eliminate the
practicability exceptions to fair value measurement that currently exist in certain standards.
The standard is applied prospectively with early adoption permitted. Comparative disclosure
information is not required for periods before the date of initial application.
Various Improvements 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 2012. The Group has not yet
analysed the likely impact of the improvements on its financial position or performance.
4 Net interest income2011
GEL000
2010
GEL000
Interest income
Loans to customers 2,024 1,660
Placements with banks - 4
Total interest income 2,024 1,664
Interest expense loans and borrowings (329) (207)
Net interest income 1,695 1,457
5 Fee and commission income2011
GEL0002010
GEL000
Settlement fees 316 177
Other 3 1
319 178
7/29/2019 EasyCred 2011 Financial statement 2011
17/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
17
6 Impairment (recovery)/losses2011
GEL000
2010
GEL000
Loans to customers (30) 141
(30) 141
7 Personnel expenses2011
GEL000
2010
GEL000
Employee compensation 512 351
8 Other general administrative expenses2011
GEL000
2010
GEL000
Professional services 82 51
Depreciation and amortization 56 47
Rent 27 2
Communications and information services 23 15
Security 7 13
Advertising and marketing 6 5
Taxes other than income tax 5 -
Office supplies 3 4
Other 71 41
280 178
7/29/2019 EasyCred 2011 Financial statement 2011
18/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
18
9 Income tax expense2011
GEL000
2010
GEL000
Current year expense
Current year 180 181
181
Deferred tax expense
Origination and reversal of temporary differences - (22)
Total income tax expense 180 159
In 2011, the applicable tax rate for current and deferred tax is 15% (2010: 15%).
Reconciliation of effective tax rate:
2011
GEL000 %
2010
GEL000 %
Profit before income tax 1,121 100% 1,058 100%
Income tax at the applicable tax rate 168 15% 159 15%
Non-deductible expenses 12 1% - -
180 16% 159 15%
(a) Deferred tax asset and liabilityTemporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes give rise to net deferred tax assets
and liabilitiesas at 31 December 2011 and 2010.
Movements in temporary differences during the years ended 31 December 2011 and 31 December
2010 are presented as follows:
GEL000
Balance
1 January 2011
Recognized
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
GEL000
Balance
1 January 2010
Recognized
in profit or loss
Balance
31 December 2010
Loans to customers - 21 21
Property, equipment and intangible assets (5) 1 (4)
(5) 22 17
7/29/2019 EasyCred 2011 Financial statement 2011
19/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
19
10 Cash and cash equivalentsCash and cash equivalents as at 31 December as shown in the statement of cash flows are
composed of the following items:
2011
GEL000
2010
GEL000
Petty cash 128 148
Bank balances
- rated B+ 3 15
- rated BB- 7 -
- not rated 2 2
Total cash and cash equivalents 140 165
The above ratings are per Fitch ratings.
None of cash and cash equivalents are impaired or past due.
The Groups exposure to interest rate risk and a sensitivity analysis for financial assets and
liabilities are disclosed in note 17.
11 Loans to customers2011
GEL000
2010
GEL000
Commercial loans loans to small businesses 353 600
Loans to individuals
Loans collateralized by real estate 4,433 3,725
Consumer loans 1,388 303
Auto loans 56 189
Total loans to individuals 5,877 4,217
Gross loans to customers 6,230 4,817
Impairment allowance (111) (141)
Net loans to customers 6,119 4,676
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
Loans to individuals
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
7/29/2019 EasyCred 2011 Financial statement 2011
20/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
20
Movements in the loan impairment allowance by classes of loans to customers for the year ended
31 December 2010 are as follows:
Commercial loansGEL000
Loans to individualsGEL000
TotalGEL000
Balance at the beginning of the year - - -
Net charge 20 121 141
Balance at the end of the year 20 121 141
(a) Credit quality of loans to customersThe following table provides information on the credit quality of loans to customers as at
31 December 2011:
Gross loans
Impairment
allowance Net loans
Impairmentallowance togross loans,
GEL000 GEL000 GEL000 %
Commercial loans
Loans without individual signs of impairment 255 - 255 -
Impaired loans:
-overdue less than 90 days 32 - 32 -
- overdue more than 90 days and less than 1
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 to individuals
Loans collateralized by real estate
- not overdue 4,076 - 4,076 -
- overdue less than 30 days 48 (2) 46 4.2%
- 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%
7/29/2019 EasyCred 2011 Financial statement 2011
21/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
21
Gross loans
Impairment
allowance Net loans
Impairment
allowance to
gross loans,
GEL000 GEL000 GEL000 %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%
- overdue more than 360 days 3 (1) 2 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%
The following table provides information on the credit quality of the loans to customers as at
31 December 2010:
Gross loans
Impairment
allowance Net loans
Impairment
allowance to
gross loans,
GEL000 GEL000 GEL000 %
Commercial loans
Loans without individual signs of impairment 432 - 432 -
Impaired loans:
- overdue less than 90 days 101 - 101 -
- overdue more than 90 days and less than 1
year 67 (20) 47
29.9%
Total impaired loans 168 (20) 148 11.9%
Total commercial loans 600 (20) 580 3.3%
Loans to individuals
Loans collateralized by real estate
- not overdue 3,128 - 3,128 -
- overdue less than 30 days 96 - 96 -
- overdue 30-89 days 176 (3) 173 1.7%
- overdue 90-179 days 68 (7) 61 10.3%
- overdue 180-360 days 257 (108) 149 42.0%
Total loans collateralized by real estate 3,725 (118) 3,607 3.2%
Consumer loans
- not overdue 241 - 241 -
- overdue less than 30 days 25 - 25 -
- overdue 30-89 days 37 (1) 36 2.7%
Total consumer loans 303 (1) 302 0.3%
7/29/2019 EasyCred 2011 Financial statement 2011
22/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
22
Gross loans
Impairment
allowance Net loans
Impairment
allowance to
gross loans,
GEL000 GEL000 GEL000 %Auto loans
- not overdue 143 - 143 -
- overdue less than 30 days 24 - 24 -
- overdue 30-89 days 18 - 18 -
- overdue 180-360 days 4 (2) 2 50.0%
Total auto loans 189 (2) 187 1.1%
Total loans to individuals 4,217 (121) 4,096 2.9%
Total loans to customers 4,817 (141) 4,676 2.9%
(b)
Key assumptions and judgments for estimating the loan impairment
(i) Commercial loansLoan impairment results from one or more events that occurred after the initial recognition of the
loan and that have an impact on the estimated future cash flows associated with the loan, and that
can be reliably estimated. Loans without individual signs of impairment do not have objective
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 future
cash flows for impaired loans and based on its past loss experience for portfolios of loans for
which no indications of impairment has been identified.
In determining the impairment allowance for commercial loans, management makes the following
key assumptions:
no historical loss rate for loans without individual signs of impairment based on the Groupspast loss experience;
a delay of 6 to 12 months in obtaining proceeds from the foreclosure of collateral for loanswith individual 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 minus one percent, the impairment
allowance on loans to corporate customers as at 31 December 2011 would be GEL 3 thousand
higher (2010: GEL 6 thousand).
7/29/2019 EasyCred 2011 Financial statement 2011
23/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
23
(ii) Loans to individualsThe Group estimates loan impairment for loans to individuals based on its past historical loss
experience on each type of loan. The significant assumptions used by management in determiningthe impairment losses for loans to individuals 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 25%-50% probability ofloss.
The significant assumptions used in determining the impairment losses for loans to individuals
include the following loan loss rates:
- Loans collateralized by real estate 1.4%- Consumer loans 1.3%- Auto loans 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 plus minus three percent, the
impairment allowance on loans to individuals as at 31 December 2011 would be GEL 174
thousand lower/higher (2010: GEL 123 thousand).
(c) Analysis of collateralThe following table provides information on collateral securing loans to corporate customers, netof impairment, by types of collateral as at 31 December 2011:
2011 2010
Loans to customers, net
GEL000 % of portfolio
Loans to customers,
net
GEL000 % of portfolio
Real estate 4,534 74% 4,117 88%
Gold and jewelry 1,205 20% 203 4%
Motor vehicles 50 1% 219 5%
No collateral 330 5% 137 3%
6,119 100% 4,676 100%
Commercial loans that are past due or impaired
Impaired or overdue commercial loans are secured by collateral with a fair value of GEL 72
thousand (2010: GEL 148 thousand), excluding the effect of overcollateralisation.
Commercial loans that are neither past due nor impaired
For the remaining loans to corporate customers with a net carrying amount of GEL 255 thousand
(2010: GEL 432 thousand), which are neither past due nor impaired, the fair value of collateral
was estimated at the inception of the loans and was not adjusted for subsequent changes to the
reporting date. The recoverability of these loans is primarily dependent on the creditworthiness of
the borrowers rather than the value of collateral, and the current value of the collateral does not
impact the impairment assessment.
7/29/2019 EasyCred 2011 Financial statement 2011
24/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
24
Collateral obtained
During the year ended 31 December 2011, the Group obtained assets with the carrying amount of
GEL 84 thousand by taking control of collateral securing commercial loans (2010: GEL 84thousand). The Groups policy is to dispose these assets as soon as it is practicable.
(i) Loans to individualsMortgage loans are secured by the underlying housing real estate. Auto loans are secured by the
underlying cars. Other consumer loans are secured by different types of collateral.
Loans collateralized by real estate
For loans collateralized by real estate with a net carrying amount of GEL 4,373 thousand
(2010: GEL 3,607 thousand) management believes that the fair value of collateral is at least equal
to the carrying amount of individual loans at the reporting date.
The Group updates the appraised values of collateral at inception of the loans to the current
values considering the approximate changes in property values. The Group obtains specific
individual valuation of collateral in case there are indications of impairment.
Auto loans
For auto loans with a net carrying amount of GEL 49 thousand (2010: GEL 187 thousand)
management believes that the fair value of collateral is at least equal to the carrying amount of
individual loans at the reporting date.
Consumer loans
Included in consumer loans are loans with a net carrying amount of GEL 930 thousand (2010:
GEL 133 thousand), which are secured by collateral with a fair value of less than the net carrying
amount of the individual loans. The fair value of collateral for these loans amounts to GEL 910
thousand (2010: GEL 128 thousand).
For consumer loans with a net carrying amount of GEL 111 thousand (2010: GEL 40 thousand)
management believes that the fair value of collateral is at least equal to the carrying amount of
individual loans at the reporting date.
For the remaining consumer loans with a net carrying amount of GEL 329 thousand (2010: GEL
129 thousand), which are neither past due nor impaired, there is no collateral or it is impracticableto determine the fair value of the collateral.
Collateral obtained
During the year ended 31 December 2011, the Group obtained assets with the carrying amount of
GEL 170 thousand by taking control of collateral securing commercial loans (2010: nil). The
Groups policy is to dispose these assets as soon as it is practicable.
7/29/2019 EasyCred 2011 Financial statement 2011
25/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
25
(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:2011
GEL000
2010
GEL000
Loans to individuals 5,792 4,096
Trade 100 417
Service 220 125
Agriculture 7 7
Manufacturing - 13
Other - 18
6,119 4,676
(e) Significant credit exposuresAs at 31 December 2011 and 2010 no individual loan balances exceed 10% of equity.
(f) Loan maturitiesThe maturity of the loan portfolio is presented in note 17(d), which shows the remaining period
from the reporting date to the contractual maturity of the loans.
12 Property, equipment and intangible assetsGEL000 Land and buildings Other Total
Cost
Balance at 1 January 2011 460 140 600
Additions 58 57 115
Disposals - (29) (29)
Balance at 31 December 2011 518 168 686
Depreciation
Balance at 1 January 2011 21 52 73
Depreciation for the year 12 44 56
Disposals - (7) (7)
Balance at 31 December 2011 33 89 122
Carrying amount
At 31 December 2011 485 79 564
Land and buildings with the carrying amount of GEL 427 thousand are pledged under loans and
borrowings (see note 14).
7/29/2019 EasyCred 2011 Financial statement 2011
26/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
26
GEL000 Land and buildings Other Total
Cost
Balance at 1 January 2010 460 114 574
Additions - 26 26
At 31 December 2010 460 140 600
Depreciation
Balance at 1 January 2010 9 17 26
Depreciation for the year 12 35 47
Balance at 31 December 2010 21 52 73
Carrying amounts
At 31 December 2010 439 88 527
At 1 January 2010 451 97 548
13 Other assets2011
GEL000
2010
GEL000
Accounts receivable 37 9
Total other financial assets 37 9
Repossessed assets 233 84
Prepayments 26 46
Prepaid other taxes 189 4Materials and supplies 2 2
Total other non-financial assets 450 136
Total other assets 487 145
14 Loans and borrowingsThis note provides information about the contractual terms of interest-bearing loans and
borrowings, which are measured at amortized cost. For more information about exposure to
interest rate, foreign currency and liquidity risk, see note 17.
2011
GEL000
2010
GEL000
Non-current liabilities
Secured bank loans 608 -Unsecured loans from individuals 16 35
624 35
Current liabilities
Secured bank loans 1,910 1,818
Unsecured loans from individuals 378 79
2,288 1,897
2,912 1,932
7/29/2019 EasyCred 2011 Financial statement 2011
27/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
27
(a) Terms and debt repayment scheduleTerms and conditions of outstanding loans were as follows:
31 December 2011 31 December 2010
GEL000 Currency
Nominal
interest
rate
Year of
maturity
Face
value
Carrying
amount
Face
value
Carrying
amount
Secured bank loan USD 12% 2012 988 988 1,048 1,048
Secured bank loan USD 11% 2012 104 104 - -
Secured bank loan USD 12% 2013 134 134 - -
Secured bank loan USD 16% 2014 235 235 - -
Secured bank loan USD 16% 2012 124 124 - -
Secured bank loan EUR 12% 2012 562 562 770 770
Secured bank loan EUR 10% 2012 132 132 - -
Secured bank loan EUR 12% 2013 239 239 - -
Unsecured loans from
individuals USD 12%-24% 2012 303 303 35 35
Unsecured loans from
individuals USD 18% 2014 16 16 - -
Unsecured loans from
individuals EUR 14%-18% 2012 75 75 - -
Unsecured loans from
individuals USD 8% 2011 - - 71 71
Unsecured loans from
individuals GEL 8% 2011 - - 8 8
2,912 2,912 1,932 1,932
Bank loans are secured by the following:
Land and buildings with the carrying amount of GEL 427 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.
15 Other liabilities2011
GEL000
2010
GEL000
Accounts payable 5 2
Total other financial liabilities 5 2
Prepayments received 63 41
Other taxes payable 10 -
Total other non-financial liabilities 73 41
Total other liabilities 78 43
7/29/2019 EasyCred 2011 Financial statement 2011
28/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
28
16 Equity(a)
Charter capital
Charter capital represents the nominal amount of capital in the founding documentation of the
Group.
(b) DividendsIn accordance with Georgian legislation the Groups distributable reserves are limited to the
balance of retained earnings as recorded in the Groups statutory consolidated financial statements
prepared in accordance with IFRSs. As at 31 December 2011 the Group had retained earnings of
GEL 940 thousand (2010: GEL 1,098 thousand).
On 23 February 2011, the Group declared dividends of GEL 199 thousand. The dividends werepaid to the shareholders during 2011.
17 Risk managementManagement of risk is fundamental to the microfinance business and is an essential element of the
Groups operations. The major risks faced by the Group are those related to market risk, credit
risk 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 adherence
to limits. Risk management policies and procedures are reviewed regularly to reflect changes in
market conditions, products and services offered and emerging best practice.
The Supervisory Board has overall responsibility for the oversight of the risk management
framework, overseeing the management of key risks and reviewing its risk management policies
and procedures as well as approving significantly large exposures.
Management is responsible for monitoring and implementation of risk mitigation measures and
making sure that the Group operates within the established risk parameters. The Chief Executive
Officer (CEO) is responsible for the overall risk management and compliance functions, ensuringthe implementation of common principles and methods for identifying, measuring, managing and
reporting both financial and non-financial risks. The CEO reports directly to the Supervisory
Board.
(b) Market riskMarket risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices. Market risk comprises currency risk, interest rate
risk and other price risks. Market risk arises from open positions in interest rate, currency and
equity financial instruments, which are exposed to general and specific market movements and
changes in the level of volatility of market prices.
7/29/2019 EasyCred 2011 Financial statement 2011
29/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
29
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, whilst optimizing the return on risk.
Overall authority for market risk is vested with management. Market risks are approved bymanagement.
(i) Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group is exposed to the effects of
fluctuations 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 create
losses in the event that unexpected movements occur.
Interest rate risk arises when the actual or forecasted assets of a given maturity period are either
greater or less than the actual or forecasted liabilities in that maturity period.
Management does not have a formal policy of determining how much of the Groups exposure
should be to fixed or variable rates. However, at the time of raising new loans or borrowings
management uses its judgment to decide whether it believes that a fixed or variable rate would be
more favorable to the Group over the expected period until maturity.
Profile
At the reporting date the interest rate profile of interest-bearing financial instruments was:
2011
GEL000
2010
GEL000Fixed rate instruments
Financial assets 6,131 4,676
Financial liabilities (2,912) (1,932)
3,219 2,744
Average interest rates
The table below displays average effective interest rates for interest bearing assets and liabilities
as at 31 December 2011 and 2010. These interest rates are an approximation of the yields to
maturity of these assets and liabilities.
2011Average effective interest rate, %
2010Average effective interest rate, %
GEL USD EUR GEL USD EUR
Interest bearing assets
Loans to customers 31% 34% 34% 30% 34% 31%
Interest bearing liabilities
Loans and borrowings - 13% 12% 8% 12% 13%
The sensitivity of the Groups interest-bearing assets and liabilities to changes in interest rate
repricing risk was not significant as at 31 December 2011 and 31 December 2010.
7/29/2019 EasyCred 2011 Financial statement 2011
30/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
30
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore a change in interest rates at the reporting date would not affect profit andloss.
(ii) Currency riskThe 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 will
fluctuate because of changes in foreign currency exchange rates. Foreign currency risk arises
when the actual or forecasted assets in a foreign currency are either greater or less than the
liabilities in that currency. The Group does not hedge its exposure to currency risk.
The following table shows the foreign currency exposure structure of financial assets andliabilities as at 31 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 3 1,657 1,252 2,912
Other financial liabilities 5 - - 5
Total liabilities 8 1,657 1,252 2,917
Net position 49 4,120 (790) 3,379
The following table shows the currency structure of financial assets and liabilities as at
31 December 2010:
GEL USD EUR Total
GEL000 GEL000 GEL000 GEL000
ASSETS
Cash and cash equivalents 16 87 62 165
Loans to customers 8 4,331 337 4,676
Other financial assets 2 7 - 9
Total assets 26 4,425 399 4,850
LIABILITIES
Loans and borrowings 8 1,154 770 1,932
Other financial liabilities 2 - - 2
Total liabilities 10 1,154 770 1,934
Net position 16 3,271 (371) 2,916
7/29/2019 EasyCred 2011 Financial statement 2011
31/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
31
A strengthening of the GEL, as indicated below, against the following currencies at 31 December
2011 and 2010 would have increased (decreased) equity and profit or loss by the amounts shown
below. This analysis is on net of tax basis and is based on foreign currency exchange rate
variances that the Group considered to be reasonably possible at the end of the reporting period.The analysis assumes that all other variables, in particular interest rates, remain constant.
2011 2010
Profit or loss
GEL000
Profit or loss
GEL000
10% appreciation of USD against GEL 350 278
10% appreciation of EUR against GEL (67) (32)
A weakening of the GEL against the above currencies at 31 December 2011 and 2010 would have
had the equal but opposite effect on the above currencies to the amounts shown above, on the
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 financial
instrument 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 the
establishment of a Credit Committee, which actively monitors credit risk. The credit policy is
reviewed 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 are
based on a structured analysis focusing on the customers business and financial performance. The
Credit Committee reviews the loan credit application on the basis of submission by the loan
officers. 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 most
recent financial information and other information submitted by the borrower, or otherwise
obtained by the Group.
The maximum exposure to credit risk is generally reflected in the carrying amounts of financial
assets on the consolidated statement of financial position. The impact of possible netting of assets
and 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:
2011
GEL000
2010
GEL000
ASSETS
Loans to customers 6,119 4,676
Bank balances 12 17
Other financial assets 37 9
Total maximum exposure 6,168 4,702
7/29/2019 EasyCred 2011 Financial statement 2011
32/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
32
For the analysis of 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 associated
with its financial liabilities that are settled by delivering cash or another financial asset. Liquidity
risk exists when the maturities of assets and liabilities do not match. The matching and or
controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental
to liquidity management. It is unusual for financial institutions ever to be completely matched
since business transacted is often of an uncertain term and of different types. An unmatched
position potentially enhances profitability, but can also increase the risk of losses.
The Group maintains liquidity management with the objective of ensuring that funds will be
available at all times to honor all cash flow obligations as they become due. The liquidity policy is
reviewed 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 diversified
portfolios of highly liquid assets, in order to be able to respond quickly and smoothly to
unforeseen 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 liabilities on the basis of their earliest
possible contractual maturity. The total gross outflow disclosed in the tables is the contractual,
undiscounted cash flow on the financial liability.
The liquidity analysis for financial liabilities as at 31 December 2011 is as follows:
GEL000
Demand
and less
than1 month
From
1 to 3months
From
3 to 6months
From
6 to 12months
More
than1 year
Total
gross
amountoutflow
Carrying
amount
Non-derivative liabilities
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
7/29/2019 EasyCred 2011 Financial statement 2011
33/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
33
The liquidity analysis for financial liabilities as at 31 December 2010 is as follows:
GEL000
Demand
and less
than1 month
From
1 to 3months
From
3 to 6months
From
6 to 12months
More
than1 year
Total
gross
amountoutflow
Carrying
amount
Non-derivative liabilities
Loans and borrowings 71 57 58 1,898 39 2,123 1,932
Other financial liabilities 2 - - - - 2 2
Total liabilities 73 57 58 1,898 39 2,125 1,934
The table below shows an analysis, by expected maturities, of the amounts recognised in the
consolidated statement of financial position as at 31 December 2011:
GEL000
Demandand less
than1 month
From
1 to 3months
From 3 to
6 months
From
6 to 12months
More than
1 year
No
maturity Total
Non-derivative assets
Cash and cash equivalents 140 - - - - - 140
Loans to customers 526 534 834 2,142 2,083 - 6,119
Property, equipment and
intangible assets - - - - - 564 564
Deferred tax asset - - - - - 17 17
Other assets 65 8 - 233 - - 306
Total assets 731 542 834 2,375 2,083 581 7,146
Non-derivative liabilities
Loans and borrowings 818 27 1,050 393 624 - 2,912
Income tax payable 3 - - - - 3
Other liabilities 72 6 - - - - 78
Total liabilities 893 33 1,050 393 624 - 2,993
Net position (162) 509 (216) 1,982 1,459 581 4,153
The table below shows an analysis, by expected maturities, of the amounts recognised in the
consolidated statement of financial position as at 31 December 2010:
GEL000
Demandand less
than1 month
From
1 to 3months
From
3 to 6months
From
6 to 12months
More than
1 year
No
maturity Total
Non-derivative assets
Cash and cash equivalents 165 - - - - - 165
Loans to customers 378 509 771 1,543 1,475 - 4,676
Property, equipment and
intangible assets - - - - - 527 527
Deferred tax asset - - - - - 17 17
Other assets 61 - - - - 84 145
Total assets 604 509 771 1,543 1,475 628 5,530
7/29/2019 EasyCred 2011 Financial statement 2011
34/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
34
GEL000
Demand
and less
than1 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 liabilities
Loans and borrowings 71 - - 1,826 35 - 1,932
Income tax payable - 144 - - - - 144
Other liabilities 43 - - - - - 43
Total liabilities 114 144 - 1,826 35 - 2,119
Net position 490 365 771 (283) 1,440 628 3,411
(e) Fair values versus carrying amountsManagement believes that the fair value of financial assets and liabilities approximates theircarrying amounts. The basis for determining fair values is disclosed in note 3(d).
18 Capital managementThe Groups policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. Capital consists of charter
capital and retained earnings.
The debt to capital ratio at the end of the reporting period is as follows:
2011
GEL000
2010
GEL000
Total liabilities 2,993 2,119
Less cash and cash equivalents (140) (165)
Net debt 2,853 1,954
Total equity 4,153 3,411
Debt to capital ratio 69% 57%
There were no changes in the Groups approach to capital management during the year.
19 Contingencies(a) Insurance
The Group does not have full coverage for its premises and equipment, business interruption, or
third party liability in respect of property or environmental damage arising from accidents on its
property or relating to operations. Until the Group obtains adequate insurance coverage, there is a
risk that the loss or destruction of certain assets could have a material adverse effect on operations
and financial position.
7/29/2019 EasyCred 2011 Financial statement 2011
35/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
35
(b) Taxation contingenciesThe taxation system in Georgia continues to evolve and is characterised by frequent changes in
legislation, official pronouncements and court decisions, which are sometimes contradictory andsubject to varying interpretation by different tax authorities. In the event of a breach of tax
legislation, no liabilities for additional taxes, fines or penalties may be imposed by the tax
authorities after six years have passed since the end of the year in which the breach occurred.
These circumstances may create tax risks in Georgia that are substantially more significant than in
other countries. Management believes that it has provided adequately for tax liabilities based on
its interpretations of applicable Georgian tax legislation, official pronouncements and court
decisions. However, 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 be
significant.
20 Related party transactions(a) Control relationships
The Groups immediate and ultimate parent company is Laponeto Commercial LLC. The party
with ultimate control over the Group is Elena Papachristodoulou Psintrou.
No publicly available financial statements are produced by the Groups parent company.
(b) Transactions with the Management BoardTotal remuneration included in personnel expenses for the years ended 31 December 2011 and
2010 is as follows:
2011
GEL000
2010
GEL000
Employee compensation 250 191
These amounts include non-cash benefits in respect of the members of the Board of Directors and
the Management Board.
The outstanding balances and average interest rates as at 31 December 2011 and 2010 fortransactions with the members of the Management Board are as follows:
2011
GEL000
Average
interest rate,%
2010
GEL000
Average
interest rate,%
Consolidated statement of financial
position
Loans to customers 6 18% 4 20%
Loans and borrowings 3 17% - -
Amounts included in profit or loss in relation to transactions with the members of the Board of
Directors and the Management Board for the year ended 31 December are as follows:
7/29/2019 EasyCred 2011 Financial statement 2011
36/36
Microfinance Organization Easycred Georgia LLC
Consolidated Statement of Changes in Equity for the year ended 31 December 2011
2011
GEL000
2010
GEL000
rofit or loss
Interest income 1 1
(c) Transactions with other related partiesThe outstanding balances and average interest rates as at 31 December 2011 and 2010 for
transactions with other related parties are as follows:
2011
GEL000
Average
interest rate,
%
2010
GEL000
Averageinterest
rate, %
Consolidated statement of financial
position
Loans and borrowings 23 18% - -
21 Events after the reporting periodOn 25 January 2012 the following decisions were made by the owners of the Group regarding
distribution of retained earnings:
pay dividends of GEL 400 thousand from the profit for the period ended 31 December 2011; after payment of dividends transfer the remaining profit for the year ended 31 December 2011
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 2012, up to the issue date of these financial statements, dividends of GEL 184 thousand were
paid to owners of the Group.
Recommended