Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697752974708.pdf (Georgia)
ANAGI GROUP Consolidated Financial Statements, Management Report and Independent Auditor’s Report For Year Ended 31 December 2021 ANAGI GROUP TABLE OF CONTENTS STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2021 1 Page INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021: Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS LOANS ISSUED INVESTMENTS IN FINANCIAL ASSETS CARRIED AT FVTPL INVENTORIES GENERAL INFORMATION 1.
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS 2.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 3.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES 4.

REVENUE 5.

COST OF SALES 6.

GENERAL AND ADMINISTRATIVE EXPENSES 7.

OTHER INCOME 8.

PROPERTY, PLANT AND EQUIPMENT 9.

INVESTMENT PROPERTY 10.

INVESTMENTS IN ASSOCIATES 11.

12.

CONSTRUCTION CONTRACT ASSETS 13.

14.

15.

16.

TRADE AND OTHER RECEIVABLES 17.

PREPAYMENTS 18.


CASH AND CASH EQUIVALENTS 19.

TERM DEPOSITS IN BANKS 20.

ADVANCES RECEIVED 21.

TRADE AND OTHER PAYABLE 22.

DIVIDENDS PAYABLE 23.

BORROWINGS 24.

FINANCIAL INSTRUMENTS 25.

RELATED PARTIES TRANSACTIONS AND OUTSTANDING BALANCES 26.

COMMITMENTS AND CONTINGENCIES 27.

EVENTS AFTER THE REPORTING PERIOD 28.
APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT REPORT 2- ANAGI GROUP STATEMENT OF MANAGEMENT’S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2021 Management is responsible for the preparation of the consolidated financial statements that present fairly the financial position of Anagi LLC and its subsidiaries (the “Group”) as of 31 December 2021 and the results of its operations, changes in equity and cash flows for the year ended 31 December 2021, in compliance with International Financial Reporting Standards (“IFRS”).
Management is also responsible for the preparation of management report in accordance with the Law of Georgia on Accounting, Reporting and Auditing.
In preparing the consolidated financial statements, management is responsible for:    Properly selecting and applying accounting policies; Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; Providing additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's consolidated financial position and financial performance;  Making an assessment of the Group's ability to continue as a going concern.
 Disclosing the information in the management report as required by the Law of Georgia on Accounting, Reporting and Auditing; Preparation of the management report consistent with the consolidated financial statements.
 Management is also responsible for:  Designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;  Maintaining adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply with IFRS;  Maintaining statutory accounting records in compliance with Georgian legislation and IFRS;   Taking such steps as are reasonably available to them to safeguard the assets of the Group; and Detecting and preventing fraud and other irregularities.
Management is responsible for the preparation of the consolidated Management Report in accordance with the requirements of Law of Georgia on Accounting, Reporting and Auditing and for such internal control as management determines is necessary to enable the preparation of the consolidated Management Report that is free from material misstatement, whether due to fraud or error.
Management is responsible for the following:    The Management Report for the year ended 31 December 2021 is prepared in accordance with the requirements of Law of Georgia on Accounting, Reporting and Auditing; The Management Report for the year ended 31 December 2021 includes the information required by the Law of Georgia on Accounting, Reporting and Auditing; and; The information provided in the Management Report is consistent, in all material respects, with the audited consolidated financial statements for the year ended 31 December 2021.
The consolidated financial statements and Management Report of the Group for the year ended 31 December 2021 were approved by management on 11 November 2022.
On behalf of Management: ______________________________ ______________________________ Irakli Gogolishvili Giorgi Chitashvili General Director Financial Director Tbilisi, Georgia Tbilisi, Georgia 11 November 2022 11 November 2022 1 Deloitte & Touche LLC King David Business Center 12 Merab Aleksidze Street Tbilisi, 0171, Georgia Tel: +995 (32) 224 45 66 Fax: +995 (32) 224 45 69 deloitte.ge INDEPENDENT AUDITOR’S REPORT To the Owner and Management of Anagi LLC: Opinion We have audited the consolidated financial statements of Anagi LLC and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended 31 December 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2021 and its consolidated financial performance and its consolidated cash flows for the year ended 31 December 2021 in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (the “IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matters We draw attention to Note 3 to the consolidated financial statements which describes the restatements of corresponding figures.

Our opinion is not modified in respect of this matter.

Other Information Management is responsible for the other information.
The other information comprises the information included in the Management Report but does not include the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities.

DTTL and each of its member firms are legally separate and independent entities.

DTTL (also referred to as “Deloitte Global”) does not provide services to clients.

Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
© 2022 Deloitte & Touche LLC.

All rights reserved.
2 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:       Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.

However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit.

We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
3 Report on Other Legal and Regulatory Requirements Management is responsible for the preparation of the management report in accordance with the Law of Georgia on Accounting, Reporting and Auditing (“the Law”), and for such internal control as management determines is necessary to enable the preparation of the management report that is free from material misstatement, whether due to fraud or error.
We performed procedures with respect to whether the management report is prepared in accordance with the requirements of the Law and includes the information required by the Law.
We have selected and performed procedures based on our judgment, including but not limited to inquiries, analysis and review of documentation, comparison of the Group’s policies, procedures, methodologies and reported information with the requirements of the Law, as well as recalculations, comparisons and reconciliations of numeric values and other information.
In our opinion:    The management report for the year ended 31 December 2021 is prepared in accordance with the requirements of Law of Georgia on Accounting, Reporting and Auditing; The management report for the year ended 31 December 2021 includes the information required by the Law of Georgia on Accounting, Reporting and Auditing; The information provided in the Management Report is consistent, in all material respects, with the consolidated financial statements for the year ended 31 December 2021.
Shota Nanitashvili on behalf of Deloitte and Touche LLC 12 November 2022 Tbilisi, Georgia 4 ANAGI GROUP CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 (In thousands of Georgian Lari) Notes 2021 2020 (restated) Revenue Cost of sales Gross profit 5 6 254,268 (223,926) General and administrative expenses Impairment of financial assets Share of results of associates Finance income Finance cost Changes in fair value of the investments carried at FVTPL Foreign exchange (loss)/gain, net Other income Other expenses 7 12,13, 15, 16 11 8 Profit before income tax Income tax expense TOTAL COMPREHENSIVE INCOME FOR THE YEAR Income Attributable to: Owner: Non-controlling interests: On behalf of Management: 238,298 (202,425) 35,873 (19,431) (2,400) (582) 3,174 (1,921) (385) 13,145 11,082 (2,712) 35,843 (638) 35,205 35,217 (12) 35,205 30,342 (18,693) (1,720) 1,422 2,046 (4,597) 4,273 (7,933) 10,786 (3,237) 12,689 (3,650) 9,039 9,144 (105) 9,039 __________________________________ Irakli Gogolishvili General Director __________________________________ Giorgi Chitashvili Financial Director Tbilisi, Georgia 11 November 2022 Tbilisi, Georgia 11 November 2022 The notes on pages 9-43 form an integral part of these consolidated financial statements.
5 ANAGI GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 (In thousands of Georgian Lari) Notes 31 December 2021 31 December 2020 (restated) 31 December 2019 (restated) ASSETS NON-CURRENT ASSETS: Property, plant and equipment Intangible assets Investment property Investments in associates Construction contract assets Prepayments Trade and other receivables Investments in financial assets carried at FVTPL Loans issued Total non-current assets CURRENT ASSETS: Inventories Investments in financial assets carried at FVTPL Loans issued Bond Construction contract assets Trade and other receivables Prepayments Taxes prepaid Term deposits in banks Cash and cash equivalents Total current assets TOTAL ASSETS OWNER’S EQUITY AND LIABILITIES OWNER’S EQUITY: Charter capital Retained earnings Equity attributable to the Owner of the Group Non-controlling interests TOTAL OWNER’S EQUITY NON-CURRENT LIABILITIES: Advances received Provisions for possible defects Total non-current liabilities CURRENT LIABILITIES: Trade and other payables Taxes payable other than income tax Advances received Dividends payable Borrowings Deferred ‘day one’ gains Total current liabilities TOTAL LIABILITIES - 59,165 37,324 8,775 18,190 620 124,335 17,996 34,376 - - 41,235 1,684 20,164 - 95,808 113,112 29,841 58 14,634 2,491 8,524 2 - 11,279 1,949 68,778 24,087 - 2,277 574 85,953 8,912 20,197 - - 35,386 177,386 246,164 5 138,876 138,881 3,736 142,617 13,802 1,460 15,262 38,697 1,382 45,709 1,938 559 - 88,285 103,547 TOTAL OWNER’S EQUITY AND LIABILITIES 310,273 251,096 246,164 On behalf of
 Management: __________________________________ Irakli Gogolishvili General Director Tbilisi, Georgia 11 November 2022 The notes on pages 9-43 form an integral part of these consolidated financial statements __________________________________ Giorgi Chitashvili Financial Director Tbilisi, Georgia 11 November 2022 6 ANAGI GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021 (In thousands of Georgian Lari) Note Charter capital Retained earnings attributable to owner Total equity attributable to owner Non- controlling interest Total equity Balance at 1 January 2020 (as previously stated) 5 130,446 130,451 3,736 134,187 Effect of Correction of error 3 8,430 8,430 - 8,430 Balance at 1 January 2020 (restated) Total comprehensive income for the year Effect of forgiveness of receivable from related parties as a result of transaction between entities under common control 3 21 Dividends declared Purchase of non-controlling interest Balance at 31 December 2020 (restated) Total comprehensive income for the year Dividends declared 21 5 - - - - 5 - - 138,876 138,881 3,736 142,617 35,217 35,217 (12) 35,205 (12,640) (24,400) (1,586) 135,467 (12,640) (24,400) (1,586) 135,472 9,144 (31,876) 9,144 (31,876) - (1,728) 516 2,512 (105) (204) (12,640) (26,128) (1,070) 137,984 9,039 (32,080) Balance at 31 December 2021 5 112,735 112,740 2,203 114,943 On behalf of Management: _________________________________ Irakli Gogolishvili General Director __________________________________ Giorgi Chitashvili Financial Director Tbilisi, Georgia 11 November 2022 Tbilisi, Georgia 11 November 2022 The notes on pages 9-43 form an integral part of these consolidated financial statements.
7 ANAGI GROUP CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2021 (In thousands of Georgian Lari) CASH FLOW FROM OPERATING ACTIVITIES Receipts from customers under construction contracts Receipts from other customers Payments to suppliers Payments to employees Payments for other operating expenses Cash generated from operations Interest paid Income tax paid Taxes paid other than on income tax Notes 2021 2020 305,398 10,907 (222,018) (58,812) (285) 35,190 (6,479) (2,492) (30,700) 242,370 22,037 (199,841) (49,865) (2,748) 11,953 (2,223) (648) (35,004) Net cash used in operating activities (4,481) (25,922) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment and investment property Acquisition of property plant and equipment and investment property Receipts from loans issued Proceeds from investments in financial assets carried at FVTPL Investments in financial assets carried at FVTPL Issuance of loans Placement of term deposits Withdrawal of the term deposits Interest received Investments in associates Dividend received from associates Withdrawal of invested capital by NCI shareholders 2,429 (5,000) 1,860 12,305 (5,531) (10,792) (6,599) 11,443 262 (1,094) 263 - 7,263 (2,869) 5,992 - - (4,672) (38,841) 29,011 988 (50) - (1,070) Net cash used in investing activities (454) (4,248) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Dividends paid to the Owner of the Group and NCI shareholders 22 22 21 Net cash used in by financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Effect of exchange rate changes on the balance of cash held in foreign currencies CASH AND CASH EQUIVALENTS, at beginning of the period CASH AND CASH EQUIVALENTS, at end of the period 17 17 300,821 (259,106) (32,537) 9,178 4,243 (1,421) 2,023 4,845 203,191 (183,027) (26,382) (6,218) (36,388) 3,025 35,386 2,023 On behalf of Management: _________________________________ Irakli Gogolishvili General Director Tbilisi, Georgia 11 November
 2022 __________________________________ Giorgi Chitashvili Financial Director Tbilisi, Georgia 11 November 2022 The notes on pages 9-43 form an integral part of these consolidated financial statements.
8 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 1.

GENERAL INFORMATION Anagi LLC (the “Company”) was incorporated on 13 November 1989 in Georgia.

The principal activity of the Company is construction.
The Company offers a full or partial package of project-construction works including:      Construction of residential, hotel, public, manufacturing and civil buildings or set of buildings; Management of construction projects and project activities; Design, decoration, finishing and MEP (mechanical, electrical, and plumbing) works; Production of construction designs and products, including: manufacturing of monolithic concrete, metal, carpentry, metal-plastic, aluminum, partition and small wall blocks.
Advisory services regarding the organization, technology, legal procedures, and other directions of the field.

The Company is a parent of a group of companies incorporated in Georgia (together referred to as the “Group” or “Anagi Group”), whose primary business activities include concrete production, renting construction vehicles and equipment, and real estate development.
As at 31 December 2021 and 2020, the sole shareholder of Anagi LLC was Mrs. Nana Aroshidze, while the Company was effectively controlled by Mr. Zaza Gogotishvili.
These consolidated financial statements include the following principal subsidiaries: Subsidiary 31 December 2021 Ownership/ voting % 31 December 2020 Ownership/ voting % Industry LLC Anagi Betoni (formerly – LLC Lugo) LLC Anagi Mechanization LLC Anagi Batumi LLC Anagi Education LLC Anagi Hotel Development 65.0% 60.0% 100.0% 100.0% 100.0% 65.0% 60.0% 100.0% 100.0% 100.0% Concrete production Renting construction equipment Real estate development Construction of school Real Estate Development Non-controlling interests in Anagi Betoni LLC were owned by Mr Ibrahim Shalikadze, David Shalikadze and Jambul Shalikadze with 25%, 5% and 5% ownership, respectively, as at 31 December 2021 and 2020.
Non-controlling interests in Anagi Mechanization LLC were owned by Mr Ibrahim Shalikadze, David Shalikadze and Irakli Gogolishvili with 25%, 10% and 5% ownership, respectively, as at 31 December 2021 and 2020.
These consolidated financial statements include the following associates: Associate JSC Supsa Energy LLC GTC Rent LLC GTC Trading LLC Green Cape - Botanico LLC H-1 LLC H-2 LLC Georgian-American Academy Progress 31 December 2021 Ownership/ voting % 31 December 2020 Ownership/ voting % Industry 50 % 50 % 50 % 49 % 50% 50% 45% 50 % 0 % 0 % 49 % 50% 0% 45% Energy Renting construction equipment Renting construction equipment Real Estate Development Real Estate Development Real Estate Development Education All the associates are incorporated in Georgia, which is their principal place business.
On 19 February 2021, Anagi LLC and GTC Group LLC established a new entity – GTC Rent LLC.

Each party owns 50% shareholding.

In 2021, LLC Anagi Hotel Development acquired 50% shares of LLC H-2, while LLC Anagi acquired 50% shares of LLC GTC Trading.

The Company is the Group’s main operating unit and accounts for most of the Group’s activities.

The Company’s principal and registered address is at #37-39 Kostava Avenue, Tbilisi, Georgia.
As at 31 December 2021 and 2020, the Group employed 1,777 and 1,926 employees, respectively.

9 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 2.
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS In 2021, the following new and revised standards have been adopted: • Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) The International Accounting Standards Board (IASB) has published 'Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)' with amendments that address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates.
The amendments are effective for annual periods beginning on or after 1 January 2021, with earlier application permitted.
As a result of the Phase 2 amendments:  When the contractual terms of the Group’s bank borrowings are amended to implement interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the basis immediately preceding the change, the Group changes the basis for determining the contractual cash flows prospectively by revising the effective interest rate.
 When a lease is modified as a direct consequence of the interest rate benchmark reform and the new basis for determining the lease payments is economically equivalent to the previous basis, the Group remeasures the lease liability to reflect the revised lease payments discounted using a revised discount rate that reflects the change in the basis for determining the contractual cash flows.
Adopting these amendments enables the Group to reflect the effects of transitioning from interbank offered rates (IBOR) to alternative benchmark interest rates (also referred to as 'risk free rates' or RFRs) without giving rise to accounting impacts that would not provide useful information to users of financial statements.

The Group has not restated the prior period.


• Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) The International Accounting Standards Board (IASB) has published 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)' that extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.
The above standards and interpretations were reviewed by the Group's management, but did not have a significant effect on the consolidated financial statements of the Group.

New and revised IFRS Standards in issue but not yet effective At the date of authorization of these consolidated financial statements, the Group has not applied the following new and revised IFRS Standards that have been issued but are not yet effective.
New or revised standard or interpretation IFRS 17 (including Amendments to IFRS 17) - Insurance contracts Amendments to IAS 1 Classification of Liabilities as Current or Non-current (as part of the project to formulate Annual Improvements to IFRS 2010-2012 cycles).
Amendments to IAS 8 - Definition of Accounting Estimates Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies Amendments to IFRS 3 - Reference to the Conceptual Framework Amendments to IAS 16 Property, Plant and Equipment - Proceeds Before Intended Use Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts – Cost of Fulfilling Contract Annual Improvements to IFRS 2018-2020 Cycle (Amendments to IFRS 1 - First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases) Amendments to IAS 12 Deferred Tax Relating to Assets and Liabilities Arising from a Single Transaction Amendment to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 10 Applicable to annual reporting periods beginning on or after 1 January 2023 1 January 2023 1 January 2023 1 January 2023 1 January 2022 1 January 2022 1 January 2022 1 January 2022 1 January 2023 Date to be determined by the IASB ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The Group does not expect that the adoption of the Standards listed above will have a material impact on the consolidated financial statements of the Group in future periods.
3.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Statement of compliance  These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).
Basis of preparation - These consolidated financial statements have been prepared on the assumption that the Group is a going concern and will continue in operation for the foreseeable future.

Management has, at the time of approving these consolidated financial statements, a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future.
Thus they continue to adopt the going concern basis of accounting in preparing the consolidated financial statements.

The consolidated financial statements have been prepared under the historical cost basis.

Historical cost is generally based on the fair value of the consideration given in exchange for assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether the price is directly observable or estimated using another valuation technique.
In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset and liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis.

The principal accounting policies are set out below.
Functional and presentation currency - The national currency of Georgia is the Georgian Lari (“GEL”), which is the functional currency of the Company, its subsidiaries and associates and the currency in which the Group’s consolidated financial statements are presented.

All amounts presented in the consolidated financial statements have been rounded to the nearest thousand.
Basis of consolidation - The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries.

Control is achieved when the Company:  has power over the investee;   is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally.
The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:     the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
11 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests.
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the consolidated financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Changes in the Group’s ownership interests in existing subsidiaries- Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions.
The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.

Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.
All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e.

reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRS).
The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Business combinations - Acquisitions of businesses are accounted for using the acquisition method.
The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree.

Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:   liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date; and assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets.

The choice of measurement basis is made on a transaction-by-transaction basis.
All other components of non-controlling interests are measured at their acquisition-date fair values, unless another measurement basis is required by IFRSs.
12 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.

Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified.

Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.

Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e.

the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

Investments in associates - Associates are entities over which the Company has significant influence (directly or indirectly), but not control.
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost.

Dividends received from associates reduce the carrying value of the investment in associates.
Other post-acquisition changes in Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated statement of profit or loss and other comprehensive income as share of result of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of result of associates.
However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss.
Foreign currencies - In preparing the consolidated financial statements of each individual Group entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing by National Bank of Georgia at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing by National Bank of Georgia at that date.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing by National Bank of Georgia at the date when the fair value was determined.

Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
13 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The exchange rates used by the Group in the preparation of the consolidated financial statements as at year-end are as follows: GEL/1 US Dollar GEL/1 Euro 31 December 2021 31 December 2020 3.0976 3.5040 3.2766 4.0233 Property, plant and equipment - Property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment, where required.
Cost of replacing major parts or components of property, plant and equipment items are capitalised and the replaced part is retired.

Subsequent expenditure is capitalised if future economic benefits will arise from the expenditure.

Costs of minor repairs and maintenance are expensed when incurred.

At the end of each reporting period management assesses whether there is any indication of impairment of property, plant and equipment.
If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use.

The carrying amount is reduced to the recoverable amount and the impairment loss is recognised in profit or loss for the year.
An impairment loss recognised for an asset in prior years is reversed where appropriate if there has been a change in the estimates used to determine the asset’s value in use or fair value less costs to sell.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognised in the consolidated statement of profit or loss and other comprehensive income within other operating income and expenses.

Depreciation - Land is not depreciated.


Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives: Categories of property, plant and equipment Depreciation rates Machinery Vehicles Buildings Office equipment 20% 20% 5% 20% Construction in progress is not depreciated until it will be ready for use.
The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Investment property - Investment property is property held by the Group to earn rental income or for capital appreciation, or both and which is not occupied by the Group.

Investment property is initially recognised at cost, including transaction costs.

Subsequent to initial recognition, investment property is carried at historical cost net of accumulated depreciation and recognized impairment loss.
Depreciation is calculated on a straight line basis over the useful life of the assets, which on buildings is 5%.

Freehold land is not depreciated.

For impairment analysis and disclosure purposes Group determines market value of investment property internally.

Group holds relevant professional qualification for investment property valuation.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.

Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its carrying amount at the date of reclassification becomes its deemed cost for accounting purposes.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost can be measured reliably.

All other repairs and maintenance costs are expensed when incurred.
14 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Intangible assets - The Group’s intangible assets other than goodwill have definite useful lives and primarily include acquired computer and accounting software licences which are stated at cost less accumulated amortisation.
Intangible assets are amortised on a straight-line basis over their estimated useful lives from the date the asset is available for use.

The estimated useful live for computer software licenses are determined to be 5 years and accounting software for 10 years.
Impairment of tangible and intangible assets - At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash- generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of 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-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.

An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash- generating unit) in prior years.

A reversal of an impairment loss is recognized immediately in profit or loss.
Prepayments - Prepayments are carried at cost less allowance for impairment.

A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition.
Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group.

Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received.
If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss for the year.

Advances received - Advances received represents advances received for the construction contracts.

Liability arising from advances received are recognized when consideration from a client is received.
Advances received is decreased as works are performed and delivered to the client.

Advances received are classified as either current or non-current depending on the agreed delivery terms.

Income taxes - Income taxes have been provided for in accordance with Georgian legislation enacted or substantively enacted by the reporting date.
The income tax charge comprises current tax and deferred tax and is recognised in profit or loss except if it is recognised directly in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, directly in other comprehensive income or directly in equity.

Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or losses for the current and prior periods.
Taxable profits or losses are based on estimates if financial statements are authorised prior to filing relevant tax returns.

Taxes other than on income are recorded within operating expenses.

The Group´s liability for current tax is calculated as a sum of tax liability of each consolidated entity.

In May 2016, the parliament of Georgia approved a change in the current corporate taxation model, with changes applicable on 1 January 2017 for all entities apart from certain financial institutions.
The changed model implies zero corporate tax rate on retained earnings and a 15% corporate tax rate on distributed earnings, compared to the previous model of 15% tax rate charged to the Group's profit before tax, regardless of the retention or distribution status.
15 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The amendments to the Georgian tax law described above also provide for charging income tax on certain transactions that are considered as profit distributions, e.g.

some transactions at non-market prices, non-business related expenses or supply of goods and services free of charge.
Taxation of such transaction is outside scope of IAS 12 Income Taxes and is accounted similar to taxes other than on income starting from 1 January 2017 in accordance with IAS 37 provisions when respective transactions occur; respective reimbursements if any are recognized as assets when the reimbursement is virtually certain.

The Group recognizes tax asset due from Revenue Service under Georgian tax law, when the Group issues a loan to non- residents.
Tax assets is set off and recovered when the loan is repaid.

Value added tax (‘VAT’) - Output VAT related to sales is payable to tax authorities upon delivery of the goods to customers.

Input VAT is generally recoverable against output VAT upon receipt of the VAT invoice.

The tax authorities permit the settlement of VAT on a net basis.
VAT related to sales and purchases is recognised in the consolidated statement of financial position on a net basis per each Group entity and disclosed as either an asset or a liability.

Where allowance has been made for impairment of receivables, impairment loss is recorded for the gross amount of the debtor, including VAT.

Inventories - Inventories are stated at the lower of cost and net realisable value.
The cost of inventories is determined on the weighted average cost basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.

Initial recognition of financial instruments - All financial instruments are initially recorded at fair value plus transaction costs.
Fair value at initial recognition is best evidenced by the transaction price.

A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (“regular way” purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver a financial asset.

All other purchases are recognised when the entity becomes a party to the contractual provisions of the instrument.

Financial instruments - key measurement terms.


Depending on their classification financial instruments are carried at fair value or amortised cost as described below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

The best evidence of fair value is price in an active market.

An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange or other institution and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees are used to fair value certain financial instruments for which external market pricing information is not available.

Valuation techniques may require assumptions not supported by observable market data.
16 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Disclosures are made in these consolidated financial statements if changing any such assumptions to a reasonably possible alternative would result in significantly different profit, income, total assets or total liabilities.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument.

An incremental cost is one that would not have been incurred if the transaction had not taken place.

Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties.
Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs.

Amortised cost is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any write-down for incurred impairment losses.
Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using the effective interest method.

Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of related items in the statement of financial position.
The effective interest method is a method of allocating interest income or interest expense over the relevant period so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument.
The effective interest rate discounts cash flows of variable interest instruments to the next interest re-pricing date except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates.

Such premiums or discounts are amortised over the whole expected life of the instrument.
The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Classification of financial assets – Debt instruments that meet the following conditions are measured subsequently at amortised cost:  The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding  Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):   The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).
Despite the foregoing, the Group may make the following irrevocable election / designation at initial recognition of a financial asset:   The Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met (see (iii) below) The Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below) All financial instruments and operations performed by the Group are pointed to collect contractual cash flows which are solely payments of principal and interest on the principal amount outstanding, except for Investments in Financial Assets Carried at FVTPL, which are held to collect investment income together with contractual cash flows.
17 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship.
The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial asset and is included in the ‘Changes in fair value of the investments carried at FVTPL’ line item.

Fair value is determined in the manner described in Note 24.
Construction contract assets, trade and other receivables and loans issued - Construction contract assets, trade and other receivables and loans issued are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Trade and other receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Cash and cash equivalents - Cash and cash equivalents comprise cash on hand and cash deposited in banks due on demand or with original maturities of less than three months.

Cash and cash equivalents are carried at amortised cost using the effective interest method.
Term deposits in banks - Term deposits in banks comprises cash deposited in banks with original maturities of more than three months.

Term deposits in banks are carried at amortised cost using the effective interest method.

Impairment of financial assets.

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments at amortised cost.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.

The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages.


For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

The Group provides 12-months ECLs for cash and bank balances.

For trade and other receivables and construction contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition.
However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For approach of PD estimations the Group uses historical PDs produced by the rating agencies.

The Group performs the individual assessment for the issued loans.
Significant financial difficulties of the counterparty, probability that the counterparty will suffer bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the issued loans is potentially impaired.

In all cases, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Group considers a financial asset in default when contractual payment are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

Uncollectible assets are written off against the related impairment loss allowance after all the necessary procedures to recover the asset have been completed and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off are credited to impairment loss account within the profit or loss for the year.
18 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Derecognition of financial assets - The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all risks and rewards of ownership but not retaining control.
Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale.
Financial liabilities and equity instruments Classification as debt or equity - Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments - An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Financial liabilities - The Group’s financial liabilities include trade and other payables and borrowings.

Trade and other payables - Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Trade and other payables are stated inclusive of value added tax.

Borrowings - Borrowings are recognised initially at their fair values less transaction costs incurred.
Fair value is determined using the prevailing market rate of interest for a similar instrument.

Subsequent to initial recognition, borrowings are carried at amortised cost using the effective interest method, with any difference between the amount at initial recognition and redemption amount being recognised in profit or loss as an interest expense over the period of the borrowings.

Charter capital - The amount of authorised charter capital is defined by the Group’s charter.
The changes in the Group’s charter shall be made only based on the decision of the Group’s owner.

The authorised capital is recognised as charter capital in the equity of the Company to the extent that it was contributed by the owner to the Group.

Dividends - Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved.
Any dividends declared after the reporting period and before the consolidated financial statements are authorised for issue are disclosed in the subsequent events note.

Provisions for liabilities and charges - Provisions for liabilities and charges are non-financial liabilities of uncertain timing or amount.
They are accrued when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Revenue recognition - Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties.
The Group recognises revenue when it transfers control of a product or service to a customer.

Group generates revenue from construction contracts, sale of goods, and operating rent income.

The Group’s policy for revenue recognition described below: Construction contracts, Sales of goods and Leasing.

Construction contracts - Revenue from construction contracts is therefore recognised over time on a cost-to-cost method, i.e.
based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.

The Management considers that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under IFRS 15.

Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable.

Contract costs are recognised as expenses in the period in which they are incurred.
19 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as unbilled construction contract assets.
For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts construction contract liabilities.

Amounts received before the related work is performed are included in the consolidated statement of financial position, as a liability, as advances received.
Amounts billed for work performed but not yet paid by the customer are included in the consolidated statement of financial position under billed construction contract assets.

The performance obligations the Group has under its contracts with customers are satisfied and revenue is recognized over time.
The Group transfers service over time and, therefore, satisfies a performance obligation and recognises revenue over time, based on the assumption that the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
Sale of goods - Revenue from the sale of goods is recognised when the control has transferred, being when the goods are delivered and titles have passed and at which time all the following conditions are satisfied:      The Group has transferred to the buyer the significant risks and rewards of ownership of the goods; The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; The amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction will flow to the Group; and The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rental income - Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

Group as a lessee - The Group assesses whether a contract is or contains a lease, at inception of the contract.
The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones).
For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Finance income and expenses - Finance income and expenses comprise interest expense on borrowings, interest income on loans issued and term deposits in banks.
Employee benefits - Wages, salaries, paid annual leave, sick leave, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group.

The Group has no legal or constructive obligation to make pension or similar benefit payments.

Starting from 1 January 2019 the Group has legal obligation to make pension amounting to 2% of employees gross salaries and benefits.
Offsetting - Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously.
20 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Restatements When preparing the consolidated financial statements for the year ended 31 December 2021, the Group made the following restatements in the prior period consolidated financial statements: 1.
Recognition of investments in financial assets carried at FVTPL: Anagi had issued a loan to an entity under common control – Lugo Trade LLC – to invest the proceeds in investment projects.

This investment was initially incorrectly classified at amortised cost.

The Group performed analysis of this transactions and concluded that the investment did not meet SPPI test as Anagi will collect investment income together with principal and interest.
Therefore, the instrument should have been subsequently measured at fair value through profit or loss.

The error was corrected retrospectively with the restatement of the consolidated statement of financial position and consolidated statement of changes in equity as of 31 December 2020 and 2019 and consolidated statement of profit or loss for 2020.
As previously reported Correction of error As restated 1 January 2020 Statement of Financial Position Investments in financial assets carried at FVTPL Non-current Assets Loans Issued Current Assets Total Assets Retained earnings Equity attributable to the Owner of the Group Total Owner’s Equity 31 December 2020 Statement of Financial Position Investments in financial assets carried at FVTPL Non-current Assets Loans Issued Investments in financial assets carried at FVTPL Current Assets Total Assets Retained earnings Equity attributable to the Owner of the Group Total Owner’s Equity Year ended 31 December 2020 Statement of Profit or Loss and Other Comprehensive Income Changes in fair value of the investments in financial assets carried at FVTPL Profit before tax Total comprehensive income 21 - 57,499 5,126 180,235 237,734 130,446 130,451 134,187 11,279 11,279 (2,849) (2,849) 8,430 8,430 8,430 8,430 11,279 68,778 2,277 177,386 246,164 138,876 138,881 142,617 - 44,133 3,160 3,160 3,160 47,293 6,123 (4,116) 2,007 - 198,918 243,051 130,515 130,520 133,032 9,001 4,885 8,045 4,952 4,952 4,952 9,001 203,803 251,096 135,467 135,472 137,984 - 26,681 26,043 (385) 9,162 9,162 (385) 35,843 35,205 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 2.1 Net-off of other income and expenses: In the financial statements of 2020, other income and expenses arisen from different transactions were presented on a net basis in the consolidated statement of profit or loss and other comprehensive income.
In the financial statements of 2021, this error was corrected, and the Group started to present on a net basis other income and expenses arising only from a group of similar transactions, in accordance with the requirements of IAS 1 Presentation of Financial Statements.

This error was corrected retrospectively and the separate statement of profit or loss and other comprehensive income was corrected appropriately.

2.2.
2.2.

Presentation of impairment of financial assets: The Group also corrected the classification of the presentation of impairment of financial assets in the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 and presented it separately as required by IAS 1 Presentation of financial statements.
In 2021 the management identified an error in the financial statements of 2020 related to recognition of forgiveness of receivables in the amount of GEL 12,640 thousand from the sale of investment property to the related parties.

Based on the analysis of the substance of the transaction, management came to the conclusion that this write-off was incorrectly recognised through profit or loss in 2020.

Details of sale transaction are disclosed in Note 10.
Receivables forgiveness was the transaction between entities under common control and it was made based on decision of the owner in her capacity as owner.

Therefore, receivables forgiveness should have been recognised through statement of changes in equity.

This error was corrected retrospectively.

The statement of profit or loss and other comprehensive income and the statement of changes in equity for 2020 were restated appropriately.
Statement of Profit or Loss and Other Comprehensive Income Other expenses, net Other income Other expenses Impairment of financial assets Profit before tax Total comprehensive income Statement of Changes in Equity Effect of forgiveness of receivable from related parties as a result of transaction between entities under common control Retained Earnings Equity attributable to the Owner of the Company Total Equity As previously reported 2020 Correction of error 2020 As restated 2020 (6,670) - - - 26,681 26,043 6,670 11,082 (2,712) (2,400) 9,162 9,162 - 11,082 (2,712) (2,400) 35,843 35,205 - (12,640) (12,640) 130,515 130,520 133,032 4,952 135,467 4,952 4,952 135,472 137,984 22 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES In the application of the Group’s accounting policies, which are described in Note 3, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the Group’s accounting policies The following are the critical judgements, apart from those involving estimations (see below), that the Group’s management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Completion stage.
Completion stage.

The Group determines when performance obligations are met and thus, recognizes construction revenue based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.

The management estimates the stage of completion of a contract by assessing actual number work units completed as at reporting date and total number of work units to be completed for the whole contract.

Business model assessment.


Classification and measurement of financial assets depends on the results of the SPPI and the business model test.

The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective.
This assessment includes judgement reflecting all relevant evidence including how the performance of the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed and how the managers of the assets are compensated.
The Group monitors financial assets measured at amortised cost or fair value through other comprehensive income that are derecognised prior to their maturity to understand the reason for their disposal and whether the reasons are consistent with the objective of the business for which the asset was held.
Monitoring is part of the Group’s continuous assessment of whether the business model for which the remaining financial assets are held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the classification of those assets.

No such changes were required during the periods presented.
Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Useful lives of property, plant and equipment.


The estimation of the useful lives of items of property, plant and equipment is a matter of judgment based on the experience with similar assets.

The future economic benefits embodied in the assets are consumed principally through use.

However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets.
Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group.

The following primary factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) technical or commercial obsolescence arising from changes in market conditions.
Tax legislation and accounting for provisions.

The Group's uncertain tax positions are reassessed by management at every reporting date.

Liabilities are recorded for income tax positions that are determined by management as less likely than not to be sustained if challenged by tax authorities, based on the interpretation of tax laws that have been enacted or substantively enacted by the consolidated statement of financial position date.
Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expenditure required to settle the obligations at the reporting date.

Actual charges could differ from these estimates.

23 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Impairment of financial assets and prepayments.
The Group creates allowances to account for estimated losses resulting from the inability of customers to make the required payments or suppliers to deliver agreed products or service.

When evaluating the adequacy of an expected losses, management bases its estimate on current overall economic conditions, ageing of the receivables and prepayments balances, historical write-off experience, customer and supplier creditworthiness and changes in payment terms.
Changes in the economy, industry or specific customer and supplier conditions may require adjustments to the expected losses recorded in the consolidated financial statements.

5.

REVENUE During the years ended 31 December 2021 and 2020, revenue of the Group consisted of: Construction contract revenue Revenue from the sale of goods Other revenue Total 6.
COST OF SALES 2021 2020 242,962 11,004 302 254,268 230,041 7,973 284 238,298 During the years ended 31 December 2021 and 2020, cost of sales of the Group consisted of: Construction contract cost of sales Cost of materials sold Total Construction contract cost of sales consisted of: Cost of materials Payroll and related charges Cost of service Short-term leases Depreciation expense Cost of bank guarantee Cost of possible defects Other Total 2021 2020 210,280 13,646 223,926 193,371 9,054 202,425 2021 2020 101,237 52,258 43,658 8,688 5,879 1,443 (3,618) 735 210,280 75,057 43,468 56,955 4,129 7,928 1,108 3,207 1,519 193,371 24 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 7.
GENERAL AND ADMINISTRATIVE EXPENSES During the years ended 31 December 2021 and 2020, general and administrative expenses consisted of: Payroll and related charges Depreciation and amortization expense Professional services Bank charges Tax and duties Communication Insurance expenses Other Total 8.
OTHER INCOME Gain from disposal of property, plant and equipment and investment property Other income Total 2021 2020 14,912 1,823 278 233 231 162 142 912 18,693 16,559 956 589 137 255 139 90 706 19,431 2021 2020 9,220 1,566 10,786 9,151 1,931 11,082 25 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 9.
PROPERTY, PLANT AND EQUIPMENT Movement of property, plant and equipment for the years ended 31 December 2021 and 2020 was as follows: Land Buildings Construction in progress Vehicles Machinery Office equipment Total Cost at 1 January 2020 1,458 8,316 4 8,562 32,263 2,160 52,763 Additions Disposals - - 519 (25) 1 - 1,249 (425) 4,028 (62) 237 (102) 6,034 (614) Cost at 31 December 2020 1,458 8,810 Additions Disposals - - 19 - Cost at 31 December 2021 1,458 8,829 Accumulated depreciation at 1 January 2020 Charge for the year Eliminated on disposal Accumulated depreciation at 31 December 2020 Charge for the year Eliminated on disposal Accumulated depreciation at 31 December 2021 - - - - - - - 826 181 (23) 984 327 - 1,311 5 - - 5 - 9,386 1,329 (289) 36,229 2,295 58,183 3,575 (9,372) 296 (11) 5,219 (9,672) 10,426 30,432 2,580 53,730 4,205 16,548 1,343 22,922 - - 998 (220) 7,150 (55) 381 (40) 8,710 (338) - - - - 4,983 23,643 1,684 31,294 918 (90) 6,141 (7,451) 300 (11) 7,686 (7,552) 5,811 22,333 1,973 31,428 As at 31 December 2020 1,458 7,826 5 4,403 12,586 611 26,889 As at 31 December 2021 1,458 7,518 5 4,615 8,099 607 22,302 As at 31 December 2021 and 2020, cost of fully depreciated assets included in property, plant and equipment was GEL 13,500 thousand, GEL 7,236 thousand, respectively.
As at 31 December 2021 and 2020, property, plant and equipment with the carrying value of GEL 6,853 thousand and GEL 9,032 thousand, respectively, were pledged as collateral against bank guarantee.

26 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 10.
INVESTMENT PROPERTY Movement of investment property for the years ended 31 December 2021 and 2020 was as follows: Cost at 1 January 2020 Additions Disposals Cost at 31 December 2020 Additions Disposals Land Buildings Total 7,010 - (5,896) 1,114 - - 9,176 - (6,605) 2,571 - - 16,186 - (12,501) 3,685 - - Cost at 31 December 2021 1,114 2,571 3,685 Accumulated depreciation at 1 January 2020 Charge for the year Eliminated on disposals Accumulated depreciation at 31 December 2020 Charge for the year Eliminated on disposals Accumulated depreciation at 31 December 2021 As at 31 December 2020 As at 31 December 2021 - - - - - - - 1,114 1,114 1,552 1,552 155 (1,225) 155 (1,225) 482 106 - 588 2,089 1,983 482 106 - 588 3,203 3,097 The land plots classified as investment property are located in Tbilisi, Batumi, Chaqvi resort, Kobuleti, Kvariati.
The fair value of the Group's investment property at 31 December 2021 and 31 December 2020, has been arrived at on the basis of a valuation carried out on the respective date by the Group’s internal valuators.

They have appropriate experience in the valuation of properties in the relevant locations.

The fair value of the investment property was determined in USD based on the market comparable approach that reflects recent transaction prices for similar properties.
The fair value of the investment property as at 31 December 2021 and 2020, was GEL 6,783 thousand and 6,118 thousand, respectively.

During 2020, the Group sold investment property to entities under common control with the carrying values of GEL 9,077 thousand for the amount of GEL 18,909 thousand.

Management believes that the selling price of the investment property approximates their fair values on arm’s lengths transactions.
Gains from these transactions were recognised in Other Income line in the statement of profit or loss and other comprehensive income.

27 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 11.
INVESTMENTS IN ASSOCIATES Proportion of ownership interest held by the Group Carrying amount of the Group’s interest as of 31/12/2021 31/12/2020 31/12/2021 Name of associate LLC H-2 LLC GTC Trading LLC H-1 LLC GTC Rent Principal activity Real Estate Development Renting construction equipment Real Estate Development Renting construction equipment JSC Supsa Energy LLC Georgian-American Academy Progress LLC Green Cape - Botanico Energy Education Real Estate Development 50% 50 % 50% 50 % 50 % 45% 49 % 0 % 0 % 50 % 0 % 50 % 45 % 49 % 31/12/2020 - 4,644 3,843 1,157 1,265 381 9 - - 1,566 - 394 - - Total carrying amount of the investments in associates 11,299 1,960 All of the above associates are accounted for using the equity method in these consolidated financial statements as set out in the Group’s accounting policies in Note 3.
On 19 February 2021, Anagi LLC and GTC Group LLC established a new entity – GTC Rent LLC.

Each party owns 50% of the entity’s shares.

In 2021, LLC Anagi Hotel Development acquired 50% shares of LLC H-2.

The initial cost of the investment amounted to GEL 4.6 mln.

In addition, LLC Anagi acquired 50% shares of LLC GTC Trading in exchange for GEL 3.6 mln.

The Group’s share of the associates’ profits amounted to GEL 1,422 thousand in 2021 (2020: loss of GEL 582 thousand).
Unrecognised share of losses of an associate The unrecognised share of loss of an associate for the year Cumulative share of loss of an associate 2021 2020 31/12/2021 - - 31/12/2020 34 34 28 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 12.
CONSTRUCTION CONTRACT ASSETS Billed amount due from costumers under construction contracts Unbilled amount due from costumers under construction contracts Less: allowance for expected credit loss Total Current portion Non-current portion 31 December 2021 31 December 2020 87,048 49,784 136,832 (10,647) 126,185 124,335 1,850 126,185 122,402 10,845 133,247 (10,737) 122,510 118,943 3,567 122,510 As at 31 December 2021 and 2020, construction retentions in construction contract assets were GEL 6,612 thousand and GEL 3,567 thousand, respectively.
In determining the recoverability of a construction assets, the Group considers any change in the credit quality of the construction contract assets from the date credit was initially granted up to the end of the reporting period.

The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
The impairment recognised represents the difference between the carrying amount of these construction contract assets and the present value of the expected liquidation proceeds.

The Group does not hold any collateral over these balances.
The following table details the risk profile of construction contract assets: 31 December 2021 Expected credit loss rate Estimated total gross carrying amount at default Lifetime ECL 31 December 2020 Expected credit loss rate Estimated total gross carrying amount at default Lifetime ECL Not past due 2.3% - less than 30 days overdue 10.0% - 30 to 60 days overdue 20.0% - 61 to 90 days overdue - over 90 days overdue 50.0% 91.2% Total 127,634 (2,948) 687 (69) 100 (20) 152 8,259 136,832 (76) (7,534) (10,647) Not past due 1.9% - less than 30 days overdue 10.0% - 30 to 60 days overdue 20.0% - 61 to 90 days overdue 49.8% 2,422 - over 90 days overdue 100.0% Total 6,565 133,247 2,287 (457) (1,207) (6,565) (10,737) 119,969 (2,308) 2,004 (200) 29 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The table below provides a credit risk rating grade disclosures: Non-overdue 0-30 past due 30-60 past due 60-90 past due 90> past due Total Non-overdue 0-30 past due 30-60 past due 60-90 past due 90> past due Total Lifetime ECL - not credit- impaired Lifetime ECL – credit-impaired 31 December 2021 (2,948) (69) (20) (76) - (3,113) - - - - (7,534) (7,534) Lifetime ECL - not credit- impaired Lifetime ECL – credit-impaired 31 December 2020 (2,308) (200) (457) (1,207) - (4,172) - - - - (6,565) (6,565) Total (2,948) (69) (20) (76) (7,534) (10,647) Total (2,308) (200) (457) (1,207) (6,565) (10,737) Movement in the allowance for expected credit loss for construction contract assets are as follows: Balance as at the beginning of the year Additional allowance recognised Recovery of allowance Balance as at the end of the period 2021 2020 10,737 4,568 (4,658) 10,647 8,392 4,884 (2,539) 10,737 30 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 13.
LOANS ISSUED LLC Tabori Resorts LLC Gorgia LLC Steel Works LLC Mepster LLC TL Construction LLC H 1 LLC Beta Group LLC Armari Engineering LLC Georgian-American Academy Progress LLC Sheni Batumi LLC Development Chavchavadze LLC Kachreti Developmenti JSC Synergy Capital LLC Sakhli Bulvarshi LLC Anagi Consulting LLC Green Cape – Botanico LLC Anagi Development Other Gross loans issued Less - allowance for impairment Loans issued, net Non-current portion of loans issued Current portion of loans issued Total Interest rate 13.75% 10.00% 12.40% 12.40% 11.85% 7.30% 7.96% 0.00% 6.70% 13.70% 6.80% 0.00% 8.00% 7.80% 11.20% 7.00% 12.00% 10%-27% Maturity CCY 31 December 2021 2022 2022 2022 2022 2022 2029 2022 2022 2023 2022 2022 2022 2022 2022 2022 2025 2021 2022 GEL USD GEL GEL GEL USD USD GEL USD GEL USD GEL USD USD USD USD GEL GEL/US D 10,146 1,933 1,756 1,501 1,090 722 546 251 176 137 127 80 78 54 41 - - 420 31 December 2020 (restated) - - - - - 655 578 - 31 December 2019 (restated) - - - - - 590 506 - 62 605 - - - 744 44 337 - 781 - 860 - - - 943 - - 1,305 559 19,058 3,806 4,763 (868) (685) 18,190 3,121 - 18,190 18,190 1,114 2,007 3,121 (537) 4,226 1,949 2,277 4,226 Accrued interest as at 31 December 2021, 2020, 2019 were GEL 1,800 thousand, GEL 750 thousand and GEL 330 thousand respectively.
In 2021, the Group has issued loans in a non-cash form (trade receivables were converted into issued loans) in the amount of GEL 5.1 million.
Movement in the allowance for expected credit loss for issued loans are as follows: Balance as at the beginning of the year Additional allowance recognized Recovery of allowance Balance as at the end of the period 2021 2020 2019 685 752 (569) 868 537 148 - 685 682 (145) 537 31 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 14.
INVESTMENTS IN FINANCIAL ASSETS CARRIED AT FVTPL Investment in Green Cape – Botanico LLC Investment in Lugo Trade LLC Total Current Non-current 15.

INVENTORIES Raw materials Spare parts and consumables Other Total gross inventory Less: allowance for obsolete inventory Inventory, net Movement in the allowance for obsolete inventory is as follows: Balance as at the beginning of the year Additional allowance recognized Balance as at the end of the period 16.
TRADE AND OTHER RECEIVABLES Trade receivable Less: allowance for irrecoverable amounts Trade receivables, net Due from employees Receivables from sale of ownership interest in subsidiaries Other receivables Non-current portion of trade and other receivables Current portion of trade and other receivables Total 32 31 December 2021 31 December 2020 (restated) 31 December 2019 (restated) 10,654 4,078 14,732 8,775 5,957 - 12,161 12,161 9,001 3,160 - 11,279 11,279 - 11,279 31 December 2021 31 December 2020 37,420 2,227 39 39,686 (2,362) 37,324 22,287 2,204 107 24,598 (1,453) 23,145 2021 2020 1,453 909 2,362 925 528 1,453 31 December 2021 31 December 2020 31,082 (3,359) 27,723 21 - 21 9,748 17,996 27,744 15,076 (1,983) 13,093 24 575 599 2,713 10,979 13,692 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Movement in the allowance for expected credit loss for trade and other receivables are as follows: Balance as at the beginning of the year Additional allowance recognized Recovery of allowance Write off Balance as at the end of the period 2021 2020 1,983 2,147 (771) - 3,359 2,078 13,731 (1,186) (12,640) 1,983 Provision amount of GEL 12,640 thousand recognized in 2020 relates to the receivable as a result of sale of investment properties during the 2020 year.
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period.

The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.

The impairment recognised represents the difference between the carrying amount of these trade receivables and the present value of the expected liquidation proceeds.
The Group does not hold any collateral over these balances.
The following table details the risk profile of trade and other receivables: 31 December 2021 Expected credit loss rate Estimated total gross carrying amount at default Lifetime ECL 31 December 2020 Expected credit loss rate Estimated total gross carrying amount at default Lifetime ECL Not past due 2.4% - less than 30 days overdue 7.7% - 30 to 60 days overdue 25.0% - 61 to 90 days overdue - over 90 days overdue 51.7% 100.0% Total 28,397 (685) 13 (1) 8 (2) 29 2,656 31,103 (15) (2,656) (3,359) Not past due 2.0% - less than 30 days overdue 9.9% - 30 to 60 days overdue 20.6% - 61 to 90 days overdue - over 90 days overdue 50.5% 100% Total 13,661 (271) 253 (25) 34 (7) 95 1,632 15,675 (48) (1,632) (1,983) 33 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The table below provides a credit risk rating grade disclosures: (GEL’000) Non-overdue 0-30 past due 30-60 past due 60-90 past due 90> past due Total (GEL’000) Non-overdue 0-30 past due 30-60 past due 60-90 past due 90> past due Total 17.
PREPAYMENTS Stage 2 Lifetime ECL - not credit- impaired Stage 3 Lifetime ECL – credit-impaired Total 31 December 2021 (685) (1) (2) (15) - (703) - - - - (2,656) (685) (1) (2) (15) (2,656) (2,656) (3,359) Stage 2 Lifetime ECL - not credit- impaired (271) (25) (7) (48) - (351) 31 December 2020 Stage 3 Lifetime ECL – credit-impaired - - - - (1,632) (1,632) Total (271) (25) (7) (48) (1,632) (1,983) 31 December 2021 31 December 2020 Prepayments for inventory Prepayments for service Prepayments to employees Prepayments for property, plant and equipment Other prepayments Less: allowance for irrecoverable amounts Total Current Non-current Movement in the allowance for irrecoverable amount of prepayments is as follows: Balance as at the beginning of the year Additional allowance recognized Recovery of allowance Balance as at the end of the period 16,619 11,011 6,471 3,567 780 38,448 (505) 37,943 34,376 3,567 18,801 7,186 - 3,187 263 29,437 (571) 28,866 25,679 3,187 2021 2020 571 410 (476) 505 243 387 (59) 571 34 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 18.
CASH AND CASH EQUIVALENTS Cash on hand Cash in bank Expected Credit Loss Total 19.

TERM DEPOSITS IN BANKS 31 December 2021 31 December 2020 164 4,681 - 4,845 1 2,024 (2) 2,023 Interest Rate Maturity 31 December 2021 31 December 2020 TBC Bank JSC Bank of Georgia JSC 3.01% 2.50% 29.01.2022 18.01.2021 4,647 - - 9,830 Total 4,647 9,830 20.

ADVANCES RECEIVED Advances received represents advances received for the construction contracts from various customers.
Current Non-current Total 31 December 2021 31 December 2020 72,080 15,168 87,248 41,235 12,636 53,871 The following table shows how much of the revenue recognised in the current reporting period relates to brought- forward advances received.

2021 2020 Revenue recognized in the current reporting period relating to brought- forward advances received 18,652 27,306 21.
TRADE AND OTHER PAYABLE Trade payables for service to sub-contractors Payables for acquisition of associates Trade payables for inventory Salaries payable Payables for non-current assets Other payables Total 35 31 December 2021 31 December 2020 12,413 9,422 8,517 7,945 453 505 39,255 12,146 2,457 8,518 6,801 2,361 442 32,725 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 22.
DIVIDENDS PAYABLE Balance as at 1 January Dividends declared to the Owner of the Group and NCI shareholders Dividends paid to the Owner of the Group and NCI shareholders Balance as at 31 December 23.
BORROWINGS 2021 2020 1,684 1,938 32,080 (32,537) 26,128 (26,382) 1,227 1,684 Interest rate Maturity CCY 31 December 2021 31 December 2020 GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL GEL 10,000 10,000 5,000 5,000 5,000 5,000 5,000 4,000 3,500 3,000 2,654 1,950 554 554 350 - - - - - - - - 61,562 - 61,562 61,562 - - - - - - - - - - - - - - - 5,000 3,605 3,000 2,290 2,169 2,000 2,000 100 20,164 - 20,164 20,164 13.30% 13.30% 13.90% 13.90% 14.00% 14.25% 14.25% 13.50% 13.90% 14.00% 14.25% 13.90% 13.80% 13.80% 13.90% 10.75% 11.50% 10.50% 11.90% 11.90% 11.90% 11.90% 12.00% JSC Bank of Georgia Loan 1 JSC TBC Bank Loan 1 JSC Bank of Georgia Loan 2 JSC Bank of Georgia Loan 3 JSC TBC Bank Loan 2 JSC Cartu Bank Loan 1 JSC Cartu Bank Loan 2 JSC TBC Bank Loan 3 JSC Bank of Georgia Loan 4 JSC TBC Bank Loan 4 JSC TBC Bank Loan 5 JSC Bank of Georgia Loan 5 JSC Bank of Georgia Loan 6 JSC TBC Bank Loan 6 JSC Bank of Georgia Loan 7 JSC TBC Bank Loan 9 JSC TBC Bank Loan 8 JSC TBC Bank Loan 7 JSC Bank of Georgia Loan 11 JSC Bank of Georgia Loan 8 JSC Bank of Georgia Loan 9 JSC Bank of Georgia Loan 10 JSC TBC Bank Loan 10 Total Long-term portion Short-term portion Total 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2021 2021 2021 2021 2021 2021 2021 2021 36 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non- cash changes.
Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s statement of cash flows as cash flows from financing activities.
1 January 2021 Financing cash flows (i) Interest changes (ii) Foreign exchange gain 31 December 2021 Borrowings 20,164 41,715 9 (326) 61,562 1 January 2020 Financing cash flows (i) Interest changes (ii) Foreign exchange gain 31 December 2020 Borrowings 559 20,164 (559) - 20,164 i) The financing cash flows represents the net amount of proceeds from borrowings and repayments of borrowings in the consolidated statement of cash flows.

ii) Interest changes include interest accruals and payments.

24.
24.

FINANCIAL INSTRUMENTS Fair value measurements- Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and appropriate valuation methodologies.
However, judgement is necessarily required to interpret market data to determine the estimated fair value.

Georgia continues to display some characteristics of an emerging market and economic conditions continue to limit the volume of activity in the financial markets.

Market quotations may be outdated or reflect distress sale transactions and therefore not represent fair values of financial instruments.
Management has used all available market information in estimating the fair value of financial instruments.

The fair value of cash and cash equivalents was determined using level 1 measurement.

The fair values of all other financial assets and liabilities were determined using level 3 measurement.

The level 3 of fair value hierarchy were estimated using the discounted cash flows valuation technique for which comparable market prices have been used.
Estimated fair values do not materially differ from their carrying amounts.
The Group measures fair value of its Investments in Financial Assets Carried at FVTPL at the end of each reporting period using the discounted cash flow method (Level 3 fair value hierarchy): expected future cash flows of the investments are estimated based on the current and forecasted market conditions and discounted using the discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
Notwithstanding the above, management considers that the valuation of its investments is currently subject to an increased degree of judgement and an increased likelihood that actual proceeds from investments may differ from their carrying values.

The principal assumptions underlying the estimation of the fair value are those relating to the future property prices, sales quantities and discount rates, which vary between 13%-15%.
The interrelation between the fair values of the investments and the main inputs are as follows: higher the sales prices/quantity, higher the fair value.

By contrast, higher the discount rate, lower the fair value.

Gain from changes in fair value of the investments carried at FVTPL for the year ended 2021 amounted to GEL 4,273 thousand (2020: loss of GEL 385 thousand).
Financial assets carried at amortised cost - The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity.

Discount rates used depend on credit risk of the counterparty.
Carrying amounts of construction contract assets, trade and other accounts receivable, loans issued and other financial assets recorded in the consolidated financial statements approximate fair values due to their short term maturities.

Liabilities carried at amortised cost - The estimated fair value of fixed interest rate instruments with stated maturity was estimated based on expected cash flows discounted at current interest rates for new instruments with similar credit risk and remaining maturity.
Management of the Group considers that the carrying amounts of financial liabilities recorded in the financial statements approximate their fair values.
37 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Capital risk management  The Group manages its capital to ensure that entity will be able to continue as a going concern while maximizing the return to the equity holder through the optimization of the debt and equity balance.

Management of the Group reviews the capital structure on a regular basis.
Based on the results of this review, the Group takes steps to balance its overall capital structure through the payment of dividends, as well as taking of new borrowings or redemption of existing ones.
The gearing ratio at end of the reporting period was as follows: Borrowings Term deposits in banks Cash and cash equivalents Net borrowings Equity Net debt to equity ratio 31 December 2021 31 December 2020 61,562 (4,647) (4,845) 52,070 114,943 45% 20,164 (9,830) (2,023) 8,311 137,984 6% Major categories of financial instruments  The Group’s principal financial liabilities comprise borrowings, and trade and other accounts payable.
The main purpose of these financial instruments is to raise finance for the Group’s operations.

The Group has following financial assets: Cash and cash equivalents, construction contract assets, loans issued and trade and other accounts receivable.
Financial assets Cash and cash equivalents Term deposits in banks Construction contract assets Trade and other receivables Investments in financial assets carried at FVTPL Loans issued Bond Total financial assets Financial liabilities Trade and other payables Borrowings Total financial liabilities 31 December 2021 31 December 2020 4,845 4,647 126,185 27,744 14,732 18,190 620 196,963 2,023 9,830 122,510 13,692 12,161 3,121 655 163,992 31 December 2021 31 December 2020 39,255 61,562 100,817 32,725 20,164 52,889 The main risks arising from the Group’s financial instruments are foreign currency, interest rate, credit and liquidity risks.
Foreign currency risk  Currency risk is the risk that the financial results of the Group will be adversely impacted by changes in exchange rates to which the Group is exposed.

The Group undertakes certain transactions denominated in foreign currencies.

The Group does not use any derivatives to manage foreign currency risk exposure.
38 35 - - - - 35 1,704 1,704 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities as at 31 December 2021 and 31 December 2020 were as follows: 31 December 2021 31 December 2020 USD USD 1 = 3.0976 GEL EUR EUR 1 = 3.5040 GEL USD USD 1 = 3.2766 GEL EUR EUR 1 = 4.0233 GEL Financial assets Cash and cash equivalents Term deposits in banks Construction contract assets Trade and other accounts receivables Investments in financial assets carried at FVTPL Loans issued 4,078 4,647 63,291 9,723 14,732 4,941 52 - 5,152 - - - 1,232 9,830 96,039 8,910 12,161 6,632 Total financial assets 101,412 5,204 134,804 Financial liabilities Trade and other payables Total financial liabilities Total net position 14,530 14,530 86,882 5,620 5,620 (416) 7,916 7,916 126,888 (1,669) The table below details the Group’s sensitivity to strengthening/weakening of functional currency against foreign currencies by 20% as at 31 December 2021 and 31 December 2020.
The analysis was applied to monetary items at the reporting date denominated in respective currencies.
As at 31 December 2021: USD impact USD/GEL + 20% USD/GEL – 20% EUR impact EUR/GEL + 20% EUR/GEL – 20% Profit/(loss) before tax 17,376 (17,376) (83) 83 As at 31 December 2020: USD impact USD/GEL + 20% USD/GEL – 20% EUR impact EUR/GEL + 20% EUR/GEL – 20% Profit/(loss) before tax 25,378 (25,378) (334) 334 Interest rate risk  Interest rate risk is the risk that changes in floating interest rates will adversely impact the financial results of the Group.
The Group has limited exposure to the interest rate risk as it borrows funds only at fixed interest rates.

Limitations of sensitivity analysis The above tables demonstrate the effect of a change in a key assumption while other assumptions remain unchanged.

In reality, there is a correlation between the assumptions and other factors.

It should also be noted that these sensitivities are non-linear, and larger or smaller impacts should not be interpolated or extrapolated from these results.
The sensitivity analysis do not take into consideration that the Group’s assets and liabilities are actively managed.

Additionally, the financial position of the Group may vary at the time that any actual market movement occurs.

For example, the Group’s financial risk management strategy aims to manage the exposure to market fluctuations.
As investment markets move past various trigger levels, management actions could include selling investments, changing investment portfolio allocation and taking other protective action.

Consequently, the actual impact of a change in the assumptions may not have any impact on the liabilities, whereas assets are held at market value on the balance sheet.
In 39 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari these circumstances, the different measurement bases for liabilities and assets may lead to volatility in shareholder equity.
Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential risk that only represent the Group ’s view of possible near-term market changes that cannot be predicted with any certainty; and the assumption that all interest rates move in an identical fashion.

Credit risk  Credit risk is the risk that a customer may default or not meet its obligations to the Group on a timely basis, leading to financial losses to the Group.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk.

All clients go through client acceptance procedures before forming an agreement with the Group and, as a result, only creditworthy clients are selected.

The Group also establishes credit limits to its customers.
The credit risk on cash and cash equivalents and deposits with banks is limited because the counterparties are banks with positive credit ratings (BB-).

For cash and cash equivalents and deposits with banks the ECL is calculated using benchmarking the exposure to the risk of default according to the research produced by the international credit agencies (Moody’s).
For financial assets or contract assets that do not contain a significant financing component, the Group uses simplified approach of ECL calculation.

Under the simplified approach the Group either classifies financial assets into stage 2 or stage 3.

The Group measures the loss allowance for financial assets at an amount equal to lifetime ECL.
For trade and other receivables and construction contract assets the expected credit losses are estimated by reference to past default experience of the debtor, financial condition for the year, an analysis of the debtor’s overdue days and migration between overdue buckets for the past 3 years.

For loans issued the expected credit loss is individually reviewed and calculated based on the past default experience of the debtor and financial condition for the year.
The expected credit loss on financial assets are estimated by multiplying probability of default by loss given default and by exposure at default.

Liquidity risk  Liquidity risk is the risk that the Group will not be able to settle all liabilities as they are due.

The following tables detail the Group's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods as at 31 December 2021 and 31 December 2020.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

Such undiscounted cash flows differ from the amount included in the consolidated statement of financial position because this amount is based on discounted cash flows.

The tables include both interest and principal cash flows.
Weighted- average interest rate Less than 1 month 1-3 months 3 months to 1 year 1-5 years 5+ years Total 31 December 2021 Borrowings Trade and other payables 13.76% 0% 709 39,255 2,059 - 61,125 - 39,964 2,059 61,125 - - - - - - 63,893 39,255 103,148 Weighted- average interest rate Less than 1 month 1-3 months 3 months to 1 year 1-5 years 5+ years Total 31 December 2020 Borrowings Trade and other payables 11.34% 0% 201 30,702 450 - 20,183 2,023 30,903 450 22,206 - - - - - - 20,834 32,725 53,559 40 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 25.
RELATED PARTIES TRANSACTIONS AND OUTSTANDING BALANCES Related parties include owner, entities under common ownership and control with the Group and members of key management personnel.

Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected on the same terms and conditions as transactions between unrelated parties.
In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
The Group had the following balances and transactions with related parties: 31 December 2021 Owner Entities under common control with the Group Other Total Trade and other receivables Construction contract assets Loans issued Investments in financial assets carried at FVTPL Trade and other payables Construction revenue Other revenue Other income 1,437 1,139 - - - 2,247 1,246 - 1,627 3,060 - 4,078 3,125 - 2,672 8,621 17,448 10,748 6,282 10,654 2,760 37,515 2,321 9,211 20,512 14,947 6,282 14,732 5,885 39,762 6,239 17,832 31 December 2020 Owner Entities under common control with the Group Other Total Trade and other receivables Construction contract assets Loans issued Investments in financial assets carried at FVTPL Trade and other payables Construction revenue Other revenue Other expenses, net - 2,707 - - - 420 10 - 750 - - 12,161 2,369 68 54 - 7,385 29,284 2,077 - 1,358 17,753 5 3,489 8,135 31,991 2,077 12,161 3,727 18,241 69 3,489 The compensation of the key management personnel (recognized as current period expenses – Note 7) for the years ended 31 December 2021 and 2020 was GEL 10,934 thousand and GEL 12,451 thousand.
Prepaid compensation to the key management personnel amounted to GEL 5,820 thousand GEL as of 31 December 2021 (2020: 0 GEL).

26.
COMMITMENTS AND CONTINGENCIES Commitments – The Group as at 31 December 2021 and 31 December 2020 had contractual construction commitments towards customers as follows: Construction commitments Construction commitments 31 December 2021 GEL EUR 60,577 14,210 31 December 2020 GEL 46,304 EUR - USD 61,911 USD 11,827 41 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Legal proceedings - As at 31 December 2021 and 31 December 2020, the Group was not engaged in any significant litigation proceedings.
Management is of the opinion that no material un-accrued losses will be incurred and accordingly no provision has been made in these consolidated financial statements.

Taxes  Georgian tax legislation in particular may give rise to varying interpretations and amendments.
In addition, as management’s interpretation of tax legislation may differ from that of the tax authorities, transactions may be challenged by the tax authorities, and as a result the Group may be assessed additional taxes, penalties and interest.

The Group believes that it has already made all tax payments, and therefore no allowance has been made in the financial statements.

Tax years remain open to review by the tax authorities for three years.
Operating environment – Emerging markets such as Georgia are subject to different risks than more developed markets; these include economic, political and social, and legal and legislative risks.

Laws and regulations affecting businesses in Georgia continue to evolve rapidly with tax and regulatory frameworks subject to varying interpretations.
The future direction of Georgia’s economy is heavily influenced by the fiscal and monetary policies adopted by the government, together with developments in the legal, regulatory, and political environment.

For the last several years Georgia has experienced a number of legislative changes, which have been largely related to Georgia’s accession plan to the European Union.
Whilst the legislative changes implemented during last couple of years paved the way, more can be expected as Georgia’s action plan for achieving accession to the European Union continues to develop.

In addition to that, starting from early 2020 a new coronavirus disease (COVID-19) has begun rapidly spreading all over the world resulting in announcement of the pandemic status by the World Health Organization in March 2020.
Responses put in place by many countries to contain the spread of COVID-19 are resulting in significant operational disruption for many companies and have significant impact on global financial markets.
As the situation is rapidly evolving it may have a significant effect on business of many companies across a wide range of sectors, including, but not limited to such impacts as disruption of business operations as a result of interruption of production or closure of facilities, supply chain disruptions, quarantines of personnel, reduced demand and difficulties in raising financing.
In addition, the Group may face the increasingly broad effects of COVID-19 as a result of its negative impact on the global economy and major financial markets.

The significance of the effect of COVID-19 on the Group’s business largely depends on the duration and the incidence of the pandemic effects on the world and Georgian economy.
Management is unable to predict all developments which could have an impact on the Georgian economy and consequently what effect, if any, they could have on the future financial position of the Group.

Management believes it is taking all the necessary measures to support the sustainability and development of the Group’s business.

27.
27.

EVENTS AFTER THE REPORTING PERIOD Subsequent to the reporting period and before these consolidated financial statements were authorized for issue, the Group declared dividends to its shareholder with the total value of GEL 13,359 thousand.

On 21 February 2022, the President of Russia signed the executive orders on the recognition of the Donetsk People’s Republic and the Lugansk People’s Republic.
On 24 February 2022, a decision to carry out military operation in Ukraine was announced and Russia started invasion of Ukraine.

Subsequent to these events, the US, UK, EU and other countries announced an extension of sanctions on certain Russian officials, businessmen and companies.

These developments may result in reduced access of the Russian businesses to international capital and export markets, weakening of the Russian Ruble, decline in capitals markets and other negative economic consequences.
Russia has hit back at western sanctions for invading Ukraine by imposing export bans on a string of products until the end of 2022.
The two major sectors of Georgian economy, wine production and tourism industry, are heavily dependent on the Russian market: 55% of export of Georgian wine in 2021 were to Russia for total amount of 130 million USD, the second largest being Ukraine with total amount of $25 million USD; As for tourism sector, Russia and Ukraine also account for significant portion of travellers.
Management is monitoring developments in the economic and political situation and taking measures it considers necessary to support the sustainability and development of the Group’s business for the foreseeable future.

Management does not expect the consequences of these events and related future changes to have a significant negative impact on the Group’s operations.
42 ANAGI GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 28.

APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements were approved by management and authorized for issue on 11 November 2022.

43 ANAGI GROUP MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 1.
GROUP AND ITS ACTIVITIES Anagi LLC is the largest construction company in Georgia.

It was founded in 1989 and shortly afterward took up the leading position in the construction sector of the country, currently maintaining this position with dignity.

As at 31 December 2021 and 2020, the sole shareholder of Anagi LLC was Mrs. Nana Aroshidze, while the Company was effectively controlled by Mr. Zaza Gogotishvili.
The main activity of Anagi LLC is civil and industrial construction; the scope of its activities includes the full spectrum of the construction field.

The company is ready to offer a full-service package to a customer – starting from design works and completing with the commissioning of the site.
Anagi LLC offers a full package of design and construction services or any part, thereof, to interested natural and legal persons, including: Construction of hotels, residential, public, industrial buildings, and single-family homes Interior design and indoor works Exterior finishing works     Management of design and construction activities   Provision of motor vehicles and construction machinery services Laboratory services to determine the quality of building materials and products, and the compliance with Standards Advisory services regarding the organization, technology, legal procedures, and other directions of the field.
 Since 2011 Quality Management System – ISO 9001 has been introduced in the Company, which continues to function efficiently.

In 2017, Anagi LLC successfully completed recertification in accordance with the rules established by the International Organization for Standardization and obtained ISO 9001:2015 certificate.

Implementation of modern technologies and systems in management, and in the first place in construction, is the main priority of Anagi.
The Company employs highly qualified engineering personnel, most of them having over 10 years of work experience.

Currently, the company employs almost 2 000 people.
The Company owns the following subsidiaries as at 31 December 2021: Anagi Betoni LLC (formerly - Lugo LLC) Anagi Mechanization LLC Anagi Batumi LLC Anagi Hotel Development Anagi Education Ownership % Industry 65% 60% 100% 100% 100% Production of concrete Rental of construction machinery Real estate development Real estate development School Construction The Company and its subsidiary companies will hereinafter be referred to as the Group.
44 ANAGI GROUP MANAGEMENT REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari Anagi Betoni LLC operates a cutting-edge concrete production facility, which manufactures modern construction materials from all classes of concrete.

The Company owns an internationally certified laboratory equipped with all the necessary testing devices and equipment manufactured in Italy.
Main activities of Anagi Mechanization LLC consist in renting the company-owned construction machinery.

Its main customer is the mother company, Anagi LLC.

Another activity Anagi Mechanization is involved in is servicing company customers with various construction equipment and systems, such as scaffolding and uprights.

The Company provides construction machinery and equipment rentals to any individual or corporate entity.
It owns over 125 units of multifunctional machinery serviced by highly qualified and technicians.

Anagi Batumi LLC is mainly involved in development and sale of real estate.

Currently, the company is inactive, but owns property in a development project.

Anagi Hotel Development LLC is mainly involved in development and sale of real estate.

Currently, the company is inactive, but owns property in a development project.
Anagi Education LLC constructs private school intended for long term operating investment.

2.

DEVELOPMENT PLANS OF THE GROUP Many years of successful activity and experience of Anagi LLC in the construction field allowed the Group to obtain high qualifications in the field of construction production and enabled it to develop a flexible and comfortable environment for relations with customers.
Rapidly developing technologies and highly competitive environment creates additional motivation for the Group to utilize new, innovative approaches in the construction, as well as in the management.

The engineering team, procurement, and technology departments constantly search for, test and implement the innovations offered in the construction sector.

1) Quality Control i. ii.

iii.

iv.


v. Development of an efficient cooperation mechanism with the production department to serve both the executive and the quality team.

Assessment of efficiency and scope of growth.

By performing SWOT analysis, strengths, weaknesses, opportunities and treats are identified by internal audit.
Internal audit is specific to Group in this case, it consists of specialists from different departments which cooperate in this process to include all factors together which is than documented and introduced to responsible parties.

According to identified factors KPIs are given to management which include lots of qualitative characteristics to improve.

The Group is in constant ongoing process of development as required by industry specification.
Formation of a team of quality engineers and their assistance and provision of appropriate training.

Team of internal quality engineers assesses work performed on sites and assists remediation of deficiencies if any.

Team is expanding yearly and currently quality control department consists of 45 engineers.
In order to provide for efficient experience sharing, raising motivation and refining structure management, the division has established a ranking system, by introducing 5 ranks: senior quality engineer, quality engineer, quality specialist, assistant, and trainee with a probationary period, and defined the scope of financial reimbursement.
Beginning of on-site work, refinement of record-taking and progress control mechanisms, which gives the Group management opportunity to directly observe process and eradicate any deficiency in a quick and effective manner.
Refining normative requirements based on the available experience and information Synchronisation of normative documents - it has been decided to synchronise the normative base developed in the division with the documents currently effective in the country to simplify communication with customers and their supervisors.

About 10 such documents have already been drafted.


45 ANAGI GROUP MANAGEMENT REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 2) Construction Technologies i. ii.

iii.

iv.

employment of engineering staff using the rotation principle in order to maximise the use of leading engineers and experience in the Group.
In order to raise awareness of the issues dealt with by conditional opponents of quality engineers, aka administrators, the Group introduced a medium-term production on-site training for quality engineers, which will improve their knowledge in construction planning, workforce management and existing processes.
Determining and archiving of the problems found at construction sites; In order to improve the quality of archiving for the administrative documents managed in the division, the Viber platform was replaced with Workplace, which will maintain continuity and availability of the production documents collected in the past periods; Organization of trainings, with priority given to trainings and seminars organised by the world’s leading manufacturers; Organisation of thematic search and development of alternative methodology in order to ensure fundamental resolution of pending technical problems; In order to improve the existing technology and ensure a higher quality in recommendations made based on the historical information, the division has created industry-specific teams, which, apart from standard works, also specialise in monitoring specific technologies, such as hydro-isolation, automated plastering, wet facade technology, etc, to strengthen the quality teams working at the sites with personnel experienced in the kind of work in progress and shorten the time required for sharing the experience.
3) Workplace hygiene and labor protection is a part of Anagi LLC’s Health and Safety Policy.

The key objective of the Workplace Safety Policy is to ensure all employees with such a work environment where they will enjoy a high level of adherence to the principles of equality, collegiality and mutual respect and will have all the tools and aids necessary to carry out their duties effectively.
This commitment is supported by the Group’s Policies through its Health, Safety, and Environmental Management System.

The tasks of workplace hygiene, safety, and environmental protection are the main motive force for the Labor Protection and Safety Policy Department of Anagi LLC.

This Department was created for effective, everyday control of operational and strategic issues.
Labor Health and Safety Engineering Department of Anagi LLC is committed to the following ideas: - Ensure systematic improvement of working conditions; - Protect employees' labor rights; - Improve working conditions; - Improve hygiene and sanitary conditions; - Provide necessary training and instruction for the employees.

46 ANAGI GROUP MANAGEMENT REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 3.
MAIN FINANCIAL AND NON-FINANCIAL INDICATORS, AND ADDITIONAL DISCLOSURES REGARDING THE AMOUNTS RECORDED IN THE CONSOLIDATED FINANCIAL STATEMENTS According to the consolidated financial statements, the revenue for the year 2021 was 254,268 thousand, 96% of which was revenue from construction activities amounted - 242,962 thousand.
The revenue from construction activities for the year has shown significant increase amounted 5.6% compared to 2020 (230,041 thousand) which is mainly caused obtaining significant construction contracts.

The Group expects that its activities will grow significantly in the coming years as a result of obtaining further significant contracts and 2022 revenue reaches to GEL 400 MLN.
The chart below shows the trend in the revenue from 2016 to 2021: Revenue 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 - 2015 2016 2017 2018 2019 2020 2021 2022 Liquidity Ratios Quick liquidity ratio Current liquidity ratio 31 December 2021 119% 140% 31 December 2020 189% 213% Quick liquidity ratio is calculated by dividing the sum of current deposits, cash and cash equivalents, trade and other receivables and other current assets by the current liabilities including taxes payable, current borrowings, trade and other payables and current part of advances received.
The Group does not experience any problem with liquidity.

The management believes that it will be able to settle all the current liabilities without having to attract additional funds.
Profitability ratios Net profit margin Gross profit margin Rate of return on equity 2021 4% 12% 8% 2020 15% 15% 26% The existing trend in the rate of return demonstrates that the Management is effective in managing the Group’s assets to generate profit, while profitability of sales is indicative that the Group is able to generate profit from its revenues.
47 ANAGI GROUP MANAGEMENT REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari The Group has been active on the Georgian market for years and regards 3 companies as its rivals.

However, unlike its rivals, which operate in certain construction industries, the Group is active in all the industries of its competitors, which contributes to its strength on the market.
The Group cooperates with largest commissioners in Georgia through to its brand and image of a stable and trustworthy company, including its 33-year long experience, customer-oriented approach, financial solidity and sustainable settlement of its liabilities.

Management believes that the success enjoyed by the Group is largely due to the high professionalism of its team.
Majority of the engineering and technical staff involved in the construction processes have the experience of over 10 years, and in some cases, over 20 years as well.

4.

MAIN RISKS AND UNCERTAINTIES 4.1 Market Risks and Their Management Currently, the main uncertainty faced by the Group is the market demand for large-scale projects.

However, the Group does not expect risks to be exaggerated in this regard.
The Group is exposed to market risks, which include fluctuation of the fair value of cash flows from financial instruments due to variability of market prices.

This might be mainly caused by currency and interest risks.

Uncertainties also include the potential future strengthening of financial and other regulations, which will directly or indirectly cause stagnation or reduction of the real estate market.
On the other hand, historical evidence shows that such regulations, when they brought about adverse effects after initiation or implementation, may be reviewed or even softened.

4.1.1 Currency risk The Group is exposed to the currency devaluation risk, as the primary economic currency of the Group (Georgian Lari) has shown strong fluctuation tendencies.

In the recent years, devaluation of Georgian Lari has significantly affected the Group’s financial indicators and profitability ratios.
The Group has several contracts denominated in US Dollar and its expenses are mainly paid in USD.

However, there are contracts (several current agreements) denominated in Georgian Lari.

In order to mitigate the risk, the Group maintains its USD-denominated cash in a bank account and attracts the working funds in GEL.

4.1.2 Interest risk In order to mitigate its interest risk, the Group borrows and lends money using fixed or variable interest rates, which is a sign of stability.
The Group does not expect any significant change in fixed interest rates, including in the national currency.

Therefore, the fair value of the Group’s cash flows is not expected to change due to fluctuations in interest rates.

4.2 Credit risk and its management The Group is exposed to a certain amount of credit risk, which consists in the possibility that its counter-agents will fail to perform on the liabilities to the Group.
The credit risk is mainly caused by construction contract assets, trade and other receivables and loans issued.

Procedures are in place to mitigate the credit risk, which are used by the Group to assess solvency of a counter-agent based on historical data.

There is also a maximum credit limit set for counter-agents and an individual approach with large trade debtors.
4.3 Regulation risk and its management The Group also faces regulation risk, which consists in the possible imposition of restrictions on mortgage loans for bank, which would significantly reduce issuance of such loans and, consequently, the demand for residential estate.

This would, in turn, affect the turnover of development companies and bring about a reduction in future construction projects, including commissions to the Group.
However, such revenue makes up a small part of the Group’s revenue and does not endanger continuity of the Group’s business.

A lesser risk is the risk of strengthening regulations in general, in all areas, which generally slows down economic growth and may indirectly affect construction industry as well.
48 ANAGI GROUP MANAGEMENT REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2021 Figures in tables are given in thousands of Georgian Lari 4.4 Operation risks and their management The Group’s main operational risks are the risk of fulfilling market demands under the quality promised to the customers of the Group, in order to avoid reputational problems and further operation.
To manage the risk the Group has created a quality control system, which ensures monitoring of all processes in the Group, and elimination and reduction of deficiencies.

To this end, the Group also employs highly professional and experienced personnel.

4.5 Liquidity risk and its management The section on financial indicators above shows why the Group does not face a problem with liquidity, which means that the Group’s current assets exceed its current liabilities.
In order to prevent a problem with liquidity and be able to cover all the liabilities when they fall due, the Group also uses a bank credit line.

In order to mitigate liquidity risk, the Group uses diversified financial assets, such as bank deposits, loans issued and trade receivables.

The Group reviews its financial position including its liquidity risk on a regular basis, at least once in a month assessing cash inflow against outflow and identifying remedies where necessary.

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