Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697752710948.pdf (Georgia)
Financial Statements and Independent Auditor's Report Limited Liability Company Microfinance Organization BaniGredit 31 December2018 Contents lndependent auditor's repon Statemenl olfinancial position _ Stalement of protit or loss and other comprehensive income Stalement of changes in eqoily ' .. Stalement ol cash nows Notss to the financial slatements 3 6 7 8 9 '10 O g"q,Thornton An instinct for growth' Independent auditor's report il!o$J6 $ra9ogqo!

6rabo6o 5a 0144, oooq'.
!o, l$Cr'no3rq,o To the sha€holders of Limited LiabiLity companv tuicroliiance o€an zation BaniC€dil': Adverse apinion We have audiljed the accompanying fnanclal slatemeits oiLim ted Labiity companv lvicrolinance organization Ban credil' (the company), which comPrise the slatement oifnancialposition as of December3l,2018, and the statement of pmni or loss and olher comprehensive income, shtemenl0l changes in equity and slateme.l ofcash flowsior the vear then ended and a su mmarv oi signilicant accounllng policesandotherexpanalorylnlormation In our op nion.
because or the signircance of the melte.
d scussed ln lhe Aasis rorAdveoe Opnlo' pa 69 raph, rhe financia statemeits do not present ia rlv the financia Posilion ot lhe companv as of December31 20r8 and the I financial perfonnanc€ and the cash rows for the vearthen ended in accordance with Inlernational Financial Reporling Slandards Basis for Adverse Oqinion Asexplained in Nole 2.5 to lhe linancial stabments the Company has not vel adopted the new IFRS 9, because the Companys intenal accounling svstems are nolveldeslgned to provide fullinfomalion .eouned for compllance wilh this standard s requ remenls The management intends to iullv adoPl IFRS I for the rcporting year endlig 31 December 20 1 9 IFRS 9 Finaicial lnstruments s eff€ctive lor ann ua periods beginning on or after 1 January 201 8 and consider n9 the natu re ot lhe companv s business and signiricance oi tinancial instruments lor the financial statements ofthe Companv, in our opinion lhe factrhat the slandad has notbeen adopted has rnaterialand Pervaslve effect on the nnancial fuftherdescribed in the.luditorb Respo'sibilitios fot lhe Audil We conducted ouraudit in accordance with Inlenaljonal Standards on audiling (lsAs') our responsibilllies underlhose slanda.ds a€ at lhe Financiat Statenents section ofour repod we are indePendent otthe Company in accodance wlth lhe lntehationa I Elhics Standards aoa rd ior Accou nta nls Code of Ethics for Professioral €levantlo ouraldil or Accountanis (he lESBA Code ) togetherwith the eth caLrequirements thal a€ the financial stalemenis in Geolgia, andwe have fullilled our other ethicaL rcsPonsib lities in accordance with those ethical rcquircmenls.
We believe lhat the audit evidence we have obtained is suftic ent and apprcpiate lo provide a baslsforour adve6e opinion Q"GrantThornton An inst nct forgrowth Management repatting lvlanagement is rcspons ble for the l,lanagernenl Reportlng The [4anagemenl Repodng comptises the information aboutthe aclivlties of the Company, risk analysis.

future plans and othermatte6 as req!rcd by the Law ofGeorgia on Accounling.

RePorting and Audiling.


The lvanagemenl Reporling is expected to be rnade avaiLab e to us after lhe date of this audilors Epon ourooinion on $e nnancial statemenls does nolcoverlhe [,lanagement RePornng.
ln conneclion with our audil ot lhe rnancial stalements, our rcsponsibillv is lo read the l',lanagement Repoding identiried above when it becornes available and, in doing so, considerwhelher lhe olher informalion is mateiallv inconsislent wilh the fnanclal statements o.ourknowledge oblaired in the audit, orolheMise app€ars lo be rnaterially misstated and to presenl rcevanl €pod Responsibitities of Management ancl Thase Charyed with Governance for the Financial Statements Managemeni is responsible forthe preparalion and fair presentalion ofthe iinancial slatem€nls accordance with lFRSs.
and for such interialcontrolas management detemines is necessarv toenable the prcparaton of f nancial statemenls lhatare tree from materialm sslatemenl whetherdue to lraud or in the linancial statements managemenl is rcsponsible torassessing the Companv s abilily lo In p€paring continue as a going concem, disclosing.

as appicabe matlec rc ated lo gong concem aid using lhe go ng concem basis of a@ounting unless ma nagemenl erlhe.

ntends to liquidate the Compa nv or to cease operalions.
orhas no realistic allernative bullodo so Those cha€ed wilh govemance are responsible foroverseeing the Companys linancialreporling Auditor's Responsibilities for the Audit of the Financial Statenents Ourobjectives are to obtain reasonable assurance aboLrlwhether lhe fnancial stalements as a whole free from maleia I misstatement, whetherdue lo fraud oreiior' and lo issue an auditols reportlhat a€ includes ouroplnion.
Reasonabe assurance is a high eveLofassurance, but is nota guaranlee thatan aud t conducled in accodance wlh lSAs w la ways detect a mate a|rnisslalemenl when rtexisls t!4isstalemenls can arise irom fraud orerrorand are considered materal i lndividLrallv or in lhe aggrcgate.
they could reasonably be expected to infLuence the economic decisions or usels laken on the basisof theseiinancialstatements As padofan audil in accordancewith lsAs, we exercise professional judgrnent and mainlain prcfessional skeplicism throughout the aud I We a so: .
ldenlfv and assess lhe I sks oi maler al m sstalement of lhe iinancia slatemenls whelher due to f€ud or errcr design and p€ rfom aud t prcced urcs responsive to those risks a nd obtain audLt evidence that is sufficientand appropriate to provide a basis forouropiion The sk ol notdeleclng a mater aLmisslatement resulting from fraLrd is hlgherthan lor one resull ng frcnr effor' as rraud mav involve colusion, fo€ery, intentional omissions mis€presentations.

orthe oveiiide ofinternal .


Oblain an undeBtand ng ol iniernal conlrol .eLevanl to Ihe audilln order to design audil procedures lhat are aoDropriale in the circumstances, but nol for the pupose ofexpressing ai opinion on lhe efiectiveness of lhe Companvs internalcontrol - p GrantThornton An instrnct lorg.owth Eva uale the approp atoness ol accounnng policias used and f's ieasonablensss ot accollnlrng sslimatss and l€lat€d disclos'lles made by management.
Conclud€ on lhs apprcpdaianess ofmanagemeds use ofhe going concem basis of accounring and.

basod on lhe audil evidsnci obtain€d.

whether a matenal unceriaint €xisls retated to evgnts or condnions thal may €sl signrfr@nt doubl o. lhe Company s abr y to conlhoe as a 90 .q concern.

ll w€ conclude lhala malenal lncerlarnry exists we are requ red lodraw allenl'on nolraud ors .epon io lhe relaled disclosures in lhelnaqcral statemenls or.

'fslch drsclosures are Inadequare.


to moditouropinron Ourconclusrons are bas€d on rhe audil evidenc€ obtain€d uptothedateof our auditoas rsport Howsver.

tutur€ ev€nls or conditjons nay €use lhe Compsny to cdase to conlinue Evaluate lhe overall presenta on, struclule and contsnl ot ths frnancial statements.

including ths disclosurEs and *,lrelher the li.ancial statemenls repEse.rrhe !.denying t.ansactions and€ve.ts r. a manne'lhal ach€ves ,b r p€se.raliol .
Oblain sulfcient approp.iate audii evideoce regarding th6 nnancial infomation of th€ enhri€s or businsss actitlj€s wihin he Company !o epress an opinion on ths fin€ncial slatdnenls.

We are tor the dir€clion, supeMsion and parfomanca of lh8 cofipany audit !

b €rnain sol€ly €sponsible rssoonsible ior ouraudii ooinion we communicale with thoss charged with go!€rnanc€ scope and tming ofthe audd and srgnif€nl audil fLndings inclldr.g any signrlicanl denoencies In internal conl.ol that we idenlifydunno o!.
aud regarding.

among othermatlels, the plained Kelevan Ghambash dze 14 June 2019 Statement of financial position Cash and cash equivalenls Prcp€rly and equipnsnt Liabililies and equily liabililies Olher liabililies Total liabililies Equi9 Additional contribulions to equity 35.42?
(3,313,029) (2.7E4,70E) (796,937) 1570.777) Total liabiliries and equiry 2.692,237 2,614,039 The finandal slalements were approved on 12 i,'lay 2019 by Rma oolidze I cnt"tu*"r"r f1@1trp ( The staranent ol inanci.
poslonislo stalemenls setoll on pages l0 to 33 be read in 6nju.ct o r w rh the rcles to and fom ng pad ol the i.ancial Statement of profit or other comprehensive oss and ncome In Geoqian lad lnt€ €st and simalar income Inte€sl and similar expense N€t interest income / (expense) (Loan loss expens€) / rccovery Net inEEst income4€xpense) aner loss€s Prcliv(loss) lrom rcvalualion of loreign cunency Prciiv(loss) fiom ioEign cunency dealing Deprecialion oeense Protiv(loss) befo€ income tax Incoms lax (expenss)/Ecovery Ot h e r con p rc he n s iv e i ncon e. '11 12 10 2014 398,168 (349.955) 44.213 (352,895) (304,682) 5,444 (E,891) {169,558) (5,255) (2,U t) (75,E64) (561,467) 33,'146 \528.321J 2017 255,139 (356,019) (100,880) (93,010) (194,496) (64,176) (3,370) (146,620) 17,290) (3,147) (99,502) (518,600) (4,580) (523,1E0) Total comprchensive income ior lhe year .528,321) (523,180) .Thesralemexofprolilorossandother@frprehensve'ncome'slobe'ead,n@nlunctonwithlhenolesloand fom ng padolthelrancia statements set out on paQes 101o33 Statement of changes in equity Sharc 332,600 35,423 12,261,328) (1,893,504) hc€ase in sha|e capilal 1,845,908 Total transactions wilh ownets 1,U5,908 Pront / (loss) ror lhe year Tota I co n Ue he n $/ e i n c an e 1,845,906 1,U5,94E (523,180) (523,180) (523,160) (523,180) asol31Oecember2017 2,174,504 35,423 12,784,708) 1570,777) Inc.ease in shar€ capital 302,16'l Total lnnsactions wilh ownerc 302,161 Prolit / (loss) for the year Tota I co n pre h e n s ive i n con e 302,161 302,161 (528,321) (52E.321) (528,321) (528,321) as of 31 December20lE 2,480,669 35,423 (3,313,029) (796,937) Statement of cash flows In Georgian lai Cash flows from opeEting activitiCs lnleresl E€eived from borcwings Loan principal covered by boffowings Loans issued Operalang tax paid Cash paid for commlnal setuices N€t cash from / (us€d fo4 operating activities Cash nows from investing activities cash paid foracquisition and development of ppeE Cash paid foracquisition ofinrangible assets N€t cash provided from invesling
 aclivilies Cash nows from linancing activilies Replenishment of capital Netcash pmvided from nnancing activities NetincEas€/ (decr€ase) in cash and cash equivalents Cash and cash equivalents ar the b€ginning of the penod Exchange €t€ differcnce Cash and cash equivalenls at lhe end ofthe p€iod year ended Yaarended Oecember3.l Decembe.3l 2017 201E 1,054,040 .1,127,3@) (138,630) (63,476) (8,333) (9,775) (1,E55) \'149,177) (118,855) (14,763) (14,763) 302,161 2,262.645 (362,480) (1,949,646) 252,720 119,102 90,600 17,421) 202,481 165,947 545,992 (877,886) (120,139) (53,655) (0,844) (26,587) (1,389) (276,045) (650,606) (21,000) (21,000) 1,661,568 223,552 (400,531) (753,363) 731,225 59,619 34,453 \3,272) 90,800 Notes to the financial statements 1 Nature of operations and general information These financial slalemenls n clLrde financial nformat or of l\,licrofinance o€anization Banicr€dit LLC (rhe company).
Which ls a imited liabiliry cor.pany, was established in 201 0 and ircm the day of the eslablishment unlil now il issues loans, - having ils business add rcss al Tbillsi, Gakhokldze slr.
i€ Th e shareholde|s of the Cornpany arel Abesalom Shavgulidze, Cil zen ofGeorgia Maka Gotsiridze, C tizen ofGeorgia Edwad Pope, Citizei ofG€al Brilain Vakhtang Ch kovani, Cltizen of GeoOia Total 31-Dec-2018 31-Dec-2017 20.40% 60.00% 10.00% 10.40% 20.000/0 00.00'/" 70.00% 10 00% 100.00% 100.00% The average number of emp oyees of the Company dunng 2018 was 0 emp oyees (2017: 6 employees) Basis of preparation 2 2.1 Statement of compliance The flnancial slatemenls have been plepa€d Slandards ('lFRSs") as ssued by the Internalional Account ng Slandads Boad (' IASB ).
2.2 Basis of measurement Ihe linancial stalements have been prepared oi lhe h slorcal cosl basis with the excepl on for ce.lain financial instrumenls lhatare stated at Dresenl discounted value ot tuture cashilows.

The deta s ot measuremenl for each category ofassets and liabi ties aredisclosed furlherln these noles.
in accordancewlh Intemaliona I Flnancial Reponing 2.3 Functional and presentation currency The national currcncy or Georg ia is the Georgian lari ( la ") wh ch s lhe Company s ru nctioial cuiiency.
since ths curcicy besl reflects lhe economic subsian@ ofihe underlying evenls and lransactions of the Comoanv 2.4 Use of estimates and judgmenl The p€paralion of tinancia stalements in contomily wilh IFRSS rcquircs management lo make cr lical accounling estimales and assumptions thal aftect lhe.epoded amounts ot assels and liabililies atlhe date or the financial slalements and lhe rcpoded amounls or €venLresand expenses dudng lhe reporting per od.
Signlncant areas invo ving a higher deg.€e ofludgmenl or complexily.
or areas where assumptions and estimates are sign iicant lo lhe financial statements are disclosed in lhe note 13lo lhe 2.5 Adoption of new and revised standards In lhe cunentyearthe Company has adopted a otthe new and revised Slandards and lilelp€talions issued by rhe Inremaliofal Accounting srandads Boad (rhe IASB") and Inlemalional Financial Reporting Interpretations commiltee (the "lFRlC ) ofthe IASB thatal€ etieclive tor annual reponirg pe ods beginnlng on 1 Jai uary 201 6. rclevanl to its operations and The nalure and the ettecl oflhese changes arc d sclosed below.
These iew slandards and amendments a€ aDo ed io.

the iilst iime in 201 8 New and revised standards and interpretalions that afe effective forannual periods beginning on or after 'l January 2018 Fo owing.elevanl new staida.ds revsions and amendmenis toexisting standards were issued by the IASB, which a€ efiective for the accounting per od beg nning on of afier Jaiuary 1.
2018: Standard Title Efrecrive date IFRS 9 |FRS 15 lAs 28 Financial Insrrumenrs (nole 3.6) Revenue irom Contracts wih Cuslome6 (iote 3.11) Investmenls in Associates and JoinlVenlures Janrary 1 .

2018 Ja^rary 1 , 2018 January 1,2018 Only adoption ol IFRS 9 is Glevant lor lhe Companys financia statements however the Company has nol yet adopted lhe new IFRS 9, because our intemal accounting systems are not yetdesgned ro provde follinformalon required iorcornpliance with th s stafdard s .equ irements.
The management inlends lo rully adopt IFRS 9 ror lhe repodifg year e nding 31 December 201 9.

Standards, interpretations and amendments to exisling standards that are not yet effective and have not been adopled ea y by the Company For the fina ncial yea r of these financial stalements the tollowing rcteva nt new standards.

ntelpretations and amendments to exisling standads have been publshed bul are noiyet effective and have not bee.
adopled early by the Coripany Inlormaton on the relevant new standards amendnrenb and inlerp€lations that are nol yel efiective forthese linancialstatements has been p.ovided betow.

New standa.ds and si9nificant amendments tostandards: lFRs 16, leases.
The IASB issLred lhe new standad for accouil ng tor January 1 2019 (a) The new standad does notsignilicantly change the accounting for teases foriessors However, itdoes €quire less,aes to recognize most eases of lhe balance sheets as lease liabililies, wilh lheconespondrng righlor-Lrse assets (b) Lessees rn usl apply a sing e model tor all .ecogn zed eases but wil have the option notto recognize 'shorl-tenn' leases and leases of low-value the prolitorloss recognition patlem for rccognized leaseswirl (c) Gene€ily, be similarlo iodays fnance lease accounting, with inte€stsnd deprccistion expense €cognized separarely in the stalemenl of profit or ross Early app ication is permitled provided the new revenLre standad, IFRS 15, is appied on the same dale Lessees m usl adopi IFRS 16 uslng either a ful rclrospective or a mod lied fetrospecl ve approach [,laragemenl has yel to assess lhe lmpact olth s revised standard on lhe Companys financial Annual lmprovements to IFRS 2015-2017 Cycle amending IFRS 3, IFRS 1 1 , IAS 12 and 23 'AS IFRIC 23 Uncedainly over Income Tax Treatments:The intepretalion the determination ortaxable prclit (iax loss) lax bases, unused add€sses lax losses, unused taxcredils and tax rales, when there is uncerlainty over ncome tax t.eatmenls under IAS 1 2 ll speciically consrdeBl January 1 , 201 I JanLrary 1 2019 Whether tax lrealments should be consid€ AssumDlions tor laxation authorilies' exam inalions: €d colectivelv New standar.ls a nd signincant amendments tostandards: The detehinaton ofraxabre protit (taxtoss), tax bases, unlsed tax rosses, unused tax credits and tax rales and lhe effectofchanqes in lacls and Amendments rn lFRs I Financiat Instrumenrs re al ng to prepaymenl feat!€swlth negalive compensation This amends the exisling rcquirer.enls in IFRS 9 regading termination .ighls in orderro alow msasuremenr ar amodized cost (or, depending on rhe business modet atfai.vatue rhrough othqcomprchensve iicome) evef in lhecase ofnegalive compensaton Amendment to IAS 1 I Emp oyee Befef ls: The
 amendmenrs cta rit lhal: on amendment, cLrrtailment orseuement ota deiined benefit ptan, a company now uses updated actua risl assumptions ro detemine its cLrrrenr setuice cosl and net interesl for lhe p€dod aid lhe efiecr oirhe assel ce ing is disrcgarded when calculaiing the gain o. toss on any seltement of lhe p an and is dealwrth separately in othe.
conprehe.s ve ircore Amendmenls in IAS 28 Investments in p6soc ates and Jo nl Ventures relaling to longtenn intercsls in assocates and joinr venrures These amendmenls clait ltut an entity applies IFRS 9 Financiat Inslrlments to longtem interests n an associate or joint venru re lhat fom part of the nel investment in the associate orloint ventu€ blt to which the equriy method is Amendments lo References tolhe Conceptuat Framework n |FRS Slardards -.nendnells ro |FRS 2 |FRS 3 |FRS 6 |FRS 4 tAS I tAS 8 IAS 34, IAS 37 IAS 38 IFRIC 12, tFRtC 19, tFRtC 20, tFRtC 22. and StC-32 lo updale lhose pronouncemenls with regard lo references to and quotes from the tramewo orto ind cate where lhey refef to a ditfe€nl verson ot lhe Conceplual Framework.
Amendments lo lFRs 10 Fina nciat statements and tAs 28 Investments in Associares and Joint Ventu res (201 r ) €tating conlribulrol o!

assets lrom.nd lvesto.

ro s associaF or to 1r ve.

[.e ro rhe tlearment of rhe sate or Janlary 1 .

201 9 Ja nuar!

1 .

2Ol9 Januarv 1 .

2019 Januay 1 2A2O Efiectve date dsierred indefinirety AdoDtol .s stil permiled.

l',la nagemenl anticipates thal at the retevaft pronoun@ments wit be adopted in ihe Compafy s accounring poricies fo.
the tiEt period begiri ing afler rhe elfective date ot rhe pronouncement The Company's rn anagement has yel to assess the mpactoilhesechangosonthetinancia siatements.

3 Significant accounting policies 3.

'1 Foreigncurrencies Fare ig n cu ffe n cy tra n$a cti a n s In preparing lhe linancia stalemenls, transactons in cufiences otherthan the functiona curencyarc recorded at lhe rales oiexchaige delined bylhe NatioiatBank olGeoqia prevaiting on the dares oi lhe llansactions.
Al each repoding date, monetary ilems denomtnated in ioreign curences are rerranstared allhe €l€s detined by lhe NationalBank otceorgia prevaiting on the reporrins date, which is 2.6766 lai ior 1 US dollar and 3.0701 laa for l euro as ot 31 December 2OlS (31 December 2017:2.5922 tatj for 1 US dolla.
3.1044 larifor l euro) Non-monetary ilems a€ not @lranstated and arc measured ar historic cost (translated using the exchange rates at the transaction dale), exceptfor non-monelary iems caded aliatvalue thatarc denominated ln fo€ign curenciaswhich are relranstated at the rares prevailing on lhe dale when the fairvalue was determined.
Exchange difibGnces arising on the selllement and retranstarion otmoierary items, are inctuded tn orotl or loss tor lhe oelod 3.2 Property, plant and equipment Properly, pantand equipmenlare stated atcost ess accumu ated depreciation and any accumulated impairmenl losses Cost compises purchase price includlng mporl duties a nd noniefundab e pu rchase laxes and otherdi€clly attdbutable cosls.
When an item otpropedy plantand equipment com pises majorcomponents havi.g difierenl usetullives lhey are accounled for as separate tems of properiy olant and eouioment.
Propenies in the course oicoistruclion forprcduclion, €nlal or administrative purposes arc canied at cosl, less any recognlzed irnpakment loss Cost includes dirccl y atlrlbutab e expenditurcs, site preparation, nslallation and assemby cosls professional fees and forqualirying assets, bonowing costs caplalzed in accordan@with the Companys accounting pollcy.
Buildings thatare leasehold propeny are also included n property plantand equipmenl ifthey are held under a finance ease Such assets ar€ deprcciated over lheir expected usefuloroverlhe lem ofthe lease.
iishorter The gain or oss arising oi the disposalor rel €ment oran item orpropedy plantand equipmeit is delemined as lhe difie€nce between thesales proceeds and lhe carying amount orthe asseland is rccognized n prolit or loss Expendilurc to replace a component of ai tem of propeny, planl and equlpment that is accounted for sepalately ls capitalized wilh lhe €rrying amount orthe component being written ofi.

Othersubsequent expenditure is capilalized iffuture economic benetils willarlse from the expendilure.
Allother expenditure ncluding reparand maintenance, is recognized in pronlor loss as incur.ed Deprecation s charged lo profl or loss of is added to the cosl ofotherassel on a straighl line melhod over the estimaled useful lives ot rhe individual assels Depreciation commences when assets aE available tor use The estimaled usetullives are as follows Buidiigs and facilities Compule6 Fumiture and olher Olherfxed assets 30yea6 - 5-yea6 - sye.B , 7,r0 yea6 3.3 Intangible asseis Intangibe assets, which are acqui€d by the Company and which have lin te useiullives are stated at costless accumulaled amortizalion and impaimenl losses.
Amodizatioi ofinl,angible assels wilh nnile usefulllves is charged to protitorloss on a straght line melhod over the estimaled usetullives ofthe inlangible assels, whlch is eslimated at 5-7 years tor soflware, righls and others nlangible zsset with a n indefinite useful il€ are not amortized.

nstead they are tested tor impaiment by comparing ils recoverable amountwith its car.y09 amo!nlannua ly, and whenevef ihere is an indication thar the intangible assetmay be impaircd.
3.4 Leased assets h accodance with IAS 17 Leases, the economic ownership of a leased assel is transterred to lhe lessee ifthe lessee bears subslanlially allthe sks and rewads related tolhe own€|shlp otthe leas€d asset.
The relaled assetis lhen recognized atlhe incepllon ofthe lease atlhelairvalue ofthe leased assetor iflower, rhe p.esenr value ofrhe rease paymenrs plus lncidentar payments itany A coiresponding amounr is recognzed as an oblgation undertinance lease irrespecl ve olwhether some of these lease payments a€ payable LrpJrontatlhe date ofinception oi lhe lease Subsequent accou nting tor assets held underiinance lease agreemenls, i.e.
deprcciation melhods and usefullives, conespond to those applied lo compa€ble assets which are legally owned byth€ Company.

The cor.esponding obligation underfnane lease is redued by lease paymenls lesslinance charges, which ale expensed lo tinance costs.

The inlercsl element oi leasing payments €presents a conslant prcportion oflhe capilalbalance oulslanding and is charged to protit or loss over lhe peiod ot Allother leases are treated as ope€ting rccognEed as an expenseon a reducing balance basis.
Associated costs such as.rraintenance and insu€nce, arc expensed as ifcur.ed.

leases Payrneils on ope€ting t€ase agreemeils are 3.5 lnventories Inventoies are assets held forsale in the ordinarv coLrrse ofbuslness or in the fom otmalerials or supplies 10 be consumed in lhe prcduclion prccess or in the rcnde.ing ofseruices ttems such as spare pads, stand'by equipmenl and servicing equ pment arc also €cogn zed as invenloies untess rhey meer the detinition ofprcpedy and eq!

pmanr.
pmanr.

Invenlories are slated at the lowerofcost aid net rcalizable vatue.

Nel reatzabte value isthe estimated se ling prce in the ordinary cou6e oi business, less the esumated cosls oi comptetion and se ing expenses The cost of nventories s based on th€ Averag€ method and includes expeiditu@ incufied in acqu ring the nvenlories and bringing them to the.existing tocalton and condition.
3.6 Financialinstruments Recognitian, vaiuatian and write-aft of tinanciat instrunents The Company Ecognizes financialassels and tiabjtilies on its stalement otfnanciat position when it becomes a pany to lhe contGctual obligation ofthe instrument Regularway purchases and sa esor financialassels and liabilties a€ ofnnancialifstruments thal wil besubseqlentlvmeasuredatfairvatuebenreentradedaleand settlement date are accounted torln thesameway as foracqu red instrunrents.
rccognised using selllementdate accou|ting.

Regutarway purchases When linancalassels andnnancial iabililies are recognized inltially.lhey are measured at tairvalue plus d reclly allributable transaction costs except the fnancta assets and tiabittties lhalare measur€d at la r value and lhe changed iairvalue is €cognized recognized al fair vaiLre.
in pfofitor oss The lastone w tinilatty be Afier in llalrecognition al tinancialliabi ti€s, othe.than labililies alfarrvatue thlough prctitor oss (lncluding heid forlrading) are measurcd atamortized cost using effective inlercstmethod.

Aflerinrial €cogn tion fnancialliab ities alfairva ue thrcugh prciitorloss a€ measured alfarvatuo.
The Company classitied its financ al assets into the following categories nnanciat assets at ia r vatue lhrough proft or loss, held,to,matu ly investments, toans and rcce vabtes afd ava lableJor-sate financ al inslruments.
The classificalion of investments behreen lhe categores is determin€d at acquisilion based on the guidelines established by the maiagement The Company detennines the classilication oiils financalassels after inil al recognitiof and, where a towed and approp ate re- evaluates lhis designalion ateach linancial year€nd.

Loans and rcceivables Loans and receivables are non-derivative linanclalassels wilh rixed ordetermlnable oavments.
thatarc not quered n lhe aclive markeiand th s category of tinanciatassets inctudes toans, receivabes and olherassels cash and cash on bank accouils.
Loans wilh fixed maluriles are inilia ly recognized atfair value plus r€lated transaclion costs Where lhe fan value of consideration g ven does nol equal the fair value of the loan tor example wherc the the ditfercnce belreen lhe fan value otconsiderat on g vei loan is issued al lower lhan ma|l(el €tes, and the tair value oilhe loai is recognized as a loss on initialrecognition oI ihe toan and nctuded in the stalemenl of prolil or loss and other comprehensive income as losses on origination ofassets.
Subsequenlly, the loan carrying value ls measured using the efiective interestmelhod.

Loans to customers lhaldo not have lixed matudties are accounled for under the eftective interestmethod based on expected matu.ily Loans tocuslomers are carned nel ofany allowance for impairment losses.

3.6.
'1 lmpairment of financial assets The Company assesses at each reporting date whelher a fnanc alasset or group ottinancial assels is Assets carned at anadized cosl A linanclalassel or a grcup oflinancialassets ls impa red and impairment losses are incurcd only if therc is objecl ve evideice of mpainrentas a €sull ot one or rnore events thatoccurred afterlhe init al €cognition ot the asset ('loss event ) and thal loss evenl (or evenls) has an impacl on lhe estimaled futurc cash tlows ot the tnanc alasset or g.orip otfnanc alassels lhat can be reliab y eslimated Criteria used lo determine lhatlhere is oblective evdence oian mpairmenl loss may include indicalions thatlhe bonoweror a grcup otboffoweG is experiencing significanl rinancialdifficu ty (rorexample, equily ratio, net ncome percentags or sales), derau ll or del nquency in inle@sl or pincipal payments, breach of oan covenanls orcondilrons, dele oralion in lhe value of collateral, the probabilV that they willenler bankruptcy or other financbl reorgan zation and where obsetuable dala indicatethal there is a measurabe decrease in the eslr.ated iulu€ cash llows such as chanqes in airears oreconomic conditions that coirelate w th defaults the Com pany nrst assesses whether objeclive eviden@ ot imparrment ex sts individually forfinancia assels lhal a€ individually signiticanl and ind vidually orcolleclvey ior iinancia assels thal are nol indivldualLy signincanl.lfit s delemined lhal no objeclive evidence or impairmenl exlsls foran indivldually assessed nnancialasset, whether sig nifcanl or not,lhe assel is included in a group or inancialassels with smilarcredlt risk characte slicsandlhalgloupoffinancialassels s collectively assessed for impaimenl.
Assets that are indiv dually assessed for impaiment and forwhich an imFnment loss ls orcontinues lo be Gcognised a€ nol included in a collective assessmenl of lfthere is objeclive evideice lhatan mpairmenl oss on iinancialassets canied atamortised cosl has been incuffed, lhe amounl of the loss s measured as the diflercnce belweef the assel s carrylng arnountand rhe presenl varue oi estimaled iulu€ cash trows (exclud ng iururc creditlosses that have nol been incurred)discounted atlhefnancalassefs o.iginal effecllve intercsl Ete (i.e.
the efiective lnterest €te computed at nil al rccognition).

Ihe carrying amountofthe asselsha lbe reduced through use of an alowance account.

The amount of lhe loss sha I be re@gn sed in lhe stalemenl of profit or loss and olher comprehensive income lia loan or heldto-maturity inveshent has a variable lnlercsl rale, the discounl rate for rneasuring a ny impaiment loss s lhe currenl enecl ve inlerest rale delermined underthe conlract.
The Company may measure impa rmenl on the basis of an instrumenls ia r value using an observabe ria.ketprice The calculaiion ofihe oresentva ue otthe eslirnaled future cash iows oia collateralised tinancialasset reflecls lhe cash fows that may resull from foreclosue less costs for obtaining and sellng the co lalera whether or not the ioreclosure s probabe For the pLrrpose ota collective evaluation otimpairment inancalassels are grouped on lhe basis ofthe Company s inlernalcredil grading sysiem lhat considers c€dil iiduslry, geographical ocatioi, collate€l9pe pastiueslatus and olher relevantractors rsk cha€cledstics such as asset lype, FutuG cash flows ii a grcup offinancalassets that are collecl ve y evaluated for impa rment are eslimat€d on lhe basis or th€ contGctual cash fows of the assets in the g.oup and h slorical loss expeienc€ exDerience is adlusled on lhe basis of cuffenl observable data to.efect the efiects of cuiient condilions thatdid not aftect the peiod on which the histodcalloss experience is based and to rcmove lhe effects of cond lions in lhe historical perod thal do nol curcnlly ex st. for assels wilh creditrisk characleristics similarto those in the group.
Hislorica loss Estimales oichanges in tuturc cash tlowsiorgroups orassels should fenedaid be di€clionally conslstentwilh changes in related observable dala frorn period lo perod (lorexample, changes in unempoyment rates, propefty pices, paymenr sratus.
orolherfacloF indicative oichanges n lhe probability otlosses in the grcup and lhe r magnlude) The methodoogyand assumplions used ror estimating iulure cash flows are reviewed regulary by the conrpanylo reduce any diferences betueen loss estimates and aclual loss experence Loans together with the assoc ated aLlowance are wrilten offwhen ihere is no realislic prospecl ofiuiure recovery and allcolaleralhas been realized orhas been transierred lo lhe Company.
lf, in a subsequent year, the amount of lhe estmated ir.pa rment loss increases ordecreases be€use ol an event occurring aiter the impa rmentwas recognized the previously €cognized impa rmenl loss is in"r"*"d or,"or""o o, uojusting the allowance account lrfururew te-off s Later recovered' the recovery is credited to the allowance accounl 3.6.2 Derecognition offinancial assets and liabilities A iinancial asset (or, where aPplicable a parl of a linancial asset or pad ot a group orsimilar rnancial assets) is derecognised when .
the rights to rece ve cash fLows ifom the asset have exptred; .
the Company has lransrered its rights to receive cash flows from the asset or retained lhe ighl to receivecashflowsi|omlheasset'buthasassumedanoblgaiionlopaythem]nfU]|wilhoutmatena| delav lo a thro parry Lrder a passrnroLgh a 'a1geae'l and ' TheCompanyeither(a)hastransferredsubstantLaLvalllhersksandrewardsoflheasselor(b)has neliher lransferred nor r€la ned slbstantially a lthe nsks and rewards of the assel buthas transferred controLof the assel Wherc the Company has iEnsfelied its rightsto receive cashflowslrom an assel and has neither rransferied nor;etarned subslaniiallv aLllhe risks and rewads oflhe assel nor transleried controlor the rr" t"-9"i""0lo ^e exlerl ol ll'e Compalv s 'o1rrn' """"' '.
"r."r, ConfinJi.grlvovere_l'al€"estheio'rotdguata'reeove'lnel'alsferedasselI rower oi lh'e origlnat carryrng amount of the assel and the max mum amount of conside€lion Comoanv could be requtred to r€pay.
19Involvementrn d-e assel lhat lhe A iina nclal iabililv is derecognised when the obligallon under the liabilitv is discha€ed or cancelled or Where an exlsting tiancial liabllitv is €p aced bv another rrorn the sarne lender on substanually difierenl te ns, o;lhe terms ofan existing liabiitv are subslantiaLlv rnodified such an exchange or modificalionistrcatedasaderecognlionoflheorjgna||abilityandtherccogntionolanewLabi|ily.and rhe diiference in ihe respective carrying amounts is recognlsed nlhestatem€ntofproiiorlossand othercornprehensNe ncome 3.7 lmpairment For lmpairment assessment pu rposes, assets a€ grcuped at the lowest Levels forwhich there are Lig",y nd"P*d"* indlviuallyior impa rment and some are tesled tl cash_gene6ting unit level (cash-s€nerallns un ts) As a resu t some assets are tested "r"h "nows lnpairnent of propefty, ptant and equipment and intangible assets t Assetsthalhaveanjndefnileus€fuIfearcnotsubjeclioamort]zatonandaretestedannua||y|0r impairment.
Assets lhatare subjectlo amo'dzation a€ reviewed ior impa ment whenever even$ or lndicate thatthe carrying amount may notbe recolerable An impaiment |oss "i,"r.uu*"" is rec;snized for the amount by which lha assefs carrying amountexceeds its recoverabE amounl "nrng"" Recove..o|earroLnl'shehghelofnelse|.ngpi|ceandva|Je'1Jse||l|.elecov€rabeamoLllofal asse|olcash-geneatingUnitisestmatediobe|essthanitscarryingamoun|'thecarryingamounlot the asset or ca;h-generaling !nit is reduced to ils recoverable amounl lmpai'meni losses are iecogn zeo as an expe*e immedialelv u nless lhe relevant assel is carded at a which case the impairment loss s l.ealed as a revalatron oecrease wr?
an rmpa'ne.I ross sLbseoJerry'e'e6es'e'ara T afoll ol rhe'asrel orcash_ge'erafng unlt is increased to lhe revised esiimate of its recove6bLe amou nt but so thal the increased carryrng amou* Ooes rct exceO tfre carrying amount thatwouLd have been detemined had no impanm€nt rccognized for lhe asset or cash-generating un it in pdor vears A reversal of an imPainnent loss rs amoLrnt in 'evalued loss recogn zed as ncome immediatey.

unless the relevantasset is caried ata revatued amount.
inwhich case anv reversalof moa.ment oss s lrealed as a revaluation ncrease.

3.8 Capital The company s sharc capila is delined by lhe company's chade r. The chang ing in the Company's Chaner (including the changes in the equily capital, the owners, etc ) s caried outby the companys padnels.

Accumulated prcfit-loss contains accumulaled poritsloss otcu.rcntand previous peiods.

Atl lransaclions rclated to the owne.s otthe company, when lheyarc ownels.
arc registercd in lhe Capita [lovemenl slatemenl n sepa€te artcles.

Payable dividendswittbe recognized as obtigations in the perod when declared 3.9 Provisions A provision is recognized in the statement ottinancialposltion when the Company has a tegator conslructive obligation as a result of past €vent.

and il is probable lhat an outtlow ofeconomic benefits willbe required lo sellle lhe obigation.
lflhe etrecl is material, provisions aredeterm ned bydiscounling lhe expecled fllure esh flows al a pre-tax rale lhat reilecls current market assessmenls ofthe lime value ofmoney and.

where appropriate,lhe rsks specillc lo the liability.

3.

10 lncome tax Income tax on the prcfl for lhe yea.

comprses curcnt and deierrcd tax.


Income tax is recognized in lhe statement ot prof t or loss and olher comprehens ve income except to the extent lhal il relates lo items rccognized di€cry in equity in whlch case ir is €cognized in equily.
Cunenl tax is the expecled tax payable on lhe taxable income for the year using tax rates enact€d or substanlialy enacfed atlhe balafce sheeldale, and any adjuslmenl lo tax payabl€ prcvious yeals In lhecase when tinancialstatements are authorized for issue beroG approprate lax relurns are submilted, laxable prcfils or losses a.e based on estimales.
Tax authorites m ghl have more stringent position n ntelPleting lax legislal on and in rcviewing lax ca lculal ons As a resull tax aulhorities mighl cla m addilionaltaxes for those transacuons, iorwhich they did not c anr previous y.

As a result sig nilicant additional taxes fines and pena lies could arlse.

Tax €view can include 3 calendaryears immed alely preceding lhe yearofa rcview In cerlain cncLrmstances tat review can include even more pefiods.
in rcspect ot Defered lax assels and liabillties a€ calcu ated in respecl oflemporary difiercnces using the liability melhod.
Deleiied ncome laxes a€ prcvided tor al tempoE ry difierences arising between the tax bases oi assels and labiities and lhe r carrying va ues for linancial repod ng purposes, exceptwhere the deferrcd incor.e lax aises ircm the niiia rccog nil on of goodwill or of a n asset or Liabil ty n a l.ansaction lhal is nol a business cor,rbination and, atthe time ofthe transaction afi€cls nelther lhe accounting prcrt nortaxable proft or loss A deieffed lax assel is recoded only lo theexlenlthatit is probable thattaxable profitwllbe available againstwhich lhe deductible temporary ditferences can be utillzed.
Oefefied tax assels afd iabilities a€ measured atlax ralesthatare expected to apply lolhe pe od when lhe asset is €aized orthe liabilily is setlled, bas€d on tax rales lhat have been enacted orsubslanlively enacled al the balance Deierrcd income lax is provided on temporary d ifle€nces ansing on investmefts in subsidiaries, associates and jointventures except whe€ lhe timing of lhe reversal of the tempo lary difiercnce can be controled and i is probable thatthetemporary differcnce will not reve6e in the foreseeable fulure.
Changes in corporate income tax effective from January 1, 2023 Efteclive January 1, 2023, tha€ w ll be signifca.l amendments to lhe Tax Code ot GeoBia, relaled to inlroduclion ofa new model for coroorate income taxation The new model(the Esloi an modelor corporale laxalion ) mplies zem corpoEte tax rale on retained lax rate of d slr buted earnings.
compared lo lhe previous modeloi 15% eam ngs and a 15% colpo€le tax rale charged to ihe company s prcft belorc tax, rcgadless of pront relenlion or d stnbulion As a / res!
Lt of changes starting 1 JanLrary 2023 financia iistilulions in Geo€ ia wil pay corporale iicome lax on earnings didnbu on (profil dishbui€d lo shareholders as divdends) and on individual lransactions lhat may be considered as indircct distrbution of ea.nings (benefils, gins, payments non-arm s length cross.bortert.ansactions wilh related panies.

expenses not related to economic activities, etc).


The corporale income tar arising iiom dislributon of d vidends is recognized as an expense n the period when dividends willbedeclared, regadless otlhe actual paymenl date or ihe perlod forwhich dividends are dstribuled.

rhe tax rate is 15/85 0lthe amount otnetd strlbution.
Fortax payable on anydivdends decla.ed and paid in 2023 and later, from earnings accumulated prior to 2022,1ax credil is avaibble torcorpolate income lax paid on undistibuted eahings underlhe According to the amended concept of coporate income taxation lhere will be no ternpoGry differen@s belween the carylng amounts olassels and liabilities in the statement ot financialposition and lheirtax bases Theretorc deterred tax assels and liahlities as defned n IAS 12 Income Taxes, are not tormed subsequenl to I January 2023.
3.11 Revenue recognition Revenue is recognlzed lo theexlenl that I s probablethalthe economic benelils willllowlo the Compa ny and lhe revef ue can be .eliably measured.

Expense s recognized to the exlent thal it is probable lhal the economic benefils w lflow iiom the Companyand lhe expense can be €liably measured.
The tolowing specillc crilera musl also be mel before revenue is rccognized tntercsl tncane and expense Inlerest incomeand expense for all inle€st-bearing held torlrading ordesgnated attairvalue lhrough prolilo.loss, are recogn sed within'iiter€st and intercstexpense in the stalement of profil or loss and other comprchensive income using the efieclive inleresl method.

fnanca instrumenls.
fnanca instrumenls.

exc€ptforthose classified as ncome Once the recoded value or a financialassel or a group oi similar linancial assets has been €duced due lo an impairmenl loss, inlerest ncome continues to be r€cog nized us ng the original efiecti!€ rate applied to the new carrylng amount.
interest Fee and connission incone Loan originalion fees fof loans ssued lo cuslomers a re deterGd (ogether with related direct costs) and rccog nised as an adjuslmenl to the efieclive yield or lhe loans F€es, com m ssions a nd other ifcor,re and expense ilems arc generally rccorded on an accrualbasis when lhe service has been prcvided.
Portfolio and other managemenl advisory and seruice fees arc €coded based on the applcab e setu ce The impact ofadoption ollFRs 15 on the company's financial statemenrs The managemenl conslders thal th s change has no maleral mpacl on the opening relained eamings or on the amounl or.evenues recognized due to the nalure orthe business of the Company.

The managemenldid nol make adjustments to p€viously l5 as itwas considered clearLy irirmaleial.
reponed figures rorlh s effectoradoplion orlFRS 3.12 Cash and cash equivalents €adily convenlbb lo known amounts orcash and which ale subject to an For the puryose of the slatement ofcash flows, cash equivalenls are shorl-lerm.
highly liquid inveslments that a€ inslgnilicanl risk ofchanges ii value Cash equiva ents arc hed forlhe pulPose ofmeeting shon+m cash comnr tmenls ratherlhan lor investm€nl or olher purposes The compa ny c assifies investments as a cash equivarenl if t is readiry convertibre to a known amountofc?sh and issubjecl toan insignllicanl rsk oichanges in value.
-,-.$ 4 Property, plant and equipment CIP Buildings TEnster trcm nvesl,renl prcperry A@ n u I at ed de pe ci at io n an.l i n p.i me nl 462,244 162,244 31,900 (494,148) 462,244 494,t4 1.759 492,389 8,299 s,299 1,306 9,420 37 503 55,222 462 248 37,503 517469 9,204 9,424 8,89.1 11,600 10,105 't8,314 49,103 571,670 593 8,043 403 8,446 6,548 23,185 1,215 5,442 7,762 24661 921 2,172 8,683 30,839 37,182 7,290 5,255 1,658 9,631 6,836 412.998 14,264 521.
3 Ps of De€mber31,2018 and 2017 non€ ot lhe Compan/s propedy and equipmenlwe€ pledged as collabrals for any liabilily.

5 Other assets Other Debto6 Total other linancial assets Year ended Year ended December3l December 31 2017 2018 30,995 200,251 58,831 43,038 43,038 u,092 26,000 Total non-financial assels 259.042 110,092 290,077 153,130 Yearended Ye6rended Dec€mber3'l D€cember31 2014 2017 78,010 '122.241 200,251 78,010 6.0E2 64.092 Total Repossessed assets Allamountsate shorl-Gm.
Tne netcarrying valu€ of olh€r apprcximation of fan value.
The Company s management has nol crcated allowancs lor other deblols 6s thercwas no indicalion of impaiment loss on evenls lhalcould casla doubl on lhe collectabilily ot a reasonable is consid€r€d €ceivables 6 Cash and bank balances ln Georgian lah Cash in hand Decemb€f 2017 16E,449 14,032 202,441 89,530 1,263 90,800 7 Loans and borrowings Borrcwangs trcm individuals Borrowings lrom legal enlities 2,389,656 1,016,650 3,408,306 1,338 869 '1,750.250 Annual inlerest rale on borrowed funds €nges ma*et Etes for the given peiod.
Allloans a're shodtem.

Oblained loans a€ notsecu€d by any do nol €quiE any condilions, for example, ce(ain assets of lhe company and lh€ indicalo|s ot fi nancial coeflicients.

flom 12vo lo 13%, which is approximately €quivalent -1!!9J19.
loan agr€em€nts to I Other liabilities In Georgian lari Liabililies to various services and goods suppliers Iota I other financial lisbililies fi,420 8,420 Olher non-nnancial liabilities Tolal other non-fi nancial liabilities Total other liabilili€s 9 Loans to customers In Georgian lan Less allowance for loan impairment Total loans to customec Oecember20'17 2.432 2,432 4.457 19,364 23,W0 26,272 24143 24.143 38,962 As ol31 December As of 3l Decembe.
2017 2018 '1,827,469 (205,304) 1,622,165 1,965,463 (93,616) 1,471,U7 The changing in allowance forloan impairmenl in this p€riod consists of: In GeoEian lari Year ended Yearended 31 December 3l Oecember 2017 201A + Expense ol Doubtful debls for the period 93,616 352,895 64,901 24,715 -A prcviousry rccognized doubttuldebts witten oft as expenses 1241.207) - Recovery of pr€viously recognized doubtfuldebls 31 Oec€mber 205,304 93,616 .
In G€orgian lari lmpairmenl on an individualbasis hpaiffient on a grcup basis As of31 As of31 December2018 December2017 20s,304 205,304 93,616 93,616 At 31 December 201 8, efieclive annua I inte'est rate on consumer loans was 2470 -49y0 (2017: 24oh - 96%).

Ths fair valu€ of loans issued to clstome.s at 31 December 2018 and 31 Oecehber 201 7 is approximately equal lo lh€ir carrying amounbThe matuity of the toans is anatysed in Note 20.
Analysis of lhe credil, cunency and inlerestrate risks issued by loans is hightight€d in Nole 15.

10 Deferred lncome Tax In Geo€ian Lai 2O1A yeal Total lncom€ tax €xo€ns€ 33,146 33,146 {4,580) (4,580) In 2018, |ne protit lax late applicable to micrclinance o€anizations taxable p.olit in ceogia was 1 5% (2017 150/o).

Dift€rence between inlernational financial reporling standards and tax legislation tead to tempo€ry difierences belween carrying amounl of a numbe.
of ass€ts and liabiliti€s for€alculation ol income ta)(.

Oefened tax as$ls ar€ calculated at a 15% tax €te.
Carcuration ot def€rrsd taxes in relalion to tempo€ry difierenc€s: In Georyaan lari Property and equipmenl Total detered hx assel (liability) Recognilion n PEL forthe y€ar end€d As ofOec yearended As of Dec Dec 3r,2017 ?1.2017 Dec31.2018 31,2018 Recognition in P&L forthe 31,2016 9,735 (1,267) 4,307 (E EE7) (10,154) 14,042 8,468 (4,580) 3,6EE 16,753 30,796 16,393 0,23E 33146 37pu 11 Interest and similar income In thousands of Georgian lar Loans and advancss tor individuals Loans and advances lof legal enlities Penalty and commission re!€nue Total inlerest income iiom loans issued forconsumeE 269,114 57,614 71,440 398,168 45,673 69,915 255,'139 '12 Other expenses ihe cost olgoods sold includes the following expenses: Fuelexpen*s Repcsentalional expenses Tax s. other lhan i@me lax duties 300 2,603 6,454 9,858 4,850 7,381 6,834 1,047 2,590 13,070 15,385 75,EE4 23,695 36 2.400 4 E1E 3,462 21.414 6,854 868 399 '14,352 21,199 99,502 13 Critical accounting estimates and judgments Estimates andjudgmenb ale continually evaluated and are based on historicalexpeience and olher factors, including e)eeclations offuture events that are believed to be rcasonable under the 13.1 Critical accounting estimates The Company makes eslimales and assumplons concarning th€ eslimates may be diffe€nl from the rclated actualresulls, The eslimates and assumptiors lhal ha!€ a signifcant dsk olcausing a mateial adjuslmenl to the carying amolnts ofassels and liabililies wilhin the nen tinancial year arc discussed below.
tutur€.

Th€ r€sulling accounling Usetul lives of propetly and equipnent Management has estimaled usefulli\€s of lhe properly, planl and equipment.

Managehenl believes lhat e€limated usetullives ofthe property, planl and equipment are nol materially ditlercnl from economic lives of fios€ ass€ls.

estimalions, iinancial statsmenls may be mabrially difter€nt.
lf aclual ussful liv€s ot prop€.ty, planl and equipment ar€ difierent ircm Measurcnent of fair values Manag€menl uses valuation lechnlques tod€lermin€ active malkelquotes are notavaiable) and non-financial assets.

This involves developing eslimaies and assumplions consislentwilh how market pa(ciparls would price lhe inslrumenl.

Management bases its assumplions on observable dala asfaras possible butlhis is notalways available.
Eslimaled fair values may vary fiom lhe actualpnces lhatwould be achie!€d between Independent parties al the r€ponjng dale (see not€ 19).. the fairvalue offinancialinslrum€nts (wh€rc Bad dehts The Company reviews loans and receivab es ai each reporting date of impairment loss.

In padic!lar judgement by management is requ ired tor d€tem ining the size of the oss altholgh the amounl and timing of future cash ilows.
Such estmales are based on assumpllons about a number oi iacto6 and aclualresults may d iter, resulting in futu.echanges to iheallowance (see note l0).

In addilion lo specifc allowances against lndivdlally slgnilicant loans and rece vables, lhe Company also makes a collecrive impa rmentallowance agaiist exposures which, although nol specifically identifed as rcquiing a specific allowance, have a g€ater conside€tion obsolescence.

aswellas dentitied structLrral weaknesses ordelerioration n cash fLows.
faclors such as any deterioration n couftry.isk.

induslry.

and lechnological rsk of deiaull than when orlginally granted.

This lake nto Market intercst rcte lvlanagemenr has estimated markel interest ralea which a€ used to eva uale fair value of Compaiys llnancialinslruments.

Changes n maRetirleresl rates may affect reporled amounts oifinancial llabillties and finance costs.
13.2 Key assumptions concerning the future The ma nagement expecls tlrere willbe no negalivo developments on the markel or in regulations lhal would afeci the Conpany s ability to cont nue ope€tions as a going coneri.

The rnanagemenl believes ihere are no other mateial risks to the Companys abilitylo continue ope€tions in usLralmannerand lo become Drofilab o evenluallv.
't4 Financial instruments 14.1 Significant accounting policies Details oflhe significant accounting polcies and melhods adopled, including lhe cdteria ror recognilon and the basis on which income and expenses a€ €cognized, fnancial liabi ity and equily instrument are discosed in note 3. in rcspect of each class orrnancia assel, 14.2 Categories of financial instruments The carrying amounts presenled if the statemeil of financ al position relate to the followi'lg calegories of assets and iabiliues: Financial assets Financialass€ls measu€d at amortized cost Loans and advances lo c0stomers Cash and bank balances Financial Iiabilities F nancial llabillties measured al amortized costl Loans and borrowrngs Trade and other payables 2014 2017 1,622.165 202,441 1,424,646 1,A71 847 1.962,647 2015 20 t7 3,450.212 38,962 3,449,174 3,158 544 24,272 3184,816 ll 664.528) 11.222,169) 15 Financial risk management ' The Company is exposed to vaious isks in,elation lo iinancial inslruments.
The main types of isks arc market isk, c€dil isk and liguidily sk.

Th6 Company does nol actively €ngag€ does it wrile options.

The mosl significanllinancial isks lo which the Company is sxposed ar€ in the lrading oitinancial assets tor speculative purposes nor Financial risk factors a) Markot isk The Company is €xpos€d curency risk and int€r€st lo market risk lhrouqh ils use oftinancial inslruments and specilically to rale riskwhich resullfrom both ils operaling and invesling activilies.
Foreign cunency isk The Company undedakes cerlain transactions denominated inforeign cur€ncies.

Hence, exposures lo exchange rale nucualions a,ise.

Mo€t ol the Companys lrade lransactions are ca.rled oul in Georgian lari, Exposu€s exchange tates risk mainly arise f.om lhe Companys loans which are denominaled in loreign cur€nciss.
Foreign cuffency denominaled linancislassels and liabilities which expose lhe Company to cunency risk are disclosed below The ahounts shown arc lhose r€pon€d translated into Geogian la at the ciosing rate: lo k€y managem€nt to currency As of 31 D€cambsr 2018 GEL USO EUR GAP Total Cash and cash equivalents 178,164 Loans to customers 1,309,063 €/l,21O Other Deposils 30,995 23,447 509 1,518,222 664,657 s09 360 - - 360 202,441 1,950,273 30,995 2,143,749 Loans and borrowings 198,136 2,191,520 T€de and olherpayables 38,962 237,099 2,191,520 - - 1,018,650 3,408,306 38,962 '1,018,650 3,447,269 1,281.123 (1.526.863) 509 (1,018.290) (1.263.520) It6m As ol31 December 20'17 GEL uso EUR GBP Total Casn and cash squivalenb 86,549 2,274 1,981 90,800 Other Deposils 736,670 1,190,625 36,163 1,965,463 43,038 868,202 +q 1,981 36,163 2,099,301 43,038 Loans and borrcwings 12,000 1,326,470 1,750,250 3,089,119 Toral f inancial liabilities 26,272 38,272 1,326 870 '1.750,250 26,271 3,115,390 829,990 (133,975) 1,941 (1,714,087) (1,015,089) The following table delails lhe Companys sensilivity to a 1ovo (2018: '10%) increase in Georgian lari againsl for€ign cun€ncy.
10% (2018i 100/o) r€prssents managemsnts assessmentoflhe possible change in foreign exchange rales.

The sensilivily analysis includes only oulsianding foreign cufiency denominal€d monetary ilems and adjusts their lranslation at the pe od end for a 1 0% (2017: 1 0%) change in toreign curency €tes.

lf Georgian lai had skengthened by 10ol.


(2018: 10%) then lhis would have had lhe following impact: ln lhousands ol Georian ai 2018 2017 152,6E6 13,396 EIJR impact 2UA (51) 2017 (198) 2018 2017 101,809 171,409 lo fo€ign exchange rates vary duing the year depending on th€ volume oflollign cuiiency the analysis above is c.nsidercd lobe leplesentative orihe Exposu€s tEnsaclions and balances.

Nonethel€ss, Company s exposurs to cun€ncy lnterest Ete isk isk.
Ths company is exposed to inlerest rale risk as il borrows funds at both fxed and floaling rales.

This isk is managed bythe Company by mainlaining an appropiat€ mix betw€en lixed and floaling rate The Companys sensitivity lo inteEsl €tes would inc.ease/decrease mainlyduo to changes offloating interest ratewhich is LIBOR and NBG retinancing rales.
The tollowing lable.econciles the avoGge conhactand effeclive inte€st €res: 201E Liabilities G€orgian lari US dollar GBP Euro 2017 Liabilili€s Geoqian lari US dollar GBP Euro Etiecuve 11.03% 9.31% 4.23% 7AA% Efieclive 12 lAyo 9.00% 4.70% 8.10% '10.37% 8.83% 7.801a T.4Qyo 12.OOoh 9.000,6 a.20vo 8.00% b) Credit isk C€dit nsk rcfels to the isk that counterpady wil defautt on its conrracruat obtigations resuling in linancjal loss to the Company.
The effect of this risk ior the Company afses from ditferent tinancial instrurnents, such asaccounts receivable.
Th€ maximum exposure to credit risk is repEsented bv ths carrying amounts oflhe folrowing f,nanoat Instruments Financial assets al c€rrying anounts Loans and advances lo customers As of 31 As of 31 Oecember20l8 Oecember20tT 1,422,165 202,481 1,424.446 1,471,U7 90,800 1,962,647 At ths r€poding datethe€was no signincant concenr€rion of crcdit risk in respectonrade and olher The cledil isk iorcash and casn €quivslents isconsidered negtigibt€, sincethe counrePades are c) Liquidity risk tiquid'ly fsk is th6 risk lhat the Company wittbe unabte to meet i6 obtigations.
Ihe Companys policy is to run a prudentllquidit managemenr poticy by means ofholding s!ffcisnt cash and bank balances, as wellas highty tiquid assetsformaking a[ opeGtionatand debt seMce relaled paymenls when lhose become due.

The following labls details the Companys Emaining contlactuat maturiry tor ils non{erivative tinancial liabililies with agEed lgpayment periods.
The tabte has been drawn up based on the undiscounted cash flows ofnnancialliabilities based on the eartiest date on which the Company can be pquired to pay.

The table includes bolh interestand orincioatcash Rows.
31 DEC,20la ln Geo€ian La to3 to6 12 lMore From lhan 5 Total 12 1 to 5 months years yeals Total Olh€rtinancial liabilities 878,463 14,420 1,990,468 3,408,306 tu,420 493,242 539 375 1.990.408 3,423.126 3,408,306 u,420 3,423,126 31 DEC,2017 ln Geoqian Lari lo3 lo0 12 lMore From lhan 5 Total 12 1 lo 5 months years yea6 Total 796,195 488,863 1,E04,001 3,0E9,119 3,089,119 liabilities 796,195 488,603 1,E04,001 3,089119 3,089,119 The Companyconsiders expecled cash nows fiom Jinancial assets in assessing and managing liquidity risk, parlicrllarly its cash resources and lrads €ceivables.
16 Fair value measurements The Company p,ovides an analysisofils assels and liabllili€s lecognition atlairvalue, grcuped into Levels 1 to 3 based on ihe degrce lowhich the fairvalue s observable.

These Le!€ls aGdescib€d below: thal are meas!ed subseqlentto inilial .

Le!€|1 - fai.

value measurementsa.e thosededved from quoled pices (unadjusted) in aclive maft€ts for identical assels or liabilitiesl .
Le!€12 - fair value msasu€ments a€ those dedved from inputs otherthan quoled prices included within Levell thatare observable lor the ass€l orliability, eilher directy (i.e.

as prices) orindi.ectly (i.e.

de ved f.om prices):and .


Level3 -fairvalue measu€ments a€ lhosedeived from valuation techniqueslhat include inpuls forthe asset or liability thal a€ not based on obss able ma*eldata (unobsetuable 16.1 Fair value measurement offinancial instruments The Company has no nnancialassets or financial liabilities measur€d at fairvalue on a recuning basis as of3'l oecember20lE and 31 December20'17.
The fan of iinancia I instruments measured at amorlized cost approximate theirfalr values 17 Capital risk management ihe Company manages ils c€pilalto ensure that twi be abe to conlinue as a 9oin9 concern and provide adequare rctum ro stakeholde.s.
The capllalstruclure or the Company consisls oiequity compising charter capitaland accumulated profils and debt, wh ch includes boiiowings disclosed in nole 0. rvlanagem€nl assesses lhe Company's capilal €quiremenls financing siructure wh le avoiding excessive leverage.

This takes into accountthe subordinalion levels or the Company s vaious classes oidebt.
The Company manages the capital slructure and rnakes adjustmenls lo il in the lighl ofchanges in economic condilions and the rsk characteristics ot the underlying assels.

In oder to maintain oradjustlhe capital structore, the Company mayadjustlhe amounl of dividends paid lo sharcho dels, retun capita to shareholders.
issue new sha.es, or sell in orderto mainta n an efiicientove€ll The amounls managed as capitalby lhe Company for the €ponlng pedods a€ summarized as iollowsl Less:cash and bank balances Capilal 830,083 \2O2 441) 627.602 830,0E3 (340E,300) (2 578 223) 57Q,777 (90 800) 479.977 574,777 (3,0E9,119) (2,518342) Capita to ove€llfnancing ratio \0.24) (0 19) '18 Contingencies I8.
'1 Business environment Georgia conlinues to undergo polillcaland economicchanges As an emeqing mad(el Georgia does nolpossess a developed buslness and regulatory lnfrastruclurc that gene€lly exisls in a morc malu€ f.ee marketeconomy.

In addition, economic conditiois continue to limltlhe volume ofactivily n lhe tina ncial markels wh ch mav not be reiective of lhe values ior f nanc al nskuments.
The main obslac e lo rufter economic development is a low level oteconom c aid instilutioraldevelopment, along with a cenlra llzed economic base, regional iistabi ity a nd inlenaliona economic crisis.

Deleriorat on of economic silualion ofcouniries collabolalng wilh Georgia led to the shol€ge ofmoiey lranste6 iiom abrcad, lpon which lhe economy ol Georgia is signifcantly dependenl.
Fudher deprec alion oflhe nalonalcurrency eads to increase oipices on imported goods There are uncertainlies over allraclon of sig nificanl volumes of d €ct capilal nvestments.

These and other circumslances may read lo delerioralion olsituation in lhe Geo€ian economy and oflhe Company However.
as lhere are a n umber of vanables and assumptions involved in lhese !ncerlainties ma nagement cannot make a €liable esumate ot lhe amounts by which lhe carrying amounls of assels and labiities olthe Company may be aftecled.

Manageritenl or the Company believes thal in the cuiienl conditions appoprate measu€s arc implemenled in ordertoensure economicstabi ty oflhe Compaiy.

'18.2 Taxes inleQrelalion.


Oflen ditrering intelp€lalions exstamong various laxalion The laxalion syslem in Georgia is €latively newand is characlerlzed by frequently changing legislalion.

which is on€n subj€ctto authoriliss and jurisdictions.

Taxes ars subject to review and investigations by laxaulhorities, which are enabled by law lo impose severe tjnes and penalties.

These lacts may creale lax risks in Geo€ia subslanli.lly mo€ lhan in olher develop€d counties.
Management beli€ves provided for tax liabilities based on its intep€tation of tax legislalion.

However,lhe rel€vant aulhorilies may have differing intepretation-s and lhe eftects could be significant.

that il hasadequately 18.3 Environmental matters Environmental legislalion in Georgla is- in prccess ofdevelopment and the€ may be some changes in lhs leg slalion which may be relevant ior lhe Company's oper6tions.
However,lhe managemenr is ofthe opinion thatlhe Company has mer the Governmenr's requirements conceming environmental mattels and belie\€s expected that maledal envircnmental liabililies willarise in the tuture periods.
thatlhe Companydoes not have any currcnt material envircnmental liabilities and it is not 19 Reconciliation of liabilities arising from financing activities The changes in lhe Companys liabilities a sing frcm financlng aclivilies can be classifi€d as tollows: As ol I January 20'18 3,158,544 3,158.544 Repayments of pincipal Repaynents of inleresl Forcign exchange (9ain)/Loss as ol31 December20lE 2,262,645 3E9,567 (1,949,646) (362,480) (48,458) 3,450,212 2,262,645 3E9,567 0,949,646) (362.480) (48,458) 3,450,212 94 9N s6 9p F9 =E az 9E eE E5 I .aa AE iJ d .-9 I F:!
8.- Ep { 3i6 a z E F .g e i * p r S 9 F olo6 =E-oB !n og {r9 ocg,E w-!

i.^6 i(,9Y>i 3(!5 aoir."

> f 695 Eia = > !j: EE8 =r-d N 3.

8E I E t: lfi le g 3. g -= =5;5F8 .E 6.; .S .-ih 3 9e =- r- E9 eE 9. qt 3.

3.

E. I .

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Zo 6Q g,T :9; s E:€ B 5 HE { 3 E5 g -=dE; =98 :g.Eg z< J g !2 .9 3!
; E5A Mkronn.nce organlz.lion BanicEdii LLC 23 Capital adequacy As of 3l December 2018 th6 law of Georgia on l,,licrofinanc€ Organlzallons r6qui.€s a miffolinanc€ organizalion to hav€ as a minhum GEL 500,000 of sup€Msory capltel, whlch Includes d|art capitsl and 6ubordlnated loans.

Tho Compan) compli€s with lhese €qlitements.


The principat obj€ctiv€s ol c€pilal management, for the purpose of doing busin€ss and to maximize the shar€holdsrs' bsn€tits are lhe compan:/s compliance'xllh dom*tic l€quir6menb credit raling snd cspllalslruclule, for €quity, as wellss malntalnlng a positive