Annual / Quarterly Financial Statement • Sep 3, 2018
Annual / Quarterly Financial Statement
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$\sim 200$
For the year ended 31 December 2017
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| Page | |
|---|---|
| Officers and Professional Advisors | |
| Management Report | $2 - 4$ |
| Independent Auditors' report | |
| $5 - 9$ | |
| Statement of profit or loss and other comprehensive income | 10 |
| Statement of financial position | Ħ |
| Statement of changes in equity | |
| Statement of cash flows | 12 |
| 13 | |
| Notes to the financial statements | $14 - 43$ |
| Board of Directors | Iurii Zhuravlov (Chief Executive Officer) |
|---|---|
| Tamara Lapta (Deputy Chief Executive Officer) | |
| Larysa Orlova (Chief Financial Officer) | |
| Borys Supikhanov (Non-Executive Director) | |
| Volodymyr Kudryavtsev (Non-Executive Director) | |
| Secretary | Inter Jura Cy (Services) Limited |
| Independent Auditors | KPMG Limited |
| Legal Advisors | K. Chrysostomides & Co LLC |
| Bankers | Commerzbank International S.A. Bank of Cyprus Public Company Ltd UBS Switzerland Bank Bank Vontobel AG |
| Registered Office | 1 Lampousas Street 1095 Nicosia Cyprus |
72
In accordance with article 9(3)(c) and (7) of the Transparency Requirements (Securities Listed for Trading on a Regulated Market) Law of 2007 (the "Law"), as amended from time to time, we, the Members of the Board of Directors and the Company official responsible for the preparation of the financial statements of parent company Agroton Public Limited (the "Company") for the year ended 31 December 2017, confirm that to the best of our knowledge:
a) the annual financial statements presented on pages 10 to 43:
| Members of the Board of Directors: | |
|---|---|
| Iurii Zhuravlov | |
| Tamara Lapta | |
| Larysa Orlova | |
| Borys Supikhanov | PiGooded |
| Volodymyr Kudryavtsev | |
Company official responsible for the preparation of the financial statements of the Company for the year ended 31 December 2017:
Nicosia, 23 April 2018
The Board of Directors of Agroton Public Limited (the "Company") presents to the members its Annual Report together with the audited financial statements of the Company for the year ended 31 December
Agroton Public Limited (the "Company") was incorporated in Cyprus on 21 September 2009 as a privated limited liability company under the Cyprus Companies Law, Cap. 113. The Company was listed at the main market of Warsaw Stock Exchange on 8 November 2010.
The principal activities of the Company, which are unchanged from last year, are those of an investment holding company and the provision of financing to related parties. The Company is the holding company of a group of companies of agriculture producers in Ukraine. The principal activities of the Group which remained the same as in the previous year, are grain and oil crops growing, agricultural products storage and sale, cattle breeding (milk cattle-breeding, poultry farming) and milk processing. The poultry farming business has been temporarily abandoned due to the military clashes and armed conflict in Eastern
The Company's financial results for the year ended 31 December 2017 are set out on page 10 to the financial statements. The net loss for the year attributable to the owners of the Company amounted to US\$354.077 (2016: US\$8.432.517 profit).
The current financial position as presented in the financial statements is not considered satisfactory and the Board of Directors is making an effort to reduce the Company losses.
The Board of Directors does not recommend the payment of a dividend.
The main risks and uncertainties faced by the Company and the steps taken to manage these risks, are described in note 21 to the financial statements.
The Company is exposed to market price risk, interest rate risk, credit risk and liquidity risk from the
Market price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices. The Company's financial assets at fair value through profit or loss are susceptible to market price risk arising from uncertainties about future prices of the investments.
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. Company's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. Credit risk related to financial instruments and cash deposits.
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets.
The Board of Directors does not expect major changes in the principal activities of the Company in the foreseeable future.
There were no changes in the share capital of the Company during the year.
During the year ended 31 December 2017 the Company did not operate any branches.
The members of the Company's Board of Directors as at 31 December 2017 and at the date of this report are presented on page 1. All of them were members of the Board of Directors throughout the year ended 31 December 2017.
In accordance with the Company's Articles of Association all directors presently members of the Board continue in office.
There were no significant changes in the assignment of responsibilities and remuneration of the Board of
Any significant events that occurred after the end of the reporting period are described in note 24 to the
Disclosed in note 20 to the financial statements.
The independent auditors of the Company, KPMG Limited, have expressed their willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be submitted at the forthcoming Annual General Meeting.
By order of the Board of Directors?
Henry
Larysa Orlova Director
Nicosia, 23 April 2018
KPMG Limited Chartered Accountants 14 Esperidon Street, 1087 Nicosia, Cyprus P.O. Box 21121, 1502 Nicosia, Cyprus T: +357 22 209000, F: +357 22 678200
We have audited the accompanying financial statements of parent company Agroton Public Limited (the "Company"), which are presented on pages 10 to 43, and comprise the statement of financial position as at 31 December 2017, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS-EU") and the requirements of the Cyprus Companies Law, Cap. 113, as amended from time to time (the "Companies Law, Cap. 113").
We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the "Auditors' responsibilities for the audit of the financial statements" section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants of the International Ethics Standards Board for Accountants ("IESBA Code"), and the ethical requirements in Cyprus that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements, as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our report.
The Board of Directors is responsible for the other information. The other information comprises the management report but does not include the financial statements and our auditors' report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except as required by the Companies Law, Cap.113.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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.
With regards to the management report, our report is presented in the "Report on other legal and regulatory requirements" section.
The Board of Directors is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS-EU and the requirements of the Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company'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 there is an intention to either liquidate the Company or to cease operations, or there is no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
We communicate with the Board of Directors 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.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore they key audit matters.
Pursuant to the requirements of Article 10(2) of EU Regulation 537/2014 we provide the following information in our Independent Auditors' Report, which is required in addition to the requirements of ISAs.
We were first appointed auditors of the Company by the General Meeting of the Company's members on 10 August 2012. Our appointment has been renewed annually by shareholder resolution. Our total uninterrupted period of engagement is 6 years covering the periods ended 31 December 2012 to 31 December 2017.
Our audit opinion is consistent with the additional report presented to the Audit Committee dated 20 April 2018.
We have not provided any prohibited NAS referred to in Article 5 of EU Regulation 537/2014 as applied by Section 72 of the Auditors Law of 2017, L.53(1)2017, as amended from time to time ("Law $L53(I)/2017$ ").
Pursuant to the requirements of Article 10(2) of EU Regulation 537/2014 we provide the following information in our Independent Auditors' Report, which is required in addition to the requirements of ISAs.
We were first appointed auditors of the Company by the General Meeting of the Company's members on 10 August 2012. Our appointment has been renewed annually by shareholder resolution. Our total uninterrupted period of engagement is 6 years covering the periods ended 31 December 2012 to 31 December 2017.
Our audit opinion is consistent with the additional report presented to the Audit Committee dated 20 April 2018.
We have not provided any prohibited NAS referred to in Article 5 of EU Regulation 537/2014 as applied by Section 72 of the Auditors Law of 2017, L.53(1)2017, as amended from time to time ("Law $L53(1)/2017$ ").
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 69 of Law L53(I)/2017, and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year ended 31 December 2017. That report is modified with the inclusion of a material uncertainty in-relation to going concern.
The engagement partner or the audit resulting in this independent auditors' report is Maria A. Papacosta.
Maria A
Pupaeusta, FCCA Confidential Rublic Accountant and Registered Auditor for and on behalf of
KPMG Limited Certified Public Accountants and Registered Auditors 14 Esperidon Street 1087 Nicosia Cyprus
23 April 2018
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| Note | 2017 US\$ |
2016 US\$ |
|
|---|---|---|---|
| Loan interest income | 3.401.413 | 6.358.860 | |
| Interest expense | (3.546.793) | (4.835.490) | |
| Gross (loss)/profit | (145.380) | 1.523.370 | |
| Other operating income | 4 | 817 | 7.172.420 |
| Administrative and selling expenses | 5 | (163.255) | (219.888) |
| Other operating expenses | 6 | (19.730) | |
| Operating (loss)/profit | $\overline{7}$ | (307.818) | 8.456.172 |
| Finance income | 1.029 | ||
| Finance expenses | (6.084) | (23.655) | |
| Net finance expenses | 8 | (5.055) | (23.655) |
| (Loss)/profit before tax | (312.873) | ||
| Tax | 9 | (41, 204) | 8.432.517 |
| (Loss)/profit for the year | (354.077) | 8.432.517 | |
| Other comprehensive income | |||
| Total comprehensive (expense)/income for the year attributable to owners |
(354.077) | 8.432.517 |
| 2017 | 2016 | ||
|---|---|---|---|
| Note | USS | US\$ | |
| Assets | |||
| Investments in subsidiaries | iO | ||
| Financial assets at fair value through profit or loss | 13 | 4.818 | 4.818 |
| Loans receivable | $\mathbf{H}$ | 235.664 | 234,847 |
| Total non-current assets | 240.482 | 49.792.785 | |
| 50.032.450 | |||
| Trade and other receivables | 12 | 144.934 | 150.334 |
| Loans receivable | H | 71.466.748 | 23.696.708 |
| Cash and cash equivalents | 14 | 15.985.539 | 10.724.472 |
| Total current assets | 87.597,221 | 34,571.514 | |
| Total assets | 87.837.703 | 84.603.964 | |
| Equity | |||
| Share capital | 15 | ||
| Share premium | 15 | 661.128 88.531.664 |
661.128 |
| Reserves | 88.531.664 | ||
| Total equity | (80.415.112) 8.777.680 |
(80.061.035) | |
| 9.131.757 | |||
| Liabilities | |||
| Loans and borrowings | 16 | 9.807.330 | 9.356.642 |
| Total non-current liabilities | 9.807.330 | 9,356.642 | |
| Short term portion of long-term loans | 16 | 69.048.797 | 65.952.692 |
| Trade and other payables | 17 | 50.481 | 49.368 |
| Tax liability | 18 | 153.415 | 113.505 |
| Total current liabilities | 69.252.693 | 66.115.565 | |
| Total liabilities | |||
| 79.060.023 | 75,472.207 | ||
| Total equity and liabilities | 87.837.703 | 84.603.964 | |
On 23 April 2018 the Board of Directors of Agroton Public Limited approved and authorised these financial statements for issue.
Director ă
Receip
| Share capital US\$ |
Share premium US\$ |
Retained earnings US\$ |
Total US\$ |
|
|---|---|---|---|---|
| Balance at 1 January 2016 | 661.128 | 88.531.664 | (88.493.552) | 699.240 |
| Comprehensive income Profit for the year Balance at 31 December 2016 |
661.128 | 8.432.517 88.531.664 (80.061.035) |
8.432.517 9.131.757 |
|
| Balance at 1 January 2017 | 661.128 | 88.531.664 | (80.061.035) | 9.131.757 |
| Comprehensive income Loss for the year Balance at 31 December 2017 |
661.128 | 88.531.664 | (354.077) (80.415.112) |
(354.077) 8.777.680 |
In accordance with the Cyprus Companies Law, Cap. 113, Section 55 (2) the share premium reserve can only be used by the Company in (a) paying up unissued shares of the Company to be issued to members of the Company as fully paid bonus shares; (b) writing off the expenses of, or the commission paid or discount allowed on, any issue of shares or debentures of the Company; and (c) providing for the premium payable on redemption of any redeemable preference shares or of any debentures of the Company.
Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, during the two years after the end of the year of assessment to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence at 17% will be payable on such deemed dividend to the extent that the ultimate owners at the end of the period of two years from the end of the year of assessment to which the profits refer are both Cyprus tax resident and Cyprus domiciled. The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant year at any time. This special contribution for defence is paid by the company for the account of the owners.
S)
| Note | 2017 US\$ |
2016 US\$ |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| (Loss)/profit for the year | (354.077) | 8.432.517 | |
| Adjustments for: | |||
| Unrealised exchange (profit)/loss | 8 | (1.029) | 1.579 |
| Fair value (gains)/losses on financial assets at fair value through profit | |||
| or loss | 4,6 | (817) | 19.730 |
| Fair value gains on other investments | 4 | (7.172.420) | |
| Interest income | 11 | (3.401.413) | (6.358.860) |
| Interest expense | 3.547.123 | 4.835.490 | |
| Income tax expense | 41.204 | ||
| Cash used in operations before working capital changes | (169.009) | (241.964) | |
| Decrease/(increase) in trade and other receivables | 5.400 | (2.968) | |
| Increase in trade and other payables | 1.150 | 13.676 | |
| Cash used in operations | (162.459) | (231.256) | |
| Tax paid | (1.294) | $\blacksquare$ | |
| Net cash used in operating activities | (1.422.190) | (231.256) | |
| Cash flows from investing activities | |||
| Loans repayments received | 11 | 5.424.122 | $_11.500.710$ |
| Net cash generated from investing activities | $6.682.558$ 11,500.710 | ||
| Cash flows from financing activities | |||
| Repurchase of notes | (5.290.761) | ||
| Unrealised exchange profit | 903 | ||
| Interest paid | (330) | ||
| Net cash generated from/(used in) financing activities | 573 | ||
| (5.290.761) | |||
| Effect of exchange rate fluctuations on cash held | |||
| 126 | (1.644) | ||
| Net increase in cash and cash equivalents | |||
| Cash and cash equivalents at beginning of the year | 5.261.067 | 5.977.049 | |
| 10.724.472 | 4.747.423 | ||
| Cash and cash equivalents at end of the year | |||
| 14 | 15.985.539 10.724.472 | ||
Agroton Public Limited (the "Company") was incorporated in Cyprus on 21 September 2009 as a private limited liability company under the Cyprus Companies Law, Cap. 113. Its registered office is at I Lampousas Street, 1095 Nicosia, Cyprus.
Agroton Public Limited (the "Company") was incorporated in Cyprus on 21 September 2009 as a privated limited liability company under the Cyprus Companies Law, Cap. 113. The Company was listed at the main market of Warsaw Stock Exchange on 8 November 2010.
The principal activities of the Company, which are unchanged from last year, are those of an investment holding company and the provision of financing to related parties. The Company is the holding company of a group of companies of agriculture producers in Ukraine. The principal activities of the Group which remained the same as in the previous year, are grain and oil crops growing, agricultural products storage and sale, cattle breeding (milk cattle-breeding, poultry farming) and milk processing. The poultry farming business has been temporarily abandoned due to the military clashes and armed conflict in Eastern Ukraine.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113 and are for the year ended 31 December 2017.
The Company has also prepared consolidated financial statements in accordance with IFRSs for the Company and its subsidiaries (the "Group"). The consolidated financial statements can be obtained from the Company's registered office.
Users of these parent's separate financial statements should read them together with the Group's consolidated financial statements as at and for the year ended 31 December 2017 in order to obtain a proper understanding of the financial position, the financial performance and the cash flows of the Company and the Group.
The financial statements have been prepared under the historical cost convention, except in the case of investments which are measured at their fair value and bonds which are measured at amortised cost.
These parent financial statements have been prepared under the going concern basis, which assumes the realisation of assets and settlement of liabilities in the course of ordinary economic activity. Renewals of the Company's assets, and the future activities of the Company, and its activities are significantly influenced by the current and future economic environment in Ukraine. The Board of Directors and Management are closely monitoring the challenging conditions in the domestic markets as described in note 19 in the financial statements and has assessed the current situation and there is no indication of adverse effects while at the same time are taking all steps to secure the Company's short and long term viability. To this effect, they consider that the Company is able to continue its operations as a going concern.
As from 1 January 2017, the Company adopted all changes to International Financial Reporting Standards (IFRSs), which are relevant to its operations. This adoption did not have a material effect on the accounting policies of the Company.
The following Standards, Amendments to Standards and Interpretations have been issued but are not yet effective for annual periods beginning on 1 January 2017. Those which may be relevant to the Company are set out below. The Company does not plan to adopt these Standards early.
The Company is required to adopt IFRS 9 "Financial Instruments" and IFRS 15 "Revenue from Contracts with Customers" from 1 January 2018. The Company has preliminarily assessed the estimated impact that the initial application of these standards will have on its financial statements. The actual impacts of adopting the standards at 1 January 2018 may change because the new accounting policies are subject to change until the Company presents its first financial statements that include the date of initial application ("DIA").
The Group is currently evaluating the expected impact of adopting the standard on its financial statements. As such, the expected impact of the standard is not yet known or reasonably estimable.
IFRS 15 (Clarifications) "Revenue from Contracts with Customers" (effective for annual periods $\bullet$ beginning on or after 1 January 2018)
The Group is currently evaluating the expected impact of adopting the standard on its financial statements. As such, the expected impact of the standard is not yet known or reasonably estimable.
(i) Standards and Interpretations adopted by the EU (continued)
IFRS 9 Financial Instruments sets out requirements for recognizing and measuring financial assets and financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 "Financial Instruments: Recognition and Measurement".
The new impairment requirements are expected to have an impact on the Company's financial statements from the implementation of IFRS 9. Management is not yet able to provide quantitative information about the expected impact since the Company is in the process of building and testing models, assembling data and calibrating the impairment stage transfer criteria. The impact is also dependent on finalizing the classification assessment and the current circumstances. Management expects loss allowances under IFRS 9 to be at the same level as 1AS 39
The Company expects that it will be in a position to provide quantitative information on the impact of the transition to IFRS 9 on its financial position and performance in its next reported consolidated financial statements.
(ii) Standards and Interpretations not adopted by the EU
The Board of Directors expects that the adoption of these standards in future periods will not have a material effect on the financial statements of the Company.
The preparation of financial statements in accordance with IFRSs requires from Management the exercise of judgment, to make estimates and assumptions that influence the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time. Actual results may deviate from such estimates.
The estimates and underlying assumptions are revised on a continuous basis. Revisions in accounting estimates are recognised in the period during which the estimate is revised, if the estimate affects only that period, or in the period of the revision and future periods, if the revision affects the present as well as future periods.
Information about judgments in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:
Notes 10 and 3 "Consolidated financial statements" - consolidation: whether the Group has de facto $\bullet$ control over the investee.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included in the following notes:
A number of the Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRSs, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in notes:
Note 21 - Financial instruments
The financial statements are presented in United States Dollars (US\$) which is the functional currency of the Company.
The following accounting policies have been applied consistently for all the years presented in these financial statements.
Changes in the Company's ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company'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 recognised directly in equity as transactions with owners acting in their capacity as owners. No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.
When the Company loses control of a subsidiary, the resulting profit or loss 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. The resulting profit or loss is recognised in profit or loss.
Any interest retained in the former subsidiary is measured at fair value when control is lost.
Subsidiaries are entities controlled by the Group. Control exists where the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Investments in subsidiaries are stated at cost, which includes transaction costs, less provision for permanent diminution in value, which is recognised as an expense in the period in which the diminution is identified.
Interest income is recognised on a time-proportion basis using the effective interest method.
Interest income is recognised on a time-proportion basis using the effective method.
Interest expense and other borrowing costs are recognised in profit or loss using the effective interest method.
(i) Functional currency
Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency').
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value is determined. Translation differences on non-monetary items such as equities held at fair value through profit or loss are reported as part of the fair value gain or loss.
Tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date. Current tax includes any adjustments to tax payable in respect of previous periods.
Dividend distribution to the Company's owners is recognised in the Company's financial statements in the year in which they are approved by the Company's owners.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
(i) Loans granted
Loans originated by the Company by providing money directly to the borrower are categorised as loans and are carried at amortised cost. The amortised cost is the amount at which the loan granted is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount, and minus any reduction for impairment or uncollectibility. All loans are recognised when cash is advanced to the borrower.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.
The Company classifies its investments in equity and debt securities in the following categories: financial assets at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of investments at initial recognition.
Financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified in the held for trading category if acquired principally for the purpose of generating a profit from short-term fluctuations in price. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within twelve months from the reporting date.
Investments with fixed or determinable payments that are not quoted in an active market and are not classified as financial assets at fair value through profit or loss or as financial assets available-forsale.
Regular way purchases and sales of investments are recognised on trade-date which is the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus directly attributable transaction costs for all financial assets not carried at fair value through profit or loss. For financial assets at fair value through profit or loss the directly attributable transaction costs are recognised in profit or loss as incurred.
Realised and unrealised gains and losses arising from changes in the fair value of financial assets at fair value through profit or loss are included in profit or loss.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis, making maximum use of market inputs and relying as little as possible on entity specific inputs. Equity investments for which fair values cannot be measured reliably are recognised at cost less impairment.
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash at bank.
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:
Any interest in such derecognized financial assets that is created or retained by the Company is recognised as a separate asset or liability
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.
Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the Company and the nominal value of the share capital being issued is taken to the share premium account. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity.
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
Non-current liabilities represent amounts that are due more than twelve months from the reporting date.
6.
ÿ,
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
| 2017 | 2016 | ||
|---|---|---|---|
| USS | US\$ | ||
| Profit on repurchase of Notes | 7.172.420 | ||
| Fair value gains on financial assets at fair value through profit or loss | 817 | ||
| 817 | 7.172,420 | ||
| 5. | ADMINISTRATIVE EXPENSES | ||
| 2017 | 2016 | ||
| US\$ | US\$ | ||
| Registrar annual fee | 381 | 391 | |
| Sundry expenses | 1.500 | 9.061 | |
| Subscriptions and contributions | 3.267 | 3.220 | |
| Independent auditors' remuneration for the statutory audit of annual accounts | 36.219 | 25.200 | |
| Independent auditors' remuneration - prior years | 3.962 | ||
| Accounting fees | 12.389 | 13.041 | |
| Legal fees | 14.612 | 16.839 | |
| Other professional fees | 50.963 | 126.594 | |
| Secretarial fees | 979 | 1.005 | |
| Registered office fees Fines |
979 | 1.005 | |
| Irrecoverable VAT | 8.426 | 17.445 | |
| Custodian Fees | 14.196 | 6.087 | |
| 15.382 | |||
| 163.255 | 219.888 | ||
| 6. | OTHER OPERATING EXPENSES | ||
| 2017 | 2016 | ||
| US\$ | US\$ | ||
| Fair value losses on financial assets at fair value through profit or loss | 19.730 | ||
| 19.730 | |||
$\bar{\chi}$
$\frac{1}{2}$
| 2017 US\$ |
2016 US\$ |
||
|---|---|---|---|
| Operating (loss)/profit is stated after charging the following items: | |||
| Independent auditors' remuneration for the statutory audit of annual accounts Independent auditors' remuneration - prior years |
36.219 3.962 |
25.200 | |
| 8. | NET FINANCE INCOME AND EXPENSES | ||
| 2017 US\$ |
2016 US\$ |
||
| Exchange profit | 1.029 1.029 |
||
| Net foreign exchange transaction losses Interest expense Sundry finance expenses |
(2.365) (330) (3.389) |
(1.836) (21.819) |
|
| Finance expenses | (6.084) | (23.655) | |
| Net finance expenses | (5.055) | (23.655) | |
| 9. | TAXATION | ||
| 2017 US\$ |
2016 US\$ |
||
| Corporation tax | 41.204 | ||
| Charge for the year | 41.204 |
| 2017 | 2017 US\$ |
2016 | 2016 US\$ |
|
|---|---|---|---|---|
| Accounting (loss)/profit before tax | (312.873) | 8.432.517 | ||
| Tax calculated at the applicable tax rates Tax effect of expenses not deductible for tax |
12,50 % | (39.109) | 12,50 % | 1.054.065 |
| purposes Tax effect of allowances and income not |
$(42,67)\%$ | 133.517 | 0.07% | 5.654 |
| subject to tax | 0.07% | (231) | $(10,63)\%$ | (896.585) |
| Tax effect of tax losses brought forward | 18,13 % | (56.719) | $(1,93)\%$ | (163.134) |
| 10% additional charge | $(1,20)\%$ | 3.746 | $-$ % | |
| Tax as per statement of profit or loss and other comprehensive income - charge |
$(13,17)\%$ | 41.204 | ||
The corporation tax rate is 12,5%.
Under certain conditions interest income may be subject to defence contribution at the rate of 30%. In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be subject to defence contribution at the rate of 17%.
| 2017 US\$ |
2016 US\$ |
||||
|---|---|---|---|---|---|
| Balance at 1 January | 4.818 | 4.818 | |||
| Balance at 31 December | 4.818 | 4.818 | |||
| The details of the subsidiaries are as follows: | |||||
| Name | Country of incorporation |
Principal activities |
Holding 丝 |
2017 US\$ |
2016 US\$ |
| Living LLC | Ukraine | Agricultural activities |
99,99 | 4.718 | 4.718 |
| Agroton BVI Limited | British Virgin Island |
Trading in Agriculture |
100 | 100 | 100 |
| LLC Gefest | Ukraine | Owner of land lease rights |
100 | ||
| LLC Lugastan | Ukraine | Owner of land lease rights |
99,99 | ||
| 4.818 | 4.818 |
The Company periodically evaluates the recoverability of investments in subsidiaries whenever indicators of impairment are present. Indicators of impairment include such items as declines in revenues, earnings or cash flows or material adverse changes in the economic or political stability of a particular country, which may indicate that the carrying amount of an asset is not recoverable. If facts and circumstances indicate that investment in subsidiaries may be impaired, the estimated future discounted cash flows associated with these subsidiaries would be compared to their carrying amounts to determine if a write-down to fair value is necessary.
The ownership of land lease rights previously held by subsidiary companies LLC Gefest and LLC Lugastan have been transferred to Agroton PJSC and PE Agricultural Production Firm Agro. Subsidiary company LLC Gefest is in the process of liquidation. LLC Lugastan is a dormant company with no assets or liabilities.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Balance at 1 January Repayments Interest charged Set off (note) |
73.489.493 3.401.414 |
96.216.327 $(5.424.159)$ $(11.500.710)$ 6.358.860 $-$ (17.584.984) |
| Balance at 31 December | 71.466.748 73.489.493 |
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Loans to own subsidiaries (note 20 (i)) | 71,466.748 | 73.489.493 |
| 71.466.748 73.489.493 | ||
| Non-current portion | 49.792.785 | |
| Current portion | 71.466.748 | 23.696.708 |
| 71.466.748 | 73.489.493 | |
| The loans are repayable as follows: | ||
| 2017 US\$ |
2016 US\$ |
|
| Within one year Between one and five years |
71.466.748 | 23.696.708 49.792.785 |
| 71.466.748 | 73.489.493 |
Note
During the year 2016 Ioans payable to Agroton BVI Limited and Mr. Iurii Zhuravlov of US\$ 15.575.350 and US\$ 2.009.634 respectively where set off with receivable loans from related parties and Mr. Iurii Zhuravlov.
The exposure of the Company to credit risk and impairment losses in relation to loan receivable is reported in note 21 to the financial statements.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Refundable VAT | 144.934 | 150.334 |
| $\frac{144.934}{2}$ | 150.334 |
The exposure of the Company to credit risk and impairment losses in relation to trade and other receivables is reported in note 21 to the financial statements.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Cyprus Stock Exchange Bank of Cyprus Public Company Limited Bank of Cyprus Holdings Plc |
235.664 | 234.847 |
| 235.664 2017 US\$ |
234.847 2016 US\$ |
|
| Balance at 1 January Change in fair value (note 4) |
234.847 817 |
254.577 (19.730) |
| Balance at 31 December | 235.664 | 234.847 |
As at 31 December 2016, financial assets designated at fair value through profit or loss represented equity securities of Bank of Cyprus converted into shares after the decree issued by Central Bank of Cyprus on 29 March 2013. Based on that decree and the measurements for recapitalization of Bank of Cyprus, 47,5% of the uninsured deposits of the affected deposits have been converted into Bank of Cyprus shares.
The Company held 1.591.105 shares with fair value $60,140$ cents. In January 2017, the shares in Bank of Cyprus Public Company Limited were exchanged with new shares of Bank of Cyprus Holdings Plc listed in both London Stock Exchange and in Cyprus Stock Exchange with nominal value of €0,10 cents each. As at 31 December 2017 the Company held 79.556 shares in Bank of Cyprus Holdings Plc with fair value €2.47 each.
The exposure of the Company to market risk in relation to financial assets is reported in note 21 to the financial statements.
For the purposes of the statement of cash flows, the cash and cash equivalents include the following:
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Cash at bank | $\underline{15.985.539}$ 10.724.472 | |
| $15.985.539$ $10.724.472$ |
The exposure of the Company to credit risk and impairment losses in relation to cash and cash equivalents is reported in note 21 to the financial statements.
| Issued and fully paid | Number of shares |
Share capital US\$ |
Share premium US\$ |
Total US\$ |
|---|---|---|---|---|
| Balance at 1 January 2016 | $_21.670.000$ | 661.128 | 88.531.664 | 89.192.792 |
| Balance at 31 December 2016 | $-21.670,000$ | 661.128 | 88.531.664 | 89.192.792 |
| Balance at 1 January 2017 | 21.670.000 | 661.128 | 88.531.664 | 89.192.792 |
| Balance at 31 December 2017 | 21.670.000 | 661.128 | 88.531.664 | 89.192.792. |
On 31 December 2017 the authorised share capital of the Company amounted to 47.619.048 ordinary shares of nominal value €0,021 each.
Upon incorporation on 21 September 2009 the Company issued to the subscribers of its Memorandum of Association 12.000.000 ordinary shares of nominal value $60,021$ each, amounting to $6252.000$ (US\$ equivalent of US\$370.591).
On 4 November 2009 the Company issued 4.000.000 additional ordinary shares of nominal value $60,021$ each, amounting to £84.000 (US\$ equivalent of US\$123.715), at a premium of £6,93 per share, amounting to a total share premium of £27.720.000 (US\$ equivalent of US\$38.791.285).
Global Depositary Receipts "GDRs" were issued against the 4.000.000 new shares by "The Bank of New York Mellon" for US\$9,72875 per each new share. The total consideration of the sharecapital issued was US\$38.915.000 out of which US\$123.715 is the total nominal value credited to the share capital account and US\$38.791.285 is the share premium reserve. Share issue expenses of US\$317.154 were deducted from the share premium reserve. GDRs are traded on the Open Market of the Frankfurt Stock Exchange since 12 November 2009.
The members of the Company held an Extraordinary General Meeting on 25 June 2010 where they authorized and approved the increase of the issued share capital of the Company from 16.000.000 ordinary shares of $60,021$ each amounting to $6336.000$ (USD\$ equivalent of US\$494.306) to 21.670.000 ordinary shares of nominal value of $60,021$ , by the creation of 5.670.000 ordinary shares of a nominal value of $60,021$ each, ranking pari pasu with the existing shares of the Company.
On 29 October 2010 the Company proceeded and issued 5.670.000 ordinary shares of nominal value €0,021 each, amounting to $€119.070$ (equivalent to US\$166.822), at a premium of $€6,7595$ per share amounting to a total share premium of €38.326.365 (US\$ equivalent of US\$54.222.634). The issue price for shares in the Company's public offering was set at PLN 27 per share. The Company raised total gross proceeds of PLN 153.090.000 (US\$ equivalent of US\$54.389.456) from the public offering. Share issue expenses of US\$4.165.101 were deducted from the share premium reserve.
During the year 2010, the Board of Directors of the Company resolved to proceed with the initial public offering of 5.670.000 new ordinary shares of the Company and the application for the admission of the entire issued share capital of the Company, including the Offer Shares to trading on the regulated marketof the Warsaw Stock Exchange.
| 2017 | 2016 | |
|---|---|---|
| US\$ | USS | |
| Balance at 1 January | 75.309.334 | 100.522.074 |
| Repayments | (25.212.740) | |
| Interest payable | 3.546.793 | |
| Balance at 31 December | 78.856.127 | 75.309.334 |
| 2017 | 2016 | |
| US\$ | US\$ | |
| Non-current liabilities | ||
| Notes | 9.807.330 | 9.356.642 |
| Current liabilities | ||
| Loans from subsidiaries (note 20 (ii)) | 69.048,797 | 65.952.692 |
| Total | 78.856.127 75.309.334 | |
| Maturity of borrowings: | ||
| 2017 | 2016 | |
| US\$ | US\$ | |
| Within one year | 69.048.797 | 65.952,692 |
| Between one and five years | 9.807.330 | 9.356.642 |
| 78.856.127 | 75.309.334 | |
On 14 July 2011, the Company issued US\$50.000.000 12,50% Notes due on 14 July 2014. The Notes have been admitted to the official list of the UK Listing authority and to the London Stock Exchange Plc and trading on the London Stock Exchange's regulated market.
The Notes bear interest at a rate of 12,50% per annum payable semi-annually in arrears on 14 January and 14 July in each year, commencing on 14 January 2012.
The Notes are recognised initially at fair value (US\$50.000.000) net of issue costs equal to US\$2.777.014. The difference between the proceeds (net of issue costs) and the redemption value as at 14 July 2014 is recognised in the statement of profit or loss over the period of the issue.
On 8 August 2013 the Company has secured the consent of the Noteholders to amend the terms and conditions of the Notes as follow:
On 18 December 2013 the Company has secured a second consent of the Noteholders to amend the terms and conditions of the Notes as follow:
On 14 April 2014 the Company has purchased Notes in an aggregate principal amount of US\$22.100.000.
On 15 December 2014 the Company has secured a third consent of the Noteholders to amend the terms and conditions of the Notes as follow:
On 28 October 2015 the Company has purchased Notes in an aggregate principal amount of US\$10.350.000.
On 12 January 2016 the Company has secured a fourth consent of the Noteholders to amend the terms and conditions of the notes as follows:
On 26 October 2016 the Company has purchased Notes in an aggregate principal amount of US\$10.000.000.
The following subsidiaries are acting as surety providers:
On 17 January 2017 the Company has secured a fifth consent of the Noteholders to postpone to 14 January 2018 the interest payments that was due for payment to Noteholders on 14 January 2017, as a result on 14 January 2018, the Company paid a coupon interest on its notes in the amount of US\$2.265.000.
On 14 January 2018, the Company paid a coupon interest on its notes in the amount of US\$2.265.000, as agreed with Noteholders on 17 January 2017.
Additionally, on 6 April 2018 the Company announced the timely and full repayment of interest on notes deferred coupon amounting to US\$2.265.000 on 14 January 2019.
The exposure of the Company to liquidity risk in relation to loans and borrowings is reported in note 2 to the financial statements.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Accruals Other creditors |
41.015 9.466 |
29.414 19.954 |
| 50.481 | 49.368 |
The exposure of the Company to liquidity risk in relation to financial instruments is reported in note 21 to the financial statements.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Corporation tax Special contribution to the defence fund |
41.204 112.211 |
٠ 113.505 |
| 153.415 | $-113.505$ |
The above amounts are payable within one year.
The Cyprus economy has been adversely affected during the last few years by the economic crisis. The negative effects have to some extent been resolved, following the negotiations and the relevant agreements reached with the European Commission, the European Central Bank and the International Monetary Fund (IMF) for financial assistance which was dependent on the formulation and the successful implementation of an Economic Adjustment Program. The agreements also resulted in the restructuring of the two largest (systemic) banks in Cyprus through a "bail in".
The Cyprus Government has successfully completed earlier than anticipated the Economic Adjustments Program and exited the IMF program on 7 March 2016, after having recovered in the international markets and having only used $\epsilon$ 7,25 billion of the total $\epsilon$ 10 billion earmarked in the financial bailout. Under the new Euro area rules, Cyprus will continue to be under surveillance by its lenders with biannual post-program visits until it repays 75% of the economic assistance received.
Although there are signs of improvement, especially in the macroeconomic environment of the country's economy including growth in GDP and reducing unemployment rates, significant challenges remain that could affect the estimates of the Company's cash flows and its assessment of impairment of financial and non-financial assets.
Ukraine's political and economic situation has deteriorated significantly since 2014. Following political and social unrest, which started in November 2013, in March 2014 various events in Crimea led to the accession of the Republic of Crimea to the Russian Federation, which was not recognised by Ukraine and many other countries. This event resulted in a significant deterioration of the relationship between Ukraine and the Russian Federation. Following the instability in Crimea, regional tensions have spread to the Eastern regions of Ukraine, primarily Donetsk and Lugansk regions. In May 2014, protests in those regions escalated into military clashes and armed conflict between supporters of the self-declared republics of the Donetsk and Lugansk regions and the Ukrainian forces, which continued through the date of these consolidated financial statements. As a result of this conflict, part of the Donetsk and Lugansk regions remains under control of the self-proclaimed republics, and Ukrainian authorities are not currently able to fully enforce Ukrainian laws on this territory.
Political and social unrest combined with the military conflict in the Donetsk and Lugansk regions has deepened the ongoing economic crisis, caused a fall in the country's gross domestic product and foreign trade, deterioration in state finances, depletion of the National Bank of Ukraine's foreign currency reserves, significant devaluation of the national currency and a further downgrading of the Ukrainian sovereign debt credit ratings. Following the devaluation of the national currency, the National Bank of Ukraine introduced certain administrative restrictions on currency conversion transactions, which among others included restrictions on purchases of foreign currency by individuals and companies, the requirement to convert 75% of foreign currency proceeds to local currency, a ban on payment of dividends abroad, a ban on early repayment of foreign loans and restrictions on cash withdrawals from banks. These events had a negative effect on Ukrainian companies and banks, significantly limiting their ability to obtain financing on domestic and international markets
The final resolution and the effects of the political and economic crisis are difficult to predict but may have further severe effects on the Ukrainian economy
Whilst management believes it is taking appropriate measures to support the sustainability of the Company's and its subsidiaries business in the current circumstances, a further deterioration in the business environment could negatively affect the Company's and its subsidiaries results and financial position in a manner not currently determinable. These consolidated financial statements reflect management's current assessment of the impact of the Ukrainian business environment on the operations and the financial position of the Company. The future business environment may differ from management's assessment.
The Company's management believes that it is taking all the necessary measures to maintain the viability of the Company and the development of its business in the current business and economic environment.
The Company is controlled by Mr. Iurii Zhuravlov, who holds directly 74,01% of the Company's share capital. The remaining 25,99% of the shares is widelyheld.
The transactions and balances with related parties are as follows:
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| PE Agricultural Production Firm Agro PE Agricultural Production Firm Agro |
7.354.519 $-63.030.979$ |
8.758.873 $-64.730.620$ |
| 70.385.498 73.489.493 |
During 2010, the Company has entered into several loan agreements with subsidiary company PE Agricultural Production Firm Agro for a total amount of US\$20,000.000. The loans bear interest at a rate of 10% per annum and expired in 31 July 2014. During 2014 the two parties agreed to postpone the repayment date.
Additionally, during same period (2010), the Company has entered into several loan agreements with subsidiary company PE Agricultural Production Firm Agro for a total amount of US\$65.000.000. The loans bear interest at a rate of 2,5% per annum.
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Agroton BVI Limited | 69.048.797 65.952.692 | |
| 69.048.797 | 65.952.692 |
On 25 July 2011 the Company has entered into a loan agreement with its subsidiary company Agroton BVI Limited amounting to US\$10.000.000. During 2012 the amount of the loan was extended to US\$60.000.000. The loan was originaly provided interest free. From 1 January 2013 onwards the loan bears interest at a rate of 6% per annum and with expiry date on 1 January 2016.
On 5 March 2013 the Company has entered into a loan agreement with its subsidiary company Agroton BVI Limited amounting to US\$90.000. The loan bears interest at a rate of 1% per annum and expired on 5 March 2015. During 2015 the two parties agreed to postpone the repayment.
The Company is exposed to the following risks from its use of financial instruments:
The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework.
The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the Company's activities.
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Loans receivables from related parties Cash at bank |
$_15.985.539$ | 71.466.748 73.489.493 10.724.472 |
| $\frac{87.452.287}{84.213.965}$ |
The Company's exposure to credit risk is influenced mainly by the loans receivables from related parties which are part of the group, and therefore, the credit risk is low.
The table below shows an analysis of the Company's bank deposit by the credit rating of the bank in which they are held:
| Bank group based on credit ratings by Moody's | 2017 US\$ |
2016 | |
|---|---|---|---|
| $A$ - to $A$ + | $No$ of banks | 1.734.142 | US\$ 10.552,340 |
| Lower than A- Without credit rating |
36.728 14.214.669 |
172.131 | |
| 15.985.539 | $_10.724.471$ |
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.
The following tables detail the Company's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
| 31 December 2017 | Carrying amounts US\$ |
cash flows US\$ |
Contractual 3 months or Between 3- less US\$ |
12 months US\$ |
Between 1-5 years US\$ |
|---|---|---|---|---|---|
| Notes Trade and other payables Loans from subsidiaries |
9.807.330 9.466 |
10.260.330 9.466 69.048.797 72.144.902 |
2.265.000 | 453.000 9.466 72.144.902 |
7.542.330 |
| $-78.865.593$ $-82.414.698$ $-2.265.000$ | $-72.607,368$ | 7.542.330 | |||
| 31 December 2016 | Carrying amounts US\$ |
cash flows USS |
Contractual 3 months or Between 3- less USS |
12 months US\$ |
Between 1-5 years US\$ |
| Notes Trade and other payables Loans from subsidiaries Loans from owners |
9.356.642 19.954 65.952.692 2.199.604 |
24.394.500 19.954 81.883.145 2.199.604 |
3.159.000 $\sim$ |
526.500 19.954 81.883.145 2.199.604 |
20.709.000 |
| 77.528.892 | 108.497.203 | 3.159.000 | 84.629.203 | 20.709.000 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. Company's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest- bearing financial instruments was:
| 2017 | 2016 | |
|---|---|---|
| US\$ | US\$ | |
| Fixed rate instruments | ||
| Financial assets | 70.385.498 73.489.493 | |
| Financial liabilities | $(78.856.127)$ $(75.309.333)$ | |
| $(8,470.629)$ $(1.819.840)$ |
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency. The Company is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Euro. The Company's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
The Company's exposure to foreign currency risk was as follows:
| 31 December 2017 | Euro US\$ |
|---|---|
| Assets Cash and Cash Equivalents Net exposure |
10.391 10.391 |
| 31 December 2016 | Euro US\$ |
| Assets Cash and Cash Equivalents Net exposure |
7.936 7.936 |
Capital management
The Company manages its capital to ensure that it will be able to continue as a going concern while increasing the return to owners through the strive to improve the debt to equity ratio. The Company's overall strategy remains unchanged from last year.
The carrying amounts and fair values of certain financial assets and liabilities are as follows:
| Carrying amounts | Fair values | |||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| USS | US\$ | US\$ | US\$ | |
| Financial assets | ||||
| Cash and cash equivalents | 15.985.539 | 10.724.472 | 15.985.539 | 10.724.472 |
| Fair value through profit or loss | 235.664 | 234.847 | 235.664 | 234.847 |
| Financial assets | 71.466.748 | 73.489.493 | 72.725.184 | 73.489.184 |
| Financial liabilities | ||||
| Notes | (9.807.330) | $(9.356.642)$ $(1.415.625)$ $(1.963.000)$ | ||
| Loans from subsidiaries | $(69.048.797)$ $(65.952.692)$ $(69.048.797)$ $(65.952.692)$ | |||
| 8.831.824 | 9.139.478 | 18.481.965 | 16.532.811 |
The fair value of financial instruments traded in active markets, such as publicly traded trading and available-for-sale financial assets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The appropriate quoted market price for financial liabilities is the current ask price.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
| 31/12/2017 | Level 1 US\$ |
Level 2 US\$ |
Level 3 US\$ |
Total USS |
|---|---|---|---|---|
| Financial assets Cash and cash equivalents Financial assets at fair value through profit |
15.985.539 | 15.985.539 | ||
| or loss Loans receivable |
235.664 | 70.385.498 | 235.664 70.385.498 |
|
| Total Financial liabilities |
235.664 | 15.985.539 | 70.385.498 86.606.701 | |
| Trade and other payables Short-term notes Loans payable |
1.415.625 | 9.466 69.048.797 |
9.466 1.415.625 69.048.797 |
|
| Total | 1.651.289 | 15.985.539 | 139.443.761 157.080.589 | |
| 31/12/2016 | Level 1 US\$ |
Level 2 US\$ |
Level 3 US\$ |
Total USS |
| Financial assets Cash and cash equivalents Financial assets at fair value through profit |
10.724.472 | 10.724.472 | ||
| or loss Loans receivable |
234,847 | 73.489.493 | 234.847 73.489.493 |
|
| Total Financial liabilities |
234.847 | $-10.724.472$ | 73.489.493 | 84.448.812 |
| Trade and other payables Long-term notes Loans payable |
1.963.000 | 19.954 65.952.692 |
19.954 1.963.000 65.952.692 |
|
| Total | 1.963.000 | 65.972,646 | 67.935.646 |
The Company had no contingent liabilities as at 31 December 2017.
The events that occurred after the reporting period are as follows:
On 14 January 2018, the Company paid a coupon interest on its notes in the amount of US\$2.265.000, as agreed with Noteholders on 17 January 2017.
Additionally, on 6 April 2018, the Company announced the timely and full repayment of interest on notes deferred coupon amounting to US\$2.265.000 on 14 January 2019.
On 23 April 2018 the Board of Directors of Agroton Public Limited approved and authorised these financial statements for issue.
×
FINANCIAL STATEMENTS
For the year ended 31 December 2017
ADDITIONAL INFORMATION
$\lambda$
$\hat{E}$
Y) $\tilde{\mathbf{s}}_2^c$
$\kappa^2$
Schedule
| Income statement | |
|---|---|
| Administrative expenses | 2 |
| Other operating expenses | ٩ |
| Finance income/cost | 4 |
| Computation of corporate tax |
| 2017 | 2016 | ||
|---|---|---|---|
| US\$ | US\$ | ||
| Schedule | |||
| Loan interest income | 3.401.413 | 6.358.860 | |
| Interest expense | (3.546.793) | (4.835.490) | |
| Gross (loss)/ profit | (145.380) | 1.523.370 | |
| Other operating income | |||
| Administrative and selling expenses | 817 | 7.172.420 | |
| Other operating expenses | $\overline{2}$ $\overline{3}$ |
(163.255) | (219.888) |
| Operating (loss)/ profit | (19.730) | ||
| (307.818) | 8.456.172 | ||
| Finance income | 4 | 1.029 | |
| Finance costs | 4 | (6.084) | (23.655) |
| Net finance expenses | (5.055) | ||
| (23.655) | |||
| (Loss)/profit before tax | |||
| Tax | (312.873) | 8.432.517 | |
| (41.204) | |||
| (Loss)/profit for the year | |||
| (354.077) | 8.432.517 |
ó.
$\mu$
$\sim$
$\frac{1}{\sqrt{2}}$
S.
ä
$\overline{\phantom{a}}$
| 2017 | 2016 | |
|---|---|---|
| US\$ | US\$ | |
| Schedule | ||
| Registrar annual fee | 381 | 391 |
| Sundry expenses | 1.500 | 9.061 |
| Subscriptions and contributions | 3.267 | 3.220 |
| Independent auditors' remuneration for the statutory audit of annual | ||
| accounts | 36.219 | 25.200 |
| Independent auditors' remuneration - prior years | 3.962 | |
| Accounting fees | 12.389 | 13.041 |
| Legal fees | 14.612 | 16.839 |
| Other professional fees | 50.963 | 126.594 |
| Secretarial fees | 979 | 1.005 |
| Registered office fees | 979 | 1.005 |
| Fines | 8.426 | 17.445 |
| Irrecoverable VAT | 14.196 | 6.087 |
| Custodian Fees | 15.382 | |
| l | 163.255 | 219.888 |
| 2017 US\$ |
2016 US\$ |
|
|---|---|---|
| Schedule | ||
| Fair value losses on financial assets at fair value through profit or loss | $\rightarrow$ | 19.730 |
| ıu. |
$\widetilde{\mathcal{L}}$
$\frac{1}{4}$
$\overline{\phantom{a}}$
Ç
œ. $\frac{1}{2}$
$\tilde{\mathbf{z}}$
ł,
| Schedule | 2017 US\$ |
2016 US\$ |
|
|---|---|---|---|
| Finance income | |||
| Unrealised foreign exchange profit | 1.029 1.029 |
||
| Finance expenses | |||
| Interest expense | |||
| Interest on taxes | 330 | ||
| Sundry finance expenses | |||
| Bank charges | 3.389 | 21.819 | |
| Net foreign exchange transaction losses | |||
| Realised foreign exchange loss | 2.365 | 257 | |
| Unrealised foreign exchange loss | 1.579 | ||
| 6.084 | 23.655 | ||
| Net finance expenses | (5.055) | (23.655) |
$\overline{\phantom{a}}$
o.
i,
| Schedule | (312.873) |
|---|---|
| Net loss before tax per income statement 1 Add: |
|
| Realised foreign exchange loss 2.365 Registrar annual fee 381 |
|
| Fines 8.426 |
|
| Interest on taxes 330 Irrecoverable VAT 14.196 |
|
| Notional interest on loans receivable 1.042.434 |
|
| 1.068.132 | |
| 755.259 | |
| Less: Fair value gains on financial assets at fair value through profit |
|
| or loss 817 |
|
| Unrealised foreign exchange profit 1.029 |
(1.846) |
| Chargeable income for the year | 753.413 |
| $\epsilon$ | |
| Converted into $\epsilon$ at US\$ 1,199300 = $\epsilon$ 1 | 628.211 |
| Loss brought forward | (378.345) |
| Chargeable income | 249.866 |
| Calculation of corporation tax Income Rate Total |
Total |
| $\epsilon$ $\frac{0}{0}$ $\epsilon$ c |
USS |
| Tax at normal rates: | |
| Chargeable income as above 249.866 12,50 31.233,25 10% additional charge |
37.458 |
| 3.123,33 TAX PAYABLE 34.356,58 |
3.746 41.204 |
t
| Tax year | Profits/(losses) | Gains Offset | Gains Offset | Gains Offset | |||
|---|---|---|---|---|---|---|---|
| for the tax year | |||||||
| Amount $\epsilon$ | Year | Amount $\epsilon$ | Year | Amount $\epsilon$ | Year | ||
| 2012 | (47.418) | 47.418 | 2015 | ||||
| 2013 | (1.058.267) | 164.013 | 2015 | 894.254 | 2016 | ||
| 2014 | (723.004) | 343.837 | 2016 | 378.345 | 2017 | ||
| 2015 | 212.254 | ||||||
| 2016 | 1.238.091 | ||||||
| 2017 | 628.211 |
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