Annual / Quarterly Financial Statement • May 4, 2017
Annual / Quarterly Financial Statement
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| Page | |
|---|---|
| Officers and Professional Advisors | 1 |
| Management Report | 2 & 3 |
| Independent Auditors' report | 4 - 8 |
| Statement of profit or loss and other comprehensive income | 9 |
| Statement of financial position | 10 |
| Statement of changes in equity | 11 |
| Statement of cash flows | 12 |
| Notes to the financial statements | 13 - 36 |
| 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 |
| Registered Office | 1 Lampousas Street 1095 Nicosia Cyprus |
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 2016.
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 Group's core business is crop production, comprising principally sunflower seeds and wheat and also engaged in livestock and food processing.
The Company's financial results for the year ended 31 December 2016 are set out on page 9 to the financial statements. The net profit for the year attributable to the owners of the Company amounted to US\$8.432.517 (2015: US\$1.735.245).
The current financial position as presented in the financial statements is considered satisfactory.
The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained.
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 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 2016 the Company did not operate any branches.
The members of the Company's Board of Directors as at 3l December 2016 and,at the date of this report are presented on page I . All of them were members of the Board of Directors throughout the year ended 3l December 2016.
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 Directors.
Any significant events that occurred after the end of the reporting period are described in note 24 to the financial statements.
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..
Larysa Orlova Director
Nicosia, 2l April2017
| 2016 | 2015 | ||
|---|---|---|---|
| Note | US\$ | US\$ | |
| Loan interest income | 6.358.860 | 6.328.241 | |
| Interest expense | (4.835.490) | (5.950.016) | |
| Gross profit | 1.523.370 | 378.225 | |
| Other operating income | 4 | 7.172.420 | 7.290.516 |
| Administrative expenses | 5 | (219.888) | (190.860) |
| Other operating expenses | 6 | (19.730) | (5.732.205) |
| Operating profit | 7 | 8.456.172 | 1.745.676 |
| Finance income | (257) | 9.160 | |
| Finance expenses | (23.398) | (18.940) | |
| Net finance expenses | 8 | (23.655) | (9.780) |
| Profit before tax |
8.432.517 | 1.735.896 | |
| Tax | 9 | - | (651) |
| Profit for the year |
8.432.517 | 1.735.245 | |
| Other comprehensive income | - | - | |
| Total comprehensive income for the year attributable to owners | 8.432.517 | 1.735.245 |
The notes on pages 13 to 36 are an integral part of these financial statements.
| 20t6 | 2015 | ||
|---|---|---|---|
| Note | US\$ | US\$ | |
| Assets | |||
| Investments in subsidiaries | |||
| Financial assets at fair value through profit or loss | 4.818 | ||
| Loans receivable | 254.577 | ||
| Total non-current assets | 259.395 | ||
| Trade and other receivables | 12 | 150.334 147.366 | |
| Loans receivable | l l | 23.696.708 96.216.327 | |
| Cash and cash equivalents | 14 | 10.724.472 4.747.423 | |
| Total current assets | 34.571.514 l0l.lI1.116 | ||
| Total assets | ___84-693254 lllll0l | I L | |
| Equity | |||
| Share capital | l5 | ||
| Share premium | l5 | 661.t28 | 66r.t28 88.531.664 88.s3 L664 |
| Reserves | (80.061.034) (88.493.551) | ||
| Total equity | 9.13r.758 699.241 | ||
| Liabilities | |||
| Loans and borrowings | |||
| Total non-current liabilities | t6 | 9.356.642 20.7r1.510 | |
| 9.356.642 20.111.sr} | |||
| Short term portion of long-term loans | I6 | 65.952.692 79.810.564 | |
| Trade and other payables | t'l | 49.367 | |
| Tax liability | 18 | I13.505 | 3s.691 |
| Total current liabilities | 66.1rs.s64 79.9s9.760 | 113.505 | |
| Total liabilities | '75.472.206 100.67r.270 | ||
| Total equity and liabilities | 84.693p54 L0l31051_L |
On 2l April 2017 the Board of Directors of Agroton financial statements for issue. Public Limited approved and authorised these
The notes on pages l3 to 36 are an integral part of these financial statements.
| Share capital US\$ |
Share premium US\$ |
Retained earnings US\$ |
Total US\$ |
|
|---|---|---|---|---|
| Balance at 1 January 2015 |
661.128 | 88.531.664 | (87.142.448) | 2.050.344 |
| Comprehensive income | ||||
| Profit for the year |
- | - | 1.735.245 | 1.735.245 |
| Total comprehensive income for the year |
- | - | 1.735.245 | 1.735.245 |
| Transactions with owners of the Company | ||||
| Contributions and distributions | ||||
| Forgiveness of debt | - | - | (3.086.348) | (3.086.348) |
| Total transactions with owners | - | - | (3.086.348) | (3.086.348) |
| Balance at 31 December 2015 |
661.128 | 88.531.664 | (88.493.551) | 699.241 |
| Balance at 1 January 2016 |
661.128 | 88.531.664 | (88.493.551) | 699.241 |
| Comprehensive income | ||||
| Profit for the year | - | - | 8.432.517 | 8.432.517 |
| Balance at 31 December 2016 | 661.128 | 88.531.664 | (80.061.034) | 9.131.758 |
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.
The notes on pages 13 to 36 are an integral part of these financial statements.
| 2016 | 2015 | ||
|---|---|---|---|
| Note | US\$ | US\$ | |
| Cash flows from operating activities | |||
| Profit for the year | 8.432.517 | 1.735.245 | |
| Adjustments for: | |||
| Unrealised exchange loss | 1.579 | - | |
| Fair value losses on financial assets at fair value through profit or | |||
| loss | 6 | 19.730 | 87.511 |
| Fair value gains on other investments | 4 | (7.172.420) | (7.233.908) |
| Impairment charge - other non-current assets | 6 | - | 5.644.694 |
| Loan interest income | (6.358.860) | (6.330.411) | |
| Interest expense | 8 | 4.835.490 | 5.950.368 |
| Income tax expense | 9 | - | 651 |
| Cash used in operations before working capital changes | (241.964) | (145.850) | |
| Increase in trade and other receivables | (2.968) | (202) | |
| Decrease in bank deposits | - | 716.614 | |
| Increase in trade and other payables | 13.676 | 7.351.749 | |
| Cash (used in)/generated from operations | (231.256) | 7.922.311 | |
| Cash flows from investing activities | |||
| Loans granted | 11 | - | (510.000) |
| Loans repayments received | 11 | 11.500.710 | - |
| Interest received | - | 2.170 | |
| Net cash generated from/(used in) investing activities | 11.500.710 | (507.830) | |
| Cash flows from financing activities | |||
| Repurchase of notes | (5.290.761) | (4.858.312) | |
| Net cash used in financing activities | (5.290.761) | (4.858.312) | |
| Effect of exchange rate fluctuations on cash held | (1.644) | - | |
| Net increase in cash and cash equivalents | 5.977.049 | 2.556.169 | |
| Cash and cash equivalents at beginning of the year | 4.747.423 | 2.191.254 | |
| Cash and cash equivalents at end of the year | 14 | 10.724.472 | 4.747.423 |
The notes on pages 13 to 36 are an integral part of these financial statements.
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. The Company was listed at the main market of Warsaw Stock Exchange on 8 November 2010. Its registered office is at 1 Lampousas Street, 1095 Nicosia, Cyprus.
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 Group's core business is crop production, comprising principally sunflower seeds and wheat and also engaged in livestock and food processing.
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 2016.
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 2016 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.
As from 1 January 2016, 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 2016. Those which may be relevant to the Company are set out below. The Company does not plan to adopt these Standards early.
(ii) Standards and Interpretations not adopted by the EU
The Board of Directors expects that the adoption of these standards or interpretations 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 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.
Significant valuation issues are reported to the Company's Audit Committee.
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.
Income from investments in securities
Dividend from investments in securities is recognised when the right to receive payment is established. Withheld taxes are transferred to profit or loss. Interest from investments in securities is recognised on an accruals basis.
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.
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.
Loans and receivables
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.
Financial instruments (continued)
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.
(iv) Borrowings
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.
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Profit on repurchase of Notes Sundry operating income |
7.172.420 - |
7.233.908 56.608 |
| 7.172.420 | 7.290.516 |
| 2016 | 2015 | ||
|---|---|---|---|
| US\$ | US\$ | ||
| Registrar annual fee | 391 | 400 | |
| Sundry expenses | 9.061 | 1.591 | |
| Subscriptions and contributions | 3.220 | - | |
| Independent auditors' remuneration for the statutory audit of annual | |||
| accounts | 25.200 | 25.616 | |
| Accounting fees | 13.041 | 12.785 | |
| Legal fees | 16.839 | 13.461 | |
| Other professional fees | 126.594 | 130.986 | |
| Secretarial fees | 1.005 | 1.028 | |
| Registered office fees | 1.005 | 1.028 | |
| Fines | 17.445 | - | |
| Irrecoverable VAT | 6.087 | 3.965 | |
| 219.888 | 190.860 | ||
| 6. | OTHER OPERATING EXPENSES | ||
| 2016 | 2015 | ||
| US\$ | US\$ | ||
| Loss on impairment of other non-current assets | - | 5.644.694 | |
| Fair value losses on financial assets at fair value through profit or loss | 19.730 | 87.511 | |
| 19.730 | 5.732.205 | ||
| 7. | OPERATING PROFIT | ||
| 2016 US\$ |
2015 US\$ |
||
| Operating profit is stated after charging the following items: |
|||
| Independent auditors' remuneration for the statutory audit of annual accounts |
25.200 | 25.616 |
| 2016 US\$ |
2015 US\$ |
|||
|---|---|---|---|---|
| Interest income | - | 2.170 | ||
| Exchange profit | (257) | 6.990 | ||
| (257) | 9.160 | |||
| Net foreign exchange transaction losses | (1.579) | (1.332) | ||
| Interest expense | - | (352) | ||
| Sundry finance expenses | (21.819) | (17.256) | ||
| Finance expenses | (23.398) | (18.940) | ||
| Net finance expenses | (23.655) | (9.780) | ||
| 9. TAXATION |
||||
| 2016 | 2015 | |||
| US\$ | US\$ | |||
| Special contribution to the defence fund year | - | 651 | ||
| Charge for the year |
- | 651 | ||
| Reconciliation of tax based on the taxable income and tax based on accounting profits: |
||||
| 2016 | 2016 | 2015 | 2015 | |
| US\$ | US\$ | |||
| Accounting profit before tax |
8.432.517 | 1.735.896 | ||
| Tax calculated at the applicable tax rates Tax effect of expenses not deductible for tax |
12,50 % |
1.054.065 | 12,50 % |
216.987 |
| purposes | 0,07 % |
5.654 | 41,32 % |
717.282 |
| Tax effect of allowances and income not | ||||
| subject to tax Tax effect of tax losses brought forward |
(10,63)% (1,93)% |
(896.585) (163.134) |
(52,16)% (1,66)% |
(905.384) (28.885) |
| Special contribution to the defence fund | - % |
- | 0,04 % |
651 |
| Tax as per statement of profit or loss and other | ||||
| comprehensive income - charge |
- % |
- | 0,04 % |
651 |
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%.
The Company's chargeable income for the year amounted to US\$1.375.676 which has been set off against tax losses brought forward. Under current legislation, tax losses may be carried forward and be set off against taxable income of the following five years. As at 31 December 2016 the balance of tax losses which is available for offset against future taxable profits amounts to US\$399.680 (€379.167).
| 2016 US\$ |
2015 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 |
2016 Holding % |
2015 Holding % |
2016 US\$ |
2015 US\$ |
|---|---|---|---|---|---|---|
| Living LLC | Ukraine | Agricultural activities |
99,99 | 99,99 | 4.718 | 4.718 |
| Agroton BVI Limited |
British Virgin Island |
Trading in Agriculture |
100 | 100 | 100 | 100 |
| LLC Gefest | Ukraine | Owner of land lease rights |
100 | 100 | - | - |
| LLC Lugastan | Ukraine | Owner of land lease rights |
99,99 | 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.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Balance at 1 January New loans granted |
96.216.327 - |
106.904.109 510.000 |
| Repayments | (11.500.710) | (17.526.023) |
| Interest charged | 6.358.860 | 6.328.241 |
| Set off | (17.584.984) | - |
| Balance at 31 December | 73.489.493 | 96.216.327 |
| 2016 | 2015 | |
| US\$ | US\$ | |
| Loans receivable | - | 3.405.381 |
| Loans to own subsidiaries (note 20 (i)) | 73.489.493 | 79.880.579 |
| Loans to directors (note 20 (ii)) | - | 12.930.367 |
| 73.489.493 | 96.216.327 | |
| Non-current portion | 49.792.785 | - |
| Current portion | 23.696.708 | 96.216.327 |
| 73.489.493 | 96.216.327 | |
| The loans are repayable as follows: | ||
| 2016 | 2015 | |
| US\$ | US\$ | |
| Within one year | 23.696.708 | 96.216.327 |
| Between one and five years | 49.792.785 | - |
| 73.489.493 | 96.216.327 |
During the year 2016 loans 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 is reported in note 21 to the financial statements.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Refundable VAT | 150.334 | 147.366 |
| 150.334 | 147.366 |
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.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Cyprus Stock Exchange Bank of Cyprus Public Company Limited |
234.847 | 254.577 |
| 234.847 | 254.577 | |
| 2016 US\$ |
2015 US\$ |
|
| Balance at 1 January Change in fair value |
254.577 (19.730) |
342.088 (87.511) |
| Balance at 31 December | 234.847 | 254.577 |
Financial assets designated at fair value through profit or loss represents 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 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:
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Cash at bank | 10.724.472 | 4.747.423 |
| 10.724.472 | 4.747.423 |
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 2015 |
21.670.000 | 661.128 | 88.531.664 | 89.192.792 |
| Balance at 31 December 2015 |
21.670.000 | 661.128 | 88.531.664 | 89.192.792 |
| 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 |
On 31 December 2016 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 €0,021 each, amounting to €252.000 (US\$ equivalent of US\$370.591)
On 4 November 2009 the Company issued 4.000.000 additional ordinary shares of nominal value €0,021 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 Bankof 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 tothe share capital account and US\$38.791.285 is the share premium reserve. Share issue expensesof 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 €0,021 each amounting to €336.000 (USD\$ equivalent of US\$494.306) to 21.670.000 ordinary shares of nominal value of €0,021, by the creation of 5.670.000 ordinary shares of a nominal value of €0,021 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 publicoffering of 5.670.000 new ordinary shares of the Company and the application for the admission of theentire issued share capital of the company, including the Offer Shares to trading on the regulated marketof the Warsaw Stock Exchange.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Non-current liabilities Notes |
9.356.642 | 20.711.510 |
| Current liabilities | ||
| Loans from subsidiaries (note 20 (iii)) | 65.952.692 | 77.924.567 |
| Loans from owners (note 20 (iv)) | - | 1.885.997 |
| 65.952.692 | 79.810.564 | |
| Total | 75.309.334 | 100.522.074 |
| Maturity of borrowings: | ||
| 2016 | 2015 | |
| US\$ | US\$ | |
| Within one year | 65.952.692 | 79.810.564 |
| Between one and five years | 9.356.642 | 20.711.510 |
| 75.309.334 | 100.522.074 | |
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 follow:
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.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Accruals Other creditors |
29.413 19.954 |
29.861 5.830 |
| 49.367 | 35.691 |
The exposure of the Company to liquidity risk in relation to financial instruments is reported in note 21 to the financial statements.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Special contribution to the defence fund | 113.505 | 113.505 |
| 113.505 | 113.505 |
The above amounts are payable within one year.
According to the Cyprus Statistical Service, economic growth for 2016 was estimated at + 2,8% compared to 2015. Even though the financial services sector showed negative growth, there has been an increase in the Gross Domestic Product which is mainly attributed to the hotels, construction, manufacturing and the wholesale and retail trade sectors. The economic growth was mainly driven by the increase in private consumption, which benefited from the reduction in unemployment and the consequent increase in disposable income. The growth was also supported by the slower pace of reductions in public spending and the increase in investments. On 17 March 2017 the credit rating of the country rose from BB to BB +.
Ukraine's political and economic situation has deteriorated significantly since 2014. Following political and social unrest in early 2014, 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 throughout the date of these 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 Group's business in the current circumstances, a continuation of the current unstable business environment could negatively affect the Group's results and financial position in a manner not currently determinable. These financial statements reflect management's current assessment of the impact of the Ukrainian business environment on the operations and the financial position of the Group. Situation development may differ from management expectations. These financial statements were not adjusted to reflect events after the reporting period.
The above could affect, among others, the Company's ability to obtain new loans on favorable terms and conditions or/and its ability to achieve satisfactory turnover.
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 68,52% of the Company's share capital. The remaining 31,48% of the shares is widelyheld.
The transactions and balances with related parties are as follows:
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| PE Agricultural Production Firm Agro PE Agricultural Production Firm Agro |
8.758.873 64.730.620 |
13.983.707 65.896.872 |
| 73.489.493 | 79.880.579 |
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 bears 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.
During 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.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Iurii Zhuravlov | - | 1.825.096 |
| Iurii Zhuravlov | - | 2.961.868 |
| Iurii Zhuravlov | - | 580.727 |
| Iurii Zhuravlov | - | 7.038.182 |
| Iurii Zhuravlov | - | 524.494 |
| - | 12.930.367 |
During the past years the Company has entered into several agreements with its ultimate beneficial owner amounting to US\$42.000.000. The loans bear interest at a rate of 10-20% per annum and expired on 2015. During 2016 the loans were set off with loans payable to Agroton BVI Limited. (note 11)
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Agroton BVI Limited Agroton BVI Limited |
65.952.692 - |
77.834.511 90.056 |
| 65.952.692 | 77.924.567 |
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 will expire 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.
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Iurii Zhuravlov (loan) | - | 1.885.997 |
| - | 1.885.997 |
On 2 August 2012 the Company has entered into a loan agreement with its ultimate beneficial owner amounting to US\$1.000.000. The loan bears interest at a rate of 20% per annum and expired on 2 August 2015. During 2016 the loans were set off with loans receivable from the beneficial owner.
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.
(i) Credit risk
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 Company has no significant concentration of credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
| 2016 | 2015 | |
|---|---|---|
| US\$ | US\$ | |
| Loans receivable | - | 3.405.381 |
| Loans receivables from related parties | 73.489.493 | 92.810.946 |
| Cash at bank | 10.724.472 | 4.747.423 |
| 84.213.965 | 100.963.750 |
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 are the contractual maturities of financial liabilities at the reporting date. The amounts are gross and are undiscounted, and include estimated interest payments:
| 31 December 2016 | Carrying amounts US\$ |
Contractual cash flows US\$ |
3 months or less US\$ |
Between 3- 12 months US\$ |
Between 1-5 years US\$ |
|---|---|---|---|---|---|
| Notes | 9.356.642 | 10.494.500 | 1.812.000 | 226.500 | 8.456.000 |
| Trade and other payables | 19.954 | 19.954 | - | 19.954 | - |
| Loans from subsidiaries | 65.952.692 | 69.909.853 | - | 69.909.853 | - |
| 75.329.288 | 80.424.307 | 1.812.000 | 70.156.307 | 8.456.000 | |
| 31 December 2015 | Carrying amounts US\$ |
Contractual cash flows US\$ |
3 months or less US\$ |
Between 3- 12 months US\$ |
Between 1-5 years US\$ |
| Notes | 20.711.510 | 24.394.500 | 3.159.000 | 526.500 | 20.709.000 |
| Trade and other payables | 5.830 | 5.830 | - | 5.830 | - |
| Loans from subsidiaries | 77.924.567 | 81.883.145 | - | 81.883.145 | - |
| Loans from owners | 1.885.997 | 2.199.604 | - | 2.199.604 | - |
| 100.527.904 | 108.483.079 | 3.159.000 | 84.615.079 | 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:
| 2016 | 2015 | |
|---|---|---|
| US\$ | US\$ | |
| Fixed rate instruments | ||
| Financial assets | 73.489.493 | 96.216.327 |
| Financial liabilities | (75.309.333)(100.522.074) | |
| (1.819.840) | (4.305.747) |
An increase of 100 basis points in interest rates at 31 December 2016 would have increased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. For a decrease of 100 basis points there would be an equal and opposite impact on the profit and other equity.
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 fair values of the Company's financial assets and liabilities approximate their carrying amounts at the reporting period.
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 Company had no contingent liabilities as at 31 December 2016.
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.
On 21 April 2017 the Board of Directors of Agroton Public Limited approved and authorised these financial statements for issue.
| Income statement | 1 |
|---|---|
| Administrative expenses | 2 |
| Other operating expenses | 3 |
| Finance income/cost | 4 |
| Computation of corporate tax | 5 |
| Certificate | 6 |
| 2016 | 2015 | ||
|---|---|---|---|
| US\$ | US\$ | ||
| Schedule | |||
| Loan interest income | 6.358.860 | 6.328.241 | |
| Interest expense | (4.835.490) | (5.950.016) | |
| Gross profit | 1.523.370 | 378.225 | |
| Other operating income | 7.172.420 | 7.290.516 | |
| Administrative expenses |
2 | (219.888) | (190.860) |
| Other operating expenses | 3 | (19.730) | (5.732.205) |
| Operating profit | 8.456.172 | 1.745.676 | |
| Finance income | 4 | (257) | 9.160 |
| Finance costs | 4 | (23.398) | (18.940) |
| Net finance expenses | (23.655) | (9.780) | |
| Profit before tax |
8.432.517 | 1.735.896 | |
| Tax | - | (651) | |
| Profit for the year |
8.432.517 | 1.735.245 |
| 2016 | 2015 | |||
|---|---|---|---|---|
| US\$ | US\$ | |||
| Schedule | ||||
| Registrar annual fee | 391 | 400 | ||
| Sundry expenses | 9.061 | 1.591 | ||
| Subscriptions and contributions | 3.220 | - | ||
| Independent auditors' remuneration for the statutory audit of annual | ||||
| accounts | 25.200 | 25.616 | ||
| Accounting fees | 13.041 | 12.785 | ||
| Legal fees | 16.839 | 13.461 | ||
| Other professional fees | 126.594 | 130.986 | ||
| Secretarial fees | 1.005 | 1.028 | ||
| Registered office fees | 1.005 | 1.028 | ||
| Fines | 17.445 | - | ||
| Irrecoverable VAT | 6.087 | 3.965 | ||
| 1 | 219.888 | 190.860 |
| 2016 US\$ |
2015 US\$ |
|
|---|---|---|
| Schedule Loss on impairment of other non-current assets Fair value losses on financial assets at fair value through profit or loss |
- 19.730 |
5.644.694 87.511 |
| 1 | 19.730 | 5.732.205 |
| Schedule | 2016 US\$ |
2015 US\$ |
|
|---|---|---|---|
| Finance income | |||
| Bank interest | - | 2.170 | |
| Realised foreign exchange profit | (257) (257) |
6.990 9.160 |
|
| Finance expenses | |||
| Interest expense | |||
| Interest on taxes | - | 352 | |
| Sundry finance expenses | |||
| Bank charges | 21.819 | 17.256 | |
| Net foreign exchange transaction losses | |||
| Unrealised foreign exchange loss | 1.579 | 1.332 | |
| 23.398 | 18.940 | ||
| Net finance expenses | 1 | (23.655) | (9.780) |
| US\$ | US\$ | ||
|---|---|---|---|
| Schedule | |||
| Net profit before tax per income statement |
1 | 8.432.517 | |
| Add: | |||
| Fair value losses on financial assets at fair value through profit or loss |
19.730 | ||
| Unrealised foreign exchange loss | 1.579 | ||
| Registrar annual fee | 391 | ||
| Fines | 17.445 | ||
| Irrecoverable VAT | 6.087 | ||
| 45.232 | |||
| 8.477.749 | |||
| Less: | |||
| Profit on repurchase of Notes | 7.172.420 | ||
| Realised foreign exchange profit | 257 | ||
| (7.172.677) | |||
| Chargeable income for the year |
1.305.072 | ||
| € | |||
| Converted into € at US\$ 1,054100 = €1 |
1.238.091 | ||
| Loss brought forward | (1.617.258) | ||
| Loss to be carried forward |
(379.167) |
| Tax year | Profits/(losses) | Gains Offset | Gains Offset | Gains Offset | |||
|---|---|---|---|---|---|---|---|
| for the tax year | |||||||
| € | Amount € | Year | Amount € | Year | Amount € | Year | |
| 2011 | - | - | - | - | |||
| 2012 | (48.241) | 48.241 | 2015 | - | - | ||
| 2013 | (1.058.267) | 164.013 | 2015 | 894.254 | 2016 | - | |
| 2014 | (723.004) | 343.837 | 2016 | - | - | ||
| 2015 | 212.254 | - | - | - | |||
| 2016 | 1.238.091 | - | - | - |
Net loss to be carried forward (379.167)
We hereby certiff, to the best of our knowledge and belief, that:
Yours truly,
Nicosia, 2l April2017
HE 255059
The Management Report , the Independent Auditors' report and the Financial Statements of the Company for the year ended 3 I Decemb er 2016 are true copies of those presented at the Annual
Signature Secretary
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