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2011 CIS Consolidated Financial Statement Template Without Convenience Translation

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Partnership Fund JSC Consolidated Financial Statements for the period from 28 June 2011 (date of incorporation) to 31 December 2011 Partnership Fund JSC Contents Independent Auditors’ Report 3 Consolidated Statement of Financial Position 4 Consolidated Statement of Comprehensive Income 5 Consolidated Statement of Changes in Equity 6 Consolidated Statement of Cash Flows 7 Notes to the Consolidated Financial Statements 8 Partnership Fund JSC Consolidated Statement of Financial Position as at 31 December 2011 ’000 GEL Note 2011 ASSETS Non-current assets Interests in equity accounted investees 10 235,957 Prepayments for non-current assets 2,942 Property and equipment 189 Intangible assets 2 Total non-current assets 239,090 Current assets Prepayments and other receivables 943 Cash and cash equivalents 11 2,537 Asset classified as held for sale 6 167,197 Total current assets 170,677 Total assets 409,767 EQUITY AND LIABILITIES Equity Owner contributions 12 382,730 Retained earnings 4,037 Total equity 386,767 Non-current liabilities Deferred tax liabilities 9 3,154 Total non-current liabilities 3,154 Current liabilities Loans and borrowings 13 745 Trade and other payables 15 18,013 Provisions 14 1,088 Total current liabilities 19,846 Total liabilities 23,000 Total equity and liabilities 409,767 4 The consolidated statement of financial position is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 8 to 36. Partnership Fund JSC Consolidated Statement of Changes in Equity for the period from 28 June 2011(date of incorporation) to 31 December 2011 Owner contributions Retained Total ’000 GEL (note 12) earnings equity Balance at 28 June 2011 (date of incorporation) - - - Total comprehensive income for the period Profit for the period - 4,037 4,037 Transactions with owners, recorded directly in equity Owner contributions, net of tax of GEL 3,439 thousand (see note 9) 382,730 - 382,730 Balance at 31 December 2011 382,730 4,037 386,767 6 The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 8 to 36. Partnership Fund JSC Consolidated Statement of Cash Flows for the period from 28 June 2011(date of incorporation) to 31 December 2011 28 June 2011 (date of incorporation) ’000 GEL Note to 31 December 2011 Cash flows from operating activities Profit before income tax 3,752 Adjustments for: Depreciation and amortisation 5 Share of results of equity accounted investees (net of income tax) (5,868) Net finance income (83) Cash used in operating activities before changes in working capital (2,194) and provisions Change in prepayments and other receivables (192) Change in trade and other payables 998 Change in provisions 1,088 Net cash used in operating activities (300) Cash flows from investing activities Interest received 15 Acquisition of property and equipment (194) Acquisition of intangible assets (2) Acquisition of interests in equity accounted investees (193) Net cash used in investing activities (374) Cash flows from financing activities Proceeds from owner contributions 2,480 Proceeds from borrowings 731 Net cash from financing activities 3,211 Net increase in cash and cash equivalents 2,537 Cash and cash equivalents at the beginning of the period - Cash and cash equivalents at the end of the period 11 2,537 During the period from 28 June 2011 (date of incorporation) to 31 December 2011 the Fund received non-cash capital contributions in the form of interests in investees and other current and non-current assets. Details of the transactions are set out in the note 12 of these consolidated financial statements. 7 The consolidated statement of cash flows is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 8 to 36. Partnership Fund JSC Notes to the Consolidated Financial Statements for the period from 28 June 2011(date of incorporation) to 31 December 2011 1. Background (a) Organisation and operations Partnership Fund JSC (the “Fund”) is a joint stock company domiciled in Georgia. The consolidated financial statements include financial statements of the Fund and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in associates and jointly controlled entities. The Group entities are Georgian joint stock and limited liability companies as defined in the “Law of Georgia on Entrepreneurs” and are disclosed in note 20. The Fund was established on 28 June 2011 as a wholly state-owned enterprise following the “Law of Georgia on Partnership Fund JSC” as of 8 April 2011. The Fund is the first specialised public sector entity established by the State of Georgia, accountable to the President of Georgia and governed by the Supervisory Board chaired by the Prime Minister of Georgia. It was created to support investments in less developed industries of the Georgian economy and create new employment opportunities in the country. The Group’s principal activity is to provide equity and debt financing, and guarantees to private and public sector companies operating in Georgia with priority for projects in the energy, agriculture, manufacturing and real estate sectors. The main sources of income are expected to come from dividends and guarantee fees. The capital of the Fund was formed by the contribution from the Government of Georgia of its 24% interests in Georgian Oil and Gas Corporation JSC and Georgian Railway LLC, both of which are state-owned monopoly companies operating in the gas distribution and transportation sectors respectively. In addition, 100% interests in Nenska JSC and Tbilisi Logistics Center LLC were contribution to the capital of the Fund by the Government of Georgia (see note 20). The Fund’s registered office is 15 Queen Tamar Avenue, 0112, Tbilisi, Georgia. As at 31 December 2011 the Fund is wholly owned by the State of Georgia represented by the Government of Georgia (the “Parent”). Related party transactions are detailed in note 19. (b) Group structure As at 31 December 2011 the Fund has interests in the following entities: 31 December 2011 Country of incorporation and Name operation Ownership/voting Principal activities Construction and operation of Nenskra JSC Georgia 100% hydro-power plant Tbilisi Logistics Center LLC Georgia 100% Servicing food commodities Borjomi Likani International JSC Georgia 50% Hotel operations Georgian Oil and Gas Oil and gas sale, extraction and Corporation JSC Georgia 24% exploration and rent of pipelines Georgian Railway LLC Georgia 24% Railroad transportation 8 Partnership Fund JSC Notes to the Consolidated Financial Statements for the period from 28 June 2011(date of incorporation) to 31 December 2011 (c) Georgian business environment The Group’s operations are located in Georgia. Consequently, the Group is exposed to the economic and financial markets of Georgia which display characteristics of an emerging market. The conflict between Georgia and the Russian Federation has created additional uncertainty in the environment. The legal, tax and regulatory frameworks continue development, but are subject to varying interpretations and frequent changes which together with other legal and fiscal impediments contribute to the challenges faced by entities operating in Georgia. The consolidated financial statements reflect management’s assessment of the impact of the Georgian business environment on the operations and the financial position of the Group. The future business environment may differ from management’s assessment. 2. Basis of preparation (a) Statement of compliance These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”). (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except that interests in investees contributed by the owners and assets classified as held for sale are measured at fair value and fair value less costs to sell, respectively, at initial recognition. (c) Functional and presentation currency The national currency of Georgia is the Georgian Lari (“GEL”), which is the Group’s functional currency and the currency in which these consolidated financial statements are presented. All financial information presented in GEL has been rounded to the nearest thousand, except when otherwise indicated. (d) Use of estimates and judgments The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes: • Note 6 - estimating the fair value less costs to sell for asset classified as held for sale • Note 10 - estimating the fair value of interests in investees contributed by the owner on initial recognition Information about assumptions and estimation
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