ISC Ziraat Bank Tbilisi Branch
Financial Statements
|anuary 1, 2015 - December 31, 2015 Table of Contents
lndependent Auditor' Report Statement of Financial Position 4 Profit-loss and Other Comprehensive Income Statements 5 Cash Flow Statements 6 Statement of Changes in Equity 7 Explanatory Notes to the Financial Statements 8 Auditing Concern "TSODNISA" Ltd 4 I,Y azha-Pshavela ave., Tbilisi, Georgia. Identiflcation code 2ll344l8$ Tel.: 239-33-50 E-mail: [email protected]
Independent Auditor's Repoft (on the reuiew of financial t,Ziraat statements of Bank rbilisi Branch,,, ISC)
I' Independent auditor - LTD Audit Concern'Tsodnisa" has audited the (accompanying) financial statements of the lsC "ziraat Bank Tbilisi Branch,,(hereinafter referred to as the company) financial statements (attached to). The financial statements comprised the statement of financial position as December at 31, 2015, the statement of profit-loss and other comprehensive income for 2015, statement of changes in equity, cash flow statement for the reporting period, the basic principles ofaccounting policies and explanatory notes, 2' The Companf s management is responsible for the performance of the financial statements and its fair presentation in accordance with International Financial Reporting Standards (//,?S), This responsibility includes: designing and implementing the relevant internal control free from material misstatement' whether due to fraud or error. our responsibility rs to express an opinion on the presented financial statements based on the performed audit, The audit was planned and per.fbrmed in accordance with International Stand.ards on Auditing so as to obtain reasonable assurance of reliability of accounting. The audit procedures selection depends on the auditors, judgment, to include the assessment of the risk of material misstatements of the financial statements whether due to fraud or error' Audit also includes evaluating the appropriateness of accounting policies used by the management and the reasonableness of accounting records rnade, as well as evaluating the overall presentation of the financial statements. We believe that the audit performed by us provides substantiated basis for our opinion. 3' According to the results of the audit, the 2015 accounting records of the Joint Stock company t'ziraat Bank rbilisi Branch'/ were kept in accordance with International Accounting Standards and International Financial Reporting Standards (IFR$, The presented 2015 financial statements in all major aspects give a true and fair view of the financial position, income and expenses' cash flows of the Bank as at the end of the year ended December 31, 2015.
Audit Concern "Tsodnisa,, LLC General Director Tsertsvadze May 13,2016 Ziraat Bank Tbilisi Branch |SC
Sta[ement of financial position as at December 2015
31.12.2015 31.12.2014 Notes
Assets Cash and Cash Equivalents 30,029,049 36,847,951 Obligatory Reserve in NBG(National Bank of Georgia) '1,073,6',74 4,346,319
Amounts due from credit institutions 31,864 30,841 Loans to Custot-ners 13,396,273 10,867,006 6 ,7 Investment Securities 10,738,254 13,019,615 Other Assets 333,526 189,111 8 Deferred Income Tax Assets 42,331 18,91 I 9 2,158,770 l,l 35,587 Fixed Assets l0 253,098 243,993 Intangible Assets - 64,056,839 66,700,000 Total Assets _
Liabilities Amounts dure to credit institutions 2,394,900 6,707,545 ll Liabilities due to customers 41,295,901 4I ,968,87 5 l2 Interests payable 45,265 31,709 Provisions 201,992 305,043 l3 Other liabilities 489,639 129,845 8 44,427,703 49,143,017 _
Capital Share capital 15,204,182 15,204,182 t4 Retained earnings 4,412,954 2,336,801 Other reserve 12,000 16,000 19,629,136 17,556,983_
Total liabilities and eguilv 64,056,839 66,700,000
Director Mehmet Uchar
Chief A Davit Kistauri l-
I Ziraat Bank Tbilisi Branch ]SC
Profit-loss and other comprehensive income statement frorn January l, 2015 - through December3l, 2015
201 5 2014- Notes lnterest lncome 2,8 10,695 I,988,766
I nterest E,xpense (356, I 71 ) (222,197) Net Interest Income 2,454,524 1,766,569 15
Possible Impairment Charge Reserve on Loans ( 158,970) (29,347)
Net lnterest lncor.ne 2,295,553 | ,7 37 ,222
679,226 Fee and Commission lncome 895,327 l6 Fee and Commission Expense (t67,279) (t44,316) Other income 221,141 t 6l,000 t7 Cains/(losses) fiom Foreign Cun'ency Operations 2,t77,012 r,050,5 l9 Cain (loss) tlom Foreign Currencies Exchange (3 r,584) (63,251) Gain/Loss trom lmpairrnent Charge on Other Assets Provisions 104,549 (89,r3r) Adnrinistrative and Othet Operating Expense (3, r 98,520) (2,603,078) l8 Operating lncome 2,296,799 128,191
Profit Before Income Tax Expense 2,296,199 728,191 Income Tax Expense (220,047) I B,9l r Profit for the Year 2,076,153 747,102
Other Comprehensive Income :
Gain/Loss ti'om Properly and Buildings Revaluation Property and Equipment Revaluation Part of Depreciation Revaluation (4,000) Total Other comprehensive income (4,000)
Total Income 2,076,153 139,102
Director Mehmet Uchar
Chief Accoun Davit Kistauri Ziraat Bank Tbilisi Branch JSC
Cash Flow Statements from January l, 2015 - throLrgh December3l, 2015
3r.12.2015 3t.12,20r4 Net inconre 2,076,153 747,102 con'ecllons; Depreciation & Amottization s32,877 518,164 Changes in Reselve ( r07,0s l) 87,863
Cash Flows from Operating Activities before changes in 2,501,978 1,353,129 operative assets and liabilities
Net growth/decrease of reserves in NBG (2,727,355) (t,454,147) Changes in leceivables to credit institutions ( r,023) ( r8,070) Changes in investment securities 2,281,361 (3,252,449) Changes in loans to customers (2,529,267) (2,803,309) Changes in difl'ered tax asset (23,420) (16,709)
Changes in other assets (143,7 49) 26,116 Changes in liabilities to cfedit institutions (4,312,64s) 4,971,048 Changes in liabilities [o customers (672,968) 22,294,290 Changes in other liabilities 359,795 (4,043,823) Net cash provided (used) by operating activities (5,267,293) 11,056,071
Cash Flows from Investing Activities
Acquisition of flxed and intangible assets (92,092) Net cash provided (used) by investing activities (92,092) _
Cash Flows from Financing Activities
Changes in intelests payable 8,3 86 Net cash provided (used) in financing activities 8,386
Increase (decrease) in cash during the period (6.818,902) t6,972,37 |
Cash balance at the beginning of the period 36,847,951 I 9,875,580
Cash balance at the end of the period 30,029,049 36,947,951
Director Mehmet Uchar
Davit Kistauri Ziraat Bank Tbilisi Branch )SC
Statement olChanges in Equiry asatDecember3l,20l5
Propefty Share-holders and Retained Earnings Surr Equity equi pment fevaluation
Property and Equipment Revaluation 20,000 20,000
Tuesdav, December 3 1, 20 1 3 I 5,204,1 82 589,699 20,000 1 6,8 1 3,88 1 2014 Dividends to Shareholders lssue of Share Capital Net Income (Loss) 747,\02 747,t02
Property and Equipment Revaluation (4,000) (4,000)
llednes4av, December 3 1, 20 I 4 15,204,182 2,336,801 16,000 I 7,5 56,983 2015 Dividends to Shareholders Issue of Share Capital Net Income (Loss) 2,076,153 2,076,153 Properly and Equi pment Revaluation
Thursclav, December 3 1, 201 5 I 5,204,1 82 4,41 2,954 16,000 I 9,633, I 36
Director Mehmet Uchar
Davit Kistauri Ziraat Bank Tbilisi Branch JSC
Explanatory Notes lronr.lanLrary l, 2015 -through December3l, 2015
L Key activities
Joint Stock Company Ziraat Bank Tbilisi Branch (the Bank) was established based on the Decision #4 of the General Division of the Turkish JSC Eemlak Bank of February 12, 1998, and Permit #7775 of the Treasury Advisory of the Prime Minister of the Republic of Turkey of February 24, 1998 as
Turkish JSC Emlak Bank Tbilisi branch, In 2001, the assets and liabilities of the ISC T, Emlak Bank were paftly transferred to the TR Ziraat Bank, which is why in September of 2001, the bank changed its name and was registered as the JSC TR Ziraat Bank Tbilisi Branch, The Bank's legal address: Georgia, 0102 Tbilisi, David the Builder Ave, #148. Bank Identification Code: 202057610.
As at December 31,2015, the Bank's founder wasZLraat BanklSC, Turkey, which owned 1000/o shares of the Bank. The Bank's authorized capital is 15 204 182 GEL.
In accordance with the banking license granted by the National Bank of Georgia (NBG), the Bank was entitled to carry out all the banking transactions, but upon request of the TR JSC Ziraat Bank General Division the NBG by the letter of 27 /0312002 restricted the Bank's license and suspended the right to issue credits and guarantees, However, in response to the new request of the TR JSC Ziraat Bank General Division of September7,2006, the National Bank of Georgia established the right to issue credits to Ziraat Bank according to the Ietter of December 22, 2006.
JSC Ziraat Banks Tbilisi Branch had 1 service center by the end of 2015.
The average number of Bank employees was 36 during the year,
2, Basis for presentation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), The Bank maintains its records in accordance with the Georgian Regulations on banking activities and accounting, The financial statements have been prepared from the mentioned accounting record and corrected as required to comply with the International Financial Reporting Standards.
The Bank and its Georgia-based subsidiaries are required by law to maintain the documentation and prepare financial statements in Georgian Lari in accordance with the IFRS. These financial statements have been prepared using the historical cost method, except for the revaluated fixed assets. The Bank's financial statements are presented at one (1) Georgian Lari accuracy.
3. Basic Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, free funds on correspondent and time deposit accounts with the National Bank of Georgia (NBG) and the funds in the banks of the countries, which are members of the Organization for Economic Cooperation and Development (OECD),
Obligatory reserves in the National Bank of Georgia
Obligatory reseryes placed in the National Bank of Georgia are carried at amortized cost and represent interest bearing obligatory reserye deposits, which are not used to finance the Group's daily activities and therefore, for the purposes of the cash flow statement, not considered as a component of cash and cash equivalents.
Amounts due from banks
The Bank places funds and puts money on deposits in other banks with different terms, Amounts due from banks are initially recorded at fair value, Afterwards the requirements to banks are carried at amortized cost using the effective interest method.
Held to maturity investments ftc "7, dafarvis vadamde flobiii investiciebi" \f C V U The Bank invests money in the short-term certificates of deposit issued by the National Bank. Certificates of deposit can be purchased through the auction. Certificates of deposit are carried at nominal value, which the National Bank of Georgia shall pay at the date of withdrawal. Certificate of deposit term is a period, upon the end of which the face value of the securities shall be repaid and is the difference of calendar days between the days of payment and acquisition, The difference between the nominal value of the certificates of deposit and the settlement price, which is less than the nominal value, is a discount which is taken to income at the end of each month, in the proportion to the number of calendar days of the certificate of deposit term in the given month. Loans issued to clients
Loans issued to clients are non-derivative financial assets which have fixed or determinable payments and are not quoted on the market, They are not classified as trading securities, are not defined as securities available for sale and are not used for sale within a short period, Such assets are carried at amortized cost using the effective interest method. Profit and loss are recognized in the income statement when the loan is written-off, impaired, as well as in the amortization process,
Loans issued by the Bank, initially are subject to the recognition at fair value, taking into account all the costs of transaction related to the acquisition and creation of financial assets, Where the compensation reflected at fair value are not equal to the loan fair value, for example when the loan is issued at rates lower than market rates, the difference between them is reflected as a loss at the initial recognition of the loan and is reflected in the profit-loss statement by the tlpe of losses. As a result, the residual value of the loan is reflected using the effective interest rate based on the expected maturity, Loans and advances to clients are reflected less impairment reserye.
Financial guaranties issued
Financial guarantee contracts concluded by the Bank, make security for credit operations, which provides for the payment of compensation, in case, if the debtor fails to timely pay in accordance with the original or modified terms and conditions of the debt instrument, Such financial guarantee contracts are subject to initial recognition at fair value. Subsequently, they are evaluated by the amount, whichever is greater: r The amount that is recognized in the form of reserves, in accordance with the IAS 37 "Reserves, contingent liabilities and contingent assets. r Initially recognized cost less accumuiated depreciation of future revenues, to be received from financial guarantees or letters of credit or as bonuses,
Written-off loans and advances
If recovery of loans and advances is not possible, they are written off using the loans possible impairment losses reserye. Loans and advances are subject to write-off in case the management has exhausted all the possibilities to recover requirements and made realization all the possible collateral,
Restoration of the amounts written-off in the previous period is made by deduction of financial assets impairment and will be reflected in the profit-loss statement (comprehensive profit and loss statement) in the restoration period,
l0 Impairment reserve
The Bank regularly reviews its loans and receivables to assess impairment. The Bank uses its own assessments in order to identify any impairment loss in cases where a borrower has financial difficulties and there are few available sources of historical data relating to similar borrowers. The Bank also estimates future cash flows changes based on the observable data indicating that there is change towards deterioration of borrower's payment status in the Bank or of the economic situation in the country, which conditions failure of fulfillment of liabilities on assets in the Bank.
Property and equipment and intangible assets
The Company records property and equipment and intangible assets at their acquisition (historical) value and records depreciation by the straight-line method, by their useful length:
Computers and Office equipments 25,00o/o Furniture and Fixtures 16.670/o Motor Vehicles 20,00o/o Other Property and Equipment 25,00o/o Leasehold improvements 20,00o/o
Fixed assets are depreciated from the month, when they are commissioned or ready to be commissioned.
The carrying value of the property and equipment is reviewed against impairment when events or changes in circumstances indicate that the carrying value may not be recoverable, Impairment losses are recognized in comprehensive income. Any revaluation surplus of the property and equipment is added to the revaluation reserve of the property and equipment included in equity, except when it is a reversal to the decline of revaluation of this asset, which was previously recognized in comprehensive income; in this case, the increase is reflected in the consolidated statement of comprehensive income, Revaluation deficit is recognized in the consolidated statement of comprehensive income, except when the deficit, which directly repeals the excess of the asset, is repealed by excess of the property and equipment revaluation. Reflection from the property and equipment revaluation reserye to retained earnings is made for the difference between impairment calculated based on the revalued carrying value and impairment calculated based on the original cost. In addition, accumulated depreciation by the date of revaluation is deducted in respect to the asset total carrying value and revaluated asset is re-reflected by the net value. At the transfer, any revaluation reserye in connection with the specific sold asset is transferred to retained earnrngs,
Costs related to repair or renovation are recorded at the origination and included in other operating expenses, unless they qualify for capitalization.
il Fixed assets are written off after sale, or when the future economic benefits are not expectable as a resuit of its use or sale, Any profit or losses (calculated as the difference between the net income from sale and the carrying amount of the asset) arising from writing off of the fixed assets is included in the statement of comprehensive income of the year when the asset is written off,
Taxes
Income tax expense represents the sum of current and deferred tax expenses.
The current tax expense is calculated from the taxable profit of the year, Taxable profit differs from the net profit, which is reflected in the profit and loss statement, because it does not include the part of the income and expenses taxable or deductible in previous years as well as the costs, which are not taxable or deductible at all, The Bank's current tax expense is calculated in accordance with the tax rate, which acted for the reporting period,
Deferred tax is the tax payable or deductible, arising on the basis of the tax base received from the difference between the residual values of assets and liabilities, reflected in the financial statements and is recorded in the balance sheet using the liability method, Deferred tax liabilities are generally recognized for all the temporary differences and deferred tax assets are recognized to the extent that there is a reasonable expectation that there will be taxable profit against which the existing temporary difference will be used. Assets and liabilities are not recognized if the temporary difference is due to the initial recognition of assets and liabilities in those operations, which do not affect the tax profit as well as the accounting profit.
Deferred tax is calculated based on the tax rate, which is expected for the period of the liability coverage or asset realization, Deferred tax is reflected in the profit and loss statement, except when it is connected directly to the capital. In this case, the current and deferred taxes are reflected in other comprehensive profit or loss or directly in equiry.
Liabilities to banks, clients accounts, subordinated loan
Liabilities to banks, clients accounts, subordinated loan are initially subject to the recognition of the fair value. Receivables are carried at amortized cost and any difference between net income and repaid is recognized in the income statement before the final payment of the debt, using the effective interest rate,
t2 Share capital and shares margin
Equity capital contributions are recognized at cost, Stocks margin is the deposit surplus of nominal value of shares issued.
External costs related to the issue of new shares, in addition to business combinations, are deducted from the capital after deducting of all related profit taxes,
Interest income and expense recognition
Interest income and expenses are recognrzed by accrual method and reflected using the effective interest method, The effective interest method is the method which is based on amortized cost of a financial asset or financial liability (or group of financial assets or liabilities). The effective interest rate is the rate that exactly discounts estimated expected cash paynents or the flow to the financial asset or financial liability net present value before expiration of the financial instruments estimated useful life, or ifappropriate, in a shorter period.
Once a financial asset or a group of such financial assets has been written down (partly written down) as a result of losses due to impairment, interest income is recognized by the interest rate that is used for discounting of expected cash flows for determination of the impairment losses,
Recognition of commission fee incomes and expenses
Loan commission fees are subject to deferral together with the direct costs and are adjusted for the effective return of the loan. Where the loan obligation possible to give rise to conclusion of the particular loan agreement, the loan commission fees are deferred together with the related direct costs, and adjusted for the effective return of the loan. Where it is not possible the loan obligation to give rise to conclusion of the particular credit agreement, the loan commission fees are recognized in the income statement over the remaining period of the loan obligations. When the loan obligations agreements term expires loan obligation commission fees are recognized in the income statement at expiration day, Loan service fees are recognized as revenue in the time of services, All other commission fees are recognized when the service is provided.
t3 Foreign currcn cy revalua ti on
The financial statements are presented in GEL, which represents the Company's functional currency. Foreign currency conversion is made at the current rate of the day of transaction, Foreign currency monetary assets and liabilities are convefted in GEL at the National Bank of Georgia (NBG) currency exchange rate for the reporting date. Profit-loss caused by the revaluation of transactions in foreign currency are recognized in the consolidated comprehensive income statement as the profit-loss caused by the foreign currency conversion (exchange differences), except when the profit or loss is recognized directly in equity less the currency exchange component. Non-monetary items, which are recognized in tenrs of historical cost in a foreign currency, are converted at the exchange rate of the day of initial transaction, Non-rnonetary items determined in fair value in foreign currency are converted at the cuffency exchange rate of the day of the fair value determination, Differences between the contractual exchange rate ofthe operation and the NBG currency exchange rate on the day ofoperation are included in operations as a profit from exchange offoreign culrency less losses.
3r.t2.20t4 - usD 1 = 1.8636 GEL, EUR | =2.2656 GEL, TRY 1 = 0.8040 GEL
31. 12.2015 - USD I = 2.3949 GEL, EUR 7 = 2.6169 GEL, TRY 1 = 0.8234 GEL
t4 Note 4 - Cash and cash eouivalents
2015 (Gel) 2014 (Gel)
Cash On Hand 3,000,51 I 1,734,101
Cash in Cash Dispensers 159,t50 3 8,755 Curfent accounts with NBG, excluding obligatory feserves 963,468 202,333 Current Accounts in Other Credit lnstitutions 4,339,07 | 3,348,182 Term Deposits in Resident and Non Resident Banks 21,566,8s0 3 1,524,s80
Totally Cash and Cash Equivalents 30,029,049 36,847,951
Note 5 - Requirements to credit institutions
Credit institutions are required to open at the National Bank of Georgia interest-bearing deposits (mandatory reserves), the amount of which depends on the volume of amounts attracted by a credit instirution,
2015 (Gel) 2014 (Gel)
Interesl Receivable fiom Deposits in Other Credit. lnstitution 31,864 30,841
Total Receivable tiom Other Credit Institutions 3 1,864 30,841
Note 6 - Loans issued to clients
2015 (Gel) 2014 (Gel)
Current Loans 13,676,347 11,034,432 Overdue Loans 71 445 Acclued lnterest 79,551 64,973 Penalties Receivable 298 Less: Allowance fbr Loan Impairment (391,36e) (232,399)
Total loans for Customers 13,396,273 10,867,006
l5 Change in Loan Reserve 2015 (Gel) 2014 (Gel)
Loan Reserve I .lanuary 20 l5 (232,400) ( 17 r,s75) Loan Reserve During Year 436,978 306,258 Loan Reserve Write Offs (se5,948) (367,083)
Loan Reserve 3 I December 2015 (3er,370) (232,400)
f nnn Qprrrrt'frt
Type and volume of collateral depends on the counterparty credit assessment. For this purpose Parameters and instructions for collateral types and valuation are developed,
Parameters and instructions for collateral types and valuation.
The main types of collateral accepted:
- Real estate - Movable property - The third-party guarantee - Unsecured Loans
2015 (Gel) 2014 (Gel)
Loans Coverage by Real Estate 9,756,380 6,697,330 Loans Coverage by Third Party Guarantee 3,622,454 4,136,467 Non Coverage Loans 328,959 200,635
Total Loans According to Coverage Types 13,707,793 11,034,432
l6 Distribution by sectors of loans and advances issued to clients (which are issued in Georgia) as at December 3I,2014 and 2015:
2015 (Gel) 2014 (Gel)
In dividua ls 7,927.809 58% 4,443,277 40% Trade and Service 5,2ts,473 38% 6,16r,313 560/o B u i ldi ng-Construction 533,065 4o/o 429,842 4%
Total Loans to Customet's 13,676,347 11,034,432
Note 7 - Investment securities
2015 (Gel) 2014 (Gel)
Certifi cates of deposit of centlal bank I 1,000,000 13,500,000 Discount (261,746) (480',38s)
Total lnvestment Securities 10,738,254 13,019,615
2015 (Cel) 2014 (Gel)
Nominal Nominal rri.*rln"t. Duration r;;;;;R"t. Duration
nl:19^o 91-364 Certitlcates of deposit in central banl< 5,56%-9.85% 4,12%-6,97% Days Days
t7 Note 8 - Other assets and liabilities
2015 (Gel) 2014 (Gel)
Assets AccounI Receivable 5 q?l 15,661 Accrued Interests Due Other Opelations 11 /{{ 16,484
Prepaid Advances 264,611 I 54,30 r I n ventory 231 100 Other Prepaid Taxes 9,001 405 Prepaid Nel Income Tax 2,826 Other Assets 29
Total Other Assets 333,526 189,771
Liabilities Creditors 191, t4l 92,405 Received Advances 36,067 20,170 Net Inconre Tax Paid 243,450 Salary Payables 8,840 8,028 Other Non Financial Liabilities 10,141 9,242
Total Other Liabilities 489,639 129,845
Note 9 - Deferred tax asset
Carcying Carrying Temporary lncome Tax lncome Tax Assel Va lue(Financial) I/alue(Tax base) Dffirences Rale (Liability)
20 t4
Properly & Equipment I ,13 5,5 87 I, I 88,949 l5o/o 8,004 Intangible assets 243,993 198,226 (4s,767) 15% (6,865)
Allowance for doubtful debts ( r l 8,478) 1 18,478 t5% t7,772
Total l,26l,lo2 1,387,174 126,072 18,91I
Catying Carrying Temporary Income Tar Income Tax Asset Value(Financia l) Value(Tax base) Differences Rate (Liability)
201 5
Pfopefty & Equipment 727,70r r ,01 9,696 291,994 l5o/o 43,799 lntangible assets 253,098 1 88,889 (64,209) l5o/o (e,63 1) Allowance for doubtful debts (54,42t) 54,421 t5% 8,1 63
Total 926,378 1,208,585 282,201 42,331
l8 Note 10 - Property, equipment and intangible assets
Fcpsty q|g Qrrgfesad N41q FLrritue t-eeddd lfiariHe Lad ad ffce HCEWAo tdetv Bjldngs E+jFrrsts vdides €mFrxues hj;Br rngu€nEns /\ssqs (cF) (c') (eL) (e) (@) (@) (GE_) (@) (@) GstqFbdudArort Fq tJa\syn15 64795 20@ 459S 564 1W714 4/a161 2S/4&fr AcUtio€ pa. 38$6 2957A 51 @ 15/0&i4 (Dspcds) 1@ lRn
At31 Derbq2015 alE& 71601.4 6f 747 58S 1@714 sm@ 4tao14
$rcddm ard lrrpdnret Bdarefcr31 bcgrbs20l5 (3s1 o1e) (4@) @/1@) (5G4) Cr/3ee) (204168) (1 sz5) Depreclatim Charge (1stry) (e4e) roso) (z7e%) (a7s) (ss3) (Dspcsds) en QN Accunlded dqecidim 31 (515%) (1 Ecsrbs2ol5 (134e) @7@ (s64) 6782) (26w) Q1p16)
Gryirg VdLe 31 Dcerber 2015 152.!fr 4W 1U@. 345@ 5C6 2411A]8
Note 11 - Liabilities to credit insdrutions
2015 (Gel) 2014 (Gel)
Current Accounts 2tl Term Deposits and Loans 2,394,900 6,707,334
Total 2,394.900 6,707,545
Note 12 - Liabilities to clients
2015 (Gel) 2014 (Gel)
Private Companies Current Accounts 22,270,152 10,993,418 Deposits 1,173,193 9,103,457
lndividua ls Current Accounts 6,161,019 5,357,794 Deposits 11,691 ,s44 16,514,206
Total 4l,295,907 4 I ,968,875 l9 Liabilities to clients by sectors
2015 (Gel) 2014 (Gel)
lndiv id uals 7,13 1,480 5,681,85 I Trade and Commerce 6,27 |,7 48 11,778,432 Electlicity, gas and water supply 1,243 1,271 Agriculture 20 B uilding 25,078,004 )t \o) )'t) Mining lndustry 308,901 1,268,310 Transporl & Com rnunication 218 72 Othef |,550,736 1,153,823
Liabi lities T'o Customers 40,342,330 4l,386,01 0
Coverage of Financial Cuarantees Issued 953s78 582,86s
Note 13 - Reserves
lmpairment Charge on Other Assets & Provisions
| )anuary,2014 213,180 g Recognition of Provision's Additional E,xpense 1 ,963 3 I December, 2014 305,043
Recognition of Provision's Additional Expense (r03,05r)
3 I December, 2015 20]l,992
Note 14 - Authorized capital
Total Tuesday, December 31,2013 15,204,18_2 lncrease in Equity During 2014Year Wednesday, December 31,201.4 15,204,182
Increase in Equity During 2015 Year Thursday, December 3r,2015 15,204,182
20 Note 15 - Percentage of income and expenses
2015 (Gel) 2014 (Gel)
Interest Income Certifi cates of deposit of central bank 859,086 530,342 Other Resources in Other Private Banks 522,497 453,476 Loans To Customers t,429,|2 t,004,948 Total Interest lncome 2,8 10,695 |,988,766
Tnterest Expense
Term Deposits Of lndividuals 3 6,3 83 16,242 Term Deposits of Private Companies 69,213 81,093 Deposits Of Banks 245,907 124,125 'N ostro' Accou nts Overdrafts 4,668 737 Total Interest expense 356,17 | 222,197
Net Interest lncome 2,454,524 |,766,569
Note 16 - Fee and commission income and expense
2015 (Gel) 2014 (Gel)
Commission income Cash Operations 277,263 205,765 Settlements operations 6l 8,064 473,461 Total Corn nission lncoure 895,327 679,226
Commission Expense
Cash Operations 3l,998 5 1,453 Settl ements operati ons 135,28 I 92,863 Total Commission Expense 167,279 144,316
Net Commission Income 728,048 534,910
21 Note 17 - Other income
2015 (Gel) 2014 (Get)
Cuarantees lncome 164,339 147,945 lncome fi'orn Penalties and Fines l,0t r 619 Incomes flom Gratis Received from Cash and Property & Equipment 20,666 lncome From Other Operations 35,125 t2,436
Total Other lncome 221,141 r61,000
Note 18 - Administrative and other operating expenses
201s (Gel) 2014 (Gel)
Col lection and Transportation Expense 49,480 29,760 Consultation Service 88,s 87 80,514
Audit Service 14, I 50 1 1,61 8 Building Rent 468,03 5 379,01 8 Cuarantee expenses 28,756 42,460 Penalties and fines paid 2,000 Court E,xpense 1,787 962 Salary Expense 1,531,302 1,t38,343 Social Assistance Expense 2,363 1,505 Advertisement Expense 3,83 9 5,640 Representative Expense 32,930 26,094 Business Trips Expense 8,767 10,960 Personnel training and recruitment ) a)1 Depreciation 532,877 518,164 Properly & Equipment Repairs 8,750 5,025 lnventory acquisition Expense 2,035 2,205 Cash Packing Expense 952 492 Utilities Expense 48,325 41,662 Communication Expense 4r,862 40,407 Propefty Insulance Expense 30,764 19,070 Security Expense 87,3s0 87,3 50 Posting Expense 1,588 1,211 Stationery Expense 10,570 9,137 Vehicles Repairs Expense 7,01 5 6,580 Software Expense 13t,632 80, I 97 Other Expense 38,039 35,137 Tax Expense 26,766 26,149
Total Administrative and Other Operating Expenses 3,1 99,520 2,603,019
22 Note 19 - Related party transactions
In the presented financial statements the parties are considered to be related, if one party has the ability to control the other Party or exercise significant influence over the other party in making financial or operational decisions according to the IAS24 Related Party Disclosures. In considering each related party relationship attention should be directed to the subsrance of the relationship, merely the legal form, Below are the year-end balances with related parties:
31 December,2015 31 December,2014
Balance of Balance of Total Related Party Connected Total Parties Salary Of Management t,609 t,609 t,836 r,836 Cash In Ziraat Bank's For.eign Branches t7,430,823 17,430,823 r 8, I 07,384 r 8, I 07,3 84
Cash ln ZiraalBank Turkish Br.anch (2,394,900) (2,3e4,e00) (6,61s,780) (6,61 s,780)
Nore 20 - Capital Risk Management
The primary objective of the Bank capital management is to ensure compatibility with the established capital requirements, as well as to maintain the strong credit rating and healthy capital ratios for successful business performance and provision of added value for shareholders. The Bank manages its capital structure and makes adjustments considering economic conditions and risk factors. In order to maintain or adjust the capital structure, the Bank may rerurn capital to shareholders or increase capital by issue ofshares. The Bank maintains an actively manages the capital base in order to manage the business related risks' "Bank" capital adequacy is checked using a variety of methods, including the ratios established by the National Bank of Georgia:
Capital adequacy ratio
The minimum regulatory capital consists of primary capital, which in turn, is made up of ordinary shares, the reserve fund and retained earnings, in addition to the current year's profit/loss, from which the amount transferred from the outlined in the charter capital revaluation reserye of the Property and equipment and intangible assets are deducted. The other component of the regulatory capital is the secondary capital, which comprises the current year profit/loss, total reserves and long- term subsidized loans.
ZJ The Bank is required to maintain the minimum standards of capital adequacy ratios set by the National Bank of Georgia, including: (primary capital adequacy ratio and the regulatory capital adequacy ratio).
3l December, 2015 31 December,20l4
Share-holders Equity 15,204,182 Last Year Retained Ealnings 2,336,801 1,589,699 Less: lntangible Assets (2s3,0e8) (243,993) Primary capital: 2,083,703 16,549,887 (loss) Cun'ent Year Net Income 2,076,153 728,192 Ceneral Reserves-Provisions 264,746 2t7,760 Supplementary capital 2,340,899 q45 qs?
Regulatory Capital 4,424,602 t7,495,839
Primary Capital Adequacy Ratio 51.42% 49.30o/o Regulatory Capital Adequacy Ratio 58/3% s2.10%
+ Coefficients counr accuracy is nor checked by rhe audit
Note 21 - Financial risk management
The Bank's risk management function is performed with respect to the financial risks (credit, market, geographical, currency and liquidity risk), operational risk, and legal risk. The main objective of the financial risk management is to establish risks limit and ensure that influence of sr,Lch risks is within this limit. The risk assessment provides a basis to allow for the placement of capital, transaction pricing and assessment of activities considering the risk. Operational and legal risk management is intended to ensure the proper functioning of the internal policies and procedures to minimize operational and legal risks, Geographical risk - geographical concentration of the Bank's assets and liabilities as at 31 December 2015:
Other Total, 3l Georgia Foreign OECD December 2015 Countries Financial Assets Cash Equivalents and Receivable Other. 30,029,049,05 - 19,825,85 1 49,854,900 Investment Securities t0,738,254 t0,738,254 Loans To Customers t3,396,273 t3,396,273 Other Assets 333,526 { { { \ /h Total Financial Assets 54,497,102 - 19,825,851 14,322,953
Financial Liabilities Liabilities to Credit Institution 2,394,900 2,394,900 Liabi lities to Customers 3 8,90 1 ,007. l9 2,394,900 4t,295,907 I ntefest Payable 45,264.53 45,265 Other Liabilities 4gg,639 489,639 Total Fina ncial Liabilities 4l,830,81 I 2,394,900 44,225,771 24 In the above table the assets and liabilities are usually reflected by the country where the counterparty is located.
Currency risk - the Bank is exposed to the risks of effects of fluctuation in the foreign currency exchange rates on its financial position and cash flow, The table below summarizes the Bank's exposure to foreign currency exchange rate risk at 31 December 2015,
Gel USD EURO TRL Assets Cash and Cash Equivalents 7,227,946 I 8,498,885 4,205,067 97,152 Obligatory Reserve in NBC(National Bank of Georgia) 5,015,469 2,058,205 Amounts due fi'om credit institutions 1,414 30,450 Loans To Customers 5,491,986 7,904,286 Investrnent Securities t0,738,2s4 Other Assets 305,746 27,606 t74 Differed Tax Asset Ploperty & Equipment 2,158,770 lntangible Assets 253,098
Liabilities Amounts Due to Credit lnstitutions 2,394,900 LiabiLities Due to Customers 5,819,192 29,09t,330 6,330,425 54,960 lnterests Payable 680 44,1s0 435 Prov ision s 20r,992 Diff'ered Tax Liability 172,329 Other Liabilities 287,542 201 ,041 1,056
Liquidity risk - liquidity risk is defined as the risk that because of incompatibility of the bank's assets and liabilities due times the Bank will not be able to timely cover the liabilities with the existing assets, Bank liquidity is affected by the everyday demand of the clients for cash resources from their current accounts, The Bank does not maintain (does not keep) the amount of cash resources which would be required to satisfy the demand of the clients for all their amounts from the current accounts at the same time, because experience shows that the expected level of demand for funds by the clients can be foreseen (estimated) sufficiently reliably,
The table below shows compatibility of assets and Iiabilities to the contractual payment term as at December 31, 2015, except if there is the evidence that any of these assets may be impaired, and paid after the contractual payment term, in such a case the expected date of payment is used.
z) 3 I Decernber, 201 5 3 I December,20l4
u-p to I During I Year Up to I Year Total DurinP, I Year Total - Year ASS9IS
Cash and Cash Equivalents 30 029 049 30 029 049 36 847 951 - 36 847 951 Amounts due lrorn credit institLrtions 3t 864 3t 864 30 841 - 30 841 Loans To CLrstorners I 094 383 2l t2 30t 890 t3 396 273 | 375934 I 491 072 t0 867 006 Investment Securities t0 738 254 t0 738 2s4 130t9615 - t3019615 Other Assets 333 526 333 526 189 177 - t89 777
Property & Equipment and lntangible Assets 2 411 868 2411 868 I 379 580 | 379 580
TOIAI ASSCTS 42227 076 14713 7s8 s6940 834 5r 464 lt8 I 0 870 652 62 334 770
Lia bilities Amounts Due to Credit Institutions 2 394 900 2 394 900 4 843 945 21 | 863 600 6707 54s Liabilities DLre to CLtstolters 4t t46207 99 149 699 4l 295 907 4t 688 892 0l 279983 4t 968 875 lnterests Payable 45 26s 45 265 3 I 708,79 - 31 709 Other Liabilities 489 639 489 639 129 844.s0 - 129 84s
Total Liabilities 44 076 012 149 699 442257t1 46 694 391 2 143 583 48 831 974
Toral Liquidity -l 848 936 14 564 059 12 715 123 4769 721 8727 069 13 496796
Note 22 - Litigation
By December 31, 2015, the Bank has nor been in any judicial proceedings.
Note 23 - Going Concern
The accompanying Financial Statements prepared in accordance with the International Financial Reporting Standards have been prepared taking into account that the Company is a going concern, which means that realization of assets and coverage of liabilities are carried out in the ordinary course of business.
Note 24 - Contingencies
The tax system of Georgia is relatively new and because of that is characterized by frequent legislative changes, These changes are of quite vague and often contradictory nature, thereby allowing the tax authorities to interpret these changes in different ways. Tax audit may be conducted by various bodies, Ieaving the Company with a threat of imposing variety of penalties or fines, These circumstances create such tax risk, which is much higher in Georgia than in other countries, The Management believes that its approach to tax issues at this point is appropriate for the applicable legal interpretations in Georgia, but it is possible that these interpretations subsequently change and the tax authorities have different position on the similar issues.
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