Exelor Limited Unaudited Interim Consolidated Financial Report For the period January 1, 2016 to June 30, 2016

Transcription

1 Exelor Limited Unaudited Interim Consolidated Financial Report For the period January 1, 2016 to June 30,

2 TABLE OF CONTENTS TABLE OF CONTENTS DIRECTOR S REPORT 3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 8 CONSOLIDATED INCOME STATEMENT 9 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 10 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 11 CONSOLIDATED STATEMENT OF CASH FLOWS

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8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at June 30, /30/ /31/2015 USD USD Notes Unaudited Audited ASSETS Non-current assets Investment property 5 60,719,673 60,719,673 Office equipment 6 3,164 5,862 60,722,837 60,725,535 Current assets Trade and other receivables 8 978, ,232 Prepayments 8 144, ,706 Financial assets at fair value through profit or loss 16 2,061,500 1,952,640 VAT refundable 8 59,226 53,840 Cash & cash equivalents 9 7,591,147 5,665,802 10,834,689 8,473,220 Total Assets 71,557,526 69,198,755 EQUITY Capital and reserves attributable to equity holders of the company Share capital 10 12,505,000 12,505,000 Share premium 10 12,500,000 12,500,000 Reserve for exchange differences 23 (31,840,431) (36,247,267) Retained earnings 65,870,512 67,658,697 Total Equity 59,035,081 56,416,430 LIABILITIES Non-Current liabilities Deposits held 256, ,749 Deferred tax liability 13 10,696,106 11,043,854 10,952,510 11,286,603 Current liabilities Trade and other payables , ,369 Accrued expenses 11 29,031 59,997 Fees payable , ,470 Tax payable , ,886 1,569,935 1,495,722 Total Liabilities 12,522,445 12,782,325 Total Equity and Liabilities 71,557,526 69,198,755 The accompanying notes are an integral part of the consolidated financial statements. 8

9 CONSOLIDATED INCOME STATEMENT For the period ended January 1, 2016-June 30, 2016 Notes USD USD Unaudited Unaudited Rental income 14 4,792,456 4,954,788 Rental costs 14 (880,083) (1,614,743) Net rental income 3,912,373 3,340,045 Foreign exchange gains/(loss) 15 (5,813,699) (1,384,980) Net results on financial assets at fair value through profit or loss 12 9,040 (54,400) Administrative expenses 19 (1,222,644) (1,180,422) Operating profit (3,114,930) 720,243 Finance income 18 28,608 28,749 Finance costs Other finance costs Finance costs - net 28,608 28,749 Profit before income tax (3,086,322) 748,992 Income tax income/(expense) 13 1,298,137 (148,937) Profit for the period (1,788,185) 600,055 Attributable to equity holders of the company (1,788,185) 600,055 Earnings per share ($7.16) $2.40 The accompanying notes are an integral part of the consolidated financial statements. 9

10 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME For the period ended January 1, 2016-June 30, /30/2016 6/30/2015 USD USD Unaudited Unaudited Profit/(loss) for the period (1,788,185) 600,055 Other comprehensive income: Items that may be subsequently reclassified to the income statement Currency translation 4,406, ,396 Total other comprehensive income/(loss) for the period 4,406, ,396 Total comprehensive income/(loss) for the period 2,618,651 1,084,451 Attributable to equity holders of the company 2,618,651 1,084,451 Items in the statement above are disclosed net of tax. Income tax relating to components of total other comprehensive income are disclosed in note 13. The accompanying notes are an integral part of the consolidated financial statements. 10

11 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the period ended January 1, 2016-June 30, 2016 Attributable to equity holders of the company share share reserve for retained total capital premium exchange differences earnings equity USD USD USD USD USD Balance at January 1, ,505,000 12,500,000 (26,090,964) 58,328,423 57,242,459 Profit for the year ,330,274 9,330,274 Other comprehensive income/(loss) for the year - - (10,156,303) - (10,156,303) Total comprehensive income/(loss) for the year - - (10,156,303) 9,330,274 (826,029) Balance at December 31, 2015 (Audited) 12,505,000 12,500,000 (36,247,267) 67,658,697 56,416,430 Balance at January 1, ,505,000 12,500,000 (36,247,267) 67,658,697 56,416,430 Profit for the period (1,788,185) (1,788,185) Other comprehensive income/(loss) for the period - - 4,406,836-4,406,836 Total comprehensive income/(loss) for the period - - 4,406,836 (1,788,185) 2,618,651 Balance at June 30, 2016 (Unaudited) 12,505,000 12,500,000 (31,840,431) 65,870,512 59,035,081 The accompanying notes are an integral part of the consolidated financial statements. 11

12 CONSOLIDATED STATEMENT OF CASH FLOWS For the period ended January 1, 2016-June 30, /30/2016 6/30/2015 Notes USD USD Unaudited Unaudited Cash flows from operating activities Profit before taxation (3,086,322) 748,992 Adjustments for: Depreciation on office equipment 6 3,188 5,583 Net realized and unrealized market results on financial assets at fair value through profit or loss 12 (9,040) 54,400 Net finance costs 18 (28,608) 28,749 Foreign exchange (gains)/losses 15 5,813, ,467 Cash generated from operations 2,692,917 1,569,191 Taxes paid (380,469) (7,843) Interest paid - (28,749) Interest received 28,608 - Movement in working capital Decrease / (increase) in trade and other receivables (326,039) 13,781 (Decrease) / increase in trade and other payables 92,464 - Net cash generated from/(used in) from operating activities 2,107,481 1,546,380 Cash flows from investing activities Purchase of investments 16 (99,820) - Sale of investments Net cash (used in)/generated from investing activities (99,820) - Cashflows from financing activities Repayments - - Additions - - Net cash (used in)/generated from financing activities - - Net increase/(decrease) in cash and cash equivalents 2,007,661 1,546,380 Cash and cash equivalents at beginning of period 5,665,802 4,459,940 Exchange gains/(losses) on cash & cash equivalents (82,316) (107,412) Cash and cash equivalents at end of period 7,591,147 5,898,908 The accompanying notes are an integral part of the consolidated financial statements. 12

13 1 GENERAL INFORMATION Exelor Limited (the "Company") is a limited liability company incorporated in the British Virgin Islands on June 22, 2006, and is the ultimate parent of the Group. The registered address of the Company is Rodus Building, 4th Floor, Box 4064, Road Town, Tortola, British Virgin Islands. The interim consolidated financial report of the Group for the period ended June 30, 2016 comprises the Company and its subsidiaries Eastern Value Partners Limited and Hyporeal East Limited (together referred to as the "Group"). The Group is primarily involved in leasing out property in the Russian Federation. The Company entered into a Global Depositary Receipt ("GDR") Program in December The GDR's were admitted to trading on the Luxembourg Stock Exchange regulated market on December 22, The GDR price on June 30, 2016 is USD (December 31, 2015: USD 21.60). These interim consolidated financial statements have been authorized for issue on August 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation The interim consolidated financial report is prepared in accordance with IAS 34 Interim Financial Reporting of the International Financial Reporting Standards as adopted by the European Union (EU-IFRS). New standards and interpretations The following new standards and amendments to the standards which are relevant to the Group and have been adopted by the European Union are effective in the European Union for the annual periods beginning on or after 1 January Annual improvements to IFRSs The improvements consist of changes to seven standards, three of which are relevant to the Group. The basis for conclusions on IFRS 13 was amended to clarify that deletion of certain paragraphs in IAS 39 upon publishing of IFRS 13 was not made with an intention to remove the ability to measure short-term receivables and payables at invoice amount where the impact of discounting is immaterial. IAS 16 and IAS 38 were amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model. The Group is not expecting any impact of the above amendments on its financial statements. The following new standards relevant to the Group have been issued, but are not yet adopted by EU: IFRS 9, Financial Instruments; IFRS 15, Revenue from Contracts with Customers; IFRS 16, Leases; Amendments to IFRS 10 and IAS 28; Annual improvements to IFRSs 2014; Amendments to IAS 7; and Amendments to IAS

14 The Group is currently assessing the possible impact of adoption of the above standards but it is not currently expected that it will be significant. IFRS 16 will require the Group to recognize in the balance sheet assets taken in an operating lease and the related lease liabilities. Other new or revised standards or interpretations that will become effective for annual periods starting after 1 January 2017 will likely have no material impact to the Group. 2.2 Consolidation Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has the right to, variable returns from its investment with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition related costs are expensed as incurred. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement. Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The Company owns 100% of its subsidiaries Eastern Value Partners Limited and Hyporeal East Limited. Eastern Value Partners Limited (EVPL) is incorporated and domiciled in Nicosia, Cyprus. The principal activities of EVPL are the provision of consultancy services to an investment company, and the leasing of real estate property in the Russian Federation. Hyporeal East Limited (HEL) is incorporated and domiciled in Nicosia, Cyprus. The principal activities of HEL are the provision of financing to consolidated related parties. 2.3 Segment reporting A business segment is a group of operations and assets engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments. 2.4 Foreign currency translation a) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). Exelor Ltd standalone uses the US dollars as a functional currency. There are three subsidiaries in the group. The functional currency of Hyporeal East Limited (HEL) and Eastern Value Partners Limited (EVPL) is US dollars. The functional currency of EVPL Branch Russia is Rubles. The interim consolidated financial statements are presented in US dollars, which is the Group's presentation currency. At 30 June, 2016 the principal rate of exchange used for translating foreign currency balances was USD 1 = RR (2015: USD 1 = RR ). The principal average rate of exchange for 2016 used for translating income and expenses was USD 1 = , (2015: USD 1 = ). 14

15 b) Transactions and balances 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 year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. c) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: a) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; b) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); c) All resulting exchange differences are recognized in other comprehensive income. 2.5 Investment property The investment property of the Group is an owned building, not occupied by the Group, and is held for longterm rental yields. Investment property is treated as a long-term investment and is stated at market value. Changes in the fair value of investment property are recognized in the income statement. Investment property is measured initially at its cost, including related transaction costs. Expenditure for repairs and maintenance of investment property is charged to the income statement of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Investment properties are derecognized when they have been disposed. Gains and losses on disposal of investment property are determined by comparing proceeds with carrying amount and are included in the income statement. 2.6 Impairment of non-financial assets Assets that are subject to amortization or depreciation are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 2.7 Financial assets Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Assets in this category are classified as current assets. 15

16 (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group s loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet Recognition and measurement Regular purchases and sales of financial assets are recognized on the trade-date the date on which the company commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or losses are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost less a provision for impairment. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the income statement within Net results financial assets at fair value through profit or loss in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement when the Group s right to receive payments is established. 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 Group 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, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs. 2.8 Trade receivables Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the recoverable amount, being the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the movement in the provision is recognized in the income statement. 2.9 Cash and cash equivalents Cash and cash equivalents comprises cash in hand, call deposits held, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, for the proceeds Trade Payables Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized directly in equity. In this case, the tax is also recognized in equity. 16

17 The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future Revenue recognition Revenue comprises rental income, service charges and net of value added tax, rebates and discounts. Rental income is recognized on a straight-line basis over the lease term. Service and management charges are recognized in the accounting period in which the services are rendered. Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Rental income from operating leases is recognized in income on a straight-line basis over the lease term. When the Group provides incentives to its customers, the cost of incentives are recognized over the lease term, on a straight-line basis, as a reduction of rental income. When the Group is acting as an agent, the commission rather than gross income is recorded as revenue Finance income and expenses Interest expenses for borrowings are recognized within finance costs in the income statement using the effective interest rate method. Interest income is recognized using the effective interest method and presented in the income statement under finance income. The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability 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 throughout the expected life of the financial instrument, or a shorter period where appropriate to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts Dividend distribution Dividend distribution to the Group s shareholders is recognized as a liability in the Group s consolidated financial statements in the period in which the dividends are approved by the Group s shareholders Leases (a) A group company is the lessee (i) Operating lease Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over the period of the lease. 17

18 (ii) Finance lease The Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease's commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and noncurrent borrowings. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The investment properties acquired under finance leases are carried at their fair value. (b) A group company is the lessor (i) Operating lease Properties leased out under operating leases are included in investment property in the balance sheet (Note 5). Lease income is recognized over the term of the lease on a straight line basis. (ii) Finance lease When assets are leased out under a finance lease, the present value of the lease payments is recognized as a receivable. The difference between the gross receivable and the present value of the receivable is recognized as unearned finance income. Lease income is recognized over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return. 3 Financial risk management 3.1 Financial risk factors The Group's activities expose it to a variety of financial risks: interest rate risk, price risk, credit risk, liquidity risk and currency risk. The financial risks relate to the financial instruments the Company holds. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group sometimes uses derivative financial instruments to hedge certain risk exposures. The risk management policies employed by the Group to manage these risks are discussed below: i) Currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, the Euro, and Russian Rubles. Foreign exchange risk arises from future commercial transactions and when recognized assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly. The tables below summarizes the Group's exposure to foreign currency risk at June 30, 2016 and December 31, 2015.The Group's assets and liabilities at carrying amounts are included in the table, categorized by the currency. 18

19 As at June 30, 2016 USD RUB EUR Total (stated in USD) (stated in USD) Trade & other receivables - 978, ,186 Financial assets at FVTPL 2,061, ,061,500 Cash & cash equivalents 7,009, ,040 53,218 7,591,147 Total Assets 9,071,389 1,506,226 53,218 10,630,833 Trade and other payables 140, , ,981 Accrued expenses 5,653-23,378 29,031 Fees payable 882, ,633 Deposits held - 256, ,404 Tax payable - 219, ,290 Total liabilities 1,029, ,716 23,378 1,826,339 Net Assets 8,042, ,510 29,840 8,804,494 As at December 31, 2015 USD RUB EUR Total (stated in USD) (stated in USD) Trade & other receivables 27, , ,232 Financial assets at FVTPL 1,952, ,952,640 Cash & cash equivalents 4,844, , ,018 5,665,802 Total Assets 6,824, , ,018 8,206,674 Trade and other payables 182, , ,369 Accrued expenses 11,145-48,852 59,997 Fees payable 873, ,470 Deposits held - 242, ,749 Tax payable - 223, ,886 Total liabilities 1,066, ,913 48,852 1,738,471 Net Assets 5,758, , ,166 6,468,203 As at June 30, 2016, if the RUB currency had strengthened/weakened 10% against the US dollar, equity would have been USD 73,251 (December 31, 2015: USD 25,986) lower/higher. As at June 30, 2016, if the EUR currency had strengthened/weakened 5% against the US dollar, equity would have been USD 1,492 (December 31, 2015: USD 22,508) lower/higher. ii) Price risk Price risk is the risk that the price of a financial instrument will fluctuate due to changes in market factors that directly or indirectly influence the value of the instrument. The Group is exposed to price risk arising from its investments in financial instruments. The group s management moderates the group s exposure to price risk through diversification and careful selection of the portfolio positions within specific guidelines to limit concentrations to particular strategies and geographic markets. iii) Cash flow and interest rate risk The Group was exposed to interest risk in relation to its floating rate notes during the year of The Group's management monitors cash flow and interest rate risk periodically and acts accordingly. Trade and other receivables and payables are interest-free and have settlement dates within one year. iv) Credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with banks and financial institutions, as well as credit exposures with respect to rental customers, including outstanding 19

20 receivables. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables. Cash balances are held with high credit quality financial institutions and the Group has policies to limit the amount of credit exposure to any financial institution. The following ratings applied during the period: 6/30/ /31/2015 Counterparty Rating 2016 Rating 2015 Balance Balance Bank Vontobel Aa3 Aa3 4,101,580 3,451,041 Hellenic Bank Caa2 Caa2 19,366 2,178 Raiffeisen Bank Aa2 Aa2 3,468,506 2,207,614 Bank of Cyprus Caa3 Caa3 1,695 4,969 7,591,147 5,665,802 No credit limits were applicable and exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties. For the terms and duration of the rental contracts reference is made to note 14. Management does not expect any losses from non-performance by the Company s counterparties. There is a possibility to use overdraft facility on accounts of Raiffeisen Bank. The limit amount of overdraft stated in the agreement with Raiffesen Bank is RUB 1,500,000 (converted in USD at USD 23,343). v) Liquidity risk 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 Group has procedures with the object of minimizing such losses such as maintaining sufficient cash. A summary table with maturity of financial current assets and liabilities is presented below. 6/30/ /31/2015 Financial assets - current Financial assets at fair value through profit and loss 2,061,500 1,952,640 Trade receivables - maturity within one year 978, ,232 Cash & cash equivalents - maturity within 3 months 7,591,147 5,665,802 10,630,833 8,206,674 Financial liabilities - current Trade and other payables - maturity within one year 438, ,369 Accrued expenses - maturity within one year 29,031 59,997 Fees payable - maturity within one year 882, ,470 1,350,645 1,271,836 The table below analyses the Group s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. 20

21 As at June 30, 2016 Less than 1 Between 2&5 More than 5 year years years Trade and other payables 438, Accrued expenses 29, Fees payable 882, Total borrowings 1,350, As at December 31, 2015 Less than 1 Between 2 & 5 More than 5 year years years Trade and other payables 338, Accrued expenses 59, Fees payable 873, Total borrowings 1,271, Capital Risk Management The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated balance sheet plus net debt. Total borrowings Less cash & cash equivalents 6/30/ /31/ ,591,147 5,665,802 Net debt (7,591,147) (5,665,802) Total equity 59,035,081 56,416,430 Total capital 51,443,934 50,750,628 Gearing ratio 0% 0% 3.3 Fair value estimation Various inputs are used in determining the value of the Fund s investments. These inputs are summarized in the three broad levels as follows: Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities (including the Fund s own assumptions in determining the fair value of investments). The Group uses the fair value measurement for its investment property and financial assets at fair value through profit and loss. The Board of Directors uses an external appraiser to determine the fair value of the investment property, namely Cushman & Wakefield as per December 31, The Board of Directors did not deviate from the calculation made by the external appraiser. For financial assets at fair value through 21

22 profit and loss, the Board of Directors used quoted prices (unadjusted) in active markets (level 1). For more information on level 3 valuation, please refer to note 5. 6/30/ /31/2015 Level 1 Financial assets at FVTPL Level 3 Investment property 2,061,500 1,952,640 60,719,673 60,719,673 62,781,173 62,672,313 4 Critical accounting estimates and judgements 4.1 Critical accounting estimates and assumptions Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Considering the Group's current position the Board has not concluded to any critical accounting estimates and judgements in the period under review except as mentioned in note Investment property 6/30/ /31/2015 At beginning of year 60,719,673 63,400,000 Revaluation - 13,844,528 Initial direct cost - 241,114 Currency translations - (16,765,969) At end of year 60,719,673 60,719,673 The investment property is shown at fair value. The fair value is determined by an external appraiser as of December 31, Valuation is executed once a year. The fair value estimate is based on, amongst others, the rental income and yield developments. The original cost price of the building was USD 42,717,373. The main characteristic of property is class B+. The property was built in 1993 by the Finnish construction company SRV Terasbetoni OY with the total leasable area of the building is 7,818.I sq.m. The main risks related to the property, being property damage, fire and terrorism, and maintenance and operation, are insured with the reputable insurance company. The insured sums according to the contracts are sufficient to cover the losses in the case of the occurrence of insured event. As at the balance sheet date there were no contracts in existence to purchase additional properties. Long term (48 years) land lease agreement dated August 04, 2010, for the land plot with a total area of 736 sq. m. The current land lease expires in June 26, The investment property is not pledge. The last external valuation was performed at 31 December The valuation and report has been prepared in accordance with the RICS valuation Professional Standards (the Red Book) by a value acting as an External Valuer. The external valuation is based on both a discounted cash flow method and direct capitalization method. The valuation of the property was performed using the income approach, taking account of sales comparable where they are available. The DCF model assumes a resale of the asset at the end of a 7-year holding period. Estimated rental value was determined based on the market comparatives adjusted for possible discounts to existing tenants, location, class of the property, year of construction and fit-out. The investment property classifies as a level 3 valuation under IFRS 13. There have been no transfers between categories for investment property. 22

23 6 Office Equipment 6/30/ /31/2015 At beginning of year 5,862 15,557 Depreciation (3,188) (7,349) Currency translations 490 (2,346) At end of year 3,164 5,862 7 Financial instruments by category The following table shows the financial instruments by category: June 30, 2016 Loans & Receivables Financial Assets at FVTPL Total Assets as per balance sheet Cash & cash equivalents 7,591,147-7,591,147 Trade and other receivables 978, ,186 Financial assets at fair value - 2,061,500 2,061,500 Total 8,569,333 2,061,500 10,630,833 Liabilities as per balance sheet Trade and other payables Trade payables Financial Liabilities at FVTPL Total 438, , , ,981 December 31, 2015 Loans & Receivables Financial Assets at FVTPL Total Assets as per balance sheet Cash & cash equivalents 5,665,802-5,665,802 Trade and other receivables 588, ,232 Financial assets at fair value - 1,952,640 1,952,640 Total 6,254,034 1,952,640 8,206,674 Liabilities as per balance sheet Trade and other payables Trade payables Financial Liabilities at FVTPL Total 338, , , ,369 23

24 8 Trade and other receivables Trade receivables (none due, none impaired) VAT refundable Prepaid corporate tax Prepayments 6/30/ /31/ , ,232 59,226 53, , ,706 1,182, ,778 The fair value of trade and other receivables which are due within one year approximates their carrying amount at the balance sheet date. - Impaired trade receivables Individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether there is objective evidence that impairment has been incurred but not yet been identified. For these receivables the estimated impairment losses are recognized in a separate provision for impairment. The group has not expected any impairment receivables. Concentrations of credit risk with respect to trade receivables are limited and the Group's historical experience in collection of trade receivables falls within the recorded allowances. The Group has no collateral or other security except for the deposits held as mentioned under note 9. Analysis by credit quality of financial trade and other receivables is as follows: Trade receivables 6/30/ /31/2015 Other financial Trade Other financial receivables receivables receivables key customers 977, ,700 - Other balances with no history of default ,530 Total fully performing (not past due) 977, , ,530 Past due: <30 days overdue days overdue days overdue days overdue - 6, over 360 days overdue ,578 Total past due, but not impaired Total individually impaired - 6,326-5,578 Less impairment provision - 6,326-5,578 Total 977, , ,530 9 Cash and cash equivalents Cash at bank 6/30/ /31/2015 7,591,147 5,665,802 7,591,147 5,665,802 The amount held as cash and cash equivalents are directly available for the group. The cash and cash equivalents do not bear any interest. 24

25 10 Share capital Number of Share Share shares Capital premium Total At June 30, ,100 12,505,000 12,500,000 25,005,000 At December 31, ,100 12,505,000 12,500,000 25,005,000 The total authorized number of non-voting shares is 500, with a par value of USD per share. There have been no changes in the number of shares during The issued shares are fully paid. Holders of the voting shares shall have the exclusive right to receive notice of, attend, and vote at general meetings of the members. Each voting share confers upon the holder the right to one vote at a meeting of the members of the Company or any resolution of members of the Company. The basic earnings per share as per 30 June, 2016 amounts USD (2015: USD 37.31) based on a loss of USD -1,788,185 (2015: profit of USD 9,330,274) and the weighted average of shares of 250,100 (2015: 250,100). 11 Trade and other payables 6/30/ /31/2015 Trade & other payables 438, ,369 Accrued expenses 29,031 59,997 Fees payable 882, ,470 Tax payable 219, ,886 1,569,935 1,495,722 The fair value of trade and other payables which are all due within one year approximates their carrying value. 12 Net result on financial assets at fair value through profit or loss 06/30/ /30/2015 Net unrealized results on financial assets at FVTPL Unrealized result on financial assets 9,040 (54,400) Net unrealized results on financial assets at fair value through profit or loss 9,040 (54,400) Net realized results on financial assets at FVTPL Realized result on financial assets - - Net realized results on financial assets at fair value through profit or loss Total net result - - 9,040 (54,400) 25

26 13 Tax Exelor Ltd., the ultimate parent of the Group, is and has, since incorporation, been resident for tax purposes solely in the British Virgin Islands. In accordance with the BVI Business Companies Act, 2004, section 242; a company; its dividends, interest, rents, royalties, compensations and other amounts; and realized capital gains with respect to any shares, debt obligations, or other securities are exempt from all provisions of the Income Tax Ordinance. 06/30/2016 Before tax Tax charge Income not subject to tax/expense not deductible Total tax income After tax EVPL branch-russia (20% tax rate) (6,490,693) 1,298,139-1,298,137 (5,192,556) HEL-Cyprus (12.5% tax rate) (21,416) (2,677) 2,677 - (21,416) EVPL-Cyprus (12.5% tax rate) 1,063, ,912 (132,912) - 1,063,295 Exelor Standalone (tax exempt in BVI) 2,362, ,362,492 (3,086,322) 1,428,374 (130,235) 1,298,137 (1,788,185) 06/30/2015 Before tax Tax charge Income not subject to tax/expense not deductible Total tax charge After tax EVPL branch-russia (20% tax rate) 744,684 (148,937) - (148,937) 595,747 HEL-Cyprus (12.5% tax rate) (221,556) (221,556) EVPL-Cyprus (12.5% tax rate) (180,585) (180,585) Exelor Standalone (tax exempt in BVI) 406, , ,992 (148,937) - (148,937) 600,055 The Cypriotic subsidiaries of the Group are subject to corporation tax on its taxable profits at the rate of 12.5%. The Russian branch of the Cypriotic subsidiary is subject to tax on its taxable profits at the rate of 20% in the Russian Federation due to its permanent establishment in that country. The following table gives an overview of the current and deferred tax for the year: 06/30/ /30/2015 Deferred income tax 1,674,010 - Corporate income tax charge (375,873) (148,937) Total tax income 1,298,137 (148,937) Deferred tax liability: 06/30/ /31/2015 At beginning of year 11,043,854 10,464,762 Deferred income tax (1,674,010) 3,546,302 Currency translation 1,326,262 (2,967,210) At end of year 10,696,106 11,043,854 The deferred tax liability relates to differences in fiscal and commercial values of the assets and liabilities, mainly related to the investment property. The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate as income might not be taxable of expenses are non-deductible. The deferred tax 26

27 liability has increased due to an increase in the value of the investment property in Rubles. However, the fair value of the property in reporting currency is decreased due to the high depreciation of Rubles compared to the US dollar, which is presented above in the currency translation. 14 Rental income and costs 06/30/ /30/2015 Rental income 4,192,165 4,954,788 Utilities and land lease rechargeable 600,291 - The company leases out its investment property under operating leases. Overview of contractual lease agreements: 4,792,456 4,954,788 Commercial leasable area: 997 sqm. Commercial leasable area is fully leased to Mc Donald's ZAO with a long-term agreement till This agreement does not provide an early termination clause. Office leasable area: 6667 sqm. Boeing Inc. leases 76% of office leasable area: an agreement prolonged on 30 December 2014 for 5 years. Progresstech ZAO leases 18% of office leasable area: period October 2006 till December 31 st Lease agreement has been renewed in September 2014 for next 5 years. Vacancy of 5% of office leasable area. The rental income for 2016 is USD 7.64 million, for 2017 up until 2020 USD million. These present the non-cancellable lease periods of the contracts mentioned above. Rental Costs 06/30/ /30/2015 Management services 336, ,380 Roof repair including related services - 702,701 Non-recoverable VAT write-off 71, ,140 Utilities Property insurance 122, ,096 32,218 38, , ,717 Property taxes Other property related operating expenses 17,506 (15,744) Legal and consulting services 110,547 37,815 Other costs 8,123 - Total 880,083 1,614, Foreign exchange gains/(losses) Other (losses)/gains 06/30/ /30/2015 (5,813,699) (1,384,980) (5,813,699) (1,384,980) 27

28 16 Financial assets at fair value through profit or loss The movement in the financial assets at fair value through profit or loss is as follows: 6/30/ /31/2015 Opening value of financial assets at fair value through profit or loss 1,952, ,000 Purchases of financial assets 99,820 1,602,090 Sale of financial assets - - Realized foreign exchange result on financial assets at fair value - - Realized mark to market result on financial assets at fair value - - Unrealized foreign exchange result on financial assets at fair value - - Unrealized mark to market result on financial assets at fair value 9,040 (29,450) Total value of financial assets at fair value through profit or loss 2,061,500 1,952, Schedule of financial assets at fair value through profit or loss The Group held the following financial assets at fair value through profit or loss at June 30, 2016 No. of Shares Description Cost Market Value 95,000 Exelor Ltd GDR REG 2,092,060 2,061,500 2,092,060 2,061,500 The Group held the following financial assets at fair value through profit or loss at December 31, No. of Shares Description Cost Market Value 90,400 Exelor Ltd GDR REG 1,992,240 1,952,640 1,992,240 1,952, Finance income and expense 06/30/ /30/2015 Finance income - credit balances held at banks and brokers 28,608 28,749 Total finance income 28,608 28,749 Finance costs from subsidiary - - Net foreign exchange gains on borrowings - - Fair value losses on borrowings - - Total other finance costs

29 19 Administrative expenses 06/30/ /30/2015 Directors' fees (Note 22 a) 75,000 77,039 Staff costs (Note 20) 4,161 8,296 Travel expenses (Note 22 a) 134,521 96,418 Tax advice fees 20,413 - Independent auditor's remuneration 33,361 22,758 Advisory fees (Note 22 c) 541, ,500 Legal fees 27, ,301 Professional fees 207, ,157 Unrecoverable VAT 6,322 - Accounting and administrative expense 46,527 59,559 License fees 8,817 3,155 Sundry expenses 7,460 15,650 Other administrative expenses 110,259 76,589 1,222,644 1,180, Staff costs Wages and salaries 06/30/ /30/2015 4,161 8,296 Average number of employees: Number Full time 1 1 Part time Advisory and performance fees An advisory fee calculated and accrued quarterly at 2% of the Stock Capitalization Value. The fee will be payable at the beginning of the quarterly period immediately following the applicable quarter during which the advisory fee was calculated and accrued. In addition to an advisory fee, the Investment Advisor is entitled to receive a performance fee as follows: a performance equal to 20% of the positive difference between the computed Stock Capitalization Value at the relevant quarterly period and the price of the Group s GDRs on the Luxembourg Stock Exchange of the preceding quarterly period. Performance fees will be payable at the beginning of the quarterly period immediately following the applicable quarter during which the performance fees were calculated; no performance fee shall be paid in the case where the Stock Capitalization Value is lower at the end of the quarterly period than the highest Stock Capitalization Value calculated as at the end of any preceding quarterly period since the Listing ( high-water-mark principle) adjusted by adding up the value of dividends which have been distributed. 22 Related-party transactions There were no transactions carried out with related parties except the following: 29