Banjalučka pivara a.d. Banja Luka

Transcription

1 Banjalučka pivara a.d. Banja Luka Financial report for the year ended 31 st of December 2016 This version of the report is a translation from the original, which was prepared in the Serbian language. In all matters of interpretation of information, views or opinions, the original language version of the report takes precedence over this translation.

2 Banjalučka pivara a.d. Banja Luka. Financial report for the year ended 31 st of December 2016 Content: Page Management s report 3 Independent Auditor s report 4 Statement of comprehensive income 5 Statement of financial position 6 Statement of changes in equity 7 Statement of cash flows 8 Notes to financial statements 9 28

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5 Banjalučka pivara a.d. Banja Luka Statement of comprehensive income For the year ended 31 st December 2016 Note Revenue 4 44,926,681 43,881,836 Other income 5 726,770 1,660,732 Total revenue 45,653,451 45,542,568 Changes in inventory 845, ,393 Raw materials, consumables and services used 6 (16,842,116) (15,947,769) Staff costs 7 (6,268,189) (6,174,391) Depreciation and amortisation expense 11 (5,698,905) (7,168,680) Other operating expenses 8 (10,162,200) (9,642,660) Profit from operating activities 7,528,020 7,338,461 Financial income Financial expenses 9 (489,083) (998,824) Net financial expenses 9 (488,519) (998,178) Profit before taxation 7,039,501 6,340,283 Income tax expense 10 (900,385) (123,368) Profit for the year 6,139,116 6,216,915 Total comprehensive income for the year 6,139,116 6,216,915 Earnings per share The accompanying notes form an integral part of these financial statements 5

6 Banjalučka pivara a.d. Banja Luka Statement of financial position As at 31 st December 2016 Note ASSETS Intangible and tangible assets 11 31,706,126 31,044,919 Long term financial assets , ,637 Total non-currents assets 32,067,721 31,418,556 Inventories 13 4,710,175 4,678,331 Trade receivables 14 3,129,025 1,995,665 Other receivables 131,287 99,148 Cash and cash equivalents 15 11,776,622 11,625,795 Total current assets 19,747,109 18,398,939 Total assets 51,814,830 49,817,495 EQUITY AND LIABILITIES Equity Share capital 16 22,300,000 22,300,000 Statutory reserves 359,413 17,482 Retained profit 12,222,986 6,471,545 Total equity 34,882,399 28,789,027 Liabilities Long - term liabilities Loans and borrowings 17 5,993,534 6,382,083 Long - term provisions 18 1,679,592 1,064,303 Total long - term liabilities 7,673,126 7,446,386 Short - term liabilities Loans and borrowings 17 3,774,166 6,755,058 Trade and other payables 19 5,485,139 6,827,024 Total short term liabilities 9,259,305 13,582,082 Total liabilities 16,932,431 21,028,468 Total equity and liabilities 51,814,830 49,817,495 The accompanying notes form an integral part of these financial statements 6

7 Banjalučka pivara a.d. Banja Luka Statement of changes in equity For the year ended 31 st December 2016 Issued capital Statutory reserves Retained profit Total capital As at 1 st January ,300, ,856 22,617,856 Profit for the year - - 6,216,915 6,216,915 Dividend - - (45,744) (45,744) Transfer - 17,482 (17,482) - As at 31 st December ,300,000 17,482 6,471,545 28,789,027 As at 1 st January ,300,000 17,482 6,471,545 28,789,027 Profit for the year - - 6,139,116 6,139,116 Dividend - - (45,744) (45,744) Transfer - 341,931 (341,931) - As at 31 st December ,300, ,413 12,222,986 34,882,399 The accompanying notes form an integral part of these financial statements 7

8 Banjalučka pivara a.d. Banja Luka Statement of cash flows For the year ended 31 st December 2016 Cash flows from operating activities Cash receipts from customers and received advance payments 61,478,938 59,618,089 Cash receipts from premiums, subventions - 50,000 Other cash received from operating activities 713, ,862 Cash paid to suppliers - raw materials, expenses and advanced payments (26,808,132) (23,757,469) Cash paid to and on behalf of employees (6,179,024) (6,327,404) Interest paid (503,714) (952,055) Income tax paid (1,010,979) - Payments for liabilities from other operating activities (18,319,511) (15,623,212) Net cash increase from operating activities 9,371,090 13,844,811 Cash flow from investing and placement activities Increase in short - term financial placements 21,419 23,597 Interest received Purchases of fixed asset (5,394,028) (4,853,030) Net cash decrease from investing activities (5,372,093) (4,828,984) Financing activities Increase in financing activities 4,500,000 7,320,798 Decrease in financing activities (8,348,170) (12,095,879) Net cash decrease in financing activities (3,848,170) (4,775,081) Net increase in cash 150,827 4,240,746 Cash and cash equivalents at the beginning of the year 11,625,795 7,385,049 Cash and cash equivalents at the end of the year 11,776,622 11,625,795 The accompanying notes form an integral part of these financial statements 8

9 Banjalučka pivara a.d. Banja Luka Notes to financial statements 1 Reporting entity The company for production of beer Banjalučka pivara A,D,, Banja Luka (hereinafter: the Company ) was founded in 1873 and nationalized in From 1975 the Company operated as a part of Agroindustrijski poljoprivredni kombinat Bosanska Krajina. During 1991, the Company registered as a shareholding entity with mixed ownership Banjalučka pivara, Banja Luka, and during 1995 in accordance with regulation applicable in the Republic of Srpska, the Company became state-owned enterprise. Pursuant to the Decision numbered U/I- 143/2003 of February 19, 2003, the Company is registered as Shareholding Company Banjalučka pivara Banja Luka. Pursuant to its Decision numbered 02/ /05 of February 3, 2005, the Government of the Republic of Srpska approved the Special privatization Program for sale of state-owned portion of capital (53,81% of core capital) via tender and variable terms. The company is listed on Banjalučka berza (Banjaluka Stock Exchange) with ordinary shares under code BLPV-R-A and preference shares under code BLPV-P-B. The Headquarter of the Company is in Banjaluka, Slatinska 8. The Company s primary business activity is in the production of beer, as well as other soft drinks, malt and brewers yeast. 2 Basis of preparation (a) (b) (c) (d) Statement of compliance The financial statements have been prepared in accordance with the Financial Reporting Framework of the Republic of Srpska. The Financial Reporting Framework includes the Law on accounting and auditing of the Republic of Srpska (Official Gazette of the RS 94/15), accounting standards that apply in the Republic of Srpska, published by the Association of Accountants and Auditors of the Republic of Srpska (under the authority of the Commission for the accounting and auditing of BiH, Official Gazette of BiH, 5/07) and the Regulations on the form and content of financial statements for the companies (Official Gazette RS 63/16) and regulations on additional accounting report Annex ( Official Gazette RS 62/16). Basis of measurement The financial statements have been prepared on the historical cost basis, unless otherwise stated. Functional and presentation currency The financial statements are prepared in the currency of Bosnia and Herzegovina, Convertible mark (), which is the Company s functional currency. Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses as disclosed in financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 9

10 Banjalučka pivara a.d. Banja Luka Notes to financial statements (continued) 3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. (a) (b) Foreign currencies Transactions in foreign currency are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into functional currency at foreign exchange rates ruling at the dates at which the values were determined. Non-monetary assets and items that are measured in terms of historical cost of a foreign currency are not retranslated. Financial instruments Non-derivative financial instruments comprise of trade and other receivables, loans and deposits, cash and cash equivalents, loans and borrowings, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, Subsequent to initial recognition non-derivative financial instruments are measured as described below. Loans and receivables Loans and receivables are recognised at depreciated cost using a method of effective interest rate. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits, petty cash, cash at bank and deposits at bank with a maturity of up to three months. Interest bearing loans and borrowings Interest bearing loans and borrowings are recognised initially at fair value minus any directly attributable transaction costs. Subsequent to initial recognition, interest bearing loans and borrowings are recognised at depreciated cost using a method of effective interest rate. Every difference between receipt (minus transaction costs) and face value is recognised in income statement during the use of borrowings using a method of effective interest rate. 10

11 3 Significant accounting policies (continued) (b) Financial instruments (continued) Trade payables Trade payables are recognised initially at fair value, Subsequent to initial recognition they are recognised at depreciated cost using a method of effective interest rate. A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Company s contractual rights to the cash flows from the financial assets expire or if the Company transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, that is, the date that the Company commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Company s obligations specified in the contract expire or are discharged or cancelled. Gains and losses arising from changes in fair value are recognized directly in equity in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognized directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized in the investments revaluation reserve is included in profit or loss for the period. Equity instruments classified as available for sale that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are stated at cost less impairment. Cash and cash equivalents for the purpose of preparation of cash flow statement and balance sheet include cash in hand, money in banks accounts and banks deposits with maturity 3 months. (c) Property, plant and equipment (i) Recognition and measurement Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. (ii) Subsequent expenditure The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iii) Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Buildings Plant and equipment 20 to 77 years 5 to 14 years Depreciation method, useful lives and residual values are reassessed at the reporting date. 11

12 3 Significant accounting policies (continued) (d) (e) (f) Intangible assets (i) Intangible assets Intangible assets are measured initially at cost. After initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The rate of amortisation used for intangible assets is based on the estimated useful life. (ii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in the income statement when incurred. (iii) Amortisation Amortisation is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use. Depreciation method, useful lives and residual values are reassessed at the reporting date. Inventories Inventories are stated at the lower of cost or net realisable value. Inventories are valued based on purchase price and include the costs of bringing the inventories to a condition ready for use, using the weighted average cost principle. In the case of manufactured inventories and work in progress, costs include an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. Impairment The carrying amounts of the Company s assets, other than inventories and deferred tax assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. For intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss. The Company considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics. 12

13 3 Significant accounting policies (continued) (g) (h) (i) (j) Provisions A provision is recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Loans and borrowings Interest bearing loans and borrowings are recognised initially at fair value of the proceeds received, less attributable transaction costs. In subsequent periods, interest bearing loans and borrowings are stated at amortised cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement as interest expense over the period of the borrowings on an effective interest basis. Employee benefits Defined contributions pension fund Obligations for contributions to defined contribution pension funds are recognised as an expense in the income statement when they are due, which is the period during which services are rendered by employees. Revenue Goods sold and services rendered Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Revenue from services is recognised in the income statement in proportion to the stage of completion of the transaction at the reporting date. Revenue from the sale of goods is generally recognised at the date the goods are delivered and represents the net invoiced value of goods and excludes value added taxes. 13

14 3 Significant accounting policies (continued) (k) (l) (m) (n) (o) Financial income and expenses Finance income comprises of interest income on funds invested (including available-for-sale financial assets) and positive changes in the fair value of financial instruments at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and negative changes in the fair value of financial instruments at fair value through profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a gross basis. Lease payments made Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Income tax expense Corporate income taxes are computed on the basis of reported income under the laws and regulations of Republic of Srpska. Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Earnings per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares. Comparative information Where necessary, comparative information has been reclassified to ensure consistency with current year presentations and disclosures. 14

15 4. Revenue Revenue from the sale of products in the Republic of Srpska 40,162,726 40,523,974 Revenue from the sale of products in the Federation of BH 2,932,091 2,892,050 Revenue from the sale of products in the Brcko District 991,874 - Revenue from the sale of products - foreign 838, ,940 Revenue from the sale of goods in the Republic of Srpska 1,428 2,500 Revenue from the sale of goods in the Federation of BH ,926,681 43,881, Other income Recovery of bad debts 320, ,323 Income from collected payment for damages 17, ,944 Income from sales of fixed asset 25, ,556 Income from own work capitalized 64,179 83,428 Income from lease 38,922 53,532 Income from dedicated source of financing - 50,000 Difference from paid and recognized securities used for repayment of tax liabilities - 23,358 Surpluses 28,520 4,776 Other income 232, , Consumables and services used 726,770 1,660,732 Raw materials 12,866,740 12,333,547 Other materials 2,482,224 1,831,533 Fuel and energy 1,484,725 1,771,711 Goods sold at cost 8,427 10,978 16,842,116 15,947,769 15

16 7. Staff costs Wages and salaries 3,523,736 3,448,235 Contributions and taxes 2,169,908 2,121,156 Other staff costs 574, ,000 As at 31 December 2016 number of employees was 249 (2015: 237 employees). 6,268,189 6,174,391 Staff costs include 1,798,090 (2015: 1,802,732) of contributions paid into the social funds of the Republic of Srpska, 8. Other operating expenses Advertising and other marketing services 2,819,036 2,168,864 Non-productive service 1,446,381 1,252,021 Entertainment and promotional costs 1,317,233 1,057,174 Other provisions 1,051, ,816 Maintenance 896, ,141 Transportation 843, ,196 Tax 529, ,896 Impairment losses on trade receivables 466,741 1,010,798 Other costs 190, ,148 Losses from disposal of materials and goods 176, ,646 Insurance premium 126, ,398 Impairment of material 69,444 72,480 Rent 59,278 57,364 Losses from disposal of fixed assets 59, ,988 Bank fees 54,522 47,229 Membership fees 24,732 22,592 Other miscellaneous costs 9,918 17,034 Impairment of long - term financial placements and assets for sale 9,392 37,982 Contributions 5,904 60,864 Losses 5,844 4,029 10,162,200 9,642,660 16

17 9. Financial income and expenses Interest income Foreign exchange gains Total financial income Interest expense (442,929) (952,436) Preference share finance costs (45,744) (45,744) Foreign exchange losses (410) (644) Total financial expenses (489,083) (998,824) Net financial expenses (488,519) (998,178) 10. Income tax expense Profit before taxation 7,039,501 6,340,283 Tax at rate of 10% 703, ,028 Non-deductible expenses 404, ,792 Non-deductible profits (41,639) (104,518) Income tax 1,066, ,302 Tax losses utilized from previous years - (753,591) Investment incentives for production (166,072) (91,343) Income tax expense 900, ,368 Income tax prepayment current year (887,611) - For payment 12, ,368 17

18 11. Intangible and tangible assets Intangible assets Land Buildings Equipment and packaging Fixed assets under construction Total Cost At 1 st January ,987,799-40,805,202 85,051, , ,169,854 Additions 36, ,185,046 5,221,946 Transfer ,649 4,712,370 (5,051,019) - Surplus ,768-5,768 Deficit (40,641) - (40,641) Disposals - - (113,045) (2,190,364) - (2,303,409) At 31 st December ,024,699-41,030,806 87,538, , ,053,518 At 1 st January ,024,699-41,030,806 87,538, , ,053,518 Additions 163, ,231,758 6,395,286 Transfer (6,010,484) 6,010,484-6,170,593 (6,170,593) - Surplus ,808-29,808 Deficit (18,094) - (18,094) Disposals (2,242,258) - (2,242,258) At 31 st December ,743 6,010,484 41,030,806 91,478, , ,218,260 Accumulated depreciation and impairment losses At 1 st January 2015 (78,595) - (29,316,668) (69,659,357) - (99,054,620) Charge for the year (15,692) - (614,020) (6,538,968) - (7,168,680) Surplus (1,005) - (1,005) Deficit ,562-37,562 Disposals ,174 2,154,970-2,178,144 At 31 st December 2015 (94,287) - (29,907,514) (74,006,798) - (104,008,599) At 1 st January 2016 (94,287) - (29,907,514) (74,006,798) - (104,008,599) Charge for the year (15,654) - (497,454) (5,185,797) - (5,698,905) Surplus (1,288) - (1,288) Deficit ,624-13,624 Disposals ,183,034-2,183,034 At 31 st December 2016 (109,941) - (30,404,968) (76,997,225) - (107,512,134) Net book value At 31 st December ,930,412-11,123,292 13,532, ,180 31,044,919 At 31 st December ,802 6,010,484 10,625,838 14,481, ,345 31,706,126 Intangible assets mostly relate to the license for the production of Kaltenberg beer. The Company has reclassified permanent right for land in the amount of 6,010,484 as land. Assets of the Company are pledged as collateral for loans and borrowings. 18

19 12. Long term financial assets Other deposits 257, ,500 Equity securities 214, ,850 Loans to employees 11,277 13,927 Impairment allowance of investments in securities (122,032) (112,640) 13. Inventories 361, ,637 Expendable material 3,443,293 3,303,190 Finished goods 608, ,013 Work in progress 575, ,133 Advances given 80, ,896 Commercial goods 2,756 2, Trade receivables 4,710,175 4,678,331 Trade receivables from customers in Republic of Srpska 5,105,568 4,194,540 Trade receivables from customers in Federation of BH 560, ,804 Trade receivables - foreign 681, ,874 Trade receivables from costumers in Brcko District 338,015 50,042 Impairment allowance (3,556,167) (3,300,595) 15. Cash and cash equivalents 3,129,025 1,995,665 Cash in banks 11,773,064 11,624,093 Cash in hand 3,558 1,702 11,776,622 11,625,795 19

20 16. Share capital Share capital 22,300,000 22,300,000 The structure of share capital as at 31 st December 2016 and 31 st December 2015 is as follows: % % Altima Global Special Situations Fund Ltd 83,67% 18,658,935 82,42% 18,379,955 Altima UK Value Investments Limited 6,84% 1,524,812 6,84% 1,524,812 Internal stakeholders and shareholders on the basis of voucher offer 8,15% 1,817,030 8,73% 1,946,763 PREF a,d, Banja Luka 1,34% 299,223 1,34% 299,223 Restitution Fund RS AD Banja Luka 0,00% - 0,67% 149,247 22,300,000 22,300,000 The share capital of the Company consists of 20,775,188 (2015: 20,755,188) ordinary shares and 1,524,812 preference shares with a nominal value of 1 per share as at 31 st December

21 17. Loans and borrowings Long - term liabilities Addiko Bank, a.d. Banja Luka 5,746,469 6,285,177 UniCredit Leasing d.o.o. Sarajevo 202,515 24,627 Municipality of Banja Luka, Republic of Srpska 44,550 66,825 Raiffeisen Leasing d.o.o. Sarajevo - 5,454 5,993,534 6,382,083 Short - term liabilities Addiko Bank, a.d. Banja Luka 3,583,901 6,593,168 UniCredit Leasing d.o.o. Sarajevo 162,542 67,525 Municipality of Banja Luka, Republic of Srpska 22,275 22,275 Raiffeisen Leasing d.o.o. Sarajevo 5,448 72,090 3,774,166 6,755,058 9,767,700 13,137,141 21

22 17. Loans and borrowings (continued) Interest rates and repayment terms on 31 st of December 2016 are as follows: Interest rate Total 1 year or less years years Interest-bearing loans and borrowings Addiko Bank a.d. Banja Luka 20,000,000 matures in June m + Euribor 3.90% 6,038,453 2,224,981 2,517,922 1,295,550 Municipality of Banja Luka Republika Srpska (utility fees - reprogram), matures in December ,163 11,054 11,054 11,055 Municipality of Banja Luka, Republika Srpska (land for construction) - 33,662 11,221 11,221 11,220 Addiko Bank a.d. Banja Luka, 4,500,000, matures in March 2019 UniCredit Leasing d.o.o. Sarajevo 6 m+ Euribor 3.90%) 3,291,917 1,358,920 1,538, , % 365, , ,097 49,418 Raiffeisen Leasing d.o.o. Sarajevo 8,36% 5,448 5, Total loans and borrowings 9,767,700 3,774,166 4,232,130 1,761,404 22

23 17. Loans and borrowings (continued) As means of security for repayment of loans from Addiko Bank, the Company notarized corresponding promissory notes without protest and transfer orders. Also, the Company entered pledge on business facilities and land within the beer production area of the factory as well as the right of pledge on equipment, which was purchased from these loans. As a result of negotiations on restructuring of credit liabilities in the past years, credit liabilities towards the bank were grouped in two groups, short-term and long-term loans. Instalments of the long-term loan ( 20 million), used for financing of building and equipping of beer filling plant, with maturity in June 2019, are paid regularly at monthly level along with the related interest. In late December 2015, an agreement was reached with the bank on the new interest rates as follows: 3.85% on short-term loans and 6-month Euribor +3.90%, margin on long-term loans. The same agreement extends duration of the Financial framework loan, from which short-term loans were placed, until the 30 th June, In addition to the contracted repayment of 800,000 of short-term loans, the Company also repaid additional 1.49 million of short-term loans in Also, in early January 2016, the Company repaid three short-term loans in the total amount of 4.5 million (loans, with maturity in February, March and April 2016). In mid-january a new contract was signed with Addiko bank on a long-term loan of 4,5 million for a period of 3 years with start of use from the 31 st March, 2016, and repayment in 36 equal monthly instalments (full repayment by the 1 st March 2019). All credit liabilities are paid regularly. 23

24 18. Long - term provisions Provisions for other financial expenses 1,633,848 1,018,559 Provision for dividends on preference shares 45,744 45,744 1,679,592 1,064,303 Provision for dividends on cumulative preference shares are calculated each year, amounting to 3% of the nominal value of shares. The total amount of provisions calculated for the period ending on 31 st December 2016 amounts to 45,744 and is calculated as 3% of the amount of 1,524, Trade and other payables Trade payables to suppliers from the Republic of Srpska 1,941,776 1,559,159 Foreign trade payables 1,549,624 1,426,022 Excise duty 828, ,009 Received advanced payments and deposits 341,909 1,837,259 Accrued expenses for salaries and benefits 284, ,682 Liabilities for salaries and benefits 176, ,627 Liabilities for VAT 139, ,532 Fees for forests, water and fire protection 63,844 29,000 Trade payables to suppliers from the Federation of BH 63,572 19,865 Liabilities for employees 19,641 17,637 Liabilities for income tax 12, ,368 Liabilities for interest 1,508 62,296 Trade payables to suppliers from Brcko District Liabilities for other taxes - 265,631 Other liabilities 60,790 62,937 5,485,139 6,827,024 24

25 20. Risk management The Company has exposure to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk Information about the Company's exposure to the risks described above, objectives of the Company, policies and processes for measuring and managing risk and capital management, and further quantitative disclosures are included throughout these financial statements. Note 2 provides additional information related to liquidity and capital management under going concern discussions. (i) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises principally from the Company s receivables from customers. (ii) Liquidity risk Liquidity risk is the risk that the Facility will not be able to meet its financial obligations as they fall due, The Company has significant exposure to liquidity risk. (iii) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rate, interest rates and equity prices will affect the Company s income or value of its financial instruments. 25

26 20. Risk management (continued) Liquidity risk The following are the contractual maturities of the financial obligations: Non-derivative financial liabilities Carrying amount Contractual cash flows 0-6 months 6-12 months 1-2 years 2-5 years 31 st December 2016 Trade and other payables 5,485,139 5,485,139 5,485, Interest bearing loans and borrowings 9,767,700 10,228,611 2,211,886 1,848,932 4,388,805 1,778,988 15,252,839 15,713,750 7,697,025 1,848,932 4,388,805 1,778, st December 2015 Trade and other payables 6,827,024 6,827,024 6,827, Interest bearing loans and borrowings 13,137,141 14,040,111 6,029,618 1,162,435 2,749,180 4,098,878 19,964,165 20,867,135 12,856,642 1,162,435 2,749,180 4,098,878 26

27 21. Related party transactions Significant transactions with related parties are given below: Balance sheet Short-term liabilities on the basis of accumulated dividends Altima UK Value Investments Limited 45,744 45,744 45,744 45,744 Income Statement Preference shares finance costs Altima UK Value Investments Limited 45,744 45,744 Consultancy fees Altima UK Value Investments Limited 868, , , ,133 Salaries and other short term benefits to management Remuneration to key management 210, ,904 Remuneration to key management relates to the salaries and other short term benefits that are received by General manager, Management Board and Audit Committee. 27

28 22. Contingent liabilities The Company is involved in a number of legal disputes arising from its normal operations and are related to commercial and contractual matters, and matters relating to labour relations, which are addressed or considered in the normal course of business. On the 31 st December 2016, the total estimated amount claimed against the Company is 74,995 excluding interest. For some legal disputes started by Banjalučka pivara, the Company asked for execution of promissory notes. As for the issues of payment of damage to the third parties deriving from legal dealings or certain qualification as a source of danger, the Company is insured in such cases. Given Management believe resulting losses will be unlikely no provisions or further disclosures have been considered necessary in the financial statements. 23. Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on expected future events that are believed to be reasonable under the given circumstances. Certain accounting estimates as applied by the Company in accordance with its accounting policies are described below: Estimated useful life of plant and equipment The Company estimated useful life and related depreciation charges for plant and equipment and intangible asset based on expected useful lives, which management assesses annually. Also, management has considered indications for impairment, and believes none exist to require a detailed test of the recoverable amount of assets. Income tax Tax calculations are performed based on the Company s interpretation of current tax laws and regulations. These calculations which support the tax return may be subjected to review and approval by the local tax authority. As a result, certain transactions may be challenged by the local tax authorities and the Company may be assessed additional taxes, penalties and interest. Impairment of trade receivable Receivables from customers 120 days overdue, as well as all other receivables for which it is assessed that they will not be collected, a correction of value in a full amount of due but non-collectable receivables is formed. Inventories Impairment allowance is recognized when it is assessed that their carrying value is to be reduced to their net market value. Inventories found to be damaged are written off in full. Impairment allowance impairment of inventories is carried out for material and spare parts which have not been used for a longer period. 28