Consolidated financial statements For the year ended 31 December 2013
Open stock holding power company Barki tojik
Consolidated financial statements
For the year ended December 31, 2013
A statement of management's responsibility for the preparation and approval of the consolidated financial statements for the year ending 31 December 2013 of
Management of Open Stock Holding Power Company Barki Tojik (hereinafter – “the Company”) and its subsidiaries (hereinafter – “the Group”) is responsible for the preparation of the consolidated financial statements that present fairly the financial position of the Group as at 31 December 2013, and the results of its operations, cash flows and changes in shareholder’s equity for the year then ended, in compliance with International Financial Reporting Standards (“IFRS”).
In preparing the consolidated financial statements, management is responsible for:
- properly selecting and applying accounting policies;
- presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's consolidated financial position and financial performance;
- making an assessment of the Group's ability to continue as a going concern.
Management is also responsible for:
- designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;
- maintaining adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply with IFRS;
- maintaining statutory accounting records in compliance with the legislation of the Republic of Tajikistan and IFRS;
- taking such steps as are reasonably available to them to safeguard the assets of the Group; and
- detecting and preventing fraud and other irregularities.
The consolidated financial statements of the Group for the year ended 31 December 2013 were approved by management on 28 July 2014.
On behalf of the Management:
______________________________ ______________________________
Rakhmatzoda R.M. Khasanov B.
Chairman Chief Accountant
28 July 2014 28 July 2014
Dushanbe Dushanbe
Republic of Tajikistan Republic of Tajikistan
Independent auditors' report
To the Shareholder of Open Stock Holding Power Company Barki Tojik:
We were engaged to audit the accompanying consolidated financial statements of Open Stock Holding Power Company Barki Tojik (“the Company”) and its subsidiaries (“the Group”), which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of profit and loss and other comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on conducting the audit in accordance with International Standards on Auditing. Because of the matters described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.
Basis for disclaimer of opinion
As at 31 December 2013, property, plant and equipment are carried in the consolidated statement of financial position at 5,050,251 thousand Somoni. In 2010 the Group performed valuation of these assets in accordance with state valuation methodology. As a result of this revaluation the book value of the property, plant and equipment increased by 1,802,319 thousand Somoni. In the absence of an internationally accepted valuation report prepared by independent valuations experts, we were unable to obtain sufficient appropriate audit evidence about the valuation of the property, plant and equipment. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.
Due to the inadequacy of the accounting system and the underlying accounting records, we were unable to satisfy ourselves as to the following items and its cash flows (all amounts are in thousands of Tajik Somoni – TJS):
- Long-term investments of TJS 182,512 as at 31 December 2013;
- Deferred tax assets of TJS 111,034 as at 31 December 2013;
- Inventory of TJS 1,150,853 as at 31 December 2013;
- Trade and other receivables of TJS 453,653 as at 31 December 2013;
- Prepayments of TJS 264,433 as at 31 December 2013;
- Retained earnings of TJS 25,110 as at 31 December 2013;
- Deferred revenue of TJS 1,823,831 as at 31 December 2013;
- Long-term liabilities of TJS 1,048,405 as at 31 December 2013;
- Short-term debt of TJS 1,225,441 as at 31 December 2013;
- Short-term accrued liabilities of TJS 1,442,797 as at 31 December 2013;
- Trade and other payables of TJS 1,137,902 as at 31 December 2013;
- Prepayments received and other accounts payable of 105,652 as at 31 December 2013;
- Revenue of TJS 1,227,977 for the year ended 31 December 2013;
- Cost of sales of TJS 599,635 for the year ended 31 December 2013;
- Selling expenses of TJS 607,347 for the year ended 31 December 2013;
- General and administrative expenses of TJS 350,844 for the year ended 31 December 2013;
- Net foreign exchange loss of TJS 16,154 for the year ended 31 December 2013;
- Other expenses of TJS 25,340 for the year ended 31 December 2013;
- Finance income of TJS 169,544 for the year ended 31 December 2013;
- Finance costs of TJS 408,593 for the year ended 31 December 2013;
- Income tax benefit of TJS 26,842 for the year ended 31 December 2013.
Disclaimer of opinion
Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the consolidated financial statements.
28 July 2014
Dushanbe
Republic of Tajikistan
Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
(in thousand Tajik Somoni)
|
Notes |
31 December 2013 |
|
31 December 2012
|
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
7 |
5,050,251 |
|
4,811,585 |
Intangible assets |
8 |
213 |
|
237 |
Long-term accounts receivable |
9 |
1,303 |
|
49,012 |
Long-term investments |
10 |
182,512 |
|
182,512 |
Deferred tax assets |
23 |
111,034 |
|
69,597 |
Other long-term assets |
|
18 |
|
30 |
Total non-current assets |
|
5,345,331 |
|
5,112,973 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventory |
11 |
1,150,853 |
|
818,884 |
Trade and other receivables |
12 |
453,653 |
|
267,772 |
Prepayments |
13 |
264,433 |
|
101,347 |
Current income tax assets |
23 |
- |
|
2,682 |
Cash and cash equivalents |
14 |
3,001 |
|
9,412 |
Total current assets |
|
1,871,940 |
|
1,200,097 |
TOTAL ASSETS |
|
7,217,271 |
|
6,313,070 |
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
15 |
383,836 |
|
383,836 |
Foreign exchange differences from translation of foreign subsidiaries |
|
(9) |
|
(9) |
Retained earnings |
|
25,110 |
|
608,660 |
Reserves |
16 |
24,302 |
|
24,302 |
Total equity |
|
433,239 |
|
1,016,789 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current liabilities |
|
|
|
|
Deferred revenue |
21 |
1,823,831 |
|
1,803,099 |
Long-term liabilities |
22 |
1,048,405 |
|
1,078,580 |
Total non-current liabilities |
|
2,872,236 |
|
2,881,679 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Short-term debt |
17 |
1,225,441 |
|
691,912 |
Short-term accrued liabilities |
18 |
1,442,797 |
|
946,494 |
Current income tax payable |
|
4 |
|
- |
Trade and other payables |
19 |
1,137,902 |
|
663,863 |
Prepayments received and other accounts payable |
20 |
105,652 |
|
112,333 |
Total current liabilities |
|
3,911,796 |
|
2,414,602 |
Total liabilities |
|
6,784,032 |
|
5,296,281 |
TOTAL EQUITY AND LIABILITIES |
|
7,217,271 |
|
6,313,070 |
On behalf of the Management:
________________________ ___________________________
Rakhmatzoda R.M. Khasanov B.
Chairman Chief Accountant
28 July 2014 28 July 2014
Dushanbe Dushanbe
Republic of Tajikistan Republic of Tajikistan
The notes on pages 9-49 form an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income
CONSOILDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
(in thousand Tajik Somoni)
|
Notes |
Year ended 31 December 2013 |
|
Year ended 31 December 2012 |
|
|
|
|
|
Revenue |
24 |
1,227,977 |
|
1,099,377 |
Cost of sales |
25 |
(599,635) |
|
(519,045) |
Gross profit |
|
628,342 |
|
580,332 |
|
|
|
|
|
Selling expenses |
26 |
(607,347) |
|
(479,645) |
General and administrative expenses |
27 |
(350,844) |
|
(161,146) |
Foreign exchange (loss)/gain, net |
|
(16,154) |
|
12,907 |
Other gains and losses |
28 |
(25,340) |
|
(25,264) |
Finance income |
29 |
169,544 |
|
118,845 |
Finance costs |
29 |
(408,593) |
|
(346,879) |
Loss before tax |
|
(610,392) |
|
(300,850) |
|
|
|
|
|
Income tax benefit/(expense) |
23 |
26,842 |
|
(30,720) |
Net loss |
|
(583,550) |
|
(331,570) |
|
|
|
|
|
Total comprehensive loss |
|
(583,550) |
|
(331,570) |
|
|
|
|
|
On behalf of the Management:
______________________________ _____________________________
Rakhmatzoda R.M. Khasanov B.
Chairman Chief Accountant
28 July 2014 28 July 2014
Dushanbe Dushanbe
Republic of Tajikistan Republic of Tajikistan
The notes on pages 9-49 form an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
(in thousand Tajik Somoni)
|
|
|
Share capital |
|
Reserves |
|
Retained earnings |
|
Foreign exchange differences from translation of foreign subsidiaries |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2012 |
|
|
383,836 |
|
24,302 |
|
940,230 |
|
(9) |
|
1,348,359 |
Total comprehensive loss for the year |
|
|
- |
|
- |
|
(331,570) |
|
- |
|
(331,570) |
Balance at 31 December 2012 |
|
|
383,836 |
|
24,302 |
|
608,660 |
|
(9) |
|
1,016,789 |
Total comprehensive loss for the year |
|
|
- |
|
- |
|
(583,550) |
|
- |
|
(583,550) |
Balance at 31 December 2013 |
|
|
383,836 |
|
24,302 |
|
25,110 |
|
(9) |
|
433,239 |
On behalf of the Management:
______________________________ _____________________________
Rakhmatzoda R.M. Khasanov B.
Chairman Chief Accountant
28 July 2014 28 July 2014
Dushanbe Dushanbe
Republic of Tajikistan Republic of Tajikistan
The notes on pages 9-49 form an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
(in thousand Tajik Somoni)
|
Notes |
Year ended 31 December 2013 |
|
Year ended 31 December 2012 |
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITY: |
|
|
|
|
|
|
|
|
|
Sales proceeds |
|
928,045 |
|
820,535 |
Other income from operations |
|
22,167 |
|
28,623 |
TOTAL CASH INFLOW FROM OPERATING ACTIVITY |
|
950,212 |
|
849,158 |
|
|
|
|
|
Cost of sales |
|
(493,105) |
|
(524,478) |
Payroll and social tax |
|
(206,168) |
|
(190,661) |
Payment for services |
|
(64,799) |
|
(39,790) |
Interest payment |
|
(144,564) |
|
(40,227) |
Income tax payment |
|
(41,103) |
|
(52,684) |
Other taxes payment |
|
(188,792) |
|
(143,930) |
Other operating payments |
|
(55,959) |
|
(124,528) |
TOTAL CASH OUTFLOW FROM OPERATING ACTIVITY |
|
(1,194,490) |
|
(1,116,298) |
CASH OUTFLOW FROM OPERATING ACTIVITY |
|
(244,278) |
|
(267,140) |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITY: |
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment |
|
(3,691) |
|
(2,106) |
TOTAL CASH OUTFLOW FROM INVESTING ACTIVITY |
|
(3,691) |
|
(2,106) |
NET CASH OUTFLOW FROM INVESTING ACTIVITY |
|
(3,691) |
|
(2,106) |
OPEN STOCK HOLDING POWER COMPANY BARKI TOJIK
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2013
(in thousand Tajik Somoni)
|
Notes |
Year ended 31 December 2013 |
|
Year ended 31 December 2012 |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
554,314 |
|
372,180 |
Repayment of borrowings |
|
(314,239) |
|
(112,898) |
NET CASH INFLOW FROM FINANCING ACTIVITY |
|
240,075 |
|
259,282 |
|
|
|
|
|
Effect of exchange rate changes on the balance of cash held in foreign currencies |
|
1,483 |
|
(149) |
Net change in cash and cash equivalents |
|
(6,411) |
|
(10,113) |
|
|
|
|
|
CASH AND CASH EQUIVALENTS at the beginning of the year |
15 |
9,412 |
|
19,525 |
|
|
|
|
|
CASH AND CASH EQUIVALENTS at the end of the year |
15 |
3,001 |
|
9,412 |
On behalf of the Management:
______________________________ _____________________________
Rakhmatzoda R.M. Khasanov B.
Chairman Chief Accountant
28 July 2014 28 July 2014
Dushanbe Dushanbe
Republic of Tajikistan Republic of Tajikistan
The notes on pages 9-49 form an integral part of these consolidated financial statements.
1. GENERAL INFORMATION
Open Stock Holding Power Company Barki Tojik (hereinafter the “Company”) was registered in the Ministry of Justice of the Republic of Tajikistan on 3 June 1999. The Company and its subsidiaries (the “Group”) carry out its activity in the Republic of Tajikistan. The Group is a stock company and was established in accordance with the legislation of the Republic of Tajikistan.
Group's principal activity is the generation, transmission and distribution of electricity and heat in the Republic of Tajikistan. The Group also sells electricity to neighboring countries due to its operational needs. Electricity is generated on six hydropower stations, which are the structural units of the Group. Operating activity of the Group is regulated by the Law of the Republic of Tajikistan “On natural monopolies” (hereinafter the “Law”), as the Group is the dominant in the generation and supply of electricity power in the Republic of Tajikistan. In accordance with the Law, tariffs of the Group must be coordinated and agreed with the Agency for regulation of natural monopolies of the Republic of Tajikistan (hereinafter the “Agency”). The main customers are SUE Tajik Aluminum Company, OJSC Azot, Tojikazot, Tojikkimiesanoat, OJSC Pamir Energy Company and the population of the Republic of Tajikistan.
Company’s Head office is located at: Republic of Tajikistan, Dushanbe, I. Somoni ave, 64.
As at 31 December 2013 and 2012, the sole shareholder of the Company is the Government of the Republic of Tajikistan. Ultimate control of the Group is carried out by the Government of the Republic of Tajikistan.
Property of the Group was formed from the assets which were on the books of State Joint-Stock Holding Company Barki Tojik. The Group is the owner of the property transferred to it by the founder, other than the property of legal entities listed as joint-stock companies, state enterprises, organisations and institutions under the management of the Group.
Open Stock Holding Power Company Barki Tojik is the holder of shares of joint-stock companies, granted by the Government of the Republic of Tajikistan, operating in the electricity sector and performs the right of possession, use and disposition of property, businesses and institutions, given for management in accordance with the article 232 of the Civil Code of the Republic of Tajikistan.
The property of the Group includes the following branches and representative offices:
Nurek branch |
Nurek hydropower station |
Baipaza branch |
Baipaza hydropower station |
Varzob branch |
Cascade and Varzob hydropower stations |
Vakhsh branch |
Cascade and Vakhsh hydropower stations |
Kairakkum branch |
Kairakkum hydropower station |
Dushanbe branch |
Central electric networks |
Kayrakkum branch |
Leninabad electric networks |
Khujand branch |
Khujand electric networks |
Rasht branch |
Rasht electric networks |
Kurgan Tube branch |
Kurgan Tube city electric networks |
Chkalovsk branch |
Chkalovsk city electric networks |
Representation of OSHPC Barki Tojik in the Russian Federation |
|
The following organisations are under control of the Group:
OJSC Shabakahoi Barkii Istaravshan |
OJSC Shabakahoi Barkii Panjakent |
OJSC Shabakahoi Barkii Shahri Dushanbe |
OJSC Shabakahoi Barkii Shahri Kulob |
OJSC Shabakahoi Barkii Kulob |
OJSC Shabakahoi Barkii Tursunzoda |
OJSC Shabakahoi Barkii Janubi |
OJSC Dushanbinskiy Heat Station |
OJSC Shabakahoi Barkii Yavon |
OJSC Remontno-Mekhanicheskiy Zavod |
OJSC Shabakahoi Barkii Janubi |
OJSC Shabakahoi Barkii Isfara |
OJSC Yavanskaya Heat Station |
ОJSC Logistical Utility Tajikenergosnab |
The Group has a subsidiary – Limited Liability Company Bark Kimgan. Share of the Group in the share capital of the subsidiary is 100%.
Number of Group’s personnel for 2013 and 2012 in average was 13,009 and 13,328, respectively.
These consolidated financial statements were authorised for issue by the Group’s management on 28 July 2014.
2. CURRENT ECONOMIC ENVIRONMENT
Emerging markets such as Tajikistan are subject to different risks than more developed markets, including economic, political and social, and legal and legislative risks. Laws and regulations affecting businesses in Tajikistan continue to change rapidly, tax and regulatory frameworks are subject to varying interpretations. The future economic direction of Tajikistan is heavily influenced by the fiscal and monetary policies adopted by the government, together with developments in the legal, regulatory, and political environment.
Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for revaluation of property, plant and equipment and certain financial instruments. The principal accounting policies applied in preparation of the consolidated financial statements are set out below. These accounting policies were consistently applied in all periods covered in this consolidated financial statements, unless otherwise stated.
These consolidated financial statements have been prepared on the historical cost basis except for the following lines:
- Long term financial liabilities at amortised cost;
- Fixed assets and construction in progress are based on historical cost basis, which includes the revaluations performed based on Decree of the Government of the Republic of Tajikistan based on coefficients and instructions, prepared by the Government of the Republic of Tajikistan, aimed to reflect inflation.
Going concern
These consolidated financial statements have been prepared on the assumption that the Group is a going concern and will continue its operation for the foreseeable future. The management and shareholder have the intention to further develop the Group’s activities in the Republic of Tajikistan. The Group is owned by the Government of the Republic of Tajikistan and generates, distributes and sells electricity in Tajikistan. Electricity remains the key element for the economy of Tajikistan, as well as fundamental for the Government’s social and economical objectives.
Based on above, the Management believes that the going concern assumption is appropriate for the Group due to its sufficient capital and continuing financing from the sole shareholder of the Group.
Functional and presentation currency
The functional currency of each of the Group’s consolidated entities is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and the Group’s presentation currency is national currency of the Republic of Tajikistan Tajik Somoni (“Somoni”).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries), which are recorded as branches for the purpose of the consolidated financial statements as at 31 December 2013 and 2012.
The subsidiary is consolidated from the date of acquisition, which is the date when control is achieved over the subsidiary, and discontinued from consolidation when the control is transferred. The consolidated financial statements of the subsidiaries is prepared for the same period as for the Company, based on consistently applied accounting policy for all branches of the Company.
Changes in ownership of subsidiaries without loss of control are treated as transactions equity. If the Group transfers the control over the subsidiary the following is reflected:
- discontinues recognition of assets and liabilities of the subsidiary;
- records the fair value of proceeds received in exchange;
- records fair value of outstanding portion of the investment;
- records gains or losses in statement of comprehensive income;
- reclassifies interest of the Company in subsidiaries, recognised in other comprehensive income before to statement of comprehensive income or retained earnings in accordance with particular requirements.
The consolidated financial statements of the subsidiaries is prepared for the same period as the Company, based on consistently applied accounting policy for all branches of the Company.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Significant accounting policies
The significant accounting policies applied by the Group in preparation of the consolidated financial statements are stated below:
Foreign currency transactions
The functional currency of the Company and the Group’s presentation currency is national currency of the Republic of Tajikistan Tajik Somoni (“Somoni”). The Group applies direct method of consolidation, and upon disposal of foreign investment performs the reclassification of gains and losses from translation differences to statement of comprehensive income.
|
31December 2013 |
31 December 2012 |
|
|
|
Somoni / USD |
4.7741 |
4.7644 |
Somoni / EUR |
6.5772 |
6.3009 |
Somoni / Russian Rouble |
0.1446 |
0.1571 |
Transactions in foreign currency are initially recognised by the companies of the Group in functional currency at exchange rate at the date of transaction.
Monetary assets and liabilities denominated in foreign currency are revalued at spot rate of functional currency effective at the reporting date.
All foreign currency differences are transferred to statement of comprehensive income.
Non-monetary lines at historical cost in foreign currency, are recognised at exchange rate effective at the date of initial transaction. Non-monetary lines at revalued method in foreign currency are recognised at the exchange rate effective at the date of consideration of fair value. Gains and losses arising from non-monetary items are treated same as gains and losses from foreign currency transactions (foreign exchange differences on lines, gains and losses for which are recognised in other comprehensive income and added to other comprehensive income, for lines of gains and losses, which are recorded in gains and losses – in gains and losses).
Assets and liabilities in foreign investments are translated to Somoni at the exchange rate effective at the reporting date, and statement of comprehensive income of such subsidiaries, are recorded at the rate effective on the date of transaction. Translation differences arising from such treatment are recorded in other comprehensive income. Upon disposal of foreign investment the component of other comprehensive income, related to this foreign investment are transferred to consolidated statement of comprehensive income.
Revenue recognition
Revenue is recognised only if inflow of economic benefits to the Group is probable, and if revenue can be reliably measured, despite of the timing of cash proceeds. The revenue is measured at fair value of the consideration received or receivable, in accordance with contractual terms of payments.
Electricity sales
Electricity sales revenue is recognised when customers on post-paid metering are billed for the power consumed. The billing is done for each monthly billing cycle based on the units consumed as read on the customers’ electricity meters and the approved customer tariffs.Electricity sales revenue is recognised in the financial statements net of Valued Added Tax (VAT).
Interest income
Interest income and expense on financial instruments held at amortised cost, and interest bearing financial assets, classified as held-for-sale are recognised based on effective interest rate method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition. The interest income is added to finance income in the consolidated statement of comprehensive income.
Taxes
Current income tax
Current tax assets and liabilities for the current period as measured at recoverable from or payable to taxation authorities. The tax rates and tax legislation applied for calculations are the rates and legislation accepted or factually adopted as at reporting date in the countries, where the Group performs its activities and has taxable income.
Deferred taxes
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are recognised for all taxable temporary differences, except for cases when:
- Deferred tax liabilities arising at initial recording of goodwill, asset or liability as a result of transaction other than business combination, and at transaction date does not impact accounting profit nor taxable profit or loss;
- Taxable temporary differences in respect of investments in subsidiaries, associates, as well as interest in joint ventures, and if possible to control distribution by periods related to recoverability of temporary differences, and there is high probability of recovery of temporary difference in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, unused tax incentives and unused tax losses, to the extent of highly probable upcoming profits, against which the recovery of deductible temporary differences, unused tax incentives and unused tax losses will take place, except for:
- Deferred tax asset, related to temporary difference as a result of initial recognition of asset or liability arising from business combinations, which at the date of transaction does not impact accounting nor tax profit or losses;
- Deductible temporary differences as a result of investments in subsidiaries, associated companies, as well as interest in joint venture where the deferred tax assets are recognised to the extend of highly probable upcoming profits, against which the recovery of deductible temporary differences, unused tax incentives and unused tax losses will take place.
The book value of deferred tax assets is reviewed at each reporting date and decreased to the extent of sufficient profits, which will allow to use all or part of the deferred tax assets, are assessed as unlikely. Deferred tax assets not recognised in the statements are reviewed at each reporting date and are recognised to the extent, when there is high probability of upcoming profits, allowing to recover such tax assets.
Deferred tax assets and liabilities are valued at tax rates, which are expected to be applied in the period, when such asset will be recovered or liability settled at tax rates (tax regulation), which were accepted or factually adopted at the reporting date.
Deferred tax, related to the components other than statement of comprehensive income, as also not recorded in statement of comprehensive income. The deferred taxes are recognised in accordance with underlying transactions or in as a component of other comprehensive income, or directly on equity.
Deferred tax assets and deferred tax liabilities are offset only if there are legal right for offset of current income tax assets and liabilities, and deferred taxes are related to the same company and tax authority.
Property, plant and equipment
The equipment is held at revalued amount less accumulated depreciation and/or accumulated loss from impairment, if any. This cost includes cost of replaced spare parts, as well as borrowing costs, in case of long term construction projects, when certain criteria are met. When there is a need for significant component replacement within defined period the Group disposes the replaced component and recognizes new components in accordance with useful life and depreciation. Expenses related to major technical check are included to the cost of the asset, as replaced equipment, when related criteria are met. All other expenses for maintenance are included in the consolidated statement of comprehensive income as incurred.
The buildings are held at revalued amount less accumulated depreciation and impairment losses.
Depreciation is charged at straight line method during the useful life of the asset:
Property, plant and equipment group |
Useful life (years) |
|
|
1. Building |
80-100 |
2. Constructions |
|
- Transmission equipment |
50-80 |
3. Machinery and equipment |
|
- Hydro turbines |
50-80 |
- Electronic equipment |
10-50 |
- Production equipment |
10-80 |
4. Other fixed assets |
|
- Vehicles |
5-15 |
- Office equipment |
5-10 |
- Furniture and appliances |
10-15 |
- Leasehold improvements |
5-20 |
- Land improvements |
5-20 |
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss, and presented in the consolidated statement of comprehensive income for the period, when derecognition took place.
The useful life term and depreciation method are annually reassessed, and adjusted if needed.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as expenses, in the period when such expenses incurred. Borrowing costs include the payment for interest and other expenses, incurred by the Group in respect of borrowings.
Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost. Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired are recorded at cost less accumulated amortisation and accumulated impairment losses (if any). Internally generated intangible assets, except for development costs included to the cost of an asset, and related expenses included in the consolidated statement of comprehensive income in the period, when incurred.
The useful life of intangible assets can be definite or indefinite.
Intangible assets with definite useful life are amortised during the period of this period and subject for impairment assessment if such indicators exist. The period and amortisation method for all intangible asset with definite useful life are reassessed at least at each reporting date. Changes in estimated useful life or structure of inflow of future benefits inherent to the asset are added to the consolidated financial statements as changes in period and method of amortisation, depending on situation, and disclosed as changes in estimates. The amortisation expenses for intangible assets with definite useful life recognised in the consolidated statement of comprehensive income in the category, which relates to the function of the intangible asset.
Intangible assets with indefinite useful life are not amortised, rather tested separately for impairment on an annual basis.
The useful life term of intangible assets with indefinite useful life is reviewed on an annual basis in order to determine whether it is reasonable to continue classify the asset as intangible asset with indefinite useful life. If it is not acceptable, the change in useful life of an asset is prospectively changed from indefinite to definite.
Gains and losses from disposal of intangible assets are measured as difference from proceeds and book value of the asset and recognised in the consolidated statement of comprehensive income at the date of disposal of use asset.
Patents and licenses
Patents are issued for the period of 10 years by the relevant state body with a right to prolong. License on right for intellectual property issued from 5-10 years, depending on type of license.
Licenses can be prolonged in the end of the term, if the Group will comply with preset conditions. Prolongation can be maid for notional fee or free of charge. Therefore the useful life of these licenses is treated as indefinite.
Financial instruments – initial recognition and subsequent measurement
(а) Financial assets
Initial recognition and measurement
Financial assets within the scope of IAS 39 are classified into the following specified categories: financial assets ‘at fair value through profit or loss' (FVTPL), financial assets and ‘loans and receivables', ‘held-to-maturity' investments, ‘available-for-sale' (AFS). The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
Financial assets initially recognised at fair value plus, in case of investments not at fair value through profit or loss, the transaction costs.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. Financial assets of the Group includes the cash and short term deposits, trade and other receivables, loans and other amounts receivables and unquoted financial instruments.
Subsequent measurement
Subsequent measurement of financial assets is subject of its classification in a following way:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Amortised cost includes the discounts and premiums at acquisition, as well as commissions or other fees, which are integral part of the effective interest rate method. Amortisation based on effective interest rate method is included in finance income in the consolidated statement of comprehensive income. Expenses related to impairment are recorded in the consolidated statement of comprehensive income as finance cost.
Short-term trade receivables are recoded at cost less bad debt reserve.
Available-for-sale financial assets (AFS financial assets)
Available-for sale financial assets include equity and promissory notes. Equity investments classified as available-for-sale are the investments, are those not classified as held for trading, nor at fair value through profit or loss. Promissory notes within this category are instruments without defined term of sale and can be sold for liquidity purposes as a result of changing market conditions.
Subsequent to initial recognition the financial investments available-for-sale are measured at fair value, and resulting gains and losses are recorded as component of other comprehensive income as reserve for available-for-sale instruments. The instrument is held within this classification until derecognition or impairment adjustment, upon which the accumulated gains and losses from reserve on available-for-sale investments are reclassified to other operating gains and losses of statement of comprehensive income. Interest income on promissory notes available-for-sale are recorded at effective interest rate method and added to the statement of comprehensive income.
The Group has assessed its financial assets, available-for-sale for assumption of ability an intention to sell in the foreseeable future.
Derecognition
Derecognition of financial asset (or if applicable –part of the financial asset or part of the group of financial assets) performed if:
- The rights for cash proceeds and asset matured;
- The Group has transferred its rights for cash proceeds from the asset, or has accepted the liability to perform the payment to the third party in full and without any delays; or if (a) the Group has transferred substantially all risks and rewards from such asset, or (b) Group did not transfer, but also did not retain risks and rewards from such asset, therefore transferred the control over such asset.
If the Group has transferred all rights for cash proceeds from asset, or has concluded an agent agreement, but did not retain all risks and rewards from such asset, as well as did not transfer control over such asset, the new asset is recognised to the extend the Group continues its participation in the asset.
In this case the Group also recognizes related liabilities. The transferred asset and related liabilities are valued based rights and liabilities retained by the Group.
The continuous participation in form of guarantee on asset transferred is recognised at lower of initial book value and maximum possible amount to be claimed from the Group.
Impairment of financial instruments
At each reporting date the Group performs the assessment of indicators of impairment of financial asset or group of financial assets. Financial asset or group of financial assets can be impaired if, and only if, when there is a reliable evidence of impairment as a result of one of number of events taking place subsequent to initial recognition (the “event resulting the loss”), which resulted the impact, which can be reliably measured, on expected future cash flows of the financial asset or group of financial assets. The indicators of impairment can include the fact that debtor or group of debtors are experiencing insolvency issues, and cannot repay the debt or has delays is repayment of interest or principal amount of debt, as well as probability of insolvency and upcoming liquidation process or financial restructuring. Moreover, such indicators include observable evidence, indicating existence of reliably measured decrease in expected cash flows of the financial instrument, in particular, the changes in overdue debts or economic environment, which has certain dependencies with defaults in repayments of debt.
Financial assets recorded at amortised cost
The Group performs the assessment of indicators of impairment financial assets recorded at amortised cost if individually significant or if individually insignificant, than by groups. If the Group identifies the reliable evidence of absence of impairment, despite of the significance, such asset is included in the group of financial assets with similar characteristic of credit risk, and subsequently reviews this group for impairment indicators in aggregate. Assets, individually assessed as impaired are not included in aggregate assessment of the group for impairment.
When there is reliable evidence of incurred losses from impairment, the amount of loss is recognised as a difference of book value and discounted expected future cash flows (without expected future credit losses not yet incurred).
Present value of expected future cash flows are discounted at initial effective interest rate of the financial asset. If the interest rate of borrowing is a floating rate, the discount rate for impairment loss calculation is current effective interest rate.
The book value of the asset decreases through reserve account, and amount of loss added to the consolidated statement of comprehensive income. Accrual of interest income on decreased book value continued based on rate, used for discounting future cash flows for the purpose of assessing losses from impairment. Interest income is included in financial income in the consolidated statement of comprehensive income. Loans along with related provisions are not included in the consolidated statement of financial position if there is not evidence of recoverability of such and all available security was sold or transferred to the Group. If during the subsequent period the amount of calculated losses from impairment increases or decreases as a result of an event taking place after recognition of impairment, the amount of losses recognised increase or decrease by means of reserve account adjustment. If the subsequently the write-off of value of financial asset recovers, the amount of recovery recognised as decrease of finance costs in the consolidated statement of comprehensive income.
Financial investments, available-for-sale
The Group performs the annual assessment for impairment indicators for the investments held-for-sale.
If the investments in equity instruments, classified as available-for-sale, the reliable evidence of impairment would be significant and continuous decrease in fair value of the investment below its initial acquisition cost. The significance is measured in comparison to initial acquisition cost, continuous means the comparison to the period, when decrease below initial acquisition cost took place. When reliable evidence of impairment is identified the amount of comprehensive loss, calculated as difference of book value and current fair value, less any other impairment loss recognised in the statement of comprehensive income, the loss is reclassified from other comprehensive income to the consolidated statement of comprehensive income.
The promissory notes classified as available-for-sale are subject of same impairment criteria applied to financial assets recorded at amortised cost. However the amount of impairment loss recognised is the difference of amortised cost and current fair value, less accumulated impairment loss for this investment, recognised previously in the consolidated statement of comprehensive income.
Accrual of interest income on decreased book value continued based on rate, used for discounting future cash flows for the purpose of assessing losses from impairment. Interest income is included in financial income in the consolidated statement of comprehensive income. If during the subsequent period the fair value of the promissory note will increase and this increase can be reliably tied with event taking place after initial loss recognition in the consolidated statement of comprehensive income, the impairment losses are recovered in profit and loss.
(b) Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit and loss and borrowings. Group classifies the financial liabilities at initial recognition.
Financial liabilities initially recorded at fair value and in case of borrowings and loans, which are recorded at amortised costs its initial recognition includes the transaction costs directly related to issue and acquisition.
Financial liabilities of the Group include the trade and other accounts payable, loans and borrowings.
Subsequent measurement
Subsequent measurement of financial liabilities depends on classification as follows:
Loans and borrowings
Subsequent to initial recognition interest bearing loans and borrowings are measured at amortised cost based on effective interest method. Gains and losses resulting from these instruments included in consolidated statement of comprehensive income at derecognition, as well as amortizing at effective interest rate.
Amortised cost includes the discounts and premiums at acquisition, as well as commissions or other fees, which are integral part of the effective interest rate method. Amortisation based on effective interest rate method is included in finance income in the consolidated statement of comprehensive income.
Derecognition
The financial liabilities in consolidated statement of financial position is derecognised when liability is settled, cancelled or the matured.
If the existing financial liability is substituted by another liability with the same counterparty with substantially different terms, or if existing liability terms are substantially changed, than such change is treated as derecognition of initial instrument and recognition of the instrument, and difference of book value are recorded in consolidated statement of comprehensive income.
(c) Offset of financial instruments
Financial assets and financial liabilities are offset and net amount is presented in the consolidated statement of financial position if, and only if there is existing contractual and legal right to offset these instruments, as well as intention to recognize as net amount, or dispose assets simultaneously with liabilities.
(d) Fair value of financial instruments
Fair value of financial instruments, which are quoted on active marketplace at each reporting date, determined based on market quotes or dealer quotes (quotes for bid for long position and quotes for ask for short position), without transaction costs consideration.
Financial instruments which are not quoted on an active marketplace the fair value is determined based on application of valuation methods. These methods include use of prices recently performed transactions based on market conditions, use of current fair value of similar instruments, analysis of discounted cash flows and other valuation models.
Inventories
Expenses incurred to deliver and bring to the condition ready for use are treated as follows:
Materials and inventories are carried at:
- cost for purchases under FIFO costing method.
Impairment of non-financial assets
The Group performs the assessment of impairment indicators of the assets at each reporting date. If such indicators exist or if there is a requirement to perform impairment test, than Group perform the assessment of recoverability of asset. The recoverable amount of the asset or component, generating cash flows (“CGI”) is higher of fair value of the asset (CGI) less cost to sell and value in use of the asset (CGI). Recoverable amount is determined for separate asset, except for cases, when such asset does not generate cash flows, which dependent on cash flows generated by other assets or group of assets. If the book value of the asset or CGI exceeds its recoverable amount, the asset is impaired and written off to recoverable amount. When estimated value in use future cash flows are discounted at the discount rate before taxation, which reflects the current market estimate of time value of money and risks related to the asset. When determining fair value of the asset less cost to sell recent market deals (if any) are taken into account. If no such information is available, appropriate valuation model is used. These calculations are supported by valuation coefficients, market prices of freely convertible shares of the subsidiaries or other available indicators of the fair value.
If the book value of the asset or CGI exceeds its recoverable amount, the asset is considered as impaired and written down to recoverable amount. Under assessment of value in use the future cash flows are discounted at the rate net of tax, which reflects the present market value of cash flows and risks inherent to the asset. Under assessment of the fair value less cost to sell, the recent market transactions (if were existent) are taken into consideration. If no such transaction took place the relevant valuation model is applied. These computations are supported by estimated coefficients, active market quotes of subsidiaries shares and other available indicators of fair value.
Impairment losses from ongoing activities (including inventory impairment) are included in the consolidated statement of comprehensive income as a component of those expenses, which are related to the function of the asset, except for previously revalued real estate if revaluation was recognised in other comprehensive income. In such cases the impairment loss is deducted from other comprehensive income to the extent the revaluation gain was recognised.
The Group performs assessment of indicators whether indicators of impairment loss still exist or decreased on an annual basis. If such indicator exist the Group assess the recoverable amount of the asset or cash generating component. Previously recorded impairment losses recovered only if the changes in applied estimate of the recoverability of the asset, since most recent impairment loss recorded. The recovery is limited to the book have not exceeding its recoverable amount, as well as not exceeding book value less depreciation, which would be charged if such impairment loss would not be recorded. This recovery of loss is included in the statement of comprehensive income.
Cash and short term deposits
Cash and short term deposits in the consolidated statement of financial position include the cash in banks and petty cash.
Provisions
Provision are recorded if the Group has current liabilities (legal or constructive), as a result of the past events, with a probable outflow economic benefits required to settle liability, and such liability can be reliably measured. If the Group expects to recover all or part of the provisions, e.g. under insurance contracts, the recovery is recorded as a separate asset, but only when such recovery inflow is not doubted. Expenses, related to the provision, are added to the consolidated statement of comprehensive income less recovery.
Retirement benefits and other remunerations
The Group performs payments to Social Fund in accordance with pension scheme of the Republic of Tajikistan. The payments to social fund are fixed. The Group will not have any further legal or constructive liabilities to the Fund in relation to the retirement benefits if Fund will not have sufficient resources to perform payments to employees for services performed in current and previous years.
The Group performs fixed payments to State Social Fund amounting to 25% of salaries of the employees and recorded in the period as incurred. The Group does not have any other pension or other schemes or liabilities to perform pension payments to its employees.
4. CRITICAL ACCOUNTING ESTIMATES AND PROFESSIONAL JUDGEMENTS IN APPLYING ACCOUNTING POLICY
The Group makes estimates and assumptions that affect within the next financial period the amounts of assets and liabilities recognised in consolidated financial statements. Estimates and judgments are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgments, apart from those involving estimations, in the process of applying the accounting policies. Judgments that have the most significant impact on the figures recorded in the consolidated financial statements and estimates that can cause a significant adjustment to the carrying amounts of assets and liabilities within the next financial period include:
Significant accounting judgments, estimates and assumptions
The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions at the end of the reporting period that affect the amounts of revenue, costs, assets and liabilities, presented in statements. However, uncertainty of these assumptions and estimates could result outcomes, that could require in future material adjustments of book value of asset or liability in respect of which such assumptions and estimates are made.
Judgments
In the process of applying the Group’s accounting policy, management has used the following judgments, which have the most significant effect on the amounts recognised in the consolidated financial statements.
Estimates and assumptions
The key assumptions about the future and other key sources of estimation of uncertainty at the reporting date, which may cause significant adjustments of the carrying value of assets and liabilities during the next financial year, are discussed below. Assumptions and estimates are based on the Group’s source data, which it had at the time of preparation of the consolidated financial statements. However, current circumstances and assumptions regarding the future are subject to change due to market changes or circumstances beyond the control of the Group. Such changes are reflected in the assumptions as they occur.
Impairment of non-financial assets
Impairment occurs when the carrying amount of an asset or the cash-generating unit, exceeds its recoverable amount, which is the higher of fair value less costs to sell and value in use. The fair value less costs to sell is based on available information on commercial deals of sales of similar assets or observable market prices less incremental costs incurred in connection with the disposal of an asset. The calculation of value in use is based on a discounted cash flow model. Cash flows are taken from the budget for the next five years and do not include restructuring activity, in conducting of which the Group does not have obligations or significant investment in future, which will improve the asset tested for impairment of cash generating unit. The recoverable amount is most sensitive to the discount rate used in the discounted cash flow model, and also to the expected cash inflows and the growth rate, used for extrapolation. More information about the key assumptions used to determine the recoverable amount of the various units, generating cash, including sensitivity analysis, is provided in Note 31.
The fair value of financial statements
In cases when the fair value of financial instruments and financial liabilities recorded in the consolidated statement of financial position can not be derived from active markets, they are determined using valuation techniques, including discounted cash flow model. As a source data for these models is used information from observable markets, but in those cases where this is not feasible, a certain proportion of judgment is required to determine fair value. The judgments include considerations of such data as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the fair value of financial instruments, recognised in consolidated financial statements.
Useful lives of property, plant and equipment
The Group reviews the estimated useful lives of property and equipment at the end of each annual reporting period. During the financial year, Management of the Group did not change useful life of property, plant and equipment.
Market rate of borrowings received
As described in Note 22, the Group uses valuation techniques that include inputs that are not based on observable market date to estimate the fair value of long-term borrowings. Borrowings are discounted at 24% annual rate, which is considered the market rate by the Management of the Group.
5. NEW STANDARDS AND CHANGES IN EXISTING STANDARDS AND INTERPRETATIONS
Amendments to IFRSs affecting amounts reported in the financial statements
In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.
Standards affecting the financial statements
IFRS 13 Fair Value Measurement. The Company has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.
IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Company has not made any new disclosures required by IFRS 13 for the 2012 comparative period (please see Notes 6, 7 and 28 for the 2013 disclosures). Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the financial statements.
New and revised IFRSs in issue but not yet effective
The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective:
- IFRS 9 Financial Instruments
- Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures2
- Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities1
- Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities1
- Amendments to IAS 36 Impairment of Assets1
- Amendments to IAS 39 Financial Instruments: Recognition and Measurement1
- Amendments to IFRIC 21 Levies1
1 Effective for annual periods beginning on or after 1 January 2014, with earlier application permitted.
2 Effective for annual periods beginning on or after 1 January 2015, with earlier application permitted.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’.
The management of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Company's financial statements as the Company does not have any financial assets and financial liabilities that qualify for offset.
6. RELATED PARTY TRANSACTIONS
The parties are considered as related if one party can control the other party, under common control or can exercise significant influence over decision making process in relation to its operations or exercise joint control. Determining whether parties are related includes the assessment of relations of parties, and not only legal form. The information on the Company and ultimate shareholder of the Group are disclosed in Note 1.
For the purpose of these financial statements the Management of the Group and Group itself are related parties.
Remuneration paid to chairman and deputy chairmen for services as executive managers includes the salaries in accordance with staff schedule and bonuses for performance in accordance with Bonus Regulation. The remuneration to Management of the Group is performed based on time-bonus system.
For the year ended 31 December 2013 and 2012, remuneration to key management is presented as follows:
|
For the year ended
2013 |
For the year ended
2012 |
| ||
Salaries and bonuses |
192,245 |
377,222 |
Social fund payments |
48,061 |
94,305 |
Total |
240,306 |
471,527 |
Transactions with state entities
The disclosure exemptions introduced in IAS 24 (as revised in 2010) were applied as the Group a government-related entity. Therefore some government related parties, which previously met definition of related parties, were excluded from the scope of the Standard.
7. PROPERTY, PLANT AND EQUIPMENT
Changes of book value of property, plant and equipment is presentes below:
|
Building and construction |
|
Machinery and equipment |
|
Other fixed assets |
|
Construction in progress |
|
Total |
| |||||||||
INITIAL COST | |||||||||
| |||||||||
As at 31 December 2011 |
1,854,075 |
1,549,759 |
162,456 |
2,614,157 |
6,180,447 | ||||
| |||||||||
Additions |
3,154 |
16,414 |
4,235 |
300,196 |
323,999 | ||||
Internal transfers |
561,426 |
1,000,235 |
1,009 |
(1,562,670) |
- | ||||
Disposals |
(1,718) |
(4,753) |
(2,796) |
(36,640) |
(45,907) | ||||
| |||||||||
As at 31 December 2012 |
2,416,937 |
2,561,655 |
164,904 |
1,315,043 |
6,458,539 | ||||
| |||||||||
Additions |
- |
46,415 |
11,378 |
394,480 |
452,273 | ||||
Internal transfers |
37,477 |
148,522 |
3,855 |
(189,854) |
- | ||||
Disposals |
(1,209) |
(41,452) |
(3,240) |
- |
(45,901) | ||||
| |||||||||
As at 31 December 2013 |
2,453,205 |
2,715,140 |
176,897 |
1,519,669 |
6,864,911 | ||||
| |||||||||
ACCUMULATED DEPRECIATION | |||||||||
| |||||||||
As at 31 December 2011 |
859,398 |
608,677 |
75,689 |
- |
1,543,764 | ||||
| |||||||||
Depreciation for year |
32,656 |
61,865 |
12,704 |
- |
107,225 | ||||
Disposals |
(1,962) |
(1,863) |
(210) |
- |
(4,035) | ||||
| |||||||||
As at 31 December 2012 |
890,092 |
668,679 |
88,183 |
- |
1,646,954 | ||||
| |||||||||
Depreciation for year |
57,611 |
107,313 |
15,145 |
- |
180,069 | ||||
Disposals |
(1,129) |
(5,216) |
(6,018) |
- |
(12,363) | ||||
| |||||||||
As at 31 December 2013 |
946,574 |
770,776 |
97,310 |
- |
1,814,660 | ||||
| |||||||||
NET BOOK VALUE | |||||||||
As at 31 December 2013 |
1,506,631 |
1,944,364 |
79,587 |
1,519,669 |
5,050,251 | ||||
As at 31 December 2012 |
1,526,845 |
1,892,976 |
76,721 |
1,315,043 |
4,811,585 |
Plant, property and equipment and construction in progress are not insured.
The Group monitors the use of its assets, but as the sole shareholder of the Groups is the Government of the Republic of Tajikistan, Group can not independently dispose fixed assets without the permission of the State Committee on Investments and State Property Management of the Republic of Tajikistan.
In-kind contribution to the Group included assets in form of power electrical equipment and electricity transmission devices, injected by the Government of the Republic of Tajikistan.
The Group borrows funds specifically for acquisition of assets that meet certain requirements and determines the amount of borrowing costs eligible for capitalisation as the sum of the actual costs incurred on these loans during the period. During 2013 Group has capitalised 205,719 thousand Somoni to the cost of constructed assets.
8. INTANGIBLE ASSETS
|
Intangible assets |
| |
INITIAL COST | |
As at 31 December 2011 |
320 |
Additions |
3 |
| |
As at 31 December 2012 |
323 |
Additions |
11 |
| |
As at 31 December 2013 |
334 |
| |
ACCUMULATED AMORTISATION | |
As at 31 December 2011 |
53 |
Additions |
33 |
| |
As at 31 December 2012 |
86 |
Additions |
35 |
| |
As at 31 December 2013 |
121 |
| |
NET BOOK VALUE | |
Net book value as at 31 December 2013 |
213 |
| |
Net book value as at 31 December 2012 |
237 |
9. LONG-TERM ACCOUNTS RECEIVABLE
|
31 December 2013 |
31 December 2012 | |
| |||
Accounts receivable |
1,303 |
49,012 | |
| |||
Total |
1,303 |
49,012 |
As at 31 December 2013 and 2012, other long-term receivables include advances paid for construction of production facilities and equipment supply.
10. LONG-TERM INVESTMENTS
|
31 December 2013 |
31 December 2012 | |
| |||
Investment in Sangtuda-2 |
150,796 |
150,796 | |
Investment in Roghun HPS |
31,603 |
31,603 | |
Others |
113 |
113 | |
Total |
182,512 |
182,512 |
In 2006, the Group has signed agreement with OJSC Sangob on financing of the construction of Sangtuda HPS in the amount of 40,000 thousand USD. In accordance with the agreement after 12 years of use, the Hydropower Plant would be transferred to the Group. As at 31 December 2012, the Group has fully paid obligations under the agreement.
In 2010, the Group acquired the shares of OJSC Roghun HPS amounting to 23,700 thousand Somoni.
11. INVENTORY
|
31 December 2013 |
31 December 2012 | |
| |||
Materials and disposables |
851,217 |
632,026 | |
Spare parts |
141,488 |
102,822 | |
Oil products |
40,055 |
65,690 | |
Goods |
2,040 |
387 | |
Construction materials |
1,945 |
1,030 | |
Supplies and other |
114,684 |
17,410 | |
|
1,151,429 |
819,365 | |
Less: Provision for obsolete inventory |
(576) |
(481) | |
Total |
1,150,853 |
818,884 |
The table below shows the change in provision for obsolete inventory:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 | |
| |||
At the beginning of the year |
481 |
509 | |
| |||
Provision |
95 |
- | |
Inventory written off |
- |
(28) | |
At the end of the year |
576 |
481 |
12. TRADE AND OTHER RECEIVABLES
|
31 December 2013 |
31 December 2012 |
| ||
Accounts receivable for electricity (national currency) |
1,113,714 |
806,196 |
Accounts receivable for electricity (foreign currency) |
21,914 |
- |
Taxes recoverable |
13,645 |
2,141 |
Accounts receivable for goods and services |
8,683 |
20,875 |
Accounts receivable for heat |
7,146 |
6,785 |
Advances to employees |
946 |
682 |
Other receivables |
9,304 |
11,663 |
|
1,175,352 |
848,342 |
| ||
Less: Provision for bad debts |
(704,187) |
(578,814) |
Less: Provision for impairment |
(17,512) |
(1,756) |
| ||
Total |
453,653 |
267,772 |
The table below shows the change in provision for bad debt reserve on trade and other receivables:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 | |
| |||
At the beginning of the year |
578,814 |
487,779 | |
| |||
Changes in estimates in the allowance for impairment during the year (Note 26) |
125,875 |
94,764 | |
Amounts written off |
(502) |
(3,729) | |
At the end of the year |
704,187 |
578,814 |
The table below shows the change in provision for impairement on trade and other receivables:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
At the beginning of the year |
1,756 |
3,101 |
| ||
Changes in estimates in the impairment during the year (Note 26) |
15,756 |
(1,345) |
At the end of the year |
17,512 |
1,756 |
As at 31 Decmebr 2013 and 2012, ageing analysis of trade receivables is as follows:
Year |
Total |
Not overdue |
Past due but not impaired |
Overdue and impaired | |||
<30 days |
30-90 days |
90-120 days |
120-360 days |
>360 days | |||
31 December 2013 |
1,175,352 |
299,342 |
78,713 |
112,074 |
154,633 |
248,245 |
282,345 |
31 December 2012 |
848,342 |
187,446 |
- |
48,075 |
72,145 |
90,950 |
449,726 |
|
|
|
|
|
|
|
|
13. PREPAYMENTS
|
31 December 2013 |
31 December 2012 |
|
|
|
Goods paid in advance |
208,567 |
51,393 |
Services paid in advance in national currency |
20,783 |
47,260 |
Other advance payments |
35,083 |
18,662 |
|
264,433 |
117,315 |
Less: Impairment reserve |
- |
(15,968) |
| ||
Total |
264,433 |
101,347 |
The table below shows the change in provision for impairement on prepayments:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
At the beginning of the year |
15,968 |
10,810 |
| ||
Changes in estimates in the impairment during the year |
- |
5,158 |
Written off against provision |
(15,968) |
- |
At the end of the year |
- |
15,968 |
14. CASH AND CASH EQUIVALENTS
|
31 December 2013 |
31 December 2012 |
| ||
Cash at bank in national currency |
1,916 |
8,101 |
Cash on hand in national currency |
812 |
674 |
Cash at bank in foreign currency in local banks |
263 |
602 |
Cash in transit |
9 |
34 |
Restricted cash |
1 |
1 |
Total |
3,001 |
9,412 |
15. EQUITY
As at 31 December 2013 and 2012, announced, issued and paid capital of the Group amounted to 383,836 thousand Somoni and 383,836 thousand Somoni, respectively.
In 2013 and 2012, the Group has not announced any dividends.
16. RESERVES
As at 31 December 2013 and 2012, the reserve, formed of retained earnings based on decision of the sole shareholder Group, amounted to 24,302 thousand Somoni,
17. SHORT-TERM DEBT
Short-term debt is as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Current portion of long-term debt in foreign currency (Note 22) |
600,855 |
295,937 |
Bank loan from Orienbank in national currency |
588,350 |
347,404 |
Loans from the Ministry of Finance of the Republic of Tajikistan in foreign currency |
27,928 |
27,872 |
Loans from the Ministry of Finance of the Republic of Tajikistan in national currency |
4,155 |
16,555 |
Other short-term debts |
4,153 |
4,144 |
Total |
1,225,441 |
691,912 |
Current portion of long-term debt is allocated in accordance with repayment schedule of principal on loans (Note 31).
18. SHORT-TERM ACCRUED LIABILITIES
Short-term accrued liabilities are as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Interest payable |
527,963 |
411,561 |
Accrued financial sanctions |
425,451 |
276,395 |
VAT payable |
276,866 |
132,249 |
Road users tax payable |
73,501 |
43,980 |
Payroll payable |
59,016 |
22,269 |
Royalty tax |
30,550 |
27,410 |
Social tax payable |
17,722 |
5,845 |
Unused vacation reserve |
11,889 |
11,232 |
Personal income tax payable |
7,871 |
3,076 |
Taxes, other than income tax |
5,698 |
7,942 |
Other current liabilities |
3,682 |
2,985 |
Other accrued expenses |
2,588 |
1,550 |
Total |
1,442,797 |
946,494 |
19. TRADE AND OTHER ACCOUNTS PAYABLE
Trade and other accounts payable are as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Accounts payable for goods and services |
1,123,225 |
627,717 |
Accounts payable for property, plant and equipment |
14,677 |
36,146 |
Total |
1,137,902 |
663,863 |
Below is information on the largest creditors:
|
31 December 2013 |
31 December 2012 |
| ||
Sangtuda-1 |
427,187 |
320,180 |
Sangtuda-2 |
133,075 |
50,046 |
Nokili Talco, LLC |
30,289 |
3,230 |
Mehrdodi Dilshod LLC |
15,538 |
- |
Promsnabservice |
11,095 |
- |
Talco Management (Shokhon, LLC) |
10,806 |
4,584 |
Somontaminot |
7,333 |
- |
Ben, LLC |
6,713 |
3,648 |
Super Oil, LLC |
5,404 |
5,371 |
Uzbekenergo (Uzbekistan) |
4,980 |
1,845 |
Kyrgyzstan NEK |
3,913 |
495 |
Paikom, LLC |
3,646 |
4,200 |
OJSC Somon Khatlon |
3,276 |
3,276 |
OJSC Somon Sanoat |
2,895 |
- |
Sughd Inter Tour, LLC |
2,511 |
4,095 |
Electric stations (Kazakhstan) |
2,233 |
2,228 |
Garmofar Union, LLC |
1,561 |
3,103 |
Sament Management |
1,014 |
- |
Bark, LLC |
600 |
3,042 |
Katari Dier, LLC |
283 |
7,888 |
Mehrona 2010, LLC |
53 |
3,577 |
Torus 2011 |
16 |
10,170 |
JSC Splibau |
- |
18,534 |
Firuz Ltd., LLC |
- |
10,698 |
Nuri Osmon, LLC |
- |
7,492 |
Safiri Rushd, LLC |
- |
5,809 |
Maryam, LLC |
- |
4,924 |
Paikom, LLC |
- |
4,200 |
Ningbao Internau |
- |
3,671 |
Regar Cabel |
- |
3,573 |
Tekhnologiyai ma’danshinosi va kuhkori, LLC |
- |
3,532 |
CJSC Hasan & Co |
- |
3,299 |
Shokhon, LLC |
- |
3,266 |
Factory Electrotekhmash |
- |
3,085 |
KEGOC (Kazakhstan) |
- |
2,430 |
Tojiktsement, LLC |
- |
1,567 |
Senefit firm Ltd. |
- |
1,479 |
Fortes group |
- |
1,244 |
Elto Somon-Tajhizot |
- |
1,234 |
Tajikcabel OJSC |
- |
1,106 |
Ukz Expert, LLC |
- |
1,063 |
Pomir Osiyo, LLC |
- |
670 |
Other |
463,481 |
150,009 |
| ||
Total |
1,137,902 |
663,863 |
20. PREPAYMENTS RECEIVED AND OTHER ACCOUNTS PAYABLE
Prepayments received and other accounts payable are as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Prepayments received for electricity in national currency |
35,227 |
22,810 |
Payables under construction agreements |
- |
1,023 |
Other prepayments received |
1,135 |
382 |
Other accounts payable |
69,290 |
88,118 |
Total |
105,652 |
112,333 |
21. DEFERRED REVENUE
Deferred revenue is as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Deferred income derived from government grants at interest rate below the market rates |
1,662,232 |
1,685,342 |
Deferred income from grants |
142,438 |
98,587 |
Other deferred revenue |
19,161 |
19,170 |
| ||
Total |
1,823,831 |
1,803,099 |
Deferred income from grants and other deferred revenue in the form of special-purpose financing, is gratuitous assets received from the government.
Deferred income derived from government grants at interest rate below the market rates is as follows:
|
31 December 2013 |
31 December 2012 |
| ||
EximBank 06015 |
549,800 |
632,479 |
EximBank 06015-06016 |
145,041 |
156,642 |
EximBank 06016 |
116,381 |
133,708 |
EximBank 2010 (024) |
130,874 |
133,975 |
Construction of the unified electric system of the Northern Tajikistan |
98,237 |
100,692 |
ADB-1817 |
75,977 |
91,193 |
Regional project on electricity transmission 0213 TAJ |
61,339 |
5,280 |
ADB -2303 |
54,021 |
58,633 |
KFW |
55,268 |
50,666 |
IDB 0030 |
40,441 |
40,355 |
ADB 0124 |
91,705 |
37,973 |
Grant №H566 TJ |
34,922 |
36,474 |
IDB -011-029-031 |
24,883 |
31,200 |
IDB -0022 |
27,196 |
26,418 |
Kuweit fund |
21,980 |
25,102 |
KFW |
25,879 |
24,479 |
Credit №4093 TJ & Grant №H178 TJ |
21,107 |
23,944 |
Swiss Government |
19,594 |
22,381 |
OFID -1141Р |
18,526 |
20,833 |
ADB -1912 |
13,939 |
15,093 |
Reconstruction of substation Regar 500 Kwh |
11,603 |
- |
Grant №H372 TJ |
9,595 |
10,375 |
PIU |
7,941 |
925 |
Swiss Government |
5,561 |
5,951 |
State Property Fund subloan agreement |
422 |
571 |
| ||
Total |
1,662,232 |
1,685,342 |
Other deferred revenue and deferred income from grants includes:
|
31 December 2013 |
31 December 2012 |
| ||
Sangtuda-2 |
71,448 |
64,313 |
PIU South-North |
19,000 |
19,000 |
Tutak HPS |
8,000 |
7,000 |
Kukhiston HPS |
5,582 |
5,582 |
Shahrinav |
3,568 |
2,068 |
TajHPS |
3,486 |
3,486 |
CHPS |
3,412 |
3,412 |
Kukhiston-1HPS |
3,410 |
3,410 |
Lakhshi Jirgatol |
2,988 |
487 |
Rehabilitation of lines in Matchoh |
2,800 |
1,800 |
Pushti bog HPS |
1,491 |
491 |
OJSC TGEM addendum#3 dated 02.05.09 |
1,177 |
1,177 |
Eastern boiler |
971 |
971 |
Tajikenergoproject Agreement#7а dated 01.03.2008 |
947 |
947 |
Sokhtmon, LLC Subcontract agreement #2 dated 02.05.2009 |
450 |
450 |
Shifobakhsh, LLC Subcontract agreement #1 dated 02.05.2009 |
300 |
300 |
Isfara HPS |
160 |
160 |
Parvoz |
139 |
139 |
Muhandis, LLC |
52 |
52 |
Mekhcalon #1 Agreement dated 19.03.2008 |
43 |
43 |
Grant IDA |
- |
2,469 |
Other |
32,175 |
- |
| ||
Total |
161,599 |
117,757 |
22. LONG-TERM LIABILITIES
Long-term liabilities are as follows:
|
31 December 2013 |
31 December 2012 |
| ||
Loans in the foreign currency |
2,698,492 |
2,745,692 |
Loans in the national currency |
840 |
1,080 |
Discount on loans |
(1,822,046) |
(1,838,192) |
Restructured loan |
170,000 |
170,000 |
Other long-term liabilities |
1,119 |
- |
| ||
Total |
1,048,405 |
1,078,580 |
As at 31 December 2013, loans include:
Name |
Currency |
Initial amount |
Including |
Discount | ||
In currency |
In somoni |
Long-term portion |
Current portion |
In Somoni | ||
ADB – 1817 |
US Dollar |
26,576 |
196,051 |
107,828 |
88,223 |
86,485 |
IDB - 011-029-031 |
Euro (Islamic Dinar) |
10,563 |
77,925 |
58,444 |
19,481 |
28,151 |
Swiss Government |
US Dollar |
8,862 |
42,309 |
30,674 |
11,635 |
21,138 |
ADB - 2303 |
US Dollar |
12,314 |
90,938 |
77,212 |
13,626 |
58,899 |
IDB - 0030 |
US Dollar |
13,980 |
66,741 |
56,730 |
10,011 |
41,224 |
OFID - 1141Р |
US Dollar |
7,907 |
37,747 |
30,198 |
7,549 |
20,486 |
Kuweit fund |
US Dollar (Kuweit Dinar) |
12,718 |
60,716 |
45,524 |
15,192 |
28,706 |
EximBank 06015 |
US Dollar |
267,219 |
1,275,732 |
978,061 |
297,671 |
638,387 |
EximBank 06016 |
US Dollar |
55,228 |
263,662 |
202,141 |
61,521 |
133,608 |
EximBank 06015-06016 |
US Dollar |
51,000 |
243,479 |
227,247 |
16,232 |
155,841 |
EximBank 2010 (024) |
US Dollar |
35,055 |
167,016 |
167,356 |
- |
131,147 |
KFW Grant |
ЕВРО |
16,916 |
111,261 |
105,341 |
5,920 |
58,887 |
KFW Grant |
ЕВРО |
6,578 |
43,268 |
37,513 |
5,755 |
27,556 |
ADB - 0124 |
US Dollar |
30,650 |
146,326 |
133,252 |
13,074 |
91,967 |
IDB - 0022 |
US Dollar |
11,150 |
53,233 |
40,559 |
12,675 |
28,130 |
ADB - 1912 |
US Dollar |
3,062 |
22,589 |
14,118 |
8,471 |
13,970 |
Regional project on electricity transmission 0213 TAJ |
US Dollar |
18,125 |
86,529 |
86,529 |
- |
61,349 |
Construction of the unified electric system of the Northern Tajikistan |
US Dollar |
26,464 |
126,341 |
126,341 |
- |
98,442 |
Reconstruction of Regar substation |
US Dollar |
3,689 |
17,611 |
17,611 |
120 |
11,603 |
IDA Grant №Н566 |
US Dollar |
15,353 |
73,299 |
73,299 |
- |
37,197 |
SECO Grant |
US Dollar |
2,323 |
11,092 |
9,706 |
1,387 |
5,877 |
IDA Grant №Н372 |
US Dollar |
4,003 |
19,111 |
17,837 |
1,274 |
10,468 |
IDA Loan №4093, №178 |
US Dollar |
11,183 |
53,391 |
42,713 |
10,678 |
24,165 |
PIU |
US Dollar |
2,568 |
12,258 |
12,258 |
- |
7,942 |
State Property Fund subloan |
Somoni |
1,200 |
1,200 |
840 |
360 |
421 |
Total |
654,686 |
3,299,825 |
2,699,332 |
600,855 |
1,822,046 |
As at 31 December 2012, loans include:
Name |
Currency |
Initial amount |
Including |
Discount | ||
In currency |
In somoni |
Long-term portion |
Current portion |
In Somoni | ||
ADB – 1817 |
US Dollar |
26,576 |
194,961 |
141,347 |
53,614 |
101,495 |
IDB - 011-029-031 |
Euro (Islamic Dinar) |
10,563 |
77,493 |
67,806 |
9,687 |
34,398 |
Swiss Government |
US Dollar |
8,862 |
42,223 |
16,889 |
25,334 |
23,876 |
ADB - 2303 |
US Dollar |
12,314 |
90,333 |
83,558 |
6,775 |
63,382 |
IDB - 0030 |
US Dollar |
12,566 |
59,872 |
53,211 |
6,661 |
41,054 |
OFID - 1141Р |
US Dollar |
7,907 |
37,670 |
33,903 |
3,767 |
22,746 |
Kuwait fund |
US Dollar (Kuwait Dinar) |
12,718 |
60,592 |
51,503 |
9,089 |
31,763 |
EximBank 06015 |
US Dollar |
267,219 |
1,273,140 |
1,145,826 |
127,314 |
719,601 |
EximBank 06016 |
US Dollar |
55,228 |
263,127 |
228,043 |
35,084 |
150,629 |
EximBank 06015-06016 |
US Dollar |
51,000 |
242,984 |
242,984 |
- |
167,102 |
EximBank 2010 (024) |
US Dollar |
35,055 |
167,016 |
167,016 |
- |
133,975 |
KFW Grant |
ЕВРО |
14,814 |
93,344 |
93,344 |
- |
52,005 |
KFW Grant |
ЕВРО |
5,761 |
36,300 |
32,992 |
3,308 |
25,058 |
ADB - 0124 |
US Dollar |
11,641 |
55,463 |
55,463 |
- |
38,158 |
IDB - 0022 |
US Dollar |
9,798 |
46,683 |
39,031 |
7,652 |
27,297 |
ADB - 1912 |
US Dollar |
3,062 |
22,463 |
19,007 |
3,456 |
15,093 |
Regional project on electricity transmission 0213 TAJ |
US Dollar |
1,527 |
7,276 |
7,276 |
- |
5,280 |
Construction of the unified electric system of the Northern Tajikistan |
US Dollar |
26,464 |
126,084 |
126,084 |
- |
100,692 |
IDA Grant №Н566 |
US Dollar |
12,526 |
59,678 |
59,678 |
- |
38,670 |
SECO Grant |
US Dollar |
2,316 |
11,069 |
10,544 |
525 |
6,254 |
IDA Grant №Н372 |
US Dollar |
4,003 |
19,073 |
19,073 |
- |
11,225 |
IDA Loan №4093, №178 |
US Dollar |
11,183 |
53,282 |
49,730 |
3,552 |
26,947 |
PIU |
US Dollar |
290 |
1,382 |
1,382 |
- |
924 |
State Property Fund subloan |
Somoni |
1,201 |
1,201 |
1,082 |
119 |
568 |
Total |
604,594 |
3,042,709 |
2,746,772 |
295,937 |
1,838,192 |
Loan agreements are presented in the following table:
Loan |
Lender |
Purpose of the loan |
Origination date |
Maturity date |
Loan amount under the agreement |
Interest rate |
2010 (024- 029 BT) |
EximBank |
Construction of high-tension transmission line 220 kilowatt «Khujand-Ayni» |
16 December 2010 |
21 September 2036 |
35 055 thousand US Dollars |
3% |
1141Р |
OFID |
For expansion of cooperation in energy sector between Tajikistan and Afghanistan |
6 September 2007 |
15 March 2027 |
8500 thousand US Dollars |
1% |
0030. |
Islamic Development Bank |
For expansion of cooperation in energy sector between Tajikistan and Afghanistan |
31 October 2007 |
30 November 2031 |
14 067 thousand US Dollars |
3% |
0124- TAJ (SF) |
Asian Development Bank |
Project on reconstruction of ОРУ-500 kilowatt on Nurek HPP |
26 December 2008 |
15 October 2033 |
54,770 thousand US Dollars |
5% |
No number |
KfW |
For change of transmittal equipment 220 kilowatt on Nurek HPP |
25 July 2008 |
1 November 2033 |
18,000 thousand Euro |
8% |
Grant №566TJ |
International Development Association |
Emergency Energy Recovery Assistance Project |
16 July 2010 |
15 September 2030 |
9,900 thousand SDR |
6% |
Grant №H372 TJ) |
International Development Association |
Emergency increasing of volume and solidity of import of electricity especially in winter period |
30 October 2008 |
15 September 2028 |
4,342 thousand US Dollars |
6% |
Credit №4093 TJ |
International Development Association |
Energy Loss Reduction Project |
6 December 2005 |
15 June 2026 |
11,183 thousand US Dollars |
6% |
06016. |
EximBank |
For construction of power grid 220 кВ «Lolazor-Khatlon» |
19 April 2006 |
21 February 2028 |
55,228 thousand US Dollars |
3% |
06015. |
EximBank |
For construction of power grid 500 кВ «ug-Sever» |
19 April 2006 |
21 February 2028 |
267,219 thousand US Dollars |
2% |
665 |
Kuweit fund |
Reconstruction of power grid of Dushanbe city |
24 June 2003 |
15 November 2030 |
3,600 thousand Kuweit Dinars |
0% |
IDB -0022 |
Islamic Development Bank |
Construction of small HPPs |
18 April 2004 |
30 June 2031 |
6,623 thousand Islamic Dinars |
3,5% |
IDB -011- 029-031 |
Islamic Development Bank |
Solid power supply in rural regions of Tajikistan |
29 January 2001 |
31 December 2021 |
7,000 thousand Islamic dinars |
5% |
Swiss Government |
Swiss Government |
For financing of Swiss Subproject on energy loss reduction |
8 September 2003 |
1 August 2017 |
8,862 thousand US Dollars |
2% |
2303 |
Asian Development Bank |
For construction of intersystem power grid |
22 February 2007 |
1 December 2031 |
8,500 thousand US Dollars |
Libor+ 0,5% |
1817 |
Asian Development Bank |
Power grid rehabilitation project |
26 February 2001 |
15 December 2025 |
39,947 thousand US Dollars |
1,5% |
06015-06016 |
EximBank |
Additional construction of high tension transmission line 500/220 кВ Юг-Север, Lolazor-Khatlon |
15 May 2009 |
21 August 2028 |
51,000 thousand US Dollars |
5% |
1912-TAJ (SF) |
Asian Development Bank |
Emergency project on stabilisation of Baipaza landslide |
20 October 2003 |
1 December 2033 |
5,320 thousand US Dollars |
2,5% |
0213-TAJ -28 БТ |
Asian Development Bank |
Regional project on electricity transmission |
23 November 2010 |
15 September 2036 |
112,500 thousand US Dollars |
5% |
KFW-034ВТ |
KFW |
Construction of distributing facility of 220кВ on Nurek HPS |
28 June 2011 |
30 May 2032 |
7,000 thousand US Dollars |
3% |
2011 (19) TOTAL № (170)-030 БТ |
EximBank |
Constrcution of united electricity system in Northern Tajikistan |
20 July 2011 |
21 March 2031 |
26,464 thousand US Dollars |
3% |
Swiss Government |
International Development Association |
Electricity Loss Reduction Project |
29 June 2007 |
30 June 2012 |
6,600 thousand US Dollars |
6% |
Grant №TF096573-035 BT |
Swiss trust fund |
Electricity Loss Reduction Project |
20 December 2011 |
15 September 2031 |
3,150 thousand US Dollars |
6% |
266-025 |
Exim Bank |
Reconstruction of Regar substation |
31 July 2013 |
31 July 2033 |
35,043 thousand US Dollars |
6% |
n/a |
EBRD |
PIU |
n/a |
n/a |
158 thousand US Dollars |
n/a |
41538 |
EBRD |
PIU |
n/a |
05 April 2026 |
10,150 thousand US Dollars |
Libor +1% |
23. INCOME TAX
As at 31 December 2012 and 2011, income tax assets and liabilities of the Group included:
|
31 December 2013 |
31 December 2012 |
| ||
Income tax assets: | ||
Deferred income tax assets |
111,034 |
69,597 |
Current income tax assets |
- |
2,682 |
| ||
Total income tax assets |
111,034 |
72,279 |
| ||
Incometaxliabilities: | ||
Current income tax liabilities |
4 |
- |
| ||
Total income tax liabilities |
4 |
- |
The Group measures and records its current income tax payable and its tax bases in its assets and liabilities in accordance with the tax regulations of the Republic of Tajikistan where the Group operates, which may differ from IFRS.
The Group is subject to certain permanent tax differences due to the non-tax deductibility of certain expenses and certain income being treated as non-taxable for tax purposes.
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Temporary differences as at 31 December 2013 and 2012 relate mostly to different methods/timing of income and expense recognition as well as to temporary differences generated by tax–book bases’ differences for certain assets.
The tax rate used for the reconciliations below is the corporate tax rate of 15% payable by corporate entities in the Republic of Tajikistan on taxable profits (as defined) under tax law in that jurisdiction.
Deferred tax assets as at 31 December 2013 are as follows:
|
IFRS |
Tax accounting |
Difference |
| |||
Property, plant and equipment |
5,050,251 |
5,080,089 |
(29,838) |
Inventory |
1,150,853 |
1,151,429 |
(576) |
Trade and other receivables |
453,653 |
1,175,352 |
(721,699) |
Short-term accrued liabilities |
1,442,797 |
1,430,908 |
11,889 |
|
8,097,554 |
8,837,778 | |
Temporary difference |
(740,224) | ||
Tax rate |
15% | ||
Deferred tax assets at the end of the year |
(111,034) |
Deferred tax assets as at 31 December 2012 are as follows:
|
IFRS |
Tax accounting |
Difference |
| |||
Property, plant and equipment |
4,811,585 |
4,841,619 |
(30,034) |
Inventory |
818,884 |
819,365 |
(481) |
Trade and other receivables |
267,772 |
865,318 |
(597,546) |
Short-term accrued liabilities |
946,494 |
935,262 |
11,232 |
Trade and other payables |
663,863 |
511,013 |
152,850 |
|
7,557,610 |
8,021,589 | |
Temporary difference |
(463,979) | ||
Tax rate |
15% | ||
Deferred tax assets at the end of the year |
(69,597) |
A reconciliation of income tax benefit as applicable to loss before income tax at the statutory income tax rate to income tax expense was as follows for the years ended 31 December 2013 and 2012:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Current income tax expense |
14,595 |
13,444 |
Deferred income tax (benefit)/expense |
(41,437) |
17,276 |
Incometax(benefit) /expenses |
(26,842) |
30,720 |
| ||
Loss before income tax |
(605,576) |
(300,850) |
Statutory tax rate |
15% |
15% |
Income tax expense at the statutory tax rate |
(90,836) |
(45,128) |
Effect of tax losses |
61,798 |
74,383 |
Effect of permanent tax differences |
2,196 |
1,465 |
Income tax (benefit) /expenses |
(26,842) |
30,720 |
Deferred income tax assets |
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
As at January 1 |
69,597 |
86,873 |
| ||
Deferred income tax benefit |
41,437 |
(17,276) |
| ||
As at December 31 |
111,034 |
69,597 |
24. REVENUE
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Revenue from the sale of electricity |
1,224,867 |
1,097,803 |
Revenue from the sale of heat |
3,041 |
1,284 |
Other revenue |
69 |
290 |
Total |
1,227,977 |
1,099,377 |
25. COST OF SALES
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Cost of electricity |
510,693 |
449,455 |
Cost of heat |
88,942 |
68,107 |
Cost of services provided |
- |
1,483 |
Total |
599,635 |
519,045 |
Cost includes the following:
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Inventories |
137,900 |
362,513 |
Remuneration of production workers and administrative staff |
58,684 |
44,215 |
Depreciation of production equipment |
29,554 |
26,051 |
Insurance expenses |
14,679 |
11,070 |
Other costs of production units |
358,818 |
75,196 |
Total |
599,635 |
519,045 |
Cost of sales include cost of own generated electricity, heat and the cost of purchased electricity. The cost of self generated electricity and heat include actual expenses of Hydropower Stations and Heat Power Plants.
26. SELLING EXPENSES
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Depreciation expenses |
127,511 |
74,688 |
Bad debt expenses (Note 12) |
125,875 |
94,764 |
Payroll |
118,035 |
97,871 |
Social fund contribution |
31,717 |
24,636 |
Receivables and other assets impairement expense/(recovery) (Note 12) |
15,756 |
(1,345) |
Other selling expenses |
188,453 |
189,031 |
Total |
607,347 |
479,645 |
Selling expense include production expenses of enterprises - electricity networks, which are involved in transmission and distribution of electricity.
27. GENERAL AND ADMINISTRATIVE EXPENSES
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Fines and penalties on taxes |
289,997 |
61,961 |
Taxes, other than income tax |
32,279 |
21,433 |
Payroll |
12,182 |
11,889 |
Depreciation expenses |
2,977 |
3,323 |
Bank charges |
3,542 |
1,879 |
Social fund contribution |
3,296 |
3,249 |
Other fines and penalties |
5 |
100 |
PIU expenses |
- |
21,051 |
Other expenses |
6,566 |
36,261 |
Total |
350,844 |
161,146 |
General and administrative expenses include expenses of Head Office, Project Implementation Unit, DPMTO and Representative office in Russian Federation, subsidiary of the Joint Limited Liability Company Bark-Kimgan.
28. OTHER GAINS AND LOSSES
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
| ||
Revenue from inventory sale |
5,425 |
1,336 |
Loss from disposal of property, plant and equipment |
(3,628) |
(4,109) |
Other expenses |
(27,137) |
(22,491) |
Total |
(25,340) |
(25,264) |
29. FINANCE INCOME AND COSTS
|
Year ended 31 December 2013 |
Year ended 31 December 2012 |
Finance income: | ||
Amortisation of discount on loans |
169,544 |
118,845 |
| ||
Total |
169,544 |
118,845 |
| ||
Finance costs: | ||
Amortisation of discount on loans |
(169,544) |
(118,845) |
Interest expenses on loans |
(239,049) |
(139,504) |
Penalties on loans |
- |
(88,530) |
Total |
(408,593) |
(346,879) |
| ||
Total finance (cost)/income |
(239,049) |
(228,034) |
30. FAIR VALUE OF FINANCIAL INSTRUMENTS
IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions As no readily available market exists for large part of the Group’s financial instruments, judgment is necessary in arriving at fair value, based on current economic conditions and specific risks attributable to the instrument.
As at 31 December 2013 and 2012, the following methods and assumptions were used by the Group to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value:
Cash and cash equivalents - The carrying amount represents their fair value.
Trade and other receivables- The carrying amount is considered a reasonable estimate of their fair value as the allowance for estimated doubtful amounts is considered a reasonable estimate of the discount required to reflect the impact of credit risk.
Trade and other payables- The carrying amount is a reasonable estimate of their fair value due to their short term nature.
Long term borrowing - The carrying amount is considered a reasonable estimate of their fair value as applied interest rate on long term borrowings is considered to be a reasonable approximation of the market rate with reference to loans with similar credit risk level and maturity period at the reporting date.
31. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(a) Changes in the energy sector
Industry as well as a whole system of the Republic of Tajikistan is experiencing significant restructuring and reform (the process of transformation of the country with a planned economy into a state with a market economy), and the future direction of reforms and results are unknown at this time. Potential reforms in tariff policy, repayment of debt by state enterprises, reorganisation of the market of gross sale and implementation of measures to promote competition in gross sale market, can have a significant impact on companies in this industry. Due to uncertainty regarding the ongoing changes in the industry, management is unable to assess the impact of reforms on the present and future financial position of the Group. However management believes that these uncertainties will have not a significant impact on operational activity compared to other companies operating in the Republic of Tajikistan.
(b) Social commitments and pensions and retirement plans
The Group incurs expenses on development and maintenance of social objects and welfare of its workers and other social needs.
Employees of the Group receive pension benefits in accordance with the laws and regulations of the Republic of Tajikistan.
As at 31 December 2013, the Group was not liable for any supplementary pensions, post- retirement health care, insurance benefits, or retirement indemnities to its current or former employees.
(c) Insurance
As at 31 December 2013, the Group had no insurance coverage in respect of its assets, activities and its public obligations and other risks, to be insured. Since the absence of insurance does not mean reducing the cost of the asset or liability is incurred, provisions were not included in the consolidated financial statements for uncertain losses.
(d) Environment protection issues
Official laws of the Republic of Tajikistan #58 “On environment protection” dated 15.06.2004 and #228 “On air protection” dated 01.02.1996 are aimed to protect atmosphere from pollution and established maximum permissible level of emission of harmful substances.
Integrated control and permits for allowable emissions of pollutants are conducted in accordance with the article 11 “Basic requirements for the valuation of atmosphere air quality” and article 13 “Measurement and control of emissions into the atmosphere”.
The Republic of Tajikistan has acceded to the Kyoto Protocol and ratified it on 22 November 2008. After the ratification of Kyoto Protocol coordination is assigned to Committee for environmental protection under the Government of the Republic of Tajikistan.
Legislation for environmental protection in the Republic of Tajikistan is in the process of development and government agencies continuously revising standards for the application of such legislation. The Group periodically evaluates its obligations under environmental regulations. As obligations are defined, they are immediately defined in the consolidated accounts. Potential liabilities that may arise as a result of changes in existing regulations, litigation in civil cases or legislation can not be estimated with any certainty, but could be significant. Under the existing system of control and penalties for non-compliance with the existing legislation, Management believes that at the moment there are no significant liabilities related to environmental damage.
(e) Litigation
During the year the Group was involved in a number of litigations (as a claimant and defendant) arising in the ordinary course of business. In present time the Company is obligated to repay 29,740 thousand Somoni to OJSC “Sangtuda-1”. In Management’s opinion at present time there are no any other pending legal proceedings or other claims, finishing of which could have a material adverse effect on the financial results and financial position of the Group, or which would not have been accrued or disclosed in these consolidated financial statements.
(f) Technical risks
Reconstruction of the electric power industry is dictated by the current situation in the energy sector due to the rapid deterioration of the technical condition of the fixed assets of the Group. Implementation of current and capital repairs is not enough; new construction, rehabilitation, reconstruction and technical re-equipment is required in accordance with technical progress.
Thus technical risk of impairment is high.
(g) Capital commitments
As at 31 December 2013 and 2012 the Group had capital commitments to continue financing the constructions and maintainance of infrastructure for generation, transmission and distribution of the electricity in the Republic of Tajikistan.
32. FINANCIAL RISKS MANAGEMENT
Main financial liabilities of the Group include loans, trade and other payables and agreements of financial guarantee. Main purpose of these financial liabilities is financing Group’s operations and support of its activity.
Group has trade and other receivables, cash and cash equivalents and short-term deposits, which directly arise in the course of Group’s operational activity. The Group also keeps investment held for sale.
The Group is subject to market risk, credit risk and liquidity risk.
Management of the Group controls risk management process. Management reviews and approves risk management policy.
Prior to placement of Group’s shares, duties of Superior Body are performed by the Government of the Republic of Tajikistan. Exclusive powers of Superior Body are:
- Determination of main directions of Company’s activity, approval of annual reports and financial statements,
- Amending of Group’s charter, including change of its share capital,
- Election of members of auditing committee (inspector) of the Group and their dismissal,
- Approval of Audit committee reports,
- Taking decision on acquisition of shares, issued by the Group,
- Taking decision on reorganisation and liquidation of the Group, assignment of liquidation committee and approval of liquidation balance sheet,
- Election of Group’s Chairman and his termination,
- Exercise of other powers, prescribed by laws of the Republic of Tajikistan and charter of the Group.
Market risk
Market risk is a risk of possible fluctuations of the fair value of future cash flows as a result of changes in market prices. Market prices include four types of risks: interest rate risk, currency risk, risk of price change and other price risks. Financial instruments which are subject of market risk include loans, deposits, investments held for sale.
Sensitivity analysis as at 31 December 2012 and 2011 is presented below. Sensitivity analysis was prepared on the basis of assumption that amount of net debt and part of financial instruments in foreign currency is constant.
Analysis does not include effect of changes of market variables on book value of pensions and other liabilities on employee’s termination, provisions and also nonfinancial assets and liabilities of subdivisions.
In preparing sensitivity analysis the following assumptions were made:
Sensitivity of consolidated statement of financial position is associated with debt instruments held for sale.
Sensitivity of relevant account of consolidated statement of comprehensive income is the effect of proposed changes of relevant market risks.
The analysis was made on the basis of financial assets and financial liabilities held as at 31 December 2013 and 2012.
Risk of price changes
Risk of price changes is the risk or uncertainty arising from possible changes in market prices and their impact on future performance and results of operational activity of the Group.
Price decrease can lead to decrease of net income and cash flows. Maintaining low prices for an extended period of time can lead to a reduction in activity and may ultimately have an impact on the Group’s ability to fulfill its obligations under the contracts. Management estimates the decline as hardly probable and Group does not use derivative instruments to reduce its exposure to this risk.
The Group enters into long-term contracts for products supply on standard commercial terms; thereby the Group is not exposed to the risk of loss of revenue due to price increase on the market.
Interest rate risk
Interest rate risk is a risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in market interest rate risks. Risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates.
The following table details the Group’s sensitivity to a 3% increase and decrease in the interest rates in 2013 and 2012, respectively. Management of the Group believes that given the current economic conditions in Tajikistan that a 3% increase is a realistic movement in the interest rates. This is the sensitivity rate used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates. The sensitivity analysis includes only outstanding liabilities with floating rates.
|
As at 31 December 2013 |
As at 31 December 2012 | ||
Interest rate +3% |
Interest rate -3% |
Interest rate +3% |
Interest rate -3% | |
Financial liabilities: |
|
|
|
|
Long term liabilities |
(2,668) |
2,668 |
(2,668) |
2,668 |
|
|
|
|
|
Net impact on profit or loss before tax |
(2,668) |
2,668 |
(2,668) |
2,668 |
|
|
|
|
|
Net impact on equity |
(2,001) |
2,001 |
(2,001) |
2,001 |
Currency risk
Currency risk is a risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in exchange rates. The Group’s exposure to foreign currency exchange rates is stipulated primarily due to Group’s operating activity (when sales or expenses are denominated in currencies, other than the functional currency of the Group), as well as the Group’s net investment in foreign subsidiaries.
The Group exports its production to Central Asia, acquires equipment and materials from overseas suppliers and attracts a substantial amount of long-term loans in foreign currency. Significant concentration of currency risk lies in loans denominated in various foreign currencies (mainly in US dollars). In accordance with he Group’s accounting policy, these loans were translated to Somoni using exchange rates prevailed at the balance sheet date. However future changes in exchange rate of Somoni to US dollar are unpredictable. Future changes in exchange rates may affect the carrying value of liabilities denominated in foreign currencies.
There are strict restrictions and controls in respect of Somoni conversion into other currencies.
Currently Somoni is not convertible currency outside the Republic of Tajikistan.
|
Tajik Somoni |
US Dollar (1USD = 4.7741 TJS) |
Euro (1EUR = 6.5772 TJS) |
SDR (1SDR= 7.3521 TJS) |
31 December 2013 Total |
Financial assets: | |||||
Cash and cash equivalents |
2,713 |
288 |
- |
- |
3,001 |
Trade and other receivables |
314,522 |
139,131 |
- |
- |
453,653 |
Long-term investments |
182,512 |
- |
- |
- |
182,512 |
| |||||
Totalfinancialassets |
499,747 |
139,419 |
- |
- |
639,166 |
| |||||
Financial liabilities: | |||||
Trade and other payables |
1,119,846 |
18,056 |
- |
- |
1,137,902 |
Short-term debt |
246,155 |
437,356 |
154,527 |
387,403 |
1,225,441 |
Long-term liabilities |
170,000 |
791,962 |
86,443 |
- |
1,048,405 |
Short-term accrued liabilities |
815,640 |
502,663 |
19,621 |
104,873 |
1,442,797 |
| |||||
Total financialliabilities |
2,351,641 |
1,750,037 |
260,591 |
492,276 |
4,854,545 |
| |||||
Open currency position |
(1,851,894) |
(1,610,618) |
(260,591) |
(492,276) |
|
Tajik Somoni |
US Dollar (1 USD= 4.7644 TJS) |
Euro (1 EUR= 6.3009 TJS) |
SDR (1SDR= 7.3225 TJS) |
31 December 2012 Total |
Financial assets: | |||||
Cash and cash equivalents |
8,806 |
606 |
- |
- |
9,412 |
Trade and other receivables |
255,035 |
12,737 |
- |
- |
267,772 |
Long-term investments |
182,512 |
- |
- |
- |
182,512 |
| |||||
Totalfinancialassets |
446,353 |
13,343 |
- |
- |
459,696 |
| |||||
Financial liabilities: | |||||
Trade and other payables |
573,557 |
73,782 |
16,524 |
- |
663,863 |
Short-term debt |
146,555 |
468,517 |
3,308 |
73,532 |
691,912 |
Long-term liabilities |
171,080 |
762,776 |
41,739 |
102,985 |
1,078,580 |
Short-term accrued liabilities |
120,172 |
434,485 |
11,118 |
154,922 |
720,697 |
| |||||
Totalfinancialliabilities |
1,011,364 |
1,739,560 |
72,689 |
331,439 |
3,155,052 |
| |||||
Open currency position |
(565,011) |
(1,726,217) |
(72,689) |
(331,439) |
Currency risk sensitivity
The following table details the Company’s Sensitivity to a 8% increase and decrease in the USD against the TJS for 2013 and 2012, respectively. These rates are the sensitivity rates used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign currency exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the period for a 8% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Company where the denomination of the loan is in a currency other than the currency of the lender or the borrower.
|
As at 31 December 2013 |
As at 31 December 2012 | ||
|
TJS/USD +8% |
TJS/USD -8% |
TJS/USD +8% |
TJS/USD -8% |
|
|
|
|
|
Impact on profit or loss |
(128,849) |
128,849 |
(138,097) |
138,097 |
|
As at 31 December 2013 |
As at 31 December 2012 | ||
|
TJS/SDR +8% |
TJS/SDR -8% |
TJS/SDR +8% |
TJS/SDR -8% |
| ||||
Impact on profit or loss |
(39,382) |
39,382 |
(26,515) |
26,515 |
As electricity tariffs of the Company are denominated in USD, it partially seeks to offset any foreign exchange gains or losses from its net borrowings/liabilities denominated in foreign currencies.
Credit risk
Credit risk is a risk that the Group will incur financial loss because the counterparties fail to meet their obligations under financial instrument or client contract. The Group is exposed to credit risk related to its operating activity (primarily, trade receivables).
Trade accounts receivable
Credit risk management associated with customers is performed by each subsidiary in accordance with the policies, procedures and control system established by the Group in respect of credit risk management associated with customers. Regular monitoring of outstanding accounts receivables is carried out.
Financial assets of the Group, which are potentially subject to credit risk, compose primarily of trade receivables.
In 2013 the percentage of money collection for the sold energy in the whole group was 76,1% (accrued – 1,276,987 thousand Somoni, paid – 971,356 thousand Somoni), including Tajik Aluminium Plant 47.8% (accrued – 279,099 thousand Somoni, paid – 133,544 thousand Somoni).
Approximately 21,9% of all sales in 2013 were supplied to the largest industrial consumer Tajik Aluminum Plant (TADAZ), which is currently controlled by the Government of the Republic of Tajikistan.
In 2012 the percentage of money collection for the sold energy in the whole group was 89.3% (accrued – 1,245,193 thousand Somoni, paid - 1,111,841 thousand Somoni), including Tajik Aluminium Plant 115.8% (accrued – 430,763 thousand Somoni, paid – 498,936 thousand Somoni).
Approximately 34.6% of all sales in 2012 were supplied to the largest industrial consumer Tajik Aluminum Plant (TADAZ), which is currently controlled by the Government of the Republic of Tajikistan. Only 4.3% of accounts receivable is accounted for Tajik Aluminium Plant.
The carrying value of accounts receivable, net of allowance for bad debt, represents the maximum amount exposed to credit risk.
Need for impairment recognition is reviewed at each balance sheet date, individually for each large entity. In addition, the amounts due from a large number of individuals are grouped into homogeneous groups and assessed for impairment on a collective basis. The calculations are based on the information on actual losses incurred in the past. The maximum exposure to credit risk at the reporting date is presented by the book value of each class of financial assets. The Group does not have the property received as security for the debt owed to it.
Although collection of receivables could be influenced by economic factors, Management believes that there is no substantial risk of loss beyond the provision for impairment of receivables.
Liquidity risk
Group exercises control over the risk of shortage of funds using a recurring liquidity planning tool.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and contracts for the hire purchase.
The Group has access to financing in sufficient amounts and terms of loans to be paid within 12 months may be postponed to a later date by agreement with current creditors.
The following table summarizes the contractual undiscounted payments on financial liabilities of the Group by maturity.
|
Up to 1 month |
From 1 to 6 months |
From 6 months to 1 year |
Over 1 year |
31 December 2013 Total |
Financial liabilities: | |||||
Trade and other payables |
- |
1,137,902 |
- |
- |
1,137,902 |
Short-term debt |
- |
1,225,441 |
- |
- |
1,225,441 |
Long-term liabilities |
- |
- |
- |
2,870,451 |
2,870,451 |
Short-term accrued liabilities |
1,233,917 |
193,309 |
15,571 |
- |
1,442,797 |
| |||||
Total financial liabilities |
1,233,917 |
2,556,652 |
15,571 |
2,870,451 |
6,676,591 |
|
|
Up to 1 month |
From 1 to 6 months |
From 6 months to 1 year |
Over 1 year |
31 December 2012 Total |
Financial liabilities: | |||||
Trade and other payables |
663,863 |
- |
- |
- |
663,863 |
Short-term debt |
647,722 |
19,885 |
24,305 |
- |
691,912 |
Long-term liabilities |
- |
- |
- |
2,916,772 |
2,916,772 |
Short-term accrued liabilities |
720,697 |
- |
- |
- |
720,697 |
Totalfinancialliabilities |
2,032,282 |
19,885 |
24,305 |
2,916,772 |
4,993,244 |
Capital management
Capital includes capital owned by the Government of the Republic of Tajikistan.
The main objective of the Group’s capital management is to ensure a strong credit rating and an adequate level of capital to conduct its operations and maximize shareholder value.
The Group manages its capital structure and its changes in response to changes of economic conditions.
For the year ended 31 December 2013 and 2012 no changes were made in the objectives, policies and processes for managing capital.
The Group monitors capital using gearing ratio, which is calculated by dividing net debt by total capital and net debt.
Group’s policy is to maintain the value of this ratio in the range 25-40%. Net debt includes interest-bearing loans and borrowings, trade and other payables less cash and cash equivalents.
|
31 December 2013 |
31 December 2012 |
| ||
Short-term debt |
1,225,441 |
691,912 |
Long-term liabilities |
1,048,405 |
1,078,580 |
Trade and other payables |
1,137,902 |
663,863 |
Short-term accrued liabilities |
1,442,797 |
946,494 |
Less: cash and short-term deposits |
(3,001) |
(9,412) |
| ||
Net debt |
4,851,544 |
3,371,437 |
Total equity |
433,239 |
1,016,789 |
| ||
Equity and net debt |
5,284,783 |
4,388,226 |
Gearing |
92% |
77% |
33. SUBSEQUENT EVENTS
There were no significant events subsequent to 31 December 2013.