aragvi holding international limited interim...

ARAGVI HOLDINGINTERNATIONAL LIMITED

INTERIM CONSOLIDATED FINANCIALSTATEMENTS FOR THE NINE MONTHPERIOD ENDED 31 MARCH 2018

PREPARED IN ACCORDANCE WITHINTERNATIONAL FINANCIALREPORTING STANDARDS

CONTENTS PAGE

Independent Auditor’s Report on Review procedure -

Interim Consolidated Statement of Financial Position 1 - 2

Interim Consolidated Statement of Comprehensive Income 3

Interim Consolidated Statement of Cash Flows 4 - 5

Interim Consolidated Statement of Changes in Equity 6-7

Notes to Interim Consolidated Financial Statements 8 - 56

ARAGVI HOLDING INTERNATIONAL LIMITED

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT

(All amounts are in thousands U.S. dollars (USD), unless otherwise stated)

The notes on pages 8 to 56 are an integral part of these interim consolidated financial statements.

1 of 56

Note 31 March 2018 30 June 2017

ASSETS

Non-current assetsIntangible assets 7 1,833 1,829Property, plant and equipment 6 233,350 237,191Available for sale financial assets 11 46 46Goodwill 7 48,688 48,688Advances given 12 1,818 1,903Other financial assets 279 _____414 286,014 290,071Current assetsInventories 9 197,021 98,553Forward contracts 8 42,243 96,395Trade receivables and advances given 10 48,309 41,242Cash and cash equivalents 13 15,421 8,649Other assets ____420 ______420

303,414 ___245,529

Total assets 589,428 ___ 535,330

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENTShare capital 14 281 281Share Options 1,603 1,603Retained earnings 187,468 162,629Fair value reserves 39,466 39,466 ___228,818 ___203,979

Non-controlling interest ____12,902 ____12,875

Total equity ___241,720 ___216,854


INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018



3 of 56

Note 31 March 2018 31 March 2017

Revenue 17 341,707 256,181Cost of sales 18 (260,463) (196,343)Gross profit 81,244 59,838

Other income 22 1,290 1,311Selling and distribution costs 19 (32,399) (21,358)General and administrative expenses 20 (6,681) (6,176)Other gains / (losses) – net 21 (2,269) ___ (3,416)Operating profit 41,185 30,199

Net finance income / (costs) 23 ___(15,920) ___ (18,410)Profit before income tax 25,265 11,789

Income tax expense 24 ___ (399) _____ (208)Profit for the year ____24,866 _____11,581

Profit attributable toOwners of the parent 24,839 11,968Non-controlling interest ________27 ______(387)Profit for the year _____24,866 ______11,581

Other comprehensive income:

Gain on revaluation of property, plant andequipment

- -

Income tax relating to components of othercomprehensive income

- -

Currency translation differences _________- _________-

Total comprehensive income for the year _____24,866 _____11,581

Attributable to:- Owners of the parent 24,839 11,968- Minority interest 27 ______(387)

Total comprehensive income for the year ______24,866 ______11,581


INTERIM CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018



4 of 56


Cash flows from operating activitiesNet profit before taxation 25,265 11,279

Adjustments for:Allowance doubtful accounts receivables

19 - 854Depreciation and amortization 18 - 21 7,053 9,291Loan commission amortisation 134 288Provisions - -Fair value of forward contracts 6,427 4,151Gains from write off of expired trade payables 21 (43) (1,007)Unrealised foreign exchange loss/(gain), net 23 (3,624) 1,782Interest and bank commission expense 23 19,544 22,190Operating profit before changes in workingcapital 54,756 48,828

Changes in working capital:Increase in inventories (98,468) (34,972)(Increase)/ Decrease in trade and other receivables 10 (7,067) 24,852(Decrease)/Increase in trade and other payables 4,156 (3,471)Cash generated from operations (46,623) 35,237

Interest and bank commissions paid __(20,498) ___(22,461)

Net cash (used)/ generated by operatingactivities (67,121) 12,776

Cash flows from investing activitiesProceeds from disposal of property, plant andequipment 1,903 68Purchases of property, plant and equipment (3,213) (10,458)Net cash used in investing activities (1,310) (10,390)


INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)FOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018



5 of 56


Cash flows from financing activities

Proceeds from borrowings 229,279 164,148Repayments of borrowings (154,831) __(162,830)Net cash from financing activities 74,448 1,318

Effect of exchange rate changes on cash movements 755 (231)

_________ _________Net increase in cash and cash equivalents 6,772 3,473

Cash and cash equivalents at the beginning of theperiod/year _____8,649 ______5,176

Cash and cash equivalents at the end ofperiod/year(Note 13) 15,421 8,649


INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018



6 of 56

Attributable to equity holders of the Company

Ordinaryshares

Translationreserves

Revaluationreserves

Unsubscribedcapital

Retainedearnings Total

Non-controlling

Interest Total EquityBalance at 30 June2016/ 1 July 2016 281 - 37,051 1,603 150,628 189,563 13,945 203,508

ComprehensiveincomeNet profit for the period - - - - 11,968 11,968 (387) 11,581Currency translationdifferences - - - - - - - -Fixed assets revaluationnet of tax - - - - - - - -Deferred tax charge on RE - - - - - - - -Total comprehensiveincome for the period 281 - 37,051 1,603 162,596 201,531 13,558 215,089

Transactions with owners

Business combinations - - - - - - - -

Balance at 31 March 2017 281 - 37,051 1,603 162,596 201,531 13,558 215,089


INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)FOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018



7 of 56

Attributable to equity holders of the Company

Ordinaryshares

Translationreserves

Revaluationreserves

Unsubscribedcapital

Retainedearnings Total

Non-controlling

Interest Total EquityBalance at 30 June 2017 281 - 39,466 1,603 162,629 203,979 12,875 216,854

Balance at 1 July 2017 281 - 39,466 1,603 162,629 203,979 12,875 216,854

ComprehensiveincomeNet profit for the period - - - - 24,839 24,839 27 24,866Currency translationdifferences - - - - - - - -Fixed assets revaluationnet of tax - - - - -Deferred tax charge on RE - - - - - - - -Total comprehensiveincome for the period 281 - 39,466 1,603 187,468 228,818 12,902 241,720

Transactions with owners

Business combinations - - - - - - - -

Balance at 31 March 2018 281 - 39,466 1,603 187,468 228,818 12,902 241,720


NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE NINE MONTH PERIOD ENDED 31 MARCH 2018


8 of 56

1 GENERAL INFORMATION

Aragvi Holding International Limited (“the Company”) is the company domiciled in the Republic ofCyprus with a juridical address Aphrodites 25, Room 204, P.C.1666, Nicosia, Cyprus. The CompanyAragvi Holding International Limited was incorporated in the Republic of Cyprus on 21 June 2012 as alimited liability Company under registration number HE 308295. Its registered office is at Menandrou,4 Gala Tower, 2nd floor, 1066, Nicosia, Cyprus.

The Company acquired its subsidiaries through a business combination under common control. Theconsideration held by the shareholder of the Company in the subsidiaries of the Group was subscribedas contribution in kind to the share capital of the Company upon its incorporation.

The interim consolidated financial statements of the Group as at and for the nine month period ended31 March 2018 comprise the Company and its subsidiaries (together refer to as a ‘Group’ andindividually as ‘Group entities’) and special purpose entities.

The Group principal activity is the production of vegetable oils (bottled and in bulk) and meals, thewholesale trade of cereals, oil seeds, farming and transhipment operations.

The Group’s financial year is from 1 July to 30 June. This set of interim consolidated financialstatements has been prepared for the nine month period ended 31 March 2018.

As of 31 March 2018 the primary subsidiaries of the Group and principal activities of the Subsidiariesconsolidated by the Company were as follows:

Entity Principal ActivityCountry ofincorporation

Sharehol-ding,%

Visions Holding SA Holding company Switzerland 100.00-Stareverest Trading &Investment Limited

Cyprus 100.00

Trezeme Limited Cyprus 100.00Amableus Limited Cyprus 100.00Kelley Grains Corporation SRL Moldova 100.00Agroindexport SRL Moldova 100.00IM Trans Oil Refinery SRL Oils seeds crushing plant Moldova 99.99Floarea Soarelui SA Moldova 84.657Trans Cargo Terminal SRL Free trade zone resident. Port

grain elevator. Provision of grainand oilseed forwarding services.

Moldova 100.00

ICS Trans Bulk Logistics SRL Free trade zone resident. Portgrain elevator. Provision of grainand oilseed forwarding services.Special purpose entity.

Moldova 80.00

FFA Trans Oil LTD SRL Whole sale grains trading company Moldova 100.00Trans-Oil International SA Switzerland 100.00




9 of 56

1 GENERAL INFORMATION (CONTINUED)

Entity Principal ActivityCountry ofincorporation

Sharehol-ding,%

Elevator Kelley Grains SA Grain elevator. Provision of grainand oilseed cleaning, drying andstorage services. Cultivation ofagriculture products and animals.

Moldova 89.295

Combinatul de Cereale Aur AlbSA

Grain elevator. Flour meal. Provisionof grain and oilseed cleaning, dryingand storage services.

Moldova 63.523

Combinatul de ProduseCerealiere Cereale Prut SA

Grain elevator. Provision of grainand oilseed cleaning, drying andstorage services.

Moldova 85.79

Elevatorul Iargara SA Moldova 89.73Flograin Group SRL Moldova 100.00Anengrain - Group SRL Moldova 100.00Unco-Cereale SRL Moldova 100.00IM Prut SA Moldova 61.926Molgranum SRL Moldova 99.99Intreprinderea de Transportnr. 7 SA

Logistics and maintenance ofvehicles

Moldova 91.60

Floarea-Soarelui Comert SRL Dealership of bottled oil Moldova 100.00Reniyskiy Elevator OOO Free trade zone resident. Port grain

elevator. Provision of grainforwarding services.

Ukraine 94.77

Reni-Line OOO Free trade zone resident. Port grainelevator. Provision of grainforwarding services.

Ukraine 66.70

Uleinord SRL Moldova 100.00Agrofloris-Nord SRL Special purpose entity. Grain

elevator. Provision of grain andoilseed cleaning, drying and storageservices.

Moldova 100.00

Ceba Grup SRL Special purpose entity. Whole salegrains trading company.

Moldova nil*

Agrotest-Lab SRL Provision of laboratory services. Moldova nil*Aragvi Finance InternationalDAC

Special purpose entity. Intended tobe the issuer of Eurobonds. Pleaserefer to Note 30.

Ireland 100.00

* Ceba Grup SRL and Agrotest-Lab SRL have been consolidated in present interim consolidatedfinancial statements, following the assertion of control by the Group’s final beneficial owner (100%).




10 of 56

1 GENERAL INFORMATION (CONTINUED)

Seasonality of operations

Generally, the Group is not exposed to significant seasonality factors. First quarter is usually driven byorigination and infrastructure segments that reflect higher volumes in the several months aftercommencement of the harvesting campaign (July – for early grains and September for crops harvestedin autumn).

Fourth quarter of the financial year has seasonally lower sales, which corresponds to the end of thecrushing season and lower production levels. Also, origination segment experiences decreasing volumesdue to lower level of available commodities on Group’s main origination markets.

2 NUMBER OF EMPLOYEES

At 31 March 2018 the Group had 1,649 employees (30 June 2017: 1,657).

3 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these interim consolidated financialstatements are set out below. These policies have been consistently applied to all years disclosed in thisinterim consolidated financial statement. These interim consolidated financial statements wereprepared for nine month reporting period ended 31 March 2018.

3.1 Basis of preparation

Statement of compliance

These interim consolidated financial statements have been prepared in accordance with IAS 34 InterimFinancial Reporting, except for the comparative information included in the interim consolidatedstatement of cash flows (Note 3.27). They do not include all disclosures that would otherwise berequired in a complete set of financial statements and should be read in conjunction with theconsolidated financial statements for year ended 30 June 2017.

The Group has applied the same accounting policies and methods of computation in its interimconsolidated financial statements as in its consolidated financial statements for the year ended 30 June2017, except for those that relate to new standards and interpretations effective for the first time periodsbeginning on (or after) 1 July 2017, and will be adopted in the consolidated financial statements for theyear ended 30 June 2018. However, none of the new standards and amendments that are effective forthe first time for periods beginning on (or after) 1 July 2017 have a material effect on the Group.




11 of 56

3 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

3.1 Basis of preparation (continued)

The Parent and its subsidiaries maintain their accounting records in local and functional currencies andin accordance with the accounting and reporting regulations of the countries of incorporation. Localstatutory accounting principles and procedures may differ from those generally accepted under IFRS.Accordingly, the interim consolidated financial statements are based on Statutory accounting records,with adjustments and reclassifications recorded for the purpose of fair presentation in accordance withIFRSs.

Income and cash flow statements

The Group presents the statement of comprehensive income by function of expenses.

The Group reports cash flow from operating activities using the indirect method. Cash flow frominvesting and financing activities are determined using the direct method.

The income statement and the cash flow statements are presented for the nine month period from 1 July2017 to 31 March 2018.

Preparation of interim consolidated financial statements

The interim consolidated financial statements have been prepared under the historical cost convention,as modified by the revaluation of property, plant and equipment, available-for-sale financial assets,inventories, forward contracts and biological assets.

The preparation of interim consolidated financial statements in compliance with IAS 34 requiresthe use of certain critical accounting estimates and requires management to exercise its judgement inthe process of applying the Group's accounting policies. It also requires the use of assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities atthe date of the interim consolidated financial statements and the reported amounts of revenues andexpenses during the reporting period. Although these estimates are based on management's bestknowledge of current events and actions, actual results may ultimately differ from those estimates.There have been no material revisions to the nature and amount of changes in estimates of amountsreported in the consolidated financial statements for the year ended 30 June 2017.

(a) Standards and Interpretations effective in the current period

The following standards, amendments to the existing standards and interpretations issued by theInternational Accounting Standards Board are effective for the current period:

• Amendments to IAS 32 “Financial instruments: presentation” – Offsetting Financial Assets andFinancial Liabilities (effective for annual periods beginning on or after 1 January 2014). Theseamendments clarify the meaning of “currently has a legally enforceable right to set off”. Theamendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (suchas central clearing house systems) which apply gross settlement mechanisms that are notsimultaneous;




12 of 56



· Amendments to IAS 36 “Impairment of assets” Recoverable Amount Disclosures for Non-FinancialAssets (effective for annual periods beginning on or after 1 January 2014). These amendmentsremove the unintended consequences of IFRS 13 on the disclosures required under IAS 36. Inaddition, these amendments require disclosure of the recoverable amounts for the assets or CGUsfor which impairment loss has been recognised or reversed during the period;

· Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” Novation ofDerivatives and Continuation of Hedge Accounting (effective for annual periods beginning on orafter 1 January 2014). Under the amendment, there would be no need to discontinue hedgeaccounting if a hedging derivative was novated, provided certain criteria are met. The IASB made anarrow scope amendment to IAS 39 to permit the continuation of hedge accounting in certaincircumstances in which the counterparty to a hedging instrument changes in order to achieveclearing for that instrument;

• IFRIC 21 “Levies” (effective for annual periods beginning on or after 1 January 2014). TheInterpretations Committee was asked to consider how an entity should account for liabilities to paylevies imposed by governments, other than income taxes, in its financial statements. ThisInterpretation is an interpretation of IAS 37 “Provisions, Contingent Liabilities and ContingentAssets”. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement forthe entity to have a present obligation as a result of a past event (known as an obligating event). TheInterpretation clarifies that the obligating event that gives rise to a liability to pay a levy is theactivity described in the relevant legislation that triggers the payment of the levy;

• Amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture”: Bearer Plants(effective for annual periods beginning on or after 1 January 2016);

• IAS 19 Defined Benefit Plans (Amended): Employee Contributions (effective from 1 January 2016);

• Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”Clarification of Acceptable Methods of Depreciation and Amortisation (effective for annual periodsbeginning on or after 1 January 2016). The amendment clarifies that when an item of property,plant and equipment is revalued, the gross carrying amount is adjusted in a manner that isconsistent with the revaluation of the carrying amount. IAS 38 Intangible Assets: The amendmentclarifies that when an intangible asset is revalued the gross carrying amount is adjusted in amanner that is consistent with the revaluation of the carrying amount.

The Group has elected not to adopt these standards, revisions and interpretations in advance of theireffective dates.The Group anticipates that the adoption of these standards, revisions and interpretations will have nomaterial impact on the financial statements of the Group in the period of initial application.




13 of 56



(b) New standards and amendments to existing standards in issue not yet adopted

At the date of authorisation of these financial statements the following standards, amendments toexisting standards and interpretations were in issue, but not yet effective:

• IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January2018);

• IFRS 15 “Revenue from Contracts with Customers” (effective for annual periods beginning on orafter 1 January 2018);

· The IASB has issued the Annual Improvements to IFRSs 2014 – 2016 Cycle, which is acollection of amendments to IFRSs. The amendments are effective for annual periods beginningon or after 1 July 2017. Management will assess if the changes of the standard will have animpact on the financial position and performance of the Company;

· IFRS 13 Fair Value Measurement: This improvement in the Basis of Conclusion of IFRS 13clarifies that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability tomeasure short-term receivables and payables with no stated interest rate at their invoiceamounts without discounting if the effect of not discounting is immaterial. This improvementclarifies that the scope of the portfolio exception defined in paragraph 52 of IFRS 13 includes allcontracts accounted for within the scope of IAS 39 Financial Instruments: Recognition andMeasurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitionof financial assets or financial liabilities as defined in IAS 32 Financial Instruments:Presentation;

• IAS 24 Related Party Disclosures: The amendment clarifies that an entity providing keymanagement personnel services to the reporting entity or to the parent of the reporting entity isa related party of the reporting entity;

The Group has elected not to adopt these new standards and amendments to existing standards inadvance of their effective dates. The Group anticipates that the adoption of these standards andamendments to existing standards will have no material impact on the financial statements of the Groupin the period of initial application.

3.2 Functional and preparation currency

Items included in the financial statements of each of the Group’s entities are measured using US Dollar.Other currencies in which entities operate, which are Moldovan Lei (MDL), Swiss Franc (CHF), Euro(EUR), Ukrainian Hrivnea (UAH) are considered as foreign currencies.

Transactions in currencies other than the functional currencies of the Group companies are initiallyrecorded at the rates of exchange prevailing on the dates of the transactions. Subsequently, monetaryassets and liabilities denominated in such currencies are translated at the rates prevailing on thestatement of financial position date.




14 of 56


3.2 Functional and preparation currency (continued)

Non‑monetary items carried at fair value that are denominated in foreign currencies are retranslated atthe rates prevailing at the date when the fair value was determined. Non‑monetary items that aremeasured in terms of historical cost in a foreign currency are not retranslated.

At 31 March 2018, the official rate of exchange as determined by the National Bank of Moldova, CentralEuropean Bank and Swiss National Bank , was US dollar (“USD”), USD 1 = 16.4681 MDL (30 June2017: 18.1544) and Euro (“EUR”), EUR 1 = 20.2929 MDL (30 June 2017: 20.7060), USD 1 =0.9566 CHF(2017: 0.9585), EUR 1 = 1.1788 CHF (30 June 2017: 1.0932).

3.3 Going concern

These financial statements have been prepared based on the going concern principle, which assumes thatthe Group will continue to operate in the foreseeable future. In order to assess the reasonability of thisassumption, the management reviews the forecasts of the future cash inflows. The management believesthat the Group will be able to continue to operate as a going concern in the foreseeable future and,therefore, this principle should be applied in the preparation of these financial statements.

3.4 Basis of consolidation

The interim consolidated financial statements comprise the financial statements of Aragvi HoldingInternational Ltd and all its subsidiaries. The financial statements of the subsidiaries are prepared for thesame reporting period as the Parent company, i.e. nine month period ended 31 March, using consistentaccounting policies. Adjustments are made to bring into line any dissimilar accounting policies that mayexist.

All inter-company balances and transactions, including unrealized profits arising from intra-grouptransactions, have been eliminated in full. Unrealized losses are eliminated unless costs cannot berecovered.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to beconsolidated from the date on which control is transferred out of the Group.

Control is achieved where the parent company has the power to govern the financial and operating policiesof an investee enterprise, either directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidatedstatement of comprehensive income from the effective date of acquisition and up to the effective date ofdisposal.




15 of 56


3.4 Basis of consolidation (continued)

Non-controlling interests at the date of the statement of the financial position represent the non-controlling equity holders’ portion of the fair values of the identifiable assets and liabilities of thesubsidiary at the acquisition date and the non-controlling equity holders’ portion of movements in equitysince the date of the acquisition. Total comprehensive income of subsidiaries is attributed to the equityholders of the Group and to the non-controlling interests even if this results in the non-controllinginterests having a deficit balance.

Special purpose entities are consolidated based on the assumption that the Group has control andconsequently the special purpose entity conducts its activities to meet Group’s specific needs, the Grouphas decision making powers, the Group has the right to the entities benefits and the Group is exposed tothe entities business risks.Share capital of SPE’s is not a subject to elimination and remains at the consolidated level of the Group.

3.5 Business Combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition ismeasured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred orassumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus anycosts directly attributable to the business combination. The acquiree's identifiable assets, liabilities andcontingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fairvalues at the acquisition date, except for non-current assets (or disposal groups) that are classified as heldfor sale in accordance with IFRS 5 ''Non-current Assets Held for Sale and Discontinued Operations'',which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess ofthe cost of the business combination over the Group's interest in the net fair value of the identifiableassets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the netfair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of thebusiness combination, the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority's proportion ofthe net fair value of the assets, liabilities and contingent liabilities recognised.

In the case that identifiable net assets attributable to the Group, after reassessment, exceed the cost ofacquisition, the difference is recognised in profit and loss as a gain on bargain purchase.Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing controlover the Subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’sinterests and the non-controlling interests are adjusted to reflect the changes in their relative interests inSubsidiaries. Any difference between the amount by which the non-controlling interests are adjusted andthe fair value of the consideration paid or received is recognised directly in equity and attributed to equityholders of the Holding.




16 of 56


3.6 Goodwill

Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess of fairvalue of consideration transferred over the Group's interest in the net fair value of the identifiable assets,liabilities and contingent liabilities of the subsidiary or jointly controlled entity recognised at the date ofacquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost lessany accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating unitsexpected to benefit from the synergies of the combination. Cash-generating units to which goodwill hasbeen allocated are tested for impairment annually, or more frequently when there is an indication that theunit may be impaired.

If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, theimpairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit andthen to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included inthe determination of the profit or loss on disposal.

3.7 Property, plant and equipment

Property, plant and equipment are carried at a re-valued amount, being its fair value at the date of therevaluation less any subsequent accumulated depreciation and subsequent accumulated impairmentlosses.

Positive differences on property, plant and equipment revaluation are recognised as revaluation reserveincluded in shareholders’ equity.

Negative revaluation differences are deducted from the revaluation reserve if amounts arising on priorrevaluations of the respective assets exist or are otherwise recognised as a loss in the reporting period.

The amounts included in the revaluation reserve are transferred to retained earnings when the relatedassets are disposed of.

Construction in progress is carried at cost less provision for any impairment in value. Upon completion,assets are transferred to property, plant and equipment at their carrying value. Construction in progress isnot depreciated until the asset is available for use.

Depreciation is calculated using the straight-line method from the time assets are available for use. So towrite down their cost or valuation to their estimated residual values over their remaining useful lives fromthe date of revaluation report:




17 of 56


3.7 Property, plant and equipment (continued)

Type Years

Buildings and construction 3 - 42Plant, machinery and equipment 1 - 35Agricultural vehicles and equipment 3 - 10Other fixed assets and assets used in non-core activities 3 – 4

Land is not depreciated

When an item of property, plant and equipment is re-valued, any accumulated depreciation is reversedso that the carrying amount of the asset after revaluation equals its re-valued amount.

Interest costs on borrowings to finance the construction of property, plant and equipment arecapitalised during the period of time that is required to complete and prepare the asset for its intendeduse.

Repairs and maintenance are charged to the income statement during the financial period in which theyare incurred.

Subsequent costs are included in the assets’ carrying amount or recognized as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item will flow tothe Group and the cost of the item can be measured reliably. Subsequent costs are depreciated over theremaining useful life of the related asset.

Buildings and constructions, production machinery and equipment, accounted for at revalued amounts,being the fair value, which is determined using external professional expert evaluation on a yearly basis.Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amountof the asset, and the net amount is restated to the revalued amount of the asset. Except for land, allother property, plant and equipment is stated at historical cost less depreciation and accumulatedimpairment losses. Land is carried at cost less accumulated impairment losses and is not depreciated.

The fair value was defined as the amount for which an asset could have been exchanged betweenknowledgeable willing parties in an arm’s length transaction. The fair value of marketable assets wasdetermined at their market value. If there is no market‑based evidence of fair value because of thespecialised nature of the item of property, plant and equipment and the item is rarely sold, except aspart of a continuing business, an income approach was used to estimate the fair value.

Property, plant and equipment acquired in a business combination are initially recognised at their fairvalue which is based on valuations performed by independent professionally qualified appraisers.




18 of 56


3.7 Property, plant and equipment (continued)

Capitalised costs include major expenditures for improvements and replacements that extend the usefullives of assets or increase their revenue‑generating capacity. Repairs and maintenance expendituresthat do not meet the foregoing criteria for capitalisation are charged to the income statement asincurred.

If the asset’s carrying amount is increased as a result of a revaluation, the increase is credited directly toother comprehensive income or loss. However, such increase is recognised in profit or loss to the extentthat it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

If the asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised inprofit or loss. However, such decrease is debited directly to other comprehensive income or loss to theextent of any credit balance existing in the revaluation surplus in respect of that asset.

Depreciation on revealed assets is charged to the profit or loss. On the subsequent sale or retirement ofrevealed assets, the revaluation surplus remaining in the revaluation reserve is transferred directly toretained earnings. No transfer is made from the revaluation reserve to retained earnings except when anasset is derecognised.

Property, plant and equipment are depreciated over the estimated useful economic lives of assets underthe straight‑line method.

ImpairmentProperty, plant and equipment are periodically reviewed for impairment. Where the carrying amount ofan asset is greater than its estimated recoverable amount, it is written down immediately to itsrecoverable amount.

The recoverable amount is determined as the higher of the asset’s net selling price and value in use. Thevalue in use of the assets is estimated based on the forecast future cash inflows and outflows to bederived from continuing use of the assets and from the estimated net proceeds on disposal, discountedto present value using an appropriate discount rate.

3.8 Intangible assets

Trademarks

Intangible assets acquired separately from a business are capitalised at initial cost. The ‘Floris’, ‘MisterCook’ and ‘Aroma Soarelui’ trademarks have indefinite useful life and thus are not amortised but aretested for impairment by comparing their recoverable amount with their carrying amount annually andwhenever there is an indication that the trademarks may be impaired.




19 of 56


3.8 Intangible assets (continued)

Other intangible assets

Expenditure on acquired software, know-how and licenses is capitalised and amortised using the straight-line method over their expected useful lives. The estimated useful lives assigned to intangible assets donot exceed 5 years. Costs associated with maintenance of computer software are recognised as an expenseas incurred.

3.9 Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to thecontractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial assetexpire, or when the financial asset and all substantial risks and rewards are transferred.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs,except for financial assets and financial liabilities carried at fair value through profit or loss, which aremeasured initially at fair value.

Financial assets and financial liabilities are measured subsequently as described below.

Financial AssetsFor the purpose of subsequent measurement, financial assets other than those designated as hedginginstruments are classified into the following categories upon initial recognition: • loans and receivables;• financial assets at fair value through profit or loss; • held to maturity investments; and • available-for-sale financial assets. The category determines subsequent measurement and whether any resultingincome and expense is recognised in profit or loss or in other comprehensive income. All financial assetsexcept for those at fair value through profit or loss are subject to review for impairment at least at eachreporting date. Financial assets are impaired when there is any objective evidence that a financial assetor a group of financial assets is impaired. Different criteria to determine impairment are applied foreach category of financial assets, which are described below. All income and expenses relating tofinancial assets that are recognised in profit or loss are presented within 'finance costs', 'finance income'or 'other financial items', except for impairment of trade receivables which is presented within 'otherexpenses'.




20 of 56


3.9 Financial instruments (continued)

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that arenot quoted in an active market. They are included in current assets, except for maturities greater than 12months after the balance sheet date. These are classified as non-current assets. The Group’s loans andreceivables comprise trade and other receivables and cash and cash equivalents in the balance sheet(Note 3.12 and 3.13).

(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or notclassified in any of the other categories. They are included in non-current assets unless managementintends to dispose of the investment within 12 months of the balance sheet date. Managementdetermines the appropriate classification of its investments at the time of purchase.The Company has equity investments in subsidiaries and associates. All material subsidiaries areconsolidated. Remaining investments are accounted for and disclosed as available-for-sale investmentsin accordance with IAS 39 “Financial Instruments: Recognition and Measurement”.

(c) Equity instruments

Investments in equity securities are carried at cost less impairment, due to the absence of marketindicators of their fair value. The amount of the impairment loss for available-for-sale equityinvestments is calculated as the difference between the asset’s cost and the present value of expectedfuture cash inflows discounted at the weighted average cost of the Group’s capital. All purchase andsales of equity securities that require delivery within the time frame established by regulation or marketconvention are recognised at the trade date, which is the date the Group commits to purchase or sell theequity securities.

d) Financial assets through profit or loss

Financial assets at fair value through profit or loss include items that are either classified as held fortrading or that meet certain conditions and are designated at fair value through profit or loss uponinitial recognition. All derivative financial instruments fall into this category, except for thosedesignated and effective as hedging instruments, for which the hedge accounting requirements apply(see below).




21 of 56


3.10 Derivative financial instruments

Forward contracts

Forward contracts, which include physical contracts to sell or purchase commodities that do not meetthe own use exemption, are initially recognised at fair value when the Group becomes a party to thecontractual provisions of the instrument and are subsequently re-measured to fair value at the end ofeach reporting period. Fair values are determined using quoted market prices, dealer price quotation orusing models and other valuation techniques, the key inputs for which include current market andcontractual prices for the underlying instrument, time to expiry, yield curves, volatility underlyinginstrument and counterparty risk.

3.11 Inventories

Trading inventories are valued at fair value less costs to sell with the remainder valued at the lower of costor net realisable value. Unrealised gains and losses from changes in fair value are reported in cost of goodssold.

Other inventories are valued at the lower of cost or net realisable value. Cost is determined using theweighted average method and comprises material costs, labour costs, and purchase value.

Financing and storage costs related to inventory are expensed as incurred.

3.12 Trade receivables and advances given

Trade receivables are amounts due from customers for goods sold or services performed in the ordinarycourse of business.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost usingthe effective interest method, less provision for impairment. An allowance for doubtful trade receivables isestablished when there is objective evidence that the Group will not be able to collect all amounts dueaccording to the original terms of the receivables. Significant financial difficulties of the debtor, probabilitythat the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments(more than 12 months overdue) are considered indicators that the trade receivable is impaired.

The amount of the provision is the difference between the asset’s carrying amount and the present valueestimated future cash flows, discounted at the original effective interest rate. The carrying amount of theasset is reduced through the use of an allowance account, and the amount of the loss is recognised in theincome statement within ‘distribution costs’. When a trade receivable is uncollectible, it is written offagainst the allowance account for trade receivables. Subsequent recoveries of amounts previously writtenoff are credited against ‘distribution costs’ in the income statement.




22 of 56


3.13 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flowstatement, cash and cash equivalents comprise cash on hand, deposits held at call with banks and othershort-term highly liquid investments with original maturities of three months or less.

3.14 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary courseof business from suppliers. Accounts payable are classified as current liabilities if payment is due withinone year or less (or in the normal operating cycle of the business if longer). If not, they are presented asnon-current liabilities.

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost,using the effective interest rate method.

3.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost using the effective yield method; any difference between proceeds(net of transaction costs) and the redemption value is recognised in the income statement over the periodof the borrowings. Interest costs on borrowings to finance the construction of property, plant andequipment are capitalised during the period of time that is required to complete and prepare the asset forits intended use. Other borrowing costs are expensed as incurred.

3.16 Non-current liabilities

Non-current liabilities represent amounts that are due more than twelve months from the consolidatedstatement of financial position date.

3.17 Shareholders’ equity

(a) Share capital

Ordinary and preference shares are classified as equity.

(b) Dividends

Dividends are recognised as a liability and deducted from equity at the balance sheet date only if theyare approved before or on the balance sheet date. Dividends are disclosed when they are proposedbefore the balance sheet date or proposed or approved after the balance sheet date but before theconsolidated financial statements are authorised for issue.




23 of 56


3.18 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods andservices in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns,rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable thatfuture economic benefits will flow to the entity and when specific criteria have been met for each of theGroup’s activities as described below.

The amount of revenue is not considered to be reliably measurable until all contingencies relating to thesale have been resolved. The Group bases its estimates on historical results, taking into consideration thetype of customer, the type of transaction and the specifics of each arrangement.

(a) Sales of goods

The Group manufactures and sells vegetable oil and oilcake, seeds, cereals and other goods in thewholesale market. Sales of goods are recognised when significant risks and rewards of ownership of thegoods are transferred to the customer.

(b) Commission revenue

Commission income is recognised when the right to receive payment is established.

(c) Processing services

The Group renders raw material processes services to third parties. These services are provided on atime and material basis. Revenue is measured at the contractual rates for labour hours and contractualprices for materials consumed, and recognised when the processed product is dispatched to thecustomer.

3.18 Foreign currencies

Monetary assets and liabilities denominated in foreign currencies other than the functional currency of therelevant Group are translated into that functional currency at exchange rates ruling at the balance sheetdate.

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions or valuation where items are re-measured. Exchange differencesarising from the settlement of transactions denominated in foreign currencies are included in the incomestatement.




24 of 56


3.19 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the incomestatement, except to the extent that it relates to items recognised directly in equity. In this case, the taxis also recognised in equity.

The current income tax charge is calculated on the basis of the tax laws enacted in Republic of Moldova,Swiss Confederation and Republic of Cyprus. Management periodically evaluates positions taken in taxreturns with respect to situations in which applicable tax regulation is subject to interpretation. Itestablishes provisions where appropriate on the basis of amounts projected to be paid to the taxauthorities.

Deferred income tax is calculated using the balance sheet liability method in respect of temporarydifferences arising between the carrying amount of assets and liabilities in the financial statements andtheir corresponding tax bases used in the computation of taxable profit. Deferred tax balances aremeasured at tax rates enacted or substantively enacted at the end of the reporting period which areexpected to apply to the period when the temporary differences will reverse or the tax loss carryforwards will be utilised. Deferred tax assets and liabilities are netted only within the individualcompanies of the Group. Deferred tax assets for deductible temporary differences and tax loss carryforwards are recorded only to the extent that it is probable that future taxable profit will be availableagainst which the deductions can be utilised.

3.20 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result ofpast events. It is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation, and a reliable estimate of the amount of the obligation to be made.

3.21 Pension costs and employee benefits

The Group, in the normal course of business, makes payments to the Moldovan State on behalf of itsemployees.

The Group agreed to provide certain retirement benefits for its employees which are unfunded. Themanagement uses for estimation of the legal obligation in relation with retirement benefits othermethod than actuarial technique considering technique cannot be properly applied due to uncertaintyregarding demographic predictions in Moldova and future salary costs evolution of the group entities.




25 of 56


3.22 Contingencies

Contingent liabilities are not recognised in the financial statements. They are disclosed unless thepossibility of an outflow of resources embodying economic benefits is remote. A contingent asset is notrecognised in the financial statements but is disclosed when an inflow of economic benefits is probable.

3.23 Subsequent events

Post year end events that provide additional information about the Group’s position at the balance sheetdate or those that indicate the going concern assumption is not appropriate (adjusting events), arereflected in the accompanying financial statements. Post year end events that are not adjusting eventsare disclosed in the notes when material.

3.24 Related parties

Parties are considered related when one party either through ownership, contractual rights, familyrelationship or otherwise, has the ability to directly or indirectly control, or significantly influence theother party.

3.25 Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurancethat the grant will be received and the group will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the income statement over theperiod necessary to match them with the costs that they are intended to compensate.

Government grants relating to property, plant and equipment are included in noncurrent liabilities asdeferred government grants and are credited to the income statement on a straight- line basis over theexpected lives of the related assets.

3.26 Borrowing cost

General and specific borrowing costs directly attributable to the acquisition, construction or productionof qualifying assets, which are assets that necessarily take a substantial period of time to get ready fortheir intended use or sale, are added to the cost of those assets, until such time as the assets aresubstantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.




26 of 56

3 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)3.27 Comparatives

Comparative information is disclosed in respect of the previous period for all numerical information inthe interim consolidated financial statements. Comparative information is also included for narrativeand descriptive information when is relevant to an understanding of the current period's consolidatedfinancial statements.

The comparative information included in interim consolidated statement of cash flows has beenpresented for the full year ended 30 June 2017, even though IAS 34 requires the statement of cash flowsto be presented with comparative information for the equivalent period in the previous financial year.

Management found impracticable to prepare the interim consolidated statement of cash flows for thecomparative nine month period ended 31 March 2017, instead presenting it for the full year ended 30June 2017. Management considers that this presentation will not significantly impact the understandingof these interim consolidated financial statements by the users.




27 of 56

4 FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, cashflow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk managementprogramme focuses on the unpredictability of financial markets and seeks to reduce potential adverseeffects on the Group’s financial performance. The Group does not use derivative financial instrumentsto hedge certain risk exposures.

(a) Market risk

The Group takes on exposure to market risks. Market risks arise from open positions in interest rate,currency and equity financial instruments, all of which are exposed to general and specific marketmovements. Management reviews such risks periodically, with the objective of ascertaining whetherthey are likely to exceed certain limits. However, the use of this approach does not prevent lossesoutside of these limits in the event of more significant market movements.

(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from variouscurrency exposures, primarily with respect to the Moldovan Lei and EURO. Foreign exchange risk arisesfrom future commercial transactions, recognised assets and liabilities.

Management has set up a policy to require Group companies to manage their foreign exchange riskagainst functional currency. To manage their foreign exchange risk arising from future commercialtransactions and recognised assets and liabilities, entities of the Group use foreign currency (MoldovanLei and EUR) for sales and purchase contracts.

(ii) Cash flow interest rate risk

The Group's interest rate risk arises from short-term originated loans, and short-term borrowings frombanks and suppliers. The Group’s borrowings and loans have been issued mainly at fixed rates and forsome borrowings at fixed margin plus 3 or 6 month LIBOR. Fair value of borrowings approximates theircarrying value. The Group’s significant interest bearing liabilities are disclosed in Note 15. The Grouphas not entered into any hedging arrangements in respect of its interest rate exposures.

(b) Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, aswell as credit exposures to wholesale customers, including outstanding receivables and committedtransactions.




28 of 56

4 FINANCIAL RISK MANAGEMENT (CONTINUED)

4.1 Financial risk factors (continued)

Cash and cash equivalents are placed with a limited number of financial institutions. However, risk ofloss is remote because the Group has a policy of only using large, creditworthy financial institutions.Financial assets, which potentially subject the Group to credit risk, consist principally of tradereceivables. The Group has policies in place to ensure that sales of products and services are made tocustomers with an appropriate credit history. The carrying amount of accounts receivable, net ofallowance for doubtful accounts receivables, represents the maximum amount exposed to credit risk.Although collection of receivables could be influenced by economic factors, management believes thatthere is no significant risk of loss to the Group beyond the provisions already recorded.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of fundingthrough an adequate amount of committed credit facilities and the ability to close out market positions.The table below analyses the Group's financial liabilities into relevant maturity groupings based on theremaining period at the balance sheet date to the contractual maturity date. The amounts disclosed inthe table are the contractual undiscounted cash flows. Balances due within 12 months equal theircarrying balances as the impact of discounting is not significant.

Less than Between 1 Between 3 months Over31 March 2018 1 month and 3 months and 1 year 1 year Total

Trade and other payables 37,451 - - - 37,451Borrowings 43,138 169,585 23,716 59,546 295,985Total 80,589 169,585 23,716 59,546 333,436

Less than Between 1 Between 3 months Over30 June 2017 1 month and 3 months and 1 year 1 year Total

Trade and other payables 28,166 - - 5,129 33,295Borrowings 39.577 97,770 41,585 86,456 __265,388Total 67,743 97,770 41,585 91,585 298,683

(d) Compliance risk

Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non-compliance with laws and regulations of the state. The risk is limited to a significant extent due to thesupervision applied by the legal department of the Group, as well as by the monitoring controls appliedby the Group. The amount of possible contingent penalties to be paid on the transactions identified asnon-compliant with legal requirements of the repatriation law of Republic of Moldova are disclosed inNote 27.




29 of 56


4.2 Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as agoing concern in order to provide returns for the shareholders and to reduce the cost of capital.

The Shareholder monitors gearing at its level. The Group monitors capital on the basis of the gearingratio.

The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as totalborrowings (as shown in the balance sheet) less cash and cash equivalents.

Total capital is calculated as equity, as shown in the balance sheet, plus net debt.

The gearing ratio as at 31 March 2018 and 30 June 2017 was as follows:

31 March 2018 30 June 2017

Total borrowings (Note 15) 295,985 265,388Less: cash and cash equivalents (Note13) (15,421) (8,649)

Net debt 280,564 256,739Total equity 241,720 216,854

Total capital 522,284 473,593

Gearing ratio 54% 54%




30 of 56


4.3 Fair value estimation

Fair values are primarily determined using quoted market prices or standard pricing models usingobservable market inputs where available and are presented to reflect the expected gross future cashin/outflows. The Company classifies the fair values of its financial instruments into a three levelhierarchy based on the degree of the source and observability of the inputs that are used to derive thefair value of the financial asset or liability as follows:

Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilitiesthat the Company can assess at the measurement date; or

Level 2 Inputs other than quoted inputs included in Level 1 that are observable for the assets orliabilities, either directly or indirectly; or

Level 3 Unobservable inputs for the assets or liabilities, requiring the Company to make marketbased assumptions.

Level 1 classification primarily include financial assets and financial liabilities that are exchange traded,whereas Level 2 classifications primarily include financial assets and financial liabilities which derivetheir fair value primarily from exchange quotes and readily observable quotes. Level 3 classificationsprimarily include financial assets and financial liabilities which derive their fair value predominatelyfrom models that use applicable market based estimates surrounding location, quality and creditdifferentials. In circumstances where the Company cannot verify fair value with observable marketinputs (Level 3 fair values), it is possible that a different valuation model could produce a materiallydifferent estimate of fair value.

It is the Company’s policy that transactions and activities in trade related financial instruments beconcluded under master netting agreements or long form confirmations to enable balances due to/froma common counterparty to be offset in the event of default, insolvency or bankruptcy by thecounterparty.

The following tables show the fair values of financial assets and financial liabilities as at 31 March 2018and 30 June 2017. Other assets and liabilities which are measured at fair value on a recurring basis arecash and cash equivalents. There are no nonrecurring fair value measurements.

31 March 2018 Level 1 Level 2 Level 3

Non-financial assets

Property, plant and equipment - - 233,350

Total - 233,350

30 June 2017 Level 1 Level 2 Level 3

Non-financial assets

Property, plant and equipment - - 237,191

Total - 237,191




31 of 56


4.4 Fair value estimation (continued)


Financial Assets

Forward Contracts - 42,243 -

Total - 42,243 -

30 June 2017 Level 1 Level 2 Level 3

Financial Assets

Forward Contracts - 96,395 -

Total - 96,395 -


Financial liabilities

Borrowings - - 295,985

Total - - 295,985

30 June 2017

Level 1 Level 2 Level 3

Financial liabilities

Borrowings - - 265,388

Total - - 265,388




32 of 56

5 CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under thecircumstances.

5.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimateswill, by definition, rarely equal the related actual results. The estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities withinthe next financial year are outlined below.

(a) Estimated fair value of property, plant and equipment

At each balance sheet date the Group assesses whether the carrying amount of the Group’s assetssignificantly differ from their fair value.

As at 30 June 2017, the group performed a revaluation of its assets. The revaluation was performed inaccordance with International Valuation Standards by Winterhill SRL. The value of the assets of thegroup reached an amount of 237,191 USD.

As at June 2017, for the purposes of an assessment of fair value of property, plant and equipment of theGroup, management made the following assumptions and estimates related to new markets:

· Earnings before Interest Tax and Depreciation for the 12 months periods ending 30 June 2018until 30 June 2022 are projected to be not lower than USD 49,719, USD 51,013, USD 52,917 andUSD 53,549 respectively;

· Selling and raw material prices for forecasted period were considered to increase per annum at acorrelated rate to increase of selling prices for finished products during subsequent financialperiods;

· Net working capital increase considered in line with revenue and selling and general andadministrative expenses increase.




33 of 56

5 CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGMENTS(CONTINUED)

5.1 Critical accounting estimates and assumptions (continued)

b. Tax legislation and income tax

Significant judgement is required in determining the provision for income taxes. There are transactionsand calculations for which the ultimate tax determination is uncertain during the ordinary course ofbusiness. The Group recognises liabilities for anticipated tax audit issues based on estimates of whetheradditional taxes will be due. Where the final tax outcome of these matters is different from the amountsthat were initially recorded, such differences will impact the income tax and deferred tax provisions in theperiod in which such determination is made.

c. Related party borrowings

In the normal course of business the Group enters into transactions with its related parties. Thesetransactions are priced predominantly at market rates.

Judgement is applied in determining if borrowings are provided at market or non-market interest rates,where there is no active market for similar transactions.

The basis for judgement is pricing for similar types of transactions with unrelated parties and effectiveinterest rate analyses.

d. Impairment of trade and other receivables

The Group reviews its trade and other receivables for evidence of their recoverability. Such evidenceincludes the customer's payment record, the customer's overall financial position and any other marketinformation concerning the client which becomes available. If indications of irrecoverability exist, therecoverable amount is estimated and a respective impairment of trade and other receivables is made.The amount of the provision is charged through the combined consolidated statement of comprehensiveincome. The review of credit risk is continuous and the methodology and assumptions used forestimating the provision are reviewed regularly and adjusted accordingly. Where there are litigations inprogress, balances are provided accordingly.




34 of 56



e. Write down of inventories

The Group reviews its inventory records for evidence regarding the saleability of inventory and its netrealizable value on disposal. The amount of write down for obsolete and slow moving inventory is basedon management's past experience, taking into consideration the value of inventory items close to expiryas well as the movement and the level of stock of each category of inventory. The amount of write downis recognized in the combined consolidated statement of comprehensive income. The review of the netrealisable value of the inventory is continuous and the methodology and assumptions used forestimating the amount of write down for obsolete and slow moving inventory are reviewed regularly andadjusted accordingly.

f. Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.If any such indication exists, or when annual impairment testing for an asset is required, the Groupmakes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of anasset's or cash generating unit's fair value less costs to sell and its value in use and is determined for anindividual asset, unless the asset does not generate cash inflows that are largely independent of thosefrom other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverableamount, the asset is considered impaired and is written down to its recoverable amount. In assessingvalue in use, the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specificto the asset. In determining fair value less costs to sell, an appropriate valuation model is used. Thesecalculations are corroborated by valuation multiples, quoted share prices for publicly tradedsubsidiaries or other available fair value indicators.

g. Impairment of intangible asset

Intangible assets are initially recorded at acquisition cost and are amortized on a straight line basis overtheir useful economic life. Intangible assets that are acquired through a business combination areinitially recorded at fair value at the date of acquisition. Intangible assets with indefinite useful life arereviewed for impairment at least once per year. The impairment test is performed using the discountedcash flows expected to be generated through the use of the intangible assets, using a discount rate thatreflects the current market estimations and the risks associated with the asset. When it is impractical toestimate the recoverable amount of an asset, the Group estimates the recoverable amount of the cashgenerating unit in which the asset belongs to.




35 of 56



h. Impairment Testing of Goodwill and Intangible Assets with Indefinite Useful Lives

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requiresmanagement to estimate the future cash flows expected to arise from the cash-generating unit and asuitable discount rate in order to calculate their present value.

The carrying amount of goodwill at 31 March 2018 and intangible assets with indefinite useful livesamounted to USD 48,688 (30 June 2017: USD 48,688). No impairment loss was recognised for thefinancial years ended 31 March 2018 and 30 June 2017.

i. Useful lives

The Group depreciates its fixed assets and intangible assets over their estimated useful lives which areassessed on an annual basis. The actual lives of these assets can vary depending on a variety of factors.Technological innovation, product life cycles, and maintenance programs all impact the useful lives andresidual values of the assets. In financial year 2014 management revised the depreciation policy andapplied the standards used by the Group’s direct competitors in the Black Sea region.

j. Advances for agricultural and farming activity

For the purposes of an assessment of fair value gains on the agricultural activity, management made thefollowing assumptions and estimates:

· Market prices for commodities to be received as result of the agreement were benchmarked toprices on the date of receipt of commodities;




36 of 56

6 PROPERTY, PLANT AND EQUIPMENT

Land, buildingsand constructions

Plant, Machineryand

_____equipment

Other fixed assetsof non-core

_______activities

Assets incourse of

__construction _____TotalAs at 30 June 2016Cost 144,275 96,685 17,733 9,547 268,240Accumulated depreciation ________ (15,075) ________(15,215) _________(4,410) ___________ - _____(34,700)

Net book amount ________129,200 ________81,470 ________13,323 ________9,547 _____233,540

Year ended 30 June 2017Opening net book amount 129,200 81,470 13,323 9,547 233,540Additions 248 330 113 12,918 13,610Disposals (44) (231) (210) (2,598) (3,084)Transfers 3,956 5,206 78 (9,240) -Fair value reserve 1,311 866 133 105 2,415Depreciation charge __________(6,116) ________ (2,727) _________ (447) ____________- _____(9,291)

Closing net book amount _______ _128,555 ________84,914 ________12,990 _______10,732 ____ _237,191




37 of 56

6 PROPERTY PLANT AND EQUIPMENT (CONTINUED)

Land, buildings andconstructions

Plant, Machineryand

_____equipment

Other fixed assetsof non-core

_______activities

Assets incourse of

__construction _______TotalAs at 30 June 2017Net book value 128,555 84,914 12,990 10,732 237,191

Net book amount _______ _128,555 ________84,914 ________12,990 _______10,732 ____ _237,191

Nine month period ended 31March 2018Opening net book amount 128,555 84,914 12,990 10,732 237,191Additions 97 178 95 5,319 5,689Disposals (979) (445) (186) (867) (2,477)Transfers 113 278 52 (443) -Depreciation charge _________ (4,643) ________ (2,070) ________ (340) ________ - ______ (7,053)

Closing net book amount 123,143 82,855 ________12,611 _______14,741 ___ _233,350




38 of 56

6 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

The property, plant and equipment were re-valued on 30 June 2017.

The revaluation was performed in accordance with International Valuation Standards by Winterhill SRL(Romania), a well-known valuation Company, who holds recognised and relevant professionalqualifications and has recent experience in valuation of assets of similar location and category.

The valuation of assets was performed at fair value in compliance with International Standards onValuation which defines fair value as “The amount for which an asset could be exchanged, or a liabilitysettled, between knowledgeable, willing parties in an arm's length transaction”. Fair values weredetermined based on the income approach.

The composition of the main assets is as follows:Fair value

Name & Location 30 June 2017

Trans Cargo - Giurgiulesti 44,330Trans Bulk - Giurgiulesti 7,685Elevator Anengrain - Anenii Noi 2,180Transoil - Ceadir Lunga 28,600Elevator Prut - Cantemir 3,170Elevator Flograin - Floresti 1,280Elevator Unco Cereale - Unchitesti 2,895Elevator Agro Floris Nord - Rogojeni 1,870Floarea Soarelui - Balti 54,090Elevator Ulei Nord - Otaci 6,170Exchange points 3,840Elevator Kelly Grains 1+2 Causeni 18,040Elevator Molgranum - Donduseni 4,100Elevator Cereale Prut - Ungheni 5,800Aur Alb - Ceadir Lunga 5,600Elevator Iargara - Iargara 5,140Elevator Molgranum - Greceni 4,890Reniyskiy Elevator – Reni 20,190Reni-Line – Reni 9,920FFA Trans Oil – Chisinau 7,313Kelley Grains Corporation – Chisinau 57Trans-Oil International - Geneva 31

237,191




39 of 56


The property, plant and equipment of the Group have been revalued in 2017 by an external andqualified valuator Winterhill Romania SRL. The Group has not valued the assets of Kelley GrainsCorporation and Trans-Oil International as these assets are clearly immaterial. The Group has, also, didnot value the assets of FFA Trans Oil because management believes the book value of these assets as thefair one. Assets hold by FFA Trans Oil contain following items:

- 75 grain hopper wagons acquired in the financial year 2014;- Office premises located in Chisinau, at 1 Veronica Micle Street;- Office premises located in Chisinau, at 27 Lev Tolstoi Street.

The following significant assumptions were applied:

· Cash flows were projected for each operational segment, the weight of each segment from totalprojected revenues for the periods being as such:

- crushing segment – 44%;- trading segment – 39%- refining and bottling segments – 10%;- other segments - 7%;

· raw material costs are projected to represent 75% of total revenue throughout remaining projectedperiod. Other production costs, such as labour costs and maintenance expenses were projectedbased on historical data. Commercial costs were projected on the level of 8% of the total revenuethroughout the projection period

· utilities costs comprise the electricity and gas payments. Utilities costs were projected on the basisof historical consumption rates and utilities tariffs provided by the Group as of the valuation date;

· return on investments of 15.5%.

If items of property, plant and equipment were stated on the historical cost basis, the amounts would beas follows:

Plant, Other Land, machinery fixed assets Assets in buildings and and of non-core course of constructions equipment activities construction Total

As at 31 March 2018Cost 44,441 37,362 990 14,710 97,503

Accumulated depreciation ___(12,034) _(20,229) ___(505) _____- __(32,768)

Net book amount 32,407 17,133 485 14,710 64,735

As at 30 June 2017Cost 44,344 37,184 894 9,392 91,814

Accumulated depreciation _(11,148) __(18,739) ___(468) _____- __(30,355)

Net book amount 33,196 18,445 426 9,392 61,459




40 of 56


Assets in course of construction comprise equipment which is not yet installed amounting to USD14,741 (2017: 10,732). The main assets under construction comprise the additional grain storage siloand in Giurgiulesti Port. This improvement will lead to:

- Increase in storage capacity by 10,000 metric tons;- Increase of annual traded volumes by circa 250,000 metric tons;- Increase in annual EBITDA by USD 1’200;- Decrease of loading cost from 4.5 USD to 3.7 USD per metric ton;

Also, a significant improvement is the new extraction division at Floarea Soarelui SA plant. Upgradedextraction will allow to fully realize the potential of investments that have been already made. The mainobjective for building a new extraction is to match the press division capacity and obtain followingbenefits:

- Processing capacity will reach 1,200 metric tons of sunflower seeds equivalent per 24h;- Increase in annual EBITDA by USD 2,500.

As of the date of the present interim consolidated financial statements, main assets of the Group, asdescribed above, were pledged to various lenders of the Group.




41 of 56

7 INTANGIBLE ASSETS

Goodwill BrandsComputer

software Licenses

Otherintangible assets Total

As at 30 June 2016Cost 48,688 1,791 110 24 65 50,678Accumulateddepreciation _______- (30) (109) (10) (18) (167)Net book amount 48,688 1,761 1 14 47 50,511

Year ended 30 June2017Opening net bookamount 48,688 1,761 1 14 47 50,511Additions - - 17 - - 17Disposals - - - - - -Transfers - - - - - -Revaluation - - - - - -Depreciation charge ______- _____- ____(11) _______- ________- _____(11)Closing net bookamount 48,688 1,761 7 14 47 50,517

As at 30 June 2017Cost 48,688 1,791 127 24 65 50,695Accumulateddepreciation ___ - (30) (120) (10) (18) (178)Net book amount 48,688 1,761 7 14 47 50,517

Nine month periodended 31 March 2018Opening net bookamount 48,688 1,761 7 14 47 50,517Additions - - 18 - - 18Disposals - - - - - -Transfers - - - - - -Revaluation - - - - - -Depreciation charge ___ - ___ (1) ___ (13) ___ - ___ - ___ (14)Closing net bookamount 48,688 1,760 12 14 47 50,521




42 of 56

7. INTANGIBLE ASSETS (CONTINUED)

As at 31 March 2018Cost 48,688 1,791 145 24 65 50,713Accumulateddepreciation ___ - ___ (31) ___ (133) ___ (10) ___ (18) ___ (192)Net book amount 48,688 1,760 12 14 47 50,521

On formation of the Group the Goodwill was allocated as follows:

As of 30 June 2012 Total Less Equity Goodwill assets historical valuation considerationGoodwill related to Visions Holding 110,948 26,421 107,667 23,140

entitiesGoodwill related to Stareverest 80,304 56,684 48,670 25,050

entities 191,252 83,105 156,337 48,190

As of 31 March 2018, no impairment of goodwill was identified. The recoverable amount was estimatedbased on the value in business valuation model used for the identification of the netassets of the entities owned by Visions Holding and Stareverest as of date of in-kind contribution of theshares of Visions Holding and Stareverest for the subscription of the on shares of the Company.

The Group’s key intellectual properties are the trademarks used in the bottled oil segment. The Groupowns 37 trademarks, out of which 8 are registered with the World Intellectual Property Organizationand 29 are registered in Moldova, including the Group’s brand name “Trans Oil Group of Companies”.

8 FORWARD CONTRACTS

The following tables present the fair value change of the Group’s forward contracts. Fair value is theprice that would be received to sell an asset or paid to transfer a liability in an orderly transaction in theprincipal (most advantageous) market at the measurement date under current market conditions.Where available, market values have been used to determine fair values. When market values are notavailable, fair values have been calculated by discounting expected cash flows at prevailing marketinterest and exchange rates. The estimated fair values have been determined using market informationand appropriate valuation methodologies.

Forward contracts 31 March 2018 30 June 2017

Fair value of forward contracts __ __42,243 _____96,395

42,243 96,395




43 of 56

8 FORWARD CONTRACTS (CONTINUED)

Fair value coming from forward contracts is made up from:

31 March 2018 30 June 2017

Forward contracts for inventory in progress 39,457 91,183Forward contracts at fair value 2,786 ______5,212

42,243 96,395

During financial year 2017 and 9 months ended 31 March 2018, the Group entered into severalagreements with farmers in Republic of Moldova for supply of commodities. The farmers cultivatewheat, corn, sunflower seeds, barley and rape seeds on the area of circa 127’000 ha. The Group isentitled to receive all commodities harvested out of those lands.

9 INVENTORIES

31 March 2018 30 June 2017

Own production 5,218 48Cereals purchased for resale 187,826 95,244Spare parts 197 272Packing materials 397 244Raw materials for agricultural products - 66Other inventories 3,383 2,679

197.021 98,553

Own production is made by the following:

31 March 2018 30 June 2017

Refined vegetable oil 1,708 -Crude vegetable oil 3,355 -Sunflower meal 117 8Soya meal - -Bottled vegetable oil 38 1Other cereals - 39

5,218 48




44 of 56

9 INVENTORIES (CONTINUED)

Cereals purchased for resale are made up as follows:

31 March 2018 30 June 2017

Wheat 34,250 19,390Barley 5,662 27Sunflower 57,566 45,671Corn 46,049 9,113Other cereals 35 44Soya 626 1,859Peas - -Rape 1,411 3,214Crude vegetable oil 38,555 15,296Sunflower meal _ ___3,672 _ ____631

187,826 95,244

Inventories are characterized as readily marketable inventories (RMI) since they relate to commoditieswhich have been purchased by the Group with the intention to be sold. These are treated by the Groupas readily convertible into cash because of their commodity characteristics and the fact that there arewidely available markets and international pricing mechanisms. The management estimates that thereadily marketable inventories represent 75% of the inventories as at the end of the reporting period.

As of the date of the present interim consolidated financial statements, the majority of the inventories ofthe Group, as described above, were pledged to various trade finance providers of the Group.

10 TRADE RECEIVABLES AND ADVANCES GIVEN

31 March 2018 30 June 2017

Trade receivables 6,338 10,478Advances to suppliers 32,394 21,832Receivables from related parties (Note 26) 8,340 8,007Receivables from the State budget 2,555 1,784Receivables from employees 1,314 2,736Other account receivables 5,101 3,880Less: allowance for doubtful trade receivables

and advances given (7,733) (7,475)

48,309 41,242

Advances to related parties and to suppliers have a non-financial character.




45 of 56

10 TRADE RECEIVABLES AND ADVANCES GIVEN (CONTINUED)

The amount of value added tax (‘VAT’) receivable included in the Receivables from the State budgetamounts to USD 2,193 (30 June 2017: USD 1,747). This amount is applicable for the refund from theGovernment as well as there is a possibility to net off the amount with VAT inland sales.

The movement in allowance for doubtful accounts receivables and advances given is as follows:

31 March 2018 30 June 2017

Balance as at 1 July (7,475) (6,621)Increase in provision - (854)Exchange rate difference _______(258) __________-

Balance at financial period ending as at31 March / 30 June (7,733) (7,475)

Trade receivables past due less than twelve month are not considered impaired. The ageing analysis ofoverdue receivables and not impaired is as follows is as following:

31 March 2018 30 June 2017

3 to 6 months 2,367 2,2046 to12 months 1,218 1,659Over 12 months ________660 _____ 1,158

4,245 5,021

The balance of the receivables from personnel represent the amounts provided to the directors of thecompanies to fulfil acquisitions of the commodities from the small farmers and as of 31 March 2018 thebalance of such amounts is USD 1,314 (30 June 2017: USD 2,736).

The carrying amounts of the Group’s Trade receivables and other receivables are denominated in thefollowing currencies: 31 March 2018 30 June 2017

MDL 1,644 1,756USD 9,531 15,212EUR ________264 ________582 11,439 17,550




46 of 56

11 AVAILABLE FOR SALE FINANCIAL ASSETS

31 March 2018 30 June 2017

Balance as of 1 July _________46 _________46

Balance at financial period ending as at31 March / 30 June 46 46

12 ADVANCES GIVEN

During financial year 2016, Group has provided and reclassified some advances to services and cropsuppliers, so as to match their maturity to the contracts’ terms. The main advances granted andclassified as long-term advances are:

31 March 2018 30 June 2017

Advances given for long-term rent _______1,818 _______1,903

1,818 1,903

13 CASH AND CASH EQUIVALENTS

31 March 2018 30 June 2017

Cash at banks in foreign currencies 1,700 537Cash in transit - 145Cash at banks in USD 13,646 7,693Cash in hand 75 274

15,421 8,649

14 SHARE CAPITAL

Number Numberof shares Amount of shares Amount

Ordinary shares 11,000 14 11,000 14Unsubscribed shares 1,221 1 1,221 1Share premium 265 265Share capital of special purpose entities ____ 1 ______ 1 281 281




47 of 56

15 BORROWINGS31 March 2018 30 June 2017

Non-currentBank borrowings 45,377 71,790Loan from related party (Note 26) 14,169 14,169Other commercial loans - 498

59,546 86,457

CurrentBank borrowings 235,940 178,421Other commercial loans 499 510

236,439 178,931

The exposure of the Group’s borrowings to interest rate changes and the contractual re-pricing dates atthe end of the reporting period are as follows:

Year ended Year ended31 March 2018 30 June 2017

6 months or less 219,944 163,7696-12 months 16,495 15,2821-5 years 42,884 68,942Over 5 years 16,662 17,395

295,985 265,388

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

31 March 2018 30 June 2017

USD 272,908 247,995MDL - -EUR 23,077 17,393

295,985 265,388

31 March 2018 30 June 2017Total bank loans 281,317 250,211Loans from individuals - -Finance lease liabilities - -Other commercial loans 499 1,008Loan from related party 14,169 14,169

Total 295,985 265,388




48 of 56

15 BORROWINGS (CONTINUED)

Split of Group’s loans and borrowings by nominal interest rates as of 31 March 2018:

Interest rate range, % 0-3 3-5 5-8 8-10 Total

Loans and Borrowings 14,668 190,555 57,132 33,630 295,985

Split of Group’s loans and borrowings by nominal interest rates as of 30 June 2017:

Interest rate range, % 0-3 3-5 5-8 8-10 TotalLoans and Borrowings 15,958 61,885 150,943 36,602 265,388

16 TRADE AND OTHER PAYABLES

31 March 2018 30 June 2017

Trade payables 11,759 261Advances received 21,971 29,544Payroll and social insurance payable 2,494 2,272Taxes payable 1,011 1,124Other 216 94

37,451 33,29517 REVENUE

31 March 2018 31 March 2017

Sales of grains and seeds 215,281 181,955Sales of vegetable oil 103,978 49,150Sales of oil meal 12,040 9,027Sales of packed vegetable oil 4,792 8,753Storage, Cleaning and Drying Services 2,930 4,412Sale of other products 2,686 2,884

341,707 256,181




49 of 56

18 COST OF SALES31 March 2018 31 March 2017

Opening stocks (Own production and Cerealspurchased for resale) 95,292 60,665Purchases of goods for resale 350,747 285,829Closing stocks (Own production and Cereals purchasedfor resale) (193,044) (156,599)

252,995 _ 189,895

Depreciation 3,970 3,569Water gas and electricity 236 148Wages and salaries 941 804Consumables 38 10Transportation 31 1Packing materials 221 148Social contributions 251 148Port services 488 695Rent 553 208Fuel 276 115Maintenance 74 24Materials 13 6Other expenses 376 572

260,463 196,343

19 SELLING AND DISTRIBUTION31 March 2018 31 March 2017

Freightage expenses 15,377 10,288Transportation 3,778 2,817Railroad expenses 4,830 1,937Wages and salaries 360 307Allowance for doubtful debts - 31Inspections and surveys 1,740 1,254Brokerage services 612 498Other commercial services 464 296Certification and expertise 212 173Custom duties 106 57Packing expenses 136 178Insurance expenses 880 565Loading expenses 1,575 1,200Depreciation 1,307 1,329Storage Services 152 80Marketing services 31 25Social contributions 99 93Other Selling and Distribution expenses 740 230

32,399 21,358




50 of 56

20 ADMINISTRATIVE EXPENSES 31 March 2018 31 March 2017

Wages and salaries 2,350 2,155Bank expenses - -Social contributions 541 646Taxes 135 156Legal and consulting expenses 700 554Entertainment and representation expenses 49 54Depreciation 499 334Audit fees 307 199Maintenance 159 188Rent 189 170Telephone and postage 192 173Survey expenses 214 221Fuel 123 102Insurance expenses 174 141Travelling and accommodation 586 476Notary's fees 11 17Other administrative expenses 452 590

6,681 6,176

21 OTHER (GAINS) / LOSSES – NET

31 March 2018 31 March 2017

Loss / (gain) on disposal of fixed assets (263) 165Depreciation 1,277 1,442Rent expenses 20 89Inventory write off 109 33Fines and claims 116 143Tax expenses 6 15Wages and salaries 453 527Social contributions 47 49Sale of other assets 3 4Repair and maintenance 36 112Other expenses 465 _837 2,269 3,416

22 OTHER INCOME

31 March 2018 31 March 2017Rental income 2 10Profit on sales from other activities 333 593Gain from write off of expired trade payables 43 -Stock count surplus 33 133Other operating income 879 575 1,290 1,311




51 of 56

23 NET FINANCE (INCOME) / COSTS

31 March 2018 31 March 2017Interest expenses 13,105 12,757Net foreign exchange difference (3,624) 970Loan Commissions 3,106 2,271Bank Commissions 3,333 2,412 15,920 18,410

24 INCOME TAX EXPENSE

The Company accrued income taxes at the rate of 12% on profits computed in accordance with the taxlegislation of the Republic of Moldova. For the residents of Free trade zone Giurgiulesti there is 0 % and3% tax rate applicable for all types of income according to the special law of “Free trade zoneGiurgiulesti” (article 7 and 8).

Profit before taxation for financial reporting purposes is reconciled to tax expense as follows:

31 March 2018 31 March 2017

Profit / (loss) before taxation 25,265 11,789Expenses not deductible for tax purposes _________ - __________-Total taxable income 25,265 11,789Tax charge at effective statutory rate of 3%-12% (2017: 3%-12%) (399) (208)Deferred income tax expense reported in the income statement ________ - _______ -Income tax expense (399) (208)

The financial year is different from the fiscal year and the tax is provided based on the management bestestimates available at the end of the financial year.

Deferred tax liability has significantly influenced the financial position as well as the net profit after taxdue to the changes in tax rate applied in Moldova (30 June 2017: 12%).

Deferred tax represents the amount of temporary difference for the non-current tangible assets.Deferred tax has been accrued and apportioned to income statement as expense and othercomprehensive income for the portion arising due current year revaluation of non-current tangibleassets of Moldovan entities in the following amounts:

Deferred tax liability as of 31 March 2018 13,488

Deferred tax liability as of 30 June 2017 13,488




52 of 56

25 EMPLOYEE BENEFIT EXPENSE

Contributions are made to the government’s retirement benefit scheme at the statutory rates in forceduring the year based on gross salary payments. The cost of social security payments is charged to theincome statement in the same period as the related salary cost. There are no other employee benefits.The cost of social security and other funds payments for financial nine month period ended 31 March2018 amounted to USD 1,327 (31 March 2017: USD 1,367).

31 March 2018 31 March 2017Wages and salaries 4,814 4,492Social insurance costs and other funds ______1,327 _______1,367 6,141 5,859

26 RELATED - PARTY TRANSACTIONS

The ultimate controlling party as of 31 March 2018 and during the financial year then ended is Mr. VajaJhashi. The shareholder and his representatives in the Board of Directors and the Management Boardact in co-operation with each other as part of governing and implementing the financial and operatingpolicies of the Group.

Parties are generally considered to be related if the parties are under common control or if one party hasthe ability to control the other party or can exercise significant influence or joint control over the otherparty in making financial and operational decisions. In considering each possible related partyrelationship, attention is directed to the substance of the relationship, not merely the legal form.

The following list represents other related (non-consolidating parties):

Entity Principal Activity Country ofin corporation

Vaja Jhashi Shareholder n/a

Delta Commodities & Financial Services SA (DCFS)

Silcampes-Sud SRL

Relationship via the shareholder

Relationship via the relatives of the oneof management of Aragvi

Relationship via the DCFS

Switzerland

Moldova

RomaniaFloarea International SRL




53 of 56

26 RELATED - PARTY TRANSACTIONS (CONTINUED)

(i) Balances with related parties

31 March 2018 30 June 2017Advances and accounts receivable (Note 10)Mr.Vaja Jhashi (shareholder) 1,060 791Floarea International SRL 6,652 7,008Delta Commodity & Financial Services SA 28 2Silcampes-Sud SRL (other related party) ______600 ______206

8,340 8,007

31 March 2018 30 June 2017Loan from related party (Note 15)Mr.Vaja Jhashi (shareholder) ______14,169 ______14,169 14,169 14,169

The loan is non-interest bearing and matures in May 2023.

(ii) Transactions with related parties

31 March 2018 30 June 2017Purchases of goods and servicesFloarea International SRL - -Silcampes-Sud SRL (other related party) _______- _______2,265 - 2,265

Key management compensation for the nine month period ended as at 31 March 2018 amounts to USD587 (31 March 2017: USD 562).




54 of 56

27 CONTINGENCIES AND COMMITMENTS

Covenants

The Group has different set of covenants to respect with their lenders. Based on 31st of March 2018financial statements, the Group was in breach of three financial covenants. Two of them have alreadybeen waived by the lenders; the last one is in process to obtain the waiver.

Taxation

The legislation and fiscal environment in Moldova and their implementation into practice changefrequently and are subject to different interpretations by various Ministries of the Government. TheMoldovan government has a number of agencies that are authorized to conduct audits (''controls'') ofMoldovan companies, as well as foreign companies doing business in Moldova. These controls aresimilar in nature to tax audits performed by taxing authorities in many countries, but may extend notonly to tax matters but to other legal or regulatory matters, which the applicable agency may beinterested. In addition, the agencies conducting these controls appear to be subject to significantly lessregulation and the company under review appears to have significantly less practical safeguards than itis customary in many countries. Profit tax returns are subject to review and correction by the taxauthorities for a period generally up to five years subsequent to their filing in Moldova and,consequently, the Moldovan subsidiaries tax returns are subject to such review.Management believes that it has adequately provided for tax liabilities in the accompanying financialstatements; however, the risk remains that Moldovan tax authorities could take differing positions withregard to the interpretation of these issues and the effect could be significant.

The Group has submitted a request for a ruling to the Swiss fiscal authorities in order to clear thepotential issue regarding the split of margin and the reinvoicing of interest. The Group is in process ofpreparation of further documentation requested additionally by Swiss tax authorities and the potentialfiscal risk still exist in case of disagreement of the fiscal authorities.

Legal proceedings

During the financial period, the Group was involved in a number of court proceedings (both as aplaintiff and a defendant) arising in the ordinary course of business. In the opinion of management,there are no current legal proceedings or other claims outstanding which could have a material effect onthe results of operations or financial position of the Group and which have not been accrued ordisclosed in these consolidated financial statements.

Operating Environment

Over recent years, Moldova has undergone substantial political and economic change. Moldova is anemerging market and does not possess the well-developed business infrastructure, which generallyexists in a more mature free market economy.




55 of 56

27 CONTINGENCIES AND COMMITMENTS (CONTINUED)

As a result, operations carried out in Moldova are generally riskier than those in developed markets.Uncertainties regarding the political, legal, tax and/or regulatory environment, including the potentialfor adverse changes in any of these factors could affect the Group’s ability to operate commercially. It isnot possible to estimate what changes may occur or the resulting effect of any such changes on theGroup financial condition or future results of operations. The market in which the Group operates is onewith strong competition but the Group is one of the leading companies with the biggest share of themarket (more than 50 % of the market capacity). The Group is operating primarily in the Moldovanmarket as a basis of its acquisition field and all over the world as an export direction (in particular BlackSea and Mediterranean Sea regions).

Contingent liabilities

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business.It is not anticipated that any material liabilities will arise from the contingent liabilities exceptfollowing:i. Subsidiary Trans Cargo Terminal SRL has a commitment to restore the land after the lease

agreement is expired (agreement between Trans Cargo Terminal SRL and Danube Logistic SRLas a lessor). Total amount of forecasted expenses are USD 95. The lease agreement has a maturityin year 2032.

ii. Subsidiary Trans Bulk Logistic SRL has a commitment to restore the land after the leaseagreement is expired (agreement between Trans Bulk Logistic SRL and Danube Logistic SRL as alessor). Total amount of forecasted expenses are USD 42. The lease agreement has a maturity inyear 2032.

Operating lease commitments

The Group is engaged in an operational lease agreements for the plot of land (25.584 square meters)located under the Giurgiulesti Grain Terminal. The Group is committed to pay until 31 March 2032 aninstalment amount minimum of USD 200 per year as a payment for the port services described in themaritime agreement.

The Group is engaged in an operational lease agreements for the agriculture land (311 Hectares) locatedin South of Moldova. The group is committed to pay in-kind to the owners of farming land in cashequivalent of USD 85 per annum, per hectar, based on the lease agreements concluded with physicalpersons (total number of agreements is around 300).The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

31 March 2018 30 June 2017

Within one year 925 925Between one and five years 4,824 4,824After five years _ 9,554 10,248

15,303 15,997




56 of 56

28 ENTITIES UNDER COMMON CONTROL WHICH ARE NOT CONSOLIDATED

The Group has investment in entities which are not consolidated.

The investment to the entities mentioned above is nil. The net assets of this entity equal to theinvestment to the subsidiary.

29 GOING CONCERN

The Group expects to continue operating under a going concern basis and to meet its obligations whenthey become due. Consequently, additional finances are negotiated by the Group as well as theshareholders express their interest to support financially the Group in order to maintain a viableworking capital structure.

30 SUBSEQUENT EVENTS

Eurobonds issuance

The Group is seeking to issue Eurobonds by the end of May 2018. The main rationale for the bond issueis to rebalance and optimize Group’s capital structure. Thus, one of the main purposes of the bonds willbe to refinance the outstanding amount of DFIs, several Moldovan banks and other existing long-termexpensive facilities.

aragvi holding international limited interim...

Documents