LLC "AISI VIDA" 15/10/2014 10.000.000 310.000 310.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC "AISI VAL" 15/10/2014 7.000.000 210.000 210.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC "AISI ROSLAV" 15/10/2014 10.000.000 310.000 310.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC " SI KONSTA" 15/10/2014 8.000.000 610.000 610.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC "AISI ILVO" 15/10/2014 10.000.000 610.000 610.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC "AISI DONETSK" 19/11/2014 40.000.000 930.000 930.000
--------------------- ------------ ------------ ---------------------- ---------------------
LLC "TORGOVI CENTR" 18/10/2014 10.000.000 120.000 120.000
--------------------- ------------ ------------ ---------------------- ---------------------
25. Contingent liabilities
The Group is involved in various legal proceedings in the
ordinary course of its business.
25.1 Tax litigation
The Group performed during the reporting period most of its
operations in the Ukraine and therefore within the jurisdiction of
the Ukrainian tax authorities. The Ukrainian tax system can be
characterized by numerous taxes and frequently changing
legislation, which may be applied retroactively, open to wide
interpretation and in some cases, is conflicting. Instances of
inconsistent opinions between local, regional, and national tax
authorities and between the National Bank of Ukraine and the
Ministry of Finance are not unusual. Tax declarations are subject
to review and investigation by a number of authorities, that are
enacted by law to impose severe fines and penalties and interest
charges. A tax year remains open for review by the tax authorities
during the three subsequent calendar years, however, under certain
circumstances a tax year may remain open for longer. These facts
create tax risks which are substantially more significant than
those typically found in countries with more developed tax systems.
Management believes that it has adequately provided for tax
liabilities, based on its interpretation of tax legislation,
official pronouncements and court decisions. However, the
interpretations of the relevant authorities could differ and the
effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
At the same time the Group's entities are involved in court
procedures with tax authorities; Management believes that the
estimates provided within the financial statements present a
reasonable estimate of the outcome of these court cases.
25.2 Construction related litigation
There are no material claims from constructors due to the
postponement of projects or delayed delivery other than those
appearing in the financial statements.
25.3 Other Litigation
Management does not believe that the result of any legal
proceedings will have a material effect on the Group's financial
position or the results of its operations other than the one
already provided for, within the financial statements.
In the case of the ex management company AISI Realty Capital
LLC, initiating a liquidation procedure in Cyprus against the
Company, the company has created a provision that equals the amount
requested pursuant to the settlement agreement signed in July 2011
(Note 28).
25.4 Other Contingent Liabilities
The Group had no other contingent liabilities as at 30 June
2012.
26. Commitments
26.1 Capital commitments
The Group has two (2) construction agreements:
a) for the construction of Brovary Logistics Park (Note 20)
b) for the construction of Bella Logistics Center (Note 20)
26.2 Operational commitments
In December 2011 the Company entered into a three year Property
Management and Maintenance Service Agreement with DTZ Consulting
Limited Liability Company. The Agreement stipulates a range of
services that were outsourced by Terminal Brovary to DTZ (billing,
servicing, maintaining) so as to both reduce cost and improve
quality. The Company has the right to terminate the Agreement with
DTZ unilaterally before its expiration date subject to prior
written notice to DTZ for 90 days before the desired date of
termination.
27. Financial Risk Management
27.1 Capital Risk Management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
stakeholders through the optimization of the debt-equity structure
and value enhancing actions in respect of its portfolio of
investments. The capital structure of the Group consists of
borrowings (note 19), cash and cash equivalents, receivables (note
13) and equity attributable to ordinary shareholders (issued
capital, reserves and retained earnings).
The Group is not subject to any externally imposed capital
requirements.
Management reviews the capital structure on an on-going basis.
As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each
investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of
equity (issuance of shares to the Group's shareholders) or in the
form of debt. Management balances the capital structure of the
Group with a view of maximizing the shareholder's Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
27.2 Significant Accounting Policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis on which
income and expenses are recognized, in respect of each class of
financial asset, financial liabilities and equity instruments are
disclosed in note 3 of the financial statements.
27.3 Categories of Financial Instruments
Financial Assets Note 30/06/2012 30/06/2011
----------------------------------------- ----- ----------- -----------
US$ US$
----------------------------------------- ----- ----------- -----------
Cash at Bank 15 154.672 18.504
----------------------------------------- ----- ----------- -----------
Interest receivable 13 - 693.431
----------------------------------------- ----- ----------- -----------
Total 154.672 711.935
----------------------------------------- ----- ----------- -----------
Financial Liabilities Note 30/06/2012 30/06/2011
----------------------------------------- ----- ----------- -----------
US$ US$
----------------------------------------- ----- ----------- -----------
Interest bearing borrowings 19 15.813.857 16.343.535
----------------------------------------- ----- ----------- -----------
Trade and other payables 20 4.257.618 16.077.102
----------------------------------------- ----- ----------- -----------
Finance lease liabilities 23 668.311 608.067
----------------------------------------- ----- ----------- -----------
Current and Provisional tax liabilities 22 1.167.227 1.133.571
----------------------------------------- ----- ----------- -----------
Total 21.907.013 34.162.275
----------------------------------------- ----- ----------- -----------
27.4 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at 30 June 2012, the Group had not entered into any
derivative contracts.
Post August 2011, the priority on cash use and management was
set on settling all past liabilities (eliminating thus the relevant
legal and financial risks) while maintaining a minimum liquidity to
allow for the future development of the Group's strategy.
27.5 Economic Market Risk management
The Group operates in the Region. The Group's activities expose
it primarily to financial risks of changes in currency exchange
rates and interest rates. The exposures and the management of the
associated risks are described below. There has been no change to
the Group's manner in which it measures and manages risks.
Foreign Exchange Risk
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