industrijske nekretnine a.d. · pdf fileindustrijske nekretnine a.d. beograd financial...

INDUSTRIJSKE NEKRETNINE A.D. BEOGRAD

Financial Reporting Package

for Consolidation of Danube Foods Group BV for the year ended 31 December 2012

Belgrade, 3 July 2013

Industrijske nekretnine a.d. Beograd

FINANCIAL REPORTING PACKAGE FOR CONSOLIDATION OF DANUBE FOODS GROUP BV

FOR THE YEAR ENDED 31 DECEMBER 2012

C O N T E N T S : Page Independent Auditors’ Report 1 – 2 Financial Reporting Package

Income Statement 3 Balance Sheet 4 Cash Flow Statement 5 Statement of Changes in Equity 6

Notes to the Financial Reporting Package 7 – 19

ABCD KPMG d.o.o. Beograd

Kraljice Natalije 11 11000 Belgrade Serbia

Telephone: Fax: E-mail: Internet:

+381 11 20 50 500 +381 11 20 50 550 [email protected] www.kpmg.rs

© 2013 KPMG d.o.o. Beograd, a Serbian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Matični broj:17148656 PIB: 100058593 Račun: 265-1100310000190-61 KPMG d.o.o. Beograd je jednočlano društvo.

Independent Auditors’ Report on Special Purpose Financial Information Prepared for Consolidation Purposes

To the Baker Tilly Berk N.V. the Netherlands As requested in your instructions, we have audited, for purposes of your audit of the consolidated financial statements of Danube Foods Group B.V., the accompanying special purpose financial information of Industrijske nekretnine a.d. Beograd as of 31 December 2012 and for the year then ended on pages 3 to 19 of the accompanying financial reporting package of Danube Foods Group B.V. Management’s Responsibility for the Special Purpose Financial Information Management is responsible for the preparation and presentation of this special purpose financial information in accordance with the instructions issued by Danube Foods Group B.V.’s management and the policies disclosed accounting policies, and for such internal control as management determines is necessary to enable the preparation of special purpose financial information that is free from material misstatement, whether due to fraud or error. This special purpose financial information has been prepared solely to enable Danube Foods Group B.V. to prepare its consolidated financial statements. Auditors’ Responsibility Our responsibility is to express an opinion on this special purpose financial information based on our audit. We conducted our audit in accordance with International Standards on Auditing. As requested, our audit procedures also included the additional procedures identified in your instructions. International Standards on Auditing require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the special purpose financial information is free from material misstatement. As requested by you, we planned and performed our audit using the materiality level specified in your instructions, which is different than the materiality level that we would have used had we been designing the audit to express an opinion on the financial information of the component alone. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the special purpose financial information. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the special purpose financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and presentation of the special purpose financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, made by management, as well as evaluating the overall presentation of the special purpose financial information.

ABCD

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. The conclusions reached in forming our opinion are based on the component materiality level specified by you in the context of the audit of the consolidated financial statements of the group. Opinion

In our opinion, the accompanying special purpose financial information for Industrijske nekretnine a.d. Beograd as of 31 December 2012 and for the year then ended has been prepared, in all material respects, in accordance with instructions issued by Danube Foods Group B.V.’s management and disclosed accounting policies. Restriction on Use and Distribution This special purpose financial information has been prepared for purposes of providing information to Danube Foods Group B.V. and management to enable it to prepare the consolidated financial statements of the group. As a result, the special purpose financial information is not a complete set of financial statements of Industrijske nekretnine a.d. Beograd in accordance with International Financial Reporting Standards and is not intended to present fairly, in all material respects, the financial position of Industrijske nekretnine a.d. Beograd as of 31 December 2012, and of its financial performance, and its cash flows for the year then ended in accordance with International Financial Reporting Standards. The financial information may, therefore, not be suitable for another purpose. This report is intended solely for Baker Tilly Berk N.V., the Netherlands and should not be used by or distributed to other parties. Belgrade, 3 July 2013 KPMG d.o.o. Beograd (L.S.)

Industrijske nekretnine a.d. Beograd Financial Reporting Package

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INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012 In thousands of RSD Note 2012 2011 Operating income 5 174,405 36,625 Operating expenses 6 (203,714) (10,229)Profit (loss) from operations (29,309) 26,396 Financial income 7 9,994 68Financial expense 8 (1,246) -Financial income and expenses, net 8,748 68 Other income 9 533 -Other expense 10 (133,062) -Other income and expenses, net (132,529) - Net profit (loss) (153,090) 23,818

The notes on pages 7 to 19 form an integral part of this Financial Reporting Package. Independent Auditors’ Report – pages 1 and 2.

BALANCE SIIEET AS AT 3I DDCtrMBER 2OI2

ln thousands ofRSD

Indusnijske neloetnine .Ld BeogndF i hanc ial Rep ott i hg P ac I'age

31 December 3l December2012 2011Nole

ASSETS

Plant and equipmenlAvailable-for-sale fi nan€ial assets

12t 3

177140,344

Toial non-cunent asseis

CunentAssets

Cash aDd cash equivalentsShort term investmentsTrade and other receivables

I 41 5l 6t 7

1 7 7

136,00366,013

108,0r l

342,t4346,455

44061.103Total curent assets

Total assets 37r,907 393.839

t71 ,7 30 J89,018

LIABILITIES AND EQUITY

EqurrySharesRetained eamings

Accunulat€d loss

1 8 545,03'l30,931

(r3,489)091 .619 )

2 3 , 8 1 8(4,050)

(38.527)Iotal capjial and rcserves

Income tax liabilityTrade payables t 9

370,866

1 , 0 4 1

526,2',7 7

2,646459

Total cunent liabilities

Total liabilities and equity

1,041 3 , 1 0 5

37r.907 s29.382

Belgrade, 3 July 2013

For and behalfofIndustrijske nelcetnine a.d.

Nebojsa Jankov

The noles on pages 7 to i9 form an integral part oflhis Financial Reporting PackageIndependenr Auditors' Report - pages I and 2.

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filft\&o,t, . 9


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CASH FLOW STATEMENT (INDIRECT METHOD) FOR THE YEAR ENDED 31 DECEMBER 2012 In thousands of RSD 2012 2011 OPERATING ACTIVITIES

Profit after tax (153,090) 23,818Adjustment for: -

Tax expenses - 2,646Depreciation 9 -Impairment of non-current assets held for sale 21,932 -Loss on disposal of non-current financial asset 111,130 -Interest expense 3 -Interest income (3,859) (67)Other 1

Total (23,874) 26,397 Decrease in inventories 184,208 6,156Increase in trade and other receivables (57,783) (440)Increase in current liabilities 1,055 459Interest paid (3) -Tax paid (3,119) -

Cash generated from operating activities 100,484 67

INVESTING ACTIVITIES Purchase of equipment (186) -Short-term loans and investments (108,131) -Interest received 499 67Capital contribution in subsidiary (32,839) -Proceeds from sale of non-current financial assets 62,053 -

Cash generated from investing activities (78,604) 67 FINANCING ACTIVITIES

Purchase of Treasury shares (2,322) -

Cash generated from financing activities (2,322) - Net increase/(decrease) in cash and cash equivalents 19,558 33,080 Cash and cash equivalents at the beginning of the period 46,455 13,375 Cash and cash equivalents at the end of the period 66,013 46,455



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STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD YEAR ENDED 31 DECEMBER 2012

In thousands of RSD SharesAccumulated

lossTreasury

sharesRetained earnings Total

As at 7 September 2011 545,037 (38,529) (4,049) - 502,459Current year result - - - 23,818 23,818 As at 31 December 2011 545,037 (38,529) (4,049) 23,818 526,277 Current year result - (153,090) - - (153,090)Total income recognized for the year - (153,090) - - (153,090)Transfer - - (7,119) 7,119 -Purchased treasury share - - (2,321) - (2,321) As at 31 December 2012 545,037 (191,619) (13,489) 30,937 370,866


Industrijske nekretnine a.d. Beograd Notes to the Financial Reporting Package

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1 Foundation and activity of the Company Industrijske nekretnine a.d. Beograd (hereinafter: the Company) is a public company registered for real estate trading. The Company was registered in the Serbian Business Agency as at 7 September 2011 according to the Separation by founding agreement of AD Industrija mleka i mlečnih proizvoda Imlek Beograd-Padinska Skela (hereinafter: Imlek ad Beograd), which was certified by the Court as at 15 August 2011. The separation was made based on the financial position of Imlek a.d. Beograd as at 31 December 2010. According to the Separation by founding agreement of AD Imlek ad Beograd, share equity of the Company on the foundation date was RSD 545,037 thousand. The equity of the Company was resulting in the decrease of equity of Imlek a.d. Beograd. The Company’s headquarter is in Belgrade. The Company has no employees as at 31 December 2012.

2 Basis of preparation This financial reporting package has, in all material respects, been prepared for the purpose of preparing consolidated financial statements of Danube Foods Group BV for 2011, that will be prepared in accordance with standards and interpretations approved by the International Accounting Standards Board, that are referred to as International Financial Reporting Standards (IFRS). The financial reporting package is presented in thousands of Dinars (“RSD”), rounded to the nearest thousand. It is prepared on the historical cost basis. The preparation of financial reporting package for the Danube Foods Group BV consolidation purposes requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of Danube Foods Group BV accounting principles applied for consolidation have significant effect on the financial reporting package and estimates with a significant risk of material adjustment in the next year are discussed in Note 4. A summary of the principal accounting policies applied in preparing the financial reporting package are set out within Note 3 to the financial reporting package.


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3 Summary of the significant accounting policies (a) Going concern This financial reporting package is prepared in accordance with the going concern concept, which assumes that the Company will continue in operation for the foreseeable future. (b) Revenue recognition Sales of goods are recognized when the significant risks and rewards of ownership have been transferred to the customer. This is normally when goods are delivered and title has passed to the customer. (c) Finance income Finance income relate to interest income. Interest income is recognized in the income statement as it accrues, taking into account the effective yield on the asset. (d) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly to equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. (e) Presentation of income statement The income statement is presented in the form based on the function of expense of “cost of sales“ method and classifies expenses according to their function as a part of cost of sales or, for example, the costs of selling and distribution or administrative activities. Further detailed analyses of expenses are provided in notes to the financial reporting package. (f) Available- for-sale financial assets Available for sale assets are those non derivative financial assets that are designated as being available for sale or are not classified as loans and receivables or financial assets at fair value through the profit and loss. These investments are stated at fair value, with any resultant gain or loss being recognized directly to fair value reserves (component part of the equity), except for impairment losses and, in the case of monetary items such a debt securities, foreign exchange gains and losses. When these investments are derecognized, the cumulative gain or loss previously recognized directly in equity is recognized in profit or loss. Where these investments


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are interest-bearing, interest is calculated using the effective interest method and is recognized in profit or loss. The fair value of available-for-sale is their quoted bid price at the balance sheet date. Where there is no active market for available-for-sale assets and where fair value cannot be reliably measured, the investments are carried at cost, less impairment losses. Available-for-sale assets are recognized/derecognized by the Company on the date it commits to purchase/sell the investments. (g) Trade and other receivables Trade and other receivables are initially stated at fair value and subsequently measured at amortized cost less impairment losses. Trade and other receivables are considered impaired if not collected within 60 days from the date they fell due and/or if disputed by trade debtors. (h) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. (i) Impairment The carrying amounts of the Company’s assets (the possible impairment of which are addressed by reference to specific IFRS), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated to reduce the carrying amount of the assets in the unit (group of units) on a pro rata basis. When a decline in the fair value of an available-for-sale financial asset has been recognized directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized directly in equity is recognized in profit or loss even though the financial asset has not been derecognized. The amount of the cumulative loss that is recognized in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss. The recoverable amount of other assets is the greater of their fair value and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss in respect of a held-to-maturity security or receivable carried at amortized cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognized. An impairment loss in respect of an investment in an equity instrument classified as available for sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring


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after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognized in profit or loss. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. (j) Inventories The Company classified an asset as held for sale when it expects to realize the asset, or intends to sell or consume it in its normal operating cycle, it holds the asset primarily for the purpose of trading, it expects to realize the asset within twelve months after the reporting period. A non-current assets classified as held for sale are measured at lower of its carrying amount and fair value less to sell. (k) Trade and other payables Trade and other payables are initially stated at fair value and subsequently measured at their amortized cost. (l) Foreign currency Transactions in foreign currencies are translated to RSD at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to RSD at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognized in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to RSD at foreign exchange rates ruling at the dates the fair value was determined. The applied exchange rates at the balance sheet dates were as follows: Currency 2012 2011 EUR 113.7183 104.6409 (m) Fair value estimation Estimated fair value disclosures of financial instruments are made in accordance with the requirements of IFRS 7 “Financial Instruments: Disclosure”. Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in forced or liquidation sale. As no readily available market exists for a large part of the Company’s financial instruments, judgment is necessary in arriving at fair value, based on current economic conditions and specific risks attributable to the instrument. The estimates presented herein are not necessarily indicative of the amounts the Company could realize in a market exchange from the sale of its full holdings of a particular instrument.


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The following summarizes the major methods and assumptions used in estimating the fair values of financial instruments. Trade and other receivables / payables Receivables / payables typically have a remaining life of less than one year and receivables are adjusted for impairment losses. Therefore, the carrying amounts for these assets and liabilities are deemed to approximate their fair values, as the allowance for estimated irrecoverable amounts is considered a reasonable estimate of the discount required to reflect the impact of credit risk.

4 Accounting estimates and judgments Due to the nature of the Company’s operations, critical accounting estimates and judgments principally relate to the valuation of equipment and trade receivables. Management makes assumptions about the estimated useful lives, depreciation methods or residual values of items of equipment could impact the results of company based on past experience and information currently available and are subject to annual reassessment. In addition, management assesses annually whether any indications of impairment of equipment. The directors of the Company believe that no equipment impairment indications currently exist. Furthermore, the Company’s management believes that the net carrying amount of trade receivables is recoverable based on their past experience in the market and their assessment of the credit worthiness of debtors at 31 December 2011. Such estimates are inherently imprecise and there may be additional information about one or more debtors that management is not aware of that could significantly affect their estimations.

5 Operating income In thousands of RSD 2012 2011 Revenue 174,405 36,625 Total 174,405 36,625

6 Operating expenses In thousands of RSD 2012 2011 Cost of sold assets held for trading 184,209 6,597Security costs 4,524 -Direct taxes 2,835 173Costs of fuel and energy 1,838 326Consulting fees 1,134 -Non-production cost 3,071 2,900Other costs 6,103 233 Total 203,714 10,229


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7 Finance income In thousands of RSD 2012 2011 Gain on exchange differences 6,135 -Interest income 3,859 68 Total 9,994 68

8 Financial expense In thousands of RSD 2012 2011 Loss on exchange differences 1,246 - Total 1,246 -

9 Other income

In thousands of RSD 2012 2011

Other income 533 -

Total 533 -

10 Other expenses In thousands of RSD 2012 2011

Impairment of non-current assets held for sale 21,932 -Loss on disposals of subsidiary 111,130 -

Total 132,529 - Total amount of loss on disposal of subsidiary relate to the sale of 100% share in the subsidiary IMK Trejd Kumanovo.

11 Income tax (a) Components of income tax In thousands of RSD 2012 2011 Current tax expenses - 2,646Deferred tax cost/income - - Total - 2,646


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(b) Reconciliation of the current income tax and product of net profit before tax and effective tax rate

In thousands of RSD 2012 2011 Net profit before tax - 26,464Calculated current tax cost 10% - 2,646Current tax cost in tax balance sheet - 2,646 Effects of deferred tax Deferred tax cost - - -Total income tax - 2,646 Effective tax rate - 10%

12 Non-current assets In thousands of RSD Equipment COST Balance as at 1 January 2012 -Additions 187Balance as at 31 December 2012 187 DEPRECIATION Balance as at 1 January 2012 -Charge for the year 9Balance as at 31 December 2012 9 Net book value as at 31 December 2012 178 Net book value as at 31 December 2011 -

13 Available-for-sale financial assets

In thousands of RSD (%) of share investment 2012 2011

IMK Trejd Kumanovo - - 140,344 Total - - 140,344 On 31 December 2011 the Company disclosed investment in 100% owned subsidiary, IMK Trejd Kumanovo. The investment was sold during 2012 (see Note 10).


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14 Inventories In thousands of RSD 2012 2011 Assets held for sale 136,003 342,143 Total 136,003 342,143 Assets held for sale comprises of land, buildings and equipment. According to the Separation by founding agreement, the Company has right to continue all conversation and legalization processes for land and buildings. By the agreement the Company is obliged to pay all cost incurred by those conversation and legalization processes. During 2012 the Company land, buildings and equipment in Zemun and Čačak with carrying value of RSD 184,208 thousand.

15 Cash and cash equivalents In thousands of RSD 2012 2011 Current account in Dinars 1,457 46,455Foreign currency account 62,542 -Other 2,014 - Total 66,013 46,455 The increase in cash on foreign currency account is a result of sales of subsidiary, IMK Trejd Kumanovo.

16 Short term financial placement In thousands of RSD 2012 2011 Short term financial placements (Note 21) 79,163 -Bank deposits 28,518 - Total 108,131 440 Short term financial placements relate to short term loans granted to Knjaz Miloš doo Arandjelovac in the total amount of EUR 700 thousand. Loans were granted with interest rate 7% p.a. and repayment period of 12 months. Bank deposits relates to the short term deposit with Raiffeisen bank ad Beograd in the amount of EUR 251 thousand.


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17 Trade and other receivables In thousands of RSD 2012 2011 Advances paid 402 -Trade receivable – domestic 49,434 337VAT receivables 1,101 103Receivables for prepaid income tax 7,278 -Receivables for interest and dividends 3,360 -Other 9 - Total 61,584 440

18 Shares As at 31 December 2012, the Company’s share capital consists of 1,007,958 ordinary shares with par value of RSD 540 per share and 1,369 priority shares with a par value of RSD 540 per share. The list of ordinary shareholders: Shareholder (%) 2012 2011 Danube Foods Group B.V. 79.36 79.36Industrijske nekretnine a.d. 4.42 2.26Akcionarski fond a.d. Beograd 1.33 1.33Other 14.8 17.05 Total 100.00 100.00 The list of priority shareholders: Shareholder (%) 2012 2011

Industrijske nekretnine a.d. Beograd 10.59 10.59Other 89.41 89.41 Total 100.00 100.00 During 2012 the Company purchased 20,125 own shares with price of RSD 110 per share.

19 Trade payables In thousands of RSD 2012 2011 Trade payables - domestic 985 459Other 56 - Total 1,041 459


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20 Events after balance sheet date There are no significant events after balance sheet date.

21 Transactions with related parties The Company has a related party relationship with entities under common control and with its ultimate parent. During 2012 and 2011, the Company had related party transactions as disclosed as follows: In thousands of RSD 2012 2011

ASSETS

Short-term financial investments

Knjaz Milos ad Arandjelovac 79,603 -Total short-term financial investments 79,603 -

Receivables for interest and dividends Knjaz Milos ad Arandjelovac 3,360 -

Total receivables for interest and dividends 3,360 -

FINANCE INCOME

Knjaz Milos ad Arandjelovac 3,360 -Total finance income 3,360 -

22 Financial risk management In the ordinary course of business, the Company is exposed to a different extent to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), liquidity risk and credit risk. Exposure to credit, interest rate and currency risks arises in the normal course of the Company’s business. As a result of the general lack of availability, arising from the developing nature of the banking and associated service markets within which the Company operates, financial instruments are not used to hedge exposure associated with these factors. The Company’s overall risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.


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22.1 Capital risk management The Company manages its capital to ensure that the Company is able to continue as a going concern, while maximizing the return to the equity holder through the optimization of the debt and equity balance. The management of the Company reviews the capital structure on a regular basis. Based on the results of this review, the Company takes steps to balance its overall capital structure through the new stakes issues as well as the issue of new debt or the redemption of existing debt. 22.2 Major categories of financial instruments The Company’s principal financial liabilities comprise trade and other accounts payable. The Company has various financial assets such as trade and other accounts receivable and cash and cash equivalents. In thousands RSD Note 2012 2011 FINANCIAL ASSETS Cash and cash equivalents 15 66,013 46,455Short-term financial investments 16 108,131 -Trade and other receivables 17 61,583 440Available-for-sale financial assets 13 - 140,344 Total financial assets 235,727 187,239 FINANCIAL LIABILITIES Income tax liability - 2,646Trade payables 19 1,041 459 Total financial liabilities 1,041 3,105 22.3 Foreign currency risk Currency risk is the risk that the financial results of the Company will be adversely impacted by changes in exchange rates to which the Company is exposed. . The Group undertakes certain transactions denominated in foreign currencies. The Group does not use any derivatives to manage foreign currency risk exposure.


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The carrying amount of the Group’s monetary assets and liabilities was as follows as of 31 December 2012: In thousands of RSD EUR RSD 2012

ASSETS Cash and cash equivalents 62,542 3,471 66,013Short-term financial investments 108,131 - 108,131Trade and other receivables - 61,583 61,583 Total assets 170,673 65,054 235,727 LIABILITIES Trade payables - 1,041 1,041 Total liabilities - 1,041 1,041 TOTAL NET POSITION 170,673 64,013 234,686 The table below details the Group’s sensitivity to strengthening of the functional currencies of the companies of the Group against foreign currencies (presented above) and by 10%. In thousands of RSD 2012 2011 Current year result 17,067 - 22.4 Interest rate risk Interest rate risk is the risk that changes in floating interest rates will adversely impact the financial results of the Company. The Company does not have any interest bearing liabilities. Interest income refers to demand deposits.


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22.5 Liquidity risk Liquidity risk is the risk that the Company will not be able to settle all liabilities as they are due. The Company’s liquidity position is carefully monitored and managed. The Company has in place a detailed budgeting and cash forecasting process to help ensure that it has adequate cash available to meet its payment obligations. The following table details the Company’s remaining contractual maturity for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

In thousands of RSD 1 to 6

months 6 monthsto 1 year

1 to 2years

2 to 5years

More than 5 years Total

31 December 2012 Trade payables 1,041 - - - - 1,041 Total 1,041 - - - - 1,041 31 December 2011 Income tax liability 2,646 - - - - 2,646Trade payables 459 - - - - 459 Total 3,105 - - - - 3,105 22.6 Price risk The Company holds no investments in the form of equity interests. 22.7 Credit risk At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The balances of trade and other receivable were as follows as of 31 December: In thousands of RSD 2012 2011 Trade and other receivables 49,434 440 Total 49,434 440

Independent Auditors’ Report – pages 1 - 2.

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