captions to financial statements (form 5) financial...5) captions to financial statements, including...

1

Approved by Approved by

No. 371-N Resolution of the Central No. ------N Order of the Minister of Finance

Bank of Armenia as of December 20, 2011 of RA as of ------December 2011

Chairman of the Central Bank of Armenia Minister of Finance of Armenia

------------------------ Artur Javadyan -----------------Vache Gabrielyan

-----------December2011 ----------December 2011

Appendix 8

CAPTIONS TO FINANCIAL STATEMENTS (form 5)

2012 II QUARTER

Caption 1. “Legal Environment and Corporate Governance”

“Renesa” CJSC (hereinafter Company) was founded in 2001 and is considered to be a close joint

stock company acting in the scope of the legislation of the Republic of Armenia (hereinafter RA).

On June 27, 2008 according to the law of RA on “Securities market” Company was reregistered

(Certificate #5) and relicensed as an investment company by the Central Bank of RA (hereinafter

CBA)

Company’s location/legal address is Vardanants str. Area 47, bld. 16, Yerevan, Republic of Armenia.

1) Main types of Company activities

The company makes investments in Armenian governmental and corporate bonds.

Brokerage services

Underwriting

2) Foreign currency sale/purchase

“Renesa” CJSC successfully cooperates with the Central Bank of Armenia, RA commercial Banks,

resident and non-resident Individuals and legal entities, is a member of “NASDAQ OMEX

ARMENIA” OJSC.

Company doesn’t have any representative or branch office and is not a member of any Group.

Managerial bodies of Company are the Company Shareholders’ General Meeting (General

Meeting), the Company Board (Board) and the company’s Chief Executive Officer (Chairman).

Shareholders’ General Meeting is the supreme managerial body of the company. The company is

obliged to convene its regular annual general meeting within six months following the fiscal year-end.

The Company Board executes general management of the Company within the limits of its

competence. The Board consists of three members having no general length limitation of their

authorities. The daily management of company activities is carried out by the Executive director, the

only executive body of the company. The Executive director of the Company is Vaghinak Saroyan.

Company managers are paid monthly rate according to the employment agreements signed with them.

According to the company’s Charter its chartered capital totals to AMD 700mln; and is divided into

14,000 (fourteen thousand) common nominal shares, each with a face value of AMD 50.000 (fifty

2

thousand). All the Company chartered capital shares are distributed, are completely sold and belong to

the Company shareholders. As of June 30, 2012 Company has 2 shareholders.

1. Eduard Marutyan with 50% stake

2. Arayik Karapetyan with 50% stake

The evaluation of manager’s work is the exclusive privilege of company’s shareholders.

The company’s statutory auditor for the year 2011 has been “Grant Thornton” CJSC. The payment of its

rendered services was realized according to the contractual agreement signed with it. Payment size was

approved by the Comopany Board.

Caption 2. “Policy of Accountancy”

Preparation and presentation of financial statements.

The company’s accountancy is conducted and financial statements are prepared in conformity with

the RA law on “Accounting and Accountancy”, International Standards of Financial statements, “policy on

Accountancy” approved by the Company Board and the accounting requirements and guidelines

established by other normative legal acts.

As set forth by the Legislation regulating the accountancy the financial statements’ package of the

company includes:

1) Financial Statement on Comprehensive Financial Result,

2) Financial Position Statement,

3) Statement on Equity Changes,

4) Cash Flow Statement,

5) Captions to Financial Statements, including Policy of Accountancy.

Principles for Conduction of Accountancy and Preparation of Financial Statements.

The company prepares its financial statements, except the statement on cash flows, on the basis of

accruals concept of accounting.

The company uses the following principles for conduction of accountancy and preparation of

financial statements: going-concern assumption, substance over form, accruals concept, understandability

principle, materiality and uniformity principle, comparability principle, severability and consistency

principles.

Recognition of Income and Expenses.

Interest income received or receivable by the company for conduction of its operations, as well as

paid interest expenses are measured, recognized and recorded by accrual concept daily, independent of

actual receipt or payment term of the income, in real value, as of the balance sheet date, on the basis of

transaction completion level as prescribed by RA Legislation.

Non-interest expenses are measured, recognized and recorded by accrual concept taking into basis

the relevant agreement or payments of previous period. Accruals on non interest expenses are credited

daily.

On the last working day of each month allowances are made forming a liability for future payments

of the company’s employee’s vacation benefits.

Registration of foreign currency transactions. The company makes operations denominated in AMD and foreign currency. The company

conducts the accountancy and prepares and presents its financial statements in AMD as prescribed by Law,

which is considered to be the reporting currency. The company initially records foreign currency

3

operations in the reporting currency by the average estimated exchange rate for that currency established

by the CBA as of the date the operation is made.

After initial recognition foreign currency items are revaluated. AMD items are recorded in the

closing rate, being the exchange rate as of the balance sheet date, and non AMD items by the exchange rate

of the date when the operation was made.

The following exchange rates were used on the purpose of financial statements preparation.

Taxes.

Accounting on the profit tax, VAT, income tax, property tax, land tax, mandatory social insurance

payments are made in accordance with Armenian Tax Legislation.

Profit tax of the accounting term consists of current and deferred taxes.

Current profit tax is calculated in accordance with the requirements set forth by RA Legislation.

Each month profit tax liability calculated against profit is recorded, and by the end of the accounting year it

is adjusted and offset with profit tax prepayments.

Deferred taxes, if any, occur from temporary differences between the balance sheet value of assets

and liabilities and their tax base. The allowances on deferred tax liabilities occurred due to temporary

differences, if any, are made in full. Deferred taxes, if any, are recognized to the extent of disposal

possibility of the given asset. Deferred tax assets and liabilities on profit tax are set off.

Recognition and evaluation of financial instruments.

The company recognizes the financial assets and liabilities in its balance sheet when it becomes one

of the contractual parties to the Instrument.

During initial recognition financial assets and liabilities are measured by their initial cost, being the

real value of compensation extended or received for them, plus or less any charges incurred in connection

with the transaction and accounting standards.

The company classifies its financial assets by the following categories: a held-for-trading financial

asset, available-for-sale financial assets, loans and accounts receivable, held-to-maturity investments.

Suchlike classification of investments is made upon their purchase on the basis of estimations set by the

company’s management.

Monetary assets and their equivalents

Monetary assets and their equivalents consist of cash and account balance remains.

Real value Securities reestimated by profits or losses.

Securities that have been mainly purchased or occurred from short-term fluctuations of prices or

dealer margins on profit earning purpose. Real value Securities reestimated by profits or losses are initially

recorded in their initial value and subsequently remeasured in their real value based on current market

prices. Relevant realized or unrealized gains and losses are carried Income Statement.

30.06.2012 31.12.2011 30.06.2011

AMD/ 1 USD 418,01 385,77 368,86

4

Available-for-sale.

Investments in debt and capital instruments that the company intends to maintain for an uncertain

term and which may be sold taking into account the liquidity requirements or changes in interest rate,

exchange rate or capital instrument values.

Urealized gains and losses arising from changes in real value of available-for-sale securities are

reflected in the capital. In case when securities are sold, adjustments on their real value are recognized in

the Income Statement as gains or losses from securities classified as available-for-sale.

The real value of financial Instruments is based on their quoted market prices. If there is no quoted

market price the real value of the Instrument is defined via price models or techniques of discounted cash

flows.

Investments in capital instruments are not usually quoted at any stock exchange and have a

restricted market. There are no acceptable principles and methods for precise estimation of real value of

those instruments, therefore the securities are accounted by their prime cost, less the depreciation reserve

amount.

Held-to-maturity securities.

Fixed held-to-maturity securities, that the company has intended and has a possibility to keep those

investments untill their maturity term expiry. If the company sells any material amount of held-to-maturity

assets the whole class is reclassified to available-for-sale. Held-to-maturity investments are recorded at

their amortized cost using efficient interest rate method.

Repo agreement transactions.

Company continues to record securities purchased on condition of repurchasing, implementing both

their persent accounting and real value rectification.

Loans and receivables.

Loans and receivables are financial assets with fixed or determinable payment that are generated by

the Company directly providing the debtor with cash without intention to pay the debt.

Fixed assets.

A unit fixed asset conforming to asset recognition standards is initially measured in its initial value

(prime cost) in AMD. Foreign currency fixed assets are recorded in average exchange rate set by the CBA

on their purchase date and are not subject to revaluation in case of exchange rate chages.

The sum of fixed assets depreciation is reguarly distributed during the asset useful service.

Company implements depreciation allowances of Fixed assets in the following terms

Fixed asset name Term Percentage %

Computers and means of

communications

3 years

33.3

Means of transportation 5 years 20

Property, office equipment 5 years 20

Other fixed assets 5 years 20

Intangible asstes.

Intangible asset is initially recognized and accounted in the balance sheet by its purchase price.

After its initial recognition the intangible asset is accounted in balance sheet value with difference of its

initial value and accumulated depreciation.

Methods of exchange rate determination.

Exchange rate is determined by Company Executive Director based on studies of the everyday

situation of the financial market.

5

Caption 3. “ Interest and similar income ”

Interest and similar income Accounting period Previous period

Interest income from bank accounts

and placed deposits

161 107

Interest income from securities 172,421 130,181

Interest income from granted loans

(borrowings)

10,867 2,733

Interest income from repo

agreements

2,245

Interest income from swap

operations

Other interest income

Total 185,694 133,021

Interest and Similar Expenses Accounting period Previous period

Interest expenses for attracted

borrowings and received loans

(10,120) (563)

Interest expenses on repo agreements (109,061) (80,555)

Interest expenses on swap operations (1,826)

Interest expenses for securities

issued by investment companies

Other interest expenses

Total (119,181) (82,944)

Net interest and similar income 66,513 50,077

Caption 4. “Commission and Other Fee Income and Expenses”

Commission and Other Fee

Income

Accounting period Previous period

Commission from securities

portfolio management

Commissions from securities

operations 2

Commissions from consulting 100

6

services

Commissions from securities’

allocation

Commissions from other investment

services

Commissions from custody services

Other commissions

Total 102

Commission and fee expenses Accounting period Previous period

Expenses on commission (361) (307)

Net commission and fee expenses

received

(361) (205)

Caption 5. “ Income dividends ”

Dividends Accounting period Previous period

Announced dividends on ordinary shares

Paid-out dividends on ordinary shares

Announced dividends on preference shares

Paid-out dividends on preference shares

Caption 6. “Net Income from Commercial Activities”

Held-for-trading investments Accounting period Previous period

Net income from sale/purchase of

real value financial assets

reestimated by profits or losses

Net income from real value changes

of real value financial assets


Total

Available-for-sale investments Accounting period Previous period

Net income from sale/purchase of

available-for-sale investments 12,789 27,488

Net income from real value changes

of available-for-sale investments (1,392)

Total 11,397 27,488

7

Foreign currency operations Accounting period Previous period

Net income from foreign currency

sale/purchase 2,522 10,845

Net income from foreign currency

revaluation (4,882) 3,869

Total (2,360) 14,714

Total net income from commercial

activities

9,037 42,202

Caption 7. “Other Operational Income ”

Other operational income Accounting period Previous period

Net income from disposal of

fixed/intangible assets

Net income from revaluation and

depreciation reversal of

fixed/intangible assets

Extraordinary gains

Other income 60 (40)

Total 60 (40)

8. Caption 8. “ Net Allowances to Possible Asset Loss Provisions ”

Due from banks, other financial

Institutions Capt.15 Accounting period Previous period

Initial balance of reserve

Allowances to reserve

Return of allowances to reserve

Net allowances to reserve

Return of amounts previously carried to

off balance sheet

Usage of reserve

Summary balance of reserve

Due from Customers Capt.16 Accounting period Previous period




8



off balance sheet

Usage of reserve


Investments Capt.19 Accounting period Previous period






off balance sheet

Usage of reserve


Other assets Capt.23 Accounting period Previous period






off balance sheet

Usage of reserve


Caption 9. “Total Administrative Expenses ”

Total Administrative Expenses Accounting period Previous period

Salary and equated payments (7,109) (2,981)

Allowances on social insurance

payments (707) (447)

Business trip, training expenses (10) (45)

Other personnel expenses

Operational leases (1,500) (1,500)

Building, equipment, technical

service, maintenance of vehicles (911) (1,414)

Audit, other consulting services (625) (550)

Communication expenses (438) (708)

9

Office supply, administrative

expenses (110) (141)

Transportation costs

Other administrative expenses (866) (801)

Total (12,276) (8,587)

As of March 31, 2012 “RENESA” CJSC company has 8 employees. The average annual monthly salary of each

employee amounts to AMD 643.125.

Caption 10. “Other Operational Expenses”

Other operational expenses Accounting period Previous period

Public relation expenses (50) (75)

Amortization costs of fixed assets (2,117) (2,048)

Amortization costs of intangible

assets

(40) (40)

Other expenses (471) (666)

Total (2,678) (2,829)

Caption 11. “ Net gains/losses from investments in chartered capital of other parties”

Net income from investments in

chartered capital of other parties


Investments in affiliated companies

Investments in joint ventures

Investments in subsidiaries

Investments in other subsidiaries

Total

Caption 12. “ Profit tax expense”

Profit tax expense Accounting period Previous period

Current tax expense (13,594) (15,489)

Adjustments to previous period taxes

recognized in current period

Deferred tax expense 280 139

Total (13,314) (15,350)

10

The interrelation between the profit tax expense and accounting profit.

Accounting

period

Effective rate

(%)

Previous

period

Effective rate

(%)

Profit before taxation 60,295 80,618

Profit tax with rate 12,059 20% 16,134 20%

Adjustments of income/expenses

for taxation on non temporary

differencies

Positive exchange rate difference 1,255 (2%) (784) (1,0%)

Untaxable income

Minimum expenses

Adjustment of tax expense

calculated the previous year

Profit tax expense 13,314 22% 15,350 19,1%

Caption 13. “Basic Profit Falling to a Single Share”

Basic profit falling to a single

share


Accounting period after tax net profit

Dividends on preference shares

calculated for the accounting period

Net gains/losses for the period

attributed to the owners of ordinary

shares

Weighed average number of ordinary

shares negotiable during the

accounting period

Basic profit falling to a single share

Diluted profit falling to a single

share

Caption 14 “ Cash in Hand and Balances with the CBA ”

Cash in hand, cash equivalents

and balances with the CBA


Cash in hand and payment

documents 3,188 3,560

Chartered capital accumulation

account with the CBA

11

Deposited funds with the CBA

Accrued interests

Cash in hand and balances with

the CBA

3,188 3,560

As of 30.09.2009 the balance of cash amounts of RENESA CJSC totals to AMD 1.769thousand. And there are

no restrictions on its usage.

Caption 15. “ Due from Banks and Other Financial Insitutions ”

Current Accounts Accounting period Previous period

With Armenian Banks 33,617 437,097

With other Banks

Deposited funds with the Banks

Accrued interests

Total 33,617 437,097

Loans (extended borrowings) and

deposits, other claims

With the CBA


deposits

Repo (repurchase) agreements,

other

With banks


deposits


securities portfolio management,

other

With Investment and Other

financial Institutions


deposits


securities portfolio management,

other

Accrued interests

Total

Possible loss provision on amounts

due from Banks and other

financial Institutions (caption 8)

Net amounts due from Banks and

Other financial Institutions

33,617 437,097

As of March 31, 2012 the overall amount of Company’s current accounts with Armenian banks has

formed AMD 33,617thousand and there are no restrictions for its usage.

12

Caption 16. Due from Customers

Due from customers Accounting period Previous period

Loans and extended borrowings,

including

Armenian Government

RA local self-governing authorities

Repo (repurchase) agreements

Securities portfolio management

Other 351,576 385,770

Accrued interests on mentioned

items

23,760 12,683

Total claims 375,336 398,453

Possible loss provision on due from

customers (caption. 8)

Total net claims 375,336 398,453

Structure of depreciated loans-

borrowings extended to the

customers as at the end of the

accounting period

Accounting period

amount/number

Previous period

amount/number

Loans and advances, including

Depreciated loans and advances,

including Overdue

Renegotiated

Refinanced

Total loans

Possible loss provision on loans

and advances to customers

(caption 7)

Total net loans

The Breakdown of Due from

Customers per Customer Base


Banks, including

Advances


Other

Other financial Institutions,

including

Advances


Other

State enterprises, including

Advances


13

Other

Private non-financial enterprises, including Large enterprises

Small and medium-size enterprises

351,576 385,770

Non-entrepreneur individuals, including Advances


Private entrepreneurs, including

Advances


Accrued interests, including

Advances


Other assets

23,760 12,683

Total claims 375,336 398,453

Possible loss provision on

amounts due to customers

(caption 8)

Total net amounts due 375,336 398,453

The loans granted by the Company as of 31.03.2012 amount to USD 900 (AMD 351,576 thousand) which

were granted to « Renshin » LLC. The mentioned loans form 36% of percentage ratio against the capital.

The breakdown of

due from from

customers per

residency

Accounting period Percentage ratio Previous period Percentage ratio

RA Residents 351,576 93.7% 385,770 96.8%

Residents of

countries with Baa3

and higher ratings

Residents of

countries with lower

than BBB/Baa3

rating or no rating at

all

Accrued interests 23,760 6.3% 12,683 3.2%

Total 375,336 100% 398,453 100%

14

Caption 17. “ Real value Financial assets reestimated by profits or losses. ”

Governmental Securities Accounting period Previous period

RA governmental securities,

including

T-Bills

CBA bonds

Other

Governmental securities of

countries with BBB- (Baa3) and

higher rating, including

T-Bills

CBA bonds

Other


countries with lower than BBB-

(Baa3) rating or no rating at all

T-Bills

CBA bonds

Other

Total state securities

RA non-governmental securities Accounting period Previous period

A-/A3/ and higher rating issuer’s

Long-term debt instruments

Short-term debt instruments

Capital instruments

Other

listed unlisted listed unlisted

Issuer with ¦ G -§ and higher

rating assigned by the CBA



Capital instruments

Other

Issuer with BBB+/Baa1/ and

lower rating or no rating at all



Capital instruments

Other

Total Armenian non-governmental

real value securities reestimated by

profits or losses

Other countries’ non-

governmental securities

A-/A3/ and higher rating issuer’s



Capital instruments

Other


Issuer with BBB+/Baa1/ and

lower rating or no rating at all



15

Capital instruments

Other

Total other countries’ non-

governmental securities calculated

by their real value reestimated by

profits or losses

Total real value securities


Other real value securities


Loans (borrowings), accounts

receviable

A-/A3/ and higher rating borrowers’

Borrowers with BBB+/Baa1 and

lower ratings, other ratings or no

rating at all

Mortgage

Consumer loans (advances)

Other

Derivative instruments

Futures

Forward

Option

Swap

Other

Total

Total real value financial assets


Caption 18. Available-for-sale Financial Assets

Governmental securites Accounting period Previous period

RA governmental bonds

T-Bills

CBA bonds

Other

6,589,973

4,412,565


countries with BBB-/Baa3/ and

higher ratings

T-Bills

CBA bonds

Other


countries with BB+/Ba1 and lower

rating or no rating at all

T-Bills

CBA bonds

Other

16

Total governmental securities 6,589,973 4,412,565

RA non-governmental securities

A-/A3/and higher rating issuer’s



Capital instruments

Other


Issuer with ¦G -§ and higher rating assigned by the

CBA



Capital instruments

Other

Issuer with BBB+/Baa1/and lower rating, other




Capital instruments

Other

20, 403

20,328

Total RA non-governmental securities 20, 403 20,328

Other countries’ non-governmental securities

A-/A3/and higher rating issuer



Capital instruments

Other


Issuer with BBB+/Baa1/and lower rating, other




Capital instruments

Other

Total non-governmental securities of other

coutries

Total available-for-sale securities 6,610,376 4,432,893

Other available-for-sale financial assets

Loans (advances), factoring, accounts receivable

A-/A3/ and higher rating borrowers’

BBB+/Baa1/and lower rating, other rating or

with no rating at all Borrowers’

Advances

Other

Total

17

Total available-for-sale financial assets 6,610,376 4,432,893

From available-for-sale financial assets RA governmental securities with real value of 4,744,797 AMD were

loaned in RA resident banks on repo agreement, and RA governmental securities with real value of 183,956

are loaned in credit organization (see in Caption 23)

Caption 19. Held to maturity investments

Governmental securities Accounting period Previous period

RA governmental securities,

including

T-Bills

CBA bonds

Other


countries with BBB-/Baa3/ and

higher rating, including

T-Bills

CBA bonds

Other


countries with BB+/Ba1/, lower

rating, or no rating at all,

including

T-Bills

CBA bonds

Other

Accrued interests

Total governmental securities

RA non-governmental securities

A-/A3/and hgiher rating issuer’s, including



Deposit certificates

Other


Issuer with ¦G -§ and higher rating assigned by the CBA,

including



Other

Issuer with BBB+/Baa1/ and lower rating, other rating or

no rating at all, including




Other

Accrued interests

18

Total

Other countries’ non-governmental securities

A-/A3/and hgiher rating issuer’s, including




Other


Issuer with BBB+/Baa1/ and lower rating, other rating or

no rating at all, including




Other

Accrued interests

Total

Depreciation of held-to-maturity inverstments (possible

loss provision) (caption 8)

Net investments in held-to-maturity financial assets

Caption 20. “ Investments in the Chartered Capital of other Entities”

Movement of chartered capital of other entities Investments in chartered capital of other entities

Balance in the beginning of the period

Accrual

Disposal (sale)

Value depreciation

Balance at the end of the period

Investments in the chartered capitals of other Institutions Accounting period Previous period

Investments in affiliated companies

Investments in joint ventures

Investments in subsidiaries

Investments in other subsidiaries

Dividends

Total

19

Caption 21. Fixed assets and intangible assets

Fixed Assets

Item Building Computer

and

communic

ation

Vehicles Property

and office

equipmen

t

Capital

investments

for fixed

assets

Capital

investmen

ts for

rented

fixed

assets

To

tal

Initial cost

Balance in the beginning

of previous period

4,040 38,285 3,085 45,410

Accrual 175 175

Disposal

Rectification

Revaluation

Reclassification

Balance at the end of the

previous period

4,040 38,285 3,260 45,585

Accrual 149 149

Disposal

Rectification (192) (192)

Reclassification

Revaluation

Amortization adjustment

from revaluation


accounting period

3,997 38,285 3,260 45,542

Accumulated

amortization


of previous period

(3,897) (19,086) (1,892) (24,875)

Accrual (50) (7,632) (636) (8,318)

Disposal

Rectification

Reclassification

20

Revaluation


previous period

(3,947) (26,718) (2,528) (33,193)

Accrual (24) (1,931) (162) (2,117)

Disposal

Rectification 192 192


from revaluation

Depreciation


accounting period

(3,779) (28,649) (2,690) (35,118)

Net balance sheet value

At the end of the

accounting period

218 9,636 570 10,424

At the end of the previous

accounting period

93 11,567 732 12,392

Intangible Assets

Computer

Software

Licenses.

Letters of

attorney

Royalty Other intangible

assets

Capital

investments on

intangible assets

Tota

l

Initial cost


of previous period 1600 1600

Accrual

Disposal

Depreciation

Revaluation


previous period 1600 1600

Accrual

Disposal

Revaluation *

Depreciation


from revaluation

21


accounting period 1600 1600

Accumulated

depreciation


of previous period (160) (160)

Accrual (160) (160)

Disposal

Depreciation

Revaluation


previous period (320) (320)

Accrual (40) (40)

Disposal


from revaluation

Depreciation


accounting period (360) (360)

Net balance sheet value

At the end of the

accounting period

1,240 1,240

At the end of the

previous accounting

period

1,280 1,280

Caption 22. “Other Assets ”


Accounts receivable on budget

Accounts receivable on suppliers 100

Prepayments to employees

Prepayments to suppliers 247 90

Prepayments to budget, for

mandatory social insurance

8,337 29,278

Other accounts receivable and

prepayments

20

Total 29,368

22

Possible loss provision on other

assets (caption 8)

Total 29,368

Other Assets

Inventory 300 252

Sequestrated pledge and available-

for-sale assets

Deferred charges

Derivative hedging instruments

Other assets

Total other assets 9,004 29,620

Caption 23. Due to Banks and other Financial Institutions


Central bank of Armenia

Loans

Repo agreements

Other

RA banks

Loans

Repo agreements

Other

4,679,849

1,132,856

3,525,534

771,540

Banks with BBB-(Baa3) and

higher rating

Loans

Repo agreements

Other

Banks with lower than BBB

(Baa3) rating or no rating at all

Loans

Repo agreements

Other

Accrued interests 11,382 12,037

Total 5,824,087 4,309,111

Financial Insitutions Loans


Other

183,542

95,733

Accrued interests 382 251

23

Total 183,924 95,984

Total amounts due to banks and

International financial Institutions

6,008,011 4,405,095

Caption 24. Due to Customers


Due to RA Government and Local self-governing

authorities

Repo agreements

Loans

Other

Calculated interests

Total

Due to RA resident legal entities, Insitutions

Repo agreements

Loans

Other


Total

Due to non-resident legal entities, Institutions

Repo agreements

Loans

Other


Total

Due to RA resident private entrepreneurs

Repo agreements

Loans

Other


Total

Due to non-resident private entrepreneurs

Repo agreements

Loans

Other

24


Total

Ra resident Individuals

Repo agreements

Loans

Other


Total

Due to non-resident Individuals

Repo agreements

Loans

Other


Total

Total amounts due to customers

Caption 25. Real value Finanacial liabilities reestimated by profits and losses.

Real value Finanacial liabilities

reestimated by profits and losses


Derivative real value instruments

reestimated by profits and losses Futures

Forward

Option

Swap

Other

Derivative hedging instruments

Other

Total

Caption 26. Securities Issued by the Investment Company

Securities issued by the

investment company


Non-interest bearing securities

issued by the investment company

Interest bearing securities issued

by the investment company

Preference shares issued by the

investment company (considered

financial liabilities)

25

Other issued securities

Accrued interests

Total

Caption 27. Reserves

Reserves Accounting period Previous period

Initial balance


Reserve usage


Summary balance

Caption 28. Other Liabilities

Other liabilities Accounting period Previous period

Accounts payable on budget

On profit tax

On VAT

On other taxes

Social insurance payments

41,388

56,985

Salary liabilities to employees 2,997 2,473

Accounts payable to suppliers 2,356 1,477

Accounts payable for replenishment

of chartered capital

Other liabilities

Balance at the end of the period 46,741 60,935

Caption 29. Chartered Capital

1) As of 31.03.2012 the company’s registered and paid-out share capital forms AMD 450.000 thous.,

2) The amount of issued and distributed shares is 9000 with face value of each equal to AMD 50000

3) Shareholders of investment company by accounting period are the following :

Name, surname of the majority

shareholder

Stake in the investment company Stake in the investment company

(percentage)

Eduard Marutyan 225,000,00 50%

Arayik Karapetyan 225,000,00 50%

4) During the accounting period the company hasn’t paid dividends.

26

Caption 30. Other Capital elements

As of March 31, 2012 the company has no other capital elements recorded in the balance sheet.

Caption 31. Transactions with Related Parties

From the angle of presented reports related parties are:

1. Company’s management,

2. Majority shareholders,

3. Individuals and legal entities related with the parties mentioned in items (1) and (2).

During its activity the Company is being involved in a number of transactions with related parties. Those transactions include loans, rents and so on. The mentioned transactions were made basing on terms and interest rates than those operative in the market.

Balances of transactions with related parties as of 31.03.2012 in the Company financial statements are mentioned below.

Due from other investment

companies


Balance as at January 1

Increase during the year

Decrease during the year

Balance as at December 31

Due from Customers Accounting period Previous period

Balance as at January 1 398,453 153,228

Increase of claims during the year 72,087 210,627

Repaid claims during the year (95,204) (312,441)

Balance as at March 31 375,336 51,414

Interest income 10,867 2,733

Due to Customers Accounting period Previous period

Balance as at January 1 95,984

Amounts received during the year 463,648

Amounts paid during the year (375,708)

Balance as at March 31 183,924

Interest expense 1,808

27

Caption 32. Minimum Disclosures on Financial Risks

Risk bearing is the inseparable part of financial activity, and risks are its inevitable outcomes. Nevertheless

the aim of the Company is to achieve the corresponding balance between risks and benefits and to reduce to

minimum undesirable influences on the Company financial position.

The company’s chief aim in the sphere of risk management is decrease of financial losses and insures the

stability of carried out operations to the benefit of its customers, owners.

The aim of the Company risk management policy is to diagnose and analyse risks, to define the appropriate

risk limits and audit and to supervise risks and limit compliance through credible and renewed information system.

Market risk

Market risk is a risk of fluctuation of future cash flows or real values of financial instruments because of

such market indicators as interest or foreign exchange rates.

Foreign currency risk

The process of foreign currency risk management includes the phases of foreign currency market research,

foreign currency risk prediction, foreign currency risk assessment, determination of potential sizes and outfalls of the

risk, prevention and decrease of losses related to foreign currency risk. The evaluations of foreign currency market

analysis are presented by the company’s CEO, who makes daily monitoring of market developments, collects and

reviews opinions of experts and gives short-term forecasts on market behaviour.

The forecasts are based on the countries economic conditions having a long-run impact on translation rate.

The company reviews translation rates’ fluctualtion trends and tendencies and analyzes their manifestations

Accounting Period

AMD I Group Foreign

Currency

II Group foreign

currency

Total

Assets

Cash in hand and balances with the CBA

3,188 3,188

Due from Banks and other Financial

Institutions

33,616 1 33,617

Real value Financial assets reestimated by

profits or losses

Due from customers 375,336 375,336

Available-for-sale financial assets 6,610,376 6,610,376

Held-to-maturity financial assets

28

Other 20,668 20,668

Total assets 6,667,848 375,337 7,043,185

Liabilities

Due to banks and other financial Institutions

4,870,428 1,137,583 6,008,011

Due to customers

Other amounts due 89,947 89,947

Total liabilities 4,960,375 1,137,583 6,097,958

Net position 1,707,473 (762,246) 945,227

Previous Accounting Period

Name of the item AMD I Group

Foreign

Currency

II Group foreign

currency

Total

Assets

Cash in hand and balances with the CBA

4,680 4,680

Due from Banks and other Financial

Institutions

31,169 103,951 135,120


profits or losses

Due from customers 51,414 51,414

Available-for-sale financial assets 4,235,401 4,235,401

Held-to-maturity financial assets

Other 26,021 26,021

Total assets 4,297,271 155,365 4,452,636

Liabilities


3,592,792 201,547 3,794,339

Due to customers

Otehr amounts due 55,881 55,881

Total liabilities 3,648,673 201,547 3,850,220

Net position 648,598 (46,182) 602,416

29

Types of derivative financial Instruments AMD I Group foreign

currency

II Group foreign

currency

Total

Liabilities and claims on futures

Liabilities and claims on forward

Liabilities and claims on options

Liabilities and claims on swap

Liabilities and claims on other derivative

financial instruments

Net position per derivative financial

Instruments

Net open position *

Interest Rate Risk

Interest rate change has a direct impact on the Company’s interest risk, cash flow related to assets and

liabilities and their real value. Therefore the analysis of terms of assets and liabilities interest rate review allows users

of financial reports to sift the Company’s interest rate risk and, as an outcome, the anticipated gains and losses.

Accounting period

Name of the item Up to 1 1- 3

months

3-6 months 6

months

to 1

year

1- 5 years Above 5

years

AM

D

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

A

MD

Fo

reig

n

curr

ency

A

MD

Fo

reig

n

curr

ency

Allocated funds

Due from banks and

other financial

Institutions,

including

-Deposits

-Repo agreements

-Other

Due from customers,

including

- Repo agreements

375,336

30

- Other

Held-for-trading and

available –for-sale

securities, including

- Long-term debt

instruments

- Short-term debt

instruments

- Capital

instruments

-Other

192,581

31,563

4,658,779

1,727,453

Held-to-maturity

securities

Other allocated

funds

Total 192,581 31,563 375,336 4,658,779 1,727,453

Liabilities

Due to banks and

other financial

Institutions,

including

-Loans

- Repo agreements

- other

4,870,428

392,916

744,667

Due to customers,

including

- Repo agreements

- Other

Securities issued by

investment

company, including

-Convertible

securities

- Mortgage bonds

- Other bonds

-Subordinate

borrowings

Other attracted

funds

Total 4,870,428 392,916 744,667

Net position (4,870,428) (392,916

)

(744,667

)

31,563 375,336 4,658,779 1,727,453

Previous Accounting Period

31

Name of the item Up to 1 1- 3 months 3-6

months

6 months to

1 year

1- 5 years Above 5

years

AM

D

Fo

reig

n

curr

ency

A

MD

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

A

MD

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

AM

D

Fo

reig

n

curr

ency

Allocated funds

Due from banks and

other financial

Institutions,

including

-Deposits

-Repo agreements

-Other

Due from customers,

including

- Repo agreements

- Other

19,888

31,526

Held-for-trading and

available –for-sale

securities, including

- Long-term debt

instruments

- Short-term debt

instruments

- Capital

instruments

-Other

86,469

28,948

32,211

3,657,200

430,573

Held-to-maturity

securities

Other allocated

funds

Total 86,469 28,948 19,888 32,211 31,526 3,657,200 430,573

Liabilities

Due to banks and

other financial

Institutions,

including

-Loans

- Repo agreements

- other

3,592,7

92

201,547

Due to customers,

including

- Repo agreements

- Other

Securities issued by

investment

company, including

32

-Convertible

securities

- Mortgage bonds

- Other bonds

-Subordinate

borrowings

Other attracted

funds

Total 3,592,7

92

201,547

Net position (3,506,

323)

28,948 (181,659) 32,211 31,526 3,657,200 430,573

Name of the item

Interest rates of the accounting

period

Interest rates of the previous

accounting period

AMD Foreign

currency

AMD Foreign

currency

% % % %

Assets

Balances with the CBA

Due from banks and other financial

Institutions, including

- Repo agreements

- Swap

Due from customers 12% 12%


profits or losses

13.2% 12.76%

Held-to-maturity securities

Liabilities


9.9% 4.6% 8.5% 4.0%

Due to customers

Liabilities on securities issued by the

investment company

Price Risk

Price risk is the risk related to changes in financial assets’ prices.

Changes in market prices highly influence the values of financial instruments. Those changes may be due to

factors typical of some types of securities and their issuers, as well as general factors influencing overall securities

circulating in the market.

Liquidity Risk

33

Liquidity risk is the jeopardy of company’s inability to duly perform its obligations partially or in full.

Liquidity risks result from insufficient liquidity or liquidity purchased in a higher price than those prevailing

in the market, which in the outcome impacts the company’s income and expenditure. This risk arises when the

company becomes unable to control decrease of its liabilities and ensure assets’ growth. Liquidity risk is a risk when

the company is unable to tackle its payment obligations as they become due.

During the accounting period the management of liquidity risk was mostly related to solution of the issue of

efficient management of assets and liabilities and gain of maximum profit, keeping the necessary liquidity level.

Liquidity risk management anticipates :

1. cash flow analysis

2. classification of assets and liabilities per contractual terms

3. market monitoring to prepare a relevant participant.

The main method of company’s liquidity management is the method of assets’ management.

The prime liquidity management means and the chief source of liquidity are its net liquid funds : the cash

and balances of correspondent accounts.

The secondary means of liquidity management are its highly liquid profitable assets, which in short term and

at minimum risk of losses may be converted into cash. The highly liquid funds are generated from RA treasury

securities.

The following other methods of assets and liabilities management are also used to manage the liquidity :

-Method of sale of liquid assets: In case of low level of liquidity the company sells its assets to receive cash.

-Liability management method : The company acquires liquidity from financial market be means of foreign

borrowings, loans, repo agreements. This method envisages processes of seeking sources of finance, choice of the

most reliable ones (with a longer term of attraction) and setting optimal correlations between various assets and

liabilities.

To manage and control its liquidity the company is driven by the following principles:

a) current liquidity,

b) time liquidity.

The company manages its liquidity by various method combinations taking into consideration changes in

external environment to reach the best possible liquidity level.

Accounting Period

ASSETS Days left to maturity Termless Total

Before

one

month

1-

3month

s

3-6

months

6-12

months

Above 1 year

Cash, cash equivalents and balances

with the CBA 1,967 1,967


Institutions 11,133 11,133

Due from customers 35,506 412,889 448,395

34

Securities, including

- real value reestimated by profits or

losses

- Available-for-sale

- Held-to-maturity

-Repo

134

3,656,486

43,972

19,438

2,010,840

5,730,870

Other claims 187 46 21,370 21,603 Off-balance sheet contingent assets Contractual claims

Total 3,669,907 79,478 19,484 434,259 2,010,840 6,213,968

LIABILITIES Days left to maturity Termless Total

Before one

month

1-

3months

3-6

months

6-12

months

Above 1 year

Due to banks and other financial

Institutions 5,045,861 209,165 5,255,026

Due to customers Amounts due on securities issued by

the investment company

Other liabilities 357 37,251 37,608 Off-balance sheet contingent

liabilities

Contractual liabilities Total liabilities 5,046,218 209,165 37,251 5,292,634

Previous Period

ASSETS Days left to maturity Termless Total

Before

one

month

1-

3months

3-6

months

6-12

months

Above 1

year

Cash, cash equivalents and balances

with the CBA 3,259 3,259


Institutions 211,087 211,087

Due from customers Securities, including

- real value reestimated by profits or

losses

- available-for-sale

- held-to-maturity

-repo

2,798

4,363,738

33,582

10,783

81,475

1,327,599

5,819,975

Other claims 191 15,041 15,232 Off-balance sheet contingent assets Contractual claims *

Total 4,581,073 33,582 25,824 81,475 1,327,599 6,049,553

LIABILITIES Days left to maturity Termless Total

Before

one

month

1-

3months

3-6

months

6-12

months

Above 1

year

Due to banks and other financial

Institutions 4,871,611 372,498 5,244,109

Due to customers Amounts due on securities issued by

the investment company

Other liabilities 354 27,512 1,865 29,731

35

Off-balance sheet contingent

liabilities

Contractual liabilities ** Total 4,871,965 372,498 27,512 1,865 5,273,840

Caption 33. ¦Capital and Capital Adequacy§

Below please find the size of company’s total capital in 2012 per months, and the capital adequacy standard

indicators.

Thousand Armenian

Drams

MONTHS TOTAL CAPITAL

(average)

FIXED CAPITAL

(average)

SIZE OF TOTAL

CAPITAL

STANDARD

SIZE OF ADEQUACY

STANDARD

1 2 3 4 5

JANUARY 818,255 725,858 300,000 24,19%

FEBRUARY 791,435 736,939 300,000 20,72%

MARCH 891,868 758,028 300,000 18,88%

APRIL 831,894 735,435 300,000 17,09%

MAY 644,324 540,128 300,000 16,01%

JUNE 861,010 682,324 300,000 19,54%

Adequacy ratio (N1 normative) between total capital and sums of risk-weighted assets has been set of 12% for

investment company.

Caption 34. “ Real Value of Financial Assets and Liabilities ”

The company believes that the real values of its assets and liabilities do not differ from their balance sheet

values in material aspects.

Liabilities and claims to financial organizations.

Balance value of mentioned liabilities and financial assets having 1 month left to maturity approximately

reflect their real value, as maturity of such financial instruments is quite short. The real value of liabilities and assets

with more than one month maturity is determined by expected future cash flow calculation and is discounted

according to interest rates existing by the end of the year. They usually coincide with contractual interest rates.

Loans to customers

36

The real value of the metioned financial instruments is close to their balance value, as contractual interest

rates correspond to interest rates of current market similar financial instruments.

Financial assets available-for-sale

By 30.06.2012 the Company classified its investments in asstes as financial assets available-for-sale. The

Company portfolio consists of the following types of assets:

-RA governmental bonds

-RA corporate bonds.

Caption 35 “ Hedging of Forecasted Future Instruments ”

During the accounting quarter the company does not have any financial Instrument that is carried as hedge of

risks related to forecasted future transactions.

Caption 36. “Derecognition”

There are no derecognized financial assets or financial liabilities in the balance sheet.

Caption 37. “Pledged Assets ”

As of June 30, 2012 the Company has pledged assets with nominal value of 1,729,600 AMD, which are

means of ensure to attracted loans.

Caption 38. “ Accepted Pledge ”

As of June 30, 2012 “RENESA” CJSC has no accepted pledge.

Caption 39. “ Breach of Liabilities”

During the accounting period the investment company has no breached contractual liabilities.

Executive Director Vaghinak Saroyan

Chief Accountant Naira Margaryan

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