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Financial Statements and
Independent Auditor's Report

Fashion Retail Georgia Limited
Liability Company
31 March 2018
Contents
Independent auditor’s report 3
Statement of financial position 6
Statement of profit or loss and other comprehensive income 7
Statement of changes in equity 8
Statement of cash flows 9
Notes to the financial statements 11
Fashion Retail Georgia LLC

Financial statements
31 December 2018 2
შპს გრანთ თორნთონ
Independent auditor’s
ქეთევან წამებულის გამზირი 54
0144, თბილისი, საქართველო
ტ.+ 995 322 604 406
report Grant Thornton LLC

54 Ketevan Tsamebuli Avenue
0144 Tbilisi, Georgia
T: + 995 322 604 406
To the shareholder of Fashion Retail Georgia LLC
Opinion
We have audited the financial statements of Fashion Retail Georgia LLC (the “Company”), which
comprise the statement of financial position as of 31 March 2018, and the statement of profit or loss and
other comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position
of the Company as of 31 March 2018, and of its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in accordance
with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (the “IESBA Code”) together with the ethical requirements that are relevant to our audit of
the financial statements in Georgia, and we have fulfilled our other ethical responsibilities in accordance
with those ethical requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Other matters
We draw attention to note 18 to the financial statements, which describes the critical judgments made
by management in applying accounting policies.
During the course of its operations the Company conducts various transactions with entities under
common control and ultimate controlling party (supply of goods, borrowings without stated repayment
dates). The Company considers these transactions to have been made on non-commercial terms at the
behest and instruction of the ultimate controlling party, and has accounted for these transactions as
those conducted with owners, by recording any gains arising on these transaction as credit to equity
(capital contribution).
The comparative financial statements of the Company as of and for the year ended 31 March 2017
prepared in accordance with the International Financial Reporting Standards were not audited.
Our opinion is not qualified in respect of this matter.
www.grantthornton.ge
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRSs, and for such internal control as management determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
 Obtain an understanding of internal control relevant to the audit 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 Company’s internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
 Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
Ketevan Ghambashidze
Registered Auditor
28 December 2018
Statement of financial position
In thousand Georgian lari As of 31 As of 1 April
As of 31 March 2017 2016
Note March 2018 (unaudited) (unaudited)
Assets
Non-current assets
Property and equipment 4 8,275 11,752 17,742
8,275 11,752 17,742
Current assets
Inventories 5 17,296 20,419 23,194
Trade and other receivables 6 4,912 4,926 4,824
Current income tax assets - - 21
Cash and bank balances 7 2,127 4,156 391
24,335 29,501 28,430
Total assets 32,610 41,253 46,172
Equity and liabilities

Capital and reserves
Capital contribution 8.1 48,045 50,074 44,976
Accumulated loss (30,118) (25,169) (15,695)
17,927 24,905 29,281
Non-current liabilities
Loans and borrowings 9 10,625 - -
Deferred income tax liabilities 17 - - 245
10,625 - 245
Current liabilities
Trade and other payables 10 3,318 16,332 16,646
Current income tax liabilities 740 16 -
4,058 16,348 16,646
Total equity and liabilities 32,610 41,253 46,172
The financial statements were approved on December 28, 2018 by:
Jim McNicolas Eduard Tsabadze
Country Director Financial Director
The statement of financial position is to be read in conjunction with the notes to and forming part of the financial
statements set out on pages 11 to 35.

31 March 2018 6
Statement of profit or loss and
other comprehensive income
In thousand Georgian lari Year ended
Year ended 31 March
31 March 2017
Note 2018 (unaudited)
Revenue 11 35,619 35,403
Cost of sales 12 (25,174) (22,949)
Gross profit 10,445 12,454
Other income 3 2
Distribution and marketing expenses 13 (2,124) (2,396)
Administrative expenses 14 (15,639) (19,656)
Results from operating activities (7,315) (9,596)
Finance income 15 128 137

Finance costs 15 (488) -
Other financial items 16 2,734 (200)
Loss before income tax (4,941) (9,659)
Income tax (expense)/recovery 17 (8) 185

Loss for the year (4,949) (9,474)
Other comprehensive income - -

Total comprehensive loss for the year (4,949) (9,474)
The statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to and
forming part of the financial statements set out on pages 11 to 35.

31 March 2018 7
Statement of changes in equity
In thousand Georgian lari Charter Capital Accumulated
capital contribution profit/(loss) Total
As of 1 April 2016
(unaudited) - 44,976 (15,695) 29,281
Loss for the year (unaudited) - - (9,474) (9,474)

Total comprehensive income for
the year (unaudited) - - (9,474) (9,474)
Increase of capital contribution

(refer to note 8.1) (unaudited) - 5,098 - 5,098
Transactions with owners
(unaudited) - 5,098 - 5,098
As of 31 March 2017
(unaudited) - 50,074 (25,169) 24,905
Loss for the year - - (4,949) (4,949)

Total comprehensive income for
the year - - (4,949) (4,949)
Decrease of capital contribution

(refer to note 8.1) - (2,029) - (2,029)
Transactions with owners - (2,029) - (2,029)
As of 31 March 2018 - 48,045 (30,118) 17,927
The statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial
statements set out on pages 11 to 35.

31 March 2018 8
Statement of cash flows
Year ended 31 March
31 March 2017
2018 (unaudited)
Cash flows from operating activities
Loss for the year (4,949) (9,474)
Adjustments for:
Depreciation 2,689 3,370
Loss on disposal of property and equipment - 1,702
Impairment/(Reversal of impairment) of non-current assets (426) 1,797
Interest expense 488 -
Income tax expense/(recovery) 8 (185)
Movement in inventory provision (177) 680
Finance income (128) (137)
Foreign exchange (gain)/loss (2,734) 200
Operating loss before working capital changes (5,229) (2,047)
Change in trade and other receivables 14 (102)

Change in inventories 3,300 2,095
Change in trade and other payables (10,212) (321)
Net cash used in operating activities (12,127) (375)
Cash flows from investing activities

Acquisition of property and equipment (513) (1,037)
Proceeds from disposal of property and equipment 1,727 158
Interest income received 128 137
Net cash from/(used in) investing activities 1,342 (742)
Cash flows from financing activities

Proceeds from loans and borrowings 15,937 -
Repayment of loans and borrowings (4,763) -
Proceeds from capital contribution 4,785 5,098
Distribution of capital contribution (6,814) -
Net cash from financing activities 9,145 5,098

31 March 2018 9
Statement of cash flows
(continued)
Year ended 31 March
31 March 2017
2018 (unaudited)
Net increase/(decrease) in cash and bank balances (1,640) 3,981
Foreign exchange effect on cash (389) (216)
Cash and bank balances at the beginning of the year 4,156 391
Cash and bank balances at the end of the year 2,127 4,156
The statement of cash flows is to be read in conjunction with the notes to and forming part of the financial statements
set out on pages 11 to 35.

31 March 2018 10
Notes to the financial statements
1 Nature of operations and general information
Fashion Retail Georgia LLC was founded in April 2011. The 100% owner of the Company is Retail
Group Georgia LLC, located in Tbilisi, Georgia.
The main activity of the Company is retail trade of fashion apparel and accessories of a number of well-
established brands, through over several stores, located in malls and shopping areas of Tbilisi city.
The registered address of the Company is: Old Tbilisi region, 20 Telavi Street, Tbilisi, Georgia.
The office address of the Company is: 50/18 Ketevan Tsamebuli Avenue, Tbilisi, Georgia.
2 Basis of preparation
2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”).
These financial statements constitute separate financial statements of the Company prepared in
accordance with IAS 27 Separate Financial Statements. These separate financial statements were
prepared in addition to consolidated financial statements of the Company and its subsidiaries as of and
for the year ended 31 March 2018, prepared in accordance with IFRS 10 Consolidated Financial
Statements, for the purpose of publication in accordance with the regulations of the Service for
Accounting, Reporting and Auditing Supervision (SARAS) of the Ministry of Finance of Georgia. The
consolidated financial statements may be obtained at the following address: 50/18 Ketevan Tsamebuli
Avenue, Tbilisi, Georgia.
2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis with the exception of certain
financial instruments that are stated at present discounted value of future cash flows.
2.3 Functional and presentation currency

The national currency of Georgia is the Georgian lari (“lari”), which is the Company’s functional
currency, since this currency best reflects the economic substance of the underlying events and
transactions of the Company.
These financial statements are presented in thousand Georgian lari (unless otherwise stated), since
management believes that this currency is more useful for the users of these financial statements. All
financial information presented in thousand Georgian lari has been rounded to the nearest thousand lari.
2.4 Use of estimates and judgment

The preparation of financial statements in conformity with IFRSs requires management to make critical
accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in note 18 to the
financial statements

31 March 2018 11
2.5 Adoption of new and revised standards
In the current year the Company has adopted all of the new and revised Standards and Interpretations
issued by the International Accounting Standards Board (the “IASB”) and International Financial
Reporting Interpretations Committee (the “IFRIC”) of the IASB that are relevant to its operations and
effective for annual reporting periods beginning on 1 January 2017.
The nature and the effect of these changes are disclosed below. Although these new standards and
amendments are applied for the first time in 2017, they did not have a material impact on the annual
financial statements of the Company.
New and revised standards and interpretations that are effective for annual
periods beginning on or after 1 January 2017
Disclosure Initiative (Amendments to IAS 7 Statements of Cash Flows)
The amendments to IAS 7, effective 1 January 2017, require the Company to provide disclosures about
the changes in liabilities from financing activities. The Company categorizes those changes into
changes arising from cash flows and non-cash changes with further sub-categories as required by IAS.
Standards, amendments and interpretations to existing standards that are not

yet effective and have not been adopted early by the Company
At the date of authorization of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published by the IASB but are not yet effective, and
have not been adopted early by the Company.
Management anticipates that all of the relevant pronouncements will be adopted in the Company’s
accounting policies for the first period beginning after the effective date of the pronouncement.
Information on new standards, amendments and interpretations that are expected to be relevant to the
Company’s financial statements is provided below. Certain other new standards and interpretations
have been issued but are not expected to have a material impact on the Company’s financial
statements.
IFRS 9 Financial Instruments

The IASB released IFRS 9 Financial Instruments, representing the completion of its project to replace
IAS 39 Financial Instruments: Recognition and Measurement. The new standard introduces extensive
changes to IAS 39’s guidance on the classification and measurement of financial assets and introduces
a new “expected credit loss” model for the impairment of financial assets. IFRS 9 also provides new
guidance on the application of hedge accounting.
The Company’s management have yet to assess the impact of this new standard on the Company’s
financial statements. The new standard is required to be applied for annual reporting periods beginning
on or after 1 January 2018.
IFRS 15 Revenue from Contracts with Customers

IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 Revenue, IAS 11
Construction Contracts, and several revenue-related Interpretations. The new standard establishes a
control-based revenue recognition model and provides additional guidance in many areas not covered
in detail under existing IFRSs, including how to account for arrangements with multiple performance
obligations, variable pricing, customer refund rights, supplier repurchase options, and other common
complexities.
IFRS 15 is effective for reporting periods beginning on or after 1 January 2018. The Company’s
management have not yet assessed the impact of IFRS 15 on these financial statements.
IFRS 16 Leases
IFRS 16 presents new requirements and amendments to the accounting of leases. IFRS 16 will require
lessees to account for leases “on-balance sheet” by recognizing a “right-of-use” asset and a lease
liability.
IFRS 16 also:

31 March 2018 12
 changes the definition of a lease;
 sets requirements on how to account for the asset and liability, including complexities such as
non-lease elements, variable lease payments and option periods;
 provides exemptions for short-term leases and leases of low value assets;
 changes the accounting for sale and leaseback arrangements;
 largely retains IAS 17’s approach to lessor accounting;
 introduces new disclosure requirements.
IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is
permitted provided IFRS 15 Revenue from Contracts with Customers is also applied. The Company’s
management have not yet assessed the impact of IFRS 16 on these financial statements.
IFRIC 22 Foreign Currency Transactions and Advance Consideration

IFRIC 22 looks at what exchange rate to use for translation when payments are made or received in
advance of the related asset, expense or income.
IFRIC 22 addresses this issue by clarifying that the date of the transaction for the purpose of
determining the exchange rate to use on initial recognition of the related asset, expense or income (or
part of it) is the date on which the Company initially recognizes the non-monetary asset or non-monetary
liability arising from the payment or receipt of advance consideration.
If there are multiple payments or receipts in advance, the Company shall determine a date of the
transaction for each payment or receipt of advance consideration.
IFRIC 22 is effective for annual reporting periods beginning on or after 1 January 2018. Earlier
application is permitted.
Annual Improvements 2014-2016

The Annual Improvements 2014-2016 made several minor amendments to a number of IFRSs. The
amendments relevant to the Company are summarized below:
IFRS 1 First-time Adoption of International Financial Reporting Standards

Deletion of short-term exemptions for first-time adopters
IFRS 1 is effective for annual periods beginning on or after 1 January 2018
IFRIC 23 Uncertainty over Income Tax Treatment

IFRIC 23 provides guidance on how to reflect the effects of uncertainty in accounting for
income taxes under IAS 12, in particular (i) whether uncertain tax treatments should be
considered separately, (ii) assumptions for taxation authorities' examinations, (iii)
determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits,
and tax rates, and (iv) effect of changes in facts and circumstances.
IFRIC 23 is effective for annual reporting periods beginning on or after 1 January 2019. Earlier
application is permitted.
3 Significant accounting policies
3.1 General conditions and first time adoption of IFRSs

The financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) which were valid as of 31 March 2018.
The concepts of accounting policy were applied to each period presented in the financial statements.
Refer to note 26 for the effect of the transfer to IFRSs on the financial statements.

31 March 2018 13
Refer to note 2.5 for standards and interpretations that were issued, but were not yet effective and were
not early adopted by the Company.
The significant accounting policies applied for the preparation of the financial statements are presented
below.
3.2 Foreign currencies

Foreign currency transactions
In preparing the financial statements, transactions in currencies other than the functional currency are
recorded at the rates of exchange defined by the National Bank of Georgia prevailing on the dates of the
transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated
at the rates defined by the National Bank of Georgia prevailing on the reporting date, which is 2.4144
lari for 1 US dollar and 2.9762 lari for 1 euro as of 31 March 2018 (31 March 2017: 2.4452 Georgian lari
for 1 US dollar and 2.6266 Georgian lari for 1 euro). Non-monetary items are not retranslated and are
measured at historic cost (translated using the exchange rates at the transaction date), except for non-
monetary items carried at fair value that are denominated in foreign currencies which are retranslated at
the rates prevailing on the date when the fair value was determined.
Exchange differences arising on the settlement and retranslation of monetary items, are included in
profit or loss for the period.
3.3 Property and equipment

Property and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses. Cost comprises purchase price including import duties and non-refundable purchase
taxes and other directly attributable costs. When an item of property and equipment comprises major
components having different useful lives, they are accounted for as separate items of property and
equipment.
The gain or loss arising on the disposal or retirement of an item of property and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in profit or loss.
Expenditure to replace a component of an item of property and equipment that is accounted for
separately is capitalized with the carrying amount of the component being written off. Other subsequent
expenditure is capitalized if future economic benefits will arise from the expenditure. All other
expenditure, including repair and maintenance, is recognized in the statement of profit or loss.
Expenditure related to the improvement of leasehold properties are recognized as an item of property
and equipment and are presented separately and is depreciated over the useful life of the asset or the
term of the leasehold agreement, whichever is shorter.
Depreciation is charged to the statement of profit or loss on a straight line basis over the estimated
useful lives of the individual assets. Depreciation commences when assets are available for use. The
annual depreciation rates based on estimated useful lives are as follows:
Vehicles - 25%
Furniture and fixtures - 10-12.5%
Leasehold improvement - 12.5%
Computers and other equipment - 10-12.5%.

31 March 2018 14
3.4 Leased assets
In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the
lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased
asset. The related asset is then recognized at the inception of the lease at the fair value of the leased
asset or, if lower, the present value of the lease payments plus incidental payments, if any. A
corresponding amount is recognized as an obligation under finance lease, irrespective of whether some
of these lease payments are payable up-front at the date of inception of the lease.
Subsequent accounting for assets held under finance lease agreements, i.e. depreciation methods and
useful lives, correspond to those applied to comparable assets which are legally owned by the
Company. The corresponding obligation under finance lease is reduced by lease payments less finance
charges, which are expensed to finance costs. The interest element of leasing payments represents a
constant proportion of the capital balance outstanding and is charged to profit or loss over the period of
the lease.
All other leases are treated as operating leases. Payments on operating lease agreements are
recognized as an expense on a straight-line basis. Associated costs, such as maintenance and
insurance, are expensed as incurred.
3.5 Inventories
Inventories are assets held for sale in the ordinary course of business or in the form of materials or
supplies to be consumed in the production process or in the rendering of services. Items such as spare
parts, stand-by equipment and servicing equipment are also recognized as inventories unless they meet
the definition of property and equipment.
Inventories are stated at the lower of cost and net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling
expenses. The cost of inventories is based on the weighted average principle and includes expenditure
incurred in acquiring the inventories and bringing them to their existing location and condition.
3.6 Financial instruments

Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognized when the Company becomes a part to the
contractual provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred.
Financial liabilities are derecognized when they are extinguished, discharged, cancelled or expire.
Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except
for financial assets and financial liabilities carried at fair value through profit or loss, which are measured
initially at fair value.
Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement financial assets other than hedging instruments are
divided into the following categories upon initial recognition:
 loans and receivables
 financial assets at fair value through profit or loss
 available-for-sale financial assets
 held-to-maturity investments.
Financial assets are assigned to different categories on initial recognition, depending on the
characteristics of the instrument and its purpose. A financial instrument's category is relevant for the
way it is measured and whether any resulting income and expenses are recognized in profit or loss or in

31 March 2018 15
other comprehensive income. Refer to note 19.2 for a summary of the Company's financial assets by
category.
Generally, the Company recognizes all financial assets using settlement date accounting. An
assessment of whether a financial asset is impaired is made at least at each reporting date. All income
and expenses relating to financial assets that are recognized 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 other expenses.
i Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and include trade and other receivables as well as cash and bank
balances.
Trade and other receivables

Current accounts receivable are initially recognized at fair value. Subsequently they are measured at
amortized cost less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Company will not be able to collect all amounts
due according to the original terms of the receivables. Significant financial difficulties of the debtor and
default and delinquency in payments 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 value of
the estimated future cash flows, discounted at the original effective interest rate.
The balance of the allowance is adjusted by recording a charge or income to profit or loss of the
reporting period. Any amount written-off with respect to customer account balances is charged against
the existing allowance for doubtful accounts. All accounts receivable for which collection is not
considered probable are written-off.
Cash and bank balances

The Company’s cash and bank balances comprise cash in hand, bank accounts and cash in transit
Classification and subsequent measurement of financial liabilities

The Company's financial liabilities include loans and borrowings and trade and other payables. A
summary of the Company's financial liabilities by category is given in note 19.2.
i Loans and borrowings

Loans and borrowings are recognized initially at fair value, net of issuance costs associated with the
borrowing. The difference between fair value and nominal value is recognized in profit or loss, except
when the borrowing was received from the owners. In this instance the difference between fair value
and nominal value is recognized in equity as additional capital. Subsequent to initial recognition, loans
and borrowings are stated at amortized cost with any difference between cost and redemption value
recognized in profit or loss over the period of the borrowings on an effective interest basis. Interest and
other costs incurred in connection with borrowings are expensed as incurred as part of finance
expenses, except for the borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset, which are capitalized as part of that asset.
ii Trade and other payables

Trade and other payables are stated at fair value and subsequently stated at amortized cost.
3.7 Impairment
Impairment of property and equipment and intangible assets
Assets that have an indefinite useful life are not subject to amortization and are tested annually for
impairment. Assets that are subject to amortization are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

31 March 2018 16
Recoverable amount is the higher of net selling price and value in use. If the recoverable amount of an
asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of
the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are
recognized as an expense immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating
unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is
recognized as income immediately, unless the relevant asset is carried at a revalued amount, in which
case any reversal of impairment loss is treated as a revaluation increase.
Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of
impairment at each reporting date. Financial assets are impaired where there is objective evidence that,
as a result of one or more events that occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been impacted.
For financial assets carried at amortized cost, the amount of the impairment is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate. The carrying amount of the financial asset is reduced by the impairment
loss directly for all financial assets with the exception of trade receivables where the carrying amount is
reduced through the use of an allowance account.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is reversed through profit or loss
to the extent that the carrying amount of the investment at the date the impairment is reversed does not
exceed what the amortized cost would have been had the impairment not been recognized.
3.8 Equity
Charter capital represents the nominal value of shares that have been issued.
Accumulated profit or loss includes all current and prior period retained profits or accumulated losses.
Dividends are recognized as a liability in the period in which they are declared.
Transactions with owners are recognized directly in equity.
3.9 Income tax

Current tax is the expected tax payable/(recoverable) on the taxable income/(loss) for the year, using
tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Changes in corporate income tax effective from 1 January 2017

Effective 1 January 2017, there are significant amendments to the Tax Code of Georgia, related to
introduction of a new model for corporate income taxation.
The new model (the “Estonian model of corporate taxation”) implies zero corporate tax rate on retained
earnings and a 15% corporate tax rate on distributed earnings, compared to the previous model of 15%
tax rate charged to the company’s profit before tax, regardless of profit retention or distribution. As a
result of changes, starting 1 January 2017 companies will pay corporate income tax on earnings
distribution (profit distributed to shareholders as dividends) and on individual transactions that may be
considered as indirect distribution of earnings (benefits, gifts, payments, non-arm’s length cross-border
transactions with related parties, expenses not related to economic activities, etc).

31 March 2018 17
The corporate income tax arising from distribution of dividends is recognized as an expense in the
period when dividends are declared, regardless of the actual payment date or the period for which
dividends are distributed. The tax rate is 15/85 of the amount of net distribution.
For tax payable on any dividends declared and paid in 2017 and later, from earnings accumulated prior
to 2016, tax credit is available for corporate income tax paid on undistributed earnings under the
previous model.
According to the amended concept of corporate income taxation, there will be no temporary differences
between the carrying amounts of assets and liabilities in the statement of financial position and their tax
bases. Therefore, deferred tax assets and liabilities, as defined in IAS 12 Income Taxes, are not formed
subsequent to 1 January 2017.
Deferred taxes prior to 1 January 2017

Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable
profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax
assets are generally recognized for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which those deductible temporary differences can be
utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises
from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Company is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is probable that there will be
sufficient taxable profits against which to utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or settle the carrying amount of its
assets and liabilities.
3.10 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable taking into account
the amount of any trade discounts and rebates allowed by the Company.
Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognized when all the following conditions are satisfied:
 the Company has transferred to the buyer the significant risks and rewards of ownership of the
goods;
 the Company retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
 the amount of revenue can be measured reliably;
 it is probable that the economic benefits associated with the transaction will flow to the Company
and

31 March 2018 18
 the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income
Interest revenue is accrued on a timely basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset’s net carrying amount.
4 Property and equipment

In thousand Georgian lari Furniture Computers
Leasehold and and other
improvement fixtures Vehicles equipment Total
Cost
As of 1 April 2016 13,578 8,781 - 1,392 23,751
Additions 502 183 121 231 1,037
Disposals (3,523) - - - (3,523)
As of 31 March 2017 10,557 8,964 121 1,623 21,265
Additions 427 17 - 69 513
Disposals (2,319) - - - (2,319)
As of 31 March 2018 8,665 8,981 121 1,692 19,459
Accumulated depreciation and

impairment
As of 1 April 2016 3,964 1,560 - 485 6,009
Charge for the year 1,635 1,476 30 229 3,370
Eliminated on disposal (1,663) - - - (1,663)
Impairment loss 431 1,335 31 - 1,797
As of 31 March 2017 4,367 4,371 61 714 9,513
Charge for the year 1,011 1,383 37 258 2,689
Eliminated on disposal (592) - - - (592)
Impairment loss - (426) - - (426)
As of 31 March 2018 4,786 5,328 98 972 11,184
Carrying amount
As of 31 March 2017 6,190 4,593 60 909 11,752
As of 31 March 2018 3,879 3,653 23 720 8,275
Depreciation expense and impairment losses have been charged to administrative expenses.
Additions in leasehold improvements and furniture and fixtures represent expenditures on newly opened
stores.
Disposal of leasehold improvement is related to closing of shops. As a result of cancellation of shop

area rental agreements, the entire balance of construction and renovation costs, previously capitalized
and recognized as leasehold improvement, was written off.
During the year ended 31 March 2017 the Company has recognized impairment losses in respect of
leasehold improvements, furniture and fixtures, computer and other equipment related to a number of
stores representing separate cash-generating units:

31 March 2018 19
- stores which have been closed subsequent to the reporting date;
- stores for which there is a management decision to close within the 12 months subsequent to the
reporting period;
- stores for which performance has been significantly worse than expected and the management does
not expect any improvement within the subsequent three years of operation.
Impairment losses have been recognized in respect of the following cash-generating units:
Store Location
Cortefiel Tbilisi Mall Declining performance
Miss Selfridge Tbilisi Mall Declining performance
Quiz Tbilisi Mall Declining performance
Aldo Aghmashenebeli Avenue, Tbilisi Closure in 2017
Blanco Aghmashenebeli Avenue, Tbilisi Closure in 2017
Blanco East Point Mall Closure in 2017
Blanco Tbilisi Mall Closure in 2017
Charles & Keith Aghmashenebeli Avenue, Tbilisi Closure in 2017
Clarks Aghmashenebeli Avenue, Tbilisi Closure in 2017
F&F Aghmashenebeli Avenue, Tbilisi Closure in 2017
FG4 Tbilisi Mall Closure in 2017
Inc East Point Mall Closure in 2017
Impairment loss for each of the cash-generating units relates to the following classes:
In thousand Georgian lari Leasehold Furniture Computers

improve- and and other
ments fixtures equipment Total
Cortefiel 225 132 - 357
Miss Selfridge 101 116 2 219
Quiz 105 38 1 144
Aldo - 95 3 98
Blanco - 16 2 18
Blanco - 139 7 146
Blanco - 226 5 231
Charles & Keith - 4 2 6
Clarks - 45 2 47
F&F - 1 1 2
FG4 - 71 - 71
Inc - 452 6 458
431 1,335 31 1,797
Leasehold improvement of closed stores, with a historical cost of Georgian lari 1,135 thousand, is
written-off, due to cancellation of respective lease agreements and are included in disposal for the year
ended 31 March 2017.
The leasehold improvements related to cash-generating units with declining performance is fully
impaired and reduced to nil, as they have neither fair value, nor value in use.

31 March 2018 20
The recoverable amounts of the remaining assets within impaired cash-generating units have been
determined as the fair value less disposal costs. Refer to note 21 for information regarding fair value
measurements.
Recoverable amount of each of the cash-generating units as of 31 March 2017 are as follows:
In thousand Georgian lari Total
Cortefiel 62
Miss Selfridge 62
Quiz 23
Aldo 57
Blanco 14
Blanco 94
Blanco 126
Charles & Keith 13
Clarks 30
F&F -
FG4 33
Inc 232
746
No additional impairment losses were incurred during the year ended 31 March 2018. Impairment loss
in the amount of 426 thousand Georgian lari, previously recognized on certain items of furniture and
fixtures, was reversed, as these assets were moved from warehouses to open stores. Based on
performance of these stores, the value in use of these items was increased.
5 Inventories
In thousand Georgian lari As of 31 As of 31
March 2018 March 2017
Apparel and accessory items for sale 16,781 20,391
Provision for slow-moving obsolete inventory (503) (680)
Goods in transit 422 -
Packaging Items 596 708
17,296 20,419
During the year ended 31 March 2018 the Company recognized a decrease in the amount of expense
previously recognized from write-down of slow moving inventory in the amount of Georgian lari 177
thousand. The reassessment of provision for slow-moving inventory has been performed on the basis of
a number of large-scale warehouse and outlet sales of slow-moving inventory held by the Company
during the reporting year.

31 March 2018 21
6 Trade and other receivables
Trade receivables 369 511
Allowances for doubtful trade receivables (123) (123)
Net trade receivables 246 388
Advance to suppliers 33 51
Prepaid rent 336 312
Prepaid insurance 1 1
Prepayment made to the State budget 4,220 4,174
Other 76 -
4,912 4,926
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable
approximation of fair value.
The Company has provided fully for all receivables over 365 days because historical experience is that
receivables that are past due beyond 365 days are generally not recoverable. As of 31 March 2018
individual items of trade receivables at the gross carrying amount of Georgian lari 123 thousand (31
March 2017: Georgian lari 123 thousand) were impaired and provided for. The ageing analysis of these
receivables is disclosed below:

Less than 6 months - -
6 months to 1 year - -
Over 1 year 123 123
123 123
Movement of the allowance for doubtful receivables is presented below:

Balance at the beginning of year 123 123
Adjustment to allowance - -
Increase in the allowance during the period - -
Balance at the end of year 123 123
In determining the recoverability of a trade receivable the Company considers any change in the
repayment pattern from the debtor from the date credit was initially granted up to the reporting date. The
concentration of credit risk is limited due to the customer range being large and unrelated. Accordingly,
the directors believe that there is no further credit provision required in excess of the allowance for
doubtful debts.

31 March 2018 22
Prepayment made to the State budget comprise the following:

Value added taxes 4,210 4,174
Property tax 10 -
4,220 4,174
Refer to note 20 for the currencies in which the trade and other receivables are denominated.
7 Cash and bank balances

Cash in hand 104 114
Bank accounts 2,023 4,042
2,127 4,156
Refer to note 20 for the currencies in which the cash and bank balances are denominated.
8 Capital and reserves
8.1 Charter capital

common control. These transactions represent mainly supply of equipment and shop fittings to the
group companies from entities under common control for which no stated repayment terms or schedules
exist or can be forecasted by the Company management.
In addition, the group companies receive cash contributions from the ultimate controlling party, on a
non-interest bearing unsecured financing modality, without stated repayment dates, terms or schedule.
No payments have been made or are expected to be made by the Company in the foreseeable future to
repay these contributions.
The Company considers these transactions to have been made on non-commercial terms at the behest
and instruction of the ultimate controlling party, and has accounted for these transactions as those
conducted with owners, by recording gains arising on these transaction as credit to equity (capital
contribution). Where, however a payment has been made to an entity under common control in
connection such supplies of goods or services previously considered as contribution to equity, such
transfer of cash and cash equivalents have been accounted for as debit to equity (withdrawal of capital
contribution).
9 Loans and borrowings

In thousand Georgian lari Current Non-current
As of 31 As of 31 As of 31 As of 31
March 2018 March 2017 March 2018 March 2017
Unsecured borrowings
from related parties - - 10,625 -
- - 10,625 -

31 March 2018 23
The fair values of current loans and borrowings equal their carrying amount. The fair values are based
on cash flows discounted at 8.5% .The effective interest rate is 7.62%.
The loan is taken by the subsidiary Fashion Retail Georgia LLC from another related company Logistics
Fashion Trading DWC LLC. Loan term is 5 years, at the nominal interest rate of 1%.
Refer to note 20 for more information about the Company’s exposure to foreign currency risks.
10 Trade and other payables

Trade payables 2,869 14,939
Payables to employee 111 147
Payables to the State budget 338 1,246
3,318 16,332
Payables to the State budget comprise the following:

Customs fees - 184
Personal income tax 338 983
Property tax - 79
338 1,246
Refer to note 20 for more information about the Company’s exposure to foreign currency risk.
11 Revenue
In thousand Georgian lari Year ended Year ended
31 March 31 March
2018 2017
Sales on local market 32,637 32,873
Export sales 2,982 2,530
35,619 35,403
12 Cost of sales
31 March 31 March
2018 2017
Purchase cost of inventory for cash sales 25,036 22,790
Cost of Royalty 138 159
25,174 22,949

31 March 2018 24
13 Distribution and marketing expenses
In thousand Georgian lari Year ended 31 Year ended 31

Inland freight and distribution expenses 301 44
Advertisement and sales promotion expenses 1,656 1,665
Credit card commissions 160 167
Materials for shop decorations 1 38
Packing materials - 482
Other 6 -
2,124 2,396
14 Administrative expenses
In thousand Georgian lari Year ended 31 Year ended 31
Rental expenses 4,344 6,845
Management service fee to head office 1,329 1,487
Employee benefits 1,991 2,307
Depreciation 2,689 3,370
Bank charges 3,141 133
Utilities and communication 454 583
Office maintenance expenses 175 234
Travel and transportation 7 3
Insurance 106 144
Taxes, other than income tax 122 149
Write off of property and equipment - 1,702
Impairment loss on property and equipment (426) 1,797
Provision for inventory obsolescence (177) 680
Other expenses 1,884 222
15,639 19,656
15 Finance income and costs

31 March 31 March
2018 2017
Interest expenses on loans from related party 488 -
Total finance costs 488 -
Interest income on bank balances 128 137

Total finance income 128 137
Net finance income/(costs) (360) 137

31 March 2018 25
16 Other financial items
31 March 31 March
2018 2017
Gain/(loss) from exchange differences on:
Loans and receivables (389) 16
Financial liabilities measured at amortized cost 3,123 (216)
2,734 (200)
17 Income tax expense/(recovery)

31 March 31 March
2018 2017
Current tax 8 60
Deferred tax adjustment - (245)
Deferred tax - -
8 (185)
The movement of deferred income taxes is disclosed below:
Year ended Year ended

In thousand Georgian lari 31 March 31 March
2018 2017
Balance at the beginning of year - (245)
(Charged)/credited to profit or loss - -
Deferred tax adjustments - 245
Balance at the end of year - -
Deferred income taxes for the year ended 31 March 2017 can be summarized as follows:
In thousand Georgian lari Recognized

in profit or 31 March
1 April 2016 loss 2017
Deferred income tax assets
Trade and other receivables 25 (4) 21
Trade and other payables 18 - 18
43 (4) 39
Deferred income tax liabilities
Property and equipment 288 (459) (171)
288 (459) (171)
Gross deferred tax (245) 455 210
Deferred tax adjustment - (210) (210)
Net position – deferred income tax

assets/(liabilities) (245) 245 -

31 March 2018 26
Deferred tax adjustments
On 1 January 2017 amendments to the Tax Code of Georgia entered into force, affecting the model of
corporate income taxation (refer to note 3.9). As a result of changes, starting from 1 January 2017
companies will pay corporate income tax on earnings distribution (profit distributed to shareholders as
dividends) and on individual transactions that may be considered as indirect distribution of earnings
(benefits, gifts, payments, non-arm’s length cross-border transactions with related parties, expenses not
related to economic activities, etc). According to the amended concept of taxation, there will be no
temporary differences between the carrying amounts of assets and liabilities in the statement of financial
position and their tax bases.
The change has had an immediate impact on deferred tax asset and deferred tax liability balances
(“deferred taxes”) attributable to previously recognized temporary differences arising from prior periods.
The Company has re-measured its deferred tax assets and liabilities as of 1 January 2017 and has fully
released the unutilisable portion of the deferred tax assets and liabilities (“deferred tax adjustments”).
18 Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.
18.1 Critical accounting estimates

The Company makes estimates and assumptions concerning the future. The resulting accounting
estimates may be different from the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Useful lives of property and equipment
Management has estimated useful lives of the property and equipment. Management believes that
estimated useful lives of the property and equipment are not materially different from economical lives of
those assets. If actual useful lives of property and equipment are different from estimations, financial
statements may be materially different.
Recoverable amounts for property and equipment
Management has estimated the recoverable amounts of its property and equipment and has recognized
impairment loss as the difference between assets' carrying amounts and their recoverable amounts.
These estimations are based on a number of assumptions related to the performance of various cash-
generating units, the weighted average cost of the capital for the Company and others, described in
note 4. If actual results are different from these assumptions, financial statements may be materially
different.
18.2 Critical judgments in applying accounting policies

Capital contribution
common control, related mainly to supply of equipment and shop fittings to the group companies from
entities under common control for which no stated repayment terms or schedules exist or can be
forecasted by the Company management.
Company receives cash contributions from the ultimate controlling party, on a non-interest bearing
unsecured financing modality, without stated repayment dates, terms or schedule. No payments have
been made or are expected to be made by the Company in the foreseeable future to repay these
contributions.

31 March 2018 27
The Company considers these transactions to have been made on non-commercial terms at the behest
and instruction of the ultimate controlling party, and has accounted for these transactions as those
conducted with owners, by recording any gains arising on these transaction as credit to equity (capital
contribution).
During the year ended 31 March 2018, the Company has obtained a loan from a related party (refer to
note 9) at a preferential rate and with extended repayment period. Differences arise between the
nominal amount of the loan and its fair value, determined based on cash flows discounted at 8.5%, was
recognized as capital contribution (element of equity).
18.3 Key assumptions concerning the future

Management’s key assumptions concerning important future events include the following:
 Management will be successful in eliminating obsolete stock balances through warehouse and
outlet sales within the next 12 months, without incurring losses in excess of estimated inventory
provision as of 31 March 2018.
 Ultimate controlling party of the Company will not demand immediate and full repayment of
financial contributions previously made to the Company’s operations in Georgia in form of non-
interest bearing cash borrowings, which do not have any stated repayment terms and maturity
dates and are considered by Company management as additional capital contributions to the
equity of the Company (refer to note 8.1).
19 Financial instruments
19.1 Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition
and the basis on which income and expenses are recognized, in respect of each class of financial asset
and financial liability are disclosed in note 3.6.
19.2 Categories of financial instruments

The carrying amounts presented in the statement of financial position relate to the following categories
of assets and liabilities:
Financial assets
Loans and receivables:
Trade and other receivables 246 388
Cash and bank balances 2,127 4,156
2,373 4,544
Financial liabilities
Financial liabilities measured at amortized cost:
Loans and borrowings 10,625 -
Trade and other payables 2,980 15,086
13,605 15,086

31 March 2018 28
20 Financial risk management
The Company is exposed to various risks in relation to financial instruments. The main types of risks are
market risk, credit risk and liquidity risk.
Financial risk factors
a) Market risk
The Company is exposed to market risk through its use of financial instruments and specifically to
currency risk,, which result from both its operating and investing activities.
Foreign currency risk

The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to
exchange rate fluctuations arise.
Most of the Company’s transactions are carried out in Georgian lari. Exposures to currency exchange
rates arise from the Company’s overseas sales and purchases, which are primarily denominated in US
dollars. British Pound and Euro. The Company also has a US dollar loan, which has been used to fund
the purchases and daily operations.
Foreign currency denominated financial assets and liabilities which expose the Company to currency
risk are disclosed below. The amounts shown are those reported to key management translated into
Georgian lari at the closing rate:
Item
As of 31 March 2018 US dollar Euro British Pound
Financial assets
Cash and Bank balances 348 540 108
Trade and other receivables 89 48 40
437 588 148
Trade and other payables 734 - -
Borrowings 10,625 2,927 237
11,359 2,927 237
Net position (10,922) (2,339) (89)

31 March 2018 29
Item
As of 31 March 2017 US dollar Euro British Pound
Financial assets
Cash and Bank balances 478 655 304
Trade and other receivables 324 - -
802 655 304
Trade and other payables 981 1,239 205
981 1,239 205
Net position (179) (584) 99
The following table details the Company’s sensitivity to a 15% (2017: 15%) increase and decrease in
Georgian lari against US dollar. 15% (2017: 15%) represents management’s assessment of the possible
change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 15% (2017: 15%)
change in foreign currency rates.
If Georgian lari had strengthened against US dollar, British Pound and Euro by 15% (2017: 15%) then
this would have had the following impact:
In thousand
Georgian
lari US dollar impact Euro impact British Pound impact
2018 2017 2018 2017 2018 2017
Profit or loss 1,638 27 351 88 13 (15)
Exposures to foreign exchange rates vary during the year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be representative of the Company’s
exposure to currency risk.
b) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in
financial loss to the Company. The effect of this risk for the Company arises from different financial
instruments, such as accounts receivable. The maximum exposure to credit risk is represented by the
carrying amounts of the following financial instruments:

Accounts receivable 246 388
Bank balances 2,023 4,042
2,269 4,430
At the reporting date there was significant concentration of credit risk in respect of trade and other
receivables, as they are from related parties.
The credit risk for bank balances is considered negligible, since the counterparties are reputable banks.

31 March 2018 30
c) Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its obligations.
The Company’s policy is to run a prudent liquidity management policy by means of holding sufficient
cash and bank balances, as well as highly liquid assets for making all operational and debt service
related payments when those become due.
The following table details the Company’s remaining contractual maturity for its non-derivative financial
liabilities with agreed repayment periods. 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.
The table includes both interest and principal cash flows.
As of 31 March 2018 Non- Fixed

interest interest rate
bearing instruments Total
Weighted average effective interest rate (%) 7.62%
Less than 6 months 2,980 - 2,980
6 months to 1 year - - -
1-5 years - - -
More than 5 years - 15,341 15,341
2,980 15,341 18,321
As of 31 March 2017 Non- Fixed

interest interest rate
bearing instruments Total
Weighted average effective interest rate (%)
Less than 6 months 15,086 - 15,086
6 months to 1 year - - -
1-5 years - - -
More than 5 years - - -
15,086 - 15,086
The Company considers expected cash flows from financial assets in assessing and managing liquidity
risk, particularly its cash resources and trade receivables. The Company’s cash resources and trade
receivables less than the current cash outflow requirements.
21 Fair value measurement

The Company provides an analysis of its assets and liabilities that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is
observable. These Levels are described below:
 Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in
active markets for identical assets or liabilities;
 Level 2 - fair value measurements are those derived from inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
 Level 3 - fair value measurements are those derived from valuation techniques that include
inputs for the asset or liability that are not based on observable market data (unobservable
inputs).

31 March 2018 31
21.1 Fair value measurement of non-financial assets
The estimated fair values of the assets within cash-generated units (furniture and fixtures, computer and
other equipment), in respect of which impairment has been recognized during the year ended 31 March
2017 are categorized within Level 2 or 3 of the fair value hierarchy.
Fair value less costs of disposal for individual assets were determined by the market method, using
inputs in Level 2 and Level 3 of fair value hierarchy. Where required, these inputs were adjusted for
"forced sales", in cases where no market exists for similar assets, i.e. there are no willing market
participants. Special assumptions underlying the forced sale estimations include the following:
 Demand elasticity of the asset;
 Time period required for expedited selling;
 Cost of financing of potential market participant, based on average market interest rates.
22 Capital risk management

The capital structure of the Company consists of equity comprising issued capital, additional capital, and
accumulated loss.
Management assesses the Company’s capital requirements in order to maintain an efficient overall
financing structure while avoiding excessive leverage. This takes into account the subordination levels
of the Company’s various classes of debt.
The amounts managed as capital by the Company for the reporting periods under review are
summarized as follows:
The Company manages its capital to ensure that it will be able to continue as a going concern and:

Total equity 17,927 24,905
Add: subordinated loan - -
Less: cash and bank balances (2,127) (4,156)
Capital 15,800 20,749
Total equity 17,927 24,905

Borrowings 10,625 -
Overall financing 28,552 24,905
Capital to overall financing ratio 0.55 0.83
23 Contingencies
23.1 Business environment

Georgia continues to undergo political and economic changes. As an emerging market, Georgia does
not possess a developed business and regulatory infrastructure that generally exists in a more mature
free market economy. In addition, economic conditions continue to limit the volume of activity in the
financial markets, which may not be reflective of the values for financial instruments. The main obstacle
to further economic development is a low level of economic and institutional development, along with a
centralized economic base, regional instability and international economic crisis.

31 March 2018 32
Deterioration of economic situation of countries collaborating with Georgia led to the shortage of money
transfers from abroad, upon which the economy of Georgia is significantly dependent. Further decline in
international prices of mining products, uncertainties due to possibilities of attraction of direct capital
investments, inflation, may lead to deterioration of the situation of Georgian economy and of the
Company. However, as the number of variables and assumptions involved in these uncertainties is high,
management cannot make a reliable estimate of the amounts by which the carrying amounts of assets
and liabilities of the Company may be affected.
Management of the Company believes that in the current conditions appropriate measures are
implemented in order to ensure economic stability of the Company.
23.2 Insurance
The Georgian insurance industry is in its development stage and many forms of insurance protection
common in other parts of the world are not yet generally available in Georgia. The Company does not
have full coverage for its plant facilities, business interruption, or third party liability in respect of property
or environmental damage arising from accidents on the Company property or relating to the Company
operations. Until the Company obtains adequate insurance coverage, there is a risk that the loss or
destruction of certain assets or environmental damage could have a materially adverse effect on the
Company’s operations and financial position.
23.3 Taxes
The taxation system in Georgia is relatively new and is characterized by frequently changing legislation,
which is often subject to interpretation. Often differing interpretations exist among various taxation
authorities and jurisdictions. Taxes are subject to review and investigations by tax authorities, which are
enabled by law to impose severe fines and penalties.
These facts may create tax risks in Georgia substantially more than in other developed countries.
Management believes that it has adequately provided for tax liabilities based on its interpretation of tax
legislation. However, the relevant authorities may have differing interpretations and the effects could be
significant.
24 Reconciliation of liabilities arising from financing activities

The changes in the Company’s liabilities arising from financing activities can be classified as follows:
In thousand Georgian lari Long-term

borrowings Total
As of 1 April 2017 - -
Cash-flows
Repayments (4,763) (4,763)
Proceeds 20,722 20,722
Non-cash
Fair value (4,785) (4,785)
Interest accrued 488 488
Foreign exchange gain (1,037) (1,037)
As of 31 March 2018 10,625 10,625
25 Related parties
The Company's related parties include its parent, entities under common control, key management and
others as described below.

31 March 2018 33
25.1 Control relationships
The Company is controlled by its 100% owner - Retail Group Georgia LLC, located in Tbilisi, Georgia.
The shareholders of Retail Group Georgia are: Advanced Retail International Co. United Kingdom of
Saudi Arabia (80%) and International Fashion Trading Limited, United Kingdom of Saudi Arabia (20%)
is a minority shareholder. The ultimate controlling party is shareholder is Fawaz Abdulaziz Al Hokair &
Co., United Kingdom of Arabia.
25.2 Transactions with related parties

During the reporting year the Company had the following transactions with the related parties and as of
the reporting date had the following outstanding balances.
In thousand Georgian lari

Year ended Year ended
31 March 31 March
Transactions 2018 2017
Entities under common control
Sale of goods 2,982 3,1367
Purchase of goods 352 1,086
Interest expenses 488 -
Proceed from borrowing 20,722 -
Payment of borrowings 4,763 -
Parent
Management service fee 1,329 1,487
In thousand Georgian lari

As of 31 As of 31
Outstanding balances March 2018 March 2018
Entities under common control

Trade and other receivables 369 511
Borrowings received 10,625 -
Trade and other payables 352 795
26 First time adoption of IFRSs

As described in note 3.1, during from 1 April 2017 to 31 March 2018 the Company has adopted
International Financial Reporting Standards (“IFRSs”) as its financial reporting framework. Thus the
transfer to IFRSs was performed as of 1 March 2017.
The Company has used IFRS 1 First Time Adoption of International Financial Reporting Standards in
preparing these financial statements. The Company performed all the adjustments required under
IFRSs. Other optional adjustments were not applicable to the Company. The effect of transfer of the
financial statements of the Company is presented below.
General points
The financial statements prepared for the first time in accordance with International Financial Reporting
Standards comprise three statements of financial position (previously balance sheet), two statements of

31 March 2018 34
profit or loss and other comprehensive income (previously income statement), two statements of cash
flows and two statements of changes in equity and related notes, including comparative information.
Statement of cash flow

According to the IFRSs, the cash flow statement was first prepared using the indirect method, whereby
profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of
past or future operating cash receipts or payments, and items of income or expense associated with
investing or financing cash flows.
Notes to the financial statements

During first time adoption of IFRSs the Company implemented new and revised standards, presented in
note 2.5, as well as for the first time disclosed the accounting policy and categories of financial
instruments, including purposes and policies of financial risk management (see notes 19 and 20).

31 March 2018 35

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Financial Statements and

Independent Auditor's Report

Independent auditor’s report 3

Statement of financial position 6

Statement of profit or loss and other comprehensive income 7

Statement of changes in equity 8

Statement of cash flows 9

Notes to the financial statements 11

Fashion Retail Georgia LLC

report Grant Thornton LLC

To the shareholder of Fashion Retail Georgia LLC

Basis for Opinion

Our opinion is not qualified in respect of this matter.

Auditor’s Responsibilities for the Audit of the Financial Statements

Total assets 32,610 41,253 46,172

Equity and liabilities

Total equity and liabilities 32,610 41,253 46,172

The financial statements were approved on December 28, 2018 by:

Jim McNicolas Eduard Tsabadze

Country Director Financial Director

Fashion Retail Georgia LLC

Finance income 15 128 137

Income tax (expense)/recovery 17 (8) 185

Other comprehensive income - -

Fashion Retail Georgia LLC

Loss for the year (unaudited) - - (9,474) (9,474)

Increase of capital contribution

Loss for the year - - (4,949) (4,949)

Decrease of capital contribution

As of 31 March 2018 - 48,045 (30,118) 17,927

Fashion Retail Georgia LLC

Change in trade and other receivables 14 (102)

Cash flows from investing activities

Cash flows from financing activities

Fashion Retail Georgia LLC

Fashion Retail Georgia LLC

2.1 Statement of compliance

2.2 Basis of measurement

2.3 Functional and presentation currency

2.4 Use of estimates and judgment

Fashion Retail Georgia LLC

Standards, amendments and interpretations to existing standards that are not

IFRS 9 Financial Instruments

IFRS 15 Revenue from Contracts with Customers

Fashion Retail Georgia LLC

 changes the accounting for sale and leaseback arrangements;

 largely retains IAS 17’s approach to lessor accounting;

 introduces new disclosure requirements.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

Annual Improvements 2014-2016

IFRS 1 First-time Adoption of International Financial Reporting Standards

IFRS 1 is effective for annual periods beginning on or after 1 January 2018

IFRIC 23 Uncertainty over Income Tax Treatment

3 Significant accounting policies

3.1 General conditions and first time adoption of IFRSs

Fashion Retail Georgia LLC

3.2 Foreign currencies

3.3 Property and equipment

Furniture and fixtures - 10-12.5%

Leasehold improvement - 12.5%

Computers and other equipment - 10-12.5%.

Fashion Retail Georgia LLC

3.6 Financial instruments