Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information 17. Amounts Owed to Credit Institutions continued Interest-bearing liabilities and borrowings of BOGG were formed as a result of the Demerger, during which BGEO Group limited, former BGEO Group PLC, contributed the entire issued share capital of JSC Georgia Capital, the Investment Business, in exchange for an interest-bearing loan. Changes in liabilities arising from financing activities Amounts due to credit institutions Carrying amount at 31 December 2016 21,692 Foreign currency translation 9 Cash repayments (21,701) Carrying amount at 31 December 2017 – Carrying amount at 31 December 2018 – 18. Debt Securities Issued Debt securities issued comprise: 2018 2017 2016 Eurobonds and notes issued 1,349,853 1,344,334 937,406 Local bonds 57,389 96,266 140,965 Certificates of deposit 323,172 268,552 177,272 Debt securities issued 1,730,414 1,709,152 1,255,643 19. Commitments and Contingencies Legal Sai-invest As at 31 December 2018, the Group was engaged in a litigation proceeding with Sai-Invest LLC in relation to a deposit pledge in the amount of EUR 7 million used to reduce the outstanding loan of LTD Sport Invest towards JSC Bank of Georgia. The management is of the opinion that the probability of incurring material losses on this claim is low, and accordingly no provision has been made in these consolidated financial statements. Rustavi Azoti At 31 December 2018, the Bank was engaged in litigation proceedings in Tbilisi City Court with East-West United Bank S.A., Agrochim S.A. and Systema Holding Limited (claimants) in relation to foreclosure on security (movable and immovable property and intangible assets) through auction on a defaulted loan of Rustavi Azoti LLC. Claimants request reinstatement of the title to the property owned by Rustavi Azoti LLC and compensation of damages in the amount of around US$ 93.6m. No provision has been made as the management believes that the claim is groundless and it is extremely unlikely that any significant loss will eventuate from this claim. At 31 December 2018, BGEO Group Limited (former BGEO Group PLC), was engaged in litigation proceedings in the High Court of Justice of England and Wales (Commercial Court) with Roman Pipia (claimant), who asserts that BGEO Group Limited is liable to the claimant under Georgian law in relation to the loss of the Rustavi Azoti plant, which he alleges he formerly beneficially owned. The Bank had initiated the sale of collateral pledged by Rustavi Azoti LLC and its parent company to secure loans granted by the Bank following default by the borrowers in 2016. Based on the revised claim submitted in December 2018, the claimed amount is around US$ 286.5m (alternatively US$ 291m). No provision has been made as the management believes that the claim is groundless and it is extremely unlikely that any significant loss will eventuate from this claim. In the ordinary course of business, the Group and BOGG are subject to legal actions and complaints. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition or the results of future operations of the Group or BOGG. Annual Report 2018Bank of Georgia Group PLC 243