Latvijas Juras medicinas centrs

Annual / Quarterly Financial Statement • May 23, 2022

JOINT STOCK COMPANY “LATVIJAS JŪRAS MEDICĪNAS CENTRS” (Unified registration number: 40003306807) FINANCIAL STATEMENTS FOR 2021 (18 th financial year) PREPARED IN ACCORDANCE WITH THE LAW ‘ON ACCOUNTING’ AND ‘ANNUAL REPORTS AND CONSOLIDATED ANNUAL REPORTS LAW’ OF THE REPUBLIC OF LATVIA Riga, 2022 JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Contents 2 Information on the Company 3 Statement of the Board’s Responsibility 4 Management Report 5 – 6 Remuneration Report for 2021 7 – 8 Financial Statements: Profit and Loss Statement 9 Balance Sheet 10 – 11 Statement of Changes to the Shareholders’ Equity 12 Statement of Cash Flows 13 Notes to the Financial Statements 14 – 28 JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Information on the Company 3 Name of the Company Latvijas Jūras medicīnas centrs Legal status Joint Stock Company Number, place and date of registration 40003306807 Riga, 27 August 1996 Re-registered with the Commercial Register On 27 February 2004 under the unified registration number 4000 330 6807 Core business: Hospital activities (86.10) Retail sale of medical and orthopaedic goods in specialised stores (47.74) Other education n.e.c. (85.59) General medical practice activities (86.21) Special medical practice activities (86.22) Dental practice activities (86.23) Other human health activities (86.90) Residential nursing care activities (87.10) Other residential care activities (87.90) Other social work activities without accommodation n.e.c. (88.99) Physical well-being activities (96.04) Other personal service activities n.e.c. (96.09) Registered office Patversmes iela 23 Riga, LV-1005, Latvia Largest shareholders Ilze Birka (17.50%) Mārtiņš Birks (17.50%) SIA ‘POM’ (8.82%) Guna Švarcberga (10.36%) Jānis Birks (12.80%) Adomas Navickas (6.85%) Names of the Board members, their positions Jānis Birks – Chairman of the Board Juris Imaks – Member of the Board Anatolijs Ahmetovs – Member of the Board Names of the Council members, their positions Mārtiņš Birks – Chairman of the Council Viesturs Šiliņš – Deputy Chairman of the Council Ineta Gadzjus – Member of the Council Jevgeņijs Kalējs – Member of the Council Uldis Osis – Member of the Council Reporting year 1 January 2021 – 31 December 2021 Name and address of the certified auditor in charge KPMG Baltics SIA Certified auditor in charge: Licence No. 55 Rainers Vilāns Vesetas iela 7 Certificate No. 200 Riga, LV-1013, Latvia JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Statement of the Board’s Responsibility 4 The Board of AS Latvijas Jūras Medicīnas Centrs (hereinafter – the Company) is responsible for preparing the financial statements of the Company. The financial statement on pages 9 to 28 is prepared based on accounting records and source documents and present fairly the financial position of Companies as at 31 December 2021 and the results of its operations, and cash flows for the 12-month period of 2021. The above mentioned financial statement of the Company is prepared in accordance with the laws ‘On accounting’ and ‘Annual Reports and Consolidated Annual Reports Law’ effective in the Republic of Latvia, on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgements and estimates have been made by the Management in the preparation of the financial statement. The management of the Company is responsible for the maintenance of a proper accounting system, safeguarding the Company’s assets, and the prevention and detection of fraud and other irregularities in the Company. The management is also responsible for compliance with laws of the Republic of Latvia. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs 27 April 2022 JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Management Report 5 Type of business A/S Latvijas Jūras medicīnas centrs (hereinafter – LJMC or the Company) is a certified and advanced private medical facility available to everyone, which consists of Sarkandaugava Ambulatory Healthcare Centre at 23 Patversmes iela, Riga; Central Hospital at 23 Patversmes iela, Riga; Vecmilgravis Hospital and Northern Diagnostics Centre 26 Vecmilgravja 5.linija; Riga, and Vecmīlgrāvis Primary Health Care Centre at 10 Melidas iela, Riga. In 2021, the average number of employees at LJMC was 352. The shares of A/S Latvijas Jūras medicīnas centrs are traded on the Baltic Secondary list of Nasdaq Riga. As of 5 September 2013, A/S Latvijas Jūras medicīnas centrs has been included on the list of medical facilities approved by the Health Inspectorate of Latvia, which provides medical tourism services, namely, LJMC provides medical tourism services as a reliable partner and this provides an insight into the overall Latvian health care system because the list only includes those healthcare institutions which have been registered with the register of health care institutions for at least 3 years and control has been carried out in the health care institution during the past three years. LJMC has accredited Clinical Diagnostics Laboratory at 23 Patversmes iela with the Latvian National Accreditation Bureau. LJMC has signed cooperation agreements with all health insurance companies operating in Latvia. LJMC has received certificate No. MSC-50-034 issued by Exova BM TRADA confirming compliance of the energy management system with ISO 50001:2018. Activities in the 12 months of 2021 and further development The Company’s activities in the 12 months of 2021 In 2021, LJMC continued to provide high-quality medical services and attract new patients. Similar to prior years, also in 2021 LJMC employed excellent doctors from Latvia and competent medical personnel. Activities of highly qualified and professional personnel allowed LJMC to provide examinations of competitive and exceptional quality and adherence to strict precautionary standards, and personnel can ensure safe and accessible services for patients when providing health care services. LJMC is on the official list of providers of medical tourism services maintained by the Health Inspection of the Republic of Latvia. In 2021, LJMC published information in the catalogue “Health Tourism in Latvia”, created and supported by LIDA. During 2021, LJMC, when providing health care services, adapted flexibly to the normative documents of the Ministry of Health, which imposed restrictions on preventing and overcoming the spread of Covid-19. Both secondary ambulatory health care services and daily hospital services, as well as paid health care services were provided to the extent permitted in the normative documents, ensuring continuity of activity and the monitoring of the impact of new events and conditions. In 2021, LJMC promoted paid health care services, ensuring increase in the number of patients living in Latvia, promoting competitiveness and recognition of LJMC. The Radiology Department in 2021 provided the full range of diagnostic services (magnetic resonance, X-ray examinations and ultrasonography) increasing the amount and quality of services (both state paid services and services paid by patients). PET/CT radiological examinations are available and payable both by private means and state funds. In order to ensure compliance with the requirements of GDPR in 2021, LJMC in cooperation with an independent data protection inspector continued improvement of documents in compliance with the laws and regulations, continued improvement of renewing the contracts (on the use of medical facilities in digital form, use of medical information system, insurance company services, communication services), and began the training process for LJMC staff. In 2021, LJMC signed agreements with the National Health Service for the provision of state paid medical services in the amount provided by the budget for 2021. In 2021, LJMC continued working on ISO. In 2019, LJMC received ISO 9001:2015 quality certification in functional diagnostics and radiological diagnostics, in-patient medical rehabilitation and day-care rehabilitation valid until 14 March 2025, and continued updating the hygiene and disinfection plan, and implementing ISO certification in other units of LJMC. JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Management Report 6 Further development of the Company To attract even more patients, in 2021 LJMC will by made investments to introduce innovative solutions for providing medical services, improve the qualification of the staff and enhance patient service. Also, LJMC will continue the state policy in re-profiling of hospitals to ambulatory healthcare institutions, thus adding to the health care service offering. In 2022, the LJMC will continue to further ensure compliance with precautionary standards in the provision of healthcare services, so that cooperation between the patients and healthcare professionals could facilitate access to those services. Continuing to improve the available services with a highly qualified and professional diagnostic service, the Radiology Department of LJMC, as one of the most modern and innovative cancer diagnostic centres in Eastern Europe, will help to increase the flow of local and foreign patients when a safe flow of patients is restored. By attracting patients not only from Latvia and other Baltic countries, but also from other EU countries and offering high-quality medical services, LJMC will increase its competitiveness in the Baltics medical market. Financial results In the 12 months of 2021, LJMC operated in accordance with the budget approved for 2021. The profit of LJMC is EUR 880 259. Risk management LJMC continues carrying out activities seeking to limit the negative impact of potential financial risks on the financial position of LJMC by implementing a set of control and analysis measures. Financial assets exposed to credit risk are mostly cash, trade receivables and other receivables. Credit risk is managed by LJMC by performing regular debtor control procedures and debt collection measures aiming to identify and solve any problems on a timely basis. Liquidity risk is managed by LJMC in line with the principle of prudence ensuring that appropriate credit resources are available to cover liabilities as they fall due. LJMC does not use loans, except operating leases. Subsequent events and going concern No other significant subsequent events have occurred in the period from the year-end to the date of these financial statements that would require adjustments to be made to these financial statements and disclosures added to the notes thereto. The Russia-Ukraine war is not expected to have material effect on the operations of the Company. The Company does not plan to enter into transactions with Russia, Belarus and Ukraine. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs 27 April 2022 JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Remuneration Report for 2021 7 Introduction The remuneration report of Joint Stock Company “Latvijas Jūras medicīnas centrs” (hereinafter – the Company) is prepared according to the remuneration policy to members of the Board and the Council approved by the decision of the Company’s Shareholders Meeting of 30 November 2020, developed on the basis of Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 as regards the encouragement of long-term shareholder engagement, as well as according to Article 59 3 of the Financial Instrument Market Law, which introduces the directive. The remuneration report is prepared by the Board and reviewed by the Council of the Company. The remuneration report is reviewed and approved by the Shareholders’ Meeting alongside other parts of the annual report. According to the Audit Services Law of the Republic of Latvia, a sworn auditor is under the obligation to provide an opinion on whether the information referred to in Section 59.4 of the Financial Instrument Market Law has been included in the remuneration report and whether significant non- conformities have been established in the remuneration statement in relation to the financial information indicated in the annual report. The remuneration report is published concurrently with the audited annual report of the Company as a separate part of the annual report in Latvian and English on the Company’s website: in section “Remuneration report”, as well as on the Nasdaq Riga website: http://www.nasdaqbaltic.com. Remuneration to the Board and Council The remuneration policy of the Board and the Council ensures that in 2021 the Company’s strategy, realization of long-term interests and sustainability, ensuring business continuity, is implemented. Remuneration to the members of the Council consists only of fixed component of remuneration. In 2021, the following total remuneration was granted and paid to the members of the Council: Name, surname Position Remuneration paid in 2021, EUR Mārtiņš Birks Chairman of the Council 8 195.76 Ineta Gadzjus Member of the Council 4 780.92 Viesturs Šiliņš Member of the Council 4 780.92 Jevgēņijs Kalējs Member of the Council 4 780.92 Uldis Osis Member of the Council 4 780.92 In 2020, the total remuneration granted and paid to the members of the Supervisory Board of the Company was as follows: EUR 27 319.44 Remuneration to the members of the Board consists of a fixed and variable component of remuneration. In 2021, the following total remuneration was granted and paid to the members of the Board: Name, surname Position Remuneration paid in 2021, EUR Fixed part of remuneration, % Variable part of remuneration, % Jānis Birks Chairman of the Board 67 445 30.45% 69.55% Juris Imaks Member of the Board 59 028 31.7% 68.3% Anatolijs Ahmetovs Member of the Board 48 477 47.2% 52.8% In 2020, the total remuneration granted and paid to the members of the Company's Board of Directors was EUR 165 624. JSC Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Remuneration Report for 2021 8 Members of the Board and the Council did not receive remuneration from another company belonging to the same group in the understanding of the Annual Reports and Consolidated Annual Report Law. Shares or share options were not granted and offered to members of the Board and the Council. No variable part of remuneration was reclaimed from members of the Board and the Council. There were no cases of applying temporary derogations from the remuneration policy. Section 59 4 , paragraph one, point 3 of the Financial Instrument Market Law requires to report, in a comparable manner, changes that took place in the last five financial years in remuneration paid to members of the Board and the Council, performance of the company and average remuneration on a full-time equivalent basis of employees of the company other than members of the Board and the Council. This is the second Remuneration Report prepared by the Company and it covers 2021. In accordance with Paragraph 66 of the Transitional Provisions of the Financial Instrument Market Law, a comparison of the changes referred to in Section 59 4 , paragraph one, Clause 3 of the Law is provided for at least the period of the last five financial years beginning not later than 1 January 2020. The Company has identified that there are no current annual changes relating to the period beginning no later than 1 January 2020. Remuneration to the Board and the Council has not changed significantly during the last 5 years, performance of the company matches its strategic goals, average remuneration on a full-time equivalent basis of employees of the company has increased in line with the overall trends of the labour market. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs 27 April 2022 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Financial statements Profit and Loss Statement for 2021 9 Note 31.12.2021 2020 EUR EUR 1. Net sales 2 9 363 852 7 080 939 2. Cost of goods and services 3 (8 146 691) (6 488 048) 3. Gross profit 1 217 161 592 891 4. Administrative expenses 4 (580 253) (557 818) 5. Other operating income 5 247 435 241 697 6. Other operating expenses 6 (3 439) (2 153) 7. Profit before corporate income tax 880 904 274 617 8. Corporate income tax for the reporting year 7 (645) (1 062) 9. Profit for the reporting year 880 259 273 555 Number of shares 800 000 800 000 x Earnings per share (EUR)* 1.10 0.34 * Profit or loss after corporate income tax / average number of shares during the reporting year. The accompanying notes on pages 14 to 28 form an integral part of these financial statements. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs Chief Accountant Gunta Kaufmane 27 April 2022 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Balance Sheet as at 31 December 2021 10 Note 31.12.2021 31.12.2020 EUR EUR Assets Long-term assets I Fixed assets: 1. Land, buildings and engineering structures 4 919 770 4 440 002 2. Equipment and machinery 883 062 244 153 3. Other fixed assets 70 196 76 129 4. Construction in progress 70 407 359 779 Total fixed assets: 8 5 943 435 5 120 063 Total long term investments: 5 943 435 5 120 063 Current assets I Stock: 1. Raw materials, primary materials and auxiliary materials 9 156 517 138 556 Total stock: 156 517 138 556 II Receivables: 1. Trade receivables 10 102 008 57 794 2. Other receivables and advanced payments 11 600 254 21 767 3. Prepaid expenses 12 7 270 24 621 4. Accrued income Prepaid expenses Prepaid expenses 4. Prepaid expenses 13 429 311 216 782 Total receivables: 1 138 843 320 964 III Cash: 14 1 017 259 1 765 040 Total current assets: 2 312 619 2 224 560 Total assets 8 256 054 7 344 623 The accompanying notes on pages 14 to 28 form an integral part of these financial statements. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Balance Sheet as at 31 December 2021 11 Note 31.12.2021 31.12.2020 EUR EUR Equity and Liabilities Shareholders’ equity: 1. Share capital 15 1 120 000 1 120 000 2. Long-term investment revaluation reserve 17 2 472 973 2 472 973 3. Reserves: b) reserves according to Statutes 63 819 63 819 4. Retained earnings: a) retained earnings brought forward from previous years 16 1 803 462 1 585 907 b) profit for the reporting year 880 259 273 555 Total shareholders' equity: 6 340 513 5 516 254 Liabilities: Long term liabilities: 1. Deferred income 20 628 654 669 617 Total long term liabilities: 628 654 669 617 Short-term liabilities: 1. Customer advances 34 057 1 831 2. Accounts payable to suppliers and contractors 303 198 387 250 3 Taxes and compulsory state social security contributions 19 249 572 155 019 4. Other creditors 18 277 672 194 938 5. Deferred income 20 58 126 55 513 6. Accrued liabilities 21 364 262 364 201 Total short term liabilities: 1 286 887 1 158 752 Total liabilities: 1 915 541 1 828 369 Total equity and liabilities 8 256 054 7 344 623 The accompanying notes on pages 14 to 28 form an integral part of these financial statements. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs Chief Accountant Gunta Kaufmane 27 April 2022 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Statement of Changes to the Shareholders Equity for 2021 12 Share capital Long-term investment revaluation reserve Reserves set in the Company’s statutes Retained earnings brought forward from previous years Profit/ (loss) for the reporting year Total shareholder's equity EUR EUR EUR EUR EUR EUR Balance as at 31 December 2019 1 120 000 2 292 360 63 819 1 861 747 164 160 5 502 086 Profit of 2019 transferred to retained earnings of previous years - - - 164 160 (164 160) - Result of revaluation in 2020 (see Note 18) - 180 613 - - - 180 613 Profit for the reporting year Dividends for 2017 - - - (440 000) - (440 000) Profit for the reporting year - - - - 273 555 273 555 Balance as at 31 December 2020 1 120 000 2 472 973 63 819 1 585 907 273 555 5 516 254 Profit of 2020 transferred to retained earnings of previous years - - - 273 555 (273 555) - Dividends for 2017 - - - (56 000) - (56 000) Profit for the reporting year - - - - 880 259 880 259 Balance as at 31 December 2021 1 120 000 2 472 973 63 819 1 803 462 880 259 6 340 513 The accompanying notes on pages 14 to 28 form an integral part of these financial statements. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs Chief Accountant Gunta Kaufmane 27 April 2022 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Statement of Cash Flows for 2021 13 Note 2021 2020 EUR EUR I. Cash flows from operating activities 1. Profit before corporate income tax 880 904 274 617 Adjustments for: a) impairment of fixed assets 8 286 644 234 829 2. Profit before adjustments for the effect of changes to current assets and short-term liabilities 1 167 548 509 446 Adjustments for: a) decrease/ (increase) in trade receivables (817 879) 13 032 b) decrease/ (increase) in stock (17 961) (36 810) c) increase/ (decrease) in accounts payable to suppliers and other liabilities 87 591 247 037 3. Gross cash flows from operating activities 419 299 732 705 Corporate income tax (1 064) - Net cash generated from operating activities 418 235 732 705 II. Cash flows from investing activities a) purchase of fixed and intangible assets 8 (1 110 016) (515 119) 6. Net cash flows used in investing activities (1 110 016) (515 119) III. Cash flows from financing activities a) Dividend paid (56 000) (440 000) 7. Net cash flows used in financing activities (56 000) (440 000) Net increase/(decrease) in cash and cash equivalents in the reporting year (747 781) (222 414) Cash and cash equivalents at the beginning of the year 1 765 040 1 987 454 Cash and cash equivalents at the end of the year 15 1 017 259 1 765 040 The accompanying notes on pages 14 to 28 form an integral part of these financial statements. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs 27 April 2022 Chief Accountant Gunta Kaufmane JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 14 (1) Information on the Company’s activities and summary of significant accounting principles Information on the Company The legal address AS Latvijas Jūras medicīnas centrs (LJMC or the Company) is 23 Patversmes iela, Riga, Latvia. The Company was registered with the Commercial Register under the common registration number 40003306807. The largest shareholders of the Company are Ilze Birka (17.50%), Mārtiņš Birks (17.50%), Jānis Birks (12.80%), Guna Švarcberga (10.36%), SIA POM (8.82%), Adomas Navickas (6.85%). The Board comprises Jānis Birks (Chairperson of the Board), Juris Imaks (Board Member) and Anatolijs Ahmetovs (Board Member). The Chairperson of the Council is Mārtiņš Birks, Council Members are Viesturs Šiliņš, Ineta Gadzjus, Jevgēņija Kalējs and Uldis Osis. The core business of the Company according to NACE rev 2. is Hospital activities (NACE 86.10); Retail sale of medical and orthopaedic goods in specialised stores (47.74); Education n.e.c. (85.59); General medical practice activities (86.21); Special medical practice activities (86.22); Dental practice activities (86.23); Other human health activities (86.90); Residential nursing care activities (87.10); Other residential care activities (87.90); Other social work activities without accommodation n.e.c. (88.99); Physical well-being activities (96.04); Other personal service activities n.e.c. (96.09). Basis of preparation The financial statements were prepared in accordance with the law ‘On Accounting’ and the ‘Annual Reports and Consolidated Annual Report Law’ (hereinafter – the Law). The management believes that the accounting policies used in the preparation of these financial statements are largely consistent with those used last year. According to Article 3(6) of the Annual Reports and Consolidated Annual Reports Law, the Company applies the requirements of the law applicable to large companies as its transferable securities are included in the regulated market of the Republic of Latvia. The profit and loss statement was prepared according to the turnover costing method. The cash flow statement was prepared according to the indirect method. The financial statements are prepared on the historical cost basis except for fixed assets disclosed under Land, buildings and engineering structures – land and buildings, which are measured using a revaluation method. Accounting principles The financial statements were prepared in accordance with the following policies: a) Going concern assumption that the Company will continue as a going concern; b) Consistent valuation principles with those used in the prior year; c) Items were valued in accordance with the principle of prudence, i.e.: ▪ the financial statements reflect only the profit generated to the balance sheet date; ▪ all incurred liabilities and current or prior year losses have been taken into consideration even if discovered within the period after the date of the balance sheet and preparation of the financial statements; ▪ all amounts of impairment and depreciation have been taken into consideration irrespective of whether the financial result was a profit or loss. d) Income and expenses incurred during the reporting year have been taken into consideration irrespective of the payment date or date when the invoice was issued or received; Expenses were matched with revenue for the reporting period. e) Assets and liabilities have been valued separately; f) The opening balance agrees with the prior year closing balance. g) All material items, which would influence the decision-making process of users of the financial statements, have been recognised and insignificant items have been combined and their details disclosed in the notes. h) Business transactions are recorded taking into account their economic contents and substance, not the legal form. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 15 Related parties Related parties represent both legal entities and private individuals related to the company in accordance with the following rules. a) A person or a close member of that person’s family is related to a reporting entity if that person: i. has control or joint control over the reporting entity; ii. has significant influence over the reporting entity; or iii. is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. b) An entity is related to a reporting entity if any of the following conditions applies: i. The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others); ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member); iii. Both entities are joint ventures of the same third party; iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity; v. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. vi. The entity is controlled, or jointly controlled by a person identified in (a); vii. a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). viii. The entity or any member of the group to which the entity belongs provides management personnel services to the entity or the parent of company of the entity. Related party transaction – a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. Financial instruments and financial risks Financial instrument is an agreement that simultaneously results in financial assets of one party and financial liabilities of the other party. The key financial instruments held by the Company are financial assets such as trade receivables, amounts due from related parties and other receivables, and financial liabilities such as prepayments from clients, accounts payable to suppliers and contractors and other creditors arising directly from its business activities. Financial risks connected with the Company's financial instruments, financial risk management Key financial risks related to the Company’s financial instruments are: ▪ Credit risk is the risk that the Company may incur financial losses if parties to the transactions fail to fulfil their liabilities under the contracts, and credit risk is primarily connected with trade receivables; ▪ Currency risk– risk that the Company may suffer unexpected losses arising from fluctuations in the foreign exchange rates; the Company is not exposed to currency risk as it does not significant amounts of currencies other than EUR. ▪ Interest rate risk – risk that the Company may incur losses due to fluctuations in interest rates; ▪ Liquidity risk – risk that the Company will not be able to meet its financial liabilities in due time. Management has implemented procedures to control the key risks. Credit risk The inability of insurance companies and patients to pay for the services provided by the Company in due time and in full amount. Most of the services are paid for within a short period of time after the provision of services or are funded by state or insurance providers, so the credit risk is low. Interest rate risk Management believes that interest rate risk is not material. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 16 Liquidity risk The Company has no external loans and it has significant financial resources to settle its liabilities. Fair value of financial assets and liabilities Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Financial assets and financial liabilities are carried at cost which according to management approximates their fair value at acquisition plus any related additional expenses. Purchase costs are acquisition costs of goods or services (net of discounts received) with added additional costs related to the purchase. Reporting period The reporting period comprises the 12 months from 1 January 2021 to 31 December 2021. Currency unit and revaluation of foreign currency All amounts in these financial statements are expressed in the official currency of Latvia – euro (EUR), the functional currency of the Company. Foreign currency transactions are translated into EUR according to currency exchange rates effective at the date of transaction and determined by reconciliation of the system of the European Central Bank and other central banks and which is published on the website of the European Central Bank. As at the reporting date, all monetary assets and liabilities are translated into EUR according to exchange rates published on the website of the European Central bank. Non-monetary items of assets and liabilities are revalued to euros in accordance with the reference exchange rate published by the European Central Bank on the transaction date. Exchange rate per EUR 1: 31.12.2021 31.12.2020 USD 1.13260 1.22710 Gain or loss resulting from payments under transactions executed in foreign currencies and the translation of monetary assets and liabilities denominated in foreign currencies is reflected in the profit and loss statement of the respective period. Estimates and judgements The preparation of financial statements requires the management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. The actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognized in the period when those estimates are reviewed and in the future periods. Key sources of estimation uncertainty are the following: (i) Useful lives of fixed and intangible assets Management estimates the useful lives of fixed and intangible assets in proportion to the expected duration of use of the asset (its expected capacity or effectiveness) based on historical experience with similar fixed assets and future plans. Land is not subject to depreciation. For other assets, depreciation and amortization is calculated on a straight-line basis over the entire useful life of the respective intangible asset and fixed asset in order to write their value or revalued value down to the estimated book value at the end of the useful life based on the following rates: % Intangible assets 20 Buildings and constructions 2.5 - 2.85 Communication equipment and instruments 33.33 Other fixed assets 20 Current maintenance and repair costs of fixed assets are recognized in the profit and loss statement as incurred. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 17 (ii) Fixed assets Fixed assets other than land, buildings and constructions are carried at cost less accumulated depreciation and impairment losses. Land, buildings and constructions are measured by the Company using the revaluation model. The balance sheet item Land, buildings and engineering structures of the financial statements of the Company is presented at revalued value, which equals fair value at the revaluation date net of subsequent accumulated deprecation and impairment loss. Based on the Company’s position as at 31 December 2020, the Company has estimated the value of the balance sheet item ‘Land, buildings and engineering structures’, and in accordance with the estimation, has determined the carrying amount of all land, buildings and engineering structures in line with market value and based on evaluation of external certified valuers. For more details on revaluation please refer to Note 8. According to the policy, revaluation of a single building or construction requires the whole category to be revalued. To determine the impact of revaluation at the date of revaluation accrued depreciation is netted of cost or other value, which replaces cost in the financial statements, and the carrying amount is increased or decreased according to the revalued value of the building or structure in the following manner: depreciation accrued to the date of revaluation is initially written-off of the current carrying amount of fixed asset, and afterwards the residual value is increased or decreased according to the fair value of fixed asset as a result of revaluation. In case the fair value of fixed assets at the balance sheet date is lower than their carrying amount, and such impairment is expected to be permanent, fixed assets are recognized at the lower value. The revaluation result is recognized in the profit and loss statement except where a previously recognized increase in the value of fixed assets offsets an impairment loss. In that event, the long term investment revaluation reserve is decreased by the amount of impairment. In case the value of fixed assets at the balance sheet date is higher than the valuation on the balance sheet, fixed assets are revalued to the higher value if the increase in value may be assumed to be other than temporary. The increase in value resulting from revaluation is recognized under ‘Long term investment revaluation reserve’. If an increase in the value resulting from revaluation compensates for the impairment of the same fixed asset which was previously recognized as an expense in the profit and loss statement, then the increase resulting from revaluation is recognized as income in the profit and loss statement as incurred. The long term investment revaluation reserve is decreased when the revalued asset is disposed, is no longer utilized, or the increase of value is no longer reasonable. The increase in value recognized in the long term investment revaluation reserve under equity is reversed by recognizing a decrease in the profit and loss statement upon liquidation or disposal of the revalued fixed asset. Receivables Receivables are disclosed at amortised cost net of impairment allowances. Doubtful debt allowances are recognized based on an individual management assessment of the recoverability of each receivable when objective evidence exists that the Company will not be able to recover the full amount of receivables according to the previously agreed repayment terms. The amount of allowance represents the difference between the carrying and recoverable amount of receivables. The allowance is charged to the profit and loss statement. Provisions Provisions are recognized when a past event has given rise to a present obligation or losses and the amount can be estimated reasonably. The likelihood of loss is assessed based on management assumptions. In order to determine the amount of loss management is required to select an appropriate calculation method and make specific assumptions connected with the specific risk. No provisions were made as at 31 December 2021. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 18 Revenue recognition Income from sales of goods Revenue from the sales of goods is recognized in the profit and loss statement after the risks and rewards of ownership are transferred to the client. No revenue is recognized if according to the provisions of the transaction the Company retains significant risks pertaining to the ownership of goods and the goods can be returned. Income from services Income from services provided is recognized in the profit and loss statement as generated. Income is received and recorded according to signed cooperation agreements. Rental income Rental income is recognised on a straight-line basis over the rental term. Long and short term classification Amounts with terms of receipt, payment or write off due in more than one year after the balance sheet date are classified as long term. Amounts to be received, paid or written off within a year are classified as short term. Lease transactions Operating lease – (the Company as a Lessor) The Company leases premises, which are part of revalued fixed assets. Depreciation is calculated on a straight-line basis over the entire useful life of the respective fixed asset in order to write its value down to the estimated carrying amount at the end of the useful life based on the rates set for similar fixed assets. Income from operating lease and client prepayments is charged to the profit and loss statement on a straight-line basis over the period of lease. Operating lease – (the Company as a lessee) Payments for operating lease are recognized in the profit and loss statement on a straight-line basis over the period of lease. Fixed assets All fixed assets other than land, buildings and constructions are recognised on the balance sheet at historical cost less depreciation. For other assets, depreciation and amortization is calculated in accordance with the straight-line method over the entire useful life of the respective intangible assets and fixed assets in order to write their value or revalued value down to the estimated book value at the end of the useful life. The depreciation method is reviewed at least on an annual basis, at the year-end. Subsequent expenses are added to the book value of the asset or recognized as a separate asset only where it is highly probable that future benefits related to this item would flow into the company and expenses of this item can be estimated reliably. Such expenses are written off over the entire useful life of the respective asset. When capitalizing the costs of installed spare parts, the book value of the spare parts is written off in the profit and loss statement. Profit or loss from disposal of fixed assets is calculated as the difference between the carrying amount of the asset and income generated from sale, and income from the reversal of the revaluation reserve of the respective fixed asset, and charged to the profit and loss statement as incurred. Accounting and valuation of stock Stock is carried at the lower of cost and net realizable value. Stock has been valued according to the FIFO method. Stock accounting is based on the perpetual method. Stock has been counted during the annual stock take. Remuneration Remuneration is set according to employment contracts, taking into account the changing requirements and trends of the labour market: by mutual agreement on the application of specific principles: %, fixed numbers, individual conditions, combined conditions. Employees have access to the procedure for calculating remuneration (data selection algorithms, data processing procedures, JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 19 data flow organisation). The Company provides only short-term remuneration benefits to its employees. Grants Grants received for special types of capital investments are treated as deferred income which is gradually recognised as revenue over the useful life of the fixed assets received or acquired using grants. Grants received to cover expenses are recognised in the same period when the related expenses have arisen, if all the conditions of receiving the grant are met. Corporate income tax (a) Current tax On 1 January 2018 the Law on Enterprise Income Tax of the Republic of Latvia entered into force and set out a new regime for paying taxes. The tax rate is 20% from the taxable base determined by dividing the value of the amount taxable with corporate income tax by coefficient 0.8, includes: • distributed profit (dividends calculated, payments equivalent to dividends, conditional dividends), and • conditionally distributed profit (such as non-operating expenses and other specific cases provided for by the law). The new tax regime is not applicable to the distribution of dividends from profit accumulated to 31 December 2017 and taxed under the previous taxation regime. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 20 (2) Net sales Net sales represents revenue generated during the reporting period from the Company’s basic activities – sales of services, net of value added tax and discounts. 2021 2020 EUR EUR Ambulatory medical services 8 721 772 6 558 049 Services covered by insurance 642 080 522 890 Paid ambulatory medical services 359 565 290 726 Paid in-patient care 282 515 232 164 9 363 852 7 080 939 The Company provides services only in the territory of the Republic of Latvia. The Company does not disclose information on distribution of net sales by lines of business in accordance with Regulation No. 1893/2006 (EK) of the European Parliament and European Council of 20 December 2006, with which the statistic classification of business activity NACE rev 2 is established, as its disclosure could have a severe negative impact on the interests of the Company. (3) Cost of goods and services The item represents costs incurred for generating net sales – such as costs of goods and services at acquisition cost, and costs related to purchase of goods and services. 2021 2020 EUR EUR Remuneration 4 409 742 3 244 861 Medicines, medical materials 864 355 757 676 Compulsory state social security contributions 997 841 750 079 Non-deductible value added tax 372 725 303 825 Lease of equipment 279 627 258 548 Depreciation 286 644 234 829 Utilities and maintenance 224 023 212 814 Office items and equipment, other materials 176 127 153 893 Repair costs 226 154 157 467 Medical examinations and other services 72 284 53 975 IT expenses 13 321 40 350 Advertisement expenses 630 635 Security 26 631 28 614 Changes in doubtful debt allowances - 63 245 Medical fund risk expenses 13 129 13 531 Transport 17 365 8 873 Office expenses 10 790 7 658 Patient catering expenses 23 593 6 951 Real estate tax 6172 6 173 Insurance 12 494 11 929 Staff training expenses 1 818 1 085 Risk duty 1 445 1 341 Benefits and gifts to employees 1 849 7 973 Changes in cost of accrued vacations 25 098 80 257 Other costs related to services 82 834 81 466 8 146 691 6 488 048 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 21 (4) Administrative expenses 2021 2020 EUR EUR Remuneration 416 643 395 692 Compulsory state social security contributions 95 395 90 942 Communication expenses 19 998 19 612 Audit of the financial statements 21 434 20 650 Office expenses 5 092 7 858 Bank services 10 783 9 597 Legal services 8 802 7 570 Representation expenses 603 1 113 Other 1 503 4 784 580 253 557 818 (5) Other operating income 2021 2020 EUR EUR Income from rent 170 490 135 708 Amortisation of funds received from EBRD 10 513 10 513 Other income – tax refund - 7 165 Other income 66 432 88 311 247 435 241 697 Other income consists of income from catering and laundry service, advertising and beauty care services. (6) Other operating expenses 2021 2020 EUR EUR Penalties 1 142 974 Other expenses 2 297 1 179 3 439 2 153 (7) Corporate income tax 2021 EUR 2020 EUR Current tax 645 1 062 645 1 062 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 22 (8) Fixed assets Land, buildings and engineering structures Equipment and machinery Other fixed assets Intangible assets Construction in progress Total EUR EUR EUR EUR EUR EUR Historical cost 31.12.2020 4 862 253 2 639 190 573 065 80 453 359 779 8 514 740 Additions - 410 992 36 350 - 662 674 1 110 016 Transfers 596 426 355 620 - - (952 046) - Disposals - (29 837) (17 325) - - (47 162) 31.12.2021 5 458 679 3 375 965 592 090 80 453 70 407 9 577 594 Accumulated depreciation and amortisation 422 251 2 395 037 496 936 80 453 - 3 394 677 31.12.2020 Accumulated depreciation and amortisation for the year 116 658 127 703 42 283 - 286 644 Depreciation of disposed fixed assets - (29 837) (17 325) - (47 162) 31.12.2021 538 909 2 492 903 521 894 80 453 - 3 634 159 Balance as at 31.12.2019 4 370 610 176 891 107 499 - 4 159 4 659 159 Balance as at 31.12.2020 4 440 002 244 153 76 129 - 359 779 5 120 063 Balance as at 31.12.2021 4 919 770 883 062 70 196 - 70 407 5 943 435 In December 2020, land, buildings and constructions were valued by independent experts. The valuation was carried out by the independent experts using a combination of the comparable transactions method and income method. A new revaluation was not performed on 31 December 2021, as the management assessed that no significant changes had taken place in the market and the recognised carrying amount did not differ materially from the fair value of the property. The fair value of land and building was determined by an external, independent property valuer, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued. The following table shows the valuation technique used in measuring the fair value of core real estate items included in position ‘Buildings and land’, as well as the significant unobservable inputs used: JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 23 Type Valuation method Significant unobservable data Inter-relation between significant unobservable inputs and fair value measurement Buildings and land in the amount of EUR 3 000 000 at Patversmes iela, Riga Fair value has been estimated based on the average of: Market comparison technique: The fair value was based on results of comparable sales of similar buildings. Discounted cash flow technique: The model is based on discounted cash flows from rendering services Price per m2 EUR 452 Rent rate per m2 – EUR 2.3-9 Capacity – 90% Capitalisation rate – 9% The fair value would increase (decrease) if the price per m2 was higher (lower). The estimated fair value would increase (decrease), if: rent rate would be higher (lower); capacity percentage would be higher (lower); capitalisation rate would be lower (higher); Buildings and land in the amount of EUR 850 000 at Vecmīlgrāvja 5.līnija, Riga Fair value has been estimated based on the average of: Market comparison technique: The fair value was based on results of comparable sales of similar buildings. Discounted cash flow technique: The model is based on discounted cash flows from rendering services Price per m2 EUR 327 Rent rate per m2 EUR 3.5-5 Capacity – 90% Capitalisation rate – 9% The fair value would increase (decrease) if the price per m2 was higher (lower). The estimated fair value would increase (decrease), if: cent rate would be higher (lower); capacity percentage would be higher (lower); capitalisation rate would be lower (higher). Type Valuation method Significant unobservable data Inter-relation between significant unobservable inputs and fair value measurement Buildings and land in the amount of EUR 630 000 at Melidas iela, Riga Fair value has been estimated based on the average of: Market comparison technique: The fair value was based on results of comparable sales of similar buildings. Discounted cash flow technique: The model is based on discounted cash flows from rendering services Price per m2 EUR 315 Rent rate per m2 EUR 5 Capacity – 90% Capitalisation rate – 9.0% Fair value would increase (reduce), if the price per m 2 was higher (lower). The estimated fair value would increase (decrease), if: rent rate would be higher (lower); capacity percentage would be higher (lower); capitalisation rate would be lower (higher). According to Section 52(2)(2) of the Annual Reports and Consolidated Annual Reports Law, disclosures are provided concerning revalued fixed assets indicating their value had revaluation not taken place: Had revaluation not taken place, the carrying amount of land, buildings and constructions as at 31.12.2021 would be EUR 3 191 888. Including: 31.12.2021 31.12.2020 EUR EUR -historical cost 4 617 716 4 021 290 -accumulated depreciation (1 425 828) (1 306 793) JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 24 (9) Stock 31.12.2021 31.12.2020 EUR EUR Medicines in warehouse 121 308 124 285 Medicines in departments 20 639 13 888 Other materials 14 570 383 156 517 138 556 (10) Trade receivables 31.12.2021 31.12.2020 EUR EUR Insurance companies 66 802 36 017 Other institutions, companies and individuals 207 057 195 442 Doubtful debt allowance (171 851) (173 665) 102 008 57 794 (11) Other receivables 31.12.2021 31.12.2020 EUR EUR Overpaid taxes (see Note 20) 6 698 Value added tax on unpaid services 4 786 4 356 Prepayments for fixed assets 571 228 - Other receivables 24 234 16 713 600 254 21 767 (12) Prepaid expenses 31.12.2021 31.12.2020 EUR EUR Rent - 17 961 Insurance 6 866 6 416 Other 404 244 7 270 24 621 (13) Accrued income 31.12.2021 31.12.2020 EUR EUR Accrued income for invoices issued after the year end 429 311 216 782 429 311 216 782 ‘Accrued income’ represents invoices from the National Health Service issued after the reporting period. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 25 (14) Cash By currency: 31.12.2021 31.12.2020 Currenc y EUR Currenc y EUR Current account USD 5 840 5 156 5 839 4 758 Current account EUR - 1 004 291 - 1 756 643 Cash on hand EUR - 7 812 - 3 639 1 017 259 1 765 040 (15) Share capital Share capital of the Company as at 31 December 2021 amounted to EUR 1 120 000 (31.12.2020: EUR 1 120 000) and consisted of 800 000 shares with nominal value of EUR 1.40. The share capital of the Company is owned by the following shareholders: 31.12.2021 31.12.2020 Number of shares Holding (%) Number of shares Holding (%) Ilze Birka 140 000 17.50% 140 000 17.50% Mārtiņš Birks 140 000 17.50% 140 000 17.50% SIA ‘POM’ 70 565 8.82% - - Ilze Aizsilniece - - 70 565 8,82% Guna Švarcberga 82 917 10.36% 82 917 10.36% Jānis Birks 102 388 12.80% 102 388 12.80% Adomas Navickas 54 811 6.85% 54 811 6.85% Other shareholders (up to 5% shares per each) 209 319 26.17% 209 319 26.17% Total 800 000 100.00% 800 000 100.00% Share capital (EUR) 1 120 000 1 120 000 All shares of the Company are name (publicly issued shares) shares. (16) Retained earnings Retained earnings, including profit for 2021 in the amount of EUR 2 683 721. (17) Revaluation reserves Revaluation reserve as at 31 December 2020 includes the result of revaluation of fixed assets. In 2021, the revaluation reserve was not changed. Long-term investment revaluation reserve 2021 EUR 2020 EUR Revaluation reserves as at 1 January 2 472 973 2 292 360 Appreciation as a result of revaluation - 208 538 Decrease as a result of revaluation - (27 925) Revaluation reserves as at 31 December 2 472 973 2 472 973 (18) Other liabilities 31.12.2021 31.12.2020 EUR EUR Salaries 277 050 194 505 Payments to the trade union 622 433 277 672 194 938 JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 26 (19) Taxes and compulsory state social security contributions Balance as at 31.12.2020 Calculated for 2021 Paid in 2021 Balance as at 31.12.2021 EUR EUR EUR EUR Corporate income tax 568 645 (1 064) 149 VAT 4 060 189 558 (175 931) 17 687 Real estate tax (6) 6 172 (6 172) (6) Natural resources tax (692) 4 713 (60) 3 961 Risk duty 111 1 445 (1 437) 119 Social contributions 93 581 1 624 712 (1 569 364) 148 929 Personal income tax 56 699 871 884 (849 856) 78 727 Total 154 321 2 699 129 (2 603 884) 249 566 Including: Overpaid taxes (698) (6) Tax liabilities 155 019 249 572 Overpaid taxes are disclosed under ‘Other receivables’. (20) Deferred income 31.12.2021 31.12.2020 EUR EUR The part of capital grants to be charged to profit or loss within 1 to 5 years 58 126 55 513 The part of capital grants to be charged to profit or loss for more than 5 years 320 655 332 854 Lease payment of 10 years 236 250 281 250 The part of capital grants to be charged to profit or loss for more than 5 years 13 623 - Deferred income, long term 628 654 669 617 The part of capital grants to be charged to profit or loss within one year 10 929 10 513 Lease payment of 10 years 45 000 45 000 The part of capital grants to be charged to profit or loss within one year 2 197 - Deferred income, short term 58 126 55 513 In 2012, the Company received EBRD funding to purchase fixed assets. In 2021, the Company recognised revenue of EUR 10 513 (2020: EUR 10 513) (see Note 5). In 2021, the Company received EBRD funding to purchase fixed assets. In 2021, the Company received funding from CFCA for the purchase of fixed assets in the amount of EUR 17 578 (agreement No. 9.3.2.0/20/a/074). The Company started to revenue recognition in 2022. The Company received lease payments for the next 10 years amounting to EUR 450 000. In 2021, the Company recognised revenue of EUR 45 000 (2020: EUR 45 000) according to the terms of lease agreements that secured lease rights for a specified period and promoted operating activities in line with the specific classification. Revenue is reflected under ‘Income from rent’, refer to Note 5. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 27 (21) Accrued liabilities 31.12.2021 31.12.2020 EUR EUR Accrued expenses for unused vacations 364 262 339 164 Accrued liabilities to suppliers - 25 037 364 262 364 201 (22) Average number of employees by category 2021 2020 Average number of employees in the reporting year: 352 330 incl. Members of the Board 3 3 Members of the Council 5 5 Other employees 344 322 (23) Personnel expenses Type of costs 2021 EUR 2020 EUR Remuneration 4 826 385 3 640 553 Compulsory state social security contributions 1 093 236 841 021 5 919 621 4 481 574 (24) Remuneration to management 2021 2020 EUR EUR Members of the Board remuneration (variable and fixed) 174 950 165 624 · compulsory state social security contributions 39 369 39 899 Members of the Council remuneration 27 319 27 319 · compulsory state social security contributions 6 040 6 182 Other members of the administration remuneration 214 374 262 812 · compulsory state social security contributions 49 986 60 301 512 038 562 137 (25) Future liabilities As at 31 December 2021, the Company has no effective future payment liabilities under agreements related to the purchase of fixed assets (31.12.2020: none). The management has no information on issued guarantees, legal proceedings and other contingent liabilities, which could impact the financial position of the Company as at 31 December 2021 (31.12.2020: none). (26) Related party transactions In 2021, the Company issued invoices to SIA Kodolmedicīnas klīnika for rent payments in the amount of EUR 17 864 (2020: EUR 32 560). In 2021, additional provisions were not accrued (2020: EUR 58 821). The outstanding amount of the credit line as at 31 December 2021 is EUR 163 863 (31 December 2020: EUR 163 863). Since December 2021, SIA Kodolmedicīnas klīnika ir not considered as a related company. The provisions are made as at 31.12.2020 to reduce the impact of transaction risk in the profit and loss statement. JSC Latvijas Jūras medicīnas centrs Financial statements for the 12-month period of 2021 Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807 Notes to the financial statements 28 (27) Remuneration to the certified auditor 2021 2020 EUR EUR Audit of the financial statements 20 386 20 650 20 386 20 650 (28) Information on operating lease and rent agreements with a significant impact on the Company’s activities The Company has 11 effective operating lease agreements regarding equipment. Under these agreements, lease payments, including VAT, are the following: In 2020 EUR 386 090 In 2021 EUR 299 530 From 2022 to 2025 EUR 119 281 (29) Subsequent events No significant subsequent events have occurred in the period from the year-end to the date of these financial statements that would require adjustments to be made to these financial statements or disclosures added within the financial statements. The Russia-Ukraine war is not expected to have material effect on the operations of the Company. The Company does not plan to enter into transactions with Russia, Belarus and Ukraine. Chairman of the Board Jānis Birks Member of the Board Juris Imaks Member of the Board Anatolijs Ahmetovs 27 April 2022 Chief Accountant Gunta Kaufmane