Akciju sabiedriba "VEF"

Interim / Quarterly Report • Aug 30, 2021

JOINT STOCK COMPANY VEF (Unified registration number 40003001328)

NON- AUDITED FINACIAL STATEMENTS For the period ended on June 30, 2021 In accordance with the Law of the Republic of Latvia

CONTENTS

General information

Report on the Management Board's responsibility

Management report

Balance sheet

Income statement

Cash flow statement

Statement of changes in equity

Notes to the financial statement

GENERAL INFORMATION

Title of enterprise	Joint stock company VEF
Legal type of enterprise	Public joint stock company
Registred:	On April 15, 1991 in the Register of Enterprises of the Republic of Latvia, re registred on December 7, 2000 with Nbr. 000300132
Taxpayers' Reg. Nbr.	On April 14, 2004 registered in the Commercial Register, Nbr. 40003001328 LV 40003001328
Legal address	Brīvības gatve 214, Rīga, LV-1039, Republic of Latvia
Equity capital 1 :	EUR 2 722 492 paīd and registered equity capital.
Core businesses:
	*Letting and renting of real-estate property
Name of the holder of shares	As on June 30, 2021:
and share capital (%)	VEF KOMUNIKĀCIJU SERVISS SIA- 45.52 % ; Laila Līduma	– 6.31 % ;
	* Tamāra Kampāne	-12.61 % ;
	* Gints Feņuks	- 24.50 % ;
Subsiaiary company	*Other shareholders Ltd . "VEF Projekts " (100%) Brīvības gatve 214,Rīga.	- 11.06 %.
Chief executive officer:	Chairman of the Board of the Company:
	GINTS FENUKS
Members of the Board:	TAMĀRA KAMPĀNE
	MĀRTINŠ CAUNA
	MODRIS ZOMMERS
Members of the Supervisory Council: LAILA LĪDUMA
	ERVINS KAMPĀNS
	GUNTIS LIPIŅŠ
	EGILS ARAJS
Period of account:	01.01.20210. - 30.06.2021.
Qualified auditor:	GUNTA DARKEVICA . Certificate Nbr.165

¹ Paid-up and registred equity capital 2 722 492 EUR common shares

The company's capital consists of the 623 528 bearer shares and 1 321 109 registered shares Nominal value of a common share is EUR 1 .40 .

Report on the Management Board's responsibility to the non-audited financial statement of JSC "VEF" for the six months of 2021

Management Board of JSC "VEF" (hereinafter – the Company) is responsible for preparation of the middle-term financial statements of the Company. The middle-term financial statements are not audited.

Middle-term financial statements are prepared based on justifying documents and represent true and clear overview on the Company's Assets and Equity and Liabilities, its financial standing and results of activity as well as cash flows within the reporting period ended on June 30, 2021.

Accounting principles used in preparation of the middle-term financial statements have not been changed comparing to the previous reporting period. During preparation of the middle-term financial statements decisions taken by the Management Board and estimations made have been cautious and well-founded. The information included in the middle-term management's report is true.

The Management Board of the Company is responsible for ensuring the corresponding accounting system, securing the assets of the Company, as well as for prevention and exposure of fraud and other violation within the Company.

On behalf of the Management Board of JSC "VEF",

Gints Fenuks Chairman of the Management Board

Management report

Joint stock venture VEF is a publicly traded company that is doing business by managing its own real estate property and renting business spaces.

This year JSC VEF ceased to provide electricity supply and distribution services in the former VEF territory. To ensure that customers continue to receive electricity supply and distribution services in the former VEF territory JSC VEF came to an agreement with JSC "Sadales tīkls" to hand-over the existing customers and continue to provide services in that area. JSC "Sadales tīkls" has built all necessary infrastructure to provide electricity supply and distribution services in the aforementioned territory.

Net turnover of the Company for the first six months of 2021 amounted 479 803 EUR that is 12.66% less than in the previous reported period.

Company continues to provide full scope of its services and is preparing renovation plans for its real estate properties that are required since buildings are more than fifteen years in use. Part of renovation works had been carried out during the time period when the Covid19 restrictions were in place and customers decreased their business activities. Remaining amount of renovation works is still in design or approval phases - these works will require substantial investments that the Company is planning to cover partially from own resources, but for the greater extent attracting bank financing; thus, executing renovation works in several stages.

The Company is preparing reconstruction and repurpose of the former production spaces to attract new customers. The Company will partially cover investments required to execute these works from its own resources but to the greater extent attract bank financing.

For the next reporting period it is planned to rebuild roads, improve surrounding infrastructure, and increase energy efficiency - these are the main drivers to excel in serving current customers, provide comfort to our customers' employees, and in the future attract new customers.

Different financial risks including credit risk and fluctuation of credit rates are impacting the business activities of the Company. The Management of the Company is trying to decrease the potential negative impact of these risks on business results. Mostly buyer and customer debts are financial positions that are exposing the Company to the known extent of concentration of credit risk. Buyers and customer debts are acknowledged as recoverable values. Partners financing the Company are local financial institutions. The Company manages liquidity risks in a cautious manner ensuring fulfillment of credit obligations within agreed terms. The Management of the Company is confident that the Company will generate enough income to ensure that its liquidity is not endangered.

Meanwhile, the Company expects a decrease of financial results if Covid19 pandemic continues to spread, fails to be localized and substantially impacts overall economic situation locally and globally; thus, decreasing solvency of the Company's customers and/or prospects to attain new customers

Gints Fenuks

Chairman of the Management Board

ASSETS

	EUR	EUR	EUR
	30.06.2021	30.06.2020	31.12.2020
LONG-TERM INVESTMENTS
Intangible assets
Concessions,patents,licences	0	30	0
Total intangible assets	0	30	0
Fixed Assets
Land,buildings and other property	5 411 114	5 470 312	5 440 714
Other fixed assets and inventory	80 314	126 816	101 294
Total fixed assets	5 491 428	5 597 128	5 542 008
Long-term financial investments
Investments in subsidiares	3 000	3 000	3 000
Loans to subsidiaries	67 000	60 000	65 000
Long-term financial investments,total	70 000	63 000	68 000
Total long-term investments	5 561 428	5 660 158	5 610 008
Current assets
Debtors
Customers and client debts	29 669	19 877	38 036
Other debtors	23 756	21 345	23 663
Future period expenses	3 544	4 235	4 859
Future period income	11 807	20 684	30 824
Total debtors	68 776	66 141	97 382
Cash	246 496	398 967	305 044
Total Current assets	315 272	465 108	402 426

TOTAL ASSETS	5 876 700	6 125 266	6 012 434

LIABILITIES

	EUR	EUR	EUR
	30.06.2021	30.06.2020	31.12.2020
Stockholder's Equity
Common stock	2 722 492	2 722 492	2 722 492
Rezerve	44 477	44 477	44 477
Long-term investments revaluation reserve	641 099	649 285	641 099
Total accumulation
Retained earnings from the previous years	53 860	40 907	40 907
Retained earnings of the financial years	-2 923	37 304	12 953
Total stockholder's equity	3 459 005	3 494 465	3 461 928
LIABILITIES
Long-term liabilities
Borrowings from credit institutions	2 024 174	2 150 174	2 024 174
Prepayments from buyers	47 273	47 273	47 273
Other liabilities	77 050	108 850	77 050
Total long-term liabilities	2 148 497	2 306 297	2 148 497
Current liabilities
Borrowings from credit institutions	84 000	126 000	168 000
Accounts payable	16 438	13 911	34 050
Taxes and social security payments	21 546	23 558	24 613
Other liabilities	14 845	14 215	13 859
Prepayments from buyers	23 236	32 930	22 702
Accrued liabilities	93 143	98 250	106 984
Other loans	15 990	15 640	31 801
Total current liabilities	269 198	324 504	402 009
Total liabilities	2 417 6951	2 630 801	2 550 506
TOTAL LIABILITIES&STOCKHOLDER'S	5 876 700	6 125 266	6 012 434

EQUITY

PROFIT AND LOSSES ACCOUNT FOR YEAR, WHICH ENDS ON JUNE 30.2021.

					EUR 30.06.2021 -	EUR 30.06.2020 -
Net turnover				1	479 803	540 566
Cost of goods sold				2	-375 734	-395 973
Gross profit					104 069	144 593
Administrative expenses				3	-47 391	-44 782
Other income from operations				4	9 701	1 532
Other expenses from operations				5	-888	-864
Finansial services income
Finansial services expenses				6	-68 414	-63 175
Profit before taxes					-2 923	37 304
Other taxes				7	0	0
Net profit					-2 923	37 304
Earnings 30.06.21	per	share	(EPS)			0 .02
Earnings 30.06.20	per	share	(EPS)
Chairman of the Board					G.Feņuks	Member of the Board

CASH FLOW STATEMENT FOR YEAR THAT ENDS ON JUNE 30, 2021

		2021 30.06.	2020 30.06.	2020 31.12.
		EUR	EUR	EUR
I.	CASH FLOW FROM OERATING ACTIVITIES
	Profit before outstanding items and taxes (+) Adjustments:	-2 923	37 304	12 953
	fixed assets depreciation ( +) Intangible assets depreciation (+)	52 679 0	49 549 3	104 669 35
	finacial services income	68 414	63 175	135 953
	Profit or losses before adjustments from current assets and liabilities Adjustments:	118 170	150 031	253 610
	debtors : increase (-); decrease (+)	-28 606	-3 924	-6 590
	liabilities: increase (-); decrease (+)	24 213	- 392	35 331
	Gross cash provide by operating activities	113 777	145 715	282 351
	Payments for financial	-68 414	-63 175	-135 953
	Net cash provided by operating activities before outstanding items:	45 363	82 540	146 398
	Cash flow from outstanding items (-/+)
	Net cash provided by operating activities:	45 363	82 540	146 398
II.	CASH FLOWS FROM INVESTING ACTIVITIES :
	Fixed assets purchase	-2 099	-5 889	-53 780
	Investments in related companies		0
	Loans to subsidiaries'	-2 000	0	-5 000
	Net cash used in investing activities:	-4 099	-5 889	-58 780
III.	CASH FLOWS FROM FINANCING ACTIVITIES:
	Expenses for borrowings repayment	-84 000	-42 000	-126 000
	Expenses on leasing liabilities	-15 812	-6 076	-26 966
	Net cash provided by financing activities:	-99 812	-48 076	-152 966
	Net cash flom	-58 548	28 575	-63 348
	CASH AT BEGINNING OF YEAR	305 044	370 392	370 392
	CASH AT END OF YEAR	246 496	398 967	305 044

STATEMENT OF CHANGES IN EQUITY FOR YEAR THAT ENDS ON JUNE 30, 2021

	30.06.2021 EUR	30.06.2020 EUR	31.12.2020 EUR
Stockholder's eguity
Balance at the beginning of the
financial year	2 722 492	2 722 492	2 722 492
Increase from
Decrease from denomination of
shares from lats to euro Balance at the end of the financial year
Long-term investments revaluation	2 722 492	2 722 492	2 722 492
reserve
Balance at the beginning of the
financial year	641 099	649 285	649 285
Increase from
Decrease from			-8 186
Balance at the end of the financial year	641 099	649 285	641 099
Accumulations
Balance at the beginning of the	44 477	44 477	44 477
financial year
Increase from denomination of shares
from lats to euro
Decrease from
Balance at the end of the financial year	44 477	44 477	44 477
Retained earnings
Balance at the beginning of the financial year	40 907	40 907	40 907
Profit or losses of the finacial year	37 304	34 304	12 953
Dividendes
Included in accumulations
Balance at the end of the financial year	78 211	78 211	53 860
Stockholder's eguity (total)
Balance at the beginning of the
financial year	3 461 928	3 457 161	3 457 161
Balance at the end of the financial year	3 459 005	3 494 465	3 461 928

(1) Net turnover

Turnover consists of revenues that the Company gained in the first six months of 2021 from its core business-service provision without VAT

Type of commercial operations	2021.06.30	2020.06.30
	EUR	EUR
power supply, distribution and servicing	0	59 697
office renting service	298 649	356 895
utility services	181 154	123 974
Total	479 803	540 566

Distribution of net turnover by geographical markets

	2021.06.30	2020.06.30
Country	EUR	EUR
Latvia	479 803	540 566
Total	479 803	540 566

(2) Cost of sales

	2021.06.30	2020.06.30
	EUR	EUR
personnel	101 249	126 413
depreciation	52 679	49 549
transport	7 446	7 508
other outstanding costs	74 221	110 026
telecommunication service	514	455
other costs tied to commercial operations	128 444	87 417
insurance (buildings)	2 766	2 507
land rent to AS Possessor	2 308	3 550
real estate tax (buildings ,land)	5 938	7 978
cash turnover expenses	169	567
depreciation of license	0	3
Total	375 734	395 973

(3)	Costs of administration	2021.06.30	2020.06.30
		EUR	EUR
	personnel	36 706	31 147
	telecommunication service	514	454
	office supplies	346	297
	transport expenses for administrative needs	7 445	7 509
	represent, personal cost	0	705
	legal assistance or raid	0	2 000
	NASDAQ Rīga annual fee	2 380	2 670
	Total	47 391	44 782
	Other revenues from commercial operation
(4)		2021.06.30 EUR	2020.06.30 EUR
	other revenues	9 701	1 532
	Total	9 701	1 532
	Other costs of commercial operations	2021.06.30	2020.06.30
		EUR	EUR
	allowances and bonuses	888	864
	Total	888	864
	Payments of interest and similar
	expenses	2021.06.30	2020.06.30
		EUR	EUR
(5)	credit interests	67 166	62 499
	līzing	1 248	676