Akciju sabiedriba "VEF"

Annual / Quarterly Financial Statement • Aug 31, 2020

JOINT STOCK COMPANY VEF (Unified registration number 40003001328)

NON- AUDITED FINACIAL STATEMENTS For the period ended on June 30, 2020 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
	On April 14, 2004 registered in the Commercial Register, Nbr. 40003001328
Taxpayers' Reg. Nbr.	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:
	Power supply - distribution of power; Letting and renting of real-estate property
Name of the holder of shares	As on June 30, 2020:
and share capital (%)	VEF KOMUNIKĀCIJU SERVISS SIA- 45.52 % ; Laila Līduma – 6.31 % ;
	* Tamāra Kampāne	-12.54 % ;
	* Gints Feņuks	- 24.50 % ;
	*Other shareholders	- 11.13 %.
Subsiaiary company	Ltd . "VEF Projekts " (100%) Brīvības gatve 214,Rīga.
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:	01.01.2020. - 30.06.2020.
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 2020

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, 2020.

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 it own
											real estate property, renting business spaces, and also providing electricity distribution services for
business			located		in		the		VEF		territory.
										Net cash flow/turnover of the joint venture within the reported year reached 540 566	EUR that is
less	by	11	%	in	comparison		with	the	last	period	reported.

Currently the Company continues to provide full set of services and is in preparations for planned renovation of its real estate that is required since buildings are in use for more than fifteen years. Renovation plans are in the phase of approval and will require substantial investments which the Company is planning to cover from own revenues executing renovation activities in several consecutive steps within following three years.

The Company is preparing to reconstruct premises previously used for production and reprofile to successfully attract tenants. To cover investments required for these activities the Company is planning partly to use its own resources – but mainly bank financing will be attracted.

As of planned works for the next reporting period the Company is planning to invest in improving of roads and energy efficiency that are important for existing and new potential customers.

During the current emergency situation caused by the outbreak of COVID-19 virus, the Company is actively following recent developments, frequently communicating with own customers and financial institutions, and evaluating possible actions how to support own customers with a significant reduction in customer flow. Regarding decisions that might be taken and might have a considerable impact on Company's activities and results.

Board of JSV VEF holds to the strategic plans of the company according to economic developments in the country and following to the trends of the real estate rent and electricity distribution markets.

Currently the Management Board and Supervisory Board are carefully monitoring market situation both locally and regionally, following to demands and requirements imposed by the Latvian Government that might influence further business prospects of the Company.

Company operations are influenced by various financial risks including credit risk and interest rate volatility. Company's management tries to minimize potential negative impacts of financial risks. Financial resources that potentially expose the Company towards acknowledged levels of credit risks, are mainly free cash and debtor and creditor debts. Debtor and creditor debts are stated as recoverable amounts. Company's partners in cash transactions are local financial institutions. Company adheres to strict management of liquidity risks ensuring meeting credit obligations within set due dates. Company's management believes that the Company will generate enough cash in order not to jeopardize its liquidity.

Meanwhile Company acknowledges possible decrease in financial results if due to COVID-19 spread overall markets both locally and globally will be hit by recession; thus, influencing financial well-being of Company's customers and/or attraction of new customers.

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

Gints Fenuks Chairman of the Management Board

ASSETS

	EUR	EUR	EUR
	30.06.2020	30.06.2019	31.12.2019
LONG-TERM INVESTMENTS
Intangible assets
Concessions,patents,licences	30	38	35
Total intangible assets	30	38	355 470 312
Fixed Assets
Land,buildings and other property	5 470 312	5 529 510	5 499 911
Other fixed assets and inventory	126 816	111 878	92 985
Advance payments for fived assets	0	0	0
Total fixed assets	5 597 128	5 641 388	5 592 896
Long-term financial investments
Investments in subsidiares	3 000	3 000	3 000
Loans to subsidiaries	60 000	60 000	60 000
Long-term financial investments,total	63 000	63 000	63 000
Total long-term investments	5 660 158	5 704 426	5 655 931
Current assets
Debtors
Customers and client debts	19 877	19 101	23 901
Other debtors	21 345	29 493	24 799
Future period expenses	4 235	1 725	4 830
Future period income	20 684	28 148	37 262
Total debtors	66 141	78 467	90 792
Cash	398 967	307 940	370 392
Total Current assets	465 108	386 407	461 184
TOTAL ASSETS	6 125 266	6 090 833	6 117 115

LIABILITIES

	EUR	EUR	EUR
	30.06.2020	30.06.2019	31.12.2019
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	649 285	657 470	649 285
Total accumulation
Retained earnings from the previous years	40 907	-81 389	-81 389
Retained earnings of the financial years	37 304	100 785	122 296
Total stockholder's equity	3 494 465	3 443 835	3 457 161
LIABILITIES
Long-term liabilities
Borrowings from credit institutions	2 150 174	2 318 174	2 150 174
Prepayments from buyers	47 273	47 273	47 273
Other liabilities	108 850	84 331	61 594
Total long-term liabilities	2 306 297	2 449 778	2 259 041
Current liabilities
Borrowings from credit institutions	126 000	84 000	168 000
Accounts payable	13 911	29 425	34 658
Taxes and social security payments	23 558	18 425	30 891
Other liabilities	14 215	13 983	13 699
Prepayments from buyers	32 930	19 877	32 930
Accrued liabilities	98 250	22 573	99 514
Other loans	15 640	8 937	21 221
Total current liabilities	324 504	197 220	400 913
Total liabilities	2 630 801	2 646 998	2 659 954
TOTAL LIABILITIES&STOCKHOLDER'S	6 125 266	6 090 833	6 117 115

EQUITY

PROFIT AND LOSSES ACCOUNT FOR YEAR, WHICH ENDS ON JUNE 30.2020.

					EUR 30.06.2020 -	EUR 30.06.2019 -
Net turnover				1	540 566	599 553
	Cost of goods sold		2	-395 973	-379 957
Gross profit					144 593	219 596
Administrative expenses				3	-44 782	-57 511
Other income from operations				4	1 532	4 518
Other expenses from operations		5	-864	-816
Finansial services income
Finansial services expenses		6	-63 175 -65 002
Profit before taxes					37 304	100 785
Other taxes				7	0	0
Net profit					37 304	100 785
Earnings 30.06.19	per	share	(EPS)			0 .05
Earnings 30.06.20	per	share	(EPS)		0.02
Chairman of the Board					G.Feņuks	Member of the Board

CASH FLOW STATEMENT FOR YEAR THAT ENDS ON JUNE 30, 2020

		2020 30.06.	2019 30.06.	2019 31.12.
I.	CASH FLOW FROM OERATING	EUR	EUR	EUR
	ACTIVITIES
	Profit before outstanding items and taxes (+)	37304	100 785	122 296
	Adjustments:
	fixed assets depreciation ( +)	49 549	44 087	92 578
	Intangible assets depreciation (+)	3	4	7
	finacial services income Profit or losses before adjustments from current	63 175	65 002	129 531
	assets and liabilities Adjustments:	150 031	209 878	344 412
	debtors : increase (-); decrease (+)	-3 924	-3 607	15 932
	liabilities: increase (-); decrease (+)	- 392	8 044	45 101
	Gross cash provide by operating activities	145 715	214 315	405 445
	Payments for financial	-63 175	-65 002	-129 531
	Net cash provided by operating activities before outstanding items:	82 540	149 313	275 914
	Cash flow from outstanding items (-/+)
	Net cash provided by operating activities:	82 540	149 313	275 94
II.	CASH FLOWS FROM INVESTING ACTIVITIES :
	Fixed assets purchase	-5 889	-111 353	-86 458
	Investments in related companies	0	0	0
	Loans to subsidiaries'	0	0	0
	Net cash used in investing activities:	-5 889	-111 353	-86 458
III.	CASH FLOWS FROM FINANCING ACTIVITIES:
	Expenses for borrowings repayment	-42 000	-60 000	-144 000
	Expenses on leasing liabilities	-6 076	-13 358	-18 402
	Net cash provided by financing activities:	-46 076	-73 358	-162 402
	Net cash flom	28 575	-35 398	27 054
	CASH AT BEGINNING OF YEAR	370 392	343 338	343 338
	CASH AT END OF YEAR	398 967	307 940	370 392

STATEMENT OF CHANGES IN EQUITY FOR YEAR THAT ENDS ON JUNE 30, 2020

	30.06.2020 EUR	30.06.2019 EUR	31.12.2019 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	2 722 492	2 722 492	2 722 492
Long-term investments revaluation
reserve
Balance at the beginning of the
financial year	649 285	657 470	657 470
Increase from
Decrease from			-8 185
Balance at the end of the financial year	649 285	657 470	649 285
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	-81 389	-81 389
Profit or losses of the finacial year	37 304	100 785	122 296
Dividendes
Included in accumulations
Balance at the end of the financial year	78 211	19 396	40 907
Stockholder's eguity (total)
Balance at the beginning of the
financial year	3 457 161	3 343 050	3 343 050
Balance at the end of the financial year	3 494 465	3 3 443 835	3 457 161

(1) Net turnover

Turnover consists of revenues that the Company gained in the first six months of 2020 from its core business-service provision without VAT

Type of commercial operations	2020.06.30	2019.06.30
	EUR	EUR
power supply, distribution and servicing	59 697	72 110
office renting service	356 895	366 970
utility services	123 974	151 473
Total	540 566	590 553

Distribution of net turnover by geographical markets

	2020.06.30	2019.06.30
Country	EUR	EUR
Latvia	540 566	590 553
Total	540 566	590 553

(2) Cost of sales

	2020.06.30 EUR	2019.06.30 EUR
personnel	126 413	100 043
depreciation	49 549	44 087
transport	7 508	7 446
other outstanding costs	110 026	146 523
personnel training	0	106
telecommunication service	455	419
other costs tied to commercial operations	87 417	69 801
insurance (buildings)	2 507	2 116
land rent to AS Possessor	3 550	3 653
real estate tax (buildings ,land)	7 978	4 090
cash turnover expenses	567	491
business travel expenses	0	1 178
depreciation of license	3	4
Total	395 973	379 957

2020.06.30	2019.06.30
EUR	EUR
31 147	44 686
454	419
297	346
7 509	7 446
705	484
2 000	1 460
2 670	2 670
44 782	57 511

Other revenues from commercial

(4) operation

	2020.06.30	2019.06.30
	EUR	EUR
fines	0	518
other revenues	1 532	4 000
Total	1 532	4 518

Other costs of commercial

⁽⁵⁾ operations

		2020.06.30 EUR	2019.06.30 EUR
	allowances and bonuses	864	774
	fines	0	42
	other expenses	0	0
	Total	864	816
	Payments of interest and similar
(6)	expenses	2020.06.30	2019.06.30
		EUR	EUR
	credit interests	62 499	64 299
	līzing	676	703
	Total	63 175	65 002