Delfin Group

Annual / Quarterly Financial Statement • Apr 27, 2020

SIA "DelfinGroup" Annual accounts for the year ended 31 December 2019 and Consolidated Annual accounts FOR THE YEAR ENDED 31 DECEMBER 2019 PREPARED IN ACCORDANCE WITH THE International Financial Reporting STANDARDS AS ADOPTED BY EU

Translation from Latvian

TABLE OF CONTENTS

Information on the Company and subsidiaries	3 - 5
Statement of management's responsibility	6
Management report	7 - 8
Corporate governance statement	9
Profit or loss account	10
Comprehensive income statement	10
Balance sheet	11 - 12
Statement of changes in equity	13
Cash flow statement	14 - 15
Notes	16 - 40
Independent Auditors' report	41 - 46

Information on the Company and Subsidiaries

Name of the Company	DelfinGroup (till 04.02.2020. ExpressCredit)
Legal status of the Company	Limited liability company
Number, place and date of registration	40103252854 Commercial Registry Riga, 12 October 2009
Operations as classified by NACE classification code system	NACE2 64.92 Other credit granting NACE2 64.91 Financial leasing NACE2 47.79 Retail sale of second-hand goods in stores NACE 69.20 Accounting and auditing services, tax consultancy
Address	Skanstes street 50A (till 10.03.2020. Raunas street 44 k-1), Riga, LV-1013 Latvia
Names and addresses of shareholders	Lombards24.lv, SIA (65.99% till 07.12.2018., 65.18% from 07.12.2018.), Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas street 44k-1)
	AE Consulting, SIA (10.00%), Skanstes street 50A, Riga, Latvia (till 10.03.2020. Posma street 2)
	EC finance, SIA (21.51% till 07.12.2018., 21.32% from 07.12.2018.), Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas street 44k-1)
	Private individuals (3.5%)
Ultimate parent company	EA investments, AS Reg. No. 40103896106 Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas street 44K-1)
Names and positions of Board members	Agris Evertovskis - Chairman of the Board Kristaps Bergmanis - Member of the Board Didzis Ādmīdiņš — Member of the Board Ivars Lamberts - Member of the Board
	Names and positions of Council members - Uldis Judinskis - Chairperson of the Council (from 16.05.2019.)
	Ramona Miglāne - Deputy Chairman of the Council (from 16.05.2019.) Anete Ozolina - Member of the Council (ex.Anete Zilīte, from 16.05.2019.)
	leva Judinska-Bandeniece - Chairperson of the Council (from 10.07.2014. till 16.05.2019.)
	Uldis Judinskis - Deputy Chairman of the Council (from 27.06.2014. till 16.05.2019.) Ramona Miglane - Member of the Council (from 27.06.2014. till 16.05.2019.)
Responsible person for accounting	Inta Pudāne - Chief accountant
Financial year	1 January 2019 - 31 December 2019

Name and address of the auditor

SIA BDO ASSURANCE Certified Auditors' Company license No. 182 Kaļķu street 15-3B, Riga, LV-1050 Latvia

Responsible Certified Auditor: Modrīte Johansone Certificate No. 135

Information on the Subsidiaries

Subsidiary	SIA ExpressInkasso (parent company interest in subsidiary - 100%)
Date of acquisition of the subsidiary	22.10.2010.
Number, place and date of registration of the subsidiary	40103211998; Riga, 27 January 2009
Address of the subsidiary	Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas Street 44 k-1)
Operations as classified by NACE classification code system of the subsidiary	66.19 Financial support services except insurance and pension accrual
Subsidiary Date of acquisition of the subsidiary	SIA ViziaFinance (parent company interest in subsidiary - 100%) 23.02.2015.
Number, place and date of registration of the subsidiary	40003040217; Riga, 06 December 1991
Address of the subsidiary	Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas Street 44 k-1)
Operations as classified by NACE classification code system of the subsidiary	64.92 Other financing services
Subsidiary Date of acquisition of the subsidiary Number, place and date of registration of the subsidiary	SIA REFIN (parent company interest in subsidiary - 100%) 03.10.2018. 40203172517; Riga, 03 October 2018
Address of the subsidiary	Skanstes street 50A, Riga, Latvia (till 10.03.2020. Raunas Street 44 k-1)
Operations as classified by NACE classification code system of the subsidiary	64.92 Other financing services

Statement of management s responsibility

The management of SIA "DelfinGroup" group is responsible for the financial statements.

Based on the information available to the Board of the parent company of the financial statements are prepared on the basis of the relevant primary documents in accordance with International Financial Reporting Standards as adopted by the European Union and present a true and fair view of the Group's assets, liabilities and financial position as at 31 December 2019 and its profit and cash flows for 2019.

The management of the parent company confirms that the accounting policies and management estimates have been applied consistently and appropriately. The management of the parent company confirms that the consolidated financial statements have been prepared on the principles of prudence and going concern.

The management of the parent company confirms that is responsible for maintaining proper accounting records and for monitoring, controlling and safeguarding the Group's assets. The management of the parent company is responsible for detecting and preventing errors, irregularities and/or deliberate data manipulation. The management of the parent company is responsible for ensuring that the Group operates in compliance with the laws of the Republic of Latvia.

The management report presents fairly the Group's business development and operational performance.

Didzis Ādmīdiņš Agris Evertovskis Kristaps Bergmanis Ivars Lamberts Chairman of the Board Board Member Board Member Board Member Riga, 24th April 2020

Management report

The Group's turnover in 12 months of 2019, compared to the previous year. has increased by 16% to EUR 21.8 million, while the company's loan portfolio amounted to EUR 31.6 million, which is an increase of 56% over the period.

In 2019, the Group's operations were affected by the changes in the Law on Consumer Rights that came into force on July 1, 2019. The unaudited results show that the company has been able to keep growing in size and in profitability under the new regulation. One reason for such track record is that 38% of DelfinGroup's revenues are generated by pawn shop operations (pawn loans, sale of goods etc.) which are not subject to the new regulation. Another reason is the company's overall efficiency achieved by the introduction of new value adding services and products and by closely monitoring the cost base. The company has further increased the maximum loan amount to EUR 5000. The Group continued to develop its youngest brand VIZIA reaching 75% annual growth in the net loan portfolio.

The company celebrated 10-year anniversary in October 2019 and marked the first completed business decade by defining a brand-new corporate identity, including the change of name from ExpressCredit to DelfinGroup in February 2020. DelfinGroup upgraded mission is to create and provide innovative and custom finance solutions to its clients.

In Q4 2019, DelfinGroup prepared for the new EUR 5 million bond issue. The preparation included setting up a new creditor structure whereby the bond holders of two existing notes issues (ISIN LV000802213 and ISIN LV000801322) and one new bond issue (ISIN LV000802379), as well as Mintos platform became secured creditors of DelfinGroup. The aforementioned creditor claims are secured by a commercial pledge whereby SIA DelfinGroup and its subsidiaries SIA ViziaFinance, SIA ExpressInkasso, and SIA REFIN have pledged all their property and receivables as an aggregation of property at the moment of pledging as well as its future components. The pledgee is Law Office Eversheds Sutherland Bitans according to the collateral agent agreement, and the commercial pledge is worth EUR 40.5 million. The subscription for the new bond issue was started on November 15, 2019 and by now ISIN LV0000802379 is subscribed by 72% or EUR 3.6 million.

By implementing business strategy and all planned activities the following financial results of the Group were achieved in year 2019 compared to year 2018:

Position	EUR, million	Change, %
Net loan portfolio	31.55	+56.2
Assets	38.27	+43.5
Net profit	3.91	- 3.5

As to compliance with the Issue Terms of notes issue ISIN LV000802213, and ISIN LV0000802379 financial covenant computation are as follows:

Covenant	Value as of 31.12.2019	Compliance
dividend amount including any interim dividends shall not exceed 40% of the last audited net profit	33%	yes
to maintain Net Debt/Net Equity indicator not exceeding 4 to 1	3.60	ves
total consolidated value of inventories and loans and receivables, plus cash, shall exceed at least 1.15 times the sum of total consolidated secured liabilities	1.28	yes
total consolidated loan amount to shareholders, management and other Related Persons shall not exceed EUR 1,400,000	1 307 683 EUR	yes

Branches

During the period from 1 January 2019 to 31 December 2019, the company continued to work on the branch network efficiency. As at 31 December 2018 the Group had 87 branches in 38 cities in Latvia (31.12.2018. - 86 branches in 39 cities).

Risk management

The Group is not exposed to significant foreign exchange rate risk because basic transaction currency is euro. Significant amount of funding of the Group consist of fixed coupon rate bonds, so that the Group is not significantly exposed to variable interest rate risk. Accurate application of the prudent strategies chosen has allowed the Group to successfully manage its financial risks, particularly the liquidity and credit risk.

Post balance sheet events

On March 12 2020, the Cabinet of Ministers of the Republic of Latvia decided to declare emergency situation in the country in relation to COVID-19. Even though the length and negative economic impact of the emergency situation cannot be precisely estimated, the Company has made, and will make in the future, decisions to ensure the Company's liquidity, cost reduction and portfolio quality until the COVID-19 situation is solved.

Except the aforementioned, there are no subsequent events since the reporting year, which would have a significant effect on the financial position of the Company as at 31 December 2019.

Distribution of the profit proposed by the Group

The Parent Company's board recommends the profit of 2019 to pay out in dividends, respecting the restrictions applied to debt securities emissions and exercising caution in relation to the uncertainty of the impact of COVID-19.

Agris Evertovskis Didzis Ādmīdiņš Kristaps Bergmanis Ivars Lamberts Chairman of the Board Board Member Board Member Board Member Riga, 24th April 2020

Corporate governance statement

Due to the fact that SIA "ExpressCredit", VNR 40103252854 (hereinafter "Company") bonds are listed on the Nasdaq Riga Stock Exchange, the Corporate Governance Statement in 2019 was prepared in accordance with Section 56.2. requirements of the third paragraph of Financial Instruments Market Law.

Information on the key elements of Company's internal control and risk management system applied in the preparation of financial statements.

Company's management, internal control and risk management are carried out in accordance with the principles of prudence and effectiveness with the aim of ensuring Company's sustainable operation in accordance with the existing laws and regulations and the interests of Company's shareholders and creditors.

The financial statements are prepared in accordance with existing laws and regulations and in accordance with International Financial Reporting Standards as adopted by the EU. Statements are prepared by an accountant using licensed accounting software and supervised by the management. In 2014, Company set up a council that also carries out the monitoring function of annual reports are independently audited, within which the auditor provides an opinion on the compliance of the accounts with regulatory enactments and International Standards.

Basic business data, regardless of accounted for in a specially tailored data processing system. This ensures double control of the underlying data and reduces the impact of human error factors on enterprise data records.

Company's financial risks are monitored by Company's management. The supervision of capital adequacy and liquidity is being managed conservatively and followed up so that the company can meet all its external obligations. Company is not exposed to significant currency fluctuations because all assets and liabilities are denominated in EUR. The risk of fluctuations in interest rates is insignificant due to the fact that borrowings with variable interest rates are basically short-term and non-substantial.

To compensate for credit risks arising from Company's operating activities - lending, the Company performs following principles: (1) all credit granting decisions are made on the basis of an approved by management and based on statistical analysis; (2) adhere to the principle of diversification - without concentrating loans towards one or a few clients; (3) calculates provisions for doubtful debts according to the developed methodology; (4) attracts and trains professional staff who work with problem debtors; (5) problematic debtors that qualify for certain criteria are assigned to debt collection companies via cession.

Company's legal risks are supervised and managed by the members of the Board in line with the responsibilities, by attracting professional legal service providers.

The Board of the Company is responsible for ensuring the multilateral and appropriate internal control and risk management system.

The Company's Annual Report and Corporate Governance Report for 2019 is available on the website of AS Nasdaq Riga www.nasdaqbaltic.com and on the Company's website www.delfingroup.lv.

Agris Evertovskis Didzis Admīdiņš Kristaps Bergmanis Chairman of the Board Board Member Board Member

Ivars Lamberts Board Member

Riga, 24rd April 2020

Profit or loss account for the year ended 31 December 2019

		Parent company 2019	Group 2019	Parent company 2018	Group 2018
	Notes	EUR	EUR	EUR	EUR
Net sales	(1)	5 403 464	5 403 464	4 186 422	4 186 422
Cost of sales Interest income and similar	(2)	(3 603 607)	(3 603 607)	(2 658 754)	(2 658 754)
income Interest expenses and similar	(3)	14 968 334	16 382 466	13 793 021	14 663 755
expenses	(4)	(3 856 979)	(4 352 226)	(2 679 091)	(2 792 480)
Gross profit		12 911 212	13 830 097	12 641 598	13 398 943
Selling expenses Administrative expenses	(5) (6)	(5 641 153) (3 335 473)	(5 974 428) (3 487 530)	(5 558 053) (2 659 968)	(5 931 648) (2 770 859)
Other operating income		113 712	94 932	93 244	80 184
Other operating expenses Income from investments	(7)	(197 288)	(199 778)	(151 363) 490 000	(151 419)
Profit before corporate income tax		3 851 010	4 263 293	4 855 458	4 625 201
Income tax expense	(8)	(349 957)	(349 957)	(78 868)	(78 879)
Profit after corporate income tax		3 501 053	3 913 336	4 776 590	4 546 322
Interim dividend				(490 000)	(490 000)
Profit for the reporting year		3 501 053	3 91 3 336	4 286 590	4 056 322
Comprehensive income statement for 2019		2019 EUR	2019 EUR	2018 EUR	2018 EUR
Profit for the reporting year Other comprehensive income		3 501 053	3 91 3 338	4 776 590	4 546 322
Total comprehensive income		3 501 053	3 913 336	4 776 590	4 546 372
Notes on pages from 76 to 40 are integral part of these financial statements.
Agris Evertovskis Kristaps Berģmanis Chairman of the Board Board Member		Didzis Ādmīdiņš Board Member		Ivars Lamberts Board Member	inta Pudāne Chief accountant
Riga, 24th April 2020

31.12.2019. EUR 184 201 16 005 6 748 206 954 54 515 1 980 106 351 553 2 386 174 (10;11) 1 682 828 117 620	31.12.2019. EUR 184 201 35 733 127 616 6 748 354 298 54 515 1 980 106 351 553 2 386 174 117 620 8 859 789	31.12.2018. EUR 204 024 22 777 226 801 34 525 193 571 228 096 1 182 828 3 121 260	31.12.2018. EUR 204 024 43 204 127 616 374 844 34 525 193 571 228 096 3 491 915
6 215 523
022 423	1 022 423	1 073 823	1 072 274
9 038 394	9 999 832	5 37 911	4 564 189
11 631 522	12 740 304	5 : 2 808	5 167 129
1 155 352	1 155 352	848 111	848 111
1 155 352	1 155 352	848 111	848 111
16 163 461	22 687 085	14 886 732	16 658 940
	165 112	518 695	204 335
165 112	2 528
5 725 734	275 751	218 449	230 989
183 065	108 539	52 085	66 945
93 988		15 675 961	17 161 209
22 331 360	23 239 015		3 489 176
812 301	1 135 644	3 368 567	21 498 496
24 299 013	25 530 011	19 892 639
35 930 535	38 270 315	25 725 447	26 665 625
Notes on pages from 16 to 40 are integral part of these financial statements
	Ivars Lamberts
Didzis Ādmīdiņš Board Member	Board Member	Inta Pudāne	Chief accountant
(16) (16) (17;26)

Balance sheet as at 31 December 2019		Parent company	Group	Parent company	Group
Liabilities Shareholders' funds:	Notes	31.12.2019. EUR	31.22019. EUR	31.12.2018. EUR	31.12.2018. EUR
Share capital	(20)	1 500 000	1 500 000	1 500 000	1 500 000
Retained earnings		2 774 384	2 954 156	(12 206)	397 834
Profit for the reporting year		3 501 053	3 913 336	4 286 590	4 056 322
Total shareholders' funds:		775 437	8 367 492	5 774 384	5 954 156
Creditors:
Long-term creditors:
Bonds issued	(21)	6 059 853	6 059 853	6 192 631	6 192 631
Other borrowings	(22)	4 810 611	5 637 790	936 930	996 544
Lease liabilities for right-of-use
assets	(11;23)	1 475 350	1 475 350
Total long-term creditors:		12 345 814	13 172 993	7 129 561	7 189 175
Short-term creditors:
Bonds issued	(21)	1 764 767	1 764 767	1 722 136	1 722 136
Other borrowings	(22)	11 522 068	13 078 131	9 810 701	10 643 864
Lease liabilities for right-of-use
assets	(11;23)	549 585	549 585
Trade payables	(25)	480 690	501 355	384 573	400 778
Accounts payable to affiliated
companies	(24)	234 266	179	171 611	416
Taxes and social insurance
	(26)	233 164	243 989	195 303	199 137
Accrued liabilities	(25)	1 024 744	591 824	537 178	555 963
Total short-term creditors:		15 809 284	16 729 830	12 821 502	13 522 294
Total creditors		28 155 098	29 902 823	19 951 063	20 711 469
Total liabilities and shareholders'
funds		35 930 535	38 270 315	25 725 447	26 665 625

Notes on pages from 16 to 40 are integral part of these financial statements.

Agris Evertovskis Chairman of the Board

Kristaps Bergmanis Board Member

Didzis Ādmīdiņš Board Member

lvars Lamberts Board Member

Inta Pudāne Chief accountant

Riga, 24th April 2020

Statement of changes in equity of the Parent Company's for the year ended 31 December 2019

	Share capital	Retained earnings	Profit for the	llotal
	EUR	EUR	reporting year EUR	EUR
As at 31 December 2017	1 500 000		1759 714	3 239 714
Dividends paid		(1 739 714)	(490 000)	(2 229 714)
Profit transfer		1 739 714	(1 739 714)
Decrease in retaind earnings*		(12 206)		(12 206)
Profit for the reporting year			4 776 590	4 776 590
As at 31 December 2018	1 500 000	(12 206)	4 286 590	5 774 384
Dividends paid		(1 500 000)		(1 500 000)
Profit transfer		4 286 590	(4 286 590)
Profit for the reporting year			3 501 053	3 501 053
As at 31 December 2019	1 500 000	2 774 384	3 501 053	7 775 437

* IFRS 9 transitional provisions adjustment of the carrying amount of financial assets for 01.01.2018. is recognized in retained earnings of previous years.

Statement of changes in equity of the Group for the year ended 31 December 2019

	Share capital	Retained earnings	Profit for the reporting year	Total
	EUR	EUR	EUR	EUR
As at 31 December 2017	1 500 000	232 708	1 956 770	3 689 478
Dividends paid		(1 739 714)	(490 000)	(2 229 714)
Prior years' retained earnings
of subsidiary sold			(3 343)	(3 343)
Profit transfer		1 953 427	(1 953 427)
Decrease in retained earnings*	-	(48 587)		(48 587)
Profit for the reporting year			4 546 322	4 546 322
As at 31 December 2018	1 500 000	397 834	4 056 372	5 954 156
Dividends paid		(1 500 000)		(1 500 000)
Profit transfer		4 056 322	(4 056 322)
Profit for the reporting year			3 913 336	3 913 336
As at 31 December 2019	1 500 000	2 954 156	3 913 336	8 367 492

* IFRS 9 transitional provisions adjustment of the carrying amount of financial assets for 01.01.2018. is recognized in retained earnings of previous years.

Notes on pages from 16 to-40 are integral part of these financial statements.

Agris Evertovskis Didzis Ādmīdiņš Kristaps Bergmanis lvars Lamberts Inta Pudāne Board Member Chairman of the Board Board Member Board Member -Chief accountant Riga, 24th April 2020

Cash flow statement for the year ended 31 December 2019

	Parent	Group	Parent	Group
	company 2019 EUR	2019 EUR	company 2018 EUR	2018 EUR
Cash flow from operating activities
Profit before extraordinary items and taxes	3 851 010	4 263 293	4 855 458	4 625 201
Adjustments for:
a) fixed assets and intangible assets
depreciation	238 974	243 863	241 753	250 463
b) right-of-use assets depreciation	741 956	741 956
c) accruals and provisions (except for bad
debts)	977 659	1 677 719	308 741	350 187
d) write-off of provisions			75 263	75 263
e) cessation results	1 169 308	1 499 243	440 273	494 170
f) interest income	(14 968 334)	(16 382 466)	(13 793 021)	(14 663 755)
g) interest and similar expense	2 687 671	2 852 983	2 238 818	2 298 310
h) impairment of non-current and current
financial assets	(34 601)	(34 601)	(14 454)	(13 151)
i) other adjustments	15 527	15 527		(3 343)
Loss before adjustments of working capital
and short-term liabilities	(5 320 830)	(5 122 483)	(5 647 169)	(6 586 655)
Adjustments for:
a) increase in consumer loans issued (core
business) and other debtors	(5 306 286)	(13 094 722)	(3 802 524)	(4 688 586)
b) stock (increase)/ decrease	(307 241)	(307 241)	(240 379)	(240 379)
c) trade creditors increase	1 546 901	1 106 837	228 441	239 400
d) Acquisition of right-of-use assets	(2 737 589)	(2 737 589)
Gross cash flow from operating activities	(12 125 045)	(20 155 198)	(9 461 631)	(11 276 220)
Corporate income tax payments	(78 868)	(78 879)	(338 863)	(367 824)
Interest income	15 023 844	16 421 309	13 667 153	14 521 911
Interest paid	(2 971 149)	(2 766 157)	(2 217 432)	(2 276 924)
Net cash flow from operating activities	(151 218)	(6 578 925)	1 649 227	600 943
Cash flow from investing activities
Acquisition of affiliated, associated or other
companies shares or parts	(500 000)		(300 000)
Earnings from the disposal of shares in
subsidiaries			513 000
Acquisition of fixed assets and intangibles	(426 272)	(430 462)	(206 020)	(222 690)
Proceeds from sales of fixed assets and
intangibles	63 774	63 774	15 369	19 226
Loans issued/repaid (other than core business				25 981
of the Company) (net) Net cash flow from investing activities	(5 438 371) (6 300 869)	(31 074) (397 762)	(287 067) (264 718)	(177 483)

Cash flow statement for the year ended 31 December 2019 (continued)

Cash flow from financing activities
Loans received and bonds issued (net)	11 462 075	14 279 871	8 204 777	8 559 898
Redemption/purchase of bonds	(1 750 000)	(1 750 000)	(1 106 000)	(1 106 000)
Loans repaid	(5 040 349)	(7 130 811)	(4 896 114)	(4 316 328)
Finance lease payments	(104 394)	(104 394)	(61 887)	(61 887)
Lease liabilities for right-of-use assets
payments	828 489	828 489
Dividends paid	(1 500 000)	(1 500 000)	(2 229 714)	(2 229 714)
Net cash flow from financing activities	3 895 821	4 623 155	(88 938)	845 969
Net cash flow of the reporting year Cash and cash equivalents at the beginning	(2 556 266)	(2 353 532)	1 295 571	1 269 429
of the reporting year	3 368 567	3 489 176	2 072 996	2 219 747
Cash and cash equivalents at the end of
reporting year	812 301	1135 644	3 368 567	3 489 176

Notes on pages from 16 to 40 are integral part of these financial statements.

Kristaps Bergmanis

Agris Evertovskis Chairman of the Board

Board Member

Didzis Ādmīdiņš Board Member

Ivars Lamberts Board Member /

Inta Pudāne Chief accountant

Riga, 24th April 2020

Notes

Accounting policies

(a) Basis of preparation

These financial statements have been prepared based on the accounting policies and measurement principles as set out below.

These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The financial statements are prepared based on historic cost method. In cases when reclassification not affecting prior year profit and equity is made, the relevant explanations are provided in the financial statements.

The preparation of financial statements in accordance with IFRS requires the use of significant estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the information on contingent assets and liabilities at the balance sheet date and the revenues and costs for the reporting period. Although these estimates are based on the information available to the management regarding the current events and actions, the actual results may differ from the estimates used. Critical assumptions and judgements are described in the relevant sections of the financial statements.

The Company have adopted the following new standards and amendments that are published andadopted by the EU:

Under IFRS 16, a contract is, or contains, a lease if it control the use of an identified asset for a period of time in exchange for consideration. For such contracts, the new model requires a right-of-use asset and a lease liability. The right-of-use asset is depreciated and the liability accrues interest. This will result in a front-loaded pattern of expense for most leases, even when the lessee pays constant annual rentals.

Effect of IFRS 16 adoption

The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the transition practical expedient to not reassess whether a contract is, or contains a lease at 1 January 2019. Instead, the Group applied the standard only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.

The Group also applied the available practical expedients wherein it:

• * Used a single discount rate to a portfolio of leases with reasonably similar characteristics
• * Relied on its assessment of whether leases are onerous immediately before the date of initial application
• * Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application
• * Used hindsight in determining the lease term where the contained options to extend or terminate the lease

The Group chose to use exceptions to leases that are short term, and leases of value that is not material. The Group has two main categories of right-of-use assets - lease of premises and lease of motor vechicles.

The off-balance sheet lease obligations as of 31 December 2018 are reconciled as fallows to the recognized lease liabilities as of 1 January 2019:

	01.01.2019.
	EUR
Off-balance sheet lease obligations as of 31 December. 2018.	2 484 108
Operating lease obligations as of January 1, 2019 (gross without discounting)	2 484 108
Operating lease obligations as of January 1, 2019 (net, discounted)	2 007 825
Residual value guarantees
Non-lease-components
Lease liabilities due to initial application of IFRS 16 as of January 1,2019	2 007 825

The quantitative impact of the first-time application of IFRS 16 on the consolidated balance sheet as of 31 December 2018 or 1 January 2019 is shown in the following table:

	31.12.2018 before application of new Adiutments IFRS FRS 16		01.01.2019 after application of new IFRS
	EUR	EUR	EUR
Right-of-use assets		2 010 644	2 010 644
Prepayments		(4 178)	(4 178)
Lease liabilities for right-of-use assets	-	(2 007 825)	(2 007 825)

Additional information on IFRS 16 adoption is disclosed in Note 11,

Notes (continued)

Accounting policies (continued)

The following amended standards became effective from 1 January 2019, but did not have any material impact on the Company and the Group, according to the Company's and the Group's management assessment:

• IFRIC 23 "Uncertainty over Income Tax Treatments" (issued on 7 June 2017 and effective for annual periods beginning on or after 1 January 2019).
• Prepayment Features with Negative Compensation Amendments to IFRS 9 (issued on 12 October 2017 and effective for annual periods beginning on or after 1 January 2019).
• Amendments to IAS 28 "Long-term Interests in Associates and Joint Ventures" (issued on 12 October 2017 and effective for annual periods beginning on or after 1 January 2019).
• Annual improvements for IFRSs 2015-2017 cycle amendments to IFRS 11, IAS 12 and IAS 23 (issued on 12 December 2017 and effective for annual periods beginning on or after 1 January 2019).
• Amendments to IAS 19 "Plan Amendment, Curtailment" (issued on 7 February 2018 and effective for annual periods beginning on or after 2019).

New standards and interpretations not yet adopted:

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018, and have not been applied in preparing these consolidated financial statements. The Company and the Group does not plan to adopt these standards early.

(i) Amendments to References to Conceptual Framework in IFRS Standards

Amendments to References to Conceptual Framework in IFRS Standards published on 29 March 2018 are effective for annual periods beginning after 1 January 2020 or later.

(ii) Amendments to IFRS 3: Business Combinations

Amendments to IFRS 3: Business Combinations published on 22 October 2018 are effective for annual periods beginning after 1 January 2020 or later

(iii) Amendments to IAS 1 and IAS 8 regarding the definition of materiality Amendments to IAS 1 and IAS 8 regarding the definition of materiality published on 31 October 2018 are effective for annual periods beginning after 1 January 2020 or later.

Accounting principles applied (b)

The items in the financial statements have been measured based on the following accounting principles:

• a) It is assumed that the company will continue as a going concern:
• ﻘ The measurement methods applied in the previous reporting year have been used;
• The measurement of the items has been performed prudently meeting the following criteria: c)
  • Only profits accruing up to the balance sheet date have been included in the report;
    • All possible contingencies and losses arising in the reporting year or the previous year have been recognised. even if they became known in the period between the balance sheet date and the issuance of the annual report;
    • All impairment and depreciation charges have been calculated and recognised irrespectively of whether the company has operated profitably or not during the reporting vear:
• d) of receipt or payment of invoices have been recognised. Revenues are matched with expenses in the reporting vear.
• Assets and liabilities are presented at their gross amounts: e)
• f) The opening balances of the reporting period reconcile with the closing balances of the previous reporting period;
• All items which may materially affect the assessment or decision-making of the financial statements g)
• are presented, immaterial items have been aggregated and their breakdown is presented in the Notes;
• h) Business transactions are presented based on their economic substance rather than their legal form.

Asset and liability recognition is performed on historical cost basis. All financial assets and liabilities are classified as held to maturity or loans and receivables.

Consolidation principles (c)

The consolidated financial statements have been prepared under the cost method. The consolidation are the Group's parent company and the subsidiaries in which the Group's parent company holds, directly, more than a half of the voting rights, or the right to control their financial and operating policies is acquired otherwise. Where the Group owns more than a half of the share capital of another company the respective company, the respective company is not consolidated. The subsidiaries of the Group are consolidated from the Group has taken over control, and the consolidation is terminated when the control cease to exist. Where the date of the share purchase agreement or the date of the decision of shareholders on making further in fundamentally different from the date of on which share ownership changes or the registration date as recorded in the Register) of Enterprises, the date of agreement shall be considered the date of the share purchase or the date of the igreement provides otherwise. The Group's all inter-company transactions and balances and unrealised profit on transactions between group companies are eliminated; unrealised losses are eliminated as well, except for the expenses are not recoverable. Where necessary, the accounting and measurement methods applied by the Group's subsidiaries have been changed to bring them in compliance with the Group's accounting and measurement methods.

In these statements the minority interest in the Group's consolidated subsidiaries and their income statement have been presented separately.

Notes (continued)

Accounting policies (continued)

Recognition of revenue and expenses (d)

Net sales

Net revenue represents the total value of goods sold and services provided during the year net of value added tax. Interest income and similar income

The Company presents interest income in the Profit and loss account prior to calculation of gross profit, as this income is related to the basic activities of the Company - charging interest for loans issued in return to pledge held as security or loans issued on other conditions. Interest income is recognised using acruals principle. Interest income is not recognised from the moment the recoverability of principal is considered doubtful. Penalty interest is recognised on a cash basis. Other income

Other income is recognised based on accruals principle.

Penalties and similar income

Of collection exists, is recognised based on cash principle.

Expenses

Expenses are recognised based on accuals principle in the period of the moment of payment. Expenses related to financing of loans is recognised in the period of liability origination and included in the profit and loss items "Interest and similar expenses".

(e) Foreign currency translation

(e1) Functional and presentation currency

Items included in the financial statements are measured using the primary economic environment in which the entity operates (the functional currency). The financial statement tems are (EUR), which is the Company's functional and presentation currency.

(e2) Transactions and balances

All transactions in foreign currencies are translated into the functional currency using the exchange rates at the date of the respective transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement of the respective period. At the balance sheet date the rates set by the Bank of Latvia were:

	31.12.2019.	31.12.2018.
	1 EUR	1 EUR
USD	1.12	1.15
RUB	69.96	79.72

(f) Fair value of Financial instruments

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. Fair values of financial assets or liabilities, including derivative financial instruments in active markets are based on quoted market prices. If the market for a financial asset or liability is not active (and for unlisted securities) the Group establishes fair value by using valuation techniques. These include the use of discounted cash flow analysis, option pricing models and recent comparative transactions as appropriate and may require the application of management's judgement and estimates.

Where, in the opinion of the Management, the fair values of financial assets and liabilities differ materially from their book values such fair values are separately disclosed in the notes to the accounts.

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs.

Amortised cost is the amount at which the financial instrument was recognition less any principal repayments plus accrued interest and for financial assets less any write-down for incurrent losses. Accrued interest includes amortisation of transaction costs defered at initial recognition and of any premium or discount to maturity amount using the effective interest method. Accrued interest income and accrued including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any) are not presented separately and are included in the carrying values of related items on the balance sheet.

The effective interest method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial liability. When calculating the effective interest rate the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

(g) Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and net amount reported in the is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the liability simultaneously.

Notes (continued) Accounting policies (continued)

(h) Intangible assets (including Company's goodwill) and fixed assets

All intangible assets and fixed assets are initially measured at cost. Intangible assets are recorded at historic cost net of depreciation and permanent diminution in value. Depreciation is calculated on a straight-line basis to write down each asset to its estimated residual value over its estimated useful life as follows:

vears

Intangibles	3 - 5
Other fixed assets	3 - 5

The residual values, remaining useful lives and methods of depreciation are reviewed and, if required annually. Fixed asset and intangibles recognition is terminated in case of its liquidation or when no future benefits are expected in connection with the utilisation of the respective asset. Any profit or loss connected with the termination of recognition (calculated as difference between the disposal gains and net book value as at the moment of derecognition), is recognised in the profit or loss account in the period when derecognition occurs. Leasehold improvements are written down on a straight-line basis over the shorter of the estimated useful life of the leasehold improvement and the lease. Current repairs and maintenance costs are charged to profit and loss account in the period when the respective costs are incurred.

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the net fair value of share of equity acquired. The recognised goodwill is reassessed at least on an annual basis to make sure no permanent diminution in value has occurred. In case such diminution in value is identified, the diminution in value is recognised in the income statement of the respective year.

Investments in the subsidiaries and associated companies (i)

In the financial statements the investments in associated companies are carried at equity method the value of the investment at the balance sheet date comprises the value of the associated company corresponding to the share of investment and the book value of the positive goodwill arising at the acquisition of the investment.

At the year-end the amount of the reported item is increased by reference to the Company's share in the profit or loss of the associated company during the year (in the post-acquisition period), or other changes in equity, as well as by the reduction of the goodwill arising at acquisition to its recoverable amount. Unrealised profit on inter-company transactions is excluded. Profit distribution is presented in the year in which the shareholders adopt a decision on profit distribution.

Impairment of assets (i)

Intangible assets which are not put into operation or which do not have a useful life are not amortised; their value is reviewed annually. The value of the assets subject to depreciation is reviewed whenever any events or circumstances support that their carrying value may not be recoverable. Impairment losses are recognised in the amount representing the difference between the carrying value of the asset and its recoverable amount is the higher of the respective assets fair value less the costs to sell and the value in use. In order to determine impairment, assets are grouped based on the smallest group of assets that independently generates cash flow (cash generating units).

Seaments (k)

A geographical segment provides or services within a particular economic environment that is subject to other economic environments characterized by different risks and benefits. A business segment is a share of assets and operations, providing products and services that are subject to other business segments of different risks and benefits.

(1) Inventories

Inventories are stated at the lower of cost or market price. Inventories are measured using the weighted FIFO method. The Company assesses at each balance sheet date whether there is objective evidence that inventories are impaired and makes provisions for slow-moving or damaged inventories loss is recognised in the period such loss is identified, writing off the relevant inventory values to the period profit and loss account.

Seized assets (m)

Collateral is repossessed following the foreclosure on loans that are in default. Seized assets are measured at the lower of cost or net realisable value and reported within "Inventories".

Trade and other receivables (n)

Accounts receivable comprise loans and other receivables (other debtors, and deposits) that are non-derivative financial assets with fixed or determinable payments. Loans are carried at amortised cost is defined as the fair value of cash consideration given to originate those loans. All loans and receivables are recognised to borrowers and derecognised on repayments. The Company has granted consumer throughout its market area. The economic condition of the market area may have an impact on the borrowers' ability to repay their debts. Restructured loans are no longer considered to be past due unless the loan is past due according to the renegotiated terms.

From October 2015 the Company has started issuance of pledged loans (except pledges in the form of golden and siver atticles) with new lending conditions, that assume 10% commission in case of loan default and subsequent sale of the pledge, i.e., the revenues received by the Company from the sale of the VAT portion. The pledges are made available for sale after 30 days of default however, they continue to hold the status of the loan recipient has the rights to buy out the pledge before the sale. In the financial statements these pledges are classified as loans issued. In case a surplus originates upon a sale of the pledge and the related costs (loan issued, interest and penalties accrued, intermediary and holding commissions), the surplus is recognised as the liability of the loan recipient. The liability expires, if the loan recipient does not claim the amount due within the 10 years term as defined in Article 1895 of the Ioan recipient has not claimed the surplus within the legally defined time limits, the income. Such income is outside VAT legislation and is not VAT taxable.

Notes (continued) Accounting policies (continued)

The Company assesses at each balance sheet date whether there is objective evidence that loans are impaired. If any such evidence exists, the amount of the allowances for loan impairment is assessed as the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows including amounts recoverable from collateral discounted at the original effective inte. The assessment of the evidence for impairment and the determination of the amount of allowances for impairment or its reversal requires the application of management and estimates. Management's judgements and estimates consider relevant factors including but not limited to, the identification of nonperforming loans (loan repayment schedule compliance), the estimated (if taken) as well as other relevant factors affecting loan and recoverability and collateral values. These judgements and estimates are reviewed periodically and as adjustments become necessary, they are reported in which they become known. The Management of the Company have made their best estimates of losses based on objective evidence of impairment and believe those estimates presented in the financial statements are reasonable in light of available information.

When loans cannot be recovered they are written off and charged against allowances for loan impairment losses. They are not written off until all the necessary legal procedures have been completed and the amount of the loss is finally determined.

The provision in the allowance account is reversed if the estimated recovery value exceeds the carrying amount.

Provisions for interest income debts is made in accordance with the policies set by the management of the Company. In accordance with the provisioning policy the Company calculates the provision required based on prior experience of loan volumes that turn out to be doubtful and the statistics of recoverability of such debts. The provision for interest accrued is made in accordance with the provisioning policies set by the management making sure that cash flows from interest receivable are excluded from cash flows used as the basis for principal recoverability testing.

The recoverability of other debtors, advances and deposits paid is valued on individual basis if there are any indications of net book value of the asset exceeding its recoverable amount.

Finance lease (0)

Where the property, plant and equipment are acquired under a finance lease arrangement and the Company/Group takes over the related risks and rewards, the property, plant and equipment items are measured at the value at which they could be purchased for an immediate payment. Leasing interest is charged to the profit and loss in the period in which it arises.

(p) Operating leases

Company is a lessor

The type of lease in which the lessor retains a significant part of the risks and rewards pertaining to ownership, is classified as operating lease. Lease payments and prepayments for a lease (net of any financial incentives received from the lessor) are charged to the profit and loss under a straight-line method over the lease term.

(a) Taxes

The corporate income tax expense is included in the financial statements based on the management's calculations made in accordance with the requirements of Latvian tax legislation.

As of 1 January 2018, Corporate Income Tax is paid on distributed and notionally distributed profits.

The distributed and conditionally distributed profit will be subject to a 20 percent gross tax or 20/80 of the net cost. Corporate income tax on dividend payments is recognized in the income statement.

Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period which are expected to apply to the period when the temporary differences are reversed or the tax loss carry forwards are utilised. Deferred tax balance is measured at a tax rate which is applicable for until decision of profits distribution is made. Therefore, any deferred tax liabilities or assets are recognised at tax rate applicable to undistributed profits.

(r) Provisions for unused annual leave

The amount of provision for unused annual leave is determined by multiplying the average daily pay of employees during the last 6 months by the number of accrued but unused annual leave days the end of the reporting year. The company separates the vacation provisions paid out till the date of annual report preparation and treats them as CIT deductible in the reporting period.

(s) Borrowings

Intially borrowings are recognised at the proceeds received net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost which is determined using the effective interest method. The difference between the proceeds received, net of transaction costs and the redemption value of the borrowing is gradually recognized in the profit and loss account over the term of the borrowing.

Cash and cash equivalents (t)

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, balances of current accounts with banks and short-term deposits with a maturity term of up to 90 days.

Payment of dividends (u)

Dividends due to the shareholders are recognized in the financial statements as a liability in the shareholders approve the disbursement of dividends.

Notes (continued) Accounting policies (continued)

(v) Financial risk management

(v1) Financial risk factors

The activities of the Company expose it to different financial risks:

(v1.1) foreign currency risk;

(v1.2) credit risk:

(v1.3) operational risk,

(v1.4) market risk;

(v1.5) liquidity risk;

(v1.6) cash flow and interest rate risk.

The Company's overall risk management is financial markets and aims to reduce its adverse effects on the Company's finance Director is responsible for risk management. The Finance Director identifies, assesses and seeks to find solutions to avoid financial risks acting in close cooperation with of the Company.

(v1.1) Foreign exchange risk

The Company operates mainly in the local market and its exposure to foreign exchange risk is low. With the current incomeexpense structure additional monitoring procedures for currency risk monitoring are not deemed necessary. No further risk prevention mechanisms are used on the account that the overall currency risk has been assessed as low.

(v1.2) Credit risk

The Company has a credit risk concentration based on its operational specifics - issuance of loans against pledge, as well as issuance of non-secured loans that is connected with an increased risk of asset recoverability. The risk may result in short-term liquidity problems and issues related to timely coverage of short-term liabilities. The Company's policies are developed in order to ensure maximum control procedures in the process of loan issuance, timely identification of bad and doubtful debts and adequate provisioning for potential loss.

(v1.3) Operational risk

Operational risk is a loss risk due to external factors namely (natural disasters, crimes, etc.) or internal ones (IT system crash, fraud, violation of laws or internal regulations, insufficient internal control). Operation of the Company carries a certain operational risk which can be managed using several methods to identify, analyse, report and reduce the operational risk. Also self-assessment of the operational risk is carried out as systematic approval of new products is provided to ensure the compliance of the products and processes with the risk environment of the activity.

(v1.4) Market risk

The Company is exposed to market risks, basically related to the fluctuations of interest rates between the loans granted and funding received, as well as demand for the Company's services fluctuations. The Company attempts to limit market risks, adequately planning the expected cash flows, diversifying the product range and fixing funding resource interest rates

(v1.5) Liquidity risk

The Company complies with the prudence principle in the management of its liquidity risk and maintains sufficient funds. The management of the Company has an oversight responsibility reserves and make current forecasts based on anticipated cash flows. Most of the Company's liabilities. The management is of the opinion that the Company will be able to secure sufficient liquidity by its operating activities, however, if required, the management of the Company is certain of financial support to be available from the owners of the Company.

(v1.6) Cash flow interest rate risk

As the Company has borrowings and finance lease obligations, the Company's cash flows related to financing costs to some extent depend on the changes in market rates of interest. The Company's interest payment related cash flows depend on the current market rates of interest. The risk of fluctuating interest rates is partly averted by the fact that a number of loans received have fixed interest rates set. Additional risk minimization measures are not taken because the available bank products do not provide an effective control of risks.

(v2) Accounting for derivative financial instruments

The Company does not actively use derivative financial instruments in its operations. Derivative financial instruments are initially recognized at fair value on the date of the contract, and are thereafter measured at fair value at the balance sheet date. Derivative financial instruments are carried as assets if their fair value is positive and as liabilities if fair value is negative. Any gains or losses arising due to the changes in the fair value of the derivative financial instrument are not classified hedges and are recognized directly in the profit and loss.

(v3) Fair value

The carrying value of financial assets and liabilities approximates their fair value. See also note (f)

(v4) Management of the capital structure

In order to ensure the continuation of the Company's activities, while maximizing the return to stakeholders' capital management, optimization of the debt and equity balance is performed. The Company's capital structure consists of borrowings from related persons, third party loans and loans from credit institutions and finance lease liabilities, cash and equity, comprising issued share capital, retained earnings and share premium. At year-end the ratios were as follows:

SIA "DELINGROUP" ANNUAL ACCOUNTS AND CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2019 (TRANSLATION FROM LATVIAN)

Notes (continued)

Accounting policies (continued)

	Parent	Group	Parent	Group
	company		company
	31.12.2019. EUR	31.12.2019. EUR	31.12.2018. EUR	31.12.2018. EUR
Loan and lease liabilities	24 391 565	26 540 720	18 834 009	19 555 591
Cash and bank	(812 301)	(1 135 644)	(3 368 567)	(3 489 176)
Net debts	23 579 264	25 405 076	15 465 442	16 066 415
Equity	7 775 437	8 367 492	5 774 384	5 954 156
Liabilities / equity ratio	3.14	3.17	3.26	3.28
Net liabilities / equity ratio	3.03	3.04	2.68	2.70

(w) Significant assumptions and estimates

The preparation of financial statements in accordance with International Reporting Standards as adopted by the EU and Latvian law requires the management to rely on estimates and assumptions that affect the reported amounts of assets and liabilities and off-balance sheet assets and liabilities at the date of financial statements, as well as the revenues and expenses reporting in the reporting period. Actual results may differ from these estimates.

The following judgements and key assumptions concerning the future are critical, and other causes in the calculations as at the date of financial statements, with a significant risk of causing a material chance sheet value of assets and liabilities within the next financial year:

• The Company review the useful lives of its fixed assets at the end of each reporting period. The management makes estimates and uses assumptions with respect to the useful lives of fixed assets. These assumptions may change and the calculations may therefore change.
• · The Company review the value of its fixed assets and intangible assets whenever any events or circumstances support that the carrying value may not be recoverable. Impairment loss is recognised in the amount equalling the difference between the carrying value of the asset and its recoverable amount is the higher of an asset's fair value less the costs to sell and the value in use. The view that considering the anticipated volumes of services no material adjustment are required the asset values.
• In measuring inventories the management relies on its experience, background information, and potential assumptions and possible future circumstances. In assessing the impairment of the value of inventories consideration is given to the possibility to sell the item of inventories and the net realisable value.
• The Company's management, based on estimates, makes provisions for the impairment of the value of receivables. The Company's management is of the opinion that the provisions for receivables presented in the financial statements accurately reflect the expected cash flows from these receivables and that these estimates have been made based on the best available information.
• · The Company is composed with caution savings potential future payment obligations in cases where disputes the validity of such legal obligation, or there are legal disputes about the amount of such liabilities.

Related parties (x)

Related parties include the shareholders of the Board of the Company, their close family members and companies in which the said persons have control or significant influence. Term "Related parties" agrees to Commission (EC) 1126/2008 of 3 November 2018 which took in force various IAS according to European Parlament and Council Regulation (EC) 1606/2002 mentioned in Annex of IAS 24 "Related Party Disclosures".

Subsequent events (V)

Post-period-end events that provide additional information about the Company's position at the balance sheet date (adjusting events) are reflected in the financial statements. Post-period-end events that are not adjusting events are disclosed in the notes when material.

Contingencies (Z)

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disolosed when an inflow of economic benefits is probable.

Earnings per share (aa)

Earnings per share (EPS) are calculated by dividing the net profit or loss for the year attributable to the shareholders with the weighted-average number of shares outstanding during the year. Diuted EPS is calculated as net income divided by the sum of average number of shares and other convertible instruments.

(ab) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker - the Company's Board, which allocates resources to and assesses the performance of the operating segments of the Group. The Company and the Group operates as a single segment - consumer lending to individuals in Latvia.

Notes (continued)

(1) Net sales

Net revenue by type of revenue

	Parent	Group	Parent	Group
	company		company
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Income from sales of goods	3 186 585	3 186 585	2 423 601	2 423 601
Income from sales of precious metals	1 459 345	1 459 345	1 008 004	1 008 004
Other income, loan and mortgage realization and
storage commissions	757 534	757 534	754 817	754 817
	5 403 464	5 403 464	4 186 422	4 186 422
Net revenue by geographical markets and type of operation
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Sales of product in Latvia	3 186 585	3 186 585	2 423 601	2 423 601
Sales of precious metals in Latvia	1 459 345	1 459 345	1 008 004	1 008 004
Sales of services in Latvia	757 534	757 534	754 817	754 817
	5 403 464	5 403 464	4 186 492	4 186 472
Cost of sales (2)
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Cost of pledges taken over	3 600 319	3 600 319	2 654 970	2 654 970
Goods and accessories purchased	3 288	3 288	3 784	3 784
	3 603 607	3 603 607	2 658 754	2 658 754
(3) Interest income and similar income
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Interest income on unsecured loans	10 290 103	11 704 235	9 431 891	10 302 625
Interest income on pledges realization	4 678 129	4 678 129	4 351 774	4 351 774
Interest income on loans to the vehicle pledges			6 905	6 905
Interest income on mortgage loans	102	102	2 451	2 451
	14 968 334	16 382 466	13 793 021	14 663 755

Notes (continued)

(5) Selling expenses

(4) Interest expenses and similar expenses

	Parent	Group	Parent	Group
	company		company
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Interest expense on other borrowings	1 473 703	1 639 014	1 075 659	1 135 151
Losses from cession	1 169 308	1 499 243	440 273	494 170
Bonds' coupon expense	1 075 282	1 075 282	1 155 315	1 155 315
Interest expense for right to use premises	133 137	133 137
Interest expense on lease	3 968	3 968	6 388	6 388
Interest expense for right to use vehicles	1 347	1 347
Net loss on foreign exchange	234	235	1 456	1 456
	3 856 979	4 352 226	2 678 091	2 792 480

2019 2019 2018 2018 EUR EUR EUR EUR Salary expenses 2 408 184 2 408 184 2 330 577 2 397 846 Rental expense 780 860 780 860 776 773 788 422 Social insurance 577 146 577 146 558 351 574 568 Provisions for doubtful debtors and illiquid stocks 505 252 630 944 344 731 328 914 Advertising 330 882 474 651 405 150 610 084 Non-deductible VAT 247 733 292 043 227 780 287 263 Depreciation of fixed assets 238 974 243 863 241 753 250 463 Other expenses 188 246 202 218 125 295 144 026 Utilities expense 180 102 180 102 197 410 199 262 Transportation expenses 92 578 92 578 93 155 93 155 Maintenance expenses 52 683 53 260 38 747 38 536 Communication expenses 35 940 36 006 55 560 56 802 Goods and fixed assets write-off 34 289 34 289 101 451 102 420 Security expenses 25 477 25 477 23 946 24 061 Renovation expenses 20 444 20 444 26 209 27 573 Business trip expenses 6 836 6 836 17 420 17 420 Provisions for unused annual leave and bonuses 1 251 1 251 (6 255) (9 167) Depreciation of right-of-use assets - motor vehicles (3 123) (3 123)

Depreciation of right-of-use assets - premises

(82 601)

5 641 153

(82 601)

5 974 428

5 558 053

5 931 648

Notes (continued)

(6) Administrative expenses

	Parent	Group	Parent	Group
	company		company
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Salary expenses	2 053 114	2 074 648	1 529 234	1 539 845
Social insurance	494 134	499 321	368 060	370 616
Bank commission	409 236	452 556	304 695	327 331
Information database subscriptions, maintenance	90 581	127 043	152 562	194 819
Office rent	62 288	62 288	42 010	42 010
Legal advice	60 097	69 294	59 249	63 179
Office expenses	30 616	30 616	32 355	32 355
Membership fees in professional organizations	28 146	31 546	48 974	50 174
Other administrative expenses	28 116	33 689	27 131	31 902
Communication expenses	26 854	27 294	23 000	23 000
Audit expenses*	18 700	29 603	17 950	28 964
State fees and duties, licence expense	17 189	32 845	28 678	42 956
Provisions for unused annual leave and bonuses	16 155	16 540	26 070	23 707
Depreciation of right-of-use assets - motor
vehicles	2 498	2 498
Depreciation of right-of-use assets - premises	(2 251)	(2 251)
	3 335 473	3 487 530	2 659 968	2 770 859

* During the reporting year the Company has not received any other services from the auditors.

(1) Other operating expenses
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Other expenses	126 883	129 373	93 106	93 162
Donations	66 000	66 000	58 000	58 000
Fines	4 405	4 405	257	257
	197 288	199 778	151 363	151 419
(8) Corporate income tax for the reporting year
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Corporate income tax charge for the current year	349 957	349 957	78 868	78 879

349 957

349 957

78 868

78 879

Notes (continued)

(9) Intangible of the Parent company

	Concessions, patents, trademarks and similar rights	Other intangible assets	Advances	Total
	EUR	EUR	EUR	EUR
Cost
31.12.2018.	307 363	39 504		346 867
Additions	47 555	4 844	6 748	59 147
Disposals	(145)	(12 500)		(12 645)
31.12.2019.	354 773	31 848	6 748	393 369
Depreciation
31.12.2018.	103 339	16 727		120 066
Charge for 2019	67 378	11 616		78 994
Disposals	(145)	(12 500)		(12 645)
31.12.2019.	170 572	15 843		186 415
Net book value 31.12.2019.	184 201	16 005	6 748	206 954
Net book value 31.12.2018.	204 024	22 777		226 801

Intangible of the Group

	Concessions, patents, trademarks and similar rights	Other intangible assets	Advances	Company's Goodwill	Total
	EUR	EUR	EUR	EUR	EUR
Cost
31.12.2018.	307 363	64 288		127 616	499 267
Additions	47 555	9 034	6 748		63 337
Disposals	(145)	(12 500)			(12 645)
31.12.2019.	354 773	60 822	6 748	127 616	549 959
Depreciation
31.12.2018.	103 339	21 084			124 423
Charge for 2019	67 378	16 505	-		83 883
Disposals	(145)	(12 500)	-		(12 645)
31.12.2019.	170 572	25 089	-		195 661
Net book value 31.12.2019.	184 201	35 733	6 748	127 616	354 298
Net book value 31.12.2018.	204 024	43 204		127 616	374 844

Notes (continued)

(10) Fixed assets of the Parent company	Other fixed assets and inventory	Advances	Leasehold improvements	Right-of- use premises	Right-of- use vehicles	Right-of- use assets,	Total
	EUR	EUR	EUR	EUR	EUR	total EUR	EUR
Cost 31.12.2018.	1 056 274		369 066				1 425 340
IFRS 16 adoption impact				1 991 044	19 600	2 010 644	2 010 644
Additions	309 413	4 770	52 942	362 795	17 240	380 035	747 160
Remeasurement Disposals	(185 480)			346 910 (24 983)		346 910 (24 983)	346 910 (210 463)
Transferred to others	4 770	(4 770)
31.12.2019.	1 184 977		422 008	2 675 766	36 840	272 606	4 319 597
Depreciation 31.12.2018.	862 703		334 541				1 197 244
Charge for 2019	127 028		32 952	732 163	9 793	741 956	901 936
Disposals	(156 307)			(9 456)		(9 456)	(165 763)
31.12.2019.	833 424		367 493	722 707	9793	732 500	1 933 417
Net book value 31.12.2019.	351 553		54 515	1 953 059	27 047	1 980 106	2 386 174
Net book value 31.12.2018.	193 571		34 525				228 096

As at 31 December 2019 the residual value of the fixed assets acquired under the terms of financial lease was 68 875 euro. (31.12.2018.: 148 678 euro). The ownership of those fixed assets will be transferred to the Group only after settlement of all lease liabilities.

	Fixed assets of the Group Other fixed assets and inventory	Advances	Leasehold improvements	Right-of- use premises	Right-of- use vehicles	Total. Right-of- use	Total
	EUR	EUR	EUR	EUR	EUR	assets EUR	EUR
Cost
31.12.2018.	1 056 274		369 066				1 425 340
IFRS 16 adoption impact				1 991 044	19 600	2 010 644	2 010 644
Additions	309 413	4 770	52 942	362 795	17 240	380 035	747 160
Remeasurement Disposals	(185 480)			346 910 (24 983)		346 910 (24 983)	346 910 (210 463)
Transferred to others	4 770	(4 770)
31.12.2019.	1 184 977		422 008	2 675 766	36 840	2 712 606	4 319 591
Depreciation
31.12.2018.	862 703		334 541				1 197 244
Charge for 2019	127 028		32 952	732 163	9 793	741 956	901 936
Disposals	(156 307)			(9 456)		(9 456)	(165 763)
31.12.2019.	833 424		367 493	722 707	9 793	732 500	1 933 417
Net book value 31.12.2019.	351 553		54 515	1 953 059	27 047	1 980 106	2 386 174
Net book value 31.12.2018.	193 571		34 525				228 096

Notes (continued)

(11) Right-of-use assets and lease liabilities

The Group adopted IFRS 16 with an initial application date of 1 January 2019. The entity applied the modified retrospective transition method. The amounts discussed in the extracts are expressed in euros. The entity provided quantititive disclosures in its consolidated financial statements in a tabular format based on the disclosure item (i.e., asset e equity and liability and income statement).

Right-of-use assets and other liabilities for rights to use assets are shown as follows in the consolidated statement of financial position and statement of comprehensive income.

	31.12.2019.	01.01.2019.
	EUR	EUR
Non-current assets
Right-of-use assets - premises	1 953 059	1 991 044
Right-of-use assets - motor vehicles	27 047	19 600
Assets, total	1 980 106	2 010 644
Non-current liabilities
Lease liabilities for right-of-use assets	1 475 350	1 370 927
Current liabilities
Lease liabilities for right-of-use assets	549 585	636 898
Equity and Liabilities, total	2 024 935	2 007 825
		2019
		EIID

Interest expenses and similar expenses
Interest expense for right to use premises	(133 137)
Interest expense for right to use vehicles	(1 347)
Selling expense
Depreciation of right-of-use assets - premises	82 601
Depreciation of right-of-use assets - motor vehicles	3 123
Administrative expenses
Depreciation of right-of-use assets - premises	2 251
Depreciation of right-of-use assets - motor vehicles	(2 498)
Leases in the statement of comprehensive income, total	(49 007

In 2019 the Group incurred expenses for lease agreements with did not qualify for recognition of Right-of-use assets. The weighted-average incremental borrowing rate for lease liabilities initially recognized as of 1 January 2019 was 6.33% per year. The average interest rate for motor vechicles as of January 1, 2019 is approximately 3.70% per year.

The cost relating to variable lease payments that do not depend on an index or a rate amounted to EUR nil for the year ended December 31, 2019. There were no he armides of a face and net and the first in the year ender the Group is committed.

Notes (continued)

(12) Parent Company's investments in subsidiaries

The Parent company is the sole shareholder of the subsidiary SIA "ExpressInkasso" (100%), of the subsidiary SIA "ViziaFinance" (100%), and implementet acquisition of (100%) shares of the subsidiary SIA "REFIN" in 2019.

a) participating interest in subsidiaries

Noame	Acquisition price of subsidiaries		Participating interest in share capital of subsidiaries
	31.12.2019.	31.12.2018.	31.12.2019.	31.12.2018.
	EUR	EUR	0/0	%
SIA Expressinkasso	2 828	2 828	100	100
SIA ViziaFinance	880 000	880 000	100	100
SIA REFIN from 03.10.2018.	800 000	300 000	100	100
	682 : 723	1 182 828

b) information on subsidiaries

		Shareholders' funds		Profit/ (loss) for the period
Name	Address	31.12.2019. EUR	31.12.2018. EUR	2019 EUR	2018 EUR
SIA ExpressInkasso	Skanstes street 50A.
	LV-1013 Riga, Latvia	366 841	245 955	120 886	242 795
	sic onerations of SIA Everestikasso are other financial senines and nension savings. The company is

B company is engaged in debt collection activities and is licensed by the Consumer Rights Protection Center in the field of out-of-court debt recovery.

	Skanstes street 50A.
SIA ViziaFinance	LV-1013 Riga, Latvia	921 436	693 541	227 895	21 447
Basic operation of SIA ViziaFinance is provices, dealing with unsecured loans. The company has
a Consumer Rights Protection Center's license in the field of consumer lending.

SIA REFIN
(from 03.10.2018.)	Skanstes street 50A. LV-1013 Riga, Latvia
		408 991	295 488	(386 497)	(4 512)
Basic operation of SIA REFIN is providing consumer lending services, issuing loans for unsecured real estate loans.

(13) The Group's loans to shareholders and management

	Loans to members EUR
Cost
31.12.2018.	1 072 274
Loans issued	371 000
Loans repaid	(450 435)
Interest of loans	29 584
31.12.2019.	1 022 423
Net book value as at 31.12.2019.	1 022 423
Net book value as at 31.12.2018.	1 072 274

Interest on borrowing is in range of 2.92% - 4% per annum. The loan maturity - 31 December 2024 (including the loan principal amount and accrued interest). The Company's management has assessed the recoverability of the loans and is convinced that a provision is not necessary. Loans are not secured. Loans are denominated in euro.

Notes (continued)

(14) Goods for sale of the Parent company and the Group

	31.12.2019. EUR	31.12.2018. EUR
Goods for sale and pledges taken over Gold	1 127 284 305 476	945 768 275 088
Provision for obsolete stock and inventory impairment	(277 408) 1 155 352	372 745) 848 111
a) Age analysis of stock
	31.12.2019.	31.12.2018.
	EUR	EUR
Outstanding for 0-180 days	822 135	587 852
Outstanding for 181-360 days	292 570	286 483
Outstanding for more than 360 days	318 055	346 521
Total stock	1 432 760	1 220 856
b) Provision for obsolete stock
	2019	2018
	EUR	EUR
Provisions for obsolete stock at the beginning of the year	372 745	238 928
Written-off	(95 337)	(124 900)
Additional provisions		258 717
Provisions for obsolete stock at the end of the year	277 408	372 745

(15) Loans and receivables

	Parent	Group	Parent	Group
	company 31.12.2019	31.12.2019.	company 31.12.2018	31.12.2018
	EUR	EUR	EUR	EUR
Long-term loans and receivables
Debtors for loans issued against pledge	82 067	82 067	32 631	32 631
Debtors for loans issued without pledge	6 133 456	8 777 722	3 088 629	3 459 284
Long-term loans and receivables, total	6 215 573	8 859 789	3 121 260	3 491 915
Short-term loans and receivables
Debtors for loans issued against pledge	2 410 406	2 410 406	2 010 735	2 010 735
Debtors for loans issued against pledge, for realization	873 750	873 750	853 160	853 160
Debtors for loans issued without pledge	14 367 295	21 741 070	12 877 096	14 782 462
Interest accrued	611 204	1 097 958	666 714	720 401
Provisions for bad and doubtful trade debtors	(2 099 194)	(3 436 099)	(1 520 973)	(1 707 818)
Short-term loans and receivables, total	16 163 461	22 687 085	14 886 7572	16 658 940
Loans and receivables	22 378 984	31 546 874	18 007 992	20 150 855

All loans are issued in euro. Long term receivables for the loans issued don't exceed 5 years.

Parent company signed a contract with third party for the receivable amounts regular cession to assued which are outstanding for more than 90 days. The carrying value of the claim amount until 31 December 2019 in total -- EUR 3 678 558, the amount of compensation - EUR 2 179 315. Losses from these transactions were recognised in the current year.

Losses from the above noted cessions are partly covered by provisions made for the loans issued in previous accounting period or are included in the current year's profit and loss account, if cession of loans issued in current year is performed.

The claims in amount of EUR 2 492 473 (31.12.2018: EUR 3 055 582) are secured by the value of the collateral. Claims against debtors for loans issued against pledge is secured by pledges, whose fair value is about EUR 4 162 430, which is 1.67 times higher than the carrying value, therefore provisions for overdue loans are not made. All pledges, for which loan payments are delayed, becomes the Group's property and are realized in the Group's stores.

'Debtors for loans issued without pledge' includes The Company's subsidiary SIA REFIN has unsecured claim rights for loans to legal entities registered in Latvia, whose economic activity includes the development and sale of real estate. The carying amount of the acquired receivables at the reporting date is EUR 6.28 million.

Notes (continued)

Loans and receivables (continued)

a) Age analysis of claims against debtors for loans issued:

	Parent company 31.12.2019. EUR	Group 31.12.2019. EUR	Parent company 31.12.2018 EUR	Group 31.12.2018 EUR
Receivables not yet due	20 799 577	30 599 448	16 406 829	18 304 695
Outstanding 1-30 days	1 631 700	1 975 902	1 144 514	1 277 681
Outstanding 31-90 days	780 027	957 883	599 622	666 441
Outstanding 91-180 days	418 184	482 098	408 491	456 618
Outstanding for 181-360 days	326 046	364 104	466 544	515 720
Outstanding for more than 360 days	522 644	603 538	502 965	637 518
Total claims against debtors for loans issued	24 478 178	34 982 973	19 528 965	21 858 673

b) Provisions for bad and doubtful trade and other receivables

	Parent	Group	Parent	Group
	company		company
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Provisions for bad and doubtful receivables
at the beginning of the year	1 520 973	1 707 818	1 212 219	1 357 617
Written-off				(9 016)
Additional provisions	578 221	1 728 281	308 754	359 217
Provisions for bad and doubtful receivables at
the end of the year	2 099 194	3 436 099	1 520 973	1 707 818

Additional provisions includes provision made on the reporting date in the amount of EUR 450 000 for unsecured claims rights of the Company's subsidiary SIA REFIN for loans to legal entities registered in Latvia, whose economic activity includes the development and sale of real estate.

c) Loan loss allowance:

Parent	Group	Parent	Group
company 31.12.2019.	31.2.2019.	company 31.12.2018	31.12.2018.
EUR	EUR	EUR	EUR
16 966 443	27 040 162	12 316 576	13 997 315
528 933	706 789	381 738	448 558
855 707	999 231	909 859	1 056 541
6 127 095	6 236 791	5 920 792	6 356 259
24 478 178	34 982 973	19 528 965	21 858 673
(1 243 477)			(571 181)
(222 337)			(234 110)
(633 380)	(730 847)		(902 527)
(2 099 194)	(3 436 099)	(1 520 973)	(1 707 818)
22 378 984	31 546 874	18 007 992	20 150 855
		(2 413 208) (292 044)	(530 799) (201 464) (788 710)

Loan loss allowance has been defined based on collectively assessed impairment.

Notes (continued)

(16) Receivables from affiliated companies and management

	Parent	Group	Parent	Group
	company 31.12.2019.	31.12.2019.	company 31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Long-term loans to affiliated companies
SIA Banknote liability for loan issued	117 620	117 620
Long-term loans to affiliated companies, total	117 620	117 620
Short-term receivables from affiliated companies
SIA REFIN liability for loan issued and loan interest	5 723 024
SIA Lombards24.lv liability for loan issued and loan
interest	70 186	70 186	57 569	57 569
SIA AE Consulting liability for loan issued and loan
interest	50 000	50 000
Liabilities of the Parent company's board for the loan
issued and loan interest	44 853	44 853	10 000	10 000
SIA Banknote liability for loan issued, loan interest
and services delivered	2 263	2 263	133 948	133 948
Debts for goods and fixed assets sold, prepayment	520	338	2 817	2 818
SIA ViziaFinance liability for loan issued, loan
interest and debt for the assigned rights of claim			314 361
Short-term receivables from affiliated companies,
tota	5 890 846	167 640	518 (625	204 335
Loans and receivables from affiliated companies,
tota	6 008 466	285 260	518 695	204 335

The interest rate on loans to related parties 2.92 - 12%. All loans and other claims denominated in euro. The Company has no debt overdue.

(17) Other debtors

	Parent	Group	Parent	Group
	company		company
	31.12.2019.	31.12.2019.	31 222018.	31.12.2018.
	EUR	EUR	EUR	EUR
Guarantee deposit	70 768	70 910	69 768	69 911
Settlements with buyers and customers	65 570	137 501	40 765	42 325
Other debtors	54 792	54 792	60 327	60 327
Advance payments	14 501	14 501	19 882	19 882
Tax overpayment	1 652	8 454	54 218	65 055
Loans to employees and other third parties	1 510	1 510	1 510	1 510
Settlement of staff claims	1 202	1 306	1 065	1 065
Provisions for bad and doubtful other debtors	(26 930)	(13 223)	(29 086)	(29 086)
	182 065	975 764	240 AAO	000 000

a) Provisions for bad and doubtful other debtors

	Parent	Group	Parent	Group
	company		company
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Provisions for bad and doubtful other debtors
at the beginning of the year	29 086	29 086	29 099	29 099
Written-off	(2 156)	(15 863)	(123 948)	(123 948)
Additional provisions			123 935	123 935
Provisions for bad and doubtful other debtors
at the end of the year	26 930	13 223	29 086	29 086

b) Age analysis of other debtors:

	Parent	Group	Parent	Group
	company 31.12.2019.	31.12.2019.	company 31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Repayable upon request	96 652	103 493	205 159	217 699
Receivables not yet due	49 233	121 371	30 052	30 052
Outstanding for 1-30 days	4 874	4 874	358	358
Outstanding for 31-90 days	6 247	6 247	9 443	9 443
Outstanding for 91-180 days	2 662	2 662	513	513
Outstanding for 181-360 days	13 744	13 744
Outstanding for more than 360 days	36 583	36 583	2 010	2 010
Provisions	(26 930)	(13 223)	(29 086)	(29 086)
Total other debtors	183 065	275 751	218 449	230 989

Notes (continued)

(18) Deferred expenses

	Parent	Group	Parent	Group
	company 31.12.2019.	31.12.2019.	company 31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Insurance	18 956	18 956	16 058	16 058
License for lending services and debt recovery services	15 351	29 576	16 665	30 890
Prepayment for rent and other costs	59 681	60 007	19 362	19 997
Total deferred expenses	93 988	108 539	52 085	66 945
(19) Cash and bank
	31.12.2019.	31.12.2019.	31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Cash at bank	564 984	888 327	3 196 605	3 317 214
Cash in hand	247 317	247 317	171 962	171 962
	812 301	1 135 644	3 368 567	3 489 176

All the Parent company's and the Group's cash is in euro.

(20) Share capital

The Parent Company's share capital is EUR 1 500 000 which consists of 1 500 000 ordinary shares, each of them with a nominal value of EUR 1.

(21) Bonds issued

	Parent	Group	Parent	Group
	company 31.12.2019. EUR	31.12.2019. EUR	company 31.12.2018. EUR	31.12.2018. EUR
Bonds issued	6 100 000	6 100 000	6 201 500	6 201 500
Bonds commission	(40 147)	(40 147)	(8 869)	(8 869)
Total long-term part of bonds issued	6 059 853	6 059 853	6 182 631	6 192 631
Bonds issued	1 750 000	1 750 000	1 705 500	1 705 500
Bonds commission Interest accrued	(15) 14 782	(15) 14 782	(378) 17 014	(378) 17 014
Total short-term part of bonds issued	1 764 767	1 764 767	1 722 136	1772 36
Bonds issued, total Interest accrued, total	7 850 000 14 782	7 850 000 14 782	7 907 000 17 014	7 907 000 17 014
Bonds commission, total	(40 162)	(40 162)	(9 247)	(9 247)
Bonds issued net	7 824 620	7 824 620	7 914 767	7 914 767

As at the date of signing of the annual report the Parent company of the Group has registered bonds (ISIN LV0000801322) with the Latvia Central Depository on the following terms – number of financial instruments 3 500 with the nominal value of 500 euro. with the total nominal value of 1 750 000 euro. Coupon is paid once a month on the 25th date. The over on amount is to be repaid once in a quarter in the amount of 125 euro per bond starting 25 March 2019. The bonds – 25 December 2020. On 14 April 2014 the public quotation of the bonds with NASDAQ Baltic Bond List was started. Debt securities list. The bonds are secured by a commercial pledge on the property and claims of the Company and all its subsidiaries,

As at the date of signing of the annual report the Parent company of the Group has registered bonds (ISIN LV000802213) with the Latvia Central Depository on the following terms -number of securities issued: 5 000, nominal value 1 000 euro per each with the total nominal value of 5 000 000 euro. Coupon is paid once a month on the 25th date. The principal amount (EUR 1000 per each bond) is to be repaid on 25 October 2021. The bond was publicly listed on NASDAQ Baltic First North Alternative market on 19 March 2018. Debt securities list. The bonds are secured by a commercial pledge on the property and claims of the Company and all its subsidiaries.

As at the date of signing of the annual report the Parent company of the Group has registered bonds (ISIN LV000802379) with the Latvia Central Depository on the following terms -amount of emissions recorded 5 000, amount of emissions recorded (on 31 December 2019) 1 100 with nominal value 1 000 euro per each with the total nominal value of 1 100 000 euro. Coupon rate - 14%, coupon is paid once a month on the 25th date. The principal amount (EUR 1000 per each bond) is to be repaid till 25 November 2022. The bond issue is not publicly traded. The bond issue launched on 15 November 2019. Debt securities list. The bonds are secured by a commercial pledge on the Company and all its subsidiaries

Notes (continued) Bonds issued (continued)

	Gross future minimum payments	NPV of future minimum payments	Interest expenses	Gross future minimum payments	NPV of future minimum payments	Interest expenses
Term:	31.12.2019. EUR	31.12.2019. EUR	31.12.2019. EUR	31.12.2018. EUR	31.12.2018. EUR	31.12.2018. EUR
up to one year	3 136 339	1 750 000	1 386 339	2 758 334	1 705 500	1 052 834
2 - 3 years	7 966 200	6 100 000	1 866 200	7 518 317	6 201 500	1 316 817
	11 102 539	7 850 000	3 252 539	10 276 651	7 907 000	2 369 651

(22) Other borrowings

	Parent	Group	Parent	Group
	company 31.12.2019.	31.12.2019.	company 31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Long-term finance lease	61 411	61 411	98 234	98 234
Other long-term loans	4 749 200	5 576 379	838 696	898 310
Total other long-term loans	4 810 611	5 637 790	936 930	996 544
Short-term finance lease	40 946	40 946	50 444	50 444
Other short-term loans	11 481 122	13 037 185	9 760 257	10 593 420
Total other short-term loans	11 - 22 068	13 078 131	9 810 701	10 643 864
Total other loans	16 332 679	18 715 921	10 747 631	11 640 408

The Parent company has acquired fixed assets on finance lease. As at 31 December 2019 the interest rate was set as 6M Euribor + 2,15 - 3,7% and the repayment term is 30.08.2023.

The Parent company has received loans from private individuals and legal entities. The interest is charged from 2,92% to 14 % and the repayment term is 18.10.2024. The loans are received without security granted.

The Company has received loans from a crowdfunding platform registered in the weighted average interest rate is from 10,62% to 11,97% per year with repayment terms in accordance with the loan agreements concluded by the Company with its customers. The loans are secured by a commercial pledge.

Total future minimum lease payments - present value and interest expense for Parent company other borrowings and borrowings from affiliated companies:

	Gross future minimum payments	NPV of future minimum payments	Interest expenses	Gross future minimum payments	NPV of future minimum payments	Interest expenses
	31.12.2019. EUR	31.12.2019. EUR	31.12.2019. EUR	31.12.2018. EUR	31.12.2018. EUR	31.12.2018. EUR
Term:
up to one year	12 957 387	11 522 068	1 435 319	11 038 094	9 813 073	1 225 021
2 - 5 years	6 945 924	4 810 611	2 135 313	1 026 310	934 558	91 752
	19 903 311	16 332 679	3 570 632	12 064 404	10 747 631	1 316 773

Total future minimum lease payments – present value and interest expense for Growings and borrowings from affiliated companies:

	Gross future minimum payments	NPV of future minimum payments	Interest expenses	Gross future minimum payments	NPV of future minimum payments	Interest expenses
	31.12.2019. EUR	31.12.2019. EUR	31.12.2019. EUR	31.12.2018. EUR	31.12.2018. EUR	31.12.2018. EUR
Term:
up to one year	14 705 646	13 078 131	1 627 515	11 975 403	10 646 236	1 329 166
2 - 5 years	8 125 440	5 637 790	2 487 650	1 091 865	994 172	97 693
	22 831 086	18 715 921	4 115 165	13 067 268	11 640 408	1 426 859

Notes (continued)

(23) Lease liabilities for right-of-use assets

	Parent company 31.12.2019. EUR	Group	Parent company 31.12.2018. EUR	Group 31.12.2018. EUR
		31.12.2019. EUR
Long term lease liabilities for right-of-use assets -
premises Long term lease liabilities for right-of-use assets -	1 460 753	1 460 753
vehicles	14 597	14 597
Total long-term lease liabilities for right-of-use assets	1 475 350	1 475 350
Short term lease liabilities for right-of-use assets - premises Short term lease liabilities for right-of-use assets -	540 601	540 601	-
vehicles	8 984	8 984
Total short-term lease liabilities for right-of-use assets	549 585	549 585
Lease liabilities for right-of-use assets, total	2 024 935	2 024 935

Premises lease agreements are signed for a period of one years and six months. Car rental agreements are signed for a period of three years to three years and eleven months.

(24) Accounts payable to affiliated companies

	Parent	Group	Parent	Group
	company 31.12.2019. EUR	31.12.2019. EUR	company 31.12.2018. EUR	31.12.2018. EUR
Accrued liabilities for facilities management and
utilities to SIA Banknote	179	179	235	235
Debt for the services provided by
the SIA AE Consulting				181
Debt for the services provided by
the SIA ViziaFinance	17
Debt for received payments of the assigned rights
of claim to SIA ExpressInaksso	234 070		171 376
Total liabilities to related parties	234 266	179	171 611	416

(25) Trade creditors and accrued liabilities

	Parent	Group	Parent	Group
	company		company
	31.12.2019.	31.12.2019.	31.12.2018.	31.12.2018.
	EUR	EUR	EUR	EUR
Debts to suppliers	198 397	219 062	171 018	187 255
Salaries	238 214	239 824	203 546	205 488
Vacation liabilities	278 778	281 035	261 372	263 244
Amounts due to loan recipients	282 293	282 293	213 553	213 553
Other liabilities	507 752	70 965	72 262	87 201
	1 505 434	1 093 179	921 751	956 741

Parent company's and Group's all trade creditors and accrued liabilities by currency, translated into EUR.

a) Ageing analysis of trade creditors and accrued liabilities:

	31.12.2019. EUR	31.12.2019. EUR	31.12.2018. EUR	31.12.2018. EUR
Receivables not yet due	1 466 598	1 053 391	738 048	757 831
Outstanding for 1-30 days	37 513	37 513	10 696	10 696
Outstanding more than 30 days	1 323	2 275	173 007	188 214
Total trade creditors and accrued liabilities	1 505 434	1 093 179	921 751	956 741

Notes (continued)

(26) Taxes and social insurance payments

Parent company's taxes and social insurance

	VAT EUR	Corporate income tax EUR	Business risk charge EUR	Social insurance EUR	Payroll tax EUR	Vehicles tax EUR	Natural resource tax EUR	Total EUR
Liabilities
31.12.2018.	17 133		90	115 774	58 214	4 092		195 303
(Overpaid) 31.12.2018. Charge for		(54 218)						(54 218)
2019 Late payment	295 931	349 957	1 172	1 560 289	800 843	14 414	756
penalty 2019 Paid in		eog			88		24
2019	(281 437)	(298 000)	(1 165)	(1 542 405)	(795 547)	(14 876)	(226)
(Overpaid) 31.12.2019.		(1 652)						(1 652)
Liabilities
31,12.2019.	31 627		97	133 658	63 598	3 630	554	233 164

Group's taxes and social insurance

	VAIL	Corporate income tax	Business risk	Social insurance	Payroll tax	Vehicles tax	Natural resource	Tota
	EUR	EUR	charge EUR	EUR	EUR	EUR	tax EUR	EUR
Liabilities
31.12.2018.	19 237	11	90	116 900	58 757	4 092		199 137
(Overpaid) 31.12.2018. Charge for		(65 048)	(7)					(65 055)
2019 Late payment	325 106	349 957	1 193	1 567 846	805 195	14 414	756	-
penalty 2019 Redirected to		609			88		24
other taxes 2019 Paid in		10 830		(7 120)	(3 710)
2019	(302 715)	(298 111)	(1 187)	(1 548 062)	(798 558)	(14 876)	(226)
(Overpaid)
31.12.2019.		(1 752)	(10)	(4 577)	(2 115)			(8 454)
Liabilities
31.12.2019.	41 678		ට බ	134 141	63 887	3 630	554	243 989
	(27) Avarage number of amployees

Average number of employees during the reporting year of the Parent company	271	264
Average number of employees during the reporting year of the Group	276	270
(28) Management remuneration
	31.12.2019.	31.12.2018.
	EUR	EUR
Board members' remuneration:
salary expenses	273 761	199 879
· social insurance	65 949	48 151
	339 710	248 030

2019

2018

Council members do not receive any remuneration for their work as council members.

During the year loans in the amount of EUR 76 000 were issued to the board members. Loans and accrued interest in the amount of EUR 42 000 were repaid during the reporting period. The interest on loans is charged as 2.92% a As at 31.12.2019. Ioans balance in the amount of Eur 44 000 to the board members.

Notes (continued)

• (29) Additional disclosure on loans issued and received movement in accordance with cashflow information disclosure initiative
• (29a) Loans received movement during the year

	Parent company	Group	Parent company	Group
	2019 EUR	2019 EUR	2018 EUR	2018 EUR
Bonds issued	7 914 767	7 914 767	8 066 930	8 066 930
Other loans	10 747 631	11 640 408	7 722 043	8 279 165
Loan from affiliated companies	171 611	416	820 987	50 541
Total loans received and bonds
issued at the beginning of the	18 834 009	19 555 591	16 609 960	16 396 636
year
Loans received	11 462 075	14 279 871	8 204 777	8 559 897
Loans repaid	(6 790 349)	(8 880 811)	(6 002 114)	(5 422 328)
Interest charged	3 856 979	4 352 226	2 238 818	2 298 310
Interest paid	(2 971 149)	(2 766 157)	(2 217 432)	(2 276 924)
Total loans received and bonds issued at the end of the year inclusive	24 391 565	26 540 720	18 834 009	19 555 591
Bonds issued	7 824 620	7 824 620	7 914 767	7 914 767
Other loans	16 332 679	18 715 921	10 747 631	11 640 408
Related parties' loans	234 266	179	171 611	416

(29b) Loans issued – movement during the year

	Parent company	Group	Parent company	Group
	2019	2019	2018	2018
	EUR	EUR	EUR	EUR
Loans and receivables	18 007 992	20 150 855	14 468 503	15 843 672
I oans to shareholders and
management	1 073 823	1 072 274	746 619	746 619
Loans to related parties	518 695	204 335	551 594	551 594
Total loans issued the beginning
of the year	19 600 510	21 427 464	15 766 716	17 141 885
Loans issued within operating
activities	53 870 228	66 445 724	48 083 648	52 111 188
Loans repaid	(47 923 165)	(53 044 546)	(43 808 530)	(46 954 055)
Other loans issued	7 135 464	494 564	1 747 016	1 303 620
Other loans repaid	(1 729 665)	(491 665)	(1 459 949)	(1 329 601)
Interest charge	14 968 334	16 382 466	13 793 021	14 663 755
Interest payments received	(15 023 844)	(16 421 309)	(13 667 153)	(14 521 911)
Accrued interest	611 204	1 097 958	666 714	720 401
Bad debt provisions	(2 099 193)	(2 986 099)	(1 520 973)	(1 707 818)
Total loans issued the end of the
year	29 409 873	32 904 557	19 600 510	21 427 464
inclusive
Loans and receivables	22 378 984	31 596 874	18 007 992	20 150 855
Loans to shareholders and
management	1 022 423	1 022 423	1 073 823	1 072 274
Loans to related parties	6 008 466	285 260	518 695	204 335

Notes (continued)

(30) Related party transactions

In the annual report there are presented only those related parties with whom have been transactions the reporting year or in the comparative period.

Related party	Transactions in 2019	Transactions in 2018
Parent company's owners
"Lombards24.lv", SIA, reg. No. 40103718685
"AE Consulting", SIA, reg. No. 40003870736
"EC finace", SIA, reg. No. 40103950614
Didzis Admīdinš, p.c. 051084-11569
Kristaps Bergmanis, p.c. 040578-13052
Ivars Lamberts, p.c. 030481-10684
Companies and individuals under common control or significant
influence
Agris Evertovskis, p.c. 081084 -10631
EA investments, AS, reg.No. 40103896106
Subsidiary
"ExpressInkasso", SIA, reg. No. 40103211998
"ViziaFinance", SIA, reg. No. 40003040217
"REFIN", SIA, reg. No. 40203172517
Other related companies
"Banknote" SIA, reg. No. 40103501494
"KALPAKS", SIA, reg.No. 40203037474
"EL Capital", SIA, reg.No. 40203035929
"EuroLombard Ltd"., reg. No. 382902595000
"OBDO Gin", SIA, reg. Nr. 50103451231		N/A

	2019 EUR	2018 EUR
Parent company transactions with:
Owners of the parent company Loans issued	371 760	203 381
	59 660	188 000
Loan repayment received		2 988
Interest paid	2 525
Interest received	31 020	37 358
Dividends paid	1 500 000	2 229 714
Services received	1 326	1 602
Services delivered	394	1 788
Goods sold		2 080
Investment in shares		4 132
Parent company's transactions with:
Subsidiaries
Loans received	696 400	661 704
Loans repaid	696 400	969 920
Loans issued	6 640 900	443 396
Loan repayment received	1 238 000	135 796
Interest paid	5 341	16 061
Interest received	15 852	4 845
Services delivered	43 010	53 756
Services received	94 547	281 773
Fixed asset additions		3 856
Investment in shares	500 000	300 000

Notes (continued)

Related party transactions (continued)

	2019	2018
Companies and individuals under common control or significant	EUR	EUR
influence		50 000
Loans repaid Loans issued	76 000	15 000
Loan repayment received	42 000	5 000
Interest paid		152
Interest received	572	35
Services delivered	1 875	60
Other related companies
Loans issued		844 679
Loan repayment received	380 005	967 960
Interest received	40 528	62 729
Services received	20 900	21 239 4 042
Services delivered	14 014
Group's transactions with:
Owners of the parent company	371 760	203 381
Loans issued	59 660	188 000
Loan repayment received	2 525	2 988
Interest paid Interest received	31 020	37 358
Dividends paid	1 500 000	2 229 714
Services received	3 504	3 780
Services delivered	394	1 788
Goods sold		2 080
Fixed assets sold		4 132
Companies and individuals under common control or significant
influence
Loans repaid		50 000
Loans issued	76 000	15 000
Loan repayment received	42 000	5 000
Interest paid		152
Interest received	572	35
Services delivered	1 875	60
Other related companies		844 679
Loans issued	380 005	967 960
Loan repayment received	40 528	62 729
Interest received	20 900	21 239
Services received	14 014	4 042
Services delivered

Notes (continued)

(31) Guarantees issued, pledges

As at 31.12.2017, the Company has issued guarantees for another Company to purchase cars on financial lease terms. The total amount guaranteed as at 31.12.2019 is EUR 37 633. The guarantee is in force until 2021. On December 4, 2019, the Company registered a commercial pledge by pledging all its property and receivales in announce of complete of the collateral for bondholders of notes issues ISIN LV000802213, ISIN LV000801322, and ISIN LV0000802379, as well as for SIA "Mintos Finance".

(32) Subsequent events

After the end of the financial year, in March 2020, the Republic of Latvia and many other countries have announced coronavirus related restrictions that substantially decrease the economic development of the world. It is unpredictable how the situation would develop in the future, and therefore uncertainty regarding economic development remains. The Company's management is continuously assessing the situation and currently the Company's operations have not been significantly negatively affected.

To ensure the Company's operational stability in unclear economic environment, the Company's management has taken ro oneans the Sompany o operational costs, (2) decrease of lending activity and focus on long-term clients with good credit history, (3) measures for maintaining high liquidity. The Company's management believes that these actions will allow to overcome the emergency situation and economic crisis related to it. However, this conclusion is based on the information available at the moment of signing these financial statements and the impact of further events on overall economic situation is unpredictable. Therefore, it is possible that the Company's loan portfolio will increase, to a greater extent than the Company has estimated. That will have a negative effect on the Company's performance and it can impact the compliance with financial covenants stipulated in the Company's financing agreements.

Agris Evertovskis Chairman of the Board

Riga, 24th April 2020

Kristaps Bergmanis Board Member

Didzis Ādmīdinš Board Membe

Ivars Lamberts Board Member

inta Pudāne Chief accountant

Translation from Latvian original

Independent Auditor's Report

To the shareholders of SIA "DelfinGroup"

Our Opinion on the Separate and Consolidated Financial Statements

We have audited the separate financial statements of SIA "DelfinGroup" ("the Company") and the consolidated financial statements of the Company and its subsidiaries ("the Group") set out on pages 10 to 40 of the accompanying separate and consolidated Annual Report, which comprise:

• · the separate and consolidated statement of financial position as at 31 December 2019;
• · the separate and consolidated statement of profit or loss and other comprehensive income for the year then ended;
• · the separate and consolidated statement of changes in equity for the year then ended;
• · the separate and consolidated statement of cash flows for the year then ended;
• · notes to the separate and consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the separate and consolidated financial position of the Company and the Group as at 31 December 2019, and of its separate and consolidated financial performance and its cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS").

Basis for Opinion

In accordance with the Law on Audit Services of the Republic of Latvia we conducted our audit in accordance with International Standards on Auditing adopted in the Republic of Latvia (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Separate and Consolidated Financial Statements section of our report.

We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards) and independence requirements included in the Law on Audit Services of the Republic of Latvia that are relevant to our audit of the financial statements in the Republic of Latvia. We have also fulfilled our other professional ethics responsibilities and objectivity requirements in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) and Law on Audit Services of the Republic of Latvia.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the note 32 of the separate and consolidated financial statements, which describes uncertainty in the economic environment created by the outbreak of the novel coronavirus. The magnitude of uncertainty encumbers Company's management capacity to forecast the Company's development in near term. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the separate and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our report:

Impairment of the loans to customers (the Company and the Group)

Key audit The Company and the Group are providing unsecured loans to individuals in matter Latvia. Total gross amount of the Group's loans comprised EUR 34,983 thousand and provision for expected credit loss comprised EUR 3,436 thousand as at 31 December 2019 (further information is provided in the note 15 of the accompanying separate and consolidated financial statements). We considered impairment in the value of loans and associated estimates for the loan loss allowance as a key audit matter as loan portfolio represents 82% of the Group's total consolidated assets as at 31 December 2019 and potential loan loss impact on the financial performance of the Company and the Group.

Our audit Our main audit procedures were as follows:

• response . . · We assessed whether the Company's and the Group's accounting policies in relation to the impairment of loans to customers are in compliance with the IFRS requirements.
  • · We tested internal controls applied within processes related to the loan approval and issuance as well as control over delayed payments and debt collection. This also included testing of general IT controls related to the automated loan issuance and re-payment control processes as well as data gathering and processing for the calculation of loan loss allowance.
  • · We tested the logic and accuracy of expected credit loss calculation models developed by the Company with a particular focus on the assessment of probability of default and loss given default ratios. We tested completeness and accuracy of data used for the calculation of loan loss allowance.

Expected credit loss for the real estate loans (the Group)

Key audit As disclosed in the note 15 of the accompanying separate and consolidated matter financial statements, during the reporting period one of the Group's entities acquired unsecured claim rights against companies involved in real estate trading. The gross value of these assets as at 31 December 2019 comprised EUR 6,279 thousand while provision of expected credit loss - EUR 450 thousand. We considered these assets as a key audit matter because their risk profile is significantly different from the rest of the Group's loan portfolio, their recovery depends on successful completion of real estate projects and significant negative deviations from management estimates for expected credit loss may result in major impact on the financial performance of the Group.

Our audit Our main audit procedures were as follows:

• response including comparison of real estate sales price assumptions used by the management with third party information.
  • · Where necessary, we asked to make corrections for management assumptions related to the projected time period to complete the sale of properties and associated calculation of expected credit loss.
  • · We tested completeness and accuracy of information disclosed in the financial statements with respect to these assets.

Reporting on Other Information

The Company's and the Group's management is responsible for the other information. The other information comprises:

• · Information about the Company and the Group, as set out on pages 3 to 5 of the accompanying Annual Report,
• · the Statement on Management Responsibility, as set out on page 6 of the accompanying Annual Report,
• · the Management Report, as set out on pages 7 to 8 of the accompanying Annual Report,
• · the Statement of Corporate Governance as set out on page 9 of the accompanying Annual Report.

Our opinion on the separate and consolidated financial statements does not cover the other information included in the Annual Report, and we do not express any form of assurance conclusion thereon, except as described in the Other reporting responsibilities in accordance with the legislation of the Republic of Latvia related to other information section of our report.

In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed and in light of the knowledge and understanding of the entity and its environment obtained in the course of our audit, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Other reporting responsibilities in accordance with the legislation of the Republic of Latvia related to other information

In addition, in accordance with the Law on Audit Services of the Republic of Latvia with respect to the Management Report, our responsibility is to consider whether the Management Report is prepared in accordance with the requirements of the Law On the Annual Reports and Consolidated Annual Reports.

Based solely on the work required to be undertaken in the course of our audit, in our opinion:

• · the information given in the Management Report for the financial year for which the separate and consolidated financial statements are prepared is consistent with the separate and consolidated financial statements; and
• · the Management Report has been prepared in accordance with the requirements of the Law On the Annual Reports and Consolidated Annual Reports.

In accordance with the Law on Audit Services of the Republic of Latvia with respect to the Statement of Corporate Governance, our responsibility is to consider whether the Statement of Corporate Governance includes the information required in section 56.2, third paragraph of the Financial Instruments Market Law.

In our opinion, the Statement of Corporate Governance includes the information required in section 56.2, third paragraph of the Financial Instruments Market Law.

The Group does not prepare the Non-financial statement.

Responsibilities of Management and Those Charged with Governance for the Separate and Consolidated Financial Statements

Management is responsible for the preparation of the separate and consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate and consolidated financial statements, management is responsible for assessing the Company's and the Group'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 liguidate the Company and/or the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's and the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Separate and Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate and consolidated 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 separate and consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• · Identify and assess the risks of material misstatement of the separate and consolidated 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 and the Group'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 and/or the Group'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 separate and consolidated 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 and/or the Group to cease to continue as a going concern.
• · Evaluate the overall presentation, structure and content of the separate and consolidated financial statements, including the disclosures, and whether the separate and consolidated financial statements represent the underlying transactions and events in a manner that achieves a 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.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and objectivity, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Reporting Responsibilities and Confirmations Required by the Legislation of the Republic of Latvia and the European Union when Providing Audit Services to Public Interest Entities

We were appointed by those charged with governance on 20 November 2018 to audit the separate and consolidated financial statements of SIA "DelfinGroup" for the year ended 31 December 2019. Our total uninterrupted period of engagement is two years, covering the periods ending 31 December 2018 to 31 December 2019.

We confirm that:

• · our audit opinion is consistent with the additional report presented to the Council of the Company and the Group who executes the Audit Committee function;
• as referred to in the paragraph 37.6 of the Law on Audit Services of the Republic of Latvia we have not provided to the Company and the Group the prohibited non-audit services (NASS) referred to in the article 5, paragraph 1 of the EU Regulation (EU) No 537/2014. We also remained independent of the audited Company and the Group in conducting the audit.

For the period to which our statutory audit relates, we have not provided any other services apart from the audit, to the Company and the Group.

Mārtiņš Zutis is the responsible engagement partner and Modrīte Johansone is the responsible sworn auditor on the audit resulting in this independent auditor's report.

"BDO ASSURANCE" SIA Licence No 182

Mārtins Zutis

Director on behalf of SIA "BDO ASSURANCE"

Riga, Latvia 24 April 2020

Modrīte Johansone

Member of the Board Sworn auditor Certificate No 135