Latvijas Juras medicinas centrs

Quarterly Report • Aug 24, 2019

JOINT STOCK COMPANY LATVIJAS JŪRAS MEDICĪNAS CENTRS

(Unified registration number: 40003306807)

FINANCIAL STATEMENTS FOR THE 6 MONTH OF 2019 (16 th financial year)

PREPARED IN ACCORDANCE WITH THE LAW 'ON ACCOUNTING' AND 'ANNUAL REPORTS AND CONSOLIDATED ANNUAL REPORTS LAW' OF THE REPUBLIC OF LATVIA

Riga, 2019

AS Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807

Contents

Information on the Company	3
Statement of the Board's Responsibility	4
Management Report	5 – 6
Financial statements:
Profit and Loss Statement	7
Balance Sheet	8 – 9
Statement of Changes to the Shareholders' Equity	10
Statement of Cash Flows	11
Notes to the Financial Statements	12 – 28

Information on the Company

Name of the Company	Latvijas Jūras medicīnas centrs
Legal status	Joint Stock Company
Number, place and date of registration	40003306807 Riga, 27 August 1996
	Re-registered with the Commercial Register 4000 330 6807	On 27 February 2004 under the unified registration number
Core business:	Hospital activities (86.10) Retail sale of medical and orthopaedic goods in specialised stores (47.74) Other education n.e.c. (85.59) General medical practice activities (86.21) Special medical practice activities (86.22) Dental practice activities (86.23) Other human health activities (86.90) Residential nursing care activities (87.10) Other residential care activities (87.90) Other social work activities without accommodation n.e.c. (88.99) Physical well-being activities (96.04) Other personal service activities n.e.c. (96.09)
Legal address	Patversmes iela 23 Riga, LV-1005, Latvia
Largest shareholders	Ilze Birka (17.50%) Mārtiņš Birks (17.50%) Ilze Aizsilniece (8.82%) Guna Švarcberga (10.36%) Jānis Birks (12.80%) Adomas Navickas (6.85%)
Names of the Board members, their positions	Jānis Birks – Chairman of the Board Juris Imaks – Member of the Board Anatolijs Ahmetovs – Member of the Board Mārtiņš Birks – Chairman of the Council Viesturs Šiliņš – Deputy Chairman of the Council Ineta Gadzjus – Member of the Council Jevgeņijs Kalējs – Member of the Council Uldis Osis – Member of the Council
Names of the Council members, their positions
Reporting year	1 January 2019 – 30 June 2019
Name and address of the certified auditor in charge	KPMG Baltics SIA Licence No.55 Vesetas iela 7 Riga, LV-1013, Latvia	Certified auditor in charge: Armine Movsisjana Certificate No. 178

Statement of the Board's Responsibility

The Board of AS Latvijas Jūras Medicīnas Centrs (hereinafter – the Company) is responsible for preparing the financial statements of the Company.

The financial statements on pages 7 to 28 are prepared based on accounting records and source documents and present fairly the financial position of LJMC as at 30 June 2019 and the results of its operations, and cash flows for the 6-month period of 2019.

The above mentioned financial statements of the Company are prepared in accordance with the laws 'On accounting' and 'Annual Reports and Consolidated Annual Reports Law' effective in the Republic of Latvia, on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgements and estimates have been made by the Management in the preparation of the financial statements.

The management of the Company is responsible for the maintenance of a proper accounting system, safeguarding the Company's assets, and the prevention and detection of fraud and other irregularities in the Company. The management is also responsible for compliance with laws of the Republic of Latvia.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

23 August 2019

Management Report

Line of business

A/S Latvijas Jūras medicīnas centrs (LJMC or the Company) is a certified and advanced private medical institution available to everyone, which consists of Sarkandaugava Ambulatory Healthcare Centre at 23 Patversmes iela, Riga; Central Hospital at 23 Patversmes iela, Riga; Vecmilgravis Hospital and Northern Diagnostics Centre 26 Vecmilgravja 5.linija; Riga, and Vecmīlgrāvis Primary Health Care Centre at 10 Melidas iela, Riga. In 2018, the average number of employees of LJMC was 347. The shares of A/S Latvijas Jūras medicīnas centrs are traded on the Baltic Secondary list of Nasdaq Riga.

As of 5 September 2013, A/S Latvijas Jūras medicīnas centrs has been included on the list of medical institutions approved by the Health Inspectorate of Latvia, which provides medical tourism services, namely, LJMC provides medical tourism services as a reliable partner and this demonstrates recognition of the overall Latvian health care system because the list only includes those healthcare institutions which have been registered with the register of health care institutions for at least 3 years and inspection has been carried out in the health care institution during the past three years.

LJMC has accredited Clinical Diagnostics Laboratory at 23 Patversmes iela with the Latvian National Accreditation Bureau.

LJMC has signed cooperation agreements with all health insurance companies operating in Latvia. LJMC has received certificate No. MSC-50-034 issued by Exova BM TRADA confirming compliance of the energy management system with ISO 50001:2011.

Activities in the 12 months of 2018 and further development

The Company's activities in the 12 months of 2018

In 2018 LJMC continued to provide high-quality medical services and attract new local and foreign patients. Similar to prior years, also in 2018 LJMC employed excellent doctors from Latvia and competent medical personnel. Activities of highly qualified and professional personnel allowed LJMC to provide examinations of competitive and exceptional quality, and to establish attraction of foreign patients as one of the development directions for 2018. LJMC is on the official list of providers of medical tourism services maintained by the Health Inspection of the Republic of Latvia.

LJMC not only successfully attracted foreign patients in 2018, but also actively popularised paid medical services among local public, thus ensuring increase in the number of patients living in Latvia, promoting competitiveness and recognition of LJMC.

Radiology Department in 2018 provided the full range of diagnostic services (magnetic resonance, X-ray examinations and ultrasonography) increasing the amount and quality of services (both state paid services and services paid by patients). PET/CT radiological examinations are available and payable both by private means and state funds.

In order to implement the requirements of GDPR in 2018, with the help of an independent data protection inspector LJMC began drafting and approving documents (internal rules, LJMC staff newsletter, patient data processing procedure, personal data processing and protection policy), renewing contracts (on the use of medical facilities in digital form, use of medical information system, insurance company services, communication services), and began the training process for LJMC staff.

In 2019, LJMC signed agreements with the National Health Service for the provision of state paid medical services in the amount approved in public budget for 2019.

In 2018, LJMC continued working on ISO compliance. In 2019, LJMC received ISO 9001:2015 quality certification in functional diagnostics and radiological diagnostics, in-patient medical rehabilitation and day-care rehabilitation valid until 14 March 2022, and continued updating the hygiene and disinfection plan, and implementing ISO certification in other units of LJMC.

Further development of the Company

To attract more foreign and local patients in 2019 LJMC will continue making investments to implement innovative solutions for providing medical services, improve qualification of staff and AS Latvijas Jūras medicīnas centrs Address: Patversmes iela 23, Riga, LV-1005 Unified registration number: 40003306807

Management Report

enhance patient service. LJMC will also continue the state policy in re-profiling of hospitals to ambulatory healthcare institutions.

Continuing to improve the available services with highly-qualified and professional diagnostics service, LJMC's Radiology Department as one of the most modern and innovative cancer diagnostics centre in Eastern Europe will promote the increase in the number of local and foreign patients.

By attracting patients not only from Latvia and other Baltic countries, but also from other EU countries and offering high-quality medical services, LJMC will increase its competitiveness in the Baltics medical market.

Financial results

In the 6 months of 2019, LJMC operated in accordance with the budget approved for 2019. The loss of LJMC is EUR 117 266. LJMC continues to implement an intensive investment policy, which is aimed at increasing the competitiveness and profitability of the Company in the future. The planned amount of investment for 2019 is EUR 450 000.

Risk Management

LJMC continues carrying out activities seeking to limit the negative impact of potential financial risks on the financial position of LJMC by implementing a set of control and analysis measures. Financial assets exposed to credit risk are mostly cash, trade receivables and other receivables. Credit risk is managed by LJMC by performing regular debtor control procedures and debt collection measures aiming to identify and solve any problems on a timely basis.

Liquidity risk is managed by LJMC in line with the principle of prudence ensuring that appropriate credit resources are available to cover liabilities as they fall due. LJMC does not use loans.

Subsequent events

No significant events have occurred from the reporting date to the date these financial statements were approved that would impact these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

23 August 2019

Financial statements

Profit and Loss Statement for 6 month of 2019

		Note	30.06.2019 EUR	2018 EUR	30.06.2018 EUR
1.		2
	Net sales from other types of operations		3 558 583	6 673 893	3 355 432
2.	Cost of goods and services	3	(3 561 164)	(6 456 788)	(3 287 487)
3.	Gross profit		(2 581)	217 105	67 945
4.	Administrative expenses	4	(269 249)	(551 544)	(279 081)
5.	Other operating income	5	154 708	257 584	123 644
6.	Other operating expenses	6	(144)	(2 474)	(11 184)
7.	Income from investments in related				-
	companies		-	-
8.
	Interest and similar income		-	-	22
9.
	Profit/ (loss) before corporate income tax		(117 266)	(79 329)	(98 654)
10.					-
	Corporate income tax for the reporting year		-	(499)
11.
	Profit / (loss) after corporate income tax		(117 266)	(79 828)	(98 654)
12.	Income from changes in balances of				-
	deferred tax liabilities			-
13.	Profit/ (loss) for the reporting year		(117 266)	(79 828)	(98 654)
	Number of shares		800 000	800 000	800 000
	Earnings per share (EUR)*		(0.15)	(0.10)	(0.12)

* Profit or loss after corporate income tax/ total shareholders' equity

The accompanying notes on pages 12 to 28 form an integral part of these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

Chief Accountant Gunta Kaufmane

23 August 2019

Balance Sheet as at 30 June 2019

	Note	30.06.2019	31.12.2018 EUR	30.06.2018 EUR
Assets
Long-term investments
I Intangible assets: Concessions, patents, licenses, trademarks and similar rights		447	1 264	6 100
Total intangible assets:		447	1 264	6 100
II Fixed assets: 1. Land, buildings and engineering structures 2. Equipment and machinery 3. Other fixed assets		4 426 485 177 107 43 729	4 483 688 135 209 45 068	4 521 186 120 920 49 148 950950 1 332
4. Construction in progress		1 332	1 332	950
Total fixed assets:	9	4 648 653	4 665 297	950 4 692 586
Total long term investments:		4 649 100	4 666 561	4 698 686
Current assets
I Stock:
1. Raw materials, primary materials		98 417	117 539	96 902
and auxiliary materials Total stock:	11	98 417	117 539	96 902
II Receivables: 1. Trade receivables 2. Due from related parties 3. Other receivables Due from related parties 4. Prepaid expenses Prepaid expenses Total receivables:		302 729 46 176 44 377 5 031 398 313	336 134 26 675 35 377 34 166 432 352	132 460 58 707 34 812 784 226 763
Prepaid expenses III Long-term investments held for trading: IV Cash: 4. Prepaid expenses	16	1 747 040	- 1 844 078	- 2 296 300
Total current assets:		2 243 770	2 393 969	2 619 965
Total assets		6 892 870	7 060 530	7 318 651

The accompanying notes on pages 12 to 28 form an integral part of these financial statements.

Balance Sheet as at 30 June 2019

	Note	30.06.2019.
Equity and Liabilities		EUR	31.12.2018 EUR	30.06.2018 EUR
Shareholders' equity:
1. Share capital	17	1 120 000	1 120 000	1 120 000
2. Long-term investment revaluation reserve	18	2 292 360	2 292 360	2 292 360
3. Reserves: b) reserves provided by the Co-operative's Statutes		63 819	63 819	63 819
4. Retained earnings	19
a) retained earnings carried forward from		1 824 481		2 341 575
previous years			2 021 575
b) profit/(loss) for the reporting year		(117 266)	(79 828)	(98 654)
Total shareholders' equity:		5 300 660	5 417 926	5 719 100
Liabilities: Long term liabilities:
1. Deferred income	22	780 644	780 643
2. Next period income		780 644	-	850 419
Total long term liabilities:			780 643	850 419
Short term liabilities:
1. Customer advances		1 831	1 840	1 831
2. Accounts payable to suppliers and contractors
			212 961	98 010
3 Taxes and compulsory state social security		114 882
contributions			163 563	223 830
4. Other liabilities		210 098
			193 636	229 602
5. Next period income		217 295	-	18 752
6. Deferred income		33 013	55 514
7. Accrued liabilities		234 447	234 447	177 107
Total short term liabilities:		811 566	861 961	749 132
Total liabilities:		1 592 210	1 642 604	1 599 551 651 104
Total equity and liabilities		6 892 870	7 060 530	7 318 651

The accompanying notes on pages 12 to 28 form an integral part of these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

Chief Accountant Gunta Kaufmane

23 August 2019

Statement of Changes to the Shareholders Equity for 6 month of 2019

	Share capital	Long-term investment revaluation reserve	Reserves set in the Company' s statutes	Retained earnings brought forward from previous years	Profit/ (loss) for the reporting year	Total equity
	EUR	EUR	EUR	EUR	EUR	EUR
Balance as at 31 December 2017 Profit of 2016 transferred to retained earnings of	1 120 000	2 292 360	63 819	1 835 086	506 489	5 396 108
previous years	-	-	-	506 489	(506 489 )	-
Dividends for 2016 Profit for the year	- -	- -	- -	(320 000) -	- 79 828	(320 000) 79 828
Balance as at 31 December 2018 Profit of 2018 transferred to retained earnings of	1 120 000	2 292 360	63 819	2 021 575	79 828	5 817 754
previous years Dividends for 2018 Loss for the reporting	- -	- -	- -		-	-
year Balance as at 30 June 2019	- 1 120 000	- 2 292 360	- 63 819	- 1 824 481	(117 266) (117 266)	(117 266) 5 300 660

The accompanying notes on pages 12 to 28 form an integral part of these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

Chief Accountant Gunta Kaufmane

23 August 2019

Statement of Cash Flows for 6 month of 2019

	Note	30.06.2019	2018 EUR	30.06.2018 EUR
I. Cash flows from operating activities 1. Profit/ (loss) before corporate income tax Adjustments for:		(117 266)	(79 329)	(98 654)
a) impairment of fixed assets	9	97 610	199 318
b) adjustments for impairment of intangible assets c) income from investments in related companies			1 659 -
d) depreciation and amortisation				111 136
e) loss from disposal of fixed assets		680		12 152
2. Profit before adjustments for the effect of changes to current assets and short term liabilities
Adjustments for:		(18 976)	121 648	24 634
a) decrease/ (increase) in trade receivables		34 039	(97 022)	85 149
b) decrease/ (increase) in stock		19 122	2 854	23 491
c) increase/ (decrease) in accounts payable to suppliers and other liabilities		(50 394)	596 010	552 957
		(16 209)
3. Gross cash flows from operating activities			623 490	686 231
4. Corporate income tax paid		-	(23 917)	-
5. Net cash flows from operating activities II. Cash flows used in investing activities a) Dividends received		(16 209)	599 573 -	686 231
b) Purchase of fixed and intangible assets		(80 829)	(86 453)	(40 89)
c) Income from disposal of shares in related, associated or other companies		-	69 660	69 660
d) Income from disposal of fixed and intangible assets		-	190 000	190 000
6. Net cash flows from investing activities		(80 829)	173 207	218 771
III. Cash flows from financing activities
a) Dividends paid 7. Net cash flows from financing activities		- -	(320 000) (320 000)	- -
		-		-
Net increase/(decrease) in cash and cash		(97 038)
equivalents in the reporting year			452 780	905 002
Cash and cash equivalents at the beginning of the year		1 844 078	1 391 298	1 391 298
Cash and cash equivalents at the end of the year	16	1 747 040	1 844 078	2 296 300

The accompanying notes on pages 12 to 28 form an integral part of these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Anatolijs Ahmetovs

23 August 2019

Member of the Board Juris Imaks

Chief Accountant Gunta Kaufmane

(1) Information on the Company's activities and summary of significant accounting principles

Information on the Company

The legal address AS Latvijas Jūras medicīnas centrs (LJMC or the Company) is 22 Patversmes iela, Riga, Latvia. The Company was registered with the Commercial Register under the common registration number 40003306807. The largest shareholders of the Company are Ilze Birka (17.50%), Mārtiņš Birks (17.50%), Jānis Birks (12.80%), Guna Švarcberga (10.36%), Ilze Aizsilniece (8.82%), Adomas Navickas (6.85%).

The Board comprises Jānis Birks (Chairperson of the Board), Juris Imaks (Board Member) and Anatolijs Ahmetovs (Board Member). The Chairperson of the Council is Mārtiņš Birks, Council Members are Viesturs Šiliņš, Ineta Gadzjus, Jevgēņija Kalējs and Uldis Osis.

The core business of the Company according to NACE rev 2. is Hospital activities (NACE 86.10); Retail sale of medical and orthopaedic goods in specialised stores (47.74); Education n.e.c. (85.59); General medical practice activities (86.21); Special medical practice activities (86.22); Dental practice activities (86.23); Other human health activities (86.90); Residential nursing care activities (87.10); Other residential care activities (87.90); Other social work activities without accommodation n.e.c. (88.99); Physical well-being activities (96.04); Other personal service activities n.e.c. (96.09).

Basis of preparation

The financial statements were prepared in accordance with the law 'On Accounting' and the 'Annual Reports and Consolidated Annual Report Law' of the Republic of Latvia (hereinafter – the Law).

In the preparation of these financial statements the management assessed that the recognition and disclosure in accordance with International Accounting Standards adopted by the European Union (hereinafter IAS) of deferred tax contributes to providing a fairer view on the Company's financial position and, accordingly, used the exemption under Section 13 of the Annual Reports and Consolidated Annual Reports Law and in these financial statements it continues to recognise, assesses and disclose deferred tax assets or deferred tax liabilities according to IAS and provides appropriate disclosures on these items. For the impact of the exemption on the profit and loss statement refer to Notes 8 and 19.

In addition, the Company's management used the exemption under Section 13 of the Annual Reports and Consolidated Annual Reports Law and in these financial statements it continued to recognise and measure long-term investments held for trading according to the International Accounting Standards and provided appropriate disclosures on these items in Note 10.

The management believes that the accounting policies used in the preparation of these financial statements are largely consistent with those used last year.

According to Article 3(6) of the Annual Reports and Consolidated Annual Reports Law, the Company applies the requirements of the law applicable to large companies as its transferable securities are included in the regulated market of the Republic of Latvia.

The profit and loss statement was prepared according to the turnover costing method. The cash flow statement was prepared according to the indirect method. The financial statements are prepared on the historical cost basis except for the fixed assets disclosed under 'Land, buildings and engineering structures' and 'Long-term investments held for trading' – land and buildings, which are measured using a revaluation method.

Accounting principles

The financial statements were prepared in accordance with the following policies:

• a) Going concern assumption that the Company will continue as a going concern;
• b) Consistent valuation principles with those used in the prior year;

• c) Items were valued in accordance with the principle of prudence, i.e.:

  • the financial statements reflect only the profit generated to the balance sheet date;
    • all incurred liabilities and current or prior year losses have been taken into consideration even if discovered within the period after the date of the balance sheet and preparation of the financial statements; and,

• all amounts of impairment and depreciation have been taken into consideration irrespective of whether the financial result was a loss or profit.

• d) Income and expenses incurred during the reporting year have been taken into consideration irrespective of the payment date or date when the invoice was issued or received; Expenses were matched with revenue for the reporting period.
• e) Assets and liabilities have been valued separately.
• f) The opening balance agrees with the prior year closing balance;
• g) All material items, which would influence the decision-making process of users of the financial statements, have been recognised and insignificant items have been combined and their details disclosed in the notes.
• h) Business transactions are recorded taking into account their economic contents and substance, not the legal form.

Related parties

Related parties represent both legal entities and private individuals related to the company in accordance with the following rules.

a) A person or a close member of that person's family is related to a reporting entity if that person:

• i. has control or joint control over the reporting entity;
• ii. has significant influence over the reporting entity; or
• iii. is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

b) An entity is related to a reporting entity if any of the following conditions applies:

• i. The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
• ii. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);
• iii. Both entities are joint ventures of the same third party;
• iv. One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
• v. The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
• vi. The entity is controlled, or jointly controlled by a person identified in (a);
• vii. a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
• viii. The entity or any member of the group to which the entity belongs provides management personnel services to the entity or the parent of company of the entity.

Related party transaction – A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.

Financial instruments and financial risks

Financial instrument is an agreement that simultaneously results in financial assets of one party and financial liabilities of the other party.

The key financial instruments held by the Company are financial assets such as trade receivables, amounts due from related parties and other receivables, and financial liabilities such as prepayments from clients, accounts payable to suppliers and contractors and other creditors arising directly from its business activities.

Financial risks connected with the Company's financial instruments, financial risk management Key financial risks related to the Company's financial instruments are:

• Credit risk is the risk that the Company may incur financial losses if parties to the transactions fail to fulfil their liabilities under the contracts, and credit risk is primarily connected with trade receivables;
• Currency risk– risk that the Company may suffer unexpected losses arising from fluctuations in the foreign exchange rates; the Company is not exposed to currency risk as it does not significant amounts of currencies other than EUR.
• Interest rate risk risk that the Company may incur losses due to fluctuations in interest rates;

▪ Liquidity risk – risk that the Company will not be able to meet its financial liabilities in due time.

Management has implemented procedures to control the key risks.

Credit risk

The inability of insurance companies and patients to pay for the services provided by the Company in due time and in full amount. Most of the services are paid for within a short period of time after the provision of services or are funded by state or insurance providers, so the credit risk is low.

Interest rate risk

Management believes that interest rate risk is not material.

Liquidity risk

The Company has no external loans and it has significant financial resources to settle its liabilities.

Fair value of financial assets and liabilities

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. Financial assets and financial liabilities are carried at cost which according to management approximates their fair value at acquisition plus any related additional expenses. Purchase costs are acquisition costs of goods or services (net of discounts received) with added additional costs related to the purchase.

Reporting period

The reporting period is the 6 months from 1 January 2019 to 30 June 2019.

Currency unit and revaluation of foreign currency

All amounts in these financial statements are expressed in the official currency of Latvia – euro (EUR), the functional currency of the Company.

Foreign currency transactions are translated into EUR according to currency exchange rates effective at the date of transaction and determined by reconciliation of the system of the European Central Bank and other central banks and which is published on the website of the European Central Bank.

As at the reporting date, all monetary assets and liabilities are translated into EUR according to exchange rates published on the website of the European Central bank. Non-monetary items of assets and liabilities are revalued to euros in accordance with the reference exchange rate published by the European Central Bank on the transaction date.

Exchange rate per EUR 1:

	31.12.2018	31.12.2017
USD	1.14500	1.19930

Gain or loss resulting from payments under transactions executed in foreign currencies and the translation of monetary assets and liabilities denominated in foreign currencies is reflected in the profit and loss statement of the respective period.

Estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. The actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in the accounting estimates are recognised in the period when those estimates are reviewed and in the future periods.

Key sources of estimation uncertainty are the following:

(i) Impairment of fixed assets

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable value. The recoverable amount is the highest of the fair value less selling expenses or value in use. Impairment losses are recognised in the profit and loss statement.

(ii) Useful lives of fixed and intangible assets

Management estimates the useful lives of fixed and intangible assets in proportion to the expected duration of use of the asset (its expected capacity or effectiveness) based on historical experience with similar fixed assets and future plans. Land is not subject to depreciation. For other assets, depreciation and amortization is calculated on a straight-line basis over the entire useful life of the respective intangible asset and fixed asset in order to write their value or revalued value down to the estimated book value at the end of the useful life based on the following rates:

	%
Intangible assets	20
Buildings and constructions	2.5 - 2.85
Communication equipment and instruments	33.33
Other fixed assets	20

Current maintenance and repair costs of fixed assets are recognized in the profit and loss statement as incurred.

(iii) Fixed assets

Fixed assets other than land, buildings and constructions are carried at cost less accumulated depreciation and impairment losses.

Land, buildings and constructions are measured by the Company using the revaluation model. The balance sheet item Land, buildings and engineering structures of the financial statements of the Company is presented at revalued value, which equals fair value at the revaluation date net of subsequent accumulated deprecation and impairment loss.

Based on the Company's position as at 31 December 2017, the Company has estimated the value of the balance sheet item 'Land, buildings and engineering structures', and in accordance with the estimation, determined the carrying amount of all land, buildings and engineering structures in line with market value and based on evaluation of external certified valuers. As at 31 December 2018, a new revaluation was not performed as the management assessed that no significant changes had taken place in the market and the recognised carrying amount did not differ materially from the fair value of the property.

According to the policy, revaluation of a single building or construction requires the whole category to be revalued. To determine the impact of revaluation at the date of revaluation accrued depreciation is netted of cost or other value, which replaces cost in the financial statements, and the carrying amount is increased or decreased according to the revalued value of the building or structure in the following manner: depreciation accrued to the date of revaluation is initially written-off of the current carrying amount of fixed asset, and afterwards the residual value is increased or decreased according to the fair value of fixed asset as a result of revaluation.

In case the fair value of fixed assets at the balance sheet date is lower than their carrying amount, and such impairment is expected to be permanent, fixed assets are recognized at the lower value. The revaluation result is recognized in the profit and loss statement except where a previously recognized increase in the value of fixed assets offsets an impairment loss. In that event, the long term investment revaluation reserve is decreased by the amount of impairment.

In case the value of fixed assets at the balance sheet date is higher than the valuation on the balance sheet, fixed assets are revalued to the higher value if the increase in value may be assumed to be other than temporary. The increase in value resulting from revaluation is recognized under 'Long term investment revaluation reserve'. If an increase in the value resulting from revaluation compensates for the impairment of the same fixed asset which was previously recognized as an expense in the profit and loss statement, then the increase resulting from revaluation is recognized as income in the profit and loss statement as incurred. The long term investment revaluation reserve is decreased when the revalued asset is disposed, is no longer utilized, or the increase of value is no longer reasonable.

The increase in value recognized in the long term investment revaluation reserve under equity is reversed by recognizing a decrease in the profit and loss statement upon liquidation or disposal of the revalued fixed asset.

(iv) Valuation of receivables

Receivables are disclosed at amortised cost net of impairment allowances. Doubtful debt allowances are recognized based on an individual management assessment of the recoverability of each receivable when objective evidence exists that the Company will not be able to recover the full amount of receivables according to the previously agreed repayment terms. The amount of allowance represents the difference between the carrying and recoverable amount of receivables. The allowance is charged to the profit and loss statement.

(v) Provisions

Provisions are recognized when a past event has given rise to a present obligation or losses and the amount can be estimated reasonably. The likelihood of loss is assessed based on management assumptions. In order to determine the amount of loss management is required to select an appropriate calculation method and make specific assumptions connected with the specific risk. No provisions were made as at 31 December 2018.

Revenue recognition

Income from sales of goods

Revenue from the sales of goods is recognized in the profit and loss statement after the risks and rewards of ownership are transferred to the client.

No revenue is recognized if according to the provisions of the transaction the Company retains significant risks pertaining to the ownership of goods and the goods can be returned.

Income from services

Income from services provided is recognized in the profit and loss statement as generated. Income is received and recorded according to signed cooperation agreements.

Rental income

Rental income is recognised on a straight-line basis over the rental term.

Dividend income

Dividends are recognized when the Company incurs a legal right to receive them.

Long and short term classification

Amounts whose terms of receipt, payment or write off are due in more than one year after the balance sheet date are classified as long term. Amounts to be received, paid or written off within 12 months are classified as short term.

Lease transactions

Operating lease – (the Company as a Lessor)

The Company leases premises, which are part of revalued fixed assets. Depreciation is calculated on a straight-line basis over the entire useful life of the respective fixed asset in order to write its value down to the estimated carrying amount at the end of the useful life based on the rates set for similar fixed assets. Income from operating lease and client prepayments is charged to the profit and loss statement on a straight-line basis over the period of lease.

Operating lease – (the Company as a lessee)

Payments for operating lease are recognized in the profit and loss statement on a straight-line basis over the period of lease.

Fixed assets

All fixed assets other than land, buildings and constructions are recognised on the balance sheet at historical cost less depreciation.

For other assets, depreciation and amortization is calculated in accordance with the straight-line method over the entire useful life of the respective intangible assets and fixed assets in order to write their value or revalued value down to the estimated book value at the end of the useful life. The depreciation method is reviewed at least on an annual basis, at the year-end.

Subsequent expenses are added to the book value of the asset or recognized as a separate asset only where it is highly probable that future benefits related to this item would flow into the company and expenses of this item can be estimated reliably. Such expenses are written off over the entire useful life of the respective asset. When capitalizing the costs of installed spare parts, the book value of the spare parts is written off in the profit and loss statement.

Profit or loss from disposal of fixed assets is calculated as the difference between the carrying amount of the asset and income generated from sale, and income from the reversal of the revaluation reserve of the respective fixed asset, and charged to the profit and loss statement as incurred.

Accounting and valuation of stock

Stock is carried at the lower of cost and net realizable value. Stock has been valued according to the FIFO method. Stock accounting is based on the perpetual method. Stock has been counted during the annual stock take.

Long-term investments held for trading

Long-term investments held for trading objects are such for which the balance sheet value will be recovered in a trading transaction rather than in the course of further utilization, and that comply with both of the classification criteria:

• these objects in their current condition are available for immediate sale and are subject only to common selling conditions of such objects;
• Their trading transaction is credible.

Long-term investments held for trading are not subject to amortisation.

Long-term investments held for trading that prior to reclassification were carried at cost are measured according to the carrying amount at the date of reclassification. Long-term investments held for trading that prior to reclassification were recognised using the revaluation method are measured at fair value.

Subsequently, long-term investments held for trading are recognized at the lowest of the carrying amount and net realisable value.

In March 2018 AS Latvijas Jūras medicīnas centrs made a public announcement that it has sold its real estate at Vecmīlgrāvja 5. linija 26 for EUR 190 000.

The Company also disposed of the shares in a subsidiary that amounted to EUR 69 660. The sales price equalled the carrying amount. Please refer to Note 10.

Grants

Grants received for special types of capital investments are treated as deferred income which is gradually recognised as revenue over the useful life of the fixed assets received or acquired using grants. Grants received to cover expenses are recognised in the same period when the related expenses have arisen, if all the conditions of receiving the grant are met.

Corporate income tax

(a) Current tax

As of 1 January 2018, the new Corporate Income Tax Law adopted on 28 July 2017 comes into effect in the Republic of Latvia setting out a conceptually new regime for paying taxes. The tax rate is 20% (until 1 January 2018 – 15%), the taxation period is one month instead of a year and the taxable base includes:

• distributed profit (dividends calculated, payments equalled to dividends, conditional dividends) and
• conditionally or theoretically distributed profit (non-operating expenses, doubtful debts, excessive interest payments, loans to related parties, decrease of income or excessive expenses which are incurred by entering transactions at prices other than those on the market that should be calculated using the methodology determined by the Cabinet of Ministers, benefits bestowed by the non-resident upon its staff or board (council members) regardless of whether the receiving party is a resident or a non-resident, if they relate to the operation of a permanent establishment

in Latvia, liquidation quota).

(b) Deferred tax

In accordance with the Annual Reports and Consolidated Annual Reports Law of the Republic of Latvia, the Company is permitted to recognise deferred tax supported by justified reasons, e.g., the company is a subsidiary of such a company which prepares its financial statements according to the statements according to the Accounting Standards. In such cases the law established that the Company is required to recognise, measure and disclose it according to the International Accounting Standards (IAS) as adopted by the European Union.

1. Under IAS 12 Income taxes, whenever there is a difference to tax rates being applied to distributed and undistributed profits, deferred tax assets and liabilities should be recognised by applying the rate applicable to undistributed profits.

According to the Law on Enterprise Income Tax of the Republic of Latvia effective as of 1 January 2018, a 20% rate is only applied to distributed profit, while a 0% rate is expected to be applied to undistributed profits. Therefore, deferred tax assets and liabilities under IAS 12 are recognisable at nil amount. This principle has been applied in the Company's financial statements for the year ended 31 December 2017.

Deferred tax assets and liabilities were reversed and changes were charged to profit or loss in the reporting period, except when deferred tax was recognised in relation to revaluation reserves. In that case, reversal of deferred tax was charged to revaluation reserves as disclosed in Note 19.

(2) Net sales

Net sales represents revenue generated during the reporting period from the Company's basic activities – sales of services, net of value added tax and discounts.

	2019 EUR	2018 EUR
Ambulatory medical services	3 288 530	6 202 110
Services covered by insurance	270 053	462 422
Paid ambulatory medical services	150 149	257 106
Paid in-patient care	119 904	205 316
Dental services Resident training	- -	9 361 -
	3 558 583	6 673 893

The Company provides services only in the territory of the Republic of Latvia.

The Company does not disclose information on distribution of net sales by lines of business in accordance with Regulation No. 1893/2006 (EK) of the European Parliament and European Council of 20 December 2006, with which the statistic classification of business activity NACE rev 2 is established, as its disclosure could have a negative impact on the interests of the Company.

(3) Cost of goods and services

The item represents costs incurred for generating net sales – such as costs of goods and services at acquisition cost, and costs related to purchase of goods and services.

	2019	2018
	EUR	EUR
Remuneration	1 742 646	3 030 946
Medicines, medical materials	453 078	781 358
Compulsory state social security contributions	411 155	716 326
Non-deductible value added tax	192 019	345 885
Lease of equipment	200 313	356 250
Depreciation	97 610	200 701
Utilities and maintenance	131 714	256 921
Office items and equipment, other materials	96 463	170 347
Repair costs	93 215	165 655
Medical examinations and other services	23 326	50 105
IT expenses	18 070	32 394
Advertisement expenses	4 568	35 115
Security	10 170	25 012
Changes in doubtful debt allowances	-	49 385
Medical fund risk expenses	7 104	15 571
Transport	9 179	11 100
Office expenses	7 071	9 729
Patient catering expenses	4 911	10 369
Real estate tax	-	7 835
Insurance	4 896	6 730
Staff training expenses	4 014	6 298
Risk duty	701	1 411
Benefits and gifts to employees	825	1 782
Changes in cost of accrued vacations	-	57 340
Other costs related to services	48 116	112 223
	3 561 164	6 456 788
(4) Administrative expenses
	2019	2018
	EUR	EUR
Remuneration	194 879	378 474
Compulsory state social security contributions	45 709	89 064
Communication expenses	8 472	17 252
Audit of the financial statements	440	14 750
Office expenses	3 969	11 599
Bank services	5 768	8 410
Legal activities	5 505	23 535
Representation expenses	1 797	1 934
Other	2 710	6 526
	269 249	551 544
(5) Other operating income
	2019	2018
	EUR	EUR
Income from rent	64 313	147 212
Amortisation of funds received from EBRD	-	10 514
Other income Other income	- 90 395	252 99 606
		257 584
	154 708

Other income consists of income from catering and laundry service, advertising and beauty care services.

(6) Other operating expenses
	2019	2018
	EUR	EUR
Loss from revaluation of long-term assets (see Note 9)		-
Loss on disposal of fixed assets, net		276
Fines		946
Other expenses	144	1 252
	144	2 474
(7) Income from investments in related companies
	2019	2018
	EUR	EUR
Dividends received from investment in SIA Klīnika Dzintari	-	-
	-	-

(8) Corporate income tax

(i) Corporate income tax recognised in the profit and loss statement

	2019 EUR	2018 EUR
Current tax		499
Deferred tax	-	-
	-	499

(ii) Deferred tax

Total movements in deferred tax:

	2019	2018
	EUR	EUR
Deferred tax liabilities, beginning of the period		-
Changes in deferred tax recognized in the profit and loss statement Adjustment to deferred tax recognized in the revaluation		-
reserve		-
Deferred tax liabilities, end of the period		-

(9) Intangible assets and fixed assets

	Intangible assets	Land, buildings and engineering structures	Equipment and machinery	Other fixed assets	Construction in progress	Total
	EUR	EUR	EUR	EUR	EUR	EUR
Historical cost
31.12.2017	80 548	4 681 639	2 793 067	499 961	1 332	8 056 547
Additions	-	-	78 222	8 231	-	86 453
Disposals	(95)	-	(294 292)	(7 395)	-	(301 782)
31.12.2018	80 453	4 681 639	2 576 997	500 797	1 332	7 841 218
Additions	-	-	68 479	12 350	-	80 829
Disposals	-	-	(56 289)	(2 592)	-	(58 881)
30.06.2019	80 453	4 681 639	2 589 187	510 555	1 332	7 863 166
Accumulated depreciation and amortisation
31.12.2017	77 625	78 244	2 679 808	439 785	-	3 275 462
Depreciation	1 659	119 707	55 996	23 339	-	200 701
Depreciation of disposed fixed
assets	(95)	-	(294 016)	(7 395)	-	(301 506)
31.12.2018	79 189	197 951	2 441 788	455 729	-	3 174 657
Depreciation Depreciation of	817	57 203	25 901	13 689	-	97 610
disposed fixed
assets	-	-	(55 609)	(2 592)	-	(58 201)
30.06.2019	80 006	255 154	2 412 080	466 826	-	3 214 066
Balance as at 31.12.2017	2 923	4 603 395	113 259	60 176	1 332	4 781 085
Balance as at 31.12.2018	1 264	4 483 688	135 209	45 068	1 332	4 666 561
Balance as at 30.06.2019	447	4 426 485	177 107	43 729	1 332	4 649 100

In February 2018 land, buildings and constructions were valued by independent experts. The valuation was carried out using a combination of the comparable transactions method and income method. The revaluation result was reflected in the financial statements as at 31 December 2017.

The upward revaluation result of land, buildings and constructions at Melīdas iela 10 of EUR 95 402 was charged to the Long-term investment revaluation reserve. The upward revaluation result of land at Patversmes iela 23 by EUR 30 000 was charged to the Long-term investment revaluation reserve.

As at 31 December 2017, the carrying amount of the buildings and constructions at Patversmes iela 23 was reduced by EUR 336 931. The downward revaluation result of EUR 109 197 was recognised

as a reversal of the previously recognised long-term investment revaluation reserve and EUR 227 734 as a revaluation decrease attributed to the profit and loss statement.

As at 31 December 2017, the carrying amount of the buildings and constructions at Vecmīlgrāvja 5. līnija 26 was reduced by EUR 214 813. The downward revaluation result of EUR 109 157 was recognised as a reversal of the previously recognised long-term investment revaluation reserve and EUR 105 656 as a revaluation decrease attributed to the profit and loss statement.

As at 31 December 2018, a new revaluation was not performed as the management assessed that no significant market changes had taken place in the market and the recognised carrying amount did not differ materially from the fair value of the property.

Information on changes due to revaluation

	2019 EUR	2018 EUR
Appreciation due to revaluation Impairment due to revaluation		- -
Net changes in the value of fixed assets due to revaluation, including: Increase from revaluation allocated to the decrease in the long term investment revaluation reserve Gross decrease from revaluation allocated to the decrease in the long term investment revaluation reserve Decrease from revaluation allocated to the profit and loss statement		- - - -
		-

The fair value of land and building was determined by an external, independent property valuer, having appropriate recognised professional qualification and recent experience in the location and category of the property being valued.

The following table shows the valuation technique used in measuring the fair value of core real estate items included in position 'Buildings and land', as well as the significant unobservable inputs used:

Type	Valuation method	Significant unobservable data	Inter-relation between significant unobservable inputs and fair value measurement
Buildings and land in the amount of EUR 3 100 000 at Patversmes iela, Riga	Fair value has been estimated based on the average of: Market comparison technique: The fair value was based on results of comparable sales of similar buildings. Discounted cash flow technique: The model is based on discounted cash flows from rendering services	Price per m2 EUR 470 Rent rate per m2 – EUR 2.3-9 Capacity – 90% Capitalisation rate – 9%	The fair value would increase (decrease) if the price per m2 was higher (lower). The estimated fair value would increase (decrease), if: Rent rate would be higher (lower); Capacity percentage would be higher (lower); Capitalisation rate would be lower (higher);
Buildings and land in the amount of EUR 850 000 at Vecmīlgrāvja 5.līnija, Riga	Fair value has been estimated based on the average of: Market comparison technique: The fair value was based on results of comparable sales of similar buildings.	Price per m2 EUR 349 Rent rate per m2 – EUR 3.5-5 Capacity – 90%	The fair value would increase (decrease) if the price per m2 was higher (lower). The estimated fair value would increase (decrease), if: Rent rate would be higher (lower); Capacity percentage would be higher (lower);

	Discounted cash flow technique: The model is based on discounted cash flows from rendering services	Capitalisation rate – 10%	Capitalisation rate would be lower (higher).
--	--------------------------------------------------------------------------------------------------------------	------------------------------	-------------------------------------------------

ype	Valuation method	Significant unobservable data	Inter-relation between significant unobservable inputs and fair value measurement
Buildings and land in the amount of EUR 640 000 at Melīdas iela, Riga	Fair value has been estimated based on the average of:		Fair value would increase (reduce) if the price per m2 was higher (lower)
	Market comparison technique: The fair value was based on results of comparable sales of similar buildings. Discounted cash flow technique: The model is based on discounted cash flows from rendering services	Price per m2 EUR 334 Rent rate per m2 EUR 1-4.7 Capacity – 90% Capitalisation rate – 9.0%	The estimated fair value would increase (decrease), if: Rent rate would be higher (lower); Capacity percentage would be higher (lower); Capitalisation rate would be lower (higher).

According to Section 52(2)(2) of the Annual Reports and Consolidated Annual Reports Law, disclosures are provided concerning revalued fixed assets indicating their value had revaluation not taken place:

The carrying amount of land, buildings and constructions as at 31 December 2018 had revaluation not taken place would be EUR 2 952 566 (31.12.2017 – EUR 3 071 601).

2019.	2018.
EUR	EUR
4 021 290	4 021 290
(1 068 724)	(1 068 724)

(10) Long-term investments held for trading

	2019. EUR	2018. EUR
Investment in SIA Klīnika Dzintari	-	-
Building and land, Vecmīlgrāvja 5. Līnija	-	-
	-	-

On 2 August 2017, the Company's shareholders' meeting made a decision to initiate sales process regarding shares. Consequently, the assets were reclassified as at 31 December 2017 out of 'Investments in related party' into 'Long-term investments held for trading'. In February 2018, LJMC sold the shares at the amount equal to the carrying amount as at 31 December 2017.

In December 2017, management of the Company also initiated sales process regarding one of the pieces of land plots and associated buildings it owns. In March 2018, the object was sold for EUR 190 000 (carrying amount EUR 190 00).

(11) Stock

	2019. EUR	2018. EUR
Medicines in warehouse	98 184	111 405
Medicines in departments	-	5 580
Other materials	233	554
	98 417	117 539

(12) Trade receivables

	2019. EUR	2018. EUR
National Health Service	220 802	240 308
Insurance companies	54 978	70 186
Other institutions, companies and individuals	38 644	37 335
Doubtful debt allowance	(11 695)	(11 695)
	302 729	336 134

(13) Due from related parties

	2019. EUR	2018. EUR
Due from related parties, gross value	112 933	93 432
Doubtful debt allowance	(66 757)	(66 757)
	46 176	26 675

The item represents the amount due from related party Kodolmedicīnas klīnika SIA for rent payments.

(14) Other receivables

	2019. EUR	2018. EUR
Overpaid taxes (see Note 21)	26 241	25 914
Value added tax on unpaid services	36	4 640
Other receivables	18 100	4 823
	44 377	35 377

(15) Prepaid expenses

	2019. EUR	2018. EUR
Insurance	5 031	3 323
Advertising	-	297
Rent	-	26 549
Other	-	3 997
	5 031	34 166

(16) Cash

By currency:		2019		2018
		Currency	EUR	Currency	EUR
Current account	USD	5 577	4 870	5 577	4 870
Current account	EUR	-	1 734 955	-	1 830 172
Cash on hand	EUR	-	7 215	-	9 036
			1 747 040		1 844 078

(17) Share capital

Share capital of the Company as at 30 June 2019 amounted to EUR 1 120 000 (31.12.2017: EUR 1 120 000) and consisted of 800 000 shares with nominal value of EUR 1.40.

The share capital of the Company is owned by the following shareholders:

	30.06.2019.		31.12.2018.
	Number of	Holding (%)	Number of	Holding (%)
	shares		shares
Ilze Birka	140 000	17.50%	140 000	17.50%
Mārtiņš Birks	140 000	17.50%	140 000	17.50%
Ilze Aizsilniece	70 565	8.82%	70 565	8.82%
Guna Švarcberga	82 917	10.36%	82 917	10.36%
Jānis Birks	102 388	12.80%	102 388	12.80%
Adomas Navickas	54 811	6.85%	54 811	6.85%
Other shareholders (up to
5% shares per each)	209 319	26.17%	209 319	26.17%
Total	800 000	100.00%	800 000	100.00%
Share capital (EUR)	1 120 000		1 120 000

All shares of the Company are name (publicly issued shares) shares.

(18) Retained earnings

Retained earnings, including the loss of 2018 of EUR 79 828, as at 30 June 2019 amount to EUR 1 824 481 (2018: EUR 1 941 747).

(19) Revaluation reserves

Revaluation reserve as at 31 December 2018 includes the amount of revaluation of fixed assets. In 2018, the revaluation reserve has not changed. In 2017 the downward revaluation result of fixed assets amounting to EUR 92 952 was recognised under 'Revaluation reserve' in Equity.

Long-term investment revaluation reserve

	2019 EUR	2018 EUR
Revaluation reserves as at 1 January	2 292 360	2 292 360
Decrease as a result of revaluation	-	-
Disposal of disposed fixed asset reserve	-	-
Reversal of deferred tax	-	-
Revaluation reserves as at 31 December	2 292 360	2 292 360

(20) Other liabilities

	2019. EUR	2018. EUR
Salaries	216 536	193 046
Payments to the trade union	689	490
Deposited remuneration for work and injunctions	70	100
	217 295	193 636

(21) Taxes and compulsory state social security contributions

	Balance as at 31.12.2018	Calculated for 2019	Paid in 2019	Balance as at 30.06.2019
	EUR	EUR	EUR	EUR
Corporate income tax	(25 908)	-	-	(25 908)
VAT	7 862	33 212	(37 011)	4 063
Real estate tax	(6)	-	-	(6)
Natural resources tax	593	-	(920)	(327)
Risk duty	118	701	(703)	116
Social contributions	103 695	664 920	(630 693)	137 922
Personal income tax	51 295	334 826	(318 124)	67 997
Total	137 649	1 033 569	(987 451)	183 857
Including:
Overpaid taxes	(25 914)			(26 241)
Tax liabilities	163 563			210 098

Overpaid taxes are disclosed under "Other receivables".

(22) Deferred income

	2019. EUR	2018. EUR
The part of capital grants to be recongized in profit or loss
within 1 to 5 years	409 393	409 393
Lease payment of 10 years	371 250	371 250
Deferred income, long term	780 643	780 643
The part of capital grants to be recongized in profit or loss
within one year	10 514	10 514
Lease payment of 10 years	22 499	45 000
Deferred income, short term	33 013	55 514

In 2012, the Company received EBRD funding to purchase fixed assets. In 2018, the Company recognised related revenue of EUR 10 514 (2017: EUR 18 752) (see Note 5).

The Company received lease payments for the next 10 years amounting to EUR 450 000. In 2018, the Company recognised revenue of EUR 33 750 according to the terms of lease agreements that secured lease rights for a specified period and promoted operating activities in line with specific classification. Revenue is reflected under 'Income from rent', refer to Note 5.

(23) Accrued liabilities

	2019 EUR	2018 EUR
Accrued expenses on unused vacations	234 447	234 447
	234 447	234 447

240 588 467 538

Notes to the Financial Statements

(24) Average number of employees by category

	2019	2018
Average number of employees in the reporting year:	347	347
incl. Members of the Board	3	3
Members of the Council	5	5
Other employees	339	339
(25) Personnel expenses
	2019	2018
Type of costs	EUR	EUR
Remuneration	1 937 525	3 409 420
Compulsory state social security contributions	456 864	805 390
	2 394 389	4 214 810
(26) Remuneration to management
	2019	2018
	EUR	EUR
Members of the Board
remuneration	50 788	91 582
· compulsory state social security contributions	12 235	22 062
Members of the Council
remuneration	13 660	27 319
· compulsory state social security contributions	3092	6 182
Other members of the administration
remuneration	130 431	259 573
· compulsory state social security contributions	30 382	60 820

(27) Future liabilities

As at 31 December 2018, the Company has no effective future payment liabilities under agreements related to the purchase of fixed assets (31.12.2017: none).

The management has no information on issued guarantees, legal proceedings and other contingent liabilities, which could impact the financial position of the Company as at 31 December 2018 (31.12.2017: none).

(28) Related party transactions

In 2018, the Company made transactions with related parties:

— Invoices issued to SIA Kodolmedicīnas klīnika for rent payments of EUR 29 530 (2017: EUR 29 220). Seeking to limit the impact of the transaction risk on profit or loss, in 2018 the Company recognised for the receivable additional allowances of EUR 49 447 (2017: EUR 17 310).

(29) Remuneration to the certified auditor

	2019 EUR	2018 EUR
Audit of the financial statements	-	14 750
	-	14 750

(30) Information on operating lease and rent agreements with a significant impact on the Company's activities

The Company has 25 effective operating lease agreements regarding equipment. According to this agreement, lease payments are the following:

In 2018	EUR 424 653
In 2019-2021	EUR 805 095

(31) Subsequent events

No significant events have occurred from the reporting date to the date these financial statements were approved that would impact these financial statements.

Chairman of the Board Jānis Birks

Member of the Board Juris Imaks

Member of the Board Anatolijs Ahmetovs

23 August 2019

Chief Accountant Gunta Kaufmane