Siguldas CMAS

Annual Report • Mar 25, 2019

Joint Stock Company 'SIGULDAS CILTSLIETU UN MĀKSLĪGĀS APSĒKLOŠANAS STACIJA'

ANNUAL REPORT for 2018

Index of Contents

	Page
Information on the Company	3
Management Report	4
Profit or Loss Account	5
Balance sheet	6
Cash flow statement	8
Statement on changes in shareholders' equity	9
Notes to the Financial Statements	10
Report on Management Liability	22
Independent Auditors' Report	23

Information on the Company

Company's name	SIGULDAS CILTSLIETU UN MĀKSLĪGĀS APSĒKLOŠANAS STACIJA
Company's legal status	Joint stock company
Registration number, place and date	40003013295, Riga, 26 July 1991
	Registration in the Commercial Register on 19 June 2004
Legal address	'Kalnabeites' 8, Sigulda parish, Sigulda municipality, LV-2150
Shareholders holding more than 5% of the total number of voting shares	'Siguldas mākslīgās apsēklošanas stacija' Ltd. (49.92%), registration No. 40003311954
	Oļegs Radčenko (5.20%)
Members of the Management Board	Nils Ivars Feodorovs, chairman of the Management Board, holding 400 shares Sarmīte Arcimoviča, member of the Management Board, holding 4 124 shares Valda Mālniece, member of the Management Board, holding 14 260 shares
Members of the Supervisory Board	Inita Bedrīte, chairman of the Supervisory Board, holding 1 084 shares Maija Beča, deputy chairman of the Supervisory Board, holding 3 066 shares Jekaterina Kreise, member of the Supervisory Board, holding 3 683 shares Baiba Mecauce, member of the Supervisory Board, holding 10 304 shares Maruta Niedrīte, member of the Supervisory Board, holding 8 307 shares
Reporting period	01.01.2018 – 31.12.2018
Previous reporting period	01.01.2017 – 31.12.2017
Auditors	Vija Dzene Sworn Auditor Certificate No. 108
	V. Dzenes Audits Ltd. Hospitalu street 8 Riga, LV-1013, Latvia Sworn Auditors' Commercial Company's license No. 120

Management Report

Types of Operations

JSC 'Siguldas ciltslietu un mākslīgās apsēklošanas stacija' (hereinafter referred to as the Company) is one of the largest high-quality breeding bull semen producers and suppliers in Latvia. The second largest field of the Company's basic economic activities is the milk testing services. The Company also provides other breeding related services – consultations on issues of cattle breeding, feeding and keeping, evaluation of cow exterior, artificial insemination of cows, initial processing of the supervisory data.

Brief Description of the Company's Activities in the Reporting Year and Financial Condition

The Company's net turnover in 2018 was 1.1 million euros, which is by 18 thousand euros or 1.6% bigger than in 2017.

The proportion of the revenue from the Company's basic economic activities, if compared to year 2017, had not changed substantially − the revenue from the sales of the bull semen comprised 52.5% of the net turnover, whereas the milk laboratory services and processing of supervisory data services, taken together, accounted for 36.7% of the net turnover.

In 2018 the revaluation of the investment properties into the actual value resulted in profit of 2 thousand euros, whereas in 2017 it accounted for loss of 30 thousand euros.

The year 2018 resulted in losses of 11 thousand euros. Compared to 2017, the profit before taxes of the reporting year has decreased by 92 thousand euros, resulting from an increase of personnel and material costs.

In 2018 there are no major events that have affected the financial statement, as well as no significant risks that the company might be confronted with and which could have an impact on its financial situation and performance.

Future Prospects and Development

By increasing the operational efficiency of its business, the Company will continue to work on the expansion of its marketed product and service volume.

Post-Balance-Sheet Events

During the period of time in between the closing of the balance sheet and the day the report is being signed by the Board, there have been no significant events or extraordinary circumstances taking place that may influence the results of the reporting year and the Company's financial condition.

Branches and Representative Offices Abroad

The Company has no branch offices, nor any representative offices abroad.

Proposals Regarding the Use of the Company's Profit or Losses

The board's proposal is to cover the losses of the reporting year from the previous years' profits and to pay out as dividends 33 795.20 euros from the previous years' profits, which is 0.08 euros per share.

Chairman of the Management Board

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece Member of the Management Board

Member of the Management Board, Manager of the Financial and Accounting department

22 March 2019

Profit or loss account

	Note	2018 EUR	2017 EUR
Net sales	3	1 126 778	1 108 990
a) from agricultural activities		1 126 778	1 108 990
Changes in stock of ready-made goods and unfinished products	4	17 874	58 560
Other operating income	5	(188)	42 066
Costs of materials:		(511 496)	(510 001)
a) raw materials and auxiliary costs of materials		(408 943)	(376 566)
b) other external costs		(102 553)	(133 435)
Personnel costs:	6	(487 067)	(456 244)
a) salaries for work		(385 412)	(364 461)
b) state social insurance compulsory contributions		(91 481)	(82 553)
c) other social insurance costs		(10 174)	(9 230)
Depreciation adjustments:		(85 987)	(68 140)
a) depreciation adjustments of fixed and intangible assets		(52 784)	(44 024)
b) depreciation adjustments of current assets which the company considers to be above the normal write-off amounts		(33 203)	(24 116)
Other operating costs	7	(70 733)	(94 387)
Profit or loss before enterprise income tax		(10 819)	80 844
Enterprise income tax for the reporting year		-	(16 767)
Profit or loss after enterprise income tax calculation		(10 819)	64 077
Revenue or expenses from the changes in the deferred tax assets or liabilities in the balance		-	1 721
The profit or loss for the year		(10 819)	65 798
Equity per 1 share (EPS)	17	(0.026)	0.156

Notes on pages 10 to 21 form an integral part of these financial statements.

Chairman of the Management Board

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece Member of the Management Board

Member of the Management Board, Manager of the Financial and Accounting department

22 March 2019

Balance sheet

Assets	Note	2018 EUR	2017 EUR
Long-term investments
Intangible assets
Concessions, patents, licenses, trademarks and similar rights		6 966	8 918
Intangible assets total	8	6 966	8 918
Fixed assets (fixed assets, investment properties)
Fixed assets
Immovable properties - land parcels, buildings and constructions		141 649	160 442
Productive animals and perennial plantings		60 238	73 284
Technological equipment and machinery		5 475	11 109
Other fixed assets and inventory		34 078	49 281
Fixed assets total	9	241 440	294 116
Investment properties	10	59 000	57 000
Long-term financial investments
Other securities and investments	11	684	684
Long-term financial investments total		684	684
Long-term investments total		308 090	360 718
Current assets
Stock
Raw materials, basic materials and auxiliary materials		20 822	19 102
Ready-made goods and goods for sale	12	703 468	693 083
Prepayments for goods		658	150
Stock total		724 948	712 335
Receivables
Trade receivables	13	220 749	188 063
Other receivables	14	11 394	2 862
Prepaid expenses	15	11 329	11 027
Receivables total		243 472	201 952
Cash	16	295 972	333 148
Current assets total		1 264 392	1 247 435
Assets total		1 572 482	1 608 153

Balance sheet

Shareholders' equity and liabilities	Note	2018 EUR	2017 EUR
Shareholders' equity
Share capital	17	591 416	591 416
Other reserves	18	1 213	1 213
Retained earnings or loss carried forward from previous years		904 144	872 141
Profit or loss of the reporting year		(10 819)	65 798
Shareholders' equity total		1 485 954	1 530 568
Payables
Short-term payables
Prepayment received from customers		770	1 306
Trade payables		19 581	23 677
Taxes and social insurance payments	19	33 982	24 793
Other payables		20 216	17 651
Accrued liabilities	20	11 979	10 158
Short-term payables total		86 528	77 585
Payables total		86 528	77 585
Shareholders' equity and liabilities total		1 572 482	1 608 153

Notes on pages 10 to 21 form an integral part of these financial statements.

Chairman of the Management Board

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece Member of the Management Board

Member of the Management Board, Manager of the Financial and Accounting department

22 March 2019

Cash flow statement

	Note	2018 EUR	2017 EUR
Cash flow from operating activities
Income from sale of goods and provision of services		1 310 459	1 330 460
Payments to suppliers, employees, other expenses arising
from basic operations		(1 302 885)	(1 281 696)
Gross cash flow from basic operations		7 574	48 764
Expenses for enterprise income tax payments		-	(16 334)
Net cash flow from operating activities		7 574	32 430
Cash flow from investing activities
Income from dispossession of capital shares of associated
company		-	92 948
Purchase of fixed assets and intangible investments		(32 852)	(119 840)
Income from dispossession of fixed assets		11 516	16 549
Net cash flow from investing activities		(21 336)	(10 343)
Cash flow from financing activities
Subsidies received as a state support		10 716	10 528
Dividends paid		(33 795)	(63 366)
Net cash flow from financing activities		(23 079)	(52 838)
Result of foreign exchange rate fluctuations		(335)	(676)
Net increase or decrease of cash and its equivalents		(37 176)	(31 427)
Cash and its equivalents balance at the beginning of the
reporting year		333 148	364 575
Cash and its equivalents balance at the end of the reporting
year	16	295 972	333 148

Notes on pages 10 to 21 form an integral part of these financial statements.

Chairman of the Management Board

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece Member of the Management Board

Member of the Management Board, Manager of the Financial and Accounting department

22 March 2019

Statement on changes in shareholders' equity

	Share capital	Other reserves	Retained earnings carried forward from previous	Profit of the reporting year	Shareholders' equity total
	EUR	EUR	years EUR	EUR	EUR
31.12.2016	591 416	1 213	850 185	85 322	1 528 136
Profit of 2016 transferred to retained earnings of previous years Dividends for 2016 Profit for the reporting year	- - -	- - -	85 322 (63 366) -	(85 322) - 65 798	- (63 366) 65 798
31.12.2017	591 416	1 213	872 141	65 798	1 530 568
Profit of 2017 transferred to retained earnings of previous years Dividends for 2017 Profit of the reporting year	- - -	- - -	65 798 (33 795) -	(65 798) - (10 819)	- (33 795) (10 819)
31.12.2018	591 416	1 213	904 144	(10 819)	1 485 954

Notes on pages 10 to 21 form an integral part of these financial statements.

Chairman of the Management Board

22 March 2019

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece Member of the Management Board

Member of the Management Board, Manager of the Financial and Accounting department

(1) General information on the Company

JSC 'Siguldas ciltslietu un mākslīgās apsēklošanas stacija' (hereinafter - the Company) was registered in the Register of Enterprises of the Republic of Latvia on 26 July 1991 and was reregistered in the Commercial Register of the Republic of Latvia on 19 June 2004.

The Company's basic activities are agriculture and the types of business are as follows:

• production and sale of agricultural products high-quality breeding animals semen,
• making of milk analyses,
• evaluation of cow exterior,
• artificial insemination of cows,
• milk recording data processing,
• animals breeding organization.

(2) Significant accounting principles

Underlying principles of preparation of the Financial Statements

The Company's Financial Statements have been prepared according to the Law On Annual Reports and Consolidated Annual reports of the Republic of Latvia. The Profit or Loss Account is been prepared based on classification according to expense types. The Cash Flow Statement was prepared according to the direct method.

Complying the regulation stated in Article 13 Part 5 Chapter 2 of the Law On Annual Reports and Consolidated Annual reports, the Company acknowledges, assesses, shows in its financial report and provides explicative information on investment properties in compliance with the international accounting standards.

Accounting principles used

The items of the Financial Statements have been evaluated according to the following accounting principles:

• It is assumed that the Company will be a going concern;
• The same evaluation methods have been used, which were used in the previous year;
• Evaluation was done with sufficient prudence:
  • The Financial Statements include solely the profit gained until the balance sheet date,
  • All expected risk amounts and losses have been taken into account, which occurred during the reporting year or in previous years, also if they were known during a certain period of time between the balance sheets date and the day of preparing the Financial Statements,
  • All value decreasing and depreciation amounts have been taken into account irrespective whether the reporting year was closed with profit or loss;
• reporting year related income and costs were recognized irrespective of the payment date and the date of receipt or issuance of invoice. Costs have been agreed with the income in the reporting period;
• components of asset and liabilities items have been recognized separately;
• the opening balance of the reporting year agrees with the closing balance of the previous year;
• all items have been recognized, which materially influence assessment or decision-making process of the users of the annual report, insignificant items are merged and they are detailed in the Appendix;
• operating transactions in the reporting year have been recognized in the Financial Statements by taking into account their economic substance and contents, rather than legal form.

Financial instruments

Fair value of financial assets and liabilities

Fair value of financial assets and liabilities reflect the amount, for which it is possible to exchange assets or perform liabilities in a deal between well informed, interested and financially independent persons. If in the Company's management opinion, fair value of financial assets and liabilities materially differs from the value recognized in the balance sheet, then the fair value of these assets and liabilities is recognized in the Notes to the Financial Statements.

Financial risks management

Credit risk

The Company's management has developed credit policy, which is constantly controlled. Client evaluation is done for all customers above a fixed amount. The Company cooperates with clients who have proper credit assessment.

Currency risk

Based on the current structure of Company's financial assets and liabilities held in foreign currencies, the currency risk is not material.

Reporting period

The reporting period is twelve months from 1 January to 31 December 2018.

Revaluation of foreign currencies

The Company's functional currency and the currency used in the Financial Statements is euro (EUR). All transactions in foreign currencies are converted into euro according to the euro foreign exchange reference rate published by the European Central Bank on the day of particular transaction being performed.

Monetary assets and liabilities, which are shown in foreign currencies, are converted into euro according to the fixed euro foreign exchange reference rate published by the European Central Bank on the last day of the reporting period.

	31.12.2018	31.12.2017
USD	1.14500	1.19930

Currency exchange rate differences arising from settlements in currencies or when recognizing assets and liabilities by using currency exchange rates, which differ from the initial currency exchange rates used for accounting of transactions, are recognized in the profit or loss account in net value.

Recognition of income

Income is recognized according to the conviction about the Company's possibility to gain economic benefit and in the amount, in which it is possible to state it, less value added tax and sales-related discounts. When recognizing income, also the following provisions are taken into account.

Sale of goods

Income is recognized when the Company has transferred to the purchaser major risks and indemnities related to the title of goods.

Provision of services

Income from services is recognized in the period when the services are provided.

Penalty and delay charges

Income from penalty and delay charges is recognized at the moment of their receipt.

Interest

Income is recognized according to the respective period of time.

Long-term and short-term items

Long-term items include amounts whose receipt, payments or write-off terms are due later after the end of the respective reporting year. Amounts, which are receivable, payable or written off during the year, are recognized in short-term items.

Leasing transactions

Financial leasing

In cases when fixed assets are purchased on the conditions of financial leasing and the related risks and return are taken over, these fixed assets are recognized in the value, for which they could be purchased with immediate payment. Leasing interest payments and similar payments are included in the profit or loss account of that period when they occurred.

Intangible assets and fixed assets

In the balance sheet, all intangible assets and fixed assets are reflected at their purchase prices, less depreciation. Depreciation is calculated from the first date of the next month after their commissioning and finished on the first date of the subsequent month after it is excluded from fixed assets. Depreciation is calculated according to the straight line method and is written off during the useful life time of respective fixed assets by choosing the following annual depreciation rates as fixed by the management:

Intangible assets:
Licenses	5 years
Fixed assets:
Buildings and constructions	10, 20, 25, 40 and 59 years
Equipment and machinery	5, 6 and 7 years
Computer hardware and communication equipment	5 years
Inventory and tools	3 and 5 years
Other fixed assets	2 and 3 years

Balances of fixed assets have been counted in the annual count of fixed assets.

Investment properties

Investment properties – land in possession of the stock company, which market value is expected to grow. Investment properties have been filed according to their purchase value. No later than at the end of the year of account the investments properties are being revalued according to their real market value considering any other activities related to particular property. The revaluation is performed by a certified evaluator. Any changes in the market value of the investments properties are being shown in the profit and loss account.

Evaluation using a comparable transaction method was carried out by a certified evaluator:

2018 – LTD 'Eiroeksperts'

2017 – LTD 'Eiroeksperts'

Stock

Stock is recognized in the lowest cost or net sales value. All stock is assessed by using the average weighted method.

Net sales value is the sales price of stock fixed during normal Company's operations, less the stock completion and selling costs. In cases when the stock net selling value is lower than their cost price, provisions are made for these stocks for decrease of their value down to the net sales value.

All direct costs, which are related to production of breeding animals - bull semen, during the year are booked in the profit or loss account and are adjusted at the end of the year when evaluating stocks according to the lowest sales value or cost price and including them in stocks as "Ready-made goods and goods for sale".

Trade receivables and other receivables

In the balance sheet receivables are recognized in the recoverable value, provisions for doubtful and bad reiceivables having been deducted. Provisions for doubtful and bad debts are made in cases when there is objective evidence to the fact that the Company will not be able to receive the debts in full value according to the initially fixed repayment dates. Provisions for doubtful and bad debts are the difference between the amortized purchase value of receivables and the recoverable value. The recoverable value of receivables is the current value of planned cash flow.

Provisions

Provisions are recognized when the Company has liabilities (legal or substantial) due to some past event and there is a probability that the performance of these liabilities will require outflow of economic resources from the Company, and the amount of liabilities can be fairly assessed.

Corporate income tax

Corporate income tax for the reporting period consists of the tax calculated for the reporting period. Corporate income tax is recognized in the profit or loss account.

The tax calculated for the reporting period is calculated in accordance with the requirements of the Law "On Corporate Income Tax", determining the taxable base and applying the statutory tax rate of 20%.

Subsidies

Amounts, which are received as a state support for agricultural, i.e., for covering of expenses for maintaining high-quality breed bulls, are included in the income of that reporting period when they are received.

Use of assumptions

When preparing the financial statements, the Company's management has to make calculations and assumptions, which impact recognition of assets and liabilities included in the financial statements as at the day of preparing the financial statements, as well as the income and expenses recognized in the specific reporting period. Management has made profit or loss assessment and considers that the financial statements reflect the true financial condition based on all currently available information.

(3) Net sales

Sales include income gained during the year from the Company's basic activities – sales of products and provision of services without value added tax and less discounts.

Type of operations	2018 EUR	2017 EUR
Livestock sperm	591 822	593 243
Milk laboratory services	309 211	293 645
Treatment of supervisory data	104 594	108 089
Artificial insemination of livestock	39 431	42 432
Other income	81 720	71 581
	1 126 778	1 108 990

Distribution of net sales according to the geographical markets:

2017 EUR
1 108 990
1 108 990

(4) Changes in stock of ready-made goods and unfinished products

	2018 EUR	2017 EUR
Changes in sperm stock value	40 668	69 370
Written-off sperm	(22 794)	(25 308)
Breeding bulls herd value changes	-	14 498
	17 874	58 560

(5) Other operating income

	2018 EUR	2017 EUR
Income from dispossession of fixed assets	11 516	16 549
Costs of dispossession of fixed assets	(34 696)	(11 549)
Profit from dispossession of fixed assets	(23 180)	5 000
Profit from investment property revaluation	2 000	-
Profit from dispossession of capital shares of associated company	-	8 896
Profit from foreign currency exchange rate fluctuations	-	1 235
State support for agricultural	10 716	10 528
Recovered doubtful and bad debts	10 274	16 250
Other income	2	157
	(188)	42 066

(6) Personnel costs

	2018 EUR	2017 EUR
Salaries for work	368 318	344 531
Life insurance with cash value accrual	15 664	16 827
State social insurance contributions	91 090	81 821
Changes in liabilities to personnel for unused vacation	1 821	3 835
Health insurance	8 765	7 650
Other costs	1 409	1 580
	487 067	456 244

(7) Other operating expenses

	2018 EUR	2017 EUR
Insurance payments	5 049	4 328
Business trip expenses	3 661	5 261
Selling expenses	1 864	2 314
The costs of accreditation and employee training	1 572	2 548
The costs of security services	1 438	1 280
Taxes applied on the vehicles	1 946	2 480
Company's management and administrative expenses	11 044	10 781
Regulated securities market expenses	10 674	9 748
Mandatory audit of the annual report	1 600	1 600
Loss from foreign currency exchange rate fluctuations	1 053	-
Loss from investment property revaluation	-	30 000
Employees' leisure and similar costs	19 112	14 335
Real estate tax	1 853	1 849
Other costs	9 867	7 863
	70 733	94 387

(8) Intangible assets

	Concessions,
	patents, licenses,
	trademarks and
	similar rights
	EUR
Initial value
31.12.2017	10 785
Purchased	-
Disposed	-
31.12.2018	10 785
Accrued depreciation adjustments
31.12.2017	1 867
Annual write-off of the value	1 952
Adjustments to accrued depreciation of excluded intangible assets	-
31.12.2018	3 819
Book value as at 31.12.2017	8 918
Book value as at 31.12.2018	6 966

	Concessions,
	patents, licenses,
	trademarks and
	similar rights
	EUR
Initial value
31.12.2016	2 725
Purchased	8 060
Disposed	-
31.12.2017	10 785
Accrued depreciation adjustments
31.12.2016	1 393
Annual write-off of the value	474
Adjustments to accrued depreciation of excluded intangible assets	-
31.12.2017	1 867
Book value as at 31.12.2016	1 332
Book value as at 31.12.2017	8 918

(9) Report on movement of fixed assets

	Land, buildings and constructions	Productive animals and perennial plantings	Technological equipment and machinery	Other fixed assets and inventory	Total
	EUR	EUR	EUR	EUR	EUR
Initial value
31.12.2017	427 659	88 660	329 177	307 914	1 153 410
Purchased	-	21 650	-	11 202	32 852
Dispossessed or liquidated	-	(34 696)	-	(16 059)	(50 755)
31.12.2018	427 659	75 614	329 177	303 057	1 135 507
Accrued depreciation adjustments
31.12.2017	267 217	15 376	318 068	258 633	859 294
Calculated depreciation Depreciation of dispossessed or	18 793	-	5 634	26 378	50 805
liquidated fixed assets	-	-	-	(16 032)	(16 032)
31.12.2018	286 010	15 376	323 702	268 979	894 067
Book value as on 31.12.2017	160 442	73 284	11 109	49 281	294 116
Book value as on 31.12.2018	141 649	60 238	5 475	34 078	241 440

As on 31 December 2018, the cadastral value of real estate – land and constructions – was EUR 158 087.

Land, buildings and constructions	Perennial plantings	Technological equipment and machinery	Other fixed assets and inventory	Total
EUR	EUR	EUR	EUR	EUR
362 641	15 376	324 376	295 103	997 496
65 618	-	7 300	38 862	111 780
(600)	-	(2 499)	(26 051)	(29 150)
				73 284
				1 153 410
252 344	15 376	314 526	251 099	833 345
15 473	-	6 041	22 036	43 550
(600)	-	(2 499)	(14 502)	(17 601)
267 217	15 376	318 068	258 633	859 294
110 297	-	9 850	44 004	164 151
160 442	73 284	11 109	49 281	294 116
	- 427 659	73 284 88 660	- 329 177	- 307 914

As on 31 December 2017, the cadastral value of real estate – land and constructions – was EUR 158 087.

(10) Investment properties

	Land
	EUR
Book value as on 31.12.2016	87 000
Increase/decrease of value due to revaluation	(30 000)
Book value as on 31.12.2017	57 000
Increase/decrease of value due to revaluation	2 000
Book value as on 31.12.2018	59 000

(11) Other securities and investments

	EUR
Purchase value as on 31.12.2017	684
Book value as on 31.12.2017	684
Purchase value as on 31.12.2018	684
Book value as on 31.12.2018	684

(12) Ready-made products and goods for sale

	2018 EUR	2017 EUR
Bull semen	696 525	683 635
Other goods for sale	6 943	9 448
	703 468	693 083

(13) Trade receivables

	2018 EUR	2017 EUR
Accounting value of trade receivables	285 813	230 985
Provisions for doubtful trade receivables	(65 064)	(42 922)
	220 749	188 063

(14) Other receivables

	2018 EUR	2017 EUR
VAT for received goods and services	760	1 269
Overpayment of enterprise income tax	9 126	1 485
Other receivables	1 508	108
	11 394	2 862

(15) Prepaid expenses

The item recognizes the costs made during the reporting year, but referring to the next reporting periods.

	2018 EUR	2017 EUR
Advertising costs	253	433
Insurance	8 990	8 661
Press and legislation updates' subscription	1 172	1 047
Server maintenance and similar costs	356	257
Other prepaid expenses	558	629
	11 329	11 027

(16) Cash in EUR and foreign currencies according to the European Central Bank's foreign exchange reference rates

Break-down of cash according to currencies:		2018			2017
		Currency	EUR	Currency	EUR
Cash in hand	EUR	-	1 643	-	3 842
Cash in bank	EUR	-	294 329	-	329 306
			295 972		333 148

(17) Share capital

Since 21 May 2007 Company's shares are quoted on the Second List of Nasdaq Riga Stock Exchange (ISIN code: LV0000100600). The Company's share capital has been formed of shareholders' investments.

The total number of shares as per 31.12.2018 is 422 440, the nominal value of one share is 1.40 euro.

The total number of shares as per 31.12.2017 was 422 440, the nominal value of one share – 1.40 euro.

	2018 EUR	2017 EUR
Bearer shares with voting rights	590 016	590 016
Shares owned by the Board without voting rights	1 400	1 400
	591 416	591 416

421 440 shares or 99.8% of the share capital are bearer shares, which give equal rights to receive dividends, receipt of liquidation quota and voting rights in the Shareholders' Meeting.

Owners of 421 440 bearer shares according to the latest available full shareholders list requested from the Latvian Central Depository.

	2018	2017
	12.04.2018 %	11.04.2017 %
'Siguldas mākslīgās apsēklošanas stacija' Ltd	49.92	49.92
Oļegs Radčenko	5.20	5.20
Swedbank AS Clients account	3.09	5.07
Inita Bedrīte, chairman of the Supervisory Board	0.26	0.26
Maija Beča, deputy chairman of the Supervisory Board	0.73	0.73
Jekaterina Kreise, member of the Supervisory Board	0.87	0.87
Baiba Mecauce, member of the Supervisory Board	2.44	2.44
Maruta Niedrīte, member of the Supervisory Board	1.97	1.97
Sarmīte Arcimoviča, member of the Management Board	0.91	0.91
Valda Mālniece, member of the Management Board	3.31	3.31
Other shareholders	31.30	29.32
	100.00	100.00

1 000 shares or 0.24% of the share capital, which are not included in the regulated market, are personnel registered shares, which may be obtained only by Members of the Board, and they give equal rights only to receipt of dividend and liquidation quota.

Owners of the Company's personnel registered shares according to the Company's carried shareholders registry.

	2018 number	2017 number
Nils Ivars Feodorovs, chairman of the Management Board	400	400
Sarmīte Arcimoviča, member of the Management Board	300	300
Valda Mālniece, member of the Management Board	300	300
	1 000	1 000

There are no share alienation restrictions, nor the necessity to receive the Company's or other shareholders' consent for alienation of shares.

There are no restrictions on voting rights, nor any other similar restrictions.

Profit per share

Profit per one share is calculated by dividing the profit of the reporting period with the average weighted number of shares during the year.

	2018 EUR	2017 EUR
Profit or loss of the reporting period	(10 819)	65 798
Average weighted number of shares during the year	422 440	422 440
	(0.026)	0.156

(18) Other Reserves

	2018 EUR	2017 EUR
The difference of the share value resulting from the denomination of the
Company's shares from lats to euro	1 213	1 213
	1 213	1 213

(19) Taxes and social insurance payments

Tax type	2018 EUR	2017 EUR
Value added tax	13 414	5 216
Personal income tax	6 651	7 034
Social insurance payments	13 856	12 480
Nature resource tax	47	50
Business risk state fee	14	13
	33 982	24 793

Tax overpaid declared in position 'Other receivables'

(20) Accrued liabilities

	2018 EUR	2017 EUR
Calculated liabilities to personnel for unused vacation	11 979	10 158
	11 979	10 158

(21) Information on the number of management members and remuneration

	2018 EUR	2017 EUR
Remuneration to five Supervisory Board members for execution of functions,
including social insurance payments	10 474	9 951
Remuneration to three Management Board members for execution of
functions, including social insurance payments	51 147	43 058
Total remuneration to the management members	61 621	53 009

There are no special regulations put in place to regulate the election of the Management Board members, the change of the composition of the Management Board and amendments to the Articles of Association.

All Management Board members have equal Company's representation rights. The chairman of the Management Board represents the Company separately, but other Management Board members may represent the Company only collectively.

There is no agreement signed between the Company and the Management Board members ensuring any kind of compensation.

(22) Average number of employees

2018 number	2017 number
Supervisory Board members (all employees perform the functions of the
Supervisory Board member as an extra work in addition to principal work
duties) 3	3
Management Board members (two employees perform the functions of the
Management Board member as an extra work in addition to principal work
duties) 3	3
Other employees 30	29
36 Total average number of employees	35

Report on Management Liability

Based on information at the Management Board's possession the Annual Report for 2018 has been prepared according to the effective requirements of legislative enactments and provide a true and fair view of the joint stock company's 'Siguldas ciltslietu un mākslīgās apsēklošanas stacija' assets, liabilities, financial condition and profit, and the management report contains true information.

Chairman of the Management Board

Nils Ivars Feodorovs Sarmīte Arcimoviča Valda Mālniece

Member of the Management Board, Manager of the Production and Marketing department

Member of the Management Board, Manager of the Financial and Accounting department

22 March 2019

Independent Auditor's Report

To the shareholders of

AS "Siguldas Ciltslietu un Mākslīgās Apsēklošanas Stacija"

Our Opinion on the Financial Statements

We have audited the accompanying financial statements of AS "Siguldas Ciltslietu un Mākslīgās Apsēklošanas Stacija ("the Company") set out on pages 5 to 22 of the accompanying annual report, which comprise:

• the balance sheet as at 31 December 2018,
• · the profit and loss statement for the year then ended,
• · the statement of changes in equity for the year then ended,
• · the statement of cash flows for the year then ended, and
• · the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of AS "Siguldas Ciltslietu un Mākslīgās Apsēklošanas Stacija as at 31 December 2018, and of its financial performance and its cash flows for the year then ended in accordance with the 'Law On the Annual Reports and Consolidated Annual Reports' of the Republic of Latvia.

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 Financial Statements section of our report.

We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) 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 IESBA Code 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.

Key audit maters

Key audit matters are such matters which, based on our professional judgement, were the most important in reporting period s financial audit. During the audit no significant atypical transactions were found, there are no sectors associated with considerable risks and significant uncertainly. Key audit matters are not separately identified in the auditor s report. Those matters were generally addressed within the context of financial statements audit, as well as, when drafting a report on those financial statements, thus, we do not express a separate report om those matters.

Other Matter

Reporting on Other Information

The Company management is responsible for the other information. The other information comprises:

• information on the company, as set out on page 3 of the accompanying Annual report,
• · the Management Report, as set out on page 4 of the accompanying Annual Report,
• · the Statement on Management Responsibility, as set out on page 22 of the accompanying Annual Report,
• the Statement of Corporate Governance, as set out on pages 3 to 20 of the accompanying Annual Report.

Our opinion on the 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 Republic of Latvia section of our report.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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

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' of the Republic of Latvia.

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 financial statements are prepared is consistent with the 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' of the Republic of Latvia

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 the Statement of Corporate Governance includes the information required in section 56.1, first paragraph, clause 3, 4, 6, 8 and g, as well as section 56.2, second paragraph, clause 5, and third paragraph of the Financial Instruments Market Law and if it includes the information stipulated in section 56.2 second paragraph, clause 1, 2, 3, 4, 7 and 8 of the Financial Instruments Market Law.

In our opinion, the Statement of Corporate Governance includes the information required in section 56.1, first paragraph, clause 3, 4, 6,, 8 and 9, as well as section 56.2, second paragraph, clause 5, and third paragraph of the Financial Instruments Market Law and it includes the information stipulated in section 56.2 second paragraph, clause 1, 2, 3, 4, 7 and 8 of the Financial Instruments Market Law.

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

Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with the 'Law On the Annual Reports and Consolidated Annual Reports' of the Republic of Latvia and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company'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 liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 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 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 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 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 to cease to continue as a going concern.
• · Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the 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 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.

The responsible certified auditor on the audit resulting in this independent auditors' report is Vija Dzene.

Vija Dzene Certified auditor Certificate No 108 SIA "V. Dzenes Audits" Licence No 120 Member of the Board Rīga, 22.03.2019.