Akciju sabiedriba "VEF"

Interim / Quarterly Report • Aug 17, 2018

JOINT STOCK COMPANY VEF (Unified registration number 40003001328)

NON- AUDITED FINACIAL STATEMENTS For the period ended on June 30, 2018

CONTENTS

General information

Report on the Management Board's responsibility

Management report

Balance sheet

Income statement

Cash flow statement

Statement of changes in equity

Notes to the financial statement

1

GENERAL INFORMATION
Title of enterprise	Joint stock company VEF
Legal type of enterprise	Public joint stock company
Registred:	On April 15, 1991 in the Register of Enterprises of the Republic of Latvia, re registred on December 7, 2000 with Nbr. 000300132
	On April 14, 2004 registered in the Commercial Register, Nbr. 40003001328
Taxpayers' Reg. Nbr.	LV 40003001328
Legal address	Brīvības gatve 214, Rīga, LV-1039, Republic of Latvia
Equity capital 1 :	EUR 2 722 492 paīd and registered equity capital.
Core businesses:
	Power supply - distribution of power; Letting and renting of real-estate property
Name of the holder of shares	As on June 30, 2018:
and share capital (%)	*VEF KOMUNIKĀCIJU SERVISS SIA- 45.52 % ;
	*Laila Līduma	– 6.31 % ;
	* Tamāra Kampāne * Gints Feņuks	-11.68 % ; - 24.50 % ;
	*Other shareholders	- 11.99 %.
Chief executive officer:	Chairman of the Board of the Company:
	GINTS FENUKS
Members of the Board:	TAMĀRA KAMPĀNE
	MĀRTINŠ CAUNA
	MODRIS ZOMMERS
Members of the Supervisory Council:	LAILA LĪDUMA
	ERVINS KAMPĀNS
	GUNTIS LIPIŅŠ
	EGILS ARAJS
Period of account:	01.01.2018. - 30.06.2018.
Qualified auditor:	GUNTA DARKEVICA . Certificate Nbr.165

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

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

Report on the Management Board's responsibility to the non-audited financial statement of JSC "VEF" for the six months of 2018

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

Middle-term financial statements are prepared based on justifying documents and represent true and clear overview on the Company's Assets and Equity and Liabilities, its financial standing and results of activity as well as cash flows within the reporting period ended on June 30, 2018.

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

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

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

Gints Fenuks Chairman of the Management Board

Management report

Joint stock venture VEF is a publicly traded company that is doing business by managing it own real estate property, renting business spaces, and also providing electricity distribution services for business located in the VEF territory.

Net cash flow/turnover of the joint venture within the reported year reached 656 880 EUR that is higher by 4.78 % in comparison with the last period reported.

Currently the Company continues to provide full set of services and is executing the planned renovation of its real estate that is required since buildings are in use for more than fifteen years. Renovation works have been started and the necessary substantial investments the Company is covering from own reserves.

The Company is preparing to reconstruct premises previously used for production and convert these premises into office spaces to successfully attract new customers. To cover investments required for these activities the Company is also planning to use its own resources - only in the case of necessity bank financing will be attracted. As of planned works for the next reporting period the Company is planning to invest in improving roads and energy efficiency that are important for existing and new potential customers.

The Board of JV VEF holds to the strategic plans of the company according to economic developments in the country and following to the trends of the real estate rent and energy markets.

Company's operations are impacted by different financial risks including credit risks, volatility of interest rates. Company's management tries to minimize negative effects of potential financial risks to Company's financial results. Company's management strongly believes that the Company will have enough financial resources in order not to jeopardize its liquidity.

Equity capital of the Company is 2 722 492 EUR. The Company's equity capital consists of 623 528 bearer shares and 1 321 109 nominal shares. Nominal value of each share is 1.40 EUR.

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

Gints Fenuks Chairman of the Management Board

EUR	EUR	EUR
30.06.2018	30.06.2017	31.12.2017
45	52	49
45	52	49
5 501 529	5 440 431	5 530 695
54 014	23 078	27 393
0	0	0
5 555 543	5 463 509	5 558 088
5 555 588	5 463 561	5 558 137
56 329	47 348	11 488
		20 073
		5 318
0	0	49 728
100 399	81 720	86 607
295 812	204 509	212 060
396 211	286 229	298 667
5 951 799	5 749 790	5 856 804
	41 204 2 866	30 048 4 324

LIABILITIES

	EUR	EUR	EUR
	30.06.2018	30.06.2017	31.12.2017
Stockholder's Equity
Common stock	2 722 492	2 722 492	2 722 492
Rezerve	44 477	44 477	44 477
Long-term investments revaluation reserve	665 655	673 774	665 655
Total accumulation
Retained earnings from the previous years	-318 072	-570 644	-570 644
Retained earnings of the financial years	144 963	89 109	252 572
Total stockholder's equity	3 259 515	2 959 208	3 114 552
LIABILITIES
Long-term liabilities
Borrowings from credit institutions	2 432 612	2 572 955	2 432 612
Prepayments from buyers	30 547	30 547	30 547
Other liabilities		0	0
Total long-term liabilities	2 463 159	2 603 502	2 463 159
Current liabilities
Borrowings from credit institutions	77 562	70 172	140 343
Accounts payable	40 087	34 322	50 320
Taxes and social security payments	28 590	22 731	32 782
Other liabilities	10 014	10 132	9 234
Prepayments from buyers	17 086	16 380	16 353
Accrued liabilities	24 986	19 501	24 986
Other loans	30 800	13 842	5 075
Total current liabilities	229 125	187 080	279 093
Total liabilities	2 692 284	2 790 582	2 742 252
TOTAL LIABILITIES&STOCKHOLDER'S	5 951 799	5 749 790	5 856 804

EQUITY

PROFIT AND LOSSES ACCOUNT FOR YEAR, WHICH ENDS ON JUNE 30.2018.

		EUR 30.06.2018 -	EUR 30.06.2017 -
Net turnover	1	656 880	625 511
Cost of goods sold	2	-417 091	-435 868
Gross profit		239 789	189 643
Administrative expenses	3	-54 671	-52 949
Other income from operations	4	15 594	1 950
Other expenses from operations	5	-1 502	-949
Finansial services income
Finansial services expenses	6	-54 247	-48 586
Profit before taxes		144 963	89 109
Other taxes	7	0	0
Net profit		144 963	89 109
Earnings per share (EPS)		0 .07	0 .05

Chairman of the Board G.Feņuks Member of the Board T.Kampane

CASH FLOW STATEMENT FOR YEAR THAT ENDS ON JUNE 30, 2018

		2018 30.06.	2017 30.06.	2017 31.12.
		EUR	EUR	EUR
I.	CASH FLOW FROM OERATING ACTIVITIES
	Profit before outstanding items and taxes (+) Adjustments:	144 963	89 109	258 354
	fixed assets depreciation ( +) intangible assets depreciation (+)	33 413 4	38 114 4	70 739 7
	finacial services income Profit or losses before adjustments from current assets and liabilities	54 247 232 627	48 586 175 813	105 483 434 583
	Adjustments: debtors : increase (-); decrease (+)	-13 792	65 826	60 939
	liabilities: increase (-); decrease (+)	22 267	-28 912	-12 204
	Gross cash provide by operating activities Payments for financial	241 102 -54 247	212 727 -48 586	483 318 -105 483
	Net cash provided by operating activities before outstanding items: Cash flow from outstanding items (-/+)	186 855	164 141	377 835
	Net cash provided by operating activities :	186 855	164 161	377 835
II.	CASH FLOWS FROM INVESTING ACTIVITIES :
	Fixed assets purchase	-30 867	0	-127 205
	Net cash used in investing activities :	-30 867	0	-127 205
III.	CASH FLOWS FROM FINANCING ACTIVITIES:
	Expenses for borrowings repayment	-62 781	-70 172	-140 343
	Expenses on leasing liabilities	9 455	-9 828	-18 595
	Net cash provided by financing activities :	-72 236	-80 000	-158 938
	Net cash flom	83 752	84 141	91 692
	CASH AT BEGINNING OF YEAR	212 060	120 368	120 368
	CASH AT END OF YEAR	295 812	204 509	212 060

STATEMENT OF CHANGES IN EQUITY FOR YEAR THAT ENDS ON JUNE 30, 2018

	30.06.2018 EUR	30.06.2017 EUR	31.12.2017 EUR
Stockholder's eguity
Balance at the beginning of the
financial year	2 722 492	2 722 492	2 722 492
Increase from
Decrease from denomination of
shares from lats to euro
Balance at the end of the financial year	2 722 492	2 722 492	2 722 492
Long-term investments revaluation
reserve
Balance at the beginning of the financial year	665 655	673 774	673 774
Increase from
Decrease from			-8 119
Balance at the end of the financial year	665 655	673 774	665 655
Accumulations
Balance at the beginning of the	44 477	44 477	44 477
financial year Increase from denomination of shares
from lats to euro
Decrease from
Balance at the end of the financial year	44 477	44 477	44 477
Retained earnings Balance at the beginning of the
financial year	-318 072	-570 644	-570 644
Profit or losses of the finacial year	144 963	89 109	252 572
Dividendes
Included in accumulations
Balance at the end of the financial year	-173 109	-481 535	-318 072
Stockholder's eguity (total) Balance at the beginning of the
financial year	3 114 552	2 870 099	2 870 099
Balance at the end of the financial year	3 259 515	2 959 208	3 114 552

(1) Net turnover

Turnover consists of revenues that the Company gained in the first six months of 2018 from its core business-service provision without VAT

Type of commercial operations	2018.06.30	2017.06.30
	EUR	EUR
power supply, distribution and servicing	157 313	165 527
office renting service	339 019	341 871
utility services	160 548	118 113
Total	656 880	625 511

Distribution of net turnover by geographical markets

	2018.06.30	2017.06.30
Country	EUR	EUR
Latvia	656 880	625 511
Total	656 880	625 511

(2) Cost of sales

	2018.06.30	2017.06.30
	EUR	EUR
personnel	90 6401	88 821
depreciation	33 413	38 114
transport	5 678	6 169
other outstanding costs	206 366	221 780
personnel training	53	78
telecommunication service	635	777
other costs tied to commercial operations	63 170	58 266
insurance (buildings)	2 606	2 651
land rent to LPA	3 694	3 586
real estate tax (buildings ,land)	9 728	15 445
cash turnover expenses	206	177
business travel expenses	899	0
depreciation of license	4	4
Total	417 092	435 868

(4)

2018.06.30	2017.06.30
EUR	EUR
42 000	39 189
635	777
570	119
5 678	6 169
49	116
2 179	3 019
3 560	3 560
54 671	52 949

Other revenues from commercial

operation
	2018.06.30	2017.06.30
	EUR	EUR
fines	674	835
other revenues	14 920	1 115
Total	15 594	1 950

Other costs of commercial

(5) operations

	2018.06.30 EUR	2017.06.30 EUR
60% of representative costs	39	210
allowances and bonuses	727	699
fines	0	40
other expenses	736
Total	1 502	949
Payments of interest and similar
expenses	2018.06.30	2017.06.30
	EUR	EUR
credit interests	54 221	48 344
līzing	26	242
Total	54 247	48 586