SAF Tehnika

Annual / Quarterly Financial Statement • Oct 20, 2014

A/S SAF Tehnika Consolidated financial statements

for the year ended 30 June 2014

Contents

Information on the Parent company	3
Management Report	4 - 5
Statement of the Board's Responsibilities	6
Independent Auditors' Report	7 - 8
Consolidated financial statements:
Consolidated Statement of Financial Position	9
Consolidated Statement of Profit or Loss and Other Comprehensive Income	10
Consolidated Statement of Changes to the Shareholders' Equity	11
Consolidated Statement of Cash Flows	12 - 13

Notes to the Consolidated Financial Statements

14 - 43

17, 2

Information on the Parent company
Name of the Company	A/S "SAF Tehnika"
Legal status	Joint Stock Company
Number, place and date of registration	40003474109 Riga, Latvia, 27 December 1999 Registered with the Commercial Register on 10 March 2004
Adress	Ganību dambis 24a Riga, LV -1005 Latvia
Name of shareholders	Didzis Liepkalns (17.05%) Andrejs Grišāns (10.03%) Normunds Bergs (9.74%) Juris Ziema (8.71%) Vents Lācars (6.08%) lvars Senbergs (5.27%) (līdz 04.09.2013) Koka Zirgs SIA (5.27%) (no 04.09.2013) Swedbank AS clients (5.02%) Other shareholders (48.10%)
their positions	Names of the Council members, Vents Lācars - Chairman of the Council Juris Ziema - Member of the Council Andrejs Grišans - Member of the Council Ivars Senbergs - Member of the Council Aivis Olšteins - Member of the Council
their positions	Names of the Board members, Didzis Liepkalns - Member of the Board Aira Loite - Member of the Board
Reporting period	01 July 2013 - 30 June 2014
Previous reporting period	01 July 2012 - 30 June 2013
Subsidiary	100% - SAF North America LLC 10500 E.54th Avenue, Unit D Denver, Colorado 80239, USA
Joint venture	50% - SAF Services LLC 10500 E.54th Avenue, Unit D Denver, Colorado 80239, USA
Auditors and address	KPMG Baltics SIA Licence nr. 55 Vesetas iela 7 Rīga, LV-1013 Latvia
	Armine Movsisjana Sworn Auditor Certificate No. 178

月 2017-07-3

Management report

Line of business

SAF Tehnika (hereinafter — the Group) is a developer, manufacturer and distributor of digital SAF Tennika (herematter = the Group) is a conprehensive and cost effective wireless broadband
microwave equipment. The Group provides comprehensive and mobile network operato microwave equipment. The Group provided outfixed and mobile network operators connectivity solutions for ugital volce and auto framestic sectors as an alternative to cable networks.

Group's net turnover in financial year 2013/ 2014 was 12.03 million EUR, 1.3 million or 9.9 % less Group's net turnover in innalial year (2013) Considering the decline in demand in microwave
than in the previous financial year (2012) Considering in Group performe than in the previous imancial year (2012) 2010). Sonological (1984). "Strated its historically wide sales market assessment, focusing consequently on markets with strategically historically wide sales manker assessment; foolvement in less perspective regions. Also, Group's greater potentiall and decleasing Tesource firvorsific customers was aimed to develop niche product
assessment and identification of the needs of specific customers was aimed assessment and identification of the heeds fr specific our of specific customer required
supply. Additional revenue was trawn from the supply. Additional revenue was urawn from the acvelopment and construction.

and our of the previous financial year, the turnover of European and CS region had increased In comparison to the previous linancial year, the tarnsver to turnover for Asia, Middle, by 2%, however, this increase and not make up of till cominates the market where wireless data
East and Africa countries - a fierds competition still cominates the market ser East and Africa countries – a liece continential orine wars. Sales on the America's transmission equipment is sold, and Suppliers are onstituted 44% of annual turnover. In
region, include countries of North, South and C8% decrease - A neable contribution was region, include countries of Noth, Soun and GS Marisher contribution was made to the comparison to the previous year there was a o'y its USA group company 'SAF North America'.
Group's product marketing in the USA and vershouse and logictic services in the rep Group's product marketing in the USA and Canada by its SOA group company in the reporting year.
Besides, the Group company provided product warehouse and logistic services in

Export accounts for 97.2% of the turnover and was 11.69 million EUR. In the reporting period Group's production was exported to 79 countries worldwide.

SAF Services, Group joint venture, was established with the aim to provide network construction and SAF Services, Group Joht venure, was established with the first trial network, but was not able to get return from this investment.

go romote the recognition of SAF brand, introduce existent as well as potential oustomers with SAF
To promote the recognition of SAF brand as native nationation in the most s To promote the recognition of SAF oranic, introduce in the most significant industry products and solutions, the Group Cofilined an activities were supported by Investment
exhibitions in Europe, America and Africa Stourise were supported by Investment exhibitions in Europe, America and Allica. Groups exporticipation in some of industry exhibitions.
and Development Agency of Latvia than by outsment to the new SAF Tehnika w and Development Agency of Latvia that co-minancing the parties of the Massale that was
An approval in assessment was given by customers to Tehnika webgage An approval in assessment was given by oustomoro to wild information about products and video materials on their application are available on the webpage.

In the reporting period, CFIP products were on the highest demand, and FreeMile, Lumina and In the reporting period, CFF products were on the newest serial products that Marathon were the best selling then sin a growing year. These products were Spectrum
were given in the production in the Course of the reportion radio systems were given in the production in the course on the reporting your. Proce (
Compact - a measurement equipment for field engineers and Infegra – next generation radio systems Oompaot - a moatest modem processing and radio technologies.

that employers competitiveness, the Group was searching for a possible object as to reduce product, To increase its competitiveness, the Group's operational costs in the reporting year did not
manufacturing and other costs. In the like are view your docreased for 10% manufacturing and other costs. In Tesail, "Oroup of except for 10%.

excearding has secured its financial stability. Group's net cash flow was positive regarding the SAF Tehnika has secured its infancial stablily. Croup only in compliance with warranty
12 month period and constituted 1.27 million EUR. In the amount of 520 thousand USD by 12 month period and constitutied 1.2 million contri nation of 620 thousand USD by
contract of export credit, the Group received compensation in the Brazilian partner on Decem contract of export credit, the Group received deliveries made to the Brazilian partner on December
Latvian Guarantee Agency due to the unpaid deliveries made to the network Latvian Guarantee Agency ado to the television broadcasting network.
2012 in order to execute the project of Brazilian television broadcasting network.

Management report (continued)

In the reporting period, the Group invested 242 thousand EUR infrastructure, production and research equipment, software, licenses and product certification purchases.

The Group finalized financial year 2013/ 2014 with a profit of 127 thousand EUR.

Research and development

In a long term, Group's precondition and key to success is its ability to constantly develop, its in a long tenn, Group's precomation and orduct line development expanding the improvement of products. In the reporting year, and solutions were drawn regarding the improvement of different frequency bands continued, and reduction of product's manufacturing of data transmissioning of data transmission fullchollarly and quality mecers and money spent on commissioning of data transmission desire of customers to leasen the time and more, silvers component in the market, equipment, and, thoreover, incentrying the spectrum Compact's newest versions, Group not only continued working on the sim generator. Also new additions are made to existing but also created a 'new 'device = spection' generale = not not not projects has gained a co-finance from
products. In the reporting period, Group's product development projec "LEO Petijumu centrs" in the amount of 253 thousand EUR.

Future perspectives

Group has been able to gain long-term experience and knowledge in the microwave radio field and is Group has been able to gain long terrene to a wide range market, proposing unique offer and able able to provide excellent quality productives and demands. Group is financially stable and able developments that are based on customer when other rivaling companies are not successful, egyingent to withstand in these economically diffeder the work on next generation data transmission equipment The fask of the Group is to continue the work of includion of production of production of production of development, putting a locus on advancement or ranstitution of ranselfally, restore revenue levels to provide long-term positive net results.

Group remains financially stable and with positive outlook for the next financial year, however the Group remains financially Stable and with positive outfool his now financial results announcements.

Normunds Bergs Chairman of the Board Didzis Liepkalns Member of the Board

Aira I oite Member of the Board

Riga, 17 October 2014

Statement of the Board's responsibilities

The Board of SAF Tehnika A/S (hereinafter – the Parent company) is responsible for preparing the The Boald of SAF Tennika AO (neremaner - the Parent Soniciaries (hereinafter - Group).

The financial statements set out on pages 9 to 43 are prepared in accordance with the source The Tinancial statements Set but on playes of to 40 pition of the Group as at 30 June 2014 and
documents and present fairly the consolidated financial position of the Goodpas documents and proceial performance and cash flows for the year then ended.

The above mentioned financial statements are prepared in accordance with International Financial The above mentioned illiancial statentens are propriam nacea going concern basis. Appropriate
Reporting Standards as adopted by the Reporting Standards as adopted by the European Union on added and reasonable judgments and estimates have been made by the Board in the preparation of the financial statements.

The Board of SAF Tehnika A/S is responsible for the maintenance of proper accounting records, the The Board of SAF Tennika AJS Is responsible for the mantanetic on of fead and other integularities
safeguarding of the Group's assets and the prevention of normaliye acts of safeguarding of the Group s'assels and the prevention and velcosments of normative acts of the
in the Group. The Board is also responsible for compliance with regular of the in the Group. The Dour is also response (Latvia and United States of America).

On behalf of the Board:

Normunds Bergs Chairman of the Board

Aira I oite Member of the Board

Riga, 17 October 2014

Didzis Liepkalns Member of the Board

KPMG Baltics SIA Vesetas iela 7 Riga LV 1013 Latvia

Phone +371 670 380 00 +371 670 380 02 Fax Internet: www.kpmg.lv

Independent Auditors' Report

To the shareholders of A/S "SAF Tehnika"

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of A/S "SAF Tehnika" and its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 30 June 2014, the consolidated statements of profit and loss and other comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 9 to 43.

Management's Responsibility for the Consolidated Financial Statements

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

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether these financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of these financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the Group's preparation and fair presentation of these financial statements 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 Group's internal controls. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by the Group management, as well as evaluating the overall presentation of the consolidated financial statements.

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

KPMG Baltics SIA, a Latvian limited liability company and a member firms affilizated
firm of the KPMG network of independent member firms affilizated
with KPMG International mber firms affiliated Swiss entity.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the A/S "SAF Tehnika" and its subsidiaries as at 30 June 2014, and of its consolidated financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Report on Other Legal and Regulatory Requirements

In addition, our responsibility is to assess whether the accounting information included in the Consolidated Management Report, as set out on pages 4 to 5, the preparation of which is the responsibility of management, is consistent with the consolidated financial statements. Our work with respect to the Consolidated Management Report was limited to the aforementioned scope and did not include a review of any information other than drawn from the consolidated financial statements of the entity. In our opinion, the Consolidated Management Report is consistent with the consolidated financial statements.

KPMG Baltics SIA License No 55

Armine Movsisjana Member of the Board Sworn Auditor Certificate No 178 Riga, Latvia 17 October 2014

Consolidated statement of financial position

			JU Julie
	Note	2014 EUR	2013 EUR
ASSETS
Non-current assets Property, plant and equipment Intangible assets	6 6 29	533 616 208 171 13 910	700 359 201 639 14 380
Equity-accounted investees Investments in other companies Long term trade receivables	8	1 188 53 526 98 684	1 188 64 404 123 194
Deferred tax asset Total non-current assets	12	909 095	1 105 164
Current assets	7	4 498 753	4 251 795
Inventories	25	69 194	163 791
Corporate income tax receivable	00	1 934 515	2 680 444
Trade receivables	ത	261 620	220 716
Other receivables		109 354	125 379
Prepaid expenses	28	180 581	361 050
Loans Placements with banks	10		590 581
Cash and cash equivalents	11	4 082 555	2 809 297
Total current assets		11 136 572	11 203 053
Total assets		12 045 667	12 308 217
SHAREHOLDERS' EQUITY	13	4 226 185	4 226 185
Share capital		2 851 725	2 851 725
Share premium		(562)	(50)
Translation reserve		3 252 648	3 125 599
Retained earnings Total shareholders' equity		10 329 996	10 203 459
LIABILITIES
Current liabilities	14	903 846	1 310 317
Trade and other payables	14	14 643	87 836
Provisions	14	684 991	429 880
Other liabilities	15	6 781	14 081
Loans	16	105 410	262 644
Deferred income Total liabilities		1715 671	2 104 758
Total oguity and liabilities		12 045 667	12 308 217

Total equity and liabilities

The accompanying notes on pages 14 to 43 form an integral part of these consolidated financial statements.

Normunds Bergs Chairman of the Boards Aloria

Didzis Liepkalns Member of the Board

Aira Loite Member of the Board

Riga, 17 October 2014

Consolidated Statement of Profit or Loss and Other Comprehensive Income vear ended Earth

		1 81 1110 1001 0000
	30 June
	Note	2014	2013
		EUR	EUR
	17	12 025 751	13 341 172
Net sales	18	(8 877 754)	(10 091 135)
Cost of goods sold		3 147 997	3 250 037
Gross profit
	19	(2 357 373)	(2 450 742)
Sales and marketing expenses	20	(816 473)	(855 277)
Administrative expenses		(25 849)	(55 982)
Loss from operating activities
	21	330 149	84 665
Other income
	22	19 411	55 778
Financial income	23	(144 777)	(88 289)
Financial expenses		(125 366)	(32 511)
Net financial expenses
Share of profit/ (loss) of equity-accounted investees, net	29	(27 375)	(23 451)
of tax		151 559	(27 279)
Profit/ (loss) before taxes			(14 714)
Corporate income tax	24	(24 510)
Current year's profit/ (loss)		127 049	(41 993)
Other comprehensive income
Foreign currency recalculation differences for foreign		(512)	(123)
operations		126 537	(42 116)
Total comprehensive income
Profit/ (loss) attributable to:			(41 993)
Shareholders of the Parent		127 049
Total comprehensive income attributable to:			(42 116)
Shareholders of the Parent		126 537
Earnings per share attributable to the shareholders of the Parent
(EUR per share)	26	0.043	(0.014)
Basic and diluted earnings/ (loss) per share

The accompanying notes on pages 14 to 43 form an integral part of these consolidated financial statements.

Normunds Bergs Chairman of the Boards

Didzis Liepkalns Member of the Board

Aira Loite Member of the Board

Riga, 17 October 2014

Consolidated Statement of Changes to Shareholders' Equity

	Share capital EUR	premium EUR	Share Translation reserve EUR	Retained earnings EUR	Total EUR
Balance as at 30 June 2012	4 226 185	2 851 725	73	3 590 211	10 668 194
Transactions with owners of the Parent company, recognised					(422 619)
directly in Equity				(422 619)
Dividends for 2011 / 2012				(422 619)	(422 619)
Total comprehensive income			(123)	(41 993)	(42 116)
Loss for the year				(41 993)	(41 993)
Other comprehensive income			(123)		(123)
	4 226 185	2 851 725	(50)	3 125 599	10 203 459
Balance as at 30 June 2013 Transactions with owners of the Parent company, recognised
directly in Equity
Total comprehensive income			(512)	127 049	126 537
Profit for the year				127 049	127 049
Other comprehensive income			(512)		(512)
Balance as at 30 June 2014	4 226 185	2 851 725	(562)		3 252 648 10 329 996

The accompanying notes on pages 14 to 43 form an integral part of these consolidated financial statements.

1

Normunds Bergs Chairman of the Boards 8 070

Didzis Liepkalns Member of the Board

Aira Loite Member of the Board

Riga, 17 October 2014

= 11

Consolidated Cash Flows Statement

	Note		For the year ended 30 June
		2014 EUR	2013 EUR
Profit/(loss) before taxes		151 559	(27 279)
Adjustments for:	ട	331 796	324 212
- depreciation	රි	84 085	84 169
- amortisation	7	(147 159)	(99 837)
- changes in write-down to net realizable value	14	(2 049)	(5 132)
- changes in provision for guarantees	14	3 179	19678
- changes in provisions for unused vacations	14	(71 144)	71 144
- changes in bonuses	00	(24 707)	123 998
- changes in doubtful debt allowances	22	(19411)	(55 778)
- interest income - share of profit/ (loss) of equity-accounted investees,
net of tax		27 375	23 451
- government grants	21	(297 609)	(63 372)
- (profit)/ loss on disposal of property, plant and		6 005	(1 555)
equipment		41 920	393 699
Operating profit/ (loss) before changes in current assets		(99 799)	81 513
(Increase)/ decrease in stock		932 636	(886 253)
(Increase)/ decrease in receivables		(142 796)	450 988
Increase/ (decrease) in payables		731 961	39 947
Cash from operating activities	21	111 957	70 183
Government grants Other payments related to corporate income tax	25	(69 194)	(44 232)
Net cash flows from operating activities	25		(3 927)
Government grants		774 724	61 971
Cash flows from investing activities	6	(175 555)	(439 706)
Purchase of property, plant and equipment		48	1 636
Proceeds from sales of property, plant and equipment	6	(86 168)	(47 544)
Purchase of intangible assets		24 345	68 267
Interest income			(477)
Investments in other companies	29	(26 905)	(37 831)
Investment in equity-accounted investees			(400 000)
Loans issued		180 000	75 103
Loans repayment received
Net cash received from placements with banks/		590 581	2 053 674
(placed with banks)		506 346	1 273 122
Net cash flows from investing activities

The accompanying notes on pages 14 to 43 form an integral part of these consolidated financial statements.

Consolidated Cash Flow Statement (continued)

	Note	For the year ended 30 June
		2014 EUR	2013 EUR
Cash flows from financing activities (Repaid)/ received loans		(7 300)	6276
Dividends paid			(422 618)
Net cash flows from financing activities		(7 300)	(416 342)
		(512)	(123)
Net increase of cash and cash equivalents		1 273 258	918 623
Cash and cash equivalents at the beginning of the year		2 809 297	1 890 669
Cash and cash equivalents at the end of the year	11	4 082 555	2 809 297

The accompanying notes on pages 14 to 43 form an integral part of these consolidated financial statements.

Normunds Bergs
Chairman of the Boards Ports

Didzis Liepkalns Member of the Board

Aira Loite Member of the Board

Riga, 17 October 2014

Notes to the consolidated financial statements

1. General information

The core business activity of SAF Tehnika A/S (hereinafter - the Parent company) and its subsidiary (together hereinafter referred to as Group) is the design, production and distribution of microwave (logement nelematier relement offering an alternative to cable channels. The Group offers and radio data transmission oquipment one include providers (such as liternet service providers and products to mobile network open as well as state institutions and private companies.

Promotion of the Parent's products and services, market research, attraction, of new Promotion of the Parent of products and size is provided by a 100% subsidiary SAF North America LLC.

In August 2012 another company began operations in North America - SAF Services LC in which In August 2012 another Company began Uporumenture arrangement). The objective of establishing the Parent company notus 30% shares goint viltere with the creation, long-term SAF Services LLC was to provide it data transmission networks. Both of these companies are registered in the USA and operate in Denver, Colorado.

The Parent company is a public joint stock company incorporated under the Republic of Letvic The Parcht Sompany is Ganību dambis 24a, Riga, Republic of Latvia.

The shares of the Parent company are listed on NASDAQ OMX Riga Stock Exchange, Latvia.

These consolidated financial statements (hereinafter – financial statements) were approved by the These consolidated infancial statements (nel Than in the presented for approval Parent company's Board of 17 October 2014. The intentential the financial statements.
to the shareholders' meeting. The shareholders have the power the power the personal sta to the shareholders' meeting. The shareholders nave the power to reguest that new financial statements be issued.

2. Summary of accounting principles used

These consolidated financial statements are prepared using the accounting policies and valuation These consolidated financial statements are prepared using the doobming polices of the years presented, unless otherwise stated.

The previous set of consolidated financial statements was prepared for the financial year ended l he previous set of consolidated finance was promotion on Ganibu dambis 24a, Riga,
30 June 2013 and are available at the Parent company's headquires com 30 June 2015 and at the Parent company's website: www.saftehnika.com.

A Basis for preparation

These financial statements have been prepared in accordance with the financial statements have These financial statements have been propan Union (IFRSs). The financial statements have Reporting Standards as adopted by the curopean only including financial instruments available-for-sale
been prepared under the historical cost convention (including financial as it is impracticable to determine their fair value).

New standards and interpretations

Standards, amendments to standards and interpretations for the first time are applicable to financial statements for year ended on 30 June 2014:

· Amendments to IFRS 7 Disclosures (effective for annual periods beginning on or after 1 January Amendments to TFKS 7 Disclosures (onconver encludes requirements for financial assets and 2013; to be applied fetrospectively) contain of financial position or subject to master netting liabilites that are "offsel" in the "statement" on the financial statements as "
arrangements or similar agreements. Amendments have the Croup arrangements of Silliabilities offsetting is not performed by the Group.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

New standards and interpretations (continued)

• IFRS 13 Fair Value Measurement (effective prospectively for annual periods beginning on or after 1 January 2013). IFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes If KSS with a single ourlow and sets out disclosure requirements for fair value a Tranlework Tor measuring "tail" value when it is required or permitted by permitted by measurements in No 10 Oxplains not impact on the financial statements since management other TFRSS. Annendments nave 'no 'impact on the fair value of assets to be consistent with IFRS 13.
• Amendments to IAS 12: Deferred Tax: Recovery of Underlying Assets (effective for annual Amendments to TAS 12. Delened Trax. 1003; to be applied retrospectively). The amendments introduce a rebuttable presumption that the value of investment property measured usings Introduce a rebuttable presumption that the burny by sale. Management's intention would not be the fair value model would be tecoved is depreciable and held within a business model whose relevant unless the investment proporty to as a setis economic benefits over the life of the asset.
  objective is to consume substantially all of the asset's echa rebutted. No objective is to consume substantally all of the rebutted. No investment property held
  This is the only instance in which the presumption on the finencial atatoments This is the only instanto in which in which in the financial statements.
• · IAS 19 (2011) Employee Benefits (effective for annual periods beginning on or after 1 January IAS 19 (2011) Employee Benehis (enecifical provisions apply). The amendment requires
  2013; to be applied retrospectively. Transitions apply). The amendment income. The 2013; to be applied Tetrospectively. Transitional provision other comprehensive income. The actuarial gains and Tosses to be recognized inimes active to recognizing actuarial gains and amendment removes the corndor metrod provize all changes in the defined benefit losses, and eliminates the ability for entiles to "coognity is allowed under the requirements of obligation and in plan assets in profit of loss, which on plan assets recognized in profit of IAS 19. The amendment also requires the expected return on plan as a more of the mondments have no impact on the financial statements.

B Consolidation

(a) Subsidiaries

(a) Subsidianos
Subsidiaries are entities controlled by the Group controls and has the ability to affect those Subsidiaries are entitles controlled by the Group. The Group online and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from The financial statements of subsidianes and in the date on which control ceases. Subsidiary was
the date on which control commences until the damn'id established; therefore acquisition accounting was not applied.

(b) Joint ventures

The Group's interests in equity-accounted investees comprise interest in a joint venture.

l he Group s interests in equity at the Group has joint control, whereby the Group has rights A joint venture is an arrangement in which the Group has joint on its liabilities.
to the net assets of the arrangement, rather than rights to the cro-recognized initial

to the net assets of the arrangement, the equity method. They are recognized initially
Interests in the joint venture are accounted to initial recognition, the consolidated f Interests in the joint venture are accounted in thitlial recognition, the consolitated financial
at cost, which includes transaction costs. Subsequent to income of equityat cost, which includes transaction coss. Subsequent to includes and other comprehensive income of equitystatements include the Group's share of the portiol coases statements include the Group Cate on which joint control ceases.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

B Consolidation (continued)

Subsidiaries and joint ventures controlled by the Parent company:

Residence country		Subsidiary and joint Number venture's equity of shares 30.06.2014 EUR		30.06.2013 EUR	Subsidiary and joint venture's (profit / losses) 2013/ 2014 2012/2013 EUR EUR
"SAF North America" LLC	United States of America	100%	19 966	18 606	7	(6 151)
"SAF Services" LLC	United States of America	50%	1 150	14 103	(54 359)	(46 480)

The accounting policies of subsidiaries were changed when necessary in order to ensure consistency with those of the Group.

(c) Transactions eliminated on consolidation

Internal transactions, account balances and unrealized gains from transactions between the Group Internal transactions, account balances and unless objective evidence exists that companies are eliminated. Oncealized gains are also official gains arising from transactions with a joint venture are also eliminated.

C Foreign currency revaluation

(a) Functional and reporting currency

(a) Functional and reporting currency
On 1 January 2014 the Republic of Latvia joined the Latvian Latvinh converted its financial On 1 January 2014 the Replanced by the euro. As a result, the Group converted its financial Group s functional currency, was replaced by the our period comparative information translated into
accounting to euros as from 1 January 2014, a 70000 to FUD 4 accounting to Cafficial exchange rate of LVL 0.702804 to EUR 1.

(b) Transactions and balances

(b) Francial in these consolidated financial statements are expressed in the Latvian national currency - euro (EUR).

= euro (LOR).
Foreign currency transactions are translated into the Group's functional currency applying the official Foreign currency transactions are translated into thronsations and from the franslation at vearexchange rate established by the European of hum transactions and from the translation at yeargains and losses resulting from the Settlement of Subir transactions with in foreign currencies are recognised in the profit or loss.

recognised in the profit of touted to the Group's functional currency according to All monetary asset and flablity ttens were revelope the reporting year. Non-monetary the exchange rate of the European Central Dank on the large transactions are revalued to the Group's
items of assets and liabilities, and foreign exchange are ext by the Erou items of assels and flabilities, and Torelyn Oxonange rate set by the European Central Bank on the transaction date.

	30.06.2014.	30.06.2013.
1 USD	1.365800	1.303904
1 GBP	0.801500	0.849823
1 LVL		0.702804

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

C Foreign currency revaluation (continued)

(c) Group companies

The results of operations and the financial position of the Group companies (none of which are The results of operations and the mith financial process with functional currencies other than the reporting currency are translated to the reporting currency as follows:

• (i) Assets and liabilities are converted according to exchange rate as at the date of statement of financial position;
• (ii) Transactions of the statement of profit and loss and other comprehensive income are rransactions of the exchange rate as at the date of transaction; and
• (iii) all currency exchange differences are recognized as a separate item of equity.

D Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and imparment. Such Property, plant and equipment are stated to acquisition of property, plant and equipment. Such losses. Cost includes expensed anotely relation and equipment if the asset recognition criteria are met.

Leasehold improvements are capitalized and disclosed as property, plant and equipment. Leasehold "improvements" are" capitalized over the shorter of the leasehold period or the estimated useful life on a straight line basis.

Where an item of property, plant and equipment has different useful live as the other items of the vvhere an item of property, plant and equipment had alle and of property, plant and equipment.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying The cost of replacing part of an them of proporty propony, benefits embodied within the part will amount of the Group and its cost can be measured reliably. The costs of the day-to-day servicing of
flow to the Group and its cost can be measured reliably. The costs of the flow to the Group and its cost can be measurou rollably in the profit or loss statement as incurred.

Maintenance costs of tangible assets are recognized in the profit and loss statement as incurred.

Depreciation is calculated on a straight-line basis to write down each asset to its estimated residual value over its estimated useful life using the following rates:

	% per year
Equipment	25 (previously - 33.3%)
	20
Vehicles	20 - 50 (previously - 25% - 50%)
Other equinment and machinery

During the reporting year the management has evaluated and reviewed estimated useful life of tangible assets due to change in the pattern of use (see Note 5).

Capital repair costs on leased Property, plant and equipment are written off on a straight line basis and Capital repair oode of heaseful lifetime of the capital repairs and the period of lease.

The assets residual values, useful lives and methods are reviewed, and adjusted if appropriate, at The assets residual values, useful incribute is witten down immediately to tits recoverable each Teporting Tate. An 'asset's carrying amount is is estimated recoverable amount (see Note F).
amount if the asset's carrying amount exceeds its estimated recoverable am

Gains and losses on disposals are determined by comparing proceeds with the respective carrying amount and included in the profit or loss statement.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

E Intangible assets

(a) Trademarks and licences

(a) Trademarks and licenses have a definite useful life and are carried at ostraint line Trademarks and licenses mare a donairment losses. Amortisation is calculated on a straight-ine amontaation and any acoumalated impannel and licenses over their estimated useful life, which usually is 3 years.

(b) Software

(b) Sollware
The acquired software licenses are capitalised on the purchase and installation costs. These costs are amortised over their estimated useful life of offware licences from 3 years to 4 These costs are annonised over their estimated useful life of software licences from 3 years to 4 years (see Note 5).

F Cost of research and development activities

Research costs are recognized in profit and loss statement as incurred. An incurred. An intengible asset arising Research costs are recognized in forth and loss starinent is recognized only when the Group can
from the development expendition for annoisting intensible seset only when the from the development expendible of can individual played so that it will be asset so that it will be asset will demonstrate the technical reasibility of completing to use or sell the asset, how the asset, how the asset, how the abjility to use or sale, its intentions to complete and its availability of tresources to complete and the ability to generate future economic beliefits, tine availably on the initial recognition of the measure reliably the expenditure during the revelopment. Pollowing the ecarried at oast less any
development expenditure, the cost model is applied requiring the asperityed o development expenditure, the cost incel is applica ne assistative is amortized is amortized over the accumulated amortisations sales from the related project.

G Impairment of non-financial assets

Intangible assets that are not put in use or have an indefinite useful life are not subject to meanglible and are reviewed for impairment on an annual basis.

amoritance reviewed in the Group's property, plant and equipment and intengible assets
Moreover, the carrying and depresential, and other non-current assets except for invent Moreover, the carrying amounts of the Group's plant and create except for inventory
that are subject to amortisation and depresation and other there is any that are subject to amortisation and depleciation and to delevision whether there is any
and deferred tax asset are reviewed at each reporting mont is estimated. and deferred tax assel are Tevlewed at 'cach Toporting "asset's recoverable amount is estimated.
indication of impairment. If any such indication exists, the asset's recovera

indication of impairnent. In any addition of the carrying amount of an asset or its cash-generating An imparment loss is recognised when the earlying unit is the smallest identifiable asset group
unit exceeds its recoverable and esse indeneder, assess, and groups. Impairmen unit exceeds its recoverable amount. A casirgendent from other assets and groups. Impairment that generates cash nows that largers and more onlined in respect of cash-generating
losses are recognised in profit or loss. Impairment losses recognised in respect of cash losses are recognised in profit or loss. Impairnent boses roosginound in ropp of unit) on a pro rata basis.

basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its The recoverable amount of an asset of case, the estimated tuture cesses move are disounted
fair value less costs to sell. In assessing value in use, the estimated assessments fair value less costs to sell. In assessm grand reflects current market assessments of the to their present value using a pre-tax discount fale that relieve of the future cash flows have not been adjusted.

not been adjusted to two cash generating units that are identified as Group's operating
All Group's assets are allocated to two circa simper indied or noted All Group s assets are anocatous on impairment indicators noted.

Segments (See note 11) insets, impairment losses recognised in prior periods are assessed at each In respect of non-current assels, impathent losses no longer exists. An imparment loss
reporting date for any indications that the lots nas decreased or no honger and reporting date for any indications that the loss has defermine the recoverable amount.
is reversed if there has been a change in the estimates used to determing amount does n is reversed if there has been a change in the extent the essets carrying amount does not
Any impairment loss reversed is only reversed to the esters carrying annum the Any impaliment loss reversed is only reversed to the oxent that we be of depreciation or amortisation, if no impairment loss had been recognised.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

H Segments

Information on the Group's operating segments is disclosed in Note 17. Segment as well as mornation on the Chief Executive Officer include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated thems comprise and liabilities those that can be allouded on a rousers), head office expenses, and tax assets and liabilities.

I Government grants

Government grants are recognized where there is a reasonable assurance that the grant will be Government grants are recognized will be complied with. When the grant relates to an expensed received and all attaching conditions will be occupits receivable are recompts receivable are recognized item, it is recognized as income over the persons received income receivable are recognized.
to the costs that it is intended to compensate and accounts receivable and is to the costs that it is intended to compensate and vacted to a defered income account and is Where the grant relates to an assel, the fail value is orduled to life of the relevant asset by equal annual instalments.

annual instalinents.
Within the framework of the contract signed between A/S SAF Tehnika and "LEO Petijumu centra Within the framework of the competence center for the Letvian industry of manufacturing SIA" a cooperation" project on a complemented, regarding which "LEO Petijumu centrs SIA" has electrical and optical devices is belig implicition of Latvia in order to obtain financing signed a contract with Investment and Development As part of the above project A/S SAF Tehnika is from the European Regional Development i unde. As part of the lose to implement projects
conducting two individual research activities to develop new products. In orginis st conducting two individual research activities to to trong remainm of project staff and other costs under these activities, co-financing is provinced to be impelemented in two years time. Co-financing
related to the specific projects. Projects planned to be impelement of Pr related to the specific projects. Projects praincal of Profit or Loss and Other
received relates to expense items recognized in Statement of Profit or Loss and Other received relates to expense lients recognized as income over the period necessary to match the Comprehensive Income and this is recognized as intended to compensate. In case the co-financing is a statement of grant on a systematic basis to the costs that it is intended to oenjoins are recognized in Statement of Financial Position under Other receivables.

J Stock

Stock is stated at the lower of cost or net realizable value. Cost is valued based on the FIFO method. Stock is stated at the lower of cost of the reline ordinary course of business, less the Net realisable value is the estimated selling price in the brained one work-in-progress include cost of materials, personnel and depreciation.

K Financial instruments

The Group's financial instruments consist of trade receivables, equity-accounted investees, The Groups financial instruments' equity, other receivables, cash and cash equivalents, borrowings, equity are investments in other companies and derivatives. Investments in other companies' equity are
trade payables and other payables and derivatives. Investes and trade payables and 'other payables and 'dchvania' assets except for equity-accounted investees and
classified as available for sale. All other fir a los lightlities at amoris classified as available for sale. All other mianolar aboots but liabilities at amortised cost.
derivatives are classified as loans and receivables but liabilities - as liabil

denvalives are except for derivatives are initially recognised at fair value plus directly attributable transaction costs.

atthbutable transform of contract when the rights to receive cash flows from the investments have Financial assets are derecognised when the fights to receive cash now home in the marks of ownership.

owneromp.
Financial liabilities are derecognized if the Group's obligations specified in the contract expire or are discharged or cancelled.

Loans, receivables and other debts

Loans, receivables and other debts are non-derivative financial assets with fixed or determinable Loans and receivables and other desist are normal for trading. Loans and receivables
payments that are not quoted in an active lection allowano, for estimated irrecoverable, payments that are not quoted in after deducting allowance for estimated irrecoverable amounts.
are stated at their amortized cost affective interest rath method. Jess any imp are stated at their amortized cost anter deducting and wated nethod, less any impairment losses.
Amortized cost is determined using the effective interest rate method, less a

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

K Financial instruments (continued)

The effective interest rate is the rate that exactly discounts the estimated future cash payments and The enective interest face is the financial asset. When calculating the effective interest rate, receips through the expected inc of the miantial associal terms of the financial instruments.

the impairment allowance for impairment of loans and receivables is established when there is An Impairment anowance Tor impairinent of Netho collect all amounts due according to the original objective evidence that the Group will not be ables, probability that the debtor will terms of the receivables. Oighinoans individule and default or delinquency in payments are considered enter bankruptcy of manicial receivable is impared. The allowance is the difference is the difference
indicators that the loan or trade receivable is impared. Yolus, of osti indicators that the loan of the lecenture in imparts. The antent of estimated future cash flows,
between the asset's carrying amount and the oresent value of esti between the lassets carrying "aniburn and "the present of other asset is reduced and the discounted at the original enective interest fate. The can'ying and other debts are uncollectible, it is written off.

Available for sale financial investments

Available for other in and are acquired to be held for an indefinite period of time.
Financial investments available-for-sales in not detarmined in an active market and whose Financial investments, whose market value is not determined in an active market and whose fin Financial investments, whose mained at acquisition cost. All other financial investments
value cannot be reliably measured, are couried at acquisition from the change in fair value cannot be reliably measured, ale caned at losses resulting from the change in fair value of available-for-sale are carred at lail value. Sams of nor impairment. In other man and of financial investments avaliable-for-sale, except is dereognised; thereognised; the cumulative gain or
comprehensive income until the financial asset is derecognised in rorify comprehensive income until the financial accorne is recognised in profit or loss.
Ioss previously recognised in other comprehensive income is recognised in profit or loss.

Liabilities

Liabilities are recognised initially at fair value plus directly attributable transaction costs and Llablifies "are "recognised" initially" at "Tall" Value "place" plane" subsequently method.

Please see note 3 (2) for the description of accounting policy for derivatives.

L Cash and cash equivalents

Cash and cash equivalents current bank accounts balances and deposits, and short term Cash and oasn' equivalients oon priginal maturity of three months or less.

M Share capital

M Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are charged against the share premium account.

N Corporate income tax and Deferred tax

Corporate income tax comprises current and deferred tax.

Corporate income tax comprehent tax payable on the taxable income for the year, using tax The calculated current tax is the expected tax payable on the taxable in the end any adjustment to tax payable in respect of previous years.

payable in respoct of promotion differences between carrying amounts for accounting Defered taxation arising form lemporary unientes "bability method. However, if the deferred tax purposes and for tax purposes is calculation of healthy the rhon of his result iting of the localistion in the loss, it is not arises from initial recognition of an asset on habition of a taxable profit or loss, it is not
that at the time of the transaction affects neither accounting, non-text have b that at the time of the transaction and tax rates (and lews) that have been enacted by the accounted for. Deferred tax is delemined to apply when the related deferred tax asset is realised or financial position date and are expected to appry who are recognised to the extent that it is
the deferred income tax liability is settled. Defered tax assets an be the defered income tax hability is settled. Defence tax accosts are new of the temporary differences can be utilised.

Income taxes are recognized through profit or loss unless they relate to items recognized directly in equity.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

O Employee benefits

The Group makes social insurance contributions under the State's health, retirement benefit and The Group makes social instranos bonth rates in force during the year, based on gross salary
unemployment schemes at the statutory rates in force shirestigans if the unemployment schemes at the Statubly Tatos in Tire obligations to pay further contibutions if these navments is payments. The Group will have no towards the employees. The cost of these payments is
statutory fund cannot settle their liabilities it warranesied as the relation salary cos Statutory Tuna Cannot Coctio their namit in the same period as the related salary cost.

P Revenue recognition

Revenue comprises the fair value of the goods and services sold, net of value-added tax and discounts. Revenue is recognised as follows:

(a) Sales of goods

(a) Galob of goods is recognised when a Group entity has passed the sustomer and the customer Sale or goods is recognised when a Group entity had pastomer and the customer and the customer and the customer ownership of the goods to the customer with the contract terms, and it is probable that the has "accepted" the "products" with the transaction will flow to the Group.

(b) Provision of services

Revenue is recognised in the period when the services are rendered.

(c) Provision of extended warranty service

(c) Provision of extended warranty service of three to five years in addition to standard one to The Group provides extended warranty service on three to fire years in warranty extension period.
five years period depending from product. Revenue is recognized over the war

Q Lease

Leases of property, plant and equipment in which a significant portion of the risks and rewards of Leases of property, plant and equipment in which as sighing leases. Payments made under ownership are retained by the lesson are classilled as operating for boss of the profit or loss
operating leases (net of any incentratives received from the lessor) are charg statement on a straight-line basis over the lease period.

R Payment of dividends

Dividends payable to the Parent company's shareholders are recognised as a liability in the Group's Dividends payable to the Parent company's shareholders are reosgnibed by the Parent company's shareholders.

S Financial income and expenses

Financial income and expenses comprise interest payable on borrowings calculated using the Financial income and expenses comprise invested, and forested, and freign exchange gains and effective interest rate method, interest in the income statement as it accrues, using the effective
losses. Interest income is recognised in finance statement as recognized losses. Interest income is recognised in the interne stations as well as a connects are recognized in profit or loss using the effective interest rate method.

T New standards and interpretations not yet adopted

The following new Standards and Interpretations are not yet effective for the annual period ended The Tollowing Trew 'Otandarde and milied in preparing these financial statements:

• Amendments to IAS 32 on Offsetting Financial Assets and Financial Liabilities o
  • Amendments to IAS 32 (effective for annual periods beginning on or after 1 January 2014; to set-off i Amendments to TAS 32 (enective for annual perfores boging enforceable right to set-off it applied retrospectively) claimy that and entity can entry nable both in the normal course of
    that right is not contingent on a future event and enforceable both in the normal that right is not contingent of a fittle event and other entity and all counterparties.
    business and in the event of default, insolventy or banks on the financial statements business and in the event of teladif, insolvents on the financial statements.
    The Group does not expect the amendments to have any impact and financial libelilities The Group does not expect the affection on of their financial assets and financial liabilities and have not entered into master netting arrangements.

Notes to the consolidated financial statements (continued)

1. Summary of accounting principles used (continued)

S New standards and interpretations not yet adopted (continued)

• · IAS 27 (2011) Separate Financial Statements (effective for annual periods beginning the on or after 1 January 2014) introduces minor clarifications. The Standard no longer addresses the principle r January 2014) introduced millen of consolidated financial statements, which or control and requirements to Consolidated Financial Statements. The Group has not yet nave been inorporation int of the impact of these new standards on the Group's operations.
• · IAS 28 (2011) Investments in Associates and Joint Ventures (Amendments effective for annual PS 20 (2011) Invostmononene 1 January 2014; to be applied retrospectively). There are limited amendments made to IAS 28 (2008):
  • Associates and joint ventures held for sale. IFRS 5, Non-current Assets Held for Sale and o Associates and John Ventrea an investment, or a portion of an investment, in any associate or a joint venture that meets the criteria to be classified as held for sale, the oguity retained portion of the investment that has not been classified as held for sale, the equity relained portion of the investment that the rise same sentinues to be an associated interest methou is applica until disploates that po if the retained interest continues to be an associate or a joint venture.
  • Changes in interests held in associates and joint ventures. Previously, IAS 28 (2008) and IAS Changes in lifterests freid in associatios and jofine or joint control triggered remeasurement 31 specified that the cessation of significant influence was succeeded by joint control.
    of any retained stake in all cases, even if significant influence interest in the inv of any relained stake in all cases, even if oigh scenarios the retained interest in the investment is not remeasured.

The Group has not yet completed the assessment of the impact of these new standards on the Group's operations.

IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of . IFRS 10 Consolidated Finalisations, In 10 Triodan beriods beginning on or after 1 January 2013; 10
Interests in Other Entities (effective or englee a original in the control Interests in Other Entiles (enective or annual portuge model in the control analysis
be applied retrospectively). IFRS 10 provides a single in the enplied in the control of S be applied retrospectively). IFRS To provides a share so sees in the scope of SIC-12. IFRS 10
for all investees, including entities that currently are SPEssing requirements for all investees, including entitles that currently are of fee in from the existing requirements in IAS 27 (2008).

Under the new single control model, an investor controls an investee when:

• er the now oligid commiting to variable returns from its involvements with the investee; and
• (1) it is exposed of has ngmo to variable its power over that investee; and
• (3) there is a link between power and returns.

The new IFRS 10 also includes the disclosure requirements and the requirements relating to the preparation of consolidated financial statements.

proparation of our IFRS 11, joint arrangements are divided into two types, each having its own accounting model defined as follows:

• · a joint operation is one whereby the jointly controlling parties, known as the joint a John operation is one whereby the jointly someoning for the liabilities, relating to the arrangement.
• A joint venture is one whereby the jointly controlling parties, known as joint venturers, have rights to the net assets of the arrangement.

Notes to the consolidated financial statements (continued)

2. Summary of accounting principles used (continued)

S New standards and interpretations not yet adopted (continued)

IFRS 11 effectively carves out from IAS 31 jointly controlled entities those cases in which, although there is a separate vehicle for the joint arrangement, separation in certain ways. These there is a separate vehile for the jointly controlled assets/operations under IAS 31, and are now arrangements are treated similary to jointly to joints accounting or proportionate consolidation; the equity method must always be used in financial statements.

IFRS 12 requires additional disclosures relating to significant judgements and assumptions made in IFRS 12 requires additional disclusures relating to ogransant, interests in subsidiaries, joint arrangements and associates and unconsolidated structured entities.

The Group has not yet completed the assessment of the impact of these new standards on the Group's operations.

3. Financial risk management

(1) Financial risk factors

The Group's activities expose it to a variety of financial risks:

• (a) foreign currency risk;
• (b) credit risk;
• (c) liquidity risk;
• (d) interest rate risk

The Group's overall risk management focuses on the unpredictability of financial markets and seeks.
The Group's of the same off a to an the Croup's financial, performance, Th The Group's overall risk management nocuses on the Group's financial performance. The Group uses
to minimise its potential adverse effects on the Groups financial performsibi to minimise its potential adverse enecis on the exponsures. The responsibility for risk derivative "Inance" instruments" to "The Finance Department identifies and evaluates
management lies with the Finance Department. The Finance Department with other operating management lies with the Finance Depannent. The Internet on with other operating units
risks and seeks for solutions to avoid finalisement and consolidated level risks and seeks for solutions to avoid infartitur holo in elece of and consolidated level.
of the Group. Financial risks are managed both on Parent company and consolidated l

(a) Foreign currency risk

(a) Foreign operates internationally and is exposed to foreign currency risk arising mainly from fluctuations of the U.S. dollar.

fluctuallors of the U.S. dollar.
Foreign currency risk arises primarily from future commercial, transactions, and Foreign currency fisk arises pirilany from rucuis k arising from furture commercial transactions and
liabilities. To manage the foreign burrency use foreign courrency, contra liabilities. To manage the foreign can ency hist and foreign commons. Foreign contracts. Foreign recognised assets and Tiablifes, the Griden ases forward Torogined issets and liabilities are
currency risk arises when future commercial transactions and liabilities are currency risk arises when luture confinence crup's functional currency. The Finance Department
denominated in a currency different from the Group mist decide to enter to fowa denominated in a currency allierent from the Group mining decide to forward
analyses the net open position in each foregone in form of credit to forward analyses the her open position in each oreign ourrency. The Ore and in appropriate currency and amount.

and amount.
The following schedule summarises net open positions for currencies expressed in EUR as at 30 June 2014:

1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1 / 1	EUR	USD	other currencies	1012
Financial assets Gross Trade receivables Cash and cash equivalents Total	1 046 596 2 921 317 3 967 913	1 310 733 1 157 015 2 467 748	4 223 4 2723	2 357 329 4 082 555 6 439 884
Financial liabilities Accounts payables Other payables Loans Total Net open positions	(406 666) (253 892) (1977) (662 535) 3 305 378	(237 154) (6 134) (4 804) (248 092) 2 219 656	4 223	(643 820) (260 026) (6781) (910 627) 5 529 257

Notes to the consolidated financial statements (continued)

3. Financial risk management

(1) Financial risk factors

The following schedule summarises net open positions for currencies expressed in EUR as at 30 June 2013:

	LVL	EUR	USD	loral
Financial assets Gross Trade receivables Placements with banks Cash and cash equivalents Total	3 948 234 205 238 153	740 349 360 503 1 703 577 2 804 429	2 507 140 230 078 871 515 3 608 733	3 251 437 590 581 2 809 297 6 651 315
Financial libilities Accounts payables Other payables Loans Total Net open positions	(144 655) (128 404) (1 050) (274 109) (35 956)	(319 037) (40 732) (6 449) (366 218) 2 438 211	(569 340) (108 149) (6 582) (684 071) 2 924 662	(1 033 032) (277 285) (14 081) (1 324 398) 5 326 917

(1) Financial risk factors (continued)

Sensitivity analysis

A 10 percent weakening of the euro against the USD on 30 June would have increased (decreased) profit or loss and equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis for 2012/ 2013 performed based on in particular "meroct" face" formalining of the lat against the USD and a 1 percent weakening of the assumptions - a 10 percent would have increased (decreased) profit or loss and equity by the iat againer the Latvian lat was pegged to Euro as at 30 June 2013.

(b) Credit risk

(b) Sroup has significant exposure of credit risk with its customers. The Group's policy is to ensure The Group has significant exposure of ordewith customers having appropriate credit history. If the that wholesale of products is oamed bat intentify then Letters of Credit issued by reputable customers are residing in countiled with managements in situations where no Letters of credit institutions are association more of the prepayments from the customers are requested or State Export Guarantees purchased. Customers' financial position is monitored on requested of State Export Garantess partmass partment of any and customer's paying behaviour.

As at 30 June 2014, the Group's credit risk exposure to a single customer amounted to 11.01% of the Group As at 50 June 2014, the Oroup's dreat net 2.7% from total net sales (30.06.2013: 13.63% and 2.6 %
total short and long-term receivables and 2.7% from total essess of the Grou total short and forig-lem receivance and ising from the other financial assets of the Group, which accordingly). With respect to creat not crioing exposure to credit risk arises from the default of the comprise cash and cash equivalents, the Croup to the carrying amount of these instruments. The counterpary, with a maximum exposure amounts to EUR 6 706 443 or 55.68% of total assets (30.06.2013: EUR 7 031 230 or 57.13% of total assets).

For more information on the Group's exposure to credit risk please refer to Note 8.

Notes to the consolidated financial statements (continued)

3. Financial risk management

(1) Financial risk factors (continued)

(c) Liquidity risk

The Group follows a prudent liquidity risk management and hence maintain a sufficient quantity of The Group Tollows a pradent Iquality not man 6.5 (30.06.2013: 5.3), quick ratio is 3.7 (30.06.2013: 3.3).

The Group's management monitors liquidity reserves for the operational forecasting, based on estimated net cash flows. Most of the Group's liabilities are short term.

Management believes that the Group will have sufficient liquidity to be generated from operating activities and does not see significant exposure to liquidity risk.

For more information on the Group's exposure to liquidity risk please refer to note 14.

(d) Interest rate risk

As the Group does not have significant interest bearing liabilities, thus the Group's cash flows from As the Group does not have sighlican merces in market interest rates. The Group's cash flows from the Group mainly results are largely independent on current market interest rates; however as the Group mainly
interest bearing assets are dependent on current market interest rates; however has short-term interest-bearing assets, the exposure is not significant.

(2) Accounting for derivative financial instruments

The Group uses derivative financial instruments such as forward currency contracts to hedge its risks The Group uses defivative illiancial institutions. Such derivative instruments are initially
associated with foreign currency fluctuations Such deriver to and are associated with foreign currency nucludions. contract is entered to and are subsequently recognized at fair value on the date on which don't received as assets when their fair value is positive and as liabilities when negative. The fair value of forward currency contracts is value is postive and as nabilities when regative: The fair vantracts with similar maturity nonlines.

calculated by lefence to current of narces in fair value of derivatives that do not qualify as hedge accounting are taken directly to profit or loss for the year.

As at 30 June 2014 and 30 June 2013 the Group did not have any open derivative financial instruments contracts.

(3) Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly Fair value is the price that would be reasurement of ple in the principal, or in its absence,
transaction between market participlies at the measures of that date. The fair v transaction between market participants at the measurement add in the province.
the most advantageous market to which the Group has access at that date. The fair value of a l reflects its non-performance risk.

When measuring the fair value of an asset or a liability, the Group uses market observable aata as When measuring the fair value of an asset of a fability, the Sreap assemmanierarchy based on the inputs used in the valuation techniques as follows:

inputs used in the valuation techniquos at rentical assets or liabilities.
Level 1: quoted prices (unadjusted) in active nluded in Lovel 1, that, are, observable

Level 1: quoted prices (unadjusted) in active nlance in that are observable for the asset or
Level 2: inputs other than quoted prices included in Level 1 that are observable liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

liability, elther directly (t.e. as pices) of indirectly (t.e. don'ted from problemanket data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorized in its entirety in the same If the inputs used to measure the fair value or an assecon a is satised in its entirety in the same
levels of the fair value hierarchy, the fair value measurement is cignific levels of the fair value hieralchy, the lawest level input that is significant to the entire measurement.
level of the fair value hierarchy as the lowest level input hierary level of the fair value merality as the lowest level myatthut light in the end of the reporting period during which the change has occurred.

Fair value of financial assets and liabilities of the Group is deemed to approximate their face value on Fall Value of Imancial assets and nables on the effect of dasounting is initial Tecognition and Carrynig Value on any obilities of the Group is mostly six months. Fair value
immaterial. The term of all financial assets and liabilities of the Grou immatenal. The totument available for sale cannot be measured.

Notes to the consolidated financial statements (continued)

4. Management of the capital structure

The Group manages its capital to ensure that the Group will be able to continue as a going concern The Group manages its Capital to ensure the end the entimization of the debt and equity balance.
while maximizing the return to stakeholders through includes the borrowings d while maximizing the return to stakenologic children the bergital me bernings and The capital structure indicator of the Group consists on assued capital, retained earnings and
in note 15, cash and cash equivalents and equity, consisting issued capital, re in note 10, outen and outing ratio at the year-end was as follows:

Debt Cash Net debt	30/06/2014 EUR 1715 671 (4 082 555) (2 366 884)	30/06/2013 EUR 2 104 758 (2 809 297) (704 539)
Shareholders' equity	10 329 996	10 203 459
Debt to equity ratio Net debt * to equity ratio	17% -23%	21% -7%

Net debt calculated as total debt net of cash and cash equivalents.

Key estimates and assumptions 5.

The management makes estimates and assumptions concerning the future. The results accounting The management makes estimates and assumplibe . The estimates and assumptions
estimates will, by definition, seldom equal the related resuing amounts of assets and estimates will, by definition, seidom equal the readed noother to the carrying amounts of assets and that have a olghin the next financial year are discussed below.

Recoverable amount and impairment of non-current assets

Recoverable and impairies indicate a potential impairment, the Group performs impairment When the events and circumstances indically in and intengible assets. Aconding to these tests
tests for items of property, plant and equipment and it pecessary Neen tests for items of property, plant and equipment and ifilians arsumy out impairment
assets are written down to their recoverable amounts, if necessary, when are of the assets assets are written down to ther recoveralie anthous anising in the use of the assets,
tests management uses various estimates for the cash flows and growth rates. tests management uses Valdus estimates for the easily of the inflation and growth rates.
sales, maintenance, and repairs of the assets, as well as in respect of the informati sales, maintenance, and repairs of the additional impairment could be recognised, or the
If the situation changes in the future, encerially of filly revorsed Secales note 2G If the situation changes in the future, elther duditional might.
previously recognised impairment could be partially or fully reversed. See also note 2G.

Impairment of loans and receivables

million or our recognizes allowances for doubtful loans and receiver. In order to set unrecoverable The Group recognizes allowances to countin than is the historical experience are
amount of receivables, management estimates the animivinal management assessment amount of receivables, management essumates the based on an individual management assessment
used. Allowances for doubtful debts are recognized based on an individual managem of recoverability of each receivable. See also note 2K.

e reother reporting date there are no indications of impairment of property, plant and equipment and As at the reporting ate the no finulations on mind antivities in the reporting year amount to
intangible assets. The Group's cash flows from operating and its strategy to intangible assets. The Groups casil nows from opending on the opensuing its strategy to
EUR 775 thousand (2012) 2013: EUR 62 thousand), Group will on tor export markets, EUR 775 thousand (2012/ 2013. EUR b2 and solutions for export markets,
develop new competitive wireless tarta transmission products and solutions for export markets, develop new competitive wreless data transmission 'production process with the aim to increase sales and profitability.

Useful lives of property, plant and equipment

Osend illes of property, plane spected useful lives of property, plant and equipment in property, plant Management estimates the expected the end in historical experience with similar property, plant
the expected duration of use of the asset based on historical experience the i the expected duration of USe of the asset based on the income statement on a
and equipment and based on future plans. Depeciation is charged to the income statement on a and equipment and based on future plans. Depresition is on them of property, plant and
straight-line basis over the estimated use and card of each part he shortest period – straight-line basis over the estimated useful nives on cach part lover the shortest period –
equipment. Depreciation of property, plant and equipment is calculated for and Se equipment. Depreciation of properly, plant and equipmont of Galculated for land. See also note 2D.
Iease term or over the useful life. No depreciation is calculated for land.

lease term or over the acoraliates of the useful lives of property, plant and equipment and intangibles. The effect was applied prospectively.

Notes to the consolidated financial statements (continued)

5. Key estimates and assumptions (continued)

The effect of change of estimates of depreciation rates for property, plant and equipment and intangibles on profit or loss is as follows:

	2013/ 2014 efekts EUR
Effect on profit or loss	3 546
	3 546

Provisions and accruals

Provisions are recognized when the Group has a present live obligation as a result Provisions are recognized when the Oroupflior of economic benefits will be required from the Group of a past event and it is probable inat on outlow on be measured reasonably. If the Group
to settle the obligation, and the amount of obligation will be partly or fully repai to settle the expenses required for recognizing the provision be really or fully repaid, for foresees that the expenses required for recognery of such expenses is recognized as separated example, within an insurance tontract, the reserville be recovered. Expenses connected with any
assets only when it is certain that such expenses with cases onnected with any assets only when it is ochaithe profit or loss statement less recovered amounts.

As at the reporting date, the following provisions and accruals were recognized:

• at the roporting apotential warranty expenses are recognized based on the management o provisions for potential warranty expenses and repairs relating to the concluded contracts. The assessment on the nor on oxposus and five years depending from product.
• · scandad liabilities for unused vacations are calculated in accordance with the number of the accrued liablities for unused vacations are calculation in also man and months of the reporting year.
• roperting your
  provision for bonuses is calculated in accordance with the procedures approved by management.

Recognition of deferred tax asset

Recognition of deferrou tax to the extent that it is probable that future taxable profits will A deferred tax asset is recognised only to the extent national as a reduced to the extent
be available against which the assec can be uiliised. Deferred to note 2N be available against which the asset can be utilised. Boleh be tealised. See also note 2N.
that it is no longer probable that the related tax benefit will be realised. See al

Notes to the consolidated financial statements (continued)

6. Property, plant and equipment and intangible assets

	Software and licences	Long term investments in leased fixed assets	Equipment and machinery	Other fixed assets	Total
	EUR	EUR	EUR	EUR	EUR
Reporting year ended 30 June 2013
Opening balance	131 479	357 118	278 809	55 806	823 212
Acquisitions	154 329	44 086	84 676	204 159	487 250
Disposals				(83)	(83)
Charge for the period	(84 169)	(118 020)	(166 318)	(39 874)	(408 381)
Closing balance	201 639	283 184	197 167	220 008	901 998
Reporting year ended 30 June 2014
Opening balance	201 639	283 184	197 167	220 008	901 998
Acquisitions	90 617		137 121	33 985	261 723
Disposals			(1 166)	(4 887)	(6 053)
Charge for the period	(84 085)	(119 400)	(143 003)	(69 393)	(415 881)
Closing balance	208 171	163 784	190 119	179 713	741 787
30 June 2012
Historical cost	899 188	1 069 783	3 206 627	558 995	5 734 593
Accumulated depreciation	(767 709)	(712 665)	(2 927 818)	(503 189)	(4 911 381)
Carrying amount	131 479	357 118	278 809	55 806	823 212
30 June 2013
Historical cost	1 052 632	1 113 869	3 251 299	741 465	6 159 265
Accumulated depreciation	(850 993)	(830 685)	(3 054 132)	(521 457)	(5 257 267)
Carrying amount	201 639	283 184	197 167	220 008	901 998
30 June 2014				767 767	6 305 776
Historical cost	1 140 750	1 113 869	3 283 390	(588 054)	(5 563 989)
Accumulated depreciation	(932 579)	(950 085)	(3 093 271)	179 713	741 787
30 June 2014	208 171	163 784	190 119

During the reporting year, the Group did not enter into any operating or finance lease agreements.

Daning the reporting is post of the reporting year ended 30 June 2014 is EUR 7 101 EUR and Historical cost of disposals for the Teporting your onaous of other 34 accordingly).
accumulated depreciation EUR 1 048 (2012/ 2013: EUR 117 and EUR 34 accordingly).

Depreciation of EUR 171 545 is included in the profit or loss statement item Costs (2012/2013) Depreciation of EUR 171 545 Is included in The Sholic of Sales and Marin Costs (2012/ 2013: (2012/2013: EUR 192 921); depreciation of EUR 168 64 in Sales and infrincing oses (2012/2013:
EUR 158 - 12); and depreciation of EUR 75 688 in Administrative expe EUR 158 912), and depreciation of EUR 75 800 in Auministrative expenses (2012/ 2013: EUR 1 056).

The acquisition costs of fully depreciated property, plant and equipment that is still in use at the The acquisition 003ts of Tally asproad 178 (2012/ 2013: EUR 3 858 633).

The Equipment and machinery group includes items bought with EU co-financing and according to The Equipment with the EU have restrictions in their usage in operations. In themselves in the agreement with the EU nave restinctions in the essage ope 2014 PPE are fully depreciated amount to LOR 04 305 (2012) 2012: 2016. 2017)
(2012/ 2013: EUR 14 816). The restrictions apply until December 2014.

Notes to the consolidated financial statements (continued)

7. Stock

	30/06/2014 EUR	30/06/2013 EUR
Raw materials Work in progress Finished goods	1 396 275 1 620 329 1 482 149 4 498 753	1 214 647 1 751 221 1 285 927 4 251 795

During the reporting year, write-down to net realizable value reversal of EUR 147 159 (2012/ 2013:13)
Previous PC 2017/11/2 and included in cost of selec Banny the reporting and recognised and included in cost of sales.

The item Finished goods within Stock include property, plant and equipment sent to clients for trial The tem Finished goods within Stock include property party sent to substitute damaged with an option to buy of Tethin while bequipment sent due to the above reasons amounted to EUR 186 559 (2012/ 2013: EUR 222 254).

Included under stock items "Work in Progress" and "Finished goods" are Salary expenses (including Included under stock items Work in Progress and infished goods accruals for vacation pay) in amount of Loss (2012) 2012 2013: EUR 5 603) and
(including accruals for vacation pay) in amount of EUR 5 107 (2012) 2013: EUR 5 603) and (Including "accruals" for" vacation" pay" in" amount of EUR 3 870 (2012/ 2013: EUR 4 072).
depreciation and amortization expenses in amount of EUR 3 870 (2012/ 2013: EUR 4 07

Trade receivables 8.

	30/06/2014 EUR	30/06/2013 EUR
Long term trade receivables	53 526	64 404
Due from joint venture Trade receivables Allowances for bad and doubtful trade receivables Short term trade receivables, net Total trade receivables, net	44 393 2 259 410 (369 288) 1934 515 1 988 041	49 646 3 137 388 (506 590) 2 680 444 2 744 848

As at 30 June 2014, the fair value of receivables approximated their carrying amount.

In the reporting year, included in the profit or loss statement caption Administrative expenses was the In the reporting year, included in the profit of foss statement caption familians and interest of EUR 24 707
net decrease of allowances for bad and doubtful trade receivables (2012/ 2013: increase EUR 86 585).

The maturity of long-term receivables is 31 March 2022.

Movement in Allowances for bad and doubtful trade receivables

Movement in Allowances for wau and doubtrui trade	EUR
Allowances for bad and doubtful trade receivables as at 30 June 2012	420 005
	(37 413)
Written-off	165 456
Additional allowances	(41 458)
Recovered debts	506 590
Allowances for bad and doubtful trade receivables as at 30 June 2013	(112 595)
Written-off	6 833
Additional allowances	(31 540)
Recovered debts Allowances for bad and doubtful trade receivables as at 30 June 2014	369 288

Notes to the consolidated financial statements (continued)

8. Trade receivables (continued)

Split of Gross Trade receivables by currencies expressed in EUR
	30/06/2014 EUR	30/06/2014 0/0	30/06/2013 EUR	30/06/2013 0/0
LVL USD EUR Total trade receivables	1 310 733 1 046 596 2 357 329	55.60 44 40 100%	3 948 2 507 140 740 349 3 259 437	0.12 77.11 22.77 100%

Ageing of Trade receivables at the reporting date

	30/06/2014 Gross EUR	30/06/2014 Impairment EUR	30/06/2013 EUR	30/06/2013 Gross Impairment EUR
Not overdue	1 521 868		2 200 205	(44 323)
Overdue by 0 - 89 days	468 365	(2 192)	553 637	(1 537)
Overdue by 90 and more days	367 096	367 096)	497 595	(460 730)
Total trade receivables	2 357 329	(369 288)	3 251 437	(506 590)

Other receivables 9.	30/06/2014 EUR	30/06/2013 EUR
Government grants* Overpaid value added tax (refer to Note 25) Advance payment to suppliers Deposits for participation in LEO Petijumu centrs SIA project Other receivables	226 220	45 754 45 370
	26 626	24 761 102 447
	8774 261 620	2 384 220 716

* Government grants receivable relate to development project realized in cooperation with the Group's associate LEO Petijumu centrs SIA.

Placements with banks 10.

	30/06/2014 EUR	30/06/2013 EUR
		590 581
Deposits	=	590 581

No free cash resources deposited with initial maturity exceeding 90 days as at 30 June 2014. The No froo cash rity of deposits as at 30 June 2014 is 11 months.

Notes to the consolidated financial statements (continued)

10. Placements with banks (continued)

Split of Deposits by currencies expressed in EUR

	30/06/2014 EUR	30/06/2014 0/0	30/06/2013 EUR	30/06/2013 0/0
EUR USD Deposits			360 503 230 078 590 231	61.04 38.96 100%
Split of Deposits by banks			30/06/2014 EUR	30/06/2013 EUR
PrivatBank AS Deposits				590 581 590 581
Cash and cash equivalents 11.
			30/06/2014 EUR	30/06/2013 EUR
Cash in bank			4 082 555 4 082 555	2 809 297 2 809 297
Split of cash and cash equivalents by currencies expressed in EUR
	30/06/2014 EUR	30/06/2014 0/0	30/06/2013 EUR	30/06/2013 0/0
LVL USD EUR	1 157 015 2 921 317	28.34 71.56	234 205 871 515 1 703 577	8.34 31.02 60.64
GBP Cash and cash equivalents	4 223 4 082 555	0.10 100%	2 809 297	100%
Split of cash and cash equivalents by banks
			30/06/2014 EUR	30/06/2013 EUR
Swedbank AS Nordea bank AB Latvian branch DNB Bank AS JP Morgan Chase bank			1 013 185 2 396 746 366 117 306 503 4	966 376 1 567 435 258 628 16 858
Other			4 082 555	2 809 297

Notes to the consolidated financial statements (continued)

12. Deferred tax (assets)/ liabilities

Deferred tax has been calculated from the following temporary differences between assets and Dororrou tax hor financial accounting and tax purposes:

	Balance at 30/06/2012 EUR	Recognized in profit or loss 2012/ 2013 EUR	Balance at 30/06/2013 EUR	Recognized in profit or loss 2013/ 2014 EUR	Balance at 30/06/2014 EUR
Temporary difference on Property, plant and equipment
depreciation and intangible asset amortisation	13 458	6 384	19 842	7 324	27 166
Tax losses carried forward				(13 154)	(13 154)
Temporary difference in the accrued liabilities for unused vacations	(25 424)	(2 951)	(28 375)	(477)	(28 852)
Temporary difference on inventory write-down to net realizable value	(116 460)	14 975	(101 485)	22 075	(79 410)
Temporary difference on provisions for guarantees	(3 274)	770	(2 504)	308	(2 196)
Temporary difference on provisions for goods returned				(2 238)	(2 238)
Temporary difference on provisions for bonuses		(10672)	(10672)	10672
Temporary difference on allowance for trade receivables Unrecognized temporary	(63 000)	(12 988)	(75 988)	20 595	(55 393)
differences related to foreign trade receivables recoverability Deferred tax (asset), net	63 000 (131 700)	12 988 8 506	75 988 (123 194)	(20 595) 24 510	55 393 (98 684)

Deferred income tax asset for the Group is recognised to the extent that the realisation of the related Deferred income tax asset for the Group is recognised the end hole plane that there is
tax benefit through the future taxable profits is probable. Management of there is tax benefit through the future taxable product widness reasonable assurance that taxable profits in the next taxation periods will be and the results in the current year.

Notes to the consolidated financial statements (continued)

Share capital 13.

As at 30 June 2014 the registered and paid-up share capital amounted to EUR 4 226 185, converting As at 50 June 2014 the rogittered and painto euros using the official exchange rate of LVL 0.702804 registered share capital of 2 970 180 ordinary bearer shares with equal and unrehear of hear rights (2012/2013: 2 970 180 shares). Share capital re-registration into euroshas not been nghts (2012) 2016. 2 or o 100 Too charge legislation it has to be completed until 30 June 2016.

14. Payables, provisions and other liabilities

	30/06/2014 EUR	30/06/2013 EUR
Trade accounts payable Due to joint venture Other accounts payable Trade and other payables	643 820 260 026 903 846	1 032 419 613 277 285 1 310 317
Provisions for warranties Provision for bonuses Provisions for guarantees	14 643 14 643	16 692 71 144 87 836
Accrued liabilities for unused vacations Customer advances Taxes and social security payments (refer to note 25) Other liabilities Other liabilities Total Payables, provisions and other liabilities	192 349 216 085 116 185 160 372 684 991 1 603 480	189 170 97 850 111 323 31 537 429 880 1 828 033

During the reporting period the increase in accrued liabilities for unused vacation pay included in During the Teporting penod the increase in assume of EUR 19 678).

Movement in provisions

	Warranties EUR	Bonuses EUR	llotal EUR
Balance as at 01.07.2012	21 824		21 824 71 144
Provisions made during the year		71 144
Provisions used during the year	(2 187)		(2 187)
Provisions reversed during the year	(2 945)		(2 945)
Balance as at 30.06.2013	16 692	71 144	87 836
	(2 049)	(71 144)	(73 193)
Provisions used during the year Balance as at 30.06.2014	14 643		14 643

Movement in provisions in the reporting year included in the profit or loss statement.

Notes to the consolidated financial statements (continued)

14. Payables, provisions and other liabilities (continued)

Split of trade payables, due to joint venture and other payables by currencies expressed in EUR

	30/06/2014 EUR	30/06/2014 0/0	30/06/2013 EUR	30/06/2013 0/0
LVL USD EUR	243 289 660 557	26.92 73.08	273 059 677 489 359 769	20.84 51.70 27.46
Trade accounts payables, due to joint venture and other payables	903 846	100%	1 310 317	100%

Ageing analysis of trade accounts payables, due to joint venture and other payables

	30/06/2014	30/06/2013
	EUR	EUR
	901 418	141 218
Not overdue	2428	169 099
Overdue by 0 - 30 days Trade accounts payables, due to joint venture and other payables	903 846	1 310 317

The carrying amounts of the Group's financial liabilities do not significantly differ from the gross cash
in the carry of the circulation mants for short torm financial inst The carrying amounts of the Group's Imanolal habilition as no no no and instruments is minor.
flows, as the influence of the interest payments for short term financial instru

15.	30/06/2014	30/06/2013
Loans	EUR	EUR
Credit cards	6 781	14 081
Deferred income	30/06/2014	30/06/2013
16.	EUR	EUR
Deferred income for goods not delivered yet Other deferred income Government grants	85 948 19 462 105 410	233 397 24 061 5 186 262 644

Notes to the consolidated financial statements (continued)

17. Segment information and sales

a) The Group's operations are divided into two major structural units:

· SAF branded equipment designed and produced in-house · CFIP and Freemile (Etherent/Hybrid/ superPDH systems), Integra (Integrated carrier-grade Ethernet microwave (Ellerent frond Super DFF dyctorie)) in radio engineers) as the first structural unit and radio), Spectrum Ochpact (moductionas, cables, some OEMed products and accessories as the second unit.

CFIP -product line is represented by:

• a split mount PhoeniX hybrid radio system with Gigabit Ethernet + 20 E1 interfaces;
• Lumina high capacity Full Outdoor all-in-one radio with Gigabit Ethernet traffic interface;
• CFIP-108 entry level radio perfect for upgrade of E1 networks into packet data networks;
• Marathon FIDU low frequency low capacity system for industrial applications and rural telecom use.

All CFIP radios are offered in most widely used frequency bands from 300MHz to 38 GHz, thus All CFIP radios are of CFIP radios all across the globe. PhoeniX radio represents the type of microwave radio which is still dominating market share point of view.

Freemile 17/24, an all outdoor hybrid radio system to be used in 17 and 24 GHz unlicensed frequency bands and providing Ethernet/E1 interfaces for user traffic.

Integra – is a next generation radio system employing latest modem technology on the market as well as radio technology in an innovative packaging.

Spectrum Compact is the latest product line in SAF's portfolio, it is a measurement tool for field Spectrum Compact is the latest product line in Ories using radio technologies. It comprises of a
engineers for telecom, broadcasting and other industries using radionality engineers for telecom, broadcasting and other other other various functionality.

· Operations related to sales of products purchased from other suppliers, like antennas, cables,
as the same of CEM and can different assesseries - as the second unit Operations Telated to Sales of Sand different accessories - as the second unit.

Notes to the consolidated financial statements (continued)

17. Segment information and sales (continued)

	CFM; CFIP; FreeMile		Other		Total
	2013/14	2012/13	2013/14	2012/13	2013/14	2012/13
	EUR	EUR	EUR	EUR	EUR	EUR
Assets
Reportable segment assets	5 834 532	5 944 125	1 634 109	2 179 362	7 468 641	8 123 487
Unallocated assets					4 577 026	4 184 730
Total assets					12 045 667	12 308 217
					1 377 758	1 440 610
Segment liabilities	1 100 557	1 114 444	277 201	326 166	337 913	664 148
Unallocated liabilities						2 104 758
Total liabilities					1 715 671
Net sales	9 469 940	9 861 466	2 555 811	3 479 706	12 025 751	13 341 172
Segment result	2 380 703	2 555 391	1 007 888	1 393 016	3 388 591	3 948 407
Unallocated expenses					(3 414 440)	(4 004 389)
					(25 849)	(55 982)
Loss from operating activities					330 149	84 665
Other income					(125 366)	(32 511)
Financial expenses, net
Profit (loss) before taxes					(27 375)	(23 451)
Corporate income tax					151 559	(27 279)
Current year's profit/ (loss)					(24 510)	(14714)
					127 049	(41 993)
Other information Additions of property plant and
equipment and intangible assets					(512)	(123)
Unallocated additions of property
plant and equipment and intangible assets					126 537	(42 116)
Depreciation and amortization
Unallocated depreciation and amortization	113 955	120 146			113 955	120 146
Total depreciation and amortization					147 768	367 104
Assets					261 723	487 250
Reportable segment assets	142 509	191 329	1119	2574	143 628	193 903
Unallocated assets					272 253	214 478
						408 381
Total assets					415 881

Notes to the consolidated financial statements (continued)

17. Segment information and sales (continued)

b) This note provides information on division of the Group's net sales and assets by geographically of atter b) This note provides internation are allocated to regions based on customer residency, all other assets remain unallocated).

2013/ 2014	2012/2013	30/06/2014	30/06/2013
EUR	EUR	EUR	EUR
5 337 085	5 654 300	818 659	1 301 928
4 617 586	4 537 193	942 404	653 008
2 071 080	3 149 679	226 978	790 963
12 025 751	13 341 172	1 988 041	2 745 899
		10 057 626	9 562 276
12.025 751	13 341 172	12 045 667	12 308 175
		Net sales	Assets

Please also refer to Note 3 (1b) for the description of dependence on individual customers.

Cost of goods sold 18.

9 600 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Purchases of components and subcontractors services	6 557 982	7 697 089
Salary expenses (including accrued liabilities for unused vacations) Depreciation and amortization (refer to Note 6)	1 457 196 171 545	1 448 091 188 849
Social insurance (including accrued liabilities for unused vacations) Rent of premises	344 253 141 841 92 734	345 863 179 706 106 321
Public utilities Transport Communication expenses	27 455 10 448	26 582 14 600
Business trip expenses Low value articles	11 457 2275 60 568	5 756 3 853 74 425
Other production costs	8 877 754	10 091 135

Research and development related expenses of EUR 1 003 445 (2012/2013: EUR 1 031 696) are Research and development related expenses of components and subcontractors services.

Notes to the consolidated financial statements (continued)

19. Sales and marketing expenses

	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Advertisement and marketing expenses	118 575	141 883
Salary expenses (including accrued liabilities for unused vacations) Business trip expenses Depreciation and amortization (refer to Note 6) Delivery costs	937 673 319 132 168 648 337 859	892 017 382 051 158 912 424 650
Social contributions (including accrued liabilities for unused vacations) Other selling and distribution costs	192 755 282 731 2 357 373	202 456 248 773 2 450 742

Administrative expenses 20.

	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Salary expenses (including accrued liabilities for unused vacations) Depreciation and amortization (refer to Note 6)	360 090 75 467	307 689 55 492
Social insurance (including accrued liabilities for unused vacations)	85 811	74 122
	52 359	31 663
IT services	14 507	15 882
Expenses on cash turnover	38 677	51 063
Representation expenses	11 525	33 031
Training	14 242	14 068
Public utilities	1 097	57
Business trip expenses	23 931	22 053
Rent of premises	23715	24 012
Insurance	6 060	2 755
Office maintenance	10 114	2 718
Sponsorship	4717	4 351
Communication expenses	(24 707)	123 998
Allowances for bad and doubtful trade receivables	118 868	92 323
Other administrative expenses	816 473	855 277

Other administrative expenses include the annual statutory audit fee in the amount of EUR 9 490
Check Child CHE 0 700). Davise the veer the Greup did not receive any other s Other administrative expenses include the annual statuely addit for in the amount of the auditor.

01 07 2012-

Other income 21.

	30.06.2014 EUR	30.06.2013 EUR
Government grants* Other income	297 609 32 540 330 149	63 372 21 293 84 665

* - Government grants receivable relate to development project realized in cooperation with LEO Petijumu centrs SIA.

During the reporting year the Group received a government grant payment of EUR 111 957 (2012/ 2013: EUR 70 183).

Notes to the consolidated financial statements (continued)

Financial income 22.	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Interest income	19411 19 411	55 778 55 778
Financial expenses 23.	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Net result of currency exchange fluctuations	144 777 144 777	88 289 88 239
Corporate income tax 24.
	01.07.2013- 30.06.2014	01.07.2012- 30.06.2013

	EUR	EUR
Change in deferred tax asset (see Note 12) Corporate income tax for the reporting year Other charges related to corporate income tax	24 510	8 506
		2 281
		3 927
	24 510	14714

Corporate income tax differs from the theoretically calculated tax amount that would arise applying the the statutory 15% rate to the Group's profit before taxation:

	01.07.2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Profit/ (loss) before tax	151 559	(27 279)
Tax rate	15%	15%
Tax calculated theoretically	22 734	(4 092)
Effect of non-deductible expenses Effect of changes in unrecognized temporary differences	14 788 (3 706) (9 306)	17 925 18 600 (17 719)
Impact of tax benefit Corporate income tax	24 510	14714

The State Revenue Service may inspect the Group's books and records for the last 3 years and The State Revenue Service may inspect and penalties. The Group's management is not
impose additional tax charges with penalty interest and penal liebility. In this resored impose additional tax charges whith may give rise to apprential material liability in this respect.
aware of any circumstances, which may give rise to applied the financial n aware of any circumstances, which may give noo to to to to position of the financial position date).

Notes to the consolidated financial statements (continued)

25.		Taxes and compulsory state social security contributions
	VAT	Social	Personal	Corporate	Business	CIT for	Total
		contributions	income tax	income tax	risk duty	services provided
						by non-
						residents
	EUR	EUR	EUR	EUR	EUR	EUR	EUR
Payable as at
30.06.2013.		72 373	38 656		294		111 323
(Overpaid) as at						(118)	(209 161)
30.06.2013.	(45 370)			(163 673)
Calculated during					3 121	239	1 259 036
the reporting year	(177 516)	913 850	519 342				239 411
Repaid by SRS	239 411
Transferred to/from other
taxes		(106 876)	(56 915)	163 791
Paid during the
reporting year	(10 554)	(808 381)	(461 756)	(69 194)	(3 316)	(239)	(1 353 440)
Payable as at
30.06.2014.		(95)	(74)		(9)		(178)
(Overpaid) as at					90		116 185
30.06.2014.	5 971	70 871	39 253
Payable as at				(69 076)		(118)	(69 194)
30.06.2013.

26. Earnings/ loss per share

Earnings per share are calculated by dividing profit by the weighted average number of shares during the year.

	EUR	01.07.2015- UIJI.LUIL= 30.06.2014 30.06.2013 EUR
Profit / (loss) of the reporting year (a) Ordinary shares as at 1 July (b) Basic and diluted earnings / (losses) per share for the reporting year (a/b)	127 049 2 970 180 (0.043)	(41 993) 2 970 180 (0.014)

27. Management remuneration

Information on the remuneration of the members of the Board and Council

	01.07.2013- 30.06.2014 EUR	01-07-2012- 30.06.2013 EUR
Remuneration of the Board members · salary · social contributions	192 963 45 949	211 794 50 970
Remuneration of the Council members · salary · social contributions Total	112 780 26 841 378 533	115 043 27 713 405 520

Notes to the consolidated financial statements (continued)

28. Related party transactions

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

• a) A person or a close member of that person's family is related to a reporting group entity if that person:
  • has control or joint control over the reporting group entity; i.
  • ii.
  • iii. is a member of the key management personnel of the reporting group entity or of a parent of the reporting entity.

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

• i. The entity and the reporting group 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 The entity is a post-employment benome phone plan . If the reporting entity is itself
  reporting group entity or an entity related to the reporting ontity such a plan, the sponsoring employers are also related to the reporting entity.
• The entity is controlled, or jointly controlled by a person identified in (a). vi.
• A person identified in (a)(i) has significant influence over the entity or is a member of the key vii. management personnel of the entity (or of a parent of the entity).

Related party transaction - a transfer of resources, services or obligations between a reporting entity Related party, transcessfalless of whether a consideration is determined.

	Transaction values for the year ended 30 June		Balance outstanding as at 30 June
	2014 EUR	2013 EUR	2014 EUR	2013 EUR
Sale of goods and services Joint venture		49 892	44 393	49 645
Purchase of goods and services Joint venture		2 968		613
Loans issued and related interest Other related parties Sale of goods and services Joint venture
		412 721	180 581	361 050

On 18 June 2012 the Parent company signed a loan agreement with the related party through On 18 June 2012 the Farent Sompany egarding the issuance of a loan of EUR 400 000. The loan management SIA Nampadina parant as at 2 July 2012. In the reporting year, as share of the nas been transferred to bonowers a asount and the outstanding loan balance as at 30 June 2014 loan was repaid announting to EUR 180 000 and unpaid interest of EUR 581 (30.06.2013)
was EUR 180 581, including principal of EUR 1859). The annual interest rate of the loan was EUR 100 501, including philopal of EUR 1 050). The annual interest rate of the loan is principal LUN 500 000 and unpara interest on on is secured with a mortgage of real estate.

All outstanding balances with these related parties are priced on an arm's length basis and are to been All outstanding balances with those reatory from the loan issued. No expect of amounts owed by secured in the current year or prior year for bad or doubtful debts in respect of amounts owed by related parties.

Notes to the consolidated financial statements (continued)

29. Equity-accounted investees

Summary financial information for equity accounted investees is as follows:

EUR	Owner- ship	Total assets	Total liabilities assets		Net Income Expenses	Profit (loss)	Group share of net assets	Carrying	Group's amount share of profit (loss)
2012/2013 SAF Services							50% 64731		(23 451)
2013 2014 SAF Services								13 910 13 910	(27 375)

30. Personnel costs

	01.07 2013- 30.06.2014 EUR	01.07.2012- 30.06.2013 EUR
Staff remuneration Social contributions Total	2 754 959 622 819 3 377 778	2 647 797 622 441 3 270 238
31. Average number of employees	01.07.2013- 30.06.2014	01.07.2012- 30.06.2013
Average number of staff in the reporting year:	169	169

32. Operating lease

On 10 December 2002 the Parent company signed the rent agreement Nr. S-116/02 with AS Dambis On the rent of premises with the total area of 5,851 m2 until 16 September 2009. Starting 17 on the York of promises wea reduced to 5,672 m2. The premises are located at 24a Gallibur Ocptember 2006 the total roof 2014 agreement amendments concluded on term of the agreement extension till 1 March 2020.

On 24 June 2013 rent agreement Nr. SAFNA-2013-003 with "THE REALTY ASSOCIATES FUND On 24 June 2016 Tont agreeming lease of premises by "SAF North America" with total area 3, 286 m2. The premises are located at 10500 E.54th Avenue, Unite D, Denver, USA.

According to the signed agreements, the Group has the following lease payment commitments as at period end:

	30.06.2014 30.06.2013
	EUR	EUR
1 year	287 630	271 599
2 - 5 years	1 090 106	722 399
More than 5 years	178 899
Total	1 556 635	993 998

33. Contingent laibilities

As part of its primary activities, the Parent company has issued performance guarantees to third parties amounting to EUR 1 770 (2012/ 2013: EUR 12 994).

Notes to the consolidated financial statements (continued)

34. Going concern

The Group's cash flows from operating activities in the reporting year amount to EUR 775 thousand The Group's Cash Tiows Trum beleagh polition in EUR 4 083 thousand (2012: 2013: EUR 2 809
(2012/ 2013: EUR 62 thousand), cash polition in CUR 4 083 thousand (2012: EUR 2 809 thousand) and the liquidity ratio at the reporting date is 6 (30.06.2013: 5).

Group will continue pursuing its strategy to develop new competitive wireless data transmission Group will continue pursuing fis strategy to uccessful financial position and control production and ochation process with the aim to increase sales and profitability.

35. Subsequent events

No significant subsequent events have occurred in the year-end to the date of these No significant subsequent events that would have a material impact on the Group's financial position
consolidated financial statements that would have a material innact on th consolidated infancial statomornance and cash flows for the year then ended.