INVL Technology — Interim / Quarterly Report 2019

Aug 26, 2019

INVL

TECHNOLOGY

INVL TECHNOLOGY

Interim condensed unaudited financial statements for the six months ended 30 June 2019

prepared according to International Financial reporting standards as adopted by the European Union

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(all amounts are in EUR thousand unless otherwise stated)

TABLE OF CONTENTS

BASIC DETAILS ... 3
STATEMENT OF COMPREHENSIVE INCOME ... 4
STATEMENT OF FINANCIAL POSITION ... 5
STATEMENT OF CASH FLOWS ... 6
STATEMENT OF CHANGES IN EQUITY ... 7
NOTES TO THE FINANCIAL STATEMENTS ... 8
1 General information ... 8
2 Basis of preparation and accounting policies ... 9
3 Accounting estimates and judgements ... 10
4 Financial assets at fair value through profit or loss ... 10
5 Cash and cash equivalents ... 14
6 Dividends ... 14
7 Bonds ... 15
8 Loans granted ... 15
9 Reserves ... 15
10 Other short term liabilities ... 15
11 Net Asset Value (non-IFRS measure) ... 15
12 Dividend income ... 16
13 Other operating expenses ... 16
14 Finance costs ... 16
15 Income tax ... 16
16 Earnings per share ... 16
17 Related-party transactions ... 16
18 Financial instruments by category ... 18
19 Financial risk management ... 18
20 Events after the reporting period ... 20

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INVL TECHNOLOGY UTIB
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019
(all amounts are in EUR thousand unless otherwise stated)

BASIC DETAILS

Investment committee

Mr Kazimieras Tonkūnas (Chairman)
Mrs Vida Tonkūnė
Mr Vytautas Plunksnis
Mr Nerijus Drobavičius

Advisory Committee

Alvydas Banys
Indrė Mišeikytė
Gintaras Rutkauskas

Management Company

INVL Asset Management UAB

Depository

AB SEB bank

Principal place of business and company code

Registered office address:
Gynėjų g. 14,
Vilnius,
Lithuania

Company code 300893533

Banks

AB SEB bank

These financial statements were authorised for issue by the Management Company and signed on 26 August 2019.

Kazimieras Tonkūnas
Chairman of the Investment Committee
INVL Technology

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(all amounts are in EUR thousand unless otherwise stated)

STATEMENT OF COMPREHENSIVE INCOME

| | Notes | 2019 6 months
Unaudited | 2018 6 months
Unaudited |
| --- | --- | --- | --- |
| Net change in fair value of financial assets | 4 | (157) | (1,143) |
| Dividend income | 12 | - | 1,139 |
| Interest income | 12 | 79 | 5 |
| Other revenue | | - | 7 |
| Total net income | | (78) | 8 |
| Management fee | | (194) | (195) |
| Other operating expenses | 13 | (98) | (85) |
| Total operating expenses | | (292) | (280) |
| Operating profit (loss) | | (370) | (272) |
| Finance costs | 14 | - | (34) |
| Profit (loss) before tax for the reporting period | | (370) | (306) |
| Income tax benefit | 15 | - | - |
| Profit (loss) for the reporting period | | (370) | (306) |
| Other comprehensive income for the reporting period, net of tax | | - | - |
| TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD, NET OF INCOME TAX | | (370) | (306) |
| Basic and diluted earnings (deficit) per share (in EUR) | 16 | (0,03) | (0,025) |

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(all amounts are in EUR thousand unless otherwise stated)

STATEMENT OF FINANCIAL POSITION

	Notes	As at 30 June 2019	As at 31 December 2018
ASSETS
Non-current assets			-
Financial assets at fair value through profit or loss	4	24,691	24,229
Bonds	7,17	266	251
Loans granted	8	123	-
Total non-current assets		25,080	24,480
Current assets
Dividends receivable	Error!	214	439
Bonds	7,17	1,362	1,001
Prepayments and deferred charges		1	-
Cash and cash equivalents	5	1,117	2,230
Total current assets		2,694	3,670
Total assets		27,774	28,150
EQUITY AND LIABILITIES
Equity
Share capital	1	3,531	3,531
Share premium		8,268	8,268
Reserves	9	10,154	10,154
Retained earnings		5,702	6,072
Total equity	11, 19.3	27,655	28,025
Liabilities
Loan payables		-	-
Total long term liabilities		-	-
Current liabilities
Loan payables		-	-
Trade payables		-	-
Other current liabilities	10	119	125
Total current liabilities		119	125
Total liabilities		119	125
Total equity and liabilities		27,774	28,150

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(all amounts are in EUR thousand unless otherwise stated)

STATEMENT OF CASH FLOWS

	Notes	2019 6 months	2018 6 months
		Unaudited	Unaudited
Cash flows from operating activities
Net profit (loss) for the reporting period		(370)	(306)
Adjustments for:
Elimination of items of financing activities		(49)	-
Dividend income	12	-	(1,139)
Interest income	17	(31)	(5)
Interest and related costs		-	7
Other revenue		-	34
Net change in fair value of financial assets	4	157	1,143
Income tax (benefit) expense		-	-
		(293)	(281)
Changes in working capital:
Investments into subsidiaries	4	(619)	-
Decrease (increase) in trade receivables		225	-
Decrease (increase) in other current assets		-	-
Increase (decrease) in trade payables	10	(6)	(3)
Increase (decrease) in other current liabilities		-	-
Received dividends		-	-
Cash flows from (used in) operating activities		(693)	(284)
Income tax paid		-	-
Net cash flows from (used in) operating activities		(693)	(284)
Cash flows from investing activities
Interest received	17	48	-
Administration interest		-	-
Sale of non-current assets		-	-
Acquisition of bonds	7	(820)	(500)
Redemption of bonds	7	475	500
Loans (granted)	8	(123)	-
Loan repayments received		-	-
Net cash flows from (used in) investing activities		(420)	-
Cash flows from financing activities
Cash flows related to owners:
Proceeds from distribution of newly issued shares		-	-
Cash balance at the company merged		-	-
		-	-
Cash flows related to other financing sources:
Interest (paid)	17	-	(34)
Loan repaid			(1,953)
Net cash flows from (used in) financing activities		-	(1,987)
Foreign exchange effect on the balance of cash and cash equivalents		-	-
Net increase (decrease) in cash and cash equivalents		(1,113)	(2,271)
Cash and cash equivalents in the beginning of the period		2,230	5,030
Cash and cash equivalents at the end of the period	5	1,117	2,759

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(all amounts are in EUR thousand unless otherwise stated)

STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Legal reserve	Reserve for acquisition of own shares	Retained earnings	Total
Balance as at 31 December 2017	3,531	8,268	354	9,800	1,859	19,728
Redistribution of retained earnings to the reserves	-	-	-	-	-	-
Total transactions with owners of the Company, recognised directly in equity	-	-	-	-	-	-
Net profit for 6 months ended 30 June 2018	-	-	-	-	(306)	(306)
Balance as at 30 June 2018	3,531	8,268	354	9,800	1,553	23,506
Balance as at 31 December 2018	3,531	8,268	354	9,800	6,072	28,025
Redistribution of retained earnings to the reserves	-	-	-	-	-	-
Total transactions with owners of the Company, recognised directly in equity	-	-	-	-	-	-
Net (loss) for 6 months ended 30 June 2019	-	-	-	-	(370)	(370)
Total comprehensive income for 6 months ended 31 June 2019	-	-	-	-	(370)	(370)
Balance as at 30 June 2019	3,531	8,268	354	9,800	5,702	27,655

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

NOTES TO THE FINANCIAL STATEMENTS

1 General information

INVL Technology UTIB (company code 300893533, hereinafter "the Company") is a closed-ended type investment company registered in the Republic of Lithuania. The Company's registered office address is Gynėjų g. 14, Vilnius, Lithuania.

On 14 July 2016 the Company has been issued a closed-ended type investment company (UTIB) license by the Bank of Lithuania. Under the company's Articles of Association, INVL Technology UTIB will operate until 14 July 2026, with extension possible for further two years.

INVL Technology strategy is to invest in national-level European IT businesses with high globalisation potential and grow them into global players by utilizing the sales channels and intellectual capital of the managed companies.

Based on the Management Company's INVL Asset Management Board decision the Investment Committee was formed in order to ensure efficiency and control of investments. The Investment Committee consists of 4 (four) representatives of the Management Company (employees, members of management bodies of the Management Company, other persons appointed by a decision of the Board of the Management Company). The purpose of the Investment Committee is to ensure the Managed Company's objectives, its investment strategy and the adoption of prudent decisions for the investment and management of the Managed Company's assets, to supervise the adopted decisions. On 2017 April the Company has formed an Advisory Committee. The purpose of the Advisory Committee is to provide the Investment Committee with reasoned and fact-based opinions as a way to express an independent position regarding investment decisions, thereby ensuring and protecting shareholders' interests. The Advisory Committee consists of four members who are appointed and removed by the Board of the Managing Company.

The Company operates as a cluster of IT businesses working with large corporate and public entities. The classification of companies into 4 areas of activity, as used previously, from the beginning of 2018 is replaced by 3 new functional groups: business climate improvement and e-government, IT services and software, and cyber security. NRD companies continue to belong to the business climate improvement and e-government group, the cyber security group covers NRD CS UAB and other potential acquisitions in this area, whereas the IT services and software group is formed by joining the areas of IT infrastructure and IT intensive industries' solutions. At the end of the first half of 2018 INVL Technology portfolio consists of 15 operating companies. The major investments of INVL Technology are currently in businesses based in Lithuania, Estonia, Norway, Moldova, Tanzania, Rwanda, Uganda and Bangladesh.

The Company has an agreement on depository services with SEB Bankas which acts as the depository of the Company's assets.

The Management Company manages the portfolio of investment instruments of the Company following principles of diversification set in the Articles of Association (the conformity of the portfolio of investment instruments of the Company to those principles shall be achieved within four years from the date the Bank of Lithuania issued a permission to certify Company's incorporation documents and to choose the Depository). The Company cannot invest more than 30% of net asset value of the Company into any single issuer of the instrument. The indicator may be exceeded up to 4 years after the date the Company became a closed-ended investment company. More detailed requirements are lined out in the Articles of Association of the Company.

The shareholders holding ownership to or otherwise controlling over 5% of the Company's authorised share capital (by number of votes held) are as follows as of 30 June 2019 and as of 31 December 2018:

	Number of votes conferred by shares held under the title of ownership As at 30 June 2019	Voting rights held, % As at 30 June 2019	Number of votes conferred by shares held under the title of ownership As at 31 December 2018	Voting rights held, % 31 December 2018
LJB Investments UAB	2,424,152	19.91%	2,424,152	19,91%
Invalda INVL AB	1,749,984	14.37%	1,744,283	14,33%
Ms Irena Ona Mišeikienė	1,466,421	12.04%	1,466,421	12,04%
Lietuvos Draudimas AB	909,090	7.47%	909,090	7,47%
Mr Kazimieras Tonkūnas	675,452	5.55%	675,452	5,55%
Mr Alvydas Banys	618,745	5.08%	618,745	5,08%
Other minor shareholders	4,331,477	35.58%	4,337,178	35,62%
Total	12,175,321	100.00%	12,175,321	100%

The Company's shares are traded in the Baltic Secondary List of Nasdaq Vilnius stock exchange.

On 30 June 2019 the Company did not have employees.

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INVL TECHNOLOGY UTIB
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts are in EUR thousands unless otherwise stated)

2 Basis of preparation and accounting policies

Interim condensed financial statements for the six months ended 30 June 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim condensed financial statements should be read in conjunction with the annual financial statements of the Company for the year ended 31 December 2018.

Except for the points, described below, Interim condensed financial statements are prepared in accordance with the accounting principles adopted for 2018 annual financial statements.

Statement of compliance

The Company meets the definition criteria of an investment entity under IFRS 10. The Company has no subsidiaries that provide services related to the Company's investment activities – therefore no subsidiaries to be consolidated – therefore the Company does not prepare consolidated financial statements.

The financial statements are presented in EUR thousands, and all the amounts have been rounded to the nearest thousand unless otherwise stated.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. Although these estimates are based on management's best knowledge of current circumstances, events or actions, actual results may ultimately differ from these estimates.

Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2018, except adoption of new Standards and Interpretations as of 1 January 2019, noted below.

A number of new or amended standards became applicable for the current reporting period:

• IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019);
• IFRIC 23 Uncertainty over Income Tax Treatments (effective for annual periods beginning on or after 1 January 2019);
• Annual Improvements to IFRSs 2015-2017 cycle (effective for annual periods beginning on or after 1 January 2019);
• Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2019);
• Amendments to IFRS 9 Prepayment Features with Negative Compensation (effective for annual periods beginning on or after 1 January 2019);
• Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (effective for annual periods beginning on or after 1 January 2019).

IFRS 16 Leases

The new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. All leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Lessees will be required to recognise: (a) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and (b) depreciation of lease assets separately from interest on lease liabilities in the income statement. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17, that are continued to be applied by the Company. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. The impact of the standard on the Company's financial statements for six months ended 30 June 2019 is non-material, because the Company are not party to any agreements as lessee.

The standards and amendments endorsed by the EU that are effective for annual periods beginning on 1 January 2019 had no significant impact on the Company's financial statements and operation results.

There are no new or revised standards or interpretations that are not yet effective that would be expected to have a material impact to the Company.

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INVL TECHNOLOGY UTIB
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019
(All amounts are in EUR thousands unless otherwise stated)

3 Accounting estimates and judgements

3.1 Judgements

In the process of applying the Company's accounting policies, management has made the following judgements that have the most significant effect on the amounts recognised in these financial statements:

Investment entity status

The management periodically reviews whether the Company meets all the definition criteria of an investment entity referred to in Note 2. In addition, the management assesses the Company's business objective (Note 1), investment strategy, origin of income and fair value valuation techniques. According to the management, the Company met all the definition criteria of an investment entity throughout all the periods presented in these financial statements.

3.2 Accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

The significant areas of estimation used in the preparation of these financial statements is discussed below.

Fair value of investments that are not traded in an active market

Fair values of investments in subsidiaries that are not traded in an active market are determined by using valuation techniques, primarily earnings multiples, discounted cash flows and recent comparable transactions. The valuation techniques used to determine fair values are periodically reviewed and compared against historical results to ensure their reliability. Details of the inputs and valuation models used to determine Level 3 fair value are provided in Note 4.

4 Financial assets at fair value through profit or loss

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The Company's financial assets at fair value through profit or loss included assets attributed to Level 3 in the fair value hierarchy. The Company has no Level 1 or Level 2 instruments.

10

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

The table below presents the Company's direct and indirect investments in unconsolidated subsidiaries as at 30 June 2019:

Name	Country of incorporation	Shares (voting rights) held directly/indirectly by the Company, (%)	Profile of activities
Novian UAB **	Lithuania	100	Information technology solutions
BAIP UAB *	Lithuania	100	Information technology solutions
Acena UAB*	Lithuania	100	Information technology solutions
Norway Registers Development AS	Norway	100	Information technology solutions
NRD Systems UAB* (previous name – NRD UAB)	Lithuania	89.20	Information technology solutions
Norway Registers Development East Africa Ltd*	Tanzania	70	Information technology solutions
Etronika UAB	Lithuania	90	Information technology solutions
Norway Registers Development Rwanda Ltd*	Rwanda	100	Information technology solutions
Infobank Uganda Ltd*	Uganda	30	Information technology solutions
NRD CS UAB	Lithuania	100	Information technology solutions
Algoritmų sistemos UAB	Lithuania	100	Information technology solutions
FINtime UAB	Lithuania	100	Business process outsourcing
NRD Bangladesh Ltd*	Bangladesh	100	Information technology solutions
Andmevara AS	Estonia	100	Information technology solutions
Andmevara Services OU	Estonia	100	Information technology solutions
Andmevara SRL*	Moldova	100	Information technology solutions
NRD AS Lithuania	Lithuania	100	Information technology solutions
Zissor AS**	Norway	100	Information technology solutions

• These entities were indirectly controlled by the Company as at 30 June 2019.
  ** Zissor AS acquired in 2019 2nd quarter

The table below presents the Company's direct and indirect investments in unconsolidated subsidiaries as at 31 December 2018:

Name	Country of incorporation	Shares (voting rights) held directly/indirectly by the Company, (%)	Profile of activities
Vitma UAB **	Lithuania	100	Information technology solutions
BAIP UAB *	Lithuania	100	Information technology solutions
Acena UAB*	Lithuania	100	Information technology solutions
Norway Registers Development AS	Norway	100	Information technology solutions
NRD UAB*	Lithuania	89.20	Information technology solutions
Norway Registers Development East Africa Ltd*	Tanzania	70	Information technology solutions
Etronika UAB	Lithuania	90	Information technology solutions
Norway Registers Development Rwanda Ltd*	Rwanda	100	Information technology solutions
Infobank Uganda Ltd*	Uganda	30	Information technology solutions
NRD CS UAB	Lithuania	100	Information technology solutions
Algoritmų sistemos UAB	Lithuania	100	Information technology solutions
FINtime UAB	Lithuania	100	Business process outsourcing
NRD Bangladesh Ltd*	Bangladesh	100	Information technology solutions
Andmevara AS	Estonia	100	Information technology solutions
Andmevara SRL*	Moldova	100	Information technology solutions

• These entities were indirectly controlled by the Company as at 31 December 2018.
  **The company name changed from VITMA UAB to UAB Novian on 21st February, 2018.

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

The Company conducts an independent valuation of its investments in subsidiaries when preparing the annual financial statements. As at 31 December 2018, the valuation was carried out by Deloitte Verslo Konsultacijos UAB using the income approach. In the opinion of the management, the fair value of investments was determined appropriately using the inputs and ratios properly selected and reasonably reflecting the investments. The fair value of investments was determined in compliance with the International Valuation Standards approved by the International Valuation Standards Council. For the income approach, the discounted cash flow method was used. It was based on free cash flow forecasts made by management for the period of 5 years. Free cash flows were calculated as net operating profit after tax plus depreciation and minus change in working capital and capital expenditure.

30 June 2019

As market conditions and other preconditions used in the valuation did not change significantly during the first six months of 2019, when preparing preliminary operating results for the six months of 2019, the Company measured the fair value of investments using the values determined as at 31 December 2018 adjusted by the net profit or loss of its investments and declared dividends to the Company that occurred during the period. Investments in entities acquired/established during 2019 were stated at cost.

The preliminary fair values of the Company's unconsolidated subsidiaries were as follows:

Name	At 30 June 2019	At 31 December 2018
Novian UAB Group*	8,216	7,588
Algoritmu sistemos UAB	3,963	4,078
NRD Group**	5,317	5,458
NRD CS UAB	6630	6,455
Andmevara***	317	470
FINtime UAB	248	231
Total	24,691	24,229

• Novian UAB group consisted of Novian UAB together with the entities controlled by it – BAIP UAB and Acena UAB
  ** NRD Group consisted of Norway Registers Development AS together with the entities controlled by it – NRD UAB, Etronika UAB, Norway Registers Development Rwanda Ltd (established in 2016) and Norway Registers Development East Africa Ltd, and its associate Infobank Uganda Ltd.
  ***Andmevara includes Andmevara AS and Andmevara SRL

Other subsidiaries of the Company as at 30 June 2019 did not have any significant restrictions on the repayment of dividends to the Company from non-consolidated subsidiaries or the Company's loans to unconsolidated subsidiaries. Due to changes in the fair value of subsidiaries of the Company, the Company may incur losses.

Information about dividends is described in Note 12.

The table below presents movements in Level 3 financial instruments during the first six months of 2019:

Opening balance at 1 January 2019	24,229
Unrealized gains and losses for the reporting period recognized in the income statement for assets managed at the end of the reporting period	(157)
Increase of share capital	619
Closing balance at 30 June 2019	24,691

*UAB „Novian“ share capital increasing

The equity capital of INVL Technology, a company that invests in IT businesses, was EUR 27.655 million, or EUR 2.2714 per share, at the end of June 2019, and decreased 1.32 percent during the period from 2019 January to June.

As at 31 December 2018

The fair values of the Company's unconsolidated subsidiaries were as follows:

Name	At 31 December 2018	At 31 December 2017
Novian UAB Group*	7,537	7,497
NRD Group**	5,458	3,624
NRD CS UAB	6,455	5,067
Algoritmu sistemos UAB	4,078	3,821
FINtime UAB	231	274
Andemavara***	470	525
Total	24,229	20,808

• Novian UAB group consisted of Novian UAB together with the entities controlled by it – BAIP UAB and Acena UAB
  ** Includes all NRD Group companies
  ***Andmevara includes Andmevara AS and Andmevara SRL

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

The subsidiaries of the Company as at 31 December 2018 did not have any significant restrictions on the repayment of dividends to the Company from non-consolidated subsidiaries or the Company's loans to unconsolidated subsidiaries. Due to changes in the fair value of subsidiaries of the Company, the Company may incur losses.

Information about dividend is presented in Note 12.

The table below presents movements in Level 3 financial instruments during 2018:

Opening balance at 1 January 2018	20,808
Realized gains on the sale of the investments fo the period recognized in the income statement	-
Unrealized gains and losses for the reporting period recognized in the income statement for assets managed at the end of the reporting period	3,421
Closing balance at 31 December 2018	24,229

The equity value of the Company was EUR 28,025 thousand, or EUR 2.30 per share, at the end of 2018, and increased 17.69 percent during the year.

At the end of the year 2018 the value of the investments managed by the Company amounted to EUR 24.2 million (EUR 20.8 million at the end of 2017) and increased by 16.44 per cent over the year. At the end of the year 2018 INVL Technology's net profit after revaluation of financial assets amounted to EUR 4.2 million.

The table below shows the fair value (Level 3) valuation methods of the investments in subsidiaries, the input data used and the sensitivity analysis for changes in input data:

Name	Fair value, EUR '000	Valuation technique	Inputs	Input value	Reasonable possible shift -/+	Change in valuation +/-
Novian UAB	7,537	Discounted cash flow	Weighted average cost of capital	9.30%	-/+ 0.5 %	455 / (396)
			Long-term growth rate	2.00%	-/+ 0.5 %	(298) / 342
			Free cash flows	-	-/+ 10 %	(635) / 635
			Discount for lack of marketability	13.5%	-/+ 2 %	161 / (161)
			5y revenue growth rate	-	-/+ 0.5 %	(196) / 200
NRD Group	5,458	Discounted cash flow	Weighted average cost of capital	11.1%	-/+ 0.5 %	293 / (262)
			Long-term growth rate	2.00%	-/+ 0.5 %	(177) / 198
			Free cash flows	-	-/+ 10 %	(482) / 482
			Discount for lack of marketability	15.1%	-/+ 2 %	128 / (128)
			5y revenue growth rate	-	-/+ 0.5 %	(90) / 92
NRD CS UAB	6,455	Discounted cash flow	Weighted average cost of capital	9.5%	-/+ 0.5 %	438 / (383)
			Long-term growth rate	2.00%	-/+ 0.5 %	(292) / 333
			Free cash flows	-	-/+ 10 %	(600) / 600
			Discount for lack of marketability	13.9%	-/+ 2 %	150 / (150)
			5y revenue growth rate	-	-/+ 0.5 %	(148) / 151
Andmevara AS	386	Discounted cash flow	Weighted average cost of capital	9.9%	-/+ 0.5 %	31 / (28)
			Long-term growth rate	2.00%	-/+ 0.5 %	(19) / 21
			Free cash flows	-	-/+ 10 %	(47) / 47
			Discount for lack of marketability	15.1%	-/+ 2 %	10 / (10)
			5y revenue growth rate	-	-/+ 0.5 %	(9) / 9
Andmevara Services OU	84	Net assets value	N/A	N/A	N/A	N/A
Algoritmų sistemos UAB	4,078	Discounted cash flow	Weighted average cost of capital	9.40%	-/+ 0.5 %	275 / (240)
			Long-term growth rate	2.00%	-/+ 0.5 %	(175) / 200
			Free cash flows	-	-/+ 10 %	(388) / 388
			Discount for lack of marketability	15.1%	-/+ 2 %	96 / (96)
			5y revenue growth rate	-	-/+ 0.5 %	(90) / 91
FINtime UAB	231	Net assets value	N/A	N/A	N/A	N/A

Total: 24,229

13

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

The fair value was based on discounted cash flow method, which was selected by the external valuator as the best representation of the company specific development potential, except for FINtime UAB where net assets value method was used. Different method was selected as at the current moment the entities do not expect to generate significant free cash flows. Due to the limited number of comparable companies and transactions, lack of reliability of the market data and limited comparability of peers, the results of the guideline public companies and transaction methods were used as a supplementary analysis and were provided only for illustrative purposes in valuation report.

Cash flow projections made by Company management for the period of 5 years (2019-2023) were used as a basis in the income method. Free cash flows were calculated as operating profit after tax plus depreciation/amortisation of property, plant and equipment and intangible assets, plus or minus changes in working capital and minus capital expenditure. The resulting value was adjusted by discount for lack of marketability and the amount of surplus assets/liabilities. As part of the valuation process, valuator had analysed items presented on the balance sheet of each company and had identified assets and liabilities, which can be treated as surplus assets (e.g. net working capital above normalised level, non-operating cash balances, loans to related parties) and debt/debt like items; all of which were adjusted when arriving at equity value of the company.

In the opinion of the management, the fair value was determined appropriately using the inputs and ratios properly selected and reasonably reflecting the investments.

5 Cash and cash equivalents

	At 30 June 2019	At 31 December 2018
Cash in bank accounts
Cash EUR	1,117	2,230
Total cash and cash equivalents	1,177	2,230

All Company's cash and cash equivalents comprised funds in the bank's current accounts.

6 Dividends

	At 30 June 2019	At 31 December 2018
Loans granted to subsidiaries and accrued interest thereon	-	-
Dividends receivable from subsidiaries	214	439
Total other receivable, gross	214	439
Less: provision for impairment of other receivables	-	-
Other receivable net of expected credit losses	214	439

The ageing analysis of the Company's receivables as at 30 June 2019:

	Receivables not past due and not impaired	Less than 30 days	30 to 90 days	90 to 180 days	More than 180 days	Receivables Impaired	Total
As at 30 June 2019
Dividends receivable	-	-	-	-	214	-	214
Expected credit losses	-	-	-	-	-	-	-
Other receivables less expected credit losses	-	-	-	-	214	-	214
As at 31 December 2018
Dividends receivable	-	-	-	-	439	-	439
Other receivables	-	-	-	-	-	-	-
Expected credit losses	-	-	-	-	-	-	-
Other receivables less expected credit losses	-	-	-	-	439	-	439

All receivables past due but not impaired were receivables from subsidiaries. In the opinion of the Company's management, these receivables were not impaired since the Company has full control of cash flows of subsidiaries and there were no

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

restrictions on transfer of the above-indicated balances to the Company. If necessary, the Company was able to collect these amounts in cash, offset them against the amounts payable to the subsidiaries, or capitalise them as an additional contribution to the share capital of the subsidiary.

7 Bonds

	At 30 June 2019	At 31 December 2018
Classified as non-current asset	266	251
Bonds	245	245
Accrued interest	21	6
Classified as current asset	1,362	1,001
Bonds	1,335	990
Accrued interest	27	11
Total value of bonds	1,628	1,252

On June 30, 2019, the Company had bonds in the following companies: OU Andmevara Services; Andmevara AS; BAIP UAB; FINtime UAB; NRD CS UAB and NRD Systems UAB. Bonds are accounted for at amortized cost as they are considered to be held for cash flow interest payments and principal repayments only. As at 30 June 2019, the expected credit loss was estimated which was considered to be not material and was, therefore, not recognized in these financial statements.

8 Loans granted

In 2019 June The Company granted a loan to the subsidiary UAB Etronika EUR 123 thousand. Loan repayment term is on 2021 January. The interest rate is fixed at 12%. During 2019 the Company accrued interest during the first half of the year in total EUR 121.

9 Reserves

As at 30 June 2019, the Company's reserves consisted of the reserve for acquisition of own shares amounting to EUR 9,800 thousand and legal reserve amounting to EUR 354 thousand.

Legal reserve

Legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated in accordance with the statutory financial statements, are compulsory until the reserve reaches 10% of the share capital. The reserve can be used only to cover the accumulated losses.

Reserve for acquisition of own shares

Reserve for acquisition of own shares is formed for the purpose of acquiring own shares in order to keep their liquidity and manage price fluctuations. It is formed from profit for appropriation. The reserve cannot be used to increase the share capital. The reserve is reduced upon annulment of own shares. During the ordinary general meeting of shareholders, the shareholder may decide to transfer the amounts not used for acquisition of own shares to the retained earnings. The Company's management did not have a formally approved programme for buy-up of its own shares as at the reporting date.

10 Other short term liabilities

	At 30 June 2019	At 31 December 2018
Payable amounts
Management Fee	101	90
Depository Fee	8	7
Other payable amounts	7	22
Audit expenses accrual	3	6
Total other short liabilities	119	125

11 Net Asset Value (non-IFRS measure)

	At 30 June 2019	At 31 December 2018
Net asset value, total, EUR	27,654,929	28,024,654
Net asset value per share, EUR	2.2714	2.3018

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

12 Dividend income

During 2018 these companies declared dividends: Novian UAB – EUR 700 thousand, NRD CS UAB – EUR 400 thousand, FINtime UAB – EUR 39 thousand.

13 Other operating expenses

	2019 6 months	2018 6 months
Professional services	95	82
Audit services	3	3
Other operating expenses total	98	85

14 Finance costs

	2019 6 months	2018 6 months
Interest and related expenses on borrowings	-	34
	-	34

15 Income tax

The Company does not account for deferred income tax liabilities related to change in the fair value of financial assets, because the Company's investments meet the criteria defined in the Law on Corporate Income Tax, under which the revenue on disposal of investments is exempt from income tax.

16 Earnings per share

Basic earnings per share are calculated by dividing net profit for the period attributable to equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of shares on 30 June 2019 was as follows:

Calculation of weighted average for 2019	Number of shares (thousand)	Par value (EUR)	Issued/36 5 (days)	Weighted average (thousand)
Shares outstanding as at 30 June 2019	12,175	0,29	365/365	12,175

The following table reflects data on profit and shares used in the basic earnings per share computations:

	6 months 2019	6 months 2018
Net profit (loss) attributable to the equity holders of the parent entity (EUR '000)	(370)	(306)
Weighted average number of ordinary shares (thousand)	12,175	12,175
Basic earnings per share (EUR)	(0.03)	(0.025)

17 Related-party transactions

The Company's transactions with other related parties during 6 months 2019 and outstanding balances as at 30 June 2019 were as follows:

	Revenue and income from related parties	Incurred costs from related parties	Receivables from related parties	Payables to related parties
The Company's subsidiaries
Interest	79	-	48	-
Dividends	-	-	214	-
Management fee	-	194	-	101
Other activities	-	-	-	-
	79	194	262	101

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

Changes in acquired bonds during HY 2019:

As at 1 January 2019 1,252
Interest charged 79
Bonds acquired 820
Bonds repayments received (475)
Interest received (48)
As at 30 June 2019 1,628

Changes in loans granted to subsidiaries in 2019:

As at 1 January 2019
Loan granted 123
Interest charged -
As at 30 June 2019 123

The Company's transactions with other related parties during 2018 and outstanding balances as at 31 December 2018 were as follows:

	Revenue and income from related parties	Incurred costs from related parties	Receivables from related parties	Payables to related parties
The Company's subsidiaries
Interests	5	-	44	-
Dividends	1,319	-	1,139	-
Management fee	-	195	-	95
Other activities	7	3	-	3
	1,151	198	1,190	98

Changes in loans granted to subsidiaries and acquired bonds during 2018:

At 1 January 2018 39
Interest charged 33
Administration fee 7
Bonds acquired 1,735
Bonds repayments received (500)
Interest received (63)
Administration fee received -
Foreign exchange effect on the balance of loans -
At 31 December 2018 1,252

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

18 Financial instruments by category

The Company's financial assets at fair value through profit or loss consisted of assets in Level 3. The Company has no instruments in Level 1 and 2.

	Loans and receivables	Financial assets at fair value through profit or loss	Total
At 30 June 2019
Assets as per statement of financial position
Financial assets at fair value through profit or loss	-	24,691	24,691
Receivables	214	-	214
Bonds	1,628	-	1,628
Loans	123		123
Cash and cash equivalents	1,117	-	1,117
Total	3,082	24,691	27,773
	Loans and receivables	Financial assets at fair value through profit or loss	Total
At 31 December 2018
Assets as per statement of financial position
Financial assets at fair value through profit or loss	-	24,229	24,229
Receivables	439	-	439
Bonds	1,252		1,252
Cash and cash equivalents	2,230	-	2,230
Total	3,921	24,229	28,150
		Financial liabilities at amortised cost
At 30 June 2019
Liabilities as per statement of financial position
Loan payables			-
Trade payables			108
Other current liabilities, excluding taxes and employee benefits			11
Total			119
		Financial liabilities at amortised cost
At 31 December 2018
Liabilities as per statement of financial position
Loan payables			-
Trade payables			4
Other current liabilities, excluding taxes and employee benefits			121
Total			125

19 Financial risk management

19.1 Financial risk factors

The risk management function within the Company is carried out by the Management Company in respect of financial risks (credit, liquidity, market, foreign exchange and interest rate risks), operational risk and legal risk. The primary objective of the financial risk management function is to establish the risk limits, and then make sure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of the internal policies and procedures necessary to mitigate the operational and legal risks.

The Company's financial liabilities consisted of trade and other payables. The Company has various categories of financial assets, however, the major items of its financial assets were financial assets at fair value through profit loss consisting of the investments in unconsolidated subsidiaries and cash and cash equivalents.

The Company is being managed in a way that its portfolio companies are operating independently from each other. This helps to diversify the operational risk and to create conditions for selling any controlled business without exposing the Company to any risks.

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

The Company's business objective is to achieve medium to long-term return on investments in carefully selected unlisted private companies operating in information technology sector. The goal of the Company is to increase the value of its investments with the purpose to sell the investments at the end of their life (Note 1) earning adequate return for the shareholders and success fee if applicable.

The main risks arising from the financial instruments are market risk (including foreign exchange risk, cash flow and fair value interest rate risk and price risk), liquidity risk, interest rate risk and credit risk. The risks are described below.

Credit risk

Credit risk arises from cash and cash equivalents, outstanding balances of trade and other receivables, and outstanding balances of loans granted.

With respect to trade and other receivables neither past due nor impaired, there were no indications as at the reporting date that the debtors will fail to fulfil their liabilities in due time, since the Company constantly reviews the balances of receivables. The Company has no significant transactions in a country other than the countries of domicile of the subsidiaries and their investments. All receivables of the Company are from subsidiaries, and their settlement terms are set by the Company itself.

With respect to credit risk arising from other financial assets of the Company (consisting of cash and cash equivalents), the Company's exposure to credit risk arises from default of the counterparty. The maximum exposure to credit risk was equal to the carrying amount of these instruments:

Assets with no credit rating assigned	At 30 June 2019	At 31 December 2018
Dividends receivable	214	439
Granted loans with interest	123	-
Bonds with interest	1,628	1,252
Cash and cash equivalents	1,117	2,230
Total current assets	3,082	3,921

The Company accepts the services from the banks and the financial institutions which (or the controlling financial institutions of which) have been assigned a high credit rating by an independent rating agency. As at 30 June 2019 the Company's cash balances were held in the financial institutions which have not been assigned individual credit ratings, but the controlling financial institutions of which have been assigned "Prime-1" rating by Moody's agency.

Interest rate risk

As at 30 June 2019 and 31 December 2018 the Company did not have borrowings, therefore, it had no interest rate risk.

Price risk

The Company's investments are susceptible to price risk arising from uncertainties about future values of the investments that are not traded in an active market. To manage the price risk, the Investment committee reviews the performance of the portfolio companies at least on a quarterly basis, and keep regular contact with the management of the portfolio companies for business development and day-to-day operation matters.

As at 30 June 2019, the fair value of the Company's investments exposed to price risk was EUR 24,691 thousand (31 December 2018: EUR 24,229 thousand).

Liquidity risk

The Company's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities to meet its commitments at a given date in accordance with the strategic plans.

Liquidity risk of the Company is managed by the Management company. The liquidity risk management is divided into long-term and short-term risk management.

The aim of the short-term liquidity risk management is to meet the day-to-day needs for funds. Each subsidiary is independently planning its internal cash flows. Short-term liquidity of the Company is managed through monthly monitoring of the liquidity status at the Company.

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INVL TECHNOLOGY UTIB

INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2019

(All amounts are in EUR thousands unless otherwise stated)

Long-term liquidity risk is managed by analysing the cash flow projections by taking into account the potential sources of financing. Before approving a new investment project, the Company evaluates the possibilities to attract the required funding. Based on monthly reports, the Company makes projections of monetary income and expenses over the next one year, thereby ensuring an effective planning of the Company's funding.

The Company's financial liabilities based on undiscounted contractual payments consisted of:

	Up to 3 months	4 - 12 months	2 to 5 years	Over 5 years	Total
Loans to credit institutions with interest	-	-	-	-	-
Other current liabilities	119	-	-	-	119
At 30 June 2019	119	-	-	-	119
Loans to credit institutions with interest	-	-	-	-	-
Other current liabilities	125	-	-	-	125
At 31 December 2018	125	-	-	-	125

The company has no liquidity problems and there are no expectations that they will arise in the foreseeable future.

Foreign exchange risk

The Company has no material exposures or transactions in currencies other than euro, therefore it is not exposed to foreign currency risk.

19.2 Fair value estimation

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company carries investments in subsidiaries at fair value, please refer to Note 4 for more details.

The Company's principal financial instruments that are not carried at fair value in the statement of financial position are cash and cash equivalents, trade and other receivables, as well as trade and other payables.

The carrying amount of the cash and cash equivalents, trade and other receivables, as well as trade and other payables of the Company as at 30 June 2019 approximated their fair value because they are short-term and the impact of discounting is immaterial.

19.3 Capital management

The Company's primary objective when managing capital is to safeguard that the Company will be able to maintain a strong credit health and healthy capital ratios in order to support its business and maximise returns for shareholders. The Company's capital management is conducted through supervision of activities of individual subsidiaries to ensure that their capital is sufficient to continue as a going concern. Management of entities oversee to ensure that the subsidiaries are in compliance with the capital requirements defined in relevant legal acts and loan contracts, and that they provide the Company's management with the necessary information.

The Company's capital comprises share capital, share premium, reserves and retained earnings. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and risks specific to its activity. To maintain or adjust the capital structure, the Company may issue new shares, reduce share capital, and adjust the dividend payment to shareholders.

During 2019, no changes were introduced in the objectives of capital management, policies or processes.

The Company is obliged to keep its equity ratio at not less than 50 % of its share capital, as imposed by the Lithuanian Law on Companies. As at 30 June 2019 the Company complied with this requirement.

20 Events after the reporting period

There were no major events.