Akciju sabiedriba "VEF" — Interim / Quarterly Report 2012

May 31, 2012

JOINT STOCK COMPANY VEF (Unified registration number 40003001328)

NON- AUDITED FINACIAL STATEMENTS For the period ended on March 31, 2012

CONTENTS

General information

Report on the Management Board's responsibility

Balance sheet

Income statement

Cash flow statement

Statement of changes in equity

Notes to the financial statement

Report on the Management Board's responsibility to the non-audited financial statement of JSC "VEF" for the three months of 2012

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

Middle-term financial statements are prepared based on justifying documents and represent true and clear overview on the Company's Assets and Equity and Liabilities, its financial standing and results of activity as well as cash flows within the reporting period ended on march 31, 2012.

Middle-term financial statements are prepared according to the EU approved International Standards of financial reports and observing principle of continuing business activity. Accounting principles used in preparation of the middle-term financial statements have not been changed comparing to the previous reporting period. During preparation of the middle-term financial statements decisions taken by the Management Board and estimations made have been cautious and well-founded. The information included in the middle-term management's report is true.

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

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

Gints Feņuks Chairman of the Management Board

GENERAL INFORMATION Title of enterprise Joint stock company VEF Legal type of enterprise Public joint stock company Registred: On April 15, 1991 in the Register of Enterprises of the Republic of Latvia, reregistred on December 7, 2000 with Nbr. 000300132 On April 14, 2004 registered in the Commercial Register, Nbr. 40003001328 Taxpayers' Reg. Nbr. LV 40003001328 Legal address Brīvības gatve 214, Rīga, LV-1039, Republic of Latvia phone: 67270618. Equity capital ¹ : Ls 1 944 637 registered and paid up capital. Core businesses: *Power supply - distribution of power; *Letting and renting of real-estate property Name of the holder of shares And share capital (% ) ² : *Ferrous and non-ferrous waste and scrap purchase. As on march 31. 2012 ; *VEF KOMUNIKĀCIJU SERVISS SIA- 45.52377 % ; *JSC Goldinvest Asset Management – 21.92579 % ; *State Social Insurance Agency - 5.01801 % ; * Tamāra Kampāne - 9.50748 % ; * Gints Feņuks - 7.01432 % ; *Other shareholders - 11.01063 % . Chief executive officer: Chairman of the Board of the Company: GINTS FEŅUKS Members of the Board: TAMĀRA KAMPĀNE PĒTERIS AVOTIŅŠ Members of the Supervisory Council: AIVARS VĪTOLIŅŠ ANDRIS DENIŅŠ INTS KALNIŅŠ GUNTIS LIPIŅŠ JĀNIS LĀMA Period of account: 01.01.2012. - 31.03.2012. Qualified auditor: Mara Liguta. Certificate Nbr.55

1 Paid-up and registered equity capital Ls 1 944 137

2 The company`s capital consists of the 623 528 bearer shares and 1 321 109 registered shares Nominal value of a common share is 1 LVL (one Latvian lat).

ASSETS	Final balance		Beginning balance
	LVL	LVL	EUR	EUR
	31.03.2012	31.03.2011	31.03.2012	31.03.2011
			0.702804	0.702804
LONG-TERM INVESTMENTS
Intangible assets
Concessions,patents,licences	1 148	273	1 633	388
Total intangible assets	1 148	273	1 633	388
Fixed Assets
Land,buildings and other property	4 008 548	4 140 830	5 703 650	5 891 870
Equipment and machinery
Other fixed assets and inventory	100 927	42 184	143 606	60 021
Advance payments for fived assets
Total fixed assets	4 109 475	4 183 014	5 847 256	5 951 891
Total long-term investments	4 110 623	4 183 287	5 848 889	5 952 280
Current assets
Inventory
Goods for sale
Total inventory	0	0	0	0
Debtors
Customers and client debts	49 321	49 937	70 177	71 054
Other debtors	9 301	11 778	13 234	16 760
Future period
Future period expenses	1 813	620	2 580	881
Total debtors	60 435	62 335	85 991	88 695
Cash	27 468	2 899	39 084	4 125
Total Current assets	87 903	65 234	125 075	92 820
TOTAL ASSETS	4 198 526	4 248 521	5 793 964	6 045 100

LIABILITIES	Final balance		Beginning balance
	LVL	LVL	EUR	EUR
	31.03.2012	31.03.2011	31.03.2012	31.03.2011
			0.702804	0.702804
Stockholder's Equity
Common stock	1 944 637	1 944 637	2 766 969	2 766 969
Long-term investments revaluation reserve	563 341	438 390	801 562	623 773
Total accumulation
Retained earnings from the previous years	-793 982	-860 928	-1 129 735	-1 224 990
Retained earnings of the financial years	9 842	10 661	14 004	15 169
Total stockholder's equity	1 723 838	1 532 760	2 452 800	2 180 921
PROVISIONS
Other provisions	9 185	9 122	13 069	12 979
Total provisions	9 185	9 122	13 069	12 979
LIABILITIES
Long-term liabilities
Borrowings from credit institutions	2 250 213	2 294 490	3 201 765	3 264 765
Prepayments from buyers	23 642	25 103	33 639	35 718
Other liabilities
Deferred tax liability	22 491	150 492	32 002	214 131
Total long-term liabilities	2 296 346	2 470 085	3 267 406	3 514 614
Current liabilities
Borrowings from credit institutions	44 277	59 036	63 001	84 001
Accounts payable	18 998	57 472	27 032	81 775
Taxes and social security payments	53 337	78 150	75 892	111 198
Other liabilities	4 785	5 558	6 808	7 908
Other borrowings	11 387		16 202
Prepayments from buyers	36 373	36 338	51 754	51 704
Total current liabilities	169 157	236 554	240 689	336 586
Total liabilities	2 465 503	2 706 639	3 508 095	3 851 200
TOTAL LIABILITIES&STOCKHOLDER'S	4 198 526	4 248 521	5 973 964	6 045 100
EQUITY

		LVL 31.03.2012	LVL 31.03.2011	EUR 31.03.2012 - 0.702804	EUR 31.03.2011 - 0.702804
1	2	4	5	4	5
Net turnover		240 874	221 249	342 733	314 809
Cost of goods sold	1	-170 832	-152 796	-243 072	-217 409
Gross profit		70 042	68 453	99 661	97 400
Selling expenses
Administrative expenses	2	-17 183	-16 046	-24 449	-22 831
Other income from operations	3	904	828	1 286	1 178
Other expenses from operations	4	-337	-1 211	-479	-1 723
Finansial services income	5	2		3
Finansial services expenses	6	-35 277	-34 570	-50 195	-49 189
Profit before taxes		18 151	17 454	25 827	24 835
Other taxes	7	-3 811	-5 043	-5 423	-7 176
Deferred tax		-4 498	-1 750	-6 400	-2 490
Net profit		9 842	10 661	14 004	15 169

PROFIT AND LOSSES ACCOUNT FOR YEAR, WHICH ENDS ON MARCH 31.2012.

Earnings per share (EPS) on 31.03.2012- 0.00506 LVL - 0.00506 EUR

31.03.2011 -0.00548 LVL -0.00548 EUR

Chairman of the Board

G.Feņuks Member of the Board T.Kampane

CASH FLOW STATEMENT FOR YEAR THAT ENDS ON MARCH 31, 2012

		2012 31.03.	2011 31.03.	2012 31.03. EUR	2011 31.03. EUR
I.	CASH FLOW FROM OERATING ACTIVITIES	LVL	LVL	0.702804	0.702804
	Profit before outstanding items and taxes (+) Adjustments:	18 151	17 454	25 827	24 835
	fixed assets depreciation ( +)	23 751	13 644	33 795	19 414
	intangible assets depreciation (+)	74	16	105	23
	increase/decrease in provisions
	profit or losses from exchange rates fluctuation (+/-)		27		38
	finansial service income	2		3
	finacial services income	35 277	34 570	50 195	49 189
	Profit or losses before adjustments from current assets and liabilities	77 255	65 711	109 924	93 498
	Adjustments:
	debtors : increase (-); decrease (+)	1 900	11 476	2 704	16 329
	inventory: increase (-); decrease (+)		-221		-315
	liabilities: increase (-); decrease (+)	-4 550	-15 319	-6 474	-21 797
	Gross cash provide by operating activities	74 605	61 647	106 153	87 716
	Payments for financial	-35 277	-34 570	-50 195	-49 189
	Income tax payments		-5 043		-7 176
	Net cash provided by operating activities before outstanding items:	39 328	22 034	55 958	31 352
	Cash flow from outstanding items (-/+) Net cash provided by operating activities :	39 328	22 034	55 958	31 352
II.	CASH FLOWS FROM INVESTING ACTIVITIES :
	Fixed assets purchase
	Interest received
	Net cash used in investing activities :
III.	CASH FLOWS FROM FINANCING ACTIVITIES:
	Expenses for borrowings repayment	-14 759	-14 759	-21 00	-21 000
	Expenses on the purchase of land.		-11 260		-16 022
	Net cash provided by financing activities :	-14 759	-26 019	-21 000	-37 022
IV.	Exchange rate fluctuation result :		-27		-38
	Net cash flom	24 569	-4 012	34 958	-5 708
	CASH AT BEGINNING OF YEAR	2 899	6 911	4 125	9 833
	CASH AT END OF YEAR
		27 468	2 899	39 083	4 125

STATEMENT OF CHANGES IN EQUITY FOR YEAR THAT ENDS ON MARCH 31, 2012

	31.03.2012 LVL	31.03.2011 LVL	31.03.2012 EUR 0.702804	31.03.2011 EUR 0.702804
Stockholder's eguity
Balance at the beginning of the
financial year	1 944 637	1 944 637	2 766 969	2 766 969
Increase from
Decrease from
Balance at the end of the financial year	1 944 637	1 944 637	2 766 969	2 766 969
Long-term investments revaluation reserve
Balance at the beginning of the financial year	563 341	438 390	801 562	623 773
Increase from
Decrease from
Balance at the end of the financial year	563 341	438 390	801 562	623 773
Accumulations
Balance at the beginning of the financial year
Increase from
Decrease from
Balance at the end of the financial year
Retained earnings
Balance at the beginning of the financial year	-793 982	-860 928	-1 129 735	- 1 224 990
Profit or losses of the finacial year	9 842	10 661	14 004	15 169
Dividendes
Included in accumulations
Balance at the end of the financial year	-784 140	-850 267	-1 115 731	- 1 209 821
Stockholder's eguity (total)
Balance at the beginning of the
financial year	1 713 996	1 515 784	2 438 797	2 156 766
Balance at the end of the financial year	1 723 838	1 532 760	2 452 800	2 180 921

(1) Net turnover

Turnover consists of revenues that the Company gained in the first three months of 2012 from its core business-service provision without VAT

Type of commercial operations	2012.03.31	2011.03.31	2012.03.31	2011.03.31
	LVL	LVL	EUR	EUR
power supply, distribution and servicing	40 612	31 522	57 786	44 832
water supply and sewage services	89	131	127	186
office renting service	100 537	102 437	143 051	145 755
utility services	58 314	54 423	82 973	77 437
black and nonferrous metal scrap and scrap
purchase	41 322	32 736	58 796	46 579
Total	240 874	221 249	342 733	314 809

Distribution of net turnover by geographical markets

	2011.03.31	2011.03.31	2012.03.31	2011.03.31
Country	LVL	LVL	EUR	EUR
Latvia	240 874	221 249	342 733	314 809
Total	240 874	221 249	342 733	314 809

(2) Cost of sales

	2012.03.31	2011.03.31	2012.03.31	2011.03.31
	LVL	LVL	EUR	EUR
personnel	30 035	25 006	42 736	35 580
depreciation	23 751	13 644	33 795	19 414
transport	2 995	1 563	4 261	2 224
other outstanding costs	68 077	61 104	96 765	86 943
personnel training	0	193	0	275
telecommunication service	234	223	333	317
other costs tied to commercial operations	18 168	22 463	25 851	31 962
insurance (buildings)	929	1 291	1 322	1 837
land rent to LPA	1 313	766	1 868	1 090
costs for the purchase and deviltry of
goods	30 035	26 527	42 736	37 745
other cost	74	16	105	23
Total	170 832	152 796	243 072	217 409

(5)

(3)	Costs of administration	2012.03.31	2011.03.31	2012.03.31	2011.03.31
		LVL	LVL	EUR	EUR
	personnel	10 424	10 391	14 832	14 785
	telecommunication service	234	222	333	319
	office supplies	302	196	430	279
	cash turnover expenses	44	45	63	64
	transport expenses for administrative needs	2 995	1 562	4 261	2 223
	representative expenses	59	13	84	18
	legal assistance or raid	0	492	0	700
	RFB annual fee	3 125	3 125	4 446	4 446
	audit cost
	Total	17 183	16 046	24 449	22 831

Other revenues from commercial

(4) operation

	2012.03.31	2011.03.31	2012.03.31	2011.03.31
	LVL	LVL	EUR	EUR
disposal of fixed assets
fines	904	828	1 286	1 178
other revenues
insurance recompense
revenues from changes in currency rates
Total	904	828	1 286	1 178
Other costs of commercial
operations
	2012.03.31	2011.03.31	2012.03.31	2011.03.31

	LVL	LVL	EUR	EUR
60% of representative costs	108	21	154	30
foreign currency loss		27		38
allowances and bonuses	175	176	249	251
fines	54	987	77	1 404
provisions for bad debtors'
Total	337	1 211	479	1 723

Other revenues from interests or similar sources

(6)		2012.03.31	2011.03.31	2012.03.31	2011.03.31
		LVL	LVL	EUR	EUR
	interest from balances of accounts	2	0	3	0
	Total	2	0	3	0
	Payments of interest and similar expenses
(7)		2012.03.31	2011.03.31	2012.03.31	2011.03.31
		LVL	LVL	EUR	EUR
	credit interests interest to LPA for long term buy-out of land	35 161	34 437	50 030	49 000
	interest to SEB Līzings	116	133	165	189
	Total	35 277	34 570	50 195	49 189
	Other taxes	2012.03.31	2011.03.31	2012.03.31	2011.03.31
(8)		LVL	LVL	EUR	EUR
	real estate tax (buildings ,land)	3 811	5 043	5 423	7 176
	Total	3 811	5 043	5 423	7 176