Akciju sabiedriba "VEF"

Quarterly Report • Sep 2, 2013

JOINT STOCK COMPANY VEF (Unified registration number 40003001328)

NON- AUDITED FINACIAL STATEMENTS For the period ended on June 30, 2013

CONTENTS

General information

Report on the Management Board's responsibility

Management report

Balance sheet

Income statement

Cash flow statement

Statement of changes in equity

Notes to the financial statement

1

GENERAL INFORMATION
Title of enterprise	Joint stock company VEF
Legal type of enterprise	Public joint stock company
Registred:	On April 15, 1991 in the Register of Enterprises of the Republic of Latvia, re registred on December 7, 2000 with Nbr. 000300132
Taxpayers' Reg. Nbr.	On April 14, 2004 registered in the Commercial Register, Nbr. 40003001328
Legal address	LV 40003001328 Brīvības gatve 214, Rīga, LV-1039, Republic of Latvia phone: 7270618.
Equity capital 1 :	Ls 1 944 637 paid and registered equity capital.
Core businesses:
	Power supply - distribution of power; Letting and renting of real-estate property
Name of the holder of shares	As on June 30, 2013:
and share capital (%)	*VEF KOMUNIKĀCIJU SERVISS SIA- 45.52 % ;
	SIA " NĪPA "	– 23.74 % ;
	*State Social Insurance Agency	- 4.99 %;
	* Tamāra Kampāne	- 9.50 % ;
	* Gints Feņuks	- 7.01 % ;
	*Other shareholders	- 9.24 %.
Chief executive officer:	Chairman of the Board of the Company:
	GINTS FEŅUKS
Members of the Board:	TAMĀRA KAMPĀNE
	MĀRTINŠ CAUNA
	MODRIS ZOMMERS
Members of the Supervisory Council: ANDRIS DENIŅŠ
	INTS KALNIŅŠ
	GUNTIS LIPIŅŠ
	ARNIS ZEKUNDE
Period of account:	01.01.2013. - 30.06.2013.
Qualified auditor:	ALEKSEJS LITVINOVS . Certificate Nbr.190

Paid-up and registred equity capital 1 944 637 common shares

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

Report on the Management Board's responsibility to the non-audited financial statement of JSC "VEF" for the six months of 2013

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

Middle-term financial statements are prepared based on justifying documents and represent true and clear overview on the Company's Assets and Equity and Liabilities, its financial standing and results of activity as well as cash flows within the reporting period ended on June 30, 2013.

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

Management report

The Joint Stock Company "VEF" is a publicly traded company, dealing with management and administration of its real estate, rendering space rental and electrical services to consumers on the VEF territory, as well as trading in ferrous and non-ferrous scrap metal.

According to the balance statement of the Company, the revenue from the economic activity in 06 months of 2013 makes LVL 396 244 (563 804 EUR ), which is 67 751 LVL ( 96 401 EUR ) it is less than over the previous reporting period.

Company focused its business to the preservation and optimization of the existing volumes of cash flow and followed this target over the proceed in the accounting period.

The Company continues to provide a full scope of its services, while maintaining the jobs and implementing the fund-saving programme, by reducing the outsourcing volumes and prices, as well as diversifying markets and risks.

The Board of Joint Stock Company "VEF" follows the Company's strategic plans of the previous year, guiding from the economic situation in the country and in particular from the situation in the space rental market. This year the plan is to enhance the monitoring of the market in the rental segment and to react to the changes of the situation, to take also an active tenant attraction for the free spaces within the property of the Company, through enlargement and renovation of the area without any additional fund borrowing.,

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

Gints Feņuks Chairman of the Management Board

ASSETS		Final balance		Beginning balance
	LVL	LVL	EUR	EUR
	30.06.2013	30.06.2012	30.06.2013	30.06.2012
			0.702804	0.702804
LONG-TERM INVESTMENTS
Intangible assets
Concessions,patents,licences	779	1 074	1 108	1 528
Total intangible assets	779	1 074	1 108	1 528
Fixed Assets
Land,buildings and other property	3 963 498	4 003 437	5 639 550	5 696 378
Equipment and machinery
Other fixed assets and inventory	120 398	91 998	171 311	130 901
Advance payments for fived assets
Total fixed assets	4 083 896	4 095 435	5 810 861	5 827 279
Total long-term investments	4 084 675	4 096 509	5 811 969	5 828 807
Current assets
Inventory
Goods for sale	13	0	19	0
Total inventory	13	0	19	0
Debtors
Customers and client debts	64 648	56 575	91 986	80 499
Other debtors	9 212	9 305	13 107	13 240
Future period expenses	1 309	500	1 862	712
Future period income
Total debtors	75 169	66 380	106 955	94 451
Cash	11 386	16 396	16 201	23 329
Total Current assets	86 568	82 776	123 175	117 780
TOTAL ASSETS	4 171 243	4 179 285	5 935 144	5 946 587

LIABILITIES	Final balance		Beginning balance
	LVL	LVL	EUR	EUR
	30.06.2013	30.06.2012	30.06.2013	30.06.2012
			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	563 341	801 562	801 562
Total accumulation
Retained earnings from the previous years	-768 646	-793 982	-1 093 685	-1 129 735
Retained earnings of the financial years	25 442	16 027	36 200	22 804
Total stockholder's equity	1 764 774	1 730 023	2 511 047	2 461 601
PROVISIONS
Other provisions	10 193	9 185	14 503	13 069
Total provisions	10 193	9 185	14 503	13 069
LIABILITIES
Long-term liabilities
Borrowings from credit institutions	2 151 118	2 235 455	3 060 765	3 180 766
Prepayments from buyers	24 903	23 642	35 434	33 640
Other liabilities
Deferred tax liability	46 934	28 473	66 781	40 513
Total long-term liabilities	2 222 955	2 287 570	3 162 980	3 254 919
Current liabilities
Borrowings from credit institutions	42 168	42 168	60 000	60 000
Accounts payable Taxes and social security payments	20 284 17 155	21 299 40 578	28 862 24 409	30 306 57 737
Other liabilities	6 168	5 895	8 776	8 388
Prepayments from buyers	24 569	36 373	34 959	51 754
Other loans	62 977	6 194	89 608	8 813
Total current liabilities	173 321	152 507	246 614	216 998
Total liabilities	2 396 276	2 440 077	3 409 594	3 471 917
TOTAL LIABILITIES&STOCKHOLDER'S	4 171 243	4 179 285	5 935 144	5 946 587
EQUITY

PROFIT AND LOSSES ACCOUNT FOR YEAR, WHICH ENDS ON JUNE 30.2013.

		LVL 30.06.2013	LVL 30.06.2012	EUR 30.06.2013 - 0.702804	EUR 30.06.2012 - 0.702804
1	2	4	4	4	4
Net turnover		396 244	463 995	563 804	660 205
Cost of goods sold	1	-262 728	-337 925	-373 828	-480 824
Gross profit		133 516	126 070	189 976	179 381
Administrative expenses	2	-35 545	-30 297	-50 576	-43 109
Other income from operations	3	1 075	1 037	1 530	1 476
Other expenses from operations	4	-1 477	-984	-2 102	-1 400
Finansial services income	5		2		3
Finansial services expenses	6	-56 377	-66 197	-80 217	-94 190
Profit before taxes		41 192	29 631	58 611	42 161
Other taxes	7	-4 770	-7 622	-6 767	-10 845
Deferred tax		-10 980	-5 982	-15 624	-8 512
Net profit		25 442	16 027	36 200	22 804

Earnings per share (EPS) EPS on 30.06.2013-0.013 LVL-0.013 EUR Earnings per share (EPS) EPS on 30.06.2012-0.0082 LVL-0082 EUR

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

CASH FLOW STATEMENT FOR YEAR THAT ENDS ON JUNE 30, 2013

		2013 30.06.	2012 30.06.	2013 30.06. EUR	2012 30.06. EUR
	CASH FLOW FROM OERATING	LVL	LVL	0.702804	0.702804
I.	ACTIVITIES
	Profit before outstanding items and taxes (+) Adjustments:	41 192	29 631	58 611	42 161
	fixed assets depreciation ( +)	40 075	37 778	57 022	53 753
	intangible assets depreciation (+)	148	148	201	211
	increase/decrease in provisions profit or losses from exchange rates fluctuation (+/-)	-420	-313	-598	-445
	finansial service income		2		3
	finacial services income	56 377	66 197	80 217	94 190
	Profit or losses before adjustments from current assets and liabilities	137 372	133 443	195 463	189 872
	Adjustments: debtors : increase (-); decrease (+)	-8 789	-16 445	-12 506	-23 399
	inventory: increase (-); decrease (+)
	liabilities: increase (-); decrease (+)	-34 628	-9 068	-49 271	-12 903
	Gross cash provide by operating activities	93 955	107 930	133 686	153 571
	Payments for financial Income tax payments	-56 377	-66 197	-80 217	-94 190
	Net cash provided by operating activities before outstanding items: Cash flow from outstanding items (-/+)	37 578	41 733	53 469	59 381
	Net cash provided by operating activities :	37 578	41 733	53 469	59 381
II.	CASH FLOWS FROM INVESTING ACTIVITIES :
	Fixed assets purchase		-607		-864
	Interest received		2		3
	Net cash used in investing activities :	0	-605	0	-861
III.	CASH FLOWS FROM FINANCING ACTIVITIES:
	Expenses for borrowings repayment	-42 168	-31 626	-60 000	-45 000
	Payment LPA for long term buy out of land
	Net cash provided by financing activities :	-42 168	-31 626	-60 000	-45 000
IV.	Exchange rate fluctuation result :	-420	-313	-598	-445
	Net cash flom	-5 010	9 189	-7 129	13 075
	CASH AT BEGINNING OF YEAR
	CASH AT END OF YEAR	16 396	7 207	23 329	10 254
		11 386	16 396	16 200	23 329

STATEMENT OF CHANGES IN EQUITY FOR YEAR THAT ENDS ON JUNE 30, 2013

	30.06.2013 LVL	30.06.2012 LVL	30.06.2013 EUR 0.702804	30.06.2012 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	563 341	801 562	801 562
Increase from
Decrease from
Balance at the end of the financial year	563 341	563 341	801 562	801 562
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	-768 646	-793 982	-1 093 685	-1 129 735
Profit or losses of the finacial year	25 442	16 027	36 200	22 804
Dividendes
Included in accumulations
Balance at the end of the financial year	-743 204	-777 955	-1 057 485	-1 106 931
Stockholder's eguity (total)
Balance at the beginning of the
financial year	1 730 023	1 540 385	2 461 601	2 191 770
Balance at the end of the financial year	1 764 774	1 730 023	2 511 047	2 461 601

Annex of the annual report of six

(1) Net turnover

Turnover consists of revenues that the Company gained in the first six months of 2013 from its core business-service provision without VAT

Type of commercial operations	2013.06.30	2012.06.30	2013.06.30	2012.06.30
	LVL	LVL	EUR	EUR
power supply, distribution and servicing	84 897	70 930	120 798	100 567
office renting service	208 619	207 888	296 838	295 798
utility services	102 728	91 534	146 169	130 241
ferrous and non-ferrous metal trading	0	93 643	0	133 242
Total	396 244	463 995	563 804	660 205

Distribution of net turnover by geographical markets

Country	2013.06.30 LVL	2012.06.30 LVL	2013.06.30 EUR	2012.06.30 EUR
Latvia	396 244	463 995	563 804	660 205
Total	396 244	463 995	563 804	660 205

(2) Cost of sales

		2013.06.30	2012.06.30	2013.06.30	2012.06.30
		LVL	LVL	EUR	EUR
personnel		57 183	53 160	81 364	75 640
depreciation		40 075	37 778	57 022	53 753
transport		4 455	4 082	6 325	5 808
other outstanding costs		127 247	123 715	181 056	176 031
personnel training		157	156	223	222
telecommunication service		455	545	647	775
	other costs tied to commercial operations	28 541	41 953	40 610	59 694
insurance (buildings)		1 852	1 872	2 635	2 664
land rent to LPA		2 625	2 625	3 735	3 735
depreciation of license		148	148	211	211
	purchaser costs and delivery of materials	0	71 891	0	102 292
Total		262 728	337 925	373 828	480 824

(3)	Costs of administration	2013.06.30	2012.06.30	2013.06.30	2012.06.30
		LVL	LVL	EUR	EUR
	personnel	25 417	20 847	36 165	29 663
	telecommunication service	454	546	646	777
	office supplies	712	708	1 013	1 007
	cash turnover expenses	113	96	161	137
	transport expenses for administrative needs	4 445	4 081	6 325	5 807
	representative expenses	20	65	28	92
	legal assistance or raid	634	202	902	287
	RFB annual fee	3 750	3 752	5 336	5 339
	Total	35 545	30 297	50 576	43 109

(4) Other revenues from commercial operation

	2013.06.30	2012.06.30	2013.06.30	2012.06.30
	LVL	LVL	EUR	EUR
fines	483	1 037	687	1 476
other revenues	592		842
Total	1 075	1 037	1 529	1 476

Other costs of commercial

(5) operations

	2013.06.30	2012.06.30	2013.06.30	2012.06.30
	LVL	LVL	EUR	EUR
loses from currency conversion	420	313	598	445
other expenses
60% of representative costs	36	120	51	171
donations to Latvian orphans fund
allowances and bonuses	389	351	554	499
fines	632	200	899	285
Total	1 477	984	2 102	1 400

(6) Other revenues from interests or

	similar sources
		2013.06.30	2012.06.30	2013.06.30	2012.06.30
		LVL	LVL	EUR	EUR
	interest from balances of accounts		2		3
	Total		2		3
(7)	Payments of interest and similar expenses
		2013.06.30	2012.06.30	2013.06.30	2012.06.30
		LVL	LVL	EUR	EUR
	credit interests	55 785	66 001	79 375	93 911
	līzing	592	196	842	279
	Total	56 377	66 197	80 217	94 190
(8)	Other taxes	2013.06.30	2012.06.30	2013.06.30	2012.06.30
		LVL	LVL	EUR	EUR
	real estate tax (buildings,land)	4 770	7 622	6 787	10 845
	Total	4 770	7 622	6 787	10 845