Joint Stock Company AFI INVESTĪCIJAS

Transcription

1 - - Joint Stock Company AFI INVESTĪCIJAS ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2016 PREPARED IN ACCORDANCE WITH THE LAWS OF THE REPUBLIC OF LATVIA TOGETHER WITH INDEPENDENT AUDITORS REPORT

2 CONTENTS GENERAL INFORMATION MANAGEMENT REPORT Page 3 4 FINANCIAL STATEMENTS Statement of profit or loss 5 Balance sheet 6 Statement of changes in equity 7 Notes to the financial statements 8-17 INDEPENDENT AUDITORS' REPORT

3 GENERAL INFORMATION Name of the company Legal status of the company AFI Investīcijas Joint stock company Unified registration number, place and date of registration , Riga, 12 March 2015 Legal and office address Main business activity Board and Council Members Skanstes iela 50 Riga, LV-1013 Latvija NACE Other financial service activities, except insurance and pension funding n.e.c. Vadims Burcevs - Board Member from ) Denis Pospelov - Chairman of the Council (from ) Yury Nilov - Deputy Chairman of the Council (from ) Leonīds Kiļs - Council Member (from to ) Alīna Ostaševska - Council Member (from ) Outsourced accountant Reporting year Previous reporting year Name and address of the auditor Andra Lāce - Chief Accountant of IMG Services SIA 1 January December March 31 December 2015 Deloitte Audits Latvia SIA Licence No 43 Grēdu iela 4a Riga, LV-1019 Latvia Roberts Stuģis Certified Auditor Certificate No 203 3

4 MANAGEMENT REPORT Business profile AS AFI Investīcijas, Reg. No , was founded on 12 March 2015 to generate profits from trading in securities and financial instruments as well as to issue bonds. The Company operates online trading platforms for trading in financial instruments and holds brokerage accounts with banks where active trading in financial instruments took place in the reporting period. Agreements with Interactive Brokers LLC and ADM Investor Services International Ltd have been signed for brokerage services in trading in financial instruments. The following listed and unlisted EU financial instruments were mainly traded in different currencies: Share options; Futures/ forwards; Options on futures/ forwards. On 14 May 2015, AFI Investīcijas issued 30,000 bonds with a par value of USD 1,000 and a coupon rate of 9%. In terms of transactions, the year 2016 was rather challenging. The annual Company s performance results were even negative; however, the successful investment management strategy and effective risk management allowed avoiding large losses and reducing the risk level that enabled the Company to close the year with a profit. The Company's development and financial performance during the reporting year At the end of 2016 the total assets of AS AFI Investīcijas amounted to 51,734,217. The assets mainly comprise cash at banks and other financial institutions, constituting 90% of the total assets, and derivatives, which account for 9.8% of the total assets. The Company earned a profit of 9,843,485 in the period ended 31 December Such a result was mainly due to the unrealised loss on transactions with financial instruments amounting to 5,655,562 while in the previous reporting period there was unrealized profit on transactions with financial instruments of 4,931,538. It was also affected by high commission fees related to the large number of financial instrument transactions and high riskrelated costs. The above costs constituted 3,305,561 or 94% of the total expense. In the reporting period, the interest expense of the Company amounted to 1,749,897 comprising payables for the regular bonds issued. In comparison to the end of 2015, the interest expense grew by 26%. The issued securities of 15,000,075 account for 29% of the total amount of equity and liabilities. At the end of the reporting period, the Company s equity was 11,746,377, an increase by 7.7% in comparison to the previous year. As at 31 December 2016, the Company s current assets exceeded its current liabilities by 26,597,741, which demonstrates good liquidity ratios, and the Company has sufficient funds to meet its current liabilities when they fall due; moreover, the Company s total assets exceeded its total liabilities by 11,746,377. Financial risk management Information about the Company s risk management is provided in Note 3 to the financial statements. Future development of the Company In 2017, the Company plans to continue attracting new investors by issuing registered ordinary shares and registered preference shares that will enable to invest the Company s funds in various financial instruments which will result in increasing the Company s net profit. In order to enhance the visibility of the Company and make it more transparent to the existing and potential shareholders, it is planned to create a home page to regularly inform about the Company s activities and publish the latest financial information. For trading in financial instruments, the Company plans to open another brokerage account with an international bank or brokerage company. In 2017, the Company plans to further develop the already effective investment management and risk management systems that will result in earning larger profits in the financial markets. The Company intends to continue trading in the same financial instruments and on the same financial markets. Share capital Information about the Company s share capital is provided in Note 20 to the financial statements. Events after balance sheet date As of the last day of the reporting year until the date of signing these financial statements, 5,857,000 bonds issued by AS AFI Investīcijas were redeemed. Change of the Company s shareholders also took place. Vadims Burcevs Board Member Riga, 28 April

5 STATEMENT OF PROFIT OR LOSS Notes Net gain on transactions with financial instruments Net interest income 5 ( ) ( ) Commission and fee expense 6 ( ) ( ) Net financial income Staff costs 8 (57 576) (20 542) Other administrative expense 9 ( ) (93 232) Other income Other expense 7 (20 000) - Profit before corporate income tax Current corporate income tax 10a ( ) ( ) Profit after corporate income tax 0 (4 585) Income or (expense) from changes in deferred tax assets or deferred tax liabilities 10c ( ) Net profit for the reporting year * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items". The accompanying notes form an integral part of these financial statements. These financial statements and notes thereto on pages 8 through 17 were approved by the management of the Company and signed on its behalf by: Vadims Burcevs Board Member Andra Lāce Outsourced accountant Riga, 28 April

6 BALANCE SHEET Notes ASSETS Non-current assets Intangible assets Total intangible assets Property, plant and equipment Total property, plant and equipment Non-current financial assets Deferred tax assets 10b Total non-current financial assets Total non-current assets Current assets Derivative financial instruments Other receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Retained earnings Profit for the reporting year Total equity Liabilities Non-currnent liabilities Securities issued Deferred tax liabilities 10b Total non-current liabilities Current liabilities Other loans Derivative financial instruments Corporate income tax payable 10a Taxes payable and statutory social insurance contributions Accrued liabilities Other liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items". The accompanying notes form an integral part of these financial statements. These financial statements and notes thereto on pages 8 through 17 were approved by the management of the Company and signed on its behalf by: Vadims Burcevs Board Member Andra Lāce Outsourced accountant Riga, 28 April

7 STATEMENT OF CHANGES IN EQUITY Share capital Retained earnings Balance as at 12 March Increase in share capital Profit for the reporting period Balance as at 31 December Profit for the reporting period Balance as at 31 December Total The accompanying notes form an integral part of these financial statements. These financial statements and notes thereto on pages 8 through 17 were approved by the management of the Company and signed on its behalf by: Vadims Burcevs Board Member Andra Lāce Outsourced accountant Riga, 28 April

8 NOTES TO THE FINANCIAL STATEMENTS 1 Corporate information AS AFI Investīcijas (hereinafter the Company). The financial statements for the year 2016 were approved both by the Board and the Council and are submitted to the shareholders for the final approval. The previous financial statements cover the period from 12 March 2015 to 31 December 2015; consequently, the statement of profit or loss, statement of changes in equity and the related notes presented in these financial statements are not comparable to the previous reporting period. 2 Summary of significant accounting policies BASIS OF PREPARATION The financial statements have been prepared in accordance with the laws of the Republic of Latvia On Accounting and On Annual Reports and Consolidated Annual Reports, except for deferred tax assets that are recognized and measured according to the provisions of International Accounting Standard No 12 Income taxes. In accordance with the Law of the Republic of Latvia on Annual Reports and Consolidated Annual Reports the Company meets the criteria of a small enterprise and the disclosures in the financial statements should be presented pursuant to the requirements set for small companies, for example, the Company does not present a statement of cash flows that is not mandatory according to the above law. The monetary unit used in the financial statements is the euro (), the monetary unit in Latvia. The financial statements are prepared on a historical cost basis and modified according to the fair value of available-for-sales securities, financial assets and financial liabilities designated at fair value through profit or loss as well as all other derivatives. KEY ACCOUNTING POLICIES Presentation of financial statements Financial statements are a structured representation of the financial position and financial performance of the Company. The objective is to provide information, useful for making economic decisions, about the Company s financial position, financial performance and cash flows. The financial statements also show the results of the management s stewardship of the resources entrusted to it. A complete set of financial statements comprises a balance sheet, a statement of profit or loss, a statement of changes in equity and notes to the financial statements. Assets and liabilities denominated in foreign currencies The Company s financial statements are presented in. Functional currency refers to the primary currency used in the Company s cash flows. Transactions in foreign currency are initially recorded at the exchange rate prevailing at the transaction day. Monetary assets and liabilities in foreign currency and non-monetary items in foreign currency measured at fair value are translated at the rates prevailing at the closing day. All gains and losses on the translation of monetary items and non-monetary items measured at fair value are recognized through profit or loss as changes in exchange rates under the caption Net gain on transactions with financial instruments. The principal rates of exchange set by the European Central Bank and used in the preparation of the Company s financial statements are as follows: /USD /GBP Financial instruments A large part of the Company s balance sheet items refer to financial instruments. A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity. Cash is an example of a financial asset, while financial liabilities might include an agreement to pay or receive cash or other financial assets. Financial instruments are classified on relevant lines of the balance sheet depending on the nature of the counterparty, for example, balances due from credit institutions. The Company recognizes the issued debt securities on its balance sheet when the funding is received. When financial liabilities are recognized initially, the Company measures them at fair value, taking into consideration the directly attributable transaction costs. After the initial recognition, they are measured at amortized cost using the effective interest method. If the issued debt securities are sold at a discount, the respective difference is amortized over the loan term using the effective interest method and is taken to the statement of profit or loss as interest expense. Recognition of financial instruments The Company s financial instruments are divided into the following valuation categories: financial instruments at fair value through profit or loss, loans and receivables and other financial liabilities. All financial instruments are initially recognised at fair value. For financial instruments that subsequently are not valued at fair value through profit or loss, supplementary entries are made for additions of direct transaction expenses to acquire the financial instrument. Subsequent measurement of financial instruments depends on the valuation category to which the financial instrument is attributed. 8

9 Financial instruments at fair value through profit or loss Financial instruments at fair value through profit or loss comprise instruments held for trading and all derivatives, excluding those designated for hedge accounting. Financial instruments held for trading have been acquired for the purpose of selling or repurchasing in the near term or are part of a portfolio for which there is evidence of a pattern of short-term profit-taking. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss. This category also includes other financial instruments that upon initial recognition have been designated as at fair value. Financial assets designated at fair value comprise instruments that are measured and their performance is evaluated on a fair value basis because the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company s documented risk management policy or investment strategy. The Company has chosen to categorise holdings of shares and participating interests that are not associates or intended for trading at fair value through profit or loss since they are managed and evaluated based on fair value. In the notes to the balance sheet, these financial instruments are classified at fair value through profit or loss. The fair value of financial instruments is determined based on quoted prices on active market. Changes in value are recognised through profit or loss under the caption Net gain on transactions with financial instruments. Changes in value owing to changes in exchange rates are recognised in the same profit or loss item. Other financial liabilities Financial liabilities that are not recognised as financial instruments at fair value through profit or loss are initially recognised on the trade day at cost and subsequently at amortised cost. Amortised cost is calculated in the same way as for loans and receivables Intangible assets Intangible assets are initially measured at cost and subsequently at cost less accumulated amortisation and accumulated impairment. The useful life of an intangible asset is stated in the purchasing record which confirms the acquisition of rights. If the useful life of an asset is not stated, it is determined by the Company s Board. Intangible assets with a finite useful life are amortised over their useful life and tested for impairment whenever there is an indication that the asset may be impaired. The useful life and amortisation methods are revised once a year. Property, plant and equipment For the use of the Company Property, plant and equipment, if any, initially are stated at cost. Subsequently, they are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated starting with the moment of putting the asset into operation; depreciation is systematically accumulated taking into account the useful life of each component and the estimated residual value of the asset. The depreciation method reflects the pattern in which the value of the asset is gradually reduced. The useful life and amortisation methods are periodically reviewed and revised, if necessary, at each closing date. The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate a lower recoverable amount of the asset. The useful life of the items of property, plant and equipment for financial and operating purposes is determined by the Board of the Company. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The estimated outflows are calculated at present value. Revenue and expense recognition The principles of revenue recognition for financial instruments are described in the section Financial instruments, recognition. Interest income and interest expense arising from financial instruments, which are calculated according to the effective interest rate method, are recognised in the caption Net interest income Commission and fee expense is included in the statement of profit or loss at the time of the particular transaction, except for commission and fee expense directly attributable to financial assets/ liabilities measured at amortised cost. Other expense, apart from interest and/or commission and fee expense, are expense related to the Company s operations. 9

10 Taxes (IAS 12) Current tax assets and tax liabilities for the current and previous periods are measured at the amount expected to be recovered from or paid to the taxation authorities. Deferred taxes refer to differences between the carrying amount and the tax base, which in the future serves as the basis for current tax calculation. Deferred tax liabilities refer to temporary differences and must be settled in the future. Deferred tax liabilities are recognised for all taxable temporary differences. At each balance sheet date, deferred tax assets are reassessed and recognized to the extent that they can be recovered. As a result, previously unrecognised deferred tax assets are recognised when a sufficient taxable income is considered to be likely available in the future. The calculations are based on the tax rates approved at the balance sheet date. The Company s deferred tax assets or liabilities are measured at nominal value using the tax rates expected to be applied in the following years. Both current and deferred taxes are recognised through profit or loss. Cash and cash equivalents Cash and cash equivalents comprise current account and securities account balances at bank as well as securities accounts with other financial organisations; cash in transit and bank deposits with an original maturity of three months or less. SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES The preparation of financial statements according to Latvian legislation requires the management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosure of contingencies at the reporting date as well as income and expense for the reporting year. The management continuously evaluates these estimates and assumptions, including those that affect the fair value of financial instruments, impairments of intangible assets and deferred taxes. The management bases its judgments and assumptions on previous experience and several other factors that are considered reasonable under the circumstances. The actual results could differ from those estimates and assumptions. When financial instruments are valued at fair value, the quoted prices on active markets are primarily used. When quoted prices on active markets are not available, various valuation models are used instead. The Company determines when the markets are considered inactive and when quoted prices no longer correspond to fair value, requiring valuation models to be used. The Company determines which valuation model and which pricing parameters are most appropriate for the individual instrument. All the valuation models the Company uses are generally accepted and are subject to independent risk control. 3 Risks and risk management TYPES OF RISKS RISK PROFILE OF THE COMPANY The Company s operations entail risks arising from various circumstances. Every type of risk can have an adverse impact on the Company s performance. The Company is exposed to the following risks: market risks credit risk liquidity risk This note provides information about the Company s exposure to each of the above mentioned risks as well as about the Company s policies and procedures for risk measurement and management. MARKET RISKS risks that the Company s results, equity or value could decline due to the of risk factors movements in financial markets. The market risks include interest rate risk, foreign currency risk, price risk (of financial instruments). Interest rate risk arises from mismatch of between the periods when interest is charged on the Company s interest bearing assets and funding obtained. Interest rate risk arises from mismatch between the when there is a difference in periods when interest is being charged on the Company s assets and liabilities, including derivative financial instruments. Price risk the risk that the value of a financial instrument will decline due to the changes in the market prices. Such changes may be caused both by factors relating solely to the particular financial instrument and factors that can affect all financial instruments traded on the market. Price risk arises when the Company takes long or short positions on financial instruments. The Company regularly assesses the risk related to the changes in the security prices within the framework of liquidity stress tests. Investments are made in assets corresponding to certain parameters. In planning investments, the Company considers the security of investments in each particular country and specific financial instruments. Currency risk the risk that the value of the Company s assets and liabilities, including derivative financial instruments, may be affected by fluctuations in exchange rates or other relevant risk factors. The fluctuations in the currency rates result both in gain or loss, and the open position result against some currency in a long term theoretically may be a zero. However, short term fluctuations are very critical. The Company s transactions are mainly in USD (U.S. dollars). Sensitivity analysis on foreign exchange risk + 10% - 10% USD USD Impact on the statement of profit or loss ( ) Changes in carrying amount ( )

11 CREDIT RISK the risk that a counterparty fails to meet its contractual obligations towards the Company. Credit risk also includes counterparty risk, concentration risk and settlement risk. Counterparty risk is the risk that a counterparty to a trading transaction in the financial market would not meet its financial obligations towards the Company and that the collateral held would not be enough to cover the claims against the counterparty. Herein, market transactions encompass repurchase transactions, financing of acquisition of securities and money market transactions. Risks of suffering losses if the counterparty or issuer will not be able or refuse to fulfil its contractual liabilities towards the Company. Before starting any cooperation with financial institutions, the Company assesses the potential counterparty considering both its financial performance and other criteria, and subsequently analyses these indices on a periodical basis. The assessment is based on the counterparty s latest financial statements available to the Company. In order to avoid from an additional risk to the Company s portfolio, transactions with derivative financial instruments may be carried out only on regulated stock exchanges, thereby avoiding counterparty risk and, if necessary, ensuring immediate closing of the derivative position, if necessary. LIQUIDITY RISK The risk that the Company cannot fulfil its payment commitments in full amount when they fall due. Liquidity risk arises when the maturities of assets and liabilities do not coincide. The Company follows a conservative approach to liquidity management. The Company measures and controls its liquidity risk. The Company maintains liquidity management to ensure the continued availability of funds to settle its liabilities when they fall due. The Company maintains sufficient cash at its accounts with banks and other financial institutions as well as highly liquid financial instruments in its trading book to be able to react quickly and effectively to unpredictable liquidity requirements. 4 Net gain on transactions with financial instruments Realised gain on transactions with financial financial instruments, net Gain/ (loss) on foreign currency trading and revaluation, net ( ) Unrealised (loss)/ gain on transactions with financial financial instruments, net ( ) Total gain on transactions with financial financial instruments, net Net interest expense Other interest income Payables on regular bonds issued by the Company ( ) ( ) Interest expense on financing of financial transactions (2 200) - Total interest expense net ( ) ( ) 6 Commission and fee expense Commission on transactions with financial instruments Other commission and fee expense Total commission and fee expense Other expense Donations (20 000) - Total other expense (20 000) - 8 Staff costs Salaries Statutory social insurance contributions Other staff costs Total Remuneration to the Board (incl. taxes) Total Total staff costs

12 9 Other administrative expense Professional fees Depreciation and amortisation Lease of premises Representaton expense Transport costs Legal fees and state duties Office maintenance Bank charges Communications Business trips Other administrative expense Total other administrative expense * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 10 Current corporate income tax 10 (a) Key components of corporate income tax Current corporate income tax expense Deferred tax (income)/ expense ( ) Total Actual corporate income tax charge for the reporting year, if compared with theoretical calculations: Profit before tax Tax at the applicable tax rate of 15% Adjustments for: Non-deductible expense for taxation purposes Non-taxable (income) ( ) ( ) Total Effective rate 15.2% 16.5% Corporate income tax liabilities at the beginning of the year Corporate income tax charge for the reporting year Corporate income tax paid ( ) - Corporate income tax liabilties at the end of the year * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 10 (b) Deferred tax liabilities and (assets) Deferred tax liabilities: Temporary difference between net carrying amount and tax value of intangible assets Temporary difference from accrued gain on increase in the value of financial instruments Total deferred tax liabilities Deferred tax (assets): Temporary difference from vacation pay reserve (354) (56) Temporary difference from accrued loss on decrease in the value of financial instruments ( ) - Total deferred tax (assets) ( ) (56) Recognised deferred tax (assets)/liabilities, net: ( ) Deferred tax is calculated by applying the currently defined tax rate of 15%. 12

13 10 (c) Movement in deferred tax liabilities/(assets) Deferred tax liabilities at the beginning of the reporting year Deferred tax (income)/expense charged to the statement of profit or loss ( ) Deferred tax (assets)/liabilities at the end of the reporting year ( ) Cash and cash equivalents Balances due from credit institutions Balances due from other financial organisations Total cash and cash equivalents * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 12 Derivative financial instruments 12 Liabilities/ (assets) at fair value Liabilities at fair value Options on futures/ forwards Share and index options Futures/ forwards Total (Assets) at fair value Options on futures/ forwards ( ) ( ) Futures/ forwards - ( ) Total ( ) ( ) Liabilities/ (assets) at fair value, net Options on futures/ forwards Share and index options Futures/ forwards (22 902) Total Property, plant and equipment and intangible assets Intangible assets Property, plant and equipment Total Acquisition cost As at 12 March 2015 Additions As at 31 December 2015 Additions As at 31 December 2016 Accumulated amortisation As at 12 March 2015 Amortisation charge As at 31 December 2015 Amortisation charge As at 31 December 2016 Carrying amount As at 31 December 2015 As at 31 December (250) (5 096) (5 346) (250) (5 096) (5 346) (3 000) (8 899) (11 899) (3 250) (13 995) (17 245)

14 14 Other receivables Accrued income Prepaid expense Salaries Other receivables Total other receivables * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 15 Other loans Other current loans Total other loans Taxes payable and statutory social insurance contributions Statutory social insurance contributions Personal income tax Unmeployment risk duty 2 1 Total taxes and statutory social insurance contributions * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 17 Accrued liabilities Accrued expense Vacation pay reserve Total accrued liabilities * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 18 Other liabilities Trade payables Salaries Other liabilities Total other liabilities * Information about the reclassifications regarding the prior period is provided in Note 25 Reclassification of comparable items to the financial statements. 19 Securities issued ISIN LV Redemption date Nominal value Coupon rate 9% Currency USD Amount of securites issued Accrued interest Total securities issued The Company retains the right to exercise early redemption of the subordinated bonds as disclosed in their base prospectus. In 2016, the Company redeemed part of the bonds issued. Accordingly, as at 31 December 2016, in these financial statements the Company presented the above bonds at net value, i.e. by offsetting the respective assets and liabilities. 14

15 20 Share capital As at 31 December 2016 and 2015, the paid up share capital of the Company was 1,000,000 and consisted of 100,000,000 shares. The nominal value of one share was All shares have equal voting and dividend rights. As at 31 December 2016 and 2015, the Company s shareholders were as follows: Investment in share capital % in share capital with voting rights Investment in share capital % in share capital with voting rights % % SIA DOP Investment SIA LK Investment SIA VIB Investment Total share capital As of the last day of the reporting year until the date of signing these financial statements, changes of the Company s shareholders took place. As a result, SIA LK Investment sold all its registered ordinary shares in the Company to SIA DOP Investment. 21 Maturity analysis for assets and liabilities On demand Up to 12 months 1-5 years Indefinite Total Assets Cash and cash equivalents Derivative financial instruments Intangible assets Property, plant and equipment Deferred tax assets Other receivables Total assets Cumulative amount Liabilities and equity Other loans Derivative financial instruments Corporate income tax Taxes payable and statutory social insurance contributions Accrued liabilities Other liabilities Securities issued Equity Total liabilities and equity Cumulative amount Net position On demand Up to 12 months 1-5 years Indefinite Total Assets Cash and cash equivalents Derivative financial instruments Intangible assets Property, plant and equipment Other receivables Total assets Cumulative amount Liabilities and equity Deferred tax liabilities Other loans Derivative financial instruments Corporate income tax Taxes payable and statutory social insurance contributions Accrued liabilities Other liabilities Securities issued Equity Total liabilities and equity Cumulative amount Net position

16 22 Currency position All amounts presented in USD GBP Total Assets Cash and cash equivalents Derivative financial instruments Intangible assets Property, plant and equipment Deferred tax assets Other receivables Total assets Liabilities and equity Other loans Derivative financial instruments Corporate income tax Taxes payable and statutory social insurance contributions Accrued liabilities Other liabilities Securities issued Equity Total liabilities and equity Net currency position ( ) - USD GBP Total Assets Cash and cash equivalents Derivative financial instruments Intangible assets Property, plant and equipment Other receivables Total assets Liabilities and equity Deferred tax liabilities Other loans Derivative financial instruments Corporate income tax Taxes payable and statutory social insurance contributions Accrued liabilities Other liabilities Securities issued Equity Total liabilities and equity Net currency position ( ) - 23 Major transactions with related parties Related parties are defined as shareholders of the Company that have the ability to control the Company or exercise significant influence over the Company in making operating decisions, members of the key management personnel of the Company, and close members of the families of any individual referred to previously and entities over which these persons exercise significant influence or control. Major transactions with related parties are the transactions with debt securities; other transactions with related parties are insignificant. Balances of the Company s issued securities sold at the end of the reporting year: Bond Invest AS PV Investīcijas AS Total Off-balance sheet items On 18 August 2015, loan agreement No 15-FP-387 was signed between ABLV Bank AS and SIA DOP Invest for the amount of USD The loan matures in August In connection with the above agreement, two surety agreements N 15-FP-0387/07 and N 15-FP-0387/08 were signed with AS AFI Investīcijas and ABLV Bank AS on 18 August As at 31 December 2016, the financial security provided by AS AFI Investīcijas according to the surety agreement met the requirements stated in the surety agreement. 16

17 25 Reclassification of comparable items In order to improve the transparency of the financial statements, the management of the Company changed the classification of certain items in the balance sheet and the statement of profit or loss in the financial statements for the year To ensure the comparability of the financial statements for the period from 12 March 2015 to 31 December 2015 and the financial statements for the year 2016, the following items in the financial statements for the period from 12 March 2015 to 31 December 2015 were reclassified: Statement of profit or loss for the period from to Item Reported Reclassification Reclassified Other administrative expense (87 886) (5 346) (93 232) Amortisation and depreciation (5 346) Balance sheet as at 31 December 2015 Item Reported as at 31 December 2015 Reclassification Reclassified as at 31 December 2015 Assets Cash and cash equivalents Balances due from credit institutions ( ) - Balances due from other financial organisations ( ) - Other receivables Salaries 95 (95) - Prepaid insurance expense 357 (357) - Equity and liabilities Corporate income tax Taxes payable and statutory social insurance contributions ( ) Other liabilities (279) Accrued liabilities Accrued expense (6 965) - Vacation pay reserve 368 (368) - The reclassifications had no impact on the financial result for the period from 12 March 2015 to 31 December Average number of employees During the reporting year the Company had 6 employees on average (2015: 4) 27 Events after balance sheet date As of the last day of the reporting year until the date of signing these financial statements, changes in the Company s shareholders took place. As a result, SIA LK Investment disposed sold all its registered ordinary shares in the Company to SIA DOP Investment. These financial statements and notes thereto on pages 8 through 17 were approved by the management of the Company and signed on its behalf by: Vadims Burcevs Board Member Andra Lāce Outsourced accountant Riga, 28 April