JOINT-STOCK COMPANY
“RIGA ELECTRIC MACHINE BUILDING WORKS”
Reg. No. 40003042006
31 Ganību Dambis, Riga, LV-1005
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS OF 2007
2
CONTENTS
Page
Information on the Company
3
Balance Sheet
4
Profit and Loss Account
6
Cash Flow Statement
10
Statement of Changes of the Shareholders’ Equity
12
Appendices
13
Principles of Drawing up Financial Statements
16
3
INFORMATION ON THE COMPANY
Name of the company
JSC “Rigas elektromašīnbūves rūpnīca” (JSC “RER”)
Legal status of the company
Joint-stock company
Registration number in the Register
of Enterprises, place and date
No. 000304200, Riga, 29 November 1991
Unified registration number
in the Commercial Registry, place and date
No. 40003042006, Riga, 29 September 2004
Legal address
31 Ganību Dambis, Riga, LV-1005, the Republic of Latvia
The company is under supervision of:
General meeting of shareholders
Name, last name of chairman of the Board
Grigorijs Uspenskis
Names, last names of members of the Board
Aleksandrs Berezins
Vladimirs Antjufejevs
Anatolijs Ostaščenko
Andrejs Zujevs
Accounting period
1 January 2007 – 30 September 2007
Auditor’s name, last name, identity No.
and address
Jānis Mežiels
Identity No.: 011059-11009
Sworn auditor’s certificate No. 127
11-501 Skolas Street, Riga, LV-1010, Latvia
Information on daughter companies
“Ražošana Enerģētika Zinātne” Ltd., to be liquidated
Reg. No. 40003532962
JSC “RER” contribution is 96%
Information on associated companies
“Lovato - REZ” LTD.
Reg. No. 40003072180
JSC “RER” contribution is 50%
4
JSC “RER” CONSOLIDATED BALANCE SHEET FOR NINE MONTHS OF 2007
ASSETS
Line
code
1. LONG-TERM INVESTMENTS
I. Intangible investments
1. Intangible assets
I. Total
II. Fixed assets
1. Land plots, buildings, constructions
2. Equipment and machinery
3. Other fixed assets and inventory
4. Creation of fixed assets
5. Prepayments for fixed assets
II. Total
I. PART TOTAL AMOUNT
2. CURRENT ASSETS
I. Inventories
1. Raw materials, direct materials and auxiliary
materials
2. Unfinished products
3. Finished products and goods for sale
4. Prepayments for goods
I. Total
II. Debtors
1. Debts of buyers and customers
2. Debts of associated companies
3. Other debtors
4. Deferred expenses
II. Total
III. Securities and participation in capitals
1. Other securities
III. Total
IV. Cash
II. PART TOTAL AMOUNT
BALANCE
Note
30.09.07
LVL
30.09.06
LVL
30.09.07
EUR
30.09.06
EUR
020
050
3871
3871
604
604
5508
5508
859
859
060
080
090
100
110
120
220
4316044
1967190
105754
477258
325434
7191680
7195551
1622178
1105354
37299
415285
1141244
4321360
4321964
6141177
2799059
150474
679077
463051
10232838
10238346
2308151
1572777
53072
590897
1623844
6148741
6149600
230
3060892
2059065
4355257
2929786
240
250
270
290
1313126
353803
338071
5065892
991751
120011
360587
3531414
1868410
503416
481032
7208115
1411135
170760
513069
5024750
300
320
330
360
370
6720838
284
292932
6260
7020314
135041
18
549460
6824
691343
9562891
404
416806
8907
9989008
192146
26
781811
9710
983693
400
410
420
430
440
1600000
1600000
15433
13701639
20897190
52688
4275445
8597409
2276595
2276595
21959
19495677
29734023
74968
6083411
12233011
6
7
Appendices to financial statements on pages 13 – 16 are an integral part of the financial statements.
5
JSC “RER” CONSOLIDATED BALANCE SHEET FOR NINE MONTHS OF 2007
LIABILITIES
1. SHAREHOLDERS' EQUITY
1. Share capital (capital stock)
2. Reserve for revaluation of long-term
investments
3. Other provisions
4. Undivided profit:
a) Undivided profit of previous years
b) Undivided profit of the accounting year
1. PART TOTAL AMOUNT
2. PROVISIONS
2. PART TOTAL AMOUNT
3. CREDITORS
I. Long-term creditors
1. Loans from credit institutions
2. Other loans
3. Deferred tax liabilities
I. Total
II. Short-term creditors
1. Loans from credit institutions
2. Other loans
3. Advance payments received from buyers
4. Debts to suppliers and contractors
5. Debts to associated companies
6. Taxes and social security payments
7. Other creditors
8. Unpaid dividends of previous years
II. Total
3. PART TOTAL AMOUNT
4. MINORITY INTEREST
BALANCE
Line
code
450
470
Note
8
9
30.09.07
LVL
30.09.06
LVL
30.09.07
EUR
30.09.06
EUR
5799005
158811
5799005
159382
8251241
225968
8251241
226780
510
192922
192922
274503
274503
530
540
550
580
590
1522945
2339592
10013275
186566
186566
2505
466936
6620750
302861
302861
2166956
3328940
14247608
265460
265460
3564
664390
9420478
430932
430932
620
630
731
740
1534736
15107
201584
1751427
890111
38975
2183733
21495
286829
2492057
1266514
55456
770
780
790
800
830
840
850
880
890
900
5912648
157548
208748
1606730
4737
607622
447139
750
8945922
10697349
910
20897190
10
929086
3514
5174
272780
9
204333
240271
726081
1655167
18631
8597409
8412940
224171
297022
2286171
6740
864568
636219
1067
12728898
15220955
29734023
1321970
5000
7362
388131
13
290740
341875
1033121
2355091
26510
12233011
6
JSC “RER” CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR NINE MONTHS OF 2007
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Items
Net turnover
Production costs of the goods sold
Gross profit or loss
Selling expenses
Administration expenses
Other operating income
Other operating expenses
Income from participation in capital of
related and affiliated companies
Other interest income and similar
income
Other interest payments and similar
expenses
Loss from consolidation
Income from consolidation
Profit or loss before extraordinary
items and taxes
Profit or loss before tax
Other taxes
Minority interest
Consolidated profit or loss of the
accounting period
EPS (earnings per share)
The number of shares is 5799005
Line
code
010
020
030
040
050
060
070
080
30.09.07
LVL
18506540
-13268741
5237799
-299519
-1988302
166713
-386062
30.09.06
LVL
9608080
-7264494
2343586
-172021
-1467476
105921
-263834
1453
30.09.07
EUR
26332434
-18879718
7452716
-426177
-2829099
237211
-549317
30.09.06
EUR
13671066
-10336444
3334622
-244764
-2088030
150713
-375402
2067
100
494
624
703
888
120
-254527
-139
-362159
-198
121
122
130
14249
2490845
-64320
15837
499631
20275
3544153
-91519
22534
710911
160
190
200
210
Note
1
2
3
4
5
2490845
-151253
2339592
0.40
499631
-30054
-2641
466936
0.08
3544153
-215214
3328939
0.57
710911
-42763
-3758
664390
0.11
7
JSC “RER” CONSOLIDATION REGISTRY
BALANCE SHEET FOR NINE MONTHS OF 2007, LVL
ASSETS
1. LONG-TERM INVESTMENTS
I. Intangible investments
1. Intangible assets
I. Total
II. Fixed assets
1. Land plots, buildings, constructions
2. Equipment and machinery
3. Other fixed assets and inventory
4. Creation of fixed assets
5. Prepayments for fixed assets
II. Total
III. Long-term financial investments
1. Participation in the capital of related
companies
2. Participation in the capital of
associated companies
III. Total
I. PART TOTAL AMOUNT
2. CURRENT ASSETS
I. Inventories
1. Raw materials, direct materials and
auxiliary materials
2. Unfinished products
3. Finished products and goods for sale
4. Prepayments for goods
I. Total
II. Debtors
1. Debts of buyers and customers
2. Debts of associated companies
3. Other debtors
4. Deferred expenses
II. Total
III. Securities and participation in
capitals
1. Other securities
III. Total
IV. Cash
II. PART TOTAL AMOUNT
BALANCE
JSC
“RER”
“LovatoREZ” LTD.
Consolidation
Registry:
Debit
Consolidation
Registry:
Credit
3871
3871
4304424
1961692
103308
477258
325434
7172116
Consolidated
Balance
3871
3871
23240
10996
4893
11620
5498
2447
39129
19565
59927
4316044
1967190
105754
477258
325434
7191680
59927
59927
7235914
39129
59927
79492
7195551
3059297
3190
1595
3060892
1313126
293194
338060
5003677
121218
22
124430
60609
11
62215
1313126
353803
338071
5065892
69913
34956
4970
644
75527
2485
322
37763
6720838
284
292932
6260
7020314
6144
106122
185614
1600000
1600000
15433
13701639
20897190
6685881
284
290447
5938
6982550
1600000
1600000
9289
13595516
20831430
12288
212245
251374
8
JSC “RER” CONSOLIDATION REGISTRY
BALANCE SHEET FOR NINE MONTHS OF 2007, LVL
LIABILITIES
1. SHAREHOLDERS' EQUITY
1. Share capital (capital stock)
2. Reserve for revaluation of long-term
investments
3. Other provisions
4. Undivided profit:
a) Undivided profit of previous years
b) Undivided profit of the accounting
year
1. PART TOTAL AMOUNT
2. PROVISIONS
2. PART TOTAL AMOUNT
3. CREDITORS
I. Long-term creditors
1. Loans from credit institutions
2. Other loans
3. Deferred tax liabilities
I. Total
II. Short-term creditors
1. Loans from credit institutions
2. Other loans
3. Advance payments received from
buyers
4. Debts to suppliers and contractors
5. Debts to associated companies
6. Taxes and soc. security payments
7. Other creditors
8. Unpaid dividends of previous years
II. Total
3. PART TOTAL AMOUNT
BALANCE
Consolidation adjustments Total
“LovatoREZ” LTD.
Consolidation
Registry:
Debit
5799005
158811
115200
31984
115200
31984
5799005
158811
192922
1168
1168
192922
1522945
2329226
-7765
-3882
14249
140587
144470
14249
JSC
“RER”
10002909
186566
186566
1534736
15107
200072
1749915
3023
3023
Consolidation
Registry:
Credit
8892040
10641955
20831430
1522945
2339592
10013275
186566
186566
1534736
15107
201584
1751427
1511
1511
5912648
157548
208748
1559831
4737
603796
444732
Consolidated
Balance
5912648
157548
208748
93798
46899
7652
4814
1500
107764
110787
251374
3826
2407
750
53882
55393
199863
199863
14249
199863
1606730
4737
607622
447139
750
8945922
10697349
20897190
9
JSC “RER” CONSOLIDATION REGISTRY
PROFIT AND LOSS ACCOUNT FOR NINE MONTHS OF 2007, LVL
No.
Items
JSC
“RER”
1
2
Net turnover
Production costs of
the goods sold
Gross profit or loss
Selling expenses
Administration
expenses
Other operating
income
Other operating
expenses
Other interest
income and similar
income
Other interest
payments and
similar expenses
Income from
consolidation
Profit or loss
before
extraordinary items
and taxes
Profit or loss
before tax
Other taxes
Consolidated profit
or loss of the
accounting period
18358048
-13120059
“Lovato
-REZ”
LTD.
296984
-297364
5237989
-296810
-1986665
-380
-5418
-3273
148492
165912
1603
802
-385903
-318
483
21
3
4
5
6
7
8
9
10
11
12
13
14
Consolidation
adjustments
Consolidation
Registry:
Debit
148492
Consolidation
Registry:
Credit
Consolidated
P&L Account
148682
18506540
-13268741
148682
2709
1636
5237799
-299519
-1988302
166713
159
10
-386062
494
-254527
-254527
14249
14249
2480479
-7765
14249
149304
153186
2490845
2480479
-7765
14249
149304
153186
2490845
-151253
2329226
-7765
14249
149304
153186
-151253
2339592
10
Appendix 2 to the Latvian Accounting
Standard No.2 of 5 February 2004
“Cash Flow Statement”
JSC “RER” CONSOLIDATED CASH FLOW STATEMENT
FOR NINE MONTHS OF 2007 (prepared by indirect method)
I. Cash flow from operating activities
Items
1
2
3
4
5
I
Profit or loss before extraordinary items and taxes
ADJUSTMENTS
Depreciation of fixed assets
Amortization of investment value
Amortization of intangible investment value
Gain from sales of fixed assets
Profit or loss from fluctuations of currency exchange
rates
Income from participation in capital of related and
affiliated companies
Amounts written off investments
Loss from consolidation
Consolidation adjustments
Reserve for revaluation of long-term investments
Profit or loss before adjustments influenced by changes
of balance of current assets and short-term liabilities
ADJUSTMENTS
Increase or decrease of balance of receivables
Increase or decrease of balance of inventories
Increase or decrease of deferred expenses
Increase or decrease of balance of debts to be paid to
suppliers, contractors and other creditors
Expenses for tax payments
Gross cash flow from operating activities
Expenses for corporate income tax payments
Cash flow before extraordinary items
NET CASH FLOW FROM OPERATING ACTIVITIES
30.09.07
LVL
2490845
30.09.06
LVL
499632
30.09.07
EUR
3544153
30.09.06
EUR
710912
193659
-1147
832
-2100
75396
122126
1208
663
-8859
105690
275552
-1632
1184
-2988
107279
173770
1719
943
-12605
150383
-1453
448093
-2067
637579
-14249
-2460
3188869
48483
-9945.5
-6526
751018.5
-20275
-3500
4537352
68985
-14151
-9286
1068603
-5647022
-1390537
18578
7120519
-1196362
-910078.5
77894
-59135
-8034988
-1978556
26434
10131586
-1702270
-1294925
110833
-84141
-150651
3139756
-208077
2931679
2931679
-30047
-1366710
-302077
-1668787
-1668787
-214357
4467471
-296067
4171404
4171404
-42753
-1944653
-429817
-2374470
-2374470
II. Cash flow form investing activities
Items
1
2
3
4
II
Purchase of stock or shares of related or associated
companies
Purchase of fixed assets and intangible investments
Income from sales of fixed assets and intangible
investments
Dividends received
NET CASH FLOW FROM INVESTING ACTIVITIES
30.09.07
LVL
30.09.06
LVL
-4695
30.09.07
EUR
30.09.06
EUR
-6680
-999856
3265
-651270
8859
-1422667
4646
-926674
12605
-996591
1453
-645653
-1418021
2067
-918682
11
III. Cash flow from financing activities
Items
1
2
3
4
5
6
7
8
III
Paid in capital stock
Income and expenses from long-terms loans
Loans received
Increase of long-term debts to creditors
Expenses for repayment of loans
Expenses for repurchase of leased fixed assets
Dividends paid out
Expenses for purchase of short-term securities (bill of
exchange)
NET CASH FLOW FROM FINANCING ACTIVITIES
30.09.07
LVL
-657742
-28010
-1500
-1600000
30.09.06
LVL
10000
-1253.5
890000
38975
-410099.5
30.09.07
EUR
-935883
-39855
-2134
-2276595
30.09.06
EUR
14229
-1783
1266356
55456
-583519
-2287252
527622
-3254467
750739
30.09.07
LVL
2931679
-996591
-2287252
-73014
-425178
440611
30.09.06
LVL
-1668787
-645653
527622
-102024
-1888842
1941530
30.09.07
EUR
4171404
-1418021
-3254467
-103890
-604974
626933
30.09.06
EUR
-2374470
-918682
750739
-145167
-2687580
2762548
15433
52688
21959
74968
IV. Summary of cash inflow and outflow
Items
I
II
III
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Result of fluctuations of currency exchange rates
Net cash flow of the accounting period
Cash and its equivalents in the beginning of the
accounting period
Cash and its equivalents at the end of the accounting
period
12
JSC “RER” STATEMENT OF CHANGES OF CONSOLIDATED SHAREHOLDERS’ EQUITY
FOR NINE MONTHS OF 2007, LVL
Kind of changes
1. Balance as of 31.12.2005
2. Income or loss of the accounting period
that is not included in the profit and loss
account:
a) decrease of fixed asset value
3. Adjustments
4. Income or loss of the accounting period in
accordance with the profit and loss account
5. Balance as of 30.09.2006
6. Balance as of 31.12.2006
7. Income or loss of the accounting period
that is not included in the profit and loss
account:
a) decrease of fixed asset value
8. Adjustments
9. Income or loss of the accounting period in
accordance with the profit and loss account
10.Balance as of 30.09.2007
Share
capital
5799005
Reserve for
revaluation
of long-term
investments
165909
Other
provisions
Undivided
profit
192922
408145
6565981
-405640
466936
-6527
-405640
466936
469441
1604724
6620750
7757922
-81779
2339592
-2460
-81779
2339592
3862537
10013275
-6527
5799005
5799005
159382
161271
192922
192922
-2460
5799005
158811
192922
Total
JSC “RER” STATEMENT OF CHANGES OF CONSOLIDATED SHAREHOLDERS’ EQUITY
FOR NINE MONTHS OF 2007, EUR
Kind of changes
1. Balance as of 31.12.2005
2. Income or loss of the accounting period
that is not included in the profit and loss
account:
a) decrease of fixed asset value
3. Adjustments
4. Income or loss of the accounting period in
accordance with the profit and loss account
5. Balance as of 30.09.2006
6. Balance as of 31.12.2006
7. Income or loss of the accounting period
that is not included in the profit and loss
account:
a) decrease of fixed asset value
8. Adjustments
9. Income or loss of the accounting period in
accordance with the profit and loss account
10.Balance as of 30.09.2007
Share
capital
8251241
Reserve for
revaluation
of long-term
investments
236067
Other
provisions
Undivided
profit
274503
580738
9342549
-577174
664390
-9287
-577174
664390
667954
2283316
9420478
11038528
-116359
3328939
-3500
-116359
3328939
5495896
14247608
-9287
8251241
8251241
226780
229468
274503
274503
-3500
8251241
225968
274503
Total
13
APPENDICES
APPENDICES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR NINE MONTHS 2007
Note No. 1 - Net turnover
Country
Latvia
Estonia
Russia
Lithuania
Germany
Great Britain
Ukraine
Sweden
Gibraltar
Kazakhstan
Finland
Byelorussia
Total
30.09.07,
LVL
8322593
3355
1248838
4835
424
7674709
1189335
35703
6362
30.09.07,
EUR
11841983
4774
1776936
6880
603
10920127
1692271
50801
9052
30.09.06,
LVL
4074151
1103670.5
790116.5
6393.5
30.09.06,
EUR
5796995
1570382
1124234
9097
3582715
42527
5097744
60510
8167
339.5
11621
483
20386
18506540
29007
26332434
9608080
13671066
30.09.07,
LVL
4269824
977322
7246520
380482
136560
30.09.07,
EUR
6075412
1390604
10310869
541377
194307
30.09.06,
LVL
1866812.5
435547.5
3997240
315238
88070
30.09.06,
EUR
2656235
619728
5687560
448543
125312
41984
52480
163569
13268741
59738
74672
232739
18879718
59807.5
403800
97978.5
7264494
85098
574556
139412
10336444
30.09.07,
LVL
141125
30.09.07,
EUR
200803
577
2100
5
19604
5
821
2988
7
27894
7
2461
836
166713
3502
1189
237211
30.09.06,
LVL
66995
121
742
8859
72
17957
33
19
6526
4597
105921
30.09.06,
EUR
95325
172
1056
12605
102
25551
47
27
9286
6542
150713
30.09.07,
LVL
10377
74251
118962
30.09.07,
EUR
14765
105650
169268
30.09.06,
LVL
859
49753
95776
30.09.06,
EUR
1222
70792
136277
3382
72014
4812
102467
2362
14854
90846
3361
21135
129262
Note No. 2 - Production costs of the goods sold
Items
Wages and salaries of personnel
Social security contributions
Costs of materials
Energy resources
Depreciation and amortization of fixed assets and
intangible investments
Travelling expenses
Repair expenses
Other expenses
Total
Note No. 3 – Other income from business activities
Items
Profit from other disposal (materials, lease)
Penalty received
Fixed asset liquidation residuals, materials
Disposal of fixed assets
Deposited wages and salaries
Income connected with maintaining social sphere
Income from fluctuations of currency exchange rates
Income from currency conversion
Decrease of revaluation of fixed asset reserve
Other income
Total
Note No. 4 - Other expenses of business activities
Items
Penalty and contractual penalties
Expenses connected with maintaining social sphere
Expenses not connected with business activities of the
company
Depreciation of material values
Loss from fluctuations of currency exchange rates
Loss from currency conversion
14
Fixed asset liquidation
Tax surcharge
Loss from written off investments
Write-off of bad debts
Loss of the previous year
Other expenses
Total
9404
28507
65468
2945
13381
40562
93153
4190
9064
12897
752
386062
1069
549317
103
217
263384
147
309
375402
30.09.07,
LVL
142635
8618
151253
30.09.07,
EUR
202952
12262
215214
30.09.06,
LVL
18103
11951
30054
30.09.06,
EUR
25758
17005
42763
Note No. 5 – Other taxes
Items
Real estate tax for buildings (constructions)
Real estate tax for buildings for land
Total
APPENDICES TO THE CONSOLIDATED BALANCE SHEET FOR NINE MONTHS OF 2007
Note No. 6 - Debtors
Items
1. Debts of buyers and customers (line code 300)
2. Debts of associated companies (line code 320)
3. Other debtors (line code 330), including
- personnel accounts receivable
- taxes paid in advance
- overpaid taxes
- advance payments for services
- VAT of outstanding invoices
- others
4. Deferred expenses
Total
30.09.07,
LVL
6720838
284
292932
17483
2628
251046
16666
30.09.07,
EUR
9562891
404
416806
24876
3740
357207
23714
7269
8907
9989008
30.09.06,
LVL
135041
18
549460
2157
2596
204458
56636
4985
278628
6824
691343
30.09.06,
EUR
192146
26
781811
3069
3694
290918
80586
7093
396451
9710
983693
5109
6260
7020314
30.09.07,
LVL
110
15323
15433
30.09.07,
EUR
157
21802
21959
30.09.06,
LVL
23797
28891
52688
30.09.06,
EUR
33860
41108
74968
Note No. 7 – Cash
Items
Cash office
Settlement account
Total
Note No. 8 – Shareholders’ equity
See “Statement of changes of consolidated shareholders equity for nine months of 2007”, page 12.
Note No. 9 – Share capital (Capital stock)
The total number of JSC “RER” shares – 5799005 pieces of par value LVL 1.00.
Capital stock amounts to LVL 5799005, which is divided into 5799005 ordinary shares with voting right.
Items
Residents, including
- natural personas
- legal persons
Non-residents, including
- Russia
- Canada
- USA
- British Virgin Islands
Total
30.09.07,
LVL
199525
174322
25203
5599480
2454978
5119
1046461
2092922
5799005
30.09.07,
EUR
283899
248038
35861
7967342
3493118
7284
1488980
2977960
8251241
30.09.06,
LVL
199525
174322
25203
5599480
1011027
5119
1527778
3055556
5799005
30.09.06,
EUR
283899
248038
35861
7967342
1438562
7284
2173832
4347664
8251241
15
Note No. 10 - Creditors
Items
1. Long-term creditors (line code 740).
(Loan, leasing contracts; deferred tax liabilities)
2. Loans from credit institutions (line code 770)
(Loan contract, credit line contract)
3. Other loans (line code 780)
(Leasing contracts)
4. Advance payments received from buyers (line code
790)
5. Debts to suppliers and contractors (line code 800)
6. Debts to associated companies (line code 830)
7. Tax payable (line code 840)
8. Other creditors (line code 850), including
- wages and salaries payable
- alimony
- settlements with personnel for debts
- others
Unpaid dividends of previous years (line code 880)
Total
30.09.07,
LVL
1751427
30.09.07,
EUR
2492057
30.09.06,
LVL
929086
30.09.06,
EUR
1321970
5912648
8412940
157548
224171
3514
5000
208748
297022
5174
7362
1606730
4737
607622
447139
438415
1120
5709
1895
750
10697349
2286171
6740
864568
636219
623806
1594
8123
2696
1067
15220955
272780
9
204333
240271
237055
1029
1201
986
388131
13
290740
341875
337299
1464
1709
1403
1655167
2355091
16
PRINCIPLES OF DRAWING UP OF CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS OF 2007
Substantiation for preparation of financial statements
Financial statements are prepared in accordance with the Republic of Latvia Law on Accounting and
Law on Consolidated Annual Accounts, as well as in accordance with basic requirements of the International
Accounting Standard 27. Financial statements provide a true and clear idea of assets, liabilities and financial
status of the companies involved in consolidation.
Financial statements are prepared on the grounds of a concept of continuation of activities.
Profit and Loss account is drawn up by cost-of-sales accounting.
Cash flow statement is prepared by indirect method.
In comparison with 2006, a method of evaluation of materials and raw materials was changed at JSC
“RER”. From 01 January 2007, materials and raw materials are evaluated using FIFO method.
Monetary unit and revaluation of foreign currencies
In the financial statements, as a monetary unit and measure of value, there is used the Republic of
Latvia monetary unit – lats. Profit or loss received as result of fluctuations of currency exchange rates is
presented in the profit and loss account for the respective period.
Data of financial statements, which are presented in euro, are recalculated using the exchange rate
stated by the Bank of Latvia on 30.09.2007: 1 EUR – 0.702804.
Fixed assets and intangible investments
Fixed assets and intangible investments are presented in the balance sheet by depreciated cost.
Depreciation and amortisation of fixed assets and intangible investments is calculated by straight-line
method.
For calculation of depreciation of fixed assets, there are used the following rates:
Buildings, constructions
1.1 – 1.9 %
Equipment and machinery
2 – 20 %
Other fixed assets and inventory
10 – 50 %
Depreciation of land is not calculated.
Inventories
Remaining balance of raw materials and materials is evaluated by purchase cost value using FIFO
method.
Inventory of law value is entered by purchase cost value and is written off 100% as expenses after
putting into operation.
Remaining balance of finished products and unfinished products are evaluated by cost of production.
Determination of companies to be involved in consolidation
“Ražošana Enerģētika Zinātne” LTD. is not included in consolidation, because on 30.09.2007, JSC
“RER” has no decisive influence in accordance with liquidation of “Ražošana Enerģētika Zinātne” LTD.
“Lovato - REZ” LTD. is the company governed jointly. There is possibility to include this company in
consolidation by performing proportional consolidation or applying equity method.
“Lovato – REZ” LTD. equity consolidation
There is added up only a proportional concern part 50% of assets, liabilities, income, and expenses.
Capital stock
Reserve for revaluation of longterm investments
Other provisions
Profit of the accounting period
115200 * 0.50 = 57600
31984 * 0.50 = 15992
1168 * 0.50 = 584
- 7765 * 0.50 = - 3882.50
Debit of
account,
LVL
3110
3130
Amount,
LVL
3360
584
Credit of
account,
LVL
Amount,
LVL
57600
15992
1330
59927
Shareholders’ equity
140587 * 0.50 = 70293.50
74176
59927
Negative consolidation
74176 – 59927 = 14249
3900
14249
difference
Negative consolidation difference was included in the profit and loss account according to part 3 of clause 18 of the Law
on Consolidated Annual Accounts.
JSC “RER” Chairman of the Board
20 November 2007
G. Uspenskis
17