Financial report for 6 month of the year 2022

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

Reg. No. 40003030187

Višķu Street 17, Daugavpils, LV-5410 Latvia

FINANCIAL REPORT

FOR 6 MONTHS OF THE YEAR 2022

(01.01.2022 – 30.06.2022)

(not subject to audit by the independent sworn auditor)

Prepared in accordance with Financial Instruments Market Law and Law On the Annual

Financial Statements and Consolidated Financial Statements of the Republic of Latvia

Daugavpils

2022

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

2

Contents

Information about the Company ..…………………………………………...………3-5

Management report ..……………………………………………………….…..……6-7

Balance sheet ……………………………………..…………………………………8-9

Income statement......................................................................................................................10

Cash flow statement ……………………….........……………………..…………….11

Statement of changes in equity ……………………………………...….…………....12

Appendixes

Explanatory notes ……………………………………………………………… 13

Explanations and analyses on separate items of financial reports ….................................... 14

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

3

INFORMATION ABOUT THE COMPANY

Company name

Legal status

Registration number

Registration in Register of Enterprises

Registration in Commercial Register Office

Legal address

Mailing address

DITTON pievadķēžu rūpnīca

Joint Stock Company

40003030187

Rīga, 03.10.1991

Rīga, 29.08.2003

Višķu St. 17, Daugavpils,

LV-5410, Latvia

Višķu St. 17, Daugavpils,

LV-5410, Latvia

Fixed capital

Number of public bearer shares

Nominal value of one share

10,360,000 EUR

7,400,000

1,40 EUR

Chief accountant

Jūlija Lavrecka

Reporting period

01.01.2022 – 30.06.2022

Persons in charge for drawing up of the financial report:

Ms. Jūlija Lavrecka, phone +371 65402316, e-mail:

dpr@dpr.lv

Mr. Boriss Matvejevs, phone +371 65402333, e-mail:

dpr@dpr.lv

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

4

INFORMATION ON MANAGEMENT BOARD AND COUNCIL

MEMBERS

THE MANAGEMENT BOARD

Chairman of the Management Board

Rolands Zarāns, re-elected on 14.01.2019 (elected since 15.01.2014).

Information about the shares held by the members of the Management Board

Members of the Management Board

Rolands Zarāns

Owned shares

*

Number%

nonenone

COUNCIL

Chairman of the Council

Boriss Matvejevs, re-elected on 18.06.2020 (elected since 05.05.2005).

Members of the Council

Genādijs Zavadskis, re-elected on 18.06.2020 (elected since 05.02.2017).

Aleksandrs Sokolovs, elected on 18.06.2020.

Information about the shares owned by the members of the Council

Members of the Council

Boriss Matvejevs

Genādijs Zavadskis

Aleksandrs Sokolovs

Owned shares*

Number%

none none

700 0009,46**

Information about the professional experience of the members of the Management Board and

Council of the JSC Ditton pievadķēžu rūpnīca (hereafter – Company) can be found on the website

www.dpr.lv.

____________________

* at 25.08.2022

**beneficiary of the Shareholder DVINSK MNG, Ltd.

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

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SHAREHOLDERS OWNING MORE THAN 5% OF THE COMPANY’S TOTAL

SHARE CAPITAL

*

Given name, surname or Name

Eduards Zavadskis

Vladislavs Drīksne

MAX Invest Holding SIA

Maleks S SIA

SIA „DVINSK MNG”

Shareholding,

%

20,00

19,92

13,63

13,56

9,46

* Note

: (1) The Company is not keeping a share owner and/or a shareholder register. The above information is provided and

updated on the basis of the shareholders list of AS Ditton pievadķēžu rūpnīca dated 25.08.2022, which was received from Nasdaq CSD

under the Commercial Law of the RoL and the Law on the Financial Instruments Market, taking into consideration the statements of

shareholders on the acquisition or loss of their holdings submitted to the Company under Section 61 of the Law on Financial Instruments

Market.

(2) At 30.06.2022, there was no information at the disposal of the Company regarding the allocation of the shares

between the heirs of E. Zavadskis (20,00 % in total) and V.Drīksne (19,92% in total) and the accounting entries in their financial

instruments accounts under Section 125 of the Law on the Financial Instruments Market.

SHARE PRICE DEVELOPMENT

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

6

MANAGEMENT REPORT

Information on the results of the company in 6 months of year 2022

The net-turnover in 6 months of 2022 reached € 2,488 thousand, being by € 11 thousand

higher than the index in 6 months of 2021.

Commodity output resulted € 1,645 thousand, what is by € 258 thousand less than in the

relevant period of the previous year.

The export of the core products to Eastern and Western markets amounted to 99 per cent

(43% eastwards and 56% westwards), 1% of products sold and services rendered on Latvian

market.

The Company closed the 6 months period of 2022 with a profit before corporate income

tax € 120 thousand.

The average number of employees of the Company during 6 months of 2022 was 122

people.

The average salary in 6 months period of 2022 amounted to € 773, what is by € 26 higher

than in 6 months of 2021.

The results of Company’s activities and financial statements of the Company for 6 months

of 2022, this Management report were approved by Company’s Management Board (Management

Board meeting Protocol No. 08/2022 dated 22 August 2022).

Significant events. Market trends and the Company’s development. Risks.

When announcing the results of its work, the Company systematically drew attention to the

fact that the Company is integrated into the world economy and international economic relations,

as a result of which the Company depends on the situation on market segments where the

Company’s as suppliers and as purchasers of raw materials and resources interests are represented.

This objectively does not allow the Company to manage market processes individually and

to plan its operations in a sustainable perspective, without taking into account the general trends in

all sectors of the economy.

In 2020-2021, the main external factors that most affect the situation in the economy were

the restrictions and slowdown in activity caused by the COVID-19 pandemic, as well as an

unbalanced and unpredictable increase in prices of raw materials and resources (electricity supply,

gas supply).

Analysis of this impact on the Company is provided in the Management Report to the

Annual Report of the Company for the year 2021.

The main external factors that most affected the situation in the Company in the first half

of the year 2022 were the mentioned above processes related to the increase in prices of raw

materials and resources, as well as the sanctions imposed in the European Union and Latvia

regarding the regions where the Company’s markets were located. Analysis of this impact on the

Company is also provided by the Management Report to the Annual report of the Company for

the year 2021, as well as in the special publications of the Company.

The Company continues to produce and sell its products in two main segments of its

markets, which are conditionally divided as follows:

“Western” market or mainly the market of European countries, and

“Eastern” market, i.e., the Russian Federation market, the Customs Union, CIS and

Ukrainian markets, as well as the market of Asian countries.

The total indicators of all market segments show an increase in the cost of the Company’s

goods and services and the Company’s net turnover.

Based on the risk diversification program (which is related to the above mentioned market

segments), during the implementation of this program (during 5-7 years) the Company’s share of the

“eastern” segment of the market in terms of sales of goods and services has been significantly

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

7

adjusted compared to the “western” segment, in favour of reducing dependence on the "eastern"

segment of the market, which in the first half of the year 2022 makes up 34% of the Company’s total

turnover and 47% of the Company’s total sales.

In order to analyse situation in the Company’s markets systematically, to evaluate the

Company’s prospects and opportunities, to plan the management procedures of economic activity

and risk management:

(a) the Council and the Management Board of the Company adopted the Risk management

policy of the JSC Ditton pievadķēžu rūpnīca on January 5, 2022 and Procedures of the JSC Ditton pievadkēžu

rūpnīca in connection with the implementation of measures imposed within the framework of sanctions on March

25, 2022 were adopted. In order to coordinate and implement these measures within the

framework of sanctions, a responsible person was appointed in the Company.

The analytical and marketing research showed that:

firstly, the Company’s products for sale are not included in the sanctions lists either by their

direct meaning or as "dual purpose" products;

secondly, the Company’s partners, its officials and business owners are also not included in

the sanctions lists.

This research will be continued.

However, the instability of the situation, systematic correction of the lists of sanctions, lack

of systematicity and clarity in the application of sanctions, including to regulate cooperation with

partners, do not allow to the Management Board to give a motivated and reliable forecast of the

situation, development of the Company and its operating activity immediately.

(b) On June 27, 2022, the shareholders of the Company adopted Program of procedures for the

operation and management of the Company for the period of time from 1 July 2022 till 31 December 2023 of the JSC

Ditton pievadķēžu rūpnīca.

The procedures and programs adopted by the Company in the first half of the year 2022

showed that they are effective, and the Company closed this time period with profit of EUR 120

thousand (before corporate income tax).

The Company is seeking to render chargeable services from the programme related to the

development of an industrial-technological park in its territory. Within the scope of this

programme, the Company carried out the upgrading of its production facilities. This enabled the

implementation of effective savings on the costs of maintenance of production facilities, as well as the

creation of a commercial offer of the lease of a production facility equipped with the

infrastructure necessary for production.

Risks to which the Company is exposed.

The structure, analysis, relevance and procedures of the risk management are specified in

the Management Report to the Annual report of the Company for the year 2021. The information

on the Company’s risks given in the annual statements for the year 2021 is fully up to date for the

interim financial report for the 6 months of the year 2022.

STATEMENT ABOUT MANAGEMENT LIABILITY

According to the information at Company’s Management Board disposal, these financial

statements for 6 months of the year 2022 have been prepared in compliance with the existing

legislative requirements, gives a true and fair view of the assets, liabilities, financial standing and

profits of the Company. Management report contains truthful information.

Chairman of the Management BoardRolands Zarāns

JSC DITTON pievadķēžu rūpnīca

31 August 2022

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

8

BALANCE SHEET

ASSETS

30.06.2022

EUR

30.06.2021

EUR

Long-term investments

Intangible investments

Concessions, patents, licenses, trademarks and similar rights

Total intangible investments

-

2 061 350

1 756 372

-

1 918 909

10 775

2 061 350

1 898 813

-

2 193 686

19 675

Fixed assets

Immovable property:

Land

Buildings and structures and permanent crop

Investment properties - land

Investment properties - buildings

Technological equipment and devices

Other fixed assets and inventory

Costs of the establishment of fixed assets and unfinished

buildings objects

Total fixed assets

-

5 747 406

-

6 173 524

Long-term financial investments

Other securities and investments

Total long-term financial investments

-

Total long-term investments

5 747 406

6 173 524

Current assets

Inventories

Raw materials, consumables and supplies

Work in progress

Finished products and goods for sale

Advance payments for inventories

Total inventories

433 415

218 679

293 377

24 563

970 034

605 486

164 801

235 830

54 692

1 060 809

Debtors

Trade receivables

Other debtors

Next period costs

Total debtors

556 788

57 889

593

615 270

492 129

34 750

634

527 513

Cash

215 162

7 199

Total current assets

1 800 466

1 595 521

TOTAL ASSETS

7 547 872

7 769 045

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

9

BALANCE SHEET

LIABILITIES

30.06.2022

EUR

30.06.2021

EUR

Equity

10 360 000

Share capital

Reserves:

Other reserves

169 251

(9 240 236)

(9 370 970)

Retained losses brought forward from the previous years

Profit of the fiscal period

Total equity

119 676

1 408 691

61 312

1 219 593

Creditors

Long-term creditors:

3 811 577

4 135 577

-

100 000

Loans from credit institutions

Other loans

Deferred income

1 050 031

1 133 515

Total long-term creditors

4 861 608

5 369 092

Short-term creditors:

185 384

150 384

Loans from credit institutions

Other loans

Prepayments received from purchasers

Accounts payable to suppliers and contractors

Taxes and State mandatory social insurance payments

Other creditors

Deferred income

Accrued liabilities

Total short-term creditors

Total creditors

100 000

23 759

499 216

274 952

65 014

41 742

87 506

1 277 573

6 139 181

-

25 927

395 976

400 902

74 641

41 742

90 788

1 180 360

6 549 452

TOTAL LIABILITIES

7 547 872

7 769 045

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

10

INCOME STATEMENT

30.06.2022

EUR

30.06.2021

EUR

Net turnover

2 488 116

2 476 636

(2 032 507)

(1 984 445)

Production costs of goods sold, purchase costs of goods sold

or services rendered

Gross profit

455 608

492 191

Selling costs

(508)

(438)

Administrative expenses

Other income from operating activities

Other costs of operating activities

Other interest receivable and similar income

Interest payment and similar expenses

(316 758)

181 445

(97 237)

950

(103 824)

(323 913)

62 502

(71 554)

1 044

(98 521)

·

to other persons

(103 824)(98 521)

Profit before corporate income tax

119 67661 312

--

119 67661 312

Corporate income tax for the fiscal period

Loss / Profit for the fiscal period

Loss / profit per share

0,0160,008

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

11

CASH FLOW STATEMENT

30.06.2022

EUR

30.06.2021

EUR

119 676

61 312

202 952

-

(41 742)

103 824

-

201 975

1 611

(41 742)

98 521

-

384 710

321 677

(30 644)

61 022

(91 972)

(120 061)

(89 594)

(181 124)

I. Cash flows from operating activities

1. Profit or loss before Enterprise income tax

Adjustments to:

Depreciation of fixed assets

Depreciation of intangible assets

Recognition of deferred income as revenue

Interest payments and similar expenses

Income from sale of fixed assets

2. Profit or loss before adjustments to fixed assets and

short-term creditors

Adjustments to:

Increase or decrease in accounts receivables

Increase or decrease in inventories

Increase or decrease in accounts payable to suppliers,

contractors and other creditors

3. Gross cash flows from operating activities

Net cash flows from operating activities

325 494

(71 480)

II. Cash flows from investing activities

Purchases of fixed assets and intangible investments

Proceeds from sale of fixed assets

Net cash flows used in investing activities

-

III. Cash flows from financing activities

Net change in borrowings

Interest payments and similar expenses

Purchase of fixed assets

Expenses for liquidation of fixed assets

Net cash flows used in financing activities

(162 000)

(103 824)

-

22 523

(243 301)

76 300

(98 521)

(6 850)

-

(29 071)

Net cash flows of the fiscal period

82 193

(100 551)

Cash and cash equivalents at the beginning of fiscal

period

132 969

107 750

Cash and cash equivalents at the end of fiscal period

215 162

7 199

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

12

STATEMENT OF CHANGES IN EQUITY

for the period from 01.01.2022 till 30.06.2022

Equity

capital

Other

reserves

Total

119 676

(61 312)

Retained

profit of

Profit or

loss of

fiscal

period

EUR

169 251

EUR

-

EUR

1 289 015

EUR

10 360 000

-

EUR

(9 240 236)

-

At 1 January 2022

Profit

of 6 months period 2022

At 30 June 2022

10 360 000

169 251

(9 240 236)

119 676

1 408 691

169 251

-

10 360 000

-

(9 370 970)

-

At 1 January 2021

Profit

of 6 months period 2021

At 30 June 2021

10 360 000

169 251

(9 370 970)

(61 312)

1 158 281

61 312

1 219 593

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

13

Appendix

Explanatory notes

Accounting policies and methods applied in present interim financial statements are consistent

with those applied in the last Annual report.

These financial statements of the JSC DITTON pievadķēžu rūpnīca prepared on the basis of

source documents present fairly the financial position of the JSC as at 30 June 2022, its` operating

results and cash flows for 6 months starting from 1 January and ending on 30 June 2022.

This financial report has been prepared in compliance with statutory regulations of the Republic of

Latvia on a going concern basis. Appropriate accounting policies have been applied consistently to

each category.

The interim financial report for 6 months of the year 2022 has not been audited by the sworn

auditor.

The interim report has been prepared in euros.

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

FINANCIAL REPORT FOR 6 MONTHS OF 2022

14

Explanations and analyses on separate items of financial reports

Production of driving chains in 6 months of 2022 (thousand euros)

The value of the produced driving chains in these 6 months reached € 1,645 thousand, what is by €

258 thousand less than the index of the same period of the previous fiscal year.

Production of driving chains in 6 months of 2022 (thousand meters)

The index of the produced driving chains is by 159 thousand meters lower than in 6 months of

2021.

Sales (net-turnover) in 6 months of 2022 (thousand euros)

The net-turnover of the fiscal period is fulfilled by € 2,488 thousand, being by € 11 thousand or 0,4

per cent more than the index in the same period of the previous year.

Core product sales in 6 months of 2022 (thousand euros)

Core product sales amounted to € 1,996 thousand in the reporting period, what is by € 21

thousand or 1 per cent less than the result of the same period in the previous year.