JOINT STOCK COMPANY “LATVIJAS VALSTS MEŽI”
(UNIFIED REGISTRATION NUMBER: 40003466281)
ANNUAL ACCOUNTS 2014
(15th Financial Year)
DRAWN UP ACCORDING TO THE “ANNUAL ACCOUNTS LAWS”
OF THE REPUBLIC OF LATVIA
AND THE INDEPENDENT AUDITOR’S REPORT
Riga 2015
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
CONTENTS
General Information
3
Management Report
4
Profit and Loss Calculations
11
Balance
12
Cash Flow Statement
14
Statement of Changes in Equity
15
Annex to the Financial Statements
16
Independent Auditor’s Report
35
2
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
General Information
Title of the Company
Latvijas valsts meži
Legal Status
Joint Stock Company
Registration Number, Place and Date
40003466281
Riga, 28 October 1999
Re-registration with the Commercial Register
On 1 November 2004
Legal Address
30 Kristapa Street
Riga, Latvia, LV-1046
Until 21.11.2014.
1 Vaiņodes Street
Riga, Latvia, LV-1004
From 21.11.2014
Full Title and Address of the Shareholder
Ministry of Agriculture
Republic of Latvia (100%)
2 Republikas Square
Riga, Latvia, LV-1981
Shareholder’s Representative
Ozols Arvīds
Representative of the Ministry of Agriculture
Birģelis Jānis
Members of the Management Board
Strīpnieks Roberts – Chairman of the Board
Bumbieris Gints
Melnis Arnis
Zakovics Edvīns
Subsidiary
“Jaunmoku pils” Ltd. (100%)
Tume Parish, Tukums Municipality, Latvia, LV-3139
Associated Company
“Meža un koksnes produktu pētniecības un attīstības institūts” Ltd. (Forest and
Wood Products Research and Development Institute) (40%)
41 Dobeles Street, Jelgava, Latvia, LV-3001
Financial Year
1 January 2014 – 31 December 2014
Auditors
Iveta Vimba
Sworn auditor of the
Republic of Latvia
Certificate No. 153
„Ernst & Young Baltic” Ltd.
1A Muitas Street, Riga
Latvia, LV – 1010
License No. 17
3
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Management Report
28 April 2015
Type of activity
The aim of the activities of the Joint Stock Company “Latvijas valsts meži” (hereinafter also “LVM” or the Company) is to
implement programmes on national forest estates and state forest management which will ensure the preservation and awareness
of the value of national forests and the income of the forest owners – the State.
The shareholder of LVM is the person from the Ministry of Agriculture of the Republic of Latvia. The Company’s regulatory
authorities are its Shareholders and the Board. The highest adjudicating authority is the Shareholders Group that represents the
shareholder  the Ministry of Agriculture of the Republic of Latvia. The highest senior executive body of LVM is the Management
Board. On 31 December 2014, the Board of LVM consisted of 4 board members  the Chairman of the Board and three other
board members.
LVM governs and manages 1.63 million hectares of land in the Republic of Latvia, including 1.60 million hectares of forest land, of
which 1.41 million hectares consists of forests. According to LVM’s strategy, approved in 2010, national conservation areas
constitute 0.32 million hectares or 20% of the total area in LVM’s possession, including 0.23 million hectares of forest areas.
Economic activities with the aim of manufacturing high-quality softwood are planned for 1.17 million hectares of the forest land, of
which 0.18 million hectares are governed with additional conditions for environmental protection, recreation, and environmental
exploration.
Company’s activities in the annual accounts
Million EUR
Actual
execution
Million EUR
Income, incl.
from sales of assorted round wood
from the guaranteed delivery of certified
products
from sales of growing trees
from sales of woodchips for producing energy
from sales of forest tree seeds and plants
from real estate management
from the leasing of hunting rights
from recreation and hunting services
other income*
interest on income
260.58
228.05
277.75
239.09
18.52
4.53
4.85
3.00
0.62
0.92
0.01
0.09
0.72
24.62
2.97
4.03
2.40
0.62
0.95
2.29
0.06
Expenses in total:
manufacturing expenses
corporate management expenses
Real estate taxes
Donations
Profit before company income taxes
204.69
195.98
8.70
3.56
3.70
48.64
183.26
175.32
7.94
3.26
5.20
86.03
5.84
10.58
42.81
75.45
Budget
Company income taxes
Profit after taxes
*differences between income and expenses, which are not directly linked to the economic activities of the company
4
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Management report (continuation)
The total income of LVM in 2014 exceeded the 17.2 million euros that were planned in the budget. This included income from
wood sales, which amounted to 16.3 million euros and was higher than expected. The income level was influenced by both sales
of an assortment of round timber and sales of growing trees. In 2014, the high income from sales of assorted round timber was
mainly determined by a higher sales price. The income from the sales of growing trees was also higher than planned in the budget,
due to higher average sales rates. In the second half of the accounting year, the demand for woodchips in the market decreased.
As a result, the amount of woodchips sold also decreased and the average sales price was lower than that planned in the budget.
The income from the sales of forest tree seeds and plants was also lower than was planned in the budget, and was influenced by
the decrease in the demand for forest tree plants in the Latvian and Swedish markets. The recent market did not allow for the
implementation of the number sales of the forest tree plants planned in the budget.
The total expenses were lower than was planned in the budget. This can be mainly explained by lower expenses for forestry,
forestry work and forest infrastructure maintenance, as well as by lower land registration expenses. The forestry expenses were
lower than was planned in the budget due to a reduction in fuel prices. Forestry work was completed according to the natural
situation in 2014; however, the unit price for the forestry work services was lower than expected. The reduced forest infrastructure
expenses were mainly influenced by a lower volume of winter work, and also by a lower service price for everyday maintenance
work.
The Joint Stock Company “Latvijas valsts meži” completely fulfilled its obligations to its owner, namely, the State. In 2014, LVM
made a payment to the amount of 54.4 million euros (90% of its income in 2013) and all taxes associated with the Company (57.3
million euros), as provided in the Cabinet of Ministers Regulation No. 1471 “Order by which the share of profits for using state
capital is determined and paid into the state budget”.
According to the accepted basic principles of the company’s owner, LVM has donated 5.2 million euros in total during the
accounting year. These donations included 2 million euros for sports support, 1 million euros for fighting African swine flu, 0.9
million euros for cultural support, 0.7 million euros for social projects via the Ziedot.lv fund and 0.6 million euros for the
development of forestry education.
Economic
activity plan
Actual
execution
million m3
4.80
4.83
0.87
0.84
Sales of fuel woodchips
million m3
million in bulk
m3
0.43
0.31
Sales of fuel woodchips
million Mwh
0.36
0.27
(thousand) k ha
15.6
18.7
incl. natural regeneration
k ha
6.9
9.8
Forest (coppice) cultivation
k ha
39.4
39.9
Land registration in the Land Register
k ha
174.9
94.6
Building forest roads
km
260
297
Activity plan
Implementation of assorted round wood
Sales of growing trees
Forest regeneration
Units
Last year, 4.83 million cubic metres of assorted round wood and 0.84 million cubic metres of growing trees were implemented. The
actual tree dimensions and quality of the wood influenced the volume of the pulpwood and the firewood at the wood felling site,
which determined a lower volume of the pulpwood and a higher volume of the firewood in 2014 than was planned in the budget.
The total volume of sawlogs also dropped below the level planned in the budget, and was basically influenced by the actual
outcome of the species at the wood felling site. According to the estimated restrictions on the dominant species, the available
wood cutting sites for the dominant species of pine had to be re-planned in April 2014, and had to be substituted with the wood
cutting sites for the dominant species of spruce.
In 2014, an area of 9.0k hectares of the forest was artificially restored with the tree species provided in LVM’s strategic plan for
forestry, using restoration technologies and according to the volume necessary in the natural environment. The natural
regeneration volume was greater than planned in the budget  9.8k hectares, or 142% of the volume planned in the budget. This
increase in the restoration area was influenced by the change in the admissible tree cutting volume from 2006 until 2010
(Modification of Cabinet of Ministers Regulation No. 655). Coppices were cultivated over the planned volume of 39.9k hectares,
with the periodicity and intensity determined in the plan.
5
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
In 2014, 297 km of forest roads were put into operation, of which 119 km of roads were reconstructed and 177 km were rebuilt.
These roads were included in the Company’s financial balance, and 19.5 million euros was invested in their reconstruction.
Building objects with a total length of 244 km were started during the account period and are planned to be put into operation in
2015.
Management Report (continuation)
The land was registered according to the surveyed land sizes submitted by the land surveyors. In 2014, 95k hectares of land was
surveyed and registered in the Land Register, and 5k hectares of forest land borders were restored. Since 2000 a total of 1.27
million hectares of LVM land has been surveyed and 1.14 million hectares of the land has been registered in the Land Register.
In all 8 regions belonging to LVM, annual FSC and PEFC supervision audits were made, while execution controls of documents
and inner procedures were performed. All the main types of the forestry work were tested and LVM’s employees and service
providers involved in the work execution were interviewed. In addition to the annual FSC supervision audits, Accreditation Services
International (an organisation that supervises the accredited certification organisations for the certification of FSC) carried out a
compliance audit for the FSC auditor work in three fields of forestry. However, representatives of the Latvian National Accreditation
Bureau (an independent legal body which is supervised by the Ministry of Economics of the Republic of Latvia, and which accredits
and supervises the PEFC in its certification of accredited certification organisations) participated in one of PEFC’s supervised
audits in order to evaluate the PEFC auditor’s compliance with the certification standards.
The re-certification ISO audit was also conducted, for certification of forest plants production in compliance with the standard requirements of the quality control LVS EN ISO 9001:2009.
LVM’s most important public relations projects and events in 2014
Environmental education professionals from approximately 20 countries around the world, who are implementing the Foundation
for Environmental Education (FEE) programme "Learning about Forests", visited Latvia this spring in order to share their experiences of how to introduce children to the forest and its values.
During the 2013/2014 academic year, 6743 pupils and teachers from 113 Latvian schools completed the Mammadaba masterclass.
The 8th Forest Olympiad was organised, where 6 of Latvia’s most knowledgeable and erudite school teams competed for the main
prizes – a natural expedition to Norway and special Dendrolight medals.
For the 7th time, LVM organised a special summer camp for 40 of the most active teachers, who participated in the implementation
of LVM’s environmental education programme “Explore the Forest”. In cooperation with teachers from the Further Education Centre MEKA, they were given an opportunity to receive a 36-hour certificate for completing the environmental education courses within three days.
The waste collection competition “For a Clean Latvia” was organised, where 373 educational institutions from all over Latvia participated to collect 1270 tonnes and 326 kg of waste paper.
Within the framework of Forest Days, 221 events were organised with a total 7982 participants, exceeding last year’s number of
participants by 19%.
LVM supported the international “Bird Rally” bird watching competition, where 6 of the most experienced bird watching and ornithologist teams from Latvia, Lithuania and Estonia participated.
For the first time in Latvia, a 360 degree photo tour for Android mobile devices became available – offering an opportunity for admirers to virtually visit the well-known attraction sites in Tērvete Nature Park. Also, a virtual 360° photo tour of Tērvete Nature Park
is available for Apple smart devices and for iPad tablets in an interactive book format.
The Company and the environment
Since 2011, LVM’s lands, which are located outside of the natural territories protected by law, has begun a new identification,
mapping and quality control of the protected habitats in Latvia and the EU, as well as the mapping of rare and especially protected
species. This information about the protected species and their habitats is used by all LVM employees who plan and perform forest
management.
6
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
In 2014, LVM’s database was supplemented by more than 5.7 k new, rare and especially protected plants, mushrooms, lichens,
and invertebrate species, and experts filed more than 10.6 k encounters with rare and especially protected species in four seasons’ time.
During the four seasons, in addition to the natural forest habitats already protected in LVM’s territory (around 50 k hectares), 35.6 k
hectares of protected habitats in Latvia and the EU were mapped, representing almost 30 different types of the protected habitats,
of which 10.3 k hectares were recognised in 2014. The highest proportion consisted of forests and marsh habitats, of which the
most frequently described forest habitats were swamp forests, old and natural boreal forests and swampy forests. 87% of the protected forest habitats are of excellent, good or average quality; however, 13% of the recognised habitats consist of low quality
habitats.
Management Report (continuation)
The employees of LVM, in verifying the expected outlets for the Company’s economic activities, each year find new nests of protected bird species. Bird experts then survey the nests and determine the necessary protection measures. Until the experts reach
their final conclusion, all of the newly found nests are put into a 500 m protection zone, where forestry activity is not permitted. The
LVM database has information about 2100 of the biggest nests, of which 1130 are nesting grounds for protected bird species, and
includes information about historical nesting grounds and artificial nests. All the known nests are provided with appropriate protection. In 2014, the LVM database was supplemented by 186 new protected bird nests.
Every year, in the territory possessed by LVM, monitoring of the protected birds, plant species, and habitats is carried out. The
results of this monitoring are used when planning the Company’s economic activities. In order to reduce the influence of the economic activities on the stated natural environment, additional protection measures are determined. For instance, in the areas surrounding black storks’ and other birds’ nests, regardless of their protection status, a prohibition within a radius of 500 m from the
nest has been enacted for forestry activities during the birds’ period of nesting. Furthermore, in the spring-summer period, forestry
activity has been banned within a radius of 1000 m from the mating places of wood grouse (for 268 mating territories, in an area of
87 k hectares). A closure of those LVM’s forest roads which lead through the territories where the protected birds are nesting or
mating is carried out during the nesting period from March until the end of July.
In order to improve or renew the protected habitats and the quality of the habitats of protected species, every year LVM performs
habitat management. In 2014, areas of more than 290 hectares of forest habitats were improved, including the area of 95 hectares
where mating places for wood grouse were managed, and the area of 360 hectares where the forest glades were cut in order to
avoid the afforestation.
The usage of the plant protection substance ROTSTOP in the long-term forestry contract areas has been implemented, and has
been applied to damaged wood at felling sites, where the preparation of the timber is done by motorised saws.
Company’s planning and development
The transition to the new national currency, the euro, has been successful.
LVM’s tactical plan for the next 5-year-period has been approved.
The geospatial solution group has been created in order to offer the market a new LVM provision – geospatial solution services.
The forestry module of the training system for service providers has been completed.
In cooperation with the Latvian State Forest Research Institute “Silava” (LVMZI) three Forestry Days have been organised and
implemented to investigate new forestry technologies, forest selections and forest stands of the birch plantations.
Two LVM Nature Days were organised, in which frameworks of the interest groups were introduced with the Company’s Annual
Accounts 2013 for forest management and for planning of the selective cutting sites.
LVM supported a study programme at the Forest Faculty of Latvia University of Agriculture (LLU) by evaluating the content and
contributing opinions for the preparation of a doctoral thesis; also, the professional standard of a forestry engineer implemented by
a joint working group was approved.
A memorandum on the direction of future cooperation with the Forest and Wood Products Research and Development Institute,
LVMZI Silava, the Forest Faculty of Latvia University of Agriculture and with Riga Technical University was concluded.
According to the scientific research priorities defined in the LVM strategies, LVM has carried out the following studies:
7
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281















Development of methodological support and a monitoring system to reduce forest management influences on the environment
Forest stand growth paths and growth models for creating mobility opportunities for the resources
Involvement in a research programme on the influence of forestry activities on greenhouse gas (CO2) emissions
Forestry adjustments to climate changes
Exploration of the shape and varieties of stems
Economically effective, sustainable and productive usage of the ground in order to manufacture agricultural and forestry
products
Ash-tree forest destruction and regeneration in Latvia
Socially economic evaluations of different land management models
Creation of a decision-making tool for the usage of forest roads
Reduced tyre pressure on low load-bearing capacity roads
Individual survey methods for the timber volume to evaluate the measuring methods
Automation of carriers and manual operations
Studies of the forest trees for the selection of genetically high-quality forest reproductive materials
Supervision of root rot and its limitation in coniferous forests
Exploration of energy resources
8
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Management Report (continuation)
Participation in international processes
Within the frameworks of international activities with the participation and support of LVM specialists, we have prepared proposals
and submitted guidance documents for the working group „Forests and Natura 2000” of the European Commission.
We participated in the EUSTAFOR (European State Forest) conference in Ireland and in a seminar on forestry certification. Also, a
seminar was prepared and a report was given for the working group, regarding the motivation and development of staff.
We participated and reported at the OSCAR (Operations Systems Centre of Advanced Research) conference in Norway. The
report focused on LVM’s experience in organising and enhancing the effectiveness of the forestry work services and also on the
implementation of CTI (reduced tyre pressure on low load-bearing capacity roads).
Financial risk management
LVM organises its economic activities according to the strategies approved by the owner. It has been determined that the company
has to ensure a stable profit and a positive money flow from its economic activities. The finance management of the Company is
carried out in a centralised way, and its liquidity provides the Company of the opportunity to fulfil all of its obligations in time, both to
its cooperation partners and to the State.
The Company’s accumulated funds are placed in low-risk financial tools for a short term – in deposits at credit institutions and in
the money market fund, where the deletion of fund units is done according to the Company’s request, with the aim of making a
stable profit.
Conditions and terms after the end of the account
Amendments have been made to the 2015 budget, because the income from sales of assorted round wood was significantly lower
in the first quarter of 2015 than was initially planned. The volume of the realised sales was influenced by weather conditions at the
beginning of the year, which limited the availability of both the felling sites and the landing sites. The realisation of pulpwood sales
was also influenced by a decrease of the demand in the market.
During the time period since the last day of the annual accounting period until the signing of this report, no other significant events
occurred which would substantially affect the Company’s financial situation as of 31 December 2014.
Most important business plans for 2015:
LVM plans to maintain its FSC and PEFC certificates in the forest management in all regions. The Company will ensure the
manufacturing of forest stands and the presence of sales quality (ISO) certificates.
LVM will ensure the realisation of assorted round wood at a volume of at least 4.76 million cubic metres, and the realisation of
growing trees, according to long-term forestry contracts, at a volume of 0.69 million cubic metres.
LVM will ensure the realisation of fuel woodchips at a bulk volume of not less than 442 k cubic metres.
LVM will carry out 14.6 k hectares of forest regeneration, including the provision of natural regeneration in 7.0 k hectares.
LVM will perform the agro-technical management of the regenerated forest area of 24.9 k hectares and to tend the young stand
felling sites in the area of 40.7 k hectares.
LVM plans to perform the cleaning of drainage ditches from obstruction for an area of 354 k cubic metres.
LVM will put into operation drainage systems in the regenerated forest for an area of 16.4 k hectares and will re-build and reconstruct forest roads with a total length of 297 km.
LVM will register 142.7 k hectares of land in the Land Register 2015 and will measure the cadastral in an area of 135.7 k hectares.
The Company will also perform renovations and maintenance of the borders in an area of 53.5 k hectares.
LVM will ensure the realisation volume of not less than 48.09 million forest tree stands, including 43.71 million new technology
plants.
9
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
The Company will begin the service provision of geospatial solution products to clients outside of LVM, as well as the service
provision of forest management to other forest owners.
When exploring its technology and work methods, LVM will evaluate the opportunities and benefits for the acquisition of wood fuel
from tending young stands, tending growing stock and the wood obtained from removing overgrowth from forest drainage systems.
LVM will evaluate the influence of the short-term and long-term climate changes on the tree plants, by determining the forestry
adjustment opportunities.
LVM will perform market research in the field of mineral resources (sand, grit) to explore opportunities to manufacture new
products and provide new services.
LVM will maintain and develop the Tērvete Nature Park complex, and will also restore and improve the Pokaiņi Forest
infrastructure.
LVM will reduce the volume of the emitted CO2 resulting from the Company’s operations and to contribute to CO2 decreases in the
atmosphere, by exploring the influence of the forestry activities on greenhouse gas emissions and CO2 involvement, and also by
evaluating the greenhouse gas emissions and CO2 in those forest stands barely affected by human economic activities.
Management Report (continuation)
Profit distribution suggested by the Board
EUR
Distributed share of profits
75,453,799
Suggested profit distribution:
To calculate the dividends for the shareholders
Undistributed profits
67,908,419
7,545,380
The Board suggests channelling the undistributed profits to the amount of EUR 7 545 380 to increase the Company’s core capital,
according to the Company’s strategy.
Roberts Strīpnieks
Chairman of the Board
10
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Profit and Loss Calculations
Note
Net turnover
Production costs for the sold products
Gross profits
Sales costs
Administration costs
Other returns from economic activities
Other costs from economic activities
Other interest returns and similar returns
Interest payments and similar costs
Profit before taxes
Corporate income taxes
Deferred corporate income taxes
Other taxes
3
4
2014
EUR
275,717,148
(172,611,995)
103,105,153
5
6
7
8
9
10
(1,515,997)
(7,938,146)
1,402,913
(5,408,202)
627,403
(22,246)
90,250,878
11
11
27
Accounting year profit
(10,578,006)
(812,397)
(3,406,676)
75,453,799
2013
EUR
259,894,387
(175,066,074)
84,828,313
(1,462,429)
(7,812,467)
896,967
(4,194,410)
741,975
(16,309)
72,981,640
(8,511,457)
(567,877)
(3,405,300)
60,497,006
The Annex is an integral part of this financial statement.
Roberts Strīpnieks
Chairman of the Board
11
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Balance
ASSETS
Note
LONG-TERM INVESTMENTS
Intangible assets
Concessions, patents, licenses, trademarks and similar costs
IN TOTAL
Fixed assets
Lands, buildings, contructions
Equipment and machines
Other fixed assets
Creation of the fixed assets and costs of the unfinished construction sites
Advanced payments for the fixed assets
IN TOTAL
Investment properties
Biological assets
Long-term finance investments
Participation in the capital of related companies
Participation in the capital of associated companies
Loans to related companies
Other securities
IN TOTAL
31.12.2014.
31.12.2013.
EUR
EUR
13
709,666
709,666
679,424
679,424
14
14
14
14
249,707,071
7,476,937
3,636,403
7,407,627
866,386
269,094,424
243,494,436
6,324,352
3,719,462
11,248,792
1,533,672
266,320,714
14
15
1,899,905
10,688,531
1,171,728
8,684,649
16
16
17
21
1,620,936
566,872
441,090
2,628,898
285,021,424
1,620,936
566,872
85,372
441,090
2,714,270
279,570,785
771,185
20,736,687
64,086
262
21,572,220
682,668
21,288,785
1,215
262
21,972,930
19
17, 28
28
17
20
17,681,663
61,020
88,220
42,672
1,230,024
465,569
19,569,168
13,635,324
61,046
113,259
2,071,078
537,619
16,418,326
21
25,917,292
25,917,292
15,017,629
82,076,309
7,628,306
7,628,306
23,269,728
69,289,290
367,097,733
348,860,075
LONG-TERM INVESTMENTS IN TOTAL
CURRENT ASSETS
Stock
Raw materials, basic materials and consumables
Finished producsts and goods for sale
Advance payments for the goods
Working animals
IN TOTAL
Debitors
Buyer's and Contractor's debts
Debts of related companies
Debts of associated companies
Loans to related companies
Other debitors
Following period costs
IN TOTAL
Securities and participation in capitals
Other securities
IN TOTAL
Money and its equivalents
18
22
CURRENT ASSETS IN TOTAL
ASSETS IN TOTAL
The Annex is an integral part of this financial statement.
Roberts Strīpnieks
Chairman of the Board
12
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Balance
.
PASSIVE
31.12.2014.
EUR
264,052,390
31.12.2013.
EUR
258,002,689
75,453,799
339,506,189
60,497,006
318,499,695
24
13,333,274
13,333,274
16,330,651
16,330,651
11
2,335,088
72,148
2,407,236
1,522,691
18,135
1,540,826
594,967
6,619,818
424
27,283
859,150
938,796
2,810,596
11,851,034
14,258,270
957,709
7,610,143
793
17,954
835,219
899,999
2,167,086
12,488,903
14,029,729
367,097,733
348,860,075
Note
EQUITY
Shares capital
Undistributed profit
undistributed profit for the accounting year
23
EQUITY IN TOTAL
SAVINGS
Other savings
SAVINGS IN TOTAL
CREDITORS
Long-term creditors
Deferred tax liabilities
Other creditors
IN TOTAL
Short-term creditors
Upfront payments received from buyers
Providers' and contractors' debts
Debts of related companies
Debts of associated companies
Taxes and mandatory state social insurance contributions
Other creditors
Accrued liabilities
IN TOTAL
CREDITORS IN TOTAL
PASSIVE IN TOTAL
28
28
27
25
26
The Annex is an integral part of this financial statement.
Roberts Strīpnieks
Chairman of the Board
13
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Cash Flow Statement
2014
EUR
Cash flow of the main activity
Profit from product sales and service provision
Payments to providers, employees, other main acitivity costs
Other profits or costs from the company's main activity
Gross cash flow of the main activity
Costs of tax payments
Net cash flow of the main activity
2013
EUR
273,692,130
(154,194,352)
441,034
119,938,812
(19,240,300)
100,698,512
263,177,809
(160,711,592)
82,560
102,548,777
(6,520,993)
96,027,784
Cash flow of the investment procedure
Purchase of the fixed assets and the intangible assets
Received interest
Investments of the money market fund
Deposit credit institutions
Net cash flow of the investment procedure
(31,096,217)
51,583
(18,279,844)
(49,324,478)
(42,054,611)
84,585
2,773,002
1,067,750
(38,129,274)
Cash flow of the financing procedure
Donations
Paid dividends
Net cash flow of the financing procedure
(5,200,000)
(54,426,133)
(59,626,133)
(3,984,041)
(49,349,911)
(53,333,952)
(8,252,099)
23,269,728
4,564,558
18,705,170
15,017,629
23,269,728
Decrease of money / (growth)
Money at the beginning of the accounting year
Money at the end of the accounting year
The Annex is an integral part of this financial statement.
14
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Statement of changes in equity
Undistributed profit of
the account year
Share capital
In total
3131-Dec-12
December 2012
Cost of dividends
Distribution of the previous year's profit
Increase in the fixed capital
Profit of the accounting year
252,517,532
54,851,573
307,369,105
5,485,157
-
(49,366,416)
(5,485,157)
60,497,006
(49,366,416)
60,497,006
31 December 2013
Cost of dividends
Distribution of the previous year's profit
Increase in the fixed capital
Profit of the accounting year
258,002,689
6,049,701
-
60,497,006
(54,447,305)
(6,049,701)
75,453,799
318,499,695
(54,447,305)
75,453,799
264,052,390
75,453,799
339,506,189
31 december 2014
The Annex is an integral part of this financial statement.
15
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Annex to the Financial Statements
1.
General information about the Company
JSC „Latvijas valsts meži” (Latvia’s State Forests, hereinafter the Company) was registered in the Commercial Register of the
Republic of Latvia on 28 October 1999, and re-registered in the Commercial Register of the Republic of Latvia on 1 November
2004.
The Company’s main fields of activity are the production of assorted round timber, forest renewals, cultivation, tending, forest
stocktaking, forest road construction, repairs and maintenance, as well as real estate management.
The Company’s financial statements for 2014 have been approved by the Decision of 28 April 2015 of the Board of the Company.
The Company’s shareholder is entitled to amend the financial statements after their issue.
2.
Summary of significant principles of the accounting policies
Guidelines for the preparation of financial statements
The financial statements of JSC „Latvijas valsts meži” (Latvia’s State Forests) have been drawn up according to the Annual
Accounts Laws of the Republic of Latvia. The financial statements were drawn up according to the historical value accounting
method. As the monetary unit in the financial statements, the euro (EUR) has been used. The financial statements cover the time
period from 1 January 2014 to 31 December 2014.
On 1 January 2014, Latvia joined the Eurozone, replacing the Latvian lat (LVL) with the euro at the fixed rate of EUR 1 = LVL
0.702804. On this date, the Company performed the conversion of its outstanding balance to euros, and its financial statements for
future periods shall be drawn up in the euro currency. Comparative data for the statements from the period from 1 January 2013
are in euros, according to the fixed rate.
Changes to the accounting policies
No changes in the Company’s accounting policies were made in 2014.
Foreign currency translations
The Company’s functional currency and the currency used in the financial statements is the euro monetary unit (EUR). All
transactions in foreign currencies have been translated into the euro, according to the rate officially set by the European Central
Bank on the date when the transaction was made. Monetary assets and liabilities denominated in foreign currencies have been
translated into euros according to the exchange rate set by the European Central Bank on the last day of the reporting year.
Currency exchange rate differences arising from transactions in other currencies or when reporting the items of assets and
liabilities, using the exchange rates that differ from the historically used currency rates for the transaction accounting, are
recognised in the profit or loss calculations in the net value.
Intangible assets
Intangible assets are listed according to their historical value, which is amortised during the useful life of the assets using the linear
method. If any event or change of conditions suggests that the value of the intangible assets may be irrecoverable, the value of
such intangible assets will be reviewed in order to state their value reduction. Losses as a result of a value reduction are
recognised if the balance value of the intangible assets surpasses the recoverable sum.
Revenue recognition
Revenue is recognised corresponding to the assurance that the Company shall gain an economic benefit, and in an amount that is
possible to determine, minus the value added tax and sales-related discounts. When recognising revenue, the following conditions
are also taken into account:




Sales of goods
o revenue is recognised when the Company has delivered to the Buyer the most significant risks and
remunerations related to the ownership of goods.
Provision of services
o revenue from services is recognised for the period when the services are provided.
Penalties and delay charges
o revenue from penalties and delay charges is recognised at the moment it is received.
Interest
revenue is recognised corresponding to the particular period of time.
16
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
2.
Summary of significant principles of the accounting policies (continuation)
Fixed assets
Fixed assets are listed according to their historical value, minus the accumulated depreciation and decrease in value. Depreciation
for land is not calculated. If the purchased land has a forest stand, the land is recorded in the cadastral value and the remaining
sum of the purchase is to be considered as the purchase value of a biological asset (the forest stand). The depreciation is
calculated during the useful use of such an asset, using the linear method:
Buildings
- 10 - 20 years
Roads
- 15 years
Equipment and machinery
- 5 - 10 years
Computers and communication facilities
- 2.85 years
Other fixed assets
- 5 years
The de-recognition of a fixed asset’s accounting value will take place if they are alienated, or in a case where there are no future
expectations of economic benefits from the further use of the fixed assets. Any profit or loss arising from the de-recognition of the
fixed asset object (calculated as the difference between the net income from the alienation and the balance value of the fixed
asset) is recognised in the profit or loss statement for the period in which the de-recognition of the fixed asset took place.
Construction in progress represents an expenditure incurred for asset creation and an expenditure of unfinished construction
objects, and is stated at its historical value. The historical value consists of the construction costs and other direct costs.
Construction in progress is not depreciated, as long as the respective assets are not completed and put into operation.
Biological assets
Biological assets are assets which are characterised by regeneration and changes in value as a result of growth. For the
Company, biological assets include forest stands, the value of which changes as a result of their growth, and the Company holds
them in order to obtain raw materials for production and for sales.
Forest stands are initially recorded at their purchase cost and after the initial recognition – at their fair value at the end of the year.
For the fair value evaluation, the method is used in which the present value of the biological asset’s net cash flow is calculated
using a discount rate. The difference between the accounting value and the value established in the re-evaluation is recognised as
income or expenses during the accounting period, according to whether the value as a result of the re-evaluation increases or
decreases.
The discount rate re-calculation for the accounting year is carried out according to the WACC (Weighted Average Cost of Capital)
methodology, where the necessary values of the assumptions are based on objectively identifiable values in the free market, and
equivalent businesses and similar companies, resulting in a discount rate of 5.31% (previously 4.24%). Changes are created
mainly by these assumptions:

A risk-free rate value serves the US government short-term (6 months) securities % rate, averaged over the period from
1958 to January 2015;

The premium for the equity risk is updated on the basis of similar forestry company average returns in northern regions
on equity indices in the period of the years 2009 - 2013;

A state risk rate uses the average difference in the US government short-term securities % rate and the Latvian
Government short-term securities % rate from February 1997 to 2014.
Participation in subsidiary and associated companies
Investments in subsidiaries (i.e. where the Company holds more than 50% of the capital shares, or otherwise controls them) and
associated companies (i.e. where the Company has a substantial influence, but where the Company does not own the
shares/capital controlling interest; but in which it owns 20-50% of the shares or capital) are stated in accordance with the cost
method. Following the initial recognition, investments in the subsidiaries and associated companies are listed at their historical
value, deducting the losses from the decrease in value. If any event or change of conditions suggests that the balance value of the
investments in the subsidiaries or associated companies may be irrecoverable, the value of the respective investments in the
subsidiaries or associated companies will be reviewed in order to state their value reduction. The Company recognises the income
from this participation only to the extent in which the Company receives the accrued profit shares of its subsidiary or associated
company, which is received after the date the shares/capital were purchased. The distribution of any profit received in excess of
such profits is considered as the recovery of investments, and is recognised as a reduction in the historical value of the
investments.
17
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
2.
Summary of significant principles of the accounting policies (continuation)
Stock
Stock is accounted according to the lowest cost value or the net selling value. All stock is evaluated by applying the FIFO method.
The net selling value is the calculated selling price, which is normally used in a business by subtracting the expenditures needed to
finish and sell the stock. In cases where the net selling value of the stock is lower than its cost, for such stock, accumulation will be
created for the reduction of its value to its net selling value.
All direct costs associated with plant cultivation, assorted round timber preparation and seed production during the year are
recorded in the profit or loss statement and are adjusted at the end of the year, with the evaluation of the stock according to the
lowest of the sales value or cost the price and included in the stock record as “Finished goods and goods for sale”.
Trade receivables and other receivables
Debts of buyers and customers are shown in the balance at their amortised value, with a deduction of the reserves for bad and
doubtful debts. Reserves for bad and doubtful debts are calculated in cases when there is objective evidence that the Company
will not be able to receive the whole amount of the debt in accordance with the initially fixed repayment dates. The amount of the
reserves for bad and doubtful debts is the difference between the amortised purchase value of the receivables and the recoverable
amount. The recoverable value of the receivable debts is the present value of the estimated cash flow.
Cash and cash equivalents
Cash and cash equivalents comprise money in bank accounts, cash in hand and short-term deposits, the original maturities of
which are up to three months.
Short-term investments in securities
Investments in securities include investments in deposits with an original maturity longer than 90 days. Investments in securities
that are actively traded are measured at their fair values. Investments in deposits are reflected with the addition of the accrued
interest receivable.
Reserves
Reserves are acknowledged if the Company has a current obligation (legal or arising from practices) caused by a past event, or if
there is a probability that in order to meet the liabilities the Company will have to use its economically beneficial resources, and
when it is possible to plausibly estimate the amounts of these liabilities.
The company is obliged to carry out the renewal of forest areas cut as a result of its economic activities. Forest renewal must be
performed 3-5 years after the cutting. During this, the actual outflow of the economic benefits from the company also takes place
and reserves for reforestation must be created from this.
Reserves for the costs of reforestation work are made on the basis of the amount of actually-cut areas in early 2013 and the
planned renewal costs, taking into account the actual expenditure for reforestation during the accounting year. The sum of the
created reserve changes is recorded in the profit or loss statement.
Corporate income tax
Corporate income tax comprises the calculated and deferred corporate income tax for the accounting year. The corporate income
tax for the accounting year is calculated by applying the rate of 15% on the taxable income generated by the Company during the
taxation period.
Deferred corporate income tax arising from temporary differences, including separate items in the tax returns and these financial
statements, are calculated using the liability method. The deferred corporate income tax assets and liabilities are determined on
the basis of the tax rates that are expected to be applicable when the timing differences shall cease to exist. The principal
temporary timing differences arise from different depreciation rates used for accounting and tax needs for the fixed assets and for
the separate reserves which are non-deductible for tax needs.
Use of estimates
When preparing the financial statements, the management has to rely on estimates and assumptions that affect particular
balances of the balance sheet and the profit and loss calculation items reflected in these statements, as well as the possible
amount of the liabilities. Future events may affect the assumptions on the basis of which these estimates are made. Any effect of
changes in the estimates will be recorded in the financial statements, when determinable.
18
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Possible liabilities and assets
In these financial statements, the possible liabilities are not acknowledged. Liabilities are acknowledged only when the possibility
that funds will be spent becomes plausible enough. Possible assets in these financial statements are not acknowledged, and are
shown only when the plausibility that an economic benefit related to a transaction will reach the Company becomes adequately
grounded.
Cash flow statement
The cash flow statement has been prepared using the direct method. Cash flow is presented in the gross amount, including the
value added tax.
Events after the balance sheet date
In the financial statements, such events are shown after the end of the accounting year that will give additional information about
the Company’s financial situation on the date of drawing up the balance (correcting events). If the events after the end of the
accounting year are not correcting, they are shown in the Annex to the financial statements only if they are significant.
19
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
3.
Net turnover
Business segment
2014
2013
239,087,004
228,460,596
Growing tree sales
24,619,837
21,483,562
Forest plant sales
3,994,348
2,842,424
Woodchip sales
2,971,693
2,931,265
Leases of land
1,202,324
751,076
Mineral resource sales
1,198,749
1,127,794
Hunting and recreation services
950,998
885,487
Income from hunting area rentals
616,311
618,374
40,056
42,321
1,035,828
275,717,148
751,488
259,894,387
Sales of assorted round timber
Forest seed sales
Other income
TOTAL:
4.
Production costs of the production sales
2014
2013
112,535,033
121,175,376
87,369,719
94,729,489
assorted round timber preparation costs
32,013,428
32,956,992
assorted round timber transportation costs
28,508,095
32,512,941
assorted round timber delivery to the road costs
23,443,615
26,004,276
forest road maintenance and repairs
9,214,141
9,253,746
tending of young stands
4,620,233
4,424,542
drawing up land properties
2,410,687
2,464,970
agro-technical maintenance of forest areas
2,413,956
2,300,243
woodchip production costs
2,259,161
2,722,226
soil preparation
928,751
1,247,612
forest planting
856,169
1,011,881
land amelioration system maintenance
702,408
744,102
natural resource management costs
463,066
899,790
forest protection measures
412,790
375,419
production of reproductive materials
357,350
418,785
maintenance of sites important for the community and with heritage value
174,540
253,687
restored forest area replenishment
142,336
118,778
hunting management costs
99,903
91,956
forest fire prevention measures
84,177
70,160
growing tree pruning
21,042
32,939
4,604
15,048
Remuneration for work and services, including:
productions costs of assorted round timber, including:
forest inventories
20
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
4.
Production costs of the production sales (continuation)
Depreciation and amortisation
25,495,875
23,319,214
Personnel costs, including:
24,514,416
22,824,446
15,526,086
14,731,528
Mandatory state social insurance contributions
4,637,067
4,413,912
Premiums
3,017,013
2,406,398
Allowances and grants
1,334,250
1,272,608
Purchases of other materials
2,457,960
2,354,011
Insurance payments
2,150,855
2,022,488
Fuel costs
1,989,773
2,343,820
Production office unit maintenance costs
1,226,478
860,771
Equipment purchases
708,650
670,090
Motor vehicle maintenance costs
472,377
781,300
Communication services
461,733
457,351
Scientific research and consultations
453,657
563,847
State fees
68,114
81,788
Legal services
44,636
87,299
552,099
(2,830,095)
(519,661)
354,368
Changes in reserves, net
(2,955,530)
(894,896)
Including reforestation
(2,704,410)
(1,576,545)
(262,610)
564,924
28,659
116,725
172,611,995
175,066,074
Basic salaries
Changes in stocks of finished products
Other production costs, including
For premiums
For unused annual leave
TOTAL:
5.
Cost of sales
Timber measurement costs
TOTAL:
2014
2013
1,515,997
1,462,429
1,515,997
1,462,429
21
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
6.
Administration Costs
2014
2013
3,615,196
3,303,563
2,340,157
2,140,447
Mandatory state social insurance contributions
655,717
640,852
Premiums
495,855
376,007
Allowances and grants
123,467
146,257
1,054,384
1,186,894
Amortisation
708,955
595,342
Insurance
335,795
300,054
Advertisements and announcements
316,000
310,692
Museum services
261,118
370,160
Consultations and other external services
173,254
230,258
Fuel
153,848
174,528
Personnel development costs
133,767
184,674
Business trip costs
116,614
153,931
Transport costs
72,341
77,561
Equipment purchases
64,853
41,522
Office maintenance costs
59,040
36,569
Representation expenses
57,705
50,040
Legal services
21,981
63,903
Communication expenses
19,149
22,144
Remuneration paid to the RL Sworn audit companies
16,249
16,189
757,897
694,443
Changes in reserves, net, of which:
(22,644)
99,856
For premiums
(30,358)
85,930
7,714
13,926
7,938,146
7,812,467
2014
2013
Increase in the value of biological assets (see Note 15)
699,015
61,293
Profits from sales of fixed assets and revolving assets, net
426,572
620,149
277,326
1,402,913
215,525
896,967
Personnel costs, including:
Basic salaries
Information system maintenance and database subscriptions
Other management and administrative expenses, including:
For unused annual leave
TOTAL:
7. Other Operating Income
Other operating income
TOTAL:
8. Other Operating Expenses
Reserves for doubtful debtors
Donations
TOTAL:
2014
2013
208,202
210,369
5,200,000
3,984,041
5,408,202
4,194,410
22
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
9. Other interests receivable and similar income
2014
2013
Penalties received
388,105
341,610
Revenue from defaults with regard to road construction
108,502
216,474
Interest income
67,785
65,280
Other income
63,011
118,611
627,403
741,975
2014
2013
2,417
13,567
19,829
2,742
22,246
16,309
TOTAL:
10. Interests payable and similar expenses
Losses from exchange rate changes, net
Other costs
TOTAL:
23
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
11. Corporate income tax
Corporate income tax calculated for the reporting year
Deferred corporate income tax resulting from temporary differences
Corporate income tax reflected in the profit or loss calculations:
Deferred corporate income tax:
Balance
31.12.2014.
31.12.2013.
2014
2013
10,578,006
8,511,457
812,397
567,877
11,390,403
9,079,334
Profit or loss calculations
2014
2013
Deferred corporate income tax liabilities
Accelerated depreciation for tax purposes
6,443,634
6,180,239
263,395
446,440
694,257
589,405
104,852
9,195
7,137,891
6,769,644
368,247
455,635
(364,588)
(403,077)
38,489
(117,225)
Temporary difference for reforestation reserves
(1,830,912)
(2,236,573)
405,661
229,467
Reserves for deposits
(2,607,303)
(2,607,303)
-
-
Gross deferred corporate income tax assets
(4,802,803)
(5,246,953)
444,150
112,242
2,335,088
1,522,691
812,397
567,877
Fair value of the biological assets (see Note 15)
Gross deferred corporate income tax liabilities
Deferred corporate income tax assets
Accumulated leave and premium liabilities
Deferred tax liabilities, net
The Company’s management believes that in the coming years, when the deferred tax liabilities will implement, these liabilities
will be covered by the aforementioned tax assets.
Actual corporate income tax compared with the theoretical calculations:
2014
2013
Profit before taxes
90,250,878
72,981,640
Real estate and natural resources taxes
(3,406,676)
(3,395,006)
86,844,202
69,586,634
13,026,630
10,437,996
932,044
727,287
76,230
41,915
(2,644,501)
(2,127,864)
11,390,403
9,079,334
Profit before corporate income tax
Theoretically calculated corporate income tax - 15%
Permanent differences:
Costs that are not related to economic activities
Other
Tax credits for donations
Actual corporate income tax for the reporting year:
24
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
12. Personnel costs and number of employees
2014
2013
22,836,829
21,073,245
Mandatory state social insurance contributions
5,292,783
5,054,764
Changes in reserves for premiums
(292,968)
650,854
Remunerations for work
Changes in reserves for leave
TOTAL:
36,373
130,651
27,873,017
26,909,514
Total personnel costs included in the following profit or loss items:
Production costs for the production sales
Administration costs
TOTAL:
2014
2013
24,280,464
23,506,096
3,592,553
3,403,418
27,873,017
26,909,514
2014
2013
360,839
337,464
43,783
81,296
404,622
418,760
2014
2013
1,272
1,257
1,272
1,257
Key management official remunerations for work
Board members
Remunerations for work
Mandatory state social insurance contributions
TOTAL:
* In 2014, the Company had no council.
The average number of employees during the reporting year
TOTAL:
25
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
13. Intangible assets
Software
31 December 2012
Historical value
Accumulated amortisation
Balance value, net
2013
Opening balance value
Purchases
Amortisation
Closing balance value
31 December 2013
Historical value
Accumulated amortisation
Balance value, net
2014
Opening balance value
Purchases
Amortisation
Closing balance value
31 December 2014
Historical value
Accumulated amortisation
Balance value, net
TOTAL
3,411,332
(2,411,490)
999,842
3,411,332
(2,411,490)
999,842
999,842
584,446
(904,864)
679,424
999,842
584,446
(904,864)
679,424
3,991,937
(3,312,512)
679,424
3,991,937
(3,312,512)
679,424
679,424
916,715
(886,473)
709,666
679,424
916,715
(886,473)
709,666
4,900,386
(4,190,720)
709,666
4,900,386
(4,190,720)
709,666
Amortisation
Total amortisation costs included in the following profit or loss statement items:
Production costs for the production sales
Administration costs
TOTAL:
2014
2013
600,816
726,864
285,657
886,473
178,000
904,864
26
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
14. Fixed assets
Land
Buildings and Equipment and
constructions
machinery
Other fixed
assets
Investment
properties
Construction in
progress
TOTAL
01-Jan-13
Historical value
Accumulated depreciation
Balance value, net
1,017,671
1,017,671
304,769,328
(74,319,931)
230,449,397
12,033,546
(6,694,457)
5,339,089
10,989,464
(7,597,989)
3,391,475
-
10,151,997
10,151,997
338,962,006
(88,612,377)
250,349,629
2013
Opening balance value
Purchases
Liquidations
Reclassifications
Depreciations
Closing balance value
1,017,671
431,500
1,449,171
230,449,397
44,326
(1,450)
31,584,816
(20,031,824)
242,045,265
5,339,089
2,508,987
(64,648)
148,470
(1,607,546)
6,324,352
3,391,475
952,697
(2,319)
747,933
(1,370,324)
3,719,462
1,171,728
1,171,728
10,151,997
35,446,804
(265,563)
(34,084,446)
11,248,792
250,349,629
38,952,814
(333,980)
1
(23,009,694)
265,958,770
31-Dec-14
Historical value
Accumulated depreciation
Balance value, net
1,449,171
1,449,171
336,392,266
(94,347,001)
242,045,265
12,200,261
(5,875,909)
6,324,352
12,560,514
(8,841,052)
3,719,462
1,171,728
1,171,728
11,248,792
11,248,792
375,022,731
(109,063,962)
265,958,769
2014
Opening balance value
Purchases
Liquidations
Reclassifications
Depreciations
Reclassified depreciations
Closing balance value
1,449,171
25,500
293,436
1,768,107
242,045,265
20,631
27,171,539
(22,011,203)
712,732
247,938,964
6,324,352
2,699,933
(72,722)
421,523
(1,896,149)
7,476,937
3,719,462
1,104,349
(19,067)
211,581
(1,406,159)
26,237
3,636,403
1,171,728
206,154
1,265,838
(4,846)
(738,969)
1,899,905
11,248,792
27,286,351
(1,763,599)
(29,363,917)
7,407,627
265,958,769
31,342,918
(1,855,388)
(25,318,357)
270,127,942
31-Dec-14
Historical value
Accumulated depreciation
Balance value, net
1,768,107
1,768,107
363,559,310
(115,620,346)
247,938,964
13,315,432
(5,838,495)
7,476,937
13,213,914
(9,577,511)
3,636,403
2,643,720
(743,815)
1,899,905
7,407,627
7,407,627
401,908,110
(131,780,167)
270,127,943
The Company manages real estate taken over from the State Forest Service and other institutions to the value of EUR 1 614 108
(2013: EUR 1 487 115), which is not included in the fixed assets of the Company (see Note 30 of the Annex).
The cadastral value of the real estate
The cadastral value of the land owned by the Company on 31 December 2014 is to the amount of EUR 1 684 369 (2013: EUR
1 393 090). The cadastral value of buildings and constructions is EUR 1 645 750 (2013: EUR 1 407 649).
Fully depreciated fixed assets
A number of fixed assets that have been fully depreciated are still being actively used in the Company's main business practices.
The total purchase value of such fixed assets, as at the end of the reporting year, was EUR 10 819 227 (2013: EUR 9 103 470).
27
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
14. Fixed assets (continuation)
Depreciation
Total depreciation costs are included for the following profit or loss statement items:
Production costs for the production sales
Administration costs
TOTAL:
2014
2013
24,895,059
22,592,350
423,298
417,343
25,318,357
23,009,693
31.12.2014.
31.12.2013.
At the beginning of the reporting year
8,684,649
7,448,301
Purchases
1,304,867
1,175,055
15. Biological assets
Increase in fair value of assets *
TOTAL:
699,015
61,293
10,688,531
8,684,649
Revenue in the reporting year from the sale of biological assets in the area of 13.2 hectares is EUR 178 339 (on 31 December
2013 is the area was 10.4 hectares and the value was EUR 46 902).
* The increase in the value of biological assets in 2014 is affected by the fact that the sales prices for assorted wood have
increased by 5-18%; the logging costs have reduced by 2%; and the timber transportation costs have reduced by 5%, 176
hectares of forest land was restored, and as a result of forest tending the forests have become more valuable, due to changes in
the tree species to include more valuable species.
16. Participation in the capital of subsidiaries and associated companies
On 16 February 2004, the Company purchased 100% capital shares of „Jaunmoku pils” Ltd., which offers hotel, restaurant,
entertainment and recreation services, as well as museum services.
On 18 October 2005, the Company purchased 38% of the shares of „Meža un koksnes produktu pētniecības un attīstības institūts”
(Forest and Wood Products Research and Development Institute). On 7 May 2009, Company members decided to increase the
share capital and on 31 December 2012 the Company owned 40% of the shares of „Meža un koksnes produktu pētniecības un
attīstības institūts”, which provides services in the field of testing and applied research, further education and vocational education
development, as well as developing research and development projects.
31.12.2014.
31.12.2013.
„Jaunmoku pils” Ltd.
1,620,936
1,620,936
„Meža un koksnes produktu pētniecības un attīstības institūts” Ltd.
566,872
2,187,808
566,872
2,187,808
TOTAL:
Information about subsidiaries and associated companies:
Company
Equity capital
31.12.2014.
31.12.2013.
„Jaunmoku pils” Ltd.
1,196,884
„Meža un koksnes produktu pētniecības un
attīstības institūts” Ltd.
TOTAL:
1,092,928
Profit / (loss) for the reporting period
2014
2013
103,956
632,053
533,295
98,758
1,828,937
1,626,223
202,714
(17,575)
(82,562)
(100,137)
28
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
17. Loans to related companies
On 5 April 2005 an agreement between the Company and its subsidiary „Jaunmoku pils” Ltd. was concluded with regard to a
loan for the amount of EUR 284 574 in the form of a line of credit for the provision of economic activities, which must be repaid
within 5 years. The RIGIBOR 6 month rate was applied to the loan. During 2010, the issued loan agreement was amended and
the loan repayment was to be made within 4 years starting from 2012. On 31 December 2014 the actually granted amount of the
loan was EUR 42 672 (on 31 December 2013 it was EUR 85 372). The loan repayment term is now 5 April 2015.
18. Finished goods and goods for sale
31.12.2014.
31.12.2013.
Forest saplings
8,935,833
8,934,401
Assorted round timber near roads and in ports
3,757,325
4,499,378
Decorative plants
2,655,022
2,725,399
Woodchips
1,742,847
1,519,622
Forest seeds
3,644,629
3,604,594
Decorative seeds
TOTAL:
1,031
5,391
20,736,687
21,288,785
19. Trade receivables
2014
2013
Trade receivables
17,889,865
13,845,693,
Reserves for doubtful debts
(208,202)
17,681,663
(210,369)
13,635,324
TOTAL:
29
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
20. Other receivables
31.12.2014.
31.12.2013.
77,937
863,945
VAT overpayments (see Note 27)
673,089
720,344
Advance payments for services
476,673
480,208
1,546
6,016
Overpaid corporate income taxes (see Note 27)
Deferred VAT
Other
TOTAL:
779
565
1,230,024
2,071,078
21. Other securities and deposits
31.12.2014.
Type of securities
Amount
JSC „Latvijas finieris akcijas”
Deposits with credit institutions,
including *
31
Sum EUR
441,090
31.12.2013.
Amount
Sum EUR
31
441,090
25,917,292
7,628,306
Total long-term:
441,090
441,090
Total short-term:
25,917,292
7,628,306
* Deposits with credit institutions include time deposits with Latvian commercial banks with a contractual maturity from 90 days to
272 days and a % rate of 0.15 to 0.6 (see also Note 31) On 31.12.2014 the balance value also included accrued interest revenue
to the amount of EUR 17 596.32 (31.12.2013: EUR 1 045.90).
22. Cash and cash equivalents
Cash in hand
Cash in banks
Deposits with credit institutions (with maturities less than 90 days)
TOTAL:
31.12.2014.
31.12.2013.
111
-
13,117,213
13,781,350
1,900,305
9,488,378
15,017,629
23,269,728
23. Share capital
On 31 December 2014 the registered share capital of the Company was EUR 264 052 390 (on 31 December 2013: EUR 258 002
689). The fully paid-up share capital was EUR 264 052 390 (on 31 December 2013: EUR 258 002 689) consisting of EUR
264 052 390 of ordinary shares with a nominal value of 1 EUR each (in 2013 the share capital consisted of LVL 181 325 322 in
ordinary shares with a nominal value of EUR 0.702804 each)
The Meeting of the Shareholders on 6 May 2014 adopted a decision to increase the Company’s share capital by investing the profits
from 2013 to the amount of EUR 6 049 701. The changes were recorded in the Commercial Register on 11 July 2014.
Dividends paid in 2014 and 2013 were respectively EUR 54 447 305 (EUR 0.21 per share) and EUR 49 366 417 (EUR 0.19 per
share).
.
30
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
24. Other reserves
31.12.2014.
Reserves for reforestation
Reserves for premiums
TOTAL:
Decrease
31.12.2013.
12,206,079
(2,704,409)
14,910,488
1,127,195
(292,968)
1,420,163
13,333,274
(2,997,377)
16,330,651
25. Other creditors
31.12.2014.
31.12.2013.
900,686
862,181
Ministry of Agriculture of RL instalments for the purchase of land
24,549
24,549
Other payables
13,561
13,269
938,796
899,999
Remunerations for work
TOTAL:
26. Accrued liabilities
31.12.2014.
31.12.2013.
Leave reserves
1,303,392
1,267,019
Other accrued liabilities
1,507,204
900,067
2,810,596
2,167,086
TOTAL:
27. Taxes and mandatory state social insurance contributions
31.12.2014
Repaid in
account
Calculated
Paid
31.12.2013.
Mandatory state social insurance contributions
520,868
-
7,697,402
(7,700,646)
524,112
Personal income taxes
300,331
-
4,343,556
(4,320,121)
276,896
Corporate income taxes
(77,937)
-
10,578,006
(9,791,998)
(863,945)
(673,089)
6,494,941
25,663,277
(32,110,962)
(720,345)
3,255,280
(3,255,655)
2,781
151,396
(147,295)
31,010
Value added taxes
Real estate taxes
2,406
Natural resources taxes
35,111
Corporate risk fees
-
433
-
5,496
(5,483)
420
TOTAL:
108,123
6,494,941
51,694,413
(57,332,160)
(749,071)
Including liabilities
859,150
835,219
Claims
(751,026)
(1,584,290)
31
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
28. Transactions with related parties
Related parties are the subsidiaries and associated companies of the Company, its shareholders, the senior officials of the
Company or the Ministry of Agriculture of the Republic of Latvia, and any close family member of the above individuals, as well
as any companies controlled by these persons.
The pricing policy for transactions with related parties does not differ from the Company's usual pricing policies for transactions
with unrelated parties.
The Company is controlled by the Ministry of Agriculture of the Republic of Latvia, which owns 100% of Company’s capital
shares.
Products and
Products and
services sold to services purchased
related parties from related parties
Related party
Ministry of Agriculture of the
Republic of Latvia
„Jaunmoku pils” Ltd. *
„Meža un koksnes produktu
pētniecības un attīstības institūts”
Ltd.
Debts of related
parties on 31
December
Amount owed to
related parties
on 31 December
2014
-
-
-
-
2013
-
-
-
-
2014
4,903
527,214
61,020
424
2013
1,629
401,607
61,046
793
2014
-
594,145
88,220
27,283
498,220
113,259
17,954
2013
-
TOTAL 2014:
4,903
1,121,359
149,240
27,707
TOTAL 2013:
1,629
899,827
174,305
18,747
* On 5 April 2005 an agreement between the Company and its subsidiary „Jaunmoku pils” Ltd. was concluded with regard to a
loan for the amount of EUR 284 574 in the form of a line of credit for the provision of economic activities, which must be repaid
within 5 years. On 31 December 2014, the actually granted amount of the loan was EUR 42 672 (on 31 December 2013 it was
EUR 85 372). The RIGIBOR 6 month rate was applied to the loan. During 2010, the issued loan agreement was amended and
the loan repayment was to be made within 4 years starting from 2012.
29. Long-term contracts
At the end of the reporting year the Company had concluded a number of long-term contracts for the construction of forest roads.
The total amount on 31 December 2014 was EUR 16 288 371 (of which EUR 1 324 011 was reported for objects under
construction from previous years) (on 31 December 2013: EUR 17 988 971) and the amount of work performed from the total
value on 31 December 2014 was EUR 2 388 398 (of which EUR 860 001 was for objects under construction from previous
years) (on 31 December 2013: EUR 4 543 792).
At the end of the reporting year the Company had concluded a number of long-term contracts for forest amelioration system
renovation. The total amount on 31 December 2014 was EUR 1 232 204, the amount of work performed from the total value on
31 December 2014 was EUR 71 716 EUR.
At the end of the reporting year, the Company had a number of long-term contracts in force for forest road bed maintenance
work. The total amount on 31 December 2014 was EUR 2 820 942, and the amount of work performed from the total value on 31
December 2014 was EUR 1 518 586.
At the end of the reporting year, the Company had a number of long-term contracts in force for cutting grass and shoots. The
total amount on 31 December 2014 was EUR 1 971 306, and the amount of work performed from the total value on 31
December 2014 was EUR 1 231 149.
At the end of the reporting year, the Company had a number of long-term contracts in force for winter daily maintenance work
(snow removal and site cleaning of forest roads). The total amount on 31 December 2014 was EUR 2 329 620, and the amount
of work performed from the total value on 31 December 2014 was EUR 455 015.
32
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
30. Off-balance assets
In accordance with Agreement No. 5.8.-21-0005-101-13-1 of 8 January 2013 in the Land Register, registered in the name of the
State in the person of the Ministry of Agriculture and belonging to the State in the person of the Ministry of Agriculture, the
accounting of LVM and the management of the existing fixed assets of LVM are performed by the RVS Horizon of the Ministry of
Agriculture, and these are not included in the list of Company’s fixed assets.
In accordance with the Forest Laws, the Company manages and administrates 1.62 million hectares of land in the Republic of
Latvia, the cadastral value of which is EUR 274.96 million, including 1.35 million hectares of forest areas where the value of the
forest stands is EUR 1109.34 million. In the Company’s balance, 5.393 hectares of forest areas are reflected. Of the total lands
managed and administrated by the Company, 1.22 million hectares of land are surveyed and recorded in the Land Register.
31. Financial risk management
The Company’s principal financial instruments comprise cash and short-term deposits. The main aim of these financial
instruments is to ensure the finances for the Company’s operations. The Company has various other financial instruments, such
as trade receivables and other receivables, trade payables and other payables, which arise directly from its operations.
Financial risks
The main financial risks arising from the Company’s financial instruments are liquidity and credit risks.
Liquidity risks
The Company manages its liquidity risks by maintaining an adequate amount of cash and cash equivalents. According to its
business cycle, free funds are placed in low-risk short-term (up to one year) financial instruments. Within the offer market and
according to the maturity for the currency and the degree of risk they are short-term (3-6 months) deposits, as well as short-term
bank debt securities and fund shares. With a view to diversifying the risks, part of the deposits (10-15%) are located outside the
banks, and are used in daily banking operations. A small part of the company’s disposable fund amount (up to 5%) with no
significant impact on the Company’s financial stability may be invested in higher-risk or longer-term financial instruments, with
the aim of making a profit above the average market level. During the placement of the deposits, the following conditions shall
be taken into account:
1. Term
2. Proposed interest rate
3. Location of the funds to be invested
4. Risk diversification.
At the same interest rates and in the absence of other factors influencing the decision, funds will be deposited in a credit
institution where they have accrued, as a cash journey creates additional costs and can only be justified if the transfer is made
to a credit institution which offers more favourable conditions for the deposit. Decision making can be affected by the need to
reduce the risks that may arise if a significant proportion of the funds are located in one credit institution.
Credit risks
The Company is exposed to credit risks through its trade receivables, loans and cash and cash equivalents in loans to its related
companies. The Company manages its credit risks by continuously assessing the debt payment history of its customers and
assigning credit terms on an individual basis. In addition, the Company continuously monitors its debtors’ debts to reduce the
risks of irrecoverable debts.
Capital management
The Latvian state owns 100% of the shares of JSC „Latvijas valsts meži”.
The Company’s objective for its capital management is to ensure the Company’s ability to continue its operations and to provide
the capital returns set by the Company’s Meeting of Shareholders.
The Latvian state, as the sole owner of the Company’s capital, has the right to make decisions related to the Company’s capital
increases, reductions, dividend distributions or redirections for the Company’s development.
32. Events after the Balance Date
Amendments to the 2015 budget have been made, since in the 1st quarter of 2015 the revenue from sales of assorted round
timber was substantially smaller than was initially planned. The sales volume was negatively affected by weather conditions at
the beginning of the year, which restricted the availability of both felling areas and logging yards. Pulpwood sales were also
affected by a decline in demand in the market.
33
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
During the time period from the last date of the reporting year to the date of signing these financial statements, there have been
no events that would result in the financial statements requiring an adjustment, or which should be explained in these financial
statements.
34
JSC „Latvijas valsts meži”
Annual Accounts 2014
Address: 1 Vaiņodes Street, Riga, LV-1004
Unified Registration Number: 40003466281
Independent Auditor’s Report
35