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AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
1 / 51
AS “DelfinGroup”
Annual accounts
for the year ended
31 December 2021
and
Consolidated
Annual accounts
for the year ended
31 December 2021
prepared in accordance
with International Financial
Reporting Standards as
adopted by EU
Translation from Latvian
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
2 / 51
Table of Contents
Information on the Company and subsidiaries
3 – 5
Statement of management’s responsibility
6
Management report
7 - 9
Statement of Profit or loss
10
Balance sheet
11 – 12
Statement of changes in equity
13
Cash flow statement
14
Notes
15 – 45
Independent Auditors’ report
46 – 51
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
3 / 51
Name of the Company
DelfinGroup
Legal status of the Company
Joint stock company (till 19.01.2021, Limited liability company)
Number, place and date of registration
40103252854 Commercial Registry
Riga, 12 October 2009
Operations as classified by NACE
classification code system
NACE2 64.92 Other credit granting
NACE2 47.91 Retail sale via mail order houses or via Internet
NACE2 47.79 Retail sale of second-hand goods in stores
NACE 47.77 retail sale of watches and jewellery in specialised stores
Address
50A Skanstes Street,
Riga, LV-1013
Latvia
Names and addresses of shareholders
SIA L24 Finance
(57.53%),
12 Juras Street, Liepaja, Latvia
SIA AE Consulting
(8.83%),
50A Skanstes Street, Riga, Latvia
SIA EC finance
(18.81%),
50A Skanstes Street, Riga, Latvia
Other
(14.83%)
Ultimate parent company
SIA L24 Finance
Reg. No. 40103718685
12 Juras Street, Liepaja, Latvia
Names and positions of Board
members
Didzis Ādmīdiņš – Chairman of the Board (from 19.01.2021)
Aldis Umblejs – Member of the Board (from 15.12.2021)
Sanita Zitmane – Member of the Board (from 01.03.2022)
Agris Evertovskis – Chairman of the Board (from 12.10.2009 till 19.01.2021)
Didzis Ādmīdiņš – Member of the Board (from 11.07.2014 till 19.01.2021)
Kristaps Bergmanis – Member of the Board (from 11.07.2014 till 15.12.2021)
Ivars Lamberts – Member of the Board (from 11.01.2018 till 28.02.2022)
Information
on the Company
and Subsidiaries
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
4 / 51
Names and positions of Supervisory Board
members
Agris Evertovskis – Chairperson of the Supervisory Board (from
19.01.2021 till 12.04.2021, from 13.04.2021)
Gatis Kokins – Deputy Chairman of the Supervisory Board
(from 13.04.2021)
Mārtiņš Bičevskis – Member of the Supervisory Board (from
13.04.2021)
Jānis Pizičs – Member of the Supervisory Board (from
13.04.2021)
Edgars Voļskis – Member of the Supervisory Board (from
13.04.2021)
Anete Ozoliņa – Deputy Chairman of the Supervisory Board
(from 19.01.2021 till 13.04.2021)
Uldis Judinskis – Member of the Supervisory Board (from
19.01.2021 till 13.04.2021)
Uldis Judinskis – Chairperson of the Supervisory Board (from
16.05.2019 till 19.01.2021)
Ramona Miglāne – Deputy Chairman of the Supervisory Board
(from 16.05.2019 till 19.01.2021)
Anete Ozoliņa – Member of the Supervisory Board (from
16.05.2019 till 19.01.2021)
Financial year
1 January 2021 - 31 December 2021
Name and address of the auditor
SIA BDO ASSURANCE
Certified Auditors’ Company
license No. 182
Kaļķu street 15-3B,
Riga, LV-1050
Latvia
Responsible Certified Auditor:
Irita Cimdare
Certificate No. 103
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
5 / 51
Subsidiary
SIA ViziaFinance (parent company interest in subsidiary –
100%)
Date of acquisition of the subsidiary
23.02.2015
Number, place and date of registration of the
subsidiary
40003040217; Riga, 06 December 1991
Address of the subsidiary
50A Skanstes Street, Riga, Latvia
Operations as classified by NACE
classification code system of the subsidiary
64.92 Other financing services
Information
on the
Subsidiaries
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
6 / 51
The management of AS DelfinGroup (hereinafter – the Company) is responsible for the preparation of the financial
statements of the Company and for the preparation of the consolidated financial statements of the Compaany and
its subsidiaries (hereinafter – the Group).
The financial statements set out on pages 10 to 45 are prepared in accordance with the source documents and
present the financial position of the Company and the Group as of 31 December 2021 and 31 December 2020 and
the results of their operations, changes in shareholders’ equity and cash flows for the years then ended. The
management report set out on pages 7 to 9 presents fairly the financial results of the reporting period and future
prospects of the Company and the Group.
The financial statements are prepared on a going concern basis in accordance with International Financial Reporting
Standards as adopted by the European Union. Appropriate accounting policies have been applied on a consistent
basis. Prudent and reasonable judgments and estimates have been made by the Management in the preparation of
the financial statements.
The Management of AS DelfinGroup is responsible for the maintenance of proper accounting records, the
safeguarding of the Group’s assets and the prevention and detection of fraud and other irregularities in the Group.
The Management is also responsible for compliance with requirements of legal acts of the countries where Group
companies and the Parent company operate.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
This document is electronically signed with safe electronical signature and contains time stamp.
Statement of
management`s
responsibility
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
7 / 51
According to the audited results of the year 2021 Latvian financial services company AS DelfinGroup has increased
its revenue to EUR 25.5 million or by 7.7.% a year on year basis and 9.2% on a quarterly basis. In the 4
th
quarter of
2021 EBITDA increased by 33.3% compared to 3
rd
quarter of 2021 and for 12 months EBITDA increased by 7.4%
and reached EUR 10.2 million. During the 4
th
quarter of 2021 profit before taxes increased by 41.7% compared to
3
rd
quarter of 2021 and was EUR 1.7 million and by 7.2% year on year and reached EUR 5.2 million. During the 4
th
quarter of 2021 the net profit has increased by 60% compared to 3
rd
quarter. The 4
th
quarter financial results mark
the best results for a give quarter in the history of the Group. The increased revenue and profitability were mainly
facilitated by stable growth of online consumer lending and retail of pre-owned goods.
During 2021 AS DelfinGroup issued EUR 52.5 million in new loans securing loan issuance growth of 9% year on
year. Growth in loan issuance was mainly supported by the significant consumer lending increase which grew by
24% year on year and reached EUR 37 million. The positive trend of consumer loan issuance also reflected in AS
DelfinGroup net loan portfolio which at the end of 2021 reached a record level – EUR 43 million, a 23.9% increase
compared to previous year. Although, due to the restrictions placed on offline services in 2021 pawn loan issuance
decreased by 15% year on year, nevertheless, in the 4
th
quarter of 2021 pawn loan segment has improved by having
only a slight 5% decrease in the issuance compared to the same period in 2020.
In the 4
th
quarter of 2021 AS DelfinGroup successfully closed initial public offering (IPO) on Nasdaq Riga stock
exchange in which a total of 5,927 investors participated. As a result AS DelfinGroup raised in total EUR 8.09 million
of gross proceeds. The split of the new shareholders is as follows: 4.5 thousand investors from Estonia, 1.2 thousand
from Latvia, 0.2 thousand from Lithuania and 44 investors from other countries. On 20 October 2021 AS DelfinGroup
shares were listed for trading on the Baltic Main List. Funds attracted from the IPO substantially improved capital
structure of the company as a result equity ratio reaching of 33.4% at the end of 2021.
With the help of funds raised from the IPO, during the 4
th
quarter 2021 AS DelfinGroup repaid and refinanced bonds
in total amount of EUR 13.5 million. From those bonds EUR 5 million with 14% coupon rate were repaid according
to schedule on 25.10.2021. With the aim to decrease financing costs EUR 5 million bonds with a 14% coupon rate
and EUR 3.5 million bonds with 12% coupon rate were redeemed prematurely in November and December of 2021.
All the transactions were made according to the IPO prospectus with the goal to decrease the cost of interest-bearing
liabilities. As a result, during the 4
th
quarter the average cost of interest-bearing liabilities decreased from 10.7% to
7.5%. In addition, to support the growing loan portfolio during November 2021 AS DelfinGroup registered a new
issue of unsecured bonds in the amount of EUR 10 million with an annual coupon rate of 8%. This is the lowest
coupon rate in the history of AS DelfinGroup and marks a new milestone for the Group. At the end of the reporting
period subscription of the bonds was still ongoing.
During 3
rd
quarter 2021 ASDelfinGroup signed a contract with AS Moda Kapitāls (the owner of the fourth largest
pawn shop network in Latvia) to purchase AS Moda Kapitāls pawn shop assets. At that time AS Moda Kapitāls owned
25 pawn shop branches throughout Latvia. Among other things, the contract involved the purchase of AS Moda
Kapitāls pawn loan portfolio. The transaction was finalized beginning of February 2022.
On December 15 December the composition of the Management Board was changed: Chief Financial Officer Aldis
Umblejs was appointed as a Member of the Management Board. He replaced Kristaps Bergmanis who had decided
to resign from his positions as Member of the Management Board and undertake other activities outside the Group.
On 1 March 2022 Sanita Zitmane was appointed as a Member of the Management Board and Ivars Lamberts
resigned from his positions as Member of the Management Board.
On 14 October SIA ExpressInkasso and on 1 December SIA REFIN were liquidated and excluded from the Register
of Enterprises. The activities of these companies will be carried out by the parent company AS DelfinGroup.
Management
report
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
8 / 51
Management report (CONTINUED)
On 10
th
December 2021 AS DelfinGroup held its first shareholders’ meeting as a public stock company. At the
meeting AS DelfinGroup shareholders approved to pay out an extraordinary dividend in the amount of EUR 512
thousand, namely EUR 0.0113 per share, from the profit of the third quarter of 2021 of AS DelfinGroup. Dividends
were paid according to AS DelfinGroup dividend policy which anticipate quarterly dividend payments up to 50% from
previous quarters’ net profit. In addition, shareholders approved the issue of new bonds up to EUR 10 million to fund
further business development of the company.
For the twelve months of 2021, in accordance with the adopted dividend policy, the company paid dividends in the
amount of EUR 3.7 million.
By implementing the business strategy and all planned activities, the following financial results of the Group were
achieved in 2021 as compares to 2020:
Position
EUR, million
Change, %
Net loan portfolio
43.0
+23.9
Assets
52.1
+12.8
Revenue
25.5
+7.7
EBITDA
10.2
+7.4
Profit before taxes
5.2
+7.2
Net profit
4.2
+3.0
And following the Group’s key financial figures for the last 5 financial quarters:
Position
2020 Q4
2021 Q1
2021 Q2
2021 Q3
2021 Q4
Total income, EUR million
6.7
6.0
5.9
6.5
7.1
EBITDA, EUR million
2.5
2.5
2.1
2.4
3.2
EBITDA margin, %
37%
42%
35%
37%
45%
EBIT, EUR million
2.2
2.3
1.8
2.1
2.8
EBIT margin, %
33%
38%
31%
33%
39%
Profit before taxes, EUR million
1.2
1.1
1.1
1.2
1.7
Net profit, EUR million
0.9
0.8
0.8
1.0
1.6
Net profit margin, %
13%
13%
14%
16%
23%
ROE (annualised), %
42%
36%
38%
46%
47%
Current ratio
1.3
1.0
0.9
1.4
1.5
In some cases, quantitative values have been rounded up to the nearest decimal place or whole number to avoid an excessive level of
detail. As a result, certain values may not necessarily add up to the respective totals due to the effects of the approximation.
EBITDA calculation, EUR million:
2021
2020
Item
Profit before tax
5.2
4.9
Interest expenses and similar expenses
3.9
3.5
Depreciation of fixed assets and amortisation
1.1
1.1
EBITDA, EUR million
10.2
9.5
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
9 / 51
Management report (CONTINUED)
As for compliance with the Issue Terms of notes issue ISIN LV0000850048 and ISIN LV0000802536 the financial
covenant computation is as follows:
Covenant
Value as of
31.12.2021
Compliance
to maintain a Capitalization Ratio at least 25%
40%
yes
to maintain consolidated ICR of at least 1.25 times, calculated on the
trailing 12 month basis
2.4
yes
to maintain the Net Loan portfolio, plus Cash, net value of outstanding
Mintos Debt Security and secured notes balance, at least 1.2 times
the outstanding principal amount of all unsecured interest-bearing
debt on a consolidated basis.
2.4
yes
Branches
During the period from 1 January 2021 to 31 December 2021, the Group continued to work on branch network
efficiency. As at 31 December 2021, the Group had 93 branches in 38 cities in Latvia (31.12.2020 - 89 branches in
38 cities).
Risk management
The Group is not exposed to foreign exchange rate risk because the basic transaction currency is the Euro. Majority
of the funding of the Group consists of fixed coupon rate bonds and loans, so that the Group is not exposed to
variable interest rate risk. Accurate application of the prudent strategies chosen has allowed the Group to
successfully manage its financial risks, particularly the liquidity and credit risk. All Group transactions are performed
in Latvia, the Group has no counterparties in Russia and Belaruss thus the impact of the war in Ukraine and the
associated sanctions has insignificant effect on the company’s operations.
Distribution of the profit proposed by the Company
The Company's board recommends the distribution of annual dividends in amount of EUR 2.5 million.
The Corporate Governance Report for 2021 has also been submitted to AS Nasdaq Riga together with this
separate and consolidated Annual Financial Report for year ended 31 December 2021 by AS DelfinGroup.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
10 / 51
Statement of profit or loss for the year ended 31 December 2021
Company
Group
Company
Group
2021
2021
2020
(restated, Note 1)
2020
(restated, Note 1)
Notes
EUR
EUR
EUR
EUR
Net sales
(2)
5 667 337
5 667 337
6 164 231
6 164 231
Cost of sales
(3)
(3 668 010)
(3 668 010)
(4 224 332)
(4 224 332)
Interest income and similar
income
(4)
16 527 133
19 821 198
15 459 316
17 499 755
Interest expenses and similar
expenses
(5)
(3 497 133)
(3 827 313)
(3 407 017)
(3 633 152)
Credit loss expenses
(1 261 141)
(2 236 898)
(890 243)
(1 505 116)
Gross profit
13 768 186
15 756 314
13 101 955
14 301 386
Selling expenses
(6)
(5 820 639)
(6 124 650)
(5 221 723)
(5 446 243)
Administrative expenses
(7)
(4 026 730)
(4 212 808)
(3 108 291)
(3 261 026)
Other operating income
237 719
85 033
71 384
72 395
Other operating expenses
(292 275)
(300 865)
(627 549)
(812 259)
Income from participating interests
262 919
-
-
-
Profit before corporate
income tax
4 129 180
5 203 024
4 215 776
4 854 253
Income tax expenses
(8)
(873 080)
(979 191)
(753 716)
(754 536)
Net profit
3 256 100
4 223 833
3 462 060
4 099 717
Earnings per share
(9)
0.079
0.103
0.087*
0.102*
* Earnings per shares for 12 months ended 31 December 2020 have been adjusted retrospectively to account for the share split
performed in 2021.
Notes on pages from 15 to 45 are an integral part of these financial statements.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
11 / 51
Balance sheet as at 31 December 2021
Company
Group
Company
Group
Assets
31.12.2021
31.12.2021
31.12.2020
(restated, Note 1)
31.12.2020
(restated, Note 1)
Non-current assets:
Notes
EUR
EUR
EUR
EUR
Intangible assets:
Patents, licences, trademarks and similar
rights
64 037
64 037
124 256
124 256
Internally developed software
376 816
376 816
202 248
202 248
Other intangible assets
42 056
50 669
41 927
54 076
Goodwill
-
127 616
-
127 616
Advances on intangible assets
18 834
18 834
-
-
Total intangible assets:
(10)
501 743
637 972
368 431
508 196
Property, plant and equipment:
Land, buildings, structures and
perennials
169 906
169 906
-
85 385
Investments in property, plant and
equipment
186 681
186 681
196 607
196 607
Right-of-use assets
2 972 570
2 972 570
3 194 412
3 194 412
Other fixtures and fittings, tools and
equipment
206 604
206 604
248 214
248 214
Total property, plant and equipment
(11;12)
3 535 761
3 535 761
3 639 233
3 724 618
Non-current financial assets:
Investments in related companies
(13)
880 000
-
1 685 672
-
Loans to related companies
(25)
1 768 200
-
1 155 565
-
Loans and receivables
(16)
21 164 732
28 569 431
13 987 061
17 711 758
Loans to shareholders and management
(14)
-
-
474 484
474 484
Total non-current financial assets:
23 812 932
28 569 431
17 302 782
18 186 242
Total non-current assets:
27 850 436
32 743 164
21 310 446
22 419 056
Current assets:
Inventories:
Finished goods and goods for sale
1 949 490
1 949 490
1 534 007
1 534 007
Total inventories:
(15)
1 949 490
1 949 490
1 534 007
1 534 007
Receivables:
Loans and receivables
(16)
12 238 336
14 392 319
12 588 435
16 962 096
Loans to related companies
(25)
38 075
-
2 876 548
-
Other debtors
289 554
352 269
135 227
374 756
Deferred expenses
110 109
167 436
224 366
279 523
Total receivables:
12 676 074
14 912 024
15 824 576
17 616 375
Cash and cash equivalents
(17)
2 225 535
2 459 862
3 768 356
4 591 954
Total current assets:
16 851 099
19 321 376
21 126 939
23 742 336
Total assets
44 701 535
52 064 540
42 437 385
46 161 392
Notes on pages from 15 to 45 are an integral part of these financial statements.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
12 / 51
Balance sheet as at 31 December 2021
Company
Group
Company
Group
Liabilities and equity
31.12.2021
31.12.2021
31.12.2020
(restated, Note 1)
31.12.2020
(restated, Note 1)
Equity:
Notes
EUR
EUR
EUR
EUR
Share capital
(18)
4 531 959
4 531 959
4 000 000
4 000 000
Share premium
6 890 958
6 890 958
-
-
Retained earnings:
- brought forward
514 359
1 730 571
775 437
1 353 992
- for the reporting period
3 256 100
4 223 833
3 462 060
4 099 717
Total equity:
15 193 376
17 377 321
8 237 497
9 453 709
Liabilities:
Long-term liabilities:
Bonds issued
(19)
10 825 162
10 825 162
8 441 717
8 441 717
Other borrowings
(20)
5 125 100
8 086 468
5 646 755
6 816 925
Lease liabilities for right-of-use assets
(12)
2 652 498
2 652 498
2 732 136
2 732 136
Total long-term liabilities:
18 602 760
21 564 128
16 820 608
17 990 778
Short-term liabilities:
Bonds issued
(19)
13 003
13 003
5 022 652
5 022 652
Other borrowings
(20)
8 345 402
10 487 168
9 339 999
10 869 932
Lease liabilities for right-of-use assets
(12)
652 699
652 699
703 715
703 715
Trade payables
752 114
805 784
676 305
702 933
Accounts payable to affiliated
companies
-
-
243 815
-
Taxes and social insurance
(21)
391 791
398 268
810 031
815 952
Accrued liabilities
750 390
766 169
582 763
601 721
Total short-term liabilities:
10 905 399
13 123 091
17 379 280
18 716 905
Total liabilities
29 508 159
34 687 219
34 199 888
36 707 683
Total liabilities and equity
44 701 535
52 064 540
42 437 385
46 161 392
Notes on pages from 15 to 45 are an integral part of these financial statements.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
13 / 51
Statement of changes in equity of the Company’s
for the year ended 31 December 2021
Share capital
Share premium
Retained earnings
(restated, Note 1)
Total
Notes
EUR
EUR
EUR
EUR
As at 31 December 2019
1 500 000
-
6 275 437
7 775 437
Dividends paid
-
-
(3 000 000)
(3 000 000)
Share capital transfer
2 500 000
-
(2 500 000)
-
Profit for the reporting period
(restated, note 1)
-
-
3 462 060
3 462 060
As at 31 December 2020
4 000 000
-
4 237 497
8 237 497
Dividends paid
-
-
(3 723 138)
(3 723 138)
Share capital increase resulted from
IPO
(18)
531 959
7 553 823
-
8 085 782
IPO transaction costs
(18)
-
(662 865)
-
(662 865)
Profit for the reporting period
-
-
3 256 100
3 256 100
As at 31 December 2021
4 531 959
6 890 958
3 770 459
15 193 376
Statement of changes in equity of the Group
for the year ended 31 December 2021
Share capital
Share premium
Retained earnings
(restated, Note 1)
Total
Notes
EUR
EUR
EUR
EUR
As at 31 December 2019
1 500 000
-
6 867 492
8 367 492
Dividends paid
-
-
(3 000 000)
(3 000 000)
Share capital transfer
2 500 000
-
(2 500 000)
-
Retained earnings subsidiary
inclusion
-
-
(13 500)
(13 500)
Profit for the reporting period
(restated, note 1)
-
-
4 099 717
4 099 717
As at 31 December 2020
4 000 000
-
5 453 709
9 453 709
Dividends paid
-
-
(3 723 138)
(3 723 138)
Share capital increase resulted from
IPO
(18)
531 959
7 553 823
-
8 085 782
IPO transaction costs
(18)
-
(662 865)
-
(662 865)
Profit for the reporting period
-
-
4 223 833
4 223 833
As at 31 December 2021
4 531 959
6 890 958
5 954 404
17 377 321
Notes on pages from 15 to 45 are an integral part of these financial statements.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
14 / 51
Cash flows statement for the year ended 31 December 2021
Company
Group
Company
Group
2021
2021
2020
(restated,
Note 1)
2020
(restated,
Note 1)
EUR
EUR
EUR
EUR
Cash flow from operating activities
Profit before corporate income tax
4 129 180
5 203 024
4 215 776
4 854 253
Adjustments for non-cash items:
a) depreciation of fixed assets and amortisation of
intangible assets
(10;11)
355 539
362 325
281 390
302 364
b) depreciation of right-of-use assets
(11)
775 932
775 932
762 806
762 806
c) credit loss expenses
1 261 141
2 236 898
890 243
1 505 116
d) cessation results
128 077
160 423
438 240
620 101
e) interest income and similar income
(4)
(16 527 133)
(19 821 198)
(15 459 316)
(17 499 755)
f) interest expenses and similar expenses
(5)
3 497 133
3 827 313
3 407 017
3 633 152
g) liquidation of subsidiaries
(13)
(30 012)
-
-
-
h) other adjustments
-
-
(2 844)
(13 500)
Profit before adjustments of working capital and
short-term liabilities
(6 410 143)
(7 255 283)
(5 466 688)
(5 835 463)
Change in operating assets/liabilities:
a) (Increase) on loans and receivables and other
debtors
(8 044 211)
(10 236 384)
(4 793 323)
(4 431 656)
b) (Increase) on inventories
(415 483)
(415 483)
(378 655)
(378 655)
c) (Decrease)/increase on trade payable and
accrued liabilities
(86 391)
(64 256)
148 584
746 238
Gross cash flow from operating activities
(14 956 228)
(17 971 406)
(10 490 082)
(9 899 536)
Interest received
16 466 080
19 690 880
15 097 001
16 951 069
Interest paid
(3 908 926)
(4 271 452)
(3 852 786)
(4 260 782)
Corporate income tax payments
(753 716)
(754 536)
(349 957)
(349 957)
Net cash flow from operating activities
(3 152 790)
(3 306 514)
404 176
2 440 794
Cash flow from investing activities
Acquisition of fixed assets, intangibles
(630 741)
(548 605)
(564 152)
(571 018)
Loans issued (other than core business of the
Company)
(14)
(92 850)
(92 850)
(438 669)
(438 669)
Loans repaid (other than core business of the
Company)
2 793 172
567 334
2 962 961
1 271 868
Liquidation quota of subsidiaries
(25)
938 691
-
-
-
Net cash flow from investing activities
3 008 272
(74 121)
1 960 140
262 181
Cash flow from financing activities
Share capital increase resulted form IPO (incl. share
premium)
(18)
8 085 782
8 085 782
-
-
IPO transaction costs
(18)
(662 865)
(662 865)
-
-
Loans received
13 643 489
20 633 934
7 349 981
10 415 870
Loans repaid
(15 505 807)
(19 849 406)
(8 642 673)
(11 546 966)
Bonds issued
11 111 000
11 111 000
8 606 000
8 606 000
Redemption of bonds
(13 481 000)
(13 481 000)
(2 975 000)
(2 975 000)
Repayment of lease liabilities
(865 764)
(865 764)
(746 569)
(746 569)
Dividends paid
(3 723 138)
(3 723 138)
(3 000 000)
(3 000 000)
Net cash flow from financing activities
(1 398 303)
1 248 543
591 739
753 335
Net cash flow of the reporting period
(1 542 821)
(2 132 092)
2 956 055
3 456 310
Cash and cash equivalents at the beginning of the
reporting period
3 768 356
4 591 954
812 301
1 135 644
Cash and cash equivalents at the end of the reporting
period
2 225 535
2 459 862
3 768 356
4 591 954
Notes on pages from 15 to 45 are an integral part of these financial statements.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
15 / 51
Notes
(1) Accounting policies
(a) Basis of preparation
These financial statements have been prepared based on the accounting policies and measurement principles as set out below.
These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU). The financial statements are prepared based on historic cost method.
The preparation of financial statements in accordance with IFRS requires the use of significant estimates and assumptions that affect the reported
amounts of assets and liabilities, as well as the information on contingent assets and liabilities at the balance sheet date and the revenues and costs
for the reporting period. Although these estimates are based on the information available to the management regarding the current events and actions,
the actual results may differ from the estimates used. Critical assumptions and judgements are described in the relevant sections of the Notes to the
financial statements.
These annual financial statements are prepared and disclosed on a consolidated basis and on a standalone basis. The following subsidiaries are
included in the consolidation: SIA ViziaFinance (100%) for the period ended 31 December 2021.
The former subsidiary SIA Banknote commercial properties (100%) has been liquidated on 21 June 2021. The assets of the SIA Banknote commercial
properties were transferred to AS DelfinGroup as liquidation quota. The former subsidiary SIA ExpressInkasso (100%) has been liquidated on 09
September 2021 (excluded from the Enterprise register on 14 October 2021). The assets of the SIA ExpressInkasso were transferred to AS
DelfinGroup as liquidation quota. The former subsidiary SIA REFIN (100%) has been liquidated on 01 December 2021. The assets of the SIA REFIN
were transferred to AS DelfinGroup as liquidation quota. For amount and types of assets acquired from each liquidated subsidiary see note 13.
Following the rapid spread of COVID-19 pandemic in 2020, which continued in 2021, many governments, including the Latvian Republic, have
introduced various measures to combat the outbreak, including travel restrictions, quarantines, closure of business and other venues and lockdown
of certain areas. These measures have affected the global supply chain, demand for goods and services, as well as scale of business activity. It is
expected that pandemic itself as well as the related public health and social measures may influence the business of the entities in a wide range of
industries.
Support measures were introduced by the Government of Latvian Republic to counter the economic downturn caused by the COVID-19 pandemic.
These measures include, among others, subsidized lending to affected industries and individuals, payment holidays and easing of certain regulatory
restrictions to help the financial sector maintain its capabilities to provide resources and to help customers avoid liquidity shortages as a result of
the COVID-19 containment measures.
Starting 11 October 2021, the government of Latvia declared a new state of emergency due to the pandemic. During the state of emergency the
Group took all mandatory and recommended security measures in relation to pandemic and all services provided by the Group were availavble to
customers in full scope.
Despite 2021 being the second year of COVID-19 pandemic, it brought a faster than expected economic recovery in Latvia. This was reflected also
in the results of the Group. The loan issuance for the Group has increased by 9% reaching EUR 52.5 million, turnover by 8% and portfolio by 24%
compared to 2020, the Management of the Group assesses that COVID-19 pandemic did not impacted significantly business operations of the Group
in 2021. The Group was able to achieve its financial targets.
The Group will continue to assess the effect of the pandemic and changing economic conditions on its activities, financial position and financial
results.
New standards, interpretations and amendments adopted by the Group
The Group applied for the first-time certain amendments to the standards, which are effective for annual periods beginning on or after 1 January
2021. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (IBOR reform Phase 2).
The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an
alternative nearly risk-free interest rate (RFR). The amendments include the following practical expedients:
- A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as
changes to a floating interest rate, equivalent to a movement in a market rate of interest
- Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship
being discontinued
- Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as
a hedge of a risk component
These amendments had no impact on the financial statements of the Company and consolidated financial statements of the Group. The Company and
the Group intends to use the practical expedients in future periods if they become applicable.
COVID-19-Related Rent Concessions beyond 30 June 2021 Amendments to IFRS 16
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
16 / 51
Notes (continued)
(1) Accounting policies (continued)
On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide relief to lessees
from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As
a practical expedient, a lessee may elect not to assess whether a COVID-19 related rent concession from a lessor is a lease modification. A lessee that
makes this election accounts for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account
for the change under IFRS 16, if the change were not a lease modification.
The amendment was intended to apply until 30 June 2021, but as the impact of the COVID-19 pandemic is continuing, on 31 March 2021, the IASB
extended the period of application of the practical expedient to 30 June 2022.The amendment applies to annual reporting periods beginning on or after
1 April 2021. However, the Group did not apply the practical expedient and continues to apply IFRS 16 guidance on lease modification accounting for
rent concessions.
Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial
statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become
effective.
- IFRS 17 Insurance Contracts, effective for reporting periods beginning on or after 1 January 2023, with comparative figures required.
- Amendments to IAS 1: Classification of Liabilities as Current or Non-current, effective for annual reporting periods beginning on or after 1
January 2023 and must be applied retrospectively.
- Reference to the Conceptual Framework – Amendments to IFRS 3, effective for annual reporting periods beginning on or after 1 January
2022 and apply prospectively.
- Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16, effective for annual reporting periods beginning
on or after 1 January 2022 and must be applied retrospectively.
- Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37, effective for annual reporting periods beginning on or after 1
January 2022.
- IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter, effective for annual reporting
periods beginning on or after 1 January 2022.
- IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities, effective for annual reporting periods
beginning on or after 1 January 2022.
- Definition of Accounting Estimates - Amendments to IAS 8, effective for annual reporting periods beginning on or after 1 January 2023.
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2, applicable for annual periods beginning on or
after 1 January 2023.
The Group is currently assessing the amendments to determine the impact they will have on the Group’s financial statements.
Voluntary changes in significant accounting policies and correction of errors
(a) In these financial statements, the Group and the Company has adopted changes in the accounting policy in respect of recognition of internally
generated intangible assets. The change relates to to development of software, mainly consisting of internally capitalised salary expenses.
For details see Note 10.
All costs incurred in 2020 which were recognized as part of the cost of an intangible asset qualified the capitalization criteria as at the date
when such costs were incurred. However, initially they were expensed in accordance with accounting policy applicable at that time. Following
the change in accounting policy expenses, including past expenses, meeting the capitalization criteria as at the date of its occurrence were
capitalized. Management considers that the change in accounting policies more accurately reflects the Company's process in regards to
internally developing IT resources as well as better aligns costs with income.
Group has made an assessment on the change in accounting policy impact on the beginning of the earliest period presented, i.e. 1 January
2020. Management assessed capitalization criteria as per IAS 38 as of 1 January 2020 and concluded that no relevant costs qualified with
requirements of IAS 38 as at that date.
(b) The Management has identified a clasification error on bond issuance commissions while preparing 2021 Group’s and Company’s financial
statements. The error relates to incorrect classification of bond issuance commissions as bank commissions under Administrative costs. The
error resulted in overstatement of amount of bank commission expenses and understatement of interest expenses;
(c) The Management has also identified a clasification error on accrued interest expenses. The error relates to incorrect classification of accrued
interest expenses for other borrowings under Credit loss expense and resulted in overstated amount of credit loss expenses and
understatement of interest expenses. To comply with presentation requitements of IFRS 9, the Group reclassified mentioned amount from
Credit loss expense to Interest expenses and similar expenses.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
17 / 51
Notes (continued)
(1) Accounting policies (continued)
The aformementioned corrections were performed by restating each of the affected Company financial statements line items for the prior period, as
follows:
Balance sheet
Reference
As at 31 December 2020
before restatement
Restatement
As at 31 December 2020
after restatement
Assets
Non-current assets
(a)
21 108 199
202 247
21 310 446
Current assets
21 126 939
-
21 126 939
Total assets
42 235 138
202 247
42 437 385
Liabilities and equity
Total equity
(a)
8 035 250
202 247
8 237 497
Long-term liabilities
16 820 608
-
16 820 608
Short-term liabilities
17 379 280
-
17 379 280
Total liabilities and equity
42 235 138
202 247
42 437 385
Statement of profit or loss
Reference
2020 before restatement
Restatement
2020 after restatement
Net sales
6 164 231
-
6 164 231
Cost of sales
(4 224 332)
-
(4 224 332)
Interest income and similar income
15 459 316
-
15 459 316
Interest expenses and similar expenses
(b), (c)
(3 278 011)
(129 006)
(3 407 017)
Credit loss expense
(c)
(963 163)
72 920
(890 243)
Gross profit
13 158 041
(56 086)
13 101 955
Selling expenses
(a)
(5 201 324)
(20 399)
(5 221 723)
Administrative expenses
(a), (b)
(3 387 023)
278 732
(3 108 291)
Other operating income
71 384
-
71 384
Other operating expenses
(627 549)
-
(627 549)
Profit before income tax
4 013 529
202 247
4 215 776
Income tax expenses
(753 716)
-
(753 716)
Net profit
3 259 813
202 247
3 462 060
Earnings per share*
0.081
0.006
0.087
* Earnings per shares for 12 months ended 31 December 2020 have been adjusted retrospectively to account for the share split
performed in 2021.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
18 / 51
Notes (continued)
(1) Accounting policies (continued)
The aformementioned corrections were performed by restating each of the affected Group financial statements line items for the prior period, as follows:
Balance sheet
Reference
As at 31 December 2020
before restatement
Restatement
As at 31 December 2020
after restatement
Assets
Non-current assets
(a)
22 216 809
202 247
22 419 056
Current assets
23 742 336
-
23 742 336
Total assets
45 959 145
202 247
46 161 392
Liabilities and equity
Total equity
(a)
9 251 462
202 247
9 453 709
Long-term liabilities
17 990 778
-
17 990 778
Short-term liabilities
18 716 905
-
18 716 905
Total liabilities and equity
45 959 145
202 247
46 161 392
Statement of profit or loss
Reference
2020 before restatement
Restatement
2020 after restatement
Net sales
6 164 231
-
6 164 231
Cost of sales
(4 224 332)
-
(4 224 332)
Interest income and similar income
17 499 755
-
17 499 755
Interest expenses and similar expenses
(b), (c)
(3 490 389)
(142 763)
(3 633 152)
Credit loss expense
(c)
(1 591 793)
86 677
(1 505 116)
Gross profit
14 357 472
(56 086)
14 301 386
Selling expenses
(a)
(5 425 844)
(20 399)
(5 446 243)
Administrative expenses
(a), (b)
(3 539 758)
278 732
(3 261 026)
Other operating income
72 395
-
72 395
Other operating expenses
(812 259)
-
(812 259)
Profit before income tax
4 652 006
202 247
4 854 253
Income tax expenses
(754 536)
-
(754 536)
Net profit
3 897 470
202 247
4 099 717
Earnings per share*
0.097
0.005
0.102
* Earnings per shares for 12 months ended 31 December 2020 have been adjusted retrospectively to account for the share split
performed in 2021.
(b) Consolidation principles
Subsidiaries, which are those entities which are controlled by the Group, are consolidated. Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control
ceases. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated in full; unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, accounting policies for
subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
19 / 51
Notes (continued)
(1) Accounting policies (continued)
(c) Recognition of revenue and expenses
- Net sales
Net revenue represents the total value of inventory sold during the year net of value added tax. Revenue from sale of inventory is recognized when
control of the inventory is transferred to the customer at an amount that reflects the consideration to which Group expects to be entitled in exchange for
those inventories. The Group has generally concluded that it is the principal in its revenue arrangements.
Revenue is measured at the fair value of the consideration received, excluding sales taxes.
- Interest income and similar income
The Group calculates interest revenue on debt financial assets measured at amortized cost by applying the EIR to the gross carrying amount of financial
assets other than credit-impaired assets. EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected life of
the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or financial liability. The calculation
takes into account all contractual terms of the financial instrument and includes any fees or incremental costs that are directly attributable to the
instrument and are an integral part of the effective interest rate, but not future credit losses. The carrying amount of the financial asset or financial
liability is adjusted if the Group revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original effective
interest rate and the change in carrying amount is recorded as interest revenue or expense.
When a financial asset becomes credit-impaired, the Group calculates interest revenue by applying the effective interest rate to the net amortised cost
of the financial asset. If the financial assets cures and is no longer credit-impaired, the Group reverts to calculating interest revenue on a gross basis.
For purchased or originated credit-impaired (POCI) financial assets, the Group calculates interest revenue by calculating the credit-adjusted EIR and
applying that rate to the amortised cost of the asset. The credit adjusted EIR is the interest rate that, at original recognition, discounts the estimated
future cash flows (including credit losses) to the amortised cost of the POCI assets.
- Other income
Other income is recognised based on accruals principle.
- Expenses
Expenses are recognised based on accruals principle in the period of origination, irrespective of the moment of payment. Expenses related to financing
of loans is recognised in the period of liability origination and included in the profit and loss items „Interest and similar expenses”.
(d) Foreign currency
All transactions in foreign currencies are translated into the functional currency using the exchange rates at the date of the respective transaction.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the income statement of the respective period. At the balance sheet date the
rates set by the Bank of Latvia were:
31.12.2021
31.12.2020
1 EUR
1 EUR
USD
1.13
1.23
(e) Fair value of Financial instruments
Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction.
Fair values of financial assets or liabilities, including derivative financial instruments in active markets are based on quoted market prices. If the market
for a financial asset or liability is not active (and for unlisted securities) the Group establishes fair value by using valuation techniques. These include
the use of discounted cash flow analysis, option pricing models and recent comparative transactions as appropriate and may require the application of
management’s judgement and estimates.
Where, in the opinion of the Management, the fair values of financial assets and liabilities differ materially from their book values such fair values are
separately disclosed in the notes to the accounts. See also note 28.
(f) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
20 / 51
Notes (continued)
(1) Accounting policies (continued)
(g) Intangible assets (including Company’s goodwill)
All intangible assets are initially measured at cost. Intangible assets are recorded at historic cost net of amortization and permanent diminution in value.
The Group has a detailed intangible assets capitalisation policy covering accounting for development projects. The Group incurs costs for development
of software and similar items, which may be capitalized. Capitalized expenditure can be either purchased or internally developed. Only those assets
are capitalised that are separately identifiable, they are controlled by the Group, for which probable future economic benefits associated with the item
will flow to the Group, and cost exceeds the minimum threshold (150 EUR) set by the Group shall be recognized. No intangible asset costs arising from
the research phase of a project are capitalized. Expenditure on research is expensed when incurred.
Amortisation commences once the item is in the location and conditions necessary for it to be capable of operating in the manner intended by
management and has been accepted by the business owner. Amortisation is calculated on a straight-line basis to write down each asset to its estimated
residual value over its estimated useful life as follows:
years
Patents, trademarks and similar rights
3 – 5
Other intangible assets (including software)
3 – 5
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the net fair value of share of equity
acquired. The recognised goodwill is reassessed at least on an annual basis to make sure no permanent diminution in value has occurred. In case such
diminution in value is identified, the diminution in value is recognised in the income statement of the respective year.
The residual values, remaining useful lives and methods of depreciation are reviewed and, if required, adjusted annually.
(h) Fixed assets
All fixed assets are initially measured at cost. Fixed assets are recorded at historic cost net of depreciation and permanent diminution in value.
Depreciation is calculated on a straight-line basis to write down each asset to its estimated residual value over its estimated useful life as follows:
years
Land, buildings, structures and perennials
20
Other fixed assets
3 – 5
Leasehold improvements
1 – 19
Right-of-use premises
1 – 19
Right-of-use vehicles
3 – 4
The residual values, remaining useful lives and methods of depreciation are reviewed and, if required, adjusted annually. Fixed asset recognition is
terminated in case of its liquidation or when no future benefits are expected in connection with the utilisation of the respective asset. Any profit or loss
connected with the termination of recognition (calculated as difference between the disposal gains and net book value as at the moment of
derecognition), is recognised in the profit or loss account in the period when derecognition occurs. Leasehold improvements are written down on a
straight-line basis over the shorter of the estimated useful life of the leasehold improvement and the term of the lease. Current repairs and maintenance
costs are charged to profit and loss account in the period when the respective costs are incurred.
(i) Investments in the subsidiaries and associated companies in the separate financial statements
In the financial statements the investments in subsidiary companies (SIA ViziaFinance as at 31 December 2021) are carried at cost less impairment.
Cost represents consideration paid for acquisition of subsidiaries as well as additional contributions to share capital of subsidiaries. Impairment is
defined as the difference between the cost and recoverable amount. Recoverable amount is the higher of the respective asset's fair value less the costs
to sell and the value in use.
(i) Impairment of assets
Intangible assets which are not put into operation or which do not have a useful life are not amortised; their value is reviewed annually. The value of the
assets subject to depreciation or amortisation is reviewed whenever any events or circumstances support that their carrying value may not be
recoverable. Impairment losses are recognised in the amount representing the difference between the carrying value of the asset and its recoverable
value. Recoverable amount is the higher of the respective asset's fair value less the costs to sell and the value in use. In order to determine impairment,
assets are grouped based on the smallest group of assets that independently generates cash flow (cash generating units).
(k) Inventories
Inventories are stated at the lower of cost or net realisable value. Inventories are measured using the FIFO method. The Group assesses at each
balance sheet date whether there is objective evidence that inventories are impaired and makes provisions for slow-moving or damaged inventories.
Inventories loss is recognised in the period such loss is identified, writing off the relevant inventory values to the period profit and loss account.
Inventories are measured at the lower of cost or net realisable value.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
21 / 51
Notes (continued)
(1) Accounting policies (continued)
(l) Trade and other receivables
Accounts receivable comprise loans and other receivables (other debtors, advances and deposits) that are non-derivative financial assets with fixed
or determinable payments. All loans and receivables are recognised when cash is advanced to borrowers and derecognised on repayments. Loans
are initially measured at their fair value. The Group subsequently measures consumer loans at amortised cost if both of the following conditions are
met:
► The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows;
► The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding (SPPI).
The Group is using a model for the recognition of impairment losses – the expected credit losses (ECL) model. There is a ‘three stage’ approach which
is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities will have to record an
immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables).
Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL.
The mechanics of the ECL calculations are outlined below and the key elements are as follows:
• PD
The Probability of Default is an estimate of the likelihood of default over a given time horizon. A default may only happen
at a certain time over the assessed period if the facility has not been previously derecognised and is still in the portfolio.
• EAD
The Exposure at Default is an estimate of the exposure at a future default date, taking into account expected changes in
the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or
otherwise, expected drawdowns on committed facilities, and accrued interest from missed payments.
• LGD
The Loss Given Default is an estimate of the loss arising in the case where a default occurs at a given time. It is based
on the difference between the contractual cash flows due and those that the lender would expect to receive, including
from the realisation of any collateral. It is usually expressed as a percentage of the EAD.
The expected credit loss is calculated as a function of PD, the exposure at default EAD and the loss given default LGD.
• For the PD calculation is determined the number of historically issued loans actually reaches the number of past due more than 90 days or
have been ceded.
• LGD calculation is based on actually recovered funds for loans over 90 days. Recovered funds are discounted using the monthly effective
interest rate.
• Expected credit losses are additionally adjusted for ceded loans. The management assesses the portfolio of overdue loans on a monthly
basis and loans that are subject to a significant risk that they will not be repaid or will be assigned.
The IFRS 9 impairment model uses a three-stage approach depending on wheather the claim is performing or not and if the claim is performing, whether
a significant increase in credit risk has occoured.
1. Stage 1 – 12-month ECL applies to all existing claims, which have no signs of material increase in risk.The ECL will be computed using 12-
month PD that represents the probability of default occurring over the next 12 months. For those assets with a remaining maturity of less
than 12 month, a PD is used that corresponds to remaining maturity.
2. Stage 2 – applies to claims, which have sign (s) of a material increase in risk and increase in default (delay days > 30 days but less than 90
days). The standard requires the computation of ECL based on liftime PD that represents the probability of default occurring over the
remaining estimated life of tthe financial asset. Provisions are higher in this stage because of an increase in risk and the impact of a longer
time horizon being considered compared to 12 months in Stage 1.
3. Stage 3 – Financial assets are recognized in Stage 3 when there is objective evidence that the loan is impaired (delay days > 90 days).
Similar to Stage 2, the allowance for credit losses will continue to capture the liftime ECL.
A settlement delay of 30 or more days are assessed based on their actual occurrence. The rest of the signs of increased risk and their impact have to
be analysed case by case and the change in a customer`s risk level has to be made based on management`s judgement. This assessment is
symmetrical in nature, allowing the credit risk of financial assets to move back to Stage 1 if the increase in credit risk has decreased since origination
and is no longer deemed to be significant.
Default or the possibility of it occuring in the future and write-off of liabilities can be divided into the following events:
• Improbability of receiving payments. Based on objective evidence, it may be presumed that the client will be unable to settle all of the financial
obligations and the situation cannot be solved satisfactorily.
• Payment delay. The contract is deemed to be non-performing if the client is no longer able or willing to fullfil payment obligations, e.g. upon
any of the following events: (a) payments are past due for more than 90 days; (b) the client does not respond to the payment reminders and
the desire to contact; (c) the client is bankrupt or deceased; (d) identity theft has been identified, i.e. misues of the credit receiver`s identity.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
22 / 51
Notes (continued)
(1) Accounting policies (continued)
The Group continiousy monitors all assets subject to ECLs in order to identify if there has been significant increase in credit risk. If there is increase,
relevand adjustments to ECL are made.
When loans cannot be recovered they are written off and charged against allowances for loan impairment losses. They are not written off until all the
necessary legal procedures have been completed and the amount of the loss is finally determined.
The recoverability of other debtors, advances and deposits paid is valued on individual basis if there are any indications of net book value of the asset
exceeding its recoverable amount.
(m) Leases
i. Group as lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The
Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of
the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment testing.
Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group
exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which
the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change
in in-substance fixed lease payments or a change in the assessment of the option to purchase the underlying asset.
The Group does not apply IASB practical expedient on COVID-19-Related Rent Concessions and adjusts both right-of-use assets and lease liabilities when
modifications of lease contracts occur.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of
equipment that are considered of low value (i.e., below EUR 4.5 thousand). Lease payments on short-term leases and leases of low-value assets are
recognized as expense on a straight-line basis over the lease term.
ii. Operating – Group as lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases.
Rental income arising is accounted for on a straight-line basis over the lease terms and is included in other income in the statement of comprehensive
income. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized
over the lease term on the same basis as lease income. Contingent rents are recognized as income in the period in which they are earned.
(n) Taxes
The corporate income tax expense is included in the financial statements based on the management's calculations made in accordance with the
requirements of Latvian tax legislation.As of 1 January 2018, Corporate Income Tax is paid on distributed and notionally distributed profits.
The distributed and conditionally distributed profit is subject to a 20% gross tax or 20/80 of the net cost. Corporate income tax on dividend payments is
recognized in the income statement. According to law effective 25% tax is applied to non-business related expenses.
(o) Provisions for unused annual leave
The amount of provision for unused annual leave is determined by multiplying the average daily pay of employees during the last 6 months by the
number of accrued but unused annual leave days the end of the reporting year.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
23 / 51
Notes (continued)
(1) Accounting policies (continued)
(p) Borrowings
Initially borrowings are recognised at fair value amounting to the proceeds received net of transaction costs incurred. In subsequent periods, borrowings
are stated at amortised cost which is determined using the effective interest method. The difference between the proceeds received, net of transaction
costs and the redemption value of the borrowing is gradually recognized in the profit and loss account over the term of the borrowing.
(q) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, balances of current accounts with banks and short-
term deposits with a maturity term of up to 90 days.
(r) Payment of dividends
Dividends due to the shareholders are recognized in the financial statements as a liability in the period in which the shareholders approve the
disbursement of dividends.
(s) Financial risk management
(s1) Financial risk factors
The activities of the Group expose it to different financial risks:
(r1.1) foreign currency risk;
(r1.2) credit risk;
(r1.3) operational risk;
(r1.4) market risk;
(r1.5) liquidity risk;
(r1.6) cash flow and interest rate risk.
The Group's overall risk management is focused on the uncertainty of financial markets and aims to reduce its adverse effects on the Company's
financial indicators. The Chief Financial Officer (CFO) is responsible for risk management. CFO identifies, assesses and seeks to find solutions to avoid
financial risks acting in close cooperation with other structural units of the Group.
(s1.1) Foreign exchange risk
The Group operates mainly in the local market and its exposure to foreign exchange risk is not relevant.
(s1.2) Credit risk
The Group has a credit risk concentration based on its operational specifics – issuance of loans against pledge, as well as issuance of non-secured
loans that is connected with an increased risk of asset recoverability. The risk may result in short-term liquidity problems and issues related to timely
coverage of short-term liabilities. The Group’s policies are developed in order to ensure maximum control procedures in the process of loan issuance,
timely identification of bad and doubtful debts and adequate provisioning for potential loss.
(s1.3) Operational risk
Operational risk is a loss risk due to external factors namely (natural disasters, crimes, etc.) or internal ones (IT system crash, fraud, violation of laws
or internal regulations, insufficient internal control). Operation of the Group carries a certain operational risk which can be managed using several
methods including methods to identify, analyse, report and reduce the operational risk. Also self-assessment of the operational risk is carried out as
well as systematic approval of new products is provided to ensure the compliance of the products and processes with the risk environment of the activity.
(s1.4) Market risk
The Group is exposed to market risks, basically related to the fluctuations of interest rates between the loans granted and funding received, as well as
demand for the Group’s services fluctuations. The Group attempts to limit market risks, adequately planning the expected cash flows, diversifying the
product range and fixing funding resource interest rates. As at 31 December 2021 all interest rates are fixed except for lease contracts amounting to
292 thousand EUR with contracts concluded in EUR currency with variable part denominate as 6 month EURIBOR rate. The interest rate market risk
is considered to be low.
(s1.5) Liquidity risk
The Group complies with the prudence principle in the management of its liquidity risk and maintains sufficient funds. The management of the Group
has an oversight responsibility of the liquidity reserves and make current forecasts based on anticipated cash flows. The management of the Group
performs liquidity analyse on a regular basis and ensures adequate gap between short-term liabilities and assets. Most of the Group's liabilities are
long-term liabilities. Based on performed procedures the management is of the opinion that the Group will be able to secure sufficient liquidity by its
operating activities. For analysis of financial liabilities by remaining contractual maturities please see note 29.
(s1.6) Cash flow interest rate risk
As the Group has borrowings and finance lease obligations, the Group’s cash flows related to financing costs to some extent depend on the changes
in market rates of interest. The Group's interest payment related cash flows depend on the current market rates of interest. The risk of fluctuating interest
rates is partly averted by the fact that a number of loans received have fixed interest rates.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
24 / 51
Notes (continued)
(1) Accounting policies (continued)
(s2) Management of the capital structure
In order to ensure the continuation of the Group's activities, while maximizing the return to stakeholders’ capital management, optimization of the debt
and equity balance is performed. The Group's capital structure consists of bonds issued, third party loans and finance lease liabilities, cash and equity,
comprising issued share capital, retained earnings and share premium. At year-end the ratios were as follows:
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
(restated, Note 1)
31.12.2020
(restated, Note 1)
EUR
EUR
EUR
EUR
Bonds issued
10 838 165
10 838 165
13 464 369
13 464 369
Other borrowings
13 470 502
18 573 636
14 986 754
17 686 857
Lease liabilities
3 305 197
3 305 197
3 435 851
3 435 851
Accounts payable to affiliated companies
-
-
243 815
-
Trade payables and accrued liabilities
1 502 504
1 571 953
1 259 068
1 304 654
Taxes and social insurance
391 791
398 268
810 031
815 952
Gross debts
29 508 159
34 687 219
34 199 888
36 707 683
Cash and cash equivalents
(2 225 535)
(2 459 862)
(3 768 356)
(4 591 954)
Net debts
27 282 624
32 227 357
30 431 532
32 115 729
Equity
15 193 376
17 377 321
8 237 497
9 453 709
Debt / equity ratio
1.94
2.00
4.15
3.88
Net debt / equity ratio
1.80
1.85
3.69
3.40
(t) Significant assumptions and estimates
The preparation of the financial statements requires management to make professional judgments, assumptions and estimates which affect the
application of accounting policies and the reported amounts of assets, liabilities, incomes and expenses. Actual results may differ from these estimates.
Assumptions and estimates based on those assumptions are analyzed regularly to identify if changes are required. The changes in accounting estimates
are recognized in the reporting period when the estimates were changed and in all periods that follow.
Useful life of fixed assets
The Group assesses the remaining useful lives of items of fixed assets at least at each financial year-end. If expectations differ from previous estimates,
the changes are accounted for as a change in accounting estimates. These estimates may have a material impact on the carrying amount of fixed
assets and depreciation recognized in the statement of profit or loss.
Impairment of fixed assets
The Group reviews the value of its fixed assets and intangible assets whenever any events or circumstances support that the carrying value may not
be recoverable. The Group’s impairment test for property and equipment is based on value in use calculations that use a discounted cash flow model.
The cash flows are derived from the forecast for the next years and do not include restructuring activities that the Group is not yet committed to or
significant future investments that will enhance the asset base of the cash generating unit being tested.
Net realisable value of inventories
The cost of the Group’s inventory may have to be reduced to its net realisable value if the inventory has become damaged, is wholly or partly obsolete,
or if its selling price has declined. The costs of inventory may not be recovered from sale because of increases in the costs to complete, or the estimated
selling costs. Writing inventory down to net realisable value is carried out on an item-by-item basis. The Group’s estimates of net realisable value are
based on the most reliable evidence available and take into account fluctuations of price or cost after the end of the period if this is evidence of conditions
existing at the end of the period.
Leases – estimating the incremental borrowing rate
In case the Group cannot readily determine the interest rate implicit in the lease, it uses its incremental borrowing rate (IBR) to measure lease liabilities.
The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’,
which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.
The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific
estimates.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
25 / 51
Notes (continued)
(1) Accounting policies (continued)
Impairment losses on loans to customers
The measurement of impairment losses on loans to customers requires judgement, in particular, the estimation of the amount and timing of future cash
flows when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors,
changes in which can result in different levels of allowances. The Group’s ECL calculations are outputs of complex models with a number of underlying
assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting
judgements and estimates include:
► The Group’s criteria for assessing if there has been a significant increase in credit risk and allocation of loans to Stage 1 or 2;
► identification of unlikeliness to pay criteria and assignment of loans to Stage 3;
► development of ECL models, including the various formulae and the choice of inputs;
► the modelling and calculation of key parameters of the ECL models, including probability of default (PD), loss given default (LGD), and
exposure at default (EAD).
The ECL model inputs and parameters were reviewed and where necessary updated. For more detailed qualitative and quantitative information on the
impairment of financial assets, refer to Note 1 Accounting Policies section l Trade and other receivables and Note 16 Loans and receivables.
(u) Related parties
Related parties include the shareholders, members of the Board and Supervisory Board of the Group, Supervisory Board their close family members
and companies in which the said persons have control or significant influence. Term “Related parties” agrees to Commission Regulation (EC) 1126/2008
of 3 November 2018 which took in force various IAS according to European Parlament and Council Regulation (EC) 1606/2002 mentioned in Annex of
IAS 24 “Related Party Disclosures”.
(v) Subsequent events
Post-period-end events that provide additional information about the Group’s position at the balance sheet date (adjusting events) are reflected in the
financial statements. Post-period-end events that are not adjusting events are disclosed in the notes when material.
(w) Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless an outflow of resources embodying economic benefits is
possible. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.
(x) Earnings per share
Earnings per share (EPS) are calculated by dividing the net profit or loss for the year attributable to the shareholders with the weighted-average number
of shares outstanding during the year.
(y) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker – the Group’s
Board, which allocates resources to and assesses the performance of the operating segments of the Group. For management purposes, the Group
is organised into three operating segments based on products and services The Group’s segments are Pawnloan segment, Consumer loans
segment and Other operating segment. Under Other operating segment there are accounted general Group administrative operations, services
provided to related entities and real estates project development financing activities.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
26 / 51
Notes (continued)
(2) Net sales
Net revenue by type of revenue
Company
Group
Company
Group
2021
2021
2020
2020
EUR
EUR
EUR
EUR
Income from sales of goods
4 210 715
4 210 715
3 686 567
3 686 567
Income from sales of precious metals
841 360
841 360
1 714 530
1 714 530
Other income, loan and mortgage realisation and storage
commission
615 262
615 262
763 134
763 134
5 667 337
5 667 337
6 164 231
6 164 231
All net sales are generated in Latvia.
(3) Cost of sales
Company
Group
Company
Group
2021
2021
2020
2020
EUR
EUR
EUR
EUR
Cost of sales of goods
2 830 483
2 830 483
2 544 053
2 544 053
Cost of sales of precious metals
837 527
837 527
1 680 279
1 680 279
3 668 010
3 668 010
4 224 332
4 224 332
(4) Interest income and similar income
Company
Group
Company
Group
2021
2021
2020
2020
EUR
EUR
EUR
EUR
Interest revenue calculated using effective interest rate:
Interest income on unsecured loans
12 398 767
15 692 832
10 785 043
12 825 482
Interest income on secured loans
4 123 605
4 123 605
4 669 988
4 669 988
Other interest income
4 761
4 761
4 285
4 285
16 527 133
19 821 198
15 459 316
17 499 755
(5) Interest expenses and similar expenses
Company
Group
Company
Group
2021
2021
2020
(restated,
Note 1)
2020
(restated,
Note 1)
EUR
EUR
EUR
EUR
Bonds’ coupon expense
2 203 614
2 203 614
1 584 149
1 584 149
Interest expense on other borrowings
1 086 344
1 416 524
1 632 089
1 858 224
Interest expense on lease liabilities for leased premises
204 489
204 489
186 800
186 800
Interest expense lease liabilities for leased vehicles
2 473
2 473
3 787
3 787
Net loss on foreign exchange
213
213
192
192
3 497 133
3 827 313
3 407 017
3 633 152
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
27 / 51
Notes (continued)
(6) Selling expenses
Company
Group
Company
Group
2021
2021
2020
(restated,
Note 1)
2020
(restated,
Note 1)
EUR
EUR
EUR
EUR
Salary expenses
2 515 879
2 515 879
2 352 184
2 352 184
Depreciation of right-of-use assets - premises
643 179
643 179
640 604
640 604
Social insurance
590 774
590 774
563 848
563 848
Advertising
505 805
739 462
407 820
548 490
Depreciation of fixed assets
355 539
362 325
281 389
302 363
Maintenance expenses
274 436
278 573
272 925
272 925
Non-deductible VAT
273 629
334 859
194 729
238 414
Utilities expenses
218 252
222 161
191 457
191 457
Transportation expenses
93 050
93 050
73 764
73 764
Depreciation of right-of-use assets - motor vehicles
29 312
29 312
38 394
38 394
Provisions for unused annual leave
26 627
26 627
(8 551)
(8 551)
Other expenses
294 157
288 449
213 160
232 351
5 820 639
6 124 650
5 221 723
5 446 243
(7) Administrative expenses
Company
Group
Company
Group
2021
2021
2020
(restated,
Note 1)
2020
(restated,
Note 1)
EUR
EUR
EUR
EUR
Salary expenses
2 309 296
2 311 503
1 864 983
1 887 638
Social insurance
531 860
531 106
442 516
447 465
Bank commission
372 742
463 168
386 123
440 993
Communication expenses
301 781
338 716
86 912
106 961
Legal advice
113 716
114 556
72 951
75 826
Depreciation of right-of-use assets - premises
93 914
93 914
75 412
75 412
State fees and duties, licence expenses
92 310
148 616
38 166
52 013
Audit expenses*
50 250
57 250
20 700
37 903
Provisions for unused annual leave
28 717
27 517
1 284
1 321
Depreciation of right-of-use assets - motor vehicles
9 527
9 527
8 396
8 396
Other administrative expenses
122 617
116 935
110 848
127 098
4 026 730
4 212 808
3 108 291
3 261 026
* During the reporting year auditors have perfomed a review engagement and issued review report on the Group’s condensed interim consolidated
financial statements for the six-month period ended June 30, 2021 for EUR 14 000. These expenses are directly attributable to IPO process and
deducted from equity (Note 18). The Group has not received any other services from the auditors except for statury audit of annual report.
(8) Corporate income tax for the reporting year
Company
Group
Company
Group
2021
2021
2020
2020
EUR
EUR
EUR
EUR
Corporate income tax charge for the current year
873 080
979 191
753 716
754 536
873 080
979 191
753 716
754 536
This tax mainly relates to the dividends paid out of the previous and current year's profits.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
28 / 51
Notes (continued)
(9) Earnings per share
Earnings per share are calculated by dividing the net result for the year after taxation attributable to shareholders by the weighted average number
of shares in issue during the year. The table below presents the income and share data used in the computations of basic earnings per share for
the Company and the Group:
Company
Group
Company
Group
2021
2021
2020
(restated,
Note 1)
2020
(restated,
Note 1)
EUR
EUR
EUR
EUR
Net profit attributed to shareholders
3 256 100
4 223 833
3 462 060
4 099 717
Weighted average number of shares
41 034 770
41 034 770
40 000 000
40 000 000
Earnings per share
0.079
0.103
0.087
0.102
Earnings per shares for 12 months ended 31 December 2020 have been adjusted retrospectively to account for the share split performed in 2021.
There is no dilution effect on weighted average number of shares for 2021 and 2020.
(10) Intangible assets
Company
Patents, trademarks
and similar rights
Internally
developed
software
(restated)
Other
intangible
assets
Advances on
intangible assets
Total
EUR
EUR
EUR
EUR
EUR
Cost
31.12.2019
354 773
-
31 848
6 748
393 369
Additions
1 387
222 647
41 047
-
265 081
Transfers
-
-
6 748
(6 748)
-
Disposals
(35)
-
(19 082)
-
(19 117)
31.12.2020
356 125
222 647
60 561
-
639 333
Additions
-
251 795
17 920
18 834
288 549
Disposals
(14 676)
-
-
-
(14 676)
31.12.2021
341 449
474 442
78 481
18 834
913 206
Amortisation
31.12.2019
170 572
-
15 843
-
186 415
Charge for 2020
61 331
20 399
11 218
-
92 948
Disposals
(34)
-
(8 427)
-
(8 461)
31.12.2020.
231 869
20 399
18 634
-
270 902
Charge for 2021
60 221
77 227
17 791
-
155 239
Disposals
(14 678)
-
-
-
(14 678)
31.12.2021
277 412
97 626
36 425
-
411 463
Net book value 31.12.2021
64 037
376 816
42 056
18 834
501 743
Net book value 31.12.2020
124 256
202 248
41 927
-
368 431
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
29 / 51
Notes (continued)
(10) Intangible assets (continued)
Group
Patents,
trademarks and
similar rights
Internally
developed
software
(restated)
Other
intangible
assets
Advances
on
intangible
assets
Goodwill
Total
EUR
EUR
EUR
EUR
EUR
EUR
Cost
31.12.2019
354 773
-
60 822
6 748
127 616
549 959
Additions
1 387
222 647
47 912
-
-
271 946
Transfers
-
-
6 748
(6 748)
-
-
Disposals
(35)
-
(35 164)
-
-
(35 199)
31.12.2020
356 125
222 647
80 318
-
127 616
786 706
Additions
-
251 795
19 083
18 834
-
289 712
Disposals
(14 676)
-
-
-
-
(14 676)
31.12.2021
341 449
474 442
99 401
18 834
127 616
1 061 742
Amortisation
31.12.2019
170 572
-
25 089
-
-
195 661
Charge for 2020
61 331
20 399
25 662
-
-
107 392
Disposals
(34)
-
(24 509)
-
-
(24 543)
31.12.2020
231 869
20 399
26 242
-
-
278 510
Charge for 2021
60 219
77 227
22 490
-
-
159 936
Disposals
(14 676)
-
-
-
-
(14 676)
31.12.2021
277 412
97 626
48 732
-
-
423 770
Net book value 31.12.2021
64 037
376 816
50 669
18 834
127 616
637 972
Net book value 31.12.2020
124 256
202 248
54 076
-
127 616
508 196
Part of the IT employees are involved in building technical solutions for the operation of DelfinGroup. These systems are constantly built to meet both
external and internal needs, and these are constantly being developed. As the systems are fully developed internally by IT department, related payroll
and tax payments are capitalized for those IT employees who were involved in the development of the systems. The list of capitalized salaries is
reviewed every month and capitalized amount is determined based on the works performed. Following initial recognition of the development
expenditure as an asset, the asset is carried at cost less any accumulated amortisation and impairment
During 2021 capitalised salary and related taxes for such systems amounted to EUR 251 795 (2020 - EUR 222 647). The systems are constantly
being developed and support the issuance of loans, growth of the portfolio and sale of goods and as such ensure that the future economic benefits
will flow to the company over a long period, thus justifying capitalization.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
30 / 51
Notes (continued)
(11) Fixed assets
Company
Land,
buildings,
structures and
perennials
Other fixed
assets and
inventory
Leasehold
improve-
ments
Right-of-use
premises
Right-of-use
vehicles
Right-of-use
assets, total
Total
EUR
EUR
EUR
EUR
EUR
EUR
EUR
Cost
31.12.2019
-
934 448
422 008
2 675 766
287 369
2 963 135
4 319 591
Additions
-
109 625
189 448
1 171 129
22 614
1 193 743
1 492 816
Remeasurement
-
-
-
716 006
-
716 006
716 006
Disposals
-
(51 549)
-
(2 864)
(17 832)
(20 696)
(72 245)
31.12.2020
-
992 524
611 456
4 560 037
292 151
4 852 188
6 456 168
Additions
113 019
123 781
22 091
345 846
-
345 846
604 737
Acquired with in liquidation of
subsidiary
83 299
-
-
-
-
-
83 299
Remeasurement
-
-
-
288 271
-
288 271
288 271
Disposals
(23 194)
(70 316)
-
(131 348)
-
(131 348)
(224 858)
31.12.2021
173 124
1 045 989
633 547
5 062 806
292 151
5 354 957
7 207 617
Depreciation
31.12.2019
-
651 770
367 493
722 707
191 447
914 154
1 933 417
Charge for 2020
-
141 086
47 356
716 017
46 789
762 806
951 248
Disposals
-
(48 546)
-
(1 718)
(17 466)
(19 184)
(67 730)
31.12.2020
-
744 310
414 849
1 437 006
220 770
1 657 776
2 816 935
Charge for 2021
4 213
164 070
32 017
737 093
38 839
775 932
976 232
Disposals
(995)
(68 995)
-
(51 321)
-
(51 321)
(121 311)
31.12.2021
3 218
839 385
446 866
2 122 778
259 609
2 382 387
3 671 856
Net book value 31.12.2021
169 906
206 604
186 681
2 940 028
32 542
2 972 570
3 535 761
Net book value 31.12.2020
-
248 214
196 607
3 123 031
71 381
3 194 412
3 639 233
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
31 / 51
Notes (continued)
(11) Fixed assets (continued)
Group
Land,
buildings,
structures and
perennials
Other fixed
assets and
inventory
Leasehold
improve-
ments
Right-of-use
premises
Right-of-use
vehicles
Right-of-use
assets, total
Total
EUR
EUR
EUR
EUR
EUR
EUR
EUR
Cost
31.12.2019
-
934 448
422 008
2 675 766
287 369
2 963 135
4 319 591
Additions
-
109 625
189 448
1 171 129
22 614
1 193 743
1 492 816
Remeasurement
-
-
-
716 006
-
716 006
716 006
Disposals
-
(51 549)
-
(2 864)
(17 832)
(20 696)
(72 245)
Acquired in business combination
130 069
-
-
-
-
-
130 069
31.12.2020
130 069
992 524
611 456
4 560 037
292 151
4 852 188
6 586 237
Additions
113 019
123 781
22 091
345 846
-
345 846
604 737
Remeasurement
-
-
-
288 271
-
288 271
288 271
Disposals
(69 964)
(70 316)
-
(131 348)
-
(131 348)
(271 628)
31.12.2021
173 124
1 045 989
633 547
5 062 806
292 151
5 354 957
7 207 617
Depreciation
31.12.2019
-
651 770
367 493
722 707
191 447
914 154
1 933 417
Charge for 2020
6 530
141 086
47 356
716 017
46 789
762 806
957 778
Disposals
-
(48 546)
-
(1 718)
(17 466)
(19 184)
(67 730)
Acquired in business combination
38 154
-
-
-
-
-
38 154
31.12.2020
44 684
744 310
414 849
1 437 006
220 770
1 657 776
2 861 619
Charge for 2021
6 300
164 070
32 017
737 093
38 839
775 932
978 319
Disposals
(47 766)
(68 995)
-
(51 321)
-
(51 321)
(168 082)
31.12.2021
3 218
839 385
446 866
2 122 778
259 609
2 382 387
3 671 856
Net book value 31.12.2021
169 906
206 604
186 681
2 940 028
32 542
2 972 570
3 535 761
Net book value 31.12.2020
85 385
248 214
196 607
3 123 031
71 381
3 194 412
3 724 618
(12) Right-of-use assets and lease liabilities
Right-of-use assets and other liabilities for rights to use assets are shown as follows in the consolidated and standalone balance sheet and statement
of profit or loss:
31.12.2021
31.12.2020
EUR
EUR
Non-current assets
Right-of-use assets - premises
2 940 028
3 123 031
Right-of-use assets - motor vehicles
32 542
71 381
Assets, total
2 972 570
3 194 412
Non-current liabilities
Lease liabilities
2 652 498
2 732 136
Current liabilities
Lease liabilities
652 699
703 715
Lease liabilities, total
3 305 197
3 435 851
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
32 / 51
Notes (continued)
(12) Right-of-use assets and lease liabilities (continued)
Leases in the statement of profit or loss
2021
2020
EUR
EUR
Interest expenses and similar expenses
Interest expense on lease liabilities for leased premises
(204 489)
(186 800)
Interest expense on lease liabilities for leased vehicles
(2 473)
(3 787)
Selling expense
Depreciation of right-of-use assets - premises
(643 179)
(640 604)
Depreciation of right-of-use assets - motor vehicles
(29 312)
(38 394)
Administrative expenses
Depreciation of right-of-use assets - premises
(93 914)
(75 412)
Depreciation of right-of-use assets - motor vehicles
(9 527)
(8 396)
Leases in the statement of profit or loss, total
(982 894)
(953 393)
Leases liabilities
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Long term lease liabilities - premises
2 627 961
2 627 961
2 670 754
2 670 754
Long term lease liabilities - vehicles
24 537
24 537
61 382
61 382
Total long-term lease liabilities
2 652 498
2 652 498
2 732 136
2 732 136
Short term lease liabilities - premises
633 826
633 826
669 951
669 951
Short term lease liabilities - vehicles
18 873
18 873
33 764
33 764
Total short-term lease liabilities
652 699
652 699
703 715
703 715
Lease liabilities, total
3 305 197
3 305 197
3 435 851
3 435 851
Lease agreements for premises are signed for a period of one year to fifteen years and six months. Car rental agreements are signed for a period of
three years to three years and three months.
The weighted-average incremental borrowing rate for premises leased in 2021 comprised 4.07% (2020: 5.25%), the weighted-average incremental
borrowing rate for motor vehicles was 3.20% (2020: 3.20%).
(13) Company’s investments in subsidiaries
Company is the sole shareholder of the subsidiary SIA ViziaFinance (100%) as of 31 December 2021.
The former subsidiary SIA Banknote commercial properties (100%) has been liquidated on 21 June 2021. The assets of the SIA Banknote commercial
properties were transferred to AS DelfinGroup as liquidation quota and consisted of real estate (EUR 83 299 (note 11)) and cash (EUR 1 511). The
former subsidiary SIA ExpressInkasso (100%) has been liquidated on 09 September 2021 (excluded from the Enterprise register on 14 October
2021). The assets of the SIA ExpressInkasso were transferred to AS DelfinGroup as liquidation quota (cash EUR 149 308). The former subsidiary
SIA REFIN (100%) has been liquidated on 01 December 2021. The assets of the SIA REFIN were transferred to AS DelfinGroup as liquidation quota
(cash EUR 787 873).
a) participating interest in subsidiaries
Name
Investments in share capital of
subsidiaries
Participating interest in share capital
of subsidiaries
31.12.2021
31.12.2020
31.12.2021
31.12.2020
EUR
EUR
%
%
SIA ExpressInkasso
-
2 828
-
100
SIA ViziaFinance
880 000
880 000
100
100
SIA REFIN
-
800 000
-
100
SIA Banknote commercial properties (from 30.09.2020)
-
2 844
-
100
880 000
1 685 672
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
33 / 51
Notes (continued)
(13) Company’s investments in subsidiaries (continued)
b) information on subsidiaries
Total equity
Name
Address
31.12.2021
31.12.2020
EUR
EUR
SIA ViziaFinance
Skanstes street 50A, LV-1013 Riga, Latvia
2 936 331
1 488 808
Basic operation of SIA ViziaFinance is providing consumer lending services, dealing with unsecured loans. The company has a Consumer Rights
Protection Center’s license in the field of consumer lending.
SIA ExpressInkasso
Skanstes street 50A, LV-1013 Riga, Latvia
-
380 318
The company was engaged in debt collection activities and was licensed by the Consumer Rights Protection Center in the field of out-of-court debt
recovery.
SIA REFIN
Skanstes street 50A, LV-1013 Rīga, Latvija
-
809 336
Basic operation of SIA REFIN was providing consumer lending services, issuing loans for unsecured real estate loans.
SIA Banknote commercial
properties (from 30.09.2020)
Skanstes street 50A, LV-1013 Riga, Latvia
-
(4 193)
Basic operation of SIA Banknote commercial properties was renting and operating of own or leased real estate.
(14) Loans to shareholders and management
Loans to members
EUR
31.12.2019
1 022 423
Loans issued
438 669
Loans repaid
(1 036 932)
Interest accrued
56 450
Interest repaid
(6 126)
31.12.2020
474 484
Loans issued
92 850
Loans repaid
(375 453)
Interest accrued
6 865
Interest repaid
(198 746)
31.12.2021
-
Net book value as at 31.12.2021
-
Net book value as at 31.12.2020
474 484
Interest on borrowing is in the range of 3.01% - 4% per annum. The loan maturity - 31 December 2025 (including the loan principal amount and
accrued interest). Loans are denominated in euros. Loans were early repaid.
Currency
Year
of issue
Interest
rate
Maturity
31.12.2021
31.12.2020
SIA AE Consulting
EUR
2019
4%
2023
-
381 796
SIA L24 Finance
EUR
2016
3.01%
2025
-
83 688
AS EA investments
EUR
2020
4%
2025
-
9 000
Loans to shareholders and
management
-
474 484
(15) Goods for sale of the Company and the Group
31.12.2021
31.12.2020
EUR
EUR
Goods for sale and pledges taken over
1 589 285
1 271 073
Inventory made of gold
360 205
262 934
1 949 490
1 534 007
In 2021, write-off to net realizable value of inventories amounted to EUR 78 514 (in 2020: EUR 100 299).
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
34 / 51
Notes (continued)
(16) Loans and receivables
a) Loans and receivables by loan type
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Debtors for loans issued against pledge
Long-term debtors for loans issued against pledge
95 058
95 058
85 492
85 492
Short-term debtors for loans issued against pledge
3 112 513
3 112 513
2 945 052
2 945 052
Interest accrued for loans issued against pledge
164 698
164 698
139 425
139 425
Debtors for loans issued against pledge, total
3 372 269
3 372 269
3 169 969
3 169 969
Debtors for loans issued without pledge
Long-term debtors for loans issued without pledge
21 069 674
28 474 373
13 901 569
17 626 266
Short-term debtors for loans issued without pledge
10 328 142
13 078 077
11 042 149
16 025 664
Interest accrued for loans issued without pledge
869 874
1 195 863
834 094
1 470 419
Debtors for loans issued without pledge, total
32 267 690
42 748 313
25 777 812
35 122 349
Loans and receivables before allowance, total
35 639 959
46 120 582
28 947 781
38 292 318
ECL allowance on loans to customers
(2 236 891)
(3 158 832)
(2 372 285)
(3 618 464)
Loans and receivables
33 403 068
42 961 750
26 575 496
34 673 854
All loans are issued in euros. Weighted average term of consumer loans is 2.5 years and pawn loans is one month.
The Group signed a contract with a third party for the receivable amounts regular cession to assign debtors for loans issued which are outstanding
for more than 90 days. Losses from these transactions were recognised in the current period.
The claims in the amount of EUR 3 372 269 (31.12.2020: EUR 3 169 969) are secured by the value of the collateral. Claims against debtors for loans
issued against pledge are secured by pledges, whose fair value is higher than the carrying value, therefore provisions for secured overdue loans are
not made.
b) Allowance for impairment of loans to customers at amortised cost
An analysis of changes in the gross carrying value for loans issued and corresponding ECL in relation to corporate lending during the year ended 31
December 2021 is as follows:
Company
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying value as at 1 January 2020
21 945 171
849 442
1 548 170
-
24 342 783
New assets originated or purchased
43 054 244
-
-
-
43 054 244
Assets settled or partly settled
(35 417 038)
(845 338)
(264 513)
-
(36 526 889)
Assets written off or sold
(464 244)
(914 057)
(695 592)
-
(2 073 893)
Effect of interest accruals
109 144
26 680
15 712
-
151 536
Transfers to Stage 1
374 778
(44 493)
(330 285)
-
-
Transfers to Stage 2
(1 788 300)
1 794 679
(6 379)
-
-
Transfers to Stage 3
(1 454 078)
(80 939)
1 535 017
-
-
At 31 December 2020
26 359 677
785 974
1 802 130
-
28 947 781
New assets originated or purchased
41 559 415
-
-
154 587
41 714 002
Assets settled or partly settled
(28 883 596)
(228 577)
(4 018 001)
(130 109)
(33 260 283)
Assets written off or sold
(150 360)
(598 044)
(1 132 881)
-
(1 881 285)
Effect of interest accruals
9 568
52 962
57 214
-
119 744
Transfers to Stage 1
278 779
(151 654)
(127 125)
-
-
Transfers to Stage 2
(1 303 649)
1 316 412
(12 763)
-
-
Transfers to Stage 3
(4 710 414)
(56 437)
4 766 851
-
-
At 31 December 2021
33 159 420
1 120 636
1 335 425
24 478
35 639 959
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
35 / 51
Notes (continued)
(16) Loans and receivables (continued)
Allowance for impairment of loans to customers at amortised cost (continued)
Company
Stage 1
Stage 2
Stage 3
POCI
Total
ECL as at 1 January 2020
954 408
148 141
861 251
-
1 963 800
New assets originated or purchased
1 897 260
-
-
-
1 897 260
Assets settled or partly settled
(1 258 885)
(222 605)
(204 029)
-
(1 685 519)
Assets written off or sold
(26 190)
(226 305)
(476 718)
-
(729 213)
Effect of interest accruals
1 821
6 066
15 770
-
23 657
Transfers to Stage 1
11 392
(5 818)
(5 574)
-
-
Transfers to Stage 2
(139 553)
142 905
(3 352)
-
-
Transfers to Stage 3
(383 553)
(67 043)
450 596
-
-
Impact on period end ECL due to transfers between
stages and due to changes in inputs used for ECL
calculations
29 849
481 949
390 502
-
902 300
At 31 December 2020
1 086 549
257 290
1 028 446
-
2 372 285
New assets originated or purchased
1 370 880
-
-
-
1 370 880
Assets settled or partly settled
(1 167 038)
(17 367)
(2 447 823)
-
(3 632 228)
Assets written off or sold
(6 870)
(143 603)
(689 297)
-
(839 770)
Effect of interest accruals
3 436
32 482
57 273
-
93 191
Transfers to Stage 1
113 764
(36 415)
(77 349)
-
-
Transfers to Stage 2
(68 248)
76 014
(7 766)
-
-
Transfers to Stage 3
(247 001)
(13 552)
260 553
-
-
Impact on period end ECL due to transfers between
stages and due to changes in inputs used for ECL
calculations
118 298
242 539
2 511 696
-
2 872 533
At 31 December 2021
1 203 770
397 388
635 733
-
2 236 891
Group
Stage 1
Stage 2
Stage 3
POCI
Total
Gross carrying value as at 1 January 2020
31 957 718
1 043 994
1 736 689
39 342
34 777 743
New assets originated or purchased
48 124 875
-
-
-
48 124 875
Assets settled or partly settled
(40 787 468)
(984 314)
(406 044)
(3 147)
(42 180 973)
Assets written off or sold
(573 630)
(1 248 691)
(836 840)
-
(2 659 161)
Effect of interest accruals
152 657
32 908
44 269
-
229 834
Transfers to Stage 1
435 581
(86 907)
(348 674)
-
-
Transfers to Stage 2
(2 357 958)
2 401 869
(43 911)
-
-
Transfers to Stage 3
(1 977 924)
(102 599)
2 080 523
-
-
At 31 December 2020
34 973 851
1 056 260
2 226 012
36 195
38 292 318
New assets originated or purchased
52 383 004
-
-
154 587
52 537 591
Assets settled or partly settled
(36 926 551)
(890 252)
(4 210 178)
(130 109)
(42 157 090)
Assets written off
(162 803)
(1 127 626)
(1 432 283)
(36 195)
(2 758 907)
Effect of interest accruals
80 394
86 429
39 847
-
206 670
Transfers to Stage 1
371 814
(197 814)
(174 000)
-
-
Transfers to Stage 2
(2 724 457)
2 817 216
(92 759)
-
-
Transfers to Stage 3
(5 097 434)
(70 504)
5 167 938
-
-
At 31 December 2021
42 897 818
1 673 709
1 524 577
24 478
46 120 582
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
36 / 51
Notes (continued)
(16) Loans and receivables (continued)
Allowance for impairment of loans to customers at amortised cost (continued)
Group
Stage 1
Stage 2
Stage 3
POCI
Total
ECL as at 1 January 2020
2 047 613
198 351
984 907
-
3 230 871
New assets originated or purchased
2 544 523
-
-
-
2 544 523
Assets settled or partly settled
(1 827 451)
(258 471)
(294 993)
-
(2 380 915)
Assets written off or sold
(34 401)
(312 667)
(567 499)
-
(914 567)
Effect of interest accruals
4 957
8 939
44 327
-
58 223
Transfers to Stage 1
15 889
(8 955)
(6 934)
-
-
Transfers to Stage 2
(218 098)
222 480
(4 382)
-
-
Transfers to Stage 3
(570 449)
(102 989)
673 438
-
-
Impact on period end ECL due to transfers between
stages and due to changes in inputs used for ECL
calculations
(68 058)
622 471
525 916
-
1 080 329
At 31 December 2020
1 894 525
369 159
1 354 780
-
3 618 464
New assets originated or purchased
2 081 031
-
-
-
2 081 031
Assets settled or partly settled
(1 429 535)
(274 762)
(2 560 567)
-
(4 264 864)
Assets written off
(8 942)
(182 955)
(745 698)
-
(937 595)
Effect of interest accruals
8 387
49 325
39 905
-
97 617
Transfers to Stage 1
160 432
(55 583)
(104 849)
-
-
Transfers to Stage 2
(161 470)
216 167
(54 697)
-
-
Transfers to Stage 3
(272 394)
(19 394)
291 788
-
-
Impact on period end ECL due to transfers between
stages and due to changes in inputs used for ECL
calculations
(508 508)
523 109
2 549 578
-
2 564 179
At 31 December 2021
1 763 526
625 066
770 240
-
3 158 832
As of 31 December 2021, the amount of loans issued against pledge in Stage 3 in Company’s and Group’s balance sheet is EUR 270 728 (as of 31
December 2020 EUR 439 721). Current fair value of pledge of these loans is EUR 475 101 (as of 31 December 2020 EUR 581 836).
c) Age analysis of claims against debtors for loans issued:
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Receivables not yet due
31 082 010
39 713 633
24 358 172
32 473 188
Outstanding 1-30 days
2 232 000
3 338 771
2 009 196
2 508 354
Outstanding 31-90 days
1 120 636
1 673 709
785 974
1 056 261
Outstanding 91-180 days
284 309
315 061
722 713
989 467
Outstanding for 181-360 days
321 372
361 973
359 486
428 390
Outstanding for more than 360 days
599 632
717 435
712 240
836 658
Total claims against debtors for loans issued
35 639 959
46 120 582
28 947 781
38 292 318
d) Age analysis of provision for bad and doubtful trade debtors:
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
For trade debtors not yet due
860 822
1 271 700
996 987
1 769 822
Outstanding 1-30 days
288 709
437 588
86 384
123 306
Outstanding 31-90 days
397 388
625 066
257 290
369 159
Outstanding 91-180 days
130 840
150 816
366 682
554 341
Outstanding for 181-360 days
165 855
193 681
174 278
244 996
Outstanding for more than 360 days
393 277
479 981
490 664
556 840
Total provisions for bad and doubful trade debtors
2 236 891
3 158 832
2 372 285
3 618 464
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
37 / 51
Notes (continued)
(16) Loans and receivables (continued)
Loan loss allowance has been defined based on collectively assessed impairment.
In August 2021 The Group signed a contract with AS Moda Kapitāls to purchase pawn shop business. The transaction involved acquisition of AS
Moda Kapitāls pawn loan portfolio. During 2021 inventories in amount EUR 387 943 and pawn loan portfolio in amount EUR 314 983 were acquired.
As of 31 December 2021 outstanding amount of inventories is EUR 126 208 and pawn loan portfolio is EUR 178 644. The Group accounted pawn
loan portfolio at fair value upon acquisition.
At the inception of the transaction management has analyzed the requirements of IFRS 3 and concluded that the transaction does not meet the
requirements of a business combination and is considered as an asset acquisition.
(17) Cash and bank
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Cash at banks
1 943 230
2 177 557
3 410 752
4 234 350
Cash in hand
282 305
282 305
357 604
357 604
2 225 535
2 459 862
3 768 356
4 591 954
All the Parent company's and the Group's cash is in euro.
(18) Share capital
On 14 October 2021, AS DelfinGroup successfully closed the initial public offering (IPO) and shares of Company has become traded in Nasdaq Riga
Baltic Main list from 20 October 2021. During IPO, the Company issued 5 319 594 new shares with par value of EUR 0.10 each.
As at 31 December 2021, the Parent Company's share capital is EUR 4 531 959,40, which consists of 45 319 594 ordinary shares, each of them with
a nominal value of EUR 0.10. All shares are fully paid.
Number of shares issued in IPO
5 319 594
Share price at the end of subscription period, EUR
1.52
Proceeds from shares issued, EUR
8 085 782
Par value of new shares, EUR
(531 959)
Costs related to IPO, EUR
(662 865)
Share premium, EUR
6 890 958
(19) Bonds issued
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Total long-term part of bonds issued
10 825 162
10 825 162
8 441 717
8 441 717
Bonds issued
-
-
4 998 768
4 998 768
Interest accrued
13 003
13 003
23 884
23 884
Total short-term part of bonds issued
13 003
13 003
5 022 652
5 022 652
Bonds issued, total
10 825 162
10 825 162
13 440 485
13 440 485
Interest accrued, total
13 003
13 003
23 884
23 884
Bonds issued net
10 838 165
10 838 165
13 464 369
13 464 369
As of 31 December 2021, the Parent company of the Group has outstanding bonds (ISIN LV0000850048) in the amount of EUR 5 000 000, registered
with the Latvia Central Depository and issued in a closed offer on 9 July 2021 on the following terms: number of bonds issued - 5 000, nominal value
- EUR 1 000 per each bond, coupon rate – 9.75%, coupon is paid once a month on the 25th date. The principal amount (EUR 1 000 per each bond)
is to be repaid by 25 August 2023. The bonds are not secured.
On 26 November 2021, the Parent company of the Group has started a closed bond offering (ISIN LV0000802536) in the amount of EUR 10 000
000. The offering has been registered with the Latvia Central Depository on the following terms: number of bonds issued - 10 000, nominal value -
EUR 1 000 per each bond, coupon rate – 8.00%, coupon is paid once a month on the 25th date. New bonds are issued periodically taking into account
the need for financing. As of 31 December 2021 bonds in total of EUR 6 111 000 have been isued. The principal amount (EUR 1 000 per each bond)
is to be repaid by 25 Nobember 2023. The bonds are not secured.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
38 / 51
Notes (continued)
(20) Other borrowings
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
Other long-term loans
5 125 100
8 086 468
5 646 755
6 816 925
Total other long-term loans
5 125 100
8 086 468
5 646 755
6 816 925
Other short-term loans
8 345 402
10 487 168
9 339 999
10 869 932
Total other short-term loans
8 345 402
10 487 168
9 339 999
10 869 932
Total other loans
13 470 502
18 573 636
14 986 754
17 686 857
The remaining amount on other borrowings is represented by loans received from a crowdfunding platform SIA Mintos Finance, a company registered
in the European Union. The weighted average annual interest rate as of 31 December 2021 is 8.3%. According to the loan agreement with SIA Mintos
Finance the loans matures according to the particular loan agreement terms concluded by the Group with its customers. The Group retains credit risk
as well as other risks and rewards on the loans to customers financed by SIA Mintos Finance.
The Group has registered a commercial pledge by pledging its property and receivables, with a maximum claim amount of EUR 25 million as collateral
in favour of SIA Mintos Finance.
(21) Taxes and social insurance payments
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
Value Added Tax
32 913
39 390
55 426
60 045
Income tax
131 868
131 868
249 901
250 721
Business risk charge
110
110
99
111
Social insurance
154 732
154 732
325 344
328 663
Payroll tax
92 937
92 937
174 948
176 207
Vehicles tax
4 460
4 460
4 226
4 226
Natural resource tax
50
50
87
87
Overpayment
(25 279)
(25 279)
-
(4 108)
Total taxes and social insurance payments
391 791
398 268
810 031
815 952
(22) Average number of employees
2021
2020
Average number of employees during the reporting year of the Company
296
274
Average number of employees during the reporting year of the Group
301
279
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
39 / 51
Notes (continued)
(23) Management remuneration
31.12.2021
31.12.2020
EUR
EUR
Supervisory Board members' remuneration:
· salary expenses
110 606
-
· social insurance
26 092
-
136 698
-
Board members' remuneration:
· salary expenses
349 096
273 631
· social insurance
82 352
65 918
431 448
339 549
(24) Changes in liabilities arising from financing activities
Company changes in liabilities arising from financing activities
The Company
Bonds
issued
Other
borrowings
Lease
liabilities
Dividends’
payables
Share capital
and Share
premium
Total liabilities
from financing
activities
EUR
EUR
EUR
EUR
EUR
EUR
Carrying amount at
31 December 2019
7 824 620
16 230 321
2 127 293
-
1 500 000
27 682 234
Proceeds
8 606 000
7 349 981
-
3 000 000
2 500 000
21 455 981
Redemption and settlement
(2 949 620)
(8 666 468)
(746 569)
(3 000 000)
-
(15 362 657)
New lease contracts
-
-
1 150 880
-
-
1 150 880
Modification of lease contracts
-
-
716 005
-
-
716 005
Interest expense on lease
liabilities
-
-
188 243
-
-
188 243
Disposals
-
-
(1)
-
-
(1)
Bonds commission accrued
(40 515)
(40 515)
Interest accrued
23 884
72 920
-
-
-
96 804
Carrying amount at
31 December 2020
13 464 369
14 986 754
3 435 851
-
4 000 000
35 886 974
Proceeds
11 111 000
13 643 488
-
3 723 138
8 085 782
36 563 408
Redemption and settlement
(13 464 369)
(15 201 285)
(865 764)
(3 723 138)
-
(33 254 556)
New lease contracts
-
-
241 317
-
-
241 317
Modification of lease contracts
-
-
288 271
-
-
288 271
Interest expense on lease
liabilities
-
-
205 522
-
-
205 522
IPO transaction costs
-
-
-
-
(662 865)
(662 865)
Bonds commission accrued
(285 838)
(285 838)
Interest accrued
13 003
41 545
-
-
-
54 548
Carrying amount at
31 December 2021
10 838 165
13 470 502
3 305 197
-
11 422 917
39 036 781
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
40 / 51
Notes (continued)
(24) Changes in liabilities arising from financing activities (continued)
Group’s changes in liabilities arising from financing activities
The Group
Bonds
issued
Other
borrowings
Lease
liabilities
Dividends’
payables
Share capital
and Share
premium
Total
liabilities from
financing
activities
EUR
EUR
EUR
EUR
EUR
EUR
Carrying amount at
31 December 2019
7 824 620
18 613 563
2 127 293
-
1 500 000
30 065 476
Proceeds
8 606 000
10 415 870
-
3 000 000
2 500 000
24 521 870
Redemption and settlement
(2 949 620)
(11 429 253)
(746 569)
(3 000 000)
-
(18 125 442)
New lease contracts
-
-
1 150 880
-
-
1 150 880
Modification of lease contracts
-
-
716 005
-
-
716 005
Interest expense on lease
liabilities
-
-
188 243
-
-
188 243
Disposals
-
-
(1)
-
-
(1)
Bonds commission accrued
(40 515)
-
(40 515)
Interest accrued
23 884
86 677
-
-
-
110 561
Carrying amount at
31 December 2020
13 464 369
17 686 857
3 435 851
-
4 000 000
38 587 077
Proceeds
11 111 000
20 633 933
-
3 723 138
8 085 782
43 553 853
Redemption and settlement
(13 464 369)
(19 806 276)
(865 764)
(3 723 138)
-
(37 859 547)
New lease contracts
-
-
241 317
-
-
241 317
Modification of lease contracts
-
-
288 271
-
-
288 271
Interest expense on lease
liabilities
-
-
205 522
-
-
205 522
IPO transaction costs
-
-
-
-
(662 865)
(662 865)
Bonds commission accrued
(285 838)
-
(285 838)
Interest accrued
13 003
59 122
-
-
-
72 125
Carrying amount at
31 December 2021
10 838 165
18 573 636
3 305 197
-
11 422 917
44 139 915
(25) Related party transactions
In the annual report there are presented only those related parties with whom have been transactions the reporting year or in the comparative period.
All transactions with related parties are carried out in accordance with general market conditions.
Transactions in 2021
Transactions in 2020
EUR
EUR
Parent company transactions with:
Shareholding companies
Interest received
SIA AE Consulting
9 090
26 804
SIA L24 Finance
775
1 575
SIA EC finance
-
11
Services received
SIA AE Consulting
-
(1 698)
Services delivered
SIA AE Consulting
75
2 965
SIA L24 Finance
-
360
SIA EC finance
-
300
Goods sold
SIA AE Consulting
59
1 090
Board members
1 702
992
Investment in shares
SIA L24 Finance
-
(1 921)
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
41 / 51
Notes (continued)
(25) Related party transactions (continued)
Transactions in 2021
Transactions in 2020
EUR
EUR
Parent company’s transactions with:
Subsidiaries
Interest paid
SIA ExpressInkasso
(1 392)
(2 944)
SIA REFIN
(6 041)
-
Interest received
SIA ViziaFinance
51 511
19 866
SIA Banknote commercial properties
739
1 619
SIA ExpressInkasso
66
15
SIA REFIN
210 787
-
Services delivered
SIA ViziaFinance
13 326
16 588
SIA ExpressInkasso
4 514
10 106
SIA REFIN
438
400
SIA Banknote commercial properties
501
330
Services received
SIA ExpressInkasso
(30 589)
-
SIA Banknote commercial properties
(5 577)
(5 294)
Acquired of fixed assets with in liquidation
SIA Banknote commercial properties
83 299
-
Liquidation quota
SIA ExpressInkasso
149 308
-
SIA REFIN
787 873
-
SIA Banknote commercial properties
1 510
-
Companies and individuals under common control or significant influence
Interest paid
Board members
-
(1 598)
Services delivered
AS EA investments
153
300
Other related companies
Interest received
SIA Banknote commercial properties
-
1 661
Ltd EuroLombard
-
1 570
Services received
SIA Banknote commercial properties
-
(15 569)
Services delivered
SIA Banknote commercial properties
-
938
SIA EL Capital
6 527
447
Ltd EuroLombard
1 545
6 139
SIA OBDO Gin
-
8 418
SIA KALPAKS
-
321
Goods received
SIA OBDO Gin
-
(43)
Fixed assets sold
SIA OBDO Gin
-
160
Group’s transactions with:
Shareholding companies
Interest received
SIA AE Consulting
9 090
26 804
SIA L24 Finance
775
1 575
SIA EC finance
-
11
Services received
SIA AE Consulting
-
(1 698)
Services delivered
SIA AE Consulting
75
2 965
SIA L24 Finance
-
360
SIA EC finance
-
300
Goods sold
SIA AE Consulting
59
1 090
Board members
1 702
992
Investment in shares
SIA L24 Finance
-
(1 921)
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
42 / 51
Notes (continued)
(25) Related party transactions (continued)
Transactions in 2021
Transactions in 2020
EUR
EUR
Companies under common control or significant influence
Interest paid
Board members
-
(1 598)
Services delivered
AS EA investments
153
300
Other related companies
Interest received
SIA Banknote commercial properties
-
1 661
Ltd EuroLombard
-
1 570
Services received
SIA Banknote commercial properties
-
(15 569)
Services delivered
SIA Banknote commercial properties
-
938
SIA EL Capital
6 527
447
Ltd EuroLombard
1 545
6 139
SIA OBDO Gin
-
8 418
SIA KALPAKS
-
321
Goods received
SIA OBDO Gin
-
(43)
Fixed assets sold
SIA OBDO Gin
-
160
Loans granted to shareholders and management
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
SIA AE Consulting
-
-
381 796
381 796
SIA L24 Finance
-
-
83 688
83 688
AS EA investments
-
-
9 000
9 000
-
-
474 484
474 484
Loans granted to subsidiaries
Company
Group
Company
Group
31.12.2021
31.12.2021
31.12.2020
31.12.2020
EUR
EUR
EUR
EUR
SIA ViziaFinance
1 768 200
-
1 056 000
-
SIA Banknote commercial properties
-
-
99 565
-
Long-term loans to related companies, total
1 768 200
-
1 155 565
-
SIA REFIN
-
-
2 874 763
-
SIA Banknote commercial properties
-
-
1 619
-
SIA ViziaFinance
38 075
-
164
-
Other subsidiaries
-
-
2
-
Short-term loans to related companies, total
38 075
-
2 876 548
-
Loans to related companies, total
1 806 275
-
4 032 113
-
The interest rate on loans to related companies 4 %. All loans and other claims denominated in euro. The Company has no debt overdue.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
43 / 51
Notes (continued)
(26) Segment information
For management purposes, the Group is organised into three operating segments based on products and services as follows:
Pawn loan segment
Handling pawn loan issuance, sale of pawn shop items in the branches and online.
Consumer loan segment
Handling consumer loans to customers, debt collection activities and loan cessions to external debt collection
companies.
Other operations segment
Providing loans for real estate development, general administrative services to the companies of the Group,
transactions with related parties. Loans for real estate development are no longer issued and are fully recovered.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance, as explained in the table below, is measured differently from profit or loss in the consolidated
financial statements. Income taxes are managed on a group basis and are not allocated to operating segments. For the costs, for which direct
allocation to a particular segment is not attributable, the judgement of the management is used to allocate general costs by segments, based on the
following cost allocation drivers – loan issuance, segment income, segment employee count, segment employee costs, the amount of segment assets.
Based on the nature of the services, the Group’s operations can be divided as follows:
EUR
Pawn loans
Consumer loans
Other activities
Total
2021
2020
(restated,
Note 1)
2021
2020
(restated,
Note 1)
2021
2020
(restated,
Note 1)
2021
2020
(restated,
Note 1)
Assets
8 509 255
8 401 792
43 555 285
32 544 339
-
5 215 261
52 064 540
46 161 392
Liabilities of
the segment
7 088 327
7 984 453
27 598 892
24 584 009
-
4 139 221
34 687 219
36 707 683
Income
9 795 703
10 838 504
15 623 398
12 383 072
69 434
442 410
25 488 535
23 663 986
Net
performance of
the segment
1 181 508
2 140 288
7 698 915
5 668 620
149 914
678 497
9 030 337
8 487 405
Financial
(expenses)
(618 101)
(624 736)
(3 196 526)
(2 593 520)
(12 686)
(414 896)
(3 827 313)
(3 633 152)
Profit/(loss)
before taxes
563 408
1 515 552
4 502 389
3 075 099
137 227
263 602
5 203 024
4 854 253
Corporate
income tax
(106 031)
(235 575)
(847 334)
(477 988)
(25 826)
(40 973)
(979 191)
(754 536)
Other
information
Fixed assets
and intangible
assets (NBV)
2 816 042
2 888 720
1 357 691
983 211
-
360 883
4 173 733
4 232 814
Depreciation
and
amortisation
during the
reporting
period
(767 989)
(726 934)
(370 268)
(247 421)
-
(90 814)
(1 138 257)
(1 065 169)
Loans issued
15 528 104
18 230 191
37 009 487
29 894 481
-
26 000
52 537 591
48 150 672
Loans received
15 875 167
18 008 376
19 812 199
20 819 042
4 806 601
2 850 292
40 493 967
41 677 710
(27) Guarantees issued, pledges
The Group has registered a commercial pledge by pledging its property and receivables, with the maximum claim amount of EUR 25 million as
collateral registered to collateral agent SIA ZAB Eversheds Sutherland Bitāns in favor of SIA Mintos Finance. As of 31 December 2021, the amount
of secured liabilities constitutes EUR 18 573 636 for AS Mintos Finance. As of 31 December 2020, the maximum claim amount was EUR 40.5 million
as collateral registered to collateral agent SIA ZAB Eversheds Sutherland Bitāns on the pari passu principle among bondholders of notes issues ISIN
LV0000802213 (EUR 5 000 000) and ISIN LV0000802379 (EUR 5 000 000), and EUR 17 268 857 in favor of SIA Mintos Finance.
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
44 / 51
Notes (continued)
(28) Fair value of financial assets and financial liabilities
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
► Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
► Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly; and
► Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market
data.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and
risks of the asset or liability and the level of the fair value hierarchy as explained above. Also set out below is a comparison by class of the carrying
amounts and fair values of the Group’s financial instruments that are not carried at fair value in the Consolidated balance sheet. The table does not
include the fair values of non-financial assets and non-financial liabilities.
At 31 December 2021
Fair value hierarchy
Level 1
Level 2
Level 3
Total fair value
Carrrying value
Assets for which fair values are disclosed
Cash and cash equivalents
2 459 862
-
-
2 459 862
2 459 862
Loans and receivables
-
-
43 445 437
43 445 437
42 961 750
Other financial assets
-
-
519 705
519 705
519 705
Liabilities for which fair values are
disclosed
Bonds issued
-
-
11 254 482
11 254 482
10 838 165
Other borrowings
-
-
18 496 882
18 496 822
18 573 636
Lease liabilities
-
-
3 487 574
3 487 574
3 305 197
Trade payables
-
-
805 784
805 784
805 784
At 31 December 2020
Fair value hierarchy
Level 1
Level 2
Level 3
Total fair value
Carrrying value
Assets for which fair values are disclosed
Cash and cash equivalents
4 591 954
-
-
4 591 954
4 591 954
Loans and receivables
-
-
32 281 609
32 281 609
34 673 854
Other financial assets
-
-
654 279
654 279
654 279
Liabilities for which fair values are
disclosed
Bonds issued
-
10 082 397
3 380 607
13 463 004
13 464 369
Other borrowings
-
-
18 414 469
18 414 469
17 686 857
Lease liabilities
-
-
3 504 097
3 504 097
3 435 851
Trade payables
-
-
702 933
702 933
702 933
(29) Analysis of financial liabilities by remaining contractual maturities
The tables below summarise the maturity profile of the Group’s financial liabilities at 31 December based on contractual undiscounted repayment
obligations . Repayments which are subject to notice are treated as if notice were to be given immediately. However, the Group expects that many
customers will not request repayment on the earliest date the Group could be required to pay.
As at 31 December 2021
Less than
3 months
3 to
12 months
1 to
5 years
Over
5 years
Total
Financial liabilities
Bonds issued
162 730
813 650
12 114 674
-
13 091 054
Other borrowings
2 606 848
6 212 304
11 522 590
90 425
20 432 167
Lease liabilities
161 824
733 915
2 001 015
1 151 747
4 048 501
Trade payables
805 784
-
-
-
805 784
Total undiscounted financial liabilities
3 737 186
7 759 869
25 638 279
1 242 172
38 377 506
AS DelfinGroup Annual accounts and Consolidated
annual accounts for the year ended 31 December 2021
(translation from Latvian)
45 / 51
Notes (continued)
(30) Subsequent events
Beginning of February 2022 the Group finalized taking over the pawn shop assets of AS Moda Kapitāls. The transaction was started in August 2021
and involved acquisition of AS Moda Kapitāls pawn loan portfolio.
On 15 February 2022, the Latvian Government decided on a gradual and responsible easement of the epidemiological safety regulations effective in
the country. First easements came into effect on 16 February, for instance, shops are allowed to work without limitations on opening hours. On 1
March 2022, state of emergency expired and a number of measures was eased further. During the state of emergency all services provided by the
Group were availavble to customers in full scope. The Group continues to assess the impact of easement of restrictions on the Group’s business
operations.
On 24 February 2022, Russian Federation has started a war at Ukraine. Countries round the world support Ukraine by announcing financial and
economic sanctions against Russian Federation and its ally Republic of Belarus. The management of the Group has evaluated current situation and
has concluded that the aforementioned sanctions have no direct impact on the Group’s operations since all sales for the Group are generated in
Latvia and the Group has no dirrect exposure to Rusian, Belarusian and Ukrainian market. In addition, the management performed an overview and
analysis of its counterparties and confirms that the Group does not have any relations with the sanctioned companies and sanctioned private
individuals. There is still uncertainty related to final outcome of the situation, but the management regularly follows on the further developments,
analyses a possible impact on the Group’s business and is properly prepared to assess and implement any changes into business operations, risk
management practices, policies and accounting estimates.
Changes in the composition of the Management board have been registered with the Enterprise Register on 1 March 2022. Sanita Zitmane was
appointed as a member of the Management board AS DelfinGroup, replacing Ivars Lamberts who left the position of member of the Management
board.
Didzis Ādmīdiņš
Chairman of the Board
Aldis Umblejs
Board Member
Sanita Zitmane
Board Member
Inta Pudāne
Chief accountant
This document is electronically signed with safe electronical signature and contains time stamp.
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www.bdo.lv
Kaļķu street 15-3B
Rīga, LV-1050
Latvia
46 / 51
Independent Auditor’s Report
To the shareholders of AS “DelfinGroup”
Our Opinion on the Separate and Consolidated Financial Statements
We have audited the separate financial statements of AS “DelfinGroup” (“the Company”) and the
consolidated financial statements of the Company and its subsidiaries (“the Group”) set out on pages 10 to
45 of the accompanying separate and consolidated Annual Report, which comprise:
• the separate and consolidated statement of financial position as at 31 December 2021;
• the separate and consolidated statement of profit or loss and other comprehensive income for the year
then ended;
• the separate and consolidated statement of changes in equity for the year then ended;
• the separate and consolidated statement of cash flows for the year then ended;
• notes to the separate and consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying separate and consolidated financial statements give a true and fair view
of the separate and consolidated financial position of the Company and the Group as at 31 December 2021,
and of its separate and consolidated financial performance and its cash flows for the year then ended in
accordance with the International Financial Reporting Standards as adopted by the European Union (“IFRS”).
Basis for Opinion
In accordance with the Law on Audit Services of the Republic of Latvia (“Law on Audit Services”) we
conducted our audit in accordance with International Standards on Auditing adopted in the Republic of
Latvia (ISAs). Our responsibilities under those standards are further described in the “Auditor’s
Responsibilities for the Audit of the Separate and Consolidated Financial Statements” section of our
report.
We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (including International Independence Standards)
and independence requirements included in the Law on Audit Services of the Republic of Latvia that are
relevant to our audit of the separate and consolidated financial statements in the Republic of Latvia. We
have also fulfilled our other professional ethics responsibilities and objectivity requirements in accordance
with the International Code of Ethics for Professional Accountants (including International Independence
Standards) and Law on Audit Services of the Republic of Latvia.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the reporting period. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated in our
report.
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Impairment of loans granted to retail customers
Key audit
matter
Loans to customers comprise EUR 46 121 thousand at gross carrying value and EUR 42 962
thousand of net carrying value as at 31 December 2021 what represents 82.5% of total
assets in the Consolidated financial statements and EUR 35 640 thousand at gross carrying
value and EUR 33 403 thousand of net carrying value as at 31 December 2021 what
represents 74.7% of total assets in the Separate financial statements.
Loan portfolio mainly consist of both unsecured loans and pawn loans granted to private
individuals. The management applies significant judgements in defining allowance for
expected credit losses on the loans.
Our audit
response
We tested internal controls applied within processes related to the loan approval and
issuance as well as controls over delayed payments and debt collection.
We tested methodology, management assumptions and inputs used in assessment of
expected credit losses with a particular focus on the audit of probability of default and
loss given default ratios. We tested completeness and accuracy of data used for the
calculation of loan loss allowance. We also audited the management’s assessment of
COVID-19 impact on the quality of loan portfolio and other related considerations.
We audited completeness and accuracy of disclosures related to loans, ECL allowance
and credit loss expense.
Estimates used in defining right-of-use assets and lease liabilities (IFRS 16)
Key audit
matter
The Group has a large number of lease contracts for the premises used in the core
business. The Group recognizes right-of-use assets and lease liabilities for contracts which
meet recognition criteria as set out in IFRS 16.
Right-of-use assets and lease liabilities currently amount to EUR 2 973 thousand and EUR
3 305 thousand, respectively, in both, the Consolidated and Separate financial
statements.
The management applies significant professional judgement to define incremental
borrowing rates used for discounting cash flows under lease contracts.
Our audit
response
We audited completeness of lease contracts recognized under IFRS 16, methodology,
inputs, and management assumptions used in calculation of carrying amount of right-of-
use assets and lease liabilities, with focus on incremental borrowing rates used to discount
cash flows under the leases.
We tested accuracy and completeness of the data used in the calculations: lease term,
lease payments, commencement dates; and accuracy of the calculations.
We tested completeness and accuracy of disclosures related to right-of-use assets and
lease liabilities.
Reporting on Other Information
The Company’s management is responsible for the other information. The other information comprises:
• Information about the Company and the Group, as set out on pages 3 to 5 of the accompanying Annual
Report,
• the Statement on Management Responsibility, as set out on page 6 of the accompanying Annual Report,
• the Management Report, as set out on pages 7 to 9 of the accompanying Annual Report,
• the Statement of Corporate Governance for the year 2021, set out in separate statement provided by AS
“DelfinGroup” management and available on AS “DelfinGroup” website
https://www.delfingroup.lv/reports
Our opinion on the separate and consolidated financial statements does not cover the other information
included in the Annual Report, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the separate and consolidated financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated.
48 / 51
If, based on the work we have performed and in light of the knowledge and understanding of the Group and
its environment obtained in the course of our audit, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Other reporting responsibilities in accordance with the legislation of the Republic of Latvia
In addition, in accordance with the Law on Audit Services of the Republic of Latvia with respect to the
Management Report, our responsibility is to consider whether the Management Report is prepared in
accordance with the requirements of the Law on the Annual Reports and Consolidated Annual Reports of
the Republic of Latvia.
Based solely on the work required to be undertaken in the course of our audit, in our opinion:
• the information given in the Management Report for the financial year for which the separate and
consolidated financial statements are prepared is consistent with the separate and consolidated
financial statements; and
• the Management Report has been prepared in accordance with the requirements of the Law on the
Annual Reports and Consolidated Annual Reports of the Republic of Latvia.
In accordance with the Law on Audit Services, we are also obliged to report whether the corporate
governance statement provides information in accordance with Section 56², paragraph three of the Financial
Instrument Market Law.
In our opinion, the corporate governance statement provides information in accordance with section 56²,
paragraph three of the Financial Instrument Market Law.
Responsibilities of Management and Those Charged with Governance for the Separate and
Consolidated Financial Statements
Management is responsible for the preparation of the separate and consolidated financial statements that
give a true and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union and for such internal control as management determines is necessary to enable the
preparation of the separate and consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, management is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibility for the Audit of the Separate and Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these separate and consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the separate and consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
49 / 51
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s and the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the separate and consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate and consolidated financial
statements, including the disclosures, and whether the separate and consolidated financial statements
represent the underlying transactions and events in a manner that achieves a fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the separate and consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence and objectivity, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the separate and consolidated financial statements of the reporting
period and are therefore the key audit matters. We describe these matters in our auditors’ report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on the compliance of the presentation of consolidated financial statements with the
requirements of the European Single Electronic Format (“ESEF”)
We have been engaged by the Management Board of the Company to conduct a reasonable assurance
engagement for the verification of compliance with the applicable requirements of the presentation of the
consolidated financial statements of AS “DelfinGroup” for the year ended 31 December 2021 (the
“Presentation of the Consolidated Financial Statements”).
Description of a subject matter and applicable criteria
The Presentation of the Consolidated Financial Statements has been prepared by the Management Board
of the Company to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation
(EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and
of the Council with regard to regulatory technical standards on the specification of a single electronic
reporting format (the “ESEF Regulation”). The applicable requirements regarding the Presentation of the
Consolidated Financial Statements are contained in the ESEF Regulation.
The requirements described in the preceding paragraph determine the basis for preparation of the
Presentation of the Consolidated Financial Statements and, in our view, constitute appropriate criteria to
form a reasonable assurance conclusion.
50 / 51
Responsibility of the Management Board and the Supervisory Board
The Management Board of the Company is responsible for the Presentation of the Consolidated Financial
Statements that complies with the requirements of the ESEF Regulation.
This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF
taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the
Presentation of the Consolidated Financial Statements which is free from material noncompliance with the
requirements of the ESEF Regulation.
Members of the Supervisory Board are responsible for overseeing the financial reporting process.
Our responsibility
Our responsibility was to express a reasonable assurance conclusion whether the Presentation of the
Consolidated Financial Statements complies, in all material respects, with the ESEF Regulation.
We conducted our engagement in accordance with the International Standard on Assurance Engagements
3000 (Revised) - ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’
(ISAE 3000 (Revised)). This standard requires that we comply with ethical requirements, plan and perform
procedures to obtain reasonable assurance whether the Presentation of the Consolidated Financial
Statements complies, in all material aspects, with the applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in
accordance with ISAE 3000 (Revised) will always detect the existing material misstatement (significant non-
compliance with the requirements).
Quality control requirements
We apply the provisions of the International Standard on Quality Control 1 and accordingly maintain a
comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
We comply with the independence and other ethical requirements of the International Code of Ethics for
Professional Accountants (including International Independence Standards) issued by the International Ethics
Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behaviour.
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the Presentation
of the Consolidated Financial Statements complies, in all material aspects, with the ESEF Regulation. Our
procedures included in particular:
• obtaining an understanding of the internal control system and processes relevant to the application of
the Electronic Reporting Format of the Consolidated Financial Statements, including the preparation of
the XHTML format and marking up the consolidated financial statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the consolidated financial statements using the iXBRL
markup language according to the requirements of the implementation of electronic format as described
in the ESEF Regulation;
• evaluating the appropriateness of the Group’s' use of XBRL markups selected from the ESEF taxonomy
and the creation of extension markups where no suitable element in the ESEF taxonomy has been
identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, based on the procedures performed, the Presentation of the Consolidated Financial
Statements complies, in all material respects, with the ESEF Regulation.
51 / 51
Appointment and period of our audit engagement
We were appointed by the Shareholders meeting on 09 August 2021 to audit the separate and consolidated
financial statements of AS “DelfinGroup” for the year ended 31 December 2021. This is our fourth year of
appointment.
We confirm that:
• our audit opinion is consistent with the additional report presented to the Audit Committee of the
Group;
• as referred to in the paragraph 37.6 of the Law on Audit Services of the Republic of Latvia we have not
provided to the Company and the Group the prohibited non-audit services (NASs) referred to in the EU
Regulation (EU) No 537/2014. We also remained independent of the Company and the Group in
conducting the audit.
For the period to which our statutory audit relates, we have not provided any other services to the Company
and the Group in addition to the audit, which have not been disclosed in the separate and consolidated
financial statements of the Company and the Group.
Irita Cimdare is the responsible sworn auditor and audit engagement partner and Andrei Surmach is the
assigned second audit engagement partner on the audit resulting in this independent auditor’s report.
SIA “BDO ASSURANCE”
License No 182
Andrei Surmach
Partner
Irita Cimdare
Member of the Board
Sworn auditor
Certificate No 103
Riga, Latvia
29 March 2022
This document is electronically signed with safe electronical signature and contains time stamp.