JSC DEVELOPMENT FINANCE INSTITUTION ALTUM
Consolidated and Separate Annual Report
for the year ended 31 December 2021
(the 8th reporting period)
1
TABLE OF CONTENTS Page
Altum Group 2
Management Report 3 - 11
Supervisory Council and Management Board 12
Statement of Management’s Responsibility 13
Financial statements:
Statement of Comprehensive Income 14
Statement of Financial Position 15
Consolidated Statement of Changes in Equity 16
Company’s Statement of Changes in Equity 16
Statement of Cash Flows 17
Notes to the Financial Statements 18 - 113
Independent Auditors’ Report 114 - 118
Other Notes to the Annual Report 119 – 145
AS Attīstības finanšu institūcija Altum
Phone: + 371 67774010
Fax: + 371 67820143
Registration No: 50103744891
www.altum.lv
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2020
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Altum Group
MISSION We help Latvia grow!
VISION To be a partner and financial expert in economic development
VALUES Excellence / Team / Responsibility
AS Attīstības finanšu institūcija Altum (the joint stock company Development Finance Institution Altum), Parent Company of
the Altum Group, is a Latvian state -owned company that implements the aid and development programmes by means of
financial instruments and grants pursuing the state’s policy in the national economy and providing for execution of other
government assignments stipulated and delegated by laws and regulations. Eliminating market failures with the help of various
support instruments that enhance the development of national economy is the fundamental purpose of Altum’s activities.
Long-term objectives until 2021
Following strategic development directions and long-term objectives are set in the approved JSC Development Finance
Institution Altum Strategy for the period 2019 – 2021:
In the implementation of the state aid programmes, the
main financial objective is to ensure positive return on
Altum’s capital.
The main non-financial objective is to support and
promote availability of finances to business and the
development of national economy.
Priority directions of Altum are the following: issuing of
guarantees and their servicing, venture capital
investments, implementation of energy efficiency
programmes with regard to thermal insulation of both
multi-apartment buildings and the corporate segment,
development of the Latvian Land Fund as well as
initiation of new projects by expanding the range of the
financial instruments offered
The main target activities embrace support to
entrepreneurs, farmers and specific categories of
persons; energy efficiency; management of the Latvian
Land Fund.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report
Activity during the reporting period
In 2021, the Development Finance Institution Altum group (hereinafter – the Group) and the Group’s parent company, the
and earned a profit of EUR 13,8 million.
Key financial and performance indicators of the Group
Based on data from audited financial statements for the respective years
2021 2020 2019
Key financial data
Net interest income (EUR ’000) 16 717 14 572 11 569
Operating profit (EUR ’000) 13 829 5 539 8 131
Profit for the period (EUR ’000) 13 829 5 539 8 131
Cos to income ratio (CIR) 39.46% 47.51% 52.58%
Employees 226 211 203
Total assets (EUR ’000) 976 204 850 704 560 061
Financial debt (EUR ’000) 360 909 342 490 217 943
Tangible common equity (TCE) / Total tangible managed assets (TMA) * 33.82% 33.56% 29.40%
Equity and reserves (EUR ’000) 440 736 382 594 232 738
Total risk coverage: (EUR ’000) 285 954 180 205 87 456
Risk coverage reserve 159 196 112 567 99 778
Risk coverage reserve used for provisions (29 496) (28 197) (27 829)
Portfolio loss reserve (specific reserve capital) 159 700 102 264 15 507
Portfolio loss reserve used to compensate provisions in the distribution of annual profit (3 446) (6 429) -
Liquidity ratio for 180 days ** 518% 464% 582%
Net Cash flows from operating activities (EUR ’000) 49 555 21 966 39 813
Net Cash flows from financing activities (EUR ’000) 43 768 165 800 18 700
Net Cash flow from investing activities (EUR ’000) 4 553 (4 016) (11 230)
Support instruments gross value (EUR ’000), of which 979 130 872 302 667 649
Financial instruments gross value (EUR ’000) ***
Loans (excluding sales and leaseback transactions) 315 674 302 481 225 144
Guarantees 414 978 359 605 284 232
Venture capital funds 85 973 73 165 68 331
Land Fund, of which: 79 163 68 258 39 634
- sales and leaseback transactions 32 999 31 500 15 268
- investment properties 46 164 36 758 24 366
Total 895 788 803 509 617 341
Number of transactions 30 978 26 578 22 437
Volumes issued (EUR ’000) (by financial instrument) ***
Loans (excluding sales and leaseback transactions) 100 966 138 238 64 320
Guarantees 126 997 137 425 98 240
Venture capital funds 29 158 14 014 9 022
Land Fund, of which: 10 595 28 191 16 384
- sales and leaseback transactions 3 254 16 796 7 239
- investment properties 7 341 11 395 9 145
Total 267 716 317 868 187 966
Number of transactions 6 579 6 147 5 559
Total contribution to economy, including the participation of the final recipients (EUR ’000) 791 646 696 306 531 661
Leverage for raised private funding 177% 114% 142%
Volume of support programmes funding per employee (EUR ’000) 3 964 3 808 3 041
Long-term rating assigned by Moody’s Investors Service Baa1 Baa1 Baa1
* TMA includes off-balance sheet item outstanding guarantees.
** The calculation of liquidity ratio takes into account the previous experience and management estimate of the expected amount and timing
of guarantee claims
*** Taking into account the significance of the volume, the Land Fund portfolio, which consists of leaseback transactions and investment
properties, is also presented in the operational volumes for the period. As in compliance with the accounting principles and IFRS the leaseback
transactions are accounted for under the loans, the loan volume in this table has been reduced for the volume of the leaseback transactions
as it is recorded under the Land Fund portfolio.
The figures are explained in the section “Key Financial and Performance Indicators” under Other Notes to the Annual Report.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Operational volumes
The core business lines of the Group include lending, issuing of guarantees, investments in capital instruments, transactions of
instruments.
As at 31 December 2021, the Group's gross portfolio of support instruments amounted to EUR 979,1 million (31 December 2020:
EUR 872,3 million), of which the gross portfolio of financial instruments totalled EUR 895,8 million and consisted of 30,978 projects
(31 December 2020: EUR 804 million and 26,578 projects).
In 2021, the Group’s financial instrument portfolio increased by EUR 92,3 million (+11.4%) and by 4,400 projects (+16.6%) and
that was significantly lower than in 2020, when due to a sharp rise in the demand for specialised financial instruments to
mitigate the negative impact of Covid-19 on the business sector it increased by EUR 186 million (+30.2%). The largest increases
in the Group's financial instrument portfolio in 2021 were not related to the support programme for overcoming the
consequences of Covid-19. That part of the Group's financial instruments portfolio increased by EUR 88,2 million, which is by
EUR 5,7 million more than in 2020, when it increased by EUR 82,5 million.
Of all the financial instruments, the guarantee portfolio recorded the highest growth in 2021, increasing by EUR 55,4 million
(+15.2%), which is less than in 2020, when it increased by EUR 75,4 million (+26.5%). The number of projects in the guarantee
portfolio increased by 4,080 projects (+21.2%), which is more than in 2020, when the number of projects increased by 3,650
projects (+23.4). The large increase in 2021 was ensured by Housing Guarantees for Families with Children and Housing
Guarantees for Young Professionals (+EUR 33,2 million), driven by a significant increase in demand in the housing market as
well as by loan guarantees for entrepreneurs and portfolio guarantees (+EUR 27 million) as companies actively invested and
replenished their working capital, taking advantage of the sharp economic recovery after the downturn in 2020. Whereas in
2021, demand for the Covid-19 crisis-related guarantee instruments fell significantly, with the portfolio declining by EUR
4,9 million.
In 2021, the loan portfolio increased by EUR 13,2 million (+4.4%) and by 153 projects (+2.4%), which is less than in the
corresponding period in 2020, when it increased by EUR 77,3 million (+34.4%) by volume and by 274 (+4.5%) projects. The
dynamics of the loan portfolio is also closely linked to demand for Covid-19 crisis-related loans – demand was high in 2020 with
a significant drop in 2021. The loan portfolio growth in 2021 was driven by loan programmes not related to Covid-19 mitigation,
such as loans for acquisition of agricultural land intended for agricultural production (+EUR 11,6 million), SME growth loans
(+EUR 10,6 million), loans for Energy Efficiency Programme of Multi-apartment Buildings (+EUR 5,1 million). Meanwhile, the loan
portfolio of support programmes established for overcoming the consequences of Covid-19 decreased by EUR 6 million in
2021.
In 2021, the venture capital funds increased by EUR 12,8 million (+17.5%), which is significantly more than in 2020, when the
volume of the venture capital funds increased by EUR 4,8 million (+7.1%). The largest increase was ensured by investments in
the AIF Altum Capital Fund.
Notwithstanding that the demand for the Land Fund services in 2021 was lower than in 2020, the Land Fund continued to grow
and its portfolio increased by EUR 10,9 million (+16%) and by 200 projects (+27.7%).
As at 31 December 2021, the balance sheet of the Land Fund included 1,202 properties with a total land area of 23,439 ha
and amounting to EUR 79,2 million, including investment properties with a total area of 13,778 ha and amounting to
EUR 46,2 million (31 December 2020: 10,964 ha; EUR 36,8 million), and leaseback transactions for 9,661 ha amounting to
EUR 33 million (31 December 2020: 9,140 ha; EUR 31,5 million).
By segment the largest portfolio of the Group is formed in the SMEs and Midcaps segment – 42%, while the Agriculture segment
accounts for – 25%, Individuals – 23% and Financial intermediaries – 10%.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Operational volumes (cont’d)
Group 31/12/2021
In 2021, an increase in volume was observed in all segments as described below. The largest growth was in the Individuals
segment, namely, by EUR 46,9 million (+28.6%), which is significantly more than in 2020, when the portfolio grew by EUR 25,2
million (+18.2%). The increase in the retail portfolios was mainly due to the increase in demand for Housing Guarantees as well
as guarantees under the Guarantee Programme for Improving Energy Efficiency in Multi-Apartments Buildings. The Agriculture
segment and the SME and Midcap segment grew by EUR 16,7 million and EUR 15,9 million respectively; however, this growth
was significantly lower than in 2020, when the Agriculture segment grew by EUR 42,6 million and the SME and Midcap segment
- by EUR 114 million, thanks to the support provided by the Group's financial instruments to businesses to mitigate the negative
effects of Covid-19. The Financial Intermediaries segment grew by EUR 12,8 million, significantly more than in 2020, when its
growth was by EUR 4,3 million. The 2021 increase was largely driven by the Altum Capital Fund, which is one of Altum's financial
instruments for overcoming the impact of Covid-19 on companies that because of the virus were prepared to adapt their
current operations by changing their business model, adapting product development, introducing new technologies, entering
new export markets thus promoting their growth.
Volume of new transactions
In 2021, the total funding disbursed for the implementation of the state aid programmes amounted to EUR 267,7 million,
breaking down as follows: 47.4% (EUR 127 million) for guarantee programmes, 37.7% (EUR 100,9 million) in loan programmes,
10.9% (EUR 29,2 million) in investments in the venture capital funds and 4% (EUR 10,6 million) in the Land Fund transactions.
Totally, 6,579 projects were supported. In general, in 2021, the volume of the new transactions was less by 15.7% compared to
the last year, when, reacting swiftly to the declaration of Covid-19 as a global pandemic in mid-March 2020 and the sharp
downturn in the economic situation, the Group actively engaged in mitigating the negative impact of Covid-19 in the business
sector by creating specialised financial instruments, which resulted in a significant increase in new transactions due to the
state aid programmes implemented by the Group for supporting entrepreneurs in mitigating the Covid-19 effect. In 2021, there
is a significant reduction in demand for specialised financial instruments to mitigate the effects of Covid-19. If in 2020 the
volume of new transactions in the specialized financial instruments for Covid-19 effect mitigation reached EUR 105,7 million,
then in 2021 its volume under these programmes was EUR 45,3 million. In its turn, in 2021, the volume of new transactions under
the regular programmes amounted to EUR 222,4 million, which is slightly higher than in 2020, when the volume of new
transactions under the regular programmes was EUR 212,2 million.
In 2021, the largest volume of the new transactions was recorded in the following segments: SMEs and Mid-caps – 47.4%;
Individuals – 24.7%; Agriculture –17%; and Financial Intermediaries – 10.9%.
In 2021, new transactions experienced the largest increase in the Individuals segment, where their volume was by
EUR 24,4 million higher than in 2020, and in the Financial Intermediaries segment – by EUR 15,1 million higher than in 2020
Whereas, their volume was lower than in 2020 in the SME and Midcap segment by EUR 69,6 million, and in the Agriculture
segment – by EUR 20,1 million.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Volume of new transactions (cont’d)
Group 31/12/2021
In 2021 there were issued new guarantees for EUR 127 million or by 7.6% (-EUR 10.4 million) less against 2020, due to a significant
decline in demand for the Covid-19 crisis-related guarantees. In 2021, the largest increase in the guarantee portfolio was in
the loan guarantees for entrepreneurs (EUR 44,5 million), Housing Guarantees for Families with Children and Housing
Guarantees for Young Professionals (EUR 43 million), the loan guarantee programmes for the Covid-19-affected businesses
(EUR 10,7 million) and Energy Efficiency Programme for Multi-apartment Buildings (EUR 10,7 million).
Taking into account the business specifics, when issuing guarantees for working capital loans, for bank issued guarantees and
for investment loan, a regular review and the extension of the issued guarantee are required for existing customers. This type
of transaction is not attributed to newly issued guarantees because it is considered as an extension of guarantees; however,
the volume of such transactions is quite significant, with EUR 65,3 million of guarantees extended in 2021.
In 2021, the volume of new loans issued amounted to EUR 100,9 million, which is by 27% (-EUR 37,3 million) less than 2020 due
to a significant decline in demand for Covid-19 crisis-related loans. In 2021, the largest amount of new loans was issued under
the SME Growth Loan Programme (EUR 32,2 million), under the Covid-19 crisis-related Loan Programme (EUR 18,7 million), loans
for acquisition of agricultural land for the purpose of agricultural production (EUR 17,8 million) and working capital loans for
agricultural enterprises (EUR 9,2 million).
As at 31 December 2021, a total of 19,490 guarantees for EUR 150,6 million of the state aid for housing acquisition was granted
within the framework of the Programme for Housing Guarantees for Families with Children; out of these, guarantees worth
EUR 34,2 million were issued in 2021, which is by 51% more against 2020, when the economic activity of people decreased
quite significantly due to the Covid-19 pandemic and national restrictions. The guarantees of the Programme help saving for
the first instalment required to obtain a mortgage loan and are used by families all over Latvia. A total of 4,386 guarantees
worth EUR 35,1 million were issued to young professionals; out of these, 1,011 guarantees worth EUR 8,8 million were issued in
2021.
Having launched the European Investment Fund (EIF) COSME and EaSI counter guarantees for loans up to EUR 25 thousand
the Group / Company has already supported 680 projects (COSME – 95 projects, EaSI – 585 projects) in total amount of EUR
9,7 million. If the loan is compatible with COSME or EaSI guarantee terms and conditions, the start-up and micro loans, working
capital loans to farmers or small loans in rural areas are granted without additional collateral, based solely on a personal
guarantee and at a lower interest rate compared to other types of unsecured loans.
In 2021, the Company’s investments made in venture capital funds amounted to EUR 29,2 million, of which EUR 14,9 million - in
the Altum Capital Fund, EUR 8 million - in the 4th generation venture capital funds, EUR 2,9 million - in the Three Seas Investment
Fund while EUR 2,2 million and EUR 1,2 million – in the Baltic Innovation Fund and the Baltic Innovation Fund 2, respectively.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Volume of new transactions (cont’d)
Although the transaction activity within the Land Fund slowed down in some periods, by the end of 2021 the market situation
had changed, with a sharp increase in the number of investment property transactions and a gradual revival of interest in
reverse rent transactions. All in all, in 2021 the land sales and leaseback transactions under the Land Fund amounted to
EUR 10,6 million or by EUR 17,6 million less compared to 2020. The drop was due to a relatively good year for agriculture in 2020,
when farmers' own purchasing power returned and thus reduced the demand for additional funding.
Non-financial instrument portfolio
In order to make accessing to the support instruments more convenient for its clients, apart from the financial instruments, the
Group / Company services the grant programmes as well, namely, the grants issued under the Energy Efficiency Programme
for Multi-apartment Buildings (EEPMB), Social Entrepreneurship Programme and European Local Energy Assistance (ELENA)
Programme, the grants under the support program BALSTS for the purchase or construction of housing for families with three
or more children, grants under the Culture Support Programme, providing support in the form of loans and grants (combined
financial instrument) where the grant does not exceed 40% of the total aid amount as well as grants under the support
programme for increasing the energy efficiency of private houses, applying for it opened on 27 May 2021. The programme
gained great interest from the very start, and 392 applications from private house owners had been received by 1 July. As the
amount of funding for the programme is limited and approximately 243 projects are envisaged to be supported, accepting
of new project applications has been suspended as of 1 July. Considering the individual’s interest in the support provided
under this programme, proposals were developed and, on 8 March 2022, the Cabinet of Ministers approved respective
amendments granting additional funding of EUR 3.27 million for continuing the programme as well as extending the range of
potential beneficiaries and including support for the installation of solar panels in private houses, which is currently attracting
a lot of interest.
As at 31 December 2021, the EEPMB programme had awarded a total of 445 grants for EUR 97,7 million, of which 107 grants
for EUR 25,5 million were granted in 2021. As of 18 December 2020, the programme was suspended and no new applications
were accepted and currently the evaluation of the projects, awarding of grants and implementation of projects are carried
out.
Under the support programme for increasing the energy efficiency of private houses, in 2021 a total of 202 grant agreements
worth EUR 1 million were signed.
As at 31 December 2021, a total of 147grants for EUR 9,3 million were awarded under the Social Entrepreneurship Programme.
In order to promote and support planning of the energy efficiency projects, Altum, acting in co-operation with the European
Investment Bank, provides to companies a supplementary support grant earmarked for covering the costs related to expertise
and drafting of energy efficiency projects. As at 31 December 2021, there were a total of 69 grants awarded for EUR 824
thousand.
In November 2020, within the framework of the new support programme BALSTS, the Group / Company started accepting
applications for the issuance of non-refundable state subsidies or grants for the purchase or construction of housing for families
with three or more children. As at 31 December 2021, a total of 569 grants for EUR 4,7 million were awarded, of which 508
grants for EUR 4,2 million were granted in 2021.
As at 31 December 2021, the portfolio of grants amounted to EUR 83.3 million.
New products and increasing operational efficiency
Since March 2020, the Group has been actively engaged in mitigating the negative impacts of Covid-19 in the business sector.
In order to continue providing support to Covid-19-affected businesses, the duration of the Covid-19 crisis support programmes
was extended their until 30 June 2022.
In 2021, the relevant Cabinet regulations were amended to ensure that the support programmes implemented by the Group
were more accessible to a wider range of beneficiaries by improving the support eligibility criteria. In parallel, the development
and implementation of new support programmes for specific customer groups continued:
- the Large Investment Loan Programme offering a capital rebate for medium-sized and large enterprises: under the
programme, entrepreneurs will have access to a loan with a capital rebate of up to EUR 10 million, or if reaching certain
objectives and meeting the criteria, the principal amount of the loan will be reduced for viable business projects with a
minimum eligible cost of EUR 10 million within a period of three years after the project implementation. The call for
applications opened on 19 January 2022. The Group will provide project funding with a loan amounting to the potential
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
New products and increasing operational efficiency (cont’d)
capital rebate, the remainder to be raised from other funders. The new programme differs from previous business support
programmes to the effect that it includes a capital rebate or a complete or partial reduction (discharge) of the loan
principal. This means that a company can qualify for a loan with a capital rebate or discharge of the Group's share of
the loan, by achieving the project's objectives and meeting certain criteria.
- the Energy Efficiency Support Programme for Private Houses: envisages granting portfolio guarantees, technical
assistance and grants for increasing the energy efficiency of private houses. The maximum amount of technical
assistance per beneficiary is EUR 1,000, while a grant for increasing the energy efficiency class of a residential house is
expected in the amount of EUR 5,000 per beneficiary. Within the framework of the programme, on 27 May 2021,
accepting of applications for projects to increase the energy efficiency of private houses was started, but already on
1 July 2021 it was suspended due to the great interest in it (the number of received applications exceeded the available
funding. Considering the individual’s interest in the support provided under this programme, proposals were developed
and, on 8 March 2022, the Cabinet of Ministers approved respective amendments granting additional funding of EUR
3.27 million for continuing the programme as well as extending the range of potential beneficiaries and including support
for the installation of solar panels in private houses, which is currently attracting a lot of interest. At the same time,
amendments to Cabinet Regulation No 500 "General Construction Regulations", dated 19 August 2014, were approved
to facilitate the installation of solar panels. From now on, private house owners are eligible for support not only for
improving energy efficiency, but also for the installation of microgeneration technologies, i.e., solar panels and small
scale wind turbines. Altum starts accepting applications in the second half of April 2022.
- the Culture Support Programme: from 19 May 2021, organizers of arts, entertainment and recreation events can apply
for a support programme developed by the Ministry of Culture in cooperation with the Group to stimulate the
organization of new events by providing support in the form of loans and grants (combined financial instrument) to
entities whose core business is related to arts, entertainment and leisure activities. The total amount of support is
EUR 6 million, given as a loan and a grant, where the grant does not exceed 40% of the total aid amount.
- the Programme for Multi-apartment Building Renovation Loans: under which it is established a Renovation Fund for
financing renovation and other related costs for Multi-apartment buildings. The programme is open for applications from
8 September 2021 and has a total funding of EUR 31 million, available as a loan. The funding is intended for repairs of
common areas and improvement of the surroundings as well as for replacing water pipes or roofs, installing a children
playground or a sports field, renovating the facade of the building and other works that improve the condition of the
building and create a more pleasant living environment. This programme may be used as a complement to the existing
Energy Efficiency Programme of Multi-apartment Buildings, as projects often incur ineligible costs that can be financed
under the new programme.
In 2021, proceeding with the centralised reviewing of the applications for micro loans (up to EUR 25 thousand) introduced
within the framework of automation and increasing of the Group’s operational efficiency, 34% of the total number of the
granted loans (excl. Covid-19 crisis related loans) were reviewed remotely without involving the regional employees in the
application reviewing process, which is slightly less than in 2020, when 36% of the total number of the granted loans were
reviewed remotely. Compared to the performance indicators for 2020, in 2021, the total amount of loans granted both under
centralised reviewing and in the regions decreased by 2% or EUR 1,05 million and the number of loans granted decreased by
8%. The average loan amount in the regions increased from EUR 80 thousand in 2020 to EUR 85 thousand in 2021, while the
average loan amount reviewed remotely on a centralised basis in 2021 was EUR 13,9 thousand, which is slightly higher than in
2020, when the average loan amount in centralised remote reviewing was EUR 13,7 thousand.
At the same time, acting in a responsible way towards the health of employees and customers and following the
recommendations of the responsible institutions on actions that would help reduce the risks of virus spread, from 13 March
2020 the Group / Company continues to provide all services remotely via the customer portal mans.altum.lv, as well as through
telephone and video consultations, thus ensuring continuous access to the services provided by the Group / Company.
Long-term Funding
In order to diversify the financing structure, in October 2017, the Group / Company issued the first transferable securities in the
form of green bonds with a total value of EUR 20 million. As at 31 December 2021, the total amount of Altum bonds listed on
the Nasdaq Riga stock exchange is EUR 85 million.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Long-term Funding (cont’d)
Continuing its long-term participation in the capital markets, on 1 October 2021 Altum issued 5-year bonds for a total amount
of EUR 20 million with a fixed annual interest rate of 0.443% and yield to maturity of 0.443% (ISIN LV0000870095) which are the
best financial conditions for bonds issued so far. The Group / Company has now launched its third bond issuance program of
EUR 75 000 000. This bond issue attracted significant interest from the Baltics investors, and the bond issue was oversubscribed
more than 3 times. The bonds were purchased by 15 institutional investors in the Baltics: 70% of the volume was allocated to
asset management funds, 18% - to banks and 9% - to insurance companies.
In the second half of 2021 ALTUM Green Bond Framework was updated according to the 2021 edition of Green & Social Bond
Principles published by Internatioanl Captal Market Association (ICMA) in June 2021. To gain investors’ confidence that funds
derived from the Altum green bonds will be invested in environmentally friendly projects and ensure that certain environmental
targets are met, CICERO (Center for International Climate and Environmental Research, Oslo) issued independent second
party opinion upon the updated ALTUM Green Bond Framework, which received the Medium Green shading from CICERO
similar the one received in 2017.
In September 2021, the ALTUM became the first company from Latvia to join the Nasdaq Sustainable Bond Network in the
world with its green bond issue.
Rating
On 12 August 2021, the International credit rating agency Moody’s Investors Service (Moody’s) published the updated credit
analysis of the Company. Moody’s assigned the Company’s (the parent company of the Group) Baa1 long-term credit rating
with a stable outlook, the baseline credit assessment (BCA) Baa3 and the P-2 short-term rating.
On 25 March 2019, Moody’s reconfirmed the Company’s (the parent company of the Group) Baa1 long-term credit rating.
The baseline credit assessment (BCA) was upgraded from Ba2 to Baa3 and the P-2 short-term rating was approved. The long-
term credit rating was approved with a stable outlook.
In June 2017 for the first time Moody’s assigned to the Company a long-term credit rating Baa1 which is one of the highest
credit ratings assigned to a corporate entity in Latvia.
The assigned rating and being a regular participant in the capital market as well as bond issuance makes it possible for the
Group / Company to implement more successfully the Group’s long-term strategy for fund raising.
Risk Management
In order to have an adequate risk management, the Group / Company has developed the Risk Management System that
provides both preventive risk management and timely implementation of risk mitigation or prevention measures. While
assuming risks, the Group / Company retains the long-term capability of implementing the established operational targets
and assignments.
To manage risks, the Group / Company applies various risk management methods and instruments as well as establishes risk
limits and restrictions. The choice of the risk management methods is based on the materiality of the particular risk and its
impact on the Group’s / Company’s operations.
In view of the Group’s / Company’s activities in high-risk areas when implementing the state aid programmes, as at
31 December 2021 the Group / Company has the risk coverage of EUR 286 million (31 December 2020: EUR 180 million) to
cover the expected credit loss of the State aid programmes. The expected loss is assessed before implementing the respective
aid programme and a portion of the public funding received within this programme is earmarked for the risk coverage. The
latter consists of the sum total of the risk coverage reserve and portfolio loss reserve (special reserve capital) less provisions for
expected credit losses.
Contribution to Sustainability
Sustainability is a key part of Altum's business and strategy and is becoming an important strategic driver for the banking
industry as well as for development finance institutions in Europe. Altum takes responsibility for the long-term impact of its daily
economic, environmental and social activities and continuously works to reduce it on the environment and with its sustainable
strategy contributes positively to such a development and its business is responsible. Moreover, Altum intends to facilitate and
support its clients' transition to a sustainable economy.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
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Management Report (cont’d)
Contribution to Sustainability (cont’d)
For the third year in a row, the Group / Company participated in the Sustainability Index organised by the Institute for
Corporate Sustainability and Responsibility, receiving the high platinum rating in 2021. The Sustainability Index rating is one of
the visible manifestations of the invisible daily work that companies carry out in accordance with the principles of corporate
sustainability and responsibility, balancing the interests of shareholders, employees, customers, the environment, business
partners and other parties with sustainable operating conditions, thus becoming the leaders of the future.
To ensure sustainability, Altum is guided by the UN Sustainable Development Goals (SDGs) that represent the global plan to
end poverty, fight inequality and halt climate change by 2030.
From the beginning of 2021, Altum's management as one of priorities has set sustainable financing and the integration of ESG
considerations into credit risk management and business processes.
Altum’s ambition level towards sustainable financing at Altum’s portfolio level is undertaken voluntary, mainly driven by (i)
stakeholders’, like investors, credit rating agencies, peer group of European development banks, international lenders,
Nasdaq, expectations towards Altum as development financial institution with large impact upon Latvian economy, and (ii)
eligibility requirements for public funding available from the EU Cohesion Policy and/or the Recovery and Resilience Facility
(“RRF”) contributing to Sustainable Europe Investment Plan/Green Deal Investment Plan where ALTUM takes pillar role for issue
of financial instruments to SME’s in Latvia. As additional trigger is sustainable financing regulatory framework already effective
for part of ALTUM’s portfolio as well as the coming Taxonomy alignment regulatory framework. Although not mandatory for
ALTUM but following the international finance institution sector practise the EBA (European Banking Authority) guidance on
integration of ESG aspects in credit risk management, including loan origination and monitoring, has been reviewed and
assessed for further integration in ALTUM’s credit risk management processes.
In autumn 2021, Altum’s stakeholder survey was carried out to establish a sustainability materiality matrix and to define the
level of ambition for sustainable finance for the loan portfolio.
Altum is committed to follow the best industry examples in Europe that have taken a strong stance in defining the targets to
be achieved and the sectors and projects not to be supported, regardless of the source of funding and already now is not
financing fossil-fuel energy generation projects. Among other things, Altum commits to define the level of ambition where the
Green Asset Ratio for new loans and the existing loan portfolio would be set for both the 3-year period and until 2030.
All the new programmes for which funding will be available from the Recovery and Resilience Facility (RRF) are, in terms of the
activities to be supported, sustainability-oriented, but in different aspects, and can be divided into (i) climate programmes
that meet the requirements of the Taxonomy's environmental objectives, (ii) digital transition programme aimed at increasing
productivity, and (iii) an affordable housing programme with the social objective of reducing inequalities.
Future Outlook
In Q3 2021, the Group's medium-term strategy 2022-2024 was developed actively and a draft Strategy was prepared, focusing
on the importance of sustainable financing and ESG factors both at product level and full integration of ESG factors in Altum's
credit risk management. The Group’s strategy was approved at the Supervisory Board meeting on 9 March 2022.
The Group continues to strengthen its role as the main government partner for the implementation of financial instrument
programmes co-financed by the European Union (hereinafter - the EU). In 2022, preparations will also continue for the launch
of the financial instrument support programmes under the new EU Cohesion Policy programming period 2021-2027. In total, at
least EUR 650 million will be available as financial instruments under the Recovery and Resilience Facility (RRF) and the EU
Cohesion Policy for the programming period 2021-2027. In 2021, in cooperation with the Ministry of Economics, the terms and
conditions for four new support programmes were developed, making funding available from the Recovery and Resilience
Facility, aimed to mitigate the economic and social impact of the Covid-19 pandemic, stimulate recovery of Europe, finance
climate change mitigation projects, and protecting and creating jobs. It also covers the possibility of raising funding for these
support programmes in the capital markets as well as borrowing from international financial institutions. Those programmes
are expected to be approved by the Cabinet in the first half of 2022, enabling to start their implementation in 2022 with
following funding from RRF: for improving the energy efficiency of multi-apartment buildings (EUR 57 million), for improving
energy efficiency in businesses and transition to renewable energy technologies (EUR 81 million), for digital transformation
(EUR 45 million) and for financing affordable housing (EUR 43 million).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
11
Management Report (cont’d)
Future Outlook (cont’d)
In order to prepare for the InvestEU Programme 2021–2027, the preparations undertaken already in 2019 for pillar assessment
of the Group was continued. ALTUM considers to apply and undertake the InvestEU implementing partner role, thus increasing
the scope of new specialized and customized financial instruments to the corporates in Latvia. An application on the InvestEU
pillar assessment was prepared in Q3 2021 to ensure further progress of the project. A positive assessment by the responsible
DG of the European Commission on Altum’s legal and financial compliance was received in early March 2022, allowing to
proceed with its actual pillar assessment.
The ongoing war in Ukraine and the related sanctions targeted against the Russian Federation and to a lesser extent to Belarus
may have impact on the Group / Company as well as the potential social and economic impact in Latvia and the region.
This may result in assumptions and estimates requiring revisions which may lead to material adjustments to the carrying value
of assets and liabilities within the next financial year. The Group / Company does not issues loans directly to businesses in
Ukraine, the Russian Federation and Belarus. The Group / Company expects that there might be impact on provisions for
expected credit losses for credit export guarantees, where Altum customers’ counterparties are residents of Ukraine, the
Russian Federation and Belarus. The exposure of such export credit guarantees to Ukraine, the Russian Federation and Belarus
as at 31 December 2021 was accordingly EUR 399 thousand, EUR 763 thousand and EUR 425 thousand. The Management has
estimated that expected credit losses from claims on export credit guarantees issued as at 31 December 2021 could amount
to EUR 1,587 thousand. In particular management expects the assumptions and estimates used in determining provisions for
expected credit losses for loan and guarantee portfolios as well as carrying value of investments in associated companies
may be affected. At this stage the management is not able to reliably estimate the indirect impact as events are unfolding
day-by-day. However, the Group / Company will assess the expected credit losses in April 2022, taking into account the most
up-to-date macroeconomic forecasts. Nevertheless, at the date of these financial statements the Group / Company
continues to meet its obligations as they fall due and therefore continues to apply the going concern basis of preparation.
Reinis Bērziņš
Chairman of the Management Board
30 March 2022
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
12
Supervisory Board and Management Board
Supervisory Council
Name, Surname Position Appointment Date Date of expiry of the term of
the mandate
Līga Kļaviņa Chairperson of the Council 28.12.2019. 27.12.2022.
Jānis Šnore Member of the Council 28.12.2019. 27.12.2022.
Ilze Baltābola Member of the Council 22.03.2022. 21.03.2023. *
* For the time (up to 1 year) until a new candidate is selected in line with the procedures of nominating supervisory board
members, according to the Law on Governance of Capital Shares of a Public Person and Capital Companies.
There were no changes in the Supervisory Council of the Company in 2021.
Management Board
Name, Surname Position Appointment Date Date of expiry of the term of
the mandate
Reinis Bērziņš Chairman of the Board 27.05.2021. 26.05.2024.
Jēkabs Krieviņš Member of the Board 27.05.2021. 26.05.2024.
Inese Zīle Member of the Board 27.05.2021. 26.05.2024.
Aleksandrs Bimbirulis Member of the Board 26.06.2020. 31.03.2022.
Ieva Jansone-Buka Member of the Board 18.03.2021. 17.03.2024.
There were no changes in the Management Board of the Company in 2021. Aleksandrs Bimbirulis is going to leave the position
of a Member of the Management Board on 31 March 2022.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
13
Statement of Management’s responsibility
Riga 30 March 2022
The Supervisory Board and the Management Board (hereinafter – Management) of the joint stock company Development
Finance Institution Altum (hereinafter - Company) are responsible for preparation of the financial statements of the Company
as well as for preparation of the consolidated financial statements of the Company and its subsidiaries (hereinafter – Group)
and information disclosed in the Other notes to Annual Report.
The financial statements and notes thereto set out on pages 14 to 113 are prepared in accordance with the source documents
and present truly and fairly the financial position of the Company and the Group as at 31 December 2021 and 2020, and the
results of their operations, changes in the shareholders’ equity and cash flows for the years then ended.
The aforementioned financial statements are prepared on a going concern basis in conformity with International Financial
Reporting Standards as adopted by the European Union. Prudent and reasonable judgements and estimates have been
made by the Management in the preparation of the financial statements.
The Management are responsible for maintenance of proper accounting records, safeguarding of the Group’s assets, and
prevention and detection of fraud and other irregularities in the Group. The Management are also responsible for operating
the Group and the Company in compliance with the Law of the Republic of Latvia on Development Finance Institution and
other laws of the Republic of Latvia as well as European Union Regulations applicable to the Company.
Reinis Bērziņš
Chairman of the Management Board
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
14
Statement of Comprehensive Income
All amounts in thousands of euro
Notes Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Interest income 4 18 857 16 442 18 857 16 442
Interest expense 5 (2 140 ) (1 870 ) (2 140 ) (1 870 )
Net interest income 16 717 14 572 16 717 14 572
-
Income for implementation of state aid programmes 6 4 446 6 526 5 718 6 526
Expenses to be compensated for implementation of state aid
programmes
7 (3 829 ) (5 950 ) (5 101 ) (5 950 )
Net income for implementation of state aid programmes 617 576 617 576
-
Gains / (losses) from trading securities and foreign exchange translation 8 51 (56 ) 51 (56 )
Share of gain / (losses) of investment in associate and other investments 17, 18 (1 382 ) (2 094 ) (1 652 ) (2 094 )
Remeasurement gain of investment in associate at fair value through
profit or loss
17 2 817 288 2 817 288
Gains less losses from liabilities at fair value through profit or loss 30 1 321 1 908 1 591 1 908
Other income 9 3 221 3 053 3 221 3 053
Other expense 10 (1 509 ) (1 065 ) (1 509 ) (1 145 )
Operating income before operating expenses 21 853 17 182 21 853 17 102
-
Staff costs 11 (5 795 ) (5 416 ) (5 795 ) (5 416 )
Administrative expense 12 (1 893 ) (1 831 ) (1 893 ) (1 831 )
Amortisation of intangible assets and depreciation of property, plant
and equipment
23, 24 (935 ) (916 ) (935 ) (916 )
Impairment gain / (loss), net 13 599 (3 480 ) 599 (3 400 )
Profit before corporate income tax 13 829 5 539 13 829 5 539
Profit for the period 13 829 5 539 13 829 5 539
Other comprehensive income: (515 ) (1 426 ) (515 ) (1 426 )
Items to be reclassified to profit or loss in subsequent periods
Net loss from financial assets measured at fair value through other
comprehensive income
38 (515 ) (1 426 ) (515 ) (1 426 )
Total comprehensive income for the period 13 314 4 113 13 314 4 113
Profit is attributable to:
Owners of the Company 13 829 5 539 - -
Non-controlling interest - - - -
Profit for the period 13 829 5 539 - -
Total comprehensive income is attributable to:
Owners of the Company 13 314 4 113 - -
Non-controlling interest - - - -
Total comprehensive income for the period 13 314 4 113 - -
The accompanying notes on pages 18 through 113 form an integral part of these financial statements.
Reinis Bērziņš
Chairman of the Management Board
Kaspars Gibeiko
Chief Accountant
30 March 2022
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
15
Statement of Financial Position
All amounts in thousands of euro
Notes Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Assets
Due from credit institutions and the State Treasury 14 455 006 359 949 455 006 359 949
Financial assets at fair value through profit or loss 16 - 5 425 - -
Financial assets at fair value through other comprehensive income
-
investment securities
15 14 051 36 958 14 051 36 958
Financial assets at amortised cost:
Investment securities 15 37 441 37 441
Loans and receivables 19 330 530 313 268 330 530 313 268
Grants 20 45 397 31 107 45 397 31 107
Deferred expense 26 642 749 642 749
Accrued income 27 1 424 772 1 424 772
Other investments 18 8 936 7 503 8 936 7 503
Investments in associates
Investments accounted for using the equity method 17 51 727 32 969 51 727 32 969
Investments accounted for using the FVTPL method 17 13 222 15 019 13 222 15 019
Investments in subsidiaries 22 - - - 4 879
Investment property 21 46 164 36 758 46 164 36 758
Property, plant and equipment 24 4 570 4 717 4 570 4 717
Intangible assets 23 1 256 1 398 1 256 1 398
Other assets 25 3 242 3 671 3 242 3 636
Total assets 976 204 850 704 976 204 850 123
Liabilities
Due to credit institutions 28 53 416 65 855 53 416 65 855
Due to general government entities 29 121 348 103 520 121 348 103 520
Financial liabilities at amortised cost - Issued debt securities 34 85 558 65 522 85 558 65 522
Deferred income 5 747 4 991 5 747 4 991
Accrued expense 33 806 857 806 937
Provisions 31 34 466 32 501 34 466 32 501
Support programme funding 30 230 287 191 963 230 287 191 963
Other liabilities 32 3 840 2 901 3 840 2 901
Total liabilities 535 468 468 110 535 468 468 190
Equity
Share capital 35 204 862 204 862 204 862 204 862
Reserves 36 221 347 170 321 221 347 170 319
Revaluation reserve of financial assets measured at fair value through
other comprehensive income
38 698 1 213 698 1 213
Retained earnings 13 829 5 539 13 829 5 539
Net assets attributable to the Company’s owners 440 736 381 935 440 736 381 933
Non-controlling interest - 659 - -
Total equity 440 736 382 594 440 736 381 933
Total equity and liabilities 976 204 850 704 976 204 850 123
The accompanying notes on pages 18 through 113 form an integral part of these financial statements.
Reinis Bērziņš
Chairman of the Management Board
Kaspars Gibeiko
Chief Accountant
30 March 2022
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
16
Consolidated Statement of Changes in Equity
All amounts in thousands of euro
The accompanying notes on pages 18 through 113 form an integral part of these financial statements.
Company’s Statement of Changes in Equity
All amounts in thousands of euro
The accompanying notes on pages 18 through 113 form an integral part of these financial statements.
Attributable to owners of the Company
Share capital Reserves Revaluation
reserve of financial
assets measured at
fair value through
other
comprehensive
income
Retained
earnings
Non-
controlling
interest
Total equity
As at 1 January 2020 204 862 16 565 2 638 8 131 542 232 738
Profit for the period - - - 5 539 - 5 539
Other comprehensive income - - (1 425 ) - - (1 425 )
Total comprehensive income - - (1 425 ) 5 539 - 4 114
Increase of reserve capital (Note 36) - 145 626 - - - 145 626
Distribution of 2019 profit of the Company (Note 36) - 8 131 - (8 131 ) - -
Non-controlling interest - - - - 117 117
As at 31 December 2020 204 862 170 321 1 213 5 539 659 382 594
Profit for the period - - - 13 829 - 13 829
Other comprehensive income - - (515 ) - - (515 )
Total comprehensive income - - (515 ) 13 829 - 13 314
Increase of reserve capital (Note 36) - 45 489 - - - 45 489
Distribution of 2020 profit of the Company (Note 36) - 5 539 - (5 539 ) - -
Distribution of Specific Reserves to General reserve
capital at distribution of the profit for year 2020
Distribution of Specific Reserves to General reserve
capital at distribution of the profit for year 2020
Non-controlling interest - (2 ) - - (659 ) (661 )
As at 31 December 2021 204 862 221 347 698 13 829 - 440 736
Share capital Reserves Revaluation reserve of
financial assets measured
at fair value through other
comprehensive income
Retained
earnings
Total equity
As at 1 January 2020 204 862 16 563 2 638 8 131 232 194
Profit for the period - - - 5 539 5 539
Other comprehensive income - - (1 425 ) - (1 425 )
Total comprehensive income - - (1 425 ) 5 539 4 114
Increase of reserve capital (Note 36) - 145 626 - - 145 626
Distribution of 2019 profit (Note 36) - 8 131 - (8 131 ) -
As at 31 December 2020 204 862 170 319 1 213 5 539 381 933
Profit for the period - - - 13 829 13 829
Other comprehensive income - - (515) - (515
Total comprehensive income - - (515 ) 13 829 13 314
Increase of reserve capital (Note 36) - 45 489 - - 45 489
Distribution of 2020 profit (Note 36) - 5 539 - (5 539 ) -
Distribution of Specific Reserves to General reserve
capital at distribution of the profit for year 2020
Distribution of Specific Reserves to General reserve
capital at distribution of the profit for year 2020
As at 31 December 2021 204 862 221 347 698 13 829 440 736
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Management Report
17
Statement of Cash Flows
All amounts in thousands of euro
Notes Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Cash and cash equivalents at the beginning of period 359 949 176 199 359 949 176 047
Cash flows from operating activities
Profit before taxes 13 829 5 539 13 829 5 539
Amortisation of intangible assets and depreciation of property, plant
and equipment
23,24 935 916 935 916
Interest income 4 (18 857 ) (16 441 ) (18 857 ) (16 441 )
Interest received 16 334 13 002 16 334 13 002
Interest expenses 5 2 140 1 870 2 140 1 870
Interests paid (1 297 ) (1 328 ) (1 297 ) (1 328 )
(Decrease) / Increase in impairment allowances 13 (599 ) 3 480 (599 ) 3 400
(Decrease) of cash and cash equivalents from operating activities
before changes in assets and liabilities
Decrease of due from credit institutions - 5 000 - 5 000
(Increase) of loans 19 (17 262 ) (93 569 ) (17 262 ) (93 569 )
(Increase) of grants 20 (14 447 ) (14 084 ) (14 447 ) (14 084 )
Increase of due to credit institutions and general government entities 28, 29 5 388 53 561 5 388 53 561
Increase in deferred income and accrued expense 626 2 280 626 2 360
(Increase) / Decrease in deferred expense and accrued income 26,27 (545 ) 822 (545 ) 822
(Increase) / Decrease of other assets 25 394 (101 ) 394 (66 )
Increase in other liabilities 62 916 61 019 62 916 60 995
Net cash flows from operating activities 49 555 21 966 49 555 21 977
Cash flows from investment activities
Sale of investment securities 15 23 500 12 830 23 500 12 830
Acquisition of property, plant and equipment and intangible assets 23,24 (824 ) (1 037 ) (824 ) (1 037 )
Purchase of investment properties 21 (7 150 ) (11 696 ) (7 150 ) (11 696 )
Sale of investment properties 21 211 42 211 42
Other investments 18 (4 723 ) (7 252 ) (4 723 ) (7 252 )
Investments in associates, net 17 (6 355 ) 4 305 (6 355 ) 4 305
Investments of subsidiaries in underlying undertakings 16 (2 924 ) (1 208 ) - -
Investments in subsidiaries 22 - - (2 924 ) (1 067 )
Net cash flows from investing activities 1 735 (4 016 ) 1 735 (3 875 )
Cash flows from financing activities
Issued debt securities 34 20 845 20 174 20 845 20 174
Increase of reserve capital 36 22 923 145 626 22 923 145 626
Net cash flow from financing activities 43 768 165 800 43 768 165 800
Increase in cash and cash equivalents 95 058 183 750 95 058 183 902
Cash and cash equivalents at the end of period 455 007 359 949 455 007 359 949
The accompanying notes on pages 18 through 113 form an integral part of these financial statements.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
18
Approval of the Financial Statements
The management of the Company has approved these financial statements on 30 March 2022. The Commercial Law of the
Republic of Latvia as well as Development Finance Institution Law stipulates that the shareholders’ meeting is entitled to pass
a decision on approval of the financial statements.
1 General Information
(1) Corporate Information
These financial statements contain the financial information about joint-stock company Development Finance Institution
Altum (Company) and its subsidiaries (hereinafter together — the Group). The separate financial statements of the Company
are included alongside these consolidated financial statements to comply with legal requirements.
JSC Development Finance Institution Altum is a Latvia state-owned company that ensures access of the enterprises and
households to the financial resources by means of support financial instruments - loans, guarantees, investments in venture
capital funds - in the areas defined as important and to be supported by the state, thus developing the national economy
and enhancing mobilization of the private capital and financial resources. On 25 March 2019 Moody’s Investors Service
(Moody’s) reconfirmed Altum’s Baa1 long-term issuer rating, with outlook stable. The assigned Moody’s rating of Altum is one
of the highest credit ratings assigned to corporate entities in Latvia.
JSC Development Finance Institution Altum was established on 27 December 2013 by a decision of the Cabinet of Ministers.
The mission of the Company’s establishment is by merging three prior independently operating companies providing state
support into a single institution and further allocate the state funds for implementation of financial instrument state support
and development programmes in one place. The Company’s operations are governed by its specific law – Development
Finance Institution Law. The Company’s Article of Association has been approved by the Cabinet of Ministers. All voting shares
of the Company are owned by the Republic of Latvia. The holders of the shares are ministries of the Republic of Latvia as
stipulated by the Development Finance Institution Law with following split of the shares – the Ministry of Finance 40%, the
Ministry of Economics 30% and the Ministry of Agriculture 30% respectively.
The Group / Company does not perform any regulated activities related to the financial and capital markets as financial
institution, therefore the Group / Company is not required to comply with capital adequacy requirements. However, the
Group / Company operates in accordance with the best financial and capital market practices regarding internal control,
risk management and compliance.
The Group holds investment in alternative investment fund “Altum Capital Fund” (the Fund) registered on 31 July 2020. The
Fund is created with the aim to support well-managed, perspective Mid-cap companies to overcome the effect of Covid-19
that as a result of the virus impact are ready to adjust their operations by changing their business model, adjusting product
development, introducing new technology and expanding to new export markets. The Fund’s committed capital was fully
subscribed on September 16, 2020, reaching EUR 100 million, of which the majority (EUR 51.1 million or 51.1%) were largest
private pension funds and EUR 48.9 million consists of public funding invested by the Company. The Company is also the
manager of the Fund registered with the Financial and Capital Market Commission on 26 May 2020.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
19
1 General Information (cont’d)
The below listed venture capital funds - subsidiaries and associates - are treated as subsidiaries or associates during the
reporting period only for purposes of financial accounting. (cont’d)
Legal Tittle Legal Address Investment % in share capital
Venture capital funds that were classified as
Subsidiaries until 31 December 2021, following a
control assessment as at 31 December 2021, are
classified as Associates *
KS Overkill Ventures Fund I Dzirnavu iela 105, Rīga, Latvija , LV-1011 100
KS Buildit Latvia Pre-Seed Fund Sporta iela 2, Rīga, Latvija, LV-1013 100
KS Commercialization Reactor Pre-seed Fund Brīvības gatve 300 -9, Rīga, Latvija 100
KS INEC 1 Krišjāņa Barona iela 32-7, Rīga, Latvija, LV-1011 75
KS INEC 2 Krišjāņa Barona iela 32-7, Rīga, Latvija, LV-1011 90
Venture capital funds classified as Associates
KS Overkill Ventures Fund II Dzirnavu iela 105, Rīga, Latvija, LV-1011 80
KS Buildit Latvia Seed Fund Sporta iela 2, Rīga, Latvija, LV-1013 80
KS Commercialization Reactor Seed Fund Brīvības gatve 300 -9, Rīga, Latvija 80
KS ZGI-4 Daugavgrīvas iela 21, Rīga, Latvija, LV-1048 60
FlyCap Mezzanine Fund II Matrožu iela 15A, Rīga, Latvija, LV-1048 60
KS Baltcap Latvia Venture Capital Fund Jaunmoku iela 34, Rīga, Latvija, LV-1046 67
KS Imprimatur Capital Technology Venture Fund Elizabetes iela 85a-18, Rīga, Latvija, LV-1050 67
KS Imprimatur Capital Seed Fund Elizabetes iela 85a-18, Rīga, Latvija, LV-1050 100
KS ZGI-3 Daugavgrīvas iela 21, Rīga, Latvija, LV-1048 95
KS FlyCap investment Fund Matrožu iela 15A, Rīga, Latvija, LV-1048 95
KS Expansion Capital fund Krišjāņa Barona iela 32-7, Rīga, Latvija, LV-1011 95
Baltic Innovation Fund
European Investment Fund, 37B, avenue J.F. Kennedy, L
-
2968
Luxembourg
20
KS AIF “Altum capital fund” Doma laukums 4, Rīga, Latvija, LV-1050 48.9
* See Note 2 (2) item (i).
2 Accounting Policies
(1) Basis of presentation
These Group’s and the Company’s financial statements are financial statements prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted in the European Union, on a going concern basis. In preparation of these
financial statements on a going concern basis the management considered the Group’s / Company’s financial position,
access to financial resources and analysed the impact of the external factors on future operations of the Group / Company.
For detailed disclosure on the impact of Covid-19 on the Group / Company see Note 3 (8). For detailed disclosure on the
impact of the conflict in Ukraine to the Group / Company see Note 42.
The Group’s and the Company’s financial statements are prepared under the historical cost convention as modified by the
fair valuation of financial assets measured at fair value through other comprehensive income, derivative financial instruments
and investment properties and support programme financing.
The preparation of financial statements in accordance with International Financial Reporting Standards as adopted by
European Union requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are based on the Management’s best knowledge of
current events and actions, actual results ultimately may differ from those estimates (Note 2 (16)).
In the financial statements the amounts are given in thousands of euros, unless specified otherwise. The functional currency of
the Company and its subsidiaries as well as presentation currency of the Group / Company has been the euro.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
20
2 Accounting Policies (cont’d)
(2) Consolidation and investments in associates
(i) Consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31
December 2021.
Subsidiaries are companies, over which the Group has control. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement and has the ability to use its power to affect the amount of the returns. Control is
deemed to exist when the parent company (i) has power to direct relevant activities of the investee that significantly affect
their returns, (ii) has exposure or rights to variable returns from its involvement with the investees, and (iii) has the ability to use
its power over the investees to affect the amount of investor’s returns.
Financial statements of the parent company and of the consolidated subsidiaries refer to the same period and have been
drawn up according to the accounting policies applicable to the Group. A subsidiary is included in the consolidated financial
statements from the time of acquisition, being the date when the parent company gains control over the subsidiary. The
subsidiary is included in the consolidated financial statements until the date when control over the company ceases to exist.
The entities of the Group are listed in Note 22. As a result of annual assessment re existence of control or significant influence
over subsidiaries (see Note 2 (16) item (vii)) the Company’s subsidiaries are not classified as subsidiaries as of 31 December
2021. Accordingly the Statement of Comprehensive Income includes financial results of those companies for the year 2021
until 30 December 2021 and the Statement of Financial Position as at 31 December 2021 is the Company’s financial position
only.
Intra-group transactions, balances and unrealised gains and losses on transactions between the Group companies are
eliminated.
At the level of the Company, the investments in subsidiaries upon their initial recognition at cost are subsequently accounted
for at equity method (see Note 2 (6) item (iii)). Some of the venture capital funds’ investments are classified as investments in
subsidiaries See Note 22 for details.
(ii) Investments in associates
Associates are all entities over which the Group has significant influence, but doesn’t control them.
The Group / Company ceases to have a significant influence over an entity when it loses power to participate in the entity’s
financial and operating policy decisions. Loss of significant influence may happen with or without changes in the absolute or
relative participation.
The Group / Company measures investments in the associates as follows: (i) for investments in associates measured using
equity method see Note 2 (6) item (i) and (ii) for investments in associates measured using fair value through profit or loss
method see Note 2 (6) item (ii). Detailed information on investments in associates split between both methods see Note 17.
(3) Foreign currency translation
During the reporting period transactions in foreign currencies were converted into euro based on the foreign exchange rate
of the European Central Bank effective on the day of the transaction. Monetary assets and liabilities as well as off-balance
sheet claims and foreign currency liabilities were converted into euro based on the foreign exchange rate of the European
Central Bank effective at the end of the reporting period. Gain or losses on foreign exchange rate fluctuations were included
in the statement of comprehensive income of the reporting period.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the
dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e.,
translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or
profit or loss, respectively).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
21
2 Accounting Policies (cont’d)
(3) Foreign currency translation (cont’d)
The applicable rates for the principal currencies at the end of the reporting period were the following:
31.12.2021 31.12.2020
1 USD = EUR 1.13260 1 USD = EUR 1.22710
1 GBP = EUR 0.84028 1 GBP = EUR 0.89903
(4) Income and expense recognition
Income and expense accounting of the Group / Company is based on accrual basis, i.e., income and expense, pertaining
to the reporting period, are included in the statement of comprehensive income regardless of the day of their receipt or
origination.
(i) Foreign income and expense
Foreign income and expense are calculated and presented in euro based on the foreign exchange rate of the European
Central Bank on the respective day.
Foreign exchange gains and losses are recognised in the profit or loss of the reporting period.
(ii) Interest income and expense
Interest income and expense are recognised in profit or loss for all interest bearing instruments on an accrual basis using the
effective interest rate method. The effective interest method is a method of calculating the amortised cost of a financial asset
or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When estimating
future cash flows, the Group / Company considers all contractual terms of the financial instrument (for example, prepayment
options), but does not consider future credit losses. The calculation includes all fees and points paid or received between
parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or
discounts.
Interest accrued on loans is included in profit or loss and interest accrual calculation uses either “30/360” or “actual days/360”
accounting method as specified in agreements with customers.
The following principles are applied with respect to contractual penalties (late payment charge):
contractual penalties are calculated for each day and are recorded in the off-balance sheet (recognized at a
point in time),
included in the profit or loss only when being paid by the customer (recognized at a point in time),
subject to grace days, i.e., if customer pays the entire amount in full within 3 days after the scheduled payment
date, contractual penalties are not calculated.
Commissions from advancing loans and their management are included in profit or loss based on the following principles:
loan processing and disbursement commissions, including loan application fee, together with related direct costs
– using effective interest rate method,
other commissions (loan account management, amendment of the terms, commitment fee etc.) are recognised
on the day of their receipt (recognized at a point in time).
Commissions from granting and maintenance of financial guarantees are included in the profit or loss following the principles
below:
commissions from granted financial guarantees – according to principles described in Note 2 (5) item (xvii)
(recognised over the time),
other commissions are recognised on the day of their receipt (recognized at a point in time).
If pricing for credit risk is covered by the Risk Coverage Reserve or Portfolio Loss Reserve, such cost component for credit risk
coverage in pricing is excluded from interest income on loans and commissions from financial guarantees charged for
customers. See also Note 2 (16) item (i) and Note 30.
Other commission income and expense, which are not related to financial guarantees, are recognized as they occur.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
22
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement
(i) Initial recognition
Financial instruments at fair value through profit or loss (FVTPL) are initially recorded at fair value. All other financial instruments
are initially recorded at fair value adjusted for transaction costs. Fair value at initial recognition is best evidenced by the
transaction price. In cases transaction price is lower than the fair value of guarantee provided due to the fact that the price
difference is covered by public funding for expected credit loss classified within Risk Coverage Reserve, the Day 1 loss is directly
allocated to Risk Coverage Reserve. See also Note 2 (16) (i). In cases transaction price is lower than the fair value of guarantee
provided due to the fact that the price difference is covered by public funding for expected credit loss classified within
Portfolio Loss Reserve (special reserve capital in equity), the Day 1 loss is charged to profit or loss and will be covered from
Portfolio Loss Reserve by transfer to Retained earnings or General reserve capital upon approval of respective year annual
accounts according to respective shareholder decision. See also Note 2 (16) item (i).
After the initial recognition, an expected credit loss (ECL) allowance is recognised for financial assets measured at amortised
cost (AC) and investments in debt instruments measured at fair value through other comprehensive income (FVOCI), resulting
in an immediate accounting loss.
All purchases and sales of financial assets that require delivery within the time frame established by market convention
(“regular way” purchases and sales) are recorded at trade date, which is the date on which the Group / Company commits
to deliver a financial asset. All other purchases are recognised when the Group / Company becomes a party to the
contractual provisions of the instrument.
(ii) Financial assets – classification and subsequent measurement – measurement categories
The Group / Company classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The
classification and subsequent measurement of debt financial assets depends on the Group’s / Company’s business model for
managing the related assets portfolio and the cash flow characteristics of an asset.
(iii) Financial assets – classification and subsequent measurement – business model
The business model reflects how the Group / Company manages assets in order to generate cash flows – whether the Group’s
/ Company’s objective is:
a) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”,) or
b) to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to collect
contractual cash flows and sell”) or,
c) if neither of (a) and (b) is applicable, the financial assets are classified as part of “other” business model and measured
at FVTPL.
Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence about the activities
that the Group / Company undertakes to achieve the objective set out for the portfolio available at the date of the
assessment. Factors considered by the Group / Company in determining the business model include the purpose and
composition of a portfolio, past experience on how the cash flows for the respective assets were collected, how risks are
assessed and managed and how the assets’ performance is assessed. Refer to Note 2 (16) for critical judgements applied by
the Group / Company in determining the business models for its financial assets.
(iv) Financial assets – classification and subsequent measurement – cash flow characteristics
Where the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell, the
Group / Company assesses whether the cash flows represent solely payments of principal and interest (“SPPI”). Financial assets
with embedded derivatives are considered in their entirety when determining whether their cash flows are consistent with the
SPPI feature. In making this assessment, the Group / Company considers whether the contractual cash flows are consistent
with a basic lending arrangement, i.e. interest includes only consideration for credit risk, time value of money, other basic
lending risks and profit margin.
Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement, the
financial asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is
not subsequently reassessed. Refer to Note 2 (16) for critical judgements applied by the Group / Company in performing the
SPPI test for its financial assets.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
23
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(v) Financial assets – reclassification
Financial instruments are reclassified only when the business model for managing the portfolio as a whole changes. The
reclassification has a prospective effect and takes place from the beginning of the first reporting period that follows after the
change in the business model.
(vi) Financial assets impairment – credit loss allowance for expected credit losses
Credit loss allowance is recognised on financial assets classified at AC and FVOCI as well as on non-financial assets such as
grants that are classified at AC. Credit loss allowance for the exposures arising from loan commitments, grant commitments
and financial guarantee contracts are recognized as provisions. The provisioning principles for expected credit losses arising
from off-balance sheet financial commitments and contingent liabilities are consistent with the principles and methods
applied for on-balance sheet exposures.
Credit loss allowance is measured based on expected credit loss model. Expected credit losses (“ECL”) reflect an unbiased
and probability-weighted amount that is determined by evaluating a range of possible outcomes and considering all
reasonable and supportable information, including past events, current conditions and reasonable and supportable forecasts
of future economic conditions that could affect the expected collectability of the future cash flows available without undue
cost or effort at the reporting date. Such allowance is measured according to whether there has been a significant increase
in credit risk since initial recognition of an instrument.
Stage 1 includes financial instruments that have not experienced a significant increase in credit risk since initial recognition
and those within the Group’ / Company’s policy to assess for low credit risk at the reporting date.
Stage 2 includes financial instruments that have deteriorated significantly in credit quality since the initial recognition but for
which there is no objective evidence of credit impairment.
Stage 3 includes financial instruments which are credit-impaired.
The 12-month ECL are recognized on instruments in Stage 1 and the lifetime ECL are recognized on instruments in Stage 2 and
Stage 3. The lifetime ECL represent losses from all possible default events over the remaining life of the financial instrument. The
12-month ECL are the portion of the lifetime ECL resulting from the default events that are possible within 12 months after the
reporting date. Consequently, the 12-month ECL are not the expected cash shortfalls over the next 12 months or the credit
losses on financial assets that are forecast to default in the next 12 months.
Measurement of expected credit losses
The Group / Company measures the ECL for financial assets that are individually significant and collectively for financial assets
that are not individually significant and share similar credit risk characteristics.
The ECL for financial assets that are assessed collectively are measured as the discounted product of a probability of default
(“PD”), an exposure at default (“EAD”), and a loss given default (“LGD”). The PD represents the likelihood that a borrower will
default on its obligation, during the next 12 months or during the remaining lifetime of the obligation. The EAD is an expected
exposure at the time of default, taking into account scheduled repayments of principal and interest, and expected further
drawdowns from loan commitments. The LGD represents the expected loss on a defaulted exposure, taking into account such
factors as counterparty characteristics, collateral and product type.
The ECL are determined by projecting the PD, LGD and EAD for each future month over the expected lifetime of an exposure.
The three parameters are multiplied together and adjusted for future information. This effectively calculates monthly ECL,
which are discounted back to the reporting date using the original effective interest rate and summed. The sum of all months
over the remaining expected lifetime results in the lifetime ECL and the sum of the next 12 months results in the 12-month ECL.
The Group / Company uses single scenario expected cash flow method with overlays for alternative scenarios for
macroeconomic factors such as year-on-year change in gross domestic product and real estate prices. PDs and LGDs are
derived from historic performance of financial assets. ‘Point in time’ probabilities (PDs in the current economic conditions, as
opposed to economic cycle-neutral ‘through the cycle’ PDs) are used for PDs.
The Group / Company assesses credit-impaired exposures individually without the use of modelled inputs. The credit loss
allowance for these exposures are established using the discounted expected cash flows.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
24
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(vi) Financial assets impairment – credit loss allowance for expected credit losses (cont’d)
Definition of default and credit-impaired financial assets
Default is an input to the PD and LGD, which affects the measurement of the ECL. Financial assets which are credit-impaired
are included in Stage 3. Default and credit-impaired are triggered when an exposure (principal or interest payment) is more
than 90 days past due, an exposure is declared in bankruptcy or similar order, a non-performing forbearance measure is
applied towards the borrower or there is an assessment that the borrower is unlikely to pay its obligations as agreed. When
assessing whether a borrower is unlikely to pay its obligations, the Group / Company takes into account both qualitative and
quantitative factors including, but not limited to the overdue status or non-payment on other obligations of the same borrower,
expected bankruptcy and breaches of financial covenants. An instrument is no longer considered to be in default or credit-
impaired when all overdue amounts are repaid, there is sufficient evidence to demonstrate that there is a significant reduction
in the risk of non-payment of future cash flows and there are no other indicators of credit-impairment.
Determining a significant increase in credit risk since initial recognition
The Group / Company assesses changes in credit risk at the individual financial instrument level. A financial instrument is no
longer considered to have experienced a significant increase in credit risk when none of the indicators of SICR are present
anymore.
Stage 2 includes financial instruments that have deteriorated significantly in credit quality since the initial recognition but for
which there is no objective evidence of credit impairment. The Group / Company primarily identifies whether a significant
increase in credit risk has occurred for an exposure due to “days past due” status or significant decrease in internal rating
status. Investments in securities and due from other credit institutions are included in Stage 1 if external rating is A3/A- or higher,
while lowering of the external rating by at least two notches (Baa1/BBB+ or lower) results in transfer of exposure from Stage 1
to Stage 2. The Group / Company also identifies whether a significant increase in credit risk has occurred for an exposure due
to changes in qualitative credit risk indicators such as financial performance of the borrower, breaches of covenants, industry
specific information, etc.
Expected lifetime
The lifetime of a financial instrument is relevant for both the assessment of significant increase in credit risk, which considers
changes in the probability of default over the expected lifetime, and the measurement of the lifetime ECL. The expected
lifetime is limited to contractual period specified in respective agreement. All contractual terms are considered when
determining the expected lifetime, including prepayment options and extension and rollover options that are binding to the
Group / Company.
Modifications
Where a loan is modified but is not derecognised, significant increases in credit risk continue to be assessed for impairment
purposes as compared to the initial recognition credit risk. Modifications do not automatically lead to a decrease in credit risk
and all quantitative and qualitative indicators will continue to be assessed.
Estimates
The Group / Company use both models and expert credit judgement (ECJ) in order to determine ECLs. The degree of
judgement that is required to estimate ECL depends on the model outcome, materiality and the availability of detailed
information. The model provides guidance and transparency as to how economic events could affect the impairment of
financial assets. Expert judgements may be applied to the modelled outcome to incorporate an estimated impact of factors
not captured by the model. Such judgemental adjustment to the model-generated ECLs may be applied to significant
exposures at a counterparty level. The adjustments are decided by the relevant committee using the model ECLs as guidance.
Presentation of credit loss allowance
For financial assets measured at AC, credit loss allowance is presented in the Group’s / Company’s statement of financial
position as a reduction of the gross carrying amount of the assets.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
25
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(vi) Financial assets impairment – credit loss allowance for expected credit losses (cont’d)
Presentation of credit loss allowance (cont’d)
For loan commitments, grant commitments and financial guarantee contracts, such allowance is presented as a liability
(provisions) in the Group’s / Company’s statement of financial position.
For debt instruments measured at FVOCI (investment securities), changes in amortised cost reduced by credit loss allowance
for ECL are recognised as profit or loss and other changes in gross carrying value are recognised in the OCI as gains less losses
on debt instruments measured at FVOCI.
A write-off reduces the gross carrying amount of a financial asset. Write-offs are recognised when the amount of loss is
ultimately determined and represent the amount before the utilisation of any previous impairment allowances. Any
subsequent recoveries of write-offs or credit loss allowance are recognised in profit or loss statement.
(vii) Financial assets – write-off
Financial assets are written-off, in whole or in part, when the Group / Company exhausted all practical recovery efforts and
has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Group
/ Company may write-off financial assets that are still subject to enforcement activity when the Group / Company seeks to
recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
(viii) Financial assets – derecognition
The Group / Company derecognises financial assets when:
the assets are redeemed or the rights to cash flows from the assets otherwise expired or
the Group / Company has transferred the rights to the cash flows from the financial assets or entered into a qualifying
pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii)
neither transferring nor retaining substantially all risks and rewards of ownership, but not retaining control. Control is
retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third
party without needing to impose restrictions on the sale
(ix) Financial assets – modification
The Group / Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group
assesses whether the modification of contractual cash flows is substantial considering, among other, any new contractual
terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency
denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a
significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group / Company
derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered
to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR
has occurred. The Group / Company also assesses whether the new asset meets the SPPI criterion. Any difference between
the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in
profit or loss.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally
agreed payments, the Group / Company compares the original and revised expected cash flows to assets whether the risks
and rewards of the asset are substantially different as a result of the contractual modification. If the difference in present value
of the expected cashflows is not significant, the modified asset is not substantially different from the original asset and the
modification does not result in derecognition. The Group / Company recalculates the gross carrying amount by discounting
the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for
purchased or originated credit impaired (POCI) financial assets), and recognises a modification gain or loss in profit or loss.
(x) Financial liabilities – measurement categories
Financial liabilities are classified as subsequently measured at AC, except for financial liabilities at FVTPL – this classification is
applied to derivatives and support programme funding.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
26
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(xi) Financial liabilities – derecognition
Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is
discharged, cancelled or expires) or significantly modified.
(xii) Due from credit institutions and the Treasury
Amounts due from credit institutions and the Treasury are recorded when the Group / Company advances money to a credit
institution or the Treasury of the Republic of Latvia with no intention of trading the resulting unquoted non-derivative receivable
due on fixed or determinable dates. Amounts due from credit instructions and the Treasury are carried at amortised cost.
Amounts due from credit institutions and the Treasury comprises cash and demand deposits with original maturity of 3 months
or less (See Note 14) and demand deposits with original maturity of more than 3 months.
(xiii) Derivative financial instruments
Derivative financial instruments including foreign currency swaps are initially recognised at fair value and subsequently
measured at their fair value. Fair values are obtained from quoted market prices and discounted cash flow models as
appropriate. Derivatives are recognized as assets when their fair value is positive and as liabilities when the their fair value is
negative. Changes in the fair value of derivatives are reported in the profit or loss. The Group / Company does not use hedge
accounting.
(xiv)Investment securities
Based on the business model and the cash flow characteristics, the Group / Company classifies investments in securities as
carried at AC or FVOCI.
Investment securities are carried at AC if they are held for collection of contractual cash flows and where those cash flows
represent SPPI, and if they are not voluntarily designated at FVTPL in order to significantly reduce an accounting mismatch.
Part of fixed income securities held by the Group / Company are included into this category.
Investment securities are carried at FVOCI if they are held for collection of contractual cash flows and for selling, where those
cash flows represent SPPI, and if they are not designated at FVTPL. Interest income from these assets is calculated using the
effective interest method and recognised in profit or loss. An impairment allowance estimated using the expected credit loss
model is recognised in profit or loss for the year. All other changes in the carrying value are recognised in OCI. When the debt
security is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from OCI to profit or loss.
Treasury bills, fixed income securities are included into this financial assets’ measurement category.
(xv) Loans
For purposes of this section, loans are:
direct lending products, i.e., the Group / Company grants a loan to a borrower, who is the end beneficiary of the
funds issued. Direct lending products include Reverse rent transaction,
indirect lending products, i.e., the Group / Company issues a loan to a borrower, who is an intermediary. The
intermediary then grants the received loan further to borrowers, who are the end beneficiaries of the funds. The
Group / Company recognizes expected credit loss either (i) resulting from solvency problems of the borrower / end
beneficiary solely or (ii) resulting from both solvency problems of the intermediary and solvency problems of the
borrower / end beneficiary, proportionate to the share of risk,
The loans are recognised in the financial statements of the Group / Company when cash is advanced to borrowers. Granted,
but not yet disbursed loans are recognised as loan commitments in off-balance sheet.
Based on the business model and the cash flow characteristics, the Group / Company classifies loans measured at AC. It
means, that loans are held for collection of contractual cash flows.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
27
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(xv) Loans (cont’d)
Loan commitments
The Group / Company issues commitments to provide loans. These commitments are irrevocable or revocable only in response
to a material adverse change. Fees received for loan commitments are amortised on a straight-line basis over the life of the
commitment. Further on such loan commitment, fees are deferred and included in the carrying value of the loan on initial
recognition. At the end of each reporting period, the commitments are measured at the remaining unamortised balance (on
off-balance sheet) of the amount at initial recognition plus the amount of the loss allowance (on-balance sheet) determined
based on the ECL model, unless the commitment is to provide a loan at an interest rate below the market rate, in which case
the measurement is at the higher of these two amounts.
The carrying amount of the loan commitments is presented as a liability within off-balance sheet.
For contracts that include both a loan and an undrawn commitment and where the Group / Company cannot separately
distinguish the ECL on the undrawn loan component from the loan component, the ECL on the undrawn commitment is
recognised together with the loss allowance for the loan. To the extent that the combined ECLs exceed the gross carrying
amount of the loan, they are recognised as a liability.
Reverse rent
Reverse rent is agricultural land purchase transaction with rent and repurchase rights for the seller of the property established
by agreement. It was concluded that the reverse rent transactions embraced the repurchase option for the lessee that could
be exercised nearly always. From IFRS point of view it means that such a rent falls outside the definition of rent as, in essence,
the usage rights of the asset are not transferred and remain with the lessee. The nature of reverse rent transaction corresponds
to the definition of financial asset where the purchase price is a long-term loan issued to the lessee (right to get the money in
the future), whereas land functions as a collateral. Following the same practice applied to the other loans the management
assesses impairment at each reporting date. A part of the impairment assessment and calculation is linked to evaluation of
the collateral.
Repossessed collateral
Repossessed collateral represents movable assets, land and buildings that have been acquired in the debt collection process
for the purpose to hold them and sell in an ordinary course of business. See Note 2 (9) item (v) details.
(xvi) Grants
The Group / Company acts as an agent when servicing grants. The Group / Company advances grants in instalments to the
customers. The grant agreements between the Company and funding providers (grantors) stipulates that the Group /
Company will provide grants to the customers in advance, and will submit quarterly reports to grantors on disbursed grants.
Grants that are advanced to the customers are recognized as non-financial assets at amortized cost. Upon approval by the
grantor for the eligibility of the disbursed grants, the advanced grants are derecognized as non-financial assets and the
related support programme funding balances are reduced by the approved amount. Grants committed to the customers,
but not yet disbursed are accounted for on the Group’s / Company's off-balance sheet.
Impairment allowances are made for expected credit losses for both advanced grants recognized as non-financial assets
and grant commitments.
(xvii) Financial guarantees
Financial guarantees require the Group / Company to make specified payments to reimburse the holder of the guarantee
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified
terms of a debt instrument. Financial guarantees are initially recognised at their fair value, which is normally evidenced by the
amount of fees received. This amount is amortised on a straight-line basis over the life of the guarantee. At the end of each
reporting period, the guarantees are measured at the higher of (i) the amount of the loss allowance for the guaranteed
exposure determined based on the expected loss model and (ii) the remaining unamortised balance of the amount at initial
outstanding recognition. In addition, an ECL loss allowance is recognised for fees receivable that are recognised in the
statement of financial position as an asset.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
28
2 Accounting Policies (cont’d)
(5) Financial assets and liabilities - initial recognition and subsequent measurement (cont’d)
(xvii) Financial guarantees (cont’d)
The outstanding amount of the financial guarantees contracts is presented as a liability within off-balance sheet (Note 37).
Payments, which are made by the Group / Company, to reimburse the holder of the guarantee for a loss are included in
Other assets (Note 25).
(xviii) Financial liabilities carried at amortised cost
Financial liabilities carried at amortised cost are mainly amounts due to the Treasury of the Republic of Latvia and credit
institutions. These are initially recognised at fair value net of transaction costs incurred. Financial liabilities are subsequently
measured at AC and any difference between net proceeds and the redemption value is recognised in the profit or loss over
the period of the borrowings using the effective interest method. In cases of early repayment, any difference between the
repaid and carrying amounts is immediately included in the profit or loss.
(xix) Issued debt securities
The Group / Company recognises issued debt securities at the date when the respective funds are received. After initial
recognition when these financial liabilities are initially recognised at fair value including direct transaction costs, those are
subsequently carried at amortised cost using the effective interest method. When issued debt securities are sold at a discount
or premium, the difference is amortised applying the effective interest method until the debt matures and charged to the
statement of comprehensive income as interest expense.
(xx) Financial liabilities designated at FVTPL
The Group / Company designates liabilities, for example, support programme funding at FVTPL at initial recognition. Gains
and losses on such liabilities are presented in profit or loss. See Note 2 (15) for details.
(6) Investments in venture capital funds
The Group’s / Company’s investments in venture capital funds (VCF) are treated as Investments in Associates, Investments in
Baltic Innovation Fund, Investments in Subsidiaries and Other Investments. According to IFRS 9, the above investments become
financial assets held either at fair value through other comprehensive income or at fair value through profit or loss. In neither
case, there is an option of stating the said assets at cost, unless the cost is estimated to be close to its fair value. Consequently,
in calculating net asset value (NAV) for the VCFs, fair values of these investments must be taken into account. The Group’s /
Company’s financial statements present NAV taking account of the funds’ fair value adjustments, i.e. fair values of investments
in equity instruments. The details of the accounting treatment of each type of the investment are described below.
(i) Investments in Associates, except for Baltic Innovation Fund
The Group’s / Company’s investments in Associates that include investments in ventures capital funds and AIF “Altum capital
fund” are stated under the equity method, except for investments in Baltic Innovation Fund.
Investments in Associate initially are recognised at acquisition cost. For subsequent measurement, the equity method is used:
the Group / Company recognizes on its balance sheet the value of the VCFs as its proportionate share of the NAV of the VCFs.
If needed, the NAV is adjusted to reflect the Group’s / Company’s accounting policies, i.e. IFRS. The NAV of the VCFs mainly
consisted of the VCFs’ investments in equity instruments and issued loans as well as of the liabilities undertaken. The NAV of the
VCF is based on the fair value measurement of the VCF’s assets and liabilities. The fair values can be adjusted by the Group /
Company to align the accounting policies of the Associates with accounting policy of the Group / Company.
The carrying value of investment in Associate includes changes in the Group’s / Company’s NAV in the Associate since
acquisition date. Changes in the NAV from operational results of the VCF are included in the Group’s / Company’s profit or
loss statement as a share of gain or (loss) of investment in associate.
The realised gains, which are received from Associate, are recognised as decrease in the VCF’s carrying value.
The financial statements of the Associate and the Group cover the same reporting period.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
29
2 Accounting Policies (cont’d)
(6) Investments in venture capital funds (cont’d)
(i) Investments in Associates, except for Baltic Innovation Fund (cont’d)
The Group / Company use the Risk Coverage Reserve (see Note 2 (16) item (i)) which is part of the support programme funding
to compensate the change in the values of venture capital funds. The risk coverage mechanism is attributable to the 2
nd
and
3
rd
generation venture capital funds, such as BaltCap Latvia Venture Capital Fund, Imprimatur Capital Technology Venture
Fund, Imprimatur Capital Seed Fund, ZGI-3 fund, FlyCap Investment Fund I un Expansion Capital Fund, as well as to the part of
the 4
th
generation venture capital funds such as Overkill Ventures Fund II, Buildit Latvia Seed Fund, Commercialization Reactor
Seed Fund, ZGI-4 fund and FlyCap Mezzanine Fund II.
The Group / Company use the Portfolio Loss Reserve (see Note 2 (16) item (i)) to compensate the change in the values of AIF
“Altum capital fund”.
(ii) Investments in the Baltic Innovation Fund
Investments in the Baltic Innovation Fund are valued at fair value through profit or loss The management has made following
assessment in order to support such valuation:
within the meaning of IAS 28, the Financial Intermediary Division of the Company and the Baltic Innovation Fund
correspond to the definition of a venture capital organisation or comparable to it entities;
within the meaning of IAS 28, the Baltic Innovation Fund’s investments should be classified as associates;
the Baltic Innovation Fund measures its investments at fair value through profit or loss according to IFRS 9.
The above conclusions enabled the Company to the exception in relation to the Baltic Innovation Fund measurement
provided in IAS 28 and in its financial statements to measure the Baltic Innovation Fund and its investments applying IFRS 9 and
deciding to state the investment in the Baltic Innovation Fund at fair value through profit or loss.
The Group / Company use part of the support programme funding, i.e., the Risk Coverage Reserve (see Note 2 (16) item (i))
to compensate the change in the values of venture capital funds. Since December 2017 the said risk coverage mechanism
is attributable also to the Baltic Innovation Fund capped for amount of EUR 2 million.
(iii) Investments in subsidiaries
The Company’s investments in subsidiaries that include investments in ventures capital funds are stated under the equity
method. Investments in subsidiaries initially are recognised at acquisition cost. For subsequent measurement, the equity
method is used: the Company recognizes on its balance sheet the value of the VCFs as its proportionate share of the NAV of
the VCFs. The NAV was adjusted to reflect the Company’s accounting policies, i.e. IFRS. The NAV of the VCFs mainly consisted
of the VCFs’ investments in equity instruments and issued loans as well as of the liabilities undertaken. The NAV of the VCF is
based on the fair value measurement, which can be adjusted by the Company to align the accounting policies of the
subsidiaries with accounting policy of the Company.
The carrying value of investment in Subsidiaries includes changes in the Company’s NAV in the subsidiary since acquisition
date. Changes in the NAV from operational results of the VCF are included in the Company’s profit or loss statement as a
share of gain or (loss) of investment in subsidiaries.
(iv) Investments of subsidiaries in underlying undertakings
Investments of subsidiaries in underlying undertakings are measured at FVTPL, except where the Group elects at initial
recognition to irrevocably designate equity investments at FVOCI. Dividends continue to be recognised in profit or loss when
return on such investment.
(v) Other Investments
Other investments include investments in the Baltic Innovation Fund II and investments in the Three Seas Initiative Investment
Fund.
Other investments initially are recognised at acquisition cost. Other investments are measured at FVTPL.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
30
2 Accounting Policies (cont’d)
(6) Investments in venture capital funds (cont’d)
(vi) Other accounting issues
The management fees of the VCFs referable to the reporting period (previous periods) are treated as fees for services received
and are included in profit or loss.
As foreseen by the new wording of the agreement No 2015/15 On Implementation of the Investment Fund dated 23 December
2015 concluded between the Company and the Ministry of Economics, the Group / Company is reimbursed from the funding
of the Ministry of Economics for the following:
management fees to the 2
nd
, 3
rd
and 4
th
generation VCFs’ managers for implementation of the financial engineering
instruments (see Notes 6, 7 and 30). This coverage mechanism is valid for the all generation VCFs (see Note 17) as
well as for Baltic Innovation Fund from the December 2017 (see Note 17) and Baltic Innovation Fund II from June 2019
(see Note 18).
all costs including management fee incurred by the Group / Company as investor in AIF “Altum capital fund” are
covered by the Portfolio Loss Reserve from September 2020 (see Note 17).
value impairment of the investments of the financial engineering instruments due to valuation or revaluation (see
Note 17). This coverage mechanism is valid for the 2nd, 3rd and 4th generation VCFs as well as for AIF “Altum capital
fund” (see Note 17).
(7) Fair values of assets and liabilities
Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction
between market participants on the measurement date. Fair values of financial assets and liabilities, including derivative
financial instruments, are based on market prices quoted in active markets. If the market for a financial asset or liability (and
for unlisted securities) is not active, the Group / Company 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. Where,
in the opinion of the Management of the Group / Company, 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.
The Group / Company measures financial assets, such as derivatives, part of investments securities, investments in Baltic
Innovation Fund, non-financial assets such as investment properties, investments in alternative investment funds, and financial
liabilities such as Support Programme funding, at fair value at each balance sheet date. The information about financial and
non-financial assets and liabilities, which are measured at fair value or which values are disclosed, are summarised in the
following notes:
Disclosures for valuation methods, significant estimates and
assumptions
Note 2 (5), 2 (6), 2 (8), 2 (9), 2 (15), 2 (16)
Quantitative disclosures of fair value measurement hierarchy Note 40
Investment property
Note 2 (9) item (
i
v)
Financial instruments including those carried at amortised cost Note 2 (5)
(8) Off-setting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assets
and settle the liability simultaneously.
(9) Non–financial assets – initial recognition and subsequent measurement
(i) Intangible assets
Acquired computer software and licences are recognised as intangible assets on the basis of the costs incurred to acquire
and bring to use the software. Intangible assets are amortised on the basis of their expected useful live (5 years) and less
impairment, if there is an indication that intangible asset may be impaired. The costs associated with developing or
maintaining computer software programs are recognised as an expense when incurred.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
31
2 Accounting Policies (cont’d)
(9) Non–financial assets – initial recognition and subsequent measurement (cont’d)
(ii) Property, plant and equipment and depreciation
All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment, if any.
Depreciation is provided using the straight-line method to write off the cost of each asset to its residual value over the
estimated useful life of the asset. The assets’ residual values and useful live are reviewed, and adjusted if appropriate, at each
balance sheet date.
The annual depreciation rates applied are as follows:
Category Depreciation rate
Land and buildings 2% p.a.
Furniture and fittings 10 - 20% p.a.
Computers and equipment 16.67 – 33.33% p.a.
Vehicles 20% p.a.
Leasehold improvements over the term of the lease agreements
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its
recoverable amount. Property, plant and equipment are periodically reviewed for impairment.
Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the asset will flow to the Group / Company and the cost of
the asset can be measured reliably.
Gains and losses on disposals of property and equipment are recognised in the profit or loss in the period of disposal. All other
repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
(iii) Impairment of non-financial assets
The Group / Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Group / Company estimates the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less
costs to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other
available fair value indicators.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group /
Company estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there
has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor
exceeds the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in the profit or loss. Goodwill impairment losses cannot be
reversed over the next reporting periods.
(iv) Investment property
Investment property comprises land or buildings, which are held in order to earn rentals or for capital appreciation or both,
and which are not occupied by the Group / Company or otherwise held for sale. Property rented out under operating lease
is classified as investment property if, and only it meets the definition of an investment property.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
32
2 Accounting Policies (cont’d)
(9) Non–financial assets – initial recognition and subsequent measurement (cont’d)
(iv) Investment property (cont’d)
Investment property is carried at fair value through profit and loss. Fair value is based on active market prices, adjusted, if
necessary, to any difference in the nature, location or condition of the asset. The fair value of investment property is based on
a valuation by an independent valuator who holds a recognised and relevant professional qualification and who has recent
experience in the location and category of the investment property being valued. If this information is not available, the Group
/ Company uses alternative valuation methods such as discounted cash flow projections. Changes in the fair value of
investment property are recorded in the profit or loss as part of operating income. Revaluation of investment property is
performed annually.
Gains and losses on sale of investment properties is recognised at sale as the difference between the proceeds from the sale
and the carrying amount (fair value) of investment properties.
(v) Repossessed collateral (included in Other assets)
Repossessed collateral includes movable assets, land and buildings that have been acquired in the debt collection process
for the purpose to hold them and sell in an ordinary course of business. Inventory is reported at the lower of cost or net realisable
value. Net realizable value is a selling price during an ordinary course of business of the Group / Company less selling expenses.
Depreciation of repossessed collateral is not calculated. Changes in value of repossessed collateral are recognised in of profit
or loss. The value of repossessed collateral is reassessed at each reporting date to ensure it is stated at the lower of cost or net
realisable value. The repossessed collateral consists of properties taken over with an aim to sell them in the near future.
Realised gains and losses on sale of repossessed collateral are recognised at sale as the difference between sale price of
repossessed collateral and carrying amount as at the moment of sale.
(vi) Assets held for sale
Non-current assets and disposal groups held for sale are measured at the lower of their carrying amount and fair value less
costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale
is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must
be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the
date of classification.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
33
2 Accounting Policies (cont’d)
(10) Leases
The Group / Company recognises a right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligation to make lease payments. The Group / Company applies optional exemptions for short-term leases
and leases of low-value items.
The Group / Company applied simplified approach and did not restate comparative information. Right–of–use assets were
measured equal to the lease liabilities at the date of initial application. Cumulative effect of initial application was immaterial
therefore it was not recognised as an adjustment to the opening balance of retained earnings.
Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. To assess whether the contract is a lease or contains a lease, the Group /
Company assesses whether:
the contract provides for the use of an identified asset: the asset may be designated, directly or indirectly, and must
be physically separable or represent practically full capacity of the asset from the physically separable asset. If the
supplier has a significant right to replace the asset, the asset is not identifiable;
the Group / Company has the right to obtain all economic benefits from the use of the identifiable asset over its
useful life;
the Group / Company has the right to determine the use of the identifiable asset. The Group / Company has the
right to determine the manner in which the asset will be used, when it can decide how and for what purpose the
asset will be used. Where the relevant decisions about how and for what purpose an asset is used are predetermined,
the Group / Company should assess whether it uses the asset, or the Group / Company has developed an asset in
a manner that predetermines how and for what purpose the asset will be used.
Upon adopting IFRS 16, the Group / Company used a single recognition and measurement approach for all leases with similar
characteristics (with certain exemptions) and made an assessment on the identified right–of–use assets non–cancellable lease
terms (including the extension and termination options) and lease payments (including fixed and variable payments etc.).
Leases are recognised as right–of–use assets and the corresponding lease liabilities at the date when leased assets are
available for use of the Group / Company. The cost of the right–of–use an asset consists of:
the amount of the initial measurement of the lease liability;
any lease payments made before the commencement date less any lease incentives received;
any initial direct costs.
The right–of–use assets are classified and recognised according to groups of property, plant and equipment. The Group /
Company accounts right–of–use assets of land, buildings and vehicles.
The right–of–use asset is amortised on a straight–line basis from the commencement date to the end of the useful life of the
underlying asset or from the commencement date of the lease to the end of the lease term, unless an asset is scheduled to
be redeemed. The right–of–use asset is periodically reduced for impairment losses, if any, and adjusted for any revaluation of
the lease liabilities.
Assets and liabilities arising from leases at commencement date are measured at the amount equal to the present value of
the remaining lease payments, discounted by the Group’s / Company's incremental interest rate. Lease liabilities include the
present value of the following lease payments:
fixed lease payments (including in–substance fixed lease payments), less any lease incentives receivable;
variable leases payments that are based on an index or a rate;
amounts expected to be payable by the Group / Company under residual value guarantees;
the exercise price of a purchase option if the Group / Company is reasonably certain to exercise that option;
payments of penalties for terminating the lease, if the lease term reflects the Group / Company exercising that
option.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
34
2 Accounting Policies (cont’d)
(10) Leases (cont’d)
Lease liabilities are subsequently measured when there is a change in future lease payments due to changes of an index or
a rate, when the Group’s / Company's estimate of expected payments changes, or when the Group / Company changes its
estimate of the purchase option, lease term modification due to extension or termination. When a lease liability is subsequently
measured, the corresponding adjustment is made to the carrying amount of the right–of–use asset or recognised in the
statement of comprehensive income if the carrying amount of the right–of–use asset decreases to zero.
Each lease payment is divided between the lease liability and the interest expense on the lease. Interest expense on lease is
recognised in the statement of comprehensive income over the lease term to form a constant periodic interest rate for the
remaining lease liability for each period.
Lease payments related to short–term leases are recognised as an expense in the statement of comprehensive income on a
straight–line basis. Short–term leases are leases with a lease term of 12 months or less at the commencement date.
(11) Corporate income tax
Corporate income tax for the reporting period is included in the financial statements based on the Group’s / Company’s
management’s calculations prepared in accordance with tax legislation of the Republic of Latvia.
Corporate income tax is calculated on the basis of distributed profit which is subject to the tax rate of 20% of their gross
amount, or 20/80 of net expense. Corporate tax on distributed profit will be recognized when the shareholders of the Company
make a decision about profit distribution.
Corporate income tax for the distributed profit is included in the profit and loss statement line item “Corporate income tax”
and disclosed by the components in the notes to the financial statements.
In accordance with Paragraph 2 of Article 15 of the Development Finance Institution Law, the Group’s / Company’s profit for
the period is transferred to reserves in order to ensure financial stability and sustainable operation of the Group / Company as
well as to mitigate the risks of approved support programmes.
(12) Provisions
The Group’s / Company’s contingent liabilities and off-balance sheet items consist of financial guarantees, loan commitments,
grant commitments as well as commitment to associates and other investments (see Note 31). Provisions include impairment
allowances for expected credit losses for loan commitments, grant commitments and financial guarantees are presented in
Note 2 (5) item (vi).
(13) Vacation reserve
Accruals for employee leaves are recognised on an accrual basis. The volume of accrued liabilities for leaves is calculated,
based on the number of leave days earned, but unused by the staff members of the Group / Company, and following the
principles listed below:
accruals are created for payment for all unused leave days of staff members,
the value of one unused leave day is defined as the staff members’ average salary per day at the end of the
reporting year, plus the appropriate compulsory social insurance contributions,
movements in accruals are recognised in the profit or loss.
(14) Employee benefits
The Group / Company pays social security contributions for state pension insurance and to the state funded pension scheme
in accordance with Latvian legislation. State funded pension scheme is a defined contribution plan under which the Group /
Company pays fixed contributions determined by the law and has no legal or constructive obligations to pay further
contributions if the state pension insurance system or state funded pension scheme are not able to settle their liabilities to
employees. The social security contributions are recognised as an expense on an accrual basis and are included within staff
costs.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
35
2 Accounting Policies (cont’d)
(15) Support programme funding
Although liabilities arising from support programme funding are interest-free or have an interest rate that differs from the
average market rate, they have an additional participation in the profit or loss related to the assets in which the Group /
Company has invested using these resources. The management of the Group / Company is of the opinion that these liabilities
have a different kind of interest return related to the return on the underlying assets. For the purposes of IFRS the interest return
of this kind is considered as embedded derivative. As it follows from IFRS 9 Clause 4.3.5., the embedded derivatives may be
recognised without separating them from the contract, together with the whole contract, at its fair value with re-measurement
through profit or loss.
The fair value of the liability established in this manner as of 1 January 2018 consists of the already carried Support programme
funding coupled with the state aid portion adjusted for the part of the future cash flow pertaining of additional payments / to
reduction of additional payments due to value appreciation or impairment of the associated assets, i.e. the liability is
recognised to the extent that corresponds to the liability’s repayment amount established for the Group / Company. In
determining the fair value of support programmes funding, the Group / Company applied a discount rate of 1% (in 2020; 1.5%)
Support programme funding includes the Risk Coverage Reserve that can be used for covering the Group’s / Company’s
credit risk losses. For accounting of Risk Coverage Reserve see Note 2 (16) item (i). See detailed information on Risk Coverage
Reserve also in Note 2 (4) item (ii), Note 2 (5) item (i), Note 2 (6) items (i) and (ii) and Note 30.
(16) Critical accounting estimates and judgements
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year,
are described below. The Group / Company bases its assumptions and estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions about future developments, however, may change due
to market changes or circumstances arising that are beyond the control of the Group / Company. Such changes are reflected
in the assumptions when they occur. The estimates and assumptions are evaluated regularly and are based on the historic
experience and other factors, including expectations of future events that are believed to be reasonable under the current
circumstances. Such estimates and judgements are disclosed below.
(i) Expected credit losses
State support programmes implemented by the Group / Company are designed according to the market gap to ensure
access of enterprises and residentials to finance resources in areas that the government has defined as important and to be
supported, fielding national policy in to the national economy or that access is not sufficient with available financial
instruments in the market. Expected loss along with programme’s impact, risk assessment, financial feasibility and
implementation expenses are estimated prior to approval of respective programme at the Cabinet of Ministers as stipulated
by Development Finance Institution Law.
In assessment of expected loss for the programme the Group / Company evaluates incorporated credit risk considering the
Group’s / Company’s activities in high-risk areas operational risk and other risks like market risks. Since the Group’s / Company’s
client in majority of support programmes is not entitled to cover the full charge of expected credit risk in, then for coverage
of the programme’s expected loss on credit risk respective portion of public funding available for that programme is allocated
at full or partial extent of total expected credit loss depending on the agreed programme’s structure and as such is earmarked
for the credit risk loss coverage. before implementation of that programme. That public funding part allocated for the
coverage of programme’s expected loss on credit risk is transferred to particular support programme reserve capital within
the Group’s / Company’s Specific reserves for support programmes and classified as Portfolio Loss Reserve (see Note 36), or
accounted separately as provisions for risk coverage (Risk Coverage Reserve) classified within the liabilities (see Note 30).
If public funding classified within Risk coverage reserve for coverage of particular programme’s expected loss on credit risk
exceeds actual credit loss incurred during the implementation of the programme, then respective excess portion of that public
funding is repayable according to the terms of programme funding agreement.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
36
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(ii) Impairment losses of loans
In order to assess impairment allowance, the management needs to make assumptions regarding the estimated cash flows
and their timing related to loans. Significant estimates need to be made in relation to value of the collateral of the loans and
advances. The assessment of the collateral includes the amounts of such impairment losses covered by Support programme
funding provided by state, see Note 30. Further details disclosed in Note 2 (5) item (vi).
Covid-19 impact
The Group / Company participated in Covid-19 loan moratoria within which upon qualifying client request a deferral of loan
principal repayment for a short period of time is allowed. For those clients who have got loan repayment relief by the Group
/ Company between March 12th, 2020 and the day the moratorium came into force (which was 5 May 2020), the Group /
Company has applied the same conditions as under the Covid-19 moratorium by the Finance Latvia Association from 1 July
2020 until 30 September 2020. Cumulative term for the principal payment deferrals under Covid-19 moratoria set by the
European Banking Authority was nine months for those requests on the principal payment deferral that were granted up until
31 March 2021. Loans to which the principal payment deferrals were applied (both one-time and repeated) in 2020 and 2021,
including those under the Covid-19 moratoria of the Finance Latvia Association, amounted to EUR 31,861 thousand up until 31
December 2021 (up until 31 December 2020: EUR 31,617 thousand). Of these loans up until 31 December 2021, the principal
payment deferrals had expired for loans in the amount of EUR 24,080 thousand and the principal payment deferrals had not
expired for loans in the amount of EUR 7,781 thousand. Loan principal payment deferrals requested within Covid-19 moratoria
framework are exempt from events triggering re-assessment of loan staging unless the SICR criteria are met at the time the
principal payment deferrals are applied. Similarly, individual requests to defer principal repayment for short period of time
which were not formally requested under Covid-19 moratoria of the Finance Latvia Association after 30 September 2020, but
were applied and in their nature were similar, were also excluded. In all cases other risk parameters (including, but not limited
to days past due and covenant breaches) were monitored and loan staging applied according to standard procedure. The
Group / Company performed an SICR test on an individual basis for all stage 1 loans to which the principal payment deferrals
were applied and had not yet expired as at 31 December 2021, and those loans with significant increase in credit risk like
loans in Covid-19 sensitive industries were transferred to stage 2 with a corresponding increase in credit loss allowances.
The Group / Company has recognised uncertainty regarding duration and severity of Covid-19 situation and associated
possible disruptions to the economy and customers of the Group / Company. Consequently, a prudent new impairment
overlay for Stage 1 customer loan exposures was introduced. The impairment overlay represents an additional loss reserve
over the modelled ECL amounts to account for other economic uncertainties. It addresses increased uncertainty regarding
the forward-looking economic conditions in the current Covid-19 situation. Such future uncertainties which “Point in time” ECL
models calibrated on historical data, despite being adjusted with forward looking information, might not be fully capturing in
the current unusual environment. As of 31 December 2021, impairment overlay of EUR 1,301 thousand (31 December 2020:
EUR 309 thousand) for the Group / Company has been recognised to address these modelling uncertainties.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
37
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(ii) Impairment losses of loans (cont’d)
The Group / Company has implemented forward-looking information in the measurement of expected credit losses. The
forward-looking adjustment incorporates two economic scenarios with distinct economic consequences: a base case
scenario which comprises most likely future economic development and a less likely adverse scenario. The GDP annual growth
rates, which are derived from a combination of external macroeconomic forecasts and which are one of the key variables,
are summarized below:
2022 2023 2024
GDP annual growth rate, in %
Base case scenario * 4.80 3.70 3.40
Adverse scenario ** 2.50 3.40 3.40
Weighted average *** 4.40 3.70 3.40
* The base case scenario combines two external scenarios: (i) The macroeconomic development scenario of the Ministry of Finance (published
in the Latvian Economic Development Report on 20 December 2021), which projected GDP growth of 5.4% in 2022 and economic growth in
the coming years. close to the average growth rate of 3.5% in 2023 and 3.4% in 2024, and (ii) the Bank of Latvia's forecast, published on 17
December 2021, projected GDP growth of 4.2% in 2022 and 4.0% in 2023. For each of the external scenarios - the Ministry of Finance and the
Bank of Latvia - a 50% probability of occurrence of the scenario was applied.
** Adverse scenario includes the forecast of the Ministry of Finance (published in the informative report “On Macroeconomic Indicators,
Revenues and General Government Budget Balance Forecasts for 2022-2024” of 24 August 2021) - GDP growth rates in 2022 were forecast will
decrease to 2.5% per year, while in the coming years economic growth will be close to the average development rate - 3.4% in 2023 and 2024.
*** The base case scenario was weighted at 80% and the negative scenario at 20%. The GDP growth rate forecast for 2022 is used to calculate
the 12-month GDP, while the GDP growth rate forecast for 2022-2024 is used to calculate the lifetime GDP.
Changes in the forecasts of macroeconomic indicators were the determining factor in the decrease in credit loss allowance
for the year 2021, which resulted in a decrease in credit loss allowance for loans in the amount of EUR 4,221 thousand, in
amount of EUR 658 thousand for loan commitments and in the amount of EUR 112 thousand for liabilities for issued financial
guarantees.
(iii) Fair value of investments in the VCF
The Group’s / Company’s management checks regularly that the value of the underlying investments of the VCFs is properly
reflected. If the information about investments’ evaluation is not sufficient or does not confirm the value, the management
needs to make assumptions about the fair value of the VCFs.
(iv) Impairment allowance for securities valued at amortised cost
Similarly as for loans, the Group / Company estimates expected credit losses to reflect changes in credit risk since initial
recognition of debt securities. Impairment allowances are recognised based on forward looking information, even if no credit
loss event has happened. The assessment considers broad range of information, but as most of these types of exposures are
rated, it relies heavily on external credit ratings and rating agencies’ reported default rates derived by calculating multi-period
rating transition matrices. Credit risk triggers (event of insolvency, any delay of payments, restructuring of debt) and individual
credit risk analysis of the issuer are also considered. The Group / Company deems investment grade rated exposures as low
credit risk, thus these are assumed no to have experienced a significant increase in credit risk. For non-investment grade
exposures decrease in external credit rating by more than 3 notches since acquisition is deemed significant increase in credit
risk. Expected credit losses are recognised based on the stage in which the exposure is allocated at the reporting date. 12-
month expected credit losses are recognised for Stage 1 exposures, where credit risk since initial recognition has not increased
significantly. Lifetime expected credit losses are recognised for Stage 2 exposures whose credit risk has increased significantly
since initial recognition and Stage 3 exposures which are credit impaired. Stage 3 exposures, if any were identified, would
additionally be subjected to comprehensive evaluation, including comparison to market valuations for similar exposures,
analysis of market depth of the respective security, past trading performance and all other available information.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
38
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(v) Revaluation of investment properties
The Group / Company carries its investment properties at fair value, with changes in fair value being recognised in the
statement of profit or loss. The Group / Company engaged an independent valuation specialist to assess fair value as at 31
December 2021 and 31 December 2020 for investment properties. Investment property consists of agricultural land.
Comparable transaction method is applied mostly for investment property. More information is provided in Note 2 (9) item (iv)
and Note 21.
(vi) Classification of the 1st, 2nd and 3rd generation VCFs
The Group / Company considers that it does not control the VCFs even though it owns more than 50% in majority of the VCF.
Instead, it has been concluded that the Group / Company has significant influence over the VCFs and therefore investments
in VCFs are classified as Associates and are measured at using the equity method.
The Group / Company has invested in several VCFs having ownerships of 20% and 33% in two of the VCFs and 64% - 100% in
rest of them (for more details, please see Note 17). The main reason for the Group / Company to invest in these VCFs is to
implement a public funding function imposed by the government. Despite the high direct investments and ownership above
50% in the most of the VCFs, the Group’s / Company’s ability to exercise its power over the VCFs is limited by the terms of the
agreements signed between the Group / Company and the VCFs managers. The Group / Company has assessed that it
doesn’t control the VCFs, but can exercise significant influence over them. The Group / Company is forbidden to take part in
the management of the VCFs’ businesses. However, the Group’s / Company’s representatives are present in different bodies
of the VCFs (e.g. Advisory Board, Investment Committee, etc.) granting it a right to approve or reject certain limited
transactions and advising the VCFs managers.
KS “Otrais Eko fonds”, which was a 1
st
generation VCF, was sold, followed by its liquidation in November 2020.
The Group / Company has to monitor the implementation of financing instruments, select financial intermediaries according
to legal acts and aim to increase the value of Investment Fund. The Group / Company could stop the cooperation with the
VCFs managers only in cases when the VCFs managers cease their operations or illegal actions would be discovered. Under
these circumstances, the VCFs in question would either be closed – the liquidation process would be initiated, no new
investments would be made or a search for a new fund manager would be initiated through public tender. The selection of
a fund manager for implementation of the state aid programmes requires following the legislation on public tenders, as would
the change of fund managers. According to the law, the replacement of the fund manager can occur only as a result of
reorganization and selection procedure is costly and time-consuming. The disruption of the cooperation with the fund
manager would put under threat the implementation of State and EU support programs which is the main goal of the Group
/ Company given it is a finance development institution. The Group’s / Company’s management considers that the monetary
amounts required to change the fund manager are material and substantial and along with the abovementioned
circumstances constitute an obstacle to exercising its power over the VCFs.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
39
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(vii) Classification of the 4th generation VCFs
In year 2018 active co-operation with the 4
th
generation VCFs was started. In order to evaluate existence of control or
significant influence, the Group / Company assessed thoroughly the concluded co-operation agreements applying IFRS 10
control criteria and IAS 28 significant influence criteria.
Upon assessment of all the factors, the rights and obligations arising under the agreements demonstrate that those VCFs over
which the Group / Company exercises the sole right of dismissing the VCFs’ managers without any additional reasons should
be treated as the subsidiaries of the Group / Company as the Group / Company has power over the investment object. While
the investments in these VCFs over which the Group / Company exercises no such right should be treated as associates over
which the Group / Company has no control, but significant influence. The management of the Group / Company is aware
that on most occasions the circumstances that point to the power of the Group / Company over the investment will cease to
exist within two years once the amount of the minimum capital investment is reached. For this reason, once the term has
expired, the management of the Group / Company will do a repeated assessment of the presence of the control indicators.
As a result of annual assessment re existence of control or significant influence over subsidiaries the Company’s subsidiaries
are not classified as subsidiaries as of 31 December 2021. That is driven by the fact that the Company doesn’t exercise one of
the core control indicator – doesn’t have the power over the particular investment object – (i) the investment decision made
by the Fund’s manager can’t be cancelled unless it is not compliant with the Fund’s investment strategy, AML assessment and
state support criteria, and (ii) the investment deal’s structure can’t be affected.
The Group / Company has to monitor the implementation of financing instruments, select financial intermediaries according
to legal acts and aim to increase the value of Fund of Funds. The Group / Company could stop the cooperation with the VCFs
managers only in cases when the VCFs managers cease their operations or illegal actions would be discovered. Under these
circumstances, the VCFs in question would either be closed – the liquidation process would be initiated, no new investments
would be made or a search for a new fund manager would be initiated through public tender. The selection of a fund
manager for implementation of the state aid programmes requires following the legislation on public tenders, as would the
change of fund managers. According to the law, the replacement of the fund manager can occur only as a result of
reorganization and selection procedure is costly and time-consuming. The disruption of the cooperation with the fund
manager would put under threat the implementation of State and EU support programs which is the main goal of the Group
/ Company given it is a finance development institution.
(viii) Investments of AIF “Altum Capital Fund” in equity instruments
According to the accounting policy of AIF “Altum Capital Fund”, it operates as an investment entity because the following
criteria set out in IFRS 10 "Consolidated Financial Statements" are met – (i) AIF “Altum Capital Fund” obtains funds for
investments from several investors for the purpose of providing those investors with investment management services, (ii) AIF
“Altum Capital Fund” commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both and (iii) AIF “Altum Capital Fund” measures and evaluates investments at fair value.
Therefore, AIF “Altum Capital Fund” does not consolidate its investments in the underlying equity instruments are not
consolidated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
40
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(ix) Monitoring value of investments in VCFs
2
nd
, 3
rd
and 4
th
generation VCFs
In accordance with the Limited Partnership Agreement, the General Partner who is the manager of the VCF and comes from
the venture capital industry, is fully responsible for all aspects of VCF`s operation, including investment assessment, revaluation
and determination of impairment if carrying value of investment exceeds recoverable amount. Carrying value and
impairment is recorded and reported on the fund`s financial statement (audited on an annual basis).
Carrying value of investments made by the VCFs on the funds` financial statement are recorded at fair value complying with
the Group`s / Company’s accounting policy. However, other aspect is determination of fair value used by funds management
for making different management decisions, including decisions regarding exit strategy, timing etc. Fair value is reported on
Funds` Quarterly Investment Reports. The value of the investment is established based on the most appropriate technique
from the International Private Equity and Venture Capital Valuation Guidelines. The employed methods include Third party
assessments, Industry Valuation Benchmarks, Discounted cash-flow method and other.
In accordance with the Group`s / Company’s principles, the Group / Company considers valuations presented by the fund
management as a reliable source as only professionals with respective experience and proven track record are selected as
fund managers. However, in order to ensure a sound and transparent finance management, the Group / Company conducts
a regular monitoring procedure (typically on a quarterly basis) for revaluation of portfolio value of the investments funds. The
assessment is carried out based on the information presented by funds management. The process is divided into several
stages:
Financial Intermediary unit, business owner of venture capital segment, is responsible for initial analysis of Fund`s
recorded and recognised investment value based on supporting information prepared and sent by fund
management. The following information is presented by the investment funds for every investment exposure: the
current development and dynamic of investment, the current financial performance and financial forecasts. It
should be noted that the funds specialised in early-stage investments (mostly, pre-revenue projects) are not able to
provide information about financial performance of projects. In this case investment scoring approach is used as a
base.
Financial Intermediary unit conducts Q&A sessions with venture capital fund management during which the fund
management reports about every investment of the portfolio. If supporting information indicates about potential
flaws in calculations of fair values, adjustment is made.
Adjusted (if any) information is provided to the Risk Management Department for revision of carrying value, then
presented on Risk and Asset-Liability Management Committee for final approving before recognized in the Group`s
/ Company’s accounting system.
If there is evidence of value decrease, the Group / Company calculates decrease of the VCFs’ NAV and recognises the loss
in the profit or loss.
AIF “Altum Capital Fund”
In accordance with the Limited Partnership Agreement, the General Partner is the Company and as the manager of the VCF
is fully responsible for all aspects of the VCF’s operation, including investment assessment, revaluation and determination of
impairment if carrying value of investment exceeds recoverable amount. Carrying value and impairment is recorded and
reported on the VCF`s financial statement (audited on an annual basis).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
41
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(ix) Monitoring value of investments in VCFs (cont’d)
AIF “Altum Capital Fund” (cont’d)
Carrying value of investments made by the VCFs on AIF “Altum Capital Fund” financial statement are recorded at fair value
complying with the Group`s / Company’s accounting policy. Fair value is reported on the VCF’s Quarterly Investment Reports.
The fair value of financial instruments is determined by applying various valuation techniques, or a combination thereof
depending on the specific nature of the investment and the information available to support the underlying assumptions. The
choice of methods is prioritized as follows – (i) the fair value of financial instruments publicly quoted on regulated market is
always determined by reference to their market bid price at the reporting date, (ii) third party quoted market prices in active
markets, (iii) transactions in comparable financial instruments of comparable entities on or outside regulated markets and (iv)
discounted cash flow. The valuation process and the necessary data gathering and their analysis are carried out by the
Investment Director who is responsible for managing the specific investment. In addition, each assessment is evaluated and
approved by another Investment Director. The results of the analysis are presented in an Investment Valuation Report and
submitted quarterly to the VCF's Investment Committee for review. Unless the Investment Committee of AIF “Altum Capital
Fund” requires changes or additions to a valuation report, it is submitted to the Accounting Department to record the changes
in the investment value.
(x) Reverse rent
Exploring the options for recording of reverse rent transactions and IFRS compliance, the management based its opinion on
the subject matter of the transaction and its economic justification rather than the legal form. As part of assessment of these
transactions, the management paid much attention to exercising of the reverse repurchase right of the lessee.
(xi) Agent vs Principal
For majority of state aid programs, the Group / Company considers that it acts as a Principal. The management of the Group
/ Company believes that the Group / Company is a Principal since the loan agreements concluded with the clients entail
contractual rights to loan repayments from the borrowers or other beneficiaries of the investments. Moreover, the loan
agreements are concluded for full amount of the loan and granted loans are carried as assets in the Group’s / Company’s
statement of financial position. The investments made comply with the definition of an asset. The Group / Company is
responsible for providing of the service and can affect the interest rate. However, some programmes have been imposed
with a limit on the interest rates that cannot be exceeded. The Group / Company believes that the Group / Company is a
Principal also for state aid programs, which are based on guarantee products, since the Group / Company is exposed to the
risk of such guarantee agreements concluded with the clients.
The Group / Company recognises its expenses due to impairment of the loans, guarantees or changes of value of venture
capital funds in profit or loss for the portion of impairment that refers to the Group / Company (ranging from 20% to 100%). The
portion of losses that the government reimburses by decreasing the amount of the loan repayable to the government, does
not affect the Group’s / Company’s profit or loss as the loan received from the government is debited. Assets and liabilities
are presented in gross values.
The interest income received on the loans issued from above mentioned activities and programs includes the amounts
collected on behalf of and for the benefit of other entities that do not increase the equity capital of the Group / Company
and therefore cannot be considered as the Group’s / Company’s income. For this reason, the Group / Company carries as
income only that part of the financial resources of the Loan Fund that is used to cover the management costs of the Loan
Fund and this amount is included in the profit or loss calculation.
(xii) Loans below market rate
The Group / Company implements the state aid programs by pursuing the government’s policy in the national economy and
supporting small and medium sized entities (SMEs). The funding of the state aid programs may be comprised of the following
public funding sources – (i) European Union funds, other foreign financial aid, funding from the state budget as well as (ii) own
funds of the very implementing body. The financing received for implementation of the programs, i.e. for issuing loans to SMEs,
is interest free. When the public funding for implementation of the state aid programmes is given with an interest rate below
the effective market rate, the effect of such favourable interest rate, i.e. the difference between the fair value of the liability
and proceeds received is treated as income-generating government grant.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
42
2 Accounting Policies (cont’d)
(16) Critical accounting estimates and judgements (cont’d)
(xii) Loans below market rate
Although a fraction of the public funding of some of the state aid programmes implemented by the Group / Company may
include the funds from the Group’s / Company’s shareholders and state budget funds, this type of funding is not treated as a
shareholder’s equity contribution since the amount of the public funding earmarked for implementation of the specific state
aid programme is received in the capacity of the implementing body of the specific state aid programme chosen as a result
of public selection and not in the capacity of entity implementing the assignment or instructions of its shareholder.
Further details on guarantees are disclosed in Notes 13 and 37.
The funding received from the state can be classified into three categories – equity financing (about guarantees see Note 2
(5) item (xviii), Notes 13 and 37), loans received from the State Treasury (see Notes 19 and 29) and support programmes funding
(see Note 30).
(17) Application of new and/or amended IFRS and the interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC)
(i) Initial application of new amendments to the existing standards effective for the current reporting period
The following amendments to the existing standards issued by the International Accounting Standards Board (IASB) and
adopted by the EU are effective for the current reporting period:
Amendments to IFRS 9 “Financial Instruments”, IAS 39 “Financial Instruments: Recognition and Measurement”, IFRS 7
“Financial Instruments: Disclosures”, IFRS 4 “Insurance Contracts” and IFRS 16 “Leases” - Interest Rate Benchmark
Reform — Phase 2 adopted by the EU on 13 January 2021 (effective for annual periods beginning on or after 1
January 2021),
Amendments to IFRS 16 “Leases” - Covid-19-Related Rent Concessions beyond 30 June 2021 adopted by the EU on
30 August 2021 (effective from 1 April 2021 for financial years starting, at the latest, on or after 1 January 2021),
Amendments to IFRS 4 Insurance Contracts “Extension of the Temporary Exemption from Applying IFRS 9” adopted
by the EU on 16 December 2020 (the expiry date for the temporary exemption from IFRS 9 was extended from 1
January 2021 to annual periods beginning on or after 1 January 2023).
The adoption of amendments to the existing standards has not led to any material (where the implementation impact was or
is expected to be reasonably material it is disclosed) changes in the Group’s / Company’s financial statements.
(ii) Standards and amendments to the existing standards issued by IASB and adopted by the EU but not yet effective
At the date of authorisation of these financial statements, the following amendments to the existing standards were issued by
IASB and adopted by the EU and which are not yet effective:
Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting Policies adopted by the EU
on 2 March 2022 (effective for annual periods beginning on or after 1 January 2023),
Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” – Definition of Accounting
Estimates adopted by the EU on 2 March 2022 (effective for annual periods beginning on or after 1 January 2023),
Amendments to IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use adopted by the EU on 28
June 2021 (effective for annual periods beginning on or after 1 January 2022),
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts - Cost of Fulfilling
a Contract adopted by the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
Amendments to IFRS 3 “Business Combinations” - Reference to the Conceptual Framework with amendments to IFRS
3 adopted by the EU on 28 June 2021 (effective for annual periods beginning on or after 1 January 2022),
IFRS 17 “Insurance Contracts” including amendments to IFRS 17 issued by IASB on 25 June 2020 - adopted by the EU
on 19 November 2021 (effective for annual periods beginning on or after 1 January 2023),
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
43
2 Accounting Policies (cont’d)
(17) Application of new and/or amended IFRS and the interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) (cont’d)
Amendments to various standards due to “Improvements to IFRSs (cycle 2018 -2020)” resulting from the annual
improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing inconsistencies and
clarifying wording - adopted by the EU on 28 June 2021 (The amendments to IFRS 1, IFRS 9 and IAS 41 are effective
for annual periods beginning on or after 1 January 2022. The amendment to IFRS 16 only regards an illustrative
example, so no effective date is stated.).
(iii) New standards and amendments to the existing standards issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting
Standards Board (IASB) except for the following new standards and amendments to the existing standards, which were not
endorsed for use in EU as at 31 March 2022 (the effective dates stated below is for IFRS as issued by IASB):
IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016) - the
European Commission has decided not to launch the endorsement process of this interim standard and to wait for
the final standard,
Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or Non-Current
(effective for annual periods beginning on or after 1 January 2023),
Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(effective for annual periods beginning on or after 1 January 2023),
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint
Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further
amendments (effective date deferred indefinitely until the research project on the equity method has been
concluded),
Amendments to IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 – Comparative Information
(effective for annual periods beginning on or after 1 January 2023).
The Group / Company makes further assessment on the impact of these new standards and amendments, but the Group /
Company anticipates that the adoption of these new standards and amendments to the existing standards will have no
material impact on the financial statements of the Group / Company in the period of initial application.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
44
3 Risk Management
For risk management, the Group / Company has developed a risk management system that takes into account its size,
structure and operational characteristics as well as restricted options for management of certain risks. The Group / Company
manages the risks affecting its operations in compliance with the risk management internal regulatory documents approved
by the Group / Company that detail and establish the aggregate of measures used in management of the risks inherent to its
operations.
The following major risk management principles are followed:
risk management is a component of every-day functions;
the Group / Company identifies and assesses the probable risks before launching of new products or services;
while assuming the risks the companies forming the Group / Company are capable of long-term pursuit of the
delegated aims and assignments;
the Group / Company does not enter into transactions, operations, etc. entailing risks that endanger its operational
stability or may result in substantial damage to its reputation.
In its risk management the Group / Company makes use of various risk analysis methods and instruments as well as establishes
risk limits and restrictions.
The major risks that the Group / Company is exposed to are credit, liquidity and operational risks.
(1) Credit Risk
The credit risk is a risk that a customer or cooperation partner of the Group / Company is unable or unwilling to meet its liabilities
towards the Group / Company in full and within the established term. Since the Group / Company is delegated
implementation of the state aid programmes, it is mainly exposed to credit risk through its lending, guarantees to the third
parties and other off-balance liabilities towards the third parties. The Group / Company is also subject to the credit risk due to
its investment activities. Credit risk also includes concentration risk, which means large individual exposures as well as significant
exposures to groups of customers or cooperation partners whose probability of default is driven by common underlying factors,
such as sector, economy or type of instrument.
(i) Credit Risk Governance
Credit risk governance is set in the Group’s / Company’s Risk Management Policy and Credit Policy:
The overall risk appetite, decided by the Supervisory Board, is broken down into detailed risk limits and target levels
for different sectors, geographies and products, but also to certain limits of each customer or cooperation partner
and group of connected customers or cooperation partners.
The business units are responsible for the credit operation, including the credit process and the credit risks stemming
from all customers or cooperation partners within the unit. The business unit shall ensure that all credit risk exposures
are assessed, decided, administrated, and followed-up according to the credit framework, including establishing an
integrated internal control of high quality in the credit process. The business unit shall also make sure that the credit
risk exposures are in line with the Group’s / Company’s strategies, policies, and instructions.
The Risk Management Department is responsible for independent monitoring and control of credit risk management.
The primary responsibility of the Risk Management Department is to maintain, develop and monitor the risk limits and
the risk classification systems. The risk limit framework identifies areas where restrictions need to be set, in order to
make sure that the portfolios exposed to the credit risk will stay within the decided risk appetite. The Risk Management
Department is also responsible of controlling compliance to internal credit rules.
The Internal Audit performs independent periodic reviews of the credit governance and the system of internal
control.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
45
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
(ii) Credit Risk Assessment and Monitoring
The key principle of credit risk management in the Group / Company is the ability of the customers or cooperation partners
to meet their liabilities towards the Group / Company, which is achieved by assessment of the customer and co-operation
partner prior to transaction, as well as further continuous monitoring and evaluation.
To maintain a well-diversified credit portfolio with a low-risk profile and to find a favourable balance between risk and return,
the Group / Company works continuously to understand the customers and their market conditions. When the Group /
Company considers a credit application, a thorough analysis is performed which includes the customer’s or cooperation
partner’s capacity and willingness to repay the new credit as well as other credits. A customer’s or cooperation partner’s cash
flow and solvency are always key variables when deciding on credit and the Group / Company strives to obtain adequate
collateral.
The risk profile of the portfolios exposed to credit risk is continuously analysed. For portfolio segments and individual customers
or cooperation partners where the risk of default appears higher, reviews are performed more frequently. If a customer’s or
cooperation partner’s risk profile has deteriorated, a number of corrective measures are considered and implemented. Each
business unit is responsible for monitoring signals and conditions that might suggest that the level of credit risk in individual
exposures has increased. In such situations a series of customised actions should be taken without delay to minimise the
Group’s / Company’s risk or losses. A special restructuring and recovering unit supports the business units when the risk
associated with a certain exposure has increased and it provides expertise in managing insolvency and restructuring cases.
(iii) Credit Risk Mitigation
The Group/Company reduces its exposure to credit risk by securing a pledge or other collateral adequate to the risk
transaction and provisions of the target programme. The collateral, its value and risk mitigating effect is considered throughout
the credit process. The term collateral covers pledges and guarantees. Credits without collateral are mainly granted for small
loans. Special loan covenants are commonly created which entitle The Group / Company to renegotiate or terminate the
agreement if the borrower’s repayment capacity deteriorates, or if the covenants are otherwise breached.
The valuation of collateral is based on a thorough review and analysis of the pledged assets, and is an integrated part in the
credit risk assessment of the customer. The establishment of the collateral value is part of the credit decision. The value of the
collateral is reassessed within periodic credit reviews of the borrower and in situations where The Group / Company has reason
to believe that the value has deteriorated or the exposure has become a problem loan.
Breakdown of the Group’s / Company’s loans by internal rating categories, in thousands of euro:
Internal rating categories A B C D E F G H Withdrawn
rating
Total
Total gross loans 1 339 37 997 44 937 80 624 94 630 29 491 13 219 2 415 29 329 333 981
Impairment allowances (26) (425) (1 326) (3 219) (5 391) (4 831) (2 518) (666) (2 311) (20 713)
Total net loans as at 31 December 2020 1 313 37 572 43 611 77 405 89 239 24 660 10 701 1 749 27 018 313 268
Total gross loans 723 26 862 45 046 114 275 70 599 27 976 19 391 9 247 34 554 348 673
Impairment allowances (8) (580) (2 233) (5 825) (2 846) (840) (1 556) (959) (3 296) (18 143)
Total net loans as at 31 December 2021 715 26 282 42 813 108 450 67 753 27 136 17 835 8 288 31 258 330 530
Breakdown of the Group’s / Company’s issued guarantees by internal rating categories, in thousands of euro:
Internal rating categories A B C D E F G H Withdrawn
rating
Total
Total gross outstanding guarantees 907 18 082 44 996 53 817 50 424 12 843 4 385 1 623 172 528 359 605
Impairment allowances * (15) (775) (2 891) (3 755) (5 532) (1 235) (584) (632) (15 994) (31 413)
Total net outstanding guarantees as at 31
December 2020
892 17 307 42 105 50 062 44 892 11 608 3 801 991 156 534 328 192
Total gross outstanding guarantees 60 24 814 50 711 41 609 33 933 20 645 19 307 2 250 221 649 414 978
Impairment allowances * (2) (717) (2 382) (2 205) (3 178) (2 692) (2 535) (587) (19 305) (33 603)
Total net outstanding guarantees as at 31
December 2021
58 24 097 48 329 39 404 30 755 17 953 16 772 1 663 202 344 381 375
* The Group / Company uses internal rating for assessment of credit risk to decide on issuing of financial guarantee and for further monitoring of
credit risk. Internal rating assigned to a guarantee is one of several factors that has been considered when the ECL is measured. Impairment
allowance for guarantees is recognised as the largest of the ECL and fair value of liabilities.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
46
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
Breakdown of the Group’s financial assets, off-balance sheet items and contingent liabilities by their qualitative assessment,
in thousands of euro:
Stage 1 Stage 2 Stage 3 Total
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Financial assets at AC
Due from credit institutions and the
Treasury
455 007 359 949 - - - - 455 007 359 949
Impairment allowances (1) - - - - - (1) -
Total net due from credit institutions and
the Treasury
455 006 359 949 - - - - 455 006 359 949
Investment securities - 407 - - 3 704 3 433 3 704 3 840
Impairment allowances - - - - (3 667) (3 399) (3 667) (3 399)
Total net investment securities - 407 - - 37 34 37 441
Loans and receivables 256 865 274 294 67 091 32 012 24 717 27 675 348 673 333 981
Impairment allowances * (3 545) (6 967) (4 425) (3 506) (10 173) (10 240) (18 143) (20 713)
Total net loans and receivables 253 320 267 327 62 666 28 506 14 544 17 435 330 530 313 268
Grants 45 729 31 282 - - - - 45 729 31 282
Impairment allowances (332) (175) - - - - (332) (175)
Total net grants 45 397 31 107 - - - - 45 397 31 107
Other financial assets 2 531 2 507 - - 2 634 3 096 5 165 5 603
Impairment allowances (21) (34) - - (1 930) (1 926) (1 951) (1 960)
Total net other financial assets 2 510 2 473 - - 704 1 170 3 214 3 643
Total financial assets at AC 760 132 668 439 67 091 32 012 31 055 34 204 858 278 734 655
Impairment allowances (3 899) (7 176) (4 425) (3 506) (15 770) (15 565) (24 094) (26 247)
Total net financial assets at AC 756 233 661 263 62 666 28 506 15 285 18 639 834 184 708 408
Financial assets at FVOCI
Investment securities 14 051 36 958 - - - - 14 051 36 958
Impairment allowances - - - - - -
Total net investment securities 14 051 36 958 - - - - 14 051 36 958
Total financial assets at FVOCI 14 051 36 958 - - - - 14 051 36 958
Impairment allowances - - - - - - - -
Total net financial assets at FVOCI 14 051 36 958 - - - - 14 051 36 958
Off
-
balance sheet items and
contingent liabilities
Outstanding guarantees 378 876 348 115 32 885 6 995 3 217 4 495 414 978 359 605
Impairment allowances * (28 088) (27 769) (3 505) (817) (2 010) (2 827) (33 603) (31 413)
Total net outstanding guarantees 350 788 320 346 29 380 6 178 1 207 1 668 381 375 328 192
Loan commitments 21 730 36 514 3 755 2 834 87 - 25 572 39 348
Impairment allowances * (484) (949) (287) (65) (19) - (790) (1 014)
Total net loan commitments 21 246 35 565 3 468 2 769 68 - 24 782 38 334
Grant commitments 11 089 6 798 - - - - 11 089 6 798
Impairment allowances (73) (74) - - - - (73) (74)
Total net grant commitments 11 016 6 724 - - - - 11 016 6 724
Total off-balance items and contingent
liabilities
411 695 391 427 36 640 9 829 3 304 4 495 451 639 405 751
Impairment allowances (28 645) (28 792) (3 792) (882) (2 029) (2 827) (34 466) (32 501)
Total net off-balance items and
contingent liabilities
383 050 362 635 32 848 8 947 1 275 1 668 417 173 373 250
* Includes net impairment allowances of EUR 3,009 thousand covered by Portfolio Loss Reserve (Special Reserve Capital) upon
approval of the 2021 annual report. In the distribution of the 2021 profit, it will be directly attributed to the Portfolio Loss Reserve, thus
the 2021 result which will be allocated to Reserves will improve. Additional information available in Note 36.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
47
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
Breakdown of the Company’s financial assets, off-balance sheet items and contingent liabilities by their qualitative
assessment, in thousands of euro:
Stage 1 Stage 2 Stage 3 Total
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Financial assets at AC
Due from credit institutions and the
Treasury
455 007 359 949 - - - - 455 007 359 949
Impairment allowances (1) - - - - (1) -
Total net due from credit institutions and
the Treasury
455 006 359 949 - - - - 455 006 359 949
Investment securities - 407 - - 3 704 3 433 3 704 3 840
Impairment allowances - - - - (3 667) (3 399) (3 667) (3 399)
Total net investment securities - 407 - - 37 34 37 441
Loans and receivables 256 865 274 294 67 091 32 012 24 717 27 675 348 673 333 981
Impairment allowances * (3 545) (6 967) (4 425) (3 506) (10 173) (10 240) (18 143) (20 713)
Total net loans and receivables 253 320 267 327 62 666 28 506 14 544 17 435 330 530 313 268
Grants 45 729 31 282 - - - - 45 729 31 282
Impairment allowances (332) (175) - - - - (332) (175)
Total net grants 45 397 31 107 - - - - 45 397 31 107
Other financial assets 2 531 2 507 - - 2 634 3 205 5 165 5 712
Impairment allowances (21) (34) - - (1 930) (1 926) (1 951) (1 960)
Total net other financial assets 2 510 2 473 - - 704 1 279 3 214 3 752
Total financial assets at AC 760 132 668 439 67 091 32 012 31 055 34 313 858 278 734 764
Impairment allowances (3 899) (7 176) (4 425) (3 506) (15 770) (15 565) (24 094) (26 247)
Total net financial assets at AC 756 233 661 263 62 666 28 506 15 285 18 748 834 184 708 517
Financial assets at FVOCI
Investment securities 14 051 36 958 - - - - 14 051 36 958
Impairment allowances - - - - - - -
Total net investment securities 14 051 36 958 - - - - 14 051 36 958
Total financial assets at FVOCI 14 051 36 958 - - - - 14 051 36 958
Impairment allowances - - - - - - - -
Total net financial assets at FVOCI 14 051 36 958 - - - - 14 051 36 958
Off
-
balance sheet items and
contingent liabilities
Outstanding guarantees 378 876 348 115 32 885 6 995 3 217 4 495 414 978 359 605
Impairment allowances * (28 088) (27 769) (3 505) (817) (2 010) (2 827) (33 603) (31 413)
Total net outstanding guarantees 350 788 320 346 29 380 6 178 1 207 1 668 381 375 328 192
Loan commitments 21 730 36 514 3 755 2 834 87 - 25 572 39 348
Impairment allowances * (484) (949) (287) (65) (19) - (790) (1 014)
Total net loan commitments 21 246 35 565 3 468 2 769 68 - 24 782 38 334
Grant commitments 11 089 6 798 - - - - 11 089 6 798
Impairment allowances (73) (74) - - - - (73) (74)
Total net grant commitments 11 016 6 724 - - - - 11 016 6 724
Total off-balance items and contingent
liabilities
411 695 391 427 36 640 9 829 3 304 4 495 451 639 405 751
Impairment allowances (28 645) (28 792) (3 792) (882) (2 029) (2 827) (34 466) (32 501)
Total net off-balance items and
contingent liabilities
383 050 362 635 32 848 8 947 1 275 1 668 417 173 373 250
* Includes net impairment allowances of EUR 3,009 thousand covered by Portfolio Loss Reserve (Special Reserve Capital) upon
approval of the 2021 annual report. In the distribution of the 2021 profit, it will be directly attributed to the Portfolio Loss Reserve, thus
the 2021 result which will be allocated to Reserves will improve. Additional information available in Note 36.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
48
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
Changes in the Group’s / Company’s credit loss allowance and gross carrying amount for loans, in thousands of euro:
Credit loss allowance Gross carrying amount
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
As at 31 December 2020 6 967 3 506 10 240 20 713 274 294 32 012 27 675 333 981
Transfers between stages:
from Stage 1 to Stage 2 (1 828) 3 088 - 1 260 (37 783) 39 185 - 1 402
to credit impaired (from Stage 1 and
Stage 2 to Stage 3)
(113) (25) 1 590 1 452 (4 337) (785) 4 917 (205)
from Stage 3 to Stage 2 - 77 (713) (636) - 2 682 (3 083) (401)
to 12
-
months ECL (from Stage 2 and
Stage 3 to Stage 1)
80 (225) (19) (164) 5 311 (5 906) (80) (675)
New originated or purchased 1 136 360 532 2 028 55 800 4 609 1 872 62 281
Derecognised during the period (645) (376) (766) (1 787) (22 317) (1 834) (3 327) (27 478)
Changes to ECL measurement model
assumptions (PD, LGD)
640 (116) 1 041 1 565 - - - -
Changes to ECL measurement model
assumptions (macroeconomic factors)
(2 749) (1 483) 11 (4 221) - - - -
Other movements 991 * - - 991 (1) - - (1)
Write-offs - - (1 079) (1 079) - - (1 079) (1 079)
Change of outstanding balance ** (934) (381) (664) (1 979) (14 102) (2 872) (2 178) (19 152)
As at 31 December 2021 3 545 4 425 10 173 18 143 256 865 67 091 24 717 348 673
* Includes the impairment overlay EUR 991 thousand that represents an additional loss reserve for SME and Midcaps portfolio
** Change of outstanding balance includes cash flows from repayment of principal
Changes in the Group’s / Company’s credit loss allowance and gross carrying amount for outstanding guarantees, in
thousands of euro:
Credit loss allowance Gross carrying amount
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
As at 31 December 2020 27 769 817 2 827 31 413 348 115 6 995 4 495 359 605
Transfers between stages:
from Stage 1 to Stage 2 (2 783) 2 925 - 142 (26 664) 23 970 - (2 694)
to credit impaired (from Stage 1 and
Stage 2 to Stage 3)
(80) (58) 843 705 (1 139) (311) 1 224 (226)
from Stage 3 to Stage 2 176 (300) - (124) 2 952 (2 660) - 292
to 12
-
months ECL (from Stage 2 and
Stage 3 to Stage 1)
- - (6) (6) - 6 (6) -
New originated or purchased 7 663 334 - 7 997 109 979 5 504 - 115 483
Derecognised during the period (2 896) (15) (841) (3 752) (48 232) (166) (1 336) (49 734)
Changes to ECL measurement model
assumptions (PD, LGD)
(38) (15) (122) (175) - - - -
Changes to ECL measurement model
assumptions (macroeconomic factors)
(97) (26) 11 (112) - - - -
Other movements 918 * - (650) 268 (524) - (1 043) (1 567)
Write-offs - - - - - - - -
Change of outstanding balance ** (2 544) (157) (52) (2 753) (5 611) (453) (117) (6 181)
As at 31 December 2021 28 088 3 505 2 010 33 603 378 876 32 885 3 217 414 978
* includes the impairment overlay EUR 954 thousand that represents an additional loss reserve for SME and Midcaps portfolio
** Change of outstanding balance includes cash flows from repayment of principal of underlying loan
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
49
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
Aging analysis of the loans issued by the Group / Company, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Performing 326 852 313 856 326 852 313 856
Past due up to 30 days 10 540 9 339 10 540 9 339
Past due from 31 to 60 days 2 346 445 2 346 445
Past due from 61 to 90 days 727 217 727 217
Past due over 90 days 8 208 10 124 8 208 10 124
Total gross loans, without interest accrued on the loans 348 673 333 981 348 673 333 981
Impairment allowances (18 143) (20 713) (18 143) (20 713)
Total net loans 330 530 313 268 330 530 313 268
The Group / Company has performed sensitivity analysis of the Group’s / Company’s credit loss allowance for loans and
outstanding guarantees using two macro-economic factors in assessment of the ECL – change in real estate prices and
change in GDP.
For the purpose of sensitivity analysis, the Group / Company applied the following upward and downward scenarios:
the 1st year projected real estate prices were adjusted by +/- 5% and this adjustment was applied to LGD used to
calculate the ECL;
the 1st year projected GDP were adjusted by +/- 1% and this adjustment was applied to the marginal PD used to
calculate the ECL.
Results of the Group’s / Company’s sensitivity analysis of the Group’s / Company’s credit loss allowance for loans as at 31
December 2021, thousands of euro:
Change in GDP Change in real estate prices
Gross
carrying
amount
+ 1% - 1% + 5% - 5%
Credit loss allowance for loans 18 143 (309) 357 (321) 520
Total credit loss allowance for loans 18 143 (309) 357 (321) 520
Results of the Group’s / Company’s sensitivity analysis of the Group’s / Company’s credit loss allowance for loans as at 31
December 2020, thousands of euro:
Change in GDP Change in real estate prices
Gross carrying
amount
+ 1% - 1% + 5% - 5%
Credit loss allowance for loans 20 713 (381) 377 (331) 289
Total credit loss allowance for loans 20 713 (381) 377 (331) 289
Results of the Group’s / Company’s sensitivity analysis of the Group’s / Company’s credit loss allowance for outstanding
guarantees as at 31 December 2021, thousands of euro:
Change in GDP Change in real estate prices
Gross carrying
amount
+ 1% - 1% + 5% - 5%
Credit loss allowance for outstanding guarantees 35 190 (2) 5 (95) 95
Total credit loss allowance for loans 35 190 (2) 5 (95) 95
Results of the Group’s / Company’s sensitivity analysis of the Group’s / Company’s credit loss allowance for outstanding
guarantees as at 31 December 2020, thousands of euro:
Change in GDP Change in real estate prices
Gross carrying
amount
+ 1% - 1% + 5% - 5%
Credit loss allowance for outstanding guarantees 31 413 (148) 155 (17) 18
Total credit loss allowance for loans 31 413 (148) 155 (17) 18
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
50
3 Risk Management (cont’d)
(1) Credit Risk (cont’d)
In calculating the ECL due to default on loan principal or interest payments or other loss events the following is taken into
account collateral, including real estate and commercial pledges measured at market value. The value of collateral is based
on the valuations performed by independent valuers.
Information on the value of collateral assessed at fair value and position against net loan portfolio, in thousands of euro :
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Real estate (loans) 189 991 178 614 189 991 178 614
Real estate (leaseback) 32 993 30 536 32 993 30 536
Movable property 43 239 52 619 43 239 52 619
Guarantees 4 974 3 048 4 974 3 048
Total collateral 271 197 264 817 271 197 264 817
Loan portfolio, gross * 348 673 333 981 348 673 333 981
Impairment allowances (18 143) (20 713) (18 143) (20 713)
Loan portfolio, net 330 530 313 268 330 530 313 268
Exposed 17.95% 15.47% 17.95% 15.47%
* includes loans in amount of EUR 116,238 thousand to mitigate the impact of Covid-19 for which no real estate or movable property is required as collateral
while credit risk is covered by risk coverage (Portfolio Loss Reserve).
The Group’s / Company’s maximum credit risk exposures of the balance and off-balance sheet items (not including collateral
held or other security), in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Assets exposed to credit risk
Due from credit institutions and the Treasury 455 006 359 949 455 006 359 949
Financial assets at fair value through other comprehensive income
-
investment
securities
14 051 36 958 14 051 36 958
Financial assets at amortised cost:
Investment securities 37 441 37 441
Loans and receivables 330 530 313 268 330 530 313 268
Grants 45 397 31 107 45 397 31 107
Other investments 8 936 7 503 8 936 7 503
Investments in associates 64 949 47 988 64 949 47 988
Other assets 3 242 3 671 3 242 3 636
Total 922 148 800 885 922 148 800 850
Off-balance sheet items exposed to credit risk
Contingent liabilities (Note 31) 414 978 359 605 414 978 359 605
Financial commitments (Note 31) 161 276 178 073 161 276 188 488
Total 576 254 537 678 576 254 548 093
Part of subitem “Loans and receivables” are loans to agriculture segment (see Note 19) that are secured by agricultural land
with a cautious valuation. Loans to other segments are secured mostly by real estate, to a lesser extent – by other types of
assets or commercial pledges. The expected cash flows from collateral are taken into account when estimating impairment
allowances for expected credit losses. Risk Coverage Reserve and Specific Reserve Capital is available to the Group /
Company to cover expected credit losses arising from deterioration of quality of loan portfolio. For more detailed information
on Risk Coverage Reserve and Specific Reserve Capital see Note 30 and Note 36.
As at 31 December 2021, part of the Group’s / Company’s assets in amount of EUR 152,296 thousand (31 December 2020: EUR
124,087 thousand) were pledged. Detailed information on the Group’s / Company’s outstanding loan agreement as at
31 December 2021 is provided in Note 18 and Note 19.
Article 37 of the Law on State Budget 2021 provides that guarantees issued by Altum in amount of EUR 270 000 thousand is
backed by the state according to Agriculture and Rural Development Law and Development Finance Institution Law. Actual
amount of issued guarantees as at 31 December 2021 was EUR 268,256 thousand (31 December 2020: EUR 251,701 thousand).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
51
3 Risk Management (cont’d)
(2) Liquidity Risk
Liquidity risk is the risk that the Group / Company is unable to meet its contractual or contingent obligations, that it does not
have the appropriate amount of funding and liquidity to support its assets or, in case of necessity, the resources might not be
available to it on the market, and/or it might be unable to dispose of positions without considerable losses and in a short period
of time to ensure the necessary liquidity.
The objective of liquidity risk management is to maintain liquid assets of sufficient size and quality, as well as to attract financing
with appropriate maturity structure, which ensures timely fulfilment of liabilities as well as planned increase of assets.
The Group / Company implements a prudent liquidity risk management policy. Consequently, the focus of liquidity
management is on balancing of existing and planned portfolio under each support programmes and the amount and timing
of funding available for their implementation.
Given that the repayment term for funding under the support programmes can be extended in accordance with the Cabinet
of Ministers regulations, this means in practice that this funding remains on the Group’s / Company's balance sheet and that
funding is reallocated to new programmes.
The Risk and Asset-Liabilities Management Committee is responsible for the monitoring and management of liquidity risk in
accordance with the Group's / Company's Resource Management Strategy and the Group's / Company's Risk Management
Strategy.
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid
assets as at 31 December 2021, in thousands of euro:
Up to
1
year *
1 to 5 years
5 to 10 years
10 to 15
years
Over 15
years and
w/o maturity
Total
Due to credit institutions 13 443 39 997 - - - 53 440
Due to general governments 6 547 30 634 31 219 18 781 36 605 123 786
Issued debt securities 854 87 623 - - - 88 477
Support programme funding ** 2 895 62 750 126 942 27 087 10 613 230 287
Other liabilities 3 000 840 - - - 3 840
Total financial liabilities 26 739 221 844 158 161 45 868 47 218 499 830
Off-balance sheet items and contingent liabilities 350 748 79 640 145 866 - - 576 254
Total financial liabilities, off-balance items and contingent
liabilities ***
377 487 301 484 304 027 45 868 47 218 1 076 084
Due from credit institutions and the Treasury 455 006 - - - - 455 006
Investment securities 3 592 10 496 - - - 14 088
Liquid assets 458 598 10 496 - - - 469 094
* According to IAS 7 “Financial Instruments: Disclosures” requirements the major part of the guarantee portfolio issued by the Group
has been classified within maturity “Up to 1 year”. The exception is the housing guarantees for families with children and housing
guarantees for young specialists – these guarantees with remaining contractual maturity exceeding 3 years, counting from the
reporting date, are classified within maturity “1 to 5 years”, because the compensation mechanism for housing guarantee for families
with children and housing guarantee for young specialists stipulates that compensation for the declared guarantee cases is paid
within 3 years from the date the guarantee case is declared. In turn, the housing guarantees for families with children and housing
guarantees for young specialists with remaining contractual maturity shorter than 1 year, counting from the reporting date, are
presented in accordance with the remaining contractual maturity.
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid assets
“Up to 1 year” as at 31 December 2021 and supporting analysis is presented in table below.
** After expiring of the support programme its funding remains on the Group’s / Company’s balance sheet since any repayment from
the existing support programme accumulates and are used to finance new support programmes.
*** Since part of off-balance sheet items and contingent liabilities is backed by funding recognized as financial liabilities, EUR 70,980
thousand are included in both the Group’s financial liabilities and the Group’s off-balance sheet items and contingent liabilities.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
52
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid
assets “Up to 1 year” as at 31 December 2021, in thousands of euro:
Up to 1 month
1 to 3 months
3 to 6 months
6 to 12 m
onths
Total up to 1
year
Due to credit institutions - 4 381 3 750 5 312 13 443
Due to general governments 84 354 2 531 3 578 6 547
Issued debt securities - 505 - 349 854
Support programme funding 77 - - 2 818 2 895
Other liabilities 2 983 8 - 9 3 000
Total financial liabilities 3 144 5 248 6 281 12 066 26 739
Off-balance sheet items and contingent liabilities * 299 718 14 010 23 605 13 415 350 748
Total financial liabilities, off-balance items and contingent
liabilities
302 862 19 258 29 886 25 481 377 487
Due from credit institutions and the Treasury 455 006 - - - 455 006
Investment securities 1 072 - - 2 520 3 592
Liquid assets 456 078 - - 2 520 458 598
* Split of off-balance sheet items and contingent liabilities by type of financial instrument – outstanding financial guarantees, loan
commitments and grant commitments as well as commitments to AIF “Altum capital fund”, investments in associates and other
investments, are presented in Note 37.
Contingent liabilities and financial commitments are funded from various funding sources available to the Group.
Outstanding financial guarantees in amount of EUR 262,119 thousand (up to 1 year) – from respective guarantee support programme
funding (see Note 30) and Specific reserve capital (see Note 36). Track records of claimed guarantee compensations presents that
the volume of guarantees claimed within such terms are considerably less than the amount of the commitment disclosed in the above
maturity analyses.
Loan commitments in amount of EUR 25,572 thousand (up to 1 year) – from financial facilities (either received by the Group or available
to the Group upon request) concluded with financial institutions and the Treasury (see Notes 28 and 29) and respective loan support
programme funding (see Note 30).
Grant commitments in amount of EUR 11,089 thousand (up to 1 year) – from respective grant support programme funding (see Note
30).
Commitments to investments in associates in amount of EUR 13,977 thousand (up to 1 year) – from respective venture capital fund
support programme funding (see Note 30).
Commitments to AIF “Altum capital fund” in amount of EUR 32,124 thousand (up to 1 year) – from specific reserve capital (see Note
36) and additional funding from shareholders expected in 2022.
Commitments to other investments in amount of EUR 5,867 thousand (up to 1 year) – for Baltic Innovation Fund 2 from support
programme funding, repayments on different support programmes and the Group’s / Company’s own funding for Three Seas Initiatives
Investment Fund.
As a consequence, the liquidity of the Group is not deteriorated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
53
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid
assets as at 31 December 2020, in thousands of euro:
Up to 1
year *
1 to 5 years
5 to 10 years
10 to 15
years
Over 15
years and
w/o maturity
Total
Due to credit institutions 12 468 53 399 - - - 65 867
Due to general governments 311 4 741 9 544 - 89 553 104 149
Issued debt securities 824 68 107 - - - 68 931
Support programme funding ** 3 444 46 655 63 006 26 521 52 337 191 963
Other liabilities 1 718 1 170 - 13 - 2 901
Total financial liabilities 18 765 174 072 72 550 26 534 141 890 433 811
Off-balance sheet items and contingent liabilities 349 731 171 663 16 284 - - 537 678
Total financial liabilities, off-balance items and contingent
liabilities ***
368 496 345 735 88 834 26 534 141 890 971 489
Due from credit institutions and the Treasury 359 949 - - - - 359 949
Investment securities 22 991 14 408 - - - 37 399
Liquid assets 382 940 14 408 - - - 397 348
* According to IAS 7 “Financial Instruments: Disclosures” requirements the major part of the guarantee portfolio issued by the Group
has been classified within maturity “Up to 1 year”. The exception is the housing guarantees for families with children and housing
guarantees for young specialists – these guarantees with remaining contractual maturity exceeding 3 years, counting from the
reporting date, are classified within maturity “1 to 5 years”, because the compensation mechanism for housing guarantee for families
with children and housing guarantee for young specialists stipulates that compensation for the declared guarantee cases is paid
within 3 years from the date the guarantee case is declared. In turn, the housing guarantees for families with children and housing
guarantees for young specialists with remaining contractual maturity shorter than 1 year, counting from the reporting date, are
presented in accordance with the remaining contractual maturity.
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid assets
“Up to 1 year” as at 31 December 2020 and supporting analysis is presented in table below.
** After expiring of the support programme its funding remains on the Group’s / Company’s balance sheet since any repayment from
the existing support programme accumulates and are used to finance new support programmes.
*** Since part of off-balance sheet items and contingent liabilities is backed by funding recognized as financial liabilities, EUR 49,053
thousand are included in both the Group’s financial liabilities and the Group’s off-balance sheet items and contingent liabilities.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
54
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Group’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid
assets “Up to 1 year” as at 31 December 2020, in thousands of euro:
Up to 1 month
1 to 3 months
3 to 6 months
6 to 12 months
Total up to 1
year
Due to credit institutions - 4 378 - 8 090 12 468
Due to general governments 123 - 140 48 311
Issued debt securities - 564 260 - 824
Support programme funding 3 444 - - - 3 444
Other liabilities 1 693 - - 25 1 718
Total financial liabilities 5 260 4 942 400 8 163 18 765
Off-balance sheet items and contingent liabilities * 287 626 13 777 14 532 34 684 350 619
Total financial liabilities, off-balance items and contingent
liabilities
292 886 18 719 14 932 42 847 369 384
Due from credit institutions and the Treasury 359 949 - - - 359 949
Investment securities 2 090 20 436 - 465 22 991
Liquid assets 362 039 20 436 - 465 382 940
* Split of off-balance sheet items and contingent liabilities by type of financial instrument – outstanding financial guarantees, loan
commitments and grant commitments as well as commitments to AIF “Altum capital fund”, investments in associates and other
investments, are presented in Note 37.
Contingent liabilities and financial commitments are funded from various funding sources available to the Group.
Outstanding financial guarantees in amount of EUR 359,605 thousand (up to 1 year) – from respective guarantee support programme
funding (see Note 30) and Specific reserve capital (see Note 36). Track records of claimed guarantee compensations presents that
the volume of guarantees claimed within such terms are considerably less than the amount of the commitment disclosed in the above
maturity analyses.
Loan commitments in amount of EUR 39,348 thousand (up to 1 year) – from financial facilities (either received by the Group or available
to the Group upon request) concluded with financial institutions and the Treasury (see Notes 28 and 29) and respective loan support
programme funding (see Note 30).
Grant commitments in amount of EUR 6,798 thousand (up to 1 year) – from respective grant support programme funding (see Note
30).
Commitments to investments in associates in amount of EUR 7,639 thousand (up to 1 year) – from respective venture capital fund
support programme funding (see Note 30).
Commitments to AIF “Altum capital fund” in amount of EUR 46,117 thousand (up to 1 year) – from specific reserve capital (see Note
36) and additional funding from shareholders expected in 2021.
Commitments to other investments in amount of EUR 9,235 thousand (up to 1 year) – for Baltic Innovation Fund 2 from support
programme funding, repayments on different support programmes (see Note 30) and the Group’s / Company’s own funding for Three
Seas Initiatives Investment Fund.
As a consequence, the liquidity of the Group is not deteriorated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
55
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and
liquid assets as at 31 December 2021, in thousands of euro:
Up to 1
year *
1 to 5 years
5 to 10 years
10 to 15
years
Over 15
years and
w/o maturity
Total
Due to credit institutions 13 443 39 997 - - - 53 440
Due to general governments 6 547 30 634 31 219 18 781 36 605 123 786
Issued debt securities 854 87 623 - - - 88 477
Support programme funding ** 2 895 62 750 126 942 27 087 10 613 230 287
Other liabilities 3 000 840 - - - 3 840
Total financial liabilities 26 739 221 844 158 161 45 868 47 218 499 830
Off-balance sheet items and contingent liabilities 350 748 79 640 145 866 - - 576 254
Total financial liabilities, off-balance items and contingent
liabilities ***
377 487 301 484 304 027 45 868 47 218 1 076 084
Due from credit institutions and the Treasury 455 006 - - - - 455 006
Investment securities 3 592 10 496 - - - 14 088
Liquid assets 458 598 10 496 - - - 469 094
* According to IAS 7 “Financial Instruments: Disclosures” requirements the major part of the guarantee portfolio issued by the Company
has been classified within maturity “Up to 1 year”. The exception is the housing guarantees for families with children and housing
guarantees for young specialists – these guarantees with remaining contractual maturity exceeding 3 years, counting from the
reporting date, are classified within maturity “1 to 5 years”, because the compensation mechanism for housing guarantee for families
with children and housing guarantee for young specialists stipulates that compensation for the declared guarantee cases is paid
within 3 years from the date the guarantee case is declared. In turn, the housing guarantees for families with children and housing
guarantees for young specialists with remaining contractual maturity shorter than 1 year, counting from the reporting date, are
presented in accordance with the remaining contractual maturity.
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid assets
“Up to 1 year” as at 31 December 2021 and supporting analysis is presented in table below.
** After expiring of the support programme its funding remains on the Group’s / Company’s balance sheet since any repayment from
the existing support programme accumulates and are used to finance new support programmes.
*** Since part of off-balance sheet items and contingent liabilities is backed by funding recognized as financial liabilities, EUR 70,980
thousand are included in both the Company’s financial liabilities and the Company’s off-balance sheet items and contingent liabilities.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
56
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and
liquid assets “Up to 1 year” as at 31 December 2021, in thousands of euro:
Up to 1 month
1 to 3 months
3 to 6 months
6 to 12
months
Total up to 1
year
Due to credit institutions - 4 381 3 750 5 312 13 443
Due to general governments 84 354 2 531 3 578 6 547
Issued debt securities - 505 - 349 854
Support programme funding 77 - - 2 818 2 895
Other liabilities 2 983 8 - 9 3 000
Total financial liabilities 3 144 5 248 6 281 12 066 26 739
Off-balance sheet items and contingent liabilities * 299 718 14 010 23 605 13 415 350 748
Total financial liabilities, off-balance items and contingent
liabilities
302 862 19 258 29 886 25 481 377 487
Due from credit institutions and the Treasury 455 006 - - - 455 006
Investment securities 1 072 - - 2 520 3 592
Liquid assets 456 078 - - 2 520 458 598
* Split of off-balance sheet items and contingent liabilities by type of financial instrument – outstanding financial guarantees, loan
commitments and grant commitments as well as commitments to AIF “Altum capital fund”, investments in associates and other
investments, are presented in Note 37.
Contingent liabilities and financial commitments are funded from various funding sources available to the Company.
Outstanding financial guarantees in amount of EUR 262,119 thousand (up to 1 year) – from respective guarantee support programme
funding (see Note 30) and Specific reserve capital (see Note 36). Track records of claimed guarantee compensations presents that
the volume of guarantees claimed within such terms are considerably less than the amount of the commitment disclosed in the above
maturity analyses.
Loan commitments in amount of EUR 25,572 thousand (up to 1 year) – from financial facilities (either received by the Company or
available to the Company upon request) concluded with financial institutions and the Treasury (see Notes 28 and 29) and respective
loan support programme funding (see Note 30).
Grant commitments in amount of EUR 11,089 thousand (up to 1 year) – from respective grant support programme funding (see Note
30).
Commitments to investments in associates in amount of EUR 13,977 thousand (up to 1 year) – from respective venture capital fund
support programme funding (see Note 30).
Commitments to AIF “Altum capital fund” in amount of EUR 32,124 thousand (up to 1 year) – from specific reserve capital (see Note
36) and additional funding from shareholders expected in 2022.
Commitments to other investments in amount of EUR 5,867 thousand (up to 1 year) – for Baltic Innovation Fund 2 from support
programme funding, repayments on different support programmes and the Group’s / Company’s own funding for Three Seas Initiatives
Investment Fund.
As a consequence, the liquidity of the Company is not deteriorated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
57
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and
liquid assets as at 31 December 2020, in thousands of euro:
Up to 1
year *
1 to 5 years
5 to 10
years
10 to 15
years
Over 15
years and
w/o maturity
Total
Due to credit institutions 12 468 53 399 - - - 65 867
Due to general governments 311 4 741 9 544 - 89 553 104 149
Issued debt securities 824 68 107 - - - 68 931
Support programme funding ** 3 444 46 655 63 006 26 521 52 337 191 963
Other liabilities 1 718 1 170 - 13 - 2 901
Total financial liabilities 18 765 174 072 72 550 26 534 141 890 433 811
Off-balance sheet items and contingent liabilities 353 898 176 870 17 325 - - 548 093
Total financial liabilities, off-balance items and contingent
liabilities ***
372 663 350 942 89 875 26 534 141 890 981 904
Due from credit institutions and the Treasury 359 949 - - - - 359 949
Investment securities 22 991 14 408 - - - 37 399
Liquid assets 382 940 14 408 - - - 397 348
* According to IAS 7 “Financial Instruments: Disclosures” requirements the major part of the guarantee portfolio issued by the Company
has been classified within maturity “Up to 1 year”. The exception is the housing guarantees for families with children and housing
guarantees for young specialists – these guarantees with remaining contractual maturity exceeding 3 years, counting from the
reporting date, are classified within maturity “1 to 5 years”, because the compensation mechanism for housing guarantee for families
with children and housing guarantee for young specialists stipulates that compensation for the declared guarantee cases is paid
within 3 years from the date the guarantee case is declared. In turn, the housing guarantees for families with children and housing
guarantees for young specialists with remaining contractual maturity shorter than 1 year, counting from the reporting date, are
presented in accordance with the remaining contractual maturity.
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and liquid assets
“Up to 1 year” as at 31 December 2020 and supporting analysis is presented in table below.
** After expiring of the support programme its funding remains on the Group’s / Company’s balance sheet since any repayment from
the existing support programme accumulates and are used to finance new support programmes.
*** Since part of off-balance sheet items and contingent liabilities is backed by funding recognized as financial liabilities, EUR 49,053
thousand are included in both the Company’s financial liabilities and the Company’s off-balance sheet items and contingent liabilities.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
58
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Maturity profile of the Company’s expected undiscounted future cash flows of financial liabilities, off-balance liabilities and
liquid assets “Up to 1 year” as at 31 December 2020, in thousands of euro:
Up to 1 month
1 to 3 months
3 to 6 months
6 to 12
months
Total up to 1
year
Due to credit institutions - 4 378 - 8 090 12 468
Due to general governments 123 - 140 48 311
Issued debt securities - 564 260 - 824
Support programme funding 3 444 - - - 3 444
Other liabilities 1 693 - - 25 1 718
Total financial liabilities 5 260 4 942 400 8 163 18 765
Off-balance sheet items and contingent liabilities * 287 155 14 194 15 365 37 184 353 898
Total financial liabilities, off-balance items and contingent
liabilities
292 415 19 136 15 765 45 347 372 663
Due from credit institutions and the Treasury 359 949 - - - 359 949
Investment securities 2 090 20 436 - 465 22 991
Liquid assets 362 039 20 436 - 465 382 940
* Split of off-balance sheet items and contingent liabilities by type of financial instrument – outstanding financial guarantees, loan
commitments and grant commitments as well as commitments to investments in associates and other investments, are presented in
Note 37.
Contingent liabilities and financial commitments are funded from various funding sources available to the Company.
Outstanding financial guarantees in amount of EUR 359,605 thousand (up to 1 year) – from respective guarantee support programme
funding (see Note 30) and Specific reserve capital (see Note 36). Track records of claimed guarantee compensations presents that
the volume of guarantees claimed within such terms are considerably less than the amount of the commitment disclosed in the above
maturity analyses.
Loan commitments in amount of EUR 39,348 thousand (up to 1 year) – from financial facilities (either received by the Company or
available to the Company upon request) concluded with financial institutions and the Treasury (see Notes 28 and 29) and respective
loan support programme funding (see Note 30).
Grant commitments in amount of EUR 6,798 thousand (up to 1 year) – from respective grant support programme funding (see Note
30).
Commitments to investments in subsidiaries in amount of EUR 4,167 thousand (up to 1 year) – from respective venture capital fund
support programme funding (see Note 30).
Commitments to investments in associates in amount of EUR 7,639 thousand (up to 1 year) – from respective venture capital fund
support programme funding (see Note 30).
Commitments to AIF “Altum capital fund” in amount of EUR 46,117 thousand (up to 1 year) – from specific reserve capital (see Note
36) and additional funding from shareholders expected in 2021.
Commitments to other investments in amount of EUR 9,235 thousand (up to 1 year) – for Baltic Innovation Fund 2 from support
programme funding, repayments on different support programmes.
As a consequence, the liquidity of the Company is not deteriorated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
59
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Breakdown of the Group’s assets and liabilities by maturity profile as at 31 December 2021 based on the time remaining from
the reporting date to their contractual maturity, in thousands of euro:
Up to 1
month
1 to 3 months
3 to 6 months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Assets
Due from credit institutions and the
Treasury
455 006 - - - - - 455 006
Investment securities * 1 072 - - 2 520 10 496 - 14 088
Loans * 11 485 14 348 16 801 39 439 147 944 100 513 330 530
Grants 93 12 642 370 377 31 075 840 45 397
Deferred expense and accrued income 2 066 - - - - - 2 066
Other investments - - - - - 8 936 8 936
Investments in associates - - 6 130 10 473 9 924 38 422 64 949
Investment property - - - - - 46 164 46 164
Property, plant and equipment - - - - - 4 570 4 570
Intangible assets - - - - - 1 256 1 256
Other assets 1 004 96 279 1 306 557 - 3 242
Total assets 470 726 27 086 23 580 54 115 199 996 200 701 976 204
Liabilities
Due to credit institutions - 4 357 3 750 5 312 39 997 - 53 416
Due to general governments - 354 2 374 3 448 29 949 85 223 121 348
Issued debt securities - 505 - 59 84 994 - 85 558
Deferred income and accrued expense 186 401 418 2 233 2 492 823 6 553
Provisions 34 466 - - - - - 34 466
Support programme funding 77 - - 2 818 62 750 164 642 230 287
Other liabilities 2 983 8 - 9 840 - 3 840
Total liabilities 37 712 5 625 6 542 13 879 221 022 250 688 535 468
Net liquidity 433 014 21 461 17 038 40 236 (21 026) (49 987) 440 736
* With regard to loans and advances to customers, the Group uses the same basis of expected repayment behaviour as used for
estimating the effective interest rate. Investments in securities reflect their contractual coupon amortisations.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
60
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Breakdown of the Group’s assets and liabilities by maturity profile as at 31 December 2020 based on the time remaining from
the reporting date to their contractual maturity, in thousands of euro:
Up to 1
month
1 to 3 months
3 to 6 months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Assets
Due from credit institutions and the
Treasury
359 949 - - - - - 359 949
Financial assets at
fair value through profit
or loss
- - - - - 5 425 5 425
Investment securities 2 090 20 436 - 465 14 408 - 37 399
Loans * 10 563 13 112 16 717 35 212 152 416 85 248 313 268
Grants 64 66 18 7 121 18 524 5 314 31 107
Deferred expense and accrued income 1 521 - - - - - 1 521
Other investments - - - - - 7 503 7 503
Investments in associates - - 7 587 16 375 5 366 18 660 47 988
Investment property - - - - - 36 758 36 758
Property, plant and equipment - - - - - 4 717 4 717
Intangible assets - - - - - 1 398 1 398
Other assets 971 208 81 259 2 117 35 3 671
Total assets 375 158 33 822 24 403 59 432 192 831 165 058 850 704
Liabilities
Due to credit institutions - 4 367 - 8 090 53 398 - 65 855
Due to general governments - - - - 4 422 99 098 103 520
Issued debt securities - 484 (2) 53 64 987 - 65 522
Deferred income and accrued expense 488 357 401 967 2 916 719 5 848
Provisions 32 501 - - - - - 32 501
Support programme funding 3 444 - - - 46 655 141 864 191 963
Other liabilities 1 693 - - 25 1 170 13 2 901
Total liabilities 38 126 5 208 399 9 135 173 548 241 694 468 110
Net liquidity 337 032 28 614 24 004 50 297 19 283 (76 636) 382 594
* With regard to loans and advances to customers, the Group uses the same basis of expected repayment behaviour as used for
estimating the effective interest rate. Investments in securities reflect their contractual coupon amortisations.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
61
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Breakdown of the Company’s assets and liabilities by maturity profile as at 31 December 2021 based on the time remaining
from the reporting date to their contractual maturity, in thousands of euro:
Up to 1
month
1 to 3 months
3 to 6 months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Assets
Due from credit institutions and the
Treasury
455 006 - - - - - 455 006
Investment securities 1 072 - - 2 520 10 496 - 14 088
Loans * 11 485 14 348 16 801 39 439 147 944 100 513 330 530
Grants 93 12 642 370 377 31 075 840 45 397
Deferred expense and accrued income 2 066 - - - - - 2 066
Other investments - - - - - 8 936 8 936
Investments in associates - - 6 130 10 473 9 924 38 422 64 949
Investments in subsidiaries - - - - - - -
Investment property - - - - - 46 164 46 164
Property, plant and equipment - - - - - 4 570 4 570
Intangible assets - - - - - 1 256 1 256
Other assets 1 004 96 279 1 306 557 - 3 242
Total assets 470 726 27 086 23 580 54 115 199 996 200 701 976 204
Liabilities
Due to credit institutions - 4 357 3 750 5 312 39 997 - 53 416
Due to general governments - 354 2 374 3 448 29 949 85 223 121 348
Issued debt securities - 505 (2) 59 84 996 - 85 558
Deferred income and accrued expense 186 401 418 2 233 2 492 823 6 553
Provisions 34 466 - - - - - 34 466
Support programme funding 77 - - 2 818 62 750 164 642 230 287
Other liabilities 2 983 8 - 9 840 - 3 840
Total liabilities 37 712 5 625 6 540 13 879 221 024 250 688 535 468
Net liquidity 433 014 21 461 17 040 40 236 (21 028) (49 987) 440 736
* With regard to loans and advances to customers, the Group uses the same basis of expected repayment behaviour as used for
estimating the effective interest rate. Investments in securities reflect their contractual coupon amortisations.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
62
3 Risk Management (cont’d)
(2) Liquidity Risk (cont’d)
Breakdown of the Company’s assets and liabilities by maturity profile as at 31 December 2020 based on the time remaining
from the reporting date to their contractual maturity, in thousands of euro:
Up to 1
month
1 to 3 months
3 to 6 months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Assets
Due from credit institutions and the
Treasury
359 949 - - - - - 359 949
Investment securities * 2 090 20 436 - 465 14 408 - 37 399
Loans * 10 563 13 112 16 717 35 212 152 416 85 248 313 268
Grants 64 66 18 7 121 18 524 5 314 31 107
Deferred expense and accrued income 1 521 - - - - - 1 521
Other investments - - - - - 7 503 7 503
Investments in associates - - 7 587 16 375 5 366 18 660 47 988
Investments in subsidiaries - - - - - 4 879 4 879
Investment property - - - - - 36 758 36 758
Property, plant and equipment - - - - - 4 717 4 717
Intangible assets - - - - - 1 398 1 398
Other assets 971 208 81 259 2 117 - 3 636
Total assets 375 158 33 822 24 403 59 432 192 831 164 477 850 123
Liabilities
Due to credit institutions - 4 367 - 8 090 53 398 - 65 855
Due to general governments - - - - 4 422 99 098 103 520
Issued debt securities - 484 (2) 53 64 987 - 65 522
Deferred income and accrued expense 488 357 401 967 2 916 799 5 928
Provisions 32 501 - - - - - 32 501
Support programme funding 3 444 - - - 46 655 141 864 191 963
Other liabilities 1 693 - - 25 1 170 13 2 901
Total liabilities 38 126 5 208 399 9 135 173 548 241 774 468 190
Net liquidity 337 032 28 614 24 004 50 297 19 283 (77 297) 381 933
* With regard to loans and advances to customers, the Group uses the same basis of expected repayment behaviour as used for
estimating the effective interest rate. Investments in securities reflect their contractual coupon amortisations.
(3) Interest Rate Risk
The interest rate risk is related to the possible influence of the fluctuations of the market rates onto the interest income and
expenses of the Group / Company.
Interest rate management principles are determined in the Risk Management Policy. Interest rate risk governance is performed
by the Risk and Asset-Liability Management Committee, while daily interest rate analysis and management is performed by
Planning and Financial Analysis Department.
The Group's / Company’s interest rate sensitive assets (99.6%) and all interest rate sensitive liabilities are linked and priced at
euro interest rate indices. To assess the interest rate risk the Group / Company analyses the maturity structure of interest rate
sensitive assets, liabilities and off-balance sheet items, net position of interest rate risk and its sensitivity to changes in interest
rates. The sensitivity is measured calculating the impact of probable interest rate changes by 100 bps on the Group’s /
Company’s interest income and expenses, assuming that all other variables held constant. Scenarios floor the lowest possible
interest rate at zero if at the rate fixing date it is with negative value and if such a condition arises from the actual agreements.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
63
3 Risk Management (cont’d)
(3) Interest Rate Risk (cont’d)
The following table represents the impact of change in interest rates by 100 bps on the Group’s / Company’s interest income
and expenses over 12-month period, with all other variables held constant:
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
Change in interest rates by +100 bps 742 889 742 889
Change in interest rates by -100 bps 166 (305) 166 (305)
(4) Foreign Currency Risk
Foreign currency risk is the risk of potential losses arising from fluctuations in foreign exchange rates. The Group's / Company's
exposure to foreign currency risk is insignificant as the transactions are denominated in Euro. The Group / Company controls
foreign currency risk by raising financing and issuing financial instruments in euro.
The Group’s / Company’s exposure to foreign currency risk, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
EUR
Financial assets 921 480 800 291 921 480 800 256
Financial liabilities 494 449 429 761 494 449 429 761
Net position 427 031 370 530 427 031 370 495
USD
Financial assets 668 594 668 594
Financial liabilities - - - -
Net position 668 594 668 594
GBP
Financial assets 0 0 0 0
Financial liabilities - - - -
Net position 0 0 0 0
Based on the net current position of the Group / Company as at 31.12.2021 and 31.12.2020, if the exchange rate for the US
dollar changes according to the scenario presented, the possible changes in the Group's / Company's total capital (excluding
tax effects) would be as follows:
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
Change in USD/EUR exchange rates by +5% (33) (29) (33) (29)
Change in USD/EUR exchange rates by -5% 32 28 32 28
(5) Operational Risk
The operational risk results from intentional or unintentional deviations from the standards adopted in daily operation of the
Group / Company, for example human mistake or fraud, malfunction of information systems, insufficient control procedures
or their ignorance altogether, etc.
The goal of the operational risk management is timely identification of the potential operational risks and implementation of
countermeasures to minimize the effect of operational risk on the Group’s / Company’s financials as much as possible and
maintain the Group’s / Company’s operational continuity. The Group / Company achieves the established goal via
identification of operational risk causes and taking preventive and corrective measures to eliminate them.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
64
3 Risk Management (cont’d)
(6) AML / CTF / sanctions risk
The Group / Company is subject to the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing
(AML/CTF) and complies with the international legal acts and legal acts of the Republic of Latvia which regulate prevention
of legalization of proceeds derived from criminal activity and financing of terrorism and proliferation and ensures compliance
with sanction lists (AML/CTF/Sanctions).The internal control system of the Group / Company is based on the "Know Your
Customer (KYC)" principles. Policies and procedures in place for the AML/CTF/Sanctions as well as control measures are
developed on the basis of the international legal acts and legal acts of the Republic of Latvia that regulate
AML/CTF/Sanctions. The international standards and the best practice guidelines as well as Policy and Guidelines of the
Finance Latvia Association in the area of the AML/CFT/Sanctions are followed as well.
The Group / Company regularly reviews and updates its policies and procedures for the prevention of AML/CTF and
compliance with Sanctions, taking into account changes in binding legislation. The Group / Company observes zero tolerance
for intentional violations of the law in the field of prevention of AML/CTF and compliance with national and international
sanctions.
In 2021, the Group / Company continued to improve the ICS for prevention of AML/CTF to reduce AML/CTF risk, including
processes related to customer due diligence and supervision were updated and improved.
The Group / Company implements annual employee training on AML/CTF risk and Sanction risk management, taking into
account the knowledge required for the job responsibilities, level of responsibility and authority. In 2021, regular internal target
trainings were introduced, which focused on a actual topic.
(7) Capital Management
Capital management is forward-looking and aligned with short-term and long-term business plans and the macroeconomic
environment. This is evaluated in the annual budgeting assessment process.
Capital management ensures that the Group / Company use capital to implement the government-approved state aid
programs. Capital planning involves assessing the impact of risks on capital by implementing all approved development
programs at the full amount. In accordance with the Development Finance Institution Act, Company before the approval of
each program by the Cabinet of Ministers evaluate the impact of the program, risks and expected losses, financial results and
costs of program implementation.
In order to assess within the capital government that the amount of equity is in line with the risks arising from the scope of
activity, the Group calculates the capital adequacy ratio, Tangible common equity (TCE) relative to the Tangible managed
assets (TMA). An explanation of the indicator and the dynamics of changes over the periods is available in the section “Key
Financial and Performance Indicators” under Other Notes to the Annual Report.
(8) Covid-19 impact
(i) Effect on new products and new volumes issued
Since March, as delegated by the government, the Group has engaged actively in mitigating the adverse impact of Covid-
19 pandemic on SME and Midcaps in Latvia by developing new financial support instruments in co-operation with the Ministry
of Economics, The Group takes pillar role for providing Covid-19 financial instruments (excl. standstill grants) – loans and
guarantees in Latvia. On 19 March 2020, having convened for an extraordinary meeting, with follow-up on 24 March 2020, the
Cabinet of Ministers approved the regulations of the new financial instruments. Both financial instruments became effective
as of 25 March 2020 being already co-ordinated with the European Commission.
In spring 2020 another financial instrument engine alternative investment fund “Altum Capital Fund” was created with the aim
to support well-managed, perspective Mid-cap companies to overcome the effect of Covid-19 that as a result of the virus
impact are ready to adjust their operations by changing their business model, adjusting product development, introducing
new technology and expanding to new export markets. The Fund’s committed capital was fully subscribed on September 16,
2020, reaching EUR 100 million, of which the majority (EUR 51,1 million or 51.1%) were largest private pension funds and EUR
48,9 million consists of public funding invested by the Company. The Company is also the manager of the Fund registered with
the Financial and Capital Market Commission on 26 May 2020. As at 31 December 2021 the total assets of the Fund managed
by the Company constitutes EUR 30,772 thousand (31 December 2020: 0). The investment period is prolonged until 30 June
2022 with active pipeline of potential investment deals as at 31 December 2021.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
65
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
Covid-19 loan and guarantee portfolio as at 31 December 2021 was EUR 58,832 thousand (31 December 2020: EUR 64,560
thousand) and EUR 27,861 thousand (31 December 2020: EUR 38,699 thousand) respectively. For detailed information on full
set of Covid-19 products see Management Report.
Total capital injection in Specific Reserve capital to ensure Covid-19 financial instruments to SME and Midcaps reached EUR
45,489 thousand during 2021 (2020: EUR 145,626 thousand) for respective funding needs and expected credit loss. Credit risk
coverage in Portfolio Loss Reserve out of that reaches EUR 43,220 thousand as at 31 December 2021 (31 December 2020: EUR
86,131 thousand).
(ii) The Group’s / Company’s management estimates on macroeconomic scenarios effecting the calculation of credit loss
allowances and provisions for guarantees.
The Group / Company has recognised uncertainty regarding duration and severity of Covid-19 situation and associated
possible disruptions to the economy and customers of the Group / Company. The Group / Company participates in Covid-19
loan moratoria within which upon qualifying client request a deferral of loan principal repayment for a short period of time is
allowed. Detailed information available in Note 2 (5) (vi).
(iii) Covid-19 impact on loan portfolio
Analysis of the Group’s / Company’s loan portfolio by client segments as at 31 December 2021, in thousands of euro:
Stage 1 Stage 2 Stage 3 Total gross
loans
Total
impairment
allowance
Gross loans
Impairment
allowance
Gross loans
Impairment
allowance
Gross loans
Impairment
allowance
Financial Intermediaries 881 2 77 2 577 337 1 535 341
Agriculture 115 778 269 10 778 192 6 000 1 534 132 556 1 995
SME and Midcaps 104 890 1 966 54 714 4 229 15 466 7 646 175 070 13 841
of which,
Covid-19 crisis related
working capital loans
36 922 1 000 18 663 720 3 247 2 485 58 832 4 205
Daily loan products 67 968 966 36 051 3 509 12 219 5 161 116 238 9 636
Private individuals 4 314 4 302 2 1 897 654 6 513 660
Land Fund 31 002 3 1 220 - 777 2 32 999 5
Total segments, gross 256 865 2 244 67 091 4 425 24 717 10 173 348 673 16 842
Impairment overlay * - 1 301 - - - - - 1 301
Total segments, net 256 865 3 545 67 091 4 425 24 717 10 173 348 673 18 143
* The impairment overlay represents an additional loss reserve for SME and Midcaps portfolio over the modelled ECL amounts to account for other
economic uncertainties. For detailed information see Note 2 (16) item (ii).
Analysis of the Group’s / Company’s loan portfolio by client segments as at 31 December 2020, in thousands of euro:
Stage 1 Stage 2 Stage 3 Total gross
loans
Total
impairment
allowance
Gross
loans
Impairment
allowance
Gross
loans
Impairment
allowance
Gross
loans
Impairment
allowance
Financial Intermediaries 1 245 10 - - 638 351 1 883 361
Agriculture 107 189 841 10 258 300 6 863 1 491 124 310 2 632
SME and Midcaps 129 745 5 755 21 007 3 195 17 509 7 443 168 261 16 393
of which,
Covid-19 crisis related working
capital loans
60 665 1 984 3 569 219 326 155 64 560 2 358
Daily loan products 69 080 3 771 17 438 2 976 17 183 7 288 103 701 14 035
Private individuals 5 224 34 490 10 2 311 953 8 025 997
Land Fund 30 889 17 256 - 355 2 31 500 19
Total segments, gross 274 292 6 657 32 011 3 505 27 676 10 240 333 979 20 402
Impairment overlay * - 309 - - - - - 309
Total segments, net 274 292 6 966 32 011 3 505 27 676 10 240 333 979 20 711
* The impairment overlay represents an additional loss reserve for SME and Midcaps portfolio over the modelled ECL amounts to account for
other economic uncertainties.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
66
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iii) Covid-19 impact on loan portfolio (cont’d)
In the agricultural segment, in 2021 there was an increase in the prices of raw materials and energy resources, which was
followed by an increase in sales prices, which was able to compensate for the increase in the costs of raw materials. The
companies of the agricultural segment closed 2021 with sufficiently good financial results. It should even be noted that the
agricultural segment is significantly subsidized and loans to this segment are mainly secured by agricultural land, which is
prudently valued. Therefore, the Group / Company does not see a deterioration in the quality of the loan portfolio in this
segment as a result of the Covid-19 crisis.
Loans issued by the Group / Company to SME and Midcap client segment are split between (i) specific COVID-19 related
support instrument – working capital loans and (ii) daily (ordinary) loan product portfolio.
Split of specific COVID-19 related support instrument - working capital loans – portfolio for the SME and Midcap client segment
by industries as at 31 December 2021, in thousands euro:
Gross
loans
Changes to
31.12.2020.
Issued in
2021
Issued in
2020
Impairment
allowance
Changes to
31.12.2020.
Net loans % of Total
Gross loans,
SME &
Midcap
Covid-19 more exposed industries
Retail 4 195 (519) 1 768 4 714 309 122 3 886 2.4%
Hotels and restaurants 2 821 (577) 600 3 398 207 110 2 614 1.6%
Tourism services 2 572 (80) 521 2 652 262 198 2 310 1.5%
Land transport services 2 040 901 1 625 1 139 75 46 1 965 1.2%
Art, entertainment and leasure 1 591 997 1 518 594 142 130 1 449 0.9%
Beauty 100 100 100 - 5 5 95 0.1%
Total Covid-19 more exposed industries 13 319 822 6 132 12 497 1 000 611 12 319 7.6%
Covid-19 less exposed industries
Manufacturing 14 877 (4 655) 5 596 19 532 1 013 274 13 864 8.5%
Wholesale 10 778 (2 400) 1 771 13 178 934 444 9 844 6.2%
Construction 7 855 1 798 2 906 6 057 762 408 7 093 4.5%
Transport, warehousing and
communications
3 091 (511) 1 040 3 602 170 60 2 921 1.8%
Information technologies and
communication
2 383 (139) 640 2 522 55 2 2 328 1.4%
Professional, science and technical
services
1 861 (434) 547 2 295 73 (7) 1 788 1.1%
Forestry 1 432 (570) 218 2 002 94 31 1 338 0.8%
Municipal authorities 899 144 305 755 35 19 864 0.5%
Real estate 490 58 100 432 14 4 476 0.3%
Electricity, gas and water utilities 457 (1 003) 34 1 460 17 (33) 440 0.3%
Health and social care 158 (5) 45 163 4 1 154 0.1%
Other industries 1 232 1 167 310 65 34 33 1 198 0.7%
Total Covid-19 less exposed industries 45 513 (6 550) 13 512 52 063 3 205 1 236 42 308 26.0%
Total Covid-19 crisis related working
capital loans
58 832 (5 728) 19 644 64 560 4 205 1 847 54 627 33.6%
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
67
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iii) Covid-19 impact on loan portfolio (cont’d)
Split of daily (ordinary) loan product portfolio for the SME and Midcap client segment by industries as at 31 December 2021,
in thousands euro:
Gross loans Changes to
31.12.2020.
Issued in
2021
Issued in
2020
Impairment
allowance
Changes to
31.12.2020.
Net loans % of Total
Gross loans,
SME &
Midcap
Covid-19 more exposed industries
Hotels and restaurants 4 600 (124) 1 947 1 021 335 (263) 4 265 2.6%
Retail 1 879 (47) 604 194 110 (268) 1 769 1.1%
Art, entertainment and leasure 1 841 (173) 598 398 295 159 1 546 1.1%
Beauty 644 297 55 116 251 190 393 0.4%
Land transport services 535 (175) 264 71 21 (234) 514 0.3%
Tourism services 333 - - - 106 19 227 0.2%
Total Covid-19 more exposed industries 9 832 (222) 3 468 1 800 1 118 (397) 8 714 5.6%
Covid-19 less exposed industries
Manufacturing 52 497 3 895 20 815 9 075 4 094 (2 668) 48 403 30.0%
Real estate 13 230 3 389 5 387 1 657 1 947 (141) 11 283 7.6%
Wholesale 7 389 850 3 008 1 474 557 (313) 6 832 4.2%
Health and social care 5 738 1 150 2 420 3 005 188 90 5 550 3.3%
Electricity, gas and water utilities 5 662 (558) 596 366 852 (143) 4 810 3.2%
Municipal authorities 5 038 722 1 577 711 20 (494) 5 018 2.9%
Construction 4 332 1 112 2 344 1 592 213 (41) 4 119 2.5%
Professional, science and
technical
services
3 053 (607) 1 143 810 36 (214) 3 017 1.7%
Forestry 2 691 239 1 320 910 54 (33) 2 637 1.5%
Fishery 2 084 437 761 281 119 (27) 1 965 1.2%
Transport, warehousing and
communications
1 190 507 792 121 191 5 999 0.7%
Information technologies and
communication
576 25 196 91 64 20 512 0.3%
Other industries 2 926 1 597 1 648 479 185 (40) 2 741 1.7%
Total Covid-19 less exposed industries 106 406 12 758 42 007 20 572 8 520 (3 999) 97 886 60.8%
Total daily (ordinary) loan products 116 238 12 536 45 475 22 372 9 638 * (4 396) 106 600 * 66.4%
* excludes impairment overlay represents an additional loss reserve for SME and Midcaps portfolio over the modelled ECL amounts to account
for other economic uncertainties. For detailed information see Note 2 (16) item (ii).
For daily (ordinary) loan product portfolio the loan application assessment process, including, accepted credit risk level,
eligible credit rating of the client, expected debt service capacity, collateral has not been lowered by Covid-19 situation. The
same loan application assessment process applies to specific Covid-19 related support instrument – working capital loans.
Manufacturing industry. In 2021, the growth of manufacturing enterprises has generally continued. Given the constraints on
the entertainment, catering, tourism and other services sectors, public consumption trends have been significantly affected
and most of the revenue is spent on various goods. The sub-sector that is experiencing the sharpest fluctuations is wood
processing, as in 2021 the trend of the second half of 2020 will continue with rapidly rising sales prices, and profit indicators will
increase accordingly. However, the availability of raw materials in connection with the economic sanctions against Belarus,
as well as the possible sharp decline in the price of products on the basis of demand adjustments, poses additional risks to
companies in the sector. The sufficiently good results of the manufacturing industry in 2021 are also shown by the
macroeconomic indicators - the output of exported goods continues to increase in almost all sub-sectors. Therefore, it can be
concluded that the negative impact of Covid-19 on the operations of the companies in the sector has been insignificant. At
the end of the second half of 2021, however, negative trends were observed due to the sharp rise in energy prices, which
may significantly affect the financial results of some energy-intensive sub-sectors in 2021.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
68
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iii) Covid-19 impact on loan portfolio (cont’d)
The second largest sector in terms of loan portfolio is real estate operations. The real estate portfolios, where the hotel business
is located, were the most affected - due to travel restrictions, the flow of visitors to the region has almost stopped. It is too early
to judge the recovery of this segment, and much will depend on the pace of vaccination and the overall success of controlling
the virus. The second most significantly affected segment is shopping centers. Restrictions on trade, social distancing, and the
boom in e-commerce have had a significant impact on the financial performance of shopping centers, with a large number
of tenants requesting rent rebates, but the proportion of vacant space in some centers increasing. In the office segment –
most office workers have had to work remotely and many still work from home on a daily basis, so the need for offices in the
future has become relevant in the real estate industry. The impact of the Covid-19 crisis on the industry as a whole has been
moderate, with negative effects being felt for companies that did not diversify their tenant portfolios by industry. For example,
rental space was mostly leased to beauty, retail customers, hotels, in this example landlords had to reduce rents or look for
other tenants, thus suffering from the effects of Covid-19. However, the problems for entrepreneurs who had tenants in various
industries in their portfolios are relatively minimal and could not significantly affect the customer's solvency. The warehousing
segment is better off during the pandemic, as the volume of goods delivered has increased significantly due to the boom in
e-commerce. At the same time, the requirements of buyers to ensure the speed of delivery of goods create additional
demand for warehouse space.
The third largest sector in terms of loan portfolio is wholesale. In the wholesale sector, as in the manufacturing sector, the
impact of the Covid-19 crisis has varied across sub-sectors. For example, wholesalers of various raw materials and equipment
have closed 2020 with very good results, and they have been able to improve their performance due to the growth of the
manufacturing sector in 2021 as well. Timber wholesalers have been less successful, having had to cope with the fall in demand
caused by BREXIT in addition to the disruption of logistics chains caused by Covid-19. However, at the end of 2020, a large
number of timber wholesalers had found new outlets in Asia and were able to close the year without significant losses due to
rising global timber prices. This trend will continue in 2021, but the challenges for the industry are similar to those for the
woodworking industry. The reporting period was slightly more successful for fuel and fuel traders as they were able to take
advantage of the positive effects of rising prices, but the industry as a whole has not fully recovered from the Covid-19 crisis in
2020 and rising prices could have a negative impact on demand in the long run. On the positive side, most companies in this
sector have sufficiently high equity ratios and owners with the ability to support companies financially. In the retail segment,
the reporting period was challenging for all sub-sectors except pharmaceuticals, food and household goods. Due to store
restrictions, many retailers of clothing, footwear, cosmetics, jewellery and other product groups have major challenges
covering their day-to-day expenses and selling existing inventory to renew their range.
(iv) Covid-19 impact on guarantee portfolio
Analysis of the Group’s / Company’s guarantees portfolio by client segments as at 31 December 2021, in thousands of euro:
Stage 1 Stage 2 Stage 3 Total
outstanding
guarantees
Total
impairment
allowance
Outstanding
guarantees
Impairment
allowance
Outstanding
guarantees
Impairment
allowance
Outstanding
guarantees
Impairment
allowance
Agriculture 11 479 1 587 1 209 148 10 6 12 698 1 741
SME and Midcaps 163 416 9 212 31 384 3 331 3 018 1 824 197 818 14 367
of which,
Covid-19 crisis related
guarantees *
10 874 1 047 16 775 2 018 212 124 27 861 3 189
Daily guarantees products 152 542 8 165 14 609 1 313 2 806 1 700 169 957 11 178
Private individuals 203 981 16 335 292 26 189 180 204 462 16 541
Total segments, gross 378 876 27 134 32 885 3 505 3 217 2 010 414 978 32 649
Impairment overlay ** - 954 - - - - - 954
Total segments, net 378 876 28 088 32 885 3 505 3 217 2 010 414 978 33 603
* Includes SME loan credit holiday guarantees, portfolio guarantees and SME and Midcap companies loan holiday guarantees
** The impairment overlay includes EUR 954 thousand that represents an additional loss reserve for SME and Midcaps portfolio over the modelled
ECL amounts to account for other economic uncertainties
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
69
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iv) Covid-19 impact on guarantee portfolio (cont’d)
Analysis of the Group’s / Company’s guarantees portfolio by client segments as at 31 December 2020, in thousands of euro:
Stage 1 Stage 2 Stage 3 Total
outstanding
guarantees
Total
impairment
allowance
Outstanding
guarantees
Impairment
allowance
Outstanding
guarantees
Impairment
allowance
Outstanding
guarantees
Impairment
allowance
Agriculture 14 305 2 118 39 5 486 311 14 830 2 434
SME and Midcaps 178 094 12 124 6 761 775 3 879 2 389 188 734 15 288
of which,
Covid-19 crisis related
guarantees *
37 005 3 001 1 437 127 257 160 38 699 3 288
Daily guarantees products 141 089 9 123 5 324 648 3 622 2 229 150 035 12 000
Private individuals 155 717 13 528 194 36 130 127 156 041 13 691
Total segments, gross 348 116 27 770 6 994 816 4 495 2 827 359 605 31 413
* Includes SME loan credit holiday guarantees, portfolio guarantees and SME and Midcap companies loan holiday guarantees
Guarantees issued by the Group / Company to SME and Midcap client segment are split between specific Covid-19 related
support instrument – SME loan credit holiday guarantees, portfolio guarantees and SME and Midcap companies loan holiday
guarantees and daily (ordinary) guarantee product portfolio.
Split of specific COVID-19 related support guarantee instruments for the SME and Midcap client segment guarantee portfolio
by industries as at 31 December 2021, in thousands euro:
Gross
outstanding
guarantees
Changes
to
31.12.2020.
Issued in
2021
Issued
in 2020
Impairment
allowance
Changes
to
31.12.2020.
Net
outstanding
guarantees
% of Total
gross
outstanding
guarantees,
SME &
Midcap
Covid-19 more exposed industries
Hotels and restaurants 5 160 (30) - 5 190 650 10 4 510 2.6%
Passenger transport services 3 040 141 1 457 2 899 425 (64) 2 615 1.5%
Retail 996 (1 876) 304 2 872 61 (29) 935 0.5%
Art, entertainment and leasure 352 268 - 84 31 22 321 0.2%
Total Covid-19 more exposed
industries
9 548 (1 497) 1 761 11 045 1 167 (61) 8 381 4.8%
Covid-19 less exposed industries
Manufacturing 7 559 (3 712) 2 794 11 270 632 (78) 6 927 3.8%
Wholesale 7 130 (1 753) 4 735 8 882 957 46 6 173 3.6%
Municipal authorities 1 961 (2 417) 1 352 4 378 285 69 1 676 1.0%
Construction 790 40 - 750 39 13 751 0.4%
Forestry 372 (75) - 447 55 (3) 317 0.2%
Electricity, gas and water utilities 239 (219) - 458 27 (20) 212 0.1%
Health and social care 221 (280) - 500 20 8 201 0.1%
Information technologies and
communication
41 (22) 32 63 7 6 34 0.0%
Real estate - (366) - 366 - (41) - 0.0%
Other industries - (539) - 539 - (39) - 0.0%
Total Covid-19 less exposed
industries
18 313 (9 343) 8 913 27 653 2 022 (39) 16 291 9.3%
Total specific COVID-19 related
guarantee products *
27 861 (10 840) 10 674 38 698 3 189 (100) 24 672 14.1%
* Includes SME loan credit holiday guarantees, portfolio guarantees and SME and Midcap companies loan holiday guarantees
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
70
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iv) Covid-19 impact on guarantee portfolio (cont’d)
Split of daily (ordinary) guarantee product portfolio of the SME and Midcap client segment by industries as at 31 December
2021, in thousands euro:
Gross
outstanding
guarantees
Changes
to
31.12.2020.
Issued in
2021
Issued in
2020
Impairment
allowance
Changes
to
31.12.2020.
Net
outstanding
guarantees
% of Total
gross
outstanding
guarantees,
SME &
Midcap
Covid-19 more exposed industries
Retail 5 660 (58) 1 766 917 689 242 4 970 2.9%
Passenger transport services 1 226 950 441 - 23 2 1 203 0.6%
Hotels and restaurants 523 (341) 45 - 61 (37) 462 0.3%
Art, entertainment and leasure 299 (6) 182 96 24 3 275 0.2%
Total Covid-19 more exposed
industries
7 708 545 2 434 1 013 797 210 6 910 3.9%
Covid-19 less exposed industries
Manufacturing 55 936 9 827 20 713 12 365 4 080 302 51 856 28.3%
Wholesale 43 225 10 481 13 921 12 060 1 909 172 41 316 21.9%
Construction 31 244 (3 162) 5 361 8 288 2 235 (1 236) 29 009 15.8%
Forestry 8 972 461 1 977 5 891 378 (137) 8 594 4.5%
Transport, warehousing and
communications
6 374 3 729 396 612 550 213 5 823 3.2%
Real estate 5 026 1 253 1 704 869 407 233 4 619 2.5%
Professional, science and technical
services
4 539 (709) 1 242 2 788 314 6 4 224 2.3%
Information technologies and
communication
2 856 9 1 059 201 153 3 2 703 1.4%
Municipal authorities 2 172 62 1 006 405 223 (26) 1 949 1.1%
Electricity, gas and water utilities 808 (2 144) 386 280 35 (486) 773 0.4%
Health and social care 594 (109) 164 100 63 (12) 531 0.3%
Other industries 504 (322) 89 179 34 (63) 471 0.3%
Total Covid-19 less exposed
industries
162 250 19 376 48 018 44 038 10 381 (1 031) 151 868 82.0%
Total daily (ordinary) guarantee
products
169 958 19 921 50 452 45 051 11 178 * (821) 158 778 * 85.9%
* excludes impairment overlay represents an additional loss reserve for SME and Midcaps portfolio over the modelled ECL amounts to account
for other economic uncertainties
For daily (ordinary) guarantee product portfolio the guarantee application assessment process, including, accepted credit
risk level, eligible credit rating of the client, expected debt service capacity has not been lowered by Covid-19 situation. The
same guarantee application assessment process applies to specific Covid-19 related support instruments.
In the agricultural segment, in 2021 there was an increase in the prices of raw materials and energy resources, which was
followed by an increase in sales prices, which was able to compensate for the increase in the costs of raw materials. The
companies of the agricultural segment closed 2021 with sufficiently good financial results. It should even be noted that the
agricultural segment is significantly subsidized and guarantees to this segment are mainly secured by agricultural land, which
is prudently valued. Therefore, the Group / Company does not see a deterioration in the quality of the portfolio in this segment
as a result of the Covid-19 crisis.
Manufacturing industry. In 2021, the growth of manufacturing enterprises has generally continued. Given the constraints on
the entertainment, catering, tourism and other services sectors, public consumption trends have been significantly affected
and most of the revenue is spent on various goods. The sub-sector that is experiencing the sharpest fluctuations is wood
processing, as in 2021 the trend of the second half of 2020 will continue with rapidly rising sales prices, and profit indicators will
increase accordingly. However, the availability of raw materials in connection with the economic sanctions against Belarus,
as well as the possible sharp decline in the price of products on the basis of demand adjustments, poses additional risks to
companies in the sector. The sufficiently good results of the manufacturing industry in 2021 are also shown by the
macroeconomic indicators - the output of exported goods continues to increase in almost all sub-sectors. Therefore, it can be
concluded that the negative impact of Covid-19 on the operations of the companies in the sector has been insignificant. In
the second half of 2021, however, negative trends were observed in connection with the sharp rise in energy prices, which
may affect the financial results of some energy-intensive sub-sectors in 2021.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
71
3 Risk Management (cont’d)
(8) COVID-19 impact (cont’d)
(iv) Covid-19 impact on guarantee portfolio (cont’d)
The second largest sector in terms of guarantee portfolio is wholesale. In the wholesale sector, as in the manufacturing sector,
the impact of the Covid-19 crisis has varied across sub-sectors. For example, wholesalers of various raw materials and
equipment have closed 2020 with very good results, and they have been able to improve their performance due to the
growth of the manufacturing sector in 2021 as well. Timber wholesalers have been less successful, having had to cope with
the fall in demand caused by BREXIT in addition to the disruption of logistics chains caused by Covid-19. However, at the end
of 2020, a large number of timber wholesalers had found new outlets in Asia and were able to close the year without significant
losses due to rising global timber prices. This trend will continue in 2021, but the challenges for the industry are similar to those
for the woodworking industry. The reporting period was slightly more successful for fuel and fuel traders as they were able to
take advantage of the positive effects of rising prices, but overall the industry has not fully recovered from the losses caused
by the Covid-19 crisis in 2020 and rising prices could have a negative impact on demand in the long run. On the positive side,
most companies in this sector have sufficiently high equity ratios and owners with the ability to support companies financially.
In the retail segment, the reporting period was challenging for all sub-sectors except pharmaceuticals, food and household
goods. Due to store restrictions, many retailers of clothing, footwear, cosmetics, jewellery and other product groups have
major challenges covering their day-to-day expenses and selling existing inventory to renew their range.
Construction. The Covid-19 crisis has affected the industry both directly and indirectly. Due to travel restrictions and illness of
employees, the construction process was delayed in many companies and the company's cash flow suffered accordingly. In
addition, suppliers changed the terms of delivery by switching to prepayment and upsetting the usual balance of project
financing. Many of the industries directly affected by Covid-19 abandoned construction projects or postponed them.
However, the industry as a whole is showing good results in 2021, as frozen projects have been reopened and, following the
peak of the frozen consumption crisis, demand has risen sharply from both institutional and private customers, leading to rising
prices and, consequently, higher profits. Facilitating travel conditions also allows Latvian companies to return to the
Scandinavian market.
Approximately ¾ of the retail guarantee portfolio consists of housing guarantees - housing guarantees for a bank loan for the
purchase or construction of a home for families with children and housing guarantees for a bank loan for the purchase or
construction of a home for new specialists. Retail guarantee portfolio’s PD rates both unadjusted and adjusted for
macroeconomic factors, in particular changes in GDP, as at 31 December 2021 has decreased compared to PD rates as at
31 December 2020 taking into account actual changes in GDP that were significantly better than initially projected due to
Covid-19. Due to the impact of Covid-19, no changes to the guarantees have been received, as banks are not required to
communicate with the Group / Company any deferral of principal or deferral of payments. As a result of Covid-19, there has
been no increase in the number of guarantee compensations in 2021, which remains at the level of previous years. An
additional risk mitigating factor is the guarantee indemnity disbursement mechanism, which provides that indemnity for
claimed guarantees is paid within 3 years from the time the guarantee claim is reported, and the bank recovers the borrower's
or guarantor's cash flow or loan collateral from this period. feeds. In addition, analysis of some of the factors that could affect
the housing guarantee portfolio, such as a sharp decline in real estate prices similar to 2008 or an increase in the EURIBOR
index, which would significantly increase the cost of servicing mortgages, real estate prices were stable in 2021. the growth
trend and the negative 6-month EURIBOR compared to the beginning of 2022 compared to the end of 2021 remained even
more negative.
(v) Investments in venture capital funds
In respect of investments in venture capital funds there might be some delay in timing where original exits were planned in
2020-2021. However that does not negatively effect on the Group’s / Company’s liquidity position.
The Covid-19 crisis still hinders new investments for the managers of the 4th generation venture capital funds thus challenging
the selection of new projects and attraction of investors, implementing the Accelerator Programme and operations of start-
ups. However that does not negatively impact any Group’s / Company’s undertaken commitments.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
72
4 Interest income
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Interest on loans and guarantees * 18 475 14 777 18 475 14 777
Interest on securities at fair value 370 1 628 370 1 628
Interest on securities at amortised cost 12 22 12 22
Other interest income - 15 - 15
Total interest income 18 857 16 442 18 857 16 442
* The Group’s / Company’s sub-item Interest income on loans and guarantees does not include interest income from loans
and premium income on issued guarantees as well as commissions which, in accordance with the program agreements
concluded with the Ministry of Economics, stipulates that the funding allocated by the Ministry of Economics (recognized in
balance sheet item Support Programs Funding) must be increased by the respective program income. Accordingly, this type
of income is not recognized as interest income, but is recognized as an increase in Support Programs Funding which in 2021
amounts to EUR 1,280 thousand (2020: EUR 1,307 thousand).
5 Interest expense
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Interest on balances due to credit institutions 760 585 760 585
Interest on issued debt securities 844 745 844 745
Allocation of state support programmes’ profit to support programme funding * 504 503 504 503
Other commission expense 32 37 32 37
Total interest expense 2 140 1 870 2 140 1 870
* For particular state support programmes according to respective agreements concluded with the Ministry of Economics the
net profit of the programme should be split between the Group / Company and the Ministry of Economics by increasing public
funding given by the Ministry of Economics (recognised as Support programme funding in the Balance sheet).
6 Income for implementation of state support
programmes
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Compensation of expenses for management of state support programmes 2 088 2 183 2 088 2 183
Compensation of venture capital fund management fees 1 711 3 447 2 983 3 447
Compensation of expenses for management of state support programmes of the
previous years
316 602 316 602
Compensation of expenses of capital congestion 331 294 331 294
Total income from implementation of state support programmes 4 446 6 526 5 718 6 526
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
73
7 Expenses to be compensated for implementation
of state support programmes
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Compensated staff costs 1 675 1 813 1 675 1 813
Compensated administrative expense 413 370 413 370
Compensated venture capital fund management fees 1 741 3 767 3 013 3 767
Total compensated expense for implementation of state support programmes 3 829 5 950 5 101 5 950
8 Gains from debt securities and foreign exchange
transactions
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Gains / (losses)
on currency exchange and trade and revaluation of other financial
instruments, net
51 (56) 51 (56)
Total gain from debt securities and foreign exchange transactions 51 (56) 51 (56)
9 Other income
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Income from lease payments for operating leases 1 393 1 046 1 393 1 046
Income from payments for financial leases 5 324 5 324
Profit from investment property revaluation 804 738 804 738
Profit from sale of investment property 191 27 191 27
Profit from sale of repossessed collateral 8 18 8 18
Other commission income 22 20 22 20
Income from management of the AIF “Altum
capital fund” and compensation of
set-up costs
620 269 620 269
Other operating income 178 611 178 611
Total other income 3 221 3 053 3 221 3 053
10 Other expense
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Maintenance and service costs of Land Fund 330 400 330 400
Debt collection costs 167 159 167 159
Maintenance costs of repossessed collateral 1 3 1 3
Revaluation of repossessed collateral - 26 - 26
Depreciation of right-of-use assets 145 138 145 138
Commission expense on investments in securities 92 91 92 91
AIF “Altum capital fund” management costs 620 247 620 247
Loss from investments in subsidiaries - - - 80
Other commission expense 2 1 2 1
Changes in fair value of support programme funding 152 - 152 -
Total other expense 1 509 1 065 1 509 1 145
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
74
11 Staff Costs
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Remuneration to the Supervisory Council and the Management Board * 459 459 459 459
to the Supervisory Council 75 74 75 74
to the Management Board 384 385 384 385
Remuneration to staff 5 573 5 309 5 573 5 309
Social security contributions 1 438 1 461 1 438 1 461
Total staff costs 7 470 7 229 7 470 7 229
Compensated staff costs (Note 7) (1 675) (1 813) (1 675) (1 813)
Net staff costs 5 795 5 416 5 795 5 416
* Remuneration to the Supervisory Council and the Management Board includes only short-term employee benefits.
In 2021, the Group / Company employed 228 persons on average, incl. 5 members of the Supervisory Board and the Audit
Committee (2020: 215). Number of employees engaged in implementation of support programmes as at 31 December 2021
was 223 (31 December 2020: 205).
12 Administrative expenses
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Information system and communication expense 507 488 507 488
Premises and equipment maintenance expense 680 681 680 681
Advertising and public relations 241 238 241 238
Training and other staff expense 186 193 186 193
Professional services * 442 361 442 361
Other expense 74 69 74 69
Real estate tax 176 171 176 171
Total administrative expenses 2 306 2 201 2 306 2 201
Compensated administrative expense (Note 7) (413) (370) (413) (370)
Net administrative expenses 1 893 1 831 1 893 1 831
* The Group’s / Company’s sub-item Professional services includes audit services in amount of EUR 60.5 thousand, which were
received in 2021 (2020: EUR 60.0 thousand) from the Group’s / Company’s sworn auditor Deloitte Audits Latvia Ltd.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
75
13 Impairment losses, net
All amounts in thousands of euro
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Impairment losses on: 13 907 17 089 13 907 17 009
Loans, net 7 523 8 585 7 523 8 585
impairment losses 6 072 9 440 6 072 9 440
impairment losses covered by Portfolio Loss Reserve 3 559 2 785 3 559 2 785
impairment losses covered by Risk Coverage Reserve (2 108) (3 640) (2 108) (3 640)
Disbursed guarantee compensations - - - -
impairment losses - 57 - 57
impairment losses covered by Portfolio Loss Reserve - - - -
impairment losses covered by risk coverage reserve - (57) - (57)
Grants 199 169 199 169
impairment losses 199 169 199 169
impairment losses covered by Portfolio Loss Reserve - - - -
Other assets 479 80 479 -
Financial assets related to loan agreements 107 137 107 137
Guarantees, net 4 735 6 484 4 735 6 484
impairment losses
13 230 10 399 13 230 10 399
impairment losses covered by Portfolio Loss Reserve 2 841 4 043 2 841 4 043
impairment losses covered by Risk Coverage Reserve (11 336) (7 958) (11 336) (7 958)
Loan commitments, net 792 1 564 792 1 564
impairment losses
1 116 1 162 1 116 1 162
impairment losses covered by Portfolio Loss Reserve 239 791 239 791
impairment losses covered by Risk Coverage Reserve (563) (389) (563) (389)
Grant commitments 72 70 72 70
Reversal of impairment on: (13 746) (12 721) (13 746) (12 721)
Loans, net (8 037) (6 349) (8 037) (6 348)
reversal of impairment (10 114) (7 705) (10 114) (7 704)
reversal of impairment covered by Portfolio Loss Reserve (1 881) (426) (1 881) (426)
reversal of impairment covered by Risk Coverage Reserve 3 958 1 782 3 958 1 782
Disbursed guarantee compensations (59) (188) (59) (188)
reversal of impairment (83) (323) (83) (323)
reversal of impairment covered by Portfolio Loss Reserve (3) - (3) -
reversal of impairment covered by Risk Coverage Reserve 27 135 27 135
Grants (101) (5) (101) (5)
Other assets (13) (358) (13) (358)
Due from credit institutions and the Treasury - (2) - (2)
Financial assets related to loan agreements (15) (60) (15) (60)
Debt securities (16) (177) (16) (177)
Guarantees, net (4 943) (4 565) (4 943) (4 566)
reversal of impairment (11 407) (13 059) (11 407) (13 060)
reversal of impairment covered by Portfolio Loss Reserve (1 509) - (1 509) -
reversal of impairment covered by Risk Coverage Reserve 7 973 8 494 7 973 8 494
Loan commitments, net (547) (1 010) (547) (1 010)
reversal of impairment
(542) (931) (542) (931)
reversal of impairment covered by Portfolio Loss Reserve
(162) (467) (162) (467)
reversal of impairment covered by Risk Coverage Reserve 157 388 157 388
Grant commitments (15) (7) (15) (7)
Total impairment losses / (reversal), net 161 4 368 161 4 288
Recovery of loans written off in previous periods (760) (888) (760) (888)
Total impairment losses and (income) from recovery of loans written-off (599) 3 480 (599) 3 400
Additional information Including on impairment allowances covered by Portfolio Loss Reserve (Special Reserve Capital) upon
approval of the 2021 annual report available in Note 3 item 1.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
76
14 Due from credit institutions and the State Treasury
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Due from credit institutions and State Treasury 455 007 359 949 455 007 359 949
cash and cash equivalent 455 007 359 949 455 007 359 949
Impairment allowances (1) - (1) -
Net due from credit institutions and State Treasury 455 006 359 949 455 006 359 949
Placing the funds within the Treasury of the Republic of Latvia and credit institutions, the external credit ratings assigned to
these credit institutions are evaluated. The evaluation of the credit institutions not having been assigned individual ratings is
based on the ratings assigned to their parent banks as well as their financial and operational assessments. Once the contracts
have been concluded, the Group / Company monitors the credit institutions and follows that the assigned limits comply with
credit risk assessment. All balances due from credit institutions and State Treasury represent Stage 1 for the ECL calculation
purposes. There were no changes in staging in 2021.
Breakdown of the Group’s balances due from credit institutions and the Treasury by credit rating categories based on Moody's
ratings or their equivalent, in thousands of euro:
Ratings Aaa Aa1-
Aa3
A1-A3 Baa1-
Baa3
Ba1-Ba3 B1-B3 Caa-C Withdrawn
rating
(WR)
Total
Due from credit institutions registered in the
Republic of Latvia and the Treasury
- 3 965 336 739 9 561 9 684 - - - 359 949
Total gross as at 31 December 2020 - 3 965 336 739 9 561 9 684 - - - 359 949
Due from credit institutions registered in the
Republic of Latvia and the Treasury
- - 437 249 17 757 - - - - 455 006
Total gross as at 31 December 2021 - - 437 249 17 757 - - - - 455 006
Breakdown of the Company’s balances due from credit institutions and the Treasury by credit rating categories based on
Moody's ratings or their equivalent, in thousands of euro:
Ratings Aaa Aa1-
Aa3
A1-A3 Baa1-
Baa3
Ba1-Ba3 B1-B3 Caa-C Withdrawn
rating
(WR)
Total
Due from credit institutions registered in the
Republic of Latvia and the Treasury
- 3 965 336 739 9 561 9 684 - - - 359 949
Total gross as at 31 December 2020 - 3 965 336 739 9 561 9 684 - - - 359 949
Due from credit institutions registered in the
Republic of Latvia and the Treasury
- - 437 249 17 757 - - - - 455 006
Total gross as at 31 December 2021 - - 437 249 17 757 - - - - 455 006
As at 31 December 2021, the Group / Company held accounts with 4 banks and the Treasury of the Republic of Latvia. The
average interest rate on balances of position Due from credit institutions and the Treasury as at 31 December 2021 was -0.01%
(31 December 2020: 0%).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
77
15 Investment Securities
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Investment securities valued at amortised cost
Latvian Treasury bills and government bonds - 407 - 407
OECD corporate bonds 3 704 3 433 3 704 3 433
Total investment securities valued at amortised cost 3 704 3 840 3 704 3 840
Impairment allowances (3 667) (3 399) (3 667) (3 399)
Net investment securities valued at amortised cost 37 441 37 441
Investment securities valued at fair value through other comprehensive income
Latvian Treasury bills and government bonds 14 051 36 958 14 051 36 958
Total investment securities valued at fair value through other comprehensive
income
14 051 36 958 14 051 36 958
Total gross investment securities 17 755 40 798 17 755 40 798
Total net investment securities 14 088 37 399 14 088 37 399
When making investments in securities, the Group / Company analyses the external credit ratings assigned to these financial
institutions and entities and their financial and operational standing. Once funds are placed, the Group / Company monitors
the monetary financial institutions and follows the compliance of the imposed limits to the credit risk rating. All Latvian Treasury
bills and government bonds are Stage 1 instruments for ECL purposes, while all OECD corporate bonds are Stage 3 instruments,
as these are already defaulted. There were no movements among Stages during the year.
Breakdown of the Group’s / Company’s investment securities by credit rating categories based on Moody's ratings or their
equivalent, in thousands of euro:
Ratings Aaa Aa1-
Aa3
A1-A3 Baa1-
Baa3
Ba1-Ba3 B1-B3 Caa-C Withdrawn
rating
(WR)
Total
Investment securities valued at fair value
through other comprehensive income
- - 36 958 - - - - - 36 958
Investment securities valued at
amortised
cost
- - 407 - - - - 3 433 3 840
Total gross as at 31 December 2020 - - 37 365 - - - - 3 433 40 798
Investment securities valued at fair value
through other comprehensive income
- - 14 051 - - - - - 14 051
Investment securities valued at amortised
cost
- - - - - - - 3 704 3 704
Total gross as at 31 December 2021 - - 14 051 - - - - 3 704 17 755
The information about classification of investment securities is available in Note 2 (5) item (iv). All securities are quoted. The
average yield on debt securities was 1.98% as at 31 December 2021 (31 December 2020: 4.54%)
16 Financial assets at fair value through profit or loss
All amounts in thousands of euro
Group Group
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Investments of subsidiaries in underlying undertakings - 5 425
Total financial assets at fair value through profit or loss - investments of subsidiaries in underlying undertakings - 5 425
In 2021, the Company made disbursements to the 4nd generation venture capital funds. Some of these funds are classified
as investments in subsidiaries. At the Group level the equity investments made by the subsidiaries are consolidated. None of
these equity investments represent a controlling stake. For more information on the classification see Note 22, for accounting
policy Note 2 (6) item (iv).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
78
17 Investments in Associates
The Group’s / Company’s investments in associates based on information provided by venture capital fund managers, in
thousands of euro:
Equity of venture capital fund Carrying Amount
Company or venture capital fund generation Country of incorporation 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
The 2nd generation VCFs LV 16 929 19 652 11 885 12 953
The 3rd generation VCFs LV 13 310 16 974 10 473 16 376
The 4th generation VCFs LV 20 073 6 459 14 371 3 640
AIF “Altum capital fund” LV 19 008 138 14 998 -
Baltic Innovation Fund * LU 85 544 79 570 13 222 15 019
Total investments in associates 154 864 122 793 64 949 47 988
* Investments in Associates are stated under the equity method, except for investments in Baltic Innovation Fund that is valued using the FVTPL
method.
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Investments in associates
Investments accounted for using the equity method 51 727 32 969 51 727 32 969
Including, reclassified due to changes in the status of subsidiaries to associates
(see Note 22)
6 563 - 6 563 -
Investments accounted for using the FVTPL method 13 222 15 019 13 222 15 019
As at 31 December 2021 the total venture capital funds’ portfolio value at cost value was EUR 85,973 thousand (31 December
2020: EUR 73,165 thousand).
Movement in the Group’s / Company’s investments in associates, in thousands of euro:
Investments in venture
capital funds
Investments in AIF “Altum
capital fund”
Investments in Baltic
Innovation Fund
Total
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Carrying amount at the beginning of
period
32 969 38 442 - - 15 019 13 851 47 988 52 293
Invested 4 233 1 546 14 918 - 1 817 3 129 20 968 4 675
Refunded (7 431) (6 196) (282) - (6 900) (2 499) (14 613) (8 695)
Reclassified due to changes in the
status of subsidiaries to associates
(see Note 22)
6 563 - - - - - 6 563 -
Mez
z
anine interest received and
realised gain on exit *
1 730 1 271 282 - - - 2 012 1 271
Unrealised gain from refunded - - - - 469 250 469 250
Share of net gain / (loss) of
investment in associate
(1 335) (2 094) 80 - - - (1 255) (2 094)
Gain from investment in associate at
fair value through profit or loss
- - - - 2 817 288 2 817 288
Net carrying amount at the period
ended at 31 December
36 729 32 969 14 998 - 13 222 15 019 64 949 47 988
* includes mezzanine interest received, realized gain / (loss) on exit and changes in revaluation of investment.
The Group’s / Company’s share of gain of investment in associate and other investments, in thousands of euro:
Investments in venture
capital funds
Investments in AIF “Altum
capital fund”
Investments in Three Seas
Initiatives Investment Fund
Total
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Share of net gain / (loss) of
investment in associate
(1 335) (1 909) 80 - - - (1 255) (1 909)
Net income / (expense), excluding
revaluation gain / (loss)
- - (75) (185) - - (75) (185)
Share of net gain / (loss) of
investment in Three Seas Initiatives
Investment Fund
- - - - (52) - (52) -
Share of net gain / (loss) of
investment in associate
(1 335) (1 909) 5 (185) (52) - (1 382) (2 094)
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
79
17 Investments in Associates (cont’d)
In 2021, the Group’s / Company’s expenses included:
Management fees for the 2nd and 3rd generation venture capital funds amounted EUR 522 thousand (2020: EUR 888
thousand) which were compensated from the risk coverage reserve;
Management fees for the 4th generation venture capital funds amounted EUR 834 thousand (2020: EUR 807
thousand) which were compensated from the risk coverage reserve;
Management fees for the Baltic Innovation Fund amounted EUR 198 thousand (2020: EUR 236 thousand) which were
compensated from the risk coverage reserve;
Management fees for the AIF “Altum capital fund” amounted EUR 404 thousand (2020: EUR 207 thousand).
Part of disbursements made into the 4th generation venture capital funds are classified as Investments in subsidiaries (detailed
information is available in Note 1) and management fees of such funds in 2021 amounted EUR 1,261 thousand (2020: EUR 1,317
thousand) which were compensated from the Risk Coverage reserve.
18 Other Investments
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
Baltic Innovation Fund 2 1 982 806 1 982 806
Three Seas Initiatives Investment Fund 6 954 6 697 6 954 6 697
Total other investments 8 936 7 503 8 936 7 503
Baltic Innovation Fund 2 (BIF 2) is a EUR 156,000 thousand Fund-of-Funds initiative launched by the European Investment Fund
(EIF) in co-operation with the Baltic national promotional institutions – KredEx (Estonia), Altum (Latvia) and Invega (Lithuania).
BIF 2 continues to sustain investments into private equity and venture capital funds focused on the Baltic States to boost equity
investments into SMEs with high growth potential. The Group / Company signed agreement on BIF 2 on 16 August 2019. The
total capital committed by the Group / Company to the BIF2 is EUR 26,500 thousand thus arriving at the ownership rate 16.99%
of the total committed capital of the BIF 2 (EUR 156,000 thousand).
The Three Seas Initiative Investment Fund is a new financial instrument for financing and developing infrastructure projects in
12 countries, including Latvia, aimed at reducing infrastructure development gaps between different European regions. The
Three Seas Initiative Investment Fund is a new financial instrument to support transport, energy and digitalization infrastructure
projects in Central and Eastern Europe. The Group / Company signed the subscription agreement on 16 September 2020. The
total capital committed by the Group / Company to the Three Seas Initiative Investment Fund is EUR 20,000 thousand thus
arriving at the ownership rate of 2.17% on 31 December 2021 (31 December 2020: 3.57%) of the total committed capital the
Three Seas Initiative Investment Fund un 31 December 2021 in amount of EUR 923,000 thousand (31 December 2020: EUR
560,000 thousand).
In 2021, the Group’s / Company’s expenses included:
Management fees for the Baltic Innovation Fund II amounted EUR 169 thousand (2020: EUR 0) which were
compensated from the risk coverage reserve;
Management fees for the Three Seas Initiatives Investment Fund amounted EUR 255 thousand (2020: 0) which were
compensated from the risk coverage reserve.
Accounting policies of other investments are described in Note 2 (6).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
80
19 Loans
The loans granted constitute the Group’s / Company’s balances due from residents of Latvia.
The Group’s / Company’s loans by the borrower profile, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
SME and Midcaps 175 070 168 262 175 070 168 262
Agriculture 132 556 124 297 132 556 124 297
Private individuals 6 513 8 025 6 513 8 025
Financial Intermediaries 1 535 1 897 1 535 1 897
Land Fund 32 999 31 500 32 999 31 500
Total gross loans 348 673 333 981 348 673 333 981
Impairment allowances (18 143) (20 713) (18 143) (20 713)
Total net loans 330 530 313 268 330 530 313 268
Breakdown of the Group’s / Company's loans by industries, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Agriculture and forestry 170 808 155 682 170 808 155 682
Manufacturing 67 635 67 807 67 635 67 807
Retail and wholesale 24 241 32 378 24 241 32 378
Real estate 13 719 10 273 13 719 10 273
Construction 12 238 9 328 12 238 9 328
Municipal authorities 8 843 8 328 8 843 8 328
Hotels and restaurants 7 498 8 214 7 498 8 214
Transport, warehousing and communications 6 856 5 227 6 856 5 227
Electricity, gas and water utilities 6 120 7 097 6 120 7 097
Health and social care 5 896 4 479 5 896 4 479
Professional, science and technical services 4 914 4 878 4 914 4 878
Information technologies and communication 2 959 3 073 2 959 3 073
Fishing 2 084 1 647 2 084 1 647
Other industries 8 344 7 545 8 344 7 545
Private individuals 6 518 8 025 6 518 8 025
Total gross loans 348 673 333 981 348 673 333 981
Impairment allowances (18 143) (20 713) (18 143) (20 713)
Total net loans 330 530 313 268 330 530 313 268
Movement in the Group’s / Company’s impairment allowances, in thousands of euro:
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Impairment allowances at the beginning of the period 20 713 20 283 20 713 20 283
Increase in impairment allowances (Note 13) 9 631 11 331 9 631 11 331
Decrease in impairment allowances (Note 13) (11 995) (8 130) (11 995) (8 130)
Write-off of loans (1 080) (3 665) (1 080) (3 665)
Reclassification (increase of impairment allowances due to changes in off
-
balance
sheet and balance sheet)
874 894 874 894
Impairment allowances at the end of the period ended 31 December 18 143 20 713 18 143 20 713
Group’s / Company’s share of impairment allowances 9 334 11 860 9 334 11 860
Impairment allowances covered by Portfolio Loss Reserve 4 144 2 359 4 144 2 359
Impairment allowances covered by Risk Coverage Reserve 4 665 6 494 4 665 6 494
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
81
19 Loans (cont’d)
Analysis of the loan amount, equalling to or exceeding EUR 1,000 thousand, issued to one customer:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Number of customers 42 36 42 36
Total credit exposure of customers (EUR ‘000) 67 623 62 821 67 623 62 821
Percentage of total gross portfolio of loans 19.39% 18,81% 19.39% 18,81%
As at 31 December 2021 the average annual interest rate for the loan portfolio of the Group / Company was 4.05% (31
December 2020: 4.05%).
20 Grants
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Energy Efficiency Programme for Multi-apartment Buildings 43 153 30 053 43 153 30 053
Social Entrepreneurship Programme 1 290 1 065 1 290 1 065
Grants for development of energy efficiency projects 41 - 41 -
Housing grant programme “Balsts” 1 042 164 1 042 164
Grants for renovation of private houses and energy efficiency improvement * 167 - 167 -
Grants for cultural industry support programme * 36 - 36 -
Total grants, gross 45 729 31 282 45 729 31 282
Impairment allowances (332) (175) (332) (175)
Total grants, net 45 397 31 107 45 397 31 107
* Combined financial instrument.
Movement in the Group’s / Company’s net book value of grants in 2021, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Carrying amount
Carrying amount at the beginning of period 31 282 17 198 31 282 17 198
Changes 14 447 14 084 14 447 14 084
Carrying amount at the end of period ended 31 December 45 729 31 282 45 729 31 282
Impairment allowances -
At the beginning of period (175) (12) (175) (12)
Changes (215) (163) (215) (163)
Reclassification (increase of impairment allowances due to changes in off
-
balance
sheet and balance sheet)
58 - 58 -
At the end of period ended 31 December (332) (175) (332) (175)
Grants net book at the beginning of the period 31 107 17 186 31 107 17 186
Grants net book value at the end of the period ended 31 December 45 397 31 107 45 397 31 107
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
82
21 Investment Properties
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Carrying amount at the beginning of period 36 758 24 366 36 758 24 366
Acquired during the reporting period * 7 150 11 395 7 150 11 395
Recognized on termination of reverse leases 1 663 300 1 663 300
Disposals during the reporting period (211) (40) (211) (40)
Net gain from fair value adjustment 804 737 804 737
Carrying amount at the end of the period 46 164 36 758 46 164 36 758
* All acquisitions of investment properties made were related to the activities of the Land Fund programme.
The Land Fund was established on 1 July 2015. According to the Cabinet of Ministers decree dated March 11, 2015, the Group
/ Company is the manager of the Land Fund. The Law “On Land Privatisation in Rural Areas” stipulated establishment of the
Land Fund. The Land Fund of Latvia is one of the tools used to ensure that agricultural land is preserved and used for agricultural
purposes.
The accounting policy for investment properties is described in Note 2 (9) item (iv).
22 Investments in Subsidiaries
In 2021, disbursements were made to the 4nd generation venture capital funds, some of which are classified as investments
in subsidiaries until 30 December 2021, but some as investments in associates. All these investments are made into the 4
th
generation venture capital funds with payments made upon call for funds. As a result of annual assessment re existence of
control or significant influence over subsidiaries as of 31 December 2021, the Company doesn’t exercise one of the core
control indicator – doesn’t have the power over the investment object (see Note 2 (i)). Therefore the Company’s Investments
in Subsidiaries in amount of EUR 6,563 thousand are classified as Investments in Associates as at 31 December 2021.
For more information on the structure of the Group see Note 1. Accounting policies of investments in subsidiaries are described
in Note 2 (2) item (i) and Note 2 (6) item (iii).
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021 31.12.2020
Investments in the share capital of subsidiaries - - - 4 849
Total investments in the share capital of subsidiaries - - - 4 849
Breakdown of the Company’s investments in the share capital of subsidiaries, in thousands of euro:
Company Company
31.12.2021. 31.12.2020
KS Commercialization Reactor Pre-seed Fund - 817
KS Buildit Latvia Pre-Seed Fund - 753
KS Overkill Ventures Fund I - 750
KS INEC 1 - 1 696
KS INEC 2 - 863
Total investments in the share capital of subsidiaries - 4 879
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
83
22 Investments in Subsidiaries (cont’d)
Breakdown of subsidiaries’ net assets value as at 31 December 2020 and profit or loss volume in 2021 and 2020, which is based
on audited venture capital funds’ financial statements for the year ended 31 December 2021 except for KS Commercialization
Reactor Pre-seed Fund, where operational financial data are used , in thousands of euro:
Net assets value Profit or loss
31.12.2021. 31.12.2020
01.01.2021.
-
30.12.2021.
01.01.2020.
-
31.12.2020
KS Overkill Ventures Fund I - 861 (268) (323)
KS Buildit Latvia Pre-Seed Fund - 1 017 (58) (343)
KS Commercialization Reactor Pre-seed Fund - 817 (272) (295)
KS INEC 1 - 2 845 72 (282)
KS INEC 2 - 1 118 (446) (381)
Total - 6 658 (972) (1 624)
23 Intangible Assets
Breakdown of the Group’s / Company’s net book value of intangible assets, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
Computer software 1 256 1 398 1 256 1 398
Total intangible assets 1 256 1 398 1 256 1 398
Movement in the Group’s / Company’s net book value of intangible assets, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Original cost
At the beginning of period 4 785 4 393 4 785 4 393
Additions 234 392 234 392
Disposals (342) - (342) -
At the end of period ended at December 31 4 677 4 785 4 677 4 785
Accumulated depreciation
At the beginning of period 3 387 2 998 3 387 2 998
Depreciation charge 376 389 376 389
Disposals (342) - (342) -
At the end of period ended at December 31 3 421 3 387 3 421 3 387
Net book value at the beginning of period 1 398 1 395 1 398 1 395
Net book value as at 31 December 1 256 1 398 1 256 1 398
24 Property, Plant and Equipment
The Group / Company uses assets that have been fully depreciated.
Breakdown of the Group’s / Company’s property, plant and equipment, in thousands of euros:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Property, plant and equipment 4 289 4 298 4 289 4 298
Right-of-use assets 281 419 281 419
Total property, plant and equipment 4 570 4 717 4 570 4 717
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
84
24 Property, Plant and Equipment (cont’d)
Movement in the Group’s / Company’s carrying amount of property, plant and equipment, in thousands of euro:
* Office equipment includes such fixed assets categories as furniture and fittings and computers and equipment, Note 2 (9) item (ii).
Movement in the Group’s / Company’s carrying amount of right-of-use assets, in thousands of euro:
Land and buildings Vehicles Office equipment * Total
Cost at 1 January 2020 4 789 132 5 512 10 433
Accumulated depreciation (1 510) (132) (4 600) (6 242)
Impairment allowances - - - -
Carrying amount at 1 January 2020 3 279 - 912 4 191
Additions 317 - 439 756
Disposals (130) (88) (887) (1 105)
Depreciation charge (187) (341) (528)
Change in depreciation from disposals 14 88 882 984
Change in impairment allowances - - - -
Carrying amount at 31 December 2020 3 293 - 1 005 4 298
Cost at 1 January 2021 4 976 44 5 064 10 084
Accumulated depreciation (1 683) (44) (4 059) (5 786)
Carrying amount at 1 January 2021 3 293 - 1 005 4 298
Additions 423 - 164 587
Disposals - - (235) (235)
Depreciation charge (185) - (373) (558)
Change in depreciation from disposals - - 197 197
Change in impairment allowances - - - -
Carrying amount at 31 December 2021 3 531 - 758 4 289
Cost at 31 December 2021 5 399 44 4 993 10 436
Accumulated depreciation (1 868) (44) (4 235) (6 147)
Impairment allowances - - - -
Carrying amount at 31 December 2021 3 531 - 758 4 289
Land and buildings Vehicles Leasehold
improvements
Total
Cost at 1 January 2020 434 183 380 997
Accumulated depreciation (81) (33) (334) (448)
Impairment allowances - - (46) (46)
Carrying amount at 1 January 2020 353 150 - 503
Additions - 45 - 45
Disposals - - (380) (380)
Depreciation charge (86) (43) (129)
Change in depreciation from disposals - - 334 334
Change in impairment allowances - - 46 46
Carrying amount at 31 December 2020 267 152 - 419
Cost at 1 January 2021 434 228 - 662
Accumulated depreciation (167) (76) - (243)
Carrying amount at 1 January 2021 267 152 - 419
Additions - - - -
Disposals - - - -
Depreciation charge (85) (53) - (138)
Change in depreciation from disposals - - - -
Change in impairment allowances - - - -
Carrying amount at 31 December 2021 182 99 - 281
Cost at 31 December 2021 434 228 - 662
Accumulated depreciation (252) (129) - (381)
Carrying amount at 31 December 2021 182 99 - 281
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
85
25 Other Assets
All amounts in thousands of euro
Group Group Company Company
31.12.2021 31.12.2020 31.12.2021 31.12.2020
Financial assets 5 165 5 603 5 165 5 568
Other assets (repossessed collateral) 28 28 28 28
Total other assets, gross 5 193 5 631 5 193 5 596
Impairment allowances for financial assets (1 951) (1 960) (1 951) (1 960)
Group’s / Company’s share of provisions (786) (1 078) (786) (1 078)
Impairment allowances covered by Portfolio Loss Reserve (186) - (186) -
Provisions covered by risk coverage (979) (882) (979) (882)
Total financial assets, net 3 214 3 643 3 214 3 608
Total other assets, net 3 242 3 671 3 242 3 636
The Group’s / Company’s sub-item Other assets (repossessed collateral) includes assets that have been taken over in the debt
collection process and are held to be sold in the ordinary course of business.
Movement in the Group’s net book value of financial assets in 2021, in thousands of euro:
Disbursed
guarantee
compensations
Financial assets
related to loan
agreements
Other financial
assets
Total
Financial assets
At the beginning of period 1 624 280 3 699 5 603
Changes (34) 590 (994) (438)
As at 31 December 2021 1 590 870 2 705 5 165
Impairment provision
At the beginning of period (1 624) (169) (167) (1 960)
Changes in impairment allowances 34 (161) 136 9
As at 31 December 2021 (1 590) (330) (31) (1 951)
Net book value at the beginning of period - 111 3 532 3 643
Net book value as at 31 December 2021 - 540 2 674 3 214
Movement in the Company’s net book value of financial assets in 2021, in thousands of euro:
Disbursed
guarantee
compensations
Financial assets
related to loan
agreements
Other financial
assets
Total
Financial assets
At the beginning of period 1 624 280 3 664 5 568
Changes (34) 590 (959) (403)
As at 31 December 2021 1 590 870 2 705 5 165
Impairment provision
At the beginning of period (1 624) (169) (167) (1 960)
Changes in impairment allowances 34 (161) 136 9
As at 31 December 2021 (1 590) (330) (31) (1 951)
Net book value at the beginning of period - 111 3 497 3 608
Net book value as at 31 December 2021 - 540 2 674 3 214
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
86
25 Other Assets (cont’d)
Movement in the Group’s net book value of financial assets in 2020, in thousands of euro:
Disbursed
guarantee
compensations
Financial assets
related to loan
agreements
Other financial
assets
Total
Financial assets
At the beginning of period 2 361 164 3 571 6 096
Changes (737) 116 128 (493)
As at 31 December 2020 1 624 280 3 699 5 603
Impairment provision
At the beginning of period (2 361) (142) (525) (3 028)
Changes in impairment allowances 737 (27) 358 1 068
As at 31 December 2020 (1 624) (169) (167) (1 960)
Net book value at the beginning of period - 22 3 046 3 068
Net book value as at 31 December 2020 - 111 3 532 3 643
Movement in the Company’s net book value of financial assets in 2020, in thousands of euro:
Disbursed
guarantee
compensations
Financial assets
related to loan
agreements
Other financial
assets
Total
Financial assets
At the beginning of period 2 361 164 3 571 6 096
Changes (737) 116 93 (528)
As at 31 December 2020 1 624 280 3 664 5 568
Impairment provision
At the beginning of period (2 361) (142) (525) (3 028)
Changes in impairment allowances 737 (27) 358 1 068
As at 31 December 2020 (1 624) (169) (167) (1 960)
Net book value at the beginning of period - 22 3 046 3 068
Net book value as at 31 December 2020 - 111 3 497 3 608
Movement in the Group’s / Company’s book value of repossessed collateral, in thousands of euro:
Group Group Company Company
31.12.2021 31.12.2020 31.12.2021 31.12.2020
At the beginning of period 28 503 28 503
Additions - 53 - 53
Disposals - (528) - (528)
Reclassified - - - -
Revaluation - - - -
Total other assets at the end of period ended 31 December 28 28 28 28
26 Deferred Expense
All amounts in thousands of euro
Group Group Company Company
31.12.2021 31.12.2020 31.12.2021 31.12.2020
Management fees paid in advance to venture capital funds’ managers 29 495 29 495
Other deferred expense 613 254 613 254
Total deferred expense 642 749 642 749
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
87
27 Accrued Income
All amounts in thousands of euro
Group Group Company Company
31.12.2021 31.12.2020 31.12.2021 31.12.2020
Compensation for management expenses of state support programs 1 424 772 1 424 772
Other accrued income - - - -
Total accrued income 1 424 772 1 424 772
28 Due to Credit Institutions
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Due to credit institutions registered in OECD countries 53 416 65 855 53 416 65 855
Total due to credit institutions 53 416 65 855 53 416 65 855
Balances Due to credit institutions registered in the OECD countries include loan received by the Group / Company from the
European Investment Bank (EIB) of EUR 53,416 thousand (31 December 2020: EUR 65,855 thousand), of which EUR 14
thousand constitutes accrued interest expenses (31 December 2020: EUR 22 thousand).
On October 2, 2009, an agreement was signed with the European Investment Bank for a loan of EUR 100,000 thousand to
finance projects under the SMEs Growth Loan Programme. As at 31 December 2021 the principal amount of the loan EUR
12,153 thousand (31 December 2020: EUR 20,833 thousand), the accrued interest on the loan amounts to EUR 14 thousand
(31 December 2020: EUR 22 thousand), the final repayment date 20 August 2024. The Ministry of Finance of the Republic of
Latvia has issued a guarantee for the loan, as a collateral serves the commercial pledge to the right of the Company’s
claims. As at 31 December 2021, the amount of the secured claim was EUR 12,166 thousand (31December 2020: EUR 20,855
thousand).
On July 8, 2020, Altum signed an agreement with the European Investment Bank for a loan of EUR 80,000 thousand to finance
working capital loans to small and medium-sized enterprises affected by the Covid-19. As at 31 December 2021 the principal
amount of the loan EUR 41,250 thousand (31 December 2020: EUR 45,000 thousand), the final repayment date 20 November
2025. As at 31 December 2021, according to the loan agreement the Company is available the financing in the amount of
EUR 35,000 thousand. On 10 December 2021, Altum signed an agreement with the European Investment Bank for an additional
loan of EUR 40,000 thousand to finance working capital loans to small and medium-sized enterprises affected by the Covid-
19, the absorption of which had not been started until December 31, 2021. The volume and pace of drawdown under both
agreements is subordinated to the further volume of new lending transactions. The loans are unsecured.
As at 31 December 2021, the average interest rate for the balances Due to credit institutions was 0.08% (31 December 2020:
0.11%).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
88
29 Due to General Governments
All amounts in thousands of euro
Group Group Company Company
31.12.2021 31.12.2020 31.12.2021 31.12.2020
Loans received from Rural Support Service 3 321 4 046 3 321 4 046
Loans received from the Treasury 118 027 99 474 118 027 99 474
Total due to general governments 121 348 103 520 121 348 103 520
Item Loans from Rural Support Service includes the financing to the Loan Fund, which was established in 2010 for the purpose
to issue the loans to the agricultural and fisheries beneficiaries via financial intermediaries. As at 31 December 2021 the Group
/ Company liabilities to Rural Support Service consist of the principal amount of EUR 3,104 thousand (31 December 2020: EUR
3,829 thousand) and accrued interest – EUR 217 thousand (31 December 2020: EUR 217 thousand). The final repayment date
is 31 December 2025. The loan from Rural Support Service is unsecured.
Loans received from the Treasury includes the loans received by the Group/Company for the implementation the following
loan programmes:
Agricultural land acquisition programme: as at 31 December 2021 the principal amount of the loan EUR 69,077
thousand (31 December 2020: EUR 72,513 thousand), the final repayment date 20 January 2058. As a collateral serves
the commercial pledge to the right of the Company’s claims resulting from loans granted by the Group / Company
under the programme. As at 31 December 2021, according to the loan agreement the Company is available the
financing in the amount of EUR 30,923 thousand, the size and pace of its drawdown relates to the further volume of
new loan transactions. As at 31 December 2021, the amount of the secured claim was EUR 82,893 thousand
(31 December 2020: EUR 72,514 thousand).
SME development programme: as at 31 December 2021 the principal amount of the loan EUR 32,103 thousand
(31 December 2020: EUR 17,040 thousand), the final repayment date 20 December 2043. As a collateral serves the
commercial pledge to the right of the Company’s claims resulting from loans granted by the Group / Company
under the programme. As at 31 December 2021, according to the loan agreement the Company still is available
the financing in the amount of EUR 22,897 thousand, the size and pace of its drawdown relates to the further volume
of new loan transactions. As at 31 December 2021, the amount of the secured claim was EUR 38,524 thousand
(31 December 2020: EUR 20,449 thousand).
Parallel loan programme: as at 31 December 2021 the principal amount of the loan EUR 4,600 thousand
(31 December 2020: absorption had not started), the final repayment date 20 January 2039. As a collateral serves
the commercial pledge to the right of the Company’s claims resulting from loans granted by the Group / Company
under the programme. As at 31 December 2021, according to the loan agreement the Company still is available
the financing in the amount of EUR 15,400 thousand, the size and pace of its drawdown relates to the further volume
of new loan transactions. As at 31 December 2021, the amount of the secured claim was EUR 5,520 thousand.
Programme of Small Loans for Rural Areas: as at 31 December 2021 the principal amount of the loan EUR 2,327
thousand, the final repayment date 31 January 2039. As a collateral serves the commercial pledge to the right of
the Company’s claims resulting from loans granted by the Group / Company under the programme. As at
31 December 2021, according to the loan agreement the Company still is available the financing in the amount of
EUR 3,673 thousand, the size and pace of the drawdown the loan relates to the further volume of new loan
transactions. As at 31 December 2021, the amount of the secured claim was EUR 2,792 thousand.
Latvian Land Fund (the financing for the Fund’s transactions): the loan amount has been used in 2020 and as at
31 December 2021 the principal amount of the loan EUR 9,919 thousand (31 December 2020: EUR 9,919 thousand),
the final repayment date 29 December 2028. As a collateral serves the mortgage on the real estate purchased with
the financing received under the loan. As at 31 December 2021, the amount of registered mortgage was EUR 10,400
thousand (31 December 2020: EUR 10,269 thousand).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
89
29 Due to General Governments (cont’d)
As at 31 December 2021 the accrued interest on the loans received from the Treasury amounts to EUR 2,210 (31 December
2020: EUR 1,743).
The Company has also concluded the following loan agreements with the Treasury, the absorption of which has not been
started until December 31, 2021:
Micro Loans and Star-up Loans programme: the amount of the loan agreement EUR 23,000 thousand, the final
repayment date 20 January 2039, commercial pledge on the Company’s claims for the loans under the programme.
The size and pace of the drawdown the loan relates to the further volume of new loan transactions. The maximum
amount of the secured claim is EUR 27,600 thousand.
Working capital loan programme for farmers: the amount of the loan agreement EUR 25,612 thousand, the final
repayment date 30 June 2025, commercial pledge on the Company’s claims for the loans under the programme.
The size and pace of the drawdown the loan relates to the further volume of new loan transactions. The maximum
secured claim is EUR 30,734 thousand.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
90
30 Support programme funding
The Group’s / Company’s information on the risk coverage reserve included in the support programme funding and state aid,
which can be used for covering the Group’s / Company’s credit risk losses as at 31 December 2021, in thousands of euro:
Financial Instrument / Programme Programme
funding *
Credit risk
coverage
Provisions
covered by risk
coverage
Net
programme
funding
Loans
ERDF II 1 805 1 655 (226) 1 579
ESF II 1 020 132 (51) 969
Microcredits of Swiss programme (closed programme) 82 82 (5) 77
ERDF I 122 24 (3) 119
ESF I 316 7 (2) 314
ERDF II (second round) 5 801 249 (39) 5 762
Incubators (from ESF II) 82 5 - 82
ERAF II 2 Public fund (programme closed) 226 - - 226
Fund of Funds programme – Start-up loans 2 705 2 705 (226) 2 479
Fund of Funds programme – Microcredits 295 295 (13) 282
Fund of Funds programme – Parallel loans 4 298 4 298 (2 584) 1 714
Energy Efficiency Programme for Multi-apartment Buildings Loans 5 293 5 142 (11) 5 282
Start-up State Aid Cumulation Lending Programme 1 875 1 875 (269) 1 606
Other loans to start-ups 1 517 197 (49) 1 468
Mezzanine Programme – Loans 3 484 3 310 (1 046) 2 438
Guarantees and interest grants programme 4 269 4 269 - 4 269
SME energy efficiency loans 3 723 3 723 (350) 3 373
Parallel loans 2 000 2 000 (155) 1 845
Loans for enterprises in rural territories 7 810 1 709 (72) 7 738
Start-up loans to innovative entrepreneurs 1 500 300 (26) 1 474
Loans for improvement of Multi-apartment Buildings and their neighbourhood ** 1 000 1 000 - 1 000
Energy Efficiency Programme for Multi-apartment Buildings Loans (II) 1 000 60 - 1 000
Cultural industry support programme *** 2 717 - - 2 717
Total loans 52 940 **** 33 037 (5 127) 47 813
* The IFRS 9 implementation adjustment of EUR (7,645) thousand incorporated in 2018 (for details see Note 2 (15)) consisting of Accrued
liabilities of state aid of EUR 4,876 thousands and Fair value correction of EUR 12,341 thousands previously disclosed in this note as
separate columns reconciling Programme funding and Net programme funding are netted off vs Programme funding as at 31
December 2020. That disclosure treatment is the same as was presented in the audited financial statements for the year ended 31
December 2018. Net decrease of Fair value correction for the year 2021 of EUR 152 thousands has been also netted off vs Programme
funding as at 31 December 2021.
** Combined financial instrument.
*** Combined financial instrument. Risk coverage (Portfolio Loss Reserve) of EUR 816 thousand has been included in the Specific reserve
capital for mitigating of impact of Covid-19, which is part of the Specific Reserves attributable to support programmes (see Note 36)
**** Support programme funding includes funding that had to be reallocated between the programmes, partly done in 2021 (from
the Microcredits of Swiss programme), to be continued in 2022.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
91
30 Support programme funding (cont’d)
The Group’s / Company’s information on the risk coverage reserve included in the support programme funding and state aid,
which can be used for covering the Group’s / Company’s credit risk losses as at 31 December 2021, in thousands of euro
(cont’d):
Financial Instrument / Programme Programme
funding *
Credit risk
coverage
Provisions
covered by risk
coverage
Net
programme
funding
Guarantees
Fund of Funds programme - Guarantees 29 909 29 909 (6 183) 23 726
Energy Efficiency Programme for Multi-apartment Buildings Guarantees 8 294 7 985 (1 015) 7 279
Housing Guarantee Programme 21 530 21 530 (11 971) 9 559
Portfolio guarantees for renovation of private houses and energy efficiency
improvement **
502 502 - 502
Guarantee Programme for Clients of State Aid Accumulation, Grace Period and
Large Economic Operators
7 753 7 753 (996) 6 757
Mezzanine Programme - Guarantees 892 847 (190) 702
Portfolio Guarantee Fund 3 913 3 446 (2 358) 1 555
Export guarantees 2 477 2 477 (636) 1 841
Study and student portfolio guarantees ***** 549 - - 549
Agricultural Guarantees 2 741 2 741 (1 020) 1 721
Total guarantees 78 560 77 190 (24 369) 54 191
Grants
Energy Efficiency Programme for Multi-apartment Buildings Grants 48 826 - - 48 826
Housing grant programme “Balsts” 7 350 - - 7 350
Grants for renovation of private houses and energy efficiency improvement ** 1 872 - - 1 872
Social Entrepreneurship Programme 1 849 - - 1 849
Cultural industry support programme ** 1 849 - - 1 849
Total grants 61 746 - - 61 746
Venture Capital Funds -
Fund of Funds and venture capital funds 52 084 43 230 - 52 084
Investment Fund Activity 5 008 4 507 - 5 008
Baltic Innovation Fund 1 939 582 - 1 939
Baltic Innovation Fund II 2 166 650 - 2 166
Total venture capital funds 61 197 48 969 - 61 197
Other Activities
Energy Efficiency Fund 3 888 - - 3 888
Regional Creative Industries Alliance - - - -
Total other activities 3 888 - - 3 888
Funding allocated to increase reserve capital ****** 1 452 - - 1 452
Total support programme funding 259 783 ******* 159 196 (29 496) 230 287
* The IFRS 9 implementation adjustment of EUR (7,645) thousand incorporated in 2018 (for details see Note 2 (15)) consisting of Accrued
liabilities of state aid of EUR 4,876 thousands and Fair value correction of EUR 12,341 thousands previously disclosed in this note as
separate columns reconciling Programme funding and Net programme funding are netted off vs Programme funding as at 31
December 2020. That disclosure treatment is the same as was presented in the audited financial statements for the year ended 31
December 2018. Net decrease of Fair value correction for the year 2021 of EUR 152 thousands has been also netted off vs Programme
funding as at 31 December 2021.
** Combined financial instrument.
***** Risk coverage of EUR 2,141 thousand has been included in the Specific reserve for non-Covid-19 programmes (Portfolio Loss
Reserve), which is part of the Specific reserves attributable to support programmes (see Note 36)
****** It is expected that the financing will be transferred to the Group's reserve capital following the decision of the shareholders'
meeting, which is planned in the 2nd quarter of 2022.
******* Support programme funding contains EUR 19,355 thousand allocated for management costs of the Group / Company to be
compensated from support programme funding.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
92
30 Support programme funding (cont’d)
The Group’s / Company’s information on the risk coverage reserve included in the support programme funding and state aid,
which can be used for covering the Group’s / Company’s credit risk losses as at 31 December 2020, in thousands of euro:
Financial Instrument / Programme Programme
funding *
Credit risk
coverage
Provisions
covered by risk
coverage
Net
programme
funding
Loans
ERDF II 2 038 1 866 (467) 1 571
ESF II 998 193 (86) 912
Microcredits of Swiss programme 3 456 268 (12) 3 444
ERDF I 116 99 (9) 107
ESF I 324 40 (31) 293
ERDF II (second round) 5 751 425 (75) 5 676
Incubators (from ESF II) 82 7 - 82
ERAF II 2 Public fund 285 58 (14) 271
Fund of Funds programme – Start-up loans 2 730 2 730 (314) 2 416
Fund of Funds programme – Microcredits 298 298 (26) 272
Fund of Funds programme – Parallel loans 3 861 3 861 (2 736) 1 125
Energy Efficiency Programme for Multi-apartment Buildings Loans 3 748 3 548 (42) 3 706
Start-up State Aid Cumulation Lending Programme 1 972 1 988 (266) 1 706
Other loans to start-ups 1 483 274 (67) 1 416
Mezzanine Programme – Loans 3 201 2 817 (2 352) 849
Guarantees and interest grants programme 4 251 4 251 - 4 251
SME energy efficiency loans 3 723 3 723 - 3 723
Parallel loans 2 000 2 000 (238) 1 762
Loans for enterprises in rural territories 7 810 1 709 (86) 7 724
Loans to Midcaps for mitigation of the COVID-19 effect 2 435 - - 2 435
Start-up loans to innovative entrepreneurs 500 100 - 500
Total loans 51 062 ** 30 255 (6 821) 44 241
Guarantees
Fund of Funds programme - Guarantees 26 907 26 906 (6 288) 20 619
Energy Efficiency Programme for Multi-apartment Buildings Guarantees 6 217 5 875 (991) 5 226
Housing Guarantee Programme 14 005 14 005 (9 669) 4 336
Guarantee Programme for Clients of State Aid Accumulation, Grace Period and
Large Economic Operators
7 753 7 753 (1 078) 6 675
Mezzanine Programme - Guarantees 1 190 1 047 (733) 457
Portfolio Guarantee Fund 4 005 3 685 (1 722) 2 283
Export guarantees 2 477 2 477 (571) 1 906
Study and student portfolio guarantees 77 - - 77
Agricultural Guarantees 1 000 1 000 (324) 676
Total guarantees 63 631 62 748 (21 376) 42 255
* The IFRS 9 implementation adjustment of EUR (7,645) thousand incorporated in 2018 (for details see Note 2 (15)) consisting of Accrued
liabilities of state aid of EUR 4,876 thousands and Fair value correction of EUR 12,341 thousands previously disclosed in this note as
separate columns reconciling Programme funding and Net programme funding are netted off vs Programme funding as at 31
December 2020. That disclosure treatment is the same as was presented in the audited financial statements for the year ended 31
December 2018.
** Support programme funding includes funding that is planned to be reallocated to other support programmes. Funding is planned
to be reallocated at the beginning of 2021.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
93
30 Support programme funding (cont’d)
The Group’s / Company’s information on the risk coverage reserve included in the support programme funding and state
aid, which can be used for covering the Group’s / Company’s credit risk losses as at 31 December 2020, in thousands of
euro(cont’d):
Financial Instrument / Programme Programme
funding
Credit risk
coverage
Provisions
covered by risk
coverage
Net
programme
funding
Grants
Energy Efficiency Programme for Multi-apartment Buildings Grants 40 538 - - 40 538
Housing grant programme “Balsts” 3 266 - - 3 266
Social Entrepreneurship Programme 1 564 - - 1 564
Grants for development of energy efficiency projects 172 - - 172
Total grants 45 540 - - 45 540
Venture Capital Funds
Fund of Funds and venture capital funds 26 654 14 967 - 26 654
Investment Fund Activity 5 272 3 173 - 5 272
Baltic Innovation Fund 2 000 700 - 2 000
Baltic Innovation Fund II 2 359 724 - 2 359
Total venture capital funds 36 285 19 564 - 36 285
Other Activities
Energy Efficiency Fund 433 - - 433
Regional Creative Industries Alliance - - - -
Total other activities 433 - - 433
Funding allocated to increase Reserve capital *** 23 209 - - 23 209
Total support programme funding 220 160 **** 112 567 (28 197) 191 963
*** In December 2020, the Ministry of Economics transferred financing in the amount of EUR 22,565 thousand to the program Loans and
their interest rate subsidies to enterprises for the promotion of the competitiveness (Cabinet Regulation No. 677 of 10 November 2020
“Regulations on Loans and Their Interest Rate Subsidies to enterprises for the promotion of the competitiveness”). In December 2020,
the Ministry of Education and Science transferred financing in the amount of EUR 644 thousand to the program of Study and Student
lending for studies in Latvia from the funds of credit institutions guaranteed from the State budget (Cabinet Regulation No. 231 of 21
April 2020 “Regulations on Granting Study Loans and Student Loans from the Funds of Credit Institutions Guaranteed from the State
Budget”). It is expected that the financing will be transferred to the Group's reserve capital following the decision of the shareholders'
meeting, which is planned in the first quarter of 2021. Reserve capital of the Group / Company was increased by this amount in
accordance with the decision of the General Meeting of Shareholders of the Group / Company of 22 March 2021.
**** Support programme funding contains EUR 21,921 thousand allocated for management costs of the Group / Company to be
compensated from support programme funding.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
94
30 Support programme funding (cont’d)
Based on the concluded programme implementation contracts, the funding received could be reduced by the outstanding
principal amount of the loans classified as lost, non-repaid loan principal amount and / or disbursements of guarantee
compensations. The Group / Company need not have to repay the reductions of funding to the funding provider.
Movement in the Group’s / Company’s support programme funding in 2021, in thousands of euro:
Financial Instrument /
Programme
Financing,
net
Financing
received
Reallo-
cated
funding
between
program-
mes
Compen-
sated
grants
Compen-
sated
income
and
expense
Revalua-
tion of
liabilities
Programmes’
income/
profit
distri-
bution
Other
changes
Changes
in provi-
sions
covered
by risk
coverage
Financing,
net
31.12.2020. 31.12.2021.
Loans
ERDF II 1 571 - (293) - - - 60 - 241 1 579
ESF II 912 - - - - - 29 (7) 35 969
Microcredits of Swiss
programme (closed
programme)
3 444 - (3 374) - - - - - 7 77
ERDF I 107 - - - - - 6 - 6 119
ESF I 293 - - - - - 21 (29) 29 314
ERDF II (second round) 5 676 - - - - - 39 11 36 5 762
Incubators (from ESF II) 82 - - - - - - - - 82
ERAF II 2 Public fund 271 - - - - - - (59) 14 226
Fund of Funds programme
–
Start-up loans
2 416 - - - - - - (25) 88 2 479
Fund of Funds programme
–
Microcredits
272 - - - - - - (3) 13 282
Fund of Funds programme
–
Parallel loans
1 125 - 437 - - - - - 152 1 714
Energy Efficiency Programme
for Multi-apartment Buildings
– Loan Fund
3 706 4 500 (3 000) - (49) - 94 - 31 5 282
Start
-
up State Aid
Cumulation Lending
Programme
1 706 - - - - - - (97) (3) 1 606
Other loans to start-ups 1 416 - - - (11) - 35 10 18 1 468
Mezzanine Programme
–
Loans
849 - 207 - (83) - 158 - 1 307 2 438
Guarantees and interest
grants programme
4 251 - - - - - - 18 - 4 269
SME energy efficiency loans 3 723 - - - - - - - (350) 3 373
Parallel loans 1 762 - - - - - - - 83 1 845
Loans for enterprises in rural
territories
7 724 - - - - - - - 14 7 738
Loans to Midcaps 2 435 - - - - - - (2 435) - -
Start
-
up loans to innovative
entrepreneurs
500 - 1 000 - - - - - (26) 1 474
Loans for improvement of
Multi-apartment Buildings
and their neighbourhood *
- - 1 000 - - - - - - 1 000
EEE Programme for MSAB
–
Loan Fund II
- - 1 000 - - - - - - 1 000
Cultural industry support
programme *
- 5 184 (2 460) - (7) - - - - 2 717
Total loans 44 241 ** 9 684 (5 483) - (150) - 442 (2 616) 1 695 47 813
* Combined financial instrument.
** Support programme funding includes funding that had to be reallocated between the programmes, partly done in 2021 (from the
Microcredits of Swiss programme), to be continued in 2022.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
95
30 Support programme funding (cont’d)
Movement in the Group’s / Company’s support programme funding in 2021, in thousands of euro (cont’d):
Financial Instrument /
Programme
Financing,
net
Financing
received
Reallo-
cated
funding
between
program-
mes
Compen-
sated
grants
Compen-
sated
income
and
expense
Revalua-
tion of
liabilities
Programmes’
income/
profit
distri-
bution
Other
changes
Changes
in provi-
sions
covered
by risk
coverage
Financing,
net
31.12.2020. 31.12.2021.
Guarantees -
Fund of Funds programme
-
Guarantees
20 619 - 3 000 - - - - 2 105 23 726
Energy Efficiency Programme
for Multi-apartment Buildings
- Guarantees
5 226 - 2 000 - (68) - 145 - (24) 7 279
Housing Guarantee
Programme
4 336 7 372 - - - - - 153 (2 302) 9 559
Portfolio guarantees for
renovation of private houses
and energy efficiency
improvement *
- - 502 - - - - - - 502
Guarantee Programme for
Clients of State Aid
Accumulation, Grace Period
and Large Economic
Operators
6 675 - - - - - - - 82 6 757
Mezzanine Programme
-
Guarantees
457 - (207) - (21) - 76 (146) 543 702
Portfolio Guarantee Fund 2 283 - - - (92) - - - (636) 1 555
Export guarantees 1 906 - - - - - - - (65) 1 841
Study and student portfolio
guarantees
77 506 - - (34) - - - - 549
Agricultural Guarantees 676 1 937 - - - - - (196) (696) 1 721
Total guarantees 42 255 9 815 5 295 - (215) - 221 (187) (2 993) 54 191
Grants
Energy Efficiency
Programme for Multi-
apartment Buildings Grants
40 538 15 000 293 (7 005) - - - - - 48 826
Housing grant
programme
“Balsts”
3 266 7 200 - (3 116) - - - - - 7 350
Grants for renovation of
private houses and energy
efficiency improvement *
- - 1 872 - - - - - - 1 872
Social Entrepreneurship
Programme
1 564 2 804 - (2 365) (154) - - - - 1 849
Grants for development of
energy efficiency projects
172 292 - (434) (30) - - - - -
Cultural industry support
programme *
- - 2 460 (595) (16) - - - - 1 849
Total grants 45 540 25 296 4 625 (13 515) (200) - - - - 61 746
Venture Capital Funds
Fund of Funds and venture
capital funds
26 654 32 059 (4 437) - (2 959)*** (551)
1 318
******
- - 52 084
Investment Fund Activity 5 272 - - - (824)**** (1 805)
1 904
*******
461 - 5 008
Baltic Innovation Fund 2 000 - - - (238)***** -
177
********
- - 1 939
Baltic Innovation Fund II 2 359 - - - (193) - - - - 2 166
Total venture capital funds 36 285 32 059 (4 437) - (4 214) (2 356) 3 399
461
*********
- 61 197
Other Activities
Energy Efficiency Fund 433 3 540 - - (85) - - - - 3 888
Regional Creative Industries
Alliance
- 2 - - (2) - - - - -
Total other activities 433 3 542 - - (87) - - - - 3 888
Funding allocated to
increase reserve capital
23 209 14 267 - - - - - (36 024) - 1 452
Total support programme
funding
191 963 94 663 - (13 515) (4 866) (2 356) 4 062 (38 366) (1 298) 230 287
* Combined financial instrument.
*** include EUR 2,095 thousand management fees for the 4th generation venture capital funds (see Note 17).
**** include EUR 522 thousand management fees for the 2nd and 3rd generation venture capital funds (see Note 17).
***** include EUR 198 thousand management fees for the Baltic Innovation Fund (see Note 17).
****** include EUR 313 thousand mezzanine interest received from investments in 4th generation venture capital funds in 2021 (see Note 17).
******* include EUR 489 thousand mezzanine interest received and EUR 1,415 thousand realised gain on investments in 2nd and 3rd generation venture capital funds in
2021 (see Note 17).
******** include EUR 153 thousand realised gain on investment in Baltic Innovation Fund in 2021 (see Note 17).
********* include deferred payments in amount of EUR 738 thousand (deferred income) from exited investments in 2nd and 3rd generation venture capital funds.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
96
30 Support programme funding (cont’d)
Gains less losses from liabilities at fair value through profit or loss, in thousands of euro:
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Revaluation of investments in 2nd and 3rd generation venture capital funds (1 805) (1 609) (1 805) (1 609)
Realised gain on investments in 2nd and 3rd generation venture capital funds (429) 64 (429) 64
Mezzanine interest received from investments in 2nd and 3rd generation venture
capital funds
489 1 203 489 1 203
Revaluation of investments in 4th generation venture capital funds (65) (1 241) (551) (1 241)
Mezzanine
interest received from investments in 4th generation venture capital
funds
313 - 528 -
Realised gain on investment in Baltic Innovation Fund 153 250 153 250
Mezzanine interest received from investments in Baltic Innovation Fund 24 250 24 250
Gains less losses from liabilities at fair value through profit or loss (1 320) (1 083) (1 591) (1 083)
31 Provisions
Breakdown of the Group’s / Company’s provisions for financial guarantees and off-balance sheet items, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Provisions for financial guarantees 33 603 31 413 33 603 31 413
Group’s / Company’s share of provisions 5 494 7 343 5 494 7 343
Provisions covered by Portfolio Loss Reserve 4 719 3 576 4 719 3 576
Provisions covered by Risk Coverage Reserve 23 390 20 494 23 390 20 494
Provisions for loan commitments 790 1 014 790 1 014
Group’s / Company’s share of provisions 140 378 140 378
Provisions covered by Portfolio Loss Reserve 188 309 188 309
Provisions covered by Risk Coverage Reserve 462 327 462 327
Provisions for grant commitments 73 74 73 74
Group’s / Company’s share of provisions 73 74 73 74
Provisions covered by risk coverage - - - -
Total provisions 34 466 32 501 34 466 32 501
Group’s / Company’s share of provisions 5 707 7 795 5 707 7 795
Provisions covered by Portfolio Loss Reserve 4 907 3 885 4 907 3 885
Provisions covered by Risk Coverage Reserve 23 852 20 821 23 852 20 821
Movement in the Group’s / Company’s provisions for financial guarantees, in thousands of euro:
Group Group Company Company
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Provisions at the beginning of the period 31 413 30 606 31 413 30 606
Increase in provisions (Note 13) 16 071 14 442 16 071 14 442
Decrease in provisions (Note 13) (12 916) (13 060) (12 916) (13 060)
Reclassification (Disbursed guarantee) (965) (575) (965) (575)
Provisions at the end of the period ended 31 December 33 603 31 413 33 603 31 413
Group’s / Company’s share of provisions 5 494 7 343 5 494 7 343
Provisions covered by Portfolio Loss Reserve 4 719 3 576 4 719 3 576
Provisions covered by Risk Coverage Reserve 23 390 20 494 23 390 20 494
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
97
32 Other Liabilities
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Due to customers 2 574 1 612 2 574 1 612
Other liabilities 1 266 1 289 1 266 1 289
Total other liabilities 3 840 2 901 3 840 2 901
The Group’s / Company’s sub-item Due to customers include funds received from clients of the Group / Company to be used
for repayment of the loans at a later stage.
33 Accrued Expense
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Other accrued expense 762 819 762 899
Audit services 43 37 43 37
Bonuses of the employees and the Management Board 1 1 1 1
Total accrued expense 806 857 806 937
34 Issued Debt Securities
In October 2021, the Company issued bonds for the total amount of EUR 20,000 thousand as part of its third bond issuance
program of EUR 75,000 thousand. All bonds are listed on the Nasdaq Baltic Bond List.
All amounts in thousands of euro
Group Group Company Company
Currency
Number
of
initially
issued
securities
Par
Value
Date of
issuance
Maturity
Date
Discount
/
Coupon
Rate
31.12.2021.
31.12.2020
31.12.2021.
31.12.2020
LV0000802353 EUR 20 000 1 000 17.10.2017 17.10.2024 1.37% 19 963 19 941 19 963 19 941
LV0000880037 EUR 10 000 1 000 07.03.2018 07.03.2025 1.30% 10 435 10 456 10 435 10 456
LV0000880037 EUR 15 000 1 000 05.06.2019 07.03.2025 1.30% 15 163 15 125 15 163 15 125
LV0000880037 EUR 20 000 1 000 15.04.2020 07.03.2025 1.30% 19 997 20 000 19 997 20 000
LV0000870095 EUR 20 000 1 000 08.10.2021 08.10.2026 0.44% 20 000 - 20 000 -
Total issued debt securities at the end of period ended 31 December 85 558 65 522 85 558 65 522
So called “Green bonds” are financial instruments used to support sustainability projects in Latvia, while providing the
Company with an opportunity to diversify Company’s funding base and support development of the Baltic Bond market.
For details on the recognition and measurement for these liabilities, refer Note 2 (5) item (xix).
Movements in the Company’s issued debt securities, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
At the beginning of period 65 522 45 348 65 522 45 348
Bond issue 20 000 20 000 20 000 20 000
Accrued coupon 873 802 873 802
Coupon pay-out (845) (585) (845) (585)
Discount amortisation (50) (50) (50) (50)
Commission amortisation 58 7 58 7
Total issued debt securities at the end of period ended 31 December 85 558 65 522 85 558 65 522
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
98
35 Share capital
All amounts in thousands of euro
Quantity Carrying amount
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Fully paid share capital
Ordinary shares 204 862 204 862 204 862 204 862
Total fully paid share capital 204 862 204 862 204 862 204 862
The decision about establishment of the Company was made by the Latvian Cabinet decision on 17 December 2013. The
Company was registered in the Commercial Register on 27 December 2013, having share capital of LVL 400,130, which
corresponds to 569,334 euros.
A capital increase was made on 11 September 2014 by investing equity shares of Latvian Guarantee Agency Ltd, the SJSC
Latvian Development Finance Institution ALTUM and the SJSC Rural Development Fund. The amount of share capital after its
increase was 204,862,333 euros. The face value of each share is 1 euro.
All shares of the JSC Development Finance Institution Altum are owned by the Government of Latvia. The Ministry of Finance
was appointed to be the shareholder until 28 February 2015. According to the Development Finance Institution Law that came
to effect on 1 March 2015, as of its effective day, the holder of 40% of the financial institution’s shares is the Ministry of Finance,
the holder of 30% of shares – the Ministry of Economics, and the holder of 30% of shares – the Ministry of Agriculture.
For more information see Note 1 (1).
In accordance with Paragraph 2 of Article 15 of the Development Finance Institution Law, the Group’s / Company’s profit for
the period is transferred to reserves in order to ensure financial stability and sustainable operation of the Group / Company as
well as to mitigate the risks of approved support programmes.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
99
36 Reserves
Analysis of the Group’s reserves movements, in thousands of euro:
Specific
reserves for
support
programmes
Other specific
reserves-difference
recognised in
Group’s
reorganisation
reserve
General
reserve
capital
Revaluation reserve of
financial assets
measured at fair value
through other
comprehensive income
Total
reserves
Reserves as of 1January 2020 15 507 (15 580) 16 638 2 638 19 203
(Decrease) in revaluation reserve of financial assets measured at fair
value through other comprehensive income
- - - (1 425) (1 425)
Distribution of 2019 year profit of the Company - - 8 131 - 8 131
Increase of reserve capital 145 626 - - - 145 626
Reserves as of 31 December 2020 161 133 (15 580) 24 768 1 213 171 534
(Decrease) in revaluation reserve of financial assets measured at fair
value through other comprehensive income
- - - (515) (515)
Distribution of 2020 year profit of the Company - - 5 539 - 5 539
Distribution of Specific Reserves to General reserve capital at
distribution of the profit for year 2020
(6 429) - 6 429 - -
Increase of reserve capital 45 489 - - - 45 489
Reserves as of 31 December 2021 200 193 (15 580) 36 736 698 222 047
Analysis of the Company’s reserves movements, in thousands of euro:
Specific reserves
for support
programmes
Other specific
reserves
General
reserve
capital
Revaluation reserve of
financial assets measured at
fair value through other
comprehensive income
Total
reserves
Reserves as of 1January 2020 15 507 (15 935) 16 991 2 638 19 201
(Decrease) in revaluation reserve of financial assets
measured at fair value through other comprehensive
income
- - - (1 425) (1 425)
Distribution of 2019 year profit of the Company - - 8 131 - 8 131
Increase of reserve capital 145 626 - - - 145 626
Reserves as of 31 December 2020 161 133 (15 935) 25 121 1 213 171 532
(Decrease) in revaluation reserve of financial assets
measured at fair value through other comprehensive
income
- - - (515) (515)
Distribution of 2020 year profit of the Company - - 5 539 - 5 539
Distribution of Specific Reserves to General reserve capital
at distribution of the profit for year 2020
(6 429) - 6 429 - -
Increase of reserve capital 45 489 - - - 45 489
Reserves as of 31 December 2021 200 193 (15 935) 37 089 698 222 045
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
100
36 Reserves (cont’d)
Breakdown of “Specific reserves for support programmes”:
Reserve capital for non-Covid-19 guarantees programmes Reserve capital for mitigating of impact of Covid-19
Reserve
capital
for AIF
“Altum
capital
fund”
Total
Specific
reserves
for support
program-
mes
Housing
Guarantee
Programme
Study and
student
portfolio
guarantees
Guarantees
for
agriculture,
fisheries and
rural
develop-
ment
Guarantee
Programme
for Clients of
State Aid
Accumulation,
Grace Period
and Large
Economic
Operators
Loans to
MidCaps
Guarantees
to
MidCaps *
Wor
-
king
capital
loans
Loan holiday
guarantees
Specific
reserves as of 1
January 2020
15 507 - - - - - - - - 15 507
Increase of
specific reserve
capital
- 626 - - - 20 000 50 000 50 000 25 000 145 626
Specific
reserves as of
31 December
2020
15 507 626 - - - 20 000 50 000 50 000 25 000 161 133
of which: -
Portfolio Loss
Reserve
(Specific
Reserves)
15 507 626 - - - 20 000 29 000 30 000 7 131 102 264
Portfolio Loss
Reserve
(Specific
Reserves) to be
used to cover
credit loss upon
approval of the
2020 annual
report
- (392) - - - - (2 668) (3 184) (185) (6 429)
Reallocation of
reserve capital
- - - 2 500 - - - (2 500) - -
Increase of
specific reserves
2 179 2 141 5 788 2 000 22 565 - 10 816 - - 45 489
Specific
reserves as of
31 December
2021 **
17 686 2 375 5 788 4 500 22 565 20 000 58 148 44 316 24 815 200 193
of which: -
Portfolio Loss
Reserve
(Specific
Reserves)
17 686 2 375 5 788 4 500 13 800 20 000 42 385 44 316 8 850 159 700
Portfolio Loss
Reserve
(Specific
Reserves) to be
used to cover
credit loss upon
approval of the
2021 annual
report
- (1 140) - - - - (1 683) (186) (437) (3 446)
* As at 31 December 2020 Specific Reserves for mitigating of impact of Covid-19 for Guarantees to MidCaps was represented
within Specific Reserves for mitigating of impact of Covid-19 for Loan holiday guarantees.
** Taking into account currently received the funding for the implementation of certain support programmes and to cover
their expected losses, where there is no demand in respective programs as originally envisaged by the financial sector, then
in accordance with Paragraphs 2 and 3 of the Protocol Decision of the Cabinet of Ministers of 6 July 2021 (Protocol No.51 §
135), the Ministry of Finance, the Ministry of Economics and the Ministry of Agriculture are instructed to ensure the reduction of
the Company's reserve capital by EUR 58,565 thousand to be diverted to finance the new Investment Loans with a capital
rebate programme from the following programs: (i) EUR 22,565 thousand from the Large Enterprises Loan Program (Loans to
MidCaps), where on January 5, 2022 “Agreement on Termination of Financing for the Financing of the Crisis Loan Program of
December 22, 2020” was signed, (ii) EUR 16,000 thousand from the Portfolio Guarantee Program (included within Loan holiday
guarantees), where on December 30, 2021 “Amendments No. 2 to the Agreement on Increase of Reserve Capital of March
30, 2020” were signed and (iii) EUR 20,000 thousand from the Guarantee Program for Large Enterprises (Guarantees to
MidCap’s), where on January 3, 2022 Amendments No. 2 “Amendments to the Agreement on the Reserve Capital Crisis
Guarantee Program of August 24, 2020” were signed. On December 30, 2021, the “Agreement on Granting Financing for the
Loan Program with Capital Rebate for Investment Projects to Promote Competitiveness” envisages, among other items, to
transfer EUR 58,565 thousand to Altum's liabilities after the relevant resolution of the Company's shareholders meeting.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
101
36 Reserves (cont’d)
Pursuant to Cabinet Regulation No. 503 of 6 July 2021 “Regulations on Loans with Capital Rebate for Investment Projects to
Promote Competitiveness”, the financing of the Investment loans with capital rebate program is used to cover the expected
losses of Altum and the capital rebate. Thus, the expected reduction of the Specific Reserve capital by reducing the funding
for certain support programs and the transfer of the respective funding in the amount of EUR 58,565 thousand to finance a
new support program is ensured, maintaining the same purpose of the funding - financing for a new support program and
cover of expected losses. By transferring financing from the Specific Reserve capital, the Portfolio Loss Reserve will decrease
by EUR 49,801 thousand with respective increase of Risk Coverage Reserve within liabilities.
Analysis of Portfolio Loss Reserve movements, in thousands of euro:
Portfolio Loss Reserve for non-Covid-19 guarantees
programmes
Portfolio Loss Reserve for mitigating of impact of Covid-
19
Reserve
capital
for AIF
“Altum
capital
fund”
Total
Portfolio
Loss
Reserve
Housing
Guarantee
Programme
Study
and
student
portfolio
guarant
ees
Guarantees
for
agriculture,
fisheries and
rural
develop-
ment
Guarantee
Programme
for Clients of
State Aid
Accumulation,
Grace Period
and Large
Economic
Operators
Loans to
MidCaps
Guarantees
to MidCaps
Working
capital
loans
Loan
holiday
guarantees
Portfolio Loss
Reserve as of 1
January 2020
- - - - - - - - - -
Increase of portfolio
loss reserve
15 507 626 - - - 20 000 29 000 30 000 7 131 102 264
Portfolio Loss
Reserve as of 31
December 2020
15 507 626 - - - 20 000 29 000 30 000 7 131 102 264
of which:
Portfolio Loss Reserve
(Specific Reserves)
to be used to cover
credit loss upon
approval of the 2020
annual report
- (392) - - - - (2 668) (3 184) (185) (6 429)
Increase /
reclassification of
Portfolio Loss Reserve
2 179 2 141 5 788 4 500 13 800 - 16 053 17 500 - 61 961
Reallocation of
funding within
Portfolio Loss Reserve
– funding for
management fee
- - - - - - - - 2 060 2 060
Portfolio Loss Reserve
used to cover credit
loss upon approval
of the 2020 annual
report
- (392) - - - - (2 668) (3 184) (185) (6 429)
Decrease of Portfolio
Loss Reserve
according to the List
of the Partners and
their Commitments
- - - - - - - - (156) (156)
Portfolio Loss
Reserve as of 31
December 2021
17 686 2 375 5 788 4 500 13 800 20 000 42 385 44 316 8 850 159 700
of which:
Portfolio Loss Reserve
(Specific Reserves)
to be used to cover
credit loss upon
approval of the 2021
annual report
- (1 140) - - - - (1 683) (186) (437) (3 446)
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
102
36 Reserves (cont’d)
Subitem Reserve capital for non-Covid-19 programmes includes the following increases in the Specific Reserve capital for non-
Covid-19 programmes in 2021:
An increase of EUR 2,179 thousand for housing guarantees in accordance with the decision of the General Meeting
of Shareholders of the Group of 22 March 2021, adopted on the basis of the Cabinet of Ministers Regulations No.95
of 20 February 2018 " Regulations on state aid for the purchase or construction of a dwelling" and the Cabinet of
Ministers Order No.55 of 22 September 2020.
An increase for study and student portfolio guarantees for the total amount of EUR 2,141 thousand includes an
increase of reserve capital in amount of EUR 1,986 thousand in accordance with the decision of the General Meeting
of Shareholders of the Group of 22 March 2021 and in amount of EUR 155 thousand in accordance with the decision
of the General Meeting of Shareholders of the Group of 15 December 2021, both adopted on the basis of the
Cabinet of Ministers Regulations No.231 of 21 April 2020 " Regulations on study and student lending for studies in Latvia
from the resources of credit institutions, which are guaranteed by the state budget" and the Cabinet of Ministers
Order No.73 of 17 November 2020. Part of that amount in amount of EUR 644 thousand was accounted as part of
support programme funding as of 31 December 2020 (see Note 20).
An increase of EUR 2,000 thousand for guarantees for clients of state aid accumulation, grace period and large
economic operators in accordance with the decision of the General Meeting of Shareholders of the Group of 5 July
2021, adopted on the basis of the Cabinet of Ministers Regulations No.383 of 16 June 2020 "Provisions on guarantees
for entrepreneurs to improve competitiveness " and the Cabinet of Ministers Order No.18 of 18 February 2021.
Increase for guarantees for agriculture, fisheries and rural development in amount of EUR 5,788 thousand in
accordance with the decision of the Extraordinary General Meeting of Shareholders of the Group of 15 December
2021, adopted on the basis of the amendments of 29 June 2021 to the Cabinet of Ministers Regulations No.9 of 8
January 2019 “Agricultural, Fisheries and Rural Development Guarantee Programs Regulations ”and Minutes No.50
of the Meeting of the Cabinet of Ministers of June 29, 2021
Subitem Reserve capital for mitigating of impact of Covid-19 includes the following increases in the Specific Reserve capital
for mitigating of impact of Covid-19 in 2021:
An increase of EUR 22,565 thousand for guarantees to MidCaps in accordance with the decision of the General
Meeting of Shareholders of the Group of 22 March 2021, adopted on the basis of the Cabinet of Ministers Order
No.70 of 10 November 2020 and the Cabinet of Ministers Regulations No.677 of 10 November 2020 "Regulations on
loans and their interest rate subsidies to entrepreneurs to support competitiveness". That amount was accounted as
part of support programme funding as of 31 December 2020 (see Note 20).
An increase for working capital loans for the total amount of EUR 10,816 thousand includes an increase of reserve
capital in amount of EUR 10,000 thousand in accordance with the decision of the General Meeting of Shareholders
of the Group of 5 July 2021, adopted on the basis of the Cabinet of Ministers Regulations No.383 of 16 June 2020
"Regulations on Working Capital Loans to Economic Operators Affected by the Spread of Covid-19" and the Cabinet
of Ministers Order No.18 of 18 February 2021, and in amount of EUR 816 thousand in accordance with the decision of
the General Meeting of Shareholders of the Group of 5 July 2021, adopted on the basis of the Cabinet of Ministers
Regulations No.86 of 4 February 2021 “Regulations for arts, entertainment and leisure businesses affected by the
Spread of Covid-19".
The funding included in the Specific Reserves will be used to cover the expected credit losses of the programmes at full extent
as well as management fees for AIF Altum Capital Fund and as such are disclosed separately as Portfolio Loss Reserve within
respective reserve capital.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
103
37 Off-balance sheet items and contingent liabilities
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Contingent liabilities:
Outstanding guarantees 414 978 359 605 414 978 359 605
Financial commitments:
Loan commitments 25 572 39 348 25 572 39 348
Grant commitments 11 089 6 798 11 089 6 798
Commitments to investments in subsidiaries - - - 10 415
Commitments to AIF “Altum capital fund” 33 450 48 772 33 450 48 772
Commitments to investments in associates 54 426 44 935 54 426 44 935
Commitments to other investments 36 739 38 220 36 739 38 220
Total contingent liabilities and financial commitments 576 254 537 678 576 254 548 093
Group’s / Company’s impairment allowances for loan commitments, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Unutilised loan facilities 25 572 39 348 25 572 39 348
Impairment allowances (790) (1 014) (790) (1 014)
Total unutilized loan facilities, net 24 782 38 334 24 782 38 334
Group’s / Company’s impairment allowances for grant commitments, in thousands of euro:
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Grant commitments 11 089 6 798 11 089 6 798
Impairment allowances (73) (74) (73) (74)
Total grant commitments, net 11 016 6 724 11 016 6 724
Breakdown of the Group’s off-balance sheet assets and contingent liabilities by remaining contractual maturities as at 31
December 2021, in thousands of euro:
Up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Contingent liabilities
Outstanding guarantees 262 115 * - - 4 18 488 134 371 414 978
Financial commitments
Loan commitments 25 572 - - - - - 25 572
Grant commitments 11 089 - - - - - 11 089
Commitments to AIF “Altum capital fund” 164 11 738 19 961 261 1 002 324 33 450
Commitments to investments in associates 415 1 787 2 796 8 979 35 006 5 443 54 426
Commitments to other investments 363 485 848 4 171 25 145 5 727 36 739
Total financial commitments 37 603 14 010 23 605 13 411 61 153 11 494 161 276
Total contingent liabilities and financial
commitments
299 718 14 010 23 605 13 415 79 641 145 865 576 254
* Outstanding financial guarantees are presented “Up to 1 month” as these guarantees can be claimed on demand and the Group
/ Company has to make a decision on payment of guarantee claim within one month.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
104
37 Off-balance sheet items and contingent liabilities
(cont’d)
Breakdown of the Group’s off-balance sheet assets and contingent liabilities by remaining contractual maturities as at 31
December 2020, in thousands of euro:
Up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Contingent liabilities
Outstanding guarantees 240 592 * - - 2 119 011 - 359 605
Financial commitments
Loan commitments 39 348 - - - - - 39 348
Grant commitments 6 798 - - - - - 6 798
Commitments to AIF “Altum capital fund” - 11 996 12 157 21 964 2 040 615 48 772
Commitments to investments in associates - 1 146 1 528 4 965 27 411 9 885 44 935
Commitments to other investments - 635 847 7 753 23 201 5 784 38 220
Total financial commitments 46 146 13 777 14 532 34 682 52 652 16 284 178 073
Total contingent liabilities and financial
commitments
286 738 13 777 14 532 34 684 171 663 16 284 537 678
* Outstanding financial guarantees are presented “Up to 1 month” as these guarantees can be claimed on demand and the Group
/ Company has to make a decision on payment of guarantee claim within one month.
Breakdown of the Company’s off-balance sheet assets and contingent liabilities by remaining contractual maturities as at
31 December 2021, in thousands of euro:
Up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Contingent liabilities
Outstanding guarantees 262 115 * - - 4 18 488 134 371 414 978
Financial commitments
Loan commitments 25 572 - - - - - 25 572
Grant commitments 11 089 - - - - - 11 089
Commitments to investments in subsidiaries - - - - - - -
Commitments to AIF “Altum capital fund” 164 11 738 19 961 261 1 002 324 33 450
Commitments to investments in associates 415 1 787 2 796 8 979 35 006 5 443 54 426
Commitments to other investments 363 485 848 4 171 25 145 5 727 36 739
Total financial commitments 37 603 14 010 23 605 13 411 61 153 11 494 161 276
Total contingent liabilities and financial
commitments
299 718 14 010 23 605 13 415 79 641 145 865 576 254
* Outstanding financial guarantees are presented “Up to 1 month” as these guarantees can be claimed on demand and the Group
/ Company has to make a decision on payment of guarantee claim within one month.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
105
37 Off-balance sheet items and contingent liabilities
(cont’d)
Breakdown of the Company’s off-balance sheet assets and contingent liabilities by remaining contractual maturities as at 31
December 2020, in thousands of euro:
Up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 5 years
Over 5 years
and w/o
maturity
Total
Contingent liabilities
Outstanding guarantees 240 592 * - - 2 119 011 - 359 605
Financial commitments
Loan commitments 39 348 - - - - - 39 348
Grant commitments 6 798 - - - - - 6 798
Commitments to investments in subsidiaries 417 417 833 2 500 5 207 1 041 10 415
Commitments to AIF “Altum capital fund” - 11 996 12 157 21 964 2 040 615 48 772
Commitments to investments in associates - 1 146 1 528 4 965 27 411 9 885 44 935
Commitments to other investments - 635 847 7 753 23 201 5 784 38 220
Total financial commitments 46 563 14 194 15 365 37 182 57 859 17 325 188 488
Total contingent liabilities and financial
commitments
287 155 14 194 15 365 37 184 176 870 17 325 548 093
* Outstanding financial guarantees are presented “Up to 1 month” as these guarantees can be claimed on demand and the Group
/ Company has to make a decision on payment of guarantee claim within one month.
Subitem Commitments to AIF “Altum capital fund” are contingent liabilities based on a limited partnership agreement
between the Company as a general partner and the members of the AIF “Altum capital fund” as limited partners which put
an obligation on the Group / Company to allocate financial resources to the fund.
Subitem Commitments to venture capital funds are contingent liabilities, which are based on agreements between the Group
/ Company and the venture capital fund which put an obligation on the Group / Company to allocate financial resources to
the fund. Additional information on classification of venture capital funds is available in Note 1.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
106
37 Off-balance sheet items and contingent liabilities
(cont’d)
Committed funding for investments in subsidiaries, associates and other investments, in thousands of euro:
Committed funding Uncalled committed funding
Contract period 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Investments in Subsidiaries
KS Overkill Ventures Fund I 09.05.2026 3 200 3 200 769 1 387
KS Buildit Latvia Pre-Seed Fund 20.06.2026 3 200 3 200 761 1 340
KS Commercialization Reactor Pre-seed Fund 24.07.2026 3 200 3 200 1 076 1 648
KS INEC 1 29.11.2028 13 650 5 250 8 897 3 034
KS INEC 2 29.11.2028 5 850 4 500 3 957 3 006
Investments in Associates
KS Overkill Ventures Fund II 09.08.2026 1 800 1 800 1 099 1 553
KS Buildit Latvia Seed Fund 30.06.2026 1 800 1 800 1 270 1 515
KS Commercialization Reactor Seed Fund 22.08.2026 1 800 1 800 1 478 1 694
KS ZGI-4 14.08.2028 19 500 19 500 13 642 15 002
KS Baltcap Latvia Venture Capital Fund 22.01.2021 20 000 20 000 3 841 3 841
KS Imprimatur Capital Technology Venture Fund 11.06.2021 4 966 4 966 168 248
KS Imprimatur Capital Seed Fund 11.06.2021 10 000 10 000 492 561
KS ZGI-3 31.12.2021 11 800 11 800 853 931
KS FlyCap investment Fund 31.12.2021 15 000 15 000 939 1 090
FlyCap Mezzanine Fund II 28.08.2029 12 790 11 053 9 581 10 486
KS Expansion Capital fund 31.12.2021 14 998 15 000 266 267
AIF “Altum capital fund” 02.09.2027 48 910 48 910 33 450 48 772
Baltic Innovation Fund I 01.01.2029 26 000 26 000 5 687 7 747
Other investments
Baltic Innovation Fund II 12.07.2036 26 000 26 500 23 517 24 917
Three Seas Initiatives Investment Fund 27.02.2035 20 000 20 000 12 872 13 304
Total funding 264 464 253 479 124 615 142 343
38 Revaluation reserve of financial assets measured
at fair value through other comprehensive income
All amounts in thousands of euro
Group Group Company Company
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
At the beginning of period 1 213 2 639 1 213 2 639
(Loss) from changes in fair value (514) (1 413) (514) (1 413)
Impairment loss* (1) (13) (1) (13)
Other comprehensive income (Note 36) (515) (1 426) (515) (1 426)
Revaluation reserve of financial assets measured at fair value through other
comprehensive income at the end of period ended December 31
698 1 213 698 1 213
* For more information see Note 2 (5) item (xiv).
39 Related party transactions
Related parties include members of the Supervisory Council and the Management Board of the Group / Company, their close
family members, as well as companies under their control.
In accordance with International Accounting Standard (IAS) 24 “Related Party Disclosures”, the key management personnel,
directly or indirectly authorised and responsible for planning, management and control of the Group’s / Company’s
operations are treated as related parties to the Group / Company. The powers granted to the heads of the structural units of
the Group / Company do not entitle them to manage the operations of the Group / Company and decide on material
transactions that could affect the Group’s / Company’s operations and/or result in legal consequences.
The Company has entered into a number of transactions with other public authorities. The most significant were obtaining
financing from the Investment and Development Agency of Latvia, Ministry of Finance, Ministry of Economics, Rural Support
Service and Central Finance and Contracting Agency, which co-finance the development programmes of the Company.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
107
39 Related party transactions (cont’d)
The Group’s balances from transactions with related parties, including off-balance sheet financial liabilities, in thousands of
euro:
People with significant
control (PSC)
Transactions with
shareholders
Associates Other companies owned by
the Group’s shareholders
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Investments in venture
capital funds
- - - - 50 077 47 988 - -
Investments in AIF “Altum
capital fund”
- - - - 14 871 -
Due to general governments - - - - - - 3 321 4 047
Support programme funding - - 222 774 192 243 - - 51 559 35 317
Off
-
balance sheet financial
liabilities for venture capital
funds
- - - - 54 426 44 935 - -
Off
-
balance sheet financial
liabilities for AIF “Altum
capital fund”
- - - - 33 450 48 772 - -
The Company’s balances from transactions with related parties, including off-balance sheet financial liabilities, in thousands
of euro:
Transactions with
shareholders
Associates Other companies owned by
the Group’s shareholders
Investments in subsidiaries
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Investments in venture
capital funds
- - 50 077 47 988 - - - -
Investments in AIF “Altum
capital fund”
- - 14 871 - - - - -
Investments in subsidiaries - - - - - - - 4 879
Due to general governments - - - - 3 321 4 047 - -
Support programme funding 222 774 192 243 - - 51 559 35 317 - -
Off
-
balance sheet financial
liabilities for venture capital
funds
- - 54 426 44 935 - - - -
Off
-
balance sheet financial
liabilities for AIF “Altum
capital fund”
- - 33 450 48 772 - - - -
Off
-
balance sheet financial
liabilities for investments in
subsidiaries
- - - - - - - 10 415
The Group’s / Company’s transactions with related parties, in thousands of euro:
Received State aid funding Issued State aid funding or funding
paid back
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
01.01.2021.
-
31.12.2021.
01.01.2020.
-
31.12.2020.
Transactions with shareholders
Ministry of Finance of the Republic of Latvia 35 931 42 077 (17 378) 423
Ministry of Agriculture of the Republic of Latvia 7 000 - - -
Ministry of Economics of the Republic of Latvia 33 744 173 526 (2 435) -
Associates
Venture capital funds 20 968 - (14 613) -
Other companies owned by the Group’s shareholders
Central Finance and Contracting Agency of the Republic of Latvia 51 559 19 327 - -
Ministry of Education and Science of the Republic of Latvia 2 003 1 375 - -
Ministry of Culture of the Republic of Latvia 3 815 - (2 185) -
Ministry of Wealth Fair of the Republic of Latvia 2 454 1 399 - -
The remuneration of the members of the Supervisory Council, Audit Committee and the Management Board of the Company
in 2021 amounted to EUR 713 thousand (2020: EUR 629 thousand), incl. social insurance contributions.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
108
40 Fair values of assets and liabilities
The fair values of the Group's financial assets and financial liabilities and their differences to their carrying amount are
presented below, in thousands of euro:
The fair values of the Company's financial assets and financial liabilities and their differences to their carrying amount are
presented below, in thousands of euro:
Carrying Amount Fair Value
31.12.2021. 31.12.2020. 31.12.2021. 31.12.2020.
Assets
Due from credit institutions and the Treasury 455 006 359 949 455 006 359 949
Financial assets at fair value through other comprehensive income
-
investment
securities
14 051 36 958 14 051 36 958
Financial assets at amortised cost:
Investment securities 37 441 90 1 133
Individuals 330 530 313 268 321 991 304 292
Companies 25 475 30 370 24 897 22 023
Loans 305 055 282 898 297 094 282 270
Grants 45 397 31 107 45 397 31 107
Investments in associates (investments in Baltic Innovation Fund) 13 222 15 019 13 222 15 019
Investments in subsidiaries - 4 879 - 4 879
Investment properties 46 164 36 758 46 164 36 758
Other assets 3 214 3 608 3 214 3 608
Total assets 907 621 801 987 899 135 793 703
Liabilities
Due to credit institutions 53 416 65 855 53 416 65 855
Due to general governments 121 348 103 520 121 348 101 838
Financial liabilities at amortised cost - Issued debt securities 85 558 65 522 85 558 65 522
Support programme funding 230 287 191 963 230 287 191 963
Total liabilities 490 609 426 860 490 609 425 178
Carrying Amount Fair Value
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Assets
Due from credit institutions and the Treasury 455 006 359 949 455 006 359 949
Financial assets at fair value through profit or loss - 5 425 - 5 425
Financial assets at fair value through other comprehensive income
-
investment
securities
14 051 36 958 14 051 36 958
Financial assets at amortised cost:
Investment securities 37 441 91 1 142
Individuals 330 530 313 268 321 991 304 292
Companies 25 475 30 370 24 897 22 023
Loans 305 055 282 898 297 094 282 270
Grants 45 397 31 107 45 397 31 107
Investments in associates (investments in Baltic Innovation Fund) 13 222 15 019 13 222 15 019
Investment properties 46 164 36 758 46 164 36 758
Other assets 3 214 3 643 3 214 3 643
Total assets 907 621 802 568 899 136 794 293
Liabilities
Due to credit institutions 53 416 65 855 53 416 65 855
Due to general governments 121 348 103 520 121 348 101 838
Financial liabilities at amortised cost - Issued debt securities 85 558 65 522 85 558 65 522
Support programme funding 230 287 191 963 230 287 191 963
Total liabilities 490 609 426 860 490 609 425 178
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
109
40 Fair values of assets and liabilities (cont’d)
The hierarchy of the Group’s financial assets and liabilities measured and disclosed at fair value, in thousands of euro:
Level 1 Level 2 Level 3 Total
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Assets measured at fair value
Financial assets at fair value through
profit or loss
- - - - - 5 425 - 5 425
Financial assets at fair value through
other comprehensive income -
investment securities
3 516 24 035 10 535 12 923 - - 14 051 36 958
Investments in associates (investments
in BIF)
- - - - 13 222 15 019 13 222 15 019
Investment properties - - - - 46 164 36 758 46 164 36 758
Assets with fair values disclosed
Due from credit institutions and the
Treasury
- - 455 006 316 631 - 43 318 455 006 359 949
Financial assets at amortised cost:
Investment securities - - 91 1 142 - - 91 1 142
Loans - - - - 321 991 304 292 321 991 304 292
Grants - - - - 45 397 31 107 45 397 31 107
Other assets - - - - 3 214 3 643 3 214 3 643
Total assets 3 516 24 035 465 632 330 696 429 988 439 562 899 136 794 293
Liabilities measured at fair value
Support programme funding - - - - 230 287 191 963 230 287 191 963
Liabilities with fair value disclosed
Due to credit institutions - - - - 53 416 65 855 53 416 65 855
Due to general governments - - - - 121 348 101 838 121 348 101 838
Financial liabilities at amortised cost
-
Issued debt securities
- - - - 85 558 65 522 85 558 65 522
Total liabilities - - - - 490 609 425 178 490 609 425 178
The hierarchy of the Company’s financial assets and liabilities measured and disclosed at fair value, in thousands of euro:
Level 1 Level 2 Level 3 Total
31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020 31.12.2021. 31.12.2020
Assets measured at fair value
Financial assets at fair value through
other comprehensive income -
investment securities
3 516 24 035 10 535 12 923 - - 14 051 36 958
Investments in subsidiaries - - - - - 4 879 - 4 879
Investments in venture capital funds
–
associates (investments in BIF)
- - - - 13 222 15 019 13 222 15 019
Investment properties - - - - 46 164 36 758 46 164 36 758
Assets with fair values disclosed
Due from credit institutions and the
Treasury
- - 455 006 316 631 - 43 318 455 006 359 949
Financial assets at amortised cost:
Investment securities - - 90 1 133 - - 90 1 133
Loans - - - - 321 991 304 292 321 991 304 292
Grants - - - - 45 397 31 107 45 397 31 107
Other assets - - - - 3 214 3 608 3 214 3 608
Total assets 3 516 24 035 465 631 330 687 429 988 438 981 899 135 793 703
Liabilities measured at fair value
Support programme funding - - - - 230 287 191 963 230 287 191 963
Liabilities with fair value disclosed
Due to credit institutions - - - - 53 416 65 855 53 416 65 855
Due to general governments - - - - 121 348 101 838 121 348 101 838
Financial liabilities at amortised cost
-
Issued debt securities
- - - - 85 558 65 522 85 558 65 522
Total liabilities - - - - 490 609 425 178 490 609 425 178
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
110
40 Fair values of assets and liabilities (cont’d)
Assets
Where possible, the fair value of securities is estimated on the basis of quoted market prices. For determining the fair value of
other securities, the Management has applied the discounted cash flow method where the cash flow forecasts are based on
assumptions and up-to-date market information available at the time of measurement. The fair value of loans with interest
payable at fixed rates by specified dates was determined by applying the discounted cash flow method, whilst in regard to
the fair value of loans with their basic interest rate tied to variable market rates, the Group / Company have assumed that the
carrying amount of such loans corresponds to their fair value.
Liabilities
The fair value of financial liabilities stated at amortised cost, for example, the fair value of balances due to credit institutions,
is estimated using the discounted cash flow method and the interest rates applied to similar products at the end of the year.
The fair value of financial liabilities (for example, balances due to credit institutions) repayable on demand or subject to a
variable interest rate, approximately corresponds to their carrying amount.
Fair value hierarchy of financial assets and liabilities
The Group / Company classify the fair value measurements based on the fair value hierarchy, reflecting the significance of
the input data. The fair value hierarchy of the Group / Company has 3 levels:
Level 1 includes listed financial instruments for which an active market exists, if in determining their fair value the
Group / Company use unadjusted quoted market prices, obtained from a stock-exchange or reliable information
systems;
Level 2 includes balances due from other credit institutions and the Treasury as well as financial instruments traded
over the counter (OTC) and financial instruments having no active market or a declining active market whose fair
value measurement are based to a significant extent on observable market inputs (e.g., rates applied to similar
instruments, benchmark financial instruments, credit risk insurance transactions, etc.);
Level 3 includes financial instruments whose fair value measurements rely on observable market inputs requiring
significant adjustment and have to be supported by unobservable market inputs, and financial instruments whose
fair value measurements are based to a significant extent on data that cannot be observed on the active market
and assumptions and estimates of the Group / Company that enable a credible measurement of the financial
instrument’s value.
Debt securities
Debt securities are measured applying quoted prices or valuation techniques using observable or unobservable market inputs
or combination of the two. The majority of investments in debt securities recognised at fair value are investments in Latvian
treasury bills with a quoted price, but not traded on the active market. The Management has estimated that it is reasonable
to presume the fair value of these securities to be equal to their quoted price.
Derivatives
The derivatives, measured using valuation techniques which rely on observable market inputs, are mainly currency swaps and
forwards. The most frequently applied valuation techniques include discounted cash flow calculations, where inputs include
foreign exchange spot and forward rates as well as interest rate curves.
Investments in venture capital funds
The Group / Company have a number of investments in venture capital funds. The Group’s and Company’s investments in
venture capital funds are classified as Associates or Investments in subsidiaries depending on existence of significant influence
or control.
Investments in venture capital funds, except for investment in Baltic Innovation Funds, are measured using the equity method
both at the Group and the Company level. Investments in Baltic Innovation Funds are measured at fair value through profit or
loss statement.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
111
40 Fair values of assets and liabilities (cont’d)
Investment properties
The fair value of the Group’s / Company’s investment property is determined based on reports of independent appraisers,
who hold a recognised and relevant professional qualification, and who have had recent experience of the valuation of
property in similar locations and of similar category.
Investments in property are measured at fair value applying one or complex of the following three methods: (a) ,market
approach, (b) income approach and (c) cost approach.
The appropriate valuation method is selected depending on the nature of property and acquisition purpose. Investment
property represents agricultural land, which average selling price per hectare is 2,5 thousand euro.
Assets held for sale
Non-current assets or disposal groups classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount is recovered
through a sale transaction rather than through continuing use. This condition is regarded to be met only when the sale is highly
probable and the asset or disposal group is available for immediate sale in its present condition. Management must be
committed to the sale, and the sale transaction must be classified as a completed sale within one year from the date of
classification. The fair value of assets held for sale is based on selling price of underling investment properties.
41 Segment Information
The Group’s management considers that the Group’s operations are performed in 7 operational segments:
Loan service
Guarantee service,
Venture capital fund service,
Grant service,
Land Fund service,
Management of AIF “Altum capital fund”
Other services.
Other services include transactions with repossessed collaterals taken over in the debt collection process and development
of new support programmes as well as transactions, which cannot be attributed to support programmes.
Segment information is prepared in a manner consistent with the internal management information provided to the chief
operating decision maker. The chief operating decision maker is the person or group that allocates resources to and assesses
the performance of the operating segments of an entity. The Management board of the Company is the chief operating
decision maker. The Group doesn’t provide detailed information on the type of transaction since all the transactions are
external.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
112
41 Segment Information (cont’d)
Analysis of the operating segments of the Group for the period from 1 January 2021 till 31 December 2021, in thousands of
euro:
Loan
service
Guarantee
service
Venture
capital
fund
service
Grant
service
Land Fund
service
Management
of AIF “Altum
capital fund”
Other
services
Total
Interest income 13 439 3 125 26 - 2 256 - 11 18 857
of which, interest on loans and
guarantees (Note 4)
13 269 2 939 - - 2 256 - 11 18 475
Interest expense (1 446) (30) - - (664) - - (2 140)
Net interest income 11 993 3 095 26 - 1 592 - 11 16 717
Income for implementation of state
aid programmes
216 1 102 2 006 1 056 - - 66 4 446
Expenses to be compensated for
implementation of state aid
programmes
(215) (476) (2 016) (1 056) - - (66) (3 829)
Net income for implementation of
state aid programmes
1 626 (10) - - - - 617
Gains
from debt securities and
foreign exchange translation
23 24 4 - - - - 51
Share of (losses) of investment in
associates
- - (1 382) - - - - (1 382)
Share of gain of investment in
associates at fair value through profit
or loss
- - 2 817 - - - - 2 817
Gains less losses from liabilities at fair
value through profit or loss
- - 1 321 - - - - 1 321
Other income - - 158 21 2 389 620 33 3 221
Other expense (273) (198) (9) (32) (368) (620) (9) (1 509)
Operating income / (loss) before
operating expenses
11 744 3 547 2 925 (11) 3 613 - 35 21 853
Staff costs (3 408) (951) (214) (778) (242) - (202) (5 795)
Administrative expense (992) (337) (96) (337) (84) - (47) (1 893)
Amortisation of intangible assets and
depreciation of property, plant and
equipment
(447) (198) (45) (174) (36) - (35) (935)
(Impairment) gain, net 983 299 - (155) 14 - (542) 599
Profit or (loss) from assets held for
sale revaluation
- - - - - - - -
Total segment profit/(loss) 7 880 2 360 2 570 (1 455) 3 265 - (791) 13 829
Financial assets at fair value through
profit or loss
- - 51 727 - - - - 51 727
Other investments - - 13 222 - - - - 13 222
Investments in associates - - 8 936 - - - - 8 936
Additions of property and
equipment, intangible assets and
investment property
161 61 14 75 2 179 - 12 2 502
Total segment assets 465 460 157 082 160 811 63 101 87 226 456 42 068 976 204
Total segment liabilities 235 612 94 115 63 142 62 819 75 576 - 4 204 535 468
Assets under management (AUM) - - - - - 30 772 - 30 772
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Notes to the Financial statements
113
41 Segment Information (cont’d)
Analysis of the operating segments of the Group for the period from 1 January 2020 till 31 December 2020, in thousands of
euro:
Loan
service
Guarantee
service
Venture
capital
fund
service
Grant
service
Land Fund
service
Managem
ent of AIF
“Altum
capital
fund”
Other
services
Total
Interest income 11 881 2 975 42 - 1 536 - 8 16 442
of which, interest on loans and
guarantees (Note 4)
11 169 2 095 - - 1 505 - 7 14 776
Interest expense (1 288) (35) - - (547) - - (1 870)
Net interest income 10 593 2 940 42 - 989 - 8 14 572
Income for implementation of state aid
programmes
478 742 4 063 1 173 - - 70 6 526
Expenses to be compensated for
implementation of state aid
programmes
(119) (452) (4 120) (1 173) - - (86) (5 950)
Net income for implementation of state
aid programmes
359 290 (57) - - - (16) 576
Gains from debt securities and foreign
exchange translation
(24) (28) (1) - (3) - - (56)
Share of (losses) of investment in
associates
- - (2 094) - - - - (2 094)
Share of gain of investment in
associates at fair value through profit or
loss
- - 288 - - - - 288
Gains less losses from liabilities at fair
value through profit or loss
- - 1 908 - - - - 1 908
Other income - - 566 7 1 811 282 387 3 053
Other expense (266) (42) (4) (33) (436) (247) (37) (1 065)
Operating income / (loss) before
operating expenses
10 662 3 160 648 (26) 2 361 35 342 17 182
Staff costs (3 417) (694) (71) (595) (270) - (369) (5 416)
Administrative expense (988) (282) (39) (370) (77) (4) (71) (1 831)
Amortisation of intangible assets and
depreciation of property, plant and
equipment
(452) (179) (32) (179) (38) - (36) (916)
(Impairment) gain, net (2 238) (1 521) 8 (228) 219 - 280 (3 480)
Profit or (loss) from assets held for sale
revaluation
- - - - - - - -
Total segment profit/(loss) 3 567 484 514 (1 398) 2 195 31 146 5 539
Financial
assets at fair value through
profit or loss
- - 5 425 - - - - 5 425
Other investments - - 7 503 - - - - 7 503
Investments in associates - - 47 988 - - - - 47 988
Additions of property and equipment,
intangible assets and investment
property
582 167 33 275 11 660 - 41 12 758
Total segment assets 425 054 156 837 126 265 50 485 68 590 - 23 473 850 704
Total segment liabilities 251 157 76 321 36 525 47 715 55 645 - 747 468 110
42 Events after the reporting date
The ongoing war in Ukraine and the related sanctions targeted against the Russian Federation and to a lesser extent to Belarus
may have impact on the Group / Company as well as the potential social and economic impact in Latvia and the region.
This may result in assumptions and estimates requiring revisions which may lead to material adjustments to the carrying value
of assets and liabilities within the next financial year. The Group / Company does not issues loans directly to businesses in
Ukraine, the Russian Federation and Belarus. The Group / Company expects that there might be impact on provisions for
expected credit losses for credit export guarantees, where Altum customers’ counterparties are residents of Ukraine, the
Russian Federation and Belarus. The exposure of such export credit guarantees to Ukraine, the Russian Federation and Belarus
as at 31 December 2021 was accordingly EUR 399 thousand, EUR 763 thousand and EUR 425 thousand. The Management has
estimated that expected credit losses from claims on export credit guarantees issued as at 31 December 2021 could amount
to EUR 1,587 thousand. In particular management expects the assumptions and estimates used in determining provisions for
expected credit losses for loan and guarantee portfolios as well as carrying value of investments in associated companies
may be affected. At this stage the management is not able to reliably estimate the indirect impact as events are unfolding
day-by-day. However, the Group / Company will assess the expected credit losses in April 2022, taking into account the most
up-to-date macroeconomic forecasts. Nevertheless, at the date of these financial statements the Group / Company
continues to meet its obligations as they fall due and therefore continues to apply the going concern basis of preparation.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
114
Independent Auditor’s Report – page 1
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
115
Independent Auditor’s Report – page 2
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
116
Independent Auditor’s Report – page 3
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
117
Independent Auditor’s Report – page 4
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
118
Independent Auditor’s Report – page 5
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
119
OTHER NOTES TO THE ANNUAL REPORT
Key financial and performance indicators 121
Definitions of indicators 122 - 123
Corporate Governance Report 2021 124 – 145
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
120
OTHER NOTES TO THE ANNUAL REPORT
KEY FINANCIAL AND PERFORMANCE INDICATORS
Based on data from audited financial statements for the respective years
2021 2020 2019 2018 2017
(corrected) *
2016
(corrected) *
Key financial data
Net interest income (EUR ’000) 16 717 14 572 11 569 11 302 ** 11 602 11 024
Operating profit (EUR ’000) 13 829 5 539 8 131 4 092 8 709 2 170
Profit for the period (EUR ’000) 13 829 5 539 8 131 4 092 8 709 * 2 170
Cos to income ratio (CIR) 39.46% 47.51% 52.58% 74.84% *** 50.30% * 88.40%
Employees 226 211 203 222 230 242
Total assets (EUR ’000) 976 204 850 704 560 061 495 939 453 668 * 443 400 *
Financial debt (EUR ’000) 360 909 342 490 217 943 177 249 146 157 141 854
Tangible common equity (TCE) / Total tangible managed
assets (TMA) ****
33.82% 33.56% 29.40% 31.70% 35.10% * 36.50%
Equity and reserves (EUR ’000) 440 736 382 594 232 738 221 590 222 848 * 210 406 *
Total risk coverage: (EUR ’000) 285 954 180 205 87 456 77 815 67 593 * 66 508 *
Risk coverage reserve 159 196 112 567 99 778 85 276 62 651 63 636 *
Risk coverage reserve used for provisions (29 496) (28 197) (27 829) (19 268) (4 753) (4 323)
Portfolio loss reserve (specific reserve capital) 159 700 102 264 15 507 11 807 9 695 7 195
Portfolio loss reserve used to
compensate provisions upon
approval of the annual report
(3 446) (6 429) - - - -
Liquidity ratio for 180 days ***** 518% 464% 582% 227% 482% * 449%
Net Cash flows from operating activities (EUR ’000) 49 555 21 966 39 813 7 997 (10 146) 34 518
Net Cash flows from financing activities (EUR ’000) 43 768 165 800 18 700 12 013 22 299 5 560
Net Cash flow from investing activities (EUR ’000) 4 553 (4 016) (11 230) 8 307 3 891 759
Support instruments gross value (EUR ’000), of which 979 130 872 302 667 649 553 628 465 724
Financial instruments gross value (EUR ’000) ***
Loans (excluding sales and leaseback transactions) 315 674 302 481 225 144 210 208 207 065 217 429
Guarantees 414 978 359 605 284 232 236 895 182 376 147 175
Venture capital funds 85 973 73 165 68 331 59 698 62 299 64 785
Land Fund, of which: 79 163 68 258 39 634 21 717 11 328 4 635
- sales and leaseback transactions 32 999 31 500 15 268 6 923 520 -
- investment properties 46 164 36 758 24 366 14 794 10 808 4 635
Total 895 788 803 509 617 341 528 518 463 068 434 024
Number of transactions 30 978 26 578 22 437 18 603 14 655 11 561
Volumes issued (EUR ’000) (by financial instrument) ******
Loans (excluding sales and leaseback transactions) 100 966 138 238 64 320 59 608 51 349 59 465
Guarantees 126 997 137 425 98 240 88 765 68 615 56 109
Venture capital funds 29 158 14 014 9 022 4 149 2 638 21 356
Land Fund, of which 10 595 28 191 16 384 10 823 6 359 3 704
- sales and leaseback transactions 3 254 16 796 7 239 6 835 520 -
- investment properties 7 341 11 395 9 145 3 988 5 839 3 704
Total 267 716 317 868 187 966 163 345 128 961 140 634
Number of transactions 6 579 6 147 5 559 5 590 4 839 4 537
Total contribution to the economy, including the contribution
of the final recipients (EUR ‘000)
791 646 696 306 531 661 460 045 370 560 359 706
Leverage for raised private funding 177% 114% 142% 162% 185% 162%
Volume of support programmes funding per employee (EUR
’000)
3 964 3 808 3 041 2 381 2 013 1 793
Long-term rating assigned by Moody’s Investors Service Baa1 Baa1 Baa1 Baa1 Baa1 -
* Due to change of accounting policy on investments in venture capital funds and adoption of IFRS 9 requirements that effects the accounting of public funding risk coverage the comparatives for
2017 and 2016 have been restated.
** Due to reclassification of fees and commission related to lending activities following the industry practise, excludes fees and commission not related to lending activities, the comparatives for 2018
have been reclassified with subsequent ratio recalculation.
*** Due to reclassification of staff and administrative costs to be compensated as well as respective income on compensation, the comparatives for 2018 have been reclassified with subsequent ratio
recalculation.
**** TMA includes off-balance sheet item outstanding guarantees.
***** Liquidity ratio calculation takes into account the previous experience and management estimate of expected amount and timing of guarantees claims
****** Taking into account the significance of the volume, the Land Fund portfolio, which consists of sales and leaseback transactions and investment properties, is also presented in the outstanding
volumes and in volumes issued in the period. Since according to the accounting principles and IFRS the sales and leaseback transactions are accounted for under the loans, the volume of loans
presented in this table has been reduced for the volume of the sales and leaseback transactions as it is recorded under the Land Fund portfolio.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
121
Definitions of ratios
Net income from interest
“Net income from interest, fees and commission” is equal to the item “Net interest income” in the Statement
of Comprehensive Income. Until 2018 this ratio included the following items of the Statement of
Comprehensive Income: “Net interest income” and “Net income from fees and commissions”. In 2019
following the industry practise Fee and commission income from lending activities is reclassified to Interest
income from “Net income from fees and commissions”. Subsequently the fee and commission income not
related to lending activities is reclassified within Other income and as such is not included in this ratio. The item
“Net income from fees and commissions” is not applicable in The Statement of Comprehensive Income
anymore. The comparatives have been reclassified accordingly. ALTUM uses this indicator as the key financial
metric for profitability by evaluating ALTUM Group’s net income amount generated by the portfolio of financial
instruments and recognised in the Statement of Comprehensive income. ALTUM management measures and
monitors the actual performance of this indicator on a quarterly basis compared to the approved level in
ALTUM Group’s budget.
Operating profit
“Operating profit” is calculated by deducting “Operating expenses” from “Operating income before
operating expenses” included in the Statement of Comprehensive Income. “Operating expenses” is
calculated as the sum of “Staff costs”, “Administrative expense”, “Amortisation of intangible assets and
depreciation of property, plant and equipment” and “Impairment gain / (loss), net” included in the Statement
of Comprehensive Income.
Cost to income ratio (CIR)
“Cost to income ratio” (CIR) is calculated by dividing the amount of “Staff costs”, “Administrative expense”,
“Amortisation of intangible assets and depreciation of property, plant and equipment” by “Operating income
before operating expenses” included in the Statement of Comprehensive Income. ALTUM uses CIR to evaluate
the operational efficiency. This is one of the measures of operational efficiency which ALTUM management
assesses on a quarterly basis in the management reports to evaluate the outputs from different operational
activities and efficiency improving measures.
Financial debt
“Financial debt” is calculated as the sum of “Due to credit institutions”, “Due to general government entities”,
“Financial liabilities at amortised cost – issued debt securities” and “Support programme funding” included in
the Statement of Financial Position less difference between “Risk Coverage Reserve” and “Risk Coverage
Reserve Used for Provisions”.
“Risk Coverage Reserve” is disclosed in the Note on Support Programme Funding to the Financial statements
of ALTUM Group. “Risk Coverage Reserve Used for Provisions” is the amount of “Risk Coverage Reserve”
allocated to and used for provisioning for impairment loss on loan portfolio and guarantees which in its turn is
disclosed in the Note on Support Programme Funding to the Financial statements of ALTUM Group.
Tangible common equity
(TCE) / Tangible managed
assets (TMA)
“Tangible Common Equity” (TCE) is calculated by subtracting the revaluation reserve of available for sale
investments from total equity.
The amount of “Total managed assets” (TMA) is calculated by adding the guarantees shown as off-balance
sheet items to the total assets of ALTUM Group taking into account provisions for these guarantees and
subtracting “Deferred expense”, “Accrued income”, “Property, plant and equipment”, “Intangible assets”,
“Other assets” and “Assets held for sale”.
Data for the calculation of both indicators (TCE, TMA) are obtained from ALTUM Group’s Financial statements:
Statement of Financial Position and Consolidated Statement of Changes in Equity, notes - Off balance sheet
items and contingent liabilities and Provisions. ALTUM uses the ratio “TCE/TMA” to evaluate ALTUM Group’s
capital position adequacy and to measure ALTUM Group’s tangible common equity in terms of ALTUM Group’s
tangible managed assets including the off-balance sheet item Guarantee portfolio. The Risk and Liquidity
Management Committee of ALTUM monitors its level on a quarterly basis.
Total risk coverage
“Total Risk Coverage” is the net funding available for covering the expected credit losses of the State aid
programmes implemented by ALTUM. “Total Risk Coverage” is calculated as the total of “Risk Coverage
Reserve” and “Portfolio Loss Reserve” (Specific Capital Reserves) less “Risk Coverage Reserve Used for
Provisions” and “Portfolio loss reserve used to compensate provisions upon approval of the annual report”. The
expected losses are estimated before implementation of the respective State aid programme and part of the
public funding received under respective State aid programme for coverage of expected losses on credit risk
is transferred either to “Portfolio Loss Reserve” as ALTUM Group’s specific capital reserve or accounted
separately as provisions for risk coverage under liabilities item “Risk Coverage Reserve”. “Portfolio Loss Reserve”
(specific capital reserve) is disclosed in the Note on Reserves to the Financial statements of the ALTUM Group.
“Risk Coverage Reserve” is disclosed in the Note on Support Programme Funding to the Financial statements
of ALTUM Group. “Risk Coverage Reserve Used for Provisions” is the amount of “Risk Coverage Reserve”
allocated to and used for provisioning for impairment loss on loan portfolio and guarantees which in its turn is
disclosed in the Note on Support Programme Funding to the Financial statements of ALTUM Group. “Portfolio
loss reserve used to compensate provisions upon approval of the annual report” is disclosed in the Note on
Reserves to the Financial statements of the ALTUM Group.
“Total Risk Coverage” is key indicator to be used for assessment of ALTUM’s risk coverage on implemented
programmes and long-term financial stability.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
122
Definition of ratios (cont’d)
180-day liquidity ratio
“180-days-liquidity ratio” is calculated by dividing the amount of the balances “Due from other credit
institutions and the Treasury” with a maturity of up to 1 month and “Financial assets at fair value through other
comprehensive income and Investment securities” by the amount of the total liabilities maturing within 6
months and total financial commitments maturing within 6 months (off-balance sheet items). The data
required for the calculation of the “180-days liquidity ratio” is disclosed in the following ALTUM Group’s Financial
statements: Statement of Financial Position and notes – Maturity profile of assets and liabilities under the section
of Risk Management, Off-balance sheet items and contingent liabilities. ALTUM uses the “180-days-liquidity
ratio” to assess and monitor ALTUM Group’s ability to fulfil ALTUM Group’s contractual and/or contingent
liabilities during 6 (six) month with the currently available liquidity resources. “180-days-liquidity ratio” helps to
manage ALTUM Group’s liquidity risk in line with ALTUM Group’s/ALTUM’s funding management objectives and
risk framework. Risk and Liquidity Management Committee of ALTUM monitors its level on a quarterly basis.
Support instruments gross
value
“Support instruments gross value” is calculated as the sum of the gross values of the portfolios of grants, loans,
guarantees, venture capital funds and Land Fund
Total contribution to the
economy, including the
participation of the final
recipients, by volumes
issued in the period
The 'Total contribution to the economy, including the participation of the final recipients, by volumes issued in
the period’ is calculated by adding to the volumes issued by ALTUM the financing provided by the private co-
financier and the project promoter.
Leverage for raised private
funding
“Leverage for raised private funding” indicates the amount of additional private funds invested in a project in
addition to ALTUM’s financing. “Leverage for raised private funding” is determined considering the financing
invested by a private co-financier and a project’s implementer, which, on average, makes up to 50 per cent
for loans, up to 70 per cent for guarantees and venture capital (except for housing loan guarantees’
programme for the first instalment with a ratio of 795 per cent) in addition to ALTUM’s funding.
Employees
Average number of employees in the report period excluding members of the Council and the Audit
Committee.
Volume of support
programmes funding per
employee
"Support programmes funding per employee" is calculated by dividing the gross value of the Financial
Instruments Portfolio by the average number of employees during the period, excluding members of the
Supervisory Council and the Audit Committee.
Venture capital The Venture Capital Funds presented at their gross value.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
123
Corporate Governance Report 2021
The statement of joint-stock company Attīstības Finanšu Institūcija Altum (Development Finance Institution Altum, hereinafter
– Altum), unified registration No. 50103744891, On corporate governance in 2021 is prepared in accordance with the
requirements of Section 56.2 Paragraph three of the Financial Instruments Market Law and based on the good corporate
governance recommendations for capital companies in Latvia, developed by the Corporate Governance Advisory Council
(Corporate Governance Code, January 2021, hereinafter – the Code). The recommendations have been developed taking
into consideration the requirements set for companies in the laws and regulations of the Republic of Latvia, as well as good
governance recommendations of the Organization for Economic Co-operation and Development. The Corporate
Governance Report also covers ESG (environmental, social and corporate governance) aspects based on the Nasdaq ESG
Reporting Guide 2.0 (May 2019).
Altum Group (Altum and the total of companies included in the consolidation group, hereinafter referred as the Group) parent
company is a Latvia state-owned company ensuring access of enterprises and households to the financing resources by
means of support financial instruments – loans, guarantees, investments in venture capital funds – in areas defined as important
and to be supported by the state, thus developing national economy and by such way enhancing mobilisation of private
capital and financial resources. Subsidiaries of Altum (individual venture capital funds) are part of Altum Group as long as
Altum controls these companies. As a result of the annual control or significant influence assessment, subsidiaries of Altum are
not considered subsidiaries as at 31 December 2021. See the Annual Report for more information.
Strategy 2019 - 2021
On 30 May 2019, Altum Council approved and on 11 March 2021 amended and enhanced Altum’s Medium-Term Operational
Strategy 2019-2021. The Medium-Term Operational Strategy 2019-2021 was amended to determine new projected
performance indicators by implementing additional state aid programmes to mitigate the impact of Covid-19 on SME and
Midcap in Latvia, which were not previously included in the strategy. Furthermore, the risk coverage for these financial
instruments is arranged by transferring funds to Altum’s special reserve capital, which provides for an increase in equity, while
programme expenses, including credit risk provisions in accordance with IFRS requirements, as well as programme revenues
affect the financial results for the reporting period.
As at 31 December 2021, Altum Group’s gross aid instruments portfolio was EUR 978.2 million (31 December 2020: EUR 872.3
million), including the gross financial instruments portfolio of EUR 895.8 million that consisted of 30,978 projects (31 December
2020: EUR 803.5 million and 26,578 projects). Since March 2020, pursuant to the Strategy and as delegated by the government,
Altum has engaged actively in mitigating the adverse impact of Covid19 pandemic on SME and Midcaps in Latvia. The Group
takes pillar role for providing Covid-19 financial instruments (excl. standstill grants) – loans and guarantees in Latvia. In order to
continue providing support for companies affected by the Covid-19 pandemic, Covid-19 crisis support programmes have
been extended until 30 June 2022.
In order to support overcoming the impact of Covid-19, alternative investment fund Altum Capital Fund was established in
the spring of 2020. Its aim is to support well-managed, perspective Mid-cap companies that as a result of the virus impact are
ready to adjust their operations by changing their business model, adjusting product development, introducing new
technology, expanding to new export markets, thereby fostering their growth. As at 31 December 2021, total assets of Altum
Capital Fund managed by Altum amounted to EUR 31 million. The Fund’s investment period has been extended until 30 June
2022 along with the terms of other Covid-19 support programmes.
Altum continues to strengthen its role as the key partner for the government in implementing financial instrument programmes
co-financed by the European Union (hereinafter – the EU), including through the new Recovery and Resilience Facility (RRF),
aimed to mitigate the economic and social impact of the Covid-19 pandemic, stimulate recovery of Europe, finance climate
change mitigation projects, and protecting and creating jobs. In 2021, preparatory work commenced to provide financial
instrument support programmes as part of the new EU Cohesion Policy 2021-2027. In total, financing in the amount of at least
EUR 650 million will be made available as financial instruments under the Recovery and Resilience Facility (RRF) and the EU
Cohesion Policy for the programming period 2021-2027.
In 2021, the terms and conditions for four new support programmes were developed in co-operation with the Ministry of
Economics, under which the following funding will be available from RRF already in 2022: funding for improving energy
efficiency of apartment buildings (EUR 57 million); for improving energy efficiency of companies and transition to technologies
using renewable energy (EUR 81 million); for digital transformation (EUR 45 million) and for financing affordable housing (EUR
43 million).
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
124
Corporate Governance Report 2021 (cont’d)
Strategy 2019 - 2021 (cont’d)
In order to prepare for implementation of the European Union’s new InvestEU Programme, preparations undertaken in 2019
for pillar assessment of the Group were continued.
Altum is planning to apply for InvestEU implementation partner role, thus increasing the scope of new specialized and
customized financial instruments to the corporates in Latvia. An application on the InvestEU pillar assessment was prepared in
Q3 2021 to ensure further progress of the project. A positive assessment by the responsible DG of the European Commission
on Altum’s legal and financial compliance was received in early March 2022, allowing to proceed with its actual pillar
assessment.
The following strategic development directions and long-term objectives were set according to Altum Medium-Term
Operational Strategy 2019-2021:
Major financial objective in implementation of
the state aid programmes – positive return on
Altum’s capital.
Priority directions of Altum are: issuing of guarantees and their
servicing, venture capital investments, implementation of
energy efficiency programmes with regard to both – heat
insulation of apartment buildings and corporate segment,
development of the Latvian Land Fund as well as initiation of
new projects by expanding the range of the financial
instruments offered.
Major non-financial objective is to support and
promote availability of finances to the business
and development of the national economy.
Main target segments: support for entrepreneurs, energy
efficiency, support for farmers, support for specific categories of
persons, management of the Latvian Land Fund.
Detailed information on implementation of financial objectives is disclosed in the Consolidated and Separate Annual Report
for the year ended 31 December 2021 (hereinafter – the Annual Report), Management Report and in the Annual Report Other
Notes.
On achievement of non-financial objectives set in the Strategy for 2021, which were included in the Medium-Term Operational
Strategy 2019-2021, see below.
Contribution to economy by Altum volumes issued in 2021 reaches EUR 792 million (+EUR 5 million/+1% vs projection
in the Strategy).
Volume of support programmes funding (excl. grants) per employee is EUR 4.0 million (+EUR 0.1 million/+3% vs
projection in the Strategy).
Employee turnover is 7%, which is less than projected in the Strategy (<10%), +4% vs 2020.
Annual number of trained employees reaches 96%, which is more than projected in the Strategy (>60%), +1% vs 2020.
Volumes issued (excl. grants) in 2021 reaches EUR 268 million (-EUR 76 million/-22% vs projection in the Strategy, -EUR
50 million/-16% vs 2020). Lower volumes issued triggered mainly by (i) considerably lower demand than expected by
the banking industry leading to no new volumes for Large Enterprises Loan Programme and Guarantee Programme
for Large Enterprises and (ii) lower demand for Covid-19 crises support products due to better economic situation
when increased volumes of ordinary products didn’t compensate the decrease for Covid-19 crises support products.
Gross portfolio as at end of 2021 is EUR 896 million (-EUR 115 million/-11% vs projection in the Strategy, +EUR 92
million/+11% vs 2020).
Credit rating assigned by Moody’s projected in the Strategy, not more than two niches below the sovereign rating
of Latvia (A3 by Moody’s), actual for 2021 (same for 2020) is Baa1 (one niche below the sovereign rating of Latvia),
better than projected.
Deviations of individual indicators from the projections in the amended and enhanced Strategy (11 March 2021) are
insignificant, and they have not adversely affected implementation of the key objectives and strategy of Altum.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
125
Corporate Governance Report 2021 (cont’d)
Strategy 2019 - 2021 (cont’d)
Upon endorsing Altum’s business plan and budget for 2022, the shareholders’ meeting approved the following major goals
and objectives for Altum in 2022 in accordance with the draft medium-term strategy 2022-2024:
Main objective – implementation of the state aid programmes to ensure an increase in Altum’s portfolio, positive return on
capital and efficiency.
Goals and objectives:
1. Launch of new programmes financed under the Recovery and Resilience Facility (RRF), where the main directions to be
supported include climate change mitigation solutions, digitisation of companies and construction of affordable rental
housing, as well as investment loans with capital rebate that will be financed from the state budget.
2. Work on the development and launch of fifth-generation venture capital funds.
3. Undergoing the Pillar Assessment so that Altum could qualify as an InvestEU implementation partner in 2023.
4. Assessment and integration of environmental, social and corporate governance (ESG) aspects in funding decisions and in
Altum credit risk management procedures.
In 2021, active work was under way on the Group’s medium-term strategy 2022-2024 and a draft Strategy was prepared,
emphasizing the importance of sustainable financing and ESG aspects, both on the product level and in full integration of
ESG aspects into Altum credit risk management practices. After the Group's Medium-Term Operational Strategy 2022-2024
was harmonised with the parties involved, the Strategy was endorsed by the Council on 9 March 2022.
Strategy 2022 - 2024
Altum will strengthen its role as the key partner for the government in implementation of financial instrument programmes.
Altum, together with the relevant ministries, will continue to be actively involved in the development of new financial instrument
programmes.
Already in 2022, four new programmes will become available with funding from RRF, which will focus on areas that need
special support: climate change mitigation – improving energy efficiency of apartment buildings and transition to renewable
energy technologies, improving energy efficiency for businesses, as well as implementation of company digitisation projects
and construction of affordable housing.
In the new strategy period, loans with capital rebate will be issued for large investment projects, work on the development
and launch of fifth-generation venture capital funds will continue, as well as other programmes to be financed from the EU in
the new programming period (2021-2027). Existing support programmes for entrepreneurs will be continued and brand new
ones will commence to support business productivity, research and innovation. The EU funds will be used to continue
supporting improvement of energy efficiency in both apartment buildings and private homes. Transition funding from the
European Agricultural Fund for Rural Development (EAFRD) will be provided to ensure additional financing for the Farmers’
Guarantee Programme and the Small Loans for Rural Areas programme, while financing from the Common Agricultural Policy
Strategic Plan 2023-2027 will be used to introduce a new measure: loans with a capital rebate for small rural entrepreneurs.
Altum will also continue to implement other existing state support programmes in the areas identified by the state as a priority,
ensuring access to finance for companies in different stages of development and for specific target groups.
Altum will watch out for changes in the demand in financial market and the current market shortcomings, upgrading and
adapting state support instruments in accordance with the needs of customers and co-operation partners, as well as the
priorities of the national economic policy.
In addition to investments from the EU, provided as financial instruments under the Cohesion Policy, Altum intends to secure
guarantees under the European Commission's InvestEU programme.
Pillar Assessment will be carried out in 2022 so that Altum could qualify for InvestEU implementation partner status in 2023.
Major non-financial objective of Altum is to support and promote availability of finances to the business and development of
the national economy.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
126
Corporate Governance Report 2021 (cont’d)
Strategy 2022 - 2024 (cont’d)
The strategy anticipates a moderate increase in the volume of new transactions, with the volume of new transactions growing
by 3.24% by 2024.
Altum’s gross financial instruments portfolio is projected to grow by 10% annually on the average, and the total portfolio is
projected to amount to EUR 1.3 billion by the end of 2024.
Contribution to the economy by volumes issued by Altum characterises a projected increase in Altum’s impact on economic
development by facilitating mobilisation of private capital and financial resources in the priority areas.
Altum’s major financial objective in implementation of the state aid programmes is to ensure positive return on Altum’s capital.
During the strategy implementation period, return on equity (ROE) is projected at over 1.3%.
Equity financial projection is expected to have positive dynamics at the end of the reporting year.
In order to ensure financial efficiency of Altum, the expenditure-revenue ratio will be limited to up to 65%.
Altum will pay particular attention to environmental, social and corporate governance (ESG) assessment, both in taking
financing decisions and in upgrading Altum’s internal procedures. ESG criteria and achievable sustainability indicators will be
introduced for the projects financed in order to integrate them into credit monitoring, revise the customer portfolio by
analysing each client, as well as phase out financing of projects that do not meet the ESG criteria set by Altum.
Altum’s operations will be based on standardisation of solutions, further optimization of internal procedures and modernisation
of IS.
Altum will also continue to ensure that credit rating assigned by Moody’s is as high as possible and not more than two niches
below the sovereign rating of Latvia.
Information on the key elements of the internal control and risk management system of Altum that
are applied in the preparation of the financial statements
Internal control
The purpose of the internal control system is to ensure efficient, sustainable and successful operation of the company,
accuracy of information provided, and compliance with the relevant laws and regulations and operating principles.
The internal control system of Altum has been designed to ensure efficient, sustainable and effective operation of the
company, accuracy of information provided, and compliance with the relevant laws and regulations to provide a reasoned
assurance that the assets of Altum and the Group are secured against loss and unauthorised management and use, the
operational risks are identified and managed on an ongoing basis, the amount of capital is adequate to cover the identified
risks inherent in the operation of Altum and the Group, the transactions are performed in line with the procedures established
by Altum and the Group, Altum and the Group operate reasonably, prudently and efficiently in compliance with the
requirements of laws and regulations, and the drawbacks identified in the management of Altum and the Group are fixed in
due time.
The management of Altum and the Group bears responsibility for establishing a comprehensive internal control system (ICS)
and its effective functioning. With respect to preparing the financial statements and the truthfulness, impartiality, clarity and
completeness of the information disclosed therein, this responsibility is materialised by selecting adequate accounting
methods that are described in internal regulatory documents.
The Internal Audit Division, being an independent body subordinated to Altum’s Council with its head appointed based on
the decision of Altum shareholders’ meeting, supervises the internal control system at Altum and the Group and assesses its
adequacy and efficiency. Every year the shareholders’ meeting approves the annual action plan for the Internal Audit Division
about which the Internal Audit Division reports to the Council. The Council supervises how the Board provides for establishment
of the internal control system and its efficient operation. In 2021, the Internal Audit Division prepared 8 audit reports in
accordance with the action plan, which provided an assessment of the operation of the process management and control
system and were communicated to Altum Council. During the reporting period, 66 audit recommendations were issued, of
which 51 were implemented in 2021. The audit reports provide assurance to Altum’s management regarding business
procedures, programmes such as state support for the purchase of farmland for agricultural production, energy efficiency
improvements in apartment buildings, working capital loans for farmers,
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
127
Corporate Governance Report 2021 (cont’d)
Information on the key elements of the internal control and risk management system of Altum that
are applied in the preparation of the financial statements (cont’d)
Internal control (cont’d)
Reverse Land Lease of the Latvian Land Fund, as well as support procedures such as personnel management, customer
relations and attraction management, and other audits. The internal audit department performs its duties in accordance with
the applicable regulatory enactments, following the international standards of professional practice of internal audit, Altum
and the Group’s internal regulatory enactments. The Internal Audit Division performs its duties in accordance with the
applicable laws and regulations, the international standards for the professional practice in internal auditing and the internal
regulations of Altum and the Group. At least once a year the Internal Audit Division drafts and submits to the Shareholders’
meeting a report on the accomplished audits and major problems identified, gives its assessment of ICS efficiency and opinion
on the measures to be undertaken to improve the operation of the internal control system.
An Audit Committee was established in Altum and the Group on 1 December 2017, which, inter alia, monitors the efficiency
of the internal control and risk management system, in as much as it pertains to maintaining the credibility and impartiality of
annual reports and consolidated annual reports. The Audit Committee, in line with the requirements of Law on the Financial
Instruments Market, monitors the process of the preparation of financial statements of Altum and the Group, and performs
other duties assigned to it by laws and regulations.
An Accounting Policy and Policy on Establishment of Provisions have been developed in Altum and the Group, the purpose
of which is to define principles, methods and rules for the accounting, assessment and disclosure of transactions, facts, events
and items in financial statements. The management of Altum and the Group has established an accounting policy that
ensures that the financial statements provide information that is reliable and useful for the users of such statements in decision
making. The applied Accounting Policy and Policy on Establishment of Provisions ensure that the information disclosed in the
statements of Altum and the Group is true, comparable, timely, significant, explicit, relevant and complete. Altum and the
Group have developed internal regulatory documents defining the procedure of preparing the financial statements.
Risk management
The purpose of risk management is to identify, assess, manage and control potential events and situations in order to provide
assurance on the achievement of the company’s strategic goals.
For risk management, Altum and the Group have developed a risk management system that takes into account the size,
structure and operational characteristics of Altum and the Group, as well as restricted options for management of certain
risks. Altum and the Group manage the risks affecting their operations in compliance with the risk management internal
regulatory documents approved by Altum and the Group that detail and establish the aggregate of measures used in
management of the risks inherent to their operations.
The following major risk management principles are followed:
Risk management is a component of every-day functions;
Altum and the Group identify and assess the probable risks before launching of new products or services;
While assuming the risks, Altum and the Group are capable of long-term pursuit of the delegated aims and
assignments;
Altum and the Group do not enter into transactions, operations, etc. entailing risks that endanger their operational
stability or may result in substantial damage to their reputation.
In their risk management Altum and the Group make use of various risk analysis methods and instruments as well as establish
risk limits and restrictions.
In order to improve the risk management system, in 2021, inter alia, the model for calculation of the actual value of guarantees
was validated with the aim of examining on a regular basis in the future the correctness of the selection of data used in the
calculation, as well as correctness and accuracy of the model calculation.
Also in 2021, an independent risk coverage adequacy assessment in implementation of state support programmes was
performed for Altum, including an assessment of the expected loss estimation approach and examining risk coverage
adequacy for certain state support programmes.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
128
Corporate Governance Report 2021 (cont’d)
Information on the key elements of the internal control and risk management system of Altum that
are applied in the preparation of the financial statements (cont’d)
Risk management (cont’d)
As the impact of Covid-19 continued, additional measures were taken to assess the credit quality of Altum’s portfolios and the
required amount of provisions, including but not limited to an additional assessment of credit quality of loan and guarantee
portfolios because of the impact of Covid-19 and an increase in provisions for possible expenditure compensation in the
future, sectors affected the most by Covid-19 were identified and additional provisions were made for anticipated credit
losses, and other measures were taken to identify an increase in credit risk in a timely manner.
As the situation in Ukraine escalated, in February 2022 Altum’s current practices in work with Export Credit Guarantees was
reviewed, restricting new business deals with customers, where the business partner is located in Russia or Belarus.
Information about the key elements of the risk management system of enterprises involved in consolidation, applied in
preparation of consolidated financial statements, is provided in Annual Report.
Latvian and Russian versions of the Annual Report is publicly available in the premises of Altum at 4 Dome Square, Riga and in
electronic form – on the website www.altum.lv, in INVESTORS section under FINANCIAL INFORMATION sub-section and in ABOUT
ALTUM section under FINANŠU INFORMĀCIJA sub-section.
Independent audit
An independent audit of the financial statements of Altum and the Group is performed by independent auditors who provide
their opinion stating whether the financial statements of Altum and the Group give a true and fair view of the financial position,
financial performance and cash flows of Altum and the Group in accordance with the International Financial Reporting
Standards as adopted by the European Union. SIA Deloitte Audits Latvija has been approved the auditor of the financial
statements of Altum and Group for years 2020-2022. Pursuant to the requirements of EU Regulation No 537/2014 regarding the
appointment of statutory auditors or audit firms at public-interest entities, Altum Audit Committee was involved in the auditor
selection process. The auditor was selected following the procedure established by the Public Procurement Law. The following
qualification criteria were considered in selection of the auditor:
In the last 3 (three) years (2017, 2018, 2019 and 2020 until the submission of the proposal) has had experience of at
least 3 (three) audits performed on the annual reports of credit institutions, provided that the balance sheet value of
the credit institution’s loan portfolio is not less than EUR 200 million;
Holds a licence for provision of the services of sworn auditor;
The auditor in charge holds the certificate of sworn auditor issued by Latvian Association of Sworn Auditors.
The tenderer as well as any cooperation partner of the tenderer’s network of audit firms (if the tenderer is a
cooperation partner of a network of audit firms) has not provided Altum or companies it controls in the European
Union with non-audit services prohibited under second subparagraph of paragraph 1 of Article 5 of EU Regulation
No 537/2014 in the period referred to in first subparagraph of paragraph 1 of Article 5, and the tenderer meets the
requirements referred to in Articles 4 and 5 of EU Regulation No 537/2014.
The following criteria were applied to selection of the auditor:
The most economically feasible offer with the lowest price;
Performance of the contract involves an expert on International Financial Reporting.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
129
Corporate Governance Report 2021 (cont’d)
Contributing to sustainability
In its day-to-day operations in implementing State-delegated functions to foster development of the national economy and
voluntarily taking the responsibility for its impact on society and the environment, Altum acts in compliance with the
organization’s strategy and values.
TEAM EXCELLENCE RESPONSIBILITY
Altum uses support financial instruments – loans, guarantees and investments in venture capital funds - to foster development
of the national economy in areas defined as important and to be supported by the state, enhancing mobilization of private
capital and financial resources. Altum has a long-term vision to attract financing for the purpose of ensuring the availability of
resources to finance business projects important for the national economy.
The financial sector will play a key role in achieving the goals of the European Green Course, including the transition to a
climate-neutral, climate-resilient, resource-efficient and equitable economy. Sustainability is a key part of Altum's business and
strategy and is becoming an important strategic driver for the banking industry as well as for development finance institutions
in Europe. Altum takes responsibility for the long-term impact of its daily economic, environmental and social activities and
continuously works to reduce its impact upon the environment and with its sustainable strategy positively contributes to
sustainable development and acting responsible in its business. Moreover, Altum intends to facilitate and support its clients'
transition to a sustainable economy.
Altum’s sustainability is based on the United Nations Sustainable Development Goals (SDG), which set out a global plan to
eradicate poverty, combat inequality and tackle climate change by 2030.
The long-term efficiency of Altum can only be ensured by adhering to the principle of sustainable business, which consists of
three interrelated and equally important aspects of ESG - environmental, social and corporate governance.
Since the beginning of 2021, Altum's management has made the integration of sustainable financing and ESG aspects into
credit risk management and business processes one of its priorities. It is planned to develop ESG criteria and achievable
sustainability indicators for financed projects, to integrate them into credit monitoring, to review the existing client portfolio by
performing their analysis, as well as to phase out the financing of projects that do not meet the ESG criteria set by Altum.
In order to move towards the implementation of the principles of sustainable financing and environmental, social and
corporate governance (ESG), ALTUM will
Expand the range of sustainable financial instruments,
Improve the involvement of SMEs and MidCap in sustainability by providing them with adequate access to finance
and certain incentives to achieve sustainability results,
Increase financial sector and state support for the integrity of this sector,
Develop internal processes for the establishment and monitoring of ESG,
Improve the competence of employees in the evaluation of sustainable financing and ESG, as well as in risk
management
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
130
Corporate Governance Report 2021 (cont’d)
Contributing to sustainability (cont’d)
Altum’s level of ambition towards sustainable financing at Altum’s portfolio level is undertaken voluntary, mainly driven by (i)
stakeholders’, like investors, credit rating agencies, peer group of European development banks, international lenders,
Nasdaq, expectations towards Altum as development financial institution with large impact upon Latvian economy, and (ii)
eligibility requirements for public funding available from the EU Cohesion Policy and/or RRF contributing to Sustainable Europe
Investment Plan/Green Deal Investment Plan where Altum takes pillar role for issue of financial instruments to SME’s in Latvia.
As additional trigger is sustainable financing regulatory framework already effective for part of ALTUM’s portfolio as well as the
coming Taxonomy alignment regulatory framework. Although not mandatory for ALTUM but following the international finance
institution sector practise the EBA (European Banking Authority) guidance on integration of ESG aspects in credit risk
management, including loan origination and monitoring, has been reviewed and assessed for further integration in ALTUM’s
credit risk management processes.
The state support programs implemented by Altum will facilitate the implementation of projects that will be able to provide a
positive assessment of the social and environmental factors related to the sustainability of companies and their impact on
society with measurable indicators. The implementation of the programs will be monitored to achieve the planned results and
objectives.
All new programs for which funding will be available from the Recovery and Resilience Facility (RRF) are sustainable in terms
of the activities to be supported, only in different aspects, and can be divided into (i) climate programs that meet the
requirements of the Taxonomic Environmental Requirements, (ii) digital transition program to increase productivity, and (iii) a
afford able rental housing program with a social objective - reducing inequality.
Altum has identified and works closely with the organisation's stakeholders, recognizing Altum's special role in the economy
and the needs of stakeholder, and helping to solve them. Altum recognizes and evaluates the social, environmental and
economic impact of its operations and engages stakeholders on issues of mutual concern. By building relationships with
stakeholders, Altum organizes and engages in consultations, partnerships, as well as organizes informative and educational
activities.
In order to compile the Altum sustainability materiality matrix and to define the level of ambition for sustainable financing in
the loan portfolio, a stakeholder identification, mapping and survey was conducted in late 2021, which allowed the
identification of key aspects to be included in the sustainability content. The survey addressed more than 620 respondents
from a variety of stakeholder groups, including employees, shareholders, customers, capital market participants, commercial
banks, financiers and the financial industry, sustainability experts, education and science representatives, suppliers, NGOs,
policy makers, the media, professional associations, business support organizations and supervisory and control authorities.
The survey asked respondents to rate Altum's performance in environmental, social and corporate governance to date, and
to express their expectations regarding Altum's sustainability in the business environment, day-to-day operations, public
support and development, and Altum as an employer.
One of the most important questions in the stakeholder survey was related to Altum's level of ambition, where respondents
were asked to choose 1 to 3 directions for sustainable financing. Taking into account the stakeholder pool on Altum's level of
ambition for sustainable financing, the TOP3 priorities include: (i) improving access to sustainable financing for small and
medium-sized enterprises, (ii) facilitating projects that can deliver positive environmental and social impacts, and ( (iii)
expanding the range of sustainable financial instruments.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
131
Corporate Governance Report 2021 (cont’d)
Contributing to sustainability (cont’d)
Consequently, in the future, even more attention will be paid to the areas of sustainability, both by expanding the set of
sustainable financing and improving its availability to companies, as well making financing-related decisions and improving
ALTUM's internal processes.
As a result of this process, the most significant interests of stakeholders were identified and summarized in this table.
Altum is committed to follow the best industry examples in Europe that have taken a strong stance in defining the targets to
be achieved and the sectors and projects not to be supported, regardless of the source of funding and already now they are
not financing fossil-fuel energy generation projects. Among other things, Altum commits to define the level of ambition where
the Green Asset Ratio for new loans and the existing loan portfolio would be set for both the 3-year period and until 2030. The
next steps in integrating sustainable financing and ESG aspects into credit risk management are as follows:
In the first half of 2022, it is planned to mark the existing green / sustainable assets in the portfolio;
In the first half of 2022, it is planned to approve the financial instruments of the Recovery and Resilience Facility;
In December 2022, it is planned to review the existing programs, excluding toxic / brown projects. The "social" vs.
"green" aspect will be assessed in the brown projects;
In the first half of 2023, changes will be made in the regulatory enactments of the Cabinet of Ministers of the
respective programs;
In March 2023, it is planned to integrate ESG aspects into Altum credit risk management, covering all business and
business support processes. Primarily the SME portfolio.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
132
Corporate Governance Report 2021 (cont’d)
ESG – corporate governance
Effective 2021, Altum follows the Corporate Governance Recommendations included in the Corporate Governance Code
(hereinafter – the Code), endorsed by the Corporate Governance Advisory Board of the Ministry of Justice. The Code is
available here .
Adherence to the principles of corporate governance contributes to value growth of the company in the long term, effective
management and transparency. The principles are applicable at all Altum levels, creating a successful system of mutual
relations between the Shareholder, the Council, the Board, employees, customers and society. In its day-to-day operations,
Altum is engaged in open and trustworthy communication with all involved parties, as well as ensures compliance with Latvian
and international legal norms and ethical standards.
In assessing the compliance of Altum’s corporate governance system with the corporate governance principles set out in the
Code and observance of these principles in Altum’s operations, Altum observes the main aspects of corporate governance
principles applicable to its operations, except for the principle “Independent members of the company’s council”.
Pursuant to Section 7 of the Law on Development Finance Institution, the members of Altum Council and Board are subject to
the requirements as are provided in the Credit Institution Law for the members of the council and of the board of a credit
institution.
The composition and period of operation of Altum Council and Board are determined by the Law on Development Finance
Institution. Altum Council is composed of three members. Each shareholder has the right to nominate one candidate for the
position of a Council member. Chairperson of the Council is a member of the Council nominated by the Ministry of Finance.
Altum Board may not have more than five members. The Council appoints the chairperson of the Board from among the
members of the Board. The term of office for the members of the Council and the Board is three years.
The procedure for nominating members of the Board and the Council is provided in the Law on Governance of Capital Shares
of a Public Person and Capital Companies.
The holder of State capital shares or the Council of the capital company establishes a nomination committee to evaluate the
candidates for members of the Board or the Council. The nomination committee includes representatives nominated by the
holder of State capital shares or the Council and the Cross-sectoral Coordination Centre, as well as independent experts and,
if necessary, observers with advisory rights.
Potential candidates for Board and Council members are selected by organizing a public application procedure for
candidates. Exceptions are allowed only in cases provided for by the law if a member of the Council or the Board is elected
for a new term or the candidate cannot be nominated in a time period that would ensure the Council or the Board’s capacity
to act.
If a candidate cannot be nominated in a time period that would ensure the Council or the Board’s capacity to act, such
candidate is appointed as a member of the Council or the Board who complies with the relevant criteria of professionalism
and competence. A person elected in accordance with this procedure fulfils the official duties until the moment when a
Council or Board member is elected pursuant to the nomination procedure laid down in the law, but not longer than for one
year.
The procedure for nominating members of the Altum Council and Board achieves the objective of the Code's corporate
governance recommendations and promotes good corporate governance within the company.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
133
Corporate Governance Report 2021 (cont’d)
ESG – Corporate governance (cont’d)
Shareholder
Effective involvement of shareholders in decision-making helps to achieve the company's financial and non-financial goals,
as well as ensures the company's sustainable operation.
The State Secretary of the Ministry of Finance Baiba Bāne continues to serve as a representative of
Altum's shareholders
The State Secretary of the Ministry of Economics Edmunds Valantis continues to serve as a
representative of Altum's shareholders
Raivis Kronbergs, State Secretary of the Ministry of Agriculture, has taken over as representative of
Altum’s shareholders, approved by the Cabinet of Ministers as the State Secretary of the Ministry of
Agriculture on January 3, 2022.
This after the previous State Secretary of the Ministry of Agriculture Dace Lucaua resigned on
December 31, 2021.
Council and Board
A competent and experienced management is a prerequisite for a company’s effective operations and decision-making,
promoting the growth of the company’s value in the long term.
The members of Altum Council have the necessary experience and competence, as well as a set of skills and knowledge,
including on finance, business development management, as well as corporate strategy and financial management. The
Council includes members of both sexes and upholds the principle of diversity.
Altum ensures a well-defined and comprehensible organisation of work and the availability of timely, high-quality and
adequate information, which facilitates an effective performance of the Council’s duties and council members’ full
involvement in decision-making. In 2021, the Council held 11 meetings, reviewing matters pertaining to Altum’s supervision
and management, as well as assessing the performance of the Audit Committee, the operation and independence of the
Internal Audit Division, matters concerning the functioning of the Internal Control System, as well as the implementation and
supervision of state support programmes. The Council took an active part in the development of the medium-term strategy
for 2022-2024.
In 2021, Kristaps Soms resigned as a member of the Council, and an extraordinary shareholders’ meeting on 22.03.2021
appointed Ilze Baltābola as an interim member of the Council until a candidate is selected in accordance with the nomination
procedure stipulated in Section 31 of the Law on Governance of Capital Shares of a Public Person and Capital Companies.
Ieva Jansone - Buka was appointed a member of the Board from March 18, 2021. Ieva Jansone - Buka was selected for the
post in a public tender for a three-year term.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
134
Corporate Governance Report 2021 (cont’d)
ESG – Corporate governance (cont’d)
Council and Board (cont’d)
In 2021, the office term of three Board members ended, and on 27.05.2021 the Council decided to elect Reinis Bērziņš, Jēkabs
Krieviņš and Inese Zīle to Altum Board for a new three-year term. The Council elected Reinis Bērziņš Chairman of the Board of
JSC Development Finance Institution Altum. A new candidate for a member of the Board will be selected in accordance with
the nomination procedure stipulated in Section 31 of the Law on Governance of Capital Shares of a Public Person and Capital
Companies.
In 2021, the Board convened for 122 board meetings.
Information on Altum managers, who are also the managers of the Group, representatives of Altum shareholders, Altum Audit
Committee and Altum’s management is available on Altum’s website www.altum.lv in the subsection Corporate Governance
and Sustainability of the section ABOUT ALTUM.
The remuneration of members of the Council and the Board is determined by the laws and regulations of the Republic of
Latvia – Law on Governance of Capital Shares of a Public Person and Capital Companies and the Cabinet regulations issued
on the basis thereof. The legal acts establish a unified regulation for the remuneration of members of the Council and the
Board of a capital company of a public person. The Cross-sectoral Coordination Centre’s Guidelines for Determining the
Remuneration of Members of the Board and Council of a Capital Company of a Public Person and a Public Private Capital
Company define the procedure for paying bonuses or variable remuneration to the Board after approving the annual
account and evaluating the performance of the company, its Board and Council in the reporting year.
Transparency of the company’s operations
The transparency of a company’s operations is the basis of effective investor relations and successful communication with
shareholders and other interested parties. Altum regularly and timely informs shareholders and other interested parties about
the company’s business operations, financial results, management and other current matters, disclosing precise, full, objective,
updated and true information. On its website the company publishes information on management, strategy and business
areas, annual reports, as well as regulations, guidelines of the ethnic code, the company’s key policies and the corporate
governance report.
Information is disclosed in accordance with the time limits stipulated by law or immediately after an event that requires the
disclosure of the information. Information is published in the Latvian and English language.
Altum has developed and adjusted information regulations, as well as regulations for internal and external communication.
On behalf of the company, authorized persons answer inquiries made by investors and other interested parties, as well as
communicate with the media. Since in October 2017 Altum started listing on Nasdaq Riga, Altum disclose information on a
regular basis in accordance with the “Procedure by which Nasdaq Riga, AS issuers disclose information” and Altum’s internal
rules.
Collective agreement
Altum maintains social dialogue with employees and their representatives. The Collective Agreement provides additional
guarantees to Altum employees, regulates rest time, remuneration and matters related to work safety, as well as upholds the
principles of fairness, mutual trust, understanding and transparency. The Collective Agreement applies to all Altum employees
with an employment contract signed for an indefinite term or for a period of not less than twelve months, and whose probation
period specified in the employment contract has expired. At the end of 2020, the Collective Agreement did not apply to 4.6%
or 10 employees with fixed-term contracts shorter than 12 months and 1.4% or 3 employees who had not yet completed the
probation period provided in their employment contracts.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
135
Corporate Governance Report 2021 (cont’d)
ESG – Corporate governance (cont’d)
Internal culture and ethical conduct
Altum has zero tolerance for bribery and corruption and they are prohibited in any form, either direct or indirect. Altum does
not engage in corrupt transactions and fully condemns such transactions. In order to ensure proper management of risks of
corruption, bribery and conflicts of interest, Altum has established an internal control system that ensures preventive risk
management and a control environment aimed at preventing corruption risks by precluding conflicts of interest, corrupt
practices and bribery in decision-making and the work environment as a whole. By improving the professional competence
of Altum employees and drawing their attention to the risks of corruption in the work environment, in 2021 Altum arranged for
a group of employees to undergo the training “Bribery of Foreign Officials” and hear the lecture “Prevention of Money
Laundering and Terrorism and Proliferation Financing: complying with personal data protection requirements” organized by
the Corruption Prevention Bureau. Improving procedures for the prevention of corruption and conflicts of interest, a unform
normative document was drawn up – Rules for the Prevention of Corruption and Conflicts of Interest, which provides a
reporting procedure for employees to prevent conflicts of interests at work.
Altum’s ethical principles are laid down in the Ethical Code and serve as the standard of conduct for Altum’s management
and all employees. The Ethical Code comprises guidelines for employees’ day-to-day communication with colleagues,
customers, business partners, which helps create a responsible, safe and comfortable working environment, which in turn
promotes loyalty and ethical conduct among the employees, thus ensuring the attainment of the company’s long-term goals.
Altum provides a number of secure and protected channels, including for whistleblowing, in order to detect any possible
bribery or corruption activity, or any violation of anti-corruption laws and regulations. No complaints about corruption or
whistleblowing reports were received in 2021.
The principles of personal data processing implemented by Altum, including in personnel selection procedures, provide
information on how Altum handles personal data through its internal resources, including information systems. . Personal data
means any information relating to an identified or identifiable natural person. Information about the processing of personal
data is provided on Altum’s website in accordance with Regulation (EU) 2016/679 of the European Parliament and of the
Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free
movement of such data.
Events 2021
International credit ratings agency Moody’s Investors Service (Moody’s) on August 12, 2021 published an updated analytical
report on the company’s credit assessment. On March 25, 2019 Moody’s Investors Service (Moody’s) affirmed the long-term
issuer rating of the company (the Group’s parent company) at Baa1, raising baseline credit assessment (BCA) from Ba2 to
Baa3. The short-term issuer rating has been affirmed at P-2. The long-term rating has a stable outlook. Moody’s first assigned
the long-term issuer rating Baa1 to the company in June 2017. The long-term issuer rating Baa1 assigned to the company by
Moody’s is one of the highest assigned to a Latvian company. The high rating enables a more successful implementation of
the Group’s long-term investment attraction strategy of being a regular participant of the capital market and issuing bonds.
In Nasdaq Baltic stock exchanges’ initiative “Nasdaq Baltic Awards 2021” Altum scored 81.47 out of 100 points in transparency,
sound governance and investor relations excellence. The awards honour the companies with the best investor relations and
the best shareholder return as well as the best performing stock exchange member. They also highlight the most significant
stock exchange events – those with the most impact on the Baltic capital market’s development. The Baltic stock exchanges’
companies and members are assessed by local and international corporate governance and investor relations experts.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
136
Corporate Governance Report 2021 (cont’d)
ESG – Corporate governance (cont’d)
Events 2021 (cont’d)
In 2021 Altum received the Platinum or highest-category award of the Sustainability Index evaluating
companies’ sustainability against international standards in all areas of corporate social responsibility. In 2019
for the first time Altum applied for the Sustainability Index maintained by the Institute for Corporate
Sustainability and Responsibility and scored Silver Category, while already in 2020, Altum significantly
improved its positions, scoring Gold Category.
The assessment of the Sustainability Index is one of the most obvious reflections of the invisible day-to-day work companies
do, adhering to the principles of corporate sustainability and responsibility, balancing interests of shareholders, employees,
customers, environment, business partners and other parties with sustainability rules, this becoming leaders of the future.
The Sustainability Index is a strategic management tool that helps companies assess their performance in five key areas:
strategic planning, market relations, work environment, environment and local community. The assessment methodology has
been developed by experts from the Institute for Corporate Sustainability and Responsibility, and the criteria are based on
international experience and principles so as to provide an objective view of companies’ approach to risk and process
management. Further information about the leading experts in each assessment category is available on the website of the
Institute for Corporate Sustainability and Responsibility.
ESG – Environmental aspect
Altum runs a continuous environmental management and operational improvement cycle, including by revising its long-term
and short-term environmental targets to find a balance between efficiency of business operations and their impact on the
environment and quality of life.
Altum is aware of its impact on climate change, as well as the impact of climate change on Altum’s operations. Our
environmental policy defines our goals and commitment to pursue our operations, leaving as little negative impact on the
environment as possible both directly and indirectly.
85.5%
73%
91.8%
82.4%
49.7%
97%
94.25%
95.2%
83.1%
83.55%
97%
94.25%
100.0%
86.15%
94.45%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Local community Strategic planning Market relations Work environment Environment
Altum performance in five corporate responsibility and sustainability
areas
2019 2020 2021
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
137
Corporate Governance Report 2021 (cont’d)
ESG – Environmental aspect (cont’d)
As the Latvian development finance institution, Altum’s impact on the environment is mostly indirect and is caused by
providing support programmes to customers. As a state capital company and participant of the financial sector, Altum is
aware of its high significance for attaining the ambitious goals of the National Energy and Climate Plan 2021-2030. Altum’s
credit policy and cooperation with other participants of the financial sector is reviewed in line with these challenges.
Altum provides a wide range of support to individual and corporate customers for improving energy efficiency. We have
come to a strong conviction that sustainability is the future of Latvia’s residents, entrepreneurs and ourselves. Altum defines
business sustainability as the creation of long-term value, taking into account economic, ethical, social and environmental
considerations. We have taken notice of the latest laws and regulations and their requirements promoting the supervision and
reduction of the impact of climate change. Altum has started work to prevent ESG related risks in credit risk management and
business processes. A correct management of ESG risks is a sound business practice that must be implemented by Altum, our
customers and cooperation partners.
Altum focuses on sustainable development and innovative solutions for ensuring financial stability.
Already In 2017 Altum issued bonds as series of notes quoted on Nasdaq Riga for the total face
value of EUR 20 million being in compliance with the Green Bond Framework, becoming the first
national development institution of a Central and Eastern European country to issue green bonds.
In the 2
nd
half of 2021, the Green Bond Framework was updated, taking into consideration the
Green and Social Bond Principles published by the International Capital Market Association in June 2021. In order to assure
investors that the funding raised by the green bonds will be used by Altum to invest in environment-friendly projects and help
reach specific environmental objectives, CICERO (Centre for International Climate and Environmental Research, Oslo)
prepared an independent opinion on the Green Bond Framework and graded the bonds Medium Green, which is equivalent
to the grading received in 2017.
The funding attracted from the issue of the Green Bonds is used to fund sustainable business projects in the fields of energy
efficiency, energy generation from renewable energy resources, green buildings and sustainable transportation, including
energy service companies (ESCO) that provide services to the companies in these fields.
To make sure the investors can follow Altum’s Green Bond investments and gain an insight into the supported projects, in
September 2021 Altum published an annual report to investors. The report is available at webpage.
As of the date the report to investors was prepared, the amount of loans granted since the launch of the energy efficiency
program reached EUR 18.1 million, of which EUR 15.7 million had been disbursed. Since the implementation projects in all four
segments is very time-consuming, financing is disbursed with a 9-12 month delay after the financing is granted.
The planned reduction of CO2 emissions for projects finances via green bonds is 7945 tons of CO2 per year, or 0.44 kg of CO2
emissions per EUR 1 loaned.
The largest share of loans, or 75%, have been issued in the energy efficiency segment, which by the number of projects and
financing, is ahead of the renewable energy, sustainable transport and green building segment, but , but as the activity in the
three latter segments continues to increase, a better balance is likely to be struck. Energy efficiency investment projects are
being implemented not only by companies but also in the municipal sector, where solutions for heating systems are mainly
implemented. Several ESCO projects in the field of lighting and technology should also be highlighted. Slowly but irreversibly,
Latvian companies are beginning to realize the need for green and sustainable investments, considering not only gains these
investments bring to the mitigation of climate change but also to immediate financial benefits of the company by decreased
consumption of energy resources and maintenance.
In September 2021, Altum became the first company from Latvia to join the Nasdaq Sustainable Bond Network with its green
bond issue.
In the autumn of 2021 Altum started improving employees’ competence in Green Deal areas, so they could be able to
promote and explain the essential role of sustainability and ESG aspects in business customers’ development and ability to
successfully operate in supply chains. Work on educating the employees will continue in 2022.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
138
Corporate Governance Report 2021 (cont’d)
ESG – Environmental aspect (cont’d)
Reducing own impact
Even though Altum, as a development finance institution, has a relatively small direct impact on the environment, Altum aims
to further reduce its direct impact on the environment. Altum makes sure it produces as little waste as possible, sorts waste,
provides separate containers for batteries (hazardous waste) at its offices, promotes recycling and reducing of greenhouse
gas emissions that are directly related to Altum’s operations.
To meet the environmental commitments, work is ongoing to improve the energy efficiency of operations and buildings,
reduce the number of business trips by using remote meetings format, and to make a transition to an energy efficient
transportation fleet for the company’s needs.
In 2021 we produced:
48.7% less CO2 emissions than in 2018, 22.4% less than in 2019 and 19.7% less than in 2020.
113 tonnes of CO2 emissions, or 0.51 tonnes per Altum employee (220 tonnes, or 0.99 tonnes of
CO2 per employee in 2018)
Evaluation of the intensity of CO2 emissions against Altum’s gross portfolio of financial instruments shows that while in 2018
Altum produced 0.42 tonnes of CO2 emissions per EUR 1 million portfolio of financial instruments, in 2021 these were only 0.12
tonnes of CO2 emissions per EUR 1 million portfolio of financial instruments. This has been achieved by significantly increasing
the portfolio of financial instruments (in 4 years it has grown by 69.3%) and reducing CO2 emissions (in 4 years CO2 emissions
have decreased by 48.7%).
CO2 emissions are calculated for the consumed electricity, thermal energy and fuel. We achieved this by improving the
energy efficiency of Altum’s offices, electricity consumption of appliances, upgrading the outdated transportation fleet, as
well as improving work arrangements so that more and more tasks could be performed remotely.
After introducing in 2019 a new document and process management system, which ensures a fully
digital workflow of documents, including the coordination, approval and publication of normative
documents in ALTUM Normative Base, preparation and signing of instructions, as well as the
workflow of incoming and outgoing documents, we reduced paper consumption threefold in 2021.
Altum pursues a continuous cycle of environmental management and performance improvement, including by revising long
and short-term environmental performance targets. Environmental management principles and performance are available
on the Altum website.
ESG – Social aspect
Social aspect refers to the trust and support of shareholders, employees, cooperation partners, customers and the public.
Employees
Altum cares for the well-being of its employees by providing opportunities for growth, adequate working conditions, as well as
social guarantees and social security measures set out in the collective agreement. Altum pursues an organizational culture
that values mutual respect, diversity, inclusive environment and the principle of equality, as well as creates conditions in which
these values are respected, maintained and developed. The work environment and processes are designed so as to prevent
the possibility of human rights being infringed upon or violated.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
139
Corporate Governance Report 2021 (cont'd)
ESG – Social aspect (cont’d)
Employees(cont’d)
In order to attract qualified, professional and motivated personnel, Altum has been implementing and continues to implement
personnel selection procedures based on clear principles. The laws and regulations of the Republic of Latvia contain extensive
provisions that regulate non-discriminatory treatment, and Altum fully complies with these provisions. The existing staff has been
built by matching professional competencies required by Altum with the labour market offer.
Employee turnover in 2021 was 7.1%. Last year, applications for 33 vacancies were announced. All employees had the
opportunity to participate in personnel selection competitions, and two vacancies were filled by Altum employees. In 2021,
there were no long-term vacancies, which points to a positive image of Altum as an employer and quality recruitment process.
Altum has observed that employees with different experiences and attitudes are able to respond more effectively to
customers’ needs, find innovative solutions, thereby increasing productivity and efficiency. Working with employees of
different age groups, we successfully combine the enthusiasm of youth with many years of experience and knowledge.
The average number of employees in 2021 was 223 – 65% were women and 35% men. 8% of employees are younger than 30,
66% are between the ages of 31 and 50, 26% employees are over the age of 51. The average age of Altum employees was
44 years in 2021.
In 2021, Altum had 43 top and medium-level managers, of which 56% were women and 44% men. 77% of managers are 31 to
50 years old, 23% of managers are older than 51 years. Altum employed 180 specialists in 2021, of which 67.8% were women
and 32.2% men. 10% of these employees are aged 20 to 30, 65% of employees are aged 31 to 50, and 25% are older than 51
years.
Altum’s Ethical Code prohibits discrimination. An Ethics Commission has been set up at the company and procedures have
been introduced for reviewing ethical violations, complaints and proposals. One employee complaint was received in 2021,
in line with the procedures of the Ethics Commission.
All Altum employees have written employment contracts and official registration of employment relationships is provided to
ensure that the relevant state institutions receive all the necessary information. In 2021, Altum employed an average of 196
employees with an open-ended employment contract and 27 employees with a fixed-term employment contract. In
cooperation with higher education institutions, in 2021 Altum provided internships for students from 3 higher education
institutions.
Working conditions, remuneration, benefits and other conditions are designed to ensure equal opportunities for all employees
and also to facilitate the work-life balance and parental responsibilities. In 2021, Altum did not receive any complaints about
violations of working hours, remuneration or absence that would constitute human rights violations.
Altum operates in full compliance with Latvia’s laws and regulations, which are in line with the UN standards on forced and
child labour, and does not engage in forced or illegal child labour. The Ethical Code sets out the basic principles of fair
treatment and prohibition of harassment, as well as provides the guidelines for the development of employment relationships
between employees, the desired attitude and conduct, as well as the course of action in case of possible violations. In 2021,
Altum received no complaints about forced or illegal child labour, harassment in the workplace, violations of employees’
human rights or other ethical issues.
Diversity management
In line with the Diversity, Equality and Inclusion Policy, Altum supports diversity and equal rights in the selection, growth and
development of personnel, without supporting or encouraging in any way discrimination against individuals on the grounds
of race, religion, age, origin, sexual orientation, disability and other aspects.
As a member of the Latvian Diversity Charter, Altum is one of the official ambassadors for diversity in business and the
workplace. Altum strives for respect for diversity both in the workplace and in Latvian society as a whole. In order to improve
Altum employees’ understanding of diversity management issues, promote a positive attitude towards diversity and
encourage the ability of society to see diversity as an opportunity rather than a disadvantage, in 2021, several Altum
employees participated in training “Skatu Punkti: Ievuguvmi” (“View Points: Benefits”) organized by the Society Integration
Fund, the Institute of Corporate Sustainability and Responsibility and organization development centre Spring Valley.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
140
Corporate Governance Report 2021 (cont'd)
ESG – Social aspect (cont’d)
Staff training, competence development
Staff training and development is an important part of the staff management system. Altum, in accordance with its strategic
goals, is involved in raising the qualification of employees, continuous development of their skills and knowledge, and the
opportunity to gain diverse experience within the company. The aim of staff training is to improve job performance and
efficiency, develop the skills needed for the job, provide additional skills for professional growth and prepare employees for
new positions and responsibilities. The most suitable solutions for increasing professional development and competence are
used in the organization of the training process.
Employee training and professional development in 2021 was organized in accordance with Altum’s strategic goals and
training needs identified in the annual professional assessment. In 2021, remote learning has become the dominating way for
development of professional skills and competencies. Altum employees were offered to participate in 129 different training
activities (courses, seminars, training with tests, conferences, etc.), which were attended by 98% of employees. A training on
protection and processing of personal data with a concluding test was organised for all employees. Most of the employees
participated in internal training on lending issues (31 training activities), lectures and discussions on promoting well-being (20
activities), use of IT systems (2 lectures). For development of leadership and management skills, medium-level and top
managers participated in 19 different training activities.
Raising of employees’ competencies on sustainability and sustainable business had been in the focus of customer service
network in 2021. Considering that in 2022,Altum is significantly expanding its support programs which in turn sets the need for
more detailed specialisation of regional employees, customers’ demands promote improvement of client service and lending
processes that require closer engagement of employees in the improvement of these processes, the principles of the
Competency Teams have been improved. One of the main tasks of the Competency Teams is to increase competence levels
within team profiles and share knowledge and practical experience among regional colleagues in cooperation with
Competency Teams leaders and program owners.
Remuneration
Altum’s remuneration policy provides for uniform and fair principles for all employees, based on the strategic goals and
performance indicators, and promotes employee development and loyalty to the company. Altum has implemented a
financial motivation system for employees, which ensures that employees are systematically evaluated and remunerated in
accordance with the quality of work they do, initiative, work intensity, and contribution.
Altum publishes information about the principles of remuneration policy alongside the fundamental principles of Altum’s code
of ethics, which are available at www.altum.lv, under section ABOUT ALTUM, sub-section Personnel/Vacancies.
Altum participates in the financial sector remuneration survey on a regular basis in order to ensure effective application of the
remuneration policy, to balance the remuneration level with the remuneration level in the labour market.
Team-building
Altum strengthens the team spirit and maintains a positive work atmosphere through internal communication fostering
cooperation and team-building activities, encouraging active involvement of employees in areas of common interest. Due
to the restrictions on gatherings in person, no traditional events were organized for the company’s employees in 2021, but
team-building and recreational events strengthening the team spirit were organized remotely in a virtual environment, and
there were outdoor team-building events for different individual departments.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
141
Corporate Governance Report 2021 (cont'd)
ESG – Social aspect (cont’d)
Work environment, safety, well-being
Tidy, comfortable and aesthetic work environment and working conditions suited to the health condition of each employee
are important to Altum. Altum promotes employees’ awareness of occupational health and safety and preventive care for
their health. Based on the opinions of employees, the work environment and technical equipment are constantly being
improved with the aim of providing all workplaces with ergonomic equipment. In order to promote employee responsibility for
the environment, Altum educates and informs employees about topics related to environmental protection and the
company’s environmental goals.
In 2021, Altum paid special attention to measures for safe and healthy work environment in connection with the spread of the
Covid-19 virus. By taking timely and well-thought-out measures to limit the spread of the virus, including by providing
teleworking opportunities, Altum has avoided an epidemic in the workplace and has been able to ensure uninterrupted and
full-fledged work of the employees. Work organization at Altum and measures to prevent the spread of Covid-19 in the
workplace are aimed at minimizing meetings between employees and third parties (both when travelling and meeting with
customers or partners), providing for remote work opportunities, limiting in-person meetings, introducing distancing
requirements and requirements for the use of respiratory protective equipment in the workplace, taking employees’ and
visitors’ temperature, not allowing employees who have returned from countries with mandatory self-isolation requirement
upon arrival, sick employees, contacts of sick persons and employees with any typical symptoms to come to work.
Altum employees are provided with the necessary collective and individual protective equipment in their daily work, premises
and workplaces are regularly disinfected.
In order to support the mental health of employees and draw their attention to well-being matters, and considering the
specifics of the remote work and the growing work load due to development of Covid-19 support programme and customer
service, in 2021employees were offered educational online lectures on stress management and well-being, and a project
“Health month” was implemented. Employees are periodically surveyed about their well-being, working environments, etc.
during remote work to monitor their well-being level.
In 2021, there were no accidents at work in Altum and no occupational diseases were detected, as well as no complaints
about occupational safety were received. In order to learn about the working environment safety and cases of near
accidents, employee survey was organised. Employees were able to share their opinion about the working environment, and
their attention could be repeatedly drawn to practical safety measures, for example, the location of the medical emergency
kit, evacuation signs and fire safety rules.
Customers
Improvement of availability of Altum services is closely related with results of customer satisfaction survey. In 2021, an on-line
customer survey was introduced for all lending services. In a year, an especially good assessment was received on how
customers evaluate knowledge and professionalism of Altum employees. The highest assessments “good” and “very good”
was given by 18% and 72% of customers respectively, which together accounts for 92%.
Asked whether the customer would recommend Altum services to his/her family, friends and acquaintances, 24% of customers
responded “likely”, 70% said “definitely, yes”, and the overall positive assessment reached 94%.
Efficient and successful customer service during the crisis significantly depends on the ability to serve customers remotely.
Altum offers fully remote customer service, starting from consultations and loan application to decision making.
Improving the remote service and taking care of reducing circulation of paper documents, motivating training of employees
on use of electronic signature, signing cooperation documents with customers, were organised throughout the year. In a year
we observed growing awareness among employees and customers that resulted in a significantly bigger share of
electronically signed documents.
Also, use of several customer service instruments were improved, for example, usability of customer portal mans.altum.lv,
customer-friendly loan application format was introduced.
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
142
Corporate Governance Report 2021 (cont'd)
ESG – Social aspect (cont’d)
Community support, contribution to development of local community
In promoting cooperation between science and business, youth involvement in research, quality of research and
commercialization of innovative ideas, Altum cooperates with the Latvian University of Life Sciences and Technologies,
fostering the emergence and implementation of innovative agricultural solutions, and with BA School of Business and Finance
to achieve more meaningful connection between studies and the development of the financial sector.
Altum’s operations are very important for the country’s economic growth. That is why, by engaging in community support
activities and supporting organizations, projects and programmes, Altum focuses on initiatives that encourage entrepreneurial
activity, improve public welfare and foster environmental protection. Altum does not make donations, but supports projects,
financially and with the help of volunteers, that help promote and foster entrepreneurship, innovation, education, meaningful
use of the available state aid instruments, and other activities that promote public welfare, environment protection and
Latvia’s economic growth.
When considering engaging in specific community support activities, Altum’s decisions are based on the objectives, policies
and values it has defined as a state-owned company, while involved in the implementation of support activities are Altum
employees and the general public. The way of involvement and the amount of funding that Altum mobilises for community
support projects are determined by Altum’s operating strategy and budget, which is approved by the company’
Management Board and shareholders.
Initiatives supported in 2021:
Innovations,
infrastructure
5G Techritory
Promoting the Baltic Sea Region countries’ cooperation in
digital infrastructure
Three Seas Initiative Investment
Fund (3SIIF)
Promoting a new financing initiative to support transport,
energy and digital infrastructure projects in Central and
Eastern Europe, contributing to the region’s economic
development and quality infrastructure
Investor of the Year
Popularization of venture capital investments and their
positive effect on the national economy of Latvia,
highlighting the most successful private and corporate
investment deals
Development of
business
environment
Culture support program during
Covid era
In order to ensure uninterrupted operations of the culture
industry and respectively organization of events important for
the community, we organized seminars about the support
instruments for this sector with a goal to ensure planning and
organization of these events after the Covid restrictions are
lifted
Business experience days
Promoting sharing of knowledge among entrepreneurs for
successful business development in cooperation with partners
– LCCI and Swedbank
Countryside Will Be! competition
(Laukiem būt)
Promotion of entrepreneurial activity in rural areas by
involving young people, fostering the development of their
competencies and involvement in rural entrepreneurship in
cooperation with the Latvian Rural Advisory and Training
Centre, while promoting a more balanced regional
development in Latvia
Financial Literacy training for
business representatives who
plant to apply for EU and state
aid
Set of seminars “Status of companies experiencing difficulties”
on how to organise the accountancy and legal liabilities in
order to attract EU funds and state aid easily and simply
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
143
Eeffect upon
environment, green
thinking,
sustainability
Living Warmer campaign and
Most Energy Efficient Building in
Latvia project
Promoting energy-efficient practices in households and
business environment, emphasizing both financial and
environmental benefits thereof
Large-scale CO2 seminar –
management of pandemic and
energy efficiency risks
Altum takes on the leading role and educates business and
public sectors on how to reduce the CO2 impact, spread of
the pandemic, and increase energy efficiency in public
premises. Risk capital community, the State Construction
Control Bureau of Latvia, Altum energy efficiency and private
sector experts participated in preparing information.
Energy efficiency of private
homes
Launch of the programme and a set of seminars to educate
the community
Project to support SSE EMBA term
paper “Why do business
representatives not care about
energy efficiency and who
should take care of it?”
Project with engagement of Latvian and Estonian large
corporate managers who, within the framework of a strategy
course, studied and presented recommendations for
management of energy efficiency in order to promote
energy efficiency literacy for business representatives and
public sector
Customer spring and autumn
seminars on insulation of
residential houses, absorption of
the ERDF
Collection of good practices and recommendation to
promote the society and project managers to perform
renovation of energy efficient residential houses easily and
simply
Online conference “Impact of
the Green Course on agricultural
economy”
Webinar in which, together with other agriculture partners,
organizations were explained the Green Course,
opportunities for farmers during the transition and the abilities
to adapt and develop
Expert discussion “Risks –
opportunities or obstacles for
development?”
Cycle of discussions for better corporate governance,
participation in expert discussion “Risks – opportunities or
obstacles for development?” that was the fifth event in a
cycle of six discussions on different aspects in improving
corporate governance. Organised by FCMC, the Ministry of
Justice and Nasdaq Riga
Latvian Capital Market Forum
2021
Participation in a discussion on the opportunities of the state
in development of the capital market
Responsible Idea Market within
the framework of Responsible
Business Week 2021
#PasakasParDarbu – ATJAUTĪGAIS JĒKABS UN ĻAUNAIS BURVIS
(#FairyTalesAboutWork –WITTY JĒKABS AND EVIL WIZARD )
Sharing experience about promoting employee well-being
and involvement – in the attached video Atbildīgu ideju tirgus
2021
Education
Higher education (Latvia
University of Life Sciences and
Technologies, BA School of
Business and Finance)
Promoting cooperation between science and business, youth
involvement in research, commercialization of research
quality and innovative ideas
Latvian student companies’
events #CitsBazārs
Educating a new generation of entrepreneurs and industry
experts by linking, in the learning process, theoretical
knowledge with practice, through participation in the Junior
Achievement Latvia programme Student Company (Skolēnu
mācību uzņēmums - SMU)
Public welfare,
demography
Social Entrepreneurship
Association
Promotion of the idea of social entrepreneurship so that
Latvia would have increasingly more enterprises with a clear
social purpose and positive social impact
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
144
Competition And Grow It Will
(Tam labam būs augt)
The aim is to promote the development of the existing social
enterprises and new social entrepreneurship ideas, as well as
to tell about these ideas and show them to the people of
Latvia. The competition is organized by the Social
Entrepreneurship Association of Latvia in cooperation with the
British Council in Latvia. The competition is supported by SEB
Banka, Development Finance Institution Altum, newspaper
Dienas Bizness and RISEBA Architecture and Media Centre
H2O6.
Conference “Housing availability
for families with children”
Conference was organised by the Association of
Organizations for Large Families in cooperation with the
Cooperation Platform of the Cross-Sectoral Coordination
Centre, the Demographic Affairs Centre, the Economics
Ministry, the State Development Financial Institution ALTUM
and local governments.
Discussions were held on support steps that are needed to
improve availability of housing that meets the needs of
families with children, and the minimum living space
standards guaranteed for children by the state or local
governments.
Think tank on remigration issues
The objective of the think tank is to bring together the parties
involved in the remigration process in order to jointly analyse
the current situation and consider proposals on how to
improve the remigration process. Promoting the availability of
information on state support for starting a business by
remigrants and support for housing purchases by residents
returning to Latvia.
Financial sector
development
Finance Latvia association
Promotion of sustainable development of the financial sector
by focusing, in cooperation with commercial banks, on the
development of lending, personnel, communication, legal
and other matters, and encouraging exchange of opinions
and decision making in Latvia’s public interest
Development of bankers’
training materials on ERDF
propositions
Development of guarantee trainings and integration in
bankers’ training handbook. Video
Export
The Red Jackets
Popularization of export-viable companies’ experience and
excellence in promoting export culture and positive
economic impact
Competition Export and
Innovation Award
Promotion of the production of new products with high export
potential by popularizing the performance of Latvian
companies and commending the manufacture of quality
domestic products for the market, introduction of innovations
and development of industrial design
Seminar LIAA
In cooperation with heads of LIAA representations across the
world, we train and thus develop competencies on how
exporters with the state aid can protect their business from
international risks (customer and country solvency risks)
Seminar “What support is
available for export”
For ALTUM cooperation partners, employees of state
institutions and state capital companies who work with
exporters
JSC Development Finance Institution Altum
Consolidated and Separate Annual report for the year ended 31 December 2021
Other notes to the Annual Report
145
Corporate Governance Report 2021 (cont'd)
ESG – Social aspect (cont’d)
More information about Altum principles for implementation of public support activities and support projects is available on
website www.altum.lv.
Corporate Governance Report 2021 is publicly available in Latvian and English at Altum’s premises at 4 Dome Square, Riga
and in electronic form – on the website www.altum.lv, in section ABOUT ALTUM/CORPORATE GOVERNANCE AND
SUSTAINABILITY under CORPORATE GOVERNANCE sub-section.
Reinis Bērziņš
Chairman of the Board
30 March 2022