Panevėžio Statybos Trestas AB

Consolidated Financial Statements for the year 2019 prepared in accordance with International Financial Reporting Standards as adopted in the European Union, presented together with Independent Auditor's Report and Annual Report

Parent Company's Details	1
Independent Auditor's Report	2
Confirmation of Company's Responsible Persons	ੈ
Consolidated Statement of Comprehensive Income	10
Consolidated Statement of Financial Position	11
Consolidated Statement of Changes in Equity	13
Consolidated Statement of Cash Flows	14
Notes	15
Company's and Consolidated Annual Report, Corporate Governance
Report and
Social Responsibility Report	64
Appendix Concerning Compliance with Governance Code	89

Parent Company's Details

Panevėžio Statybos Trestas AB

Company code:	147732969
Phone no:	+370 45 505 503
Fax:	+370 45 505 520
Address:	P. Puzino st. 1, LT-35173 Panevėžys

The Board

Remigijus Juodviršis, Chairman Justas Jasiūnas Audrius Butkūnas Audrius Balčėtis Vilius Gražys

Management

Dalius Gesevičius, Managing Director

Auditor

Ernst & Young Baltic UAB

Banks

Luminor bank AS SEB bank AB Swedbank AB Šiaulių Bankas AB OP Corporate Bank Plc Lithuania Branch

UAB ..Ernst & Young Baltic" Subačiaus g. 7 LT-01302 Vilnius I ietuva Tel.: (8 5) 274 2200 Faks.: (8 5) 274 2333 [email protected] www.ey.com

Juridinio asmens kodas 110878442 PVM mokėtojo kodas LT108784411 Juridinių asmenų registras

Ernst & Young Baltic UAB Subačiaus St. 7 LT-01302 Vilnius l ithuania Tel · +370 5 274 2200 Fax: +370 5 274 2333 [email protected] www.ey.com

Code of legal entity 110878442 VAT paver code LT108784411 Register of Legal Entities

INDEPENDENT AUDITOR'S REPORT

To the shareholders of AB Panevėžio statybos trestas

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of AB Panevėžio statybos trestas and its subsidiaries (hereinafter the Group), which comprise the consolidated statement of financial position as of 31 December 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2019 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of publicinterest entities (regulation (EU) No 537/2014 of the European Parliament and of the Council). Our responsibilities under those standards are further described in the Audit of the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the requirements of the Law on Audit of the financial statements of the Republic of Lithuania that are relevant to the audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities in accordance with the financial statements of the Republic of Lithuania and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most of the financial statements of the current period. These matters were addressed in the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have fulfilled the responsibilities described in the Audit of the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement . The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

The key audit matter

How the matter was addressed in the audit

Uncertainty related to the fine imposed by the Competition Council

As disclosed in Note 27 of the consolidated financial statements, on 21 December 2017 the Competition Council ruled that the parent company has breached the competition law regulations when concluding joint activity agreements for participation in certain tenders and imposed on the parent company a fine of EUR 8.5 million. The management disagrees with the decision of the Competition Council and filed an appeal to the Supreme Administrative Court of Lithuania with the request to cancel the fine imposed after the unfavourable decision taken by Vilnius Regional Administrative Court on this matter, and the payment of the fine is currently suspended till the resolution of Among other procedures, our audit procedures included discussions with the management and the management's external legal advisor about the facts and circumstances concerning the Competition Council decision and the arguments underlying the management's assessment of the expected outcome of the lawsuit and the resulting management's disclosure of the contingent liability in the consolidated financial statements. Our procedures also included reading the appeal filed by the parent company to the Vilnius Regional Administrative Court, discussing with the external legal advisor of the Company the progress of

The key audit matter

How the matter was addressed in the audit

including historical default rate information and forward-looking information as of 31 December 2019. We tested the correctness of aging of the receivables by agreeing the date to the invoices issued for selected items and verified the arithmetical accuracy of the management's calculation of impairment.

Furthermore, we have assessed the adequacy of the disclosure in the consolidated financial statements on this matter (Notes 2 and 18).

Other information

Other information consists of the information included in the Group's 2019 Annual Report, including Corporate Governance Report, and Corporate Social Responsibility Report, other than the financial statements and our auditor's report thereon. Management is responsible for the other information presentation.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except as indicated below.

In connection to our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

We also have to evaluate, if the consolidated financial information included in the Group's Annual Report, including Corporate Governance Report, corresponds to the consolidated financial year and if the Group's Annual Report, including Corporate Governance Report, was prepared in accordance with the relevant legal requirements. In our opinion, based on the work performed in the course of the consolidated financial statements, in all material respects:

The financial information included in the Group's Annual Report, including Corporate Governance Report, corresponds to the financial information in the consolidated financial statements for the year then ended; and

▸ The Group's Annual Report, including Corporate Governance Report, was prepared in accordance with the requirements of the Law on Consolidated Financial Reporting by Groups of Undertakings of the Republic of Lithuania.

We also need to check that the Corporate Social Responsibility Report has been provided. If we identify that Corporate Social Responsibility Report has not been provided to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statement is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance that an audit conducted in accordance with ISAs will always detect a material misstatements can arise from fraud or error and are considered material if, individually or in the agregate, they could reasonably be expected to influence the esers taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements. whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

› Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained. whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

› Obtain sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit finding any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the est benefits of such communication.

Report on Other Legal and Regulatory Requirements

Other requirements of the auditor's report in accordance with Regulation (EU) No 537/2014 of the European Parliament and of the Council.

Appointment and approval of the auditor

In accordance with the decision made by the extraordinary shareholders meeting on 9 November 2017 we have been chosen to carry out the audit of Group's financial statements for the period of our total uniterrupted engagement is three years.

Consistency with the audit report submitted to the audit committee

We confirm that our opinion in the section 'Opinion' is consistent with the additional Audit report which we have submitted to the Group and to the Audit Committee.

Non-audit services

We confirm that to the best of our knowledge and belief, services provided to the Group are consistent with the requirements of the law and regulations and do not comprise non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

Throughout our audit engagement period, in addition to the financial statements we have provided AB Panevėžio statybos trestas group with tax consulting service for the total fee of EUR 2 800 excluding VAT.

The partner in charge of the audit resulting in this independent auditor's report is Inga Gudinaité.

UAB ERNST & YOUNG BALTIC Audit company's licence No. 001335

Inga Gudinaitė Auditor's licence No. 000366

3 April 2020

Company code: 147732969 Address: P. Puzino st. 1, LT-35173 Panevėžys

CONFIRMATION OF COMPANY'S RESPONSIBLE PERSONS

This confirmation of responsible employees concerning the audited consolidated financial statements and the consolidated annual report of Panevežio Statybos Trestas AB and its subsidiaries (hereinafter "the Group") for the year 2019 is presented in accordance with the Law on Securities of the Republic of Lithuania and the Rules for Preparation and Presentation of Periodic and Additional Information approved by Resolution of the Board of Lithwania.

Hereby I confirm that, as to our knowledge, the presented consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the consolidated assets, consolidated liabilities, consolidated financial position, consolidated profit or loss and consolidated cash flows, and that the consolidated annual report fairly states the review of business development and activities, the Group's position and description of the main risks and uncertainties that are faced.

Panevėžio Statybos Trestas AB Managing Director Dalius Gesevičius

3 April 2020

Company code: 147732969 Address: P. Puzino st. 1, LT-35173 Panevėžys

Consolidated Statement of Comprehensive Income

For the year ended December 31

EUR thousand		Note	2019	2018
Revenue from contracts with customers Cost of Sales		5,6 7	110,466 (104,586)	104,861 (100,017)
Gross profit			5,880	4,844
Other income Selling Expenses Administrative expenses, total:		11 8 9	390 (527) (6,034)	419 (473) (6,551)
receivables Other administrative expenses Other expenses	Impairment loss on trade debts, contract assets and other	11	(236) (5,798) (50%)	(830) (5,721) (490)
Operating profit (loss)			(799)	(2,251)
Total finance income Interest income Other finance income Finance costs		12 12	1,836 0 1,836 (143)	11 7 4 (1,885)
Profit/(loss) before tax Income tax expense		। ਤੇ	894 (73)	(4,125) (182)
Net profit/(loss)			82.1	(4,307)
Other comprehensive income Items that will never be transferred to profit/(loss) Impact of real estate revaluation Impact of income tax Items that can or will be transferred to profit/(loss) Currency translation effect Other comprehensive income (loss), total			0 0 0 (1,475) (1,475) (1,475)	1,178 1,385 (207) 1,386 1,386 2,564
Total comprehensive income (loss)			(654)	(1,743)
Net profit/(loss) attributable to: To the equity holders of the Parent Non-controlling interest			407 414 821	(3,691) (616) (4,307)
Comprehensive income (loss) attributable to: To the equity holders of the Parent Non-controlling interest			(635) (19)	(1,543) (200)
Basic and diluted earnings/(loss) per share (EUR)		26	(654) 0.05	(1,743) (0.26)
	The notes on pages 15-63 are an integral part of these consolidated financial statements.
Managing Director	Dalius Gesevičius		03704/2020
Chief Accountant	Danguolė Širvinskienė		03/04/2020

03/04/2020

Company code: 147732969 Address: P. Puzino st. 1, LT-35173 Panevėžys

Consolidated Statement of Financial Position

As at December 31

EUR thousand

	Note	2019	2018
A 13 31 13
Non-current assets
Property, Plant and Equipment	। ने	7,168	7.806
Intangible assets	। ਦੇ	219	136
Investment property	16	1.612	1,562
Non-current trade receivables	18	1,703	2,912
Other non-current financial assets		77	67
Deferred income tax assets	13	1 80	89
Total non-current assets		10,068	12,572
Current assets
Inventories	17	31,602	17,636
Trade receivables	18	22,120	12,069
Contract assets	18	3,745	3,284
Prepayments		460	587
Other assets	19	1,066	1,647
Prepaid income tax	13	বী	207
Cash and cash equivalents	20	6.674	16,046
Total current assets		65.711	51,476
TOTAL SSEEKS		76,679	64,048

The notes on pages 15-63 are an integral part of these consolidated financial statements.

Dalius Gesevičius Managing Director

Chief Accountant Danguolė Širvinskienė Company code: 147732969 Address: P. Puzino st. 1, LT-35173 Panevėžys

Consolidated Statement of Financial Position (continued)

As at December 31

EUR thousand

	Note	2019	2018
EQUITY AND LIABILITIES
Equity
Issued capital	21	4,742	4,742
Reserves	21	5,242 24,343 34,327	6,434 23-784 34,960
Retained earnings
Total equity attributable to equity holders of the Parent
Non-controlling interest		913	ਕੇ ਦੇ
Total equity		35,240	35,905
Loans and borrowings	23	2	g
Provisions	24	1,158	1,166
Deferred tax liability	13	36	રેણ
Total non-current liabilities		1,196	1,231
Current lisbilities
Loans and borrowings	23	12.319	રો વે
Trade payables	22	20.074	18.476
Contract liabilities	25	3,686	3,251
Provisions	18, 25	111	611
Income tax payable	13	215	63
Other liabilities	હર્સ	3,838	3,992
Total current liabilities		40,243	26,912
Total liabilities		41,439	28,143
TOTAL EQUITY AND LIABILITIES		76.679	64,048

The notes on pages 15-63 are an integral part of these consolidated financial statements.

Managing Director	Dalius Gesevičius

Chief Accountant Danguolė Širvinskienė

03/04/2020 03/04/2020 -

Consolidated Statement of Changes in Equity
EUR thousand	Note	capital Issued	reserve Legal	Revaluation reserve	translation currency Foreign reserve	Retained earnings	Attributable to holders of the the equity Parent	Noncontrol interest ling	Total equity
Equity as at 1 January 2019		4,742	ਵੇਂ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਕੇ ਇੱਕ ਸੀ। ਇਸ ਦੀ ਇੱਕ ਵਿੱਚ ਇੱਕ ਸੀ। ਉਹ ਇੱਕ ਵਿੱਚ ਇੱਕ ਸੀ। ਉਸ ਦੀ ਇੱਕ ਵਿੱਚ ਇੱਕ ਸੀ। ਉਸ ਦੀ ਇੱਕ ਵਿੱਚ ਇੱਕ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਸੀ। ਉਸ ਦੀ ਇੱਕ ਸੀ। ਉਸ ਦੀ	2,475	3,360	23.784	34.960	945	35,905
Total comprehensive income for the year Net profit/(loss)						407	407	414	821
Real estate revaluation	21				(1,042)		(1,042)	(433)	(1,475)
Total other comprehensive income Currency translation effect					(1,042)		1.042	(433)	(1,475)
Total comprehensive income for the year					(1,042)	407	(635)	(19)	(654)
Depreciation transfer for buildings				150)		152	ਟ		C
Transactions with owners, recognized directly in equity
Dividends paid out by subsidiary to minority owners	26						0	(13)	(13)
Total Transactions with owners of the Parent								913	35,240
Equity as at 31 December 2019		4,742	ਟੇਰੇਰੇ	2,325	2,318	24.343	34 377
Equity as at 01 January 2018		4,142	ਟੋਰੇਗੇ	1,384	2387	28,371	37,483	1,145	38,628
Total comprehensive income for the year						(3,691)	(3.691)	(616)	(4,307)
Net profit/(loss)				1,175			1,175	5	1,178
Real estate revaluation					973		973	413	1,386
Currency translation effect				1.175	973		2.148	416	2-564
Total comprehensive income for the year Total other comprehensive income				1.175	973	(3.691)	(1.543)	(200)	(1.743)
Depreciation transfer for buildings				(84)		84	0		0
Transactions with owners of the Parent,
recognized directly in equity	26					(980)	(980)		(980)
Total Transactions with owners of the Parent Dividends						(980)	(980)		(980)
Equity as at 31 December 2018		4.742	جوو	2.475	3,360	23,784	34.960	ਰੇਪਟੇਵ	35,905
The notes on pages 15-63 are an integral part of these consolidated financial statements.
Managing Director		Dalius Gesevičius					03/04/2020
Chief Accountant		Danguolė Sirvinskienė					03/04/2020

								t

Consolidated Financial Statements for 2019 AB "Panevėžio statybos trestas"

Company code: 147732969 Address: P. Puzino st. 1, LT-35173 Panevėžys

Consolidated Statement of Cash Flows

POI file yest entiet trevenuer of
EUR thousand	Note	2019	2018
Cash flows from/(used in) operating activities Net profit/(loss)		821	(4,307)
Adjustments to:
Depreciation and amortisation (including impairment)	14, 15	1,543	1,438
Proceeds from disposal of property, plant and equipment		9	33
Income tax expense	13	73	182
Elimination of results from financing activities	12	(1,321)	1,903
Other non-cash items		(922)	419
		203	(332)
	17	(13,640)	(7,115)
Changes in inventories	18	(8,568)	(7,595)
Changes in trade receivables and contract assets		127	180
Changes in prepayments	19	240	387
Changes in other assets	22	1 રેઝર	8,219
Changes in trade payables Changes in prepayments received		873	(2,777)
Changes in other liabilities		(825)	1,650
		(19,994)	(7,383)
		(52)	0
Income tax paid
Net cash flows from/(used in) operating activities		(20,046)	(7,383)
Cash flows from/(used in) investing activities
Acquisition of intangible assets and property, plant and
equipment	14, 15	(990)	(2,287)
Disposal of property, plant and equipment		0	26
Loans granted		(15)	(25) प
Collection of loans granted		20	7
Interest and dividends received		3
Net cash flows from/(used in) investing activities		(973)	(2,275)
Cash flows from/(used in) financing activities
Dividends paid	31	(1)	(979)
Repayment of borrowings	31	(3,213)	(79)
Loans and borrowings received	31	15,000	0
Payment of finance lease liabilities	31	(7)	(78) (53)
Paid interest for bank guarantees		(40) (92)	0
Paid interest for loans
Net cash flows from/(used in) financing activities		11,647	(1,187)
Net increase/(decrease) in cash and cash equivalents		(9,372)	(10,845)
Effect of foreign exchange on cash		0	0
Cash and cash equivalents as at January 1		16,046	26,891
Cash and cash equivalents as at December 31		6,674	16,046
The notes on pages 15-63 are an integral part of these consolidated financial statements.

Dalius Gesevičius

03/04/2020

Notes

General information 1.

AB Panevéžio Statybos Trestas (hereinafter "the Company", "Parent") was established in 1957. The company code is 147732969 and it is registered at P. Puzino st. 1, LT-35173 Panevežys. Since 13 July 2006, the Parent's ordinary shares are traded on the Official trading list of the Vilnius Stock Exchange (VSE). These consolidated financial statements comprise the financial statements of the Parent and its subsidiaries (hereinafter "the Group"). The Group is primarily involved in the construction of buildings, structures, other facilities and networks, as well as real estate development in Lithuania and abroad. As at 31 December 2019, the Group had 978 employees (as at 31 December 2018 - 1,057).

As at 31 December 2019 and 2018, the principal shareholders of the Company were as follows:

· Panevėžio Keliai AB, S. Kerbedžio st. 7, Panevėžys, company code 147710353, (49.78%) the ultimate controlling parent;
· Swedbartk AS (Estonia), Liivalaia st. 8, 15040 Tallim, Estonia, company code 10060701, (7.89%);
· The freely traded shares, owned by natural and legal persons (42.33%). No one owns more than 5%.

Panevéžio Keliai AB is the ultimate controlling parent which prepares separate and consolidated financial statements based on Business Accounting Standards (BAS) of the Republic of Lithuania. Shareholders of Panevežio Keliai AB are natural persons. There is no controlling ultimate private person. The shareholders of the Company have a statutory right to either approve these financial statements or not approve them and require a new set of financial statements to be prepared. The Parent's management authorized these financial statements on 3 April 2020.

Country of Equity as at Operatio 31/12/2019 Nature of activities (EUR thousand) n		profit/(loss) for the year 2019	Equity as at 31/12/2018	Net profit/(loss) for the year 2018
PST Investicijos Lithuania
Real estate UAB (subgroup
development consolidated)	3,890	1,249	3,938	(1,720)
Construction:
electrical installation Lithuania Vekada UAB	1,292	59	1,534	220
Lithuania Construction: steel Metalo Meistrai
structures IJAB	429	(82)	499	108
Construction: wooden
I ithusnia panel houses Skydmedis UAB	826	353	972	376
Construction:
conditioning
Lithuania equipment Alinita UAB	(378)	101	(479)	(10)
Real estate
development Russia OOO Teritorija	(1,267)	130	(1,223)	(182)
Kingsbud Sp. Z. 0.
Intermediary services Poland 0.	252	93	161	60
Construction SIA PS Trests I atvia	(175)	(6)	(165)	(5)
Real estate Seškinės Projektai			1,107
Lithuania development UAB	717	(390)		(112)
Real estate Ateities Projektai	349		421	174
development Lithuaria TIAB		(72)
Wholesales of steel	79	ਦੇਹੇ	10	0
Hustal UAB Lithuania structures
Real estate Tauro Apartamentai	3	0	3	0
Lithuania development UAB				1 5

Financial information of the subsidiaries is as follows:

Ownership of subsidiaries:

	Registration address	2019	2018
PST Investicijos UAB (group)	Verkių st. 25C, Vilnius	68.3%	68.3%
Vekada UAB	Marijonų st. 36, Panevėžys	વેરે 6 જેવ	05.6 %
Metalo Meistrai UAB	Tinklų st. 7, Panevėžys	100 %	100 %
Skydmedis UAB	Pramonės st. 5, Panevėžys	100 %	100 %
Alinita UAB	Tinklų st. 7, Panevėžys	100 %	100 %
Seškinės Projektai UAB	Verkių st. 25C, Vilnius	100 %	100 %
	Lunačiarsko ave. 43/27, Cerepovec, Vologda
OOO Teritorija	o., Russia	87.5 %	87.5 %
Kingsbud Sp. z. o. o.	A. Patli st. 12, 16-400 Suwalki, Poland	100 %	100 %
SIA PS Trests	Skultes st. 28, Skulte, Marupes mun., Latvia	100 %	100 %
Tauro Apartamentai UAB	Verkių st. 25C-1, Vilnius	100 %	100 %
Hustal UAB	Tinklu st. 7, Panevėžys	100 %	100 %
Ateities Projektai UAB	Verkių st. 25C-1, Vilnius	100 %	100 %*
Aliuminio Fasadai UAB	Pramonės st. 5. Panevėžys	100 % **

* On 25 January 2018, the Parent acquired 100% of Ateitics projektai, UAB shares from its subsidiary UAB PST investicijos

** On 6 December 2019 Aliuminio Fasadai UAB was established by the Parent. The company was registered on 2 January 2020.

The Group's subsidiary PST Investicijos UAB has the following subsidiary:

Nature of activities	2019	2018
ZAO ISK Baltevromarket Development of real estate projects in Kaliningrad	100 %	100 %

Joint operations

In 2016 the Group made and agreement with limited liability Group SIA ARMS GROUP, Gobu st. 1-129, Baloži, Kekavas municipality, Latvia, regarding joint operations and joint liability for newly established general partnership enterprise PST Un Arms. Under the agreement, 50% of operating expenses, assets and liabilities of the joint operations of PST Un Arms belongs to the Group. General partnership enterprise PST Un Arms is established for a certain project developed in Latvia.

As at 31 December 2019, summary financial information of PST Un Arms was as follows: total assets amounted to EUR 805 thousand, liabilities - EUR 755 thousand, equity - EUR 50 thousand, income - EUR 1,778 thousand and net result - EUR 72 thousand. As at 31 December 2018 the corresponding amounts were as follows: total assets amounted to EUR 1,029 thousand, liabilities - EUR 1,052 thousand, equity - EUR (22) thousand, income - EUR 1,749 thousand and net result - EUR (31).

2. Basis of Preparation

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (hereinafter "IFRSs").

Basis of preparation of the Consolidated Financial Statements

The consolidated financial statements have been prepared on the historical cost basis except for land and buildings measured using the revaluation model and investment property measured at fair value.

Functional and presentation currency

The consolidated financial statements are presented in the national currency of the Republic of Lithuania, euro (EUR), which is the Parent company's functional currency as well as of subsidiaries operating in Lithuania and Latvia. The functional currencies of foreign subsidiaries are the respective foreign currencies of the country of residence. Items included in the financial statements of these subsidiaries are measured using their functional currency. The principles of functional currency translation into the currency of the Group's financial statements are disclosed in Note 3.1.

Due to rounding of certain amounts to thousand, figures in the tables may differ. Such rounding bias is immaterial in these financial statements.

Estimates

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty in applying accounting policies that have a significant effect on the amounts recognized in the financial statements and have a significant risk of causing material adjustments to the financial statements in the next financial year is included in the following notes:

· Note 13: Deferred taxes recognition. Deferred tax asset is recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences could be utilized.
· Note 14: Fair value of land and buildings which are measured using the revaluation model, useful lives of property, plant and equipment. The Group verifies economic useful lives of property, plant and equipment and intangible assets at least once a year - (Note 3.3). Revaluations are carried out regularly ensuring that the carrying amount of land and buildings do not significantly differ from their fair values as at reporting date: when preparing these financial statements, the management has assessed that no periodic revaluation is needed for the property, plant and equipment carried at revalued amount as there are no internal or external indications of material change in the fair values as at 31 December 2019 since the last revaluation performed and accounted for in the financial statements in 2018.
· Note 16: Fair value of investment property. The Group engaged external appraisers to estimate the fair values of these assets.
· Note 17: Measurement of net realizable value of inventories. A key factor in estimating the net realizable value of inventories is the recoverability of ongoing construction projects. Therefore, the Group engaged external appraisers to estimate the fair values of these projects based on discounted cash flow or comparable price technique.
· Note 18: Impairment of trade receivables and measurement of revenue from contracts with customers as well as contract assets and contract liabilities based on the stage of completion of the construction contracts. The accurate recognition of revenue on contracts in progress is highly dependent on judgement exercised by the management in assessing the completeness and accuracy of the overall costs of the project (estimates) as it is the key assumption in the assessment of the stage of completion of the contracts in progress. Estimating the recoverable amounts of receivables is a process, which requires significant management judgement and estimates, particularly those that are related to expected credit losses assessment based on the analysis of the historical credit losses, considerations of future factors and other subjective risk factors related to the specific debtor or debtors' group. Estimates were applied in assessing the amounts to be collected and their timing.
· Note 24: Warranty provision is calculated by the Group on a monthly basis based on monthly revenue. Warranty provision is being calculated by taking into account revenue, actual warranty expenses incurred in previous periods, its proportion against actual sales, legal term of warranty and historical information.
· Note 27: The management uses judgement while assessing the possible outcome of the legal disputes. Contingent liabilities are not recognised in the financial statements as based on the management judgement it is more likely than not, that the Group will win the legal disputes mentioned in the note, or it is not possible to assess reliably the possible outcome of the contingency at the moment.
· Note 31: the Group assessed the potential impact of COVID-19 pandemic situation, including the quarantine that has been announced in the Republic of Lithuanian on 16 March 2020, on the financial statements, including going concern assumption. The management has assessed that this matter will not affect the Group's ability to continue as a going concern as the Group has not yet experienced and does not expect to experience a significant business disruption due to this matter and also has sufficient balance of cash and cash equivalents and liquid assets in order to manage the short-term volatility in the Group's cash flows if caused by COVID-19 situation. In addition, the management has concluded that this event is a nonadjusting subsequent event and therefore it's potential impact was not considered when making estimates and assumptions about the fair values of property, plant and equipment carried at revalued amounts and investment property, indications of impairment of other property, plant and equipment, net realisable value of inventory and expected credit losses on trade receivables and contract assets that are mentioned above. This matter might have a significant impact on these estimates in the next financial period, which cannot be reasonably quantified at this stage by the management due to great level of uncertainty associated with further development of COVID-19 pandemic situation in the countries of operation of the Group and the economy as the whole due to general business disruption caused by this matter.

3. Summary of Significant Accounting Policies

Basis of consolidation

The financial statements of the subsidiaries are prepared for the same reporting year, using consistent accounting policies.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

The power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);
The right to variable returns from its involvement with the investee;
The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control.

Subsidiaries are consolidated from the date from which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. All intergroup transactions, balances and unrealised gains and losses on transactions among the Group companies have been eliminated. The equity and net income attributable to noncontrolling interests, are shown separately in the statement of financial position and the statement of comprehensive income.

The losses of subsidiaries are attributable to the non-controlling interest even if that results in a deficit balance on the non-controlling interest.

Acquisitions and disposals of non-controlling interest by the Group are accounted as equity transaction: the difference between the carrying value of the net assets acquired from/disposed to the non-controlling interests in the Group's financial statements and the share purchase/sale prices are accounted directly in equity.

Basis of Consolidation (continued)

Change of ownership share in the subsidiary when control is accounted for as equity transaction. If the Group loses control of the subsidiary, the Group takes the following actions:

· Derecognises the assets (including goodwill) and liabilities of the subsidiary;
· Derecognises the carrying amount of non-controlling interest, if any;
· Derecognises accumulated currency exchange differences accounted for in equity;
· Accounts for consideration received at fair value:
· Accounts for retained investment at fair value;
· Accounts for arising surplus or deficit in the profit or loss;
· Reclassifies the components previously recognized in other comprehensive income and attributable to the parent company to the statement of comprehensive income or retained earnings respectively.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the acquisition-date fair value of the consideration transferred and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration that is classified as an asset or liability is measured at fair value in accordance with IFRS 9: in either in profit/loss or as a change in other comprehensive income. If contingent consideration is classified as equity, it is not remeasured and its subsequent settlement is accounted for within equity. Acquisition costs incurred are expensed and included in administrative expenses.

If the business combination is achieved in stages, the acquirer's equity interest previously held in the acquiree is measured at fair value at the acquisition date through statement of comprehensive income.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in statement of comprehensive income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Impairment is assessed annually. Accounted impairment is not restated. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, assigned to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

A joint anangement is an arrangement of which two or more parties have joint control. These arrangement has the following characteristics:

· The parties are bound by a contractual arrangement.

· The contractual arrangement gives two or more of those parties joint control of the arrangement.

The Group has a joint arrangement that is a joint operation.

Basis of Consolidation (continued)

As a joint operator the Group recognises in relation to its interest in a joint operation:

· its assets, including its share of any assets held jointly;
· its liabilities, including its share of any liabilities incurred jointly;
· its revenue from the sale of its share of the output arising from the joint operation;
· its share of the revenue from the sale of the output by the joint operation; and
· its expenses, including its share of any expenses incurred jointly.

Adoption of new and/or changed IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations

The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Group as of 1 January 2019:

· IFRS 16: Leases

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ("lessee")and the supplier ("Jessor"). The new standard requires lessees to recognize most leases on their financial statements. Lessees have a single accounting model for all leases, with certain exemptions. Lessor accounting is substantially unchanged. The adoption of the standard had no significant impact on the financial statements as the Group only has few lease contracts that are not material.

· IFRS 9: Prepayment features with negative compensation (Amendment)

The Amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract (so that, from the perspective of the asset there may be 'negative compensation'), to be measured at amortized cost or at fair value through other comprehensive income. Due to absence of this kind of property, the amendment had no impact on the Group's financial statements.

· IAS 28: Long-term Interests in Associates and Joint Ventures (Amendments)

The Amendments relate to whether the measurement, in particular impairment requirements, of long- term interests in associates and joint ventures that, in substance, form part of the inet investment' in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Amendments clarify that an entity applies IFRS 9 Financial Instruments, before it applies IAS 28, to such long-term interests for which the equity method is not applied. In applying IFRS 9, the entity does not take account of any adjustments to the carrying amount of long- term interests that arise from applying IAS 28. The adoption of the amendments had no material impact on the Group's financial statements.

· IFRIC INTERPETATION 23: Uncertainty over Income Tax Treatments

The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12. The Interpretation provides guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and the uppropriate The adoption of the amendments had no material impact on the Group's financial statements.

· IAS 19: Plan Amendment, Curtailment or Settlement (Amendments)

The Amendments require entities to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement has occurred. The Amendments also clarify how the accounting for a plan amendment, curtailment or settlement affects applying the asset ceiling requirements. Due to absence of such plans, the amendment did not have material impact on the Groups financial statements.

· The LASB has issued the Annual Improvements to IFRSs 2015 - 2017 Cycle, which is a collection of amendments to IFRSs. Implementation of improvements had no material impact on the Group's financial statements.

> IFRS 3 Business Combinations and IFRS 11 Joint Arrangements:

The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasures previously held interests in that business.

IAS 12 Income Taxes:

The amendments clarify that the income tax consequences of payments on financial instruments classified as equity should be recognized according to where the past transactions or events that generated distributable profits has been recognized.

IAS 23 Borrowing Costs:

The amendments clarify paragraph 14 of the standard that, when a qualifying asset is ready for its intended use or sale, and some of the specific borrowing related to that qualifying asset remains outstanding at that point, that borrowing is to be included in the funds that an entity borrows generally.

Standards issued but not yet effective

The Group has not applied the following IFRS and IFRIC interpretations that have been issued but not yet effective:

· Amendment in 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

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The Group has not yet evaluated the impact of the adoption of these amendments.

· Conceptual Framework in IFRS standards

The IASB issued the revised Conceptual Framework for Financial Reporting on 29 March 2018. The Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards. IASB also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. Its objective is to support transition to the revised Conceptual Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction. For preparers who develop accounting policies based on the Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.

· IFRS 3: Business Combinations (Amendments)

The IASB issued amendments in Definition of a Business (Amendments to IFRS 3) aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The Amendments are effective for business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period, with earlier application permitted. These Amendments have not yet been endorsed by the EU. The Group has not yet considered the impact of these amendments on the Group's financial statements as they will only be relevant, if the Group makes business acquisition transactions in the future.

· IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of "material" (Amendments)

The Amendments are effective for annual periods beginning on or after 1 January 2020 with earlier application permitted. The Amendments clarify the definition of material and how it should be applied. The new definition states that, "Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity". In addition, the explanations accompanying the definition have been improved. The Amendments also ensure that the definition of material is consistent across all IFRS Standards. Management has not yet evaluated the impact of the implementation of these amendments.

· Interest Rate Benchmark Reform - IFRS 9, IAS 39 and IFRS 7 (Amendments)

The amendments are effective for annual periods beginning on or after 1 January 2020 and must be applied retrospectively. Earlier application is permitted. In September 2019, the IASB issued amendments to IFRS 9, IAS 39 and IFRS 7, which concludes phase one of its work to respond to the effects of Interbank Offered Rates (IBOR) reform on financial reporting. Phase two will focus on issues that could affect financial reporting when an existing interest rate benchmark is replaced with a risk-free interest rate (an RFR). The amendments published, deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and address the implications for specific hedge accounting requirements in IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement, which require forward-looking analysis. The amendments provided temporary relief, applicable to all hedging relationships that are directly affected by the interest rate benchmark reform, which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate. There are also amendments to IFRS 7 Financial Instruments: Disclosures regarding additional disclosures around uncertainty arising from the interest rate benchmark reform. Management has not yet evaluated the impact of the implementation of these amendments.

· IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments)

The Amendments are effective for annual periods beginning on or after 1 January 2022 with earlier application permitted. The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by the company issuing own equity instruments. Management has not yet evaluated the impact of the implementation of these amendments.

The Group plans to adopt the above mentioned amendments to the standards not earlier than their effective date provided they are endorsed by the EU.

3.1 Foreign Currency

Transactions in foreign currencies are translated to the functional currency at exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate by the European Central Bank ruling at that date. The foreign currency gain or loss on monetary items is recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost are translated into the functional currency at the exchange rate at the date that the asset or liability is recognized in statement of financial position. Foreign currency differences arising on translation are recognized in profit or loss.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the presentation currency at exchange rates at the dates of the transactions. The effect of translation is recognized directly in other comprehensive income. When a foreign operation is disposed of, the relevant amount in the foreign currency translation reserve is reclassified to profit or loss.

3.2 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables and contract assets that do not contain a significant financing component, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables and contract assets that do not contain a significant financing component are measured at the transaction price determined under IFRS 15.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how the Group manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

A regular way purchases or sales of financial assets are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

After initial recognition, the Group measures a financial asset at:

(a) Amortised cost (debt instruments);
(b) Fair value through OCI with recycling of cumulative gains and losses upon derecognition (debt instruments). The Group did not have such items as at 31 December 2019 and 2018;
(c) Fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments). The Group did not have such items as at 31 December 2019 and 2018,
(d) Fair value through profit or loss. The Group did not have such items as at 31 December 2019 and 2018.

Financial assets at amortised cost (debt instruments)

The Group measures financial assets at amortised cost if both of the following conditions are met:

(i) The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
(ii)The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method, less impairment losses. Gains and losses are recognised in the statement of comprehensive income when the asset is derecognised, modified or impaired.

The Group's financial assets at amortised cost includes trade, other current and non-current receivables and loans granted.

Impairment of financial assets

Following IFRS 9, in common case scenario, the Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are wovided for credit losses that result from default events that are possible within the next 12months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.

(a) Assessment of impairment of trade receivables and contract assets

Based on assessment of the Management, trade receivables and contract assets that do not contain a significant financing component and accordingly their impairment is assessed by applying a simplified approach, i.e. for material individual customers the management performs an assessment of specifically expected credit losses, taking into account the customer's credit history as well as forward looking factors and risk factors specific to the debtor. For all other receivables the Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

(b) Assessment of impairment of loans granted

The Group is granting loans under the agreements with defined repayment terms. In a common case scenario the expected 12-months credit losses are assessed and accounted upon issue of the loan. In subsequent periods, given the absence of significant increase in the credit risk associated with the debtor, the Group re-assesses the 12-months ECL balance based on the loan amount still outstanding as of the re-assessment. If it is determined that the financial position of the debtor has significantly deteriorated in comparison with the position when the loan was issued, the Group accounts for ECL over the remaining life of the loan. Loans subject to assessment of lifetime ECL is considered to be credit-impaired financial assets.

The Group considers that the defaulted on the obligations associated with the financial assets, if the contractual payments are overdue more than 90 days or when there are indications that the debtor, or the group of debtors, are facing significant financial difficulties, default on the payments of principal amount or interest, and there is a probability that bankruptcy or reorganization procedures will be initiated, as well as when observable data indicates that the decrease of expected future cash flows is likely, e.g. change in the overdue days or change in the economic factors that correlate with the defaults on the obligations.

Impairment losses on trade receivables and loans granted are recognized in profit (loss) using contra-asset accounts. Financial assets are derecognized when there is no reasonable expectation to recover contractual cash flows.

Financial liabilities

Initial recognition and measurement:

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans received and payables. All financial liabilities are recognised initially at fair value and, in the case of loans received and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, loans received, including bank overdrafts and finance lease liabilities.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below.

Loans received and other payables

After initial recognition, loans and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of comprehensive income, when the liabilities are written off or amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of comprehensive income.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, i.e. to realise the assets and settle the liabilities simultaneously.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's statement of financial position) when:

The rights to receive cash flows from the financial asset have expired or i)
The Group has transferred its rights to receive cash flows from the asset or has assumed ii) an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the financial asset.

When the Group has transferred its rights to receive cash flows from an financial asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of ownership of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

The Group involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay (amount of the guarantee).

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.

3.3 Property, Plant and Equipment

Items of property, plant and equipment except for land and buildings are measured at ost tesses and accumulated depreciation and accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.

Land and buildings are carried at revalued amount which is their fair value as at the revaluation Land and bundings are barred at re-deseciation and impairment. Revaluations are cartied out regularly ensuring that the carrying amount of land and buildings do not significantly differ from their fair values as at reporting date. The fair value of land and buildings is established by certified independent real estate appraisers. The revaluation reserve of land and buildings is reduced by an amount equal to the difference between the depreciation based on the revalued carrying amount and the depreciation based on the original cost of the land and buildings each year and is transferred directly to retained earnings (loss).

In case of revaluation, when the estimated fair value of the assets exceeds their carrying value, the case of reveluation, when and to the fair value and the amount of increase is included into revaluation reserve of property, plant and equipment as other comprehensive income in equity. However, such increase in revaluation is recognized as income to the extent it does not exceed the decrease of previous revaluation recognized in profit or loss. Depreciation is carred beach and the depreciable amount which is equal to acquisition cost or revaluated amount less residual value of an asset.

Accumulated depreciation is eliminated against the gross carrying anount of the reselvation revaluation date. The asset itself is then adjusted to its new revalued amount. Any revaluation surplus arising on disposal of these assets or on an annual recognition of these assets is transferred to the balance of retained earnings.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of Cost methous capenditure mat is directly dra the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Borrowing costs related to qualifying assets are capitalized.

When components of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

The cost of replacing component of property, plant and equipment is capitalised only if it its probable that the future economic benefits embodied within the componsent will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced component is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

Depreciation is recognized in profit or loss on a straight-line basis over the essists are deservices lives of each part of an item of property, plant and equipment. Leased assets are depreciated Irves of cabil part of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

The estimated useful lives of the assets are the following:

· Buildings and structures	8-40 years
· Plant and equipment	5-10 years
· Vehicles	5-10 years
· Fixtures and fittings	3-6 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

Gains and losses on disposal are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within other income in profit or loss. When revalued assets are sold or reclassified, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

3.4 Intangible Assets (except Goodwill)

Software and other intamgible assets, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful life is 3 years.

The Group does not have any intangible assets with infinite useful life.

3.5 Investment Property

Investment properties of the Group consist of buildings that are held to earn rentals or for capital appreciation, rather than for use in the production, or supply of goods, or services or for administration purposes, or sale in the ordinary course of business.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the profit or loss in the period in which they arise.

Acquisition cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of raw materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, as well as the costs of dismantling and removing the items and restoring the site on which they are located. Borrowing costs related to qualifying assets are capitalized.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the profit or loss in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

3.6 Leased Assets

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

From 1 January 2019, the Group (as a leasee) applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

The Group had only few asset lease contracts that are insignificant at the beginning of 2019.

The Group as a lessor: the Group's buildings that are leased according to operating lease agreements are accounted in the statement of financial position as investment property. Lease income is recognized on a straight line basis over the lease period.

3.7 Inventories

Capitalized costs related to the real estate development projects for sale in the usual activities of the Group, are classified as inventories and carried at lower of the cost or net realisable value (NRV).

Capitalised costs include land, construction, sub-contracting and other project development costs.

Other inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out (FIFO) principle, and includes expenditure incurred in acquiring the inventories, production and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Unrealisable inventory is fully written-off.

3.8 Cash and Cash Equivalents

Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank accounts as well as deposits in bank with original term equal to or less than 3 months and tax bank accounts.

3.9 Impairment of Non-Financial Assets

The carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount is the greater of the asset's value in use and its fair value less costs to sell. 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. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cashgenerating unit).

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. An impairment loss on a non-revalued asset is recognised in profit or loss. However, an impairment loss on a revalued asset is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Such an impairment loss on a revalued asset reduces the revaluation surplus for that asset.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

3.10 Dividends

Dividends are recognized as a liability in the period in which they are declared.

3.11 Provisions

A provision is recognized in the statement of financial position if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

A provision for warranties is recognized when the underlying construction services are sold (assurance type warranty), as the Group does not provide additional warranties to customers. The provision is based on historical warranty costs data and probabilities.

3.12 Employee Benefits

The Group does not have any defined contribution and benefit plans and has no share based payment schemes. Post-employment obligations to employees retired on pension are borne by the State.

According to the requirements of the Labour Code of the Republic of Lithuania, each employee leaving the Group at the age of retirement is entitled to a one-off payment in the amount of 2month salary.

The past service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested. Any gains or losses appearing as a result of curtailment and/or settlement are recognised in the statement of comprehensive income as incurred. The past service costs are recognized as expense in the statement of comprehensive income as incurred. The employee benefit obligation is calculated based on actuarial assumptions, using the projected unit credit method. Obligation is recognized in the statement of financial position and reflects the present value of these benefits on the preparation date of the statement of financial position. Present value of the non-current obligation to employees is determined by discounting estimated future cash flows using the discount rate which reflects the interest rate of the Government bonds of the same currency and similar maturity as the employment benefits. Actuarial gains and losses are recognized in other comprehensive income as incurred.

Short-term employee benefits are recognized as a current expense in the period when employees render the services. These include salaries and wages, social security contributions, bonuses, paid holidays and other benefits.

3.13 Revenue

Revenue from contracts with customers

The majority of the Group's revenue comes from the construction of buildings, structures, equipment and networks, and the production and assembly of wooden panel houses. In addition, as described in Note 5, the Group earns revenue from the design and manufacturing of metal structures. Revenue from contracts with customers is recognised when control of the services or goods are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services or goods. Generally, the Group has no material variable price components in its contracts with customers.

The Group has concluded that generally it is the principal in its construction services contracts even when the subcontractors are used in the implementation of the projects, because:

Controls the goods or services before transferring them to the customer;
Is primarily responsible for the general completion of the contract with the customer and bears risk of non-performance;
Has latitude in establishing price.

Significant management judgements made in relation to revenue recognition from the contracts with customers are disclosed in Note 2.

3.13 Revenue (continued)

Performance obligations arising from the construction contracts with customers', contracts for the assembly of wooden panel houses and the design and production of metal structures are fulfilled over time and respectively revenue from these contracts and installation services are recognized over time if any of the following criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs; (b) the Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (c) the Group's performance does not create an asset with an alternative use and the Group has an enforceable right to payment for performance completed to date.

When the Group can reasonably measure its progress towards complete satisfaction of the performance obligation, for each contract, the Group recognizes revenue and expenses based on the stage of completion. The stage of completion is assessed based on the proportion of the costs incurred in fulfilling the contract up to date over to the total estimated costs of the contract.

When the Group is not be able to reasonably measure the outcome of a performance obligation (for example, in the early stages of a contract), the Group recognizes revenue only to the extent of contract costs incurred that it is probable will be recoverable.

Contract modification (scope or price, or both) is accounted for either as a separate contract with customer, if the scope of the contract increases because of the addition of promised goods or services that are distinct and the price of the contract increases by an amount of consideration that reflects the Company's stand-alone selling prices of the additional promised goods or services in the circumstances of the particular contract. Otherwise the contract modification is accounted as (a) termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification or (b) part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification. The effect that the contract modification has on the transaction price, and on the Group's measure of progress towards complete satisfaction of the performance obligation, is recognised as an adjustment to revenue (either as an increase in or a reduction of revenue) at the contract modification.

Provisions for loss making contracts are recognized when the Group has a present obligation (legal or constructive) to complete the construction contract for the third party for the price that is lower than the total estimated cost to perform the contract as of the date of the financial statements. The difference between the contract price and the total estimated cost of delivery under the contract is recognized in the statement of comprehensive income at the reporting date. When contract costs are likely to exceed contract revenue, a loss is recognized immediately in profit or loss.

When fulfilling the contracts, the Group can receive short term prepayments from its customers. Applying the practical expedient, the Group is not adjusting the price allocation by the financing component, if at the inception of the contract it is expected that the time period from the customer payment for goods/services till the delivery of these goods/services will not exceed one year.

Contract balances

Contract assets

Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before the Group's right to amount of consideration is unconditional, a contract asset is recognised for the earned consideration, except any amounts that are recognized as receivables.

3.13 Revenue (continued)

Trade receivables

Trade receivable represents the Group's right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Receivables are accounted in accordance with IFRS 9 (Note 3.2).

Contract liability

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Group performs under the contract.

Income from other services or sales of goods is recognized when the control over service/goods is transferred to the customer, although such transactions are relatively not material.

3.14 Finance Income and Costs

Finance income comprises mainly interest income and other similar income. Interest income is recognized as it accrues, using the effective interest method. Finance costs comprise interest expense and other financial expenses. Interest expense is recognized using the effective interest method. Foreign currency translation gains and losses are reported on a net basis in profit or loss.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. Other borrowing costs are expensed as incurred.

3.15 Income Tax

Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date. Each company of the Group is taxed individually, irrespective the consolidated Group's results.

Deferred taxes are calculated using the liability method. Deferred tax is recognized, providing Deterred there the carbing the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Starting from 1 January 2014 the tax loss carried forward cannot exceed 70% of the taxable Buarding from in financial year in Lithuania. Tax losses can be carried for indefinite prom of our except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the company changes its activities due to which these losses were incurred except when the company does not continue its activities due to reasons which do not depend on the company itself. The losses from disposal of securities and/or derivative financial instruments can be carried for 5 consecutive years sociatives used to reduce thatable income earned from the transactions of the same nature.

3.16 Earnings per Share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the net profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, such as convertible notes and share options granted to employees.

The Group has no dilutive potential ordinary shares. The diluted earnings per share are the same as the basic earnings per share.

3.17 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. An operating segment's operating results are reviewed regularly by the chief operating decision maker of the Group to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

3.18 Determination of Fair Values

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Fair values have been determined for measurement and/or disclosure purposes based on the methods and assumptions described Note 14, 16 and 29. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

3.19 Off-setting

When preparing the financial statements, assets and liabilities as well as revenues and expenses are not set off except for the cases where the International Financial Reporting Standards specifically require such off-setting.

Financial Risk Management বঁ

Overview

The Group has exposure to the following financial risks, credit risk, liquidity risk and market risk. This note presents information about the Group's exposure to each of these risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these financial statements.

The Board of directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations and arises principally from the Group's receivables from customers.

The Group controls credit risk by credit policies and procedures. The Group has established a credit policy under which each new customer is analysed for creditworthiness before the standard payment terms and conditions are offered. Customers that fail to meet the benchmark creditworthiness may transact with the Group only on a prepayment basis.

The measure of credit risk is the maximum credit risk for each class of financial instruments, which is equal to their carrying amount. The maximum amount of exposure to credit risk in relation to particular classes corresponds to their carrying amount.

The maximum exposure to credit risk is set out below:

(EUR thousand)	2019	2018
Trade receivables and contract assets Loans granted Cash and cash equivalents	27,568 4 6.674	18,265 21 16.046
Total	34,246	34,332
Trade receivables and contract assets
(EUR thousand)	2019	2018
Municipalities and state institutions Legal persons	728 26,840	163 18,102
Total trade receivables and contract assets	27,568	18,265

In the statement of financial position, trade receivables and contract assets (i.e. accrued income on the stage of completion) are accounted for under the caption "Non-current and current trade receivables and contract assets", as disclosed in Note 18.

(EUR thousand)	2019	%	2018	96
Client I	6.516	23.6	2,209	12.1
Client 2	3.000	10 d	। 'ਕੇਂਟ	10.7
Client 3	2,387	8.7	1,746	વે રે
Client 4	1,840	6.7	1,615	8.8
Client 5	1,716	6.2	910	5.0
Client 6	1,441	5.2	808	4.4
Client 7	1,150	4.2	727	4 0
Other clients	9,876	35.8	8.966	49.1
Impairment	(358)	(1.3)	(667)	(3.7)
Total	27,568	100.0	18,265	100.0
Trade receivables by geographic regions:

Trade receivables from major customers:

(EUR thousand)	2019	2018
Local market (Lithuania)	26,302	16,396
Euro zone countries	873	1,435
Other countries	ਤੇ ਹੋ ਤੇ	434
Total	27,568	18,265

Ageing of gross trade receivables as at the reporting date can be specified as follows:

(EUR thousand)	2019	Impairment	2018	lmparment
Not overdue	22,656	0	15,007	62
Overdue 0-30 days	3,816	0	2,196	15
Overdue 30-90 days	534	0	382	ന
More than 90 days	ਹੇਰੇਤੋ	431	1.347	587
Total	27,999	431	18,932	667

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The main components of this allowance are specific losses that relate to individually significant accounts receivable and expected credit losses recognised using ELCs method. Methodology used for establishing the allowance is reviewed regularly to reduce any differences between loss estimate and actual loss experienced.

Cash and cash equivalents comprise cash on hand and at bank; therefore, the related credit risk is relatively low.

Although the management considers that there is no significant risk of material loss to the Group beyond the impairment already recorded as of 31 December 2019, the collection of loans and receivables could be influenced by the economic factors disclosed in Note 31.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Typically, the Company ensures that it has sufficient cash on demand to meet expected operating expenses, including the servicing of financial obligations.

Payment maturities of liabilities as at 31 December 2019, including calculated interest, as to the agreements, are presented below:

(EUR thousand)	Carrying amount	Contractual undiscounted cash flows	Up to 6 months	6-12 months	1—2 years
Liabilities Loans and lease liabilities	12,321	12,450	0	12,448	2
Trade payables	20,074	20,074	20,074
Total	32,395	32,324		20,074 12,448	2

Payment terms of financial liabilities, including calculated interest, as to the agreements, as at 31 December 2018 are presented below:

		Contractual
	Carrying	undiscounted Up to 6		6-12		2-5	న్న
(EDR thousand)	amount	cash flows	months months		1-2 years years		years
Liabilities
Loans and lease liabilities	528	534	300	224	7	ਰਾ
Trade payables	18,476	18,476	18,476
Total	19.004		19,010 18,776	2010		3

Interest rate applied for calculation of contractual net cash flows:

	2019	2018
Loans and lease liabilities	1.9-6.0%	1.9-6.0%

On 14 December 2017, an overdraft agreement was signed with bank with the limit of EUR 15 million. Overdraft with the repayment term as of 14 December 2020 was used for the development of real estate project of Seškines Projektai UAB on 31 December 2019. As at 31 December 2019, the overdraft withdrawn at 78.7%, the remaining amount can be used at any time till the overdraft term. Overdraft limit was not used as of 31 December 2018 (Note 23).

Market risk

Market risk is the risk that changes in market prices, such as changes in foreign currency rates and interest rates will affect the results of the Group. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. As at 31 December 2019 and 2018 the Group did not use any derivative financial instruments.

Currency risk. The Group is exposed to the risk of changes in foreign currency rates on sales and receivables, purchases payables and borrowings that are denominated in a currency other than the functional currency.

During the year, the following exchange rates were observed against the euro:

	2019 As at December 31	Average 2019	2018 As at December 31	Average 2018
1 SEK =	0.0958	0.0945	0.0973	0.0975
1 RUB =	0.0144	0.0138	0.0126	0.0135
1 JPY=	0.0082	0.0082	0.0079	0.0077
I NOK =	0.1016	0-1015	0.1003	0.1041

The Group's analysis of monetary balance sheet items by currency can be specified as follows:

As at 31 December 2019 (EUR thousand)	EUR	JPY	SEK	Sheep of the States currency
Deferred income tax assets	189
Trade receivables and contract assets	27,568
VAT overpayment	રેતેરે
Cash and cash equivalents	6.361		313
Deferred tax liability	(36)
Loans and borrowings	(12,321)
Trade payables	(20,021)	(19)		(34)
Provisions	(1,158)
Other liabilities	(3,838)
Total exposure	(2,661)	(19)	313	(34)

Other

affected or and I Immart on profit

As at 31 December 2018 (EUR thousand)	E OR	JPY	SEK	Other currency
Deferred income tax assets Trade receivables and contract assets Excess VAT Cash and cash equivalents Deferred tax liability	89 18.265 1.635 16,008 (56)		રે રે	2
Loans and borrowings Trade payables Provisions Other liabilities	(528) (18.156) (1,166) (4,059)	(239)		(81)
Total exposure	12.032	(289)	રેણ	(79)

The following table presents the Group's income before tax sensitivity to expected currency in this yely The Tonowing table presons the Group of as constants (in accordance with changes in fair value of financial asset and liability).

The effect of Euro on Russian subsidiary:

	1117 PT POST FOR PORT PORTERS . In currency rate	REPORT PORTER PRODUCTION COLLEGION COLLECTION COLLECTION COLLEGION before tax
2019		(2,030)
EUR	+15.00 %
EUR	-15.00 %	2.030

	Increase/(decrease) in currency rate	Impact on profit before tax
2018	+15.00 %	(1,920)
EUR EUR	-15.00 %	1.920

Interest rate risk. All the Group's loans received and granted, and other borrowings me subject to variable interest rates linked to EURIBOR. No financial instruments are used to manage the risk.

With an increase in the interest rate by 0.5% as at 31 December 2019, the Group's net profit would decrease by approximately EUR 62 thousand due to loans received. Taking into would accrease by uppromisment loans as of 31 December 2018, the change of interest rate would not have a material effect.

Capital management

The Boards of directors' policy is to maintain a strong capital base so as to maintain investor, The Boards of theckors' policy in to martin future development of the business. The Board of clearers monitors the return on capital and proposes the level of dividends to ordinary shareholders based on the Group's financial results and strategic plans.

The Board also aims to keep balance between bigger return which could be af there was higher level of borrowed "funds" and security which is provided by higher level of equilia, of The Group adheres to the requirement set in the Law on Companies of the Republic of Lithuania under which the equity of the entity must not be less than ½ of the issued aspital. As at 31 December 2019 and 2018, the Group was in line with this regulation. The Group's capital management policy did not change during the year.

For capital management purpose, capital consists of share capital, retained earnings, revaluation reserve and legal reserve.

5. Segments

For management purposes, the Group is organized into business units based on type of activities and has four reportable segments:

Construction; .
Steel structures; .
Wooden panel houses; ●
Other activity.

The segment of construction includes operations of Panevežio Statybos Trestas AB, Vekada I HE Segmont of Consolubian into SIA. The main field of activity is the construction, design and installation of various buildings, constructions, facilities and communications of construction of other objects (electrical installation works, removation of buildings, installation of plumbing, sewage and fire protection systems, video surveillance systems, security and fire alarm systems) in Lithuania and outside the country.

The segment of steel structures includes operation of Metalo Meistrai UAB and Hustal UAB. The main field of activity is designing and fabrication of steel structures for construction purposes. This company also supplies steel structures for other companies where steel items are required.

The segment of wooden panel houses includes operation of Skydmedis UAB. The main field of activity is production, construction and outfit of wooden panel houses. Wooden panel houses or activity is product of the Group with approximately 95 % of products successfully exported to Norway, Sweden, Switzerland, Iceland and other countries.

Other activity includes operations of Šeškinės Projektai UAB, OOO Teritorija, Ateities Projektai UAB, PST Investicijos UAB whose main activity is real estate development, and Frightar CPD, For investerior of El vity is the wholesale trading of building materials, as well as other activities of Panevežio Statybos Trestas AB (production of aluminium constructions, concrete floor installation, and the like).

Operating segments related to construction activity have been aggregated in order to form one Operating segment as these separate segments are to various operations performed at different phases of construction. No other operating segments have been aggregated to form the above reportable segments.

Segment performance is evaluated based on operating profit or loss and is measured consistently with profit from operations in the consolidated financial statements.

Transfer prices between operating segments are based on the prices set by the management, which management considers being similar to transactions with third parties.

Operating Segments

The following tables present revenue, expenses, profit and certain asset and liability information segments: operating accountable the regarding

			Wooden
EOR thousand)		Steel	panel	Other	Total	Intersegment	Total
As at or for the year ended 31 December 2019	Construction	structures	houses	activity	segments	eliminations	Group
Third parties Revenue	96,818	4,242	6,137	3,269	110,466	0	110,466
Intersegment	18,332	1,565	0	2,238	22,135	(22,135)	0
Total revenue	115,150	5,807	6,137	5,507	132,601	(22,135)	110,466
Other income	341	0		48	390	0	390
Depreciation and amortisation Expenses	(1,459)	(3)	(71)	(ਰੇ)	(1,542)	0	(1,542)
Other administrative and selling expenses	(93,824)	(4,248)	(5,740)	(5,793)	(109,605)	6	(109,605)
Interest expense	(101)	0	0	ા હ	(85)		(85)
Interest income					1,778	C	1,778
Financial activity (other than interest), net	(462) (9)	(10) (3)	(11)	1,801 (28)	(508)	0	(508)
Income tax expense Other expenses	(3)	0	(8) 87	(157)	(73)	0	(73)
Segment result	19,633	1-543	395	1,385	22,956	22,135	821
Segment assets	80,964	2,064	2,654	28.465	114,147	(37,468)	76,679
Segment liabilities	38,789	1,545	1,828	24,521	66.683	(25,044)	41,439

Segment assess and liabilities are presented aftercompany assess and liabilities within the segment, which are eliminated on consolidation.

989 1 ਦੇ ਹੋ 10 ਰੇ। ਤੇ Capital expenditure Other disclosures

989

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

Consolidated Financial Statements for 2019 AB "Panevėžio statybos trestas"

			Wooden
EUR thousand)		Steel	panel	Other	Total	Intersegment	Total
As at or for the year ended 31 December 2018	Construction	structures	houses	activity	segments	eliminations	Group
Revenue	90,777	3.964	6.582	3,538	104.861		104,861
ntersegment hird parties	10,465	239		2,055	12.760	-12,760	0
l'otal revenue	101,242	4,203	6,583	5,593	117 621	-12,760	104.861
Other income	323	40	ਨ	ਟੈਪ	419		ਪੀ ਹੈ
Depreciation and amortisation Jamenses	(1,279)	(88)	(62)	(ਰੇ	(1.438)		(1,438)
Other administrative and selling expenses	(89,979)	(4,028)	(5,865)	5,731	105,603		(105,603)
nterest expense	(36)	(2)		(14)	(52)		(52)
nterest income	ર્ભ				7		7
Financial activity (other than interest), net	(24)	(1)	(11)	(1,793)	(1829)		(1,829)
Jther expenses	(120)	(291)	(g)	(70)	(490)		(490)
Income tax expense	ટને	(23)	(226)	13	(182)		(182)
Segment result	10.187	(190)	412	(1,956)	8.453	(12,760)	(4,307)
Segment assets	68.080	1,278	1.904	14.104	85 366	(21,318)	64.048
Segment liabilities	26,357	788	931	0.685	37.761	(9,618)	28,143

2807 10 136 34 2,627 Capital expenditure Other disclosures

2,807

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

Reconciliation of assets	2019	2018
Segment operating assets Intersegment assets	114.147 (37,468)	85,366 (21,318)
Total assets	76.679	64,048
Reconciliation of liabilities	2019	2018
Segment operating liabilities	66,683	37,761
Intersegment liabilities	(25_244)	(9,618)
Total liabilities	41.439	28,143

Geographical information

The following table presents the Group's geographical information on revenue based on the location of the customers:

	2019	2018
Lithuania	94,207	88,651
Russia	1,092	2-516
Scandinavian countries	10.054	ਰੇ ਤੇ ਤੇ ਤੇ ਹੋ
Other countries	5.113	4.335
	110.466	104.861

The major part of the Group's non-current assets is Lithuania. Non-current assets consist of property, plant and equipment, investment property, intangible assets, non-current financial and other assets.

6. Revenue from Contracts with Customers

(EUR thousand)	2019	2018
Construction	104.579	97359
Other revenue from contracts with customers	5.887	7.502
Total sales income	110,466	104,861

In 2019, the Group recognised EUR 2,376 thousand of revenue from contracts with customers that were included in the balance of contract liabilities at the beginning of the period (in 2018 - EUR 1,707 thousand).

Information on contracts in progress at the end of reporting period is disclosed in Note 18.

7. Cost of Sales

	(BUR thousand)	2019	2018
	Construction sub-contractors	45,932	41.737
	Raw materials and consumables	37,203	35,745
	Salary related expenses (Note 10)	14,451	15,140
	Depreciation and amortisation	હરે રે	1,032
	Other	6,047	6,363
	Total cost of sales	104,586	100,017
8.	Selling Expenses (EUR thousand)	2019	2018
	Advertising and similar expenses	104	ડેરિ
	Salary related expenses (Note 10)	334	385
	Other expenses	89	52
	Total selling expenses	597	473

9. Administrative Expenses (EUR thousand)	2019	2018
Salary related expenses (Note 10)	3,305	3,496
Purchased services for administrative use	1.452	1,108
Operating taxes other than income tax	211	213
Depreciation	346	300
Total impairment loss of trade debts, contract assets and other
receivables:	236	330
Impairment of receivables	236	77
Impairment of loans and other receivables	0	753
Amortization	15	12
Write-down of inventories to net realizable value	83	10
Other expenses	386	582
Total administrative expenses	6,034	6,551

In 2018, impairment of EUR 722 thousand was recognised for receivables from OOO Baltlitstroj (Note 19).

10. Salary Related Expenses

(EUR thousand)	2019	2018
Wages and salaries	16,018*	13,292
Social security contributions	471*	3,791
Daily allowances and illness payments	1,104	1,297
Change in accrued vacation reserve and bonuses	512	664
Total salary related expenses	18.105	19,044
Recognised in:
Cost of sales	14.451	15,140
Administrative expenses	3,305	3,496
Selling expenses	ਤੇ ਤੇ ਕੇ	385
Other operating expenses	15	23
Total salary related expenses	18,105	19,044

* The change in the split between salary and social security contribution lines resulted from change in payroll tax legislation effective 1 January 2019, that reduced the social security contribution payable by the employer at the same time increasing social tax paid by employees and their salary respectively.

11. Other Income and Expenses 2019 2018 (EUR thousand) 311 ડેરણ Rental and other income 0 0 Change in fair value of investment property (Note 16) 108 Gain from disposed property, plant and equipment 24 419 390 Total other income (363) (229) Depreciation of rented premises (127) (279) Other expenses (490) Total other expenses (સ્તાક) (71) (118) Total other income and expenses, net

124	Finance Income and Costs (EUR thousand)	2019	2018
	Interest income	0	6
	Foreign currency exchange gain	1,834	5
	Other finance income		0
	Total finance income	1,836	11
	Interest expense	117	ਦੇਤੇ
	Foreign currency exchange loss	24	1,831
	Other expenses	2
	Total finance expenses	143	1,885
	Total finance income and costs, net	1,693	(1,874)
13.	Income Tax
	Income tax expense
	(EUR thousand)	2019	2018

2019	2018
193	183
	140
(120)	(141)
73	182

In 2019 and 2018, the Group applied a standard rate of 15% in Lithuania, a 23% rate in Norway, a 22% rate in the Kingdom of Sweden, a 20 % rate in Russia and 0% in Latvia. Reconciliation of effective tax rate:

(EUR thousand)	2019		2018
Profit before tax		894		(4,125)
Income tax applying the Company's domestic tax rate Impact of different tax rates in other	15.0 %	134	15.0 %	(619)
countries		77		0
Non-deductible expenses		70		91
Non-taxable income		(151)		(48)
Utilized tax losses		(38)		0
Adjustment of income tax of prior periods		0		140
Change in deferred income tax
realisation allowance		(19)		ਨਵੰਧ
	8.16%	73	(4.4%)	(182)

13. Income Tax (continued)

Deferred tax:

(EUR thousand)	2019		2018
	Temporary differences	Deferred tax	Temporary differences	Deferred tax
Impairment of receivables	2,827	474	2,943	441
Write-down of inventories to net
realizable value	ਰੇਡ	15	62	9
Accrued vacation reserve	306	46	255	38
Accrued bonuses	370	56	220	33
Warranty provision and other	1.135	ો સ્વે	1.068	161
Tax losses carry forward	2.162	324	1,193	179
Onerous contracts	111	17	611	92
Total deferred tax asset		1.051		953
Unrecognized deferred tax asset Deferred income tax asset		(385)		(404)
recognized		666		549
Revaluation of land and buildings Difference in investment property	(1,867)	(280)	(2,922)	(438)
value	(1,560)	(233)	(223)	(78)
Deferred tax liability		(513)		(516)
Total deferred tax, net		153		33
Reported in the statement of
financial position as:
Deferred income tax assets		189		89
Deferred tax liability		36		56

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the tax benefit can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax asset of impairment of a part of accounts receivable and tax differences in foreign jurisdictions has not been recognized due to uncertainty of realisation.

The tax loss carried forward as at 31 December 2019 amounted to EUR 2,130 thousand (as at 31 December 2018 - EUR 1,193 thousand). Tax loss carry forward can be utilised indefinitely.

Group's deferred income tax assets and liabilities have been netted-off to the extent to which they are related to the same tax authority and the same taxable entity.

Change of deferred tax:

(EUR thousand)	2019	2018
Net deferred tax as at 1 January	33	ਹੈ ਕੇ
Recognized in other comprehensive income	0	(207)
Recognized in profit or loss	120	141
Net deferred tax as at 31 December	153	33

13. Income Tax (continued)

Change of income tax payable:

(EUR thousand)	2019	2018
Prepaid income tax as at 1 January	207	396
Income tax payable as at I Jamuary	(63)	(19)
Prepaid (payable) income tax as at 1 January	144	377
Income tax calculated over the reporting period	(193)	(323)
Paid/set off with overpayment of other taxes	d3	153
Prepaid income tax as at 31 December	44	207
Income tax payable as at 31 December	(215)	(63)
Prepaid (payable) income tax as at 31 December	(171)	144

Consolidated Financial Statements for 2019 AB "Panevėžio statybos trestas"

Property, Plant and Equipment

	Land and	Plant and		Fixtures and	Construction
BUR thousand)	buildings	equipment	Vehicles	fittings	in progress	Total
Cost (revalued carrying value of land and buildings)
Balance as at 1 January 2019	3.866	7.778	4.418	3,466	473	20.001
Additions	0	320	210	198	123	851
Reclassification	582	0	0	0	(582)
Disposals and asset written off	(36)	(4,303)	(2,001)	(2,315)		(8.655)
Balance as at 31 December 2019	4,412	3,795	2.627	1,349	7 1	12,197
Balance as at 1 January 2018	4,000	7,038	4.012	3.573	0	18.623
Additions	0	934	586	214	473	2,207
Revaluation of assets	128					128
Reclassification to investment property	(262)		0			(262)
Disposals	0	(194)	(180)	(321)		(695)
Balance as at 31 December 2018	3.866	7,778	4,418	3,466	473	20,001
Depreciation and impairment
Balance as at 1 January 2019	0	6.087	3,115	2.993		12.195
Depreciation for the year	309	577	390	211		1,487
Disposals and asset written off	(36)	(4.310)	(1,994)	(2313)		(8.653)
As at 31 December 2019	273	2,354	1,511	891		5.029
Balance as at 1 January 2018	1.039	5,801	2,918	3.141		12-899
Depreciation for the year	232	537	389	189		1,347
Disposals	0	(251)	(192)	(337)		(780)
Revaluation impact	(1,271)	0	0	0		1,271)
Balance as at 31 December 2018		6,087	3,115	2,993		12,195
Carrying amount
As at 1 January 2018 As at 1 January 2019	2,961 3.866	1,237 1,691	1,303 1,094	473 432	0 473	7,806 5.724
As at 31 December 2019	4,139	1,441	1,116	458	14	7,168

14. Property, Plant and Equipment (continued) (EUR thousand)	2019	2018
Depreciation recognised in:
Cost of sales	912	ਰੇਤੇ ਤੋਂ
Administrative expenses	346	298
Other expenses	229	તેરે
Total depreciation	1,487	1,347

Land and buildings are stated at revalued amount. The last external revaluation was performed as at 31 December 2018 based on the consultations on possible market prices of the Group's land and buildings provided by independent appraisers, having appropriate recognized professional qualifications and necessary experience in valuation of property at certain location and of certain category. The valuation was performed using the market comparison technique (Level 3 in the fair value hierarchy). Significant unobservable data was used in fair value measurement, i.e. price per square meter/are. The fair value would increase with an increase in price per square meter/are and decrease with a decrease in price per square meter/are. For the purpose of financial statements, the management considers if there are any indications that the carrying value of land and buildings is significantly different from the market value on an annual basis for financial reporting purposes. To verify management assessment, every five years external valuation report by appraiser is performed. If the buildings were stated at cost model, their carrying amount as at 31 December 2019 would be equal to EUR 1,795 thousand (31 December 2018 - EUR 1,374 thousand).

As at 31 December 2019, acquisition cost of fully depreciated but still in use assets amounted to EUR 1,170 thousand, (as at 31 December 2018 - EUR 9,782 thousand). As at 31 December 2019, land and buildings, including investment property, with the net carrying amount of EUR 2.617 thousand were pledged to the banks (as at 31 December 2018 - EUR 3,946 thousand). At 31 December 2019, the net carrying amount of leased non-current assets (machinery, equipment and vehicles) was EUR 9 thousand (as at 31 December 2018 - EUR 16 thousand).

15.	Intangible assets
-----	-------------------	--

A RE POSTER SECTIOn PRODUCT CA (EUR thousand)	Goodwill	Software	Other assets	Total
Cost
Balance as at 1 January 2019	323	649	62	1.034
Additions	0	137	2	139
Asset written-off	0	(436)	(2)	(438)
Balance as at 31 December 2019	323	350	62	735
Balance as at 1 January 2018	323	614	62	ರಿರಿದ
Additions	0	78	0	78
Disposals	0	(43)	0	(43)
Balance as at 31 December 2018	323	edd	62	1,034
Amortization/impairment losses
Balance as at 1 January 2019	292	547	ਦੇਰੇ	898
Calculated during the year	0	54	2	રેમ
Amortisation of assets written-off	0	(436)	-2	(438)
Balance as at 31 December 2019	292	165	59	516
Balance as at 1 January 2018	292	502	56	850
Calculated during the year	0	88	3	ਹੈ।
Amortisation of disposed assets	0	(43)	0	(43)
Balance as at 31 December 2018	292	547	ਟੇਰੇ	898
Carrying amount
As at 1 January 2019	31	102	3	136
As at 31 December 2019	31	185	3	219

15. Intangible Assets (continued)

Amortization is accounted for in the following way: EUR 41 thousand is included under cost of sales, EUR 15 thousand - administrative expenses (in 2018: EUR 79 thousand - under cost of sales, EUR 12 thousand - administrative expenses).

The goodwill is related to the subsidiary Alinita UAB (construction: conditioning work CGU). The management has estimated that value in use is higher than the carrying amount; therefore; no impairment was recognized for the goodwill.

As at 31 December 2019, acquisition cost of fully amortized intangible assets (but still in use) amounted to EUR 134 thousand, (as at 31 December 2018 - EUR 472 thousand).

16. Investment property

(FUR thousand)	2019	2018
Balance as at January 1	1.562	1,300
Reclassified from property, plant and equipment	()	262
Change in fair value	રા	0
Balance as at December 31	1,612	1,562

During the year 2015, the Group acquired a 14-floor hotel Panevežys in Panevežys, 16.74% of which is rented out to third parties, and the rest of the hotel is not used. The Group has no detailed plans regarding the use of the remaining part of the building yet; however, the building is not planned to be used in the Group's activities; therefore, the whole building is classified as an investment property.

The fair value measurement of the property has been determined by valuation of the building carried out by the independent property appraisers Ober-Haus UAB, having appropriate professional qualification and relevant valuation experience. While carrying out the valuation the discounted cash flows method was used (discount rate - 9%, exit yield - 7%, occupation rate of first and second floor 80-90%; the same assumptions were used in 2019 and 2018). If the discount rate would increase by 1% (remaining assumptions would not be changed), then investment property fair value would decrease approximately by EUR 90 thousand and if exit yield would increase by 1% (remaining assumptions would not be changed) fair value of investment property would decrease by EUR 80 thousand. The change in fair value, if any, is reported under other income.

At the end of the financial year, future minimum lease payments receivable for hotel premises under non-cancellable lease agreements were the following: EUR 102 thousand in less than one year, EUR 90 thousand between one and five years (as at 31 December 2018 - EUR 87 thousand in less than one year, EUR 35 thousand between one and five years). Revenue from the hotel premises rent in 2019 amounted to EUR 105 thousand (in 2018 - EUR 99 thousand) and was accounted under other income.

As at 31 December 2018, the Group reclassified the operational buildings, storages and other premises to investment property that are rented for third parties. Estimated fair value of these buildings as at 31 December 2018 amounted to EUR 262 thousand, which was evaluated in accordance with the reports of independent real estate appraisers and a percentage of rented space. The assessment of assets was carried out by corporation Matininkai UAB. Assets were evaluated using comparable and income methods, with regard to the larger value. An average discount rate of 11.91% was applied to income method in accordance with weighted average cost of capital.

Expected rental receivables of this investment property under uncancellable contracts as at 31 December 2019 amounted to: EUR 69 thousand in less than one year, EUR 177 thousand between one and five years (as at 31 December 2018 - EUR 45 thousand in less than one year, EUR 172 thousand between one and five years). Revenue from lease in 2019 amounted to EUR 65 thousand (in 2018 - EUR 45 thousand) and was accounted under other income.

The fair value of the investment property amounted to EUR 1,612 thousand (in 2018 - EUR 1,562 thousand) and was attributed to Level 3 in fair value hierarchy.

17. Inventories

(EUR thousand)	2019	2018
Capitalized costs related to real estate development Other inventories	27,903 3.600	12,058 5,578
Total inventories	31,602	17,636
Capitalized costs related to real estate development are as follows: (EUR thousand)	2019	2018
Cost Costs of acquired land and real estate Real estate development project costs	6.098 22,146	6.098 6,255
Total cost Write-down: Write-down to net realizable value of projects in progress	28,244 (341)	12,353 (295)
Total write-down	(341)	(295)
Total capitalized costs	27,903	12,058
Change in write-down of capitalized costs:	2019	2018
Write-down to net realizable value of capitalized costs at the beginning of the period	205	4.83
Additional write-down (reversal) recognized under administrative expenses	વ દિ	(188)
Write-down to net realizable value of capitalized costs at the end of the period	341	205

Write-down of capitalized costs in relation to real estate development projects is measured taking into consideration the expected realisation amounts of these projects, which are based on the assessment of market prices of real estate projects performed by independent appraisers. For each construction project under development a special purpose entity has been established. As at 31 December 2019 and 2018, the Group had the following special purpose entities:

	Total capitalized costs as of 31 December 2019, carrying amount	Total capitalized costs as of 31 December 2018, carrying amount
Panevėžio Statybos Trestas AB	1,945	0
ZAO ISK Baltevromarket	5.790	5,414
Seškinės Projektai UAB	19.431	5,944
Ateities Projektai UAB	737	700
Catal	27.903	12,058

To support the net realizable value of the project developed by ZAO ISK Baltevromarket in Kaliningrad, the management has considered the fair value estimations as provided by the independent appraiser using a discounted cash flows method as well as commercial proposals that were received from the potential buyers of the land plots in 2019.

The management considered the fair value that was determined by the independent appraiser to be EUR 7,500 thousand as at 30 November 2019. ZAO ISK Baltevromarket land plots (54 % of all land plot) designated for development of commercial properties were valued using the and marked walue method, based on which the value of the land plots was EUR 3,670 thousand. The remaining land plots designated for residential property development were valued using the residual method (where such approaches were analysed: the cost approach, market approach and income approach), based on which the value of the land plots was EUR 3.830 thousand.

17. Inventories (continued)

The key inputs used by the valuator in the discounted cash flows method could be detailed as follows:

· discount rate 25%:
· disposal of land plot 62 EUR/sq. m;
· significant unobservable data used to determine fair value price for 1 sq. m, planned various project cost, discount rate.

The fair value of land plots (designated for development of commercial properties) evaluated using comparable value method would increase if the price per 1 sq. m was higher and would decrease if price per 1 sq. m. was lower. If the disposal price of this type of land plots decreased by 5 %, fair value would decrease by approximately EUR 183 thousand. If the discount rate of land plot, which was evaluated using discounted cash flows method (designated for residential property development), increased by 0.25% (remaining assumptions would not be changed), the fair value of land plot would decrease by EUR 35 thousand, if the land plot disposal price decreased by 5%, it would result in fair value decrease by EUR 235 thousand. If project cost increased by 5%, the estimated net realizable value would decrease by EUR 58 thousand

The management considered that the fair value of the ZAO ISK Baltevromarket project as of 31 December 2019 ranges from EUR 6,500 thousand (the value of land plots based on commercial offer, which was also used to measure the recoverable amount on 31 December 2018 as disclosed below) to EUR 7,500 thousand (the value determined by the appraiser as disclosed above), therefore the value of this project is not impaired as at 31 December 2019.

The net realizable value of project developed by Ateities Projektai UAB was assessed based on independent real estate appraiser's Ober-Haus Nekilnojamas Turtas consultation on possible market price as of 23 December 2019. Comparable value method was used. Fair value would increase if price per 1 hectare would be higher and decrease if price per hectares would be lower for land plot.

The net realizable value of project developed by Seskines Projektai UAB as of 31 December 2019 and 2018 was estimated by the management based on independent real estate appraiser's Ober-Haus Nekilnojamas Turtas consultation on possible market price as of 30 November 2019 and 2018 (residual method was used) and also taking into account additional progress on the project during December. Key assumptions used by the management in the estimation of the net realizable value of the project as of 31 December 2019 were as follows: developer's margin -13%, sales prices of office and commercial area - from 1,961 to 2,280 EUR/sq. m. and the remaining construction costs -EUR 6,1 million. Key assumptions used in the valuation in the vear 2018 were as follows: developer's margin - 20%, sales prices of office and commercial area - from 1,961 to 2,073 EUR/sq. m. and remaining construction costs - EUR 19 million. Based on the assessment, the carrying value of the project as of 31 December 2019 and 2018 was not impaired. Based on management's sensitivity analysis, the likely change in significant assumptions as of year-end is not expected to result in the impairment of the project.

Other inventories can be specified as follows:

(EUR thousand)	2019	2018
Raw materials and consumables	3,466	3,470
Work in progress and finished goods	પ	। ਹੈ
Goods for resale	328	2.151
Write-down to net realizable value at the beginning of the year	(62)	(52)
Write-off	0	8
Additional write-down to net realizable value during the period	(37)	(18)
Write-down to net realizable value	(ਰੇਰੇ)	(62)
Total other inventories	3,699	5,578

Change in write-down of other inventory to the net realizable value was included under administrative expenses.

18. Trade receivables and contract assets

(EUR thousand)	2019	2018
Trade receivables	24,123	15,482
Contract assets (accrued revenue in accordance with the stage of completion)	3.745	3,284
Receivables from related parties	131	166
Impairment at the beginning of the year	(667) 380	(1,060) 20
Write-off of doubtful trade receivables Repayment of doubtful trade receivables	13	20
Additional impairment /(reversal) during the period Impairment at the end of the year	(157) (431)	રેરેને સેવિત્તાના પાસની વસવાડી તેમ જ દૂધની ડેરી જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામનાં લોકોનો મુખ્ય વ્યવસાય ખેતી, ખેતમજૂરી તેમ જ પશુપાલન છે. આ ગામનાં પ્રાથમિક શાળા, પંચાયતઘર, (667)
Total trade receivables and contract assets	27,568	18,265

The part of trade receivables due from customers is accounted for as non-current trade receivables: EUR 1,703 thousand as at 31 December 2019, EUR 2,912 thousand as at 31 December 2018. These amounts are related with non-current retentions as described below.

As at 31 December 2019, trade receivables include retentions (retention - a fixed percentage of the total contract price which shall be paid when the construction is completed and the bank guarantee in the amount of the retained payment is provided or warrantee document of the insurance Group is provided to the customer) of EUR 9,027 thousand (as at 31 December 2018 - EUR 5,813 thousand) relating to construction contracts in progress. For impairment of trade receivables refer to Note 4.

As at 31 December 2019, the total contract amount attributed to performance obligations under the construction contracts with customers that were outstanding (or partly outstanding) amounted to EUR 68,692 thousand (as at 31 December 2018 - EUR 110,797 thousand). It is expected that the majority of these projects will be finished and the revenue recognised accordingly within one year.

Information about customer specific contracts in progress as of 31 December 2019 and 2018: 2019 2018 (EUR thousand)

Sales according to specific customers' projects in progress, recognized in the statement of comprehensive income during the year	89.506	64,736
Sales according to specific customers' projects in progress, recognized over the contract period	139,720	89.646
Expenses incurred carrying out specific customers' projects in progress, recognized in the statement of comprehensive income during the year	83.812	65,241
Expenses incurred carrying out specific customers' projects in progress, recognized over the contract period	133,555	88,372
Contract assets (accrued income)	3,745	3,284
Contract liability (deferred income) under contracts in progress at the year-end (Note 25)	1.939	2,376
Contract liability (prepayments for purchase of inventories and etc.)	1.748	875
Provisions for onerous contracts (Note 25)	111	રી તે
Trade receivables (under the caption "Trade receivables" and "Receivables from related parties")	24,383	14,473

19. Other Current Assets

(EUR thousand)	2019	2018
Financial assets Receivables from the former subsidiary OOO Baltlitstroj related to prepayment to the supplier on behalf of this subsidiary Impairment of receivables from OOO Baltlitstroj Loan granted to 000 Baltlitstroj Impairment of loan granted to OOO Baltlitstroj	1,240 (1,240) 281 (281)	1,240 (1,240) 245 (245)
Non-financial assets Excess VAT Other current assets	રેતેરે 471	1,635 12
Total other current assets	1,066	1,647

The former subsidiary OOO Baltlitstroj is under bankruptcy procedure. Legal proceedings are in progress to recover trade receivables from OOO Baltlitstroj. The management, considering the circumstances of ongoing legal processes in 2018, recognised an additional impairment of receivables from this company of EUR 722 thousand (accounted in administrative expenses) as at 31 December 2018. As at 31 December 2019, no changes were observed. Unstable business environment in Russia and ongoing legal proceedings can impact the assessment of loan recoverability possibility. The impact cannot be assessed at the moment, therefore, the management's assessment of the receivable amount impairment can significantly differ in the future.

The Group did not have any term deposits as at 31 December 2019 and 2018.

20. Cash and Cash Equivalents

(EUR thousand)	2019	2018
Cash at bank Cash on hand	6,669	16,038
Total cash and cash equivalents	6.674	16,046

Capital and Reserves 21.

The Group's issued capital consists of 16,350,000 ordinary shares with a nominal value of EUR 0.29 each. The Group's share capital is fully paid. The holders of the ordinary shares are entitled to one vote per share in shareholder meetings of the Group and are entitled to receive dividends as declared from time to time and to capital repayment in case of decrease of the capital. There were no changes in the share capital in 2019. The Group did not hold its own shares in 2019 and 2018.

Reserves were as follows:

(EUR thousand)	2019	2018
Revaluation reserve	2,325	2,475
Legal reserve Foreign currency translation reserve	રેજેવ 2,318	ਟੋਰੇਰੇ 3.360
Total reserves	5,242	6,434

21. Capital and Reserves (continued)

The revaluation reserve relates to the revaluation of land and buildings and is equal to the carrying amount of revaluation less the related deferred tax liability.

Movement of revaluation reserve:	2019	2018
Revaluation reserve as at 1 January	2,475	1,384
Revaluation (Note 14)	0	1,175
Depreciation of revaluation	(177)	(97)
Deferred tax on depreciation of revaluation	27	13
Revaluation reserve as at 31 December	2.325	2,475

Legal reserve is a compulsory reserve allocated in accordance with Lithuanian legislation. An annual allocation of at least 5% of the net profit is required until the reserve is not less than 10% of the authorized share capital. The reserve cannot be paid out in dividends. Legal reserve at 31 December 2019 and 2018 amounted to 10% of the issued capital and was fully formed.

The foreign currency translation reserve results from translation differences arising on consolidation of subsidiaries with functional currency which differs from Group's functional currency.

Trade navables 22.

2019	2018
18,760	16,519
676	774
286	377
352	806
20,074	18.476

Trade payables are non-interest bearing and are normally settled on 30-90 day terms.

Loans and Borrowings (EUR thousand)			2019	2018
I oans Leasing (finance lease) liabilities			12,312 9	512 16
Total loans and borrowings			12,321	578
Non-current liabilities			2	9
Current liabilities			12,319	રી તે
Total loans and borrowings			12,321	573
Loans can be specified as follows: (EUR thousand)	Interest rate	Maturity	2019	2018
OP Corporate Bank plc.	3-month
Lithuania (overdraft)	EURIBOR+1% 1-month and 6-month	12/2020	11,800	0
Panevėžio Keliai AB (loan)	EURIBOR+1.9% 12 % fixed since 30	12/2020	305	297
Natural persons	November 2017 - 6%	1 272020	207	215
Total loans			12,312	512

As at 31 December 2019, the unwithdrawn balance of overdraft limit amounted to EUR 3,200 thousand and it is available for withdrawal until the maturity date.

Under the contract with bank for using the overdraft facility on 31 December 2019 the Group has pledged a right to rent a land plot together with a non-residential building at Ukmerges st. 219, Vilnius owned by its subsidiary Seškinės Projektai UAB, as a collateral.

Under the terms of the contract with bank, the Group has to ensure compliance with certain financial and non-financial obligations. As at 31 December 2019, the Group failed to satisfy one of the financial ratios (the Group's net debt to EBITDA ratio) of the overdraft which is classified as short term. The management believes that the bank will not request of early repayment of the overdraft due to this incompliance.

Other financial liabilities include liabilities related to non-current assets acquired under leasing terms with the balance value of EUR 9 thousand as at 31 December 2019 (as at 31 December 2018 - EUR 16 thousand) and liabilities to the bank for issued guarantees.

Finance lease liabilities are payable as follows:

Year 2019 (thousand EUR)	Minimum payments	Interest	Principal amount
>1 year 1-5 years	11,945 2	138 0	11,807 2
	11,947	138	11,809
Year 2018 (thousand EUR)	Minimum payments	Interest	Principal amount
>1 year	7	0	7
1-5 years	10		9
	17	1	16

24. Non-current Provisions

2019	2018
885 273	722 444
1.158	1,166

Change in provisions:

	2019 Warranty	2019 Pensions	2019 Other	2018 Warranty	2018 Pensions	2018 Other
Warranty provision at the beginning
of the period	72	230	214	586	139	82
Used during the period	(151)	(33)	(172)	(179)	(13)	(8)
Accrued during the period	314	r	ﺮﻭ ﺍﻟﻤﺮﺍﺟﻊ ﺍﻟﻤﺮﺍﺟﻊ	315	54	140
Warranty provision at the end of the period	885	202	71	79.2	230	214

Warranty provisions are related to constructions built in 2015-2019. Based on the legislation of the Republic of Lithuania, the Company has a warranty liability for construction works, the term of which varies from 5 to 10 years after delivery of construction works. Provision for warranties is based on estimates made from historical data of actually incurred costs of warranty repairs.

25. Contract and Other Liabilities

(EUR thousand)	2019	2018
Non-financial liabilities:
Contract liability (deferred income) under contracts in progress (Note
18)	1,938	2,376
Contract liability (prepayments for purchase of inventories and etc.)
(Note 18)	1.748	875
Accrued vacation reserve	1.677	1,716
Payable salaries and related taxes	1,360	1,419
Payable VAT	105	72
Accrued expenses	167	448
Provisions for onerous contracts (Note 18)	111	611
Other liabilities	130	64
Salary bonuses for employees	3 gdd	273
Total contract and other liabilities	7,635	7,854
Whereof:
Non-current portion	0	0
Current portion	7,635	7,854

26.	Earnings and dividends per share (in EOR)	2019	2018
	Net result for the year attributable to equity holders of the Group Dividends declared Average number of shares	821,487 0 16,350,000	(4,307,054) 981.000 16,350,000
	Basic and diluted earnings per share Distigants declared ner share	0.05 0	(0.26) 0.06

The Group has no potential shares. Hence the diluted earnings (loss) per share are the same as the basic earnings per share.

27. Contingent Liabilities

Guarantees

As of 31 December 2019, the banks issued guarantees to third parties amounting to EUR 8,108 thousand in connection with obligations under the construction contracts performed by the Group (EUR 6,724 thousand as of 31 December 2018). The guarantees expire in the period from 25 February 2020 to 27 October 2022. In addition, the Group has guarantees issued by insurance companies for the amount of EUR 14,925 thousand, which are also related to obligations in the construction contracts (EUR 12,780 thousand as of 31 December 2018). The guarantees expire in the period from 1 January 2020 to 1 January 2023. No additional liabilities guarantees chipit in in per these guarantees in the financial statements other than estimated warranty reserve (Note 24).

Property with a carrying amount of EUR 2,617 thousand as at 31 December 2019 (as a 31 December 2018 - EUR 2,665 thousand) has been pledged to banks for the guarantee limit issued and guarantees issued by bank. The guarantee limit amounts to EUR 15,000 thousand, the used amount as at 31 December 2019 is EUR 8,108 thousand. The guarantee limit agreement is effective until 30 June 2021 with the possibility to issue guarantees until 30 June age control is enound be valid for 3 years following their date of issue. Guarantees are valid for 5 year following their date of issue if the amount does not exceed EUR 1,500 thousand. As at 31 year lenowing the guarantee limit amount was EUR 15,000 thousand, the used annum was EUR 6.724 thousand. Their fair value approximated their carrying amount (as at 31 December EOR 0, 2 . Housand and as at 31 December 2018 - EUR 6,724 thousand).

Legal contingencies

The Group is involved in below described material legal cases.

1) The Competition Council has made a decision as of 21 December 2017 , Regarding Irdaiva IT I and PST AB actions in joint participation in public tenders of buildings renovation and modernization works meeting the requirements of Article 5 of the Competition law of the Republic of Lithuania". Based on the Competition Council decision, joint activity agreement signed between the Parent Company and UAB Irdaiva for providing joint offers in 24 public tenders organized by Vilniaus Vystymo Kompanija UAB intended to limit competition and violated the requirements of Article 5(1) of the Competition Law of Republic of Lithuania. A fine was set to the Company in total amount of EUR 8,514 thousand. The Group's management the was set to the Company of the Competition Council and argues it in full extent, having the position that cooperation with UAB Irdaiva was incorrectly considered as agreement with intention to limit competition. The Group provided a claim to Vilnius county court asking to mich to mart compension Council, and after ruling in favour of the opporcent, the Company appealed to the Supreme Administrative Court of Lithuania. The Supreme Company "appeared" to "ide "Suppointed a hearing on 10 March 2020. During the hearing, it was decided to adjourn the proceedings until 22 April 2020. After the appeal had been lodged, the parties of the proceeding filed further observations, therefore, the court decided to take a break by giving the parties the opportunity to comment on the new observations.

The Group's management based on all know facts and circumstances, believes that it is more likely than not that the Group will receive a positive decision and did not account for any provision related to the decision made by the Competition Council described above in these financial statements.

2) On 24 October 2018, the Thirteenth Court of Commercial Arbitration of the Russian Federation annulled the Kaliningrad region decision of Arbitration Court and satisfied the demand of one of the creditors of the subsidiary OOO Baltlitstroj (the entity under bancrupcy procedure as also disclosed in Note 19) for the Parent Company AB to repay back the returned loan of RUB 75 million (~ EUR 1,083 thousand) to OOO Battlitstroj. This decision was appealed and on 15 April 2019 the Federal Arbitration court North-West district of the Russian Federation has ruled that the Parent Company should pay back the returned loan of RUB 17,2 million (~ 248 thousand EUR) to OOO Baltlitstroj. On 28 February 2020, the bankruptcy administrator of OOO Baltlitstroj, pursuant to the Agreement between the Russian Federation and the Republic of Lithuania, sent the notice of recovery to the Court of Appeal of Lithuania. The management believes that the above mentioned actions violated legal procedures: the case had to be heard in the courts of the Republic of Lithuania. The management also considers that the mentioned court ruling was biased and expects that in case the court is heard in the Republic of Lithuania as required by legal procedures, the Parent Company is more likely than not to receive a favourable ruling on this matter. Based on the above, the provision of EUR 248 thousand has not been recognised in the financial statements as at 31 December 2019 and 2018.

3) The subsidiary of the Group has a claim of SEK 27 million (equivalent to EUR 2,800 thousand as of 31 December 2019) from one of its customers. The claim states that the subsidiary has supplied goods with defects. The management has performed its own technical exammation and disagrees with the claim. The first hearing of the case was took place in the Arbitrage in Stockholm of in the beginning the year 2020, but still no final decision has been taken yet. The management taking into account the consultations held with the legal advisor, believe, that the Arbitrage may acknowledge the subsidiary's position or reduce the claim amount significantly. The management recorded no provision in respect of this claim in these consolidated financial statements as of 31 December 2019 as the potential outcome of the case cannot be reasonably determined at this stage.

28. Transactions with Related Parties

Related parties are defined as shareholders, employees, members of the Management Board, their close relatives and companies that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with the Group, provided the listed relationship empowers one of the parties to exercise the control or significant influence over the other party in making financial and operating decisions.

28. Transactions with Related Parties (continued)

The Group had sales and purchase transactions in 2018-2019 with the parent of the Group Panevėžio Keliai AB and with subsidiaries of Panevėžio Keliai AB. Transactions with related parties during 2018-2019 are as follows:

(EUR thousand)	Type of transaction	2019	2018
Sales:
Shareholder
Panevėžio Keliai AB	Goods and services	158	314
Subsidiaries of shareholder
Ukmergės Keliai UAB	Goods and services	હવ	117
Sostinės Gatvės UAB	Goods and services	0	63
Related to shareholder	Goods and services	ਤੇ ਕੇ	ો રે
Purchases:
Shareholder
Panevėžio Keliai AB	Goods and services	355	391
Subsidiaries of shareholder
Ukmergės Keliai UAB	Goods and services	2	48
Sostinės Gatvės UAB	Goods and services	4	12
Keltecha UAB	Goods and services	37	41
Aukštaitijos Traktas UAB	Goods and services	13	0
Related to shareholder
Panevėžio Ryšių Statyba UAB	Goods and services	9	6 193
Specializuota Komplektavimo Valdyba AB	Goods and services	0
Betono Apsaugos Sistemos UAB	Goods and services	106	153
Related persons	Services	ర్తి	0
		2019	2018
(EUR thousand)
Receivables:
Shareholder
Panevėžio Keliai AB (trade receivable)		57	40
Subsidiaries of shareholder
Sostinės Gatvės UAB		7	77
Other		25	49
Related to shareholder
Other		42	0
Payables:
Shareholder
Panevėžio Keliai AB		ો રેણ	ર્ભર્
Subsidiaries of shareholder
Sostmes Gatvės UAB		5	0
Related to shareholder

Other

Receivables and payables payment terms between the related parties are up to 30-90 days.

Outstanding balances at the year-end are unsecured and settlement occurs in cash, unless agreed otherwise. There have been no guarantees provided or received for any related party receivable or payable and no allowance has been made for the receivables from related parties by the Group. The balances outstanding with related parties of the Group were not overdue as at 31 December 2019 and 2018.

28. Transactions with Related Parties (continued)

Management remuneration

Wages, salaries and social insurance contributions, calculated to the Group's directors and board members for the year 2019 amounted to EUR 1,065 thousand (EUR 1,181 thousand for the year 2018). For Group's directors and board members there were no guarantees issued, any other paid or accrued amounts or assets transferred.

29. Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction under current market conditions in the main (or the most favourable) market independent on whether this price is directly observable or established using valuation techniques.

As at 31 December 2019

	Carrying amount	Fair value
	Total	Level 1	Level 2	Level 3
Financial assets
Trade receivables	23,823			23,823
Cash and cash equivalents	6.674	6.674
Total financial assets	30,497	6,674		23,823
Financial liabilities
Interest bearing loans and borrowings	(12,312)			(12,312)
Lease obligations	(ਰੇ)			(9)
Trade payables	(20,074)			(20,074)
Total financial llabilities	(32,395)			(32,395)

As at 31 December 2018

	Carrying amount		Fair value
	Total	Level 1	Level ?	Level 3
Financial assets
Trade receivables	14.981			14.981
Cash and cash equivalents	16.046	16,046
Total financial assets	31.027	16.046		14,981
Financial liabilities
Interest bearing loans and borrowings	(512)			(512)
Lease obligations	(16)			(18)
Trade payables	(18,476)			(18,476)
Total financial llabilities	(19,004)			(19,004)

There were no transfers between levels of the fair value hierarchy in 2019 and 2018 at the Group. The following methods and assumptions are used by the Group to estimate the fair value of the financial instruments not carried at fair value:

Cash

Cash represents cash in banks and on hand stated at value equal to the fair value.

29. Fair Value of Financial Instruments (continued) Receivables

The fair value of trade and other receivables and loans granted is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. Fair value of short-term trade and other receivables with no stated interest rate is deemed to approximate their face value on initial recognition and carrying value on any subsequent date as the effect of discounting is immaterial.

The fair value of non-current trade receivables was estimated to approximate carrying value as discounting effect was determined to be not material.

The fair value of loans granted was estimated to approximate carrying value as majority of the loans are subject of market level variable interest.

Accounts payable, loans and borrowings, and lease liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Fair value of current trade payables with no stated interest rate is deemed to approximate their face value on initial recognition and carrying value on any subsequent date as the effect of discounting is immaterial.

30. Investments in Subsidiaries, Non-Controlling Interests

As at 31 December 2019 and 2018, Panevežio Statybos Trestas AB held 95.6%, 68.3% and 87.5% ordinary registered shares of subsidiaries Vekada UAB, PST Investicijos UAB, group subsidiary OOO Teritorija, respectively, and is considered a controlling shareholder of the subsidiaries.

The main financial indicators of the subsidiary that has non-comtrolling interests (thousand EUR):

	PST Investicijos UAB
	2019	2018
Non-controlling interest, %	31 7 %	31.7%
Non-current assets		30
Cirrent assets	6,250	5,984
Total assets	0 2 31	6,014
Non-current liabilities	2,157	2,016
Current liabilities	204	60
Total liabilities	2,361	2,076
Net assets	3,890	3,938
Net assets attributable to non-controlling interest	1,233	1,248
Revenue	1,679	450
Expenses	(430)	(2,170)
Net profit/(loss)	1,249	(1,720)
Other comprehensive income
Net profit/(loss) attributable to non-controlling interest	30€	(245)
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from/used in operating activities	(107)	(50)
Cash flows from/used in investing activities	0	0
Cash flows from/(used in) financing activities	0	0
Net increase/(decrease) in cash and cash equivalents	(107)	(50)

	Vekada UAB
	2019	2018
Non-controlling interest, %	4.4 %	4.4 %
Non-current assets	360	378
Current assets	1,972	1,777
Total assets	2,332	2,155
Non-current liabilities	24	42
Current liabilities	1,016	579
Total liabilities	1,040	621
Net assets	1,292	1,534
Net assets attributable to non-controlling interest	57	67
Revenue	3,080	4,320
Expenses	3,021	4,100
Net profit/(loss)	ਤੇ ਹੋ	24.0
Other comprehensive income	0	0
Net profit/(loss) attributable to non-controlling interest	3	10
Other comprehensive income attributable to non-controlling interest	0	0
		603
Cash flows from/used in operating activities	(396) (45)	(રતુ)
Cash flows from/used in investing activities	(302)	(2)
Cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents	(743)	547
	OOO Teritorija 2019	2018
Non-controlling interest, %	12.5%	12.5%
Non-current assets	0	0
Current assets	11	14
Total assets	11	14
Non-current liabilities	0	0
Current liabilities	1,278	1,237
Total liabilities	1,278	1,237
Net assets	(1,267)	(1,223)
Net assets attributable to non-controlling interest	(158)	(153)
Revenue		53
	168
Expenses	(66)
Net profit/(loss)	130
Other comprehensive income	0
Net profit/(loss) attributable to non-controlling interest	16
Other comprehensive income attributable to non-controlling interest	0
		(235) (187) 0 (23) 0 (5)
Cash flows from/used in operating activities	(7) 0	0
Cash flows from/used in investing activities Cash flows from/(used in) financing activities	0

30. Investments in Subsidiaries, Non-Controlling Interests (continued)

	As at 31		Additions			As at 31
	December	Dividends		Cash	Currency	December
(EUR thousand)	2018	declared		tlow out	exchange	2019
Dividends payable	26	0	0	(1)	0	25
Loans received and
interests payable	512	0	15.000	(3 193)	ರಿ	12,319
Other liabilities	0	0	0	0	0	0
Lease liabilities	16	0	0	(7)	0	0
Total	554	D	15,000	(3 201)	இ	12,353

31. Change in Liabilities Arising from Financial Activities

32. Events after the end of the reporting period

The outbreak of the coronavirus (COVID-19) at the beginning of 2020 will have an impact on the Company's future business operations both globally and in Lithuania. As disclosed in Note 2, this non-adjusting subsequent event was not reflected in the sigmificant estimates and assumptions as of 31 December 2019 and might result in significant change in these estimates in the next upcoming financial statements. However, it has not yet been possible to assess its possible effect due to the uncertainty of the situation at the date of issue of these financial statements.

After the end of the financial year and up until the date these financial statements were approved, no other significant subsequent events occurred, except for the above information described in these financial statements.

Managing Director

Dalius Gesevičius

Chief Accountant

Danguolė Širvinskienė

03/04/2020 03/04/2020 '

Corporate and Consolidated Annual Report, Governance Report and Social Responsibility Report of Panevezio statybos trestas AB for 2019

1. Accounting period covered by the Annual Report

This Corporate and Consolidated Annual Report for 2019 covers the period from 1 January 2019 until 31 December 2019.

2. References and additional clarifications on the data included in the Annual Report

All financial data provided in this report have been calculated in the national Lithuanian currency -Euros.

The auditor of the company is Ernst & Young Baltic UAB.

In this report, Panevezio statybos trestas AB can also be called 'the Company', and the Company together with its subsidiary companies can be called 'the Group'.

3. The main data about the Company (the issuer)

Public limited liability company
Panevezio statybos trestas
4,741,500 Euros
P. Puzino Str. 1, LT-35173 Panevezys, Lithuania
(+370 45) 505 503
(+370 45) 505 520
Public limited liability company
30 October 1993, Panevezys City Board
AB 9376
147732969
11147329610
52990000VPCGEWIDCX35
State Enterprise Centre of Registers
pst(a)pst.lt
www.pst.lt

4. Nature of the main activities of the issuer

The main area of activities of the Company and its subsidiaries (the Group) is designing and construction of buildings, structures, equipment and communications and other objects for various applications in and outside Lithuania, sale of building materials and real estate development. In addition to the above activities, the Company is engaged in rent of premises and machinery.

5. The companies included in the Group of Panevezio statybos trestas AB

As of 31 December 2019, the Group of Panevezio statybos trestas AB included the following companies:

Registration date, Subsidiary register company administrator		Company code	Registered address	Telephone, fox, e-mail, website	Portion of controlled shares (per cents)
Skydmedis OF A B	17 June 1999 State Enterprise Centre of Registers	148284718	Pramones Str. 5, Panevezys	Tel. (+370 45) 467626 Fax (+370 45) 460259 [email protected] www.skydmedis.lt	100
Metalo meistrai UAB	16 June 1999 State Enterprise Centre of Registers	148284860	Tinklu Str. 7. Panevezys	Tel. (+370 45) 461677 Fax (+370 45) 585087 [email protected] www.metalomeistrai.lt	100
Vekada UAB	16 May 1994 State Enterprise Centre of Registers	147815824	Marijonu Str. 36, Panevezys	Tel. (+370 45) 461311 Fax (+370 45) 461311 [email protected] www.vekada.lt	તેરે રે
Alinita UAB	8 December 1997 State Enterprise Centre of Registers	141619046	Tinklu Str. 7. Panevezys	Tel. (+370 45) 467630 Fax (+370 45) 467630 [email protected] www.alinita.It	100
Kingsbud Sp.z 0.0.	11 August 2010 District Court in Bialystok, XII Economic Department of National Court	200380717	A. Patli Str. 12, 16-400 Suwalki. Poland	Tel. (+48 875) 655 021 Fax (+48 875) 655 021 biuro(@kingsbud.pl www.kingsbud.lt	100
PS Trests SIA	22 May 2000 Centre of Registers, Republic of Latvia	40003495365	Skultes Str. 28, Skulte, Marupes Parish, Riga Region, Latvia	Tel. +371 29525066	100
Teritorija 000	3 June 2013 Kaliningrad Obl. Federal Tax Service Inspection No. 12	3528202650	Lunacharskogo Drive 43-27, Cherepovets, Bologda Obl., Russian Federation	Tel. +7 9097772202 Fax +7 9217234709 baltevromarketao@ mail.ru maslenal 1 @mail.ru	87.5
Seskines projektai	9 November 2010 State Enterprise Centre of Registers	302561768	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 [email protected] www.psti.lt	100
Ateilies projektai UAB	25 April 2006 State Enterprise Centre of Registers	300560621	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 Verkiu Str. 25C. [email protected] Vilnius www.psti.lt		100
250 investicijos UAB	23 December 1998 State Enterprise Centre of Registers	124665689	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 [email protected] www.psti.lt	68

Subsidiary company	Registration date, register administrator	Company code	Registered Telephone, fax, address e-mail, website		Portion of controlled shares (per cents)
Tauro aparta- mentai UAB	23 October 2018 State Enterprise Centre of Registers	304937621	Verkiu Str. 25C- 1. Vilnius	Tel.(+370 610) 09222 a, jokubaitis(a)psti.lt	100
Hustal UAB	11 December 2018 State Enterprise Centre of Registers	304968047	Tinklu Str. 7, Panevezys	Tel.(+370 45) 461677 Fax (+370 45) 585087 egidijus.urbonas(ameta lomeistrai. It	100
Aliuminio fasadai UAB	2 January 2020 State Enterprise Centre of Registers	305412441	Pramones Str.5. Panevezys	Tel. +370 686 32727 gamyba(@pst.lt	100

Subsidiary companies of PST investiciios UAB:

6. Principle nature of activities of the companies included in the Group

Skydmedis UAB - production, construction and outfit of pre-fabricated timber panel houses. Panel houses are the main product of the company. Products are successfully exported to Norway, Sweden, Switzerland, Iceland and other countries.

Metalo meistrai UAB - designing and fabrication of steel structures for construction purposes. The company also supplies steel structures for other industries where steel items are required.

Vekada UAB - installation of electrical systems. Alongside with the usual electrical engineering activities, works in the low current fields are carried out: video surveillance systems, security and fire alarm systems, utility system control.

Alinita UAB - installation of heating, ventilation and air-conditioning systems in buildings, indoor water supply, waste water and fire-fighting systems designing, start-up and commissioning of indoor utility systems.

Kingsbud Sp.z o.o. - wholesale of construction materials. Kingsbud Sp.z o.o. has a branch established in Lithuania, which focuses on wholesale of stoneware and glazed tiles for indoor and outdoor application.

PS Trests SIA - construction activities. The company was established for searching of new markets and carrying out construction activities in Latvia.

Teritorija OOO - real estate development.

Seskines projektai UAB - real estate preparation and sale.

Ateities projektai UAB - real estate preparation and sale.

PST investicijos UAB - real estate preparation and sale. PST investicijos UAB has the subsidiary company, Baltevromarket ZAO ISK, established for development of real estate projects in the Kaliningrad Oblast, Russian Federation.

Tauro apartamentai UAB - development of real estate projects.

Hustal UAB - sale, erection and designing of steel structures. Activity and sale of the company are focused on the Scandinavian market.

Altuminio fasadai UAB - production of aluminium profile systems, aluminium framed windows and doors.

7. Contracts with the intermediary of public trading in securities

In 2013, the Company signed the contract with the Financial Brokerage Company Finasta AB for accounting of securities and provision of services related with securities accounting. On 21 December 2015, the Financial Brokerage Company Finasta AB had been rearranged by way of merge with Siauliu bankas AB, which took over all assets, rights and liabilities of the Financial Brokerage Company Finasta AB from the mentioned date.

8. Data on trading in securities of the issuer in regulated markets

The ordinary registered shares of Panevezio statybos trestas AB have been on the Official Trading List of Nasdaq Vilnius AB since 13 July 2006 (company symbol PTRIL).

Share type	Number of shares, pcs.	Euros	Par value, Total par value, Suros	Emission code 18979
Ordinary registered shares (ORS)	16,350,000	0.29	4,741,500	LT0000101446

Comparison of PTRIL Panevezio statybos trestas and OMX Vilnius Benchmark GI indexes in 2019

Company share price variation at the stock exchange market Nasdag Vilnius for the period 2015 through 2019 (Euros)

Table 1. Information on the Company share price at the stock exchange market Nasdaq Vilnus in 2015 through 2019:

Indicator	2019	2018	2017	2016	2015
Highest price, Eur	0.878	0 ਰੇਰੇ	1.34	1.08	1.09
Lowest price, Eur	0.71	0.75	0.85	0.845	0.84
Share price as of the end of reporting period, Eur	0.75	0.752	0.916	0.94	0.925
Turnover, pcs.	989,685	1,596,044	2.854.251	1,565,210	2,006,833
Turnover, min. Eur	0.77	1.41	3.08	1.49	1.94
Capitalization, mln. Eur	12.26	12.3	14.98	15.37	15.12

9. Fair review of position, performance and development of the Company and the Group, description of the principal risks and uncertainties the company faces

Key events of the reporting period

On 18 March 2019, Panevezio statybos trestas AB and Panevezys City Municipality has signed the contract for complex arrangement of the Laisves Square in Panevezys and its approaches. The contractual price of the work is 5,958,012 Euros.

In March 2019, after the contract at the public procurement tender, Panevezio statybos trestas AB has signed the contract with Klaipeda City Municipality for conversion of the football school and swimming-pool building. The contractual price of the works is 11,326,645 Euros. On 29 April 2019, the Ordinary General Meeting of Shareholders has been convened:

Consolidated and Separate Financial Statements of Panevezio statybos trestas AB for the year 2018, which had been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union and submitted together with the independent auditor's opinion were approved.
Distributable profit of the Company in the amount of 26,656,711 Euros was carried forward to next year.
Audit Committee was elected for the one-year term of office.

On 14 October, the Ordinary General Meeting of Shareholders has been convened:

The audit company Ernst & Young UAB was elected an auditor to carry out the audit of the financial statement sets of Panevezio statybos trestas AB and the companies of Panevezio statybos trestas AB Group for the years 2019 and 2020.

In November 2019, Panevezio statybos trestas AB has signed the contract for Construction of Office and Residential Complex at Basanaviciaus Str. 10. Vilnius. The cost of the contractual works amounts to EUR 18.5 mln. Euros (VAT incl.). The total area of the buildings is 10,058.56 square meters. The project completion is scheduled for the autumn of 2021.

The Company continued co-operation with the companies in Panevezys: in 2019 construction of the new trading centre for Linas Agro in Latvia and production facilities for Rifas was completed, Panevezys Park of Culture and Leisure was renewed. The Company successfully carries out construction works of Kaunas CHP plant in Kaunas. Based on the contract, Panevezio statybos trestas AB undertakes to build more than 15 objects and facilities (main and auxiliary buildings of the power plant, utility networks and communications, internal roads, etc.). The value of services to be provided according to the signed contract amounts to 33.6 mln. Euros. In addition to that, the Company continues its activities in the private projects, such as reconstruction of the former hospital buildings in Boksto Street, Vilnius, construction of production and storage facilities for Elmoris in Vilnius and construction of the business centre U219.

The Company has won more than one award for successfully implemented projects, their complexity, high quality and organization of complicated activities. In 2019, Panevezio statybos trestas AB was awarded the gold medal for construction of the printing house KOPA.

In 2019, the following branches continued their operation in the structure of the Company: Gerbusta, focusing on construction of utility networks and landscaping. Pastatu apdaila, carrying out indoor and outdoor finishing works, Betonas, Konstrukcija, Stogas where production capacities were concentrated, Vilnius branch Genranga, performing general contracting activities and project management in Vilnius Region, and Klaipstata, performing general contracting activities and project management in Klaipeda Region. The company has permanent establishments in the Republic of Latvia and Kingdom of Sweden.

From 2020 the aluminium structure production workshop at Pastatu apdaila Branch of Panevezio statybos trestas AB has been reformed to Aliuminio fasadai UAB. The company produces the most advanced aluminium profile systems, aluminium windows and doors, facades.

In 2019, the companies of the Group successfully continued their activity both inside and outside Lithuania. Metalo meistrai UAB stated implementing their strategic decision of fining down the production processes. In 2019, a few large-scope projects were completed in Sweden and Norway. About 60 per cents of the orders of Metalo meistrai UAB are fulfilled in the Scandinavian countries. Hustal UAB was engaged in their main activity in 2019 - wholesale trade in steel structures. The main direction of the steel structures sales is the Scandinavian countries. Skydnedis UAB, which is producing pre-fabricated timber panel houses, sells nearly all of their products in the foreign market. 98 per cents of the company's revenue were received for the products sold in the Scandinavian countries. Vekada UAB, Alinita UAB, which specialize in installation of building heating, ventilation and conditioning systems, and in installation of electric systems, renewable energy and low current fields, worked on the projects in Lithuania. PS Trests SIA operating in Latvia is continuing the started construction and is looking for new orders. The real estate development companies Seskines projektai UAB, UAB PST investicijos and Ateities projektai UAB had no income from development of real estate projects. The key project under development of Seskines projektai UAB in 2019 is the business centre U219 in Ukmerges Street, Vilnius. This project has great potential both in terms of location near the city centre and multifunctional use of the premises. Ateities projektai UAB develops the project of residential houses in Kunigiskes. During the reporting year the wholesale of building materials is further developed. Kingsbud Sp.z o.o, the company operating in Poland, is engaged in this.

Risk factors related to the company's activities:

In performance of business, both the Company and the Group face various types of risks: legal regulation, severe competition, shortage of qualified labour, variation in the value of the Russian Rouble, cyclical nature of economy, macroeconomic factors, damping. However, only a few of them may have significant impact on the performance results of the Group and the Company. The main factors that create business risk for the Company and the Group are competition in the construction market and changes in the demand for construction services. The demand for construction services also depends heavily on the volume of investments and financing received from the EU structural funds. Increase and variation of material and service prices make the process of the project budgeting and possibility to complete the already started projects based on the planned costs more difficult. This results in extra risk for performance of fixed price construction contracts and reduces profitability of projects. Furthermore, activity of the Company and the Group is influenced by the economic situation (economic cycles) in Lithuania and the countries where the Group companies operate. Although there is still some uncertainty about the trends in global economic development as well as regional and global crisis in future.

Information on the types of financial risks and risk management is provided in the Separate Financial Statements (Note 4) and the Consolidated Financial Statements (Note 4).

Legal contingencies are provided in the Notes to the Separate Financial Statements (Note 27) and the Notes to the Consolidated Financial Statements (Note 27).

10. Analysis of financial and non-financial performance, information related to environment and employee matters

Over the twelve months of 2019, the turnover of Panevezio statybos trestas AB was 108.464 mln. Euros. In 2019, the net profit of the Company amounted to 0.59 mln. Euros. The sales revenue of Panevezio statybos trestas AB increased by 14 per cents over the year 2019.

Over the same period, the total consolidated revenue of Panevezio statybos trestas AB Group was 110.466 mln. Euros, that is by 5 per cents higher compared to the year 2018 when the revenue of the Group had been 104.861 mln. Euros. The net profit of the Group amounted to 0.821 mln. Euros in 2019, whereas in 2018, the loss of the Group was 4.307 mln. Euros.

Revenue and net profitability variation for the Company:

Revenue and net profitability variation for the Group:

Group				Company
2017	2018	2019	Items	2017	2078	2019
73,816	104,861	110,466	Revenue	56,351	94.797	108,464
68.082	100.017	104.586	Cost of sales	52,277	92,655	104,913
5,731	4,844	5,880	Gross profit	4.074	2.142	3.551
7.76	4.62	5.32	Gross profit margin (per cents)	7.23	2.26	3.27
=1,281	-2,180	-681	Typical operating result	-800	-3,043	-651
-1.73	-2.08	-0.62	Typical operating result from turnover (per cent)	-1.44	-3.21	-0.60
2,148	-2,634	2,553	ERITDA '	1,286	-3.724	1 926
2.91	-2.51	2.31	EBITDA margin (per cents)	2.28	-3.98	1.78
753	4,307	321	Net profit	194	-4,852	રેવે (
1.02	-4.11	0.74	Nets profit (loss) margin (per cents)	0.35	-5.12	0.54
0.046	-0-263	0.05	Earnings per share (Euros) (EPS) 2	0.012	-0.297	0.036
2.01	-12.32	2.39	Return on equity (per cents) (ROE) 3	0.50	-14.13	1.70
1.26	-6.72	1.07	Return on assets or asset profitability (ROA) 4	0.35	-8.23	0.83
1.90	-11.60	2.25	Return on investments (ROI) 3	0.49	-13.84	1.65
2.55	1.91	1-63	Current liquidity ratio 6	2.36	1-44	1.35
2.01	1.26	0.85	Critical liquidity ratio r	2.27	1.40	1.24
0.63	0.55	0.45	Equity ratio 8	0.70	0.58	0.49
2.29	2.14	2.10	Book value per share 9	2.38	2.09	2.13
0.40	0.35	0.36	Price-to-book ratio (P/B ratio) 10	0.38	0.36	0.35
19.89	-2.85	14.94	Price-to-earnings ratio (P/E) 11	77.20	-2.53	20.83

Table 2. The results (thousands Euros) of the Company and the Group of Panevezio statybos trestas AB for the period 2017 through 2019:

' EBITDA = profit before taxes, interest, depreciation. The essence of EBITDA indicator is to determine the most objective profit (loss) of the compuny, which is least dependable on circumstances (least variable).

(teast variable).
4 Eurnings per share (Euros) = net profit (loss) / number of issued shares.

Belongs on than bearers) (ROE) = net profit / equity capital (a portion equity capital belonging to the shareholders).

4 Return on assets (ROA) or asset profitability = net profit / assets.

5 Return on investments (ROI) = net profit / {assets-current debt}.

6 Current liquidity ratio = current assets / current liabilities.

7 Critical liguidity ratio = (current assets - inventories) / current liabilities.

8 Equity ratio = equity capital / assets.

8 Equity ratio = equity capital / assets.
9 Book value per share = equity capital / number of shares.

10 Price-to-book ratio (P/B ratio) = share price as of the end of reporting period / share book value.

11 Price-to-earnings ratio (P/E) = share price as of the end of reporting period / net profit allocated for one share.

Table 3. Income (min. Euros) by activity types:

		Group			Compuny
	2017	2018	2019	2017	2018	2019
Construction works	64.61	97.36	104.60	56.35	94.80	108.5
Products produced and other income	9.21	7.50	5.90

The main income of the Company by activity types is from construction and erection activities. In 2019, the income of the Group from construction and erection activities totalled 94.7 per cents, the income from made products and other income amounted to 5.3 per cents, whereas in 2018, the income of the Group from construction and erection activities totalled 92.8 per cents, other income amounted to 7.2 per cents.

Income distribution for the Group by activity types (per cents):

Table 4. Operating income (min. Euros) by countries:

	Group			Company
	2017	2018	2019	2017	2018	2119
Lithuania	57.79	88.65	94.21	53.89	90.18	102.13
Russian Federation	0.15	2.52	1.09	0.71	2.52	1.09
Scandinavian countries	11.40	0.36	10.05	0.09	0	0
Other countries	4.48	4.33	5.11 1	1.65	2.11	5.24

The main activities of the Company were performed in Lithuania and made 94.16 per cents of all works carried out by the Company in 2019 and 95.1 per cents in 2018. The revenue of the Group from the works performed inside the country made 85.3 per cents of the revenue, whereas in 2018 it was 84.4 per cents. In 2018 and 2019, the revenue of the Group in the Scandinavian countries was respectively 9.1 and 8.9 per cents of the all revenue.

Operating income distribution by countries for the Group (per cents):

Operating income distribution by countries for the Company (per cents).

Environment protection

Quality, environment protection, occupational health and safety play a very important role in activities of Panevezio statybos trestas AB. Quality Management (ISO 9001), Environmental Management (ISO 14001) and Occupational Health and Safety Management (OHSAS 18001) Systems introduced and available at the Company allow taking proper care of these significant factors. Assessment of occupational risk is carried out, analyses are performed and measures for risk reduction or elimination are taken on each site. For the purposes of environment and resource protection and sustainability, ensuring pollution prevention, in the beginning of each project the environmental plan including specific measures for control of significant aspects of environment protection and activities performed is prepared.

In 2019, the Lithuanian National Accreditation Bureau accredited the Construction Laboratory of the Company for the period of 5 years in accordance with LST EN ISO/IEC 17025:2005, thus granting it the right to perform tests of building materials.

The companies of the Group also have quality, environmental and occupational health and safety management systems in accordance with the requirements of LST EN ISO 9001:2015, LST EN ISO 14001:2015 and LST ISO 45001:2018 introduced and successfully functioning.

Employees

Professional, competent and responsible employees are the biggest asset of the Company. Therefore, much attention is paid to motivation of employees: environment favourable for generation and implementation of new ideas is being created and sharing of information is being promoted. In modern environment, competence of employees is one of the key factors describing competitiveness of the company. Taking this factor into account, the company encourages employees in all organizational levels to learn and improve their skills. The employees are motivated not only by material incentives - competitive salaries, progressive bonus system but also by exceptional quality of working environment. As of 31 December 2019, the number of employees in the Group was 978, in the Company - 704. As of 31 December 2018, the number of employees in the Group was 1,057, in the Company - 775.

Average number of employees		2018	2019
	Group	Company	Group	Company
Managers	24	13	24	13
Specialists	326	251	334	264
Workers	705	510	656	473
Total	1,055	774	1,014	750

Table 5. Average number of employees in 2018 and 2019:

Table 6. Education level of the Group employees as of the end of the period:
------------------------------------------------------------------------------	--

PST Group employees	Payroll Rumber	Higher university level education	Higher non- university education	Junior college education	Secondary education	Incomplete secondary education
Managers	24	21	】	2	0	0
Specialists	333	259	24	31	19	()
Workers	611	31	14	127	384	રેરે
Total	તે રમ	311	30	160	403	55

Table 7. Average gross pay per employee per month (Euros) in 2018 and 2019:

	2018*		2319
	Group	Company	Group	Company
Managers	3.919	4.432	3.417	4.083
Specialists	1,731	1,720	1,716	1.752
Workers	1,232	1,263	1,278	1,322
Total	1,480	1,508	1,510	1,569

*The average monthly gross pay per englayee for 2018 was recalculated following the law amending Articles 2, 4, 7, 8, 10, 23, 25 and 32 of the Law on State Social Insurance of the Republic of Lithuania No. 1-1336.

During the twelve months of 2019, the natural turnover of employees took place. Employment contracts do not include any special rights and obligations of employees or some part of them. In 2019, the Company also paid much attention to qualification improvement. Training in the Company is done in two directions using:

1. Services of training arranging institutions (external training);
1. Services of higher education institutions (employee studies).

11. Important events having occurred since the end of the preceding financial year

Information on important events having occurred after the end of the financial year is provided in the Notes to Separate Financial Statements (Note 31) and the Notes to the Consolidated Financial Statements (Note 32), also refer to the 13th part of this Annual Report.

12. Information on research and development activities performed by the Company and the Group

The Company aims to maintain the highest competence in the construction sector by implementing innovative processes and technologies.

For design preparation we use the up-to-date designing software. We are constantly keeping up to date with the latest applications and supplementing our software package.

The Company strives for especially fluent constructions. We use the up-to-date software that allows us using the advantages of the Building Information Modelling (BIM). This digital model is used in the tender preparation for construction stages, planning of necessary resources, scheduling production and supply, making the budget, delivering supplies to the site, monitoring the progress of planned and completed activities.

Application of BIM allows assessing risks, reducing probability of delay in work, taking immediate corrective actions, if necessary, and improving performance quality.

The Company improves the business process management, makes targeted investments in compatibility increase of such production capacities as production and erection of aluminium-glass structures, installation of industrial concrete floor and foundation installation.

13. Operation plans and forecasts of the Company and the Group

Following announcement of the quarantine in Lithuania and implementation of the measures on prevention of the coronavirus (COVID-19) in the country by the Government, the Group of Panevezio statybos trestas AB continues the projects in progress. It is understood that the pandemic and the restrictions will have a negative impact on the construction sector. However, so far, the course of the pandemic is completely unclear and there is complete uncertainty about the impact of the coronavirus on the local economy. As long as the quarantine is continued in Lithuania and it is not known how the operating conditions will change, the management makes no assessment of the qualitative and quantitative impact on the operation and performance of the Company and the Group in 2020. By estimates of the Management, the Company/the Group has sufficient amount of liquid assets and cash to continue its operations for at least one year from the financial statement date. As we have encountered fairly high uncertainties, only after the end of the quarantine and with more obvious consequences will the management of the Company assess the impact of these events and provide information on the impact of the COVID-19 outbreak on the Group and the Company. The consequences for the Lithuanian economy, and at the same time for the Company and the Group will depend on the time-span of the quarantine.

In response to the situation responsibly, Panevezio statybos trestas AB and Panevezio statybos trestas AB Group has taken all mandatory and recommended precautionary measures to maximally protect the interests of the employees and business partners of the Company. The management responsibly monitors and evaluates the current situation (especially with regard to payments by the clients, shortage of supplies, fulfilment of orders) and is ready to give a response immediately as well as take appropriate decisions to ensure continuity of operations.

Information on the impact of COVID-19 on the financial statements is provided in the Notes to Separate Financial Statements (Note 31) and the Notes to the Consolidated Financial Statements (Note 32).

Although growth will be significantly slower due to COVID-19, the Company will pursue the operation strategy and business goals approved by the Board - to stay competitive and maintain its leadership in the construction market. In the process of the strategic goal implementation, the Company and the Group will look for solutions to amortise the negative impact of the virus on the operations of the Group in order to optimize the costs of the ongoing projects, investments and routine operations.

In 2020 the Company and the Group will make every effort to search for new markets, increase the number of the projects in progress, implement new projects in Lithuania and abroad. The Company and the Group will continue expanding and developing real estate for return on investment.

The companies of Panevezio statybos trestas AB Group keeps on trying to increase production, technical and intellectual potential. Plans are made to make investments by computerizing and automating processes, making production and technological processes more effective, with the help of these measures maintain the current positions in Lithuania and abroad as well as increase sales volumes and achieve good results

14. Authorised capital of the issuer and its structure

As of 31 December 2019, the authorised capital of the company amounted to 4,741,500 Euros divided into 16,350,000 ordinary registered shares (ORS) the nominal value of each share being 0.29 Euros.

All shares are fully paid. The proof of ownership is the record in the securities accounts.

The Company has not acquired any shares of the Company.

On 31 December 2019, the total number of the shareholders was 1,491.

Investors	Number of shares, pcs.	Portion of authorized capital, per cents
Foreign investors
Legal entities	2,412,265	14.75%
Material norsoms	1 109 814	6.79%

1,109,814

8,607,143

4,220,778

Table 8. Distribution of the shareholders by residence country and legal form:

Table 9. Shareholders holding or controlling more than 5 per cents of the authorised capital of the Company:

52.64%

25.82%

Full name of a shareholder (company name, type, headquarter address, company code)	Number of ordinary registered shares held by a shareholder under ownership right (pcs.)	Portion of the authorized capital held (%)	Portion of votes granted by the shares held under ownership right (%)
Panevezio keliai AB S. Kerbedzio Str. 7, Panevezys Company code: 147710353	8,138,932	49.78	49.78
Clients of Swedbank AS Liivalaia 8, 15040 Tallinn, Estonia Company code: 10060701	1,290,138	7.89	7.89
Freely floating shares	6,920,930	42.33	42.33

None of the shareholders of the issuer has any special control rights. All shareholders have equal rights prescribed by Section 4 of the Law on Companies of the Republic of Lithuania.

The number of shares carrying votes at the General Meeting of Sharcholders of Panevezio statybos trestas AB is 16,350,000, one ordinary registered share on the Company carries one vote at the General Meeting of Shareholders.

15. Dividends

Natural persons Local investors

Natural persons

Legal entities

The decision to pay dividends is taken and the amount to be paid as dividends is set by the General Meeting of Shareholders. The company pays the allocated dividends within 1 month from the date when decision on profit appropriation has been taken.

The persons who were the shareholders of the Company at the end of the tenth business day from the General Meeting of Shareholders that adopted the relevant decision are entitled to the dividends.

Dividends are taxable in accordance with the Law on Income Tax of Individuals and the Law on Corporate Income Tax of the Republic of Lithuania. In 2019 no dividends were paid by Panevezio statybos trestas AB.

	Profit of financial year allocated for dividends
	2012	2014	2115	2016	2017
Total amount allocated for dividends, Euros	118,382	1,079,100	261,977	1,062,750	981,000
Dividends per share	0.0072	0.066	0.016	0.065	0.060
Ratio of dividends to the Company's net profit, per cent	28.20	164.80	79.80	59.33	504 50
Dividend profitability (dividends per share / share price as of the end of the period), per cents	0.80	7.70	1.7	6.9	6.6

Table 10. History of dividends paid over the previous years:

16. Information on significant transactions between the related parties

All transactions with related parties are provided in the Notes to the Separate Financial Statements (Note 28) and the Notes to the Consolidated Financial Statements (Note 28).

17. Published information

Table 11. Summary of published information:

Description of notification	Category of notification	Language	Date
Calendar for Publishing Performance Results of Panevezio statybos trestas AB in 2020	Notification on material event	Lt. En	20 Dec. 2019
PST Will Build Office and Residential Complex in Vilnius	Notification on material event	Lt, En	12 Dec. 2019
Resolutions of Extraordinary General Meeting of Shareholders	Notification on material event	Lt. En	4 Oct. 2019
Draft Resolutions of Extraordinary General Meeting of Shareholders	Notification on material event	Lt. En	6 Sept. 2019
Convening of Extraordinary General Meeting of Shareholders	Notification on material event	Lt, En	3 Sept. 2019
Unaudited Performance Results of Panevezio statybos trestas AB and the Group for the First Half of 2019	Notification on material event	Lt. En	30 Aug. 2019
Preliminary Unaudited Performance Results of Panevezio statybos trestas AB for the First Half of 2019	Notification on material event	Lt, En	5 Aug. 2019
Annual Information Approved by Annual General Shareholders Meeting of Panevezio statybos trestas AB	Annual information	Lt, En	29 April 2019
Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	29 April 2019
Management of the Company Issues Revised Separate Financial Statements of Panevezio statybos trestas AB	Notification on material event	Lt. En	26 April 2019

Description of notification	Category of notification	Language	Date
Draft Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	8 April 2019
Preliminary Performance Results of Panevezio statybos trestas AB and Panevezio statybos trestas AB Group for Twelve Months of 2018	Notification on material event	Lt. En	5 April 2019
Convening of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	29 March 2019
Contract Signed with Klaipeda City Municipality	Notification on material event	Lt, En	27 March 2019
Contract Signed with Panevezys City Municipality	Notification on material event	Lt, En	19 March 2019

All notifications of Panevezio statybos trestas AB to be made public in accordance with the legal requirements are published following the timelines prescribed by the laws and legal acts of the Republic of Lithuania. Information on the material events of the company is presented through the information system of NASDAQ OMX Vilnius Stock Exchange (Globe Newswire) and published on the website of the Company.

18. Corporate governance report

Information on compliance with the Corporate Governance Code

The information on compliance with the Corporate Governance Code is presented in Appendix 1 to the Annual Report.

Panevezio statubos trestas AB in principle complies with the recommendatory Governance Code for the companies listed at NASDAQ OMX Vilnius. Referring to the Articles of Association of the Company, the governance bodies of the Company include the General Meeting of Shareholders, the Board and the Managing Director. According to the Law on Companies of the Republic of Lithuania, either two (supervisory and management) or one collegial management body may be set up in the Company at the discretion of the Company. No Supervisory Board is set up in the Company. Following the Articles of Association of the Company, the Board is set up of 5 members, which are elected for the period of four years. The members of the Board represent the shareholders and perform the supervisory and control functions. Only the Audit Committee, which is elected for the period of one year, is formed in the Company. The functions of the Nomination and Remuneration Committees are performed by the Board.

The system of the corporate governance ensures fair treatment of all shareholders, including minority and foreign shareholders, and protects the rights of the shareholders.

The Company does not prepare and make public the remuneration statement. In the opinion of the Company, such information should not be made public commercially. The Company complies with the Management remuneration policy approved by the Board. The Company's remuneration policy is an internal and confidential document which is not publicly available.

The management system of the Company ensures that any information on all essential issues, including financial situation, operation and Company management, is disclosed in a timely and accurate manner.

The Audit Committee of the Company gives recommendations to the Board on nomination of an auditing company/auditor. The Board selects the candidate for the auditing company/auditor and submits it to the General Meeting of Shareholders for approval. Thus independence of the conclusions and opinion provided by the auditing company.

Information on extent of risk and risk management

The following financial risks are faced within the Group: credit, liquidity and market risks.

The Board is responsible for setting up and maintaining the risk management structure. The risk management policy of the Group is aimed at identifying and analysing the risks faced by the Group, introduction and maintenance of appropriate limits and controls. The risk management. policy and risk management systems are reviewed at regular intervals to reflect changes in market conditions and performance of the Group seeks to create a disciplined and constructive environment for risk management where all employees know their roles and responsibilities.

Based on the credit risk policy established by the Group, standard payments and terms are only offered when assessing credit standing of each new clients failing to meet the established limit may only make purchases with the Group after paying prepayments.

The Group manages liquidity risk to ensure, as far as possible, sufficient liquidity, which allows fulfilling its obligations under both normal and complex conditions without incurring unacceptable losses and without risking to lose reputation of the Group. In general, the Group maintains sufficient cash to cover its planned operating expenses, including financial debt repayment.

The market risk is the risk that changes in market prices, for example, changes in exchange rates and interest rates will affect the result of the Group or the value of available financial instruments. The purpose of the market risk management is to manage open positions of risk in order to optimize returns.

The accounts of the Company are kept and financial statements are prepared in accordance with International Financial Reporting Standards adopted for application in the EU. The annual financial statements are audited by the independent auditors selected by the General Meeting of Shareholders. This procedure ensures relevance and transparency of the data provided in the financial statements.

Information on significant directly or indirectly held share portfolios

The Company has no information available on directly held share portfolios.

Information on any transactions with related parties as prescribed by Paragraph 2, Article 37 of the Law on Companies.

There were no such transactions concluded.

Information on shareholders with special control rights

There are no shareholders with special control rights in the Company. The ordinary dematerialised shares of the Company grant equal voting rights to all shareholders of the Company.

Information on all existing limitations on voting rights

The Company has no information available on limitations on voting rights.

Information on rules regulating election and replacement of the Board members, and amendment of Articles of Association

The Board of the Company consisting of five members is elected by the General Meeting of Shareholders for a period not longer than 4 years. At present there are five members in the Board. The procedure of electing and dismissing the members of the Board is not different from that prescribed by the Law on Companies.

The Articles of Association may be amended only by the General Meeting of Shareholders by the qualified majority of at least 2/3 of the total votes of the shareholders attending the meeting. The resolution amending the Articles of Association is adopted following the procedure set forth in the Law on Companies of the Republic of Lithuania.

Information on powers of members of the Board

The powers of the members of the Board are set forth in the Law on Companies of the Republic of Lithuania and the Articles of Association. The Articles of Association of Panevezio statybos trestas AB are published on the website at http://www.pst.lt/en/investuotojams.

Information on powers of General Meeting of Shareholders, rights of shareholders and their exercising

The powers of the General Meeting of Shareholders and the rights of shareholders are set forth in the Articles of Association and are not different from that prescribed by the Law on Companies.

Information on composition of management, supervisory bodies and their committees, their activities and field of activities of the Chief Executive Officer

Referring to the Articles of Association of Panevezio statybos trestas AB, the management bodies of the Company are the General Meeting of Shareholders, the Board and the Managing Director. The Supervisory Council is not formed in the Company.

The competence of the General Meeting of Shareholders is not different from that of the competence prescribed by the Law on Companies.

The Board is led by the Chairman of the Board. The Board elects the Chairman from the members of the Board.

The Board elects and dismisses the Chief Executive Officer of the Company - the Managing Director, fixes his salary, sets other terms and conditions in the employment contract with him, approves his job description, gives incentives and imposes penalties. The Managing Director shall organize the activities of the Company.

The Board:

REMIGITUS JUODVIRSIS - the Chairman. No ownership in the capital of the Company. Participating in the activities or capital of the companies below:

Company	Position	Number of chares	Capital, %	Votes, %
Panevezio statybos trestas AB Company code 147732969 P. Puzino Str. 1, Panevezys	Chairman/ Consultant
Panevezio keliai AB Company code 147710353 S. Kerbedzio Str. 7, Panevezys	Board Member/ Consultant Main place of employment	531.675	28.47	28.47
Lauktuves jums UAB Company code 147797155 Laisves Sg. 26, Panevezys	Chairman	10,737	48.65	48.65
Pakstas UAB Company code 168424572 Gustoniu Vig., Panevezys District Municipality		111	50	50
Klovainiu skalda AB Company code 167901031 Klovainiu Township, Pakruojis District Municipality		470.421	8.74	8.74
Gustoniu zemes ukto technika UAB Company code 168581940 S. Kerbedzio g. 7F, Panevezys	Board Member	1.085	50.28	50.28
PST investīcijos UAB Company code 124665689 Verkiu Str. 25C, Vibrius	Board Member	16,407	3.32	3.32
Convestus UAB Company code 300124684 Laisves Sq. 26, Panevezys		50.000	50	50

Company	Number of shares	Capital, %	Votes, %
Kauno tiltai AB Company code 133729589 Ateities Road 46, Kaunas	492	0.31	0.31
Specializuota komplektavimo valdyba AB Company code 121420097 Savanoriu Ave. 191A, Vilnius	21,490	1.07	1.07
Tertius UAB Company code 247647690 S. Kerbedzio Str. 7F, Panevezys	704,638	80	80

Term of office: June 2018 through June 2022. Clean record.

AUDRIUS BUTKUNAS - the Board Member. No ownership in the capital of the Company. Participating in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio statybos trestas AB Company code 147732969 P. Puzino Str. 1, Panevezys	Board Member
Panevezio kellai AB Company code 147710353 S. Kerbedzio Str. 7, Panevezys	Board Member/ Technical Director Main place of employment	22,010	1.18	1.18
PK Road AB Company code 559020-4623 Skiffervagen 10, 22478 Lund, Sweden	Board Member

Term of office: June 2018 through June 2022. Clean record.

AUDRIUS BALCETIS - the Board Member. No ownership in the capital of the Company. Participating in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio statybos trestas AB Company code 147732969 P. Puzino Str. 1, Panevezys	Board Member
Panevezio keliai AB Company code 147710353 5. Kerbedzio Str. 7. Panevezys	Chairman	2,226	0.12	0.12
Panevezio rysiu statyba UAB Company code 147688743 Patiuniskio Str.9, Panevezys	Director/ Board Member Main place of employment	279,507	27	27
P5T investicijos UAB Company code 124665689 Verkiu Str. 25C. Vilnius	Board Member

Term of office: June 2018 through June 2022 Clean record.

VILIUS GRAZYS - the Board Member. No ownership in the capital of the Company. Participating in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio statybos trestas AB Company code 147732969 P. Puzino Sir. I, Panevezys	Board Member	-
Akvalda UAB Company code 300568422 Vyturio g.45, Panevezys		750	50	50
Betono apsaugos sistemos UAB Company code 126148612 Papilenu Str. 1-30, Vilnius		40	40	40
Panevezio keliai AB Company code 147710353 S. Kerbedzio Str. 7, Panevezys	Consulting Expert	12,395	0.66	0.66
Formus UAB Company code 303349362 Gedimino Ave. 54A-3, Vilnius		1,322	21.96	21.96

Term of office: June 2018 through June 2022 Clean record.

JUSTAS JASIUNAS - the Board Member. No ownership in the capital of the Company. Participating in the activities or capital of the companies below:

Company	Position	Number of shares	Capital. %	Votes, %
Panevezio statybos trestas AB Company code 147732969 P. Puzino Str. 1, Panevezys	Board Member/ Commercial Director Main place of employment
KINGSBUD Sp.z 0.0. Company code 200380717 A. Patli Str. 12, 16-400 Suwalki, Poland	Chairman
Vekada UAB Company code 147815824 Marijonu Str. 36, LT-35138 Panevezys	Chairman
Skydmedis UAB Company code 148284718 Pramonės Str. 5, LT-35100 Panevezys	Board Member

Term of office: June 2018 through June 2022 Clean record.

Administration:

DALIUS GESEVICIUS- Company's Chief Executive Officer, Managing Director. Holds 41,015 shares of the Company. University education (VISI, 1984), Construction Engineering. Master Degree in Management and Business Administration. Clean record.

DANGUOLE SIRVINSKIENE - Chief Accountant of the Company. Holds no shares of the Company. University Education (LZUA, 1983), Accounting - Economics. Clean record.

In 2019, no loans, guarantees, sureties were granted and no property was transferred to any Board Members or top managers of Panevezio statybos trestas AB.

Audit Committee

Following Article 52 of the Law on Audit of the Republic of Lithuania, the General Meeting of Shareholders of Panevezio statybos trestas AB elects the Audit Committee. The Audit Committee consists of three members, two of them being independent. The term of office of the Audit Committee is one year. The continuous term of office of a committee member cannot exceed 12 vears.

The duties of the Audit Committee are as follows:

1) to monitor the financial reporting process;

2) to monitor effectiveness of the company's internal control, risk management and internal audit, if applicable, systems;

3) to monitor the process of the audit;

4) to monitor independence and objectivity of the auditor or audit company.

The following members were elected to the Audit Committee at the Annual General Meeting of Shareholders of Panevezio statybos trestas AB on 29 April 2019:

Drasutis Liatukas - an independent auditor, Head of Finansu auditorius UAB, auditor. Holds no shares of the Company;

Irena Kriauciuniene - an independent auditor. Holds no shares of the Company;

Egle Grabauskiene - Deputy Chief Accountant of the Company. Holds no shares of the Company. Diversity policies applied to election of the CEO and members of the supervisory bodies of the company

The Company has no diversity policy for election of the CEO and members of the supervisory bodies of the Company. The main criterion for election of a candidate to CEO and members of the supervisory or management bodies is competence of the candidate.

Information on earnings for each member of management and supervisory bodies

In 2019, neither the members of the Board nor the top managers of Panevezio statybos trestas AB were granted any special benefits.

		Table 12. Information on earnings of members of management and supervisory bodies of the issuer
in 2019:

Board Members and CEO of Panevezio statybos trestas AB		Average monthly pay (Euros) in 2019	Share of profits allocated in 2019 (Euros)
Remigijus Juodvirsis	Chairman/ Adviser	2,767
Audrius Butkunas	Board Member
Audrius Balcetis	Board Member		I
Vilius Grazys	Board Member	1
Justas Jasiunas	Board Member/ Commercial Director	4.513
Dalius Gesevicius	Managing Director	7,752

Information on all agreements between the shareholders

The Company has no information on any agreements between the shareholders available.

19. Social Responsibility

In their activities both, the Company and the Group, follow the highest standards of business ethics and principles of social ethics. Social responsibility is based on its values and defines the Company's approach to its activities, integration of social, environmental and transparent business principles in the internal processes of the Company and the Group as well as in relations with its clients.

Short description of activity model

Panevezio statybos trestas AB (PST) is one of the largest local construction companies, which has been operating in the construction sector for more than 60 years. The company comprised the following branches: Gerbusta, focusing on construction of utility networks and landscaping. Pastatu apdaila, carrying out indoor and outdoor finishing works, Betonas, Konstrukcija, Stogas where production capacities were concentrated, Vilnius branch Genranga, performing general contracting activities and project management in Vilnius Region, and Klaipstata, performing general contracting activities and project management.

The Group of Panevezio statybos trestas AB consists of the following companies - Panevezio statybos trestas AB. Skydmedis UAB, Metalo meistrai UAB, Alinita UAB, Alinita UAB, PS Trests SIA, Kingsbud Sp.z o.o, Teritorija OOO, Seskines projektai UAB, Ateities projektai UAB, PST investiciios UAB, Tauro apartamentai UAB and Hustal UAB, Aliuminio fasadai UAB.

For management purposes, the Group is divided into business units based on the nature of their activity and has the following accountable segments:

Construction;
Steel structures; 0
Timber panel houses; �
Concrete floor installation; 0
Aluminium structure production .
Other activity.

The segment of construction includes activity of Panevezio statybos trestas AB, Vekada UAB, Alinita UAB and PS Trests SIA. The main area of activity is construction, designing and erection of various buildings, structures, equipment and communications, construction/installation of other objects (electrical installation, building renovation, installation of plumbing, waste water systems, fire protection systems, video surveillance, security and fire alarm) in Lifauania and other countries.

The segment of steel structures includes activity of Metalo meistrai UAB and Hustal UAB. The main area of their activity is designing and fabrication of steel structures for construction. The company also delivers steel structures to other companies based on their demand.

The segment of timber panel houses includes activities of Skydmedis UAB. The area of activity is designing, production, construction and outfitting of prefabricated timber panel houses, production of timber structures and millwork.

The segment of concrete floor installation are carried out by Pastatu apdaila, the branch of Panevezio statvbos trestas AB.

The work in of aluminium structure production (the production of aluminium profile systems, aluminium framed windows and doors) has been started by Aliuminio fasadai UAB since the beginning of 2020.

The segment of other activity includes Seskines projektai UAB, Ateities projektai UAB, Tauro apartamentai UAB, Teritorija OOO, PST investicijos UAB, which are engaged in real estate development, and Kingsbud Sp.z o.o., which is engaged in wholesale of construction materials.

Due to insignificance of volumes, the segments concrete floor installation and production of aluminium structures are not distinguished and are presented in the segment of "Other activity" in the consolidated financial statements.

Strategy, vision, mission and targets of the Company

In its activity, Panevezio statybos trestas AB follows the 3-year strategy approved by the Board. The strategy of the Company for the years 2019 through 2021 is based on growth of activity, enhancement in corporate value, management of client relations, ensuring of safe working environment and development of employees.

Vision - To become a reputed construction company in Europe, which uses advanced technologies, ensures quality and agreed work completions terms.

Mission - While honestly fulfilling our obligations, promoting long-term cooperation and proposing mature solutions in construction, we ensure profitable and sustainable business development.

Target - To retain the leading position in the construction market by creating the added-value to our clients, shareholders and employees.

Principles of social responsibility:

Accountability (for impact on society, economy, environment); Transparency (of decisions and activity, which have impact on society and environment); Ethical (proper) behaviour; Respect (listening attentively and responding) for stakeholders' interest; Respect for the rule of law; Respect for international norms of behaviour; Respect for human rights.

Environmental Protection

Panevezio statybos trestas AB and the companies of the Group (Skydmedis UAB, Metalo meistrai UAB. Alinita UAB, Vekada UAB) have the Environment System (EMS) consistent with the requirements of ISO 14001:2015/LST EN ISO 14001:2015, legal and other environmental regulations established, documented and constantly reviewed to ensure its suitability, adequacy and effectiveness.

In the process of implementation related to the established Environmental Policy, the Company seeks to preserve a healthy environment to any employee, biological and landscape diversity as well as optimal use of natural resources. The Environmental Policy is published in all branches, subsidiary companies and sites of Panevezio statybos trestas AB, available for public and all interested parties on the website at www.pst.lt

When making plans of the environmental system, external and internal issues with regard to the targets and strategic direction of the Company as well as needs and requirements of interested parties are taken into account resulting in defining risks and opportunities to make sure that the integrated management system is able to achieve the intended outcome, strengthen the desired impact, prevent or reduce undesired effects and achieve continual improvement. The Company plans actions to eliminate risks, actions to address and strengthen opportunities, how actions should be integrated and implemented in the EMS processes, assessment criteria and effectiveness of these actions. Panevezio statybos trestas AB has the Risk and Opportunity Register prepared.

The significant environmental aspects are determined in all branches, subsidiary companies and sites of the Company after significance of activity impact on environment is taken into account and legal requirements are identified. The environmental aspects are identified by analysing past. current and potential beneficial and adverse environmental impact of activities, services and products of the subdivisions. The review of these aspects is performed at least once per year and in case the nature of activities or any other conditions, such as a process, materials used, technologies, etc., changes, provided they condition occurrence of new environmental aspects. The site aspects are identified individually for each project.

The significant environmental aspects can cause one or more significant environmental impacts and therefore can result in risks and opportunities to be assessed in order to ensure the Company is able to achieve the intended outcomes of the EMS. When determining environmental aspects, a life cycle perspective is taken into account. The following key life cycle stages of a product/service are thought over and evaluated: raw material acquisition, design, production of construction products, transportation, construction of a building, use of a building, end-of-life treatment and final disposal (waste recycling and management). For each aspect possible legal and other requirements, which can affect activities of the Company and the Group, are identified.

For control of significant aspects and mitigation of adverse effects, targets and objectives are set, environmental management programmes and environmental plans covering specific actions, measures, terms and responsibilities are prepared.

Measurements of environmental parameters are planned and a list of environmental effectiveness indicators is drawn up. In the process of a construction project implementation, monitoring of the EMS is performed. In order to achieve the set environmental targets and objectives, training is performed at the Company and the Group. The purpose of such training is to familiarize those who work for and on behalf of the Company with the EMS policy, significant environmental aspects, targets and objectives, potential threats and emergencies as well as preventative measures to be used to avoid them, emergency preparedness and response plan, waste collection and segregation at the places of its forming, safe use of chemicals, information provided in safety data sheets.

All materials, including chemicals, are purchased and used in conformity with the applicable legal requirements. The suppliers are selected taking into account their possibilities to comply with the quality, environmental, occupational health and safety requirements applicable to products/services.

Internal audits are performed based on the Annual Internal Audit Plan. The information obtained is submitted for the management review. At least once per year the top managers analyse the EMS to ensure its continuing suitability, adequacy and effectiveness. The management review covers the environmental management system as well as environmental policy and targets.

The implemented EMS has been certified and is supervised by the certification company Bureau Veritas Lit UAB.

Relationship with Employees

The main asset of the Company is employees, who are the most important link in achieving the targets. Therefore, much attention is paid to motivation of employees: environment favourable for development of new ideas and their implementation is being created, continuous exchange of information is taking place. In the present-day environment, competence of employees is one of the key factors describing competitiveness of the Company. Considering this factor, the Company encourages employees in all organizational levels to learn and develop. Employees are given the opportunity to study, improve their qualifications, and participate in various seminars and trainings. Employees are motivated not only by material incentives, such as competitive wages and salaries, progressive bonus system, but also by exceptional quality of working environment. The Company and the Group provides social guarantees: the allowance is paid in the event of the death of a family member or immediate family of the employee, in case of an employee's death, a gift to an employee when a baby is born, on the employee's anniversary birthday.

In order to create safe and healthy working environment, the Company and the Group pay much attention to occupational safety. The situation in the occupational health and safety system is analysed on a year-to-year basis resulting in targets and objectives, plans for improvement of occupational health and safety. Occupational risks are constantly assessed and risk-eliminating measures are taken. Every year the Company makes investments in modern collective protective equipment. Employees are provided with certified personal protective equipment free of charge. To improve perception of safe work, occupational health and safety training is provided to managers and employees. Health checks for employees are arranged at health care establishments, analysis of the employee morbidity is performed followed by measures for morbidity reduction are taken.

On 5 January 2018, the Works Council for representation of the employees consisting of 11 members was elected at the Company. The Works Council submits proposals to the employer on economic, social and work issues, which are topical to the employees, employer's decisions, laws and other regulations governing work relations. The Council is elected for the period of three years, which starts from the beginning of their term of office.

Human Rights

The Company and the Group adhere to the principles for the protection of human rights and do not tolerate any violations of human rights in their activities. They are for the fair and transparent wage and salary policy, comply with the laws regulating overtime and working hours, respect the right of employees to rest and do not tolerate harassment and violence of any nature.

The Company opposes any discrimination and forced labour. Employees of the Company have equal rights and possibilities regardless their gender, nationality, social or family status, membership in public or political organisations or personal qualities. In 2019, there were no violations of human rights or relevant claims recorded

Social Initiatives

Panevezio statybos trestas AB keeps on implementing its target to be a reliable and transparent company. In its activity, the Company follows the principles of sustainable business development, which also include social responsibility. PST invests in various indirect activities, supports different social, sports, cultural and health promotion projects.

At the end of 2019, Panevezio statybos trestas AB gave a present, two big TV sets, to the Pediatric Intensive Therapy Unit at the Republican Panevezys Hospital, rendered support to sports clubs and federations, sponsored cultural projects, events arranged by educational institutions for local communities and nationwide.

Fight against Corruption and Bribery

The Company and its subsidiaries do not tolerate corruption or its manifestations of any nature and pursue open competition, ethical business conditions and proper ensuring of transparency and publicity in their activities. The Company does not tolerate fraud, extortion, unofficial accounting, unofficial and inadequately executed transactions, accounting for fictitious expenses, use of forged documents and other forms of corruption. Provisions of corruption intolerance apply to all employees of the Company, members of the management and supervisory bodies, any third parties acting on behalf of the Company.

The risk is mitigated by existing integrated internal controls for identifying potential risk factors for corruption. The company constantly monitors its activities and improves its activities.

Panevezio statybos trestas AB refrains from any form of influence on politicians and does not fund election campaigns of political parties, their representatives or their candidates.

The Company always co-operates with the institutions and is ready to provide all the necessary information.

The Company ensures that its procurement is carried out in compliance with the principles of equality, non-discrimination, transparency, mutual recognition, proportionality and requirements of confidentiality as well as impartiality at the same time using the Company's funds in a rational manner. Suppliers are selected on the basis of the most economically advantageous proposal or the lowest price under equal and non-discriminatory conditions.

In performing selection of subcontractors, the Company carries out assessment of subcontractors' qualification. Compliance with environmental, occupational health and safety requirements as well as honesty are the fundamental requirements for subcontractors.

Managing Director

Dalius Gesevicius

Annex 1

Corporate Governance Reporting Form

Panevezio statybos trestas AB (hereinafter referred to as the "Company"), acting in compliance with Article 22 (3) of the Law of the Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of Nasdaq Vilnius AB, hereby discloses how it complies with the Corporate Governance Code for the Companies listed on Nasdaq Vilnius as well as its specific provisions or recommendations. In case of non-compliance with this Code or some of its provisious or recommendations, the specific provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In addition, other explanatory information indicated in this form must be provided.

1. Summary of the Corporate Governance Report:

Parevezio statybos trestas AB in principle complies with the recommendatory Governance Code for the companies listed at NASDAQ Vilnius. Referring to the Articles of Association of the Company, the governance bodies of the Company include the General Shareholders' Meeting, the Management Board and the Managing Director. According to the Law on Companies of the Republic of Lithuania, either two (supervisory and management) or one collegial management body may be set up in the Company at the discretion of the Company. No Supervisory Board is set up in the Company. Following the Articles of Association of the Company, the Management Board is set up of 5 members, which are elected for the period of for years. The members of the Management Board represent the shareholders and perform the supervisory and control functions. Only the Audit Committee, which is elected for the period of one year, is formed in the Company. The functions of the Nomination and Remuneration Committees are performed by the Management Board. The system of the corporate governance ensures fair treatment of all shareholders, including minority and foreign shareholders, and protects the rights of the shareholders.

In its Annual Report, in accordance with the requirements of the legal acts, the Company provides information on the total amounts of money calculated during the reporting period to the members of the Management Board of the Company, the Chief Executive Officer.

The management system of the Company ensures that any information on all essential issues, including financial situation, operation and company management, is disclosed in a timely and accurate manner.

The audit company is proposed by the Management Board and elected by the Meeting of Shareholders, thus ensuring independence of the conclusions and opinion provided by the audit company

2. Structured table for disclosure:

YES/NO/ NOT PRINCIPLES/ RECOMMENDATIONS APPLICABLE	COMMENTARY
-------------------------------------------------------------	------------

Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders' rights

The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders.

1.1. All shareholders should be provided with access to the information and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed.	Yes	All information that shall be made public in accordance with legal acts is published in Lithuanian and English via informational system of stock-exchange Nasdaq Vilnius and on the website of the Company. The venue, date and time of the Meeting of Shareholders convened by the Company are chosen in such a way as to ensure participation of all shareholders in the decision-making process of the Company.
1.2. It is recommended that the company's capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all of their holders.	Yes	The Company's authorized share capital consists of EUR 0.29 nominal value ordinary shares, which provide their holders equal voting, property, dividend and other rights.
1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares.	y es	The rights attached to the shares are indicated in the Articles of Association of the Company, which are published on the website of the Company.
1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all assets of the company which in principle would mean the transfer of the company, should be subject to approval of the general meeting of shareholders.	No	The Articles of Association of the Company do not provide that the mentioned transactions are subject to approval of the General Meeting of Shareholders. The shareholders of the Company approve the transactions for approval of which they have the right prescribed by the Law on Companies of the Republic of Lithuania and the Articles of Association of the Company.
1.5. Procedures for convening and conducting a general meeting of shareholders should provide shareholders with equal opportunities to participate in the general meeting of shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting of shareholders should not prevent active participation of shareholders at the general meeting. In the notice of the general meeting of shareholders being convened, the company should specify the last day on which the proposed draft decisions should be submitted at the latest.	Yes	The Company convenes a General Meeting of Shareholders in accordance with the procedure established by the Law Off Companies of the Republic of Lithuania.
1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the general meeting of shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the general meeting of	Yes	All information for investors, notices on convocation of General Meetings of Shareholders, drafts of resolutions and documents proposed for the Meeting of shareholders by the Management Board and adopted resolutions and approved documents

shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the company. Such documents may be published to the extent that their public disclosure is not detrimental to the company or the company's commercial secrets are not revealed. 1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot.	Yes	are made public in Lithuanian and English languages through the information system of NASDAQ OMX Vilnius Stock Exchange and published on the website of the Company. Each shareholder can participate at the meeting in person or delegate the participation to some other person. The Company allows the shareholders voting by filling the general voting ballot in as
1.8. With a view to increasing the shareholders' opportunities to participate effectively at general meetings of shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in general meetings of shareholders via electronic means of communication. In such cases the security of transmitted information must be ensured and it must be possible to identify the participating and voting person.	No	prescribed by the law. The Company does not comply with the provisions of this recommendation, as it is not possible to ensure text protection and identify the signature of a voting person. Furthermore, in the opinion of the Company, so far there was no need for any modern technologies at the General Meeting of Shareholders for the purposes of participation and voting via electronic means of communication.
1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit company if these issues are included into the agenda of the general meeting of shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided.	y es	Information on the candidates to the members of the Management Board of the Company is provided to the shareholders at the General Meeting of Shareholders with the item related to the election of the members of the Management Board on the agenda in accordance with the procedure established by the Law on Companies of the Republic of Lithuania. Information on the audit company to be elected is made public together with the notice on the draft resolutions of the General Meeting of Shareholders to be convened in accordance with the procedure prescribed by the legal acts.
company's 1.10. Members of the collegial management body, heads of the administration' or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders.	Yes	The Managing Director of the Company, the Chairman and other competent persons who can provide information on the agenda of the General Meeting of Shareholders always participate at the General Meeting of Shareholders. The proposed candidates to the members of the Management Board, however not all, participated at the General Meeting of Shareholders.

¹ For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.

Principle 2; Supervisory board

2.1. Functions and liability of the supervisory board

The supervisory board of the company should ensure representation of the interests of the company and its

shareholders, accountability of this body to the shareholders and objective monitoring of the company's

operations and its management bodies as well as constantly provide recommendations to the management bodies

of the company.

The supervisory board should ensure the integrity and transparency of the company's financial accounting and control system.

2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders and represent their interests, having regard to the interests of employees and public welfare.	Not applicable	As the Law on Companies of the Republic of Lithuania provides for the possibility to elect only one either collegial supervision or management body, the collegial management body, the Management Board performing the function, and supervision one-person management body, the Managing Director, are set up in the Company. The collegial supervising - the Supervisory Board is not formed.
2.1.2. Where decisions of the supervisory board may have a different effect on the interests of the company's shareholders, the supervisory board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the company's strategy, risk management and control, and resolution of conflicts of interest.	Not applicable	See item 2,1.1.
2.1.3. The supervisory board should be impartial in passing decisions that are significant for the company's operations and strategy. Members of the supervisory board should act and pass decisions without an external influence from the persons who elected them.	Not applicable	See item 2.1.1.
2.1.4. Members of the supervisory board should clearly voice their objections in case they believe that a decision of the supervisory board is against the interests of the company. Independent2 members of supervisory board should: a) maintain the independence of their analysis and decision-making; b) not seek or accept any unjustified privileges that might compromise their independence.	Not applicable	See item 2.1.1.
2.1.5. The supervisory board should oversee that the company's tax planning strategies are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long-term interests of the company and its shareholders, which may give rise to reputational, legal or other risks.	Not applicable	See item 2.1.1.

² For the purposes of this Code, the criteria of incependence of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.

2.1.6. The company should ensure that the supervisory board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek independent professional advice from external legal, accounting or other experts on matters periaining to the competence of the supervisory board and its committees. 2.2. Formation of the supervisory board	Not applicable	See item 2.1.1.
The procedure of the formation of the supervisory board should ensure proper resolution of interest
and effective and fair corporate governance.
2.2.1. The members of the supervisory board elected by the general meeting of shareholders should collectively ensure the diversity of qualifications. professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the members of the supervisory board, it should be ensured that members of the supervisory board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks.	Not applicable	See item 2.1.1.
2.2.2. Members of the supervisory board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience.	Not applicable	See item 2.1.1.
2.2.3. Chair of the supervisory board should be a person whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or management board member of the company should not be immediately appointed as chair of the supervisory board either. Where the company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision.	Not applicable	See item 2.1.1.
2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the supervisory board. Each member of the supervisory board should undertake to limit his other professional obligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the supervisory board. Should a member of the supervisory board attend less than a half of the meetings of the supervisory board throughout the financial year of the company, the shareholders of the company should be notified thereof.	Not applicable	See item 2.1.1.
2,25. When it is proposed to appoint a member of the supervisory board, it should be announced which members of the supervisory board are deemed to be independent. The supervisory board may decide that, despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered indenendent due to snerial personal or commany-	Not applicable	See item 2.1.1.

related circumstances.
2.2.6. The amount of remuneration to members of the supervisory board for their activity and participation in meetings of the supervisory board should be approved by the general meeting of shareholders.	Not applicable	See item 2.1.1.
Every year the supervisory board Not applicable 2.02.01 should carry out an assessment of its activities. It should include evaluation of the structure of the supervisory board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year, make public respective information about its internal structure and working procedures.		See item 2.1.1.
Principle 3: Management Board
3.1. Functions and liability of the management board
The management board should ensure the implementation of the company's strategy and good corporate
governance with due regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the implementation of the company's strategy approved by the supervisory board if the latter has been formed at the company. In such cases where the supervisory board is not formed, the management board is also responsible for the approval of the company's strategy.	Yes	As there is no Supervisory Board formed at the Company, the Management Board performs supervisory functions, discusses and approves the strategy of the Company, and evaluates information on analyses implementation of the strategy of the Company.
3.1.2. As a collegial management body of the company, the management board performs the functions assigned to it by the Law and in the articles of association of the company, and in such cases where the supervisory board is not formed in the company, it performs inter alia the supervisory functions established in the Law. By performing the functions assigned to it, the management board should take into account the needs of the company's shareholders, employees and other interest groups by respectively striving to achieve sustainable business development.	y es	The Company follows the strategic plan of the Company based on which the mission of the management bodies of the Company is to create and maintain a strong, competitive, financially capable and technically advanced Company that creates and maximizes the value for the shareholders.
3.1.3. The management board should ensure compliance with the laws and the internal policy of the company applicable to the company or a group of companies to which this company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers.	Yes	The Management Board ensures compliance with the laws and internal policy of the Company applicable to the Company or the Group.

3.1.4. Moreover, the management board should ensure that the measures included into the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance are applied at the company in order to ensure adherence to the applicable laws, rules and standards.	Yes	The Management Board complies with this recommendation.
3.1.5. When appointing the manager of the company, the management board should take into account the appropriate balance between the candidate's qualifications, experience and competence.	Yes	When appointing the Chief Executive Officer, the Board takes into account the candidate's qualifications, experience and competence.
Formation of the management board 3-2.
3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is not formed, by the general meeting of shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the management board, it should be ensured that the members of the management hoard would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks.	Yes	The members of the Management Board of the Company are elected by the General Meeting of Shareholders. The members of the Management Board of the Company are qualified and competent to perform their functions, have a long experience in management. At present the Management Board fails to maintain gender equality. All members of the Management Board are male.
3.2.2. Names and surnames of the candidates to become members of the management board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of personal data at the meeting of the supervisory board in which the management board or individual members of the management board are elected. In the event that the supervisory board is not formed, the information specified in this paragraph should be submitted to general meeting of shareholders. The the management board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the company's annual report.	Yes	Information on the positions taken by the members of the Management Board or their participation in operation of other companies is continuously collected and compiled, and at the end of every year it is revised and presented in the reports prepared by the Company.
3.2.3. All new members of the management board should be familiarized with their duties and the structure and operations of the company.	Yes	The new members of the Management Board have been familiarised with their duties, the structure, operations and strategy of the Company.
3.2.4. Members of the management board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status.	Yes	The Management Board of the Company is elected by the General Meeting of Shareholders for the maximal four-year term in office prescribed by the Law on Companies of the Republic of Lithuania. Individual members of the Management Board or the entire Management Board may be recalled by the General Meeting of Shareholders before the end of their term of office.

³ Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oood.org/daf/anti-bribery/44884389.pdf

3.2.5. Chair of the management board should be a person whose current or past positions constitute no obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the company should not be immediately appointed as chair of the management board. When a company decides to depart from these recommendations, it should furnish information on the measures it has taken to ensure the impartiality of supervision.	Yes	The Chairman of the Management Board represents the main shareholder and has never been the Chief Executive Officer of the Company.
3.2.6. Each member should devote sufficient time and attention to perform his duties as a member of the Management Board. Should a member of the Management Board attend less than a half of the meetings of the Management Board throughout the financial year of the company, the Supervisory Board of the company or, if the Supervisory Board is not formed at the company, the General Meeting of Shareholders should be notified thereof.	Yes	The members of the Management Board fulfil their functions properly: actively participate at the meetings of collegial body and devote sufficient time to perform their duties as a member of the collegial body. There were 12 (twelve) meetings of the Management Board held in 2019. All members of the Management Board participated in ten meetings, one member of the Management Board failed to participate in two meetings and two members of the Management Board failed to participate in one meeting.
3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members will be independent4, it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company-related circumstances.	No	At present there are no independent members in the Management Board. Historically the Company exhibits the situation that the sufficiency of the independent members has not been considered. All members of the Management Board are related to the main shareholder of the Company.
3.2.8. The general meeting of shareholders of the company should approve the amount of remuneration to the members of the management board for their activity and participation in the meetings of the management board.	Yes	The members of the Management Board are paid remuneration (tantjems) for their activity in the Board by the decision of the General Meeting of Shareholders in accordance with the Law on Companies of the Republic of Lithuania. The members of the Management Board are not remunerated for their activities and participation in the meetings.
3.2.9. The members of the management board should act in good faith, with care and responsibility for the benefit and the interests of the company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to no-compete agreements and they should not use the business information or opportunities related to the company's operations in violation of the company's interests.	Yes	Based on the data available to the Company, all members of the Management Board act in good will for the interests of the Company and its shareholders, they are guided by the interests of the Company and not those of their own or any third parties, seek to maintain their independence in decision-making.
3.2.10.Every year the management board should carry out an assessment of its activities. It should	Yes No	The internal documents of the Company do not directly provide for an activity assessment

⁴ For the purposes of this Code, the criteria of incependence of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.

include evaluation of the structure of the management board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the management board, and evaluation whether the management board has achieved its objectives. The management board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data.

of the collegial bodies exercising individual supervisory functions. However, the collegial body ensures that its members are competent and have a variety of knowledge, opinions and experience to perform their tasks properly.

Principle 4: Rules of procedure of the supervisory board and the management board of the company

The rules of procedure of the supervisory board, if it is formed at the company, and of the management board

should ensure efficient operation and decision-making of these bodies and promote active cooperation between

the company's management bodies.

4.1. The management board and the supervisory board, if the latter is formed at the company, should act in close cooperation in order to attain benefit for the company and its shareholders. Good corporate governance requires an open discussion between the management board and the supervisory board. The management board should regularly and, where necessary, immediately inform the supervisory board about any matters significant for the company that are related to planning, business development, risk management and control, and compliance with the obligations at the company. The management board should inform he supervisory board about any derogations in its business development from the previously formulated plans and objectives by specifying the reasons for this.	Not applicable	There is no Supervisory Board formed at the Company.
4.2. It is recommended that meetings of the company's collegial bodies should be held at the respective intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings of the company's collegial bodies should be convened at least once per quarter.	Yes	The meetings of the Management Board of the Company are held once a quarter in accordance with the regulations of the Management Board. If required, the meetings of the Management Board are held at shorter intervals.
4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the company require immediate resolution.	Yes	The members of the Management Board are notified of the meeting being convened and its agenda in advance. All members of the Management Board get all materials relevant to the issues on the agenda in advance and have an opportunity to get familiarised with them and ask questions before and during the meeting, have the right to request to supplement or clarify the materials relevant to the issue to be discussed.

4.4. In order to coordinate the activities of the company's collegial bodies and ensure effective	Not applicable	The Company does not have a Supervisory
decision-making process, the chairs of the		Board.
company's collegial supervision and management
bodies should mutually agree on the dates and
agendas of the meetings and close cooperate in
resolving other matters related to corporate
governance. Meetings of the company's supervisory
board should be open to members of the
management board, particularly in such cases where
issues concerning the removal of the management
board members, their responsibility or remuneration
are discussed

Principle 5: Nomination, remuneration and audit committees

5.1. Purpose and formation of committees

The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest.

Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final

decision should be adopted by the collegial body.

5.1.1. Taking due account of the company-related circumstances and the chosen corporate governance structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the management board which performs the supervisory functions, establishes committees. It is recommended that the collegial body should form the nomination, remuneration and audit committees". 5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the three different committees.	No Yes	The collegial body of the Company's management is the Management Board performing the functions of Nomination Committee the Remuneration and Committees. The Management Board selects and approves the candidacy of the Chief Executive Officer of the Company - Managing Director and agrees with the candidacies of Directors of the Company proposed by the Managing Director. The Management Board continuously evaluates their experience, professional capabilities and implementation of the Company's strategic goals, hears out their reports. The Board selects the candidate for the external auditor and provides proposals to the General Meeting of Shareholders for approval. On 29 April 2019, the Audit Committee was elected at the Annual General Meeting of Shareholders.
5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole.	No	See the commentary on the recommendation provided in item 5.1.1. The recommendation is implemented to the extent it is related to the activities of the Audit Committee in the Company.

⁵ The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the Republic of Lithuania provides that public-interest entities to public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the exemptions where the firstions of the audit committee may be carried out by the collegial body performing the supervisory functions).

5.1.4. Committees established by the collegial body should normally be composed of at least three members. Subject to the requirements of the legal acts, committees could be comprised only of two members as well. Members of each committee should be selected on the basis of their competences by giving priority to independent members of the collegial body. The chair of the management board should not serve as the chair of committees.	Yes/No	See the commentary on the recommendation provided in 5.1.1. The recommendation is implemented to the extent it is related to the activities of the Audit Committee in the Company. The Audit Committee is composed of three members. Two members conform to the requirements for independence. The Audit Committee is elected for the period of one year.
5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the company on its governance structure and practice on an annual basis). In compliance with the legal acts regulating the processing of personal data, companies should also include in their annual reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance.	Yes/No	See the commentary on the recommendation provided in item 5.1.1. The Audit Committee follows the Rules of the Audit Committee prepared by the committee and approved by the General Meeting of Shareholders. These rules define the regulations specifying the rights and duties of the Audit Committee, size of the Audit Committee, term of office in the Audit Committee, requirements for education. professional experience and principles iof independence. The approved Rules of the Audit Committee are published on the website of the Company. In 2019, there were 3 meetings of the Audit Committee held where all members of the Audit Committee were present.
5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee.	Yes/No	See the commentary on the recommendation provided in item 5.1.1. The recommendation is implemented to the extent it is related to the activities of the Audit Committee in the Company.

5.2. Nomination committee
5.2.1. The key functions of the nomination committee should be the following: 1) to select candidates to fill vacancies in the membership of supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected; 2) assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought; 3) devote the attention necessary to ensure succession planning.	Not applicable	There is no Nomination Committee formed at the Company. The functions of the collegial body - the Management Bord performs the functions of the Nomination Committee. (See the commentary on the recommendation provided in item 5.1.1.).
5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the company and the heads of the administration, the manager of the company should be consulted by granting him/her the right to submit proposals to the Nomination Committee.	Not applicable
5.3. Remuneration committee
The main functions of the remuneration committee should be as follows: 1) submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so; 2) submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company's remuneration policy and the evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation.	Not applicable	There is no Remuneration Committee formed at the Company. (See the commentary on the recommendation provided in 5.1.1).

5.4. Audit committee
5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee 6.	Ves	this implements The Company recommendation. On 29 April 2019, the Audit Committee was elected at the Annual General Meeting of Shareholders. The Audit Committee is composed of three members, two of which requirements the for conform to independence. The Audit Committee organizes its activities in accordance with the Rules of the Audit Committee approved at the Meeting of Shareholders.
5.4.2. All members of the committee should be provided with detailed information on specific issues of the company's accounting system, finances and operations. The heads of the company's administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches.	Yes	The Audit Committee organizes its activities in accordance with the Rules of the Audit Committee approved at the Meeting of Shareholders. All members of the Committee are provided with detailed information on specific issues of accounting and system, finances the operations of the Company.
5.4.3. The audit committee should decide whether the participation of the chair of the management board, the manager of the company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, to meet the relevant persons without members of the management bodies present.	Yes	The Audit Committee organizes its activities in accordance with the Rules of the Audit Committee approved at the Meeting of Shareholders.
5.4.4. The audit committee should be informed about the internal auditor's work program and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work program of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the company and its group.	Yes	The Audit Committee organizes its activities in accordance with the Rules of the Audit Committee approved at the Meeting of Shareholders. The Audit Committee is provided with the information mentioned listed herein from independent audit firm. No internal audit function exists at Company/ Gruoup.
5.4.5. The audit committee should examine whether the company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the company and should also ensure that there is a in place for proportionate and procedure independent investigation of such issues and appropriate follow-up actions.	Yes	The Audit Committee organizes its activities in accordance with the Rules of the Audit Committee approved at the Meeting of Shareholders.

⁶ Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank of Lithuania.

5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not formed, to the management board its activity report at least once in every six months, at the time that annual and half-yearly reports are approved.	y es	The Audit Committee makes analysis of ang gives evaluation to the financial statements of the Company, gives recommendations on their approval to the Management Board together with the reports on their activity over the nemod.
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Principle 6: Prevention and disclosure of conflicts of interest

The corporate governance framework should encourage of the company's supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies.

The Corporate Governance Framework should recognize the rights of stakeholders as established by law and encourage active co-operation between companies and stakeholders in creating the company value, jobs and financial sustainability. In the context of this principle the concept "stakebolders" includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned.

Any member of the company's supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the company which elected him/her or the company's shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value.	Yes	Members of the management bodies of the Company behave in such a way that there is no conflict of interest with the Company. During the reporting period, there have been no known conflict of interest between the Company and the member of its management body.
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Principle 7: Remuneration policy of the company

The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial

bodies and heads of the administration, in addition it should ensure the publicity and transparency of the

company's remuneration policy and its long-term strategy.

7.1. The company should approve and post the remuneration policy on the website of the company; such policy should be reviewed on a regular basis and be consistent with the company's long-term strategy.	Yes	The Company has prepared the draft of revised Remuneration Policy, which is subject to the approval at the coming General Meeting of Shareholders.
7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the company can recover the disbursed amounts or suspend the payments.	Yes	The Remuneration Policy of the Company defines the renumeration components and established the principles of its award and payment.
7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the supervisory functions should not receive remuneration based on the company's performance.	Yes	Remuneration policy is intended to establish only the principles of remuneration of top and middle management staff. See item 3.2.8.

7.4. The remuneration policy should provide sufficient information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in general should not be higher than the non-variable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance.	Yes	Company this The complies with recommendation in accordance with the provisions of the Labour Code of the Republic of Lithuania within the limits established therein.
7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three vears after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares.	Not applicable	There is no scheme anticipating remuneration of the directors in shears, shear options or any other right to purchase shears.
7.6. The company should publish information about the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial vear. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the company's remuneration policy, compared to the previous financial year.	No	After the Remuneration Policy of the Company is approved at the General Meeting of Shareholders, the Company will publish the information about implementation of the Remuneration Policy on its website.
7.7. It is recommended that the remaneration policy or any major change of the policy should be included on the agenda of the general meeting of shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the general meeting of shareholders.	No	The Company does not apply any schemes under which members and employees of a collegial body receive remuneration in shares or share options.

Principle 8: Role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual agreements and encourage active cooperation between companies and stakeholders in creating the company value,

jobs and financial sustainability. In the context of this principle the concept "stakeholders" includes investors,

employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned.

8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected.	Yes	The Company protects all rights of the stakeholders, allows the stakeholders to participate in corporate governance in the manner prescribed by law.
8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the company's authorized capital, involvement of creditors in corporate governance in the cases of the company's insolvency, etc.	Yes	this The complies with Company recommendation. For example, the Company has a Co-operation Agreement signed with the Works Council. According to the signed agreement, the Company informs the representatives of the Council about the financial position of the employer's status, expected Company, changes, etc.
8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information.	Yes	Detailed information on scheduled events of the shareholders is made public following the procedure prescribed by law, the investors (shareholders) have sufficient opportunities to familiarize themselves with the relevant information and vote in adopting decisions.
8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function.	Yes	The stakeholders may submit anomymous reports to the collegial body.

Principle 9: Disclosure of information

The corporate governance framework should ensure the timely and accurate disclosure of all material corporate

issues, including the financial situation, operations and governance of the company.

9.1. In accordance with the company's procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the company should
include but not be limited to the following:
9.1.1. operating and financial results of the company;	Yes	The operating and financial results of the Company are made public in the Intermediate Semi-annual and Annual Reports of the Company on the website of the Company and on the website of stock-exchange Nasdaq Vilnius.
9.1.2. objectives and non-financial information of the company;	Yes	Information is published in the Intermediate Semi-annual and Annual Reports of the Company.

9.1.3. persons holding a stake in the company or controlling it directly and/or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary; 9.1.4. members of the company's supervisory and management bodies who are deemed independent, the manager of the company, the shares or votes held by them at the company, participation in corporate governance of other companies, their	y es Yes	All information available to the Company is published in the Intermediate Semi-annual and Annual Reports of the Company. Information is published in the Intermediate Semi-amual and Annual Reports of the Company.
competence and remuneration; 9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities;	Yes	Information on composition, number of meeting and attendance of members of the existing committees is published in the Intermediate Semi-annual and Annual Reports of the Company.
9.1.6. potential key risk factors, the company's risk management and supervision policy;	888	Information is published in the Intermediate Semi-annual and Annual Reports of the Company.
9.1.7. the company's transactions with related parties;	Yes	Information is published in the Intermediate Semi-annual and Annual Reports of the Company.
9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the company's shares or share options as incentives, relationships with creditors, suppliers, local community, etc.);	No	The Company does not apply any schemes under which employees receive remuneration in shares, share options or other rights to share acquisition.
of structure 9.1.9. and corporate strategy governance;	Yes/No	Information is published in the Intermediate Semi-annual and Annual Reports of the Company.
of 9.1.10. initiatives social and measures responsibility policy and anti-corruption fight, significant current or planned investment projects. This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list. This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts.	Yes	Information is published in the Intermediate Semi-annual and Annual Reports of the Company.

9.2. When disclosing the information specified 10 paragraph 9.1.1 of recommendation 9.1, it is recommended that the company which is a parent company in respect of other companies should disclose information about the consolidated results of the whole group of companies.	Yes	Company with the The complies recommendation and discloses information about the results of the Company and the Group of its subsidiaries. The information is published in the Intermediate Semi-annual and Annual Reports of the Company.
9.3. When disclosing the information specified 111 paragraph 9.1.4 of recommendation 9.1, it 18 recommended that the information on the professional experience and qualifications of members of the company's supervisory and management bodies and the manager of the company as well as potential conflicts of interest which could affect their decisions should be provided. It is further recommended that the remuneration or other income of members of the company's supervisory and management bodies and the manager of the company should be disclosed, as provided for in greater detail in Principle 7.	Yes	information specified the The in recommendation in provided in the Annual and Semi-annual Reports of the Company.
9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time.	Yes	The Company discloses the information via the information disclosure system used by the Vilnius Stock Exchange in the Lithuanian and English languages simultaneously. The Company does not disclose the information likely to impact the price of the issued by it securities in its comments, interviews or otherwise by the time such information is announced via the information system of the Stock Exchange.

Principle 10: Selection of the company's audit firm

The company's audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.

10.1. With a view to obtain an objective opinion on the company's financial condition and financial results, the company's annual financial statements and the financial information provided in its annual report should be audited by an independent audit firm.	Yes	The independent audit company performs auditing of the individual and consolidated (the Group) annual financial statements of the Company and its subsidiaries in accordance with the International Accounting Standards applicable in the European Union. The independent audit company evaluates conformity of the Annual Report to the audited Financial Statements.
10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company.	Yes	The Management Board proposes an audit firm to the General Meeting of Shareholders.
10.3. In the event that the audit firm has received remuneration from the company for the non-audit services provided, the company should disclose this publicly. This information should also be available to the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company when considering which audit firm should be proposed to the general meeting of shareholders.	Yes	In 2019, the audit firm in addition to audit services has provided tax consultation to the subsidiary of the Company for the total fee of EUR 2 800 excluding VAT.

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Panevezio Statybos Trestas

2244_agm-r_2020-04-29_d8303485-a205-40a7-9893-9efd78f6d8d5.pdf

Contents

Parent Company's Details

Panevėžio Statybos Trestas AB

The Board

Management

Auditor

Banks

INDEPENDENT AUDITOR'S REPORT

Report on the Audit of the Consolidated Financial Statements

Opinion

Basis for opinion

Key audit matters

The key audit matter

Uncertainty related to the fine imposed by the Competition Council

The key audit matter

How the matter was addressed in the audit

Other information

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor's responsibilities for the audit of the consolidated financial statements

Report on Other Legal and Regulatory Requirements

Appointment and approval of the auditor

Non-audit services

CONFIRMATION OF COMPANY'S RESPONSIBLE PERSONS

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Financial Position (continued)

Consolidated Statement of Cash Flows

Notes

General information 1.

Joint operations

2. Basis of Preparation

Statement of compliance

Basis of preparation of the Consolidated Financial Statements

Functional and presentation currency

Estimates

3. Summary of Significant Accounting Policies

Basis of consolidation

Basis of Consolidation (continued)

Basis of Consolidation (continued)

Adoption of new and/or changed IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations

· IFRS 16: Leases

· IFRS 9: Prepayment features with negative compensation (Amendment)

· IAS 28: Long-term Interests in Associates and Joint Ventures (Amendments)

· IFRIC INTERPETATION 23: Uncertainty over Income Tax Treatments

· IAS 19: Plan Amendment, Curtailment or Settlement (Amendments)

> IFRS 3 Business Combinations and IFRS 11 Joint Arrangements:

Standards issued but not yet effective

· Amendment in 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

· Conceptual Framework in IFRS standards

· IFRS 3: Business Combinations (Amendments)

· Interest Rate Benchmark Reform - IFRS 9, IAS 39 and IFRS 7 (Amendments)

3.1 Foreign Currency

3.2 Financial Instruments

Financial assets

Initial recognition and measurement

Subsequent measurement

Financial assets at amortised cost (debt instruments)

Impairment of financial assets

(a) Assessment of impairment of trade receivables and contract assets

(b) Assessment of impairment of loans granted

Financial liabilities

Initial recognition and measurement:

Subsequent measurement

Loans received and other payables

Offsetting of financial instruments

Derecognition of financial assets and liabilities

Financial assets

Financial liabilities

3.3 Property, Plant and Equipment

3.4 Intangible Assets (except Goodwill)

3.5 Investment Property

3.6 Leased Assets

3.7 Inventories

3.8 Cash and Cash Equivalents

3.9 Impairment of Non-Financial Assets

3.10 Dividends

3.11 Provisions