Panevezio Statybos Trestas

Interim / Quarterly Report • Aug 31, 2017

PANEVEZIO STATYBOS TRESTAS AB Consolidated Interim Financial Statements and Consolidated Interim Report for the First Half of 2017 (UNAUDITED)

31 August 2017 Panevezys

STATEMENT OF EXECUTIVE OFFICERS OF THE COMPANY

Hereby we confirm that based on the information available to us, the interim financial statements of the Company and the Group provided for the first half of the year 2017 prepared in accordance with the International Financial Reporting Standards are true and show the assets, liabilities, financial position, profit or loss and cash flows of Panevezio statybos trestas AB and Panevezio statybos trestas AB Group in a correct manner, and that the review of business development and performance is indicated correctly in the interim report.

Jerland

Dalius Gesevicius Managing Director Panevezio statybos trestas AB

Danguole Sirvinskiene Chief Accountant Panevezio statybos trestas AB

Tel +370 45 505 503 Faks. +370 45 505 520 El. paŝtas: pst@pst.lt www.pst.lt

AB DNB bankas A/s LT694010041200090221 AB SWEDBANK A/s LT947300010000074994

1. Accounting period covered by the Semi-Annual Report

This Consolidated Report for First Half of 2017 covers the period from 1 January 2017 until 30 June 2017.

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

Name of issuer	Public Limited Liability Company Panevezio statybos trestas
Authorised capital	4,741,500 Euros
Address of registered office	P. Puzino Str. 1, LT-35173 Panevezys, Lithuania
Telephone	$(+37045) 505503$
Fax	$(+37045)$ 505 520
Legal-organisational form	Public Limited Liability Company
Date and place of registration	30 October 1993, Panevezys City Board
Registration No.	AB 9376
Register code	147732969
VAT code	LT477329610
Administrator of	State Enterprise Centre of Registers
Legal Entity Register
E-mail	$pst(\omega pst.$
Website	www.pst.lt

3. Nature of the main operation of the issuer

The main operation area of the company and its subsidiaries (the Group) is designing and construction of various buildings, structures, equipment and communications and other objects in Lithuania and abroad, sale of building materials and real estate development. Furthermore, the company is engaged in rent of premises and machinery.

Vision

To become a well-known company of the construction sector in Europe that uses advanced technologies and guarantees quality as well as agreed work completion terms.

Mission

While honestly fulfilling our obligations, developing long-term cooperation and proposing mature solutions in construction, we increase the value to shareholders and develop operation of the company, ensure safe, stable environment to employees, create environment of higher quality to business, society and people.

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

As of 31 December 2017, the Group of Panevezio statybos trestas AB included the following companies:

Subsidiary company	Registration date, register administrator	Company code	Registered address	Telephone, fax, e-mail, website	Percentage of controlled shares
Skydmedis UAB	17 June 1999 State Enterprise Centre of Registers	148284718	Pramones Str. 5, Panevezys	Tel. (+370 45) 467626 Fax (+370 45) 460259 info@skydmedis.lt www.skydmedis.lt	100
Metalo meistrai UAB	16 June 1999 State Enterprise Centre of Registers	148284860	Tinklu Str. 7, Panevezys	Tel.+370 45 460377 Fax. +370 45 585087 info@metalomeistrai.lt 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 info@vekada.lt www.vekada.lt	95.6
Alinita UAB	8 December 1997 State Enterprise Centre of Registers	141619046	Tinklu Str. 7, Panevezys	Tel. (+370 45) 467630 Fax (+370 45) 467630 info@alinita.lt www.alinita.lt	100
Kingsbud Sp.z.o.o.	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
PST un ARMS PS	5 October 2016 Centre of Registers, Republic of Latvia	40203019731	Rozu Str. 27, Marupe, Marupes Parish, LV-2167	Tel.+371 29525066	50
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 maslena11@mail.ru	87.5
PST Nordic AB	9 September 2013 Bolagsverket	5569418568	Krossgatan 25, 162 50 Vällingby Stockholm County	+46 70 68 48 562 info@pstnordic.se www.pstnordic.se	100
Seskines projektai UAB	9 November 2010 State Enterprise Centre of Registers	302561768	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 info@psti.lt www.psti.lt	100
PST investicijos UAB	23 December 1998 State Enterprise Centre of Registers	124665689	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 info@psti.lt www.psti.lt	68

Subsidiary companies of PST investicijos UAB:

Ateities projektai UAB	25 April 2006 State Enterprise Centre of Registers	300560621	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 info@pst. www.psti.lt	100
ISK Baltevromarket ZAO	13 July 2001 Independent Registration Company AB	3906214631	Rostovskaja Str. $5 - 7$ . Kaliningrad, Kaliningrad Obl., Russian Federation	Tel.+79097772202 baltevromarketao@ mail.ru	100

5. Contracts with the intermediary of public trading in securities

In 2013, the Company signed the contract with the Financial Brokerage Company Finasta AB for securities accounting 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.

6. 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 (company symbol PTR1L) since 13 July 2006.

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

Comparison of PTR1L Panevezio statybos trestas and OMX Vilnius Benchmark GI indexes for the First Half of 2017

Company share price variation at the Stock Exchange Market Nasdaq Vilnius for the period 2013 through the First Half of 2017 (Euros)

Company share price variation at the Stock Exchange Market Nasdaq Vilnius for the First Half $of 2017$ (Euros)

Table 1. Information on the company share price at The Stock Exchange Market Nasdaq Vilnius (Euros)

Last price 30 June 2016	Last price 31 Dec. 2016	Average share price for I half of 2017	Highest price for I half of 2017	Lowest price for I half of 2017	Last price 30 June 2017
$0.912$ EUR	$0.94$ EUR	$0.99$ EUR	1.07 EUR	0.91 EUR	1.05 EUR

Authorised capital of the issuer and its structure $7.$

As of 30 June 2017, 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 non-certificated and fully paid. The proof of ownership is the record in the securities accounts.

On 30 June 2017, the total number of shareholders was 1568.

Table 2. The shareholders holding or controlling more than 5 per cents of the authorised capital of the company

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)	Percentage of the authorized capital held	Percentage of votes granted by the shares held under ownership right	Portion of votes owned by a shareholder along with acting persons
Panevezio keliai AB S. Kerbedzio Str. 7, Panevezys Company code: 147710353	8,138,932	49.78	49.78	$\frac{1}{2}$
Clients of Swedbank AS Liivalaia 8, 15040 Tallinn, Estonia	1,190,254	7.28	7,28	28.28.00 부장
Freely negotiable shares	7,020,814	42.94	42.94	---

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 Shareholders of Panevezio statybos trestas AB is 16,350,000.

8. Information on the performance of the issuer

During the first half of 2017, the turnover of Panevezio statybos trestas AB was 24.4 mln. Euros, that is by 29 per cents lower compared to the six months of the year 2016. In the first half of 2017, the company incurred losses. The losses amounted to 0.62 mln. Euros. Referring to the first half of 2016, the company had net profit of 1.4 mln. Euros. In the first half of the year a few projects large in scope were completed – extension of the Shopping and Leisure Centre Mega in Kaunas, storage facilities of Lemora UAB. Preparations were started for new projects. This conditioned the losses incurred and decrease in income.

The comprehensive income of the Group over the same period amounted to 33.5 mln. Euros and, compared to the comprehensive income in the amount of 41.5 mln. Euros over the first half of 2016, decreased by 19 per cents. Over the reporting period, the Group incurred losses amounting to 1.7 mln. Euros. Referring to the first half of 2016, the company had net profit of 0.6 mln. Euros.

The decisive influence on the Group results was made by losses incurred by PST Nordic AB, the subsidiary company of Panevezio statybos trestas AB.

Panevezio statybos trestas AB and the Group continues expanding operations in Latvia. In the first half of 2017 reconstruction of the Jelgava Palace was in progress. Activities related to of energy efficiency increase of Krimulda People's House have been started. In Iecava area construction of storage facilities, pump house and two tanks for liquid nitrogen fertilizers have been started. Construction of a hotel for the Rezekne Academy of Technologies is close to commencing.

Over the first half of 2017, EBITDA – earnings before interest and depreciation – was $-0.006$ mln. Euros (1.8 mln. Euros over the first half of 2016) for the company and -0.874 mln. Euros $(1.5 \text{ min. Euro})$ for the Group.

Risk factors related to the company's operation:

In their operation, both the company and the Group face various types of risks:

• legal regulation; a.
• severe competition; $\sim$
• shortage of qualified labour; $\omega_{\rm c}$
• cyclical nature of economy; $\omega_{\rm{eff}}$
• macroeconomic factors; $\omega$ .
• damping. $\mathbf{r}$

Information on the types of risks and risk management is provided in the Notes to the Separate Financial Statements for the year ended on 31 December 2016 (Note 4) and the Notes to the Consolidated Financial Statements for the year ended on 31 December 2016 (Note 4).

Table 3. The results (thousands Euros) of the company and the Group of Panevezio statybos trestas AB for the period First Half of 2015 through First Half of 2017

Group					Company
I half of 2015	I half of 2016	I half of 2017	Items	I half of 2015	I half of 2016	I half of 2017
64,917	41,492	33,548	Income	41,144	34,252	34,252
59,378	37,323	32,562	Cost	36,654	34,252	24,386
5,539	4,169	985	Gross profit	4,941	3,248	1,120
8.5	10	2.94	Gross profit margin (per cents)	10.9	9.5	4.6
981	$-706$	$-2,197$	Typical operating result	1 2 7 6	1 1 9 6	$-1122$
1,5	$-1.7$	$-6.5$	Typical operating result from turnover (per cents)	3.1	3.5	$-4.6$
3,281	4,459	$-874$	Profit before taxes, interest, depreciation and amortization EBITDA	2,429	1,845	$-6.2$
5.05	3.5	$-2.6$	EBITDA margin (per cents)	5.9	5.4	$-0.03$
2,124	558	$-1,681$	Net profit	1,653	1,431	$-619$
3.3	1.3	$-5$	Nets profit (loss) margin (per cents)	4.02	4.2	$-2.5$
0.13	0.03	$-0.10$	Profit (loss) per share (Euros)	0.10	0.09	$-0.04$
5.95	1.58	$-4.81$	Return on equity (per cents) (ROE) Net profit Equity capital	4.13	3.63	$-1.63$
2.91	0.94	$-3.22$	Return on assets or asset profitability (ROA) Net profit Assets	2.63	2,64	$-1.28$
5.54	1.48	$-4.49$	Return on investments (ROI) Net profit Assets - Current debt	4.05	3.56	$-1.59$
1.87	2.40	$3.02^{\circ}$	Current liquidity ratio Current assets Current liabilities	2.23	2.94	3.61
1.48	1.93	2.34	Critical liquidity ratio Current assets - Inventories Current liabilities	2.18	2.84	3.50
0.49	0.60	0.67	Asset to equity ratio	0.64	0.73	0.79
2.18	2.16	2.14	Book value per share	2.45	2.41	2.33
0.45	0.42	0.49	Ratio of share price and book value $(P/BV)$	0.40	0.38	0.45

Income and net profitability variation for the Company:

Income and net profitability variation for the Group:

Table 4. Income (mln. Euros) by operation types

		Group
mln. Euros	I half of 2015	I half of 2016	I half of 2017
Construction works	59.67	37.66	29.14
Real estate	3.36	0.34	Ω
Products produced and other income	1.88	3.49	4.41

The main income of the company by operation types is from building and erection. Over the first half of 2017, the income of the Group from building and construction totalled 86.9 %, income from made products and other income amounted to 13.1 %. Over the first half of 2016, the income of the Group from building and construction totalled 90.8 %, income from made products and other income amounted to 8.4 % and income from real estate amounted to 0.8 %.

Income distribution for the Group by operation types (per cents)

Table 5. Operating income (mln. Euros) by countries:

		Group
mln Euros	I half of 2015	I half of 2016	I half of 2017
Lithuania	43.10	36.28	26.05
Russian Federation	19.07	0.77
Scandinavian countries		4.44	6.67
Other countries	2.75		0.83

Over the first half of 2017, the company mainly operated in Lithuania. The income of the Group from the works performed inside the country made 77.6 per cents of the income whereas over the first half of $2016$ it was 87.4 per cents. Over the first half of 2017, the income in the Scandinavian countries increased and made 19.4 per cents of the Group income (10.7 per cents over the first half of 2016).

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

Environmental protection

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

In 2013, 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 related to building materials.

Employees

Professional, competent and responsible employees are the biggest asset of Panevezio statybos trestas AB. 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. Considering this factor, the company encourages employees in all organizational levels to learn and improve their skills on a continuing basis. The employees are motivated not only by material incentives – competitive salaries, progressive bonus system but also by exceptional quality of working environment. As of 30 June 2017, the number of employees in the Group was 1,045, in the company - 765.

Average number of employees		I half of 2016		I half of 2017
	Group	Company	Group	Company
Managers	27	13	25	13
Specialists	322	234	294	225
Workers	792	512	721	519
Total	1141	759	1040	757

Table 6. Average number of employees for the First Halves of 2016 and 2017

Table 7. Education level of the Group employees as of the end of the period

PST Group employees	Payroll number	Higher university level education	Higher non- university education	Junior college education	Secondary education	Incomplete secondary education
Managers	25	24	0		0
Specialists	295	232	21	29	13	$\theta$
Workers	725	25	29	161	445	65
Total:	1.045	28 I	50	191	458	65

		I half of 2016		I half of 2017
	Group	Company	Group	Company
Managers	2478	3166	3144	4035
Specialists	1047	1086	1235	1210
Workers	890	840	979	936
Total	1052	1062	1179	1172

Table $\delta$ . Average monthly gross pay per employee (Euros)

Over the first half of 2017, 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 2017, the company also pays much attention to qualification improvement. Training in the company is done in three directions using:

1. Services of training arranging institutions (external training);

2. Services of higher education institutions (employee studies).

Essential events having taken place during the first six financial months of the year 9.

During the first half of this year, Panevezio statybos trestas AB has signed a few new contracts:

• with Prodo UAB acting on the basis of the Partnership Agreement for construction of the Guest House at Paplaujos Str. 9a, Vilnius. The project value exceeds 10 mln. Euros. The overall area of the building including the underground parking amounts to 26,882 square meters;

• with the Design and Printing Private Limited Liability Company Kopa for construction of a new production building – a printing-house with offices at Industrijos Str. 12, Biruliskiu Vlg., Kaunas District. The value of the project amounts to about 5 mln. Euros, VAT exclusive. The area of the new building will be about 7200 square meters and the project is expected to be completed within 13 months.

• together with the partner, SIA Monum, the contract has been signed with Siauliu vandenys UAB for reconstruction of water supply and waste water networks in Siauliai. The value of the work to be carried out by the companies will exceed 6.7 mln. Euros, VAT exclusive. The reconstruction scope will include over 18 km of water supply and nearly 20 km of waste water networks.

• together with the partner, Eigesa UAB, the contract the contract with Radviliskio vanduo UAB for construction of water supply and waste water networks, waste water treatment and water improvement plant in Grinkiskis. The value of the works to be carried out by the companies will exceed 2.6 mln. Euros, VAT exclusive. The reconstruction scope will include over 8 km of water supply and over 9.5 km of waste water networks. The project is scheduled for 18 months.

• with Panevezio gatves UAB for installation of surface wastewater collection network and with Cooperative Society Zvoruna for construction of grain handling and storage facilities, installation of utility network and installation of equipment. The total value of both contracts exceeds 9 mln. Euros, VAT inclusive.

In May 2017, the judgement on initiation of bankruptcy proceedings against Baltlitstroj OOO, the subsidiary company of Panevezio statybos trestas AB, adopted by the Arbitration Court of Kaliningrad Oblast, Russian Federation, entered into force. The bankruptcy proceedings are currently in progress.

As a result of negative profitability of PST Nordic AB, the subsidiary company of Panevezio statybos trestas AB, the management of the company took the decision to cease operation of PST Nordic AB. In August the judgement on initiation of bankruptcy proceedings against PST Nordic AB, the subsidiary company of Panevezio statybos trestas AB, entered into force. The bankruptcy proceedings are currently in progress.

10. Information on research and development activities performed by the company

The company keeps on successfully introducing innovative technologies in its activities. Panevezio statybos trestas AB aims that preparation for construction, work planning for future projects was done and construction activities were carried out especially fluently.

For that purpose, investments are made in the modern designing software. The company The company continues improving design preparation using not only the currently available software but also a new software package, which allows preparing complete designs covering its all parts in the environment of BIM (Building Information Modelling).

Site construction activities are planned on the basis of the BIM model. Application of the digital (BIM) model in planning and performance of works allows reducing probability of delay in work, taking immediate corrective actions in work organisation, if necessary, and improving performance quality. The computer simulation of construction created in the preparation stage allows choosing optimum construction methods and comparing the actually completed work quantities with the planned ones.

Use of the Building Information Modelling (BIM) is started during transportation of the items to be used to the site. With the help of the BIM model and work schedules the required items are delivered to the site at the time required. This allows reducing the logistics costs to the most extent, eliminating large storage areas on the site.

11. Procedure for amendment of the Articles of Association of the issuer

Any amendments of the Articles of Association of Panevezio statybos trestas AB are made following the procedure set forth in the laws and regulations of the Republic of Lithuania.

12. Bodies of the issuer

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. There is no Supervisory Board is formed in the company.

The powers of the General Meeting of Shareholders has no difference from the powers of the General Meeting of Shareholders set forth by the Law on Companies.

The Board of the Company consisting of five persons is elected by the General Meeting of Shareholders for a period not longer than 4 years. At present, the Board of the Company consists of four members. The procedure for election and withdrawal of a member of the Board has no difference from the procedure set forth by the Law on Companies.

The activities of the Board are managed by the Chairman of the Board. The Chairman of the Board is elected by the Board from the members of the Board.

The Board elects and removes from the office the manager of the Company - the Managing Director, fixes his salary, sets other terms of the employment contract, approves his job description, gives incentives and imposes penalties.

The manager of the Company is a single-person management body of the Company who organizes the current economic activities based on the authority granted.

The Board:

REMIGIJUS JUODVIRSIS – the Chairman of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Tertius UAB		704,638	80	80
Panevezio keliai AB	Member of the Board	531,675	28.47	28.47
Lauktuves jums UAB	Chairman of the Board	11,069	50.15	50.15
Pokstas UAB		111	50	50
Klovainiu skalda AB		470,421	8.74	8.74
Emulteka UAB (in the process of liquidation)		14	14.0	14.0
Gustoniu ZUT UAB	Member of the Board	1.085	50.28	50.28
Specializuota komplektavimo valdyba AB		21,490	1.07	1.07
PST investicijos UAB	Member of the Board	16,407	3.32	3/32
Convestus UAB	$\mathcal{L}^{\mathcal{A}}$	50,000	50	50
Alproka UAB	Chairman of the Board	z	u	$\sim$
Kauno tiltai UAB		492	0.31	0.31

Term of office: November 2014 through November 2018 Clean record.

VIRMANTAS PUIDOKAS – the member of the Board. No membership in the capital of the company. Membership in the capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio keliai AB	General Director	66,769	3.57	3.57
Skalduva UAB	Director	42	42	42
Klovainiu skalda AB	Member of the Board	541,785	10.1	10.1
Avia invest UAB		10,000	100	100
Istros aviaparkas UAB		2,000	100	100
Akvalda UAB	Director	750	50.00	50.00
Emulteka UAB		9	9	9

Term of office: November 2014 through November 2018 Clean record.

ARTURAS BUCAS – the Member of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes.%
Dvarcioniu keramika AB (subject to bankruptcy proceedings)	Shareholder	356	-	C.
Panevezio keliai AB	Member of the Board			岑

Terms of office: November 2014 through November 2018 Clean record.

AUDRIUS BALCETIS – the Member of the Board. Membership in the capital of the companies below:

Company	Position	Number of shares	Capital, %	$V$ otes. %
Panevezio keliai AB	Member of the Board
Panevezio rysiu statyba UAB	Director	279,507		27
PST investicijos UAB	Member of the Board		$\sim$

Terms of office: April 2015 through November 2017 Clean record

VILIUS GRAZYS – the Member of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Akvalda UAB		750	50	50
Emulteka UAB		11
Betono apsaugos sistemos UAB		40	40	40
Panevezio keliai AB	Technical Director	83,058	4.45	4.45

Terms of office: November 2014 through November 2018 Clean record.

Following the decision of the General Meeting of Shareholders of Panevezio statybos trestas AB that had taken place on 21 April 2017, the share of profit was paid to the members of the Board. Such amount of the share of profit is 354,195 Euros.

Administration:

DALIUS GESEVICIUS- Head of the Company Administration, Managing Director. Holds 30,015 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 the first half of 2017 neither the members of the Board nor the top managers of Panevezio statybos trestas AB were granted loans, given guarantees and sureties, had any property transfers to them.

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, one 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 years.

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 carrying out 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 21 April 2017:

Lina Rageliene – Deputy Chief Accountant of Panevezio statybos trestas AB. Holds no shares of the company.

Drasutis Liatukas – independent auditor, Head of Finansu auditorius UAB, auditor. Holds no shares of the company.

Irena Kriauciuniene – independent auditor, auditor. Holds no shares of the company.

13. Published information

Table 9. Summary of published information from the beginning of 2017 up to the submission date of this report

Description of notification	Category of notification	Language	Date
Regarding opening of bankruptcy proceedings	Notification on material event	$Lt$ , $En$	17 Aug. 2017
Cessation of PST Nordic AB Activities	Notification on material event	$Lt$ , $En$	27 July 2017
Panevezio statybos trestas AB Will Carry Out Work in Panevezys and Pasvalys	Notification on material event	$Lt$ , $En$	10 July 2017
Initiation of Bankruptcy Proceedings	Notification on material event	$Lt$ , $En$	25 May 2017
Panevezio statybos trestas AB Will Build Water Supply and Waste Water Networks in Radviliskis District	Notification on material event	$Lt$ , $En$	24 May 2017
Annual Information Approved by Annual General Shareholders Meeting of Panevezio statybos testas AB	Annual information	$Lt$ , $En$	21 April 2017
Resolutions of Annual General Shareholders' Meeting	Notification on material event	Lt, En	21 April 2017

Description of notification	Category of notification	Language	Date
Panevezio statybos trestas AB Will Reconstruct the water supply and sewage water networks in Siauliai	Notification on material event	Lt, En	20 April 2017
Panevezio statybos trestas AB Will Build a Printing-House	Notification on material event	$Lt$ , $En$	18 April 2017
CORRECTION: Draft Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	$Lt$ , $En$	4 April 2017
Draft Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	$Lt$ , $En$	31 March 2017
Panevezio statybos trestas AB Will Build the Guest House in Vilnius	Notification on material event	$Lt$ , $En$	22 March 2017
Convening of Annual General Meeting of Shareholders	General Meeting of Shareholders	$Lt$ , $En$	21 March 2017
Calendar for Publishing Performance Results of Panevezio statybos trestas AB in 2017	Notification on material event	$Lt$ , $En$	2 Jan. 2017

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.

14. Information on compliance with the Governance Code

The Company complies with the procedure of company management set forth by the Law on Companies of the Republic of Lithuania.

The Company partially complies with the Governance Code applicable to the companies that are on the list of the Vilnius Stock Exchange. During six months of 2017 there were no essential changes related to the company's notification on compliance with the Governance Code for the year 2016 applicable to the companies that are on the list of NASDAQ OMX VILNIUS Stock Exchange.

The annual report of the Company will include the more detailed explanation of how the Company complies with the recommendations of the Governance Code.

15. Unaudited financial statements Separate statement of financial position

ASSETS	30 June 2017	31 Dec. 2016
Non-current assets	14,388,526	14,565,919
Intangible assets	125,689	146,366
Tangible assets	6,234,340	6,344,932
Investment and amounts receivable in one year	7,796,846	7,737,283
Deferred tax assets	231,651	337,338
Current assets	33,986,239	39,306,813
Inventories	1,016,136	763,560
Prepayments	141,654	246,123
Trade receivables	9,675,316	11,878,844
Other current assets	4,517,118	4,008,371
Cash and cash equivalents	18,636,015	22,409,915
TOTAL ASSETS	48,374,765	53,872,732

In Euros

EQUITY AND LIABILITIES	30 June 2017	31 Dec. 2016
Equity	38,058,455	39,740,384
Share capital	4,741,500	4,741,500
Reserves	1,749,951	1,786,660
Retained earnings	31,567,004	33,212,224
Translation reserve
Minority share
Amounts payable and liabilities	10,316,310	14,132,348
Amounts payable in one year and non- current liabilities	895,725	943,876
Loans and other borrowings
Warranty provision and others	670,584	712,257
Deferred tax liabilities	225,141	231,619
Amounts payable in one year and current liabilities	9,420,585	13,188,472
Loans and borrowings
Trade payables	5,861,946	9,248,266
Prepayments received	897,686	37,635
Income tax payable
Other liabilities	2,660,953	3,902,571
TOTAL EQUITY AND LIABILITIES:	48,374,765	53,872,732

Consolidated statement of financial position

ASSETS	30 June 2017	31 Dec. 2016
Non-current assets	7,596,321	7,888,154
Intangible assets	164,020	192,515
Tangible assets	5,826,841	5,987,351
Investment and amounts receivable in one year	1,302,227	1,299,368
Deferred tax assets	303,233	408,920
Current assets	44,644,560	53,576,989
Inventories	9,959,738	9,894,109
Advance payments	479,063	331,124
Amounts receivable	11,098,517	17,243,288
Other current assets	2,352,522	726,795
Cash and cash equivalents	20,754,720	25,381,673
TOTAL ASSETS:	52,240,881	61,465,143

EQUITY AND LIABILITIES	30 June 2017	31 Dec. 2016
Equity	34,949,121	36,797,154
Share capital	4,741,500	4,741,500
Reserves	2,023,964	2,067,053
Retained earnings	25,846,173	28,231,051
Translation reserve	2,337,484	1,757,550
Minority interest	1,165,482	1,357,311
Amounts payable and liabilities	16,126,278	23,310,678
Amounts payable in one year and non- current liabilities	1,328,488	1,377,960
Loans and borrowings	8,801	8,801
Warranty provisions and other	986,238	1,025,165
Deferred tax liabilities	331,593	338,971
Other liabilities	1,856	5,023
Amounts payable in one year and current liabilities	14,797,790	21,932,718
Loans and borrowings	715,680	707,984
Trade payables	8,512,495	14,573,603
Prepayments received	1,615,527	324,916
Income tax payable	51,443	43,734
Other liabilities	3,902,645	6,282,481
TOTAL EQUITY AND LIABILITIES:	52,240,881	61,465,143

In Euros

Separate statement of comprehensive income

ITEM	First Half of 2017	First Half of 2016
REVENUE	24,385,664	34,252,428
COST OF SALES	$-23,265,968$	$-31,004,323$
GROSS PROFIT (LOSS)	1,119,696	3,248,105
OPERATING EXPENSES	$-2,241,588$	$-2,051,619$
Sales	$-160,394$	$-167,317$
General and administrative	$-2,081,194$	$-1,884,302$
TYPICAL OPERATING PROFIT (LOSS)	$-1,121,892$	1,196,486
OTHER ACTIVITIES	103,608	95,645
Income	286,713	284,239
Costs	$-183,105$	$-188,594$
FINANCIAL AND INVESTMENT ACTIVITIES	498,315	354,909
Income	514,267	381,312
Costs	$-15,952$	$-26,403$
PROFIT (LOSS) BEFORE TAXATION	-519,969	1,647,040
INCOME TAX	$-99,209$	$-215,969$
NET PROFIT (LOSS)	$-619,178$	1,431,071

Consolidated statement of comprehensive income

ITEM	First Half 2017	First Half 2016
SALES	33,547,877	41,491,789
COST OF SALES	$-32,562,465$	$-37,323,000$
GROSS PROFIT (LOSS)	985,412	4,168,789
OPERATING EXPENSES	$-3,182,778$	$-4,876,358$
Sales	$-163,039$	$-167,317$
General and administrative	$-3,019,739$	-4,709,041
TYPICAL OPERATING PROFIT (LOSS)	$-2,197,366$	$-707,569$
OTHER ACTIVITIES	$-634$	31,338
Income	238,619	253,925
Costs	$-239,253$	$-222,587$
FINANCIAL AND INVESTMENT ACTIVITIES	663,027	1,502,943
Income from company liquidation	1,721,711	0
Income from other financial activities	16,265	1,567,460
Other financial costs	$-1,074,949$	$-64,517$
PROFIT (LOSS) BEFORE TAXATION	$-1,534,973$	826,712
INCOME TAX	$-146,411$	$-269,098$
NET PROFIT (LOSS)	$-1,681,384$	557,614
ATTRIBUTABLE TO SHAREHOLDERS	$-1,382,756$	305,844
ATTRIBUTABLE TO MINORITY INTEREST	$-298,628$	251,770

Separate statement of changes in equity

In Eu

n Euros
	Share capital	tangible asset Non-current revaluation reserve	reserve Legal	Retained profit	Total
Balance as of 31 December 2015 Net profit (loss) for 2016	4,741,500	1,386,310	473,537	31,609,648 $-261,977$ 1,431,071	38,210,995 $-261,977$ 1,431,071
Total comprehensive income Dividends		$-36,900$	613	36,287
Balance as of 30 June 2016	4,741,500	1,349,410	474,150	32,815,029	39,380,089
Balance as of 31 December 2016 Net profit (loss) for 2017	4,741,500	1,312,510	474,150	$-619,178$ 33,212,224	$-619,178$ 39,740,384
Dividends				$-1,062,751$	1,062,751
Total comprehensive income		-36,709		36,709
Balance as of 30 June 2017	4,741,500	1,275,801	474,150	31,567,004	38,058,455

Panevezio statybos trestas AB Interim Financial Statements for the First Half of 2017

Consolidated statement of changes in equity

In Euros

פט נוט ע עם
	capital Share	Revaluation reserve	reserve Legal	translation Currency reserve	Retained earnings profit	attributable company's owners Equity to the	Minority interest	Total
Balance as of 31 December 2015 Dividends	4,741,500	1,552,617	598,468	3,446,256	25,846,294 $-261,977$	36,185,135 $-261,977$	1,247,111	37,432,246 $-261,977$
Total other comprehensive income Net profit (loss) for 2016		43,279	612	-901,046	305,844 42,666	-901,047 305,844	$-252,429$ 251,770	$-1,153,476$ 557,614
Balance as of 30 June 2016	4,741,500	1,509,338	599.080	2,545,210	25,932,827	35,327,955	1,246,452	36,574,407
Balance as of 31 December 2016	4,741,500	1,467,973	599,080	1,757,550	28,231,051	36,797,154	1,357,311	38,154,465
Net profit (loss) for 2017 Dividends					$-1,382,756$ 1,062,751	$-1,382,756$ $-1,062,751$	$-298,628$ 4,375	$-1,067,126$ $-1,681,384$
Total other comprehensive income		43,089		579,934	60,629	597,474	11,174	708,648
Balance as of 30 June 2017	4,741,500	1,424,884	599,080	2.337.484	27,147,317	34,949,121	1,165,482	36,114,603

22

Separate statement of cash flows

In Euros $\,$

	First Half of 2017	First Half of 2016
Cash flows from operating activities
Net profit (loss)	$-619,178$	1,431,071
Depreciation and amortization	502,657	438,550
Profit (loss) from transfer of non-current assets	$-20,078$	8,546
Income tax expense	99,209	215,969
	$-37,390$	2,094,136
Change in inventories	$-242,063$	$-764,200$
Change in trade receivables	2,282,810	$-5,423,166$
Change in prepayments	104,469	165,081
Change in amounts receivable after one year	$-3,091$	$-24,697$
Change in other assets	$-493,137$	-270,014
Change in trade payables	$-3,386,320$	328,635
Change in prepayments received	860,051	$-641,580$
Change in provisions and other liabilities	$-1,567,302$	$-2,562,772$
	$-2,481,973$	$-7,098,577$
Income tax paid	$-252,801$	$-229,070$
Net cash flows from operating activities	$-2,734,774$	$-7,327,647$
Cash flows from investing activities
Acquisition of non-current assets (excl.investments)	-400,090	$-505,439$
Disposal of non-current assets (excl. investments)	48,780	19,800
Loans granted	$-183,532$	$-25,000$
Loans recovered	111,450	3,870,287
Dividends and interest received	451,322	257,480
Net cash flows from investing activities	27,930	3,617,128
Cash flows from financing activities
Dividends paid	$-1,056,243$	$-257,175$
Proceeds from loans and borrowings	0	0
Loans and borrowings repaid	$\bm{0}$	0
Interest paid	$-10,813$	$-26,290$
Net cash flows from financing activities	$-1,067,056$	$-283,465$
Increase (decrease) in net cash flows	$-3,773,900$	-3,993,984
Cash and its equivalent at the beginning of the period	22,409,915	20,896,409
Cash and its equivalents at the end of the period	18,636,015	16,902,425

Consolidated statement of cash flows

In Euros $\,$

	First Half of	First Half of
	2017	2016
Cash flows from operating activities
Net profit (loss)	$-1,681,384$	557,614
Elimination of other non-cash items:
Depreciation and amortization	630,692	578,121
Other non-cash items	178,836	$-233,660$
	$-871,856$	902,075
Change in inventories	$-250,494$	$-582,109$
Change in trade receivables	3,369,518	$-2,054,193$
Change in prepayments	$-160,352$	489,608
Change in other assets	183,340	$-553,345$
Change in trade payables	$-2,275,212$	$-566,216$
Change in prepayments received	1,326,263	$-867,291$
Change in provisions and other liabilities	$-1,253,962$	$-3,515,896$
	67,245	$-6,747,367$
Elimination of results from financial and investing
activities	$-3,201,514$	$-1,208,259$
Net cash flows from operating activities	$-3,134,269$	$-7,955,626$
Cash flows from investing activities
Acquisition of non-current assets (excl.
investments)	$-472,349$	$-558,405$
Disposal of non-current assets (excl. investments)	48,780	82,379
Loans granted	0	10,000
Loans recovered	11,450	122,743
Dividends and interest received	516	7,019
Net cash flows from investing activities	$-411,603$	$-336,264$
Cash flows from financial activities
Dividends paid	$-1,060,618$	$-257,175$
Proceeds from loans and borrowings	0	0
Loans and borrowings repaid	0	$-1,126,040$
Payment of finance lease liabilities	$-8,290$	$-20,257$
Interest paid	$-12,173$	$-40,140$
Net cash flows from financing activities	$-1,081,081$	$-1,443,612$
Increase (decrease) in net cash flows	$-4,626,953$	$-9,735,502$
Cash and cash equivalents in the beginning of the
period	25,381,673	28,817,259
Cash and cash equivalents at the end of the
period	20,754,720	19,081,757

EXPLANATORY NOTE

General Information

Panevezio statybos trestas AB (hereinafter "the Company") was established in 1957 and for a long time was known as the North Lithuania Construction Trust (Siaures Lietuvos statybos trestas). In 1991, the Company was registered as a State Company. On 30 October 1993, the State Company was reorganized to a Public Limited Liability Company. Company code 147732969, VAT code LT477329610. Registration certificate No. 013732 issued on 27 September 2004 by the State Register Centre Panevezys Branch.

The Company comprises the following branches: Gerbusta, Pastatu apdaila, Genranga, Konstrukcija, Betonas, Stogas and Klaipstata. The Company has its permanent establishments in Latvia and the Kingdom of Sweden. Financial year of the Company is calendar year. The period of commercial-economic operation of the Company is unlimited.

The main operations of the Company and its subsidiaries (hereinafter "the Group") is designing and construction of various buildings, structures, facilities, communications and other similar objects in Lithuania and abroad, real estate development.

Basis of interim financial statement preparation

The figures in the interim financial statement are presented in Euros.

Separate and consolidated financial statements were prepared according to the International standard of Financial Accounting applicable in the European Union.

The same accounting principles were applicable to both - the interim financial statement and the annual financial statement.

The following currency rates (amount of currency for 1 Euro) were used when preparing the interim financial statement:

Currency	30 June 2017	30 June 2016
1 RUB	67.3005	71.0452
1 SFK	9.7215	9.4311
1 PLN	4.2489	4.4261

Principles of consolidation

Subsidiary companies are the companies controlled by the parent company. Such control is defined as a capability to a company to have determinant effect on other company, manage and influence financial and economic activities to get benefit from that company. For the purposes of control assessment the total available number of shareholder votes at the General Meeting of Shareholders is considered. The financial statements of subsidiary companies are included into the Consolidated Financial Statement from the day of control gain and are excluded from the day of control loss. During consolidation of financial statement the income and expenses, amounts receivable and payable and unrealized results of the Company Group are eliminated.

Segments

As the income, profit and assets of the Company and the Group in the segments do not exceed 10 or more per cents of all operating segments, following the requirements of item 13 in the IFRS 8, operating and geographical segments of the Group are not provided.

Investments

Over the first half 2017 the investments of the Group in acquisition of non-current assets amounted to 472,349 Euros. Panevezio statybos trestas AB acquired non-current assets for 400,090 Euros. During the first half of 2017 the costs related to depreciation and amortization of assets of the Group amounted to 630,692 Euros, including 502,657 Euros accounted for in the Financial Statements of Panevezio statybos trestas AB.

Assets and liabilities

As in May 2017, the judgement on initiation of bankruptcy proceedings against Baltlitstroj OOO, the subsidiary company of Panevezio statybos trestas AB, adopted by the Arbitration Court of Kaliningrad Oblast, Russian Federation, entered into force, the mentioned company has been eliminated from the Group operation. Such elimination of Baltlitstroj OOO from the Group operation reduced assets of the Group by 4,064,443 Euros and liabilities of the Group by 6,830,084 Euros.

Loans

As of 30 June 2017, the Group had loans amounting to 715,680 Euros, including 376,002 Euros as long-term credits of PST investiciios UAB Group.

Guarantees, sureties

As of 30 June 2017, the guarantees of the liabilities of Panevezio statybos trestas AB Group issued by credit institutions amounted to 5,103,152 Euros, including 4,823,271 Euros for guarantees related to performance of contracts and obligations by Panevezio statybos trestas AB and issued by the Lithuanian credit institutions and insurance companies.

On 17 May 2017 a six-month surety agreement was signed with Ergo Insurance SE for the liabilities of the subsidiary company PS Trests SIA, which amounted to 200,000 Euros and on 8 August 2017 a four-month surety agreement was signed for the amount of 11,361 Euros.

Transactions with associated parties

There were no significant transactions made with any associated parties.

Dividends

The Annual General Meeting of Shareholders of Panevezio statybos trestas AB that took place on 21 April 2017 made the decision to pay dividends for the year 2016 in the amount of 1,062,750 Euros. As of 30 June 2017, the dividends in the amount of 1,056,162 Euros have been paid, which makes 99.4 % of the amount payable.