Panevezio Statybos Trestas

Interim / Quarterly Report • Nov 25, 2010

PANEVĖŽIO STATYBOS TRESTAS AB

Consolidated and Company Financial Statements for Nine Months Ending 30 September 2010

Unaudited

Company register given code 147732969 Address of registered office P. Puzino Str. 1, LT-35173 Panevėžys, Lithuania

STATEMENT OF EXECUTIVE OFFICERS OF THE COMPANY

Hereby we confirm that on the basis of the information available to us, the Consolidated Interim Financial Statement for Nine Months of 2010 made in accordance with the International Financial Reporting Standards is true and shows the assets, liabilities, financial state, and profit or loss of Panevėžio statybos trestas AB and companies of Panevėžio statybos trestas Company Group in a correct manner.

Dalius Gesevičius, Managing Director Glolland Date Bernotaitiene, Finance Director
Panevėžio statybos trestas AB

$\mathbf{1}$

BALANCE SHEET

In Litas	Company
ASSETS	30 Sept. 2010	31 Dec. 2009
Non-current assets	65063023	73650975
Intangible assets	31475	80009
Tangible assets	24972956	28832083
Investment and amounts receivable in one year	39870410	44393475
Deferred tax assets	188182	345408
Current assets	127503979	110829276
Inventories	3533087	4418046
Prepayments	554560	4198396
Trade receivables	69204456	47623506
Other current assets	23586116	654644
Cash and cash equivalents	30625760	53934684
TOTAL ASSETS	192567002	184480251

Company In Litas
EQUITY AND LIABILITIES	30 Sept. 2010	31 Dec. 2009
Equity	135216206	124731781
Authorized capital	16350000	16350000
Reserves	10824744	11350624
Retained profit (loss)	108041462	97031157
Translation reserve
Minority interest
Amounts payable and liabilities	57350796	59748470
Amounts payable after one year and
long term liabilities	5049023	7328058
Loans and borrowings	2632071	4323901
Warranty provision	781317	1289640
Deferred tax liabilities	1635635	1714517
Amounts payable in one year and short
term liabilities	52301773	52420412
Loans and borrowings	2258685	2760113
Trade payables	33906849	17967020
Prepayments received	5596773	17798652
Profit tax payable	59362	126597
Other liabilities	10480104	13768030
TOTAL EQUITY AND LIABILITIES:	192567002	184480251

BALANCE SHEET

In Litas	Group
ASSETS	31 Dec. 2009 30 Sept. 2010
Non-current assets	29576906	40244322
Intangible assets	157672	234725
Tangible assets	28164556	32412105
Other investment and amounts receivable in one year	133548	6247855
Other non-current assets	1121130	1349637
Current assets	173409614	172830335
Inventories	36981757	53811431
Prepayments	2983530	6189074
Trade receivables	76662509	54467327
Other assets	20989081	2222936
Cash and cash equivalents	35792737	56139567
TOTAL ASSETS:	202986520	213074657

In Litas	Group
EQUITY AND LIABILITIES	30 Sept. 2010	31 Dec. 2009
Equity	118711112	101114316
Authorized capital	16350000	16350000
Reserves	11882177	12465122
Retained profit (loss)	90109010	71488724
Translation reserve	369925	810470
Minority interest	5194788	$-670604$
Amounts payable and liabilities	79080620	112630945
Amounts payable after one year and
long term liabilities	20991496	11575314
Loans and borrowings	16995870	6988316
Provisions	1771752	2248495
Deferred tax liabilities	1770303	1849184
Grants and subsidies	54825	60563
Other liabilities	398746	428756
Amounts payable in one year and short
term liabilities	58089124	101055631
Loans and borrowings	2477432	40697653
Trade payables	36225490	22254571
Prepayments received	5903969	18201667
Profit tax payable	253423	127923
Other liabilities	13228810	19773817
TOTAL EQUITY AND LIABILITIES:	202986520	213074657

PROFIT (LOSS) STATEMENT

In Litas		Company
ITEM	Jan.-Sept. 2010	Jan.-Sept. 2009	July-Sept. 2010	July-Sept. 2009
SALES INCOME	125913671	131588027	53110302	36791271
COST OF SALES	107455936	111285294	45297628	30901099
GROSS PROFIT (LOSS)	18457735	20302733	7812674	5890172
OPERATING EXPENSES	6419017	15123260	2819198	3794841
Sales	206846	323257	72014	111082
Doubtful debt rating	-3677297	4899821	$-115470$	1939994
General and administration	9889468	9900182	2862654	1743765
TYPICAL OPERATING PROFIT (LOSS)	12038718	5179473	4993476	2095331
OTHER ACTIVITIES	-99784	$-138266$	$-74385$	$-42284$
Income	413893	325692	83085	144508
Expenses	513677	463958	157470	186792
FINANCIAL AND INVESTMENT ACTIVITIES	856438	2403086	-758835	1462254
Income	991796	2979283	-887680	1643619
Expenses	135358	576197	$-128845$	181365
USUAL ACTIVITY PROFIT (LOSS)	12795372	7444293	4160256	3515301
WINDFALL PROFIT			$\mathbf{0}$
LOSSES			$\mathbf 0$
PROFIT (LOSS) BEFORE TAXATION	12795372	7444293	4160256	3515301
PROFIT TAX	1166446	3002583	323153	1215109
NET PROFIT (LOSS)	11628926	4441710	3837103	2300192

$\widetilde{\mathcal{C}}$

PROFIT (LOSS) STATEMENT

In Litas		Group
ITEM	Jan.-Sept. 2010	Jan.-Sept. 2009	July-Sept. 2010	July-Sept. 2009
SALES INCOME	147254807	145208544	62737010	37587245
COST OF SALES	122736343	123545312	52080042	31203665
GROSS PROFIT (LOSS)	24518464	21663232	10656968	6383580
OPERATING EXPENSES	11450884	19339933	4744698	5077336
Sales	363334	386133	136331	129385
Doubtful debt rating	-3677297	4899821	$-115470$	1939994
General and administration	14764847	14053979	4723837	3007957
TYPICAL OPERATING PROFIT (LOSS)	13067580	2323299	5912270	1306244
OTHER ACTIVITIES	-370704	$-255321$	$-92270$	-99821
Income	304973	311824	113154	124730
Expenses	675677	567145	205424	224551
FINANCIAL AND INVESTMENT ACTIVITIES	10522947	$-1324489$	-2443479	336578
Income from other financial activities	1661381	3035542	$-2472466$	1630781
Income from corporate control loss	11599912	$\mathbf 0$	$\mathbf 0$	$\bf{0}$
Other financial activity expenses	1143990	4360031	-28987	1294203
Expenses of corporate control loss	1594356	$\mathbf 0$	$\mathbf 0$	$\mathbf 0$
USUAL ACTIVITY PROFIT (LOSS)	23219823	743489	3376521	1543001
WINDFALL PROFIT
LOSSES
PROFIT (LOSS) BEFORE TAXATION	23219823	743489	3376521	1543001
PROFIT TAX	1387448	2701848	254612	1113626
NET PROFIT (LOSS)	21832375	-1958359	3121909	429375
ATTRIBUTABLE TO SHAREHOLDERS	19182776	167801	3793347	1029988
ATTRIBUTABLE TO MINORITY INTEREST	2649599	$-2126160$	$-671438$	$-600613$

CASH FLOW STATEMENT

	Company
	Jan. - Sept. 2010	Jan. - Sept. 2009
Cash flow from operating activities
Net profit (loss)	11.628.926	4.441.710
Depreciation and amortization costs	4.363.633	4.918.494
Profit (loss) from transfer of non-current assets	$-103.731$	$-9.815$
Income tax expense	1.166.446	3.002.583
	17.055.274	12.352.972
Change in inventories	884.959	5.120.345
Change in amounts receivable	$-21.580.950$	44.008.199
Change in prepayments	3.643.836	$-1.526.015$
Change in amounts receivable after one year	$-213.691$	$-1.200$
Change in other assets	$-11.240.609$	$-9.605.636$
Change in trade payables	15.939.829	-34.717.401
Change in prepayments received	$-12.201.879$	10.383.530
Change in provisions and other liabilities	$-2.771.289$	$-12.612.126$
	$-10.484.520$	13.402.668
Income tax paid	$-1.601.688$	$-7.512.694$
Net cash flow from operating activities	$-12.086.208$	5.889.974
Cash flow from investing activities
Acquisition of long term assets (excl. investment)	$-560.021$	$-406.876$
Transfer of long term assets (excl. investment)	213.280	57.281
Acquisition of investments	$-4.377$
Loans issued	$-7.365.925$	$-13.289.051$
Loans recovered	352.192	4.439.326
Dividends and interest received	930.880	1.662.264
Net cash flow from investing activities	$-6.433.971$	$-7.537.056$
Cash flow from financial activities Dividends, bonuses paid Proceeds from loans and borrowings	$-2.268.094$	$-2.256.526$
Repayments from loans and borrowings
Payment of finance lease liabilities	$-2.193.258$	$-2.835.981$
Interest paid	$-327.393$	$-550.906$
Net cash flow from financing activities	$-4.788.745$	$-5.643.413$
Increase (decrease) in net cash flow	-23.308.924	-7.290.495
Cash and its equivalents in the beginning of the period	53.934.684	54.770.637
Cash and its equivalents at the end of the period	30.625.760	47.480.142

CASH FLOW STATEMENT

	Group
	Jan. - Sept. 2010	Jan. - Sept. 2009
Cash flow from operating activities
Net profit (loss)	21.832.375	$-1.958.359$
Elimination of other non-monetary items
Depreciation and amortization costs	5.062.546	5.708.417
Corporate control loss	$-10.225.774$	0
Other non-monetary items	37.905	440.385
	16.707.052	4.190.443
Change in inventories	$-976.028$	3.798.739
Change in amounts receivable	$-22.195.182$	41.691.129
Change in prepayments	3.205.544	$-440.346$
Change in other assets	$-11.607.555$	4.513.076
Change in trade payables	14.112.864	$-32.577.150$
Change in prepayments received	$-12.297.698$	10.031.955
Change in provisions and other liabilities	$-1.936.705$	$-14.875.678$
	$-14.987.708$	16.332.168
Elimination of results from financial and investing
	$-15.886$	2.003.873
activities Net cash flow from operating activities	$-15.003.594$	18.336.041
Cash flow from investing activities Acquisition of non-current assets (except investments) Transfer of non-current assets (except investments) Loans issued Loans recovered Dividends and interest received Net cash flow from investing activities	$-689.860$ 68.202 843.340 221.682	$-464.172$ 171.188 $-6.160.412$ 50.002 1.638.200 $-4.765.194$
Cash flow from financial activities Dividends, bonuses paid Proceeds from loans and borrowings Repayments from loans and borrowings	$-2.268.094$ 468.594 $-2.436.313$	$-2.256.526$ 1.852.637 $-12.220.746$ $-3.246.200$
Payment of finance lease liabilities	$-1.329.105$	$-3.678.772$
Interest paid	$-5.564.918$	$-19.549.607$
Net cash from financing activities
Increase (decrease) in net cash flow Cash and cash equivalent in the beginning of the	$-20.346.830$	-5.978.760
period	56.139.567	57.143.406
Cash and cash equivalent at the end of the period	35.792.737	51.164.646

ء ح
$\frac{1}{2}$
j I
֖֖֧֧֧֧֦֧֧֦֧֧֧֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֚֬֝֓֕֓֕֓֝֓֡֬֝֓֬֝֓֝֬֝֓֬֓֝֬֝֬֝֬֝֬
í
$\begin{array}{c} \begin{array}{c} \begin{array}{c} \begin{array}{c} \end{array} \ \end{array} \ \begin{array}{c} \end{array} \end{array} \end{array} \end{array}$

STATEMENT OF EQUITY CHANGES

$CappanY$

16.350.000 16,350.000 16.350.000 Revaluation of non-current tangible assets Increase (decrease) of authorized capital Unrecognized net profit (loss) for 2009 Balance as of 30 September 2009 Balance as of 31 December 2009 Balance as of 31 December 2008 Related deferred tax liability Net profit (loss) for 2009 Dividend	premium Share Authorized	Non-current revaluation TA	Financial reserve	reserve Legal	reserves Other	Deferred result	Total
		$-525.880$ 9.705.028		1.635.030		93.372.055 4.441.710 525.880	4,441.710 121.062.113
						$-1.144.500$	$-1.144.500$
		9.179.148		1.635.030 1.635.030		97.195.145 97.031.157	124.359.323 124.731.781
Revaluation of non-current tangible assets Related deferred tax liability		9.715.594
Deferred profit tax liability related to reappraisal of tangible assets						525.880
Unrecognized net profit (loss) for 2010 Net profit (loss) for 2010 Dividend		$-525.880$				11.628.926 $-1.144.501$	11.628.926 $-1.144.501$
Reserves formed Reserves used
Increase (decrease) of authorized capital
16.350.000 Balance as of 30 September 2010	$\bullet$	9,189.714	$\bullet$	1.635.030	$\bullet$	108.041.462	135.216.206

3.276.900 123.905.900 21.831.439 $-1.144.500$ 115.049.599 0 100.443.712 $-501.651$ 1.275.243 $-1.958.627$ 116.877.484 $-1.144.501$ 5.194.788 3.276.900 $-61.106$ 2.649.598 2.419.074 $-670.604$ 4.545.502 $-2.126.428$ part $-1.144.500$ 118,711.112 440.545 112.630.525 1.275.243 101.114.316 19.181.841 112.331.982 167.801 $-1.144.501$ company share 90.109.010 1.144.500 82.335.415 583.176 71.488.724 19.181.841 $-231$ $-115.132$ 583.176 $-1.144.501$ 82.844.071 167.801 profit 369.925 440.545 1.957.017 810.470 1.275.243 681.774 exchange rate 2.020.212 2.118.493 231 115.132 2.019.981 2.003.361 reserve 9,861.965 9,869,600 $-583.176$ 152.776 10.445.141 $-583.176$ reserve 10.4 0 bonus 16.350.000 16.350.000 16.350.000 16,350.000 capital Influence of change in exchange rate Balance as of 30 September 2009 Balance as of 30 September 2010 Balance as of 31 December 2009 Decrease in revaluation reserve Decrease in revaluation reserve Balance as of 1 January 2009 Net profit (loss) for 2010 Net profit (loss) for 2009 Change in exchange rate Legal reserves formed Deferred tax liability	Authorized	Share	Revaluation	Legal	Influence of change in	Accumulated	Losses per parent	Minority	Total

$\circ$ $\frac{1}{2}$

Group

EXPLANATORY NOTE

General Information

Panevėžio statybos trestas AB (hereinafter "the Company") was established in 1957 and for a long tome was known as the North Lithuania Construction Trust (Šiaurės Lietuvos statybos trestas). In 1991 the Company was registered as a State Capital Company. On 30 October 1993 the State Capital 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 Panevėžys Branch.

In January through September 2010 the following subsidiaries were functioning in the company: Gerbusta, Pastatų apdaila, Genranga and Klaipstata. These subsidiaries keep separate records, but their assets, liabilities and financial results are included when preparing financial accountability of the Company. The Company has its representative offices in Tchrepovec and a subsidiary in Kaliningrad. Financial year of the Company is calendar year. The period of commercial-economic activities of the Company is unlimited.

The main activity 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. In addition to the listed activities the Company rents out premises and equipment, resells utility and communication services.

Subsidiaries	Type of activities	Share controlled (per cent)	Registered address
Skydmedis UAB	Production of wood constructions	100	Pramonės Str. 5, Panevėžys Tel.: +370 45 583341
Metalo meistrai UAB	Production of metal constructions	100	Tinklų Str. 7, Panevėžys
Vekada UAB	Electrical installation activities	96	Marijonų Str. 36, Panevėžys Tel.: +370 45 461311
Vilniaus papėdė TUB	Construction works	69	Švitrigailos Str. 8, Vilnius Tel.: +370 5 2609405
Alinita UAB	Air conditioning equipment	100	Dubysos Str. 31, Klaipėda Tel.: +370 46 340363
KINGSBUD Sp.zo.o.	Construction works	100	A.Patli Str. 16-400 Suwalki, Poland
PS Trests SIA	Construction	100	Vietalvas Str. 5, Riga
OOO Baltlitstroj	Construction	100	Sovetskij Ave. 43, Kaliningrad

As of 31 December 2010 the Group includes the parent company and 9 subsidiaries:

			Tel.: 0074012350435
PST Investicijos UAB	Real estate development	67	Lvovo Str. 25, Vilnius
			Tel.: +370 5 2102130
Subsidiaries of PST investicijos UAB:
Ateities projektai UAB	Real estate development and	100	Lvovo Str. 25, Vilnius
	sales
Sakališkės UAB	Real estate development and	100	Lvovo Str. 25, Vilnius
	sales
Kauno erdvė UAB	Real estate development and	100	Lvovo Str. 25, Vilnius
	sales
Verkių projektas UAB	Real estate development and	100	Lvovo Str. 25, Vilnius
	sales
OOO ISK	Construction investment	100	Cherniachovsk Str. 6
Baltevromarket	company		Kaliningrad

Basis of interim financial statement preparation

The figures in the interim financial statement are presented in the national currency of Lithuania, Litas, which is also the Company's functional currency.

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

The following currency rates were used when preparing the interim financial statement:

Currency	30 Sept. 2010	31 Dec. 2009	30 Sept. 2009
1 EUR	3.4528	3.4528	3.4528
10 RUB	0.8342	0.7947	0.7845

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 shareholders' 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. As in June 2010 the Group lost control of Gelužės projektai UAB and Smiltynų kalvos UAB, the financial statements of these companies for nine months of the year 2010 have not been consolidated.

During consolidation of financial statement the income and expenses, amounts receivable and payable and unrealized results of the Company Group are eliminated.

Investment in non-current assets

In January through September 2010 the investments of the Group in acquisition of non-current assets amounted to 689,860 Litas: Panevėžio statybos trestas AB acquired non-current assets for 560,020 Litas. Over three quarters the costs related to depreciation and amortization of assets of the Group amounted to 5,062,546 Litas, including 4,363,633 Litas accounted for in the Financial Statement of Panevėžio statybos trestas AB.

On 22 April 2010 as per decision of the Annual General Meeting of Shareholders of PST investicijos UAB the authorized capital of the company was increased by 12,136,600 Litas (by additional issue of 121,366 pieces of ordinary registered shares) and registered at the Register of Legal Persons on 12 August 2010.

On 28 April 2010 the Share Purchase Agreement was signed between Panevėžio statybos trestas AB and PST investicijos UAB based on which Panevėžio statybos trestas AB acquired 88,597 pieces of ordinary registered shares for the amount of 8,859,700 Litas by paying, settling amounts receivable from PST investicijos UAB paid to DnB NORD bankas AB based on the Surety Agreement.

Loans

As of 30 September 2010 the long-term loans of the Company Group of PST investicijos UAB amounted to 13,995,328 Litas including bank credits totaling 13,526,734 Litas. For using credits SEB AB is paid the interest rate 1 month VILIBOR + 1.1%, for other loans the interest rate is 3 months VILIBOR and the interest margin is 1.9%.

Guarantees, sureties

As of 30 September 2010 the guarantees of the liabilities of Panevėžio statybos trestas AB by credit institutions amounted to 23,779,487 Litas, including 20,104,219 Litas for the Environmental Project Management Agency of the Ministry of Environment of the Republic of Lithuania.

The Board of Panevėžio statybos trestas AB made a decision to stand surety (guarantor) OOO Baltlitstroj for performance of obligations to the administration of Sovetsk City Council regarding work performance on-site for the amount not exceeding 99.995.440 Roubles.

Transactions with associated parties

As per resolution adopted by the Board of Panevėžio statybos trestas AB dated 20 July 2009, Panevėžio keliai AB had been given a loan amounting 6.2 mln. Litas that was accounted for in currents assets in the Financial Statement dated 30 June 2010.

Dividends

The Annual General Meeting of the Shareholders of Panevėžio statybos trestas AB that took place on 5 May 2010 made the decision to pay dividends in the amount of 1,144,500 Litas (0.07 Litas per share) and bonuses in the amount of 1,144,500 Litas.

Bonuses were paid during the first half of the year. Dividends are paid by DnB NORD bank in accordance with the contract. As of 30 September 2010, 98 percents of dividends have been paid.

Significant changes in the interim financial statement during the reporting period

In January through September 2010 the Group made the net profit amounting to 23.2 mln. Litas, whereas it suffered the loss of 0.74 mln. Litas in January through September of 2009. The profit in the amount of 10 mln. Litas was made due to control loss of the companies of PST investicijos UAB: Gelužės projektai UAB and Smiltynų kalvos UAB. (In June 2010 Gelužės projektai UAB was sold and bankruptcy proceedings were initiated to Smiltynu kalvos UAB based on the resolution of Vilnius Regional Court). After control of Gelužės projektai UAB and Smiltynų kalvos UAB had been lost, the loans payable to credit institutions decreased by 24.1 mln. Litas and contracts in progress decreased by 14.6 mln. Litas in the Financial Statements of the Group. The result of 3.6 mln. Litas was improved by decrease in operating expenses after receivable doubtful debts evaluated in 2009 had been recovered.

	Group		Company
	30 September 2010	30 September 2009	30 September 2010	30 September 2009
Income	147255	145208	125914	131588
Cost price	122736	123545	107456	111285
Gross profit	24518	21663	18458	20303
Gross profit margin (per cent)	16.65	14.92	14.66	15.43
Net profit margin (per cent)	14.83	$-1.35$	9.24	3.38
Earnings before taxes and interest, EBIT (thousands Litas)	24548	4425	12468	6893
Earnings before taxes, interest, depreciation and amortisation EBITDA (thousands Litas)	29611	10131	16832	11811
Profit per one share (Litas)	1.17	0.01	0.71	0.27
Return on equity (per cent) (ROE)	18.39	$-1.74$	8.60	3.57
Return on assets (ROA)	10.76	$-0.85$	6.04	2.31
Return on investment (ROI)	15.07	$-1.43$	8.29	3.32
Current liquidity ratio	2.99	2.01	2.44	2.20
Book value of a share	7.26	6.81	8.27	7.61
Share price/book value ratio (P/BV)	0.70	0.69	0.61	0.62

Key Indicators of Panevėžio statybos trestas AB Company Group (thousands Litas):