Ditton pievadkezu rupnica

Quarterly Report • May 31, 2016

JSC DITTON PIEVADĶĒŽU RŪPNĪCA

NON-AUDITED AND NON-CONSOLIDATED FINANCIAL REPORT FOR 3 MONTHS OF YEAR 2016

(01.01.2016 – 31.03.2016)

Prepared in accordance with Latvian statutory requirements and JSC NASDAQ OMX Riga provisions

Daugavpils 2016

Contents

Information about the Company …………………………………	3-5
Management report ………………………………………………	6
Balance sheet ……………………………………………………	7-8
Income statement	9
Cash flow statement …………………………………………	10-11
Statement of changes in equity ………………………….…………	12
Appendixes
Explanatory notes …………………………………………………….	13
Explanations and analyses on separate items of financial reports …	14

INFORMATION ABOUT THE COMPANY

Company name Legal status Registrations number Registration in Register of Enterprises Registration in Commercial Register Office Legal address Mailing address	Ditton pievadķēžu rūpnīca Joint Stock Company 40003030187 Rīga, 03.10.1991 Rīga, 29.08.2003. Višķu St. 17, Daugavpils, LV-5410, Latvia Višķu St. 17, Daugavpils, LV-5410, Latvia
Fixed capital	10 360 000 EUR
Number of public bearer shares	7
Nominal value	400 000
of one share	1.40 EUR
Chief accountant	Valentīna Krivoguzova

Reporting period 01.01.2016 – 31.03.2016

Persons in charge for drawing up of the financial report: Mr. Boriss Matvejevs, phone +371 65402333, email: dpr@dpr.lv Ms. Natalja Redzoba, phone +371 65402333, email: dpr@dpr.lv

INFORMATION ON MANAGEMENT BOARD AND COUNCIL MEMBERS

THE MANAGEMENT BOARD

Chairman of the Management board Rolands Zarāns, elected 15.01.2014 Member of the Management board Nataļja Redzoba, elected 29.08.2003.

Information on shares owned by Members of the Management board

Members of the Management board	Share ownership 
	Quantity of shares	%
Rolands Zarāns	no shares	-
Natalja Redzoba	no shares	-

THE COUNCIL

Chairman of the Council Boriss Matvejevs, elected 05.05.2005 Deputy Chairman of the Council Georgijs Sorokins, elected 06.11.2000 Members of the Council Anželina Titkova, elected 14.08.2009

Information on shares owned by Members of the Council Members of the Council Share ownership*

	Quantity of shares	%
Boriss Matvejevs	no shares	-
Georgijs Sorokins	5 768	0,08
Anželina Titkova	no shares	-

For more information on professional background of the Management board and Council members, please refer to the website of the JSC Ditton pievadķēžu rūpnīca www.dpr.lv.

^* As at 02.02.2016

COMPANY SHAREHOLDERS WITH OVER 5% OF EQUITY OWNERSHIP *

NAME	Ownership interest %
Eduards Zavadskis	20,00
Vladislavs Driksne	19,92
MAX Invest Holding Ltd.	13,63
Maleks S Ltd.	12,24
DVINSK MNG Ltd.	9,46

* Note: Information is provided and updated upon shareholders list for the shareholders` meeting of the JSC Ditton pievadķēžu rūpnīca on 02.02.2016, taking into account submitted to the Company shareholders' notices of acquisition or disposal of interests.

SHARE PRICE DEVELOPMENT

MANAGEMENT REPORT

Information on the results of the company in 3 months of year 2016

The net-turnover was fulfilled in 3 months period of 2016 for EUR 1,369 thousand.

In the reporting period, the company exported 71 per cent of its core products to Eastern and Western markets (37 per cent eastwards and 34 per cent westwards), and 29 per cent were sold on Latvian market.

The Company closed the 3 months period of 2016 with pre-tax book losses EUR 507 thousand. Book losses after taxes amounted to EUR 523 thousand. The reasons and circumstances, which affected these indices, are revealed in the section "Significant events. Market tendencies and development of the company. Risks"

The average statistical number of employees of JSC Ditton pievadķēžu rūpnīca in 3 months of year 2016 was 166 employees.

The average salary in 3 months of 2016 amounted to EUR 563 what is by EUR 144 higher than in 3 months of 2015.

Significant events. Market tendencies and development of the company. Risks.

The Company's' Management board released in the Management report to the annual report for 2015 all the significant events, market tendencies, development and risks of the Company, as well as other significant factors influencing these processes.

All the circumstances and factors mentioned before remained relevant for the reporting period, and thus have to be taken into account.

Along with the circumstances stated in the report for the year 2015, there have been retail sales volumes down in the fourth quarter of 2016 that significantly affected Companys loss as prime costs retained at their level. Companys sales volumes collapse is caused by measures the Company was forced to undertake, and namely to increase substantially prices for 5-15 per cent in the first quarter of 2016. In the short term, such price increases objectively cause decrease in sales and customer loss, followed afterwards with market stabilization as sales increase and customer return in the future.

The reason for rise in price is associated with additional tax charges 18-30 per cent for the metal products exported from the Russian Federation to the European Union what Management board already reported in its statements to shareholders.

The in-depth and objective analysis of all the tendencies will be possible upon performance results for the first half of the year 2016.

The Management board reports on launching development of the Industrial and Technology Park based on the infrastructure (industrial premises, utility connections, communication lines) owned by the Company and developed together with the European Regional Development Fund in 2015 in the frame of project "Construction of industry premises in the free industrial area of JSC Ditton pievadķēžu rūpnīcas". The initial results on park performance will be summed up in the 6 months report for the year 2016.

STATEMENT ABOUT MANAGEMENT LIABILITY

According to the information at disposal of the Management board, this financial statement for 3 months of 2016 has been prepared in compliance with the existing legislative requirements, gives a true and fair view of the assets, liabilities, financial position and profits of the Joint Stock Company. Management report contains truthful information.

Chairman of the Management board Rolands Zarāns of JSC Ditton pievadķēžu rūpnīca

BALANCE SHEET

ASSETS	31.03.2016. EUR	31.03.2015. EUR
1. Long-term investments
I. Intangible investments
Concessions, patents, licenses, trademark and similar rights	522	951
Other intangible investments	-	1 192 350
Total intangible investments	522	1 193 301
II. Fixed assets
Land, buildings and structures	4 589 243	4 829 218
Equipment and machinery	24 681	16 798
Other fixed assets and inventory	34 825	6 849
Costs of the establishment of fixed assets and unfinished building objects	12 649	10 331
Total fixed assets	4 661 398	4 863 196
III. Long-term financial investments
Participation in the capital of related companies	67 160	67 160
Total long-term financial investments	76 160	67 160
1. Total long-term investments	6 135 171	9 925 921
2. Current assets
I. Inventories
Raw materials, basic materials and consumables	486 466	703 511
Work in progress	200 875	276 078
Finished products and goods for sale	310 261	610 220
Advance payments for goods and services	1 582 813	1 428 659
Total inventories	2 580 415	3 018 468
II. Debtors
Trade receivables	672 597	2 691 008
Other debtors	84 778	218 460
Next period costs	-	6 096
Total debtors	757 375	2 915 564
IV. Cash and cash equivalents	74 640	39 357
2. Total current assets	3 412 430	5 973 389
TOTAL ASSETS	8 141 510	12 097 046

BALANCE SHEET

LIABILITIES	31.03.2016. EUR	31.03.2015. EUR
1. Equity
Stock or share capital (equity capital)	10 360 000	10 360 000
Other reserves	169 251	169 251
Retained profits:
a) retained profits brought forward from the previous year	-9 907 291	-5 637 329
b) retained profits of fiscal period	- 522 525	-938 224
1. Total equity	99 435	3 953 698
2. Long-term creditors
Loans from credit institutions	-	1 502 387
Next period income	1 099 313	-
2. Total long-term creditors	1 099 313	1 502 387
3. Short-term creditors:
Loans from credit institutions	2 054 223	2 052 576
Other loans	328 607	406 607
Prepayments received from purchasers	36 460	51 651
Accounts payable to suppliers and contractors	3 626 687	3 263 185
Taxes and State mandatory social insurance payments	221 901	422 637
Other creditors	578 054	376 540
Next period income	45 390	-
Accrued obligations	51 440	67 765
3. Total short-term creditors	6 942 762	6 640 961
Total creditors	8 042 075	8 143 348
TOTAL LIABILITIES	8 141 510	12 097 046

INCOME STATEMENT

	31.03.2016. EUR	31.03.2015. EUR
Net turnover	1 368 741	1 456 518
Production costs of goods sold	-1 852 568	-1 794 962
Gross profit	-483 827	-338 444
Sales costs	-7 128	-397 450
Administrative expenses	-147 564	-146 864
Other income from operating activities	146 891	19 287
Other costs of operating activities	-15 093	-17 708
Interest payment and similar expenses	-545	-27 266
Profit or loss before taxes	-507 266	-908 445
Other taxes	-15 259	-29 779
Profit or loss for the fiscal period	-522 525	-938 224
Earnings per share (EPS)	-0.071	-0.127

CASH FLOW STATEMENT

	31.03.2016. EUR	31.03.2015. EUR
I. Cash flows from operating activities
1. Profit or loss before taxes	-507 266	-908 445
Adjustments to:
Depreciation of the received EU structural funds	-15 130	-
Depreciation of tangible assets	43 605	93 911
Amortization of intangible assets	108	107
Interest payments	545	27 266
Amortization of other intangible assets	-	397 450
2. Net-profit or net-loss from operating activities in fiscal period	-478 138	-389 711
Adjustments to Current assets and Short-term creditors:
Debtors	11 989	1 001 426
Reserves	11 559	-1 600 615
Creditors	733 525	1 625 580
3. Cash flows from operating activities	278 935	636 680
4. Taxes payments (corporate income and immovable property taxes)	-15 259	-29 779
Net cash provided by operating activities	263 676	606 901
II. Cash flows from investing activities
Loans issued	-	-
Purchases of fixed assets Disposal of fixed assets	-27 750 -	-729 430 -
Net cash used in investing activities	-27 750	-729 430
III. Cash flows from financing activities
Proceeds from borrowings or repayment of borrowings, net	-240 000	129 576
Interest payments	-545	-27 266
Net cash used in financing activities	- 240 545	102 310

CASH FLOW STATEMENT SUMMURY

	31.03.2016. EUR	31.03.2015. EUR
Cash flows from operating activities	263 676	606 901
Cash flows from investing activities	-27 750	-729 430
Cash flows from financing activity	-240 545	102 310
Net (decrease)/increase in cash and cash equivalents	-4 619	-20 219
Cash and cash equivalents at the beginning of fiscal	79 259	59 576
period
Cash and cash equivalents at the end of fiscal period	74 640	39 357

STATEMENT OF CHANGES IN EQUITY for the period from 01.01.2016 till 31.03.2016

	Equity capital	Other reserves	Retained profit of previous periods	Profit/ loss of reporting period	Total
	EUR	EUR	EUR	EUR	EUR
At 1 January 2016	10 360 000	-	-9 907 291	-	452 709
Other reserves	-	169 251	-	-	169 251
Profit/loss of 3 months period 2016	-		-	-522 525	-522 525
At 31 March 2016	10 360 000	169 251	-9 907 291	-522 525	99 435
At 1 January 2015	10 529 251	-	-5 637 329	-	4 891 922
Other reserves	-169 251	169 251	-	-	-
Profit/loss of 3 months period 2015	-		-	-938 224	-938 224
At 31 March 2015	10 360 000	169 251	-5 637 329	-938 224	3 953 698

Appendix

Explanatory notes

Accounting policies and methods applied in present interim financial statement are consistent with those applied in the last Annual Report.

This financial statement of the JSC DITTON pievadķēžu rūpnīca prepared under source documents presents fairly the financial position of the JSC as at 31 March 2016, its` operating results and cash flows for 3 months ended 31 March 2016.

This financial report has been prepared in compliance with statutory regulations of the Republic of Latvia on a going concern basis. Appropriate accounting policies have been applied on a consistent base.

The interim financial report for 3 months of 2016 has not been audited by sworn auditor.

The interim report has been prepared in euros.

Explanations and analyses on separate items of financial reports

Commodity output in 3 months of 2016 (in thousands of meters) The raw volume of driving chains produced is by € 82 thousand of meters less than in 3 months of 2015.

Commodity output in 3 months of 2016 (in thousands of euros) The volume of driving chains produced in 3 months of this year reached € 905 thousand, being by € 557 thousand lower than in the relevant period of previous year.

Sales (net-turnover) in 3 months of 2016 (in thousands of euros) The net-turnover in the fiscal period is fulfilled by € 1,369 thousand, what is by € 87 thousand or by 6% less than the index in the same period of the previous year.

Core product sales in 3 months of 2015 (in thousands of euros)

Core product sales amounted to € 1,130 thousand in the reporting period, what is by € 78 thousand or by 7% less than the result of the same period in the previous year.