Ditton pievadkezu rupnica

Quarterly Report • Nov 30, 2015

JSC DITTON PIEVADĖĒŽU RŪPNĪCA

UNAUDITED AND UNCONSOLIDATED FINANCIAL REPORT FOR 9 MONTHS OF 2015 (01.01.2015 – 30.09.2015)

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

Daugavpils 2015

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	DITTON pievadėēžu rūpnīca
Legal status	Joint Stock Company
Registrations number	40003030187
Registration in Register of Enterprises	Rīga, 03.10.1991
Registration in Commercial Register Office	Rīga, 29.08.2003.
Legal address	Višėu St. 17, Daugavpils,
	LV-5410, Latvia
Mailing address	Višėu St. 17, Daugavpils,
	LV-5410, Latvia

Fixed capital	10 360 000 EUR
Number of public bearer shares	7 400 000
Nominal value of one share	1.40 EUR

Chief accountant Valentina Krivoguzova

Reporting period 01.01.2015 – 30.06.2015

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 Members of the Management Board Natalja 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 Vladimir Bagaev, elected 28.05.2012

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

Quantity of shares	%
	-
5 768	0,08
no shares	-
no shares	-
	no shares

For detailed information on professional background of the Management Board and Council members please refer to our website www.dpr.lv.

^* As at 16.07.2015

INFORMATION ON SHAREHOLDERS AND SHARES

COMPANY SHAREHOLDERS (OVER 5%) *

NAME	Ownership interest, %
Eduards Zavadskis	20,00
Vladislavs Driksne	19,92
MAX Invest Holding Ltd.	13,63
Maleks S Ltd.	12,29
DVINSK MNG Ltd.	9,46

* Note: Information presented is based on the list of shareholders of JSC DITTON pievadėēžu rūpnīca as at 16.07.2015, taking into account the shareholders' notification of the acquisition or disposal of major holdings in the Company.

SHARE PRICE DEVELOPMENT

JSC DITTON PIEVADĖĒŽU RŪPNĪCA FINANCIAL REPORT FOR 9 MONTHS OF 2015 MANAGEMENT REPORT

Information on the results of the company in 9 months of 2015

The net-turnover has been € 4,904 thousand in 9 months of 2015, what is by € 3,969 thousand or 45% less than the index in 9 months of 2014.

Commodity output reached € 3,779 thousand, being by € 1,877 thousand lower than in the relevant period of previous year.

The export of the core products to the East and West amounted to 67 % in the fiscal period (41% eastwards and 26% westwards), 33% of products went to the local market.

The Company closed the 9 months period of 2015 with a pre-tax loss € 2,986 thousand. The after-tax rate reached € 3,065 thousand. The analysis of the loss structure and causes given in the section "Significant events. Market tendencies and development of the company. Risks" of the Management report to the annual report 2014 also applies to the figures of this fiscal period as well.

The average number of employees of JSC DITTON pievadėēžu rūpnīca was 196 employees during 9 months of 2015.

The average salary amounted to € 411 in 9 months period of 2015, which is by € 70 less than in 9 months of 2014.

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

The Management Board described significant events, market trends, social development processes and risks, as well as other relevant circumstances and factors that influence these processes, in Company`s Annual statement 2014 and in the interim financial report for the first 6 months of 2015.

All the conditions and factors mentioned before remained relevant for Company's operating results in the 3rd quarter 2015, and unfortunately, response to expectations of Management Board. These aspects maintain the Company's integration into the EU, the CIS and other markets of the joint economic area; as well, supply-and-demand forecast on goods and services, enclosing Company's products as its` components.

According to the Company's forecasts, which are given regularly by Management Board since 2010, there are such factors as "a second wave of the crisis", which changed the consumption system, demand for driving chains, and their manufacturing in general. 2014 and the second half of 2015 are affected by commonly known events, bilateral sanctions, the Customs Union (Russia) and Ukraine's internal market crises as well (this market fall reduced Company`s sales by 52.7%).

For more information on the position of driving chains on the market, Management Board intends to provide in the Management report to Company's Annual statement 2015.

STATEMENT ABOUT MANAGEMENT LIABILITY

According to the information at our disposal, this financial statement for 9 months ended 30 September 2015 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 JSC DITTON pievadėēžu rūpnīca. Management report contains truthful information.

Chairman of the Management Board of JSC DITTON pievadėēžu rūpnīca Rolands Zarāns

BALANCE SHEET

ASSETS	30.09.2015. EUR	30.09.2014. EUR
1. LONG-TERM INVESTMENTS
I. Intangible investments
Concessions, patents, licenses, trademarks and similar rights	737	1 165
Other intangible investments	397 450	1 987 250
Total intangible investments	398 187	1 988 415
II. Fixed assets
Land, buildings and structures	4 665 437	2 278 461
Equipment and machinery	28 251	8 126
Other fixed assets and inventory	4 666	3 618
Costs of the establishment of fixed assets and unfinished building objects	10 331	387 640
Total fixed assets	4 708 685	2 677 845
III. Long-term financial investments
Participation in the capital of other companies	67 160	67 160
Other loans and other long-term debtors	-	4 076 674
Deferred tax asset	-	329 651
Total long-term financial investments	67160	4 473 485
1. TOTAL LONG-TERM INVESTMENTS	5 174 032	9 139 745
2. CURRENT ASSETS
I. Inventories
Raw materials, basic materials and consumables	607 180	918 463
Unfinished orders	189 601	291 375
Finished products and goods for sale	235 084	270 695
Advance payments for goods Total inventories	1 834 797 2 866 662	1 123 913 2 604 446
II. Debtors
Purchasers and commissioning party debts	736 507	4 910 666
Other debtors Next period costs	68 663 -	1 014 671 14 000
Total debtors	805 170	5 939 337
IV. Cash and cash equivalents	28 480	765 845
2. TOTAL CURRENT ASSETS	3 700 312	9 309 628
TOTAL ASSETS	8 874 344	18 449 373

BALANCE SHEET

LIABILITIES	30.09.2015. EUR	30.09.2014. EUR
1. Equity
Stock or share capital (equity capital)	10 360 000	10 529 251
Other reserves	169 251	-
Retained profits:
a) retained profits brought forward from the previous year	- 5 637 329 1 543 379
b) retained profits of fiscal period	-3 065 480	19 850
1. Total equity	1 826 442	12 092 480
2. Long-term creditors
Loans from credit institutions	1 502 387	1 585 658
2. Total long-term creditors	1 502 387	1 585 658
3. Short-term creditors:
Loans from credit institutions	1 998 915	1 920 729
Other loans	328 607	239 645
Prepayments received from purchasers	10 691	88 300
Accounts payable to suppliers and contractors	2 531 408	1 829 207
Taxes and State mandatory social insurance payments	192 312	348 060
Other creditors	433 964	276 867
Accumulated liabilities	49 618	68 427
3. Total short-term creditors	5 545 515	4 771 235
Total creditors	7 047 902	6 356 893
TOTAL LIABILITIES	8 874 344	18 449 373

INCOME STATEMENT

	30.09.2015. EUR	30.09.2014. EUR
Net turnover	4 903 874	8 872 972
Production costs of goods sold	-6 246 051	-7 545 030
Gross profit	-1 342 177	1 327 942
Sales costs	-1 192 350	-1 192 691
Administrative expenses	-433 327	-600 846
Other income from economic activities	192 241	724 985
Other costs of economic activities	-127 352	-57 822
Interest payments and similar expenses	-82 857	-111 441
Profit or loss before taxes	-2 985 822	90 127
Other taxes	-79 658	-70 277
Profit or loss for the fiscal period	-3 065 480	19 850
Earnings response coefficient	-0.296	0.002

CASH FLOW STATEMENT

	30.09.2015. EUR	30.09.2014. EUR
I. Cash flows from operating activities
	-2 985 823	90 127
1. Pre-tax income or loss
Adjustments for:
Depreciation of fixed assets	264 157	509 884
Amortization of intangible assets	321	321
Interest	82 857	111 441
Amortization of other intangible assets	1 192 350	1 192 349
Gain on disposal of fixed assets	-54 618	-679 782
2. Net-profit or net-loss from economic activities in fiscal	-1 500 756	1 224 340
period
Adjustments to Current assets and Short-term creditors:
Debtors	3 111 819	-2 025 305
Reserves	-1 448 809	705 682
Creditors	661 796	-526 862
3. Cash flows from operating activities	824 050	-622 145
4. Taxes payments (corporate income and immovable property taxes)	-79 658	-70 277
Net cash provided by operating activities	744 392	-692 422
II. Cash flows from investing activities
Purchases of fixed assets	-745 165	-366 106
Disposal of fixed assets	54 618	704 637
Net cash used in investing activities	-690 547	338 531
III. Cash flows from financing activities
Proceeds from borrowings or repayment of borrowings, net	-2 084	1 023 835
Interest	-82 857	-111 441
Net cash used in financing activities	-84 941	912 394

CASH FLOW STATEMENT SUMMURY

	30.09.2015. EUR	30.09.2014. EUR
Cash flows from operating activities	744 392	-692 422
Cash flows from investing activities	-690 547	338 531
Cash flows of financing activities	-84 941	912 394
Net (decrease)/increase in cash and cash equivalents	-31 096	-558 503
Cash and cash equivalents at the beginning of fiscal period	59 576	207 342
Cash and cash equivalents at the end of fiscal period	28 480	765 845

STATEMENT OF CHANGES IN EQUITY for the period from 01.01.2015 till 30.09.2015

	Equity capital	Other reserves	Retained profit of previous periods	Profit of fiscal period	Total
	EUR	EUR	EUR	EUR	EUR
At 1 January 2015	10 529 251	-	-5 637 329	-	4 891 922
Other reserves	-169 251	169 251	-	-	-
Loss of 9 months period 2015	-		-	-3 065 480	-3 065 480
At 30 September 2015	10 360 000	169 251	-5 637 329	-3 065 480	1 826 442
At 1 January 2014	10 529 251	-	1 543 379	-	12 072 630
Profit of 9 months period 2014	-	-	-	19 850	19 850
At 31 September 2014	10 529 251		1 543 379	19 850	12 092 480

Appendixes

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 JSC DITTON pievadėēžu rūpnīca, based on source documents, presents fairly the financial position of the JSC as at 30 September 2015, its` operating results and cash flows for 9 months ended 30 September 2015.

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 9 months of 2015 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 9 months of 2015 (in thousands euros)

Commodity output – amount of produced driving chains - reached € 3,779 thousand in 9 months of this year, being by € 1,877 thousand lower than in the relevant period of previous year.

Commodity output in 9 months of 2015 (in thousands meters)

Commodity output - amount of produced driving chains - is by 830 thousand meters less than in the first 9 months of previous year.

Sales (net-turnover) in 9 months of 2015 (in thousands euros)

The net-turnover has been € 4,904 thousand in 9 months of 2015, what is by € 3,969 thousand or 45% less than the index in the same period of previous year.

Core product sales in 9 months of 2015 (in thousands euros)

Core product sales amounted to € 4,058 thousand in the reporting period, what € 2,618 thousand or 39% less than the result of the same period in previous year.