Ditton pievadkezu rupnica

Quarterly Report • May 31, 2011

JSC "DITTON PIEVADĖĒŽU RŪPNĪCA"

NON-AUDITED AND NON-CONSOLIDATED FINANCIAL REPORT FOR 3 MONTHS OF YEAR 2011 (01.01.2011 – 31.03.2011)

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

Daugavpils 2011

Contents

Information about the Company …………………………………	3-5
Management report ………………………………………………	6-7
Balance sheet ……………………………………………………	8-9
Income statement	10
Cash flow statement …………………………………………	11-12
Statement of changes in equity ………………………….…………	13
Appendixes
Explanatory notes …………………………………………………….	14
Summary of financial results ……………………………………………	15
Explanations and analyses on separate items of financial reports …	16

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 pievadkezu rupnica Joint Stock Company 40003030187 Riga, 03.10.1991 Riga, 29.08.2003. Visku Str. 17, Daugavpils, LV-5410, Latvia Visku Str. 17, Daugavpils, LV-5410, Latvia
Fixed capital Public bearer shares Nominal value of one public bearer share	7 400 000.00 LVL 7 400 000 1.00 LVL
Chief accountant	Valentina Krivoguzova

Reporting period 01.01.2011 – 31.03.2011

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

INFORMATION ON MANAGEMENT BOARD AND COUNCIL MEMBERS

THE MANAGEMENT BOARD

Chairman of the Management Board

Pjotrs Dorofejevs, elected 22.06.2010 (Member of the Management Board from 07.01.2004) Member of the Management Board

Natalja Redzoba, elected 29.08.2003. Jevgenijs Sokolovskis, elected 22.06.2010

Information on shares owned by Members of the Management Board

Members of the Management Board	Share ownership ∗
	Quantity of shares	%
Pjotrs Dorofejevs	no shares	-
Natalja Redzoba	1 900	0,03
Jevgenijs Sokolovskis	no shares	-

THE COUNCIL

Chairman of the Council Boriss Matvejevs, elected 14.08.2009 Deputy Chairmen of the Council Georgijs Sorokins, elected 14.08.2009 Inga Goldberga, elected 14.08.2009 Members of the Council Anzelina Titkova, elected 14.08.2009 Timo Sas, elected 16.10.2009

Information on shares owned by Members of the Council

Members of the Management Board	Share ownership*
	Quantity of shares	%
Boriss Matvejevs	no shares	-
Georgijs Sorokins	5 768	0,08
Inga Goldberga	no shares	-
Anzelina Titkova	no shares	-
Timo Sas	no shares	-

For more detailed information on professional background of the Management Board and Council members please refer to our website: http://www.dpr.lv/web_ru/for-akcioner.htm

^* As of 31.03.2011

INFORMATION ON SHAREHOLDERS AND SHARES

COMPANY SHAREHOLDERS (OVER 5%) *

	Ownership
NAME	interest, %
Vladislavs Driksne	20,39
Eduards Zavadskis	20,00
MAX Invest Holding SIA	13,16
Maleks S SIA	9,86
Pavels Samuilovs	9,46

* Note: Information is presented on the basis of the list of shareholders of JSC "Ditton pievadėēžu rūpnīca" dated 23.05.2011.

SHARE PRICE DEVELOPMENT

MANAGEMENT REPORT

Information on the results of the company in 3 months of year 2011

In 3 months period of 2011 net-turnover in fact was fulfilled in the amount of 2 206 thous.LVL (3 139 thous.EUR) against the forecast 1 750 thous.LVL (2 490 thous.EUR), increase amounts to 456 thous.LVL (649 thous.EUR) or 26%. Compared to the level of previous year, net-turnover of the reporting period is by 812 thous.LVL (1 155 thous.EUR) or by 58% more.

Profit before taxes amounted to 265 thous.LVL (377 thous.EUR) in 3 months period of 2011, which is by 235 thous.LVL (334 thous.EUR) more than the forecast. Profit after taxes amounts to 255 thous.LVL (363 thous.EUR).

Commodity output is estimated in the amount of 1 568 thous.LVL (2 231 thous.EUR). The result of 3 months of 2011 is by 460 thous.LVL (655 thous.EUR) or by 42% higher than in the relevant period of previous year.

At present the company exports 99% of its products to the East and West: among them 68% eastwards and 31% westwards; 1% of products are sold on domestic market.

The average statistical number of employees of JSC "Ditton pievadėēžu rūpnīca" was 362 employees in 3 months of year 2011.

The average salary amounted to 305 LVL (434 EUR) in 3 months period of 2011, which is by 60 LVL (85 EUR) more than in 3 months of 2010.

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

The activity of the company in 3 months of the year 2011 gives the ground to consider that the situation on the market where production of the company is represented has stabilized and there are certain growth trends outlined. It is indicated by the economic situation on the markets of the states where production of the company is represented and by increase of purchase orders in Eastern and Western market segments. Improvement of the situation on the Eastern market is still favoured by the support program for automobile manufacturers adopted by the government of Russian Federation from 01.03.2010 which undoubtedly shall increase production delivery volumes on conveyors of automobile factories. Currently, in the community of Russian Federation there are discussions about the second phase of this program or its extension. In these circumstances development and maintenance of Eastern market (RF, CIS) represent important goals and interests of the Company. In such way it can be assumed that all risks and market trends reflected in the management report of the annual report for the year 2010 are effective and relevant in the first quarter of 2011.

However, the Management Board of the company notes that up trends can be affected by price increase on metal products which started on the market in the 2nd quarter of 2010, as well as by the expected domestic increase of energy prices. These changes which are not controlled by the company and often – ungrounded and nonsystematic – negatively affect production programs of the Company, do not allow to enter into long-term supply contracts due to price and prime cost fluctuations.

Also the rate of turnover growth forecasted for 2010 can be considered as fulfilled which resulted in a certain stabilization of the financial situation of the company, at the same time, some facts and market trends, in particular, increase of prices on raw materials, may be evidence for the probability of the "second wave" of crisis phenomena. Alongside with that, in the 1st quarter of 2011 all expected forecasts of financial indices, inclusive of investments into future development, are fulfilled.

Probability of the "second wave" of crisis, as well the fact that consumer market is growing with no surpassing the forecasts and in respect of many indicators it has not reached the pre-crisis level are taken into account by the Management Board by organization of the Company's activity in general. However, as indicated above, not all influencing factors can be evaluated and managed, which along with the Company's integration into global economics cause negative factors of dependence.

In the existing circumstances the Company is continuing to work in economy regime by using internal resources and reorganizing production processes according to the existing volumes of demand, production and costs, including optimization of staff in accordance with production volumes and its actual employment.

The Management Board considers it as its main task to continue working upon allocation of consequences of global crisis, maintaining the company with its brand, technologies, personnel, traditional partners and market and future development together with the whole global and Latvian economics with simultaneous using of all favorable conditions appearing for development of the company's chances and its market growth.

Taken together, these conditions and revival of the market brought to positive results in the Company's activity in the 1st quarter of 2011, and it closed this period with profit.

STATEMENT ABOUT MANAGEMENT LIABILITY

According to our information, the presented financial statements for 3 months of year 2011 ended 31 March 2011 have been prepared in accordance with the existing legislative requirements and give a true and fair view of the assets, liabilities, financial position and profits of the joint-stock company "Ditton pievadėēžu rūpnīca". Management report contains truthful information.

Chairman of the Management Board of JSC "Ditton pievadkezu rupnica" Pjotrs Dorofejevs

BALANCE SHEET

			1 EUR = 0,702804 LVL
ASSETS	31.03.2011. LVL	31.03.2011. EUR	31.03.2010. LVL	31.03.2010. EUR
1. Long-term investments
I. Non-material investments
Concessions, patents, licenses, trade marks and similar rights	3	4	71	101
Other non-material investments	5 307 260	7 551 551	-	-
Non-material investments total	5 307 263	7 551 555	71	101
II. Fixed assets
Plots of land, buildings and constructions	2 205 559	3 138 228	2 916 050	4 149 165
Technological equipment and machinery	13 744	19 555	12 877	18 322
Other fixed assets and stock	88 687	126 190	810	1 153
Formation of fixed assets and costs of unfinished construction objects	7 261	10 332	7 261	10 332
Fixed assets total	2 315 251	3 294 305	2 936 998	4 178 972
III. Long-term financial investments
Participation in the capital of other companies	47 200	67 160	47 200	67 159
Long-term loans	333 518	474 554	378 845	539 048
Assets of deferred tax	85 048	121 012	28 867	41 074
Long-term financial investments total	465 766	662 726	454 912	647 281
1. Long-term investments total	8 088 280	11 508 586	3 391 981	4 826 354
2. Current assets
I. Reserves
Raw materials, basic materials and subsidiary	626 720	891 742	787 670	1 120 754
materials
Unfinished products	253 046	360 052	270 897	385 452
Finished products and goods for sale	341 027	485 238	711 576	1 012 481
Advance payments for goods	50 841	72 340	41 897	59 614
Reserves total	1 271 634	1 809 372	1 812 040	2 578 301
II. Debtors
Debts of buyers and customers	1 508 099	2 145 832	5 234 173	7 447 557
Other debtors	870 189	1 238 167	475 050	675 935
Deferred expenses	-	-	367	522
Debtors total	2 378 288	3 383 999	5 709 590	8 124 014
IV. Cash and cash equivalents	155 876	221 791	98 696	140 432
2. Current assets total	3 805 798	5 415 162	7 620 326	10 842 747
TOTAL ASSETS	11 894 078	16 923 748	11 012 307	15 669 101

BALANCE SHEET

			1 EUR = 0,702804 LVL
LIABILITIES	31.12.2010	31.12.2010	31.12.2009	31.12.2009
	LVL	EUR	LVL	EUR
1. Equity capital
Fixed capital	7 400 000	10 529 251	7 400 000	10 529 251
Retained earnings:
a) retained earnings of previous years	969 052	1 378 837	589 152	838 288
b) profit / (loss) of reporting period	255 063	362 922	316 960	450 994
1. Equity capital total	8 624 115	12 271 010	8 306 112	11 818 533
2. Long-term creditors:
Loans from credit institutions	1 429 422	2 033 885	-	-
2. Long-term creditors total	1 429 422	2 033 885	-	-
3. Short-term creditors:
Loans from credit institutions	120 232	171 074	1 706 474	2 428 094
Other loans	160 171	227 903	175 000	249 002
Advance payments received from customers	63 641	90 552	62 023	88 251
Debts to suppliers and contractors	686 281	976 490	257 121	365 850
Taxes and compulsory social security
contributions	607 872	864 924	326 414	464 445
Other creditors	130 753	186 045	139 610	198 647
Accumulated liabilities	71 591	101 865	39 553	56 279
3. Short-term creditors total	1 840 541	2 618 853	2 706 195	3 850 568
Creditors total	3 269 963	4 652 738	2 706 195	3 850 568
LIABILITIES TOTAL	11 894 078	16 923 748	11 012 307	15 669 101

INCOME STATEMENT

			1 EUR = 0,702804 LVL
	31.03.2011.	31.03.2011.	31.03.2010.	31.03.2010.
	LVL	EUR	LVL	EUR
Net turnover	2 205 811	3 138 586	1 394 390	1 984 038
Production cost of sold products	-1 457 707	-2 074 130	-1 192 906	-1 697 352
Gross profit	748 104	1 064 456	201 484	286 686
Selling costs	-281 639	-400 736	-42 165	-59 995
Administration costs	-169 492	-241 165	-157 611	-224 260
Other operating income	1 222	1 738	353 870	503 512
Other operating expenses	-13 063	-18 587	-13 058	-18 580
Interest payment and similar expenses	-19 694	-28 022	-15 522	-22 087
Profit / (loss) before taxes	265 438	377 684	326 998	465 276
Other taxes	-10 375	-14 762	-10 038	-14 283
Profit / (loss) of reporting period	255 063	362 922	316 960	450 993
Index EPS	0.034	0.049	0.043	0.061

STATEMENT OF CASH FLOW

			1 EUR = 0,702804 LVL
	31.03.2011. LVL	31.03.2011. EUR	31.03.2010. LVL	31.03.2010. EUR
I. Cash flow of basic activity
1. Profit / (loss) before taxes	265 438	377 684	326 998	465 276
Corrections:
Depreciation of fixed assets	184 364	262 326	187 454	266 723
Depreciation of non-material investments	5	7	24	34
Interest expense	19 694	28 022	15 556	22 134
Amortization share of other non-material investments	279 329	397 449	-	-
2. Profit / (loss) from economic activity in
reporting period	748 830	1 065 488	530 032	754 167
Corrections in current assets and short-term creditors:
In Debtors	-714 050	-1 016 001	-836 881	-1 190 774
In Reserves	-15 780	-22 453	303 188	431 398
In Creditors	178 905	254 559	-25 469	-36 239
3. Cash flow of basic activity, gross	197 905	281 593	-29 130	-41 448
4. Expenses on tax payments (corporate income tax and tax on immovable property)	-10 375	-14 762	-10 038	-14 283
Cash flow of basic activity, net	187 530	266 831	-39 168	-55 731
II. Cash flow of investing activity
Loans issued	-94 222	-134 066	-	-
Purchase of fixed assets	-5 391	-7 671	-	-
Cash flow of investing activity, net	-99 613	-141 737	-	-
III. Cash flow of financing activity
Loans (repaid) / received, net	-19 694	-28 021	-	-
Interest paid	-66 783	-95 024	-15 556	-22 134
Cash flow of financing activity, net	-86 477	-123 045	-15 556	-22 134

CONSOLIDATED DATA ON CASH INCOME AND EXPENSES

1 EUR = 0,702804 LVL

	31.03.2011. LVL	31.03.2011. EUR	31.03.2010. LVL	31.03.2010. EUR
Cash flow of basic activity, net	187 530	266 831	-39 168	-55 731
Cash flow of investing activity, net	-99 613	-141 737	-	-
Cash flow of financing activity, net	-86 477	-123 045	-15 556	-22 134
Growth of cash and cash equivalents	1 440	2 049	-54 724	-77 865
Balance of cash and cash equivalents at the beginning of reporting period	154 436	219 743	153 420	218 297
Balance of cash and cash equivalents at the end of reporting period	155 876	221 792	98 696	140 432

Statement of changes in equity for the period from 01.01.2011 till 31.03.2011 (LVL)
	Share capital	Share premium	Other reserves		Currency translation reserves	Accumulat ed profit	Current period's profit	Total
	LVL	LVL	LVL		LVL	LVL	LVL	LVL
As at 1st January, 2011 Profit for 3 months of	7 400 000	-		-	-	969 052	-	8 369 052
2011	-	-		-	-	-	255 063	255 063
As at 31 March, 2011	7 400 000	-		-	-	969 052	255 063	8 624 115
As at 1st January, 2010 Profit for 3 months of	7 400 000	-		-	-	589 152	-	7 989 152
2010	-	-		-	-	-	316 960	316 960
As at 31 March, 2010	7 400 000	-		-	-	589 152	316 960	8 306 112

1 EUR = 0,702804 LVL

Statement of changes in equity for the period from 01.01.2011 till 31.03.2011 (EUR)
	Share capital	Share premium	Other reserves		Currency translation reserves	Accumulat ed profit	Current period's profit	Total
	EUR	EUR	EUR		EUR	EUR	EUR	EUR
As at 1st January, 2011 (0.702804)	10 529 251	-		-	-	1 378 837	-	11 908 088
Profit for 3 months period 2011 (0.702804)	-	-		-	-	-	362 922	362 922
As at 31 March, 2011 (0.702804)	10 529 251	-		-	-	1 378 837	362 922	12 271 010
1st January, 2010 (0.702804)	10 529 251	-		-	-	838 288	-	11 367 539
Profit for 3 months period 2010 (0.702804)	-	-		-	-	-	450 994	450 994
As at 31 March, 2010 (0.702804)	10 529 251	-		-	-	838 288	450 994	11 818 533

Appendix

Explanatory notes

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

This financial statement of JSC "Ditton pievadkezu rupnica" has been prepared in accordance with the source documents and presents fairly the financial position of the JSC as of 31 March 2011 and the results of its operation and cash flows for the 3 months period ended 31 March 2011.

This financial report has been prepared in compliance with Latvian Financial Accounting Standards on a going concern basis. Appropriate accounting policies have been applied on a consistent base.

The interim financial report for 3 months of 2011 has not been audited by jury auditor.

The interim report has been prepared in Latvian Lats and Euro.

Currency exchange rate: 1 EUR = 0,702804 LVL.

Summary of financial results for 3 months of year 2011

					thous.LVL
Name of index		Forecast	3 months of year 2011		Deviation
		for 2011	forecast	in fact	( + / - )
Production of commodity products		6 900	1 700	1 568	-132
Production of main products		6 800	1 693	1 525	-168
Production of driving chains		6 750	1 685	1 518	-167
	incl. automotive	2 520	629	477	-152
	industrial	4 230	1 056	1 041	-15
Sales volume		7 000	1 750	2 206	+456
Sales of main products		6 900	1 725	1 703	-22
Profit after taxes		40	10	255	+245

thous.EUR

				1 EUR = 0,702804 LVL
	Forecast		3 months of year 2011	Deviation
Name of index	for 2011	forecast	in fact	( + / - )
Production of commodity products	9 818	2 419	2 231	-188
Production of main products	9 676	2 409	2 170	-239
Production of driving chains	9 604	2 398	2 160	-238
incl. automotive	3 586	895	679	-216
industrial	6 019	1 503	1 481	-21
Sales volume	9 960	2 490	3 139	+649
Sales of main products	9 818	2 454	2 423	-31
Profit after taxes	57	14	363	+349

Explanations and analyses on separate items of financial reports

Production of commodity products in the period of 3 months of year 2011 (thous.LVL/thous.EUR)

Output of commodity products is estimated in the amount 1 568 thous.LVL (2 231 thous.EUR). The result of reporting period is by 460 thous.LVL (655 thous.EUR) or 42% higher than in 3 months period of previous year.

Production of driving chains in 3 months of 2011 (thous.meters)

Production of driving chains in natural units is by 200 thous.meters less than the forecast.

Production of driving chains in 3 months of year 2011 (thous.LVL/thous.EUR) Production of driving chains in money terms is by 167 thous.LVL (238 thous.EUR) less than the forecast. The actual performance of reporting period is by 424 thous.LVL (603 thous.EUR) more than in the relevant period of previous year.

Sales (net-turnover) in 3 months of 2011 (thous. LVL/thous.EUR)

Net-turnover has been forecasted to amount to 1 750 thous.LVL (2 490 thous.EUR) in 3 months of year 2011, in fact it has been fulfilled in the amount of 2 206 thous.LVL (3 139 thous.EUR), increase amounts to 456 thous.LVL (649 thous.EUR). The actual performance of the reporting period is by 812 thous. LVL (1 155 thous.EUR) or 58% more than the index of the same period of previous year.

Sales of main products in 3 months of 2011 (thous. LVL/ thous.EUR) Sales of main products in the reporting period was by 22 thous.LVL (31 thous.EUR) less than the forecast, and it is by 489 thous.LVL (696 thous.EUR) or 40 % more than the result of the relevant period of prior year.