INVL Technology

Annual Report • Mar 10, 2015

AB INVALDA

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION PRESENTED TOGETHER WITH INDEPENDENT AUDITORS' REPORT

	INDEPENDENT AUDITORS' REPORT 3
	GENERAL INFORMATION 5
	CONSOLIDATED AND COMPANY'S INCOME STATEMENTS 6
	CONSOLIDATED AND COMPANY'S STATEMENTS OF COMPREHENSIVE INCOME 7
	CONSOLIDATED AND COMPANY'S STATEMENTS OF FINANCIAL POSITION 8
	CONSOLIDATED AND COMPANY'S STATEMENTS OF CHANGES IN EQUITY 10
	CONSOLIDATED AND COMPANY'S STATEMENTS OF CASH FLOWS 13
	NOTES TO THE FINANCIAL STATEMENTS 15
1	GENERAL INFORMATION 15
2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 20
3	BUSINESS COMBINATIONS AND ACQUISITION OF NON-CONTROLLING INTERESTS, INVESTMENTS INTO ASSOCIATES
	AND JOINT VENTURES, DISPOSALS 42
4	SEGMENT INFORMATION 50
5	OTHER INCOME AND EXPENSES 54
	5.1. Net changes in fair value on financial instruments 54
	5.2. Impairment, write-down and provisions 54
	5.3. Other income 55
	5.4. Finance costs 55
6	INCOME TAX 55
7	DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS CLASSIFIED AS HELD-FOR-SALE 59
8	EARNINGS PER SHARE 62
9	DIVIDENDS PER SHARE 63
10	PROPERTY, PLANT AND EQUIPMENT 64
11 12	INVESTMENT PROPERTIES 66 INTANGIBLE ASSETS 67
13	FINANCIAL INSTRUMENTS BY CATEGORY 69
14	FINANCIAL ASSETS AVAILABLE-FOR-SALE AND AT FAIR VALUE THROUGH PROFIT AND LOSS 71
15	LOANS GRANTED 72
16	INVENTORIES 73
17	TRADE AND OTHER RECEIVABLES 74
18	CASH AND CASH EQUIVALENTS, TERM DEPOSITS 75
19	RESTRICTED CASH 76
20	SHARE CAPITAL AND SHARE PREMIUM 77
21	RESERVES 78
22	BORROWINGS 79
23	FINANCE LEASE 81
24	TRADE PAYABLES 81
25	PROVISIONS 82
26 27	OTHER LIABILITIES 82 FINANCIAL RISK MANAGEMENT 83
28	COMMITMENTS AND CONTINGENCIES 90
29	RELATED PARTY TRANSACTIONS 92
30	EVENTS AFTER THE REPORTING PERIOD 98

Consolidated and Company's income statements

		Group		Company
	Notes	2012	2011	2012	2011
Continuing operations
Revenue	4	326,324	317,367	-	-
Other income	5.3	4,537	10,110	40,795	24,220
Net gains (losses) on disposal of subsidiaries, associates and joint ventures	3	1,282	-	(1,052)	318,438
Net gains (losses) from fair value adjustments on investment property	11	(8,709)	(14,727)	-	-
Net changes in fair value of financial instruments at fair value through profit loss	5.1.	3,567	(83,876)	836	(37,951)
Changes in inventories of finished goods, work in progress and residential real estate		2,515	(3,806)	-	-
Raw materials and consumables used	4	(184,701)	(184,285)	(22)	(22)
Employee benefits expenses	4	(52,449)	(43,804)	(2,858)	(2,623)
Impairment, write-down and provisions	5.2	866	(18,712)	(13,156)	(30,427)
Premises rent and utilities		(18,826)	(17,472)	(171)	(166)
Depreciation and amortisation	10, 12	(9,715)	(10,261)	(72)	(83)
Repairs and maintenance cost of premises		(10,249)	(10,748)	-	-
Other expenses		(24,051)	(21,500)	(1,212)	(2,898)
Operating profit (loss)		30,391	(81,714)	23,088	268,488
Finance costs
	5.4.	(3,888)	(13,720)	(906)	(9,221)
Share of profit of associates and joint ventures	3	8,665	247	-	-
Profit (loss) before income tax		35,168	(95,187)	22,182	259,267
Income tax credit (expense)	6	(3,184)	13,750	(1,235)	15,603
Profit (loss) for the year from continuing operations		31,984	(81,437)	20,947	274,870
Discontinued operations
Profit after tax for the year from discontinued operations	7	-	297,980	-	-
PROFIT FOR THE YEAR		31,984	216,543	20,947	274,870
Attributable to: Equity holders of the parent
Profit (loss) for the period from continuing		24,655	(88,934)	20,947	274,870
operations Profit for the period from discontinued operations		-	297,980	-	-
Profit for the period attributable to equity holders of the parent		24,655	209,046	20,947	274,870
Non - controlling interest
Profit for the period from continuing operations		7,329	7,497	-	-
Profit for the period from discontinued operations		-	-	-	-
Profit for the period attributable to non – controlling interests		7,329	7,497	-	-
		31,984	216,543	20,947	274,870
Basic earnings per share (in LTL)	8	0.47	4.05	0.40	5.32
Basic earnings (deficit) per share (in LTL) from		0.47	(1.72)	0.40	5.32
continuing operations Diluted earnings per share (in LTL)	8	0.47	3.69	0.40	4.83
Diluted earnings (deficit) per share (in LTL) from continuing operations		0.47	(1.72)	0.40	4.83

Consolidated and Company's statements of comprehensive income

		Group		Company
		2012	2011	2012	2011
Profit (loss) for the year		31,984	216,543	20,947	274,870
Continuing operations
Net gain on cash flow hedges		-	164	-	-
Income tax		-	(25)	-	-
		-	139	-	-
Exchange differences on translation of foreign operations		43	-	-	-
Share of other comprehensive income (loss) of associates	3	(6)	(31)	-	- -
Other comprehensive income for the period from continuing operations		37	108	-	-
Discontinued operations Reclassification adjustment of other comprehensive income (losses) to profit (loss) due to sale of associates Share of other comprehensive income (losses) of associates	3	- -	2,162 (284)	- -	- -
Other comprehensive income for the period from discontinued operations		-	1,878	-	-
Other comprehensive income for the period, net of tax		37	1,986	-	-
Total comprehensive income for the period, net of tax		32,021	218,529	20,947	274.870
Attributable to: Equity holders of the parent Income (loss) for the period from continuing operations		24,683	(88,826)	20,947	274,870
Income for the period from discontinued operations		-	299,858	-	-
Income for the period attributable to equity holders of the parent		24,683	211,032	20,947	274,870
Non - controlling interest
Income for the period from continuing operations		7,338	7,497	-	-
Income for the period from discontinued operations		-	-	-	-
Income for the period attributable to non – controlling interests		7,338	7,497	-	-
		32,021	218,529	20,947	274,870

Consolidated and Company's statements of financial position
-------------------------------------------------------------

		Group		Company
	Notes	As at 31 December 2012	As at 31 December 2011	As at 31 December 2012	As at 31 December 2011
ASSETS
Non-current assets
Property, plant and equipment	10	47,471	38,259	127	184
Investment properties	11	225,587	248,957	-	-
Intangible assets	12	11,390	13,074	13	7
Investments into subsidiaries	1	-	-	98,119	99,607
Investments into associates and joint ventures	1	48,799	39,269	685	724
Investments available-for-sale	14	2,859	2,859	1,817	1,817
Loans granted	15	-	12,041	82,862	4,143
Trade and other receivables long term	17	5,156	-	-	-
Other non-current assets	28	2,848	2,848	-	-
Deferred income tax asset	6	19,624	22,372	17,401	19,941
Total non-current assets		363,734	379,679	201,024	126,423
Current assets
Inventories	16	39,564	25,819	-	-
Trade and other receivables	17	35,833	33,437	273	218
Current loans granted	15	31,730	31,233	104,193	174,648
Prepaid income tax		1,521	973	3	-
Prepayments and deferred charges		3,441	2,587	155	123
Deposits	18	21,418	99,137	41	48,621
Financial assets at fair value through profit loss	14	32,974	47,599	32,974	33,298
Restricted cash	19	3,602	2,915	-	-
Cash and cash equivalents	18	56,092	21,346	33,530	11,888
Total current assets		226,175	265,046	171,169	268,796
Assets of disposal group classified as
held-for-sale	7	-	1,708	-	3,745
TOTAL ASSETS		589,909	646,433	372,193	398,964

(cont'd on the next page)

Consolidated and Company's statements of financial position (cont'd)

		Group		Company
	Notes	As at 31 December 2012	As at 31 December 2011	As at 31 December 2012	As at 31 December 2011
EQUITY AND LIABILITIES Equity
Equity attributable to equity holders of the parent
Share capital	1, 20	51,802	51,660	51,802	51,660
Share premium		60,747	34,205	60,747	34,205
Reserves	21	241,523	20,299	220,967	-
Retained earnings (accumulated deficit)		38,883	280,046	27,045	274,870
		392,955	386,210	360,561	360,735
Non - controlling interest		23,241	29,151	-	-
Total equity		416,196	415,361	360,561	360,735
Liabilities
Non-current liabilities
Non-current borrowings	22	98,737	119,478	-	-
Finance lease liabilities	23	423	391	-	-
Government grants		152	283	-	-
Provisions	25	396	396	-	-
Deferred income tax liability	6	15,116	15,178	-	-
Other non-current liabilities	26	4,831	3,345	-	-
Total non-current liabilities		119,655	139,071	-	-
Current liabilities
Current portion of non-current borrowings	22	6,071	6,254	-	6
Current portion of financial lease liabilities	23	206	257	-	-
Current borrowings	22	549	572	9,125	353
Trade payables	24	28,373	34,485	55	630
Income tax payable		114	379	-	-
Provisions	25	227	300	-	-
Advances received	16	4,272	3,262	-	-
Convertible bonds	20	-	34,059	-	34,059
Other current liabilities	26	14,246	12,433	2,452	3,181
Total current liabilities		54,058	92,001	11,632	38,229
Total liabilities		173,713	231,072	11,632	38,229
TOTAL EQUITY AND LIABILITIES		589,909	646,433	372,193	398,964

⁽the end)

Consolidated and Company's statements of changes in equity

		Eq uit rib ble uit ho lde of the att uta to nt y eq y rs p are
					Re se rve s
Gr ou p	No tes	Sh are ita l ca p	Sh are ium p rem	Fa ir v alu e res erv e	Le al d o the g an r res erv es	Fo rei g n cu rre nc y lat ion tra ns res erv e	Re tai d e ing ne arn s (ac lat ed cu mu de fic it)	Su bto tal	No n - oll ing ntr co int st ere	To tal uit eq y
Ba lan 31 De mb 20 10 at ce as ce er		66 0 51 ,	67 6 44 ,	( 139	) 20 24 1 ,	-	58 69 4 ,	132 175 ,	24 91 9 ,	20 0, 05 1
Ne ain sh flow he dg t g on ca e		-	-	139	-	-	-	139	-	139
Sh of he he nsi inc f ot are r c om pre ve om e o oci ate ass s		-	-	-	-	-	1, 84 7	1, 84 7	-	1, 84 7
Ne rof it fo r th r 2 01 1 t p e y ea	8	-	-	-	-	-	20 9, 04 6	20 9, 04 6	7, 49 7	21 6, 54 3
To tal reh siv e i e f the co mp en nc om or y ea r		-	-	139	-	-	21 0, 89 3	21 03 2 1,	49 7, 7	21 8, 52 9
Va lue of loy rvic em p ee se es		-	-	-	-	-	-	-	77 0	77 0
Div ide nds llin inte f to tro ts o no n-c on g res bsi dia ries su		-	-	-	-	-	-	-	( 4, 35 1)	( 35 1) 4,
Ch s in an ge re se rve s	20 21 ,	-	( 10 47 1) ,	-	58	-	10 41 3 ,	-	-	-
To tal ibu tio by d d ist rib uti ntr s t co ns an on o of the Co ow ne rs mp an y		-	( 10 1) 47 ,	-	58	-	10 3 41 ,	-	( 3, 58 1)	( 3, 58 1)
No llin inte risi bu sin tro t a n-c on g res ng on ess mb ina tio co n	3	-	-	-	-	-	-	-	1, 40 7	40 1, 7
Ac isit ion of th olli inte ntr t qu e n on -co ng res	3	-	-	-	-	-	46	46	( 1, 09 1)	( 04 5) 1,
To tal ion ith of the tra act ns s w ow ne rs Co nis ed di tly in uit mp an y, rec og rec eq y		-	( 10 47 1) ,	-	58	-	10 45 9 ,	46	( 3, 26 5)	( 3, 21 9)
Ba lan at 31 De mb 20 11 ce as ce er		51 66 0 ,	34 20 5 ,	-	20 29 9 ,	-	28 0, 04 6	38 6, 21 0	29 15 1 ,	41 5, 36 1

(cont'd on the next page)

Consolidated and Company's statements of changes in equity (cont'd)

Eq uit rib ble uit ho lde of the att uta to nt y eq y rs p are
					Re se	rve s
Gr ou p	No tes	Sh are ita l ca p	Sh are ium p rem	Ow n sh are s	Le al d o the g an r res erv es	Fo rei g n cu rre nc y lat ion tra ns res erv e	Re tai d ne rni ea ng s (ac lat ed cu mu de fic it)	Su bto tal	No n - oll ing ntr co int st ere	To tal uit eq y
Ba lan 31 De mb 20 11 at ce as ce er		51 66 0 ,	34 20 5 ,	-	20 29 9 ,	-	28 0, 04 6	38 6, 21 0	29 15 1 ,	41 5, 36 1
Cu nsl atio n d iffe tra rre ncy ren ces		-				34		34	9	43
Sh of he he nsi inc e ( los s) of ot are r c om pre ve om oci ate ass s		-	-	-	-		- (	(		( 6)
Ne rof it fo r th t p r 2 01 2 e y ea	8	-	-	-	-	-	6) 24 65 5	6) 24 65	- 7, 32	31 98
To tal reh siv e i e f the co mp en nc om or y ea r		-	- -	- -	- -	- 34	, 24 64 9 ,	5 , 24 68 3 ,	9 7, 33 8	4 , 32 02 1 ,
Sh of of in uity iate nts are m ove me eq as soc s		-					87 1	87 1		87 1
Va lue of loy rvic em p ee se es		-	-	-	-	-			- ( ) 93	( 93 )
Div ide nds llin inte f to tro ts o no n-c on g res bsi dia ries su		-	- -	- -	- -	- -	- -	- -	( 10 82 9) ,	( 10 82 9) ,
Co rsio f c rtib le b ds into sh nve n o on ve on are ital ca p	20	5, 89 8	26 54 2 ,	-	-	-	6, 09 8	38 53 8 ,	-	38 53 8 ,
Ch s in an ge re se rve s	21	-	-	-	27 5, 09 3	-	( 27 5, 09 3)	-	-	-
Ac ired ha qu ow n s res	20	-	-	( 59 65 9) ,	-	-	-	( 59 65 9) ,	-	( 59 65 9) ,
De of sh ital cre ase are ca p	20	( 5, 75 6)	-	59 65 9 ,	( 53 90 3) ,	-	-	-	-	-
To tal ibu tio by d d ist rib uti ntr s t co ns an on o of the Co ow ne rs mp an y		142	26 2 54 ,	-	22 190 1,	-	( 26 8, 124 )	( 20 25 0) ,	( 10 92 2) ,	( 31 172 ) ,
No llin inte risi bu sin tro t a n-c on g res ng on ess mb ina tio co n	3	-	-	-	-	-	-	-	-	-
of Ac isit ion th olli inte ntr t qu e n on -co ng res	3	-	-	-	-	-	2, 31 2	2, 31 2	( 2, 32 6)	( 14)
To tal ion ith of the tra act ns s w ow ne rs Co nis ed di tly in uit mp an y, rec og rec eq y		142	26 54 2 ,	-	22 1, 190	-	( 26 5, 81 2)	( 17 93 8) ,	( 13 24 8) ,	( 31 186 ) ,
Ba lan 31 De mb 20 12 at ce as ce er		51 80 2 ,	60 74 7 ,	-	24 1, 48 9	34	38 88 3 ,	39 2, 95 5	23 24 1 ,	41 6, 196

(cont'd on the next page)

Consolidated and Company's statements of changes in equity (cont'd)

					Reserves
Company	Notes	Share capital	Own shares	Share premium	Legal reserve	Reserve for acquisition of own shares	Retained earnings (accumulated deficit)	Total
Balance as at 31 December 2010		51,660	-	44,676	-	-	(10,471)	85,865
Changes in reserves Total comprehensive income for the	20	-	-	(10,471)	-	-	10,471	-
year		-	-	-	-	-	274,870	274,870
Balance as at 31 December 2011		51,660	-	34,205	-	-	274,870	360,735
Conversion of convertible bonds into share capital	20	5,898	-	26,542		-	6,098	38,538
Acquired own shares	20	-	(59,659)	-	-	-	-	(59,659)
Decrease of share capital	20	(5,756)	59,659	-	-	(53,903)	-	-
Changes in reserves Total comprehensive income for the	21	-	-	-	5,756	269,114	(274,870)	-
year		-	-	-	-	-	20,947	20,947
Balance as at 31 December 2012		51,802	-	60,747	5,756	215,211	27,045	360,561

(the end)

Consolidated and Company's statements of cash flows

		Group		Company
		2012	2011	2012	2011
Cash flows from (to) operating activities
Profit (loss) after tax from continuing operations		31,984	(81,437)	20,947	274,870
Profit after tax from discontinued operations		-	297,980	-	-
Net profit for the year		31,984	216,543	20,947	274,870
Adjustment to reconcile result before tax to net cash flows:
Non-cash:
Valuation (gain) loss, net	11	8,709	14,727	-	-
Depreciation and amortisation	10, 12	9,715	10,261	72	83
Loss (gain) on disposal of property, plant and equipment		(159)	(4)	-	-
Realized and unrealized loss (gain) on investments	5.1	(3,567)	83,876	(836)	37,951
Loss (gain) on disposal of subsidiaries and associates	3, 7	(1,282)	(296,363)	1,052	(318,438)
Share of net loss (profit) of associates and joint ventures	3	(8,665)	(1,865)	-	-
Interest income	5.3	(3,656)	(6,749)	(12,025)	(12,883)
Interest expenses	5.4	3,716	12,375	906	8,216
Deferred taxes	6	1,597	(15,906)	1,235	(15,773)
Current income tax expenses	6	1,587	2,156	-	170
Allowances	5.2	(793)	18,841	13,156	30,677
Change in provisions	25	(73)	(129)	-	(250)
Share based payment	21	(93)	770	-	-
Dividend income	5.3	(18)	-	(28,758)	(11,314)
Profit (loss) from bargain purchase	3	-	(1,484)	-	-
Loss (gain) from other financial activities		140	(123)	140	1,224
		39,142	36,926	(4,111)	(5,467)
Working capital adjustments:
Decrease (increase) in inventories		(1,613)	3,333	-	-
Decrease (increase) in trade and other receivables		(2,824)	(5,949)	172	967
Decrease (increase) in other current assets		(804)	712	(32)	(97)
Increase (decrease) in trade payables		(6,104)	3,254	(563)	(683)
Increase (decrease) in other current liabilities		3,437	778	(553)	802
Cash flows from (to) operating activities		31,234	39,054	(5,087)	(4,478)
Income tax paid		(554)	(1)	-	(1)
Net cash flows from (to) operating activities		30,680	39,053	(5,087)	(4,479)

(cont'd on the next page)

Consolidated and Company's statements of cash flows (cont'd)

		Group		Company
		2012	2011	2012	2011
Cash flows from (to) investing activities
Acquisition of non-current assets (except investment
properties)		(17,506)	(8,122)	(21)	(24)
Proceeds from sale of non-current assets (except for investment properties)		383	183	-	-
Acquisition of investment properties	11	(3,427)	(6,902)	-	-
Proceeds from sale of investment properties	11	6,129	990	-	-
Acquisition and establishment of subsidiaries, net of cash
acquired	3	-	(7,557)	-	(109)
Proceeds from sales of subsidiaries, net of cash disposed	3	-	-	-	-
Acquisition of associates and joint ventures	3	-	(1,489)	-	(6)
Proceeds from sales of associates and joint ventures	7	3,797	369,282	3,797	369,282
Expenses related to sell of associates	7	-	(20,510)	-	(20,510)
Loans granted		(30,825)	(80,399)	(65,081)	(169,677)
Repayment of granted loans		41,711	13,673	58,684	46,310
Transfer to/from term deposits		77,171	(118,505)	48,339	(68,339)
Dividends received	5.3	15	-	28,756	-
Interest received		4,928	5,815	3,329	4,547
Sale of financial assets designated at fair value through
profit and loss on initial recognition	14	6,503	-	6,503	-
(Acquisition) of held-for-trading financial assets	14	(25,361)	(28,095)	(28,234)	(17,536)
Sale of held-for-trading financial assets	14	30,413	55,182	26,989	53,932
(Acquisition) of available-for-sale financial assets	14	-	(1,042)	-	-
Net cash flows from (to) investing activities		93,931	172,504	83,061	197,870
Cash flows from (to) financing activities
Cash flows related to company shareholders:
Dividends paid to equity holders of the parent		(99)	(59)	(99)	(59)
Payments from bondholders upon conversion of bonds
into share capital	20	4,788	-	4,788	-
(Acquisition) of own shares		(59,659)	-	(59,659)	-
(Acquisition) of non – controlling interest	3	(14)	(1,045)	(155)	(173)
Dividends paid to non – controlling interest		(9,817)	(3,884)	-	-
		(64,801)	(4,988)	(55,125)	(232)
Cash flows related to other sources of financing:
Proceeds from loans		4,060	12,582	150	18,403
Repayment of loans		(25,009)	(187,119)	(1,217)	(185,801)
Interest paid		(2,929)	(17,178)	-	(13,856)
Finance lease payments		(388)	(342)	-	-
Transfer to/from restricted cash
		(681)	2,361	-	-
		(24,947)	(189,696)	(1,067)	(181,254)
Net cash flows to financial activities		(89,748)	(194,684)	(56,192)	(181,486)
Impact of currency exchange on cash and cash
equivalents		(117)	(219)	(140)	(219)
Net increase (decrease) in cash and cash equivalents		34,746	16,654	21,642	11,686
Cash and cash equivalents at the beginning of the year
	18	21,346	4,692	11,888	202
Cash and cash equivalents at the end of the year	18	56,092	21,346	33,530	11,888

Notes to the financial statements

1 General information

AB Invalda (hereinafter the Company) is a public limited liability company registered in the Republic of Lithuania on 20 March 1992. The address of its registered office is:

Šeimyniškių str. 1A, Vilnius, Lithuania.

The Company is incorporated and domiciled in Lithuania. AB Invalda is one of the major Lithuanian investment companies with primary objective to steadily increase the investor equity value. For the purpose of achieving this objective the Company actively manages its investments, exercising control or significant influence over target businesses. The Company gives the priority to furniture manufacturing, real estate, facilities management, agriculture and IT infrastructure segments.

In respect of each business the Company defines its performance objectives, sets up the management team, participates in the development of the business strategy and monitors its implementation. The Company plays an active role in making the decisions on strategic and other important issues that have an effect on the value of the Group companies.

The Company's shares are traded on the Baltic Main List of NASDAQ OMX Vilnius.

As at 31 December 2012 and 2011 the shareholders of the Company were (by votes)*:

		2012		2011
	Number of		Number of
	votes held	Percentage	votes held	Percentage
Mrs. Irena Ona Mišeikiene	12,434,159	24.00%	13,185,706	25.52%
Mr. Vytautas Bučas	8,198,367	15.83%	9,585,803	18.56%
Mr. Algirdas Bučas	4,234,709	8.18%	3,424,119	6.63%
Mr. Darius Šulnis	3,984,762	7.69%	4,071,762	7.88%
UAB Lucrum Investicija	3,836,621	7.41%	5,363,865	10.38%
UAB RB finansai	3,279,972	6.33%	-	-
Mr. Alvydas Banys	2,029,624	3.92%	2,029,624	3.93%
Mrs. Daiva Banienė	1,836,234	3.54%	1,836,234	3.55%
Other minor shareholders	11,967,698	23.10%	12,162,645	23.55%
Total	51,802,146	100.00%	51,659,758	100.00%

* Some shareholders have sold part of their shares under repo agreement (so do not hold the legal ownership title of shares), but they retained the voting rights of transferred shares.

All the shares of the Company are ordinary shares with the par value of LTL 1 each and were fully paid as at 31 December 2012 and 2011. Subsidiaries, joint ventures and associates did not hold any shares of the Company as at 31 December 2012 and 2011.

As at 31 December 2012 the number of employees of the Group was 1,051 (as at 31 December 2011 – 994). As at 31 December 2012 the number of employees of the Company was 15 (as at 31 December 2011 – 13).

The financial statements were approved and signed by the Management and the Board of Directors on 9 April 2013.

According to the Law on Companies of Republic of Lithuania, the annual financial statements prepared by the Management are authorised by the General Shareholders' meeting. The shareholders hold the power not to approve the annual financial statements and the right to request new financial statements to be prepared.

The Group consists of the Company and the following directly and indirectly owned subsidiaries (hereinafter the Group):

		As at 31 December 2012 As at 31 December 2011
			Size of		Size of
		Share of the	investment	Share of the	investment
	Registration	stock held by	(acquisition	stock held by	(acquisition
Company Furniture production	country	the Group (%)	cost)	the Group (%)	cost)	Main activities
segment:
AB Vilniaus Baldai	Lithuania	72.14	13,900	72.14	13,900	Furniture manufacturing
UAB Ari-Lux**	Lithuania	72.14	17	72.14	17	Fitting packing
Real estate segment:
AB Invaldos Nekilnojamojo Turto Fondas	Lithuania	100.00	116,908	100.00	116,908	Real estate investor
UAB Naujoji Švara	Lithuania	100.00	26,528	100.00	13,828	Real estate investor
UAB INTF Investicija**	Lithuania	100.00	4,282	100.00	4,282	Real estate investor
UAB Sago	Lithuania	100.00	6,972	100.00	6,972	Real estate investor
UAB Ineturas	Lithuania	100.00	10,200	100.00	8,500	Real estate investor
UAB Elniakampio Namai	Lithuania	100.00	725	100.00	725	Real estate investor
UAB IBC Logistika	Lithuania	100.00	15,000	100.00	12,500	Real estate investor
UAB Saistas	Lithuania	100.00	3,648	100.00	2,898	Real estate investor
UAB Dizaino Institutas	Lithuania	100.00	2,677	100.00	2,677	Real estate investor
UAB Riešės Investicija	Lithuania	100.00	6,500	100.00	6,500	Real estate investor
UAB Minijos Valda	Lithuania	100.00	1,050	100.00	600	Real estate investor
UAB Rovelija	Lithuania	100.00	600	100.00	200	Real estate investor
UAB BNN	Lithuania	100.00	3,090	100.00	3,090	Real estate investor
UAB Justiniškių valda, *	Lithuania	100.00	960	-	-	Real estate investor
UAB Justiniškių , Aikštelė *	Lithuania	100.00	405	-	-	Real estate investor
UAB Trakų Kelias	Lithuania	100.00	512	100.00	512	Real estate investor
UAB Perspektyvi Veikla**	Lithuania	100.00	180	100.00	180	Real estate investor
UAB Kopų Vėtrungės, *	Lithuania	100.00	4,000	-	-	Real estate investor
UAB Danės Gildija, *	Lithuania	100.00	7,980	-	-	Real estate investor
UAB Aikstentis	Lithuania	100.00	108	76.00	108	Dormant
UAB Wembley	Lithuania	-	-	64.24	400	Dormant
Neringa, ** UAB Ekotra	Lithuania	100.00	1,750	100.00	1,750	Agricultural land investor
UAB Šimtamargis	Lithuania	100.00	300	100.00	300	Agricultural land investor
UAB Žemvesta	Lithuania	100.00	950	100.00	800	Agricultural land investor
	Lithuania	100.00	700	100.00	700	Agricultural land investor
UAB Agrobitė UAB Puškaitis	Lithuania	100.00	340	100.00	-	Agricultural land investor
	Lithuania	100.00	900	100.00	900	Agricultural land investor
UAB Žemynėlė**
UAB Žemėpatis**	Lithuania	100.00	610	100.00	610	Agricultural land investor
UAB IŽB 1* UAB Lauksėja,	Lithuania	100.00	930	100.00	430	Agricultural land investor
**	Lithuania	100.00	300	-	-	Agricultural land investor
UAB Inreal	Lithuania	100.00	3,801	100.00	3,801	Intermediation in operation with real
UAB Inreal Valdymas	Lithuania	100.00	10,049	100.00	10,049	estate, property valuation Real estate management and administration
UAB Inreal Geo	Lithuania	100.00	10	100.00	10	Geodesy, cadastral measurements and

		31 December 2012		31 December 2011
	Registration	Share of the stock held by	Size of investment (acquisition	Share of the stock held by	Size of investment (acquisition
Company	country	the Group (%)	cost)	the Group (%)	cost)	Main activities
Facilities management segment:
UAB Inreal Pastatų Priežiūra	Lithuania	100.00	500	100.00	500	Facilities management
UAB IPP Integracijos Projektai**	Lithuania	100.00	10	-	-	Facilities management
UAB Cmanagement	Lithuania	100.00	367	100.00	367	Maintenance services
UAB Priemiestis**	Lithuania	100.00	2,157	100.00	2,157	Facilities
UAB Jurita**	Lithuania	100.00	1,154	100.00	2,519	management Facilities
UAB Naujosios Vilnios Turgavietė**	Lithuania	100.00	94	100.00	94	management Market place management
Information technology segment:
UAB BAIP Grupė	Lithuania	80.00	4,003	80.00	4,003	Information
UAB Informatikos Pasaulis**	Lithuania	80.00	939	80.00	699	technology solutions Information technology solutions
UAB Vitma**	Lithuania	80.00	8,357	80.00	7,607	Information
UAB BAIP**	Lithuania	80.00	3,942	80.00	3,942	technology solutions Information technology solutions
UAB Acena**	Lithuania	80.00	137	80.00	137	Information
Norway Registers Development AS**	Norway	80.00	4,298	80.00	4,298	technology solutions Information technology solutions
UAB NRD**	Lithuania	56.95	859	56.58	846	Information technology solutions
Other production and
services segment: UAB Kelio Ženklai	Lithuania	100.00	6,554	100.00	6,554	Road signs production, wood
UAB Lauko Gėlininkystės Bandymų Stotis**	Lithuania	100.00	1,411	100.00	1,411	manufacturing Cultivation and trade of ornamental plants,
VšĮ Iniciatyvos Fondas	Lithuania	100.00	10	100.00	10	flowers Social initiatives activities
UAB Finansų Rizikos Valdymas	Lithuania	100.00	3,357	100.00	3,357	Investment activities
UAB Fortina***	Lithuania	100.00	4,350	100.00	4,350	Investment activities
UAB Ente	Lithuania	100.00	320	100.00	320	Investment activities
UAB Aktyvo	Lithuania	100.00	940	100.00	940	Management of bad debt
UAB Investicijų Tinklas	Lithuania	100.00	1,850	100.00	1,850	Investment activities
UAB Aktyvus Valdymas	Lithuania	100.00	1,500	100.00	1,500	Investment activities
UAB Inreal Pastatų Priežiūros Grupė	Lithuania	100.00	1,350	100.00	1,350	Investment activities
UAB Cedus Invest	Lithuania	100.00	10,000	100.00	10,000	Investment activities
AB Invetex**	Lithuania	83.90	5,624	83.90	5,624	Investment activities (cont'd in the next page)

		31 December 2012		31 December 2011
			Size of		Size of
		Share of the	investment	Share of the	investment
	Registration	stock held by	(acquisition	stock held by	(acquisition
Company Other production and	country	the Group (%)	cost)	the Group (%)	cost)	Main activities
services segment
(cont'd):
UAB MGK Invest	Lithuania	100.00	10	100.00	10	Dormant
UAB MBGK**	Lithuania	100.00	4,720	100.00	4,720	Dormant
UAB RPNG	Lithuania	100.00	10	100.00	10	Dormant
UAB Regenus	Lithuania	100.00	10	100.00	10	Dormant
UAB Consult Invalda	Lithuania	100.00	10	100.00	10	Dormant
UAB Cedus	Lithuania	100.00	10	100.00	10	Dormant
UAB Via Solutions	Lithuania	100.00	10	100.00	10	Dormant
Invalda Lux S.A.R.L	Luxembourg	100.00	224	100.00	69	Dormant
			315,969		283,431
Less indirect ownership			(58,556)		(44,824)
Less impairment			(159,294)		(139,000)
Investments into
subsidiaries (Company)			98,119		99,607

(the end)

*These companies were newly established in 2012.

**These companies are owned indirectly by the Company as at 31 December 2012 and 2011.

***The Company has invested LTL 1,100 thousand directly and LTL 3,250 thousand indirectly.

****The entity was liquidated in 2012.

As of 31 December 2012 and 2011 investments into real estate segment subsidiaries were impaired by LTL 150,743 thousand and LTL 130,625 thousand, into other segments' companies by LTL 8,551 thousand and LTL 8,375 thousand, respectively.

The subsidiaries UAB Dizaino Institutas, UAB Invaldos Nekilnojamojo Turto Fondas, UAB Sago, UAB INTF Investicija have no right to repay loans granted by the Group without bank consent according to borrowings agreements. UAB Dizaino Institutas and UAB BAIP have no right to pay dividends without bank consent. UAB Sago and UAB INTF Investicija are allowed to distribute up to 50 % of net profit as dividends without bank consent. UAB Invaldos Nekilnojamojo Turto Fondas is allowed to pay dividends only if covenants would be met after repayment.

Associates of the Group as at 31 December 2012 were as follows (amounts stated relate to 100 % of these entities):

Company	Share of the stock held by the Group (%)	Size of investment (acquisition cost)	Profit (loss) for the reporting Year	Assets	Share holders' equity	Liabilities Revenue		Main activities
UAB Litagra*	36.88	38,575	19,341	344,648	145,591	199,057	429,221	Agriculture
UAB ŽVF Projektai	21.46	2 38,577	127	126	-	126	-	Investment property
Less indirect ownership		(38,575)
Less impairment Investment into associates (Company)		(2) -

Associates of the Group as at 31 December 2011 were as follows (amounts stated relate to 100 % of these entities):

Company	Share of the stock held by the Group (%)	Size of investment (acquisition cost)	Profit (loss) for the reporting Year	Assets	Share holders' equity	Liabilities Revenue		Main activities
								Production and
AB Umega	29.27	4,042	(1,303)	45,892	5,630	40,262	69,075	services
UAB Litagra*	36.88	38,575	494	291,288	125,116	166,172	318,076	Agriculture Investment
UAB ŽVF Projektai	21.46	2	(77)	444	(127)	571	3	property
		42,619
Less indirect ownership		(38,575)
Less impairment Less assets held for		(297)
sale		(3,745)
Investment into associates
(Company)		2

*The associate is owned indirectly by the Company as at 31 December 2012 and 2011.

The Group has a 50 % interest in the jointly controlling entity UAB Dommo Nerija as at 31 December 2012 and 2011 (owned directly by the Company).

The Company's interest in joint ventures as at 31 December 2012 and 2011 amounted to LTL 685 thousand (after impairment of LTL 365 thousand) and LTL 722 thousand (after impairment of LTL 328 thousand), respectively.

The share of the assets, liabilities, income and expenses of the jointly controlled entity as at 31 December 2012 and 2011 and for the years then ended are as follows (amounts stated relate to 100 % of the entity):

	2012	2011
Current assets	60	95
Non-current assets	7,270	6,947
Total assets	7,330	7,042
Current liabilities	5,947	5,571
Non-current liabilities	14	27
Total liabilities	5,961	5,598
Revenue	452	1,782
Expenses	(540)	(860)
Profit (loss) before income tax	(88)	922
Income tax	13	(27)
Net profit (loss)	(75)	895

The principal accounting policies adopted in preparing the Group's and the Company's financial statements for the year ended 31 December 2012 are as follows:

2.1. Basis of preparation

Statement of compliance

The financial statements of the Company and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (hereinafter the EU).

These financial statements have been prepared on a historical cost basis, except for investment properties, financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss and available-for-sale investments that have been measured at fair value. The financial statements are presented in thousands of Litas (LTL) and all values are rounded to the nearest thousand except when otherwise indicated.

Adoption of new and/or changed IFRSs and IFRIC interpretations

The Group has adopted the new and amended IFRS and IFRIC interpretations as of 1 January 2012:

– IFRS 7 Disclosures - Transfers of Financial Assets effective 1 July 2011

The principal effects of these changes are as follows:

IFRS 7 Disclosures - Transfers of Financial Assets

The amendment requires additional disclosures in respect of risk exposures arising from transferred financial assets. The amendment includes a requirement to disclose by class of asset the nature, carrying amount and a description of the risks and rewards of financial assets that have been transferred to another party yet remain on the entity's statement of financial position. Disclosures are also required to enable a user to understand the amount of any associated liabilities, and the relationship between the financial assets and associated liabilities. Where financial assets have been derecognised but the entity is still exposed to certain risks and rewards associated with the transferred asset, additional disclosure is required to enable the effects of those risks to be understood. The amendment has no impact on the Group's financial statements for the year ended 31 December 2012.

Standards adopted by the EU but not yet effective

Amendments to IAS 1 Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after 1 July 2012),

The amendments change the disclosure of items presented in other comprehensive income. It require entities to separate items presented in other comprehensive income into two groups, based on whether or not they may be reclassified to profit or loss in the future. The suggested title used by IAS 1 has changed to 'statement of profit or loss and other comprehensive income'. The Group expects the amended standard to change presentation of its financial statements, but have no impact on the Group's financial position or performance.

IAS 19 Employee Benefits (Amendment) (effective for annual periods beginning on or after 1 January 2013)

The amendment makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. The standard requires recognition of all changes in the net defined benefit liability (asset) when they occur, as follows: (i) service cost and net interest in profit or loss; and (ii) remeasurements in other comprehensive income. The Group has to recognise all actuarial gains and losses in other comprehensive income, not in the profit or loss as currently, and to present service cost and net interest in separate line in the income statement. The Group is currently assessing the full impact of the remaining amendments.

Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets (effective for annual periods beginning on or after 1 January 2013)

The amendment introduced a rebuttable presumption that an investment property carried at fair value is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. SIC-21, Income Taxes – Recovery of Revalued Non-Depreciable Assets, which addresses similar issues involving nondepreciable assets measured using the revaluation model in IAS 16, Property, Plant and Equipment, was incorporated into IAS 12 after excluding from its scope investment properties measured at fair value. The amendment would have no impact on the Group's financial position or performance.

2.1 Basis of preparation (cont'd)

Standards adopted by the EU but not yet effective (cont'd)

IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

IFRS 10 replaces all of the guidance on control and consolidation in IAS 27 Consolidated and separate financial statements and SIC-12 Consolidation - special purpose entities. IFRS 10 changes the definition of control so that the same criteria are applied to all entities to determine control. This definition is supported by extensive application guidance. The Group is currently assessing the impact of the new standard on its financial statements.

IFRS 11 Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities—Non-Monetary Contributions by Ventures. Changes in the definitions have reduced the number of types of joint arrangements to two: joint operations and joint ventures. The existing policy choice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting is mandatory for participants in joint ventures. The Group has used equity accounting for the interests in joint ventures already. The Group is currently assessing the full impact of the other changes regarding of the new standard on its financial statements.

IFRS 12 Disclosure of Interest in Other Entities (effective for annual periods beginning on or after 1 January 2014)

IFRS 12 applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity. IFRS 12 sets out the required disclosures for entities reporting under the two new standards: IFRS 10, Consolidated financial statements, and IFRS 11, Joint arrangements, and replaces the disclosure requirements currently found in IAS 28, Investments in associates. IFRS 12 requires entities to disclose information that helps financial statement readers to evaluate the nature, risks and financial effects associated with the entity's interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. To meet these objectives, the new standard requires disclosures in a number of areas, including significant judgments and assumptions made in determining whether an entity controls, jointly controls, or significantly influences its interests in other entities, extended disclosures on share of non-controlling interests in group activities and cash flows, summarised financial information of subsidiaries with material non-controlling interests, and detailed disclosures of interests in unconsolidated structured entities. The Group is currently assessing the impact of the new standard on its financial statements.

IFRS 13 Fair value measurement (effective for annual periods beginning on or after 1 January 2013)

IFRS 13 aims to improve consistency and reduce complexity by providing a revised definition of fair value, and a single source of fair value measurement and disclosure requirements for use across IFRSs. The Group is currently assessing the impact of the standard on its financial statements.

IAS 27 Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014)

IAS 27 was changed and its objective is now to prescribe the accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The guidance on control and consolidated financial statements was replaced by IFRS 10 Consolidated Financial Statements. The Group is currently assessing the impact of the amended standard on its financial statements.

IAS 28 Investments in Associates and Joint Ventures (effective for annual periods beginning on or after 1 January 2014)

The amendment of IAS 28 resulted from the Board's project on joint ventures. When discussing that project, the Board decided to incorporate the accounting for joint ventures using the equity method into IAS 28 because this method is applicable to both joint ventures and associates. With this exception, other guidance remained unchanged. The Group is currently assessing the impact of the amended standard on its financial statements.

Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014)

The amendment added application guidance to IAS 32 to address inconsistencies identified in applying some of the offsetting criteria. This includes clarifying the meaning of 'currently has a legally enforceable right of set-off' and that some gross settlement systems may be considered equivalent to net settlement. The Group is currently assessing the impact of the amended standard on its financial statements.

Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013).

The amendment requires disclosures that will enable users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off. The amendment will have an impact on disclosures but will have no effect on measurement and recognition of financial instruments.

2.1 Basis of preparation (cont'd)

Standards adopted by the EU but not yet effective (cont'd)

Improvements to IFRS (issued in May 2012 and effective for annual periods beginning on or after 1 January 2013).

The improvements consist of changes to five standards.

• − IFRS 1 First–time adoption of International Financial Reporting Standards was amended to (i) clarify that an entity that resumes preparing its IFRS financial statements may either repeatedly apply IFRS 1 or apply all IFRSs retrospectively as if it had never stopped applying them, and (ii) to add an exemption from applying IAS 23, Borrowing costs, retrospectively by first-time adopters.
• − IAS 1 Presentation of Financial Statements was amended to clarify that explanatory notes are not required to support the third balance sheet presented at the beginning of the preceding period when it is provided because it was materially impacted by a retrospective restatement, changes in accounting policies or reclassifications for presentation purposes, while explanatory notes will be required when an entity voluntarily decides to provide additional comparative statements.
• − IAS 16 Property, Plant and Equipment was amended to clarify that servicing equipment that is used for more than one period is classified as property, plant and equipment rather than inventory.
• − IAS 32 Financial Instruments: Presentation was amended to clarify that certain tax consequences of distributions to owners should be accounted for in the income statement as was always required by IAS 12.
• − IAS 34 Interim Financial Reporting was amended to bring its requirements in line with IFRS 8. IAS 34 will require disclosure of a measure of total assets and liabilities for an operating segment only if such information is regularly provided to chief operating decision maker and there has been a material change in those measures since the last annual financial statements.

The Group is currently assessing the impact of the Improvements on its financial statements.

Transition Guidance Amendments to IFRS 10, IFRS 11 and IFRS 12 (effective for annual periods beginning on or after 1 January 2014).

The amendments clarify the transition guidance in IFRS 10 Consolidated Financial Statements. Entities adopting IFRS 10 should assess control at the first day of the annual period in which IFRS 10 is adopted, and if the consolidation conclusion under IFRS 10 differs from IAS 27 and SIC 12, the immediately preceding comparative period (that is, year 2013 for a calendar year-end entity that adopts IFRS 10 in 2014) is restated, unless impracticable. The amendments also provide additional transition relief in IFRS 10, IFRS 11, Joint Arrangements, and IFRS 12, Disclosure of Interests in Other Entities, by limiting the requirement to provide adjusted comparative information only for the immediately preceding comparative period. Further, the amendments will remove the requirement to present comparative information for disclosures related to unconsolidated structured entities for periods before IFRS 12 is first applied. The Group is currently assessing the impact of the amendments on its financial statements.

The following amendments of the standards and interpretations are not relevant for the Group:

– Amendments to IFRS 1 Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (effective for annual periods beginning on or after 1 July 2013)

– IFRIC 20 Striping Costs in the Production Phase of a Surface Mine (effective for annual periods beginning on or after 1 January 2013)

– Amendments to IFRS 1 Government Loans (effective for annual periods beginning on or after 1 January 2013)

Standards not yet adopted by the EU

IFRS 9 Financial Instruments Part 1: Classification and Measurement (effective for financial years beginning on or after 1 January 2015 once adopted by the EU)

IFRS 9 issued in November 2009 replaces those parts of IAS 39 relating to the classification and measurement of financial assets. IFRS 9 was further amended in October 2010 to address the classification and measurement of financial liabilities and in December 2011 to (i) change its effective date to annual periods beginning on or after 1 January 2015 and (ii) add transition disclosures. Key features are as follows:

• − Financial assets are required to be classified into two measurement categories: those to be measured subsequently at fair value, and those to be measured subsequently at amortised cost. The decision is to be made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.
• − An instrument is subsequently measured at amortised cost only if it is a debt instrument and both (i) the objective of the entity's business model is to hold the asset to collect the contractual cash flows, and (ii) the asset's contractual cash flows represent only payments of principal and interest (that is, it has only "basic loan features"). All other debt instruments are to be measured at fair value through profit or loss.

2.1 Basis of preparation (cont'd)

Standards not yet adopted by the EU (cont'd)

IFRS 9 Financial Instruments Part 1: Classification and Measurement (cont'd)

• − All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognise unrealised and realised fair value gains and losses through other comprehensive income rather than profit or loss. There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss, as long as they represent a return on investment.
• − Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The key change is that an entity will be required to present the effects of changes in own credit risk of financial liabilities designated as at fair value through profit or loss in other comprehensive income.

In subsequent phases, the IASB will address classification and measurement of hedge accounting and impairment of financial assets. The Group is considering the implications of the standard, the impact on the Group and the timing of its adoption by the Group. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment entities (effective for annual periods beginning on or after 1 January 2014 once adopted by the EU).

The amendment introduced a definition of an investment entity as an entity that (i) obtains funds from investors for the purpose of providing them with investment management services, (ii) commits to its investors that its business purpose is to invest funds solely for capital appreciation or investment income and (iii) measures and evaluates its investments on a fair value basis. An investment entity will be required to account for its subsidiaries at fair value through profit or loss, and to consolidate only those subsidiaries that provide services that are related to the entity's investment activities. IFRS 12 was amended to introduce new disclosures, including any significant judgements made in determining whether an entity is an investment entity and information about financial or other support to an unconsolidated subsidiary, whether intended or already provided to the subsidiary. The Group is currently assessing the impact of the amendments on its financial statements, analyzing whether it could apply investment entity definition itself.

2.2. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All intra-group balances, transactions, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions that are recognised in assets, are eliminated in full.

Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent and is presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from parent shareholders' equity. The group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Total comprehensive income (losses) within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance from 1 January 2010. Losses absorbed by the parent company prior to 1 January 2010 were not reallocated between non-controlling interests and the parent shareholders.

When the group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss or retained earnings, as appropriate.

2.3. Functional and presentation currency

The consolidated financial statements are prepared in local currency of the Republic of Lithuania, Litas (LTL), and presented in LTL thousand. Litas is the Company's functional and the Group's and the Company's presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency year-end exchange rate. All differences are taken to profit or loss. Non monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

At the end of each reporting period the assets and liabilities of the foreign subsidiaries are translated into the presentation currency of the Group (LTL) at the year-end exchange rate and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income and accumulated in reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement as part of the gain or loss on sale.

Starting from 2 February 2002 Lithuanian Litas is pegged to euro at the rate of 3.4528 Litas for 1 euro. The exchange rates in relation to other currencies are set daily by the Bank of Lithuania.

As these financial statements are presented in LTL thousand, individual amounts were rounded. Due to the rounding, totals in the tables may not add up.

2.4. Property, plant and equipment

Property, plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment losses. Such cost includes the cost of replacing part of the plant and equipment when the cost is incurred, if the recognition criteria are met. Replaced parts are written off.

The carrying values of property, plant and equipment are reviewed for impairment when events or change in circumstances indicate that the carrying value may not be recoverable.

Depreciation is calculated using the straight-line method over the following estimated useful lives.

Buildings	10–66 years
Machinery and equipment	4–10 years
Vehicles	4–10 years
Other non-current assets	2–8 years

The asset residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end to ensure that they are consistent with the expected pattern of economic benefits from items in property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement within "other income" in the year the asset is derecognised.

Construction in progress represents plant and properties under construction and is stated at cost. This includes the cost of construction, plant and equipment and other direct costs. Construction in progress is not depreciated until the relevant assets are completed and are available for its intended use.

2.5. Investment properties

Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the companies in the consolidated Group, are classified as investment properties. Investment properties also include properties that are being constructed or developed for future use as investment properties.

Land held under operating leases is classified and accounted for by the Group as investment property when the rest of the definition of investment property is met. Land is not presented separately from the buildings as these assets cannot be acquired or sold separately.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are carried at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement within "Net gains (losses) from fair value adjustments on investment property" in the year of retirement or disposal.

Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation, commencement of an operating lease to another party. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with view to sale.

For a transfer from investment property to owner occupied property or inventories, the deemed cost of property for subsequent accounting is its fair value at the date of change in use. If the property occupied by the Group as an owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy adopted for property, plant and equipment up to the date of change in use. For a transfer from inventories to investment property, any differences between fair value of the property at that date and its previous carrying amount are recognised in the income statement.

2.6. Intangible assets other than goodwill

Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets other than goodwill are assessed to be finite. Intangible assets are amortised using the straight-line method over the best estimate of their useful lives.

Contracts and customer relationship

Contracts include information technology solution service contracts acquired during information technology solutions entities acquisition and the dwelling-houses facilities management and the market management contracts acquired during dwellinghouses facilities management's entity acquisition. Customer relationship was acquired during information technology solutions entities acquisition.

Contracts and customer relationship assured on the acquisition of subsidiaries are capitalised at the fair value established on acquisition and treated as an intangible asset. Following initial recognition, contracts are carried at cost less any accumulated impairment losses. The information technology solution service contracts and customer relationship are amortised during 2 - 10 years, the dwelling-houses facilities management contracts are amortised during 2.5 - 5 years, the market management contract – 11 years.

Software

The costs of acquisition of new software are capitalised and treated as an intangible asset if these costs are not an integral part of the related hardware. Software is amortised during 3-4 years.

Costs incurred in order to restore or maintain the future economic benefits that the Group and the Company expect from the originally assessed standard of performance of existing software systems are recognised as an expense when the restoration or maintenance work is carried out.

Other intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Other intangible assets are amortised during 3 - 4 years.

2.7. Business combinations and goodwill

The group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred from 1 January 2010 (until that they were included in the acquisition cost). Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. In the business combinations, which was incurred prior to 1 January 2010, subsequent adjustments to the contingent consideration were recognised as part of goodwill.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

2.7 Business combinations and goodwill (cont'd)

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated:

− represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

− is not larger than an operating segment determined in accordance with IFRS 8 Operating Segments.

Where goodwill forms part of a cash generating unit (group of cash generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained.

2.8. Investments in associates (the Group)

The Group's investments in its associates are accounted for using the equity method of accounting. An associate is an entity in which the Group has significant influence, generally accompanying a shareholding of between 20 % and 50 % of the voting rights.

Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post acquisition changes in the Group's share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The income statement reflects the share of the results of operations of the associate. Where there has been a change recognised in the other comprehensive income of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the other comprehensive income. Group's share in the changes in the net assets of the associate that are not recognised in profit or loss or other comprehensive income (OCI) of the associate, are recognised in equity. Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The reporting dates of the associate and the Group are identical and the associate's accounting policies conform to those used by the Group for like transactions and events in similar circumstances. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss of the Group's investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in associate is impaired. If this is the case the Group calculates the amount of impairment as being the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement. When the group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.

2.9. Investments in joint ventures (the Group)

The Group has an interest in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The Group recognises its interest in the joint venture using the equity method in the consolidated financial statements. The financial statements of the joint venture are prepared for the same reporting year as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

When the Group contributes or sells assets to the joint venture, any portion of gain or loss from the transaction is recognised based on the substance of the transaction. When the Group purchases assets from the joint venture, the Group does not recognise its share of the profits of the joint venture from the transaction until it resells the assets to an independent party.

Upon loss of joint control the Group measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former joint controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an associate.

2.10. Investments in subsidiaries, associates and joint ventures (the Company)

Investments in subsidiaries, associates and joint ventures in the Company's stand-alone financial statements are carried at cost, less impairment. The Company assesses at each reporting date whether there is an indication that investments in subsidiaries, associates and joint ventures may be impaired. If any such indication exists, the Company makes an estimate of the investment's recoverable amount. The impairment test is performed as outlined in Note 2.12, and in addition the market value of debt is deducted from the recoverable amount.

2.11. Non-current assets (or disposal groups) held-for-sale and discontinued operations

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use.

In the consolidated income statement of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing activities as a single amount as profit or loss after tax from discontinued operations in the income statement, even when the Group retains a non-controlling interest in the subsidiary after the sale.

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

2.12. Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses of continuing operations are recognised in the income statement within "impairment, write-down and provisions".

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement. Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount.

The following criteria are also applied in assessing impairment of specific assets:

Goodwill

Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of the cash generating unit (or group of cash generating units), to which the goodwill relates. Where the recoverable amount of the cash generating unit (or group of cashgenerating units) is less than the carrying amount of the cash-generating unit (group of cash-generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 31 December.

2.13. Biological assets

Biological assets are measured on initial recognition and at each reporting date at its fair value less estimated cost to sell, except for the case where the fair value cannot be measured reliably on initial recognition. Agricultural produce harvested from the Group's biological assets is measured at its fair value less estimated cost to sell at the point of harvest and subsequently recorded as inventories.

Biological assets of associate of the Group consist of livestock and crops.

Livestock is measured at fair value less estimated cost to sell. Fair value is determined using current market value of livestock groups or market values of similar groups of livestock by age, breed and adjusting them accordingly, if necessary.

Crops are measured at their fair value less estimated cost to sell. At initial recognition the crops are measured at the cost as the market-determined values are not available for such biological assets. At year-end the crops are measured at the cost as little biological transformation has taken place since the costs were originally incurred. In the subsequent periods when major biological transformation has taken place since the costs were originally incurred, the fair value of crops is measured using the comparable market prices of agricultural produce harvested from crops, adjusted by expected productivity and estimate of expenses which would be incurred from reporting date until the harvest.

2.14. Financial assets

Financial assets within the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The classification depends on the purpose for which the financial assets were acquired The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial asset or financial liability not at fair value through profit or loss, directly attributable transaction costs. The Group considers whether a contract contains an embedded derivative when the entity first becomes a party to it. The embedded derivatives are separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract.

The Group determines the classification of its financial assets at initial recognition.

All regular way purchases and sales of financial assets are recognised on the settlement date. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Financial assets at fair value through profit or loss

The Group classifies its investments in debt and equity securities, and derivatives, as financial assets or financial liabilities at fair value through profit or loss.

This category has two sub-categories: financial assets or financial liabilities held for trading and those designated at fair value through profit or loss at inception.

• (i) Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives, including separable embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or financial guarantee contracts.
• (ii) Financial assets designated at fair value through profit or loss at inception are financial instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Group's documented investment strategy. The Group's policy requires the Management Board to evaluate the information about these financial assets and liabilities on a fair value basis together with other related financial information.

Gains or losses on financial assets at fair value through profit or loss are recognized in profit and loss within "Net change in fair value of financial instruments at fair value through profit or loss". Interest on debt securities at fair value through profit or loss is recognized within other income based on the effective interest rate. Dividends earned on investments are recognised in the income statement as other income when the right of payment has been established. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

2.14 Financial assets (cont'd)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through amortisation process. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group's loans and receivables comprise 'loans granted', 'trade and other receivables', 'deposits', 'restricted cash' and 'cash and cash equivalents' in the statement of financial position (see Notes 15, 17, 18, 19).

Available-for-sale financial instruments

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of other categories. After initial measurement, available-for-sale financial assets are measured at fair value with unrealised gains or losses being recognised as other comprehensive income in the fair value reserve. When the investment is disposed of, the cumulative gain or loss previously accumulated in equity is recognised in the income statement. Interest earned on the investments is reported as interest income or expense using the effective interest rate. Dividends earned on investments are recognised in the income statement as other income when the right of payment has been established. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Unquoted ordinary shares, which fair value cannot be measured reliably, are measured at cost.

Fair value

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm's length market transactions; reference to the current market value of another instrument, which is substantially the same; and discounted cash flow analysis.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.15. Derivative financial instruments and hedge accounting

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives during the year that do not qualify for hedge accounting and the ineffective portion of an effective hedge are taken directly to the income statement.

For the purpose of hedge accounting, hedges are classified as:

• − fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment (except for foreign currency risk); or
• − cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment; or
• − hedges of a net investment in a foreign operation.

As at 31 December 2012 and 2011 the Group has not use any derivatives to hedge risks.

2.15 Derivative financial instruments and hedge accounting (cont'd)

Current versus non-current classification

Derivative instruments that are not a designated and effective hedging instrument are classified as current or non-current or separated into a current and non-current portion based on an assessment of the facts and circumstances (i.e., the underlying contracted cash flows):

• − where the Group will hold a derivative as an economic hedge (and does not apply hedge accounting), for a period beyond 12 months after the end of the reporting period, the derivative is classified as non-current or separated into current and noncurrent portions) consistent with the classification of the underlying item;
• − derivative instruments that are designated as, and are effective hedging instruments, are classified consistent with the classification of the underlying hedged item. The derivative instrument is separated into a current portion and non-current portion only if a reliable allocation can be made.

2.16. Impairment of financial assets

Assets carried at amortised cost

The Group assesses at each reporting date whether is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

• − Significant financial difficulty of the issuer or obligor;
• − A breach of contract, such as a default or delinquency in interest or principal payments;
• − The group, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;
• − It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
• − The disappearance of an active market for that financial asset because of financial difficulties; or
• − Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:
• (i) Adverse changes in the payment status of borrowers in the portfolio; and
• (ii) National or local economic conditions that correlate with defaults on the assets in the portfolio.

The group first assesses whether objective evidence of impairment exists.

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss within "impairment, write-down, allowances and provisions".

The Group assesses whether objective evidence of impairment exists individually for financial assets. When financial asset is assessed as uncollectible and all collateral has been realised or has been transferred to the Group the impaired asset is derecognised. The objective evidence for that is insolvency proceedings against the debtor is initiated and the debtor has not enough assets to pay to creditors, the debtor could not be found.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss within "impairment, write-down, allowances and provisions", to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

2.16 Impairment of financial assets (cont'd)

Available-for-sale financial investments

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the same criteria as financial assets carried at amortised cost. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income. If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

2.17. Inventories

Raw materials, finished goods and work in progress

Inventories are initially recorded at acquisition cost. Cost is determined using the first-in, first-out (FIFO) method. Subsequent to initial recognition, inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are estimated as follows:

• − raw materials purchase cost using FIFO method;
• − finished goods and work in progress cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity and including borrowing costs, where applicable.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Residential real estate

Properties initially acquired for development and subsequent resale are initially recognised at the cost of purchase. The cost of residential real estate comprises construction costs and other direct cost related to property development, including borrowing costs. Investment properties that are started developed for future sale are reclassified as inventories at their cost, which is the carrying amount at the date of reclassification. Inventories are subsequently carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less cost to complete redevelopment and selling expenses. Residential real estate include assets that are sold as part of the normal operating cycle even when they are not expected to be realised within twelve months after the reporting date.

2.18. Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.19. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less.

For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand and in current bank account as well as deposit in bank with an original maturity of three months or less.

The cash or short-term deposits, which use is restricted, are presented in caption 'restricted cash' in the statement of financial position (see Note 19).

2.20. Financial liabilities

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The measurement of financial liabilities depends on their classification as follows:

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

2.21. Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• → the rights to receive cash flows from the asset have expired;
• → the Group and the Company retain the right to receive cash flows from the asset, but have assumed an obligation to pay them in full without material delay to a third party under a "pass through" arrangement; or
• → the Group or the Company have transferred their rights to receive cash flows from the asset and either (a) have transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

2.22. Compound financial instruments

Compound financial instruments issued by the group comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

2.23. Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. A reassessment is made after inception of the lease only if one of the following applies:

• a) There is a change in contractual terms, other than a renewal or extension of the arrangement;
• b) A renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term;
• c) There is a change in the determination of whether fulfilment is dependant on a specified asset; or
• d) There is a substantial change to the asset.

Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gave rise to the reassessment for scenarios a), c) or d) and at the date of renewal or extension period for scenario b).

Financial lease

Group as a lessee

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are reflected in the income statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

If the result of sales and lease back transactions is financial lease, any profit from sales exceeding the book value is not recognised as income immediately. It is postponed and amortised over the lease term.

Operating lease

Group as a lessee

Leases where the lessor retains all the risk and benefits of ownership of the asset are classified as operating leases. Operating lease payments (net of any incentives received from the lessor) are recognised as an expense in the income statement on a straight-line basis over the lease term.

If the result of sales and lease back transactions is operating lease and it is obvious that the transaction has been carried out at fair value, any profit or loss is recognised immediately. If the sales price is lower than the fair value, any profit or loss is recognised immediately, except for the cases when the loss is compensated by lower than market prices for lease payments in the future. The profit is then deferred and it is amortised in proportion to the lease payments over a period, during which the assets are expected to be operated. If the sales price exceeds the fair value, a deferral is made for the amount by which the fair value is exceeded and it is amortised over a period, during which the assets are expected to be operated.

Group as a lessor

Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

2.24. Revenue recognition

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the group's activities as described below. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. The following specific recognition criteria must also be met before revenue is recognised.

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods.

Disposal of investments

Gain (loss) from sale of investment is recognised when the significant risk and rewards of ownership of the investment have passed to the buyer and are recognised within operating activity, as the parent company treats the securities trading as its main activity.

Sales of services and long-term contracts

The Group sells information technology infrastructure and facility management services to the customers. For sales of services, revenue is recognised in the accounting period in which the services rendered, by reference to stage of completion of the specific transaction and assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Rental income

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms. When the Group provides incentives to its tenants, the cost of incentives is recognised over lease term, on a straightline basis, as a reduction of rental income.

Interest income

Income is recognised as interest accrues (using the effective interest method that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

Dividends income

Income is recognised when the Group's right to receive the payment is established.

2.25. Dividends distribution

Dividends distribution to the Company's shareholders is recognised as a liability in the Group's and the Company's financial statements in the period in which the dividends are approved.

2.26. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

2.27. Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the end of the reporting period in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The standard income tax rate in Lithuania was 15 % in 2012 and in 2011. After the amendments of Income Tax Law of Republic of Lithuania had come into force, 15 % income tax rate has been established for indefinite period starting 1 January 2010. Starting from 2010, tax losses can be transferred at no consideration or in exchange for certain consideration between the group companies if certain conditions are met.

The standard income tax rate in Norway is 28 %. In Luxembourg the standard income tax rate is 28.80 % with a minimum flat corporate income tax of LTL 5 thousand.

Deferred income taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse based on tax rates enacted or substantially enacted at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• − Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is
• not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; − In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

By Lithuanian Income Tax Law shall be not taxed sale of shares of an entity, registered or otherwise organised in a state of the European Economic Area or in a state with which a treaty for the avoidance of double taxation has been concluded and brought into effect and which is a payer of corporate income tax or an equivalent tax, to another entity or a natural person where the entity transferring the shares held more than 25% of voting shares in that entity for an uninterrupted period of at least two years. If mentioned condition is met or will be met by judgement of the management of the Company, there are not recognised any deferred tax liabilities or assets in respect of temporary differences associated with this investments.

Deferred income tax asset has been recognised in the statement of financial position to the extent the management believes it will be realised in the foreseeable future, based on taxable profit forecasts. If it is believed that part of the deferred income tax asset is not going to be realised, this part of the deferred tax asset is not recognised in the financial statements.

Deferred tax asset are not recognised:

• − Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
• − In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the Company changes its activities due to which these losses incurred except when the Company does not continue its activities due to reasons which do not depend on the Company itself. The losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.28. Grants

Grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. The amount of the grants related to assets is recognized as deferred income and released to income on a linear basis over the expected useful life of related asset. In the income statement, depreciation expense account is decreased by the amount of grant amortisation.

2.29. Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities recognised in a business combination (applicable as of 1 January 2010)

A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of:

• − the amount that would be recognised in accordance with the general guidance for provisions above (IAS 37) or
• − the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the guidance for revenue recognition (IAS 18).

2.30. Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as Board of Directors that makes strategic decisions.

2.31. Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised in equity as a deduction, net of tax, from the proceeds. Where any group company purchases the company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company's equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company's equity holders.

2.32. Employee benefits

Social security contributions

The Company and the Group pay social security contributions to the state Social Security Fund (the Fund) on behalf of its employees based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under which the Group pays fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period. Social security contributions are recognised as expenses on an accrual basis and included in payroll expenses.

Termination benefits

Termination benefits are payable whenever an employee's employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company and the Group recognise termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.

Bonus plans

The Company and the Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

Pension and anniversary obligations

The Group's company AB Vilniaus Baldai has collective labour agreement. According to the agreement each employee has right to receive age and seniority anniversary benefit and 2 – 3 month an amount on retirement subject to years of service. This is the unfunded defined benefit pension plan. The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period, together with adjustments for unrecognised pastservice costs. The cost of providing benefits under this plan is determined using the projected unit credit method. Actuarial gains and losses are recognised in full in the period in which they occur in the income statement. Past-service costs are recognised immediately as expenses, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. All expenses related to the pension and anniversary obligations are recognised within "employee benefits expenses".

2.33. Share - based payments

The group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee services received in exchange for the grant of the options is recognised as an employee benefits expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

• − including any market performance conditions;
• − excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
• − excluding the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the options are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

2.33 Share - based payments (cont'd)

Share - based payments – modification and cancellation

If the terms of an equity-settled award are modified, at a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

If an equity award is cancelled by forfeiture, when the vesting conditions (other than market conditions) have not been met, any expense not yet recognised for that award, as at the date of forfeiture, is treated as if it had never been recognised. At the same time, any expense previously recognised on such cancelled equity awards are reversed from the accounts effective as at the date of forfeiture.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

2.34. Contingencies

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

A contingent asset is not recognised in the financial statements but disclosed when an inflow or economic benefits is probable.

2.35. Events after the reporting period

Events after the reporting period that provide additional information about the Group's position as at the end of the reporting period (adjusting events) are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material.

2.36. Significant accounting judgements and estimates

The preparation of financial statements requires management of the Group and the Company to make judgements and estimates that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgements

In the process of applying the Group accounting policies, management has made the following judgement, which has most significant effect on the amounts recognised in the consolidated financial statements:

Financial assets designated at fair value through profit and loss on initial recognition

The shares of Trakcja S.A. were designated at fair value through profit or loss on initial recognition because the Management believes that this presentation represents best the way this investment is managed and its performance is evaluated and provides more relevant information to the users of financial statements.

The impact of planned split-off

Management has assessed what impact planned split-off has on the financial statements for the year ended 31 December 2012. In the management view, due to reasons described in Note 30, the assets and liabilities to be split off did not meet the definition of "held for distribution" under IFRS 5 as of 31 December 2012. Therefore, it was concluded that no changes have to be made in the current measurement or presentation, but the information should be disclosed in sufficient details (Note 30).

2.36 Significant accounting judgements and estimates (cont'd)

Judgements (cont'd)

Investment in AB Vernitas

Management has assessed the level of influence that the group has on AB Vernitas and determined that it has no significant influence even though the share holding is above 20% because the entity is controlled by a group interrelated persons. The entity has Management Board and Supervisory Council and the Group has only one representative at the Supervisory Council and none at the Management Board. The Board manages the entity. Consequently, this investment has been classified as available-for-sale (Note 14).

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

The significant areas of estimation used in the preparation of these financial statements are discussed below.

Fair value of investment properties

Investment properties have been valued either based on the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics (income approach) or using the sales comparison approach which refers to the prices of the analogues transactions in the market. Discounted cash flow projections are based on estimates of future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current (at the date of the statement of financial position) market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. The future rental rates were estimated depending on the actual location, type and quality of the properties, and taking into account market data and projections at the valuation date. The sales comparison approach compares a subject property's characteristics with those of comparable properties which have recently sold in similar transactions. The process uses one of several techniques to adjust the prices of the comparable transactions according to the presence, absence, or degree of characteristics which influence value, such as available use, floor area, location, age of the property and condition of property.

The fair value of the investment properties as at 31 December 2012 was LTL 225,587 thousand (as at 31 December 2011 – LTL 248,957 thousand), from which the fair value of the investment properties valued using the sales comparison approach was LTL 61,885 thousand and fair value of the investment properties valued using income approach was LTL 163,702 thousand (2011: LTL 83,324 thousand and LTL 165,633 thousand, respectively) (described in more details in Note 11).

Impairment of investments in subsidiaries

The Company assesses at each reporting date whether there is an indication that investments in subsidiaries, associates and joint ventures may be impaired. Each investment is considered individually. If any such indication exists, the Company makes an estimate of the recoverable amount of investment. The recoverable amounts of investments have been determined based on value in use calculations. The value in use was based on the estimated future net cash flows of the underlying entities that are attributable to the Company's interest. These calculations require the use of estimates (Note 3).

Impairment of loans granted and trade receivables

The impairment loss of trade receivables and loans granted was determined based on the management's estimates on recoverability and timing relating to the amounts that will not be collectable according to the original terms of receivables and loans. These accounting estimates require significant judgement. Judgement is exercised based on net assets value of subsidiaries, significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganisation, and default or delinquency in payments. If there is objective evidence that an impairment loss on loans granted and trade receivables has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows. The expected cash flows exclude future credit losses that have not been incurred and are discounted at the original effective interest rate (that is, the effective interest rate computed at initial recognition). Carrying amounts of loans and receivables are disclosed in Notes 15 and 17.

2.36 Significant accounting judgements and estimates (cont'd)

Estimates and assumptions (cont'd)

Impairment of goodwill

The group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.12. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 12).

Useful lives of contracts and customer relationship

The useful lives of contracts and customer relationship acquired through business combinations are disclosed in Note 2.6 and amortisation charge for the year is disclosed in Note 12. The useful lives are determined by management at the time the asset is acquired and reviewed on an annual basis for appropriateness. The lives are based on historical experiences with similar assets as well as anticipation of future events, which may impact their life. If the estimated useful lives of contracts and customer relationship have been one year shorter, the annual amortisation charge would have increased by LTL 489 thousand for the year ended 31 December 2012.

Deferred income tax assets

Deferred income tax assets are recognised for tax losses carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and amount of future taxable profits together with future tax planning strategies.

Deferred income tax asset is recognized on individual company basis taking into account future performance plans of those companies. For the loss making Group entities other than the Company, deferred tax asset is recognized only to the extent deferred tax liability was available and the realization period allows offsetting. No deferred tax asset is recognized from tax losses carry forward of LTL 23,162 thousand as 31 December 2012 (as at 31 December 2011 – LTL 20,900 thousand) due to future uncertainties related with the performance of those companies. As at 31 December 2012 in the total deferred tax asset balance of the Group the amount of LTL 6,894 thousand (as at 31 December 2011 – LTL 4,805 thousand) relates to deferred income tax asset recognized from the taxable losses of the Company and only LTL 2,643 thousand (as at 31 December 2011 – LTL 3,104 thousand) was recognized from the taxable losses of other group entities, net of transferred tax losses within the Group (Note 6).

Other areas involving estimates include useful lives of property, plant and equipment and allowances for accounts receivable. According to the management, these estimates do not have significant risk of causing a material adjustment.

3 Business combinations and acquisition of non-controlling interests, investments into associates and joint ventures, disposals

The movement of investments in associates and joint ventures was as follows:

	Group		Company
	2012	2011	2012	2011
At 1 January	39,269	125,512	724	110,916
Share of profit (loss) of associates	7,160	1,417	-	-
Profit from bargain purchases of associates	1,542	-	-	-
Share of profit (loss) of joint ventures	(37)	448	-	-
Share of exchange differences	(6)	(992)	-	-
Share of cash flow hedge reserves	-	677	-	-
Acquisition of non-controlling interest in subsidiary held by associate	871	-	-	-
Increase of share capital	-	1,450	-	1,450
Acquisition	-	38,581	-	6
Disposals (Note 7)	-	(126,116)	-	(109,558)
Reversal of impairment due to disposals	-	-	-	1,655
Impairment	-	-	(39)	-
Reclassification to assets held for sale (Note 7)	-	(1,708)	-	(3,745)
At 31 December	48,799	39,269	685	724
Associates	48,114	38,547	-	2
Joint ventures	685	722	685	722

The movement of investments in subsidiaries in the Company was as follows:

	Company
	2012	2011
At 1 January	99,607	87,398
Acquisition	-	10
Acquisition of non-controlling interest	-	173
Establishment of subsidiaries and increase of share capital (mainly nominal amount of loans capitalised) Reclassification of allowance on loans capitalized within share capital of subsidiaries	18,805	21,839
Reversal of impairment due to increase of recoverable amount of the investments	(6,620) 2,808	(16) 2,889
Additional impairment charge for the year	(16,481)	(12,686)
At 31 December	98,119	99,607

In 2012 the Company recognised impairment losses of investments to subsidiaries of LTL 16,306 thousand that operate in real estate segment because of decreased carrying amount of net assets of these subsidiaries. The recoverable amounts of these investments have been determined based on value in use calculations. The value in use of investments is mainly dependant on the fair value of investment properties (Note 11) and the amount of borrowings each subsidiary has. If liabilities of a subsidiary exceed the fair value of its property, such an investment is impaired to nil. Where the net assets of an entity are positive, value in use was based on the estimated future net cash flows of the underlying entities that are attributable to the Company. The key estimates used in valuing investment property are disclosed in Note 11. For the purposes of impairment testing the borrowings are measured discounting all future payments using current market rate. The fair value of financial liabilities is disclosed in Note 27.2.

Acquisitions in 2012

There were no business combinations in 2012.

Acquisitions in 2011

Analysis of cash flows on acquisition:

	2011
Consideration paid in cash	(8,688)
Cash acquired with the subsidiary	1,131
Acquisition of subsidiaries, net of cash acquired	(7,557)

If the acquisition of the subsidiaries in 2011 had occurred on 1 January 2011, the consolidated revenue of the Group would have been LTL 323,435 thousand and consolidated net profit of the Group would have been LTL 215,403 thousand for the year ended 31 December 2011.

UAB Lauko Gėlininkystės Bandymų Stotis

On 4 January 2011, the Group acquired 51 % of shares of UAB Lauko Gėlininkystės Bandymų Stotis for LTL 911 thousand (all amount paid in cash) from Valstybės Turto Fondas (the State Property Fund). Acquisition-related cost was equal to nil.

The acquiree operates in field of growing and trading of ornamental trees and shrubs. Future operations of the company acquired will also include the development the owned real estate.

The fair values of the identifiable assets and liabilities of UAB Lauko Gėlininkystės Bandymų Stotis were:

	Fair values recognised on acquisition
Property, plant and equipment	1,437
Inventories	597
Trade and other receivables	11
Other current assets	29
Cash and cash equivalents	275
Total assets	2,349
Deferred tax liabilities	(158)
Other current liabilities	(63)
Total liabilities	(221)
Total identifiable net assets	2,128
Non-controlling interests measured at fair value	(500)
Acquired net assets	1,628
Profit from bargain purchase	(717)
Total consideration transferred	911

On 22 July 2011, the Group acquired remaining 49 % of shares of UAB Lauko Gėlininkystės Bandymų Stotis for LTL 500 thousand. Now the Group owns 100 % of the shares of UAB Lauko Gėlininkystės Bandymų Stotis. The fair value of the additional interest acquired was LTL 542 thousand. The positive difference equal to LTL 42 thousand between the consideration and the value of the interest acquired has been recognised directly in the shareholders equity.

Acquired business contributed revenues of LTL 1,448 thousand and incurred the net loss of LTL 59 thousand to the Group during the year ended 31 December 2011.

Acquisitions in 2011 (cont'd)

UAB Jurita

On 4 August 2011 the Group acquired 100 % of the shares of UAB Jurita from Vilnius municipality for LTL 2,519 thousand (the total acquisition price paid in cash). The acquiree manages dwelling-houses in Vilnius district Justiniškės. The acquisition is expected to increase the Group's market share in a facility management and reduce cost through a synergy. Acquisitionrelated cost was equal to nil.

The fair values of the identifiable assets and liabilities of UAB Jurita were:

	Fair values recognised on acquisition
Intangible assets (were not recognised in the financial statements of the acquiree)	150
Investment property	2,578
Property, plant and equipment	33
Inventories	32
Trade and other receivables	294
Other current assets	11
Term deposits and restricted cash	1,103
Cash and cash equivalents	586
Total assets	4,787
Deferred tax liabilities	(184)
Non - current liabilities	(955)
Other current liabilities	(361)
Total liabilities	(1,500)
Total identifiable net assets	3,287
Profit from bargain purchases	(768)
Total consideration transferred	2,519

Acquired business contributed revenues of LTL 1,142 thousand and net profit of LTL 319 thousand to the Group for the period from 1 August 2011 to 31 December 2011.

The fair value of acquired trade receivables is LTL 294 thousand. The gross contractual amount for the acquired trade receivables due is LTL 542 thousand, of which LTL 248 thousand are expected to be uncollectible.

Acquisitions in 2011 (cont'd)

Acquisition of Norway Registers Development, AS

On 28 November 2011, UAB BAIP Grupė (the Group owns 80 % of the shares of this company) acquired 100 % of the shares of Norwegian company Norway Registers Development, AS, owning 70.73 % of the shares of UAB NRD in Lithuania. The total consideration was LTL 4,298 thousand. Acquisition-related costs were LTL 181 thousand and were included in other operating expenses. The contract for acquiring 100% of shares of Norway Registers Development, AS was signed by the Group on 20 October 2011.

The acquired company specializes in the programming of register systems including legislation development, project implementation and support. As a result of the acquisition, the Group is expected to enter into new international markets and to expand the portfolio of services in the critical infrastructure field. The goodwill of LTL 1,600 thousand arising from acquisition is attributable to assembled workforce and economies of scale expected from combining the operations of the companies of the information technology segment and Norway Registers Development, AS. None of the goodwill recognised is expected to be deductible for income tax purposes.

The following table summarises the consideration paid for Norway Registers Development, AS, and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date:

Consideration:

Cash	4,143
Contingent consideration	155
Total consideration	4,298

Recognised amounts of identifiable assets acquired and liabilities assumed:

	Fair value recognised on acquisition
Intangible assets (assets with fair value of LTL 2,026 thousand were not recognised in the financial
statements of acquiree)	2,052
Property, plant and equipment	977
Deferred income tax asset	130
Trade and other receivables	576
Prepaid income tax	32
Prepayments and deferred charges	1,656
Financial assets held for trading	261
Cash and cash equivalents	175
Total assets	5,859
Deferred tax liabilities	(344)
Non current bank borrowings and lease liabilities	(724)
Income tax liabilities	(73)
Other current liabilities	(1,113)
Total liabilities	(2,254)
Total identifiable net assets	3,605
Non-controlling interest, measured as a proportion of net assets acquired	(907)
Acquired net assets	2,698
Goodwill arising on acquisition	1,600
Total consideration transferred	4,298

The contingent consideration arrangement requires the Group to pay the former owners of Norway Registers Development, AS 50% of the positive difference between the total EBITDA for the years 2011–2013 and EUR 900 thousand (LTL 3,108 thousand). The maximum undiscounted amount of the payment is unlimited. The fair value of the contingent consideration arrangement of LTL 155 thousand was estimated by applying the income approach at the date of acquisition. The fair value estimates were based on a discount rate of 7 % and assumed probability-adjusted profit in the acquiree of LTL 967 thousand to LTL 1,554 thousand and the maximum undiscounted amount of the payment of LTL 452 thousand.

Acquisitions in 2011 (cont'd)

Acquisition of Norway Registers Development, AS (cont'd)

As at 31 December 2012, there was a decrease of LTL 42 thousand recognised in the income statement for the contingent consideration arrangement. The maximum undiscounted amount of the payment was decreased to LTL 236 thousand as the actual EBITDA for 2011 – 2012 was below the forecasted EBITDA.

The fair value of trade and other receivables is LTL 576 thousand and is equal to gross contractual amount.

Acquired business contributed revenues of LTL 1,462 thousand and net profit of LTL 417 thousand to the Group for the period from 1 December 2011 to 31 December 2011.

UAB Puškaitis, UAB Žemynėlė and UAB IŽB 1

On 30 September 2011, the Group acquired 100 % of the shares of UAB Puškaitis and UAB Žemynėlė. On 22 December 2011, the Group acquired 100 % of the shares of UAB IŽB 1. The total consideration was LTL 1,115 thousand (the total acquisition price paid in cash). The companies are investing in agricultural land. Acquisition-related cost was equal to nil.

The fair value of assets and liabilities of UAB Puškaitis, UAB Žemynėlė and UAB IŽB 1 were:

	Fair values recognised on acquisition
Investment properties	9,627
Trade receivables	397
Deferred tax assets	38
Other current assets	11
Cash and cash equivalents	95
Total assets	10,168
Deferred tax liabilities	(78)
Non current bank borrowings	(2,509)
Short-term borrowings and other liabilities refinanced by the Group	(6,654)
Other current liabilities	(31)
Total liabilities	(9,272)
Total identifiable net assets	896
Fair value adjustment on investment properties	219
Total consideration transferred	1,115

Establishment of companies (increase of share capital) in 2012 and 2011

In March 2012 the Company has invested LTL 155 thousand to increase share capital of Invalda Lux S.a.r.l. by cash. In July and December 2012 the Company has invested additional LTL 18,650 thousand to increase share capital of UAB Naujoji Švara, UAB Žemvesta, UAB Rovelija, UAB Saistas, UAB Ineturas, UAB Minijos valda, UAB IBC logistika by converting loans granted to shares. No cash consideration was transferred.

In January 2012 UAB Justiniškių Valda and UAB Justiniškių Aikštelė, which own investment property previously owned by UAB Jurita, were separated from UAB Jurita. The new separated entities are allocated to real estate segment.

The Group has established three real estate investment companies by investing by cash of LTL 30 thousand: UAB Lauksėja (investment in the agricultural land, in May 2012), UAB Danės Gildija (project of apartments building in Klaipėda, in May 2012) and UAB Kopų Vėtrungės (project of apartments building in Nida, in August 2012). Also investment properties with carrying value of LTL 7,970 thousand, located in Klaipėda, were invested into share capital of UAB Danės Gildija (in June 2012), and investment properties with carrying value of LTL 3,990 thousand, located in Nida, were invested into share capital of UAB Kopų Vėtrungės (in September 2012).

During 4th Quarter of 2012 the Group has invested LTL 10 thousand by establishing UAB IPP Integracijos Projektai and in addition invested LTL 2,120 thousand to increase share capital of UAB Informatikos pasaulis, UAB Vitma, UAB IŽB 1, UAB Lauksėja, UAB Puškaitis mainly by converting loans granted to shares.

During 2011 the Group has established these new companies: UAB Inreal GEO, Invalda Lux S.a.r.l, UAB Perspektyvi Veikla, UAB Via Solutions, UAB Minijos Valda. UAB Naujosios Vilnios Turgavietė was separated from UAB Priemiestis. Also a dormant company UAB Cedus was acquired. The total amount of these investments is LTL 289 thousand (from this amount the Company has directly invested LTL 109 thousand).

In December 2011 the Company and the Group invested additional LTL 21,740 thousand and LTL 22,810 thousand respectively to increase share capital of subsidiaries, mainly by converting loans granted to shares.

Other acquisitions in 2011

In 2011 the Group has acquired back the real estate company UAB BNN, which owns the investment property with carrying amount of LTL 1,400 thousand, when the debt owed by UAB BNN was obtained from UAB Nerijos Būstas as collateral of trade receivables of the Group. The obtained debt was capitalized into share capital of UAB BNN. The Group has recognised profit of LTL 173 thousand in other income in the profit (loss) statement from the acquisition.

Non – controlling interest acquisition in 2012

In April 2012 the Company has acquired 24% of shares of UAB Aikstentis (currently a dormant entity attributed to the real estate segment) for LTL 3. Amount of LTL 2,309 thousand was attributed to the non-controlling interest, so it was reduced by this amount, and, respectively, retained earnings attributable to equity holders of the parent were increased. The reason for a large attribution was that in 2010 prospectively applying the new requirement of IAS 27 net losses of prior periods equal to LTL 2,343 thousand were not attributed to the non-controlling interest of UAB Aikstentis, but due to the sale of UAB Broner (previous subsidiary of UAB Aikstentis) the net profit of LTL 2,316 thousand was attributed to the non-controlling interest.

In August 2012 the Group has acquired 0.65 % of shares of UAB NRD for LTL 13 thousand. The value of the additional interest acquired was LTL 17 thousand. The positive difference equal to LTL 4 thousand between the consideration and the value of the interest acquired has been recognised directly to the shareholders equity.

Non – controlling interest acquisition in 2011

The Group acquired 0.13 % of the shares of AB Vilniaus baldai and 6.41 % of the shares of AB Invetex for LTL 544 thousand. The value of the additional interest acquired was LTL 548 thousand. The positive difference equal to LTL 4 thousand between the consideration and the value of the interest acquired has been recognised directly to the shareholders equity.

Acquisition of associates and joint ventures in 2012

There were no acquisitions of associates and joint ventures in 2012.

Acquisition of associates and joint ventures in 2011

In August 2011 the Group acquired additional shares of AB Umega for LTL 6 thousand. Also in September 2011 the Company invested LTL 1,350 thousand to increase share capital of AB Umega by converting loans granted to shares. As consequence the share of stock held by the Group was increased from 19.42 until 29.27 percent. The value of the additional interest acquired was LTL 1,418 thousand and the profit of LTL 62 thousand has been recognised in the income statements. In 2012 the shares of AB Umega were sold.

In December 2011 the Group invested additional LTL 100 thousand to share capital of UAB Dommo Nerija by converting loan granted to shares.

Investment to UAB Litagra

On 7 November 2011, the Group signed an agreement to invest into UAB Litagra shares. The share capital increase of UAB Litagra was completed on 15 December 2011, when a permission of the Competition Council was received. The Group invested a total of LTL 38,575 thousand into shares of UAB Litagra: LTL 37,092 thousand was invested into new share issue by converting loans that were granted to UAB Litagra during 2011 and existing shares were acquired from the current shareholders for LTL 1,483 thousand for cash. After the transaction the Group owns 36.88% shares of UAB Litagra, the chairman of the board of UAB Litagra Mr. Gintaras Kateiva owns 37%, investment fund Amber Trust II – 18%, Mr. Dziugas Grigaliunas and Mr. Adomas Grigaitis, the managers of Litagra Group, - 6.4% and 1.7% respectively.

The companies of Litagra Group are engaged in the primary crop and livestock (milk) production, grain processing and agricultural services. Group companies trade in plant protection products, fertilizers, seeds, compound feed, feed supplements, veterinary products. Moreover, companies trade grain, provide grain and other raw materials drying, cleaning, loading and storage services. Group companies provide agricultural services in Lithuania, Latvia and Estonia.

UAB Litagra is accounted as an associate in the financial statements of the Group using equity method. The acquisition of UAB Litagra is reflected in the financial statements of the Group from 31 December 2011. The fair value of identifiable net assets of UAB Litagra amounted to LTL 40,117 thousand at the date of acquisition. The Group has recognised profit from bargain purchases of LTL 1,542 thousand in the income statement for the year ended 31 December 2012, after the fair value measurement was completed.

Disposals

There were no disposals of subsidiaries in 2012 and 2011.

Net gains (losses) on disposal of subsidiaries, associates and joint ventures are as follows:

	Group		Company
	2012	2011	2012	2011
Net gain (loss) on sale of subsidiaries	-	-	-	-
Net gain (loss) on sale of associates and joint ventures	1,282	-	(1,052)	338,948
Direct costs of disposal of subsidiaries, associates and joint ventures	-	-	-	(20,510)
	1,282	-	(1.052)	318,438

Disposals of associates and joint ventures in 2012

AB Umega

On 12 January 2012, the sale of 29.27% of shares of AB Umega according to the agreement signed on 30 November 2011 was completed. Consideration for the shares sold was LTL 3,745 thousand. The Group has earned a profit of LTL 2,037 thousand, as the associate was incurring losses. In the financial statements of the Company, the price for the shares sold was equal to the carrying amount of the investment. The loss of LTL 298 thousand (the price of the shares was less as initial acquisition cost) is included under the caption "Net gains (losses) on disposal of subsidiaries, associates and joint ventures" in the Company's income statement and the impairment reversal of the same amount - LTL 298 thousand – is presented under the caption "Impairment, write-down and provisions" in the Company's income statement.

SIA Uran

In June 2012 the loans with nominal amount of LTL 807 thousand granted to real estate entity SIA Uran, operating in Latvia, were converted into 42.86 % shares of the entity. The carrying amount of these converted loans was LTL 237 thousand. These shares were sold in June 2012 for LTL 52 thousand. In the profit (loss) statement of the Group and the Company a loss of LTL 755 thousand was recognised within Net gains (losses) on disposal of subsidiaries, associates and joint ventures and the allowance for loans granted of LTL 570 thousand was reversed.

Disposals of associates and joint ventures in 2011

See Note 7 for detailed information of sale of shares of AB Kauno Tiltai, Tiltra Group AB and AB Sanitas.

4 Segment information

The Board of Directors monitors the operating results of the business units of the Group separately for the purpose of making decisions about resource allocations and performance assessment. Segment performance is evaluated based on net profit or loss and it is measured on the same basis as net profit or loss in the financial statements. Group financing (including finance costs and finance revenue) and income taxes are allocated between segments as they are identified on basis of separate legal entities. Consolidation adjustments and eliminations are not allocated on a segment basis. Segment assets are measured in a manner consistent with that of the financial statements. All assets are allocated between segments, because segments are identified on a basis of separate legal entities.

For management purposes, the Group is organised into following operating segments based on their products and services:

Furniture production

The furniture segment includes flat-pack furniture mass production and sale.

Real estate

The real estate segment includes investment in real estate, real estate management and administration, intermediation in buying, selling and valuation of real estate, and the geodesic measurement of land.

Facilities management

The facilities management segment includes facilities management of dwelling-houses, commercial and public real estate properties, as well as construction management.

Agriculture

Agricultural activities include the primary crop and livestock (milk) production, grain processing and agricultural services. The segment's companies sell plant protection products, fertilizers, seeds, compound feed, feed supplements, veterinary products, buy grain, provide grain and other raw materials drying, cleaning, handling and storage services.

Information technology infrastructure

The information technology infrastructure segment is involved in offering IT infrastructure strategy, security and maintenance solutions and supplies of all hardware and software needed for IT infrastructure solutions of any size.

Other production and service segment

The other production and service segment is involved in hardware articles production, road signs production, wood manufacturing, growing and trading of ornamental trees and shrubs. The Group also presents investment, financing and management activities of the holding company in this segment, as these are not analysed separately by the Board of Directors.

Segment revenue, segment expense and segment result include transfers between business segments. Those transfers are eliminated in column 'Inter-segment transactions and consolidation adjustments'. Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties including assets from the acquisition of subsidiaries.

The loans granted by the Company are allocated to other production and services segment. The impairment losses of these loans are allocated to a segment to which the loan was granted initially.

4 Segment information (cont'd)

The following table presents revenues, profit and certain assets and liabilities information regarding the Group's business segments for the year ended 31 December 2012:

	Furniture	production Real estate	Facility management Agriculture		Information technology infrastructure	Other production and service	Inter-segment transactions and consolidation adjustments	Total continuing operations
Year ended 31 December 2012
Revenue
Sales to external customers	230,142	32,236	11,675	-	40,598	11,673	-	326,324
Inter-segment sales	-	1,133	1,459	-	171	2	(2,765)	-
Total revenue	230,142	33,369	13,134	-	40,769	11,675	(2,765)	326,324
Results
Interest income	496	158	91	-	3	10,071	(7,163)	3,656
Other income	1,491	202	156	-	56	57	(1,081)	881
Net loss from fair value adjustment on investment property	-	(8,709)	-	-	-	-	-	(8,709)
Net gains (loss) on disposal of subsidiaries, associates and joint ventures	-	(755)	-	-	-	2,037	-	1,282
Net changes in fair value of financial assets	-	-	-	-	-	3,567	-	3,567
Impairment, write-down, allowances and provisions	(1)	815	73	-	(88)	67	-	866
Employee benefits expense	(27,543)	(3,582)	(6,123)	-	(9,129)	(6,072)	-	(52,449)
Raw materials and consumables used	(157,986)	(92)	(783)	-	(19,660)	(6,197)	17	(184,701)
Changes in residential real estate	-	(4,973)	-	-	-	-	-	(4,973)
Depreciation and amortization	(5,388)	(205)	(666)	-	(2,601)	(855)	-	(9,715)
Interest expenses	(23)	(8,475)	(158)	-	(1,292)	(931)	7,163	(3,716)
Other expenses	(11,533)	(19,686)	(6,077)	-	(9,186)	(3,157)	3,829	(45,810)
Share of profit (loss) of the associates and joint ventures	-	(37)	-	8,675	-	27	-	8,665
Profit (loss) before income tax	29,655	(11,970)	(353)	8,675	(1,128)	10,289	-	35,168
Income tax credit (expenses)	(2,819)	937	59	-	9	(1,370)	-	(3,184)
Net profit for the year	26,836	(11,033)	(294)	8,675	(1,119)	8,919	-	31,984
Attributable to:
Equity holders of the parent	19,359	(11,032)	(294)	8,675	(942)	8,889	-	24,655
Non-controlling interest	7,477	(1)	-	-	(177)	30	-	7,329
As at 31 December 2012
Assets and liabilities
Segment assets	98,504	275,269	9,853	-	27,236	249,236*	(118,988)	541,110
Investment in associates and joint ventures	-	685	-	48,114	-	-	-	48,799
Total assets	98,504	275,954	9,853	48,114	27,236	249,236	(118,988)	589,909
Segment liabilities	26,495	219,277	7,654	-	25,453	13,822	(118,988)	173,713
Other segment information
Capital expenditure:
• Property, plant and equipment	14,588	87	673	-	1,195	365	-	16,908
• Investment properties	-	3,427	-	-	-	-	-	3,427
• Intangible assets	703	-	74	-	66	10	-	853

* LTL 222,008 thousand from this amount are attributable to the Company.

4 Segment information (cont'd)

The following table presents revenues, profit and certain assets and liabilities information regarding the Group's business segments for the year ended 31 December 2011:

	Furniture	production Real estate	Facility management Agriculture		Information technology infrastructure	Other production and service	Inter-segment transactions and consolidation adjustments	Total continuing operations
Year ended 31 December 2011
Revenue
Sales to external customers	238,368	25,106	8,390	-	34,400	11,103	-	317,367
Inter-segment sales	-	1,577	2,320	-	130	5	(4,032)	-
Total revenue	238,368	26,683	10,710	-	34,530	11,108	(4,032)	317,367
Results
Interest income	1,450	10	158	-	-	12,502	(7,371)	6,749
Other income	1,425	213	1,642	-	355	808	(1,082)	3,361
Net gain (loss) from fair value adjustment on investment property Net gains on disposal of	-	(15,647)	160	-	-	760	-	(14,727)
subsidiaries, associates and joint ventures	-	-	-	-	-	-	-	-
Net changes in fair value of financial assets	-	-	-	-	8	(83,884)	-	(83,876)
Impairment, write-down, allowances and provisions	113	1,497	(128)	-	(7)	(20,187)	-	(18,712)
Employee benefits expense	(24,453)	(3,013)	(4,290)	-	(6,523)	(5,525)	-	(43,804)
Raw materials and consumables used	(155,917)	(91)	(1,033)	-	(20,416)	(6,833)	5	(184,285)
Changes in residential real	-	(1,323)	-	-	-	-	-	(1,323)
estate Depreciation and amortization	(6,390)	(262)	(558)	-	(2,012)	(1,039)	-	(10,261)
Interest expenses	(181)	(9,366)	(239)	-	(778)	(9,182)	7,371	(12,375)
Other expenses	(23,484)	(19,020)	(5,342)	-	(5,645)	(5,166)	5,109	(53,548)
Share of profit (loss) of the associates and joint ventures	-	448	-	-	-	(201)	-	247
Profit (loss) before income tax	30,931	(19,871)	1,080	-	(488)	(106,839)	-	(95,187)
Income tax credit (expenses)	(4,119)	2,021	(50)	-	(217)	16,115	-	13,750
Net profit for the year	26,812	(17,850)	1,030	-	(705)	(90,724)	-	(81,437)
Attributable to:
Equity holders of the parent	19,314	(17,846)	1,030	-	(661)	(90,771)	-	(88,934)
Non-controlling interest	7,498	(4)	-	-	(44)	47	-	7,497
As at 31 December 2011
Assets and liabilities
Segment assets	116,061	271,516	12,152	-	26,951	305,965*	(127,189)	605,456
Investment in associates and joint ventures	-	722	-	38,575	-	1,680	-	40,977
Total assets	116,061	272,238	12,152	38,575	26,951	307,645	(127,189)	646,433
Segment liabilities	32,025	226,196	6,736	-	24,034	69,270	(127,189)	231,072
Other segment information
Capital expenditure:
• Property, plant and equipment	5,921	366	181	-	1,428	2,197	-	10,093
• Investment properties	-	20,648	2,578	-	-	-	-	23,226
• Intangible assets	10	224	91	-	4,109	-	-	4,434

* LTL 267,201 thousand from this amount are attributable to the Company.

4 Segment information (cont'd)

In 2012 employee benefits expense included LTL 11,698 thousand social security contribution paid by employer (2011: LTL 9,294 thousand) and LTL 3,394 thousand social security contribution paid by employee (2011: 2,698 LTL thousand)

Analysis of revenue by category:

	Group
	2012	2011
Sales of goods
Furniture production	230,142	238,366
Sales of residential real estate	6,968	1,433
IT sector revenue	21,287	21,328
Sales of other production	11,072	10,967
Total	269,469	272,094
Revenue from services
Rent and other real estate income	25,268	23,673
IT sector revenue	19,311	13,072
Facilities management revenue	11,675	8,390
Furniture sector revenue	-	2
Other services revenue	601	136
Total	56,855	45,273
Total revenue	326,324	317,367

The entity is domiciled in the Lithuania. The result of its revenue from external customers in the Lithuania is LTL 88,301 thousand (2011: LTL 79,184 thousand), and the total of revenue from external customers from other countries is LTL 238,023 thousand (2011: LTL 238,183 thousand).

Analysis of revenue from external customers by group of countries other than Lithuania:

	Group
	2012	2011
Germany	84,773	33,489
Netherlands	24,627	82,388
United Kingdom	13,903	28,893
France	22,278	3,365
Other European Union countries	50,930	62,881
Other than European Union countries	41,512	27,167
Total	238,023	238,183

The following table presents non-current assets other than financial instruments and deferred tax assets regarding Group's geographical distribution for the years ended 31 December 2012 and 2011:

	Lithuania	Foreign countries	Total continuing operations
Year ended 31 December 2012	284,250	198	284,448
Year ended 31 December 2011	299,967	323	300,290

Revenues of LTL 225,587 thousand (2011: LTL 232,379 thousand) are derived from a single external customer and these revenues are attributable to the furniture production segment.

5 Other income and expenses

5.1. Net changes in fair value on financial instruments

		Group		Company
		2012	2011	2012	2011
Gain (loss) from shares of Trakcja S.A.		970	(76,564)	970	(76,564)
Net gain (loss) from financial assets designated upon initial recognition at fair value through profit or loss, total		970	(76,564)	970	(76,564)
Gain (loss) from bonds of Trakcja S.A.		-	(5,507)	-	(5,507)
Gain from derivative representing AB Sanitas share sale price adjustment according to the agreement (included within the
discontinued operations in the Group)	7	-	-	-	43,715
Other gains (losses)		2,555	(1,805)	(134)	405
Net gain (loss) from financial assets held for trading, total		2,555	(7,312)	(134)	38,613
Net gain (loss) from financial assets at fair value through profit or loss, total		3,525	(83,876)	836	(37,951)
Net gain from financial liabilities at fair value through profit or loss (contingent consideration from the acquisition of NRD AS)		42	-	-	-
		3,567	(83,876)	836	(37,951)

5.2. Impairment, write-down and provisions

	Group		Company
	2012	2011	2012	2011
Change in provision for impairment of loans granted	939	2,303	258	(2,435)
Change in provision for impairment of trade receivables	(76)	(786)	-	-
Impairment as consequence of AB Bankas Snoras insolvency (Note 18)	-	(20,100)	-	(20,100)
Impairment on financial assets, total	863	(18,583)	258	(22,535)
Impairment of investments in subsidiaries, associates and joint ventures	-	-	(16,520)	(8,142)
Reversal of impairment due to increase of recoverable amount of the investments in subsidiaries, associates and joint ventures	-	-	3,106	-
Change in write-down of inventories	(70)	125	-	-
Provisions	73	129	-	250
Other impairment losses on non-financial assets	-	(383)	-	-
Impairment on non-financial assets and provisions, total	3	(129)	(13,414)	(7,892)
	866	(18,712)	(13,156)	(30,427)

In 2012 and in 2011 the Company recognised additional impairment losses of investments to subsidiaries that operate in real estate segment due to the decrease in value of net assets of these subsidiaries (see Note 3). In 2011 the Company recognised allowance for impairment of the deposit certificate of AB Bankas Snoras due insolvency of the bank (see Note 18).

5.3. Other income

	Group		Company
	2012	2011	2012	2011
Interest income from loans, receivables, term deposit and cash	2,663	3,486	11,032	9,620
Interest income from held to maturity financial assets	187	-	187	-
Interest income from held-for-trading financial assets	806	3,263	806	3,263
Dividend income	18	-	28,758	11,314
Profit from bargain purchases (Note 3)	-	1,484	-	-
Other income	863	1,877	12	23
	4,537	10,110	40,795	24,220

In 2012 the Company recognised LTL 2,667 thousand interest income on impaired loans (2011: LTL 2,325 thousand). In 2012 the Group recognised LTL 5 thousand interest income on impaired loans (2011: LTL 446 thousand).

5.4. Finance costs

		Group		Company
	2012	2011	2012	2011
Interest expenses of convertible bonds	(768)	(3,212)	(768)	(3,212)
Other interest expenses	(2,948)	(9,163)	(138)	(5,004)
Other finance costs	(172)	(1,345)	-	(1,005)
	(3,888)	(13,720)	(906)	(9,221)

6 Income tax

	Group		Company
	2012	2011	2012	2011
Components of the income tax credit (expenses)
Current year income tax	(1,639)	(2,289)	-	(170)
Prior year current income tax correction	52	133	-	-
Deferred income tax credit (expenses)	(1,597)	15,906	(1,235)	15,773
Income tax credit (expenses) charged to the income statement	(3,184)	13,750	(1,235)	15,603
			Group

	2012		2011
Consolidated statement of comprehensive income
Deferred income tax on cash flow hedge		-	(25)
Deferred tax effect of net gains (loss) on available-for-sale investments		-	-
Income tax credit (expenses) recognised in statement of comprehensive income		-	(25)

	Group		Company
	2012	2011	2012	2011
Consolidated statement of changes in equity
Current year income tax (conversion of bonds)	(1,076)	-	(1,076)	-
Income tax credit (expenses) recognised in statement of changes in equity	(1,076)	-	(1,076)	-

Deferred income tax asset and liability were estimated at 15% rates as at 31 December 2012, except for temporary differences arising from entities operating in Luxembourg and Norway (28.80 % and 28 %, respectively).

The movement in deferred income tax assets and liabilities during 2012 is as follows:

	Balance as at 31 December 2011	Recognised in the income statement	Recognised in equity	Correction of transfer of tax losses within group	Currency transla tion	Balance as at 31 December 2012
Deferred tax asset
Tax loss carry forward for indefinite period of time	9,654	(989)	(1,076)	(11)	-	7,578
Tax loss carry forward till 2014 – 2017	1,398	4,055	-	-	-	5,453
Property, plant and equipment	109	4	-	-	-	113
Investment properties	2,267	480	-	-	-	2,747
Receivables	601	(16)	-	-	-	585
Investments at fair value through profit and loss	15,318	(4,822)	-	-	-	10,496
Inventories	104	(61)	-	-	-	43
Accruals	350	(148)	-	-	-	202
Intangible assets	53	(20)	-	-	3	36
Other	500	117	-	-	-	617
Deferred tax asset available for recognition	30,354	(1,400)	(1,076)	(11)	3	27,870
Less: unrecognised deferred tax asset from tax losses carried forward for indefinite period of time Less: unrecognised deferred tax asset due to	(3,143)	(351)	-	-	-	(3,494)
future uncertainties	(2,372)	(469)	-	-	-	(2,841)
Recognised deferred income tax asset, net	24,839	(2,220)	(1,076)	(11)	3	21,535
Asset netted with liability of the same legal entities	(2,467)	550	-	6	-	(1,911)
Deferred income tax asset, net	22,372	(1,670)	(1,076)	(5)	3	19,624
Deferred tax liability
Property, plant and equipment	(296)	27	-	-	-	(269)
Intangible assets	(665)	183	-	-	(5)	(487)
Investment properties	(16,046)	301	-	-	-	(15,745)
Investments available-for-sale	-	-	-	-	-	-
Investments held for trading	(77)	77	-	-	-	-
Inventories	(38)	8	-	-	-	(30)
Other	(523)	27	-	-	-	(496)
Deferred income tax liability	(17,645)	623	-	-	(5)	(17,027)
Liability netted with asset of the same legal
entities	2,467	(550)	-	(6)	-	1,911
Deferred income tax liability, net	(15,178)	73	-	(6)	(5)	(15,116)
Deferred income tax, net	7,194	(1,597)	(1,076)	(11)	(2)	4,508

Deferred income tax asset and liability were estimated at 15% rates as at 31 December 2011, except for temporary differences arising from entities operating in Luxembourg and Norway (28.80 % and 28 %, respectively).

The movement in deferred income tax assets and liabilities during 2011 is as follows:

	Balance as at 31 December 2010	Recognised in the income statement	Recognised in equity	Acquired and disposed subsidiaries	Balance as at 31 December 2011
Deferred tax asset
Tax loss carry forward for indefinite period of time	9,983	(506)	(25)	202	9,654
Tax loss carry forward till 2014 – 2016	927	471	-	-	1,398
Property, plant and equipment	78	(37)	-	68	109
Investment properties	1,929	(22)	-	360	2,267
Receivables	147	442	-	12	601
Investments at fair value through profit and loss	-	15,318	-	-	15,318
Inventories	103	1	-	-	104
Accruals	105	222	-	23	350
Intangible assets	5	1	-	47	53
Other	311	189	-	-	500
Deferred tax asset available for recognition	13,588	16,079	(25)	712	30,354
Less: unrecognised deferred tax asset from tax losses carried forward for indefinite period of time	(2,045)	(1,073)	-	(25)	(3,143)
Less: unrecognised deferred tax asset due to future uncertainties	(1,746)	(295)	-	(331)	(2,372)
Recognised deferred income tax asset, net	9,797	14,711	(25)	356	24,839
Asset netted with liability of the same legal entities	(3,154)	753	-	(66)	(2,467)
Deferred income tax asset, net	6,643	15,464	(25)	290	22,372
Deferred tax liability
Property, plant and equipment	(303)	215	-	(208)	(296)
Intangible assets	(348)	49	-	(366)	(665)
Investment properties	(16,522)	854	-	(378)	(16,046)
Investments available-for-sale	-	-	-	-	-
Investments held for trading	(137)	60	-	-	(77)
Inventories	-	(38)	-	-	(38)
Other	(578)	55	-	-	(523)
Deferred income tax liability	(17,888)	1,195	-	(952)	(17,645)
Liability netted with asset of the same legal
entities	3,154	(753)	-	66	2,467
Deferred income tax liability, net	(14,734)	442	-	(886)	(15,178)
Deferred income tax, net	(8,091)	15,906	(25)	(596)	7,194

The movement in deferred income tax assets and liabilities for the Company during 2012 is as follows:

	Balance as at 31 December 2011	Recognised in the income statement	Recognised in equity	Transfer of tax losses within group	Balance as at 31 December 2012
Deferred tax asset
Tax loss carry forward for indefinite period of time	3,407	(883)	(1,076)	(7)	1,441
Investments at fair value through profit and loss	15,032	(4,536)	-	-	10,496
Tax loss carry forward till 2014 - 2017	1,398	4,277	-	(222)	5,453
Accruals	104	(93)	-	-	11
Deferred tax asset available for recognition	19,941	(1,235)	(1,076)	(229)	17,401
Asset netted with liability of the same legal entities	-	-	-	-	-
Deferred income tax asset, net	19,941	(1,235)	(1,076)	(229)	17,401
Deferred income tax, net	19,941	(1,235)	(1,076)	(229)	17,401

The movement in deferred income tax assets and liabilities for the Company during 2011 is as follows:

	Balance as at 31 December 2010	Recognised in the income statement	Transfer of tax losses within group	Balance as at 31 December 2011
Deferred tax asset
Tax loss carry forward for indefinite period of time	3,400	174	(167)	3,407
Investments at fair value through profit and loss	-	15,032	-	15,032
Tax loss carry forward till 2014 - 2016	927	471	-	1,398
Accruals	8	96	-	104
Deferred tax asset available for recognition	4,335	15,773	(167)	19,941
Asset netted with liability of the same legal entities	-	-	-	-
Deferred income tax asset, net	4,335	15,773	(167)	19,941
Deferred income tax, net	4,335	15,773	(167)	19,941

The analysis of deferred tax assets and deferred tax liabilities is as follows:

	Group		Company
	2012	2011	2012	2011
Deferred tax assets
Deferred tax assets to be recovered after more than 12 months	19,178	21,638	17,307	19,828
Deferred tax assets to be recovered within 12 months	446	734	94	113
	19,624	22,372	17,401	19,941
Deferred tax liabilities
Deferred tax liability to be recovered after more than 12 months	14,954	15,165	-	-
Deferred tax liability to be recovered within 12 months	162	13	-	-
	15,116	15,178	-	-

The reconciliation of the total income tax to the theoretical amount that would arise using the tax rate of the Group and the Company is as follows:

	Group		Company
	2012	2011	2012	2011
Accounting profit before tax from continuing operations	35,168	(95,187)	22,182	259,267
(Loss) profit before tax from a discontinued operation	-	297,980	-	-
(Loss) profit before income tax	35,168	202,793	22,182	259,267
Tax calculated at the tax rate of 15 % Disposal of shares of AB Sanitas, AB Kauno Tiltai and Tiltra Group	(5,275)	(30,419)	(3,328)	(38,890)
AB not subject to tax	-	44,454	-	54,323
Tax non-deductible (expenses) / non taxable income	2,877	994	2,093	340
Deferred tax expenses arising from write-down or reversal of previous write-down The amount of the benefit arising from previously unrecognised tax	(152)	(1,368)	-	-
loss or temporary difference of a prior period that is used to reduce deferred tax expense The amount of the benefit arising from previously unrecognised tax	(785)	103	-	-
loss or temporary difference of a prior period that is used to reduce current tax expense	102	10	-	-
Tax loss carry forward expiry (derecognition)	-	-	-	-
Withholding income tax	-	(137)	-	(137)
Correction of prior year current income tax	52	133	-	(33)
Different income tax rate in foreign subsidiaries	(3)	(20)	-	-
Income tax credit (expenses) recorded in the income statement	(3,184)	13,750	(1,235)	15,603
Income tax attributable to a discontinued operation		-	-	-
Income tax attributable to a continuing operation	(3,184)	13,750	(1,235)	15,603

7 Discontinued operations and non-current assets classified as held-for-sale

	2012		2011
Share of profit of associates (road and bridge construction)		-	-
Gain on sale of road and bridge construction segment		-	130,998
Direct expenses related to transaction		-	(20,510)
Total discontinued operations (road and bridge construction)		-	110,488
Share of profit of associates (pharmacy segment) Gain from derivative representing the share sale price adjustment of AB Sanitas according to the		-	1,618
agreement		-	43,715
Gain on sale of pharmacy segment		-	142,159
Total discontinued operations (pharmacy segment)		-	187,492
Total discontinued operations		-	297,980
Earnings per share in LTL:	2012		2011
Basic from discontinued operations (LTL per share)		-	5.77
Diluted from discontinued operations (LTL per share)		-	5.18

7 Discontinued operations and non-current assets classified as held-for-sale (cont'd)

Cash flows related to the sales of associates:

	Group	Company
Cash received for the sale of road and bridge construction segment	54,202	54,202
Sales price of AB Sanitas, received in cash	286,690	286,690
Additional price adjustment for shares acquired in January 2009	(16,293)	(16,293)
Additional net cash flows related to sales of AB Sanitas shares according to the agreement
signed on 24 October 2008 with Baltic Pharma Limited	45,227	45,227
Cash paid for Tiltra Group shares price reduction	(546)	(546)
Total cash flows related to sale of associates	369,280	369,280

Tiltra Group AB and AB Kauno Tiltai

On 18 November 2010, the Company signed an agreement regarding the sale 44.78 % shares of Tiltra Group AB and 43.36 % shares of AB Kauno Tiltai, if the conditions precedent set out in the Agreement is fulfilled. The mentioned associates comprised the road and bridge construction segment. The Buyer of the shares was Trakcja Polska S. A. (current name – Trakcja S.A.), whose main activity is a rail infrastructure construction. Therefore the investments were presented as discontinued operations in the income statement. The deal was completed on 19 April 2011.

Tiltra Group AB and AB Kauno Tiltai (cont'd)

The Company sold to Trakcja Polska S.A. 44.78% stake in Tiltra Group AB and 43.36% stake in AB Kauno Tiltai and subsequently, the Company acquired:

(i) 29,017,087 newly issued Trakcja Polska S.A. shares amounting to 12.5% in share capital of Trakcja Polska S.A. (ii) 59,892 bonds of Trakcja Polska S.A. with par value PLN 1,000 (LTL 873.95) each, annual interest rate – 7% (paid out on 30 June and 31 December of each year), maturity date – 12 December 2013,

(iii) 59,891 bonds of Trakcja Polska S.A. with par value PLN 1,000 (LTL 873.95) each, annual interest rate – 7% (paid out on 30 June and 31 December of each year), maturity date – 12 December 2014.

Remaining LTL 54,202 thousand was paid to the Company in cash.

Amounts in PLN are converted to LTL at the actual currency exchange rate ruling at 19 April 2011.

Acquired financial assets through the sale of road and bridge construction segment were measured at fair value on transaction date and gain on disposal excluding transaction expenses was calculated as follows:

	2011
	Group	Company
Shares of Trakcja S.A.	92,055	92,055
Bonds of Trakcja S.A.	97,049	97,049
Cash received	54,202	54,202
The carrying amount of investments sold	(72,075)	(25,004)
Foreign currency translation reserve of associates sold	(40)	-
Price reduction due to Tiltra Group's failure to achieve the agreed results	(40,193)	(40,193)
Gain on disposal of associates without transaction expenses	130,998	178,109

In the Company the gain on sale of associates was calculated as follows:

	2011
Gain on sale of associates without related expenses	178,109
Direct expenses related to sale	(20,510)
Profit of sales of associates	157,599

7 Discontinued operations and non-current assets classified as held-for-sale (cont'd)

Tiltra Group AB and AB Kauno Tiltai (cont'd)

On 21 December 2011, the Company and other former shareholders of Tiltra Group executed an agreement with Trakcja S. A. and its shareholder Comsa S. A. regarding the amendment to an agreement of 18 November 2010. Because it was unlikely that Tiltra Group achieves planned results for the financial year ending 31 March 2012 it was agreed to reduce Tiltra Group sale price and settle finally. Consideration attributable to the Company was reduced by LTL 40,193 thousand, measured at fair value. The Company sold back to Trakcja S. A. 54,652 bonds issued by Trakcja S. A. with par value PLN 1,000 (LTL 771.10) each, annual interest rate – 7%, maturing on 12 December 2014 (bonds' fair value at settlement date was LTL 39,647 thousand). In addition PLN 707 thousand (LTL 546 thousand) were paid in cash. Amounts in PLN were converted to LTL at the currency exchange rate as at 21 December 2011.

The Company has provided tax warranties to Trakcja S. A. and warranties in respect of a legal title of sold shares. Management does not expect these warranties to become liabilities.

AB Sanitas

The Company and other AB Sanitas shareholders, all together controlling 87.2% shares, on 23 May 2011, have signed a definitive share sale and purchase agreement for the sale of their entire shareholding in AB Sanitas to Valeant Pharmaceuticals International, Inc. ("Valeant"). Pursuant to the agreement, the Company sold 26.5% shares in AB Sanitas for LTL 286,690 thousand or 10.06 EUR (34.74 LTL) per share. The mentioned associate comprises the pharmacy segment. Therefore the investment was presented as discontinued operations in the income statement. The deal was closed on 19 August 2011.

In addition, the Company had to pay LTL 16,293 thousand for the shares acquired from business partners in January 2009, as the final acquisition price of those shares was dependant on the sales price of AB Sanitas shares to the end buyer.

Taking into account the share price adjustment mechanism set out in the agreement signed on 24 October 2008 with Baltic Pharma Limited, (regarding sale of 20.3 % of the share capital of Sanitas AB in 2008) and analogous mechanism set out in the agreements with some investors, from which AB Sanitas shares were acquired in the end of 2008, total proceedings of the Company from previously sold shares of AB Sanitas less payments to business partners for previously acquired shares amounted to LTL 45,227 thousand. This way the derivative was realised, which represented the probable share price adjustment for previously sold shares.

The gain on sale of AB Sanitas shares was calculated as follows:

	2011
	Group	Company
Sales price, received in cash	286,690	286,690
Additional price adjustment for shares acquired in January 2009	(16,293)	(16,293)
The carrying amount of investments sold	(126,116)	(109,558)
Cash flow hedge reserve of associates sold	(266)	-
Foreign currency translation reserve of associates sold	(1,856)	-
Gain on disposal of associates	142,159	160,839

AB Umega

	Group		Company
	2012	2011	2012	2011
Non-current assets classified as held-for-sale
AB Umega	-	1,708	-	3,745
	-	1,708	-	3,745

On 30 November 2011, the Company signed the agreement regarding sale of 29.27 % shares of associate AB Umega, which activity is metal processing. The deal was completed in January 2012, when the permission of the Competition Council was received (see Note 3). The investment was classified as assets held for sale in the statement of financial position for the year ended 31 December 2011. Because the investment has not comprised separate operating segment, it is not presented as discontinued operations in the income statement.

8 Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of shares for 2012 and 2011 were as follows:

Calculation of weighted average for the year 2012	Number of shares (thousand)	Par value (LTL)	Issued/366 (days)	Weighted average (thousand)
Shares issued as at 31 December 2011	51,660	1	366/366	51,660
Shares issued as at 30 March 2012	5,898	1	276/366	4,448
Own shares acquired on 18 May 2012	(5,756)	1	227/366	(3,570)
Shares issued as at 31 December 2012	51,802	1	-	52,538

Calculation of weighted average for 2011	Number of shares (thousand)	Par value (LTL)	Issued/365 (days)	Weighted average (thousand)
Shares issued as at 31 December 2010	51,660	1	365/365	51,660
Shares issued as at 31 December 2011	51,660	1	-	51,660

The following table reflects the income and share data used in the basic earnings per share computations:

	Group		Company
	2012	2011	2012	2011
Net profit (loss), attributable to the equity holders of the parent from continuing operations	24,655	(88,934)	20,947	274,870
Net profit, attributable to the equity holders of the parent from discontinued operation	-	297,980	-	-
Net profit (loss), attributable to equity holders of the parent for basic
earnings	24,655	209,046	20,947	274,870
Weighted average number of ordinary shares (thousand)	52,538	51,660	52,538	51,660
Basic earnings (deficit) per share (LTL)	0.47	4.05	0.40	5.32

8 Earnings per share (cont'd)

The following table reflects the share data used in the diluted earnings per share computations in 2012:

	Number of shares (thousand)	Issued/366 (days)	Weighted average (thousand)
Weighted average number of ordinary shares for basic earnings per share
	-	-	52,538
Potential shares from convertible bond of LTL 25 million (issued on 1
December 2008) (Note 20)	4,545	90/366	1,117
Potential shares from convertible bond of LTL 7.44 million (issued on 8
January 2010) (Note 20)	1,353	90/366	333
Weighted average number of ordinary shares for diluted earnings per share	-	-	53,988

The following table reflects the share data used in the diluted earnings per share computations in 2011:

	Number of shares (thousand)	Issued/365 (days)	Weighted average (thousand)
Weighted average number of ordinary shares for basic earnings per share Potential shares from convertible bond of LTL 25 million (issued on 1	-	-	51,660
December 2008) Potential shares from convertible bond of LTL 7.44 million (issued on 8	4,545	365/365	4,545
January 2010) Weighted average number of ordinary shares for diluted earnings per share	1,353 -	365/365 -	1,353 57,558

The following table reflects the income data used in the diluted earnings per share computations in 2012 and 2011:

	Group		Company
	2012	2011	2012	2011
Net profit, attributable to the equity holders of the parent for basic
earnings	24,655	209,046	21,589	274,870
Interest on convertible bond	768	3,212	768	3,212
Net profit, attributable to equity holders of the parent for diluted
earnings	25,423	212,258	22,357	278,082
Weighted average number of ordinary shares (thousand)	53,988	57,558	53,988	57,558
Diluted earnings(deficit) per share (LTL)	0.47	3.69	0.41	4.83

9 Dividends per share

In 2012 and 2011 dividends were not declared.

10 Property, plant and equipment

Group			Machinery and		Construc tion in	Other property, plant and
	Land	Buildings	equipment	Vehicles	progress	equipment	Total
Cost:
Balance as at 31 December 2010	-	32,441	62,845	1,098	500	8,917	105,801
Additions	-	986	3,050	237	562	2,810	7,645
Disposals and write-offs	-	(3)	(2,101)	(57)	-	(656)	(2,817)
Transfers between groups	-	100	1,665	24	(463)	(1,326)	-
Transfers to/from investment properties	-	(2,255)	-	-	-	-	(2,255)
Acquisition of subsidiaries	-	2,145	-	124	-	179	2,448
Balance as at 31 December 2011	-	33,414	65,459	1,426	599	9,924	110,822
Additions	157	351	10,449	431	219	5,301	16,908
Disposals and write-offs	-	-	(1,456)	(106)	-	(1,572)	(3,134)
Transfers between groups	-	-	2,036	43	(60)	(2,019)	-
Balance as at 31 December 2012	157	33,765	76,488	1,794	758	11,634	124,596
Accumulated depreciation:
Balance as at 31 December 2010	-	14,594	45,826	444	-	6,061	66,925
Charge for the year	-	1,154	5,653	147	-	1,539	8,493
Impairment	-	383	-	-	-	-	383
Disposals and write-offs	-	(2)	(1,951)	(57)	-	(628)	(2,638)
Transfers to/from investment properties	-	(600)	-	-	-	-	(600)
Balance as at 31 December 2011	-	15,529	49,528	534	-	6,972	72,563
Charge for the year	-	1,065	4,805	200	-	1,402	7,472
Disposals and write-offs	-	-	(1,384)	(92)	-	(1,434)	(2,910)
Balance as at 31 December 2012	-	16,594	52,949	642	-	6,940	77,125
Net book value as at 31 December 2011	-	17,885	15,931	892	599	2,952	38,259
Net book value as at 31 December 2012	157	17,171	23,539	1,152	758	4,694	47,471

10 Property, plant and equipment (cont'd)

Company	Other property, Vehicles plant and equipment		Total
Cost:
Balance as at 31 December 2010	154	414	568
Additions	-	25	25
Disposals and write-offs	-	(14)	(14)
Balance as at 31 December 2011	154	425	579
Additions	-	10	10
Disposals and write-offs	-	(23)	(23)
Balance as at 31 December 2012	154	412	566
Accumulated depreciation:
Balance as at 31 December 2010	2	328	330
Charge for the year	26	53	79
Disposals and write-offs	-	(14)	(14)
Balance as at 31 December 2011	28	367	395
Charge for the year	25	42	67
Disposals and write-offs	-	(23)	(23)
Balance as at 31 December 2012	53	386	439
Net book value as at 31 December 2011	126	58	184
Net book value as at 31 December 2012	101	26	127

The depreciation charge of the Group's and the Company's property, plant and equipment for the year 2012 amounts to LTL 7,472 thousand and LTL 67 thousand, respectively (in the year 2011 LTL 8,493 thousand and LTL 79 thousand, respectively). Amounts of LTL 7,289 thousand and LTL 67 thousand for the year 2012 (LTL 8,493 thousand and LTL 79 thousand for the year 2011) have been included into operating expenses of continuing operations in the Group's and the Company's income statement, respectively. The depreciation charge for the Group is decreased by LTL 127 thousand of amortization of grants related to assets in 2012 (2011: 82 thousand LTL). Amounts of LTL 183 thousand have been included in the inventories of the Group.

In 2nd quarter of 2011 the asset located at A. Juozapavičiaus g. 7 was transferred from owned-occupied property to investment property. The carrying amount of an asset was bigger than the fair value (LTL 2,000 thousand), therefore the impairment loss of LTL 383 thousand was recognised in the income statement.

Property, plant and equipment of the Group with a net book value of LTL 1,304 thousand as at 31 December 2012 (LTL 18,939 thousand as at 31 December 2011) was pledged to the banks as a collateral for the loans (Note 22).

There were no borrowing cost incurred by the Group and capitalised to the acquisition, construction or production of a qualifying asset for the year 2012 and 2011.

The acquisition cost of the Group's property, plant and equipment that is being prepared for bringing into use amounted to LTL 11,198 thousand as of 31 December 2012 (LTL 370 thousand as of 31 December 2011). Such property is classified in the category of machinery and equipment.

At the end of 2012, the Group entered into contracts with Homag Holzbearbeitungssysteme GmbH for the acquisition of modern equipment. The total amount of commitments to purchase property, plant and equipment under the contracts is LTL 4,807 thousand as of 31 December 2012.

11 Investment properties

	Group
	2012	2011
Balance at the beginning of the year	248,957	240,573
Additions	3,090	9,211
Subsequent expenditure	337	191
Additions through acquisition of subsidiaries	-	13,824
Disposals	(6,129)	(990)
Transfer from other property, plant and equipment	-	2,000
Transfer to other property, plant and equipment	-	(345)
Transfer to inventories	(11,959)	(780)
Disposals of subsidiaries	-	-
Gain from fair value adjustment	5,988	4,630
Loss from fair value adjustment	(14,697)	(19,357)
Balance at the end of the year	225,587	248,957

Investment properties of the Group include office buildings, warehouses, land and flats. The majority of buildings and warehouses are leased under the operating lease agreements and generate rental income amounting to LTL 11,907 thousand in 2012 (LTL 10,790 thousand in 2011). The direct operating expenses arising from investment properties that generated rental income during the year 2012 amounted to LTL 3,731 thousand (LTL 4,926 thousand in 2011).

Investment properties are stated at fair value, which has been determined based on the joint valuations performed by the accredited valuers: UAB OBER-HAUS Nekilnojamasis Turtas, and UAB Inreal (the Group company) as at 30 September 2012 and as at 31 December 2011. There were no significant changes in the market from 30 September 2012 that could have an effect on the value of investment properties, therefore the updated valuation was not performed on 31 December 2012. The fair value represents the amount at which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm's length transaction at the date of valuation, in compliance with the International Valuation Standards set out by the International Valuation Standards Committee. The fair value was set using either the sales comparison approach or income approach. Sales comparison approach refers to the prices of the analogues transactions in the market. Income approach is based on the assumption that defined correlation between net activity future income and fair value of the objects exists. Discounted cash flow projections are based on estimates of future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current (at the date of the statement of financial position) market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. Discount rates used to determine the fair value of the investment properties that are leased out, calculated based on future lease and sale cash flow projections as at 30 September 2012 was 8.5 - 13.82 % and at 31 December 2011 was 8 – 11 %. Capitalisation rate used to determine the terminal value of the properties as at 30 September 2012 was 7.22- 10.82 % and at 31 December 2011 was 7.5 – 10 %. Capitalisation rate used to determine the fair value of the investment properties held for the future redevelopment, that are calculated based on sale cash flow projections, as at 30 September 2012 and 31 December 2011 was 15 - 20 %.

The sensitivity analysis of investment properties valued using income approach as at 31 December 2012 is as follows:

		Increase of estimates	Decrease of estimates
Estimates	Leased Investment properties	Investment properties held for future redevelopment	Leased Investment properties	Investment properties held for future redevelopment
Change in future rental rates by 10 %	13,493	-	(13,361)	-
Change in future sale prices of developed properties by 10%	-	26,340	-	(20,840)
Change in construction costs by 10%	-	(16,780)	-	22,120
Change in expected vacancy rates by 20%	(1,719)	-	1,649	-
Change in discount and capitalization rate by 50 bps	(7,442)	(800)	8,808	1,300

11 Investment properties (cont'd)

During 2012 the Group has acquired investment properties for LTL 3,090 thousand, including agricultural land for LTL 2,976 thousand. During 2012 investment properties were sold for LTL 6,129 thousand. The main deal was sale of commercial property, located in Donelaičio street 33, in Kaunas. The sale price was equal to LTL 4,754 thousand.

The main addition in 2011 was investment in agriculture land through direct purchases and through acquisition of subsidiaries (LTL 15,629 thousand). The Group has obtained also an investment property for LTL 2,500 thousand from bankrupted company UAB Nerijos Būstas, offsetting part of trade receivable from this company. The investment property was reclassified to inventories in 2012. The Group has acquired the investment properties in Vilnius district Justiniškės through acquisition of UAB Jurita and an investment property in Neringa through acquisition of UAB BNN (see Note 3).

In 3rd Quarter of 2012 assets located in Klaipėda and Nida, with carrying value LTL 11,959 thousand were reclassified from investment property to inventories. In 1st quarter of 2011 asset located at Elniakampio 7, Vilnius with carrying value of LTL 700 thousand was reclassified from investment property to inventories. The construction of residential apartments was started.

As at 31 December 2012 investment properties with carrying amount of LTL 146,465 thousand (LTL 171,369 thousand as at 31 December 2011) were pledged to the banks as collateral for the loans (Note 22).

There were no restrictions on the realisation of investment properties or the remittance of income and proceeds of disposals as at 31 December 2012 and 2011, except the Group has signed future sale agreement regarding investment property in Vilnius district Justiniškės and regarding some investment properties, located in Plunge (the carrying amounts was LTL 1,515 thousand as at 31 December 2012). If sale conditions would be met, the Group would sell the investment property in 2013 for LTL 2,055 thousand. No material contractual obligations to purchase, construct, repair or enhance investment properties existed at year end except as stated above.

12 Intangible assets

Group	Goodwill	Contracts and customer relationship	Software	Other intangible assets	Total
Cost:
Balance as at 31 December 2010	-	13,195	1,191	436	14,822
Additions	-	-	399	233	632
Acquisition of subsidiaries	1,600	2,176	26	-	3,802
Disposals and write-offs	-	-	(388)	(2)	(390)
Transfers between groups	-	-	415	(415)	-
Balance as at 31 December 2011	1,600	15,371	1,643	252	18,866
Additions	-	-	256	597	853
Disposals and write-offs	-	(4)	(50)	(4)	(58)
Transfers between groups	-	(1)	178	(177)	-
Difference of foreign currency exchange	-	19	-	-	19
Balance as at 31 December 2012	1,600	15,385	2,027	668	19,680
Accumulated amortisation:
Balance as at 31 December 2010	-	3,520	796	16	4,332
Charge for the year	-	1,495	343	12	1,850
Disposals and write-offs	-	-	(388)	(2)	(390)
Balance as at 31 December 2011	-	5,015	751	26	5,792
Charge for the year	-	2,120	408	26	2,554
Disposals and write-offs	-	(4)	(50)	(4)	(58)
Transfers between groups	-	(1)	-	1	-
Difference of foreign currency exchange	-	2	-	-	2
Balance as at 31 December 2012	-	7,132	1,109	49	8,290
Net book value as at 31 December 2011	1,600	10,356	892	226	13,074
Net book value as at 31 December 2012	1,600	8,253	918	619	11,390

12 Intangible assets (cont'd)

Company	Software	Other intangible assets	Total
Cost:
Balance as at 31 December 2010	31	2	33
Additions	-	-	-
Disposals and write-offs	(4)	(2)	(6)
Balance as at 31 December 2011	27	-	27
Additions	11	-	11
Disposals and write-offs	-	-	-
Balance as at 31 December 2012	38	-	38
Accumulated amortisation:
Balance as at 31 December 2010	19	2	21
Charge for the year	5	-	5
Disposals and write-offs	(4)	(2)	(6)
Balance as at 31 December 2011	20	-	20
Charge for the year	5	-	5
Disposals and write-offs	-	-	-
Balance as at 31 December 2012	25	-	25
Net book value as at 31 December 2011	7	-	7
Net book value as at 31 December 2012	13	-	13

The amortisation charge of the Group's and the Company's intangible assets for the year ended 31 December 2012 amounts to LTL 2,554 thousand and LTL 5 thousand, respectively (in the year 2011 LTL 1,850 thousand and LTL 5 thousand, respectively) and have been included into operating expenses of continuing operations in the Group's and the Company's income statement.

The goodwill was acquired through business combination in the information – technology segment and has been allocated to cash-generating unit of NRD subgroup. In 2012 the recoverable amount of unit has been determined based on value in use calculation using cash flow projections based on financial forecasts approved by the Group management covering a 5-year period. The pre –tax discount rate applied to cash flow projections is 11.90 %, cash flows within the 5-year period are extrapolated using 5 % growth rate and cash flows for continuing value are extrapolated using 2 % growth rate.

Main intangible items are:

• − Contracts and customer relationship acquired during acquisition of UAB BAIP in 2007 (information technology sector). Its carrying amount equals LTL 4,876 thousand and remaining estimated useful live is 5 years as of 31 December 2012.
• − Dwelling-houses facilities management contracts acquired during acquisition of UAB Priemiestis in 2010. Their carrying amount equals LTL 898 thousand and remaining estimated useful live is 2.6 years as of 31 December 2012.
• − The market management contract acquired during acquisition of UAB Priemiestis in 2010. Its carrying amount equals LTL 592 thousand and remaining estimated useful live is 8.6 years as of 31 December 2012.
• − Contracts and customer relationship acquired during acquisition of NRD AS in 2011 (information technology sector). Its carrying amount equals LTL 1,452 thousand and remaining estimated useful live varies from 6 months until 9 years as of 31 December 2012.

13 Financial instruments by category

Group	Available-for sale	Loans and receivables	Assets at fair value through the profit and loss	Total
31 December 2012
Assets as per statement of financial position
Investments available-for-sale	2,859	-	-	2,859
Trade and other receivables long term	-	5,156	-	5,156
Trade and other receivables short term excluding tax
receivables	-	32,417	-	32,417
Financial assets at fair value through profit and loss	-	-	32,974	32,974
Current loans granted	-	31,730	-	31,730
Restricted cash	-	3,602	-	3,602
Term deposits	-	21,418	-	21,418
Cash and cash equivalents	-	56,092	-	56,092
Total	2,859	150,415	32,974	186,248
Group	Available-for sale	Loans and receivables	Assets at fair value through the profit and loss	Total
31 December 2011
Assets as per statement of financial position
Investments available-for-sale	2,859	-	-	2,859
Non-current loans granted	-	12,041	-	12,041
Trade and other receivables excluding tax
receivables	-	30,920	-	30,920
Financial assets at fair value through profit and loss	-	-	47,599	47,599
Current loans granted	-	31,233	-	31,233
Restricted cash	-	2,915	-	2,915
Term deposits Cash and cash equivalents	- -	99,137 21,346	- -	99,137 21,346

Group	Financial liabilities at amortised cost	Financial liabilities at fair value through profit or loss	Total
31 December 2012
Liabilities as per statement of financial position
Borrowings	105,357	-	105,357
Finance lease liabilities	629	-	629
Trade payables	28,373	-	28,373
Other liabilities excluding tax payables and employee benefit
payables	6,603	114	6,717
Total	140,962	114	141,076
Group	Financial liabilities at amortised cost	Financial liabilities at fair value through profit or loss	Total
31 December 2011
Liabilities as per statement of financial position
Borrowings	126,304	-	126,304
Finance lease liabilities	648	-	648
Trade payables	34,485	-	34,485
Convertible bonds	34,059	-	34,059
Other liabilities excluding tax payables and employee benefit
payables	4,446	154	4,600
Total	199,942	154	200,096

Total 2,859 197,592 47,599 248,050

13 Financial instruments by category (cont'd)

Company	Available-for sale	Loans and receivables	Assets at fair value through the profit and loss	Total
31 December 2012
Assets as per statement of financial position
Investments available-for-sale	1,817	-	-	1,817
Non-current loan granted	-	14,057	-	14,057
Trade and other receivables	-	273	-	273
Financial assets at fair value through profit and
loss	-	-	32,974	32,974
Current loans granted	-	172,998	-	172,998
Term deposits	-	41	-	41
Cash and cash equivalents	-	33,530	-	33,530
Total	1,817	220,899	32,974	255,690

Company	Available-for sale	Loans and receivables	Assets at fair value through the profit and loss	Total
31 December 2011
Assets as per statement of financial position
Investments available-for-sale	1,817	-	-	1,817
Non-current loan granted	-	4,143	-	4,143
Trade and other receivables	-	218	-	218
Financial assets at fair value through profit and
loss	-	-	33,298	33,298
Current loans granted	-	174,648	-	174,648
Term deposits	-	48,621	-	48,621
Cash and cash equivalents	-	11,888	-	11,888
Total	1,817	239,518	33,298	274,633

Company	31 December 2012	31 December 2011
Liabilities as per statement of financial position	Financial liabilities at amortised cost	Financial liabilities at amortised cost
Borrowings	9,125	359
Trade payables	55	630
Convertible bonds	-	34,059
Other current payables excluding tax payables and employee benefit payables	2,061	2,155
Total	11,241	37,203

14 Financial assets available-for-sale and at fair value through profit and loss

	Group		Company
	2012	2011	2012	2011
Available-for-sale
Ordinary shares – unquoted (carried at cost)	2,859	2,859	1,817	1,817
	2,859	2,859	1,817	1,817
Held-for-trading
Ordinary shares - quoted	5,080	15,530	5,080	2,539
Bonds	17,936	15,268	17,936	15,268
Investment units	-	1,310	-	-
	23,016	32,108	23,016	17,807
Designated at fair value through profit and loss on initial recognition
Shares of Trakcja S.A. (quoted)	9,958	15,491	9,958	15,491
	9,958	15,491	9,958	15,491
Total financial assets at fair value through profit and loss	32,974	47,599	32,974	33,298

The shares of Trakcja S.A. were designated at fair value through profit or loss on initial recognition because the Management believes that this presentation represents best the way this investment is managed and its performance is evaluated and provides more relevant information to the users of financial statements.

The fair value of the quoted ordinary shares and listed bonds is determined by reference to published price quotations in the active market.

The unquoted ordinary shares are measured at cost. The fair value of unquoted ordinary shares has not been disclosed because the fair value cannot be measured reliably. The Company, as a non-controlling shareholder, is getting only limited information about these investments. There is only a limited number of comparable companies in Europe. No liquid market for these securities exists, only small deals are noticed in recent years. The Company intends to dispose of these shares in case majority stake of the company is sold to another investor or if current shareholders will offer attractive price.

After the additional share acquisitions during 2011, the Group holds 20,27% of AB Vernitas shares as at 31 December 2012 and 2011 and classifies those as financial instruments available for sale. The Group has no significant influence over this entity, therefore this entity is not presented as an associate in the financial statements. The entity is controlled by a group of interrelated persons. The entity has Management Board and Supervisory Council, the Group has only one representative at the Supervisory Council and none at the Management Board. The Board manages the entity.

The fair value of bonds that are not traded in an active market is determined by using observable market data (taking for basis listed bonds of comparable issuers with similar remaining maturity, cash flow pattern, currency, credit risk and interest basis).

The credit quality of debt securities can be assessed by reference to external credit ratings of the issuer:

		Group		Company
	2012	2011	2012	2011
Moody's ratings
Prime-2	2,668	-	2,668	-
Not Prime	15,268	15,268	15,268	15,268
	17,936	15,268	17,936	15,268

Cash flows

Cash flows related to held-for-trading and available-for-sale investments are as follows:

	Group		Company
	2012	2011	2012	2011
Sale of shares of Trakcja S.A.	6,503	-	6,503	-
Sale of bonds of Trakcja S.A	-	53,473	-	53,473
(Acquisition) and sale of other held-for-trading investments	5,052	(26,386)	(1,245)	(17,077)
(Acquisition) of available-for-sale investments	-	(1,042)	-	-
	11,555	26,045	5,258	36,396

15 Loans granted

The Group's and the Company's loans granted are described below:

	Group		Company
	2012	2011	2012	2011
Loans granted to third parties	31,669	63,947	28,164	60,102
Secured loans granted to third parties	30,209	31	30,179	-
Loans granted to subsidiaries	-	-	158,501	156,119
Loans granted to other related parties	7,329	18,697	6,621	6,656
	69,207	82,675	223,465	222,877
Less: long-term loans	-	(12,041)	(82,862)	(4,143)
Less: allowance for impairment to third parties	(31,669)	(33,593)	(28,164)	(29,873)
Less: allowance for impairment to subsidiaries	-	-	(2,438)	(8,405)
Less: allowance for impairment to other related parties	(5,808)	(5,808)	(5,808)	(5,808)
Total allowance for impairment	(37,477)	(39,401)	(36,410)	(44,086)
Total short-term loans granted	31,730	31,233	104,193	174,648

As at 31 December 2012 the Group and the Company had granted secured loans to third parties with the maturity term till March 2013. These loans are secured by Lithuanian government bonds.

The loans granted to third parties are unsecured. The interest rates for all loans are fixed. The loans are denominated in LTL or EUR.

Loans granted to other related parties are disclosed in more details in Note 29.

As at 31 December 2012 the Group's and the Company's loans granted with nominal value of LTL 37,508 thousand and LTL 46,135 thousand, respectively, were impaired (as at 31 December 2011 LTL 39,782 thousand and LTL 46,176 thousand, respectively). The net amounts of LTL 31 thousand and LTL 9,725 thousand are recognised in the statement of financial position of the Group and the Company, respectively (LTL 381 thousand and LTL 2,090 thousand in 2011, respectively).

Movements in the allowance for impairment of granted loans (assessed individually) were as follows:

	Individually impaired
	Group	Company
Balance as at 31 December 2010	44,456	43,938
Charge for the year	694	7,644
Write-offs charged against the allowance	(2,735)	(2,270)
Recoveries of amounts previously written-off Reclassification of allowance on loans capitalized within share capital of subsidiaries and	(2,997)	(5,209)
joint ventures	(17)	(16)
Balance as at 31 December 2011	39,401	44,087
Charge for the year	-	823
Write-offs charged against the allowance	(985)	(799)
Recoveries of amounts previously written-off Reclassification of allowance on loans capitalized within share capital of subsidiaries and	(939)	(1,081)
joint ventures	-	(6,620)
Balance as at 31 December 2012	37,477	36,410

Changes in allowance for impairment of loans granted for the year 2012 and 2011 have been included within 'impairment, write down and provisions' expenses in the income statement (Note 5.2.). The Group and the Company have reversed part of impairment losses of loans granted to previously owned Latvian real estate entities because part of loans was returned. In previous periods the loans were impaired to nil. In 2012 and 2011 at the Company level additional impairment losses of loans granted to subsidiaries operating in real estate segment were recognised due to decrease in value of net assets of these subsidiaries.

15 Loans granted (cont'd)

The ageing analysis of loans granted of the Group as at 31 December 2012 and 2011 is as follows:

				Granted loans past due but not impaired
	Granted loans neither past due nor impaired	Less than 30 days	30–90 days	90–180 days	More than 180 days	Total
2012	31,699	-	-	-	-	31,699
2011	42,893	-	-	-	-	42,893

The ageing analysis of loans granted of the Company as at 31 December 2012 and 2011 is as follows:

	Granted loans past due but not impaired
	Granted loans neither past due nor impaired	Less than 30 days	30–90 days	90–180 days	More than 180 days	Total
2012	177,330	-	-	-	-	177,330
2011	176,701	-	-	-	-	176,701

All granted loans neither past due nor impaired as at 31 December 2012 and 2011 have no history of counterparty defaults.

16 Inventories

		Group
		2012			2011
	Acquisition cost	Write-down	Carrying value	Acquisition cost	Write-down	Carrying value
Raw materials	5,176	(80)	5,096	8,248	(79)	8,169
Work in progress	2,488	-	2,488	2,479	-	2,479
Finished goods	12,859	(16)	12,843	5,380	(18)	5,362
Residential real estate	16,981	-	16,981	7,871	-	7,871
Goods for resale	2,227	(71)	2,156	1,938	-	1,938
	39,731	(167)	39,564	25,916	(97)	25,819

The acquisition cost of the Group's inventories excluding residential real estate accounted for at net realisable value as at 31 December 2012 amounted to LTL 252 thousand (LTL 138 thousand as at 31 December 2011). Changes in the allowance for inventories for the years ended 31 December 2012 and 2011 have been included within 'impairment, write down and provisions' expenses in the income statement (Note 5.2.).

The advance payments received for the residential real estate as at 31 December 2012 amounted to LTL 112 thousand (31 December 2011: LTL 578 thousand). The Group expects to realise apartments, which construction is completed, with the carrying amount of LTL 3,503 thousand within 12 months. Residential real estate with the carrying amount of LTL 13,478 thousand are currently under construction and the Group expects to complete construction and to sell the apartments within 24 months.

As disclosed in Note 22, inventories of the Group with the carrying value of nil as at 31 December 2012 (LTL 9,000 thousand as at 31 December 2011) were pledged to banks as collateral for the loans.

17 Trade and other receivables

	Group		Company
	2012	2011	2012	2011
Trade and other receivables, gross	45,820	39,103	893	838
Taxes receivable, gross	3,416	2,517	-	-
Less: long term trade and other receivables	(5,156)	-	-	-
Less: allowance for doubtful trade and other receivables	(8,247)	(8,183)	(620)	(620)
	35,833	33,437	273	218

Changes in allowance for doubtful trade and other receivables for the year 2012 and 2011 have been included within 'impairment, write down and provisions' expenses in the income statement (Note 5.2.).

Trade and other receivables are non-interest bearing and are generally on 10–60 days terms. Receivables from related parties are disclosed in more details in Note 29.

As at 31 December 2012 the Group's and the Company's trade and other receivables with nominal value of LTL 8,286 thousand and LTL 620 thousand, respectively, were impaired (as at 31 December 2011 LTL 8,218 thousand and LTL 620 thousand, respectively). The net amounts of LTL 39 thousand and LTL nil, respectively, are presented in the statement of financial position of the Group and the Company (as at 31 December 2011 LTL 35 thousand and LTL nil).

In 2012 shares classified as financial assets held for trading were sold in two transactions with the same counterparty. The receivables of amount of LTL 6,612 thousand from mentioned transaction are interest bearing, have to be settled till 2015, and are secured by the pledge of sold shares.

Movements in the allowance for accounts receivable of the Group and the Company (assessed individually) were as follows:

	Individually impaired
	Group	Company
Balance as at 31 December 2010	7,357	620
Charge for the year	805	-
Write-offs charged against the allowance	(262)	-
Recoveries of amounts previously written-off	(19)	-
Acquisition of subsidiaries	302	-
Balance as at 31 December 2011	8,183	620
Charge for the year	139	-
Write-offs charged against the allowance	(12)	-
Recoveries of amounts previously written-off	(63)	-
Acquisition of subsidiaries	-	-
Balance as at 31 December 2012	8,247	620

17 Trade and other receivables (cont'd)

The ageing analysis of trade and other receivables of the Group as at 31 December 2012 and 2011 is as follows:

			Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30–90 days	90–180 days	More than 180 days	Total
2012	30,450	4,500	1,593	393	598	37,534
2011	25,401	3,623	1,116	251	494	30,885

The ageing analysis of trade and other receivables of the Company as at 31 December 2012 and 2011 is as follows:

				Trade receivables past due but not impaired
	Trade receivables neither past due nor impaired	Less than 30 days	30–90 days	90–180 days	More than 180 days	Total
2012	224	-	-	-	49	273
2011	218	-	-	-	-	218

Credit quality of financial assets neither past due nor impaired

All trade receivables neither past due nor impaired as at 31 December 2012 and 2011 have no history of counterparty defaults. With respect to trade and other receivables that are neither past due nor impaired, there are no indications as at the reporting date that the debtors will not meet their payment obligations since the Group and the Company trades only with recognised, creditworthy third parties. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security, except as mentioned above.

18 Cash and cash equivalents, term deposits

	Group		Company
	2012	2011	2012	2011
Cash at bank	32,194	19,846	9,719	11,888
Cash on hand	15	38	-	-
Cash in transit	72	85	-	-
Term deposits with the maturity up to 3 months	23,811	1,377	23,811	-
	56,092	21,346	33,530	11,888

Cash at bank earns interest at floating rates based on daily bank deposit rates.

The Group's and the Company's foreign and local currency accounts in banks amounting to LTL 1,288 thousand and LTL nil as at 31 December 2012 (LTL 3,211 thousand and LTL nil thousand as at 31 December 2011) are pledged to the banks as collateral in relation to the loan, respectively (Note 22).

As at 31 December 2012, the Group and the Company have placed term deposits at banks with the maturity of more than 3 months.

	Group	Company
Deposits with the maturity between 3 and 6 months	9,020	-
Deposits with the maturity more than 6 months	12,316	-
Deposit's certificate of AB Bankas Snoras	20,000	20,000
Accumulated interest	182	141
Less allowance for impairment as consequence of AB Bankas Snoras insolvency	(20,100)	(20,100)
	21,418	41

18 Cash and cash equivalents, term deposits (cont'd)

As at 31 December 2011, the Group and the Company have placed term deposits at banks with the maturity of more than 3 months.

	Group	Company
Deposits with the maturity between 3 and 6 months	59,283	48,339
Deposits with the maturity more than 6 months	39,223	-
Deposit's certificate of AB Bankas Snoras	20,000	20,000
Accumulated interest	731	382
Less allowance for impairment as consequence of AB Bankas Snoras insolvency	(20,100)	(20,100)
	99,137	48,621

On 24 November 2011, the Bank of Lithuania announced AB Bankas Snoras as insolvent and revoked the licence. According to the public information about AB Bankas Snoras, most likely is that bank's assets were significantly below the liabilities already on 30 September 2011. Therefore the management of the Company decided to recognise allowance for impairment of deposit's certificate in full amount.

The credit quality of cash can be assessed by reference to external credit ratings of the banks:

		Group		Company
	2012	2011	2012	2011
Moody's ratings
Prime-1	51,900	20,916	33,342	11,677
Prime-2	3,267	-	-	-
Not Prime	624	156	1	146
Not rated	214	151	187	65
	56,005	21,223	33,530	11,888

The credit quality of term deposits can be assessed by reference to external credit ratings of the banks:

		Group		Company
	2012	2011	2012	2011
Moody's ratings
Prime-1	41	97,873	41	48,621
Prime-2	21,377	-	-	-
Not Prime	-	1,264	-	-
Not rated	-	-	-	-
	21,418	99,137	41	48,621

19 Restricted cash

Major part of restricted cash amounting to LTL 1,353 thousand as at 31 December 2012 (LTL 1,352 thousand as at 31 December 2011) represents the balance of cash received by the Group company AB Invalda Nekilnojamojo Turto Fondas for sold investment properties which were pledged to Nordea Bank Finland Plc Lithuania Branch. The subsidiary has no ability to use these funds except for repayment of the loan and payment of interest. In 2009 the amount of LTL 8,981 thousand was settled as repayment of loan. The remaining amount was deposited to secure liabilities to the bank.

The other amount of restricted cash represents funds deposited at administrating entities by the residents of dwelling houses and was LTL 1,407 thousand as at 31 December 2012 (LTL 1,113 thousand as at 31 December 2011).

The remaining amount of restricted cash represents frozen cash in other banks deposited to secure future interest payments of various Group companies and to secure service contracts.

20 Share capital and share premium

The total authorised number of ordinary shares is 51,802,146 (as of 31 December 2011: 51,659,758 shares) with a par value of LTL 1 per share (as of 31 December 2011: LTL 1 per share). All issued shares are fully paid.

On 1 December 2008 non-public convertible bonds of LTL 25,000 thousand were released. The issue was redeemed by persons related with the shareholders of the Company.

The main characteristics of convertible bonds:

• − annual interest rate: 9.9 %;
• − redemption day 1 July 2010;
• − the bonds can be converted into the Company's shares. One bond with par value of LTL 100 has an option to be converted to ordinary shares at ratio 5.5 (one bond would be converted into 18.18 shares approximately; final result would be rounded by arithmetical rules).
• − If the bond holder exercises the conversion option, he has to pay back the interest received previously and forfeit any interest unpaid.

During the General Shareholder Meeting which was held on 30 January 2010 it was decided to change the conditions of convertible bonds and to issue additional emission of convertible bonds of LTL 7,440 thousand. After realizing the decision a maturity of convertible bonds of LTL 25,000 thousand was extended until 1 July 2012 and new emission of convertible bonds of LTL 7,440 thousand (maturity - 1 July 2012) was issued. According to the changed terms of bonds, the bond holders would have to pay back on conversion all interest received in cash and forfeit any interest unpaid starting from 2010.

The application from the bondholders to convert LTL 32,400 thousand par value bonds (par value of one bond is LTL 100) into the shares of the Company was received on 28 March 2012. The bonds were converted into 5,898,182 shares of LTL 1 par value on 30 March 2012, when new By-laws of the Company were registered. After the conversion, share capital of the Company was increased by LTL 5,898 thousand up to LTL 57,558 thousand and divided into 57,557,940 shares of LTL 1 par value. The conversion price was LTL 5.50 per share. The share premium was increased by LTL 26,542 thousand, as established in the terms of bond conversion and required by Lithuanian legislation. The bond holders paid back earlier received interest of LTL 4,788 thousand and forfeited the accrued interest of LTL 2,386 thousand as at 30 March 2012. Both these amounts were reversed through retained earnings. The current income tax expenses of LTL 1,076 thousand were also recognised directly through retained earnings. As a result of the conversion, the Company's and the Group's equity increased by LTL 38,538 thousand.

The share buy-back was announced on 30 April 2012 and exercised from 2 to 15 May 2012. The Company has offered to buy 10 percent of own shares for LTL 10.358 for each share. All 10 percent of own shares – 5,755,794 shares were acquired for LTL 59,659 thousand, including brokerage fees. Acquired own shares did not have voting rights.

On 24 May 2012 the shareholders of the Company decided to reduce the share capital to LTL 51,802,146 by cancelling own shares. On 6 August 2012, the new version of the Articles of Association of the Company was registered. According to the Articles of Association the share capital was reduced from LTL 57,557,940 to LTL 51,802,146 by cancelling 5,755,794 ordinary registered shares with par value of LTL 1, which the Company had acquired in May. This way the decision of shareholders' meeting, which occurred on 24 May 2012, was implemented.

On 29 April 2011 shareholders of the Company decided to cover accumulated deficit of LTL 10,471 thousand by transferring LTL 10,471 thousand from share premium.

21 Reserves

The movements in legal and other reserves are as follows:

Group	Legal reserve	Reserve for acquisition of own shares	Share based payments reserve	Fair value reserve	Other reserves	Foreign currency reserve	Total
As at 31 December 2010	1,272	18,002	289	(139)	678	- -	20,102
Net loss on cash flow hedge	-	-	-	139	-	-	139
Transfer to reserves	58	-	-	-	-	-	58
As at 31 December 2011	1,330	18,002	289	-	678	-	20,299
Exchange differences on translation of foreign
operations	-	-	-	-	-	34	34
Transfer to reserves	5,892	269,228	-	-	(27)	-	275,093
Decrease of share capital (Note 20)	-	(53,903)	-	-	-	-	(53,903)
As at 31 December 2012	7,222	233,327	289	-	651	34	241,523

On 30 April 2012, the shareholders of the Company decided to transfer LTL 269,114 thousand from retained earnings to the reserve for the acquisition of own shares and LTL 5,756 thousand to the legal reserve. In other entities of the Group amounts of LTL 136 thousand and 114 thousand were transferred from retained earnings, attributable to the equity holder of the parent, to legal reserve and reserve for acquisition of own shares.

Fair value reserves

Fair value reserves comprise changes in fair value of available-for-sale investments and cash flow hedge.

Legal reserve

Legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5 % of net profit, calculated in accordance with the statutory financial statements, are compulsory until the reserve reaches 10 % of the share capital. The reserve can be used only to cover the accumulated losses.

Reserve for the acquisition of own shares

Own shares reserve is formed for the purpose of buying own shares in order to keep their liquidity and manage price fluctuations.

Share based payments reserve

The share-based payment transactions reserve is used to recognise the value of equity-settled share-based payment transactions provided to key management personnel of information technology segment, as part of their remuneration in 2009. From 2010 all share-based payments are attributed fully to the non-controlling interest. The key management personnel has the right to share option subject to the information technology segment achieving its target of EBITDA for years 2009 – 2012 (year's and accumulated targets are used). In 2011 the agreement was changed after acquisition of Norway Registers Development AS and new target was set for 2012 - 2014. The share based payment for 2012 was replaced by share based payment for 2012 – 2014. For the year 2009 and 2012 EBITDA target was not reached, but in 2010 and 2011 the target was reached. The value of share based payments was calculated using binomial method. Reversal of expenses of LTL 93 thousand were recognised within "employee benefits expenses" in 2012. In 2011 expenses of LTL 770 thousand were recognised.

22 Borrowings

	Group		Company
	2012	2011	2012	2011
Non-current:
Non-current bank borrowings	98,520	119,281	-	-
Other borrowings	217	197	-	-
	98,737	119,478	-	-
Current:
Current portion of non-current borrowings	6,071	6,254	-	6
Current bank borrowings	2	80	-	-
Other borrowings	547	492	-	-
Borrowings from related parties	-	-	9,125	353
	6,620	6,826	9,125	359
Total borrowings	105,357	126,304	9,125	359

The Company's borrowings are from related parties. Please refer to Note 29 for more details.

Borrowings at the end of the year in local and foreign currencies expressed in LTL were as follows:

	Group	Company
Borrowings denominated in:	2012	2011	2012	2011
EUR	101,480	123,772	8,601	-
LTL	3,877	2,532	524	353
	105,357	126,304	9,125	353

Borrowings at the end of the year with fixed or floating interest rate (with changes in 1, 3, 6 months period) were as follows:

	Group			Company
Interest rate type:	2012	2011	2012	2011
Fixed	38,383	2,511	-	-
Floating	66,974	123,793	9,125	353
	105,357	126,304	9,125	353

22 Borrowings (cont'd)

The amounts pledged to the banks are as follows:

	Group		Company
	2012	2011	2012	2011
Property, plant and equipment	1,304	18,939	-	-
Investments into subsidiaries and associates	-	184	-	49,904
Investment properties	146,465	171,369	-	-
Inventories	-	9,000	-	-
Cash	1,288	3,211	-	-
Other current assets	1,865	265	-	-
Trade receivables	64	1,365	-	-
Granted loans	-	-	12,106	25,534

Weighted average effective interest rates of borrowings outstanding at the year-end:

	Group		Company
2012	2011	2012	2011
2.93%	4.77%	5%	6.58%

In 2012 and 2011 all Group entities have complied with bank loan covenants.

During the 1st half of 2012 the entity operating in the information technology segment has signed the loan agreement of LTL 3,000 thousand with AB DNB Bankas.

During the year 2012, the Group and the Company repaid respectively LTL 25,009 thousand and LTL 1,217 thousand of loans (during the year of 2011 respectively LTL 187,119 thousand and LTL 185,801 thousand, mainly using the proceeds from sale of road and bridge construction and pharmacy segments and held-for-trading bonds).

On 31 March 2011, the Group has agreed with Nordea bank on the extension of current financing of the real estate segment. Current loans, which mature in 2011, were extended for 3 years and the bank provided indemnify against non-compliance with covenants for the same period. In April 2012 amendments of the above mentioned agreement were signed. According to them, the Group has early paid back the liabilities of UAB Naujoji Švara to the bank in full (LTL 14,701 thousand). The assets with carrying amounts of LTL 21,782 were released from the pledge, which allows more successfully develop them. It was also agreed, that partial repayments of borrowings of UAB Sago and UAB INTF Investicija would be cancelled, and the liabilities would be due in full in 2014. Therefore the partial repayments of the loan of the UAB Invaldos Nekilnojamojo Turto Fondas were accelerated. As a result of these amendments during 2012 the Group had to pay back LTL 2,123 thousand more.

In June 2012 liabilities of the Group to the AB Šiaulių Bankas were covered by a subsidiary, which invest into the agricultural land (LTL 2,503 thousand). In 2012 AB Vilniaus Baldai has finished to repay loan to Danske Bank A/S Lithuanian branch (LTL 1,253 thousand).

In 2011 the Company's liabilities to AB Šiaulių Bankas, AB Bankas Snoras, AB DNB Bankas and UAB Medicinos Bankas were covered in full (on the statement of financial position as at 31 December 2010 their carrying amounts were LTL 18,000 thousand, LTL 24,254 thousand, LTL 94,350 thousand and 2,048 thousand LTL, respectively). The Company's liabilities to the Group companies decreased from LTL 46,553 thousand to LTL 359 thousand in 2011.

During the year 2011 the Group paid back liabilities to the banks before maturity. The amount of paid back liabilities of subsidiaries amounted to LTL 28,964 thousand in the statement of financial position as at 31 December 2010.

23 Finance lease

The assets leased by the Group under finance lease contracts consist of vehicles and other fixtures, fittings, tools and equipment. Apart from the lease payments, the most significant liabilities under lease contracts are property maintenance and insurance. The remaining terms of financial lease are from 11 to 59 months. In 2012 the Group has acquired vehicles of LTL 320 thousand (2011: LTL 88 thousand) and other fixtures, fittings tools and equipment of LTL nil thousand (2011: LTL 67 thousand) through finance lease. The distribution of the net carrying amount of the assets acquired under financial lease is as follows:

		Group
	2012	2011
Machinery and equipment	-	-
Other fixtures, fittings, tools and equipment	101	275
Vehicles	703	462
	804	737

Financial lease payables at the end of the year in local and foreign currencies expressed in LTL were as follows:

	Group
Borrowings denominated in:	2012	2011
EUR	446	545
LTL	183	103
	629	648

As at 31 December 2012 the interest rate on the financial lease liabilities in EUR varies depending on the 6-month EUR LIBOR and EURIBOR and the margin varying from 1.3 % to 2.5 % (2011: from 1.3 % to 4 %). As at 31 December 2012 the interest rates on the financial lease liabilities in LTL are 6-month VILIBOR and the margin varying from 1.5 % to 4.5 % and fixed rate amounted to 8 %.

Future minimal lease payments and their present value under the above mentioned financial lease contracts are as follows:

	Group
		2012	2011
	Minimum payments	Present value of payments	Minimum payments	Present value of payments
Within one year	224	206	289	257
From one to five years	445	423	424	391
Total financial lease obligations	669	629	713	648
Interest	(40)	-	(65)	-
Present value of financial lease obligations	629	629	648	648
Financial lease obligations are accounted for as:
- current		206		257
- non-current		423		391

24 Trade payables

Trade payables are non-interest bearing and are normally settled on 14–60 day terms. For terms and conditions relating to related parties please refer to Note 29.

25 Provisions

	Group
	Sale of Finasta Group	Constructor claims	Total
As of 1 January 2011	250	575	825
Changes during the year	(250)	121	(129)
As of 31 December 2011	-	696	696
Changes during the year	-	(73)	(73)
As of 31 December 2012	-	623	623
Non-current 2012	-	396	396
Current 2012	-	227	227
Non-current 2011	-	396	396
Current 2011	-	300	300

26 Other liabilities

The other current and non-current liabilities are presented in the table below:

	Group		Company
	2012	2011	2012	2011
Financial liabilities
Dividends payable	3,934	3,022	1,980	2,079
Liability incurred in relation to business combination	114	154	-	-
Other amounts payable	2,669	1,424	81	76
	6,717	4,600	2,061	2,155
Non – financial liabilities
Salaries and social security payable	7,095	6,146	386	1,021
Tax payable	1,179	2,036	5	5
Pensions and anniversary obligation	1,673	997	-	-
Other amounts payable	2,413	1,999	-	-
	12,360	11,178	391	1,026
Total other current and non-current liabilities	19,077	15,778	2,452	3,181
Non-current liabilities	4,831	3,345	-	-
Current liabilities	14,246	12,433	2,452	3,181

The Group's company AB Vilniaus Baldai has collective labour agreement. According to the agreement each employee has right to receive age and seniority anniversary benefit and an amount of 2 – 3 month salaries on retirement subject to years of service. This is the unfunded defined benefit pension plan. The liability recognised in the statement of financial position is LTL 1,673 thousand as at 31 December 2012 and LTL 997 thousand as at 31 December 2011.

27 Financial risk management

27.1 Financial risk factors

The risk management function within the Group is carried out in respect of financial risks (credit, market, currency, liquidity and interest rate), operational risks and legal risks. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. The operational and legal risk management functions are intended to ensure proper functioning of internal policies and procedures to minimise operational and legal risks.

The Group's and the Company's principal financial liabilities comprise loans and overdrafts, bonds, finance leases, trade and other payables. The main purpose of these financial liabilities is to raise finance for the Group's and the Company's operations. The Group and the Company have various financial assets such as trade and other receivables, loans granted, investment in equity and debt securities, deposits held in banks and cash which arise directly from its operations.

The Group and the Company also enter or may enter into derivative transactions, such as interest rate swaps and forward currency contracts. The purpose of them is to manage the interest rate and currency risks arising from the operations and its sources of finance. The Company has not used any of derivative instruments so far, as management considered that there is no necessity for them.

The Group is being managed the way so its main businesses would be separated from each other. This is to diversify the activity risk and create conditions for selling any business avoiding any risk for the Company.

The Company implemented policy related to non provision of any guarantee or surety for the Group's companies. The Group's companies do not provide any guarantees one against another usually.

The main risks arising from the financial instruments are market risk (including currency risk, cash flow and fair value interest rate risk and price risk), liquidity risk and credit risk. The risks are identified and disclosed below.

Credit risk

Credit risk arises from cash and cash equivalents, restricted cash, deposits with banks and financial institutions, as well as credit exposures to outstanding trade receivables, loans granted and debt securities.

The Group estimates the credit risk separately by the segments. The single furniture production segment has significant concentration of trading counterparties. The main customer of AB Vilniaus Baldai as at 31 December 2012 accounts for approximately 30 % (54 % as at 31 December 2011) of the total Group's trade and other receivables (Note 17, included within receivables "neither due nor impaired").

At the date of financial statements there are no indications of worsening credit quality of trade and other receivables, which are neither due, nor impaired, due to constant control by the Group of receivable balances. Also, in 2010 due to worsening of worldwide and Lithuanian economical conditions a decrease in real estate prices was noted. This factor had an impact to some related parties of the Group and Company which had significant investments into real estate. As it is further described in Note 15, this resulted in significant increase in impairment level of loans granted by the Group and the Company.

The Group and the Company trade only with recognised, creditworthy third parties. It is the Group's and the Company's policy, that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances of subsidiary companies are monitored on a monthly basis. The maximum exposure to credit risk is disclosed in Notes 15 and 17. There are no significant transactions of the Group or the Company that do not occur in the country of the relevant operating unit.

With respect to credit risk arising from other financial assets of the Group and the Company, which comprise deposits at banks and cash and cash equivalents, restricted cash and debt securities, the Group's and the Company's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

For banks and financial institutions, only independently rated parties with high credit ratings are accepted (Note 18).

27.1 Financial risk factors (cont'd)

Cash flow and fair value interest rate risk

The Group's and the Company's exposure to the risk of changes in market interest rates relates primarily to the non-current debt obligations with floating interest rates. Current environment is not attractive to target fixed interest rates (fixed interest rate is significantly higher than the float, and due to the volatility in the market fixed interest rates are offered for short period of time only). In real estate sector some credits are associated with the projects which last 2–3 years, therefore, the risk related to increase of the interest rate cannot be considered as high.

The Group and the Company are prepared to enter into interest rate swap agreements, if this allows to further mitigate risk.

The following table demonstrates the sensitivity to a reasonably possible change in floating interest rates (EURIBOR, LIBOR EUR, VILIBOR), with all other variables held constant, of the Group's and the Company's profit before tax (through the impact on floating rate borrowings). There is no impact on the Group's and the Company's equity, other than current year profit impact.

	Increase/decrease in basic points	Group Effect on profit before tax	Company
2012 EUR LTL	100 100	(650) (20)	- -
EUR LTL	-10 -10	65 2	- -
2011 EUR LTL	100 100	(1,237) (1)	- -
EUR LTL	-50 -50	618 1	- -

27.1 Financial risk factors (cont'd)

Liquidity risk

The Group's and the Company's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed credit facilities to meet their commitments at a given date in accordance with strategic plans. The liquidity risk of the Group and the Company is controlled on an overall Group level. The Group's and the Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, bonds and finance leases. The liquidity risk management is divided into long-term and short-term risk management.

The aim of the short-term liquidity management is to meet daily needs for funds. Each business segment is independently planning its internal cash flows. Short-term liquidity for the Group and the Company is controlled through weekly monitoring of the liquidity status and needs of funds according to the Group's business segments.

Long-term liquidity risk is managed by analysing the predicted future cash flows taking into account the possible financing sources. Before approving the new investment projects the Group and the Company evaluate the possibilities to attract needed funds. On a monthly basis the business segments report to the Company the forecasted cash inflows and outflows for a future one year period which allows planning the Group's financing effectively. The general rule is applied in the Group to finance the Group companies or to take loans from them through the parent company in order to minimise the presence of direct borrowings between the companies of different business segments.

The table below summarises the maturity profile of the Group's financial liabilities as at 31 December 2012 and 2011 based on contractual undiscounted payments.

	On demand	Less than 3 months	4 to 12 months	2 to 5 years	More than 5 years	Total
Interest bearing borrowings	-	2,407	6,081	100,602	-	109,090
Finance lease obligations	-	69	155	445	-	669
Trade and other payables	-	27,882	491	337	-	28,710
Other liabilities	3,934	1,468	593	244	222	6,461
Balance as at 31 December 2012	3,934	31,826	7,320	101,628	222	144,930
Interest bearing borrowings	-	2,829	43,754	127,232	49	173,864
Finance lease obligations	-	76	213	424	-	713
Trade and other payables	-	34,198	287	-	-	34,485
Other liabilities	3,022	1,226	24	236	141	4,649
Balance as at 31 December 2011	3,022	38,329	44,278	127,892	190	213,711

The table below summarises the maturity profile of the Company's financial liabilities as at 31 December 2012 and 2011 based on contractual undiscounted payments.

	On demand	Less than 3 months	4 to 12 months	2 to 5 years	More than 5 years	Total
Interest bearing borrowings Finance lease obligations	- -	- -	9,399 -	- -	- -	9,399 -
Trade and other payables Other current liabilities	- 1,980	43 60	12 26	- -	- -	55 2,066
Balance as at 31 December 2012	1,980	103	9,437	-	-	11,520
Interest bearing borrowings Finance lease obligations	-	6	36,033	-	-	36,039
Trade and other payables Other current liabilities	- - 2,079	- 630 76	- - -	- - -	- - -	- 630 2,155
Balance as at 31 December 2011	2,079	712	36,033	-	-	38,824

27.1 Financial risk factors (cont'd)

Liquidity risk (cont'd)

In 2012 and 2011 all Group entities have complied with bank loan covenants.

The Group's liquidity ratio ((total current assets plus assets of disposal group classified as held-for-sale) / total current liabilities plus liabilities of disposal group directly associated with the assets classified as held-for-sale) as at 31 December 2012 was approximately 4.18 (2.90 as at 31 December 2011), the quick ratio ((total current assets – inventories) / total current liabilities) – 3.45 (2.60 as at 31 December 2011). The Company's liquidity ratio as at 31 December 2012 was approximately 14.72 (7.13 as at 31 December 2011), the quick ratio – 14.72 (7.03 as at 31 December 2011). The Group's and the Company's management considers the liquidity position of the Group and the Company based on the current market conditions and takes actions to keep the favourable situation.

Price risk

The Group and the Company are exposed to equity securities price risk because of investments held by the Group and the Company and classified on the statement of financial position either as available-for-sale or at fair value through profit or loss. The Group and the Company are not exposed to commodity price risk. To manage their price risk arising from investments in equity securities, the Group and the Company diversify their portfolio.

The Group's and the Company's investments in equity of other entities that are publicly traded are included in one of the following two equity indexes: OMX Baltic Benchmark Gross Index (OMXBBGI), WSE sWIG80 equity indexes.

The table below summarises the impact of increases/decreases of the two equity indexes on the Group's and the Companys profit before tax for the year. The analysis is based on the assumption that the equity indexes had increased/ decreased by 20 % with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index:

Index	Group			Company
	2012	2011	2012	2011
OMXBBGI	672	2,774	672	249
SWIG80	3,808	4,852	3,808	4,852

Profit before tax for the year would increase/decrease as a result of gains/losses on equity securities classified at fair value through profit or loss.

27.1 Financial risk factors (cont'd)

Foreign exchange risk

As a result of operations the statement of financial position of the Group can be affected by movements in the reporting currencies' exchange rates. The Group's and the Company's policy is related to matching of money inflows from the most probable potential sales with purchases by each foreign currency. The Group and the Company do not apply any financial means allowing to hedge foreign currency risks, because these risks are considered insignificant.

The foreign currency risk at the Group and the Company is not large, taking into consideration that most monetary assets and obligations are denominated in each separate company's functional currency or euro. In Lithuania and in Latvia the Euro is pegged to Litas and Lats accordingly, therefore, there are no fluctuations between these currencies.

The following table demonstrates the sensitivity to a reasonably possible change in the foreign exchange rates, with all other variables held constant, of the Group's and the Company's profit before tax (due to changes in the fair value of monetary assets and liabilities).

	Increase/decrease	Group	Company
	in forex rate	Effect on profit before tax
2012
PLN/LTL	+10 %	981	1,002
USD/LTL	+10 %	237	268
PLN/LTL	-10 %	(981)	(1,002)
USD/LTL	-10 %	(237)	(268)
2011
PLN/LTL	+10 %	1,593	1,549
USD/LTL	+10 %	106	-
PLN/LTL	-10 %	(1,593)	(1,549)
USD/LTL	-10 %	(106)	-

27.2 Fair value estimation

The Group's and the Company's principal financial instruments that are not carried at fair value in the statement of financial position are cash and cash equivalents, deposits at banks, restricted cash, trade and other receivables, granted loans, trade and other payables, non-current and current borrowings, investments available-for-sale.

Fair value is defined as the amount at which the instrument could be exchanged between knowledgeable willing parties in an arm's length transaction, other than in forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate.

The carrying amount of the financial assets and financial liabilities of the Group and the Company as at 31 December 2012 and 2011 approximated their fair value, except for bank borrowings as at 31 December 2012. The fair value of bank borrowings as at 31 December 2012 was LTL 98,659 thousand (the carrying amount – LTL 104,592 thousand). The fair value of bank borrowings as at 31 December 2011 was LTL 116,850 thousand (the carrying amount – LTL 125,615 thousand). The fair value was calculated using 4.47 % and 5.71 % interest rate as at 31 December 2012 and 2011, respectively. The carrying amount of loans granted by the Company approximates their fair value because interest rates are reviewed and adjusted when market rates change.

The fair value of borrowings has been calculated by discounting the expected future cash flows at prevailing interest rates.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:

• (a) The carrying amount of current trade and other accounts receivable, current trade and other accounts payable and current borrowings from related parties approximates to their fair value.
• (b) The fair value of bank borrowings is based on the quoted market price for the same or similar issues or on the current rates available for debt with the same maturity profile.

27.2 Fair value estimation (cont'd)

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The following table presents the group's assets and liabilities that are measured at fair value at 31 December 2012:

	Level 1	Level 2	Level 3	Total balance
Assets
Shares of Trakcja S.A	9,958	-		- 9,958
Held-for-trading securities	7,748	15,268		- 23,016
Total Assets	17,706	15,268		- 32,974
Liabilities	-	-		- -

The following table presents the group's assets and liabilities that are measured at fair value at 31 December 2011:

	Level 1	Level 2	Level 3	Total balance
Assets
Shares of Trakcja S.A	15,491	-		- 15,491
Held-for-trading securities	16,840	15,268		- 32,108
Total Assets	32,331	15,268		- 47,599
Liabilities	-	-		- -

During 2012 and 2011, there were no transfers between Level 1 and Level 2 fair value measurements. Level 2 includes acquired unlisted bonds of financial institution which is listed on NASDAQ OMX Vilnius. There are no instruments in Level 3.

The available-for-sale financial assets owned by the Group are measured at cost in accordance with IAS 39 because their fair value cannot be measured reliably, as they have no quoted market prices in an active market.

27.3 Capital management

The primary objective of the capital management is to ensure that the Group and the Company maintain a strong credit health and healthy capital ratios in order to support their business and maximise shareholder value. The Company's management supervises the investments so that they are in compliance with requirements applied to the capital, specified in the appropriate legal acts and credit agreements, as well as provide the Group's management with necessary information.

The Group's and the Company's capital comprises share capital, share premium, reserves and retained earnings. The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions and specific risks of their activity. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year 2012 and 2011.

The Company is obliged to keep its equity ratio at not less than 50 % of its share capital, as imposed by the Law on Companies of Republic of Lithuania. Due to significant changes in investment property prices, turmoil in financial markets and economic crisis from 2008 in Lithuania, as of 31 December 2012 twenty subsidiaries (in real estate segment – thirteen, information technology segment – one, facilities management – one, other segment – five) did not comply with the above mentioned requirements (2011: twenty three; real estate segment – twelve, information technology segment – three, facilities management – two, other segment – six). If subsidiaries, based on the current year results, violate requirements of the laws, according to the order and terms provided for in laws the Company shall apply the appropriate means so that the aforementioned requirements on the capital would be met. It is expected that after the issuance of annual financial statements appropriate measures will be taken in order to increase share capitals of the above mentioned companies capitalising to equity of subsidiaries the loans granted by the Company.

Besides, some Group subsidiaries have obligations arising out of credit agreements concluded with banks, including capital. For the purpose of ensuring of bank credits it is required that the ratio of equity plus subordinated borrowings divided by total assets would be not less than specified in the appropriate agreements. Depending on risks related to projects and activities under development the ratio required by banks is 0.2–0.3. The Company, when subordinating credits, seeks to ensure that the subsidiaries comply with this ratio.

28 Commitments and contingencies

Operating lease commitments – Group as a lessee

The Group and the Company concluded several contracts of operating lease. The terms of lease do not include restrictions on the activities of the Group and the Company in connection with the dividends, additional borrowings or additional lease agreements.

The majority of the Group's operating lease expenses include lease of premises after the sale of investment property in 2007. The Group's company AB Invalda Nekilnojamojo Turto Fondas concluded the operating lease back agreement with an Irish private investor for the sold investment properties of the Group. Lease payments and the sale price of the investment properties are accounted for at fair value. Operating lease back term – 10 years, but the agreement might be unilaterally terminated by the parties. The Group paid a one time deposit in the amount of LTL 2,848 thousand corresponding to the 6 months amount of the lease fee which will be set-off against the last part of lease fee at the termination of the lease.

In 2012 and 2011, the lease expenses of the Group amounted to LTL 7,986 thousand and LTL 7,588 thousand, respectively. In 2012 and 2011, the lease expenses of the Company amounted to LTL 271 thousand and LTL 237 thousand, respectively.

Future lease payments according to the signed operating lease contracts are as follows:

		Group		Company
		2012	2011	2012	2011
Within one year
	- lease of premises	5,620	5,470	-	81
	- other lease	468	653	101	72
		6,088	6,123	101	153
From one to five years
	- lease of premises	18,262	23,662	-	-
	- other lease	670	600	137	64
		18,932	24,262	137	64
After five years
	- lease of premises	-	1,032	-	-
	- other lease	-	-	-	-
		-	1,032	-	-
		25,020	31,417	238	217
Denominated in:
- EUR		23,424	29,591	56	100
- LTL		1,596	1,826	182	117

28 Commitments and contingencies (cont'd)

Operating lease commitments – Group as a lessor

The Group companies operating in real estate segments have entered into commercial property leases of the Group's investment properties under operating lease agreements. The majority of the agreements have remaining terms of between 1 and 5 years.

Future rentals receivable under non-cancellable and cancellable operating leases as at 31 December are as follows:

		2012	2011
Within one year
	- non-cancellable	4,939	3,560
	- cancellable	4,070	4,475
		9,009	8,035
From one to five years
	- non-cancellable	3,842	1,882
	- cancellable	2,666	2,571
		6,508	4,453
After five years
	- non-cancellable	-	-
	- cancellable	301	-
		301	-
		15,818	12,488

Future rentals receivable under non-cancellable and cancellable operating subleases as at 31 December are as follows:

		2012	2011
Within one year
	- non-cancellable	2,678	622
	- cancellable	2,700	4,558
		5,378	5,180
From one to five years
	- non-cancellable	5,779	653
	- cancellable	3,801	10,995
		9,580	11,648
After five years
	- non-cancellable	-	-
	- cancellable	-	-
		-	-
		14,598	16,828

For the cancellable lease and sublease agreements, tenants must notify the administrator 3–6 months in advance if they wish to cancel the rent agreement and have to pay 3–12 months rent fee penalty for the cancellation. According to noncancellable lease and sublease agreements tenants must pay the penalty equal to rentals receivable during the whole remaining lease period.

Part of leases and subleases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

Tax legislation

Tax authorities have right to examine accounting records of the Company and its subsidiaries at anytime during the 5 year period after the current tax year and account for additional taxes and fines. In the opinion of the Company's management, currently there are no circumstances which would raise substantial liability in this respect to the Company and to the Group.

29 Related party transactions

The parties are considered related when one party has the possibility to control the other one or have significant influence over the other party in making financial and operating decisions.

The related parties of the Group in 2012 and 2011 were associates, joint ventures, the shareholders of the Company (Note 1) and key management personnel, including companies under control or joint control of key management and shareholders having significant influence. In 2012 and 2011 UAB Laikinosios Sostinės Projektai, over which the Group has lost joint control, is also attributed to the list of related parties (under the subgroup of joint ventures).

Receivables from related parties are presented in gross amount (without allowance, with interests, which are calculated according to the agreement on gross amount disregard the allowance). Interest income and expenses are presented in the 'revenue' and 'purchases' columns, respectively.

Transactions of the Group with associates in 2012 and balances as at 31 December 2012 were as follows:

2012 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	-	-	-	-
Real estate income	22	-	-	-
	22	-	-	-

Transactions of the Group with joint ventures in 2012 and balances as at 31 December 2012 were as follows:

2012 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	48	-	6,653	-
Real estate income	-	-	40	-
	48	-	6,693	-

Transactions of the Group with shareholders and key management personnel in 2012 and balances as at 31 December 2012 were as follows:

2012 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	289	-	708	-
Sale of apartments	1,078	-	-	-
	1,367	-	708	-

The maturity of loans granted is 2013, effective interest rate is 4 – 6.25 % and fixed. Loans hold no collateral.

Transactions of the Group with companies under control of shareholders with significant influence were convertible bonds in 2012 and 2011 (Note 20).

Transactions of the Group with associates in 2011 and balances as at 31 December 2011 were as follows:

2011 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	48	-	-	-
Real estate income	40	-	3	-
Furniture segment	-	1,541	-	71
Roads and bridges construction segment	266	3,905	86	-
Other	197	8	26	-
	551	5,454	115	71

Transactions of the Group with joint ventures in 2011 and balances as at 31 December 2011 were as follows:

2011 Group	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	60	-	6,687	-
Real estate income	1	-	40	-
Other	7	-	-	-
	68	-	6,727	-

Transactions of the Group with other related parties in 2011 and balances as at 31 December 2011 were as follows:

2011 Group	Interest income	Payables to related parties
Shareholders and key management	882	-	12,041	-

The maturity of loans granted is 2012 - 2013, effective interest rate is 6 – 6.25 % and fixed. Loans hold no collateral.

The Company's related parties are the subsidiaries, associates, joint ventures, shareholders (Note 1), key management personnel and companies under control or joint control of key management and shareholders with significant influence.

Transactions of the Company with subsidiaries in 2012 and balances as at 31 December 2012 were as follows:

2012 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties
Loans and borrowings	10,153	138	160,030	9,124
Real estate income	-	155	-	6
Dividends	28,740	-	-	-
Other	-	26	49	-
	38,893	319	160,079	9,130

There are no any Transactions of the Company with associates in 2012 and balances as at 31 December 2012.

Transactions of the Company with joint ventures in 2012 and balances as at 31 December 2012 were as follows:

2012 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	48	-	6,653	-

The maturity of loans granted is till 2013, effective interest rate 4 - 11 % and fixed, for borrowings received maturity is 2013, effective interest rate 3 - 4 % and fixed.

There were no transactions of the Company with other related parties in 2012 and balances as at 31 December 2012.

Transactions of the Company with subsidiaries in 2011 and balances as at 31 December 2011 were as follows:

2011 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties
Loans and borrowings	7,903	1,293	157,177	353
Real estate income	-	160	-	4
Dividends	-	-	-	-
Other	-	21	217	-
	7,903	1,474	157,394	357

Transactions of the Company with associates in 2011 and balances as at 31 December 2011 were as follows:

2011 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings Roads and bridges construction segment	48 -	- 3,491	- -	- -
	48	3,491	-	-

Transactions of the Company with joint ventures in 2011 and balances as at 31 December 2011 were as follows:

2011 Company	Revenue and other income from related parties	Purchases from related parties	Receivables from related parties	Payables to related parties
Loans and borrowings	60	-	6,687	-

The maturity of loans granted is till 2012, effective interest rate 6 - 11 % and fixed, for borrowings received maturity is 2012, effective interest rate 5 %.

Transactions of the Company with other related parties in 2011 and balances as at 31 December 2011 were as follows:

2011 Company	Interest income	Payables to related parties
Shareholders and key management	-	-	-	-

The movements of loan granted to joint ventures were:

	Group		Company
	2012	2011	2012	2011
At 1 January	6,687	6,856	6,687	6,856
Loans granted during year	818	872	818	872
Loans repayment received	(851)	(500)	(851)	(500)
Loans converted to increased share capital Sale of loans to third parties (sale price equalled to the carrying	-	(100)	-	(100)
amount)	-	(501)	-	(501)
Interest charged	48	60	48	60
Interest received	(49)	-	(49)	-
At 31 December	6,653	6,687	6,653	6,687

The movements of loans granted to associates were:

	Group		Company
	2012	2011	2012	2011
At 1 January	-	2,173	-	2,173
Loans granted during year	-	-	-	-
Loans and interest converted to increased share capital	-	(1,351)	-	(1,351)
Interest charged	-	48	-	48
Interest received		(870)		(870)
At 31 December	-	-	-	-

The movements of loans granted to subsidiaries were:

	Company
	2012	2011
At 1 January	157,177	71,906
Loans granted during year	34,256	114,540
Loans repayment received	(27,534)	(41,748)
Loans and interest converted to increased share capital	(18,651)	(21,740)
Loans granted to third parties, which became granted to subsidiaries after acquisition of its	-	26,950
Loans granted purchased within the Group without cash	9,695	-
Interest settlement against amounts payable	(44)	-
Loans granted settlement against purchase of held-for-trade financial assets within Group	(4,082)	-
Interest charged	10,153	7,903
Interest received	(940)	(634)
At 31 December	160,030	157,177

The movements of loans granted to shareholders were:

	Group
	2012	2011
At 1 January	12,041	13,975
Loans granted during year	-	5,750
Loans repayment received	(10,407)	(7,479)
Interest charged	289	882
Interest received	(1,215)	(1,087)
At 31 December	708	12,041

The movements of borrowings from subsidiaries were:

	Company
	2012	2011
At 1 January	353	46,553
Borrowings received during year	150	18,396
Borrowings repaid during year	(1,212)	(53,476)
Borrowings settlement against dividends receivable	-	(11,194)
Borrowings originated from purchasing of granted loan within the Group without cash	9,695	-
Interest charged	138	1,293
Interest paid	-	(1,219)
At 31 December	9,124	353

Terms and conditions of transactions with related parties

Outstanding balances at the year-end are unsecured, interest free (except as stated above) and settlement occurs in cash. In 2012 the Company has recognised additional impairment losses in respect of loans due from subsidiaries, amounting to LTL 823 thousand (LTL 7,074 thousand in 2011). As at 31 December 2012 the impairment allowance for the Company's loans granted to UAB Laikinosios Sostinės Projektai and subsidiaries, amounted to LTL 5,808 thousand and LTL 2,438 thousand, respectively (LTL 5,808 thousand and LTL 8,405 thousand, respectively, in 2011). The impairment allowance for the Company's loans granted to subsidiaries has decreased due to reversal of impairment (LTL 170 thousand in 2012) and as a result of converting loans to increased share capital (LTL 6,620 thousand). As at 31 December 2012 the cumulative interest amount, which is not recognised in the financial statements, but is calculated according to the loans' agreements, for Company's loans granted to joint ventures and subsidiaries, amounted to LTL 31 thousand and 1,529 thousand (LTL 31 thousand and LTL 1,057 thousand, respectively, in 2011). The impairment allowance was increased in 2011 due to decrease of the carrying amount of assets of subsidiaries, operating in real estate segment. Doubtful debts assessment is undertaken at the end of each financial year through examination of the financial position of the related party and the market in which the related party operates.

Key management compensation and other payments

The management remuneration contains short-term employees' benefits and share-based payments. Key management of the Company and the Group includes Board members and Chief accountant and the General Managers, which manage the Group's segment, (excluding associates and joint ventures), respectively.

		Group		Company
	2012	2011	2012	2011
Wages, salaries and bonuses	3,028	1,901	1,548	805
Social security contributions	959	604	500	259
Bonus for the Board members	3,000	945	-	-
Share-based payments	(43)	309	-	-
Total key management compensation	6,944	3,759	2,048	1,064

There were no loans granted during the reporting period or outstanding at the end of the reporting period. In 2012 and 2011 dividends were not paid.

30 Events after the reporting period

Split-off of the Company

On 20 November 2012 the Extraordinary General Shareholders Meeting of the Company approved drawing up of the terms of the Company's split-off and authorized the Board to prepare the terms of split-off. On 13 February 2013 the split-off terms were published to public. The new name of the Company after the split-off would be AB Invalda LT. The name of new established company after split-off would be AB Invalda Privatus Kapitalas. In the split-off approximately 45.45 percent of the total assets, liabilities and the equity of the Company will be allocated to AB Invalda Privatus Kapitalas. According to the split-off terms some assets are allocated not proportionally (in full to one or other side), some assets are allocated proportionally. The entities that invest into agricultural land were split-off in the 1st Quarter 2013 into separate legal entities. New entities would be allocated in full to one or other side. Remaining assets will be allocated under the principle that transferred assets to AB Invalda Privatus Kapitalas would constitute approximately 45.45 percent of total assets of the Company as of the day of executing of the Transfer – Acceptance Certificates. The Extraordinary General Shareholder Meeting that will decide regarding approval of the terms of the Company's split-off is convened on 9 April 2013. The shareholders holding the shares with the nominal value of less than 1/10 of the authorized capital of the Company, except the shareholders whose rights to sell shares to the Company during the split – off are limited according to the split – off terms, will have a right within 45 days after approval of the split – off terms by the general meeting of shareholders to request that their shares would be redeemed by the Company. If more than 10 percent of the Company shares are requested to be redeemed, they will not be redeemed, but the split-off will be cancelled. The split – off will also be cancelled, if the major shareholders sell their shares through the redemption. If the terms of split-off are approved by Shareholders' meeting and split-off is not cancelled due to reasons described above, it would be completed till end of May 2013. Below the split-off of the balance sheet of the Company as at 31 December 2012 is presented:

	T he	As ts se	l loc d fu l ly te a a	Lo d an s a n i ies t t en w , ag r	inv in tm ts to es en h ic h inv in ts to es icu l lan d tu re	As se t p ro p or	l loc d ts te a a ion l ly ic ly tr t a s
	Co mp an y be fo re l i f f t-o sp	Inv l da L T a	Inv l da Pr iva tu a s Ka i las ta p	Inv l da L T a	Inv l da Pr iva tu a s Ka i las ta p	Inv l da L T a	Inv l da Pr iva tu a s Ka i las ta p	O he t r ts as se
Pr lan d e ip ty, t a t op er p n q u me n	1 2 7	-	-	-	-	-	-	1 2 7
In i b le tan ts g as se	1 3	-	-	-	-	-	-	1 3
Inv in bs i d iar ies tm ts to es en su Inv in ia d j in tm ts to tes t v tur es en as so c an o en es	9 8, 1 1 9 6 8 5	5 6, 1 3 7 -	1 0, 5 1 2 6 8 5	2, 4 6 7 -	2, 0 3 3 -	1 3, 0 3 8 -	1 0, 8 6 2 -	3, 0 7 0 -
Inv i la b le- for le tm ts es en av a -sa	1, 8 1 7	-	-	-	-	-	-	1, 8 1 7
No loa d t te n-c urr en ns g ran De fer d inc tax ts re om e as se	8 2, 8 6 2 1 7, 4 0 1	2 5, 2 8 1 -	1 3, 6 6 3 -	2, 2 8 9 -	2, 6 1 2 -	1 6, 6 7 1 -	1 3, 8 8 9 -	8, 4 5 7 1 7, 4 0 1
To l n ta t a ts on -cu rre n ss e	2 0 0 2 1, 4	8 8 1, 4 1	2 8 6 0 4,	6 4, 7 5	6 4, 4 5	2 9, 0 9 7	2 4, 7 5 1	3 0, 8 8 5
Cu t a ts rre n ss e Tr de d o he iva b les t a an r re ce Cu loa d t te rre n ns g ran	2 7 3 1 0 4, 1 9 3	- 2, 5 1	- 4 2, 2 8	1 7 1 4, 5 0	3 1 1 1, 8 6	-	-	2 2 5 3 3, 0 2
Pr d de fer d c ha i d ts ep ay me n an re rg es p rep a , inc tax om e F ina ia l a fa ir v lue hro f i los ts t t t	1 5 8 3 2, 9 7 4	5 -	0 7 4	8 -	2 -	- -	- -	8 8 4 3 2, 9 7
h p nc ss e a a ug ro s Ca h a d c h e iva len de i ts, ter ts s n as q u m p os	3 3, 5 7 1	- -	- -	- -	- -	- -	- -	4 3 3, 5 7 1
To l c ta t a ts ur ren ss e To l a ta ts ss e	1 7 1, 1 6 9 3 2, 9 3 7 1	2, 5 1 5 8 3, 9 3 3	4 2, 3 5 4 6 2 7, 1 4	1 4, 5 2 5 9, 2 8 1 1	1 1, 8 9 3 6, 3 8 1 5	- 2 9, 0 9 7	- 2 4, 7 5 1	9 9, 8 8 2 3 0, 6 1 7 7

30 Events after the reporting period (cont'd)

Split-off of the Company (cont'd)

Assets, equity, liabilities as at 31 December 2012	Invalda LT	Invalda Privatus Kapitalas	The Company before split-off
Assets allocated according to Split-off conditions not proportionally Assets allocated according to Split-off	103,214	83,752	186,966
conditions proportionally	29,709	24,751	54,460
Other assets	70,117	60,650	130,767
Total	203,040	169,153	372,193
Equity	196,694	163,867	360,561
Liabilities	6,346	5,286	11,632
Total	203,040	169,153	372,193

The assets and liabilities of the Group entities, which would be transferred from the Group according to the terms of the splitoff, recognised in the statement of financial position are follows (inter-group balances are eliminated):

	Carrying amount as at 31 December 2012
Intangible assets	959
Investment properties	59,176
Property, plant and equipment	38,889
Associates	685
Deferred tax assets	1,598
Inventories	36,048
Trade and other receivables	23,412
Prepaid income tax	1,316
Prepayment and deferred charges	3,070
Term deposits and restricted cash	21,377
Cash and cash equivalents	7,887
Total assets	194,417
Deferred tax liabilities	(1,348)
Non-current bank borrowings and financial lease liabilities	(1,340)
Other non-current liabilities	(1,868)
Current bank borrowings and financial lease liabilities	(168)
Trade payables	(19,283)
Other current liabilities	(7,794)
Total liabilities	(31,801)
Total net assets	162,616

The Group would loose control of AB Vilniaus Baldai and this subsidiary would become an associate of the Group. The assets and liabilities of AB Vilniaus Baldai are included in the table above. The carrying amount of the proportion of net assets that would be attributable to the Group is LTL 28,337 thousand as at 31 December 2012 and these would be recognized as an associate at fair value at the time of split off. The assets and liabilities of the Company, which are recognised in the consolidated statement of financial position and which would be transferred from the Company according to the terms of the split-off, are equal to LTL 54,090 thousand and LTL 1,136 thousand, respectively (net assets are equal to LTL 52,954 thousand) as of 31 December 2012.

30 Events after the reporting period (cont'd)

Acquisition of own shares

From 19 February 2013 until 5 March 2013 the Company implemented share buy-back through the market of official offer. Maximum number of shares to be acquired was 5,180,214. Share acquisition price established at LTL 8,287 per share. All offered shares were bought-back, the Company has paid for own shares LTL 42,950 thousand, including brokerage fees. Acquired own shares do not have voting rights.

After share buy-back the shareholders of the Company are (by votes):

	Number of votes held Percentage
Mrs. Irena Ona Mišeikiene	12,434,159	26.67%
Mr. Vytautas Bučas	8,198,367	17.58%
Mr. Algirdas Bučas	4,234,709	9.08%
Mr. Darius Šulnis	3,984,762	8.55%
UAB Lucrum Investicija	3,836,621	8.23%
UAB LJB Investments*	3,698,116	7.93%
Mr. Alvydas Banys	2,029,624	4.35%
Mrs. Daiva Banienė	1,836,234	3.94%
Other minor shareholders	6,369,340	13.67%
Total	46,621,932	100.00%

*UAB RB Finansai was merged with UAB LJB Investments in February 2013.