Panevezio Statybos Trestas

Annual / Quarterly Financial Statement • Apr 27, 2018

AB Panevėžio Statybos Trestas

Consolidated financial statements for the year 2017 prepared according to International Financial Reporting Standards adopted in the European Union, along with independent auditor's report

Contents

Parent company details	l
Independent Auditor's Report	2
Confirmation of Company's responsible persons	8
Consolidated statement of financial position	ರಿ
Consolidated statement of comprehensive income	11
Consolidated statement of changes in equity	12
Consolidated statement of cash flows	13
Notes	14
Company's and Consolidated Annual Report, Corporate Governance Report
and Social Responsibility Report of Panevezio statybos trestas AB	રતે
Supplement regarding compliance	82

Parent company details

AB Panevėžio Statybos Trestas

Entity's code:	147732969
Telephone:	+370 45 505 503
Telefax:	+370 45 505 520
Address:	P. Puzino 1, LT-35173 Panevėžys

Board

Remigijus Juodviršis, Chairman Artūras Bučas Virmantas Puidokas Audrius Balčėtis Vilius Gražys

Management

Dalius Gesevičius, Managing Director

Auditor

"Ernst & Young Baltic", UAB

Banks

AB Luminor Bankas AB SEB Bankas Swedbank, AB AB Šiaulių Bankas AB Citadele Bankas OP Corporate Bank Pic Lithuania Branch Bank Sankt - Peterburg

UAB "Ernst & Young Baltic" Subačiaus g. 7 LT-01302 Vilnius Lietuva Tel.: (85) 274 2200 Faks .: (85) 274 2333 Vilnius@lt.ev.com www.ey.com/lt Juridinio asmens kodas 110878442 PVM mokėtojo kodas LT108784411 Juridinių asmenų registras

Ernst & Young Baltic UAB Subačiaus St. 7 LT-01302 Vilnius Lithuania Tel.: +370 5 274 2200 Fax: +370 5 274 2333 Vilnius@lt.ey.com www.ey.com/lt Code of legal entity 110878442 VAT payer code LT108784411 Register of Legal Entities

INDEPENDENT AUDITOR'S REPORT

To the shareholders of AB Panevėžio statybos trestas

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of AB Panevežio statybos trestas and its subsidiaries (hereinafter the Group), which comprise the consolidated statement of financial position as of 31 December 2017, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant , colici iss

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2017 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the Europan Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities (regulation (EU) No 537/2014 of the European Parliament and of the Council). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the requirements of the Law on Audit of the financial statements of the Republic of Litbuan a that are relevant to the audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities in accordance with the Law on Audit of the financial statements of the Republic of Lithuania and the USBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our our bot bo financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

The key audit matter

How the matter was addressed in the audit

Uncertainty related to the fine imposed by the Competition Council

As disclosed in Note 27 of the consolidated financial statements, on 21 December 2017 the Competition Council ruled that the parent company has breached the competition law regulations when concluding joint activity agreements for participation in certain tenders and imposed the Company a fine of EUR 8.5 million. The management disagrees with the decision of the Competition Council and filed an appeal to the Vilnius Regional Administrative Court with the request to cancel the fine imposed and the payment of the fine is currently deferred till the resolution of the case by the

Among other procedures, our audit procedures included discussions with the management and the management's external legal advisor about the facts and circumstances concerning the Competition Council decision and the arguments underlying the management's assessment of the potential outcome of the lawsuit. Our procedures also included reading the appeal filed by the parent company to the Vilnius Regional Administrative Court as well as reading the external legal advisor's letter responding to our inquiries about this uncertainty. Furthermore, we have

The key audit matter

Court. Considering the expected outcome of this uncertainty the management recorded no provision in respect of the fine imposed by the Competition Council in the Group's consolidated financial statements as of 31 December 2017.

This matter was significant for our audit because an adverse outcome of this lawsuit would have a material effect on the financial statements of the Group and it involves a significant management judgement to assess the probable outcome of this uncertainty and consequently the amount of provision to be recorded and contingent liability to be disclosed in the financial statements.

Revenue recognition for constructions contracts in progress

The Group's main revenue stream comes from large long-term construction contracts. As disclosed in Notes 2 and 18, the Group recognizes revenue from the customer specific construction contracts in progress as of vear-end based on the estimated stage of completion of the projects, which is assessed by reference to the proportion of total costs incurred through the reporting date compared to total costs of the contract estimated by management.

This matter was significant to our audit because recognition of revenue for the reporting year is highly dependent on the judgment exercised by management in assessing the completeness and accuracy of forecast costs to complete the construction contract and changes in these judgments and related estimates throughout a contract life can result in material adjustments to revenue and margin recognised on contracts, which can be either positive or negative.

How the matter was addressed in the audit

considered the adequacy of the disclosures in the consolidated financial statements on this matter.

Our audit procedures included, among others:

• Testing controls over the recognition of revenue from construction contracts. including allocation of revenues and costs to a specific contract.
• Retrospective consideration of the accuracy of management's forecasts for potential management bias by comparing the historical financial performance of selected contracts completed in 2017 with the total cost estimates and forecasted margins for those contracts used for revenue recognition as of 31 December 2016.
• Selecting a sample of contracts with greatest potential impact on the financial statements for the year ended 31 December 2017, considering both quantitative and qualitative criteria, such as significant margin changes, loss-making contracts or projects which are unique in their nature, for additional testing as outlined below.

For the sample of contracts selected, we have considered the adequacy of the management's estimate on the amount of revenue to be recognized in the financial statements by performed the following procedures, among others:

• Comparing the contracts signed with customers against the total contract value estimates included in the management's calculations;
• Considering the management's estimated costs required to complete the contracts by reference to our understanding of the contract scope and the management's contracts' cost budgets and our inquiries of contract managers;
• Tracing costs incurred up to date as per management's estimation of the stage of completion to the costs included in the income statement, considering also whether they are

The key audit matter

How the matter was addressed in the audit

reflective of the actual progress of the work and only take into account eligible items;

• Considering the reasonableness of the margins recognised by the Group for the projects in progress taking into account our understanding of the contract scope and the historical performance of the Group:
• Considering whether all loss making contracts were properly identified and accounted for;
• And tracing actual contract revenues accounted for in the income statement to the estimation of the management of the amounts of revenue to be recognized for the contracts in progress based on the assessment of their stage of completion.

Finally, we considered the adequacy of the disclosures about the matter in the financial statements.

Assessment of impairment of projects under development in Kaliningrad

The Group has projects under development in its subsidiary ZAO ISK Baltevromarket in Kaliningrad with the total carrying value of EUR 6 million as of 31 December 2017, which are accounted under inventory in the statement of financial position. Project development costs capitalized as of 31 December 2017 mostly represents cost of acquired land and incurred infrastructure development costs. As disclosed in Note 17 to the financial statements certain impairment risk factors indicate that the value of these projects might be impaired and the management assessed the net realizable value to the reference of the estimated market prices of real estate projects, considering the valuations of land used in the development projects performed by independent valuator. As a result no impairment was recognized in the financial statements by the management in the financial statements for the year ended 31 December 2017.

This matter was important to our audit due to significance of the amounts involved and high degree of related management estimation.

Assessment of impairment of receivables from former subsidiary OOO Baltlitstroi undergoing bankruptcy procedures

The Group has amounts receivable (including loans granted) with the net carrying value of EUR 0.7 million as of 31 December 2017 from the former subsidiary which is in the bankruptcy process from April 2017. As disclosed in Note 19 to the financial statements the management assessed the recoverable amount of Among other procedures, we involved a valuation specialist to assist us with the assessment of external independent valuations used by the management in the estimation of the recoverable value of these projects under development. Our considerations, among others, included:

• Considerations about the independent external appraiser's competence, capabilities and objectivity;
• Understanding the methods used by the external appraiser to estimate market values;
• Consideration of the accuracy and relevance of the input data provided by management to the external appraiser where discounted cash flows method was used. We considered the key assumptions used by the management in the discounted cash flows, including discount rates, cost of construction, market rent price level, vacancy rates and other;
• Consideration of the reasonableness of the level of market prices used were comparable market prices method was used.

Finally, we considered the Group's analysis of the sensitivity of the impairment tests' results to changes in key assumptions and the adequacy of the Group's disclosures in the financial statements.

Among other procedures, our audit procedures included discussions with the management of the basis underlying the management's estimate of the recoverability of these receivables, including:

• Consideration of management analysis of the net assets available in COO Baltlitstroj for

The key audit matter

these receivables considering the data received from the bankruptcy administrator about the net assets available to satisfy the claims of the Group and its status in the creditors list. As a result, EUR 0.8 million impairment for these receivables (including loans granted) was recognized in the financial statements by the management in the financial statements for the year ended 31 December 2017.

This matter was important to our audit due to significance of the amount involved and significant assumptions involved in the management estimation.

How the matter was addressed in the audit

settlement of the claims of the creditors and discussion with the management about the uncertainties with the recoverability of these net assets;

Consideration of the consistency of the information contained in the letter obtained by us from the external legal advisors of the Group used to assist in the recovery of the receivables with the assumptions used by management;

Consideration of the sensitivity of the management's estimation to change in the assumptions concerning certain uncertainties associated with the ability of OOO Baltlitstroj to recover some of the receivables from its clients to be available for the distribution to its creditors, including the Group.

Finally, we considered the adequacy of the disclosures about the matter in the financial statements.

Other matter

The financial statements of the Group for the year ended 31 December 2016, were audited by another auditor who
expressed an unmodified oninion on these statements on 31 March expressed an unmodified opinion on those statements on 31 December 2017.

Other information

Other information consists of the information included in the Company's and consolidated annual report, including to corporate governance report in nieded in the Conformy S and consolution in including
our auditor's report hand corporate social responsible than the financial statements and our auditor's report there) and of porties social responsibility Teport, other than the innancial
our auditor's report thereon. Management is responsible for the other inform

Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon, except as indicated holow assurance conclusion thereon, except as indicated below.

In connection to our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be mancial stating of our of our of our of our performed, we conclude that there is a materially missuled. In based on the work we have have have have have have be that fact. We have nothing to report in this regard.

We also have to evaluate, if the financial information included in the Company's and consolidated annual report, including corporate governance in the financial statements for the same financial report,
the annual report, including cornerance renner was manner for the same financial yea the annual report, including corporate covernance report, was prepared in accordance with the relevant legal requirements. In our opinion geromance report, was prepared in accordance with the relevant legal
material respects: material respects:

* The financial information included in the Company's and consolidated annual report, including corporate governance report, corresponds to the consolidated annual report, including corporated
for the vear ended 31 December 2017 - and for the year ended 31 December 2017; and

* The Company's and consolidated annual report, including corporate governance report, was prepared in accordance with the requirements of the united by on alle goven halter report, was prepared in
of the Republic of Lithuania of the Republic of Lithuania.

We also need to check that the corporate social responsibility report has been provided. If we identify that corporate social responsibility report has or provided, we are required if we dentiry that corporate
in this reqard. in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standation of the European Union, and For such internal control as management determines is necessary to enable the proparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

ln preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to going content and using the going content
realistic alternative but to do so realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it an addit concerner can arise from froud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists of ecounting and, based on significant doubt on the Group's ability to continue as a going concern. If we conclude that a may cast exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or concilisors may cause the Group to cease to continue as a going concern.

▸ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements receited. Including the maily the many in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We are responsible for our audit opinion

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant and the regarding, among other maters, the plained scope and
identify during our audit identify during our audit.

We also provide those charged with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and ther matters that matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Other requirements of the auditor's report in accordance with Regulation (EU) No 537/2014 of the European Parliament and of the Council.

Appointment and approval of the auditor

In accordance with the decision made by the extraordinary shareholders meeting on 9 November 2017 we have been chosen to carry out the audit of Group's financial statements for the first time and the period of our total uninterrupted engagement is one year.

Consistency with the audit report submitted to the audit committee

We confirm that our opinion in the section 'Opinion' is consistent with the additional Audit report which we have submitted to the Group and to the Audit Committee.

Non audit services

We confirm that to the best of our knowledge and belief, services provided to the Group are consistent with the requirements of the law and regulations and do not comprise non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

Throughout our audit engagement period, we have not provided any other services except for the audit of the financial statements.

The partner in charge of the audit resulting in this independent auditor's report is Inga Gudinaite.

UAB ERNST & YOUNG BALTIC Audit company's license No. 001335

Inga Gudinaitė Auditor's license No. 000366

29 March 2018

CONFIRMATION OF COMPANY'S RESPONSIBLE PERSONS

This confirmation of responsible employees concerning the audited consolidated financial statements and the consolidated annual report of Panevezio statybos trestas AB and its subsidiaries (hereinafter - "the Group") for the year 2017 is presented in accordance with the Law on Securities of the Republic of Lithuania and the Rules for Preparation and Presentation of Periodic and Additional Information approved by Resolution of the Board of the Bank of Lithuania.

Hereby I confirm, that as to our knowledge, the presented consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the consolidated assets, consolidated liabilities, consolidated financial position, consolidated profit or loss and consolidated cash flows, and that the consolidated annual report fairly states the review of business development and activities, the Group's position and description of the main risks and uncertainties that are faced.

Dalius Gesevicius Managing Director Panevezio statybos trestas AB

29/03/2018

29/03/2018

Entity's code: 147732969 Address: P. Puzino 1, LT-35173 Panevėžys

Approved on
Minutes No.

Consolidated statement of financial position

as at 31 December

In thousand EUR

	Note	2017	2016
ASSIPTS
Non-current assets
Property, plant and equipment	14	5 723	5 987
Intangible assets	ો રે	149	193
Investment property	16	1 300	1 270
Non-current trade receivables	18	1 060	રેરવ
Other non-current financial assets		37	30
Deferred tax asset	13	121	1 49
Total non-current assets		8 390	8 183
Current assets
Inventories	17	10 934	9 894
Trade receivables	18	9716	16 688
Prepayments		767	331
Loans granted		0	14
Other assets	19	2 રેજર	। ୧୧୧
Prepaid income tax		366	57
Cash and cash equivalents	20	26 891	24 382
Total current assets		51 299	53 022
TOTAL ASSETS		રતે રહ્યું રેજિતે	61 205

The notes on pages 14-58 are an integral part of these consolidated financial statements.

Managing Director Dalius Gesevičius Chief Accountant

Danguolė Širvinskienė

Entity's code: 147732969 Address: P. Puzino 1, LT-35173 Panevėžys

Approved on Minutes No.

Consolidated statement of financial position (continued)

as at 31 December

In thousand EUR

	Note	2017	2016
EQUITY AND LIABILITIES
Equity
Share capital	21	4 742	4 742
Reserves	21	4 369	3 825
Retained earnings		28 372	28 231
Total equity attributable to equity holders of the Company		37 483	36 797
Non-controlling interest		1 145	1 357
Total equity		38 628	38 154
Loans and borrowings	23	રવે	ರಿ
Provisions	24	857	1 025
Deferred tax liabilities	13	22	79
Other non-current liabilities	25	ರಿ	1
Subsidies and grants		0	4
Total non-current liabilities		942	1 118
Current liabilities
Loans and borrowings	23	639	708
Trade payables	22	10 280	14 574
Prepayments received	18	3 652	325
Income tax payable		19	44
Other liabilities	ટર્ડ	ર 529	6 282
Total current liabilities		20 119	21 933
Total liabilities		21 061	23 051
TOTAL EQUITY AND LIABILITIES		રેતે રહેતું રેજિતે	61 205

The notes on pages 14-58 are an integral part of these consolidated financial statements.

Managing Director Dalius Gesevičius

Danguolė Širvinskienė Chief Accountant

29/03/2018

29/03/2018

Entity's code: 147732969 Address: P. Puzino 1, LT-35173 Panevėžys

Approved on
Minutes No.

Consolidated statement of comprehensive income

for the year ended 31 December

In thousand EUR

	Note	2017	2016
Revenue	5.6	73 816	વેત રેણે
Cost of sales	7	(68 085)	(90 221)
Gross profit		5 731	9 140
Other income	11	455	ર 18
Selling expenses	8	(369)	(322)
Administrative expenses	ರಿ	(7 496)	(7 734)
Other expenses	11	(426)	(449)
Result from operating activities		(2 105)	1 153
Finance income	12	4 271	2 738
Finance costs	12	(1 350)	(276)
Result before income tax		816	રે રીકે
Income tax expense	13	(63)	(448)
Net profit		753	3 167
Other comprehensive income
Effect of currency translation		802	(2 183)
Items that will never be reclassified to profit or loss		0	0
Items that are or may be reclassified to profit or loss		802	(2 183)
Total other comprehensive income		802	(2 183)
Total comprehensive income		ી રહેરેન્ડ	984
Net profit (loss) attributable to:
Owners of the Company		119	2 562
Non-controlling interest		(366)	રે રેણરે
		753	3 167
Total comprehensive income attributable to:
Owners of the Company		1 750	874
Non-controlling interest		(195)	110
		1 555	984
Basic earnings per share	26	0.05	0.19

The notes on pages 14-58 are an integral part of these consolidated financial statements.

Managing Director	Dalius Gesevičius

Chief Accountant Danguolė Širvinskienė 29/03/2018

29/03/2018_

AB Panevezio Statubos I restas	Consolidated financial statements for the vear 2017
--------------------------------	-----------------------------------------------------	--

Approved on Minutes No.

Address: P. Puzino 1, LT-35173 Panevėžys Entity's code: 147732969

Consolidated statement of changes in equity

STATUTATATA SECRESSION OF STATES OF THE FORTES )
In thousand EUR	Note	capital Share	reserve Legal	Revaluation reserve	translation Currency reserve	Retained earnings	Equity attributable to the Company's owners	controlling interest Non-	Total equity
Total comprehensive income for the year Balance as at 31 December 2015		4 742	598	રેરેરે ﺎ	3 446	25 846	36 185	1 247	37 432
Net profit (loss)						562 C	2 562	605	3 167
Effect of currency translation					(1 689)		(1 689)	(494)	(2 183)
Revaluation of property, plant and equipment				(85)		૪૨	0		0
Effect of conversion to euro						(1)	0		0
Total other comprehensive income		0		(82)	689)	84	689) 1	(494)	183) (Σ
Total comprehensive income for the year Transactions with owners of the		0		(82)	(88)	647 7	874	110	984
Company, recognized directly in equity
Dividends	26					(262)	(262)		(262)
Total transactions with owners of the Company						(262)	(262)		(262)
Equity as at 31 December 2016		742 ব	ਟੇਰੇਰੇ	468 L	757	28 231	36 797	357	38 154
Total comprehensive income for the year Net profit (loss)						119	119	(366)	753
Effect of currency translation					630		630	172	802
Revaluation of property, plant and equipment				(84)		84	0		0
Total other comprehensive income		0	0	(84)	630	84	630	172	802
Total comprehensive income for the year		0	0	(84)	630	203	749	(194)	ર્સ્ટર્
Company, recognized directly in equity Transactions with owners of the Dividends	26					(1 063)	063)	(18)	081)
Total transactions with owners of the
Company						(1 063)	(1 063)	(18)	(1 081)
Equity as at 31 December 2017		4 742	ਵੇਰੇ ਹੋ	384	2.387	28 372	37 483	145	38 628
The notes on pages 14-58 are an integral part of these consolidated				financial statements.
Managing Director	Dalius Gesevičius					29/03/2018
Chief Accountant	Danguolė Širvinskienė					29/03/2018
								12

Entity's code: 147732969 Address: P. Puzino 1, LT-35173 Panevėžys		Approved on Minutes No.
Consolidated statement of cash flows
for the year ended 31 December
In thousand EUR		Note	2017	2016
Cash flows from operating activities
Net profit (loss) Adjustments:			753	3 167
Depreciation and amortization (including impairment)		14, 15	1 257	1 187
Result from disposal of property, plant and equipment			(20)	0
Income tax expense Other non-cash items		13	63	448 98
			(401)
			1 652	4 900
Change in inventories		17	(243)	50
Change in trade receivables Change in prepayments		18	6 223 (436)	(148) 649
Change in other assets		19	(1 285)	(783)
Change in trade payables		22	(4 294)	(2 178)
Change in prepayments received			3 327	(1 198)
Change in other liabilities			(1 278)	(521)
			3 666	771
Income tax paid			(117)	(518)
Elimination of results from financing activities		12	974	(1 943)
Net cash flows from/ (used in) operating activities			4 523	(1 690)
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible
assets		14, 15	(878)	(1 125)
Disposal of property, plant and equipment Loans granted			રવ 0	188 (20)
Loans recovered			14	129
Interest and dividends received			67	13
Net cash flows (used in) investing activities			(743)	(815)
Cash flows from financing activities
Dividends paid			(1 074)	(262)
Loans repaid		23	(108)	(1 460)
Payment of finance lease liabilities		23	(52)	(40)
Interest paid			(31	(168)
Net cash (used in) financing activities			(1 271)	(1 930)
Net change in cash and cash equivalents			2 509	(4 435)
Cash and cash equivalents at 1 January Effect of exchange rate fluctuations on cash held			24 382 0	28 817 0
Cash and cash equivalents at 31 December			26 891	24 382
The notes on pages 14-58 are an integral part of these consolidated financial statements.
Managing Director	Dalius Gesevičius		29/03/2018
Chief Accountant	Danguolė Sirvinskienė		29/03/2018

Notes

1. General information

AB Panevežio Statybos Trestas (hereinafter "the Company") was established in 1957. The entity's code is 147732969 and it is registered at P. Puzino 1, LT-35173 Panevežys. The ordinary registered shares of the Company have been listed on the Official Trading List of the Vilnius Stock Exchange (VSE) since 13 July 2006. These consolidated financial statements comprise the financial statements of the Parent Company and its subsidiaries (hereinafter "the Group"). The Group is primarily involved in the construction of buildings, constructions, other facilities and networks, as well as real estate development in Lithuania and abroad. The Group employed 1 043 employees as at 31 December 2017 (1 071 employees as at 31 December 2016).

The main shareholders of the Group as of 31 December 2017 and 2016 are:

• · AB Panevėžio Keliai, S. Kerbedžio g. 7, Panevėžys, company code 147710353, (49.78%);
• · Swedbank AS (Estonia) clients, Liivalaia 8, 15040 Tallim, Estonia, company code 10060701, (7.57 %);
• · Freely traded shares, owned by private persons and legal entities (42.65 %). No one owns more than 5%.

AB Panevežio Keliai is the ultimate controlling party which prepares its own separate and consolidated financial statements based on Business Accounting Standards (BAS) of the Republic of Lithuania. Shareholders of AB Panevežio Keliai are private persons. There is no controlling ultimate private person.

The shareholders of the Company have a statutory right to either approve these consolidated financial statements or not approve them and require the Management to prepare a new set of consolidated financial statements.

These consolidated financial statements were approved by the Board of directors for issue on 29 March 2018.

	Country		Equity as at	Net profit (loss) for	Equity as at	Net profit (loss) for
(in thousand EUR)	of operations	Nature of activities	31/12/201 7	the year 2017	31/12/201 6	the year 2016
JAB PST	Lithuania
Investicijos		Real estate
(consolidated)		development	4 409	(1 108)	4 975	2 571
	Lithuania	Construction:
UAB Vekada		electricity	1 251	196	1 456	167
UAB Metalo	Lithuania	Construction: steel
Meistrai		structures	391	214	177
UAB	Lithuania	Constructions				62
Skydmedis		: wood houses	597	464	1 033	350
	Lithuania	Construction:
UAB Alinita		conditioning	(470)	12	(482)	51
	Russia	Real estate
000 Teritorija		development	(1 206)	(194)	(1 119)	(431)
Kingsbud Sp. z.	Poland	Intermediary
0. 0.		services	(191)	13	71	7
SIA PS Trests	Latvia	Construction	(161)	રેવે	(215)	6
IJAB Šeškinės	Lithuania	Real estate
Projektai		development	1 219	(4)	1 223	(22)
000	Russia
Baltlitstroj		Construction	* _	#	(2 432)	(1 151)
AB PST Nordic	Sweden	Constriction	* _	*	15	13

Financial information of the subsidiaries is as follows:

1. General information (continued)

Subsidiary ownership:

			Registration address	2017	2016
UAB	PST	Investicijos	Verkių 25C, Vilnius
(consolidated)				68.3 %	68.3%
UAB Vekada			Marijonų 36, Panevėžys	95.6 %	95.6%
	UAB Metalo Meistrai		Tinklų 7, Panevėžys	100 %	100%
	UAB Skydmedis		Pramonės 5, Panevėžys	100 %	100%
UAB Alinita			Tinklų 7, Panevėžys	100 %	100%
		UAB Seškinės Projektai	Verkių 25C, Vilnius	100 %	100%
			Lunačiarsko pr. 43/27, Cerepovecas.
000 Teritorija			Vologdos sr., Russia	87.5 %	87.5%
	Kingsbud Sp. z. o. o.		A. Patli g. 12, 16-400 Suwalki, Poland	100 %	100%
SIA PS Trests			Skultes iela 28, Skulte, Marupes nov., Latvia	100 %	100%
			Krossgatan 25, 162 50 Vallingby, Stokholm,
	AB PST Nordic		Sweden	**	100%
	000 Baltlitstroj		ul. Rostovskaja 5/7, Kaliningrad, Russia	%	100%
			The Company's subsidiary UAB PST Investicijos has the following subsidiaries:

	Type of activity	2017	2010
UAB Ateities Projektai	Development of real estate projects in Palanga	100%	100%
ZAO ISK Baltevromarket	Development of real estate projects in Kaliningrad	100%	100%

*In 2017 the Group lost control of AB PST Nordic and OOO Baltlistroj due to their bankruptcy. These former subsidiaries are not consolidated since the loss in control which occurred in 2017. The effect of the bankruptcy of AB PST Nordic and OOO Baltlistroj to the Group is disclosed in Notes 9 and 12.

Joint operations

In 2016 Group made and agreement with limited liability company SIA ARMS GROUP, Gobu iela 1-129, Baloži, Kekavas novads, Latvia, regarding joint control and solidarity responsibility for newly established general partnership enterprise PST Un Arms. According to agreement, 50 % of operating expenses, assets and liabilities of PST Un Arms of the joint operations belongs to the Group. General partnership enterprise PST Un Arms is established for certain project developed in Latvia.

Total amounts as reported by PST un Arms as of 31 December 2017 are: assets - EUR 465 thousand, liabilities - EUR 501 thousand, equity - EUR 35 thousand, revenue - EUR 1 674 thousand and net result – EUR 0 thousand. PST un Arms activity in 2016 was insignificant.

2. Basis of preparation

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (hereinafter IFRSs).

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for land and buildings within property, plant and equipment which are measured using the revaluation model, and investment property, which is measured at fair value.

Functional and presentation currency

The consolidated financial statements are presented in the national currency of the Republic of Lithuania, euro (EUR), which is the Parent company's functional currency as well as of subsidiaries operating in Lithuania and Latvia. The functional currencies of foreign subsidiaries are the respective foreign currencies of the country of residence. Items included in the financial statements of these subsidiaries are measured using their functional currency.

Due to rounding of certain amounts to thousand, figures in the tables may differ. Such rounding bias is immaterial in these financial statements.

Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

• · Note 12 deferred taxes recognition. Deferred tax asset is recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences could be utilized.
• · Note 13 fair value of land and buildings, useful lives of property, plant and equipment. The Group verifies economic useful lives of property, plant and intangible assets at least once a year.
• · Note 17 measurement of net realizable value of inventories. A key factor in estimating the net realizable value of inventories is the recoverability of ongoing construction projects. Therefore, the Group engaged external appraisers to estimate the fair values of these projects based on discounted cash flow or comparable price technique.
• · Note 18 impairment of trade receivables and estimation of stage of completion of construction contracts. The accurate recording of revenue on contracts in progress is highly dependent on judgment exercised by management in assessing the completeness and accuracy of forecasted costs as it is a key assumption in the assessment of the stage of completion of the contracts in progress. Estimating recoverable amounts of receivables is a process, which requires significant management judgement and estimates, particularly those that are related to future cash flows. The judgment was applied in estimating the amounts to be repaid and their timing.
• · Note 24 warranty provision is calculated by the Group on a monthly basis based on monthly revenue. Warranty provision is being calculated by taking into account revenue, actual warranty expenses incurred in previous periods, its proportion against actual sales and historical information.
• · Note 27 Contingent liabilities are not recognised in the financial statements as based on management judgement as management it is more likely than not, that the Group will win the legal disputes mentioned in the note.

Significant accounting policies 3.

Basis of consolidation

The financial statements of the subsidiaries are prepared for the same reporting year, using consistent accounting policies.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

• Exposure, or rights, to variable returns from its involvement with the investee;
• The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control.

Basis of consolidation (continued)

Subsidiaries are consolidated from the date from which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. All intercompany transactions, balances and unrealised gains and losses on transactions among the Group companies have been eliminated. The equity and net income attributable to non-controlling interests, if any, are shown separately in the statement of financial position and the statement of comprehensive income.

Total comprehensive income of a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.

Acquisitions and disposals of non-controlling interest by the Group are accounted as equity transaction: the difference between the carrying value of the net assets acquired from/disposed to the non-controlling interests in the Group's financial statements and the acquisition price/proceeds from disposal is accounted directly in equity.

Change of ownership share in the subsidiary when control is accounted for as equity transaction. If the Group loses control of the subsidiary company, it:

• · Derecognises the assets (including goodwill) and liabilities of the subsidiary;
• · Derecognises the carrying amount of non-controlling interest, if any;
• · Derecognises accumulated currency exchange differences accounted for in equity;
• · Accounts for consideration received at fair value;
• · Accounts for retained investment at fair value;
• · Accounts for arising surplus or deficit in the profit or loss under finance activity;
• · Reclassifies the components previously recognized in other comprehensive income and attributable to the parent company to the statement of comprehensive income or retained earnings respectively.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. Any contingent consideration to be transferred by the acquirer will be 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. For each business combination. the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through statement of comprehensive income.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in statement of comprehensive income.

Basis of consolidation (continued)

After 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 that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit 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.

A joint arrangement is an arrangement of which two or more parties have joint control. These arrangement has the following characteristics:

• · The parties are bound by a contractual arrangement.
• · The contractual arrangement gives two or more of those parties joint control of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group has a joint arrangement that is a joint operation.

As a joint operator the Group recognises in relation to its interest in a joint operation:

• · its assets, including its share of any assets held jointly;
• · its liabilities, including its share of any liabilities incurred jointly;
• · its revenue from the sale of its share of the output arising from the joint operation;
• · its share of the revenue from the sale of the output by the joint operation; and
• · its expenses, including its share of any expenses incurred jointly.

Foreign currency

Transactions in foreign currencies are translated to the functional currency at exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rates of the European Central Bank ruling at the reporting date. The foreign currency gain or loss is recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost are translated to the functional currency at the exchange rate at the date that the asset or liability is recognized in statement of financial position. Currency exchange gain or loss is recognized in profit or loss.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the presentation currency at exchange rates at the dates of the transactions. Effect of translation is recognized directly in other comprehensive income. When a foreign operation is disposed of, the relevant amount in the foreign currency translation reserve is reclassified to profit or loss.

Non-derivative financial instruments

Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, trade payables and other liabilities. The Group has no heldto-maturity investments, available-for-sale financial assets or financial assets at fair value through profit or loss.

Cash and cash equivalents comprise cash balances and call deposits with maturities of less than 3 months.

Non-derivative financial instruments are recognized initially at fair value plus (except for instruments at fair value through profit or loss) any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

Financial instruments are recognized on the trade date. Financial assets are derecognized if the contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are derecognized if the obligations of the Group specified in the contract expire or are discharged or cancelled.

Loans and receivables are non-derivative financial assets and are not quoted in an active market. They are included into current assets except for maturities longer than 12 months. Loans and receivables are subsequently measured at amortized cost using the effective interest method, less impairment losses, if any. Current receivables are not discounted.

Allowance for doubtful receivables is evaluated when the indications leading to the impairment of accounts receivable are noticed and the carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised (written off) when they are assessed as uncollectible.

Loans and borrowings and other financial liabilities, including trade payables are subsequently stated at amortized cost using the effective interest method. Current liabilities are not discounted.

The effective interest method is a method of calculating the amortized cost of a financial asset or liability and of allocating interest income and expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts or payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Property, plant and equipment

Items of property, plant and equipment except for land and buildings are measured at cost less accumulated depreciation and accumulated impairment losses. Land and buildings are carried at revalued amount which is their fair value as at the revaluation date less subsequently accumulated depreciation and impairment. Revaluations are carried out regularly ensuring that the carrying amount of land and buildings do not significantly differ from their fair values as at reporting date. The fair value of land and buildings is established by certified independent real estate valuators. Depreciation is calculated on a straight line basis over the estimated useful lives of the assets. The revaluation reserve of land and buildings is reduced by an amount equal to the difference between the depreciation based on the revalued carrying amount and the depreciation based on the original cost of the land and buildings each year and is transferred directly to retained earnings.

In case of revaluation, when the estimated fair value of the assets exceeds their carrying value, the carrying value is increased to the fair value and the amount of increase is included into revaluation reserve of property, plant and equipment as other comprehensive income in equity. However, such increase in revaluation is recognized as income to the extent it does not exceed the decrease of previous revaluation recognized in profit or loss. Depreciation is calculated from the depreciable amount which is equal to acquisition cost or revaluated mount less residual value of an asset.

Property, plant and equipment (continued)

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of the Group's self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Borrowing costs related to qualifying assets are capitalized.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The cost of replacing part of an item of property, plant and equipment is capitalised only if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is written off. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.

Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

The estimated useful lives of the assets are the following:

· Buildings and structures	8-40 years
· Plant and equipment	5-10 years
· Vehicles	5—10 years
· Fixtures and fittings	3-6 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

Gains and losses on disposal are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

Investment property

Investment properties of the Group consist of buildings that are held to earn rentals or for capital appreciation, rather than for use in the production, or supply of goods, or services or for administration purposes, or sale in the ordinary course of business.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated 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 profit or loss in the period in which they arise.

Acquisition cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of raw materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located. Borrowing costs are capitalized in assets that comply with capitalisations requirements.

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. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the profit or loss in the period of derecognition.

Investment property (continued)

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

Intangible assets, except goodwill

Software and other intangible assets, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful life is 3-4 years.

The Group does not have any intangible assets with infinite useful life.

Leased assets

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.

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. All other leases are treated as operating leases and leased assets are not capitalized.

The Group's buildings that are leased according to operating lease agreements are accounted in the statement of financial position as investment property. Lease income is recognized on a straight line basis over the lease period.

Inventories

Capitalized costs related to the real estate development are stated at the lower of cost and net realisable value (NRV).

Other inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Inventories related with specific ongoing projects are accounted for under inventories caption in the statement of financial position until inventories are used in construction process and further are accounted for as cost of sales. Specific project related inventories' accounting policy is the same as stated above.

Unrealisable inventory is fully written-off.

Construction work in progress of specific projects

Construction work in progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognized to date less progress billings and recognized losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group's contract activities based on normal operating capacity.

Construction work in progress is presented as part of trade receivables in the statement of financial position. If payments received from customers exceed the income recognized, then the difference is presented as deferred income in the statement of financial position.

Impairment of financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest income and expense over the relevant period.

Impairment loss is recognized in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is recognized in profit or loss.

Impairment of non-financial assets

The carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit).

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. An impairment loss on a non-revalued asset is recognised in profit or loss. However, an impairment loss on a revalued asset is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Such an impairment loss on a revalued asset reduces the revaluation surplus for that asset.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. No impairment reversal for goodwill is allowed.

Dividends

Dividends are recognized as a liability in the period in which they are declared.

Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

A provision for warranties is recognized when the underlying construction services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

Employee benefits

The Group does not have any defined contribution and benefit plans and has no share based payment schemes. Post-employment obligations to employees retired on pension are borned by the State.

According to the requirements of Lithuanian Labour Code, each employee leaving company at the age of retirement is entitled to a one-off payment in the amount of 2 month salary.

The past service costs are recognised as an expense on a straight line basis over the average period until the benefits become vested. Any gains or losses appearing as a result of curtailment and/or settlement are recognised in the statement of comprehensive income as incurred. The past service costs are recognized in the statement of comprehensive income in other comprehensive income as incurred. The above mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit credit method. Obligation is recognized in the statement of financial position and reflects the present value of these benefits on the preparation date of the statement of financial position. Present value of the non-current obligation to employees is determined by discounting estimated future cash flows using the discount rate which reflects the interest rate of the Government bonds of the same currency and similar maturity as the employment benefits. Actuarial gains and losses are recognized in statement of other comprehensive income as incurred.

Short-term employee benefits are recognized as a current expense in the period when employees render the services. These include salaries and wages, social security contributions, bonuses, paid holidays and other benefits.

Revenue

Construction contract revenue includes the initial amount agreed in the contract plus any variations in contract work and other payments to the extent that it is highly probable that they will result in revenue and can be measured reliably. As soon as the outcome of a customer specific construction contract can be estimated reliably, contract revenue and expenses are recognized in proportion to the stage of completion of the contract. The stage of completion is assessed by proportion of actual cost incurred and the budgeted cost of construction contract.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognized immediately in profit or loss.

Revenue from services is recognised when service is provided.

Onerous contracts provision is recognised when the Group has a present obligation (legal or constructive) to complete a construction work to a third party for a price lower than its cost of sales at the reporting date. The difference between the value of the contract and its selling price at the reporting date is charged to cost of sales in the statement of comprehensive income.

Finance income and costs

Finance income comprises interest income is recognized as it accrues, using the effective interest method. Finance costs comprise interest expense and impairment losses recognized on financial assets. Interest expenses are recognized using effective interest rate method. Foreign currency gains and losses are reported on a net basis.

Income tax

Income tax expense comprises current and deterred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized in other comprehensive income or equity.

Income tax (continued)

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date.

Deferred taxes are calculated using the liability method. Deferred tax is recognized, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Starting from 1 January 2014 the tax loss carried forward cannot exceed 70% of the taxable profit of current financial year in Lithuania. Tax losses can be carried 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 were 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 for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature.

Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, such as convertible notes and share options granted to employees.

The Group has no dilutive potential ordinary shares. The diluted earnings per share are the same as the basic earnings per share.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. An operating segment's operating results are reviewed regularly by the chief operating decision maker of the Group to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the chief operating decision maker of the Group include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Borrowings

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.

Borrowings are initially recognised at fair value of proceeds received, less the costs of transaction. They are subsequently carried at amortised cost, the difference between net proceeds and redemption value being recognised in the net profit or loss over the period of the borrowings (except for the capitalized part) using the effective interest method.

Determination of fair values

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its nonperformance risk. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Fair values have been determined for measurement and/or disclosure purposes based on the methods described Note 29. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Off-setting

When preparing the financial statements, assets and liabilities as well as revenues and expenses are not set off except for the cases where the International Financial Accounting Standards specifically requires such off-setting.

Changes in accounting policies

Except for the changes below, the Group has consistently applied the accounting policies set out in these financial statements to all periods presented in the financial statements.

Adoption of new and/or changed IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations

The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRS which have been adopted by the group as of 1 January 2017:

· IAS 12 "Profit taxes": Recognition of Deferred Tax Assets for Unrealized Losses (Amendments)

The objective of the Amendments is to clarify the requirements of deferred tax assets for unrealized losses in order to address diversity in practice in the application of IAS 12 Income Taxes. The specific issues where diversity in practice existed relate to the existence of a deductible temporary difference upon a decrease in fair value, to recovering an asset for more than its carrying amount, to probable future taxable profit and to combined versus separate assessment. The Amendments had no significant impact to the Group as there were no material deferred tax assets related to unrealized losses.

· IAS 7 "Cash flow statement": Disclosure Initiative (Amendments)

The objective of the Amendments is to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The Amendments specify that one way to fulfil the disclosure requirement is by providing a tabular reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities, including changes from financing cash flows, changes arising from obtaining or losing control of subsidiaries or other businesses, the effect of changes in foreign exchange rates, changes in fair values and other changes. The Group has applied the amendments and included mandatory disclosures in the financial statements (Note 31).

Standards issued but yet not effective

· IFRS 9 Financial Instruments: Classification and Measurement

The standard is effective for annual periods beginning on or after 1 January 2018, with early application permitted. The final version of IFRS 9 Financial Instruments reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. The management of the Group preliminary assessed the effect of this standard on the financial statements of the Group and concluded that it will not have a material effect.

· IFRS 15 Revenue from Contracts with Customers

The standard is effective for annual periods beginning on or atter 1 January 2018. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard's requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity's ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates. Management has assessed the application of the standard and based on the preliminary analysis performed, the Group does not expect significant impact on its Financial Statements (except extended disclosure requirements) as the Group does not have long-term contracts with multi-element arrangements, no take-or-pay agreements, no sales incentives are provided, no material contract costs are generally incurred and contract modifications are rare, etc.

· IFRS 15: Revenue from Contracts with Customers (Clarifications)

The Clarifications apply for annual periods beginning on or after 1 January 2018 with earlier application permitted. The objective of the Clarify the IASB's intentions when developing the requirements in IFRS 15 Revenue from Contracts with Customers, particularly the accounting of identifying performance obligations amending the wording of the "separately identifiable" principal versus agent considerations including the assessment of whether an entity is a principal or an agent as well as applications of control principle and of licensing providing additional guidance for accounting of intellectual property and royalties. The Clarifications also provide additional practical expedients for entities that either apply IFRS 15 fully retrospectively or that elect to apply the modified retrospective approach. Management has assessed the application of the standard and standard adoption will not have a significant impact for the Group (as described above).

· IFRS 16: Leases

The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor'). The new standard requires lessees to recognize most leases on their financial statements. Lessees will have a single accounting model for all leases, with certain exemptions. Lessor accounting is substantially unchanged. The Group has not yet evaluated the impact of the implementation of this standard.

· Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. The Group has not yet evaluated the impact of the implementation of this amendment

· IFRS 2: Classification and Measurement of Share based Payment Transactions (Amendments)

The Amendments are effective for annual periods beginning on or after 1 January 2018 with earlier application permitted. The Amendments provide requirements on the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled sharebased payments, for share-based payment transactions with a net settlement feature for withholding tax obligations and for modifications to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. These Amendments have not yet been endorsed by the EU. The Group does not have share based payment transactions and these amendments will not have any impact on the Group's financial statements.

· IAS 40: Transfers to Investment Property (Amendments)

The Amendments are effective for annual periods beginning on or after 1 January 2018 with earlier application permitted. The Amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The Amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management's intentions for the use of a property does not provide evidence of a change in use. These Amendments have not yet been endorsed by the EU. The Group has not yet evaluated the impact of the implementation of this amendment.

· IAS 28: Long-term Interests in Associates and Joint Ventures (Amendments)

The Amendments are effective for annual reporting periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments relate to whether the measurement, in particular impairment requirements, of long term interests in associates and joint ventures that, in substance, form part of the 'net investment' in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Amendments clarify that an entity applies IFRS 9 Financial Instruments, before it applies IAS 28, to such long-term interests for which the equity method is not applied. In applying IFRS 9, the entity does not take account of any adjustments to the carrying amount of long- term interests that arise from applying IAS 28. These Amendments have not yet been endorsed by the EU. The Group has not yet evaluated the impact of the implementation of this amendment.

· LAS 19: Plan Amendment, Curtailment or Settlement (Amendments)

The Amendments are effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments require entities to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement has occurred. The amendments also clarify how the accounting for a plan amendment, curtailment or settlement affects applying the asset ceiling requirements. These Amendments have not yet been endorsed by the EU. The Amendments are not expected to be applicable for the Group.

· IFRIC INTERPETATION 22: Foreign Currency Transactions and Advance Consideration

The Interpretation is effective for annual periods beginning on or after 1 January 2018 with earlier application permitted. The Interpretation clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. The Interpretation covers foreign currency transactions when an entity recognizes a non-monetary asset or a non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income. The Interpretation states that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. This Interpretation has not yet been endorsed by the EU. The Group has not yet evaluated the impact of the implementation of this standard.

· The IASB has issued the Annual Improvements to IFRSs 2014 - 2016 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2017 for IFRS 12 Disclosure of Interests in Other Entities (adopted by EU in 2018) and on or after 1 January 2018 for IFRS 1 First-time Adoption of International Financial Reporting Standards and for IAS 28 Investments in Associates and Joint Ventures. Earlier application is permitted for IAS 28 Investments in Associates and Joint Ventures. These amendments will not have any impact on the financial statements of the Group.

IFRS 12 Disclosure of Interests in Other Entities: The amendments clarify that the disclosure requirements in IFRS 12, other than those of summarized financial information for subsidiaries, joint ventures and associates, apply to an entity's interest in a subsidiary, a joint venture or an associate that is classified as held for sale, as held for distribution, or as discontinued operations in accordance with IFRS 5.

IFRS 1 First-time Adoption of International Financial Reporting Standards: This improvement deletes the short-term exemptions regarding disclosures about financial instruments, employee benefits and investment entities, applicable for first time adopters.

IAS 28 Investments in Associates and Joint Ventures: The amendments clarify that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition.

· IFRIC INTERPETATION 23: Uncertainty over Income Tax Treatments

The Interpretation is effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12. The Interpretation provides guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and circumstances. This Interpretation has not yet been endorsed by the EU. The Group has not yet evaluated the impact of the implementation of this interpretation.

• · The IASB has issued the Annual Improvements to IFRSs 2015 2017 Cycle, which is a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. These annual improvements have not yet been endorsed by the EU. The Group's Management has assessed the application of the improvements and they will not have any impact on Group's financial statements.

  • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements: The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

  • IAS 12 Income Taxes: The amendments clarify that the income tax consequences of payments on financial instruments classified as equity should be recognized according to where the past transactions or events that generated distributable profits has been recognized.

  • IAS 23 Borrowing Costs: The amendments clarify paragraph 14 of the standard that, when a qualifying asset is ready for its intended use or sale, and some of the specific borrowing related to that qualifying asset remains outstanding at that point, that borrowing is to be included in the funds that an entity borrows generally.

The Group plans to adopt the above mentioned standards and interpretations not earlier than their effective date provided they are endorsed by the EU.

4. Financial risk management

Overview

The Group has exposure to the following financial risks: credit risk, liquidity risk and market risk. This note presents information about the Group's exposure to each of these risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included in other notes to these consolidated financial statements.

The Board of directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations, and arises principally from the Group's receivables from customers.

The Group controls credit risk by credit policies and procedures. The Group has established a credit policy under which each new customer is analysed for creditworthiness before the standard payment terms and conditions are offered. Customers that fail to meet the benchmark creditworthiness may transact with the Group only on a prepayment basis.

The measure of credit risk is the maximum credit risk for each class of financial instruments, which is equal to their carrying amount. The maximum amount of exposure to credit risk in relation to particular classes corresponds to their book value.

The maximum exposure to credit risk can be specified as follows:

2017	2016
10 776	17 243
0	14
1 722	1 000
26 891	24 382
39 389	42 639
2017	2016
04	2 971
10 682	14 272
10 776	17 243

In the statement of financial positon, trade receivables (including unbilled accrued receivables in accordance with the stage of completion) are accounted for under trade receivables and other noncurrent assets, as disclosed in Note 18.

Credit risk (continued)

Trade receivables according to major customers:

(in thousand EUR)	2017	0/0	2016	0/0
Client 1	1 013	9.4	3 488	20.2
Client 2	949	8.8	1 749	10.1
Client 3	657	6.1	714	4.1
Client 4	523	4.9	438	2.5
Client 5	408	3.8	366	2.1
Client 6	376	3.5	311	1.8
Client 7	328	3.0	272	1.6
Other clients	7 582	70.3	12 501	72.6
Impairment	(1 060)	(9.8)	(2 596)	(15.0)
Total	10 776	100.0	17 243	100.0

Trade receivables according to geographic regions:

2017	2016
9 806	13 011
0	3 704
970	528
10 776	17 243

Ageing of gross trade receivables as at the reporting date can be specified as follows:

2017	Impairment	2016	Impairment
8 844		12 361
1 110		640
691		264
1 191	1 060	6 574	2 596
11 836	1 060	19 839	2 596

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures. Methodology used for establishing the allowance is reviewed regularly to reduce any differences between loss estimate and actual loss experience.

Current other financial assets include term deposits at banks and receivable from the bankrupt subsidiary, which is partly impaired (Note 19).

Cash and cash equivalents comprise cash on hand and at bank; therefore, the related credit risk is minimum.

Although collection of loans and receivables could be influenced by economic factors, the management believes that there is no significant risk of loss to the Group beyond the impairment already recorded.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Payment terms of financial liabilities as at 31 December 2017, including calculated interest, as to the agreements, are presented below:

	Carrying	Contractual	6 months	6-12	1-2	2-5
(In thousand EUR)	value	net cash flows or less		months	years	years	>5 years
Liabilities
Loans and lease liabilities	693	711	10	643	33	25
Trade payables	10 280	10 280	10 280
Total	10 973	10 991	10 290	643	33	25

Payment terms of financial liabilities as at 31 December 2016, including calculated interest, as to the agreements, are presented below:

	Carrying	Contractual	6 months	6-12	1-2	2-5
(In thousand EUR)	value	net cash flows or less		months	years	years	>5 years
Liabilities
Loans and lease liabilities	717	739	723	7	ਨੇ
Trade payables	14 574	14 574	14 574
Total	15 291	15 313	15 297		ರಿ

Interest rate applied for calculation of contractual net cash flows:

	2017	2016
Loans and lease liabilities	1.9-6.0 %	1.9- 4.3 %

On 14 December 2017, an overdraft agreement was signed with bank with the limit of EUR 15 million. Overdraft is planned to be used for development of UAB Šeškinės projektai project and its maturity is 14 December 2019. Overdraft limit was not used as of 31 December 2017.

Market risk

Market risk is the risk that changes in market prices, such as changes in foreign currency rates and interest rates will affect the results of the Group or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. As at 31 December 2017 and 2016 the Group did not use any derivative financial instruments.

Currency risk. The Group is exposed to the risk of changes in foreign currency rates on sales, purchases and borrowings that are denominated in a currency other than the functional currency.

During the year, currency exchange rates in respect of the euro were as follows:

	31		31
	December	Average	December	Average
	2017	2017	2016	2016
1 SEK =	0.1016	0.1038	0.1046	0.1057
1 RUB =	0.0144	0.0152	0.0158	0.0135

Market risk (continued)

The Group's exposure to foreign currency risk can be specified as follows:

Year 2017 (in thousand EUR)	E OR	RUB	SEK	( )ther currency
Deferred tax assets	121
Trade receivables	10 776
Current other financial assets	1 722
VAT overpayment	783			19
Advance income tax	રેતેર
Cash and cash equivalents	26 607	263	16	5
Deferred tax liabilities	22
Loans and borrowings	(693)
Trade payables	(10 206)	(2)		(72)
Provisions	(857)
Other liabilities	(3 831)
Total exposure	24 840	261	16	(48)
Year 2016 (in thousand EUR)	EUR	RUB	SEK	Other currency
Deferred tax assets	149
Trade receivables	13 070	3 704	470
Loans granted	14
Current other financial assets	1 000
VAT overpayment	608
Advance income tax	57
Cash and cash equivalents	23 574	450	350	8
Deferred tax liabilities	(79)
Loans and borrowings	(717)
Trade payables	(10 240)	(3 555)	(379)	(400)
Provisions	(1 025)
Other liabilities	(3 992)	(1 192)	(192)
Total exposure	22 419	(593)	249	(392)

Sensitivity analysis to changes in foreign exchange rates are not included in these financial statements as based on management estimate it is insignificant as of 31 December 2017 and 2016.

Interest rate risk. All the Group's loans received and other borrowings are subject to variable interest rates linked to EURIBOR. No financial instruments are used to manage the risk. Taking into consideration the current level of issued and received loans, the likely change of interest rate would not have a material effect.

Capital management

The Board's of directors policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of directors monitors the return on capital and proposes the level of dividends to ordinary shareholders based on the Group's financial results and strategic plans.

The Board of directors also aims to keep balance between bigger return which could be available if there was higher level of borrowed assets and security which is provided by higher level of equity. The Group adheres to the requirement set in the Law on Companies of the Republic of Lithuania under which the equity of the entity must not be less than ½ of the authorised capital. As at 31 December 2017 and 2016 the Group was in line with this regulation. The Group's capital management policy did not change during the year.

For capital management purpose, capital consists of share capital, retained earnings, revaluation reserve and legal reserve.

5. Segments

For management purposes, the Group is organized into business units based on type of activities and has four reportable segments:

• 0 Construction;
• Steel structures; .
• Panel houses; @
• � Other activity.

The segment of construction includes operations of AB Panevežio statybos trestas, UAB Vekada, UAB Alinita, OOO Baltlitstroj, AB PST Nordic and PS Trests SIA. The main field of activity is the construction, design and installation of various buildings, constructions, facilities and communications or construction of other objects (electrical installation works, renovation of buildings, installation of plumbing, sewage and fire protection systems, video surveillance systems, security and fire alarm systems) in Lithuania and outside the country.

The segment of steel structures includes operation of UAB Metalo meistrai. The main field of activity is designing and fabrication of steel structures for construction purposes. The company also supplies steel structures for other companies where steel items are required.

The segment of panel houses includes operation of UAB Skydmedis. The main field of activity is production, construction and outfit of pre-fabricated timber panel houses. Panel houses are the main product of the company. About 87% of products are successfully exported to Norway, Sweden, France, Switzerland, Iceland and other countries.

Other activity includes operations of UAB Seškinės projektai, OOO Teritorija, UAB PST investicijos whose main activity is real estate development, and Kingsbud Sp.zo.o., which the main activity is the wholesale trading of building materials.

Construction related operating segments have been aggregated in order to form one construction segment as these separate segments are related with various operations performed at different phases of constructions. No other operating segments have been aggregated to form the above reportable segments.

Segment performance is evaluated based on operating profit or loss and is measured consistently with profit from operations in the consolidated financial statements.

Transfer prices between operating segments are based on the prices set by the management, which management considers being similar to transactions with third parties.

Operating Segments

The following tables present revenue, expenses, profit and certain asset and liability information regarding the reportable operating segments:

Year ended as of 31 December 2017 (in thousand EUR)	Construction	structures Steel	houses Panel	Other activity	Segment Total S	Intersegment eliminations	Group Total
Third parties Revenue	60 186	3 970	6 260	3 400	73 816		73 816
Intersegment	4 705 64 891	4 177 207	ਟ	642	ર રેરિય	5 556)
Total revenue			6 262	4 042	79 372	5 556)	73 816
Other income	450	t		ಕ	વર્સ્ટ	u	વર્સર
Expenses
Depreciation and amortisation	(1 096)	(91)	(62)	(8)	(1 257)	14	(1 257)
Other cost of sales and administrative expenses	(61 177)	(3 762)	ર રેજેવી	(4 158)	(74 693)	-1	(74 693)
Interest expenses	(30)	(1)		(44)	(75)	ંત	(75)
Interest income	67	l	l	11	67	11	67
Financial activity (other than interest), net	544		8,	(957)	(421)	350 3	2 929
Other expenses	(419)	l	(9)	ਟ	(426)		(426)
Income tax expenses	(8)	(4)	(89	38	(63)		(63)
Segment net result	3 222	321	498	(1 082)	2 959	(2 206)	753
Segment assets	62 777	604	703	9 283	75 367	(15 678)	ਵੇਰੇ ਦੇ ਉਰੇ
Segment liabilities	19 029	213 1	1 106	4 771	26 119	(5 058)	21 061
Segment asses and liablities are presented before elimination of intercompany asses and liabilities within the segment, which are climination.
Capital expenditure Other disclosures	756	157	70	0	983	0	983
Copial expenditure consists of additions of property, intangible asses, investment properties and assets from the acquisition of subsidiance.

Consolidated financial statements for the year 2017 35

Year ended as of 31 December 2016 (in thousand EUR)	Construction	structures Steel	houses Panel	Other activity	Segments Total	Intersegment eliminations	Group Total
Third parties Revenue	88 023	4 141	4 570	627 2	do 361		do 361
Intersegment	ર 750	114	ﻟﺴﺎ	024 ﺎ	ર 895	(6 895)
Total revenue	93 773	4 255	577 ব	(21 €	106 256	(6 805)	09 361
Other income	રેીરે		て		ર્ર 8		રી 8
Depreciation and amortisation Expenses	(1 013)	(102)	(66)	(6)	(1 187)	0	(1 187)
Other cost of sales and administrative expenses	(84 611)	(3 981)	(4 062)	(4 437)	(97 091)	=	(97 091)
Interest expenses	(126)	(2)	l	(40)	(168)	11 011	(168)
Interest income	ર	9	=	క	8	1000	8
Financial activity (other than interest), net	72		(2)	547 7	623 2		2 623
Other expenses	(439)		(9)	(1)	(449)	1	(449)
Income tax expenses	(310)	(15)	(48	(75)	(448)		(448)
Segment net result	7 856	161	392	1 653	10 062	(6 895)	3 167
Segment assets	66 590	411 1	1 797	તે રેસ્ટેલ	79 454	18 249	61 205
Segment liabilities	23 342	231	763	507 বা	29 843	(6 792	23 051
Segment assets and liabilities are presented before of intercompany assets and liabilities within the segment, which are climinated on consolidation.
Capital expenditure Other disclosures	1 031	9	ર્ડવ	38	1 129		1 129
Copital expenditure consists of additions of property, intangible asses, investment properties and assets from the acquisition of subsidaries.

Consolidated financial statements for the year 2017 AB Panevėžio Statybos Trestas

ડ. Segments (continued)

Reconciliation of assets	31 December 2017	31 December 2016
Segment operating assets Intersegment balances	75 367 (15678)	79 454 (18 249)
Total assets	દેવે રજકો	61 205
Reconciliation of liabilities	31 December 2017	31 December 2016
Segment operating liabilities Intersegment balances	26 119	29 843
	(5 058)	(6 792)

Geographical information

The following table presents the Group's geographical information on revenue based on the location of the customers:

	2017	2016
Lithuania	57 786	88 297
Russia	150	899
Scandinavia countries	11 404	9 929
Other countries	4 476	236
	73 816	તે જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામનાં લોકોનો મુખ્ય વ્યવસાય ખેતી, ખેતમજૂરી તેમ જ પશુપાલન છે. આ ગામમાં મુખ્યત્વે ખેત-ઉત્પાદની ખેતી કરવામાં આવેલું એક ગામનાં લોકોનો મુખ્ય વ્

The major part of the Group's non-current assets is located in Lithuania. Non-current assets consist of property, plant and equipment, investment property, intangible assets, non-current financial and other assets.

6. Sales

(in thousand EUR)	2017	2016
Construction-installation	73 666	98 912
Real estate development	150	449
Total sales	73 816	99 361

Revenue from the largest customer of the Group in 2017 amounted to approximately EUR 6 712 thousand (2016: EUR 36 073 thousand) of the Group's total revenues.

7.	Cost of sales (in thousand EUR)	2017	2016
	Construction sub-contractors	22 165	36 797
	Raw materials and consumables	20 741	30 102
	Salary related expenses	12 820	13 159
	Depreciation and amortization	867	793
	Other	11 492	9 370
	Total cost of sales	68 085	90 221

8. Selling expenses	2017 (in thousand EUR)
Advertising and similar expenses		ਦੇ ਤੋਂ	82
Salary related expenses		253	239
Other		ર્સ્ડિ
Total sales expenses		360	32

9. Administrative expenses

(in thousand EUR)	2017	2016
Salary related expenses	3 500	4 018
Purchased services for administration purposes	1 073	તે રેણે વિરિટ
Operating taxes, except income tax	201	290
Depreciation	277	277
Write-off (reversal) of accounts receivables	(11)	74
Amortization	11	24
Write-down (reversal) of inventories to net realizable value	0	(98)
Impairment (reversal) of amounts receivable	260	1 083
Impairment of loans granted and other receivables	823	0
Other expenses	1 332	1 111
Total administrative expenses	7 496	7 734

In 2017 the Group lost a control of AB PST Nordic and OOO Baltlistroj due to their bankruptcy. This resulted in 100 % allowance for trade receivables in the total amount of EUR 309 thousand and EUR 400 thousand guarantee paid to AB Aksa according to surety agreement signed.

Impairment expenses of a EUR 335 thousand loan granted to OOO Baltlistroj and receivable from it in total amount of EUR 518 thousand were accounted for in 2017.

10.	Salary related expenses
	(in thousand EUR)	2017	2016
	Wages and salaries	12 659	11 795
	Compulsory social security contributions	3 184	3 748
	Daily and illness allowances Change in accrued vacation reserve and bonuses	919 (156)	1 183 775
	Total personnel expenses	16 606	17 501
	Included into:
	Cost of sales	12 820	13 159
	Administrative expenses	3 540	4 018
	Selling expenses	253	239
	Expenses from other activities	ਤੇਤੇ	૪૨
	Total personnel expenses	16 646	17 501
11.	Other income and expenses
	(in thousand EUR)	2017	2016
	Rent and other income	380	358
	Change in fair value of investment property (Note 16)	30	0
	Gain from disposal of property, plant and equipment	36	160
	Total other income	વર્તદ	518
	Depreciation of rented premises and other expenses	(426)	(449)
	Total other expenses	(426)	(449)
	Total other income and expenses, net	29	રેતે
12.	Finance income and costs (in thousand EUR)	2017	2016
	Interest income	67	8 0
	Result from the loss of control of subsidiaries	3 933 0	2 610
	Foreign currency exchange gain Other income	271	120
	Total finance income	4 271	2 738
	Interest expense	75	168
	Foreign currency exchange loss	તે રેણે તે જેવી જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામના લોકોનો મુખ્ય વ્યવસાય ખેતી, ખેતમજૂરી તેમ જ પશુપાલન છે. આ ગામના લોકોનો મુખ્ય વ્યવસાય ખેતી, ખેતમજૂરી તેમ જ પશુપાલન છે. આ ગા	0
	Other expenses	ਤੋਂ ਉੱਚੇ	108
	Total finance costs	1 350	276
	Total finance income and costs, net	2 921	2 462

13. Income tax

Income tax expense:

(in thousand EUR)	2017	2016
Current income tax expense Change in deferred tax	92 (29)	498 (50)
Total income tax expense	63	448

In 2017 and 2016, the Group applied a standard rate of 15% in Lithuania, a 22% rate in the Kingdom of Sweden, a 20% rate in Russian Federation and a rate of 15% in Latvia. Reconciliation of effective tax rate:

(in thousand EUR)	2017		2016
Profit before tax		816		3615
Income tax using the Group's domestic tax rate	15,0 %	122	15,0 %	રેપેટ
Effect of tax rates in foreign jurisdictions Non-deductible expenses		0 વર્સ		26 168
Non-taxable income Utilized tax losses		(45) (60)		(250) (38)
	7,7%	ર્દિક	12,4 %	448

Deferred tax:

(in thousand EUR)	2017		2016
	Temporary differences	Deferred tax	Temporary differences	Deferred tax
Impairment for amounts
receivable	843	126	ર્ડ રેતેર	380
Write-down to net realizable
value of inventories	534	80	530	80
Vacation reserve	રેપેત્ર	76	ર્સ્ડિ	84
Accrued bonuses	169	ડી રે	741	111
Warranty provision and other	ರಿನ್ನೊ	140	1 025	154
Tax losses carry forward	227	34	287	43
Loss on onerous contracts	324	49	0	0
Total deferred tax assets Not recognized deferred tax		530		861
assets		(150)		(452)
Recognized deferred tax assets		380		409
Revaluation of land and buildings Revaluation of investment	1 636	245	1 735	260
property	240	36	524	79
Deferred tax liabilities		281		339
Total deferred tax, net		ਹੇ ਹੋ		70
Reported in the statement of financial position as:
Deferred income tax asset		121		149
Deferred income tax liability		22		79

13. Income tax (continued)

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax asset of impairment of a part of accounts receivable and tax differences in foreign jurisdictions has not been recognized due to uncertainty of realisation.

The tax loss carried forward as at 31 December 2017 amounted to EUR 227 thousand (as at 31 December 2016: EUR 287 thousand respectively). Tax loss carry forward can be utilised indefinitely.

Group's deferred income tax assets and liabilities have been netted-off to the extent to which they are related to the same tax authority and the same taxable entity.

Change of deferred tax:

(in thousand EUR)	2017	2016
Net deferred tax as at 1 January	70	20
Recognized in other comprehensive income	0	0
Recognized in profit or loss	ನಿರ	50
Net deferred tax as at 31 December	ਹੈ ਹੈ	70
Change of income tax payable:
(in thousand EUR)		2016
Prepaid income tax as at 1 January	57	24
Income tax payable as at 1 January	(44)	(206)
Prepaid (payable) income tax as at 1 January	13	(152)
Income tax calculated over the financial year	(92)	(206)
Paid / set off with overpayment of other taxes	456	671
Prepaid income tax as at 31 December	396	57
Income tax payable as at 31 December	(19)	(44)
Prepaid (payable) income tax as at 31 December	377	14

AB Panevėžio Statybos Trestas Consolidated financial statements for the year 2017

1. Property, plant and equipment

al 7 1	Land and	Plant and		Fixtures and
(in thousand EUR)	buildings	equipment	Vehicles	fittings	Total
of land and Cost (revalued carrying value buildings)
Balance at 1 January 2016	834 শ	e 828	4 033	3 343	038 18
Additions	49	290	468	184	991
Disposals	1	(367)	(344)	(114)	(825)
Balance at 1 January 2017	883 3	6 751	4 157	413 3	18 204
Additions	I ਤੇ ਰੇ	446	। 05	254	944
Disposals and write-offs	(22)	(159)	(250)	(94)	(525)
Balance at 31 December 2017	4 000	7 038	4 012	3 573	18 623
Depreciation and impairment losses
Balance at 1 January 2016	ર્ણ રેણવાડી તેમ જ દૂધની ડેરી જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામનાં પ્રાથમિક શાળા, આંગણવાડી તેમ જ દૂધની ડેરી જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામનાં પ્રાથમિક શાળા, આંગણવાડી તેમ	રે 450	2 750	3 011	11 846
Depreciation for the year	209	422	317	1 ਦੇ 8	1 106
Disposals		(367)	(259)	(110)	(736)
Balance at 1 January 2017	844	રે રેણે રહ્યા റ	2 808	3 020	12 216
Depreciation for the year	211	454	340	170	1 175
Disposals and write-offs	ારા	158	(230)	(88)	(492)
Balance at 31 December 2017	1 039	5 801	2 918	3 141	12 899
At 1 January 2016 Carrying amounts	3 199	1 378	1 283	332	6 192
At 1 January 2017	3 039	246 1	349 1	354	ਦੇ ਹੋ 888
At 31 December 2017	2 961	237	094 -	432	5 724

42

14. Property, plant and equipment (continued)

(in thousand EUR)	2017	2016
Depreciation included into:
Cost of sales	796	735
Administrative expenses	277	278
Other expenses	102	92
Total depreciation	1 175	1 105

Land and buildings are stated at revalued amount. The last external revaluation was performed as at 31 December 2013 based on the consultations on possible market prices of the Company's land and buildings provided by independent valuation company, having appropriate recognized professional qualifications and necessary experience in valuation of property at certain location and of certain category. The valuation was performed using the market comparison technique. Significant unobservable data was used in fair value measurement, i.e. price per square meter/are. The fair value would increase with an increase in price per square meter/are and decrease with a decrease in price per square meter/are.

Management considers, if there are any indications that the carrying value of land and buildings is significantly different from the market value on an annual basis for financial reporting purposes. To verify management assessment, every five years external valuation report by valuation expert is performed.

If the buildings were stated at cost model, their carrying amount as at 31 December 2017 would be equal to EUR 1 437 thousand (31 December 2016: EUR 1 413 thousand).

Land and buildings, including accounted for under investment property, with a net carrying amount of EUR 3 140 thousand as at 31 December 2017 are pledged to the banks. At 31 December 2017, the net carrying amount of leased non-current assets (machinery, equipment and vehicles) was EUR 113 thousand (2016: EUR 130 thousand).

15. Intangible assets

(in thousand EUR)	Goodwill	Software	Other	Total
Cost Balance at 1 January 2016 Additions	323 0	456 139	ਦੇ ਰੇ 0	838 139
Disposals	0	(1)	0	(1)
Balance at 1 January 2017 Additions Disposals	323 0 0	રુવે રે રે (15)	ਦੇ ਰੇ 4 (1)	976 ਤੇ ਰੇ (16)
Balance at 31 December 2017	323	614	୧೭	дад
Amortization/impairment losses Balance at 1 January 2016 Calculated during the year Amortization of disposals	292 0 0	372 69 (1)	ਤੇ ਹੋ 12 0	703 81 (1)
Balance at 1 January 2017 Calculated during the year Amortization of disposals	292 0 0	440 76 (14)	51 6 (1)	783 82 (15)
Balance at 31 December 2017	292	202	રેસ	820
Carrying amounts At 1 January 2017	31	154	8	193
At 31 December 2017	31	112	6	149

15. Intangible assets (continued)

Amortization is accounted for in the following way: EUR 71 thousand is included under cost of sales, an amount of EUR 11 thousand is included under administrative expenses (2016: EUR 57 thousand is included under cost of sales, an amount of EUR 24 thousand is included under administrative expenses).

The goodwill is related to the subsidiary UAB Alinita (construction: conditioning work CGU). The management has estimated that value in use is higher than the carrying amount; therefore; no impairment was recognized for the goodwill.

16. Investment property

2017	2016
1 270	1 270
0	0
0	0
30	0
1 300	1 270

During the year 2015, the Group acquired a 14-floor hotel Panevėžys in Panevėžys, 16.73 % of which is rented out to third parties, and the rest of the hotel is not used. The Group has no detailed plans regarding the use of the remaining part of the building yet; however, the building is not planned to be used in the Group's activities; therefore, the whole building is classified as an investment property.

The fair value measurement of the property has been determined by valuation of the building carried out by the independent property appraisers UAB Ober-Haus, having appropriate professional qualification and relevant valuation experience. While carrying out the valuation the discounted cash flows method was used (discount rate - 9%, exit yield - 7%, occupation rate of first and second floor 80-90%; the same assumptions were used in 2017 and 2016).

If the discount rate would increase by 1% (remaining assumptions would not be changed), then investment property fair value would decrease approximately by EUR 90 thousand and if exit yield would increase by 1% (remaining assumptions would not be changed) fair value of investment property would decrease by EUR 80 thousand.

The change in fair value was reported under other income.

The identified fair value of the investment property of EUR 1 300 thousand (EUR 1 270 thousand in 2016) was attributed to Level 3 under the fair value hierarchy.

At the end of the financial year, future minimum lease payments receivable under non-cancellable lease agreements were the following: EUR 90 thousand receivable in less than one year, EUR 49 thousand receivable between one and five years (31 December 2016: EUR 109 thousand receivable in less than one year, EUR 164 thousand receivable between one and five years). Revenue from lease in 2017 amounted to EUR 93 thousand (in 2016: EUR 90 thousand) and was accounted under other income.

THVCHLOLICS (in thousand EUR)	2017	2016
Capitalized costs related to real estate development	7 851	7 803
Other inventories	3 083	2 091
Total inventories	10 934	9 894
Capitalized costs related to real estate development are as follows:
(in thousand EUR)	2017	2016
Cost:
Costs of acquired land and real estate	2 861	2 861
Cost of acquired long term land rent right	3 237	3 237
Real estate development project costs	2 236	2 188
Total cost Write-down:	8 334	8 286
Write-down to net realizable value of projects in progress	(483)	(483)
Total write-down	(483)	(483)
Total capitalized costs	7 851	7 803
Change in write-down of capitalized costs:
	2017	2016
Write-down (disposal) to net realizable value of capitalized costs
at the beginning of the period	483	509
Recognized under administrative expenses	0	(26)
Write-down (disposal) to net realizable value of capitalized costs
as at the end of the period	483	483

17.

Write-down of capitalized expenses in relation to real estate development projects is measured taking into consideration the expected recoverable amounts of these projects, which are based on the assessment of market prices of real estate projects performed by independent appraisers. For each construction project under development a special purpose entity has been established and as at 31 December 2017 and 2016 the Group has the following special purpose entities:

	Total capitalized costs as of 31 December 2017	Total capitalized costs as of 31 December 2016
ZAO ISK Baltevromarket	e 019	6 315
UAB Šeškinės Projektai	] 465	1 121
UAB Ateities Projektai	367	367
Total	7 851	7 803

To support the net realizable value of the project developed by ZAO ISK Baltevromarket in Kaliningrad, the Group has obtained a fair value estimate prepared by an independent property appraiser. According to the evaluation of the real estate expert's from CB Richard Ellis LLC (Moscow, Russia), the fair value of the project developed by ZAO ISK Baltevromarket as at 31 October 2017 amounted to EUR 9 470 thousand. There were no significant changes in real estate market during the last quarter of 2017, based on management assessment and the project was concluded to be not impaired as of 31 December 2017.

17. Inventories (continued)

Six out of seven of AO ISK Baltevromarket developed land plots were valuated using the market price technique, based on which the value of the land plots are EUR 2 343 thousand; remaining land plot was valuated using the discounted cash flows method, based on which the value of the land plot is EUR 7 130 thousand. The key inputs used by the appraiser in the discounted cash flows method could be detailed as follows:

• discount rate 20%;
• exit yield 11.5%;
• · shopping centre area: annual rent prices from 45 to 372 EUR/sq. m., occupancy rate - from 70% in the first year to 95% in the last year of the model for different premises.

While assessing the fair value, significant not observable input data was used - price per 1 hectare, planned construction cost, discount rate, rent price and exit vield.

The fair value of land plots valuated by market price technique would increase if the price per 1 hectare would be higher and decrease if price per 1 hectare be lower.

If the discount rate would increase by 0.25% (remaining assumptions would not be changed), the fair value of land plot, which was valuated by discounted cash flows method, would decrease by EUR 500 thousand and the carrying value of the project would remain not impaired; if the rent price would decrease by 5%, it would result in fair value decrease by EUR 3 500 thousand, i.e. approx. EUR 50 thousand of net realizable value write-down on the project would occur, and if exit yield would increase by 0.25%, the fair value would decrease by EUR 960 thousand the carrying value of the project would remain not impaired. If cost of construction would increase by 10%, the estimated net realizable value would decrease by EUR 3 060 thousand.

The recoverable value of project developed by UAB "Ateities projektai" was assessed by independent real estate appraiser's "Ober-Haus nekilnojamas turtas" consultation on possible marker price as of 31 December 2017. Market price technique was used. Fair value would increase if price per 1 hectares would be higher and decrease if price per hectares would be lower for land plot.

Key assumptions used in valuation of real estate project developed by UAB Šeškinės Projektai are: profit on cost ratio - 20 %, sales prices - from 1 754 to 6 510 EUR/sq. m. (parking lot) and construction cost - 917 EUR/sq. m.

Other inventories can be specified as follows:

(in thousand EUR)	2017	2016
Raw materials and consumables	2 674	। રેક્ષર
Work in progress and finished goods	11	152
Goods for resale	450	400
Write-down to net realizable value at the beginning of the year	(46)	(98)
Write-off		60
Additional write-down to net realizable value during the period	(15)	(8)
Write-down to net realizable value	(52)	(46)
Total other inventories	3 083	2 091

Change in write-down of other inventory to the net realizable value was stated under Administrative Expenses.

18. Trade receivables

19.

(in thousand EUR)	2017	2016
Trade receivables Accrued (unbilled) receivables in accordance to the stage of	10 283	16 821
completion	1 236	3 016
Receivables from related parties	317	2
Impairment at the beginning of the year	(2 596)	(1 439)
Repayment, write-off of doubtful trade receivables	1 837	74
Additional impairment during the period	(321)	(1 231)
Impairment at the end of the year	(1 060)	(2 596)
Total trade receivables, net	10 776	17 243

The part of trade receivables due from customers as of 31 December 2017 is accounted for as non-current trade receivables: EUR 1 060 thousand, 2016 – EUR 554 thousand. These amounts are related with non-current retentions as described below.

As at 31 December 2017 trade receivables include retention - a fixed percentage of the total contract price which shall be repaid when the construction is completed and the bank guarantee in the amount of the retained payment is provided or warrantee document of the insurance company is provided to the customer) of EUR 1 748 thousand (2016: EUR 1 759 thousand) relating to construction contracts in progress. For impairment of trade receivables refer to Note 4.

Prepayments received from customers amounted to EUR 3 652 thousand as at 31 December 2017 (31 December 2016: EUR 325 thousand).

Information about customer specific contracts in progress as of 31 December 2017 and 2016:

	2017	2016
Sales according to specific customers' projects in progress recognized in
income statement during the year	38 460	60 791
Sales according to specific customers' projects in progress recognized in
income statement during total contract period	58 267	71 605
Expenses incurred carrying out specific customers' projects in progress
recognized in income statement during the year	34 829	રરે રેરેર
Expenses incurred carrying out specific customers' projects in progress
recognized in income statement during total contract period	54 278	65 018
Accrued income (not billed invoices)	1 236	3 016
Deferred income (billed but not yet earned income) (Note 25)	1 707	911
Accrual for onerous contracts (Note 25)	324	0
Trade receivables from customers	રે છે. રે	6 737
Other current assets
(in thousand EUR)	2017	2016
Financial assets
Bank deposit	1 000	1 000
Receivable from OOO Baltlitstroj	1 240	0
Impairment of receivable from OOO Baltlitstroj	(518)	0
Loan granted to 000 Baltlitstroj	281	0
Impairment of loan granted to OOO Baltlitstroj	(281)	0
Non-financial assets
VAT overpayment	802	608
Other current assets	71	48
Total other current assets	2 595	1 PERF

19. Other current assets (continued)

As noted in Note 1, OOO Baltlitstroj is under bankruptcy procedure. Legal proceedings are in progress to recover the trade receivables from OOO Baltlitstroj. OOO Baltistroj has repaid to the Company EUR 238 thousand during 2017. The management considered the net assets available in this former subsidiary to satisfying the needs of its creditors and based on this assessment recognized an impairment of receivables in the amount of EUR 518 thousand as of 31 December 2017.

In additional, in February 2018 the Company won a case in Saint Petersburg administrative court for EUR 1 752 thousand in relation to OOO Baltlitstroj. However, unstable Russian business environment can negatively impact return of this debt. This impact cannot be evaluated at the moment, due to this management assessment of the impairment of the receivables could significantly change in the future.

The Group has granted a loan to OOO Baltlitstroj which is fully impaired as of 31 December 2017. The total amount of loan granted is equal to EUR 335 thousand.

As at 31 December 2017 the Group had a term deposit bearing a 0.65% interest with original maturity of 12 months (as at 31 December 2016: with original maturity of 12 months 0.9% interest).

20. Cash and cash equivalents

(in thousand EUR)	2017	2016
Cash at bank Cash on hand	26 886	24 352 30
Total cash and cash equivalents	26 891	24 382

21. Capital and reserves

The Group's share capital consists of 16.350.000 ordinary shares with a nominal value of EUR 0.29 each. The Group's share capital is fully paid. The holders of the ordinary shares are entitled to one vote per share in shareholder meetings of the Group and are entitled to receive dividends as declared from time to time and to capital repayment in case of decrease of the capital. There were no changes in the authorized share capital in 2017. The Group did not hold its own shares in 2017 and 2016.

Reserves are as follows:

(in thousand EUR)	2017	2016
Revaluation reserve	1 384	1 468
Legal reserve	રેત્વે જેવે છે	રેતેવે
Currency translation reserve	2 386	1 757
Total reserves	4 369	3 824

The revaluation reserve relates to the revaluation of land and buildings and is equal to the carrying amount of revaluation less the related deferred tax liability.

Movement of revaluation reserve:

	2017	2016
Revaluation reserve at 1 January	1 468	1 553
Depreciation of revaluation	(97)	(100)
Deferred tax on depreciation of revaluation	13	15
Revaluation reserve at 31 December	1 384	1 468

Legal reserve is a compulsory reserve allocated in accordance with Lithuanian legislation. An annual allocation of at least 5% of the net profit is required until the reserve is not less than 10% of the authorized share capital. The reserve could be used to cover loses. Legal reserve at 31 December 2017 and 2016 amounts to 10% of the authorized share capital and was fully formed.

The foreign currency translation reserve results from translation differences arising on consolidation of subsidiaries with functional currency which differs from Group's functional currency.

22. Trade payables

(in thousand EUR)	2017	2016
Lithuanja	9 443	10 419
Russia	ಗ	3 564
Poland	235	454
Other	રેત્વે	136
Total trade payables	10 280	14 573

Trade payables are non-interest bearing and are normally settled on 30-90 day terms.

23. Loans and borrowings

(in thousand EUR)	2017	2016
Loans	622	698
Leasing (finance lease) liabilities	71	19
Total loans and borrowings	રેતિક	717
Non-current	ਟੇ ਕੇ	9
Current	ਦੌਤੇ ਹੋ ਕੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱਤੇ ਉੱ	708
Total loans and borrowings	693	717

Loans can be specified as follows:

(in thousand EUR)	Interest rate	Maturity	2017	2016
AB Panevėžio Keliai (loan)	1 and 6-month Euribor+1.9 12% fixed, since 30	12/2018	380	372
Individuals	November 2017 – 6%	12/2018	242	326
Total loans			622	રજક

Other financial liabilities include liabilities related to non-current assets acquired under leasing terms with the balance value of EUR 113 thousand as at 31 December 2017 and liabilities to the bank for issued guarantees.

Finance lease liabilities are payable as follows:

Year 2017 (in thousand EUR)	Minimum payments	Interest	Principal amount
Less than one year	19	2	17
Between one and five years	57	3	54
	76	5	71
Year 2016 (in thousand EUR)	Minimum payments	Interest	Principal amount
Less than one year	11	1	11
Between one and five years	9		8

24. Provisions

(in thousand EUR)	2017	2016
Provision for warranties	ર 86	660
Other	271	૩૯૨
Total provisions	857	1 025

Change of provision is as follows:

	2017 Warranty	2017 Pension	2017 Other	2016 Warranty	2016 Pension	2016 Other
Provision the at of beginning the period	��0	132	23	558	22	233
Used during the period	(259)	(ર)	(233)	(116)	(22)
Accrued during the period	ાં 85	62	82	218	132
Provision at the end of the period	ર્સ્કર્	189	82	660	132	233

Warranty provisions are related to constructions built in 2013-2017. Based on the legislation of the Republic of Lithuania, the Group has a warranty liability for construction works. The term of liability varies from 5 to 10 years after delivery of construction works. Provision for warranties is based on estimates made from historical data of actually incurred costs of warranty repairs. Changes in warranty provisions are recognised in cost of sales.

25. Other liabilities

26.

(in thousand EUR)	2017	2016
Non-financial liabilities:
Deferred income in accordance to the stage of completion (Note 18)	1 707	911
Accrued vacation reserve	। ୧୧୧	1 734
Payable salaries and related taxes	1 336	1 499
Payable VAT	3	71
Subsidies and grants	0	4
Loss on onerous contracts	324	0
Other liabilities	298	1 327
Salary bonuses for employees	214	741
Total other liabilities	ર ૨૩૪	6 287
Including:
Non-current portion	9	5
Current portion	ર રહેતે	6 282
Earnings and dividends per share
(in EUR)	2017	2016
Net result for the year attributable to equity holders of the Group	752 812	3 167 496
Dividends declared	1 062 750	261 977
Average number of shares	16 350 000	16 350 000
Basic and diluted earnings per share Dividends declared per share	0.05 0.07	0.19 0.02

The Group has no dilutive potential ordinary shares. Hence the diluted earnings per share are the same as the basic earnings per share.

27. Contingencies

Guarantees

The banks issued guarantees to third parties amounting to EUR 3 866 thousand in connection with obligations under the construction contracts performed by the Group (EUR 993 thousand as of 31 December 2016). The guarantees expire between 24 January 2018 to 27 October 2022. In addition, the Group has guarantees issued by insurance companies for the amount of EUR 10 474 thousand, which are also related to liabilities in the construction contracts (EUR 8 410 thousand as of 31 December 2016). The guarantees expire between 1 January 2018 to 30 December 2020. No additional liabilities are recorded in respect of these guarantees in the financial statements other than estimated warranty reserve.

Property with a carrying amount of EUR 2 106 thousand as at 31 December 2017 has been pledged to banks for the guarantee limit issued and guarantees issued by bank. The guarantee limit amounts to EUR 10 000 thousand, the used amount as at 31 December 2017 is EUR 2 988 thousand. The guarantee limit agreement is effective until 30 June 2019 with the possibility to issue guarantees until 30 June 2019 that would be valid for 3 years following their date of issue. Guarantees are valid for 5 year following their date of issue if the amount does not exceed EUR 1 500 thousand.

Property with a carrying amount of EUR 1 034 thousand as at 31 December 2017 has been pledged to a bank for the guarantee limit issued. The guarantee limit amounts to EUR 3 000 thousand, the used amount as at 31 December 2017 is EUR 878 thousand. Additional agreement to a guarantee limit agreement as signed on 7 December 2016 is valid until 31 December 2018.

Legal contingencies

The Group is involved in several legal cases. Based on management assessment, they will not have a significant impact for the financial statements, except below mentioned cases:

The Competition Council has made a decision as of 21 December 2017 "regarding UAB Irdaiva and AB PST actions in joint participation in public tenders of buildings renovation and modernization works meeting the requirements of 5th article of the Competition law of the Republic of Lithuania". Based on the Competition Council decision joint activity agreement signed between the Company and UAB Irdaiva for providing joint offers in 24 public tenders organized by UAB Vilniaus vystymo kompanija intended to limit competition and violated the requirements of 5th article 1p of the Competition Law of Republic of Lithuania. A fine was set to the Company in total amount of EUR 8 514 thousand. The Company's management does not agree with the decision of the Competition Council and argues it in full extent, having the position that cooperation with UAB Irdaiva was incorrectly considered as agreement with intention to limit competition. The Company has already appealed to Vilnius county court asking to cancel the fine set by the Competition Council. On 19th January 2018 the court accepted the Company's claim. The payment term of the fine is suspended until final resolution of the court.

The Group's management based on all know facts and circumstances, believes that this is more likely than not that the Group will receive a positive decision and did not account for any provision related with the decision made by the Competition Council described above in these financial statements.

In civil case with RUAB "Arno vila" the Group has received a claim to reduce construction price by EUR 304 thousand. At the moment there is court's expert's assessment of the construction works taking place. Management assessed the arguments of the claim and believes in positive result of the claim. In addition, the Group initiated criminal proceedings to RUAB "Amo vila" owner A. Stravinskas for EUR 2 609 thousand damages made.

In a civil case with the owners of DNSB Šeškinės str. 4 and 6 the Group has received a claim of EUR 130 thousand for damages compensation. The first instance court accepted the claim of DNSB which subsequently was appealed by the Group's management based on all know facts and circumstances, believes that this is more likely than not that the legal proceedings will end up with the positive outcome for the Group and no provisions related with these legal proceedings were recorded in these financial statements other than the warranty reserve as of 31 December 2017.

28. Transactions with related parties

Related parties are defined as shareholders, employees, members of the Management Board, their close relatives and companies that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with the Group, provided the listed relationship empowers one of the parties to exercise the control or significant influence over the other party in making financial and operating decisions.

The Group had sales and purchase transactions during 2017/2016 with the parent company AB Panevėžio Keliai and with subsidiaries of AB Panevėžio Keliai. Transactions with related parties during 2017/2016 are as follows:

(in thousand EUR)	Type of transaction	2017	2016
Sales:
Shareholders
AB Panevėžio keliai	Goods and services	507	ો રેણ
Shareholders private persons	Goods and services	0	-
Subsidiaries of shareholder
UAB Ukmergės keliai	Goods and services	20	77
UAB Sostinės gatvės	Goods and services	108	14
Related to shareholder		15	5
Companies under joint control
PS PST un Arms	Goods and services	650	18
Purchases:
Shareholder
AB Panevėžio keliai	Goods and services	478	425
Subsidiaries of shareholder
UAB Ukmergės keliai	Goods and services	26	રેટરેડ
UAB Sostinės gatvės	Goods and services	ತಿ	3 જેવેરે
UAB Keltecha	Goods and services	58	46
Related to shareholder
UAB Panevėžio ryšių statyba	Goods and services	92	77
UAB Gelhera	Goods and services	તર	49
Other	Goods and services	32	4

(in thousand EUR)	2017	2016
Receivables:
Shareholder
AB Panevėžio keliai (trade receivable)	23	0
Subsidiaries of shareholder
UAB "Sostinės gatvės"	24	0
UAB Keltecha (trade receivable)	0	1
Related to shareholder
Other	71	0
Companies under joint control
PS PST un Arms	199	22
Payables:
Shareholder
AB Panevėžio keliai	173	705
Subsidiaries of shareholder
UAB Sostinės gatvės	0	103
UAB Ukmergės keliai	0	72
UAB Keltecha	5	0
Related to shareholder
UAB Panevėžio ryšių statyba	0	7
Other	3	3

28. Transactions with related parties (continued)

Receivables and payables payment terms between the related parties are up to 30-90 days, except for the loans, which are disclosed in Note 19.

Outstanding balances at the year-end are unsecured and settlement occurs in cash, unless agreed otherwise. There have been no guarantees provided or received for any related party receivable or payable and no allowance has been made for the receivables from related parties by the Group. The balances outstanding with related parties of the Group were not overdue as at 31 December 2017 and 2016.

Management remuneration

Wages, salaries and social insurance contributions, calculated to the Group's directors and board members for the year 2017, amounted to EUR 1 318 thousand (EUR 1 292 thousand for the year 2016). For Group's directors and board members there were no guarantees issued, any other paid or accrued amounts or assets transferred, except board remuneration.

29. Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction under current market conditions in the main (or the most favourable) market independent on whether this price is directly observable or established using valuation techniques.

As at 31 December 2017

	Carrying amount	Fair value
	Total	Level 1	Level 2	Level 3
Financial assets
Trade receivables	10 776			10 776
Other financial assets	1 722			1 722
Cash and cash equivalents	26 891	26 891
Total financial assets	39 389	26 891	0	12 498
Financial liabilities
Interest bearing loans and borrowings	(622)			(622)
Finance lease obligations	(71)			(71)
Trade payables	(10 280)			(10 280)
Total financial liabilities	(10 973)	0	0	(10 973)

As at 31 December 2016

	Carrying amount		Fair value
	Total	Level 1	Level 2	Level 3
Financial assets
Trade receivables	17 243			17 243
Loans granted	14			14
Cash and cash equivalents	25 382	25 382
Total financial assets	42 639	25 382	0	17257
Financial liabilities
Interest bearing loans and borrowings	(697)			(697)
Finance lease obligations	(19)			(19)
Trade payables	(14 574)			(14 574)
Total financial liabilities	(15 290)	0	0	(15 290)

There were no transfers between levels of the fair value hierarchy in 2017 and 2016 at the Group. The following methods and assumptions are used by the Company to estimate the fair value of the financial instruments not carried at fair value:

Cash

Cash represents cash in banks and on hand stated at value equal to the fair value.

Receivables and term deposits

The fair value of trade and other receivables and loans granted is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. Fair value of short-term trade and other receivables with no stated interest rate is deemed to approximate their face value on initial recognition and carrying value on any subsequent date as the effect of discounting is immaterial.

The fair value of non-current trade receivables was estimated to approximate carrying value as discounting effect was determined to be not material.

The fair value of loans granted was estimated to approximate carrying value as majority of the loans are subject of market level variable interest.

29. Fair value of financial instruments (continued)

Loans and borrowings, finance lease

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases and loans the market rate of interest is determined by reference to similar lease and loans agreement. Fair value of shorter term financial liabilities with no stated interest rate is deemed to approximate their face value on initial recognition and carrying value on any subsequent date as the effect of discounting is immaterial.

30. Investments in subsidiaries, non-controlling interests

As at 31 December 2017, AB Panevėžio Statybos Trestas held 95.6%, 68.3% and 87.5% ordinary registered shares of subsidiaries UAB Vekada, UAB PST Investicijos group, subsidiary OOO Teritorija, respectively, and is considered a controlling shareholder of the subsidiaries.

	UAB PST Investicijos
	2017	2016
Non-controlling interest, percentage	31,7 %	31,7 %
Non-current assets	17	17
Current assets	6819	7 325
Total assets	6 836	7 3492
Non-current liabilities	ರ	0
Current liabilities	2 418	2 359
Total liabilities	2. 42.7	2359
Net assets	4 409	4 983
Net assets attributable to non-controlling interest	1 398	1 580
Income	8	2 882
Expenses	(1 116)	(311)
Net profit (loss)	(1 108)	2 571
Other comprehensive income	0	0
Net profit (loss) attributable to non-controlling interest	(321)	815
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	(203)	1 207
Cash flows from investing activities	0	122
Cash flows from financing activities	0	(6 620)
Net increase (decrease) in cash and cash equivalents	(203)	(5 291)

The main financial indicators of the subsidiary that has non-controlling interests:

30. Investments in subsidiaries, non-controlling interests (continued)

	UAB Vekada
	2017	2016
Non-controlling interest, percentage	4.4 %	4 4 %
Non-current assets
Current assets	321	387
	1 902	1 688
Total assets	2. 247.3	2,075
Non-current liabilities	22	29
Current liabilities	dag	674
Total liabilities	971	703
Net assets	1 252	1 372
Net assets attributable to non-controlling interest
	55	60
Income	3 273	3 749
Expenses	3 077	(3 582)
Net profit (loss)	196	167
Other comprehensive income	0	0
Net profit (loss) attributable to non-controlling interest	9	7
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	100	185
Cash flows from investing activities
	(10)	(0)
Cash flows from financing activities	(399)	2
Net increase (decrease) in cash and cash equivalents	(309)	178
	000 Teritorija
	2017	2016
Non-controlling interest, percentage	12.5 %	12.5 %
Non-current assets	0	0
Current assets	18	147
Total assets	18	147
Non-current liabilities	0	0
Current liabilities	1 224	1 266
Total liabilities	1 224	1 266
Net assets	(1 224)	(1 119)
Net assets attributable to non-controlling interest	(153)	(140)
Income	120	726
Expenses	(344)	(1 157)
Net profit (loss)	(194)	(431)
Other comprehensive income	0	0
Net profit (loss) attributable to non-controlling interest	(24)	(54)
	0
Other comprehensive income attributable to non-controlling interest		0
Cash flows from operating activities	125	374
Cash flows from investing activities	0	0
Cash flows from financing activities Net increase (decrease) in cash and cash equivalents	(108) 17	(374) 0

(in thousand EUR) Dividends	As at 31 December 2016	Dividends declared	Cash flow out	Leased asset	Interest accrued	Interest paid	As at 31 December 2017
payable	19	1 081	(1 074)	0	0	0	26
Loans received and
interests
payable	રેજેજ	0	(108)	0	63	(30)	622
Lease
liabilities	19	0	(52)	104	7	(7)	71
Total	735	1 081	(1 234)	104	70	(37)	719

31. Change in liabilities arising from financial activities

Subsequent events 32.

After the end of the financial year until the date of approval of these consolidated financial statements there were no subsequent events which would have a material effect on the consolidated financial statements or require a disclosure.

Managing Director	Dalius Gesevičius
Chief Accountant	Danguolė Sirvinskienė

29/03/2018 29/03/2018 €

Company's and Consolidated Annual Report, Corporate Governance Report and Social Responsibility Report of Panevezio statybos trestas AB for 2017

1. Accounting period covered by the Annual Report

This Consolidated Annual Report for 2017 covers the period from 1 January 2017 till 31 December 2017.

2. References and additional clarifications on the data included in the Annual Report

All financial data in this consolidated report have been calculated in accordance with the International Financial Reporting Standards in the EU, based on the audited financial statements in the national Lithuanian currency - Euros.

The auditor of the company is Ernst & Young Baltic UAB.

In this report, Panevezio statybos trestas AB can also be called 'the Company', and the Company together with its subsidiary companies can be called 'the Group'

Name of issuer	Public limited liability company Panevezio statybos trestas
Authorised capital	4,741,500 Euros
Address of registered office	P. Puzino Str. 1, LT-35173 Panevezys, Lithuania
Telephone	+370 45) 505 503
Fax	(+370 45) 505 520
Legal-organisational form	Public limited liability company
Date and place of registration	30 October 1993, Panevezys City Board
Registration No.	AB 9376
Register code	147732969
VAT code	11477329610
LEI code	52990000VPCGEWIDCX35
Administrator of Legal Entity Register	State Enterprise Centre of Registers
E-mail	pst(a)pst.lt
Website	www.pst.lt

3. The main data about the Company (the issuer)

4. Nature of the main activities of the issuer

The main area of activities of the Company and its subsidiaries (the Group) is designing and construction of buildings, structures, equipment and communications and other objects for various applications in and outside Lithuania, sale of building materials and real estate development. In addition to the above activities, the company is engaged in rent of premises and machinery.

Vision

To become a well-known company of the construction sector in Europe, which uses advanced technologies and ensures quality as well as agreed work completion terms.

Mission

While honestly fulfilling our obligations, developing long-term cooperation and proposing mature solutions in construction, we increase the value to the shareholders and develop activities of the company, ensure safe, stable environment to employees, create environment of higher quality to business, society and people.

5. The companies included in the Group of Panevezio statybos trestas AB

As of 31 December 2017, the Group of Panevezio statybos trestas AB included the following companies:

Subsidiary company	Registration date, register administrator	Company code	Registered address	Telephone, fax, e-mail, website	Portion of controlled shares (per cents)
Skydmedis UAB	17 June 1999 State Enterprise Centre of Registers	148284718	Pramones Str. 5, Panevezys	Tel. (+370 45) 467626 Fax (+370 45) 460259 info@skydmedis.lt www.skydmedis.lt	100
Metalo meistrai UAB	16 June 1999 State Enterprise Centre of Registers	148284860	Tinklu Str. 7. Panevezys	Tel.+370 45 460377 Fax. +370 45 585087 info@metalomeistrai.lt www.metalomeistrai.lt	100
Vekada UAB	16 May 1994 State Enterprise Centre of Registers	147815824	Marijonu Str. 36, Panevezys	Tel. (+370 45) 461311 Fax (+370 45) 461311 info@yekada.lt www.vekada.lt	95.6
Alinita UAB	8 December 1997 State Enterprise Centre of Registers	141619046	Tinklu Str. 7, Panevezys	Tel. (+370 45) 467630 Fax (+370 45) 467630 info@alinita.lt www.alinita.lt	100
Kingsbud Sp.z.o.o.	11 August 2010 District Court in Bialystok, XII Economic Department of National Court	200380717	A. Patli Str. 12, 16-400 Suwalki, Poland	Tel. (+48 875) 655 021 Fax (+48 875) 655 021 biuro@kingsbud.pl www.kingsbud.lt	100
PS Trests SIA	22 May 2000 Centre of Registers, Republic of Latvia	40003495365	Skultes Str. 28, Skulte, Marupes Parish, Riga Region, Latvia	Tel. +371 29525066	100
Teritorija 000	3 June 2013 Kaliningrad Obl. Federal Tax Service Inspection No. 12	3528202650	Lunacharskogo Drive 43-27. Cherepovets, Bologda Obl., Russian Federation	Tel. +7 9097772202 Fax +7 9217234709 baltevromarketao@ mail.ru maslena11@mail.ru	87.5
Seskines projektai UAB	9 November 2010 State Enterprise Centre of Registers	302561768	Verkiu Str. 25C. Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 info@psti.lt www.psti.lt	100
PST investicijos UAB	23 December 1998 State Enterprise Centre of Registers	124665689	Verkiu Str. 25C, Vilnius	Tel. (+370 5) 2102130 info@psti.lt www.psti.lt	68

Subsidiary companies of PST investicijos UAB:

Ateities projektai UAB	25 April 2006 State Enterprise Centre of Registers	300560621	Verkiu Str. 25C. Vilnius	Tel. (+370 5) 2102130 Fax (+370 5) 2102131 info@psti.It www.psti.lt	100
ISK Baltevromarket AO	13 July 2001 Independent Registration Company AB - Administrator of shareholders' register	3906214631	Rostovskaja Str. 5-7. Kaliningrad, Kaliningrad Obl., Russian Federation	Tel.+79097772202 baltevromarketao@ mail.ru	100

6. Principle nature of activities of the companies included in the Group

Skydmedis UAB - production, construction and outfit of pre-fabricated timber panel houses.

Panel houses are the main product of the company. About 80% of products are successfully exported to Norway, Sweden, France, Switzerland, Iceland and other countries.

Metalo meistrai UAB - designing and fabrication of steel structures for construction purposes. The company also supplies steel structures for other industries where steel items are required.

Vekada UAB - installation of electrical systems. Alongside with the usual electrical engineering activities, works in the low current fields are carried out: video surveillance systems, security and fire alarm systems, utility system control.

Alinita UAB - installation of heating, ventilation and air-conditioning systems in buildings, indoor water supply, waste water and fire-fighting systems, designing, start-up and commissioning of indoor utility systems.

Kingsbud Sp.zo.o. - wholesale of construction materials.

Kingsbud Sp.zo.o. has a branch established in Lithuania, which focuses on wholesale of stoneware and glazed tiles for indoor and outdoor application.

PS Trests SIA - construction activities. The company was established for searching of new markets and carrying out construction activities in Latvia.

Teritorija OOO - real estate development.

Seskines projektai UAB - real estate preparation and sale.

PST investicijos UAB - real estate preparation and sale. PST investicijos UAB has the following subsidiary companies established for development of real estate projects: Ateities projektai UAB, Baltevromarket ZAO ISK.

7. Contracts with the intermediary of public trading in securities

In 2013, the Company signed the contract with the Financial Brokerage Company Finasta AB for recording of securities and provision of services related with securities recording. On 21 December 2015, the Financial Brokerage Company Finasta AB had been rearranged by way of merge with Siauliu bankas AB, which took over all assets, rights and liabilities of the Financial Brokerage Company Finasta AB from the mentioned date.

8. Data on trading in securities of the issuer in regulated markets

The ordinary registered shares of Panevezio statybos trestas AB have been on the Official Trading List of Nasdaq Vilnius AB since 13 July 2006 (company symbol PTR1L).

Shure type	Number of shares,	Par value,	Total par value,	Emission code
	pcs.	Euros	Euros	ISSIN
Ordinary registered shares (ORS)	16.350.000	0.29	4,741,500	LT0000101446

Company share price variation at the stock exchange market Nasdaq Vilnius for the period 2013 through 2017 (Euros)

Company share price variation at the stock exchange market Nasdaq Vilnius in 2017 (Euros)

Table 1. Information on the Company share price at the stock exchange market Nasdaq Vilnius in 2017 (Euros):

Last price	Average share	Highest price for	Lowest price for	Last price
31 Dec. 2016	price for 2017	2017	2017	31 Dec. 2017
0.94 EUR	1.078 EUR	1.34 EUR	0.85 EUR	0.916 EUR

Table 2. Capitalization of the Company (mln. Euros):

Capitalization
2013	2014	2015	2016	2017
18.47	14.03	15.12	15.37	14.98

9. Fair review of position, performance and development of the Company and the Group, description of the principal risks and uncertainties the company faces

Panevezio statybos trestas AB (PST) is one of the largest construction companies in the country, which has been operating in construction sector for more than 60 years. Honesty, responsibility, professionalism, high quality work and effective solutions are the values that allowed us achieving the set objectives.

The Company gets approximately 80 per cents of orders from private clients. PST is actively involved in such private projects as Reconstruction of the Former Hospital Building in Boksto Street in Vilnius, Construction of Guest House at Paplaukio Str. 9a, Vilnius, Construction and Storage Building of Elmoris UAB. Construction of a New Production Building - a Printing-House with Offices at Industrijos Str. 12. Biruliskiu Vlg., Kaunas District, Designing and Construction of a Business Centre U219 in Vilnius. The Company continues its activities in construction of a new production building for Schmitz Cargobull Baltic UAB, carries our expansion of LTP Texdan UAB factory in Kedainiai. The Company is also involved in reconstruction of water supply and waste water network in Panevezys, Siauliai and Grinkiskis. In 2017 the work was successfully completed in Lidl stores, storage facilities at Lemora UAB, Wirlgen Lietuva UAB, Shopping and Leisure Centre Mega in Kaunas.

The Company has won more than one award for successfully implemented projects, their complexity, high quality and organization of complicated activities. In 2017, the Company was awarded the gold medal for implementation of the expansion project at the Shopping and Leisure Centre Mega at the competition Lithuanian Product of the Year 2017 arranged annually by the Lithuanian Confederation of Industrialists.

Panevezio statybos trestas AB performs the function of the general contractor, project management and designing. This is the strength of the Company. Being able to offer a full package of required services, the Company executes large projects in terms of scope and successfully implements them.

The Company withdrew from the Russian and Swedish markets in 2017 but continues implementing projects in Latvia successfully. There is a subsidiary company established here.

In 2017, the following branches continued their operation in the structure of the company: Gerbusta, focusing on construction of utility networks and landscaping. Pastatu apdaila, carrying out indoor and outdoor finishing works, Betonas, Konstrukcija, Stogas where production capacities were concentrated, Vilnius branch Genranga, performing general contracting activities and project management in Vilnius Region, and Klaipstata, performing general contracting activities and project management in Klaipeda Region. The company has permanent establishments in the Republic of Latvia and Kingdom of Sweden.

In 2017, the companies of the Group successfully continued their activity both inside and outside Lithuania. Metalo meistrai UAB completed a few large orders in Sweden and Norway. Skydmedis UAB, which is producing pre-fabricated timber panel houses, sold 87 per-cents of its products in the foreign market in such countries as Norway. Sweden, France, Switzerland and Iceland.

Vekada UAB, Alinita UAB, which specialize in installation of building heating, ventilation and conditioning systems, and in installation of electric systems, renewable energy and low current fields,

worked on the projects in Lithuania and had a profitable year. PS Trests SIA operating in Latvia continued construction activities successfully in 2017. The real estate development companies Seskines projektai UAB and PST investicijos UAB had no income from development of real estate projects. During the reporting year the wholesale of building materials is further developed. Kingsbud Sp.zo.o, the company operating in Poland, is engaged in this.

The companies of the Group are actively searching for new sales markets and innovative products.

Risk factors related to the company's activities:

In performance of business, both the Company and the Group face various types of risks:

• legal regulation;
• severe competition; 11
• shortage of qualified labour;
• variation in the value of the Russian Rouble;
• cyclical nature of economy;
• macroeconomic factors;
• damping.

Information on the types of financial risk and risk management is provided in the Notes to the Separate Financial Statements (Note 4) and the Notes to the Consolidated Financial Statements (Note 4).

10. Analysis of financial and non-financial performance, information related to environment and employee matters

Over the twelve months of 2017, the turnover of Panevezio statybos trestas AB was 56.351 mln. Euros. In 2017, the income was lower by 1.49 times compared to the year 2016. During the accounting period, the Company had the net profit in the amount of 0.194 mln. Euros, whereas in 2016 the net profit was as high as 1.791 mln. Euros.

Reduction in the income and results of the Company was conditioned by a few large projects close to completion and preparation activities for a new projects.

Referring to the same period, the total consolidated income of the PST Group amounted to 73,816 mln. Euros and decreased by 25.7 per cents compared to the twelve months of 2016, which amounted to 99.36 mln. Euros. The consolidated profit of the Group before taxes for 2017 was 0.753 mln. Euros, i. e. lower by 4.2 times compared to the twelve months of 2016.

EBITDA, i. e. earnings before interest, taxes, depreciation and ammortization, was lower by 2.4 times for the Company and lower by 2.3 times for the Group compared to twelve months of 2016. That is, for the twelve months of 2017 EBITDA of the Company was 1.286 mln. Euros (3.046 mln. Euros in 2016), of the Group - 2.148 mln. Euros (4.970 mln. Euros in 2016).

Income and net profitability variation for the Group:

Table 3. The results (thousands Euros) of the Company and the Group of Panevezio statybos trestas AB for the period 2015 through 2017:

Group				Company
2015	2016	2017	Items	2015	2016	2017
121,217	99,361	73,816	Income	77,438	83,910	56,351
109,278	90,221	68,085	Cost of sales	70,226	77,031	52,277
11,939	9,140	5,731	Gross profit	7,212	6,879	4,074
9.85	9.20	7.76	Gross profit margin (per cents)	ਹੈ 31	8.20	7.23
3,155	1,085	-1,281	Typical operating result	1,619	1,813	-809
2.60	1.09	-1.73	Typical operating result from turnover (per cent)	2.09	2.16	-1.44
4,260	4.970	2,148	Profit before taxes, interest, depreciation and amortization ERITDA	1,590	3,046	1,286
3.51	5.00	2.91	EBITDA margin (per cents)	2.06	3.63	2.28
1.996	3,167	753	Net profit	328	1,791	194
1.65	3.19	1.02	Nets profit (loss) margin (per cents)	0.42	2.13	0.35
0.12	0.194	0.046	Profit (loss) per share (Euros)	0.02	0.11	0.012
5.52	8.61	2.01	Return on equity (per cents) (ROE) Net profit Equity capital	0.86	4.51	0.50
3.02	5.17	1.26	Return on assets or asset profitability (ROA) Net profit Assets	0.59	3.34	0.35
5.14	8.06	1.90	Return on investments (ROI) Net profit Assets - Current debt	0.84	4.43	0.49
2.11	2.42	2.55	Current liquidity ratio Current assets Current liabilities	2.59	2.94	2.36

Group					Company
2015	2016	2017	Items	2015	2016	2017
1.78	1.97	2.01	Critical liquidity ratio Current assets - Inventories Current liabilities	2.52	2.88	2.27
0.55	0.60	0.63	Asset to equity ratio	0 €9	0.74	0.70
2.21	2.25	2.29	Book value per share	2.34	2.43	2.38
0.42	0.42	0.40	Ratio of share price and book value (P/BV)	0.40	0.39	0.38

Table 4. Income (min. Euros) by activity types:

	Group			Company
	2015	2016	2017	2015	2016	2017
Construction works	109.49	91.51	64.61	77.44	83.91	56.35
Real estate	4.79	0.45	0
Products produced and other income	6.94	7.40	9 21

The main income of the Company by activity types is from building and erection activities. In 2017, the income of the Group from building and construction activities totalled 87.5 %, the income from made products and other income amounted to 12.4 %. In 2016, the income of the Group from building and construction activities totalled 92.1 %, income from real estate amounted to 7.4 %, income from made products and other income amounted to 0.5 %.

Income distribution for the Group by activity types (per cents):

Table 5. Operating income (mln. Euros) by countries:

		Group			Company
	2015	2016	2017	2015	2016	2017
Lithuania	82.88	88.30	57.79	77.07	83.88	54.60
Russian Federation	32.22	0.90	0.15	0.36
Scandinavian countries	4.39	ਹੈ ਹੈਤੇ	11.40			0.09
Other countries	1.73	0.23	4.48	0.01	0.03	1.65

In the year 2017, the main activities of the Company were performed in Lithuania and made 96.88 per cents of all works carried out by the Company (99.96 per cents in 2016), the income of the Company in Latvia increased up to 2.95 per cents. The Group from the works performed inside the country made

78.3 per cents of the income whereas in 2016 it was 88.9 per cents. In 2017, the income in the Scandinavian countries made 15.4 per cents of the Group income (10 per cents in 2016).

Operating income distribution by countries for the Group (per cents):

Operating income distribution by countries for the Company (per cents):

Environment protection

Quality, environment protection, occupational health and safety play a very important role in activities of Panevezio statybos trestas AB. Quality (ISO 9001), environmental (ISO 14001) and occupational health and safety (OHSAS 18001) management systems introduced and available at the company allow taking proper care of these significant factors. Assessment of occupational risk is carried out, analyses are performed and measures for risk reduction or elimination are taken on each site. For the purposes of environment and resource protection and sustainability, ensuring pollution prevention, in the beginning of each project the environmental plan including specific measures for control of significant aspects of environment protection and activities performed is prepared.

In 2013, the Lithuanian National Accreditation Bureau accredited the Construction Laboratory of the company for the period of 5 years in accordance with LST EN ISO/IEC 17025:2005, thus granting it the right to perform tests of building materials.

Quality, environmental and occupational health and safety management systems in accordance with the requirements of ISO 9001, ISO 14001 and OHSAS 18001 are also successfully operating in the companies of the Group. The constant aim is to minimize the impact of construction processes on the environment.

Professional, competent and responsible employees are the biggest asset of Panevezio statybos trestas AB. Therefore, much attention is paid to motivation of employees: environment favourable for generation and implementation of new ideas is being created and sharing of information is being promoted. In modern environment competence of employees is one of the key factors describing competitiveness of the company. Taking this factor into account, the company encourages employees in all organizational levels to learn and improve their skills. The employees are motivated not only by material incentives - competitive salaries, progressive bonus system but also by exceptional quality of working environment. As of 31 December 2017, the number of employees in the Group was 1,043, in the Company - 771.

Average number of employees		2016	2017
	Group	Company	Group	Company
Managers	27	13	24	13
Specialists	313	236	292	223
Workers	731	રજેર	714	રેટિ
Total	1,077	774	1,030	762

Table 6. Average number of employees in 2016 and 2017:

Table 7. Education level of the Group employees as of the end of the period:

PST Group employees	Payroll number	Higher university level education	Higher non- university education	Junior college education	Secondary education	Incomplete secondary education
Managers	24	21	0	ന്ന	0	0
Specialists	303	244	17	27	15	0
Workers	716	29	14	148	469	56
Total:	1,043	294	31	178	484	રેણ

Table 8. Average gross pay per employee per month (Euros) in 2016 and 2017:

		2016		2017
	Group	Company	Group	Company
Managers	2,836	3,641	3,193	4,032
Specialists	1,186	1,198	1,261	1.244
Workers	927	891	914	917

During the twelve months of 2017, the natural turnover of employees took place. Employment contracts do not include any special rights and obligations of employees or some part of them.

In 2017, the Company also paid much attention to qualification improvement. Training in the Company is done in three directions using:

1. Services of training arranging institutions (external training);

2. Services of higher education institutions (employee studies).

11. Important events having occurred since the end of the preceding financial year

Information on important events having occurred after the end of the financial year is provided in the Notes to Separate Financial Statements (Note 31) and the Notes to the Consolidated Financial Statements (Note 32).

12. Information on research and development activities performed by the Company and the Group

The company keeps on successfully introducing innovative technologies in its activities. Panevezio statybos trestas AB aims that preparation for construction, work planning for future projects was done and construction activities were carried out especially fluently.

For that purpose, investments are made in the modern designing software. The company The company continues improving design preparation using not only the currently available software but also a new software package, which allows preparing complete designs covering its all parts in the environment of BIM (Building Information Modelling).

Site construction activities are planned considering the BIM model where the forth (4D) dimension of the digital model, time, is added. Application of the digital (BIM) model in planning and performance of works allows reducing probability of delay in work, taking immediate corrective actions in work organisation, if necessary, and improving performance quality. Both the construction schedule and computer simulation are prepared using specific software at the preparation stage. This allows choosing optimum construction methods and comparing the actually completed work quantities with the planned ones.

Use of the Building Information Modelling (BIM) is started during transportation of the items to be used to the site. With the help of the BIM model and work schedules the required items are delivered to the site at the time required. This allows reducing the logistics costs to the most extent, eliminating large storage areas on the site.

To speed up production and improve quality, the companies of the Group make investments in production by means of process computerization and automatization.

13. Performance plans and forecasts of the Company and the Group

The objective of the Company remains the same, i.e. to be competitive, one of the largest construction companies in Lithuania.

In 2018, the Group expects to increase the number of executed projects, continue the started activities and implement new projects in both inside and outside Lithuania.

14. Authorised capital of the issuer and its structure

As of 31 December 2017, the authorised capital of the company amounted to 4,741,500 Euros divided into 16,350,000 ordinary registered shares (ORS) the nominal value of each share being 0.29 Euros.

All shares are non-certificated and fully paid. The proof of ownership is the record in the securities accounts. The Company has not acquired any shares of the Company.

On 31 December 2017, the total number of the shareholders was 1,537.

Investors	Number of shares. pcs.	Portion of authorized capital. per cents
Foreign investors
Legal entities	3.095.953	18.9%
Natural persons	1,008,914	6.2%
Local investors
Legal entities	8.410.055	51.4%
Natural persons	3,835,078	23.5%

Table 9. Distribution of the shareholders by residence country and legal form:

Table 10. The shareholders holding or controlling more than 5 per cents of the authorised capital of the Company:

Full name of a shareholder company name, type, headquarter address, company code)	Number of ordinary registered shares held by a shareholder under ownership right (pcs.)	Portion of the authorized capital held (%)	Portion of votes granted by the shares held under ownership right (%)	Portion of votes owned bv a shareholder along with acting persons (%)
Panevezio keliai AB S. Kerbedzio Str. 7, Panevezys Company code: 147710353	8,138,932	49.78	49.78
Clients of Swedbank AS Liivalaia 8, 15040 Tallinn, Estonia Company code: 10060701	1,238,250	7.57	7.57
Freely floating shares	6,972,818	42.65	42.65

None of the shareholders of the issuer has any special control rights. All shareholders have equal rights prescribed by Section 4 of the Law on Companies of the Republic of Lithuania.

The number of shares carrying votes at the General Meeting of Shareholders of Panevezio statybos trestas AB is 16,350,000.

15. Dividends

The decision to pay dividends is taken and the amount to be paid as dividends is set by the General Meeting of Shareholders. The company pays the allocated dividends within 1 month from the date when decision on profit appropriation has been taken.

The persons who were the shareholders of the Company at the tenth business day from the General Meeting of Shareholders that adopted the relevant decision are entitled to the dividends.

Dividends are taxable in accordance with the Law on Income Tax of Individuals and the Law on Corporate Income Tax of the Republic of Lithuania.

The General Meeting of Shareholders of Panevezio statybos trestas AB that took place on 21 April 2017 made the resolution to pay dividends in the amount of 1,062,750 Euros for the year 2016. As of 31 December 2017, 99.4 per cents of dividends were paid.

Table 11. History of dividends paid over the previous years:
--------------------------------------------------------------	--

	Profit of financial year allocated for dividends
	2009	2010	2012	2014	2015	2016
Total amount allocated for dividends, Euros	331,470	331,470	118,382	1,079,100	261,977	1,062,750
Dividends per share	0.0203	0.0203	0.0072	0.066	0.016	0.065
Ratio of dividends to net profit, per cents	23.80	11.30	28.20	164.80	79.80	રેજે 33
Dividend profitability (dividends per share / share price as of the end of the period), per cents	1.80	1.00	0.80	7.70	1.7	6.9

16. All restrictions of security transfer

None

17. Description of main investments made during the reporting period including their amount

Investments of the Group for acquisition of non-current assets in the year 2017 amounted to 983,566 Euros. Panevezio statybos trestas AB acquired non-current assets for 733,481 Euros. In 2017, depreciation and amortization costs of non-current assets amounted to 1,257,220 Euros in the Group including 1,00,003 Euros accounted for in the Financial Statements of Panevezio statybos trestas AB. All investments in the subsidiary companies are provided in the Notes to the Separate Financial Statements (Note 16).

18. All agreements between shareholders which are known to the issuer and which may restrict transfer of securities and/or voting right

None

1. Authorizations of issuer's bodies to issue and purchase issuer's shares

None

1. All material agreements to which the issuer is a party and which would come into effect, be amended or terminated in case of change in the issuer's control, also their impact except the cases where the disclosure of the nature of the agreements would cause significant damage to the issuer

None

1. All agreements of the issuer and the members of its management bodies or the employee agreements providing for a compensation in case of the resignation or in case they are dismissed without due reason or their employment is terminated in view of the change of control of the issuer

None

22. Information on significant transactions between the related parties

All transactions with related parties are provided in the Notes to the Separate Financial Statements (Note 28) and the Notes to the Consolidated Financial Statements (Note 28).

23. Publicly disclosed information

Table 12. Summary of published information:

Description of notification	Category of notification	Language	Date
Panevezio statybos trestas AB Will Build Jekabpils Multifunctional Sports Centre in Latvia	Notification on material event	Lt. En	9 March 2018
Resolution by the Director of the Supervision Service of the Bank of Lithuania	Notification on material event	Lt. En	7 March 2018
Panevezio statybos trestas AB Will Build a Complex of Apartment Buildings in Vilnius	Notification on material event	Lt. En	2 Feb. 2018
Panevezio statybos trestas AB Has Acquired Shares of Ateities projektai UAB	Notification on material event	Lt. En	26 Jan. 2018

Description of notification	Category of notification	Language	Date
Appeal against Decision of Competition Council	Notification on material event	Lt, En	10 Jan. 2018
Decision Adopted by Competition Council	Notification on material event	Lt, En	21 Dec. 2017
Calendar for Publishing Performance Results of Panevezio statybos trestas AB in 2018	Notification on material event	Lt, En	21 Dec. 2017
Panevezio statybos trestas AB Will Finance Project under Development by Seskines projektai UAB	Notification on material event	Lt, En	1 Dec. 2017
Resolutions of Extraordinary General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	9 Nov. 2017
Draft Resolutions of Extraordinary General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	18 Oct. 2017
Convening of Extraordinary General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	10 Oct. 2017
Panevezio statybos trestas AB Will Reconstruct Physical Training and Sports Centre in Panevezys	Notification on material event	Li, En	19 Sept. 2017
Panevezio statybos trestas AB Will Build a New Factory in Vilnius	Notification on material event	Lt, En	18 Sept. 2017
Panevezio statybos trestas AB Will Reconstruct Lithuanian Embassy in Moscow	Notification on material event	Lt, En	5 Sept. 2017
Notification of Transactions in Issuer's Securities by Manager	Notifications on transactions concluded by managers of the companies	Lt, En	1 Sept. 2017
Unaudited Performance Results of Panevezio statybos trestas AB and the Group for the First Half of 2017	Half-Yearly information	Lt, En	31 Aug. 2017
Regarding opening of bankruptcy proceedings	Notification on material event	Lt, En	17 Aug. 2017
Cessation of PST Nordic AB Activities	Notification on material event	Lt, En	27 July 2017
Panevezio statybos trestas AB Will Carry Out Work in Panevezys and Pasvalys	Notification on material event	Lt, En	10 July 2017
Initiation of Bankruptcy Proceedings	Notification on material event	Lt, En	25 May 2017
Panevezio statybos trestas AB Will Build Water Supply and Waste Water Networks in Radviliskis District	Notification on material event	Lt, En	24 May 2017
Annual Information Approved by Annual General Meeting of Shareholders of Panevezio statybos trestas AB	Annual information	Lt, En	21 April 2017
Resolutions of Annual General Meeting of Shareholders	Notification on material event	Lt, En	21 April 2017
Panevezio statybos trestas AB Will Reconstruct Water Supply and Sewage Water Networks in Siauliai	Notification on material event	Lt, En	20 April 2017
Panevezio statybos trestas AB Will Build a Printing-House	Notification on material event	Lt, En	18 April 2017
Draft Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	4 April 2017
Draft Resolutions of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt, En	31 March 2017

Description of notification	Category of notification	Language	Date
Panevezio statybos trestas AB Will Build the Guest House in Vilnius	Notification on material event	Lt. En	22 March 2017
Convening of Annual General Meeting of Shareholders	General Meeting of Shareholders	Lt. En	21 March 2017
Calendar for Publishing Performance Results of Panevezio statybos trestas AB in 2017	Notification on material event	Lt. En	2 Jan. 2017

All notifications of Panevezio statybos trestas AB to be made public in accordance with the legal requirements are published following the timelines prescribed by the laws and legal acts of the Republic of Lithuania. Information on the material events of the company is presented through the information system of NASDAQ OMX Vilnius Stock Exchange (Globe Newswire) and published on the website of the company.

24. Corporate governance report

Information on compliance with the Corporate Governance Code

The information on compliance with the Corporate Governance Code is presented in Appendix 1 to the Annual Report.

Panevéžio statybos trestas AB in principle complies with the recommendatory Governance Code for the companies listed at NASDAQ OMX Vilnius. Referring to the Articles of Association of the Company, the governance bodies of the Company include the General Meeting of Shareholders, the Board and the Managing Director. According to the Law on Companies of the Republic of Lithuania, either two (supervisory and management) or one collegial management body may be set up in the Company at the discretion of the Company. No Supervisory Board is set up in the Company. Following the Articles of Association of the Company, the Board is set up of 5 members, which are elected for the period of for years. The members of the Board represent the shareholders and perform the supervisory and control functions. Only the Audit Committee, which is elected for the period of one year, is formed in the Company. The functions of the Nomination and Remuneration Committees are performed by the Board.

The system of the corporate governance ensures fair treatment of all shareholders, including minority and foreign shareholders, and protects the rights of the shareholders.

The Company does not prepare and make public the remuneration statement. In the opinion of the Company, such information should not be made public commercially. Following the procedure prescribed by the legal acts, in the Annual Report the Company provides information on the total amounts calculated to the members of the Board, the Chief Executive Officer and Chief Accountant over the accounting period. The management system of the Company ensures that any information on all essential issues, including financial situation, operation and company management, is disclosed in a timely and accurate manner.

The audit company is proposed by the Board and elected by the Meeting of Shareholders, thus ensuring independence of the conclusions and opinion provided by the audit company.

Information on extent of risk and risk management

The following financial risks are faced within the Group: credit risk, liquidity risk and market risk.

The Board is responsible for setting up and maintaining the risk management structure. The risk management policy of the Group is aimed at identifying and analysing the risks faced by the Group, introduction and maintenance of appropriate limits and controls. The risk management policy and risk management systems are reviewed at regular intervals to reflect changes in market conditions and performance of the Group. The Group seeks to create a disciplined and constructive environment for risk management where all employees know their roles and responsibilities.

Based on the credit risk policy established by the Group, standard payments and terms are only offered when assessing credit standing of each new clients failing to meet the established limit of credit standing may only make purchases with the Group after paying prepayments.

The Group manages liquidity risk to ensure, as far as possible, sufficient liquidity, which allows fulfilling its obligations under both normal and complex conditions without incurring unacceptable losses and

without risking to lose goodwill of the Group. As a general rule, the Group maintains sufficient cash to cover its planned operating expenses, including financial debt repayment.

The market risk is the risk that changes in market prices, for example, changes in exchange rates and interest rates will affect the result of the Group or the value of available financial instruments. The purpose of the market risk management is to manage open positions of risk in order to optimize returns.

Information on any harmful transactions (not complying with the company's targets, existing usual market conditions, violating any interests of the shareholders or any other groups of persons, etc.], which had or might have in future negative impact on operation and/or performance results of the issuer, and information on any transactions, concluded in the event of a conflict of interests between managers of the issuer, controlling shareholders or any other obligations to the issuer by any related parties and their private interests and/or any other obligations

There were no such transactions concluded.

Information on any transactions with related parties as prescribed by Paragraph 2, Article 37 of the Law on Companies.

There were no such transactions concluded.

Information on significant directly or indirectly held share portfolios

The Company has no information available on directly held share portfolios.

Information on shareholders with special control rights

There are no shareholders with special control rights in the Company. The ordinary registered shares of the Company grant equal voting rights to all shareholders of the Company.

Information on all existing limitations on voting rights

The Company has no information available on limitations on voting rights.

Information on rules regulating election and replacement of the Board members, and amendment of Articles of Association

The Board of the Company consisting of five members is elected by the General Meeting of Shareholders for a period not longer than 4 years. At present there are five members in the Board. The procedure of electing and dismissing the members of the Board is not different from that prescribed by the Law on Companies.

The Articles of Association may be amended only by the General Meeting of Shareholders by the qualified majority of at least 2/3 of the total votes of the shareholders attending the resolution amending the Articles of Association is adopted following the procedure set forth in the Law on Companies of the Republic of Lithuania.

Information on powers of members of the Board

The powers of the members of the Board are set forth in the Law on Companies of the Republic of Lithuania and the Articles of Association. The Articles of Association of Panevezio statybos trestas AB are published on the website at http://www.pst.lt/en/investuotojams.

Information on powers of General Meeting of Shareholders, rights of shareholders and their exercising

The powers of the General Meeting of Shareholders and the rights of shareholders are set forth in the Articles of Association and are not different from that prescribed by the Law on Companies.

Information on composition of management, supervisory bodies and their committees, their activities and field of activities of the Chief Executive Officer

Refering to the Articles of Association of Panevezio statybos trestas AB, the management bodies of the Company are the General Meeting of Shareholders, the Board and the Managing Director. The Supervisory Council is not formed in the Company.

The competence of the General Meeting of Shareholders is not different from that of the competence prescribed by the Law on Companies.

The Board is led by the Chairman of the Board elects the Chairman from the members of the Board.

The Board elects and dismisses the Chief Executive Officer of the Managing Director, fixes his salary, sets other terms and conditions in the employment contract with him, approves his job description, gives incentives and imposes penalties. The Managing Director shall organize the activities of the company.

The Board:

REMIGIJUS JUODVIRSIS - the Chairman of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio keliai AB	Member of the Board	531,675	28.47	28.47
Lauktuves jums UAB	Chairman of the Board	11,069	50.15	50.15
Pokstas UAB		111	રેણ	રે()
Klovainiu skalda AB		470,421	8.74	8.74
Gustoniu ZUT UAB	Member of the Board	1,085	50.28	50.28
PST investicijos UAB	Member of the Board	16,407	3.32	3/32
Convestus UAB		50,000	રેણ	50
Alproka UAB	Chairman of the Board
Kauno tiltai UAB		492	0.31	0.31
Specializuota komplektavimo
valdyba AB		21,490	1.07	1.07
Tertius UAB		704,638	80	80
Emulteka UAB (subject to liquidation proceedings)			1	=

Term of office: November 2014 through November 2018 No previous convictions.

VIRMANTAS PUIDOKAS - the member of the Board. No membership in the capital of the company. Membership in the capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes. %
Panevezio keliai AB	General Director	66.769	3.57	3.57

Skalduva UAB	Director	43	43	43
Klovainių skalda AB	Member of the Board	541,785	10.1	10.1
Avia invest UAB		10,000	100	100
Istros aviaparkas UAB		2,000	100	100
Akvalda UAB	Director	750	50.00	50.00
Emulteka UAB		ੇ	の	ರಿ

Term of office: November 2014 through November 2018 No previous convictions

ARTURAS BUCAS - the Member of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Dvarcioniu keramika AB (subject to bankruptcy proceedings)	Shareholder	356
Panevezio keliai AB	Member of the Board	11 •

Terms of office: November 2014 through November 2018 No previous convictions

AUDRIUS BALCETIS – the Member of the Board. Membership in the capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Panevezio keliai AB	Member of the Board			L
Panevezio rysiu statyba UAB	Director	279.507	27	27
Linas AB		33.634	0.14	0.14
PST investicijos UAB	Member of the Board

Terms of office: April 2015 through November 2017 No previous convictions

VILIUS GRAZYS - the Member of the Board. No membership in the capital of the company. Membership in the activities or capital of the companies below:

Company	Position	Number of shares	Capital, %	Votes, %
Akvalda UAB		750	50	50
Emulteka UAB		11	11	11
Betono apsaugos sistemos UAB		40	40	40
Panevezio keliai AB	Technical Director	83,058	4.45	4.45

Terms of office: November 2014 through November 2018 No previous convictions Administration:

DALIUS GESEVICIUS- Chief Executive Officer. Managing Director. Holds 38,015 shares of the company. University education (VISI, 1984), Construction Engineering. Master Degree in Management and Business Administration.

No previous convictions.

DANGUOLE SIRVINSKIENE - Chief Accountant of the Company. Holds no shares of the Company. University Education (LZUA, 1983), Accounting - Economics. No previous conviction.

In 2017, no loans, guarantees, sureties were granted and no property was transferred to any members of the Boards or top managers of Panevezio statybos trestas AB.

Audit Committee

Following Article 52 of the Law on Audit of the Republic of Lithuania, the General Meeting of Shareholders of Panevezio statybos trestas AB elects the Audit Committee consists of three members, two of them being independent. The term of office of the Audit Committee is one year. The continuous term of office of a committee member cannot exceed 12 years.

The duties of the Audit Committee are as follows:

1) to monitor the financial reporting process;

2) to monitor effectiveness of the company's internal control, risk management and internal audit, if applicable, systems;

3) to monitor the process of the audit;

4) to monitor independence and objectivity of the auditor or audit company.

The following members were elected to the Audit Committee at the Annual General Meeting of Shareholders of Panevezio statybos trestas AB on 21 April 2017:

Drasutis Liatukas - an independent auditor, Head of Finansu auditorius UAB, auditor. Holds no shares of the company;

Irena Kriauciuniene - an independent auditor;

Lina Rageliene - Accountant of Panevezio statybos trestas AB. Holds no shares of the company.

Information on the sums calculated to the top managers over the reporting period (Euros):

In 2017, neither the members of the Board nor the top managers of Panevezio statybos trestas AB were granted special benefits.

Table 13. Information on salaries for the top managers of the issuer in 2017:

thousands Euros	2017
Members of the Board (bonuses and salary)	388
Average per member of the Board	776
Administration (Managing Director and Chief Accountant)	133
Average per member of Administration	66.5

25. Social Responsibility

In their activities both, the Company and the Group, follow the highest standards of business ethics and principles of social ethics. Social responsibility is based on its values and defines the Company's approach to its activities, integration of social, environmental and transparent business principles in the internal processes of the Company and the Group as well as in relations with its clients.

Environmental Protection

Panevezio statybos trestas AB and the companies of the Environmental Management System (EMS) consistent with the requirements of ISO 14001:2015. legal and other environmental regulations established, documented and, to ensure its suitability, adequacy and effectiveness, constantly reviewed.

In the process of implementation related to the established Environmental Policy, the Company seeks to preserve a healthy environment to any employee, biological and landscape diversity as well as optimal use of natural resources. The Environmental Policy is published in all branches, subsidiary companies and sites of Panevezio statybos trestas AB, available for public and all interested parties on the website at www.pst.lt.

When making plans of the environmental system, external issues with regard to the targets and strategic direction of the company as well as needs and requirements of interested parties are taken into account resulting in defining the risks and opportunities to make sure that the integrated management system is able achieve the intended outcome, strengthen the desired impact, prevent or reduce undesired effects and achieve continual improvement. The Company plans actions to eliminate risks, actions to address and strengthen opportunities, how actions should be integrated in the EMS processes, assessment criteria and effectiveness of these actions. There is a Risk and Opportunity Register of Panevezio statybos trestas AB prepared.

The significant environmental aspects are determined in all branches, subsidiary companies and sites of the Company after significance of activity impact on environmental is taken into account and legal requirements are identified. The environmental aspects are identified by analysing past, current and potential beneficial and adverse environmental impact of activities, services and products of the subdivisions. The review of these aspects is performed at least once per year and in case the nature of activities or any other conditions, such as process, materials used, technologies, etc., changes, provided they condition occurrence of new environmental aspects are identified individually for each project.

The significant environmental aspects can cause one or more significant environmental impacts and therefore can result in risks and opportunities to be assessed in order to ensure the Company is able to achieve the intended outcomes of the EMS. When determining environmental aspects, a life cycle perspective is taken into account. The following key life cycle stages of a product/service are thought and evaluated: raw material acquisition, design, production of construction products, transportation, construction of a building, use of a building, end-of-life treatment and final disposal (waste recycling and management). For each aspect possible legal and other requirements, which can affect activities of the Company and the Group, are identified.

For control of significant aspects and mitigation of adverse effects, targets and objectives are set, environmental management programmes and environmental plans covering specific actions, measures, terms and responsibilities are prepared. Measurements of environmental parameters are planned and a list of environmental effectiveness indicators is drawn up. In the process of a construction project implementation, monitoring of the EMS is performed.

In order to achieve the set environmental targets and objectives, training is performed at the Company and The Group. The purpose of such training is to familiarize those who work for and on behalf of the Company with the EMS policy, significant environmental aspects, targets and objectives, potential threats and emergencies as well as preventative measures to be used them, emergency preparedness and response plan, waste collection and segregation at the places of its forming, safe use of chemicals, information provided in safety data sheets.

All materials, including chemicals, are purchased and used in conformity with the applicable legal requirements. The suppliers are selected taking into account their possibilities to comply with the quality, environmental, occupational health and safety requirements applicable to products/services.

Internal audits are performed based on the Annual Internal Audit Plan. The information obtained is submitted for the management review. At least once per year the top managers analyse the EMS to ensure its continuing suitability, adequacy and effectiveness. The management review covers the environmental management system as well as environmental policy and targets.

The implemented EMS has been certified and is supervised by the certification company BM TRADA.

Relationship with Employees

The main asset of the Company is employees, who are the most important link in achieving the targets. Therefore, much attention is paid to motivation of employees: environment favourable for development of new ideas and their implementation is being created, continuous exchange of information is taking place. In the present-day environment, competence of employees is one of the key factors describing competitiveness of the company. Taking this factor into account, the Company encourages employees in all organizational levels to train and improve. Employees are given the opportunity to study, improve their qualifications, and participate in various seminars and trainings.

Employees are motivated not only by material incentives, such as competitive wages and salaries, progressive bonus system, but also by exceptional quality of working environment. The Company and the Group provides social guarantees: the allowance is paid in the event of the death of a family member or immediate family of the employee, in case of an employee's death, a gift to an employee when a baby is born, on the employee's anniversary birthday.

In order to create safe and healthy working environment, the Company and the Group pay much attention to occupational safety. The situation in the occupational health and safety system is analysed on a year-to-year basis resulting in targets and objectives, plans for improvement of occupational health and safety. Occupational risks are constantly assessed and risk eliminating measures are taken. Every year the Company makes investments in modern collective equipment. Employees are provided with certified personal protective equipment free of charge. To improve perception of safe work, occupational health and safety training is provided to managers and employees. Health checks for employees are arranged at health care establishments, analysis of the employee morbidity is performed followed by measures for morbidity reduction are taken.

On 5 January 2018, the Work Council for representation of the employees consisting of 11 members was elected at the Company. The Work Council submits proposals to the employer on economic, social and work issues, which are topical to the employees, employer's decisions, laws and other regulations governing work relations. The Council is elected for the period of three years, which starts from the beginning of their term of office.

Human Rights

The Company and the Group adhere to the principles for the protection of human rights and do not tolerate any violations of human rights in their activities. They are for the fair and transparent wage and salary policy, comply with the laws regulating overtime and working hours, respect the right of employees to rest and do not tolerate harassment and violence of any nature.

The Company opposes any discrimination and forced labour. Employees of the Company have equal rights and possibilities regardless their gender, nationality, social or family status, membership in public or political organisations or personal qualities. In 2017, there were no violations of human rights or relevant claims recorded.

Social Initiatives

The Company continuously participates in various support projects, co-operates with local universities, scientific establishments. The support funds of the Company are allocated for support of education, cultural, sports projects in the town.

In 2017, the Company contributed to the project VGTU Graduates: 100 Perspectives arranged by the Vilnius Gediminas Technical University. The aim of this project is to select promising, gifted, talented graduates of master and bachelor studies at the VGTU, increase their self-motivation and present them to Lithuanians and foreign business organizations, create conditions for establishing valuable contacts.

During the workshop organized by students of the Faculty of Civil Engineering and Architecture at Kaunas University of Technology (KTU) at the festival Builders Days 2017, employees of Panevezio statybos trestas AB shared information on successfully implemented unique projects, experience and available engineering competence.

The Company established the 1st place award for the best architectural project at the national project Smart City organized by Structum, the magazine of architecture and construction Infrastructure.

In 2017 Panevezio statybos trestas AB contributed to the special preventive measures for the safe traffic of pedestrians and drivers implemented by the Panevezys County Police Headquarters. On occasion of the new school year, the Company gave safety reflectors to all the first formers of Panevezys.

Fight against Corruption and Bribery

The Company and its subsidiaries do not tolerate corruption or its manifestations of any nature and pursue open competition, ethical business conditions and proper ensuring of transparency and publicity in

their activities. The Company does not tolerate fraud, extortion, unofficial accounting, unofficial and inadequately executed transactions, accounting for fictitious expenses, use of forged documents and other forms of corruption. Provisions of corruption intolerance apply to all employees of the Company, members of the management and supervisory bodies, any third parties acting on behalf of the Company.

The risk is mitigated by existing integrated internal controls for identifying potential risk factors for corruption. The company constantly monitors its activities and improves its activities.

Panevezio statybos trestas AB refrains from any form of influence on politicians and does not fund election campaigns of political parties, their representatives or their candidates.

The company always co-operates with the institutions and is ready to provide all the necessary information. The Company ensures that its procurement is carried out in compliance with the principles of equality, non-discrimination, transparency, mutual recognition, proportionality and requirements of confidentiality as well as impartiality at the same time using the Company's funds in a rational manner. Suppliers are selected on the basis of the most economically advantageous proposal or the lowest price under equal and non-discriminatory conditions.

In performing selection of subcontractors, the Company carries out assessment of subcontractors' qualification. Compliance with environmental, occupational health and safety requirements as well as honesty are the fundamental requirements for subcontractors.

Managing Director

29/03/2018

Disclosure form by Panevėžio statybos trestas AB concerning compliance with the Governance Code for the companies listed at the Vilnius Stock Exchange

Following Paragraph 3, Article 21 of the Law on Securities of Lithuania and Clause 24.5 of the Listing Rules of NASDAQ OMX Vilnius AB, the public limited liability company Panevas (hereinafter "the Company") hereby discloses its compliance with the Governance Code for the companies listed at NASDAQ OMX Vilnius and its specific provisions or recommendations. In the event of non-compliance with the Code or certain provisions or recommendations thereof, it is indicated which specific provisions are not complied with and the reasons of such non-compliance and in addition to that any explanatory information prescribed in this form is also provided.

Summary of Corporate Governance Report:

Panevežio statybos trestas AB in principles with the recommendatory Governance Code for the companies listed at NASDAQ OMX Vilnius. Referring to the Articles of Association of the Company, the governance bodies of the Company include the General Shareholders' Meeting, the Board and the Managing Director. According to the Republic of Lithuania, ether two (supervisory and management) or one collegial management body may be set up in the Company No Supervisory Board is set up in the Company. Following the Articles of Association of the Board is set up of 5 members, which are elected for the period of for years. The members of the Board represent the shareholders and control functions. Only the Audit Committee, which is elected for the period of one year, is formed in the Company. The Nomination and Remuneration Committees are performed by the Board.

The system of the corporate governance ensures fair treatment of all shareholders, including minority and foreign shareholders, and protects the rights of the shareholders.

The Company does not prepare and make public the remuneration statement. In the Company, such information should not be made public commercially. Following the procedure prescribed by the legal acts, in the Annual Report the Company provides information on the total amounts calculated to the members of the Chief Executive Officer and Chief Accountant over the accounting period.

The management system of the Company ensures that any information on all essential issues, including financial situation, operation and company management, is disclosed in a timely and accurate manner.

The audit company is proposed by the Board and elected by the Shareholders' Meeting, thus ensuring independence of the conclusions and opinion provided by the audit company.

PRINCIPLES/ RECOMMENDATIONS	YESNO / NOT APPLICABLE	COMMENTARY
Principle 1: Basic Provisions
shareholder value.		The overriding objective of a company should be to operate in common interests of all the shareholders by optimizing over fime
1.1. A company should adopt and make public the company's development strategy and objectives by clearly declaring how the company intends to meet the interests of its shareholders and optimize shareholder value.	Yes	The Company's strategy and objectives are made public on the website http://www.pst.lt and in the notifications for the Vilnius Stock Exchange, periodic notifications to the BNS news agency, notifications in the newspapers and at the press conferences.
1.2. All management bodies of a company should act in furtherance of the declared strategic objectives in view of the need to optimize shareholder value.	Yes
1.3. A company's supervisory and management bodies should act in close co-operation in order to attain maximum benefit for the company and its shareholders.	Yes	The Board of the Company is responsible not only for the strategic management of the Company but also analyses and evaluates the material on all issues of the Company activities presented by the managers: implementation of activity strategy, activity arrangement, financial status, etc.

1.4. A company's supervisory and management bodies	Yes
should ensure that the rights and interests of persons other
than the company's shareholders (e.g. employees, creditors,
suppliers, clients, local community), participating in or
connected with the company's operation, are duly respected.

Principle II: The corporate governance framework

The corporate governance framework strategic guidance of the company, the effective oversight of the company's management bodies, an appropriate balance and distribution of functions between the company's bodies, protection of the shareholders' interests.

2.1. Besides obligatory bodies provided for in the Law on Companies of the Republic of Lithuania - a general shareholders' meeting and the chief executive officer, it is recommended that a company should set up both a collegial supervisory body and a collegial management body. The setting up of collegial bodies for supervision and management facilitates clear separation of management and supervisory functions in the company, accountability and control on the part of the chief executive officer, which, in its turn, facilitate a more efficient and transparent management process.	No	As the Law on Companies of the Republic of Lithuania provides for the possibility to elect only one either collegial supervision or management body, the collegial management body, the Board, and one-person management body, the Managing Director, are set up in the Company. The collegial supervisory body - the Supervisory Board is not set up.
2.2. A collegial management body is responsible for the strategic management of the company and performs other key functions of corporate governance. A collegial supervisory body is responsible for the effective supervision of the company's management bodies.	Yes	The supervision of the Company's activities and the responsibility and control of the Chief Executive Officer are ensured by the Board, which analyses and evaluates the material on all items of the Company operation presented by the Chief Executive Officer.
2.3. Where a company chooses to form only one collegial body, it is recommended that it should be a supervisory body, i.e. the supervisory board. In such a case, the supervisory board is responsible for the effective monitoring of the functions performed by the company's chief executive officer.	No	The Company in principle complies with this recommendation, though only one collegial management body, the Board, is set up, however the authority assigned to the Board by the Articles of Association essentially matches the authority assigned to the Supervisory Board.
2.4. The collegial supervisory body to be elected by the general shareholders' meeting should be set up and should act in the manner defined in Principles III and IV. Where a company should decide not to set up a collegial supervisory body but rather a collegial management body, i.e. the board, Principles III and IV should apply to the board as long as that does not contradict the essence and purpose of this body.3	Yes

l Provisions of Principles III and IV are more applicable to those instances when the general shareholders' meeting elects the supervisory board, i.e. a body that is essentially formed to ensure supervision of the chief executive officer and to represent the company's shareholders. However, in case the company does not form the supervisory board but rather the board, most of the recommendations set out in Principles III and IV become important and applicable to the board as well. Furthermore, it should be noted that certain recommendations, which essence and nature applicable exclusively to the supervisory board (e.g. formation of the committees), should not be applied to the competence and functions of these bodies according to the Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) are different. For instance, item 3.1 of the Code concerning oversight of the management bodies applies to the extent it concerns the oversight of the chief executive officer of the of the board itself; item 4.1 of the Code concerning recommendations to the management bodies applies to the provision of recommendations to the company's chief executive officer; item 4.6 of the Code concerning independence of the collegial body elected by the general meeting from the company's management bodies is applied to the extent it concerns independence from the chief executive officer.

2.5. Company's management and supervisory bodies should comprise such number of board (executive directors) and supervisory (non-executive directors) board members that no individual or small group of individuals can dominate decision-making on the part of these bodies 2	Yes	The Board consists of 5 members and this number is considered to be sufficient.
2.6. Non-executive directors or members of the supervisory board should be appointed for specified terms subject to individual re-election, at maximum intervals provided for in the Lithuanian legislation with a view to ensuring necessary development of professional experience and sufficiently frequent reconfirmation of their status. A possibility to remove them should also be stipulated however this	No	As the Law on Companies of the Republic of Lithuania provides for the possibility to elect only one either collegial supervision or management body, the collegial management body, the Board, is set up in the Company. The Supervisory Board is not set up.
procedure should not be easier than the removal procedure for an executive director or a member of the management board.
2.7. Chairman of the collegial body elected by the general shareholders' meeting may be a person whose current or past office constitutes no obstacle to conduct independent and impartial supervision. Where a company should decide not to set up a supervisory board but rather the board, it is recommended that the chairman of the board and chief executive officer of the company should be a different person. Former company's chief executive officer should not be immediately nominated as the chairman of the collegial body elected by the general shareholders' meeting. When a company chooses to departure from these recommendations, it should furnish information on the measures it has taken to ensure impartiality of the supervision.	Yes	The Chairman of the Board represents the main shareholder and has never been the Chief Executive Officer of the Company.

Principle III: The order of the formation of a collegial body to be elected by a general shareholders' meeting

The order of the formation a collegial body to be elected by a general shareholders' meeting should ensure representation of minority shareholders, accountability of this body to the shareholders and objective monitoring of the company's operation and its management bodies.3

3.1. The mechanism of the formation of a collegial body to	Yes	Though there are no independent members of the Board at the
be elected by a general shareholders' meeting (hereinafter in		Company, the Board ensures objective and fair monitoring of
this Principle referred to as the 'collegial body') should		the Company's management bodies as well as representation of
ensure objective and fair monitoring of the company's		minority shareholders.
management bodies as well as representation of minority
shareholders.

² Definitions 'executive director' and 'non-executive director' are used in cases when a company has only one collegial body.

³ Attention should be drawn to the fact that in the situation where the collegial body the general shareholders' meeting is the board, it is natural that being a management body it should ensure oversight not of all management bodies of the company, but only of the single-person body of management, i.e. the company's chief executive officer. This note shall apply in respect of item 3.1 as well.

3.2. Names and surnames of the candidates to become members of a collegial body, information about their education, qualification, professional background, positions taken and potential conflicts of interest should be disclosed early enough before the general shareholders' meeting so that the shareholders would have sufficient time to make an informed voting decision. All factors affecting the candidate's independence, the sample list of which is set out in Recommendation 3.7, should be also disclosed. The collegial body should also be informed on any subsequent changes in the provided information. The collegial body should, on yearly basis, collect data provided in this item on its members and disclose this in the company's annual report.	Yes	Information on the positions taken by the members of the board or their participation in other companies' operation is continuously collected and compiled, and at the end of every year it is revised and presented in the reports prepared by the Company.
3.3. Should a person be nominated for members of a collegial body, such nomination should be followed by the disclosure of information on candidate's particular competences relevant to his/her service on the collegial body. In order shareholders and investors are able to ascertain whether member's competence is further relevant, the collegial body should, in its annual report, disclose the information on its composition and particular competences of individual members which are relevant to their service on the collegial body.	Yes	The information on the composition of the Board is provided in the semi-annual and annual reports prepared by the Company.
3.4 In order to maintain a proper balance in terms of the current qualifications possessed by its members, the desired composition of the collegial body shall be determined with regard to the company's structure and activities, and have this periodically evaluated. The collegial body should ensure that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to complete their tasks properly. The members of the audit committee, collectively, should have a recent knowledge and relevant experience in the fields of finance, accounting and/or audit for the stock exchange listed companies. At least one of the members of the remuneration committee should have knowledge of and experience in the field of remuneration policy.	Yes	The Board is formed considering the Company's structure and activities, the experience of its members, diversity of knowledge related to the Company activities allow doing the work properly.
3.5. All new members of the collegial body should be offered a tailored program focused on introducing a member with his/her duties, corporate organization and activities. The collegial body should conduct an annual review to identify fields where its members need to update their skills and knowledge.	Yes	The new members are introduced with the Company and the regulations of the Board. The members of the Board constantly participate at various refresher courses and seminars where they collect information about the essential changes in the legislation regulating the Company's activities.
3.6. In order to ensure that all material conflicts of interest related with a member of the collegial body are resolved	No	Historically the Company exhibits the situation that the sufficiency of the independent members has not been considered. As the trading of the Company shares takes place actively and the minority shareholders take an active part in the management of the Company, the Company will seek implementation of this principle.

properly, the collegial body should comprise a sufficient4
number of independent5 members.
3.7. A member of the collegial body should be considered to	No
be independent only if he is free of any business, family or		All five members of the Board are related to the largest
other relationship with the company, its controlling		shareholder - Panevėžio keliai AB. The candidates to become
shareholder or the management of either, that creates a		the members of the Board are proposed to the Shareholders'
conflict of interest such as to impair his judgment. Since all		Meeting by Panevėžio keliai AB, which holds 49.78 per cents
cases when member of the collegial body is likely to become		of the authorised capital of the Company.
dependant are impossible to list, moreover, relationships and
circumstances associated with the determination of
independence may vary amongst companies and the best
practices of solving this problem are yet to evolve in the
course of time, assessment of independence of a member of
the collegial body should be based on the contents of the
relationship and circumstances rather than their form. The
key criteria for identifying whether a member of the collegial
body can be considered to be independent are the following:
1) he/she is not an executive director or member of the
board (if a collegial body elected by the general
shareholders' meeting is the supervisory board) of the
company or any associated company and has not been
such during the last five years;
2) he/she is not an employee of the company or some any
company and has not been such during the last three
years, except for cases when a member of the collegial
body does not belong to the senior management and
was elected to the collegial body as a representative of
the employees;
3) he/she is not receiving or has been not receiving
significant additional remuneration from the company
or associated company other than remuneration for the
office in the collegial body. Such additional
remuneration includes participation in share options or
some other performance based pay systems; it does not
include compensation payments for the previous office
in the company (provided that such payment is no way
related with later position) as per pension plans
(inclusive of deferred compensations);
4) he/she is not a controlling shareholder or
representative of such shareholder (control as defined in the Council Directive 83/349/EEC Article 1 Part 1); 5) he/she does not have and did not have any material business relations with the company or associated

⁴ The Code does not provide for a concrete numbers to comprise a collegial body. Many codes in foreign countries fix a concee number of independent members (e.g. at least 1/3 or 1/2 of the members of the collegial body to comrise the ollegial body. However, having regard to the institution of independent members in Lithunia and potential problems in finding and electing a concete number of independent members, the Code provides for a more flexible wording and allows the ompanies themselves to decide what number of independent members is sufficient. Of course, a larger number of independent mervorsion a ollegial body is encouraged and will constitute an example of more suitable corporate governance.

⁵ If should be noted that in some companies all members of the collegial body may, due to a very small number of minority shareholders, be elected by the majority shareholder or a few major shareholders. But even a member of the collegial body shoulded majority shareholders may be considered independent if he/she meets the independence criteria set out in the Code.

company within the past year directly or as a partner, shareholder, director or superior employee of the subject having such relationship. A subject is considered to have business relations when it is a major supplier or service provider (inclusive of financial, legal, counseling and consulting services), major client or organization receiving significant payments from the company or its group; 6) he/she is not and has not been, during the last three years, partner or employee of the current or former external audit company of the company or associated company; 7) he/she is not an executive director or member of the board in some other company where executive director of the company or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) is non-executive director or member of the supervisory board, he/she may not also have any other material relationships with executive directors of the company that arise from their participation in activities of other companies or bodies; 8) he/she has not been in the position of a member of the collegial body for over than 12 years; 9) he/she is not a close relative to an executive director or member of the board (if a collegial body elected by the general shareholders' meeting is the supervisory board) or to any person listed in above items 1 to 8. Close relative is considered to be a spouse (common- law spouse), children and parents.
3.8. The determination of what constitutes independence is fundamentally an issue for the collegial body itself to determine. The collegial body may decide that, despite a particular member meets all the criteria of independence laid down in this Code, he cannot be considered independent due to special personal or company-related circumstances.	Not applicable	The recommendation provided in 3.7 is not complied with.
3.9. Necessary information on conclusions the collegial body has come to in its determination of whether a particular member of the body should be considered to be independent should be disclosed. When a person is nominated to become a member of the collegial body, the company should disclose whether it considers the person to be independent. When a particular member of the collegial body does not meet one or more criteria of independence set out in this Code, the company should disclose its reasons for nevertheless considering the member to be independent. In addition, the company should annually disclose which members of the collegial body it considers to be independent.	No	The practice of independence assessment and disclosure for the members of the Board is not applied at the Company. The recommendation provided in 3.7 is not complied with.
3.10. When one or more criteria of independence set out in this Code has not been met throughout the year, the company should disclose its reasons for considering a particular member of the collegial body to be independent. To ensure accuracy of the information disclosed in relation with the independence of the members of the collegial body, the company should require independent members to have their independence periodically re-confirmed.	No	The practice of independence assessment of and disclosure for the members of the Board is not applied at the Company. The recommendation provided in 3.7 is not complied with.

3.11. In order to remunerate members of a collegial body for	Yes	The Shareholders' Meeting approves the amount of tantiems
their work and participation in the meetings of the collegial		allocated to the members of the Board. Referring to the
body, they may be remunerated from the company's funds.6.		International Accounting Standards, tantiems for the members
The general shareholders' meeting should approve the		of the Board are attributed to operating expenses of the
amount of such remuneration.		Company.

Principle IV: The duties and liabilities of a collegial body elected by the general shareholders' meeting

The corporate governance framework should ensure proper and effective functioning of the collegial by the general shareholders' meeting, and the powers granted to the collegial body should ensure effective monitoring ' of the company's management bodies and protection of interests of all the company's shareholders.

4.1. The collegial body elected by the general shareholders' meeting (hereinatter in this Principle referred to as the 'collegial body') should ensure integrity and transparency of the company's financial statements and the control system. The collegial body should issue recommendations to the company's management bodies and monitor and control the company's management performance.8	Yes	The Board hears the information on the economic activities of Company presented by the Chief Executive Officer and Chief Accountant. It analyses their performance, evaluates its efficiency and, if required, makes recommendations. The Board analyses, evaluates the draft Annual Financial Statement and draft Profit (Loss) Statement of the Company, and presents them to the General Shareholders' Meeting.
4.2. Members of the collegial body should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders with due regard to the interests of employees and public welfare. Independent members of the collegial body should (a) under all circumstances maintain independence of their analysis, decision-making and actions (b) do not seek and accept any unjustified privileges that might compromise their independence, and (c) clearly express their objections should a member consider that decision of the collegial body is against the interests of the company. Should a collegial body have passed decisions independent member has serious doubts about, the member should make adequate conclusions. Should an independent member resign from his office, he should explain the reasons in a letter addressed to the collegial body or audit committee and, if necessary, respective company-not-pertaining body (institution).	Yes	Though historically the Company exhibits the situation that the sufficiency of the independent members has not been considered, based on the data available to the Company, all members of the Board act in good will in respect of the Company, they are guided by the interests of the Company and not those of their own or any third parties, the principles of good faith and reasonableness.

7 See Footnote 3.

⁶ It is notable that currently it is not yet completely clear, in what form members of the board may be remuserated for their work in these bodies. The Law on Companies of the Republic of Lithuania (Official Guzette, 2003, No 123-5574) provides that members of the supervisory board or the board may be remunerated for their work in the board by payment of annual bonuses (tantiems) in the manner prescribed by Article 59 of this Law, i.e. from the company's profit. The current wording, contrary to the wording effective before 1 January 2004, eliminates the exclusive requirement that annual be the only form of the company's compensation to members of the supervisory board or the board. So it seems that the Law contains so probibition to remunerate members of the supervisory board for their work in other forms, besides bonuses, although this possibility is not expressly stated either.

⁸ See Footnote 3. In the event the collegial body elected by the general shareholders' meeting is the board, it should provide recommendations to the company's single-person body of management, i.e. the company's chief executive officer.

4.3. Each member should devote sufficient time and attention to perform his duties as a member of the collegial body. Each member of the collegial body should limit other professional obligations of his (in particular any directorships held in other companies) in such a manner they do not interfere with proper performance of duties of a member of the collegial body. In the event a member of the collegial body should be present in less than a half of the meetings of the collegial body throughout the financial year of the company, shareholders of the company should be notified.	Yes	The members of the Board participated at the meetings of the Board and each of them devoted sufficient time to perform the duties as a member of the Board. In all meetings of the Board taken place in 2017 there was quorum prescribed by the legislation. The members of the Board participating at the meeting are recorded in the Minutes of the Meeting. 13 meetings of the Board took place in 2017. Three members of the Board participated in all meetings and two members of the Board participated in 12 meetings of the Board.
4.4. Where decisions of a collegial body may have a different effect on the company's shareholders, the collegial body should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed on the company's affairs, strategies, risk management and resolution of conflicts of interest. The company should have a clearly established role of members of the collegial body when communicating with and committing to shareholders.	Yes	The management bodies of the Company follow the principles of communication with the shareholders established by the laws.
4.5. It is recommended that transactions (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions), concluded between the company and its shareholders, members of the supervisory or managing bodies or other natural or legal persons that exert or may exert influence on the company's management should be subject to approval of the collegial body. The decision concerning approval of such transactions should be deemed adopted only provided the majority of the independent members of the collegial body voted for such a decision.	Not applicable	Transactions with the members of managing bodies are not concluded. Only usual activity transactions are concluded with the main shareholder.

⁹ It is notable that companies can make this requirement more stringent and provide that shareholders should failure to participate at the meetings of the collegial body if, for instance, a member of the collecial body participated at less than 2/3 1/4 0 the meetings. Such measures, which ensure active participation in the meetings of the collegial body, are encouraged and will constitute an example of more suitable corporate governance.

4.6. The collegial body should be independent in passing decisions that are significant for the company's operations and strategy. Taken separately, the collegial body should be independent of the company's management bodies10. Members of the collegial body should act and pass decisions without an outside influence from the persons who have elected it. Companies should ensure that the collegial body and its committees are provided with sufficient administrative and financial resources to discharge their duties, including the right to obtain, in particular from employees of the company, all the necessary information or to seek independent legal, accounting or any other advice on issues pertaining to the competence of the collegial body and its committees. When using the services of a consultant with a view to obtaining information on market standards for remuneration systems, the remuneration committee should ensure that the consultant concerned does not at the same time advice the human resources department, executive directors or collegial management organs of the company concerned. 4.7. Activities of the collegial body should be organized in a	Yes No	The collegial management body, which to a wide extent is dependent on the main shareholder acting in the similar business, passes decisions considering the interests only of the Company. The Company provides the Board with sufficient resources required for their function performance, and the employees of the Company who are responsible for the areas of operation under discussion participate at the meeting of the Board and present all necessary information. The collegial body of the Company's management is the Board
manner that independent members of the collegial body could have major influence in relevant areas where chances of occurrence of conflicts of interest are very high. Such areas to be considered as highly relevant are issues of nomination of company's directors, determination of directors' remuneration and control and assessment of company's audit. Therefore when the mentioned issues are attributable to the competence of the collegial body, it is recommended that the collegial body should establish nomination, remuneration, and audit committees11. Companies should ensure that the functions attributable to the nomination, remuneration, and audit committees are carried out. However they may decide to merge these functions and set up less than three committees. In such case a company should explain in detail reasons behind the selection of alternative approach and how the selected approach complies with the objectives set forth for the three different committees. Should the collegial body of the company comprise small number of members, the functions assigned to the three committees may be performed by the collegial body itself, provided that it meets composition requirements advocated for the committees and that adequate information is provided in this respect. In such case provisions of this Code relating to the committees of the collegial body (in particular with respect to their role, operation, and transparency) should apply, where relevant, to the collegial body as a whole.		performing the functions of Nomination Committee and the Remuneration Committees. The Board chooses and approves the candidacy of the Chief Executive Officer of the Company - Managing Director, and agrees with the candidacies of Directors of the Company proposed by the Managing Director. It continuously evaluates their experience, professional capabilities and implementation of the Company's strategic goals, hears out their reports. The Board selects the candidate for the external audit and provides proposals to the General Shareholders' Meeting for approval. On 21 April 2017 the Audit Committee was elected during the Annual General Shareholders' Meeting.

¹⁰ In the event the collegial body elected by the general shareholders' meeting is the recommendation concerning its independence from the company's management bodies applies to the independence from the company's chief executive officer.

¹¹ The Law on Audit of the Republic of Lithuania (Official Gazette, 2008, No 82-53233) determines that an Audit Committee shall be formed in each public interest entity (including, but not limited to, the public companies whose securities are traded in the engulated market of the Republic of Lithuania and/or any other member state).

4.8. The key objective of the committees is to increase efficiency of the activities of the collegial body by ensuring that decisions are based on due consideration, and to help organize its work with a view to ensuring that the decisions it takes are free of material conflicts of interest. Committees should exercise independent judgement and integrity when exercising its functions as well as present the collegial body with recommendations concerning the decisions of the collegial body. Nevertheless the final decision shall be adopted by the collegial body. The recommendation on creation of committees is not intended, in principle, to constrict the competence of the collegial body or to remove the matters considered from the purview of the collegial body itself, which remains fully responsible for the decisions taken in its field of competence.	Yes/No	See commentary on the recommendation provided in 4.7. The recommendation is implemented to the extent it is related to the activities of the Audit Committee in the Company.
4.9. Committees established by the collegial body should normally be composed of at least three members. In companies with small number of members of the collegial body, they could exceptionally be composed of two members. Majority of the members of each committee should be constituted from independent members of the collegial body. In cases when the company chooses not to set up a supervisory board, remuneration and audit committees should be entirely comprised of non-executive directors. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals. Chairmanship and membership of the committees should be decided with due regard to the need to ensure that committee membership is refreshed and that undue reliance is not placed on particular individuals.	Yes/No	See commentary on the recommendation provided in 4.7. The Audit Committee is composed of three members. Two member conform to the requirements for independence. The Audit Committee is elected for the period of one year.
4.10. Authority of each of the committees should be determined by the collegial body. Committees should perform their duties in line with authority delegated to them and inform the collegial body on their activities and performance on regular basis. Authority of every committee stipulating the role and rights and duties of the committee should be made public at least once a year (as part of the information disclosed by the company annually on its corporate governance structures and practices). Companies should also make public annually a statement by existing committees on their composition, number of meetings and attendance over the year, and their main activities. Audit committee should confirm that it is satisfied with the independence of the audit process and describe briefly the actions it has taken to reach this conclusion.	Yes	See commentary on the recommendation 4.7. The authority, rights and duties of the Audit Committee are determined by the Rules of the Audit Committee following the applicable legislation, and the authority, rights and duties of the Audit Committee are approved by the General Shareholders' meeting. The authority, rights and duties of the Audit Committee do not differ from those determined by the legislation. The approved rules of the Audit Committee are made public on the Company's website.
4.11. In order to ensure independence and impartiality of the committees, members of the collegial body that are not members of the committee should commonly have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or demand participation in the meeting of particular officers or experts. Chairman of each of the committees should have a possibility to maintain direct communication with the shareholders. Events when such are to be performed should be specified in the regulations for committee activities.	Yes	See commentary on the recommendation provided in 4.7. Applicable to the Audit Committee. The members of the Board, Chief Executive Officer, Finance Director, Company employees may be invited to the meetings of the Audit Committee.

4.12. Nomination Committee.	Not	The Nomination Committee is not formed.
4.12.1. Key functions of the nomination committee should be	applicable	The collegial management body of the Company, the Board,
the following:		performs the function of the Nomination Committee.
1) identify and recommend, for the approval of the collegial		(See commentary on the recommendation provided in 4.7.)
body, candidates to fill board vacancies. The nomination
committee should evaluate the balance of skills, knowledge
and experience on the management body, prepare a
description of the roles and capabilities required to assume a
particular office, and assess the time commitment expected.
Nomination committee can also consider candidates to
members of the collegial body delegated by the shareholders
of the company;
2) assess on regular basis the structure, size, composition and
performance of the supervisory and management bodies, and
make recommendations to the collegial body regarding the
means of achieving necessary changes;
3) assess on regular basis the skills, knowledge and
experience of individual directors and report on this to the
collegial body;
4) properly consider issues related to succession planning;
5) review the policy of the management bodies for selection
and appointment of senior management.
4.12.2. Nomination committee should consider proposals by
other parties, including management and shareholders. When
dealing with issues related to executive directors or members
of the board (if a collegial body elected by the general
shareholders' meeting is the supervisory board) and senior
management, chief executive officer of the company should
be consulted by, and entitled to submit proposals to the
nomination committee.
4.13. Remuneration Committee.	Not	The committee is not formed.
4.13.1. Key functions of the remuneration committee should	applicable
be the following:		The collegial management body of the Company, the Board,
1) make proposals, for the approval of the collegial body, on		performs the function of the Nomination Committee.
the remuneration policy for members of management bodies		(See commentary on the recommendation provided in 4.7.)
and executive directors. Such policy should address all forms
of compensation, including the fixed remuneration,
remuneration performance-based schemes,
pension arrangements, and termination payments. Proposals
considering performance-based remuneration schemes
should be accompanied with recommendations on the related
objectives and evaluation criteria, with a view to properly
aligning the pay of executive director and members of the
management bodies with the long-term interests of the
shareholders and the objectives set by the collegial body;
2) make proposals to the collegial body on the individual
remuneration for executive directors and member of
management bodies in order their remunerations are
consistent with company's remuneration policy and the
evaluation of the performance of these persons concerned. In
doing so, the committee should be properly informed on the
total compensation obtained by executive directors and
members of the management bodies from the affiliated
companies;
3) ensure that remuneration of individual executive directors
or members of management body is proportionate to the
remuneration of other executive directors or members of management body and other staff members of the company;

4) periodically review the remuneration policy for executive
directors or members of management body, including the
policy regarding share-based remuneration, and its
implementation;
5) make proposals to the collegial body on suitable forms of
contracts for executive directors and members of the
management bodies;
6) assist the collegial body in overseeing how the company
complies with applicable provisions regarding the
remuneration-related information disclosure (in particular the
remuneration policy applied and individual remuneration of
directors);
7) make general recommendations to the executive directors
and members of the management bodies on the level and
structure of remuneration for senior management (as defined
by the collegial body) with regard to the respective
information provided by the executive directors and members
of the management bodies.
4.13.2. With respect to stock options and other share-based
incentives which may be granted to directors or other
employees, the committee should:
1) consider general policy regarding the granting of the above
mentioned schemes, in particular stock options, and make
any related proposals to the collegial body;
2) examine the related information that is given in the
company's annual report and documents intended for the use
during the shareholders meeting;
3) make proposals to the collegial body regarding the choice
between granting options to subscribe shares or granting
options to purchase shares, specifying the reasons for its
choice as well as the consequences that this choice has.
4.13.3. Upon resolution of the issues attributable to the
competence of the remuneration committee, the committee
should at least address the chairman of the collegial body
and/or chief executive officer of the company for their opinion on the remuneration of other executive directors or
members of the management bodies.
4.13.4. The remuneration committee should report on the
exercise of its functions to the shareholders and be present at
the annual general meeting for this purpose.

4.14. Audit Committee.

4.14.1. Key functions of the audit committee should be the following:

1) observe the integrity of the financial information provided by the company, in particular by reviewing the relevance and consistency of the accounting methods used by the company and its group (including the criteria for the consolidation of the accounts of companies in the group);

2) at least once a year review the systems of internal control and risk management to ensure that the key risks (inclusive of the risks in relation with compliance with existing laws and regulations) are properly identified, managed and reflected in the information provided;

3) ensure the efficiency of the internal audit function, among other things, by making recommendations on the selection, appointment, reappointment and removal of the head of the internal audit department and on the budget of the department, and by monitoring the responsiveness of the management to its findings and recommendations. Should there be no internal audit authority in the company, the need for one should be reviewed at least annually;

4) make recommendations to the collegial body related with selection, appointment, reappointment and removal of the external auditor (to be done by the general shareholders' meeting) and with the terms and conditions of his engagement. the committee should investigate situations that lead to a resignation of the audit company or auditor and make recommendations on required actions in such situations:

5) monitor independence and impartiality of the external auditor, in particular by reviewing the audit company's compliance with applicable guidance relating to the rotation of audit partners, the level of fees paid by the company, and similar issues. In order to prevent occurrence of material conflicts of interest, the committee, based on the auditor's disclosed inter alia data on all remunerations paid by the company to the auditor and network, should at all times monitor nature and extent of the non-audit services. Having regard to the principals and guidelines established in the 16 May 2002 Commission Recommendation 2002/590/EC, the committee should determine and apply a formal policy establishing types of non-audit services that are (a) excluded, (b) permissible only after review by the committee, and (c) permissible without referral to the committee;

6) review efficiency of the external audit process and responsiveness of management to recommendations made in the external auditor's management letter.

4.14.2. All members of the committee should be furnished with complete information on particulars of accounting, financial and other operations of the company. Company's management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches. In such case a special consideration should be given to company's operations in offshore centers and/or activities carried out through special purpose vehicles (organizations) and justification of such operations.

Yes

On 21 April 2017, the Audit Committee was elected during the Annual General Shareholders' Meeting. The Audit Committee is composed of three members, two of which are independent. The Audit Committee organizes its work following the rules of the Audit Committee approved at the Shareholders' Meeting.

4.14.3. The audit committee should decide whether
participation of the chairman of the collegial body, chief
executive officer of the company, chief financial officer (or
superior employees in charge of finances, treasury and
accounting), or internal and external auditors in the meetings
of the committee is required (if required, when). The
committee should be entitled, when needed, to meet with any
relevant person without executive directors and members of
the management bodies present.
4.14.4. Internal and external auditors should be secured with
not only effective working relationship with management,
but also with free access to the collegial body. For this
purpose the audit committee should act as the principal
contact person for the internal and external auditors.
4.14.5. The audit committee should be informed of the
internal auditor's work program, and should be furnished
with internal audit's reports or periodic summaries. The audit
committee should also be informed of the work program of
the external auditor and should be furnished with report
disclosing all relationships between the independent auditor
and the company and its group. The committee should be
timely furnished information on all issues arising from the
audit.
4.14.6. The audit committee should examine whether the
company is following applicable provisions regarding the
possibility for employees to report alleged significant
irregularities in the company, by way of complaints or
through anonymous submissions (normally to an independent
member of the collegial body), and should ensure that there
is a procedure established for proportionate and independent
investigation of these issues and for appropriate follow-up
action.
4.14.7. The audit committee should report on its activities to
the collegial body at least once in every six months, at the
time the yearly and half-yearly statements are approved.
4.15. Every year the collegial body should conduct the	No	There is no practice for assessment of internal activities and
assessment of its activities. The assessment should include
evaluation of collegial body's structure, work organization		informing about that available at the Company.
and ability to act as a group, evaluation of each of the
collegial body member's and committee's competence and
work efficiency and assessment whether the collegial body
has achieved its objectives. The collegial body should, at least
once a year, make public (as part of the information the
company annually discloses on its management structures
and practices) respective information on its internal
organization and working procedures, and specify what
material changes were made as a result of the assessment of
the collegial body of its own activities.

Principle V: The working procedure of the company's collegial bodies

The working procedure of supervisors and management bodies established in the company should ensure efficient operation of these bodies and decision-making and encourage active co-operation between the company succession

5.1. The company's supervisory and management bodies (hereinafter in this Principle the concept 'collegial bodies' covers both the collegial bodies of supervision and the collegial bodies of management) should be chaired by chairpersons of these bodies. The chairperson of a collegial body is responsible for proper convocation of the collegial body meetings. The chairperson should ensure that information about the meeting being convened and its agenda are communicated to all members of the body. The chairperson of a collegial body should ensure appropriate conducting of the meetings of the collegial body. The chairperson should ensure order and working atmosphere during the meeting.	Yes	The meetings of the Board are chaired by the Chairperson. The Board Secretary assists in arranging the work of the Board.
5.2. It is recommended that meetings of the company's collegial bodies should be carried out according to the schedule approved in advance at certain intervals of time. Each company is free to decide how often to convene meetings of the collegial bodies, but it is recommended that these meetings should be convened at such intervals, which would guarantee an interrupted resolution of the essential corporate governance issues. Meetings of the company's supervisory board should be convened at least once in a quarter, and the company's board should meet at least once a month 12.	Yes	The meetings of the Company's collegial body, the Board, are carried out based on the periodicity approved in advance and in accordance with the planned agendas.
5.3. Members of a collegial body should be notified about the meeting being convened in advance in order to allow sufficient time for proper preparation for the issues on the agenda of the meeting and to ensure fruitful discussion and adoption of appropriate decisions. Alongside with the notice about the meeting being convened, all the documents relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body are present or certain issues of great importance to the company require immediate resolution.	Yes	Three days before to the meeting date each member of the Board can familiarize himself/herself with the documents of the meeting, reports, and draft resolutions.
5.4. In order to co-ordinate operation of the company's collegial bodies and ensure effective decision-making process, chairpersons of the company's collegial bodies of supervision and management should closely co-operate by co-coordinating dates of the meetings, their agendas and resolving other issues of corporate governance. Members of the company's board should be free to attend meetings of the company's supervisory board, especially where issues concerning removal of the board members, their liability or remuneration are discussed.	No	The Company is not able to implement this recommendation because the Supervisory Board is not set up.

¹² The frequency of meetings of the collegial body provided for in the recommendation must be applied in those cases when both additional collegial bodies are formed one provided and the supervisory board. In the event only one additional collegia body is formed in the company, the fequency of its meetings may be as established for the supervisory board, i.e. at least once in quarter.

Principle VI: The equitable treatment of shareholders and shareholder rights

The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. The corporate governance framework should protect the rights of the shareholders,

6.1. It is recommended that the company's capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all their holders.	Yes	The Company's capital consists of ordinary registered shares granting equal personal and non-property rights to their owners.
6.2. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares.	Yes
6.3. Transactions that are important to the company and its shareholders, such as transfer, investment, and pledge of the company's assets or any other type of encumbrance should be subject to approval of the general shareholders' meeting. 13 All shareholders should be furnished with equal opportunity to familiarize with and participate in the decision-making process when significant corporate issues, including approval of transactions referred to above, are discussed.	No	The Articles of Association do not assign the decision making to the General Shareholders' Meeting if they are related to the long-term assets , the balance sheet value of which is higher than 1/20 of the Company's authorized capital, investment transfer, rent, mortgage, purchase, etc.
6.4. Procedures of convening and conducting a general shareholders' meeting should ensure equal opportunities for the shareholders to effectively participate at the meetings and should not prejudice the rights and interests of the shareholders. The venue, date, and time of the shareholders' meeting should not hinder wide attendance of the shareholders.	Yes	The place, date and time of the General Shareholders' Meeting are chosen in a manner ensuring the possibilities to all shareholders to effectively participate at the Shareholders' Meeting. The shareholders are informed about the convening of the General Shareholders' Meeting in public and no later than 21 days prior to the Shareholders' Meeting are allowed to familiarize themselves with the draft resolutions.
6.5. If is possible, in order to ensure shareholders living abroad the right to access to the information, it is recommended that documents on the course of the general shareholders' meeting should be placed on the publicly accessible website of the company not only in Lithuanian language, but in English and /or other foreign languages in advance. It is recommended that the minutes of the general shareholders' meeting after signing them and/or adopted resolutions should be also placed on the publicly accessible website of the company. Seeking to ensure the right of foreigners to familiarize with the information, whenever feasible, documents referred to in this recommendation should be published in Lithuanian, English and/or other foreign languages. Documents referred to in this recommendation may be published on the publicly accessible website of the company to the extent that publishing of these documents is not detrimental to the company or the company's commercial secrets are not revealed.	Yes	The notices on the General Shareholders' Meeting to be convened, draft resolutions and documents proposed by the Board to the General Shareholders' Meeting as well as the resolutions adopted and documents approved are made public and are accessible on the Company's website. All information and documents for investors are made public in both Lithuanian and English through the information system of NADAQ OMX Vilnius and on the Company's website.

¹³ The Law on Companies of the Republic of Lithuania (Official Gazette, 2003, No 123-5574) no longer assigns resolutions concerning the investmant, transfer, lease, mortgage of acquisition of the long-terms assets accounting for more than 1/20 of the company's authorized capital to the competence of the general shares in anim, However, transactions that are important and material for the company's activity should be considered and approved by the general shareholders' meeting. The companies computibition to this the metings, someonies an foo to encumber the company's activity and escape an unreasonably frequent consideration of transcions at the meetings companies are free to establish their own criterial transactions, which are subject to the approval of the meeting While establishing these criterial transactions, companies may follow the criteria set out in times 3, 4, 5 and o of paragement of Article 34 of the Law on Companies or derogate from them in view of their operation and their attempt to ensur uninterrupted, efficient functioning of the company.

6.6. Shareholders should be furnished with the opportunity to vote in the general shareholders' meeting in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot.	Yes	Each shareholder can participate in the meeting in person or delegating the participation to some other person. The Company allows the shareholders voting by filling in the general voting ballot as prescribed by the law.
6.7. With a view to increasing the shareholders' opportunities to participate effectively at shareholders' meetings, the companies are recommended to expand use of modern technologies by allowing the shareholders to participate and vote in general meetings via electronic means of communication. In such cases security of transmitted information and a possibility to identify the identity of the participating and voting person should be guaranteed. Moreover, companies could furnish its shareholders, especially shareholders living abroad, with the opportunity to watch shareholder meetings by means of modern technologies.	No	The Company does not comply with the provisions of this recommendation, as it is not possible to ensure text protection and identify the signature of a voting person. Furthermore, in the Company's opinion, so far there was no need for any modern technologies at the Shareholders' Meeting for the purposes of participation and voting vie electronic means of communication.

Principle VII: The avoidance of conflicts of interest and their disclosure

The corporate governance framework should encourage members of the corporate bodies to avoid conflicts of interest and assure transparent and effective mechanism of conflicts of interest regarding members of the corporate bodies

7.1. Any member of the company's supervisory and management body should avoid a situation, in which his/her personal interests are in conflict or may be in conflict with the company's interests. In case such a situation did occur, a member of the company's supervisory and management body should, within reasonable time, inform other members of the same collegial body or the company's body that has elected him/her, or to the company's shareholders about a situation of a conflict of interest, indicate the nature of the conflict and value, where possible.	Yes	The members of the management bodies act in such a manner that there was no conflict of interests, therefore in practice there was not a single event thereof.
7.2. Any member of the company's supervisory and management body may not mix the company's assets, the use of which has not been mutually agreed upon, with his/her personal assets or use them or the information which he/she learns by virtue of his/her position as a member of a corporate body for his/her personal benefit or for the benefit of any third person without a prior agreement of the general shareholders' meeting or any other corporate body authorized by the meeting.	Yes
7.3. Any member of the company's supervisory and management body may conclude a transaction with the company, a member of a corporate body of which he/she is. Such a transaction (except insignificant ones due to their low value or concluded when carrying out routine operations in the company under usual conditions) must be immediately reported in writing or orally, by recording this in the minutes of the meeting, to other members of the same corporate body or to the corporate body that has elected him/her or to the company's shareholders. Transactions specified in this recommendation are also subject to recommendation 4.5.	Not applicable	No transactions are concluded with the members of the Company's management bodies.
7.4. Any member of the company's supervisory and management body should abstain from voting when decisions	Yes

<-- PDF CHUNK SEPARATOR -->

concerning transactions or other issues of personal or '
business interest are voted on.

Principle VIII: Company's remuneration policy

Remuneration policy and procedure for approval, revision and discloser of directors' remuneration established in the company should prevent potential conficity referent in determining remuneration of directors, in addition it should ensure publicity and transparency both of company's remuneration policy and remuneration of directors.

8.1. A company should make a public statement of the company's remuneration policy (hereinafter the remuneration statement) which should be clear and easily understandable. This remuneration statement should be published as a part of the company's annual statement as well as posted on the company's website.	No	The Company does not prepare and make public the remuneration statement. In the opinion of the Company, such information should not be made public commercially. Following the procedure prescribed by the legal acts, in the Annual Report the Company provides information on the total amounts calculated to the members of the Board, the Chief Executive Officer and Chief Accountant over the accounting period. The Company observes the rules for the directors' remuneration, which are approved by the Board.
8.2. Remuneration statement should mainly focus on directors' remuneration policy for the following year and, if appropriate, the subsequent years. The statement should contain a summary of the implementation of the remuneration policy in the previous financial year. Special attention should be given to any significant changes in company's remuneration policy as compared to the previous financial year.	No	Recommendations provided in 8.1 are not complied with.
8.3. Remuneration statement should leastwise include the following information: 1) Explanation of the relative importance of the variable and non-variable components of directors' remuneration; 2) sufficient information on performance criteria that entitles directors to share options, shares or variable components of remuneration; 3) an explanation how the choice of performance criteria contributes to the long-term interests of the company; 4) an explanation of the methods, applied in order to determine whether performance criteria have been fulfilled; 5) sufficient information on deferment periods with regard to variable components of remuneration; 6) sufficient information on the linkage between the remuneration and performance; 7) the main parameters and rationale for any annual bonus scheme and any other non-cash benefits; 8) sufficient information on the policy regarding termination payments; 9) Sufficient information with regard to vesting periods for share-based remuneration, as referred to in point 8.13 of this code; 10) sufficient information on the policy regarding retention of shares after vesting, as referred to in point 8.15 of this code; 11) sufficient information on the composition of peer groups of companies the remuneration policy of which has been examined in relation to the establishment of the remuneration policy of the company concerned;	No	Recommendations provided in 8.1 are not complied with.

description of the main characteristics 12) a
of supplementary pension or early retirement schemes for
directors;
13) remuneration statement should not include
commercially sensitive information.
8.4. Remuneration statement should also summarize and
explain company's policy regarding the terms of the contracts	No	The contracts with the Chief Executive Officers are executed
executed with executive directors and members of the		and approved by the Board. These contracts are confidential and
management bodies. It should include, inter alia, information		their content as well as provisions thereof are not made public.
on the duration of contracts with executive directors and
members of the management bodies, the applicable notice
periods and details of provisions for termination payments
linked to early termination under contracts for executive
directors and members of the management bodies.
8.5. Remuneration statement should also contain detailed	No	Recommendations provided in 8.1 are not complied with.
information on the entire amount of remuneration, inclusive
of other benefits, that was paid to individual directors over
the relevant financial year. This document should list at least
the information set out in items 8.5.1 to 8.5.4 for each person
who has served as a director of the company at any time
during the relevant financial year.
8.5.1. The following remuneration and/or emoluments-
related information should be disclosed:
1) The total amount of remuneration paid or due to the
director for services performed during the relevant financial
year, inclusive of, where relevant, attendance fees fixed by
the annual general shareholders meeting;
2) the remuneration and advantages received from any
undertaking belonging to the same group;
3) the remuneration paid in the form of profit sharing and/or
bonus payments and the reasons why such bonus payments
and/or profit sharing were granted;
4) if permissible by the law, any significant additional
remuneration paid to directors for special services outside the
scope of the usual functions of a director;
5) compensation receivable or paid to each former executive
director or member of the management body as a result of his
resignation from the office during the previous financial year;
6) total estimated value of non-cash benefits considered as
remuneration, other than the items covered in the above
points.
8.5.2. As regards shares and/or rights to acquire share options
and/or all other share-incentive schemes, the following
information should be disclosed:
1) the number of share options offered or shares granted by
the company during the relevant financial year and their
conditions of application;
2) the number of shares options exercised during the relevant
financial year and, for each of them, the number of shares
involved and the exercise price or the value of the interest in
the share incentive scheme at the end of the financial year;
3) the number of share options unexercised at the end of the
financial year; their exercise price, the exercise date and the
main conditions for the exercise of the rights;
4) all changes in the terms and conditions of existing share
options occurring during the financial year.
8.5.3. The following supplementary pension schemes-related
information should be disclosed:

1) When the pension scheme is a defined-benefit scheme.
changes in the directors' accrued benefits under that scheme
during the relevant financial year;
2) when the pension scheme is defined-contribution scheme,
detailed information on contributions paid or payable by the
company in respect of that director during the relevant
financial year.
8.5.4. The statement should also state amounts that the
company or any subsidiary company or entity included in the
consolidated annual financial report of the company has paid
to each person who has served as a director in the company
at any time during the relevant financial year in the form of
loans, advance payments or guarantees, including the amount
outstanding and the interest rate.
8.6. Where the remuneration policy includes variable	Yes	The rules for the directors' remuneration approved by the Board
components of remuneration, companies should set limits on		provides for the evaluation criteria of their performance results.
the variable component (s). The non-variable component of
remuneration should be sufficient to allow the company to
withhold variable components of remuneration when
performance criteria are not met.
8.7. Award of variable components of remuneration should be subject to predetermined and measurable performance	Yes
criteria.
8.8. Where a variable component of remuneration is awarded,	Yes
a major part of the variable component should be deferred for
a minimum period of time. The part of the variable
component subject to deferment should be determined in
relation to the relative weight of the variable component
compared to the non-variable component of remuneration.
8.9. Contractual arrangements with executive or managing	Not	The Company did not pay any variable components of
directors should include provisions that permit the company	applicable	remuneration which had been awarded on the basis of data
to reclaim variable components of remuneration that were		which subsequently proved to be manifestly misstated.
awarded on the basis of data which subsequently proved to
be manifestly misstated.
8.10. Termination payments should not exceed a fixed	No	Termination payments are paid following the laws of the
amount or fixed number of years of annual remuneration,		Republic of Lithuania.
which should, in general, not be higher than two years of the
non-variable component of remuneration or the equivalent
thereof.
8.11. Termination payments should not be paid if the	No
termination is due to inadequate performance.		Termination payments are paid following the laws of the Republic of Lithuania.

8.12. The information on preparatory and decision-making processes, during which a policy of remuneration of directors is being established, should also be disclosed. Information should include data, if applicable, on authorities and composition of the remuneration committee, names and surnames of external consultants whose services have been used in determination of the remuneration policy as well as the role of shareholders' annual general meeting.	No	Recommendations provided in 8.1 are not complied with.
8.13. Shares should not vest for at least three years after their award.	Not applicable	Recommendations provided in 8.1 are not complied with. The directors are not remunerated in shears.
8.14. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements should not be exercisable for at least three years after their award. Vesting of shares and the right to exercise share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should be subject to predetermined and measurable performance criteria.	Not applicable	Recommendations provided in 8.1 are not complied with. The directors are not remunerated in shears, shear options or any other right to purchase the Company's shares.
8.15. After vesting, directors should retain a number of shares, until the end of their mandate, subject to the need to finance any costs related to acquisition of the shares. The number of shares to be retained should be fixed, for example, twice the value of total annual remuneration (the non-variable plus the variable components).	Not applicable	Recommendations provided in 8.1 are not complied with. The directors are not remunerated in shears, shear options or any other right to purchase the Company's shares.
8.16. Remuneration of non-executive or supervisory directors should not include share options.	Not applicable	Recommendations provided in item 8.1 are not complied with. The directors are not remunerated in shears, shear options or any other right to purchase the Company's shares.
8.17. Shareholders, in particular institutional shareholders, should be encouraged to attend general meetings where appropriate and make considered use of their votes regarding directors' remuneration.	Not applicable	Recommendations provided in item 8.1 are not complied with.
8.18. Without prejudice to the role and organization of the relevant bodies responsible for setting directors' remunerations, the remuneration policy or any other significant change in remuneration policy should be included into the agenda of the shareholders' annual general meeting. Remuneration statement should be put for voting in shareholders' annual general meeting. The vote may be either mandatory or advisory.	Not applicable	Recommendations provided in item 8.1 are not complied with.

8.19. Schemes anticipating remuneration of directors in	Not
shares, share options or any other right to purchase shares or	applicable	There is no scheme anticipating remuneration of directors in
be remunerated on the basis of share price movements should		shares, share options or any other right to purchase shares or be
be subject to the prior approval of shareholders' annual		remunerated on the basis of share price movements adopted at
general meeting by way of a resolution prior to their adoption.		the Company.
The approval of scheme should be related with the scheme
itself and not to the grant of such share-based benefits under
that scheme to individual directors. All significant changes in
scheme provisions should also be subject to shareholders'
approval prior to their adoption; the approval decision should
be made in shareholders' annual general meeting. In such
case shareholders should be notified on all terms of suggested
changes and get an explanation on the impact of the suggested
changes.
8.20. The following issues should be subject to approval by	Not
the shareholders' annual general meeting:
1) grant of share-based schemes, including share options, to	applicable
directors:
2) determination of maximum number of shares and main
conditions of share granting;
3) the term within which options can be exercised;
4) the conditions for any subsequent change in the exercise of
the options, if permissible by law;
5) all other long-term incentive schemes for which directors
are eligible and which are not available to other employees
of the company under similar terms. Annual general
meeting should also set the deadline within which the body
responsible for remuneration of directors may award
compensations listed in this article to individual directors.
8.21. Should national law or company's Articles of
Association allow, any discounted option arrangement under	Not
which any rights are granted to subscribe to shares at a price	applicable
lower than the market value of the share prevailing on the day
of the price determination, or the average of the market values
over a number of days preceding the date when the exercise
price is determined, should also be subject to the
shareholders' approval.
8.22. Provisions of Articles 8.19 and 8.20 should not be
applicable to schemes allowing for participation under	Not
similar conditions to company's employees or employees of	applicable
any subsidiary company whose employees are eligible to
participate in the scheme and which has been approved in the
shareholders' annual general meeting.

8.23. Prior to the annual general meeting that is intended to
consider decision stipulated in Article 8.19, the shareholders must be provided an opportunity to familiarize with draft resolution and project-related notice (the documents should be posted on the company's website). The notice should contain the full text of the share-based remuneration schemes or a description of their key terms, as well as full names of the participants in the schemes. Notice should also specify the relationship of the schemes and the overall remuneration policy of the directors. Draft resolution must have a clear reference to the scheme itself or to the summary of its key terms. Shareholders must also be presented with information	Not applicable
on how the company intends to provide for the shares
required to meet its obligations under incentive schemes. It should be clearly stated whether the company intends to buy
shares in the market, hold the shares in reserve or issue new ones. There should also be a summary on scheme-related
expenses the company will suffer due to the anticipated application of the scheme. All information given in this
article must be posted on the company's website.

Principle IX: The role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stablished by law and encourage active cooperation between companies and station of company walle, jobs and financial sustainsbility. For the purposes of ve cofitis Principle, the concept 'stake investors, employees, creditors, suppliers, clients, local commons of the purposs of
persons having certain interest in the simpley, credi persons having certain interest in the company concerned.

9.1. The corporate governance framework should assure that the rights of stakeholders that are protected by law are respected. 9.2. The corporate governance framework should create	Yes Yes	The Company respects all rights of the stakeholders, allows the stakeholders to participate in corporate governance in the manner prescribed by law. Detailed information on scheduled events of the shareholders is made public following the procedure prescribed by law, the investors (shareholders) have
conditions for the stakeholders to participate in corporate governance in the manner prescribed by law. Examples of mechanisms of stakeholder participation in corporate governance include: employee participation in adoption of certain key decisions for the company; consulting the employees on corporate governance and other important issues; employee participation in the company's share capital; creditor involvement in governance in the context of the company's insolvency, etc.		sufficient opportunities to familiarize themselves with the relevant information and vote in adopting decisions.
9.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information.	Yes

Principle X: Information disclosure and transparency

The corporate governance framework should ensure that timely and accurate in material information regarding the company, including the financial situation, performance and governance of the company.

10.1. The company should disclose information on: 1) the financial and operating results of the company; 2) company objectives; 3) persons holding by the right of ownership or in control of a block of shares in the company; 4) members of the company's supervisory and management bodies, chief executive officer of the company and their remuneration; 5) material foreseeable risk factors; 6) transactions between the company and connected persons, as well as transactions concluded outside the course of the company's regular operations; 7) material issues regarding employees and other stakeholders; 8) governance structures and strategy. This list should be deemed as a minimum recommendation, while the companies are encouraged not to limit themselves to disclosure of the information specified in this list.	Yes	The information mentioned in this recommendation is disclosed in notifications of material events through the information disclosure and distribution system Globenewswire used by NASDAQ OMX, on the Company's website, in the Company's annual and intermediate information statements to the extent required by the legislation and international financial reporting standards adopted in the European Union.
10.2. It is recommended to the company, which is the parent of other companies, that consolidated results of the whole group to which the company belongs should be disclosed when information specified in item 1 of Recommendation 10.1 is under disclosure.	Yes
10.3. It is recommended that information on the professional background, qualifications of the members of supervisory and management bodies, chief executive officer of the company should be disclosed as well as potential conflicts of interest that may have an effect on their decisions when information specified in item 4 of Recommendation 10.1 about the members of the company's supervisory and management bodies is under disclosure. It is also recommended that information about the amount of remuneration received from the company and other income should be disclosed with regard to members of the company's supervisory and management bodies and chief executive officer as per Principle VIII.	Yes/No	See the commentary to recommendation 3.2, principle III. The Company does not prepare and make public the remuneration statement - see the commentary on recommendation 8.1, principle VIII.
10.4. It is recommended that information about the links between the company and its stakeholders, including employees, creditors, suppliers, local community, as well as the company's policy with regard to human resources, employee participation schemes in the company's share capital, etc. should be disclosed when information specified in item 7 of Recommendation 10.1 is under disclosure.	Yes/No

10.5. Information should be disclosed in such a way that neither shareholders nor investors are discriminated with regard to the manner or scope of access to information. Information should be disclosed to all simultaneously. It is recommended that notices about material events should be announced before or after a trading session on the Vilnius Stock Exchange, so that all the company's shareholders and investors should have equal access to the information and make informed investing decisions.	Yes	The Company presents the information through the information disclosure system Globenewswire used by NASDAQ OMX in the Lithuanian and English languages at the same time. The Company does not disclose any information that might have effect on the price of its securities in the comments, interviews or any other ways before such information is announced through the information system of the Stock Exchange.
10.6. Channels for disseminating information should provide for fair, timely and cost-efficient or in cases provided by the legal acts free of charge access to relevant information by users. It is recommended that information technologies should be employed for wider dissemination of information, for instance, by placing the information on the company's website. It is recommended that information should be published and placed on the company's website not only in Lithuanian, but also in English, and, whenever possible and necessary, in other languages as well.	Yes	The Company plans to sign a contract with Vilnious vertybiniu popieriu birza, AB (Vilnius Stock Exchange) regarding the creation of the column for the link with the investors in the website of the Company where all information published by the information disclosure and distribution system Globenewswire used by NASDAQ OMX will also be published on the Company's website.
10.7. It is recommended that the company's annual reports and other periodical accounts prepared by the company should be placed on the company's website. It is recommended that the company should announce information about material events and changes in the price of the company's shares on the Stock Exchange on the company's website too.	Yes

Principle XI: The selection of the company's auditor

The mechanism of the selection of the company's auditor should ensure of the firm of auditor's conclusion and opinion.

11.1. An annual audit of the company's financial reports and interim reports should be conducted by an independent firm of auditors in order to provide an external and objective opinion on the company's financial statements.	Yes	The audit of the annual financial statement and annual report is conducted by the independent audit company.
11.2. It is recommended that the company's supervisory	Yes
board and, where it is not set up, the company's board should
propose a candidate firm of auditors to the general
shareholders' meeting.
11.3. It is recommended that the company should disclose to	Yes	The firm of auditors, KPMG Baltics UAB, which had
its shareholders the level of fees paid to the firm of auditors		performed the audit for the year 2016, in 2017 provided non-
for non-audit services rendered to the company. This		audit services for 5,375 Eur, VAT excl.
information should be also known to the company's
supervisory board and, where it is not formed, the company's
board upon their consideration which firm of auditors to
propose for the general shareholders' meeting.