AB Panevėžio Statybos Trestas

Consolidated Financial Statements for

the year 2021, prepared in accordance

with International Financial Reporting

Standards as adopted by the European

Union, presented together with the

Independent Auditor’s Report and

Annual Report

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Contents

Parent Company’s Details

Independent Auditor’s Report

Confirmation of the Company’s Responsible Persons

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

The Company’s Annual Report and Consolidated Annual Report,

Corporate Governance Report, Remuneration Report and

Social Responsibility Report

Appendix Concerning Compliance with Governance Code

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Parent Company’s Details

AB Panevėžio Statybos Trestas

Company code: 147732969

Phone: +370 45 505 503

Fax: +370 45 505 520

Address: P. Puzino st. 1, LT-35173 Panevėžys

Board

Justas Jasiūnas, Chairman

Gvidas Drobužas

Kristina Mačiulienė

Lina Simaškienė

Vaidas Grincevičius

Management

Egidijus Urbonas, Managing Director

Auditor

Grant Thornton Baltic UAB

Banks

Luminor Bank AS

SEB Bank AB

Swedbank AB

Šiaulių Bankas AB

OP Corporate Bank Plc Lithuania Branch

Grant Thornton Baltic UAB

Grant Thornton International Ltd narys

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of AB PANEVĖŽIO STATYBOS TRESTAS

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of AB PANEVĖŽIO STATYBOS

TRESTAS and its subsidiaries (hereinafter the ‘Group’), which comprise the consolidated statement of

financial position as at 31 December 2021, 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 accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material

respects, of the financial position of the Group as at 31 December 2021, and their consolidated financial

performance and consolidated cash flows for the year then ended in accordance with the International

Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the ‘Auditor’s Responsibilities for the

Audit of the Consolidated Financial Statements’ section of our report. We are independent of the Group

in accordance with the International Code of Ethics for Professional Accountants (including International

Independence Standards) (IESBA Code) together with the requirements of the Law on Audit of the

financial statements of the Republic of Lithuania 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 IESBA 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 judgement, were of most significance in

our audit of the consolidated financial statements of the current period. These matters were addressed

in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters. Below is the description of each

key audit matter and our response to it.

We have fulfilled the responsibilities described in the ‘Auditor’s Responsibilities for the Audit of 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, including the procedures

performed to address the matter below, provide the basis for our audit opinion on the accompanying

consolidated financial statements.

1. Fine imposed by the Competition Council

As disclosed in Note 27 of the financial statements, on 3 June 2020 the Supreme Administrative Court

of Lithuania announced a non-appealable ruling on the dispute of the parent of the Group against the

decision of the Competition Council and as a consequence, the Group has recognized in the financial

statements for the year ended 31 December 2020 the fine amounting to EUR 8.5 million EUR and

related interest charge amounting to EUR 1.4 million. The Group is discussing with the State Tax

Inspectorate the interest and execution costs. They are seeking for payment period extension

This matter was significant for our audit because the payment of the fine and interest charge significantly

affect the Cash Flow of the Group.

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How the Matter Was Addressed in the Audit

Our audit procedures, among others, included the following:

- Reading the ruling issued by the Supreme Administrative Court.

- The Group is discussing with the State Tax Inspectorate the interest and execution costs.

They are seeking for payment period extension.

- Analysis of responses in the external legal advisor‘s letter to our inquiries.

- Consideration of the outcome of the respective prior year management’s estimate, including

assessment of potential management bias.

Furthermore, we have considered the adequacy of the disclosures in Note 27 of the financial statements

on this matter.

2. 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, 3.13 and 18, the Group recognizes revenue from the customer specific construction contracts

in progress as of the year-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 the 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.

Our audit procedures, among others, included the following:

- Updating our understanding of the Group’s revenue recognition process, including the model

used for the revenue recognition in relation to the contracts in progress, and controls in relation

to long-term construction contracts. We also assessed how the management makes the

accounting estimate (determines the stage of completion of the projects) and the accuracy,

completeness and relevance of the data on which it is based as further described below.

- Testing the Group’s key controls over allocation of revenues and costs to a specific contract.

- Consideration of the accuracy of management’s forecasts for potential management bias by

comparing the historical financial performance of selected contracts completed in 2021 with the

total cost estimates and forecasted margins for those contracts used for revenue recognition as

of 31 December 2020.

- Considering whether all material loss making contracts were properly identified and accounted

for;

- Selecting a sample of contracts with the greatest potential impact on the Company’s financial

statements for the year ended 31 December 2021, 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.

How the Matter Was Addressed in the Audit

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 performing 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;

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- tracing costs incurred up to date as per management’s estimation of the stage of completion to

the costs included in the statement of comprehensive income, considering also whether they

are reflective of the actual progress of the work and are 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;

- and tracing actual contract revenues accounted for in the statement of comprehensive income

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 Notes 2, 3.13 ir 18 of the

financial statements.

3. Fair value assessment of the investment property

The Group accounts for investment properties in the financial statements at fair value (IAS 40). The

significant increase under Investment property caption as of 31 December 2020 is related to the change

in the fair value of the business centre project developed UAB Šeškinės projektai. Gain arising from

changes in fair value is recognised the statement of comprehensive income.

The fair value of the Group’s investment property is based on the valuations performed by independent

appraisers. The valuations are dependent on certain key assumptions which requires significant

judgements. Details of the valuation methodology and key inputs used in the valuations are disclosed

in Notes 2 and 16.

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

related management estimation.

How the Matter Was Addressed in the Audit

- We gained an understanding of how the management estimates the fair value of the investment

property (including methods and assumptions).

We considered the following:

- 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,

owner related expenses, and market rent price level, vacancy rates and other;

- Consideration of the level of market prices used where comparable market prices method was

used.

Finally, we considered the adequacy of the Group’s disclosures on the matter in Notes 2 and 16 of the

financial statements.

4. Impairment of trade accounts receivable and contract assets

As at 31 December 2021, the Group had non-current and current trade accounts receivable and contract

assets balance amounting to EUR 0.03 million and EUR 18.48 million respectively, reported in the

statement of financial position, as disclosed in Note 18 of the consolidated financial statements.

The estimation of the expected credit losses (ECL) as required by IFRS 9 Financial instruments involves

significant management judgement. As disclosed in Note 2, specific factors management considers

include analysis of the historical credit losses, consideration of economic developments and other

subjective risk factors related to the specific debtor or debtors’ group.

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This matter is significant to our audit due to materiality of the amounts as these receivables constitute

over 21% of the total assets of the Group in the statement of financial position as at 31 December 2021

and high level of management judgement involved in the assessment of their impairment.

How the Matter Was Addressed in the Audit

Our audit procedures, among others, included the following:

- We gained an understanding of the management’s process of estimation of impairment of trade

receivables and contract assets. This included the consideration whether the model used to

develop the estimate is appropriate and assessment whether the impairment accounting policy

applied by the Company is in line with the requirements of IFRS 9 Financial instruments.

We also assessed how the management made the accounting estimate and the accuracy, completeness

and relevance of the data on which it is based as follows:

- For receivables and contract assets assessed by the management for impairment individually,

we have discussed with the management selected individual balances, including management’s

analysis of expected recoverability of these balances, and also considered independently the

indications of potential understatement of ECL by assessing the ageing of the receivables and

amounts collected after the date of the statement of financial position.

- For receivables assessed by the management using the expected credit loss rate matrix, we

have assessed the key estimates made by the management in developing the ECL matrix,

including historical default rate information and forward-looking information as of 31 December

2021. We tested the correctness of aging of the receivables by agreeing the date to the invoices

issued for selected items and verified the arithmetical accuracy of the management’s calculation

of impairment.

Furthermore, we have assessed the adequacy of the disclosure in the financial statements on this matter

(Notes 2 and 18).

Other matters

The financial statements of the Company for the year ended 31 December 2020, were audited by

another auditor expressed an unmodified opinion on the Company’s financial statements on 2 April

2021.

Other Information

The other information comprises the information included in the Group’s annual report, including

Corporate Governance Statement, Remuneration Report and Corporate Social Responsibility Report,

but does not include the consolidated financial statements and our auditor’s report thereon.

Management is responsible for the other information presentation.

Our opinion on the consolidated financial statements does not cover the other information and we do

not express any form of assurance conclusion thereon, except as specified below.

In connection with our audit of the consolidated financial statements, our responsibility is to read the

other information and, in doing so, consider whether the other information is materially inconsistent with

the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be

materially misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in

this regard.

In addition, our responsibility is to consider whether information included in the Group’s Annual Report,

including Corporate Governance Statement and Remuneration Report, for the financial year for which

the consolidated financial statements are prepared is consistent with the consolidated financial

statements and whether the Group’s Annual Report, including Corporate Governance Statement and

Remuneration Report, has been prepared in compliance with applicable legal requirements. In our

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opinion, based on the work performed in the course of the audit of the consolidated financial statements,

in all material respects:

• The information given in the Group’s annual report, including Corporate Governance Statement

and Remuneration Report, for the financial year for which the financial statements are prepared

is consistent with the consolidated financial statements; and

• The Group’s annual report, including Corporate Governance Statement and Remuneration

Report, has been prepared in accordance with the requirements of the Law of the Republic of

Lithuania on Consolidated Financial Reporting by Groups of Undertakings.

It is also our responsibility check whether the Consolidated Corporate Social Responsibility Report has

been provided. If we identify that the Consolidated Corporate Social Responsibility Report has not been

provided, we are required to report that fact. We have nothing to report 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 Standards as adopted by the European

Union, and for such internal control as management determines is necessary to enable the preparation

of the consolidated financial statements that are free from material misstatement, whether due to fraud

or error.

In 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 liquidate

the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s consolidated 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 free 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 exists. Misstatements can arise from fraud or error and are considered material if, individually

or taken together, 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 judgement and maintain

professional scepticism 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 related to events

or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.

If we conclude that a material uncertainty 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

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to the date of our auditor’s report. However, future events or conditions 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 represent the

underlying transactions and events 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 remain

solely 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 audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all relationships and other

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

In accordance with the decision made by the General Meeting of Shareholders on 29 July 2021, we

have been chosen to carry out the audit of the Group’s consolidated financial statements for the first

time. Our appointment to carry out the audit of the Group’s consolidated financial statements in

accordance with the decision made by the General Meeting of Shareholders is renewed every two years

and the period of total uninterrupted engagement is one year.

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.

We confirm that in light 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 Company's separate and Group consolidated financial statements and also translation services

of the aforementioned financial statements.

Report on the Compliance of the Format of Consolidated Financial Statements with the

Requirements of the European Single Electronic Format

We have been engaged as part of our audit engagement letter by the Management of the Company to

conduct a reasonable assurance engagement for the verification of compliance with the applicable

requirements of the single electronic reporting format of the consolidated financial statements for the

year ended 31 December 2021, including the consolidated annual report, in a single electronic reporting

format (hereinafter the “single electronic reporting format of the consolidated financial statements”).

Description of a subject matter and applicable criteria

The single electronic reporting format of the consolidated financial statements has been applied by the

Company to comply with the requirements of Articles 3 and 4 of the Commission Delegated Regulation

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(EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament

and of the Council with regard to regulatory technical standards on the specification of a single electronic

reporting format (hereinafter the “ESEF Regulation”). The applicable requirements regarding the single

electronic reporting format of the consolidated financial statements are laid down in the ESEF

Regulation.

The requirements referred to in the preceding sentence determine the basis for application of the

Electronic reporting format of the consolidated financial statements and, in our opinion, constitute

appropriate criteria to form a reasonable assurance conclusion.

Responsibilities of Management and Those Charged with Governance

The Company’s management is responsible for the application of the single electronic reporting format

of the consolidated financial statements that complies with the requirements of the ESEF Regulation.

This responsibility includes the selection and application of appropriate iXBRL tags using ESEF

taxonomy, the design, implementation and maintenance of internal control relevant to the preparation

of the consolidated financial statements in a single electronic reporting format and material departures

from the requirements set out in the ESEF Regulation.

Those charged with governance are responsible for overseeing the Company’s financial reporting

process.

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

Our responsibility is to express a reasonable assurance opinion about whether the singe electronic

reporting format of the consolidated financial statements complies with the ESEF Regulation.

We conducted our reasonable assurance engagement in accordance with the International Standard on

Assurance Engagements 3000 (Revised), Assurance Engagements other than Audits or Reviews of

Historical Financial Information (hereinafter ‘ISAE 3000 (R)’). This Standard requires that we comply

with ethical requirements and plan and perform procedures to obtain reasonable assurance about

whether the singe electronic reporting format of the consolidated financial statements was prepared, in

all material aspects, in accordance with the applicable requirements. Reasonable assurance is a high

level of assurance, but is not a guarantee that an assurance engagement conducted in accordance with

ISAE 3000 (R) will always detect a material misstatement when it exists.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the single

electronic reporting format of the consolidated financial statements was applied, in all material aspects,

in accordance with the applicable requirements and such application is free from material errors or

omissions. Our procedures included, in particular:

• obtaining an understanding of the internal control system and processes relevant to the

application of the single electronic reporting format of the consolidated financial statements,

including the preparation of the XHTML format and marking up the consolidated financial

statements;

• verification that the XHTML format was applied properly;

• evaluating the completeness of marking up the consolidated financial statements using the

XBRL markup language according to the requirements of the implementation of electronic

format as described in the ESEF Regulation;

• evaluating the appropriateness of the Company’s use of XBRL tags selected from the ESEF

taxonomy and the creation of extension tags where no suitable element in the ESEF taxonomy

has been identified; and

• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our opinion.

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Opinion

In our opinion, the single electronic reporting format of the consolidated financial statements for the year

ended 31 December 2021 complies, in all material aspects, with the ESEF Regulation.

The partner in charge of the audit resulting in this independent auditor’s report is Arvydas Ziziliauskas.

Arvydas Ziziliauskas

Lithuanian Certified Auditor

License No 000467

4 April 2022

Jonavos st. 60C, Kaunas

Grant Thornton Baltic UAB

Audit company’s licence No 001513

Auditor‘s report was electronically signed on April 4th 2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

CONFIRMATION OF THE COMPANY’S RESPONSIBLE PERSONS

This confirmation of responsible employees concerning the audited consolidated financial

statements and the consolidated annual report of AB Panevėžio Statybos Trestas and its

subsidiaries (hereinafter “the Group”) for the year 2021 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 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.

AB Panevėžio Statybos Trestas AB Panevėžio Statybos Trestas

Managing Director Chief Accountant

Egidijus Urbonas Danguolė Širvinskienė

4 April 2022 4 April 2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

For the year ended December 31

EUR thousand

Note

2021

2020

Revenue from contracts with customers

5, 6

98,451

74,912

Cost of sales

(86,283)

(68,167)

Gross profit

12,168

6,745

Change in fair value of investment property

2,260

5,026

Other revenue

1,710

404

Selling expenses

(516)

(438)

Administrative expenses, total:

(9,238)

(15,667)

Fine imposed by the Competition Council

(8,514)

Impairment loss on trade debts, contract assets and other

receivables

(365)

Other administrative expenses

(9,243)

(6,788)

Other expenses

(1,612)

(779)

Operating profit (loss)

4,772

(4,709)

Finance income, total

Other finance income

Finance costs

(646)

(5,453)

Interest expense

(484)

(1,685)

Other finance expenses

(162)

(3,768)

Profit (loss) before tax

4,205

(10,143)

Income tax expense

(706)

(288)

Net profit (loss)

3,499

(10,431)

Other comprehensive income

Items that will never be transferred to profit/(loss)

Items that can or will be transferred to profit/(loss)

(95)

2,833

Currency translation effect

(95)

2,833

Other comprehensive income (loss), total

(95)

2,833

Total comprehensive income (loss)

3,404

(7,598)

Net profit/(loss) attributable to:

To the equity holders of the Parent

3,049

(9,503)

Non-controlling interest

450

(928)

3,499

(10,431)

Comprehensive income (loss) attributable to:

To the equity holders of the Parent

2,998

(7,509)

Non-controlling interest

406

(89)

3,404

(7,598)

Basic and diluted earnings/(loss) per share (EUR)

0.20

(0.58)

The notes on pages 15–63 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2022

Chief Accountant Danguolė Širvinskienė 04/04/2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Consolidated Statement of Financial Position

As at 31 December

EUR thousand

Note

2021

2020

ASSETS

Non-current assets

Property, plant and equipment

9,846

10,099

Intangible Assets

267

290

Investment Property

31,400

28,335

Non-current trade receivables

228

Other non-current financial assets

703

236

Deferred tax assets

390

531

Total non-current assets

42,635

39,719

Current assets

Inventories

10,129

9,866

Trade receivables

15,069

11,210

Contract assets

3,414

774

Prepayments

1,766

388

Other assets

1,243

1,014

Prepaid income tax

Cash and cash equivalents

11,888

9,410

Total current assets

43,569

32,675

TOTAL ASSETS

86,204

72,394

The notes on pages 15–63 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2022

Chief Accountant Danguolė Širvinskienė 04/04/2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Consolidated Statement of Financial Position (continued)

As at 31 December

EUR thousand

Note

2021

2020

EQUITY AND LIABILITIES

Equity

Issued capital

4,742

Reserves

6,869

7,085

Retained earnings

17,713

14,498

Total equity attributable to equity holders of the Parent

29,324

26,325

Non-controlling interest

1,230

824

Total equity

30,554

27,149

Loans and borrowings

19,441

Provisions

965

993

Deferred tax liability

875

555

Other liabilities

784

304

Total non-current liabilities

22,065

1,852

Current liabilities

Loans and borrowings

816

15,529

Trade payables

15,660

9,888

Contract liabilities

3,771

3,791

Provisions

18, 25

148

319

Income tax payable

120

Other liabilities

13,070

13,783

Total current liabilities

33,585

43,393

Total liabilities

55,650

45,245

TOTAL EQUITY AND LIABILITIES

86,204

72,394

The notes on pages 15–63 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2022

Chief accountant Danguolė Širvinskienė 04/04/2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Consolidated Statement of Changes in Equity

EUR thousand

Note

Issued

capital

Legal

reserve

Revaluation

reserve

Foreign

currency

translation

reserve

Retained

earnings

Attributable to

the equity

holders of the

Parent

Non-

controlling

interest

Total equity

Equity as at 31 December 2020

4,742

600

2,173

4,312

14,498

26,325

824

27,149

Total comprehensive income for the year

Net profit (loss)

3,049

450

3,499

Currency translation effect

(51)

(44)

(95)

Total other comprehensive income

(51)

(44)

(95)

Total comprehensive income for the year

(51)

3,049

2,998

406

3,404

Depreciation transfer for buildings

(165)

166

Equity as at 31 December 2021

4,742

600

2,008

4,261

17,713

29,324

1,230

30,554

Equity as at 31 December 2019

4,742

599

2,325

2,318

24,343

34,327

913

35,240

Total comprehensive income for the year

Net profit (loss)

(9,503)

(928)

(10,431)

Currency translation effect

1,994

839

2,833

Increase in legal reserve

(1)

Total other comprehensive income

1,994

(1)

1,994

839

2,833

Total comprehensive income for the year

1,994

(9,504)

(7,509)

(89)

(7,598)

Depreciation transfer for buildings

(152)

149

(3)

Transactions with owners of the Parent,

recognised directly in equity

Dividends declared

(490)

Total transactions with owners of the Parent

(490)

Equity as at 31 December 2020

4,742

600

2,173

4,312

14,498

26,325

824

27,149

The notes on pages 15–63 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2022

Chief Accountant Danguolė Širvinskienė 04/04/2022

Company code: 147732969

Address: P. Puzino st. 1, LT-35173 Panevėžys

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Consolidated Statement of Cash Flows

For the year ended December 31

EUR thousand

Note

2021

2020

Cash flows from operating activities

Net profit (loss)

3,499

(10,431)

Adjustments to:

Depreciation and amortisation (including impairment)

14, 15

1,063

1,434

Proceeds from disposal of property, plant and equipment

(191)

Income tax expense

706

288

Elimination of results from financing activities

394

2,999

Change in fair value of investment property

(2,260)

(5,026)

Other non-cash items

579

10,545

Net cash flows from ordinary activities before changes in

working capital

3,790

(168)

Changes in working capital:

Changes in inventories

(3,168)

(3,951)

Changes in trade receivables and contract assets

(6,306)

15,423

Changes in prepayments

(1,379)

Changes in other assets

1,020

(76)

Changes in trade payables

5,710

(10,185)

Changes in prepayments received

895

237

Changes in other liabilities

(1,083)

(68)

Income tax paid

(717)

(3)

Net cash flows from operating activities

(1,238)

1,281

Cash flows used in investing activities

Acquisition of intangible assets and property, plant and equipment

14, 15

(796)

(1,003)

Disposal of property, plant and equipment

377

Acquisition of investments

(9)

Loans granted

Collection of loans granted

Interest and dividends received

Net cash flows used in investing activities

(412)

(978)

Cash flows from/used in financing activities

Dividends paid

(488)

Repayment of borrowings

(317)

Loans and borrowings received

5,000

3,200

Payment of finance lease liabilities

(71)

(6)

Interest paid

(484)

(273)

Net cash flows from/used in financing activities

4,128

2,433

Net increase/(decrease) in cash and cash equivalents

2,478

2,736

Effect of foreign exchange on cash

Cash and cash equivalents as at the beginning of the year

9,410

6,674

Cash and cash equivalents as at the end of the year

11,888

9,410

The notes on pages 15–63 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2022

Chief Accountant Danguolė Širvinskienė 04/04/2022

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

1 General information

AB Panevėžio Statybos Trestas (hereinafter the “Company”) was established in 1957. The

company code is 147732969 and it is registered at P. Puzino st. 1, LT-35173 Panevėžys. As from

13 July 2006, the Company’s ordinary shares are listed on the Official trading list of the Vilnius

Stock Exchange (VSE). These consolidated financial statements comprise the financial

statements of the Parent and its subsidiaries (hereinafter “the Group”). The Group is primarily

involved in the construction of buildings, structures, other facilities and networks, as well as real

estate development in Lithuania and abroad. As at 31 December 2021, the Group had 840

employees (as at 31 December 2020: 879).

As at 31 December 2021 and 2020, the principal shareholders of the Company were as follows:

• AB Panevėžio Keliai, S. Kerbedžio st. 7, Panevėžys, company code 147710353, (49.78%) –

the ultimate controlling parent;

• Clairmont Holdings LTD, Grigori Afxentiou, 27 P.O.6021, CY (5.73%);

• The freely traded shares, owned by natural and legal persons (44.49 %). No one owns more

than 5%.

AB Panevėžio Keliai is the ultimate controlling parent which prepares separate and consolidated

financial statements based on Business Accounting Standards (BAS) of the Republic of Lithuania.

Majority of shareholders of AB Panevėžio Keliai is natural persons, none of them holds more

than 50% of shares. The shareholders of the Company have a statutory right to either approve

these financial statements or not approve them and require a new set of financial statements to be

prepared. The Company’s management authorised these financial statements on 4 April 2022.

Financial information of the subsidiaries is as follows:

(EUR thousand)

Country

operation

Type of activity

Equity as

31/12/20

Net

profit/(loss)

for the year

2021

Equity as

31/12/20

Net

profit/(loss)

for the year

2020

UAB PST Investicijos

(subgroup

consolidated)

Lithuania

Real estate development

4,848

1,341

2,580

(2,795)

UAB Vekada

Lithuania

Construction: electrical

installation

1,013

(286)

1,299

UAB Metalo Meistrai

Lithuania

Construction: steel

structures

1,030

272

758

318

UAB Skydmedis

Lithuania

Construction: wooden

panel houses

1,170

570

1,000

674

UAB Alinita

Lithuania

Construction:

conditioning equipment

(24)

163

(187)

191

OOO Teritorija

Russia

Real estate development

(1,059)

307

(1,126)

(349)

Kingsbud Sp. z. o. o.

Poland

Intermediary services

456

125

242

SIA PS Trests

Latvia

Construction

(142)

(163)

UAB Šeškinės

Projektai

Lithuania

Real estate development

4,367

3,649

UAB Ateities

Projektai

Lithuania

Real estate development

199

(95)

294

(55)

UAB Hustal

Lithuania

Wholesale of steel

structures

226

133

226

147

UAB Aliuminio

Fasadai

Lithuania

Production of aluminium

profile systems

(71)

(173)

(148)

UAB Tauro

Apartamentai

Lithuania

Real estate development

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

1 General information (continued)

Ownership of subsidiaries:

Registration address

2021

2020

UAB PST Investicijos

(group)

Verkių st. 25C, Vilnius

68.3 %

UAB Vekada

Marijonų st. 36, Panevėžys

95.6 %

UAB Metalo Meistrai

Tinklų st. 7, Panevėžys

100 %

UAB Skydmedis

Pramonės st. 5, Panevėžys

100 %

UAB Alinita

Tinklų st. 7, Panevėžys

100 %

UAB Šeškinės Projektai

Verkių st. 25C, Vilnius

100 %

OOO Teritorija

Lunačiarsko ave. 43/27, Cherepovec,

Vologda, Russian Federation

87.5 %

Kingsbud Sp. z. o. o.

A. Patli st. 12, 16-400 Suwalki, Poland

100 %

SIA PS Trests

Skultes st. 28, Skulte, Marupes mun., Latvia

100 %

UAB Tauro Apartamentai

Verkių st. 25C-1, Vilnius

100 %

UAB Hustal

Tinklų st. 7, Panevėžys

100 %

UAB Ateities Projektai

Verkių st. 25C-1, Vilnius

100 %

UAB Aliuminio Fasadai

Pramonės st. 5, Panevėžys

100 %*

The Group’s subsidiary UAB PST Investicijos has the following subsidiary:

Type of activity

2021

2020

ZAO ISK Baltevromarket

Development of real estate projects in Kaliningrad

100 %

Joint operations

In 2016 the Group made and agreement with limited liability Group SIA ARMS GROUP, Gobu

st. 1-129, Baloži, Kekavas municipality, Latvia, regarding joint operations and joint liability for

newly established general partnership enterprise PST Un Arms. Under the agreement, 50% of

operating expenses and income, assets and liabilities of the joint operations of PST Un Arms

belongs to the Group. General partnership enterprise PST Un Arms is established for a certain

project developed in Latvia. In 2021, the project was completed.

Summarised information of PST Un Arms

(EUR thousand)

2021

2020

Total assets

696

Total liabilities

617

Equity

Revenue

(33)

846

Net result

(24)

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 preparation of the Consolidated Financial Statements

The consolidated financial statements have been prepared on the historical cost basis except for

land and buildings measured using the revaluation model and investment property measured at

fair value.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

2 Basis of preparation (continued)

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. The principles of

functional currency translation into the currency of the Group’s financial statements are disclosed

in Note 3.1.

Due to rounding of certain amounts to thousand, figures in the tables may differ. Such rounding

bias is immaterial in these financial statements.

Judgements and estimates

The preparation of the consolidated financial statements in conformity with IFRSs requires

management to make judgements and estimates 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 recognised in the period in which the estimates are revised

and in any future periods affected.

Information about significant areas of estimation uncertainty in applying accounting policies that

have a significant effect on the amounts recognized in the financial statements and have a

significant risk of causing material adjustments to the financial statements in the next financial

year is included in the following notes:

• Note 4. Classification of the fine imposed by the Competition Council. As described in

Note 4, the management determined that the liability must be classified in the Group’s

financial statements as current.

• Note 13: deferred taxes recognition. Deferred tax asset is recognised to the extent that it is

probable that taxable profit will be available against which the deductible temporary

differences could be utilised.

• Note 14: Fair value of land and buildings which are measured using the revaluation model,

useful lives of property, plant and equipment. The Group verifies economic useful lives of

property, plant and equipment and intangible assets at least once a year – (Note 3.3).

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: when

preparing these financial statements, the management has assessed that no periodic

revaluation is needed for the property, plant and equipment carried at revalued amount as

there are no internal or external indications of material change in the fair values as at 31

December 2021 since the last revaluation performed and accounted for in the financial

statements in 2018.

• Note 16: Fair value of investment property. The Group engaged external appraisers to

estimate the fair values of these assets.

• 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, the Company also

relied on the Purchase and Sale Agreement signed with a third party after the reporting date

and related information.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

2 Basis of preparation (continued)

• Note 18: Impairment of trade receivables and measurement of revenue from contracts with

customers as well as contract assets and contract liabilities based on the stage of completion

of the construction contracts. The accurate recognition of revenue on contracts in progress

is highly dependent on judgement exercised by the management in assessing the

completeness and accuracy of the overall costs of the project (estimates) as it is the key

assumption in the assessment of the stage of completion of the contracts in progress.

Estimating the recoverable amounts of receivables is a process, which requires significant

management judgement and estimates, particularly those that are related to expected credit

losses assessment based on the analysis of the historical credit losses, considerations of

future factors and other subjective risk factors related to the specific debtor or debtors’

group. Estimates were applied in assessing the amounts to be collected 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,

legal term of warranty and historical information.

• Note 27: The management judgements are to predict the outcome of litigations. Provisions

are not recognised in the financial statements as based on the management judgement it is

more likely than not, that the Group will win the legal disputes mentioned in the Note 27,

or it is not possible to assess reliably the possible outcome of the contingency at the

moment.

Impact of COVID-19:

In 2021, the construction industry was still one of the industries most affected by the

pandemic. The Group of companies Panevėžio Statybos Trestas sought solutions and options

for the problems, operational challenges and risks that emerged during COVID-19 pandemic,

was able to adapt to the dramatic changes in the operating environment and behaviour of

market participants. The Group of companies tried to maintain a moderate pace of activities

rather than delaying decisions to calmer post-quarantine times. Management monitors and

evaluates the current situation responsibly (especially with regard to customer billing,

shortages of supplies, execution of orders), responds promptly and makes appropriate

decisions to safeguard the going concern.

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:

- The power over the investee (i.e., existing rights that give it the current ability to direct

the relevant activities of the investee);

- The right 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.

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

intergroup 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, are shown separately in the statement of financial position and the statement of

comprehensive income.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

The losses of subsidiaries are attributable to the non-controlling interest even if that results in a

deficit balance on the non-controlling interest.

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 share purchase/sale prices

are accounted directly in equity.

Change of ownership share in the subsidiary when control is retained, is accounted for as equity

transaction. If the Group loses control of the subsidiary, the Group takes the following actions:

• 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;

• 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 acquisition-date fair value of the consideration transferred and

the amount of any non-controlling interest in the acquiree. 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. Any contingent consideration to be

transferred by the acquirer is recognised at fair value at the acquisition date. Contingent

consideration that is classified as an asset or liability is measured at fair value in accordance with

IFRS 9: in either in profit/loss or as a change in other comprehensive income. If contingent

consideration is classified as equity, it is not remeasured and its subsequent settlement is

accounted for within equity. Acquisition costs incurred are expensed and included in

administrative expenses.

If the business combination is achieved in stages, the acquirer’s equity interest previously held in

the acquiree is measured at 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.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Impairment is assessed annually. Accounted impairment is not restated. For the purpose of

impairment testing, goodwill acquired in a business combination is, from the acquisition date,

assigned 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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.

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.

(A) Application of new and/or changed IFRS and interpretations issued by International

Accounting Standards Board (IASB)

During the reporting period, the Group adopted new standards and amendments to existing

standards and their interpretations, which are relevant to the activities and effective for annual

periods beginning on or after 1 January 2021.

(a) Standards, their amendments and interpretations effective for annual periods beginning on

or after 1 January 2021.

Amendments to IFRS 16 – Covid-19-Related Rent Concessions beyond 30 June 2021(issued

on 31 March 2021 with effective date of 1 April 2021)

These amendments extend the scope of the 2020 amendments by increasing the eligibility period

for the application of practical expedient from 30 June 2021 to 30 June 2022.

On 28 May 2020, the International Accounting Standards Board (IASB) issued COVID-19-

Related Rent Concessions, which amended IFRS 16 Leases. The 2020 amendment permitted

lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a

direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account

for those rent concessions as if they were not lease modifications. Among other conditions, the

2020 amendment permitted lessees to apply the practical expedient only to rent concessions for

which any reduction in lease payments affects only payments originally due on or before 30 June

2021. If a rent concession reduces lease payments both before and after 30 June 2021, IFRS 16

does not permit the practical expedient to be applied to that concession.

These amendments are effective in European Union for annual reporting periods beginning on or

after 1 April 2021. In the management’s opinion, these amendments do not have a material impact

on these financial statements as no significant concessions/discounts were received during the

reporting period and are not expected to be received in subsequent periods.

Interest Rate Benchmark Reform – Phase 2 – IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

(Amendments) (issued on 27 August 2020 with effective date of 1 January 2021)

The amendments provide temporary reliefs which address the financial reporting effects when an

interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR).

The amendments include the following practical expedients:

• A practical expedient to require contractual changes, or changes to cash flows that are

directly required by the reform, to be treated as changes to a floating interest rate, equivalent

to a movement in a market rate of interest.

• Permit changes required by IBOR reform to be made to hedge designations and hedge

documentation without the hedging relationship being discontinued.

• Provide temporary relief to entities from having to meet the separately identifiable

requirement when an RFR instrument is designated as a hedge of a risk component.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

These amendments are effective in European Union for annual reporting periods beginning on or

after 1 January 2021. The management assessed that these amendments has no material impact

on these financial statements.

Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (issued on

27 August 2020 with effective date of 1 January 2021 and must be applied retrospectively)

Amendments to IFRS 9, IAS 39 and IFRS 7 bring to a conclusion phase two which is focused on

issues that could affect financial reporting when an existing interest rate benchmark is replaced

with a risk-free interest rate (an RFR). These amendments will have no impact on these financial

statements.

(b) Standards issued but not yet effective and not early adopted and their amendments

New standards, amendments and interpretations that are not mandatory for reporting period

beginning on 1 January 2021 and have not been early adopted when preparing these financial

statements are presented below:

IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,

Contingent Liabilities and Contingent Assets as well as Annual Improvements 2018-2020

(Amendments) (all issued on 14 May 2020 with effective date of 1 January 2022)

The IASB has issued narrow-scope amendments to the IFRS Standards as follows:

• IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the

Conceptual Framework for Financial Reporting without changing the accounting

requirements for business combinations.

• IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting

from the cost of property, plant and equipment amounts received from selling items produced

while the company is preparing the asset for its intended use. Instead, a company will

recognise such sales proceeds and related cost in profit or loss of the statement of profit or

loss and other comprehensive income.

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify

which costs a company includes in determining the cost of fulfilling a contract for the

purpose of assessing whether a contract is onerous.

• Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption

of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41

Agriculture and the Illustrative Examples accompanying IFRS 16 Leases

These amendments are effective in European Union for annual reporting periods beginning on or

after 1 January 2022. The management is currently assessing the impact of these amendments on

financial statements.

IFRS 17 and IFRS 4: the Deferral of Effective Dates of IFRS 17 and IFRS 9 for Insurers

(Amendments) (issued on 25 June 2020 with effective date of 1 January 2023, but not before it

is adopted by the EU).

The amendments to IFRS 17 are effective, retrospectively, for annual periods beginning on or

after 1 January 2023, with earlier application permitted. The amendments aim at helping

companies implement the Standard. Overall, the amendments are designed to reduce costs by

simplifying some requirements in the standard; make it easier to explain financial performance;

and ease transition by deferring the effective date of the standard to 2023 and by providing

additional relief to reduce the effort required when applying IFRS 17 for the first time.

The amendments to IFRS 4 change the fixed expiry date for the temporary exemption in IFRS 4

Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be

required to apply IFRS 9 for annual periods beginning on or after January 1, 2023.

The management has assessed that these amendments will not have any impact on the Company’s

and the Group’s financial statements.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

IFRS 17 Insurance Contracts (issued on 18 May 2017 with effective date of 1 January 2023,

but not before it is adopted by the EU).

The standard is effective for annual periods beginning on or after 1 January 2021 with earlier

application permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9

Financial Instruments have also been applied. In its March 2020 meeting the Board decided to

defer the effective date to 2023. IFRS 17 Insurance Contracts establishes principles for the

recognition, measurement, presentation and disclosure of insurance contracts issued. It also

requires similar principles to be applied to reinsurance contracts held and investment contracts

with discretionary participation features issued. The objective is to ensure that entities provide

relevant information in a way that faithfully represents those contracts. This information gives a

basis for users of financial statements to assess the effect that contracts within the scope of IFRS

17 have on the financial position, financial performance and cash flows of an entity. This IFRS

will not have any impact on the financial position or performance of the Group and Company as

insurance services are not provided.

IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single

Transaction (Amendments) (issued on 7 May 2021 with effective date of 1 January 2023, but

not before it is adopted by the EU)

Under the amendments, the initial recognition exception does not apply to transactions that, on

initial recognition, give rise to equal taxable and deductible temporary differences. The

amendments become effective for annual reporting periods beginning on or after January 1,

2023 with earlier application permitted. These amendments have not yet been endorsed by the

EU. The management has not yet evaluated the impact of the implementation of these

amendments.

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of

Accounting Estimates (Amendments) (issued on 12 February 2021 with effective date of 1

January 2023, but not before it is adopted by the EU)

The amendments introduce a new definition of accounting estimates, defined as monetary

amounts in financial statements that are subject to measurement uncertainty. Also, the

amendments clarify what changes in accounting estimates are and how these differ from changes

in accounting policies and corrections of errors. The amendments become effective for annual

reporting periods beginning on or after 1 January 2023 with earlier application permitted and

apply to changes in accounting policies and changes in accounting estimates that occur on or after

the start of that period. These amendments have not yet been endorsed by the EU. The

management has not yet evaluated the impact of the implementation of these amendments.

Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current (issued on

23 January 2020 with effective date of 1 January 2023, but not before it is adopted by the EU).

The amendments aim to promote consistency in applying the requirements by helping companies

determine whether, in the statement of financial position, debt and other liabilities with an

uncertain settlement date should be classified as current or non-current. The amendments affect

the presentation of liabilities in the statement of financial position and do not change existing

requirements around measurement or timing of recognition of any asset, liability, income or

expenses, nor the information that entities disclose about those items Also, the amendments

clarify the classification requirements for debt which may be settled by the company issuing own

equity instruments. The management has not yet evaluated the impact of the implementation of

these amendments.

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IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of

Accounting policies (Amendments) (issued on 12 February 2021 with effective date of 1 January

2023, but not before it is adopted by the EU).

The amendments effective for reporting periods beginning on or after 1 January 2023. Earlier

application is permitted. The amendments provide guidance on the application of materiality

judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the

requirement to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’

accounting policies. Also, guidance and illustrative examples are added in the Practice Statement

to assist in the application of the materiality concept when making judgements about accounting

policy disclosures. These amendments have not yet been endorsed by the EU. The management

has not yet evaluated the impact of the implementation of these amendments.

3.1 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 rate by

the European Central Bank ruling at that date. The foreign currency gain or loss on monetary

items is recognised 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 recognised in statement of

financial position. Foreign currency differences arising on translation are recognised in profit or

loss.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments

arising on acquisition, are translated into 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. The 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.

3.2 Financial instruments

Financial instrument: a contract that gives rise to a financial asset of one entity and a financial

liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

At initial recognition, financial asset is classified as either measured at amortised cost, fair value

through other comprehensive income or fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s

contractual cash flow characteristics and the Group’s business model for managing them. With

the exception of trade receivables and contract assets that do not contain a significant financing

component, the Group initially measures a financial asset at its fair value plus, in the case of a

financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do

not have a significant financing component are measured at the transaction price identified under

IFRS 15.

Financial asset is classified and measured at amortised cost or fair value through other

comprehensive income, where cash flows arising from financial asset are solely payments of

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principal and interest (SPPI) on the principal amount outstanding. This assessment is known as

the SPPI test and is performed for each financial instrument.

The Group’s business model for managing financial assets refers to how the Group manages its

financial assets in order to generate cash flows. The business model determines whether cash

flows will be generated by collecting contractual cash flows, by selling this financial asset or by

using both options.

A regular way purchases or sales of financial assets are recognised on the trade date, i.e., the date

that the Group commits to purchase or sell the asset.

Subsequent measurement

After initial recognition, the Group measures a financial asset at:

At amortised cost (debt instruments).

At fair value through other comprehensive income with recycling of cumulative gains and losses

upon derecognition (debt instruments). The Group did not have such items as at 31 December

2021 and 2020;

At fair value through other comprehensive income with no recycling of cumulative gains and

losses upon derecognition (equity instruments). The Group did not have such items as at 31

December 2021 and 2020;

At fair value through profit or loss. The Group did not have such items as at 31 December 2021

and 2020.

Financial asset at amortised cost (debt instruments)

The Group measures financial assets at amortised cost if both of the following conditions are met:

(i) The financial asset is held within a business model with the objective to hold financial assets

in order to collect contractual cash flows; and

(ii) Contractual terms and conditions of financial asset allow for obtaining cash flows, on certain

dates, which are solely the payments of the principal or the interest on the outstanding

principal.

Financial assets measured at amortised cost are subsequently accounted for by applying the

effective interest method (EIR) less impairment losses. Gain or loss is recognised in the statement

of comprehensive income when the asset is derecognised, modified or impaired.

The Group’s financial assets at amortised cost includes trade, other current and non-current

receivables and loans granted.

Impairment of financial assets

Following IFRS 9, in common case scenario, the Group recognises an allowance for expected

credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are

based on the difference between the contractual cash flows due in accordance with the contract

and all the cash flows that the Group expects to receive, discounted at an approximation of the

original effective interest rate. ECLs are recognised in two stages. For credit exposures for which

there has not been a significant increase in credit risk since initial recognition, ECLs are provided

for credit losses that result from default events that are possible within the next 12-months (a 12-

month ECL). For those credit exposures for which there has been a significant increase in credit

risk since initial recognition, a loss allowance is required for credit losses expected over the

remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating

ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss

allowance based on lifetime ECLs at each reporting date.

(a) Assessment of impairment of trade receivables and contract assets

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Based on assessment of the Management, trade receivables and contract assets that do not contain

a significant financing component and accordingly their impairment is assessed by applying a

simplified approach, i.e. for material individual customers the management performs an

assessment of specifically expected credit losses, taking into account the customer’s credit history

as well as forward looking factors and risk factors specific to the debtor. For all other receivables

the Group has established a provision matrix that is based on its historical credit loss experience,

adjusted for forward-looking factors specific to the debtors and the economic environment.

(b) Estimation of the impairment of loans granted

The Group is granting loans under the agreements with defined repayment terms. For assessment

of impairment of loans granted the expected 12-months credit losses are assessed and accounted

upon issue of the loan. In subsequent periods, given the absence of significant increase in the

credit risk associated with the debtor, the Group re-assesses the 12-months ECL balance based on

the loan amount still outstanding as of the date of the re-assessment. If it is determined that the

financial position of the debtor has significantly deteriorated in comparison with the position

when the loan was issued, the Group accounts for ECL over the remaining life of the loan. Loans

subject to assessment of lifetime ECLs are considered to be credit-impaired financial assets.

The Group considers that the debtor has defaulted on the obligations associated with the financial

assets, if the contractual payments are overdue more than 90 days or when there are indications

that the debtor, or the group of debtors, are facing significant financial difficulties, default on the

payments of principal amount or interest, and there is a probability that bankruptcy or

reorganization procedures will be initiated, as well as when observable data indicates that the

decrease of expected future cash flows is likely, e.g. change in the overdue days or change in the

economic factors that correlate with the defaults on the obligations.

ECLs for loans and trade receivables is accounted for through profit/loss using allowance for

doubtful debts. A financial asset is written off when there is no reasonable expectation of

recovering the contractual cash flows.

Financial liabilities

Initial recognition and measurement:

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through

profit or loss, loans received and payables. All financial liabilities are recognised initially at fair

value and, in the case of loans received and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans received, including bank

overdrafts and finance lease liabilities.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below.

Loans received and other payables

After initial recognition, loans and other payables are carried at amortised cost using the effective

interest method (EIR). Gains and losses are recognised in the statement of comprehensive income

when the liabilities are derecognised or amortised. Amortised cost is calculated by reference to

the discount or premium on acquisition, as well as taxes or costs that are an integral part of the

EIR. EIR amortization is included in financial expenses in the statement of comprehensive

income.

Offsetting of financial instruments

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Financial assets and financial liabilities are offset and the net amount is reported in the statement

of financial position if there is a currently enforceable legal right to offset the recognised amounts

and there is an intention to settle on a net basis, i.e. to realise the assets and settle the liabilities

simultaneously.

Derecognition of Financial Assets and Liabilities

Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar

financial assets) is primarily derecognised (i.e., removed from the Group’s statement of financial

position) when:

(i) the contractual rights to receive cash flows from the financial asset have expired; or

(ii) The Group has transferred its rights to receive cash flows from the asset or has assumed

an obligation to pay the received cash flows in full without material delay to a third party

under a “pass-through” arrangement; and either (a) the Group has transferred

substantially all the risks and rewards of the asset, or (b) the Group has neither transferred

nor retained substantially all the risks and rewards of the asset, but has transferred control

of the financial asset.

When the Group has transferred its rights to receive cash flows from a financial asset or has

entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the

risks and rewards of ownership of the asset. When it has neither transferred nor retained

substantially all the risks and rewards of ownership of the asset, nor transferred control of the

asset, the Group continues to recognise the transferred asset to the extent of its continuing

involvement. In that case, the Group also recognises an associated liability. The transferred asset

and the associated liability are measured on a basis that reflects the rights and obligations that the

Group has retained.

The Group involvement that takes the form of a guarantee over the transferred asset is measured

at the lower of the carrying amount of the asset and the maximum amount of consideration that

the Group could be required to repay (amount of the guarantee).

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged,

cancelled or expired. When a present financial liability is swapped with other liability to the same

lessor, although, upon other conditions or when the present liability terms are substantially

changed, this change is recognized as initial derecognition and establishment of a new liability.

The difference between respective balance values is recognised in the statement of comprehensive

income.

3.3 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. Depreciation is calculated on a

straight-line basis over the estimated useful lives of the assets.

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 appraisers. 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 or loss.

In case of revaluation, when the estimated fair value of the assets exceeds their residual value, the

residual value is increased to the fair value and the amount of increase is included into revaluation

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reserve of property, plant and equipment as other comprehensive income in equity. However,

such increase in revaluation is recognised as income to the extent it does not exceed the decrease

of previous revaluation recognised in profit or loss. Depreciation is calculated from the

depreciable amount which is equal to acquisition cost or revaluated amount less residual value of

an asset.

The accumulated depreciation as at the revaluation date is eliminated against the gross carrying

amount of the asset and the net amount is restated to the revalued amount of the asset. Upon

disposal or recognising regular depreciation charge, any revaluation surplus relating to the

particular asset being depreciation or sold is transferred to retained earnings.

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 capitalised.

When components of property, plant and equipment have different useful lives, they are

accounted for as separate items of property, plant and equipment.

The cost of replacing component of property, plant and equipment is capitalised only if it is

probable that the future economic benefits embodied within the component will flow to the Group

and its cost can be measured reliably. The residual value of the replaced component is

derecognised. The costs of the day-to-day servicing of property, plant and equipment are

recognised in profit or loss as incurred.

Depreciation is calculated 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 Company 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, residual values and useful lives are reviewed at each reporting date.

Gains and losses on disposal are determined by comparing the proceeds from disposal with the

residual value of property, plant and equipment and are recognised net within other income or

expenses. When revalued assets are sold or reclassified, the amounts included in the revaluation

surplus reserve are transferred to retained earnings.

Software and other intangible assets, which have finite useful lives, are measured at cost less

accumulated amortization and accumulated impairment losses. Amortisation is recognised 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 years.

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

3.5 Investment Property

Investment property of the Group consists 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.

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Investment property is 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 property 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 assets.

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, as

well as the costs of dismantling and removing the items and restoring the site on which they are

located. Borrowing costs related to qualifying assets are capitalised.

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.

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, plant and equipment, 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.

3.6 Leased assets and lease liabilities

A. Group as a lessee

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. That

is, if the contract conveys the right to control the use of an identified asset for a period of time in

exchange for consideration.

The Group (as a lessee) applies a single recognition and measurement approach for all leases,

except for short-term leases and leases of low-value assets. The Group recognises lease liabilities

to make lease payments and right-of-use assets representing the right to use the underlying assets.

The Group had only few assets (cars) lease contracts that are insignificant at the beginning of

2020, however, a long-term lease agreement for 21 car was effective at the end of 2021.

Right of use assets

The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the

underlying asset is available for use). Right-of-use assets are measured at cost, less any

accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease

liabilities.

The cost of right-of-use assets includes the amount of the initial measurement of the lease liability,

initial direct costs incurred, and lease payments made at or before the commencement date less

any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the

shorter of the lease term and the estimated useful lives of the assets, as follows:

• Cars 3 years

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost

reflects the exercise of a purchase option, depreciation is calculated using the estimated useful

life of the asset.

The right-of-use assets are also subject to impairment.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the

present value of lease payments to be made over the lease term. The lease payments include fixed

payments (including in-substance fixed payments) less any lease incentives receivable, variable

lease payments that depend on an index or a rate, and amounts expected to be paid under residual

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value guarantees. The lease payments also include the exercise price of a purchase option

reasonably certain to be exercised by the Group and payments of penalties for terminating the

lease, if the lease term reflects the Group exercising the option to terminate. Variable lease

payments that do not depend on an index or a rate are recognised as expenses (unless they are

incurred to produce inventories) in the period in which the event or condition that triggers the

payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate

at the lease commencement date because the interest rate implicit in the lease is not readily

determinable. After the commencement date, the amount of lease liabilities is increased to reflect

the estimates of interest and reduced for the lease payments made. In addition, the carrying

amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a

change in the lease payments (e.g., changes to future payments resulting from a change in an

index or rate used to determine such lease payments) or a change in the assessment of an option

to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Group apply the short-term lease recognition exemption to its non-current-asset (i.e., those

leases that have a lease term of 12 months or less from the commencement date and do not contain

a purchase option). Lease payments on short term leases and leases of low-value assets are

recognised as expense on a straight-line basis over the lease term.

B. The Group is a lessor

The Group’s buildings that are leased under operating lease agreements are accounted in the

statement of financial position as investment property. Lease income is recognised on a straight

line basis over the lease period.

3.7 Inventories

Capitalised costs related to the real estate development projects for sale in the usual activities of

the Group, are classified as inventories and carried at lower of the cost or net realisable value

(NRV).

Capitalised costs include land, construction, sub-contracting and other project development costs.

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 (FIFO) principle, and includes expenditure incurred

in acquiring the inventories, production 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.

Unrealisable inventory is fully written-off.

3.8 Cash and Cash Equivalents

Cash includes cash on hand and cash at banks. Cash equivalents are short-term, highly liquid

investments that are readily convertible to known amounts of cash with original maturities of 3

months or less and that are subject to an insignificant risk of change in value.

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For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand

and in current bank accounts, as well as deposits in bank with original term equal to or less than

3 months.

3.9 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 is the greater of the asset’s 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 flows from continuing use that are

largely independent of the cash flows of other assets or groups of assets.

An impairment loss is recognised 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 recognised 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 recognised.

3.10 Dividends

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

3.11 Provisions

A provision is recognised in the statement of financial position if, as a result of a past event, the

Company 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 future cash flows to their present value 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

(assurance type warranty), as the Group does not provide additional warranties to customers. The

provision is based on historical warranty costs data and probabilities.

3.12 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 borne by the

State.

Based on the requirements of the Labour Code of the Republic of Lithuania, each employee

leaving the Group 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 changes in terms of

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benefits (curtailment or settlement) are recognised in the statement of comprehensive income as

incurred. Current year cost of employee benefits is recognised as incurred in the statement of

comprehensive income.

The above mentioned employee benefit obligation is calculated based on actuarial assumptions,

using the projected unit credit method. Obligation is recognised 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 recognised in other comprehensive income as incurred.

Short-term employee benefits are recognised 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.

3.13 Revenue

Revenue from contracts with customers

The majority of the Group’s revenue comes from the construction of buildings, structures,

equipment and networks, and the production and assembly of wooden panel houses. In addition,

as described in Note 5, the Group earns revenue from the design and manufacturing of metal

structures. Revenue from contracts with customers is recognised when control of the services or

goods are transferred to the customer at an amount that reflects the consideration to which the

Group expects to be entitled in exchange for those services or goods. Generally, the Group has

no material variable price components in its contracts with customers.

The Group has concluded that generally it is the principal in its construction services contracts

even when the subcontractors are used in the implementation of the projects, because:

- controls the goods and services before transferring them to the customer;

- is responsible for the overall performance of the contract with the customer and is exposed to

the risk of default;

- the entity has discretion in establishing the price.

Performance obligations arising from the construction contracts with customers’, contracts for the

assembly of wooden panel houses and the design and production of metal structures are fulfilled

over time and respectively revenue from these contracts and installation services are recognized

over time if any of the following criteria are met: (a) the customer simultaneously receives and

consumes the benefits provided by the Group’s performance as the Group performs; (b) the

Group’s performance creates or enhances an asset that the customer controls as the asset is created

or enhanced; or (c) the Group’s performance does not create an asset with an alternative use and

the Group has an enforceable right to payment for performance completed to date.

When the Group can reasonably measure its progress towards complete satisfaction of the

performance obligation, for each contract, the Group recognizes revenue and expenses based on

the stage of completion. The stage of completion is assessed based on the proportion of the costs

incurred in fulfilling the contract up to date over to the total estimated costs of the contract.

When the outcome of a contract cannot be estimated reliably (for example, in the early stages of

a contract), only the portion of the contract costs incurred that is expected to be recovered is

recognised as revenue.

Contract modification (scope or price or both) are accounted for as a separate contract if the scope

of the contract increases because of the addition of promised goods or services that are distinct

and the price of the contract increases by an amount of consideration that reflects the Group’s

stand-alone selling prices of the additional promised goods or services in the circumstances of the

particular contract. Otherwise the contract modification is accounted as (a) termination of the

existing contract and the creation of a new contract, if the remaining goods or services are distinct

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from the goods or services transferred on or before the date of the contract modification, or (b)

part of the existing contract if the remaining goods or services are not distinct and, therefore, form

part of a single performance obligation that is partially satisfied at the date of the contract

modification. The effect that the contract modification has on the transaction price, and on the

Group’s measure of progress towards complete satisfaction of the performance obligation, is

recognised as an adjustment to revenue (either as an increase in or a reduction of revenue) at the

date of the contract modification.

Provisions for loss making contracts are recognized when the Group has a present obligation

(legal or constructive) to complete the construction contract for the third party for the price that

is lower than the total estimated cost to perform the contract as of the date of the financial

statements. The difference between the contract price and the total estimated cost of delivery

under the contract is recognised in the statement of comprehensive income at the reporting date.

When contract costs are likely to exceed contract revenue, a loss is recognized immediately in

profit or loss.

When fulfilling the contracts, the Group can receive short term prepayments from its customers.

Applying the practical expedient, the Group is not adjusting the price allocation by the financing

component, if at the inception of the contract it is expected that the time period from the customer

payment for goods/services till the delivery of these goods/services will not exceed one year.

Contract balances

Contract assets

Contract asset is the right to consideration in exchange for goods or services transferred to the

customer. If the Group performs by transferring goods or services to a customer before the customer

pays consideration or before the Group’s right to amount of consideration is unconditional, a

contract asset is recognised for the earned consideration, except any amounts that are recognized

as receivables.

Receivables

Trade receivable represents the Group’s right to an amount of consideration that is unconditional

(i.e., only the passage of time is required before payment of the consideration is due). Receivables

are accounted for in accordance with IFRS 9 (Note 3.2).

Contract liability

A contract liability is the obligation to transfer goods or services to a customer for which the Group

has received consideration (or an amount of consideration is due) from the customer. Contract

liabilities are recognised as revenue when the Group performs under the contract.

Income from other services or sales of goods is recognised when the control over service/goods

is transferred to the customer, although such transactions are relatively not material.

3.14 Finance Income and Expense

Finance income comprises mainly interest income and other similar income. Interest income is

recognised as it accrues, using the effective interest method. Financial costs comprise interest

expense and other financial expenses. All borrowing costs are recognised using the effective

interest method. Foreign currency gains and losses are reported on a net basis in profit or loss.

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. Other borrowing costs are expensed as incurred.

3.15 Income Tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit

or loss except to the extent that it relates to items recognised in equity.

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Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted

at the reporting date. Each company of the Group is taxed individually, irrespective the

consolidated Group’s results. Most of the Group’s activities are carried out in Lithuania, where

income tax rate of 15% applies.

Deferred taxes are calculated using the liability method. The deferred tax reflects temporary

difference between the accounting value of assets and liabilities, and net tax influence of their tax

base. Deferred tax assets and liabilities are measured using the tax rates expected to apply to

taxable income in the years in which those temporary differences are expected to be recovered or

settled based on tax rates enacted or substantially enacted at the date of the statement of financial

position.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will

be available against which the asset can be utilised. 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 realised.

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 forward for indefinite period,

except for the losses incurred as a result of disposal of securities and/or derivative financial

instruments. Such carrying forward is disrupted if the company changes its activities due to which

these losses were incurred except when the entity does not continue its activities due to reasons

which do not depend on the Company itself. The losses from disposal of securities and/or

derivative financial instruments can be carried forward for 5 consecutive years and can only be

used to reduce the taxable income earned from the transactions of the same nature.

3.16 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 net 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.

3.17 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 management include items directly attributable to a segment

as well as those that can be allocated on a reasonable basis.

3.18 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 non-

performance risk. Fair values are obtained from quoted market prices, discounted cash flow

models and option pricing models as appropriate.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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 and assumptions described Note 14, 16 and 29. Where applicable, further information

about the assumptions made in determining fair values is disclosed in the notes specific to that

asset or liability.

3.19 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 Reporting Standards

specifically require such off-setting.

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 throughout these financial statements.

The Board has overall responsibility for the establishment and oversight of the Company’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

contract liabilities. This risk arises principally from the Group’s trade receivables, contract assets

and the balance of cash and cash equivalents.

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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 carrying amount.

The maximum exposure to credit risk is set out below:

(EUR thousand)

2020

Trade receivables and contract assets

18,512

12,211

Loans granted

Cash and cash equivalents

11,888

9,410

Total

30,406

21,632

Trade receivables and contract assets:

(EUR thousand)

2020

Municipalities and state institutions

3,305

605

Legal persons

15,207

11,606

Total trade receivables and contract assets

18,512

12,211

In the statement of financial position, trade receivables and contract assets (i.e. accrued income

on the stage of completion) are accounted for under the caption “Non-current and current trade

receivables and contract assets”, as disclosed in Note 18.

Trade receivables from major customers:

(EUR thousand)

2021

2020

Client 1

2,099

11.3

2,618

21.4

Customer No 2

1,692

9.1

1,965

16.1

Customer No 3

925

5.0

797

6.5

Customer No 4

826

4.5

739

6.1

Customer No 5

763

4.1

719

5.9

Customer No 6

468

2.5

597

4.9

Customer No 7

467

2.5

478

3.9

Other customers

11,644

62.9

4,663,

38.2

Impairment

(372)

(1.9)

(365)

(3)

Total

18,512

100

12,211

100.0

Trade receivables by geographic regions:

(EUR thousand)

2021

2020

Local market (Lithuania)

16,078

9,911

Euro zone countries

2,097

2,011

Other countries

337

289

Total

,18,512

12,211

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

(EUR thousand)

2021

Impairment

2020

Impairment

Not overdue

15,122

9,226

Overdue 0–30 days

2,269

995

Overdue 30–90 days

1,079

504

More than 90 days

414

372

1,851

365

Total

18,884

372

12,576

365

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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 specific losses that

relate to individually significant accounts receivable and expected credit losses recognised using

ELCs method. Methodology used for establishing the allowance is reviewed regularly to reduce

any differences between loss estimate and actual loss experienced.

Cash and cash equivalents comprise cash on hand and at bank (only reliable banks are selected);

therefore, the related credit risk is relatively low.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial liabilities 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 Company ensures that it has sufficient cash on demand to meet expected operating

expenses, including the servicing of borrowings.

Payment maturities of financial liabilities as at 31 December 2021 (undiscounted) as to the

agreements, are presented below:

(EUR thousand)

Carrying

amount

Contractual

undiscounted

cash flows

Up to 6

months

More than 6

months

Liabilities

Loans and lease liabilities

2,0257

22,220

417

21,803

Trade payables

15,660

Fine payable under the decision of the

Competition Council*

8,542

Total

44,459

46,422

24,619

21,803

* The entire amount of the penalty is presented as payable during 6 months because as describe above the management

while preparing these financial statements made a judgement that the Company has not yet an unconditional and

contractual right to defer the payment when there is no signed the agreement with the Tax Authority and currently the

Company pays the penalty in equal parts for a period of eight years (without additional interest).

Payment maturities of financial liabilities as at 31 December 2020 (undiscounted) as to the

agreements, are presented below:

(EUR thousand)

Carrying

amount

Contractual

undiscounted

cash flows

Up to 6

months

More than 6

months

Liabilities

Loans and lease liabilities

15,529

15,677

15,137

540

Trade payables

9,888

Fine payable under the decision of the

Competition Council

9,808

Total

35,225

35,373

34,833

540

Interest rate applied for calculation of contractual net cash flows:

2021

2020

Loans and lease liabilities

1.95–2.7%

1.95–6.0%

On 14 December 2017, an overdraft agreement was signed with bank with the limit of EUR 15

million. Overdraft with the repayment term of 14 June 2021 was used for the development of real

estate project of Šeškinės Projektai UAB on 31 December 2020.To refinance the loan, UAB

Šeškinės projektai signed a credit agreement with OP Corporate Bank PLC and AB Citadele for

EUR 20,000 thousand in 2021. The contractual maturity date is 1 July 2026.

On 17 June 2021, an overdraft agreement was signed with bank with the limit of EUR 5 million.

As at 31 December 2021 overdraft limit was not used (Note 23).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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. The objective of market risk management is

to manage and control market risk exposures within acceptable parameters, while optimising the

return. As at 31 December 2021 and 2020, the Group did not use any derivatives.

Currency risk. The Group is exposed to the risk of changes in foreign currency rates on sales and

receivables, purchases payables 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:

2021

As at 31 December

Average

2021

2020

As at 31 December

Average

2020

1 SEK =

0.0976

0.0984

0.0994

0.0953

1 RUB =

0.0118

0.0115

0.0109

0.0121

1 NOK =

0.1003

0.0984

0.0948

0.0932

The Group’s analysis of monetary balance sheet items by currency can be specified as follows:

As at 31 December 2021 (EUR thousand)

EUR

NOK

PLN

RUB

Deferred tax assets

390

Trade receivables and contract assets

18,487

Excess VAT, prepaid income tax

726

Cash and cash equivalents

11741

Deferred tax liability

(875)

Loans and borrowings

(20,319)

Trade payables

(15,491)

(40)

(43)

(24)

Provisions

(1,113)

Income tax

(82)

(37)

(1)

Other liabilities

(17,192)

(231)

(185)

(17)

Total exposure

(23,728)

(249)

(140)

As at 31 December 2020 (EUR thousand)

EUR

NOK

SEK

RUB

Deferred tax assets

531

Trade receivables and contract assets

12,211

Excess VAT

727

Cash and cash equivalents

8,950

374

Deferred tax liability

(555)

Loans and borrowings

(15,529)

Trade payables

(9,882)

(6)

Provisions

(1,176)

Other liabilities

(13,442)

(341)

Total exposure

(18,165)

The following table presents the Group’s income before tax sensitivity to expected currency rate

fluctuations, considering all other variables as constants (in accordance with changes in fair value of

financial assets and liabilities).

The effect of Euro on Russian subsidiary:

Increase/(decrease)

in currency rate

Impact on profit

before tax

2021

EUR

+15.00 %

(2 012)

EUR

-15.00 %

2 012

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Increase/(decrease)

in currency rate

Impact on profit

before tax

2020

EUR

+15.00 %

(1 900)

EUR

-15.00 %

1 900

Interest rate risk. All the Group’s loans received and granted, and other borrowings are subject to

variable interest rates linked to EURIBOR. No financial instruments are used to manage the risk.

With an increase in the interest rate by 0.5% as at 31 December 2021, the Group’s net profit would

decrease by approximately EUR 102 thousand due to loans received (as at 31 December 2020:

net profit would decrease by EUR 76 thousand).

Capital management

The Boards 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 monitors the

return on capital and proposes the level of dividends based on the Group’s financial results and

strategic plans.

The Board also aims to keep balance between higher return, which could be available if there was

higher level of borrowed “funds” 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 issued capital. As at 31 December

2021 and 2020, 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:

• Construction;

• Steel structures;

• Wooden panel houses;

• Other activity.

The segment of construction includes operations of AB Panevėžio Statybos Trestas, UAB

Vekada, UAB Alinita 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 Metalo Meistrai UAB and Hustal UAB.

The main field of activity is designing and fabrication of steel structures for construction purposes.

This company also supplies steel structures for other companies where steel items are required.

The segment of wooden panel houses includes operation of UAB Skydmedis. The main field of

activity is production, construction and outfit of wooden panel houses. Wooden panel houses are

the main product of the Group with approximately 94 % of products successfully exported to

Norway, Sweden, Switzerland, Iceland and other countries.

Other activity includes operations of UAB Šeškinės Projektai, OOO Teritorija, UAB Ateities

Projektai, UAB PST Investicijos, whose main activity is real estate development, and Kingsbud

Sp.z.o.o., which the main activity is the wholesale trading of building materials, as well as other

activities of AB Panevėžio Statybos Trestas (production of aluminium constructions, concrete

floor installation, and the like).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Operating segments related to construction activity have been aggregated in order to form one

construction segment as these separate segments are to various operations performed at different

phases of construction. 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 accountable operating segments:

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

5 Segments (continued)

Segment assets and liabilities are presented after elimination of intercompany assets and liabilities within the segment, which are eliminated on consolidation.

Other disclosures

Capital expenditure

274

222

283

796

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

(EUR thousand)

As at or for the year ended 31 December 2021

Construction

Steel

structures

Wooden

panel

houses

Other

activity

Total

segments

Intersegment

eliminations

Total

Group

Revenue

Third parties

70,801

5,887

7,004

14,759

98,451

Intersegment

4,992

4,916

781

10,689

Total revenue

75,793

10,803

7,004

15,540

109,140

10,689

98,451

Other revenue

634

116

3,393

4,143

Expenses

Depreciation and amortisation

(923)

(60)

(93)

(1,063)

(1063)

Other administrative and selling expenses

(71,105)

(5173)

(6,421)

(12,275)

(94,974)

Interest expense

(276)

(1)

(207)

(484)

Interest income

Financial activity (other than interest), net

(24)

(6)

(53)

(83)

Other expenses

(650)

(962)

(1,612)

Income tax expense

(164)

(2)

(578)

(706)

Segment result

3 285

5,607

598

4,871

14,361

10,689

3,672

Segment assets

58,710

3,701

3,150

44,369

109,930

(23,726)

86,204

Segment liabilities

29,250

1,932

2,312

33,689

67,183

(11,533)

55,650

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

5 Segments (continued)

Segment assets and liabilities are presented after elimination of intercompany assets and liabilities within the segment, which are eliminated on consolidation.

Other disclosures

Capital expenditure

684

236

182

1 201

Capital expenditure consists of additions of property, plant and equipment, intangible assets and investment properties.

(EUR thousand)

As at or for the year ended 31 December 2020

Construction

Steel

structures

Wooden

panel

houses

Other

activity

Total

segments

Intersegment

eliminations

Total

Group

Revenue

Third parties

57,469

5,412

8,259

3,772

74,912

Intersegment

8,592

4,528

1,022

14,142

14,142,

Total revenue

66,061

9,940

8,259

4,794

89,054

14,142

74,912

Other revenue

245

5,115

5,430

Expenses

Depreciation and amortisation

(1,308)

(14)

(75)

(37)

(1,434)

Other administrative and selling expenses

(71,772)

(4,523)

(7,295)

752

(82,838)

Interest expense

(1,671)

(14)

(1,685)

Interest income

Financial activity (other than interest), net

(8)

(13)

(49)

(3,679)

(3,749)

Other expenses

(736)

(1)

(42)

(779)

Income tax expense

449

(77)

(139)

(521)

(288)

Segment result

(8,740)

5,369

714

6,368

3,711

14,142

(10,431)

Segment assets

70,694

4,090

2,858

39,009

116,651

(44,257)

72,394

Segment liabilities

41,187

3,054

1,858

31,776

77,875

(32,631)

45,244

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

5 Segments (continued)

Reconciliation of liabilities

2021

2020

Segment operating liabilities

67,183

77,875

Intersegment liabilities

(11,533)

(32,631)

Total liabilities

55,650

45,244

Geographical information

The following table presents the Group’s geographical information on revenue based on the

location of the customers:

2021

2020

Lithuania

77,654

60,857

Russia

6,777

Scandinavian countries

12,051

12,018

Other countries

1,969

2,037

98,451

74,912

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 Revenue from contracts with customers

(EUR thousand)

2021

2020

Construction

70,801

70,417

Other revenue from contracts with

customers

27,650

4,495

Total sales income

98,451

74,912

In 2021, the Group recognised EUR 1,800 thousand of revenue from contracts with customers that

were included in the balance of contract liabilities at the beginning of the period (in 2020 – EUR

1,939 thousand).

Information on contracts outstanding at the end of the financial year is disclosed in Note 18.

7 Cost of sales

(EUR thousand)

2021

2020

Construction sub-contractors

32,432

28,762

Raw materials and consumables

2,7847

21,556

Wages and salaries (Note 10)

12,998

13,199

Sale of land plots

4,826

Depreciation and amortisation

670

744

Other

7,510

3,906

Total cost of sales

86,283

68,167

8 Selling expenses

(EUR thousand)

2021

2020

Advertising and similar expenses

Wages and salaries (Note 10)

395

324

Other expenses

Reconciliation of assets

2021

2020

Segment operating assets

109,930

116,651

Intersegment assets

(23,726)

(44,257)

Total assets

86,204

72,394

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Total selling expenses

516

438

9 Administrative expenses

(EUR thousand)

2021

2020

Wages and salaries (Note 10)

6,078

4,584

Purchased services for administrative use

2,080

1,077

Fine imposed by the Competition Council (Note 27)

8,514

Provision for implementation expenses (Note 27)

396

Operating taxes other than income tax

168

139

Depreciation charge

327

361

Total impairment loss of trade debts, contract assets and other

receivables:

(66)

Impairment (reversal of impairment) of receivables (Note 18)

(66)

Amortisation charge

Write-down (reversal) of inventories to net realizable value (Note 17)

(33)

Rent expenses

406

209

Board remuneration paid

118

Other expenses

139

350

Total administrative expenses

9,238

15,667

10 Wages and Salaries

(EUR thousand)

2021

2020

Wages and salaries

16,606

15,537

Social security contributions

347

374

Daily allowances and incapacity benefits

1,468

1,432

Change in accrued vacation reserve and bonuses

1,172

777

Total salary related expenses

19,593

18,120

Recognised in:

Cost of sales

12,998

13,199

Administrative expenses

6,078

4,584

Selling expenses

395

325

Other operating expenses

122

Total salary related expenses

19,593

18,120

11 Other Income and Expenses

(EUR thousand)

2021

2020

Change in fair value of investment property

2,260

5,026

Rental and other income

309

375

Gain from sale of property, plant and equipment and other

1,401

Total other income

3,970

5,430

Depreciation of rented premises

(32)

(295)

Other expenses

(1,580)

(484)

Total other expenses

(1,612)

(779)

Total other income and expenses, net

2,358

4,651

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

12 Finance Income and Expense

(EUR thousand)

2021

2020

Interest income

Foreign currency exchange gain

Other finance income

Total finance income

Interest expenses, related to penalty imposed by the Competition

Council (Note 27)

1,385

Loan interest expenses

484

300

Foreign currency exchange loss

3,756

Other expenses

123

Total finance expense

646

5,453

Total finance income and expense, net

(567)

(5,434)

13 Income tax

Income tax expense:

(EUR thousand)

2021

2020

Current income tax expense

245

111

Change in deferred tax

461

177

Total income tax expense

706

288

In 2021 and 2020, the Group applied a standard rate of 15% in Lithuania, a 23% rate in Norway,

a 22% rate in the Kingdom of Sweden, a 20% rate in Russia and 0% in Latvia. Reconciliation of

effective tax rate:

(EUR thousand)

2021

2020

Profit (loss) before tax

4,205

(10,143)

Income tax expense (benefit) applying

the Group’s tax rate in Lithuania

15.0%

631

15.0%

(1,521)

Impact of different tax rates in other

countries

Non-deductible expenses

498

2,244

Non-taxable income

(322)

(374)

Utilized tax losses

(186)

(38)

Adjustment of income tax of prior

periods

(41)

Change in deferred tax asset’s realisation

allowance

(13)

(2.84%)

706

8.16%

288

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

13 Income Tax (continued)

Deferred tax:

(EUR thousand)

2021

2020

Temporary

differences

Deferred tax

Temporary

differences

Deferred tax

Impairment of receivables

2,558

384

2,767

415

Write-down of inventories to net

realisable value

Accrued vacation reserve

424

346

Accrued bonuses

428

304

Warranty provisions and other

1,104

166

1,131

170

Tax losses carry forward

5,698

855

5,306

796

Onerous contracts

135

Total deferred tax assets

1,542

1,508

Unrecognised deferred tax asset

(342)

(372)

Deferred tax asset recognised

1,200

1,136

Revaluation of land and buildings

(1,492)

(224)

(1,689)

(253)

Difference in investment property

value

(9,740)

(1,461)

(6,041)

(907)

Deferred tax liabilities

(1,685)

(1,160)

Total deferred tax, net

(485)

(24)

Reported in the statement of

financial position as:

Deferred tax assets

390

531

Deferred tax liability

(875)

(555)

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits

will be available against which the tax benefit can be utilized. Deferred tax assets are reduced to

the extent that it is no longer probable that the related tax benefit will be realised. 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 2021 amounted to EUR 5,986 thousand (as at 31

December 2020 – EUR 5,419 thousand). 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:

(EUR thousand)

2021

2020

Net deferred tax as at 1 January

(24)

153

Amounts recognised in other comprehensive income

Recognised in profit or loss

(461)

(177)

Net deferred tax as at 31 December

(485)

(24)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

13 Income Tax (continued)

Change of income tax payable:

(EUR thousand)

2021

2020

Prepaid income tax as at 1 January

Income tax payable as at 1 January

(83)

(215)

Prepaid (payable) income tax as at 1 January

(70)

(171)

Income tax calculated over the reporting period

(587)

(148)

Paid/set off with overpayment of other taxes

717

332

Prepaid income tax as at 31 December

Income tax payable as at 31 December

(120)

(83)

Prepaid (payable) income tax as at 31 December

(60)

(70)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

14 Property, Plant and Equipment

(EUR thousand)

Land and

buildings

Machinery

and

equipment

Vehicles

Fixtures and

fittings

Construction-

in-progress

Total

Cost (revalued carrying amount of land and

buildings)

Balance as at 1 January 2021

7,844

3,905

2,765

1,535

16,049

Additions

468

176

766

Reclassification

327

(173)

235

Disposals and asset written off

(116)

(167)

(250)

(276)

(809)

Balance as at 31 December 2021

8,081

4,287

2,611

1,262

16,241

Balance as at 01 January 2020

4,412

3,795

2,627

1,349

12,197

Additions

3,228

256

233

456

140

4,313

Reclassification

154

(154)

Disposals and asset written off

(146)

(95)

(270)

(461)

15,127

Balance as at 31 December 2020

7,844

3,905

2,765

1,535

16,049

Depreciation and impairment

Balance as at 1 January 2021

597

2,718

1,774

861

5,950

Depreciation for the year

426

316

207

1,017

Disposals and asset written off

(82)

(102)

(113)

(275)

(572)

Balance as at 31 December 2021

583

3,042

1,977

793

6,395

Balance as at 01 January 2020

273

2,354

1,511

891

5,029

Depreciation for the year

324

494

350

227

1,395

Disposals and asset written off

(130)

(87)

(257)

(474)

Balance as at 31 December 2020

597

2,718

1,774

861

5,950

Residual value

1 January 2020

4,139

1,441

1,116

458

7,168

01 January 2021

7,247

1,187

991

674

10,099

31 December 2021

7,498

1,245

634

469

9,846

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

14 Property, Plant and Equipment (continued)

(EUR thousand)

2021

2020

Depreciation recognised in:

Cost of sales

657

723

Administrative expenses

327

361

Other expenses

311

Total depreciation

1,017

1,395

Land and buildings are stated at revalued amount. The last external revaluation was performed as

at 31 December 2018 based on the consultations on possible market prices of the Group’s land and

buildings provided by independent appraisers, 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 comparable price method (Level 3 in the fair

value hierarchy). 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.

For the purpose of financial statements, the 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. To verify management assessment, every five years external valuation report by appraiser is

performed. If the buildings and land were stated at cost model, their residual value as at 31

December 2021 would be equal to EUR 1,670 thousand (as at 31 December 2020: EUR 1,811

thousand).

As at 31 December 2021, the acquisition cost of fully depreciated but still in use assets amounted

to EUR 2,660 thousand, (as at 31 December 2020: EUR 2,228 thousand).

As at 31 December 2021, land and buildings, including investment property, with the net carrying

amount of EUR 31,400 thousand were pledged to the banks (as at 31 December 2020: EUR 30,002

thousand). At 31 December 2021, the residual value of right-of-use assets (machinery, equipment

and vehicles) was EUR 147 thousand (as at 31 December 2020: EUR 3 thousand).

15 Intangible Assets

(EUR thousand)

Goodwill

Software

Other assets

Total

Cost

Balance as at 1 January 2021

323

408

798

Additions

Asset written-off

(71)

(9)

(80)

Balance as at 31 December 2021

323

367

748

Balance as at 01 January 2020

323

350

735

Additions

113

118

Asset written-off

(55)

Balance as at 31 December 2020

323

408

798

Amortisation/impairment losses

Balance as at 1 January 2021

292

156

508

Calculated during the year

Amortisation of asset written-off

(64)

(9)

(73)

Balance as at 31 December 2021

292

137

481

Balance as at 01 January 2020

292

165

516

Calculated during the year

Amortisation of assets written-off

(47)

Balance as at 31 December 2020

292

156

508

Residual value

As at 1 January 2021

252

290

252

290

As at 31 December 2021

230

267

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

15. Intangible Assets (continued)

Amortisation is accounted for in the following way: EUR 13 thousand is included under cost of sales,

EUR 33 thousand – administrative expenses (in 2020: EUR 21 thousand – under cost of sales, EUR

18 thousand – administrative expenses).

The goodwill is related to the subsidiary Alinita UAB (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.

As at 31 December 2021, acquisition cost of fully amortised intangible assets (but still in use)

amounted to EUR 90 thousand, (as at 31 December 2020: EUR 116 thousand).

16. Investment Property

(EUR thousand)

2021

2020

Balance as at 1 January

28,335

1,612

Reclassification from (to) property, plant and equipment

(4,04)

(3,277)

Reclassified of project in progress from inventories

1,209

24,974

Change in fair value

2,260

5,026

Balance as at 31 December

31,400

28,335

In 2015, the Company acquired a 14-floor hotel Panevėžys located in Panevėžys, 16.74% of which

is rented out to third parties, and the rest of the hotel is not used. The Company has no detailed plans

regarding the use of the remaining part of the building yet; however, the building is not planned to

be further used in the Company’s activities; therefore, the whole building is classified as an

investment property.

The fair value measurement 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. The discounted cash flow method was used in the valuation (discount

rate – 9%, exit yield – 7%, occupation rate 80–90%; the same assumptions were used in 2020 and

2019). If the discount rate would increase by 1% (remaining assumptions would not be changed),

then investment property fair value would decrease approximately by EUR 100 thousand and if exit

yield would increase by 1% (remaining assumptions would not be changed) fair value of investment

property would decrease by EUR 90 thousand.

The identified fair value of the above investment property of EUR 1,420 thousand (in 2020: EUR

1,350 thousand) was attributed to Level 3 in 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 123 thousand in less than one year, EUR 165 thousand

between one and five years (as at 31 December 2020: EUR 91 thousand in less than one year, EUR

64 thousand between one and five years). Revenue from the hotel premises rent in 2021 amounted

to EUR 102 thousand (in 2020: EUR 99 thousand) and was accounted for under other income (see

Note 10).

The Group reclassified the operational buildings, storages and other premises to investment property

that are rented for third parties. Estimated fair value of these buildings as at 31 December 2018

amounted to EUR 262 thousand, which was evaluated in accordance with the reports of independent

real estate appraisers and a percentage of rented space. The assessment of assets was carried out by

UAB Corporation Matininkai. Assets were evaluated using comparable and income methods, with

regard to the larger value. An average discount rate of 11.91% was applied to income method in

accordance with weighted average cost of capital. The management assessed that the fair value of

the investment property did not change significantly in 2021 and 2020.

Expected rental receivables of this investment property under non-cancellable contracts as at 31

December 2021 amounted to: EUR 62 thousand in less than one year, EUR 120 thousand – between

one and five years (as at 31 December 2020: EUR 64 thousand in less than one year, EUR 129

thousand – between one and five years). Revenue from lease in 2021 amounted to EUR 60 thousand

(in 2020: EUR 63 thousand) and was accounted under other income.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

16. Investment Property (continued)

During 2021 and 2020, the Company reclassified the real estate project under development (office

building) UAB Šeškinės projektai from inventories, where it was accounted for as t at 31

December 2020 and 31 December 2019, respectively (Note 17), to investment property to achieve

the management’s current objectives to earn rentals. Following reclassification of certain assets,

accounted for as assets used in Group of companies, the fair value of remaining investment

property as at 31 December 2021 was estimated at EUR 29,895 thousand. N 2021, these assets

were measured at fair value in accordance with the Group’s accounting policy on investment

property, and an increase in value of EUR 2,433 was accounted for under other income (note 11).

The management considered the consultation of the independent appraiser (Ober-Haus

Nekilnojamas Turtas) on the fair value of the project as of 30 November 2021, and the

management’s estimation of the changes in the fair value during December when determining the

fair value of this project. Key assumptions used by the management in the estimation of the

recoverable value of investment as of 31 December 2021 were as follows: discount rate – 8%

(pre-tax), lease of premises – 84%, and leasing cost – 12.20–15.00 EUR/sq. m. per month.

At the end of the financial year, future minimum lease payments receivable under non-cancellable

lease agreements for office premises were as follows: EUR 1,676 thousand in less than one year,

EUR 4,801 thousand between one and five years (in 2020: EUR 1,044 thousand in less than one

year, EUR 5,206 thousand between one and five years).In 2021, lease income comprised EUR

1,093 thousand and was accounted under sales revenue (in 2020: EUR 444 thousand).

As at 31 December 2021, the total fair value of the investment property was estimated at EUR

31,400 thousand (in 2020: EUR 28,335 thousand) and was attributed to Level 3 in fair value

hierarchy.

17. Inventories

(EUR thousand)

2021

2020

Capitalized costs related to real estate development

4,644

7,548

Other inventories

5,485

2,318

Total inventories

10,129

9,866

Capitalised costs related to real estate development are as follows:

(EUR thousand)

2021

2020

Cost:

Costs of acquired land and real estate

3,083

6,098

Real estate development project costs

2,151

1,791

Total cost

5,234

7,889

Write-down:

Write-down to net realisable value of projects in progress

(261)

(341)

Total write-down

(261)

(341)

Total capitalised costs

4,973

7,548

Change in write-down of capitalised costs:

2021

2020

Write-down to net realisable value of capitalised costs at the beginning

of the period

341

Additional write-down (reversal) recognized under administrative expenses

(80)

Write-down to net realizable value of capitalized costs at the end of the

period

261

341

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Write-down of capitalised costs in relation to real estate development projects is measured taking

into consideration the expected realisation 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. As at 31

December 2021 and 2020, the Group had the following special purpose entities:

Total capitalised costs as of

31 December 2021,

carrying amount

Total capitalised costs as of 31

December 2020, carrying

amount

AB Panevėžio Statybos Trestas

2,414

2,177

ZAO ISK Baltevromarket

4,501

UAB PST Investicijos

UAB Šeškinės Projektai

UAB Ateities Projektai

2,487

863

Total

4,973

7,548

The net realisable value of project developed by Ateities Projektai UAB was assessed based on

independent real estate appraiser’s Ober-Haus Nekilnojamas Turtas consultation on possible

market price as of 30 November 2021. Comparable value method was used. It should be noted

that construction of cottages commenced in 2021.

The net realisable value of project developed by AB Panevėžio Statybos Trestas in Vilnius

(Kudirkos st.) was assessed based on independent real estate appraiser’s Ober-Haus Nekilnojamas

Turtas consultation on possible market price as of 30 November 2021. Comparable value method

was used. Construction of the project is scheduled for 2022, after obtaining all necessary permits.

Other inventories can be specified as follows:

(EUR thousand)

2021

2020

Raw materials and consumables

5,062

1,954

Work in progress and finished goods

10,

Goods for resale

152

420

Write-down to net realizable value at the beginning of the year

(66)

(99)

Write-off

Additional write-down to net realisable value during the period

(65)

Write-down to net realisable value

(58)

(66)

Total other inventories

5,156

2,318

Change in write-down of other inventory to the net realisable value was included under

administrative expenses.

18 Trade receivables and contract assets

(EUR thousand)

2021

2020

Trade receivables

14 904

11 736

Contract assets (accrued income based on the stage of completion)

3 414

774

Receivables from related parties

566

Impairment at the beginning of the year

(365)

(431)

Write-off of doubtful trade receivables, debt repayment

177

Repayment of doubtful trade receivables

Additional impairment/(reversal) during the period

(16)

(111)

Impairment at the end of the year

(372)

(365)

Total trade receivables and contract assets

18,512

12,211

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

The part of trade receivables due from customers is accounted for as non-current trade

receivables: EUR 29 thousand as at 31 December 2021, EUR 228 thousand as at 31 December

2020. These amounts are related with non-current retentions as described below.

As at 31 December 2021, trade receivables include retentions (retention – a fixed percentage of

the total contract price which shall be paid by the customer when the construction is completed

and the bank guarantee in the amount of the retained payment is provided or warranty document

of the insurance Group is provided to the customer) of EUR 3,775 thousand (as at 31 December

2020: EUR 4,405 thousand) relating to construction contracts in progress. For impairment of trade

receivables refer to Note 4.

As at 31 December 2021, the total contract amount attributed to performance obligations under

the construction contracts with customers that were outstanding (or partly outstanding) amounted

to EUR 82,730 thousand (as at 31 December 2020: EUR 66,619 thousand). Most of these

construction projects are expected to be completed and revenue recognised within one year.

Information about customer specific contracts in progress as of 31 December 2021 and 2020:

(EUR thousand)

2021

2020

Sales by specific customers’ projects in progress, recognised in the statement of

comprehensive income during the year

43,188

35,885

Sales by specific customers’ projects in progress, recognised over the contract

period

53,649

84,587

Expenses incurred for completing specific customers’ projects in progress,

recognised in the statement comprehensive income during the year

39,769

35,335

Expenses incurred for completing specific customers’ projects in progress,

recognised in the statement comprehensive income over the contract period

50,295

82,561

Contract assets (accrued income)

3,332

774

Contract liability (deferred income) under outstanding contracts at the year-end

(Note 25)

694

1,800

Contract liability (payments from customers for purchase of inventories and etc.)

2,632

1,991

Provisions for onerous contracts (Note 25)

135

Trade receivables (under the caption of trade receivables and receivables from

related parties)

9,071

9,484

19 Other Current Assets

(EUR thousand)

2021

2020

Financial assets

Receivables from the former subsidiary OOO Baltlitstroj related to

prepayment paid to the supplier on behalf of this subsidiary

1,240

Impairment of receivables from OOO Baltlitstroj

(1,240)

Loan granted to OOO Baltlitstroj

174

160

Impairment of loans granted to OOO Baltlitstroj

(174)

(160)

Non-financial assets

Excess VAT

718

727

Other Current Assets

525

287

Other current assets, total

1,243

1,014

Former subsidiary OOO Baltlitstroj is undergoing bankruptcy procedure. Legal proceedings are

in progress to recover trade receivables from OOO Baltlitstroj. Based on the management’s

estimates, allowance was established.

The Group did not have such items as at 31 December 2021 and 2020.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

20 Cash and cash equivalents

(EUR thousand)

2021

2020

Cash at bank

11,886

9,399

Cash on hand

Cash and cash equivalents, total

11,888

9,410

21 Capital and Reserves

The Group’s issued 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 issued capital in 2020. The Group did not hold its own shares in 2021 and

2020.

The reserves were as follows:

(EUR thousand)

2021

2020

Revaluation reserve

2,008

2,173

Legal reserve

600

Foreign currency translation reserve

4,261

4,312

Total reserves

6,869

7,085

The revaluation reserve relates to the revaluation of land and buildings and is equal to the residual

value of revaluation less the related deferred tax liability.

Dynamics in revaluation reserve:

2021

2020

Revaluation reserve as at 1 January

2,173

2,325

Revaluation (Note 14)

Depreciation of revaluation

(165)

(169)

Deferred tax on depreciation of revaluation

Revaluation reserve as at 31 December

2,008

2,173

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 cannot be paid out in dividends. Legal reserve at 31

December 2021 and 2020 was estimated at 10% of the issued 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

(EUR thousand)

2021

2020

Lithuania

14,629

8,751

Latvia

591

651

Poland 55 +25+329

359

428

Other 11+19 +51

Total trade payables

15,660

9,888

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

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

23. Loans and Borrowings

(EUR thousand)

2021

2020

Loans

20,172,

15,526

Lease liabilities

Total loans and borrowings

20,257

15,529

Non-current liabilities

19,441

Current liabilities

816

15,529

Total loans and borrowings

20,257

15,529

Loans can be specified as follows:

(EUR thousand)

Interest rate

Maturity

2021

2020

OP Corporate Bank plc.

Lithuanian branch

3-month

EURIBOR+0.98%;

from 21/05/2020 to

30/07/2020 – 3-month

EURIBOR+1.30%;

from 31/07/2020 –

EURIBOR+1.95%;

from 29/09/2021 – 2.44

and 2.72%

07/2026

20,000

15,000

AB Panevėžio Keliai (loan)

1-month and 6-month

EURIBOR+1.9%; from

01/01/2019 – 3-month

EURIBOR+2.85%

12/2021

313

Natural persons

Fixed at 12%, as from

30 November 2017 –

6%, until 31/12/2020 –

12/2022

,172

213

-12-31

Total loans

20,172

15,526

Under the contract with bank for using the loan on 31 December 2021 the Group has pledged a

right to rent a land plot together with a non-residential building at Ukmergės st. 219, Vilnius

owned by its subsidiary Šeškinės Projektai UAB, as a collateral.

Other financial liabilities include lease liabilities with the residual value of EUR 85 thousand as

at 31 December 2021 (as at 31 December 2020: EUR 3 thousand) and liabilities to the bank for

issued guarantees.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

24 Non-Current and Current Provisions

(EUR thousand)

2021

2020

Warranty provisions

816

837

Other

297

339

Total provisions

1,113

1,176

Change in provisions:

2021

2020

Warranty

Pensions*

Other

Warranty

Pensions

Other

Warranty provision at the

beginning of the period

837

293

885

202

Used during the period

238

(37)

(288)

(28)

(25)

Accrued during the year

(259)

(24)

240

119

Warranty provision at the end of the

period

816

288

837

293

* Represents current and non-current part of provision.

Warranty provisions are related to constructions. Based on the legislation of the Republic of

Lithuania, the Company has a warranty liability for construction works, the term of which 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.

25 Contract and other liabilities

(EUR thousand)

2021

2020

Non-financial liabilities:

Contract liability (deferred income) under contracts in progress (Note

18)

891

1,800

Contract liability (payments from customers for purchase of inventories

and etc.) (Note 18)

2,880

1,991

Accrued vacation reserve

1,775

1,466

Salaries and related taxes payable

1,595

1,298

Bonus accrual for employees

428

318

Payable VAT

307

432

Accrued expenses

223

101

Provisions for onerous contracts (Note 18)

135

Financial liabilities:

Liabilities related to the fine imposed by the Competition Council (Note

27)

8,542

9,808

Operating lease liabilities

216

Other liabilities

897

449

Total contract and other liabilities

17,625

18,014

Whereof:

Non-current portion

784

304

Current portion

16,841

17,710

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

26 Earnings and Dividends per Share

(EUR)

2021

2020

Net result for the year attributable to equity holders of the Group

3,049,262

(9,503,186)

Dividends declared

490,000

Average number of shares

16,350,000

Basic and diluted earnings per share

0.19

(0.58)

Dividends declared per share

0.03

The Group has no potential shares. Hence the diluted earnings (loss) per share are the same as the

basic earnings per share.

27 Contingent Liabilities

Guarantees

As at 31 December 2021, the banks issued guarantees to third parties amounting to EUR 8,365

thousand in connection with liabilities under the construction contracts performed by the Group

(EUR 7,842 thousand as of 31 December 2020). The guarantees expire in the period from 17

January 2022 to 2 March 2025. In addition, the Group has guarantees issued by insurance

companies for the amount of EUR 13,417 thousand, which are also related to liabilities in the

construction contracts (in 2020: EUR 15,046). The guarantees expire in the period from 1 January

2022 to 17 December 2024. No additional liabilities are recorded in respect of these guarantees

in the financial statements other than estimated warranty reserve (Note 24).

Property with a carrying amount of EUR 35,975 thousand as at 31 December 2021 (EUR 30,002

thousand as at 31 December 2020) has been pledged to banks for the guarantee limit issued and

guarantees issued by bank. The guarantee limit amounts to EUR 15,000 thousand, the used

amount as at 31 December 2021 is EUR 8,013 thousand. The guarantee limit agreement is

effective until 30 June 2023 with the possibility to issue guarantees until 30 June 2023 that would

be valid for 3 years following their date of issue. Guarantees are valid for 5 years following their

date of issue if the amount does not exceed EUR 1,500 thousand. As at 31 December 2020, the

guarantee limit amount was EUR 15,000 thousand, the used amount was EUR 7,842 thousand.

Legal contingencies

The Group is involved in below described material legal cases:

(1) The Competition Council has made a decision as of 20 December 2017 „Regarding Irdaiva

UAB and PST AB 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

organised by UAB Vilniaus Vystymo Kompanija intended to limit competition and violated the

requirements of Article 5.1 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 disputed the decision of the

Competition Council regarding the fine imposed and based on the assessment of the management

of all know facts and circumstances when preparing the Company’s annual financial statements

for the year ended 31 December 2019, the management believed that it is more likely than not

that the Company will receive a positive decision and did not account for any provision related to

the decision made by the Competition Council as at 31 December 2019.

On 3 June 2020, the Supreme Administrative Court of Lithuania announced a non-appealable

ruling on the dispute of the Company against the decision of the Competition Council. As a

consequence, the Company recognised in the financial statements for the year ended 31 December

2020 the fine amounting to EUR 8,514 thousand (Note 8) and related interest charge amounting

to EUR 1,385 thousand (Note 11), and the bailiff enforcement fee amounting to EUR 396

thousand (Note8). The Company recognised the full amounts of fine, interest and enforcement

fees in its financial statements for the year ended 31 December 2020, however the management

took additional legal actions to reduce the interest and the enforcement fee amounts, as further

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

described below. The final outcome of the dispute over the size of interest expenses cannot be

reasonably determined at this stage.

The Tax Authority informed the participants involved in the enforcement process by the letter No

21915 (individual administrative act) of 12 August 2020 on the decision to set the payment of

fines and interest imposed on the Company in equal parts for a period of eight years. The Tax

Authority also stated that the bailiff's enforcement fees should not be included in the payment

schedule. A draft settlement agreement for implementation in the enforcement process is currently

being submitted to the Tax Authority for approval. The Tax Authority informed the Company

that it had applied to the European Commission for notification of state aid. The European

Commission’s decision is expected in the spring of this year. Upon receipt of a positive decision

of the European Commission, the Company will have to agree the final terms of the settlement

agreement with the State Tax Authority, and the settlement agreement signed by the parties will

have to be approved by the court. Meanwhile the Company fulfils its obligations and pays the

fine imposed by the Competition Council in line with the 8-year fine payment schedule, although

the Tax Authority has left a right to change the schedule if changes in circumstances appear. Also

the Company’s assets with the residual value of EUR 3,057 thousand as at 31 December 2021

(EUR 3,578 thousand as at 31 December 2020) was arrested as a guarantee for fulfilment of the

obligations.

Additionally, one civil cases is currently pending in the courts regarding interest charge and

enforcement fees, as described further.

In relation to the claim regarding interests in the amount of EUR 1,385 thousand, the Company

believes that the amount of the calculated interest and time limits for its calculation had to be

specified in the enforcement order, i.e. the decision of the Competition Council of 9 June 2020.

In addition, statutory interest must be calculated in accordance with Article 39(2) of the

Competition Law of Republic of Lithuania, i.e. interest must be accrued until the fine is paid to

the state budget and no longer than 180 days. In this case, interest shall amount to EUR 252

thousand. The bailiff's order regarding the enforcement fees in amount of EUR 396 thousand is

also disputed in the court. In the Company’s view, the enforcement fees are clearly excessive. In

the disputes concerning interest and enforcement fees, the court has granted interim measures, i.

e. the recovery of interest and enforcement fees has been suspended.

The Chamber of Panevėžys of the Panevėžys District Court investigated the appeal of AB

PANEVĖŽIO STATYBOS TRESTAS in a civil case No 2YT-8648-452/2020 [2YT-230-

452/2021] regarding the bailiff’s orders by which the interest payable and the enforcement fees

were calculated under the Decision No 2S-11(2017) of 20 December 2017 of the Competition

Council of the Republic of Lithuania. The Chamber of Panevėžys of the Panevėžys District Court

dismissed the appeal by an order of 13 January 2021. This order was appealed by bringing a

separate appeal on 20 January 2021. By order of 20 April 2021, the Panevėžys Regional Court

upheld the decision of the Chamber of Panevėžys of the Panevėžys District Court unchanged.

This decision was appealed in cassation. The hearing will be held at the Supreme Court of

Lithuania on 14 April 2022.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

28 Related-Party Transactions

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 in 2021–2020 with the parent of the AB Group

Panevėžio Keliai and with subsidiaries of AB Panevėžio Keliai. Transactions with related parties

during 2021 and 2020 were as follows:

(EUR thousand)

Type of transaction

2021

2020

Sales:

Shareholder

AB Panevėžio Keliai

Goods and services

105

880

Subsidiaries of shareholder

UAB Ukmergės Keliai

Goods and services

UAB Panevėžio Ryšių Statyba

Goods and services

UAB Keltecha

Goods and services

Purchases:

Shareholder

AB Panevėžio Keliai

Goods and services

944

206

Subsidiaries of shareholder

UAB Ukmergės Keliai

Goods and services

UAB Keltecha

UAB Aukštaitijos Traktas

Goods and services

Other companies related to the shareholder

UAB Panevėžio Ryšių Statyba

Goods and services

UAB Specializuota Komplektavimo

Valdyba

Goods and services

UAB Betono Apsaugos Sistemos

Goods and services

(EUR thousand)

2021

2020

Receivables:

Shareholder

AB Panevėžio Keliai (trade receivable)

Payables:

Shareholder

AB Panevėžio Keliai

210

Subsidiaries of shareholder

Other

Other companies related to the shareholder

Other

Receivables and payables payment terms between the related parties are up to 30–90 days.

Balances at the year-end have no collaterals and all transactions are carried out in cash unless

otherwise agreed. 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 2021 and 2020.

Management remuneration

Wages, salaries and social insurance contributions, payable to the Group`s management and the

Board members for the year 2021 amounted to EUR 1,943 thousand (EUR 1,412 thousand for the

year 2020). For the Group’s management and the Board members, there were no guarantees

issued, any other paid or accrued amounts or assets transferred.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

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 2021

Carrying

amount

Fair value

Total

Level 1

Level 2

Level 3

Financial assets

Trade receivables

18,512

Cash and cash equivalents

11,888

Financial assets, total

30,400

11,888

18,512

Financial liabilities

Interest bearing loans and borrowings

(20,319)

Lease obligations

(147)

Trade payables

(15,598)

Fine payable under the decision of the

Competition Council (Note 27)

(8,542)

Total financial liabilities

(44,606)

As at 31 December 2020

Carrying

amount

Fair value

Total

Level 1

Level 2

Level 3

Financial assets

12,211

Trade receivables

9,410,

9,410

Cash and cash equivalents

21,621

9,410

12,211

Financial assets, total

Financial liabilities

Interest bearing loans and borrowings

(15,526)

(15,526),

Lease obligations

(3)

Trade payables

(9,888)

Fine payable under the decision of the

Competition Council (Note 27)

(9,808)

Total financial liabilities

(35,225)

There were no transfers between levels of the fair value hierarchy in 2021 and 2020 at the Group.

The following methods and assumptions are used by the Group to estimate the fair value of the

financial instruments not carried at fair value:

Cash

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

Receivables

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

29 Fair Value of Financial Instruments (continued)

The fair value of loans granted was estimated to approximate carrying value as majority of the

loans are subject of market level variable interest.

Accounts payable, loans and borrowings, and lease liabilities

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. Fair value of current trade payables 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 other current payables including fine imposed by the

Competition Council is considered to approximate to their carrying value due to short contractual

maturity term. The fair value of borrowings (overdraft) was estimated to approximate carrying

value as it is subject to variable market interest rates.

30 Non-Controlling Interest

As at 31 December 2021 and 2020, AB Panevėžio Statybos Trestas held 95.6%, 68.3% and 87.5%

ordinary registered shares of subsidiaries UAB Vekada, UAB PST Investicijos, the Group

subsidiary OOO Teritorija, respectively, and is considered a controlling shareholder of the

subsidiaries.

The main financial indicators of the subsidiary that has non-controlling interests (thousand EUR):

UAB PST Investicijos

2021

2020

Non-controlling interest,%

31.7 %

Non-current assets

Current assets

4,865

5,906

Total assets

4,865

5,907

Non-current liabilities

Current liabilities

2,284

Total liabilities

2,293

Net assets

4,850

3,614

Net assets attributable to non-controlling interest

1,537

1,146

Revenue

6,787

1,147

Expenses

(5,446)

(3,942)

Net profit (loss)

1,341

(2,795)

Other comprehensive income

Net profit/(loss) attributable to non-controlling interest

425

(885)

Other comprehensive income attributable to non-controlling interest

Cash flows from operating activities

919

(916)

Cash flows used in investing activities

Cash flows from/used in financing activities

Net increase/(decrease) in cash and cash equivalents

919

(916)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

30 Investments in Subsidiaries, Non-Controlling Interests (continued)

UAB Vekada

2021

2020

Non-controlling interest,%

4.4 %

Non-current assets

245

322

Current assets

1,203

1,581

Total assets

1,448

1,903

Non-current liabilities

Current liabilities

380

504

Total liabilities

380

504

Net assets

1,068

1,399

Net assets attributable to non-controlling interest

Revenue

2,909

2,700

Expenses

(3,195)

(2,693)

Net profit (loss)

(286)

Other comprehensive income

Net profit/(loss) attributable to non-controlling interest

(13)

Other comprehensive income attributable to non-controlling interest

Cash flows from operating activities

(218)

257

Cash flows used in investing activities

(13)

Cash flows from/used in financing activities

Net increase/(decrease) in cash and cash equivalents

(142)

244

OOO Teritorija

2021

2020

Non-controlling interest,%

12.5 %

Non-current assets

Current assets

Total assets

Non-current liabilities

Current liabilities

1,073

1,298

Total liabilities

1,073

1,298

Net assets

(1,059)

(1,287)

Net assets attributable to non-controlling interest

(132)

(161)

Revenue

335

Expenses

(28)

(349)

Net profit (loss)

307

(349)

Other comprehensive income

Net profit/(loss) attributable to non-controlling interest

(44)

Other comprehensive income attributable to non-controlling interest

Cash flows from operating activities

(1)

Cash flows used in investing activities

Cash flows from/used in financing activities

Net increase/(decrease) in cash and cash equivalents

(1)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

31 Change in Liabilities Arising from Financing Activities

(EUR thousand)

As at

31/12/202

Dividends

declared

Accrued

Cash

flow

out

Currency

exchange

As at

31/12/2021

Dividends payable

Loans received and

interests payable

15,526

5,000

(207)

20,319

Other liabilities

Lease liabilities

153

(71)

Total

15,557

5,153

(2,78)

20,432

32 Events after the End of the Reporting Period

Still reeling from the impact of the COVID-19 pandemic, the economy needs to face another

round of challenges in 2022. Increased geopolitical tensions in the region and in the European

Union (EU) following Russia’s attack on Ukraine undoubtedly affect the construction and real

estate sector. Today it is very difficult to predict the impact of the situation on the construction

sector. Ukraine is a significant supplier of raw materials, therefore the war in Ukraine has a

significant impact on the material supply chain and price increases. Having assessed the risk, the

Group ceased ordering raw materials from third countries, including Ukraine, Belarus and Russia,

however, a significant part of reinforcing bars, crude steel, wood and silicon blocks were imported

from Ukraine, Belarus and Russia. To ensure timely supply of materials, the Group companies

are looking for alternative sources of supply and reorganizing the supply chain to import raw

materials from other countries. The construction sector and other Group companies are also

heavily influenced by the increased energy costs.

It is likely that disturbances in the financial market, rising prices of raw materials and energy, will

encourage customers to review or hold back investments with some projects being suspended or

delayed. This may weaken the construction output.

The Group thoroughly monitors and evaluates the ongoing processes in the market in order to

ensure a seamless continuation of activities.

AB Panevėžio Statybos Trestas and Group of companies will look for solutions to cushion the

negative impact of war on the Group’s activities and will seek to ensure the optimisation of costs

of implemented projects, ongoing investments and routine activities.

Managing director Egidijus Urbonas 04/04/2022

Chief Accountant Danguolė Širvinskienė 04/04/2022

Company’s and Consolidated Annual Report,

Governance Report,

Consolidated Report of Social Responsibility,

and Remuneration Report

of Panevezio statybos trestas AB

for 2021

I. Company’s and Consolidated Annual Report

1. Accounting period covered by the Annual Report

This Company’s and Consolidated Annual Report for the year 2021 covers the period from 1 January

2021 until 31 December 2021.

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

The auditor of the company is Grant Thornton Baltic UAB.

In this report, Panevezio statybos trestas AB can also be referred to as ‘the Company’, and the

Company together with its subsidiary companies can be referred to as ‘the Group’.

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

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 Panevezio, 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

147732969

VAT code

LT477329610

LEI code

529900O0VPCGEWIDCX35

Administrator of Legal Entity Register

State Enterprise Centre of Registers

E-mail

pst@pst.lt

Website

www.pst.lt

4. Nature of the main activities of the issuer

The main area of activities of the Company and its subsidiaries (the Group) is design 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 listed

activities, the Company is engaged in rent of premises and machinery.

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

As of 31 December 2021, the Group of Panevezio statybos trestas AB included the following

companies:

Subsidiary

company

Registration date,

administrator

Company

code

Registered

address

Telephone, fax,

e-mail, website

Portion of

shares held

(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) 461677

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@vekada.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

OOO

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

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

info@psti.lt

gbujokas@psti.lt

100

Ateities

projektai UAB

25 April 2006

State Enterprise

Centre of Registers

300560621

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

Fax (+370 5) 2102131

info@psti.lt

gdieckuviene@psti.lt

100

PST

investicijos

UAB

23 December 1998

State Enterprise

Centre of Registers

124665689

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

info@psti.lt

gbujokas@psti.lt

Tauro

apartamentai

UAB

23 October 2018

State Enterprise

Centre of Registers

304937621

Ukmerges Str. 219,

Vilnius

Tel.(+370 610) 09222

gbujokas@psti.lt

100

Subsidiary

company

Registration date,

administrator

Company

code

Registered

address

Telephone, fax,

e-mail, website

Portion of

shares held

(per cents)

Hustal UAB

11 December 2018

State Enterprise

Centre of Registers

304968047

Tinklu Str. 7,

Panevezys

Tel.(+370 45) 461677

Fax (+370 45) 585087

andrius.maciekus@hus

tal.eu

www.hustal.eu

100

Aliuminio

fasadai UAB

2 January 2020

State Enterprise

Centre of Registers

305412441

Pramones Str. 5,

Panevezys

Tel. +370 686 32727

info@alfasadai.lt

www.alfasadai.lt

100

Subsidiary companies of PST investicijos UAB:

ISK

Baltevromarket

13 July 2001

Independent

Registration

Company AB –

Administrator of

Shareholders’

3906214631

Rostovskaja Str.

5-7,

Kaliningrad,

Kaliningrad Obl.,

Russian Federation

Tel.+79097772202

baltevromarketao@

mail.ru

100

6. Nature of principle 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. Products are successfully exported to Norway, Sweden,

Switzerland, Iceland and other countries.

Metalo meistrai UAB – design 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, design, start-up and commissioning of indoor

utility systems.

Kingsbud Sp.z o.o. – wholesale of construction materials. Kingsbud Sp.z o.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.

Ateities projektai UAB – real estate preparation and sale.

PST investicijos UAB – real estate preparation and sale. PST investicijos UAB has the subsidiary

company, Baltevromarket ZAO ISK, established for development of real estate projects in the

Kaliningrad Oblast, Russian Federation.

Tauro apartamentai UAB – development of real estate projects.

Hustal UAB – sale, erection and design of steel structures. Activity and sale of the company are

focused on the Scandinavian market.

Aliuminio fasadai UAB – production of aluminium profile systems, aluminium framed windows and

doors.

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

accounting of securities and provision of services related to securities accounting. 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).

Share type

Number of shares,

pcs.

Par value,

Euros

Total par value,

Euros

Emission code

ISIN

Ordinary registered shares

(ORS)

16,350,000

0.29

4,741,500

LT0000101446

Comparison of PTR1L Panevezio statybos trestas and OMX Vilnius Benchmark GI indexes in 2021

Company share price variation at Stock Exchange Market Nasdaq Vilnius for the period 2017

through 2021 (Euros)

Company share price variation at Stock Exchange Market Nasdaq Vilnius in 2021 (Euros)

Table 1. Information on the Company share price at Stock Exchange Market Nasdaq Vilnius for the

period 2017 through 2021:

Indicator

2021

2020

2019

2018

2017

Highest price, Euros

0.838

0.85

0.878

0.99

1.34

Lowest price, Euros

0.53

0.52

0.71

0.75

0.85

Average price, Euros

0.677

0.629

0,78

0,881

1,078

Share price as of the end

of reporting period, Euros

0.66

0.57

0.75

0.752

0.916

Traded volume

2,935,832

19,80,134

987

1,596,044

2,854,251

Turnover, mln. Euros

1.99

1.25

0.77

1.41

3.08

Capitalisation, mln. Euros

10.79

9.32

12.26

12.3

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

Key events of the reporting period

3 February 2021. Panevezio statybos trestas AB has signed the contract for construction of the

building for the new shopping centre Senukai in Vilnius. The project value exceeds 7 mln. Euros

(incl. VAT).

3 February 2021. Panevezio statybos trestas AB received a notice from the European Court of

Human Rights (ECHR) through the authorised person confirming that the application by PST had

been registered for preliminary proceedings.

PST exercised the right of the legal person to turn to the European Court of Human Rights for

protection of business interests in application of the Convention for the Protection of Human Rights

and Fundamental Freedoms. PST went to the ECHR for possible infringement of Article 6 of the

Convention and Paragraph 1 Article 1 Protocol 1 to the Convention, which had been possibly

infringed by the Lithuanian Administrative Courts in hearing the appeals by PST on vacation of the

judgement No. 2S-11(2017) dated 20 December 2017 by the Competition Council.

18 February 2021. The company participates in the litigation over the bailiff’s actions in the case

on the penalty imposed by the Competition Council. On 17 February 2021, the Panevezys Regional

Court made the ruling upholding the judgment by the court of first instance, which had cancelled the

arrangement by the bailiff on scheduling payment of the penalty imposed by the Competition

Council, in particular on the instalments for July and August 2020.

23 February 2021. Panevezio statybos trestas AB received the ruling by the European Court of

Human Rights (ECHR) rejecting the application of the Company regarding violations of the

Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention).

23 February 2021. After winning the public tender Panevezio statybos trestas AB (PST) was

awarded and signed the contract with the Vilnius City Municipality for construction of the Lazdynai

Swimming Pool. The total value of the contract is 21.8 mln. Euros (incl. VAT). The construction

activities of the swimming pool will be resumed in the nearest future and completed by the beginning

of 2022.

9 April 2021. The Extraordinary General Meeting of Shareholders of Panevezio statybos trestas AB

took place where the Board of the Company (in corpore) was withdrawn before the end of the term

of office and the new Board was elected.

20 April 2021. The Panevezys Regional Court by the ruling dated 20 April 2021 in the case of

payment of the interest calculated by the Competition Council of the Republic of Lithuania for the

whole period of judicial proceedings when the Company litigated the fine imposed on the Company

by the Competition Council has left the court ruling by the Panevezys Chamber of the Panevezys

District Court unaffected.

29 April 2021. The Ordinary General Meeting of Shareholders of Panevezio statybos trestas AB took

place. The Ordinary General Meeting of Shareholders did not come to the decision to pay dividends.

9 July 2021. Panevezio statybos trestas AB has concluded a transaction with the real estate developer

Galio Group for construction of the residential estate reVINGIS at Gelezinio Vilko Str. 2, Vilnius.

The total value of the contract exceeds 16 mln. Euros (incl. VAT). The construction activities of the

real estate are planned to be completed in the second half of 2023.

13 July 2021. Panevezio statybos trestas AB has brought an action before the Panevezys Regional

Court in respect with the decision by the state enterprise Ignalina Nuclear Power Plant to reject the

bid by Panevezio statybos trestas AB in the public procurement arranged by means of an

international tender for Procurement of Works for Construction of INPP Near Surface Repository

for Low and Intermediate-Level Short-Lived Radioactive Waste (Construction Stages I/A, II/A) and

Design, Construction and Connection of External Rainwater Drainage Networks to INPP

Infrastructure.

29 July 2021. The Extraordinary General Meeting of Shareholders of Panevezio statybos trestas AB

took place where Grant Thornton Baltic UAB was selected as the auditor of the company.

26 November 2021. The Court of Appeal of Lithuania had investigated the complaint by Panevezio

statybos trestas AB about the decision by the state enterprise Ignalina Nuclear Power Plant to reject

the submitted bid in the tender for Procurement of Works for Construction of INPP Near Surface

Repository for Low and Intermediate-Level Short-Lived Radioactive Waste (Construction Stages

I/A, II/A) and Design, Construction and Connection of External Rainwater Drainage Networks to

INPP Infrastructure. The court upheld the decision to reject the bid by Panevezio statybos trestas AB

but the reasons of the state enterprise Ignalina Nuclear Power Plant for the decision to reject the bid

due to the instalment payments of the fine imposed by the Competition Council were found

unjustified. The company is considering the court judgement and intends to appeal it to the Supreme

Court of Lithuania.

In 2021, the Company successfully completed several large construction projects, such as

Reconstruction of Former Hospital Building Complex in Boksto Street in Vilnius, Construction of

Production and Storage Building for Elmoris in Vilnius, Fourth Stage of Modernization at Panevezys

Bakery of Vilniaus duona UAB, Construction of Multifunctional Sports Centre in Klaipeda, Senukai

Shopping Centre at V. Pociuno Str. 10, Vilnius. Moreover, several apartment building renovation

projects were completed at Debesijos Str. 6 and 8, Architektu Str. 196 in Vilnius.

In addition to that, activities are continued in such projects as Reconstruction of Wroblewski Library

of Academy of Sciences, Reconstruction of Kedainiai Waste Water Treatment Plant, New Head

Office of Lietuvos draudimas at J. Basanaviciaus Str. 10, Vilnius. Construction of Laboratory Block

for Faculties of Electronics, Mechanics and Transport Engineering at Vilnius Gediminas Technical

University at Plytines Str. 25, Vilnius is also in progress and construction of Educational Block for

Faculties of Mechanics, Electronics and Transport Engineering of the University has been started.

More than once the Company has been awarded for successfully implemented projects, their

complexity, high quality and organization of complicated activities. The awards of the Lithuanian

Product of the Year 2020, as every year, are arranged by the Lithuanian Confederation of

Industrialists. The project of the Kaunas CHP Plant implemented by Panevezio statybos trestas AB

was awarded the gold medal. A high-efficiency waste-to-energy cogeneration plant can produce and

deliver about 40 per cents of heat demand of Kaunas.

In 2021, 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, Konstrukcija, where production capacities were concentrated, Vilnius

branch Genranga, performing general contracting activities and project management in the Vilnius

Region, and Klaipstata, performing general contracting activities and project management in the

Klaipeda Region.

The Company has permanent establishments in the Republic of Latvia and Kingdom of Sweden.

In 2021, the companies of the Group successfully continued their activity both inside and outside

Lithuania. The main direction of Metalo meistrai UAB is fabrication of steel structures and elements

for steel structures for construction purposes. In 2021 Hustal UAB continued their main activity –

wholesale trade in steel structures. The main direction for selling the steel structures is the

Scandinavian countries. Skydmedis UAB, which is producing pre-fabricated timber panel houses,

sells nearly all of their products in the foreign market. 94 per cents of the company’s revenue were

for the products sold in the Scandinavian countries. Vekada UAB, Alinita UAB‚ which specialize in

installation of heating, ventilation and conditioning systems in the buildings, and in installation of

electric systems, renewable energy and low current fields, implemented the projects in Lithuania.

The most advanced aluminium profile systems, aluminium windows and doors, façades are produced

at Aliuminio fasadai UAB.

PST investicijos UAB, Ateities projektai UAB and Seskines projektai UAB are the real estate

development companies. Ateities projektai UAB develops the project of residential houses in

Kunigiskes.

PS Trests SIA operating in Latvia is continuing the started construction and is looking for new orders.

In 2021, the wholesale of building materials is further developed. Kingsbud Sp.z o.o, the company

operating in Poland, is engaged in this.

Key events after the reporting period (in the year 2022)

5 January 2022. The company had appealed in cassation against the mentioned court judgement to

the Supreme Court of Lithuania. On 5 January 2022, the Supreme Court of Lithuania upheld the

judgement of 17 February 2021 by the Panevezys Regional Court.

7 January 2022. On 6 January 2022 the Supreme Court of Lithuania delivered the judgement on the

decision by the state enterprise Ignalina Nuclear Power Plant to reject the submitted bid in the tender

for Procurement of Works for Construction of INPP Near Surface Repository for Low and

Intermediate-Level Short-Lived Radioactive Waste (Construction Stages I/A, II/A) and Design,

Construction and Connection of External Rainwater Drainage Networks to INPP Infrastructure

thereby dismissing the cassation appeal of Panevezio statybos trestas AB and hearing the case in

cassation proceedings. The court motivated their decision mainly by the fact that the case is of little

significance to the practice of the Lithuanian courts and public procurement. The court judgement

and the outcome of the dispute will not affect the future operations of the company as its possibilities

for participation in public procurement are no longer restricted.

8 March 2022. Panevezio statybos trestas AB notified that it ceases to operate its companies located

in the region of the Russian Federation:

- Operation of Baltevromarket OOO, with 100 per cents of the authorized capital hold by PST

Investicijos UAB, is ceased though there have been no assets owned by the company since

mid of 2021;

- Territorija OOO has been out of active operation for the period of three years;

- Baltlitstroj OOO is declared bankrupt and is in the process of the relevant proceedings.

For several years now, taking into account the risks involved, Panevezio statybos trestas AB has

been putting tendentious efforts to withdraw from the market of the Russian Federation.

Risk factors related to the Company’s activities:

In their operation, both the Company and the Group face various types of risks, such as legal

regulation, severe competition, shortage of qualified labour, cyclical nature of economy, consistency

of orders, volatile material prices in the global market, macroeconomic factors, damping. However,

only a few of them may have significant impact on the performance results of the Group and the

Company. The main factors that create business risk for the Company and the Group are competition

in the construction market and changes in the demand for construction services. The demand for

construction services also depends heavily on the volume of investments and financing received from

the EU structural funds. Increase and variation of material and service prices make the process of the

project budgeting and possibility to complete the already started projects based on the planned costs

more difficult. This results in extra risk for performance of fixed price construction contracts and

reduces profitability of projects. Furthermore, activity of the Company and the Group is influenced

by the economic situation (economic cycles) in Lithuania and the countries where the Group

companies operate. Although there is still some uncertainty about the trends in global economic

development as well as regional and global crisis in future.

Information on the types of financial risks and risk management is provided in the Notes to the

Separate Financial Statements (Note 4) and Consolidated Financial Statements (Note 4). Legal

uncertainties are provided in the Notes to the Separate Financial Statements (Note 28) and

Consolidated Financial Statements (Note 27).

COVID-19 impact:

In 2021, the construction sector was still among the ones most affected. The Company and the Group

of Panevezio statybos trestas AB looked for solutions and recourses for the problems, operational

challenges and risks that emerged during the COVID-19 pandemic, they were able to adapt to the

radically changed operating conditions and the changed behaviour of market participants. Instead of

postponing decisions to quieter times after the quarantine, the Company and the Group made every

effort to maintain a normal pace of operations. The management responsibly monitors and assesses

the current situation (especially with regard to customer payments, shortages of supplies, order

fulfilment) and responds without delay as well as makes appropriate decisions to ensure business

continuity.

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

environmental and employee matters

He global keyword of 2021 was ‘the pandemic’. COVID-19 and the measures taken to limit its spread

have affected the whole country, all sectors of the economy and all social activities. Under the

influence of COVID-19, the year was very difficult and ununiform in terms of operations and

economic growth of the Company and the Group.

Over the twelve months of 2021, the turnover of Panevezio statybos trestas AB amounted to 65.721

mln. Euros, whereas the revenue of the Company for the twelve months of 2020 amounted to 59.712

mln. Euros. Although the Company experienced the difficulties caused by the pandemic, the revenue

of the Company increased by 10 per cents compared to that in 2020. During 2021, the Company

managed to close the year with the minimum profit in the amount of 0.304 million Euros, whereas

in 2020 the loss amounted to 12.418 mln. Euros.

Over the same period, the total consolidated revenue of Panevezio statybos trestas AB Group was

98.451 mln. Euros, i.e. by 31 per cents higher than the revenue for the year 2020. In 2020, the revenue

of the Group amounted to 74.912 mln. Euros. The net profit of the Group is 3.049 mln. Euros in

2021, whereas in 2020 the Group suffered the loss in the amount of 10.431 mln. Euros.

Revenue and net profitability variation for the Company:

Revenue and net profitability variation for the Group:

Table 2. Performance (thousands Euros) of the Company and the Group of Panevezio statybos

trestas AB for the period 2019 through 2021:

Group

Items

Company

2019

2020

2021

2019

2020

2021

110,466

74,912

98,451

Revenue

108,464

59,712

65,721

104,586

68,167

86,283

Cost of sales

104,913

58,531

59,888

5,880

6,745

12,168

Gross profit

3,551

1,181

5,833

5.32

9.00

12.36

Gross profit margin (per cents) (API)

3.27

1.98

8.88

-681

-9,360

2,414

Typical operating result

-651

-12,595

-589

-0.62

-12.49

2.45

Typical operating result from

turnover (per cent)

-0.60

-21.09

-0.90

2,553

-7,925

3,477

EBITDA

(API)

1,926

-11,362

259

2.31

-10.58

3.53

EBITDA margin (per cents) (API)

1.78

-19.03

0.39

821

-10,431

3.499

Net profit (API)

590

-12,418

304

0.74

-13.92

3.55

Nets profit (loss) margin (per cents)

0.54

-20.80

0.46

0.05

-0.638

0.214

Earnings per share (Euros) (EPS)

(API)

0.036

-0.76

0.019

2.39

-34,40

12.58

Return on equity (per cents) (ROE)

(API)

1.70

-43.89

1.38

Group

Items

Company

2019

2020

2021

2019

2020

2021

1.07

-13.99

4.41

Return on assets or asset

profitability (ROA)

(API)

0.83

-18.59

0.55

2.25

-35.97

6.65

Return on investments (ROI)

(API)

1.65

-52.81

1.29

1.63

0.75

1.30

Current liquidity ratio

(API)

1.35

0.88

1.12

0.85

0.53

1.00

Critical liquidity ratio

(API)

1.24

0.81

0.94

0.45

0.36

0.34

Equity ratio

(API)

0.49

0.35

0.46

0.54

0.62

0.65

Debt ratio

(API)

0.51

0.65

0.54

1,21

1.72

1.90

Debt to equity ratio

(API)

1.05

1.85

1.19

2.10

1.61

1.79

Book value per share

(API)

2.13

1.34

1.35

0.36

0.35

0.37

Price-to-book ratio (P/B ratio)

(API)

0.35

0.43

0.49

14.94

-0.89

3.08

Price-to-earnings ratio (P/E)

(API)

20.83

-0.75

35.50

EBITDA = profit before taxes, interest, depreciation and amortization. The essence of EBITDA indicator is to determine

the most objective profit (loss) of the company, which is least dependable on circumstances (least variable).

Earnings per share (Euros) = net profit (loss) / number of issued shares.

Return on equity (per cents) (ROE) = net profit / equity capital (a portion equity capital belonging to the shareholders).

Return on assets (ROA) or asset profitability = net profit / assets.

Return on investments (ROI) = net profit / (assets-current debt).

Critical liquidity ratio = (current assets – inventories) / current liabilities.

Equity ratio = equity capital / assets.

Debt ratio = liabilities / assets.

Debt to equity ratio = liabilities / equity.

Book value per share = equity capital / number of shares.

Price-to-book ratio (P/B ratio) = share price as of the end of reporting period / share book value.

Price-to-earnings ratio (P/E) = share price as of the end of reporting period / net profit allocated for one share.

Panevezio statybos trestas AB uses Alternative Performance Indicators to better disclose the

financial performance of the Group and the Company. The description of these indicators and

methodology for their calculation are available on the Company's website

https://www.pst.lt/en/finansines-ataskaitos

The main revenue of the Company by activity types is from construction and erection activities. In

2021, the revenue of the Group from construction and erection activities totalled 71.9 per cents, the

revenue from real estate was 8 per cents, the revenue from finished products and other revenue

amounted to 20.1 per cents, whereas in 2020, the revenue of the Group from construction and erection

activities totalled 94 per cents, the revenue from real estate was 1.7 per cents, the revenue from

finished products and other revenue amounted to 4.3 per cents.

Revenue distribution by activity types for the Company (mln. Euros):

108,50

59,71

65,72

0,00 20,00 40,00 60,00 80,00 100,00 120,00

2019

2020

2021

Construction and erection activities

Revenue distribution by activity types for the Group (mln. Euros):

The main activities of the Company were performed in Lithuania and made 99.17 per cents of all

works carried out by the Company in 2021 and 97.8 per cents in 2020. The revenue of the Group

from the works performed inside the country made 78.9 per cents of the revenue, whereas in 2020 it

was 81.2 per cents. In 2021 and 2020, the revenue of the Group in the Scandinavian countries was

respectively 12.2 and 16 per cents of the all revenue.

Operating revenue distribution by countries for the Company (mln. Euros):

Operating revenue distribution by countries for the Group (mln. Euros):

104,60

70,42

70,80

1,24

7,87

5,90

3,26

19,78

0,00 20,00 40,00 60,00 80,00 100,00 120,00

2019

2020

2021

Revenue of the Group (mln. Euros)

Construction works Real estate Products produced and other income

102,13

58,40

63,86

1,09 5,24

1,31

1,86

0,00 20,00 40,00 60,00 80,00 100,00 120,00

2019

2020

2021

Revenue of the Company (mln. Euros)

Lithuania Russian Federation Latvia

94,21

60,86

77,65

1,09

6,78

10,05

12,02

12,05

5,11

2,04

1,97

0,00 20,00 40,00 60,00 80,00 100,00 120,00

2019

2020

2021

Revenue of the Group (mln. Euros)

Lithuania Russian Federation Scandinavian countries Other countries

Environment protection

Quality, environment protection, occupational health and safety play a very important role in

activities of Panevezio statybos trestas AB. Quality Management (ISO 9001), Environmental

Management (ISO 14001) and Occupational Health and Safety Management (OHSAS 18001)

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 2020, the Lithuanian National Accreditation Bureau accredited the Construction Laboratory of the

Company in accordance with LST EN ISO/IEC 17025:2018 for the period of 5 years, thus granting

the right to perform tests of building materials.

The companies of the Group also have Quality, Environmental And Occupational Health And Safety

Management Systems in accordance with the requirements of LST EN ISO 9001:2015, LST EN ISO

14001:2015 and LST ISO 45001:2018 introduced and successfully functioning.

Employees

Professional, competent and responsible employees are the biggest asset of the Company. 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 2021, the number of employees in the Group was 833, in the Company – 560.

As of 31 December 2020, the number of employees in the Group was 870, in the Company – 593.

Operating restrictions caused by the COVID-19 pandemic, reduced workload also had direct impact

on decrease in the number of employees of the Company and the Group.

Table 3. Average number of employees in 2020 and 2021:

Average number of

employees

2020

2021

Group

Company

Group

Company

Managers

Specialists

315

236

316

234

Workers

575

382

523

347

Total

915

631

862

592

Table 4. 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

Specialists

311

243

Workers

500

353

Total

833

287

365

Employment contracts do not include any special rights and obligations of employees or some part

of them.

In 2021, the Company also paid much attention to qualification improvement. Training in the

Company is done in two directions using:

1. Services of training 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 key events having occurred after the end of the financial year is provided in the Notes

to the Separate Financial Statements (Note 32) and Consolidated Financial Statements (Note 32),

also refer to Section 13 of this Annual Report.

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

Group

The Company and companies of the Group pay much attention to improvement of business process

management, increase of operational efficiency, make targeted investments in increasing

competitiveness of production capacities, improving working conditions of employees.

To maintain the highest competence in the construction sector, the Company implements and uses

advanced processes and technologies in its activities.

For design preparation we use the up-to-date design software. We are constantly keeping up to date

with the latest applications and supplementing our software package.

The Company strives for fluent construction operations. We use the up-to-date software that allows

us using the advantages of the Building Information Modelling (BIM). This digital model is used in

the tender preparation and preparation for construction stages, delivering supplies to the site,

monitoring the progress of planned and completed activities.

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

The economy that has not been able to recover from the impact of the COVID-19 pandemic will face

a difficult period again in 2022. The increased geopolitical tension in the region and the European

Union (EU) following the Russia's invasion of Ukraine are undoubtedly affecting the construction

and real estate sectors. Thus far, it is very difficult to forecast the impact of the situation on the

construction sector. As Ukraine is a major supplier of raw materials, the war currently taking place

in Ukraine has a significant impact on the supply chain of materials and price increase. The Group

has considered the risks and does not order materials from any third countries, including Ukraine,

Belarus and Russia. However, most of the Lithuanian suppliers from which the Group purchases

materials, imported most of reinforcement bars, raw steel, timber and silicate blocks from Ukraine,

Belarus and Russia. To ensure the timely delivery of materials, the Company and the companies of

the Group are looking for alternatives and reorganizing the supply chain of materials to other

countries. The rise in energy prices also has a significant impact on the construction sector and the

companies of the Group.

It is likely that due to the turmoil in the financial markets, rising prices for raw materials and energy,

clients may review or suspend investments resulting in suspension or delay of some projects. This

might mean reduction in the volume of construction.

The Group and the Company responsibly monitors and assesses the processes ongoing in the market

to ensure the smooth continuity of operations.

Panevezio statybos trestas AB and the companies of the Group will search for solutions to absorb

the negative effects of the war on the operations of the Group, seek to ensure that the costs of the

projects in progress as well as investments and operating activities are optimal.

In 2022, the Company and the Group will make every effort to assess and manage the risks that have

arisen, find new markets and increase the cost-effectiveness of new projects. The Company and the

Group will continue developing real estate in order to achieve a return on investments.

14. Authorised capital of the issuer and its structure

As of 31 December 2021, 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 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 2021, the total number of the shareholders was 1,734.

Table 5. Distribution of shareholders by residence country and legal form:

Investors

Number of shares,

pcs.

Portion of authorized

capital, per cents

Foreign investors

Legal entities

1,991,745

12.2%

Natural persons

1,362,559

8.3%

Local investors

Legal entities

9,358,358

57.2%

Natural persons

3,637,338

22.2%

Table 6. 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 (%)

PANEVEZIO KELIAI AB

S. Kerbedzio Str. 7, Panevezys

Company code: 147710353

8,138,932

49.78

CLAIRMONT HOLDINGS LTD

Company number 85573

GRIGORI AFXENTIOU, 27

P.O. 6021, CYPRUS

936,052

5.72

Freely floating shares

7,275,016

44.50

At the Extraordinary General Meeting of Shareholders of Panevezio keliai AB held on 14 March

2022 the shareholders of the company took the decision to replace the name of Panevezio keliai AB

(legal entity number 147710353) by HISK AB. This change has affected only the name of the

company, other data as well as rights and obligations remain unchanged.

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, one ordinary registered share of the Company carries one vote at the

General Meeting of Shareholders.

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 end of 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 Ordinary General Meeting of Shareholders of Panevezio statybos trestas AB that took place on

29 April 2021 did not come to the decision to pay dividends.

Table 7. History of dividends paid over the previous years:

Profit of financial year allocated for dividends

2015

2016

2017

2018

2019

Total amount allocated for dividends,

Euros

261,977

1,062,750

981,000

490,500

Dividends per share

0.016

0.065

0.060

0.030

Ratio of dividends to the Company's net

profit, per cent

79.80

59.33

504.50

83.09

Dividend profitability (dividends per

share / share price as of the end of the

period), per cents

1.7

6.9

6.6

5.3

16. Information on significant transactions between the related parties

All transactions with related parties are provided in the Notes to the Separate Financial Statements

(Note 29) and Consolidated Financial Statements (Note 28).

17. Published information

In accordance with the procedure established by the laws of the Republic of Lithuania, all material

events related to operation of the Company and information on the time and place of the General

Meeting of Shareholders are published on the website of the Company

https://www.pst.lt/investuotojams and on the stock exchange NASDAQ Vilnius AB

(www.nasdaqomxbaltic.com).

Corporate Governance Report

Information on compliance with the Corporate Governance Code

The information on compliance with the Corporate Governance Code is provided in Appendix 1 to

the Annual Report.

Panevezio 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. As no Supervisory Board is set up in the Company, the

Board is elected, which performs the supervision functions pursuant to the Law on Companies of the

Republic of Lithuania. Following the Articles of Association of the Company, the Board is set up of

5 members, which are elected for the period of four 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 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 Committee of the Company gives recommendations to the Board on nomination of an

auditing company/auditor. The Board selects the candidate for the auditing company/auditor and

submits it to the General Meeting of Shareholders for approval. This ensures independence of the

conclusions and opinion provided by the auditing company.

Information on extent of risk and risk management

Risk management is a part of strategic management and integral to the day-to-day operations of the

Group. In managing risks, the main objective of the Group is to identify higher and significant risks

and manage them in the optimal way. The following financial risks are faced within the Group: credit,

liquidity, market and operational.

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 operation 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 after credit standing of each new client has been assessed. The potential credit risk for the

clients of the Group and the Company is managed through continuous monitoring of outstanding

balances. The aim to ensure that the services are provided to reliable clients and do not exceed the

permissible credit risk limit is continuously maintained. The clients failing to meet the established

limit 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 facing the risk to lose reputation of the Group. The Company and the Group strives

to maintain sufficient amount of cash and cash equivalents or secure of appropriate credit instruments

so as to fulfil their obligations.

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.

Business risk is related to the Group's entry into new markets, segments, management of available

inventories and investments, and execution of construction contracts. One of the peculiarities related

to construction activities is that the fulfilment of concluded construction contracts is a long-term

process, which makes the sector inert to changes in the economic environment. For this reason, both

positive and negative changes reach the economic environment in the construction sector with

considerable delay. In order to manage business risk, the Company and the Group seek to diversify

their sources of revenue. To this end, orders are being sought and contracts are being concluded in

both private and public sectors, and markets are being searched not only in Lithuania but in other

countries as well. The companies of the Group operate in different sectors, such as construction, real

estate development, production and engineering network installation. The construction sector is not

limited to the construction of single-purpose buildings. The Company implements construction

projects for industrial, engineering, environmental and residential buildings. Before starting new

projects, the Company and the companies of the Group make a thorough analysis of the project

specifics and only after are confident that the environment is sufficiently stable and a competent team

is collected, final decisions are made.

The accounts of the Company are kept and financial statements are prepared in accordance with

International Financial Reporting Standards adopted for application in the EU. The annual financial

statements are audited by the independent auditors selected by the General Meeting of Shareholders.

This procedure ensures relevance and transparency of the data provided in the financial statements.

Operational risk constitutes the risk of probability to incur losses due to people, systems, inadequate

internal processes or their failure, effects of external events, including legal risks. For the purposes

of operational risk management, the Group implements appropriate measures to ensure functioning

of the internal control system and appropriate co-operation with relevant third parties. The main

elements of internal control applied in the Group are control of operations and accounting, limits of

decision-making powers and their control, separation of business decision-making and control

functions, etc. The aim is to minimize the risk of legal compliance and ensure that the activities

carried out comply with the applicable legislation. To this end, the advice of professional lawyers

and their participation are used in the processes of drafting internal instruments and contracts.

Information on significant directly or indirectly held share portfolios

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

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 shareholders with special control rights

There are no shareholders with special control rights in the Company. The ordinary dematerialised

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 meeting. 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

Referring 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 General Meeting of Shareholders is the highest governing body of the Company, resolving the

issues assigned to its competence by the Law on Companies and the Articles of Association of the

Company. The competence of the General Meeting of Shareholders does not differ from that of the

competence prescribed by the Law on Companies.

According to the Law on Companies of the Republic of Lithuania, one collegial management body

may be formed in the Company. The Board consists of 5 (five) members, who are elected by the

General Meeting of Shareholders for the period of 4 (four) years. They represent the shareholders

and perform supervisory and control functions. The activities of the Board are managed by the

Chairman. The Board elects the Chairman from the members of the Board.

The Chief Executive officer of the Company is the Managing Director. The Managing Director is

the sole governing body of the Company. The Managing Director is the main person managing and

representing the Company. The Board elects and dismisses the Chief Executive Officer of the

Company – 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:

The Board members of Panevezio statybos trestas AB were elected for a new 4 (four) year term at

the General Meeting of Shareholders on 9 April 2021, 2 (two) members of the Board are independent.

The term of office of all members of the Board will end on 9 April 2025.

JUSTAS JASIUNAS, Chairman

Educational background: Mykolas Romeris University, Master in Law.

Place and position of employment: Consultant at Panevezio statybos trestas AB (company code

147732969, P. Puzino Str. 1, Panevezys).

Participation in activities of other companies:

Board Member at Panevezio keliai AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys);

Chairman at Aliuminio fasadai UAB (company code 305412441, Pramones Str. 7, Panevezys);

Chairman at Vekada UAB (company code 147815824, Marijonu Str. 36, Panevezys);

Board Member at Skydmedis UAB (company code 148284718, Pramones Str. 5, Panevezys).

As of 31 December 2021, held no shares of the Company.

GVIDAS DROBUŽAS, Board Member

Educational background: Panevezys Polytechnic School, higher non-university.

Place and position of employment: General Director, Board Member at IOCO Packaging UAB

(company code 110564826, Pusaloto Str. 212, Panevezys).

Participation in activities of other companies:

Chairman at Panevezio keliai AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys);

Consultant at Panevezio statybos trestas AB (company code 147732969, P. Puzino Str. 1, Panevezys);

Board Member at PST investicijos UAB (company code 124665689, Ukmerges Str. 219, Vilnius);

Director at Pokstas UAB (company code 168424572, Gustonys Vlg., Naujamiestis Eldership,

Panevezys District Municipality);

Director at IOCO UAB (company code 302547850, Verkiu Str. 25C-1, Vilnius);

Director at Stenrosus UAB (company code 300007108, B. Sruogos Str. 6-14, Vilnius).

As of 31 December 2021, held 5 (five) shares of the Company, a shareholder of Panevezio keliai AB.

VAIDAS GRINCEVICIUS, independent Board Member

Educational background: Vilnius University, Master in Management and Business Administration.

Participation in activities of other companies:

Venture Capital Investor, Member of LitBAN (Lithuanian Business Angel Network) Association

(company code 304811409, L. Stuokos-Guceviciaus Str. 9-10, Vilnius);

Chairman at SIQOR industries UAB (company code 304755864, Konstitucijos Ave. 21A, Vilnius).

As of 31 December 2021, held no shares of the Company.

KRISTINA MACIULIENE, Board Member

Educational background: Kaunas University of Technology, Bachelor in Business Administration,

Lithuanian University of Law, Master in Law.

Place and position of employment: Expert-Consultant at Panevezio keliai AB (company code

147710353, S. Kerbedzio Str. 7, Panevezys).

Participation in activities of other companies:

Board Member at Panevezio keliai AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys);

Chairman at Skydmedis UAB (company code 148284718, Pramones Str. 5, Panevezys);

Chairman at Hustal UAB (company code 304968047, Tinklu Str. 7, Panevezys);

Board Member at Metalo meistrai UAB (company code 148284860, Tinklu Str. 7, Panevezys);

Board Member at Vekada UAB (company code 147815824, Marijonu Str. 36, Panevezys);

Board Member at Aliuminio fasadai UAB (company code 305412441 Pramones Str. 5, Panevezys);

Chairman at Lauktuves Jums UAB (company code 147797155, Laisves Sq. 26, Panevezys);

Chairman at Gustoniu zemes ukio technika UAB (company code 168581940, S. Kerbedzio Str. 7F,

Panevezys).

As of 31 December 2021, held 10 (ten) shares of the Company.

LINA SIMASKIENE, independent Board Member

Educational background: Kaunas University of Technology, Engineer-Economist.

Place and position of employment: Chief Financial Officer at IOCO Packaging UAB (company code

110564826, Pusaloto Str. 212, Panevezys).

Participation in activities of other companies:

Chief Accountant at IOCO UAB (company code 302547850, Verkiu Str. 25C-1, Vilnius);

Chief Accountant at Pokstas UAB (company code 168424572, Gustonys Vlg., Naujamiestis

Eldership, Panevezys District Municipality);

Chief Accountant at Stenrosus UAB (company code 300007108, B. Sruogos Str. 6-14, Vilnius);

Chief Accountant at New Miracle UAB (company code 304552981, J. Zikaro Str. 33A, Panevezys);

Director at WEB Solutions MB (company code 303044019, Filaretu Str. 99A, Vilnius),

As of 31 December 2021, held no shares of the company.

Administration:

EGIDIJUS URBONAS – Head of the Company Administration, Managing Director. Holds no shares

of the Company. University education, Construction Engineering, Kaunas Technology University.

Master Degree in Construction Engineering, Vilnius Gediminas Technical University, postgraduate

program in Construction Management.

Participation in activities of other companies: Chairman at PST investicijos UAB (company code

124665689, Ukmerges Str. 219, Vilnius)

As of 31 December 2021, held no shares of the Company

DANGUOLE SIRVINSKIENE – Chief Accountant of the Company. Holds no shares of the

Company. University education (LZUA, 1983), Accounting - Economics.

In 2021, no loans, guarantees, sureties were granted and no property was transferred to any Board

Members 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. 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 functions 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 29 April 2021:

Drasutis Liatukas – an independent auditor, Head of Finansu auditorius UAB, auditor. Holds no

shares of the Company;

Irena Kriauciuniene – an independent auditor. Holds no shares of the Company;

Egle Grabauskiene – Deputy Chief Accountant of the Company. Holds no shares of the Company.

Diversity policies applied to election of the CEO and members of the supervisory bodies of the

company

The Company has no diversity policy for election of the CEO and members of the supervisory bodies

of the Company. The main criterion for election of a candidate to CEO and members of the

supervisory or management bodies is competence of the candidate.

Information on all agreements between the shareholders

The Company has no information on any agreements between the shareholders available.

Consolidated Report of Social Responsibility

We believe that corporate social responsibility is effective only when integrated into everyday work

and, if managed like any other business activity, it leads to a sustainable and responsible economy.

Constant and continuous improvement of business and project management, quality, customer

satisfaction, supply and subcontracting chain management, environmental and public relations at

PST is not only openness to the surrounding environment, but also the goal of operating ethically,

fairly and transparently in respect of the market, environmental protection, society and employees.

In their activities both, the Company and the companies of the Group, follow the highest standards

of business ethics and principles of social ethics. Social responsibility is based on its values and

defines the approach of the Company 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.

Short Description of Activity Model

Panevezio statybos trestas AB is one of the largest local construction companies, which has been

operating in the construction sector for more than 60 years and has the highest competence for

creation of exceptional quality. Honesty, responsibility, professionalism, quality workmanship and

efficient solutions are the values that have allowed us to achieve our goals – today we are one of the

largest construction companies in Lithuania. The Company has implemented many especially

important and complex projects that have contributed to the economic growth of Lithuania and have

a significant impact on development of infrastructure and improvement of environment protection in

the country.

In 2021, the Company made structural changes in order to optimize costs, concentrate services and

strengthen production capacity. One of them, merge of the branches Konstrukcija and Betonas,

Genranga and Stogas, took place at the beginning of the year. This merge resulted in reduction of

branch administration costs and faster decision-making processes.

The Company comprises the following branches:

- Gerbusta, focusing on construction of utility networks and landscaping.

- Pastatu apdaila, carrying out indoor and outdoor finishing works,

- Konstrukcija where production capacities were concentrated,

- Vilnius branch Genranga, performing general contracting activities and project management

in the Vilnius Region,

- Klaipstata, performing general contracting activities and project management.

The business model of Panevezio statybos trestas AB Group did not change last year. The number

of the companies remained the same. The Group consists of the parent company, Panevezio statybos

trestas AB, and 13 subsidiaries in Lithuania, Latvia, Poland and the Russian Federation. Information

on the portion of the capital held by Panevezio statybos trestas AB in the subsidiaries is provided in

Section 5 of the Consolidated Annual Report.

Panevezio statybos trestas AB and the companies of Panevezio statybos trestas AB Group belong to

various associations. Panevezio statybos trestas AB is the member of the Lithuanian Construction

Association, Association of Testing Laboratories for Construction Products, Panevezys Chamber of

Commerce, Industry and Crafts. Metalo meistrai UAB is the member of the Lithuanian Association

of Welders and PST investicijos UAB is the member of the Lithuanian Real Estate Development

Association.

For management purposes, the Group is divided into business units based on the nature of their

activity and has the following accountable segments:

• Construction;

• Steel structures;

• Timber panel houses;

• Concrete floor installation;

• Aluminium structure production;

• Real estate development;

• Other activity.

The segment of construction includes activity of Panevezio statybos trestas AB, Vekada UAB, Alinita

UAB and PS Trests SIA. The main area of activity is construction, design and erection of various

buildings, structures, equipment and communications, construction/installation of other objects

(electrical installation, building renovation, installation of plumbing, waste water systems, fire

protection systems, video surveillance, security and fire alarm) in Lithuania and other countries.

The segment of steel structures includes activity of Metalo meistrai UAB and Hustal UAB. The main

area of their activity is design and fabrication of steel structures for construction. The company also

delivers steel structures to other companies based on their demand.

The segment of timber panel houses includes activities of Skydmedis UAB. The area of activity is

design, production, construction and outfitting of prefabricated timber panel houses, production of

timber structures and millwork.

The segment of concrete floor installation are carried out by Pastatu apdaila, the branch of Panevezio

statybos trestas AB.

The aluminium structure production (the production of aluminium profile systems, aluminium

framed windows and doors) was started by Aliuminio fasadai UAB in the beginning of 2020.

The segment of real estate development includes Seskines projektai UAB, Ateities projektai UAB,

Tauro apartamentai UAB, Teritorija OOO and PST investicijos UAB.

The segment of other activity includes Kingsbud Sp.z o.o., which is engaged in wholesale of

construction materials.

Due to insignificance of volumes, the segments of concrete floor installation and production of

aluminium structures are not distinguished and are presented in the segment of Other activity in the

consolidated financial statements.

In view of the increased geopolitical tension in the region, new sanctions and restrictive measures

imposed on the Russian Federation and Republic of Belarus by the European Union and its allies,

Panevezio statybos trestas AB ceases to operate its companies located in the region of the Russian

Federation.

Strategy, vision, mission and objectives of the Company

In its activity, Panevezio statybos trestas AB follows the 3-year strategy approved by the Board. The

strategy of the Company for the years 2019 through 2021 is based on growth in operation,

enhancement in corporate value, management of client relations, ensuring of safe working

environment and development of employees.

Vision – To become a reputed construction company in Europe, which uses advanced technologies,

ensures quality and agreed work completions terms.

Mission - While honestly fulfilling our obligations, promoting long-term cooperation and proposing

mature solutions in construction, we ensure profitable and sustainable business development.

Objective - To retain the leading position in the construction market by creating the added-value to

our clients, shareholders and employees.

Principles of social responsibility:

Accountability (for impact on society, economy, environment);

Transparency (of decisions and activity, which have impact on society and environment);

Ethical (proper) behaviour;

Respect (listening attentively and responding) for stakeholders’ interest;

Respect for the rule of law;

Respect for international norms of behaviour;

Respect for human rights.

Environment Protection

Panevezio statybos trestas AB and the companies of the Group (Skydmedis UAB, Metalo meistrai

UAB, Alinita UAB, Vekada UAB) have the Environmental Management System (EMS) consistent

with the requirements of ISO 14001:2015/LST EN ISO 14001:2015, legal and other environmental

regulations established, documented and constantly reviewed to ensure its suitability, adequacy and

effectiveness.

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 and internal issues with regard to the

objectives and strategic direction of the Company as well as needs and requirements of interested

parties are taken into account resulting in defining risks and opportunities to make sure that the

integrated management system is able to 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 and implemented in the EMS processes, assessment criteria and effectiveness of these

actions. Panevezio statybos trestas AB has the Risk and Opportunity Register prepared.

The significant environmental aspects are determined in all branches, subsidiary companies and sites

of the Company after significance of activity impact on environment 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 a process, materials used, technologies, etc., changes,

provided they condition occurrence of new environmental aspects. The site 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

over 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.

As every year, in 2021 the Company monitored the EMS indicators and performed measurements:

amount of waste, amount of hazardous chemicals used, incidents related to soil pollution with oil

products, rainwater pollution, emissions from internal combustion engines, air pollution with

particulate matter, noise, indoor dust, street pollution with dirt/dust, consumption of electricity,

water, fuel, etc.

The use of hazardous chemicals in construction sites is being reduced by replacing them with less

hazardous ones.

In its operation the company uses only green electricity produced from renewable energy sources.

Panevezio statybos trestas AB has a responsible approach on the issues of climate change and is not

only a consumer of electricity, but also a producer.

Panevezio statybos trestas AB operates a 200 kW solar power plant generating approximately 190

thousand kWh of the electric power annually, which makes about 30 per cents of the electric power

consumed by the production facilities. In addition to that, the Company operates three power plants

of 30 kW each, together they generate about 80,000 kWh of renewable electric power, which is

supplied to the electric grid. In 2021, a new 150 kW solar power plant was installed and started in

one of the companies of Panevezio statybos trestas AB Group, Skydmedis UAB. It is planned that it

will produce about 80 – 90 per cents of the electric power required for production facilities.

The amount of green electric power generated from the renewable electric sources over the year 2021

totalled 263.549 thousand kWh (24.9 thousand kWh in 2020), which prevented 1028.79 t of CO2

emissions (97.2 t of CO

in 2020).

In 2021, the company of Panevezio statybos trestas AB Group, Skydmedis UAB, installed and started

using a bioboiler for heating of premises. 30 per cents of the biofuel required for operation of this

boiler is obtained from production timber waste, which does not need to be disposed of.

The MobyDick ConLine KIT Flex400 MC Wheel Washing System has been successfully in use. The

closed-cycle wheel washing system not only reduces street pollution with dirt, prevents contaminated

water from entering urban sewage networks, but also does not interfere with other road users when

cleaning roads and is an alternative to sweeping brooms that cause dust and particulate matter spread

in the city.

The accounting of generated waste is performed in the GPAIS module: https://www.gpais.eu.

The Group sorted out the following quantities of waste for recycling and reuse, as well as secondary

raw materials:

2021

2020

Group

incl. Company

Group

incl. Company

Timber waste, t

71.03

68.89

42.59

35.93

Paper, cardboard waste, t

12.83

8.53

6.49

Polyethylene waste, t

7.69

7.81

0.12

To reduce air pollution Gerbusta branch performs control of emissions from vehicles and machinery

with internal combustion engines, Skydmedis UAB monitors air cleaning equipment, Metalo meistrai

UAB makes efficiency measurements of air cleaning equipment in painting chambers.

In 2021 the pollution charges paid amounted to 132,955 Euros (168,509 Euros in 2020) for the Group

and 123,071 Euros (157,968 Euros in 2020) for the Company, including:

2021

2020

Euros

Group

incl. Company

Group

incl. Company

Pollution with packaging waste

2,797

1,383

2,290

1,096

Pollution from mobile pollution sources

6,556

5,844

2,544

2,120

Environment protection (waste

management)

123,642

115,844

163,675

154,752

Modern engineering systems creating a healthy working environment are applied in the buildings

under construction. Where possible, environmentally friendly building materials are used. The

changed climatic conditions are taken into account in the construction process of the new buildings.

As the temperature conditions change, the needs for indoor ventilation, heating and cooling also

change. Therefore, new technological and architectural solutions are being implemented. The

construction sector uses very unsustainable CO

-neutral materials: steel, cement, glass, etc., therefore

solutions are being sought to make the construction process more environmentally friendly, i. e. use

of organic materials. Designers apply the highest standards for design and construction of a building,

contributing to environmental sustainability and healthy work environment. In the design process

much attention is paid to ensuring indoor air quality, intelligent lighting in accordance with good

international practices, sound resistance that retains external noise. The B2EAM New Construction

Very Good certificate confirming the above measures has been awarded to the Business Centre U219.

This certificate also acknowledges the responsible approach of developers to the environment and

human health, and guarantees long-term returns.

The report has been prepared based on the Communication from the European Commission -

Guidelines on Non-Financial Reporting (2017-C 215-01).

Taxonomy Overview

Regulation (EU) 2020/852, also known as the Taxonomy Regulation, establishes a common

nomenclature for the classification of sustainable economic activities and analysis of investments to

be considered as contributing to environmental objectives. The main activity of the Company is the

construction and design of various buildings, structures, equipment and communications and other

objects. The Company carries out work on the basis of detailed designs approved by the clients and

does not directly affect any sustainable economic activities set out in the regulation. As the Group

will be obliged to provide information in accordance with the Taxonomy Regulation, we have carried

out a preliminary assessment of whether/how the activities contribute to one of the six environmental

objectives set.

1. The new buildings construction of which is currently started by the Company are of the A++

energy efficiency class. The buildings of the A ++ energy efficiency class use almost no

thermal energy, which contributes to the climate change mitigation.

2. In its operations the Company uses only green electric power generated from renewable

electric power sources. A part of the consumed electric power is produced by the Company

itself, and another part is purchased from the suppliers of green electric power. operates a

200 kW solar power plant generating approximately 190 thousand kWh of the electric power

annually, which makes about 30 per cents of the electric power consumed by the production

facilities. In addition to that, the Company operates three power plants of 30 kW each,

together they generate about 80,000 kWh of renewable electric power, which is supplied to

the electric grid. A new 150 kW solar power plant was installed and started in one of the

companies of Panevezio statybos trestas AB Group, Skydmedis UAB. The amount of green

electric power generated from the renewable electric sources over the year 2021 totalled

263.549 thousand kWh (24.9 thousand kWh in 2020). the company of Panevezio statybos

trestas AB Group, Skydmedis UAB, uses a biofuel boiler house for heating of premises. 30

per cents of the biofuel required for operation of this boiler is obtained from production

timber wood waste, which does not need to be disposed of. These are renewable energy

sources, which allow significantly reducing the use of fossil fuels and contribute to reduction

of the greenhouse effect.

3. For construction of new buildings, sustainable materials are used more often. After the life

cycle of the building these materials could be reused for a new life cycle or be

environmentally friendly and do not result in pollutions by means of recycling. One such

material is timber. Skydmedis UAB, the company of the Group, uses timber panels for the

construction of houses.

4. Renewable car fleet. We give up old polluting cars by adding new, less polluting cars to the

fleet. 30 per cents of the vehicles owned by the Group comply with the requirements of the

Euro 6 emission standard.

Relationship with Employees

The main asset of the Company is employees, who are the most important link in achieving the

objectives. 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. Considering this factor, the Company

encourages employees in all organizational levels to learn and develop. Employees are given the

opportunity to study, improve their qualifications, and participate in various seminars and trainings.

In 2021, the training cycles on emotional intelligence were organized, and a course on improvement

of performance appraisal skills was provided for managers. The lawyers together with the staff of

the Personnel Department attended the Annual Labour Law Conference, and training was provided

to the lawyers on the continuously changing regulation of public procurement. In 2021 considerable

attention was also paid to improving the practical skills of internal communication, for that purpose

professional lecturers were invited.

We constantly strive to become the leader in the construction market, guaranteeing safe and non-

hazardous work places for the employees of Panevezio statybos trestas AB and all employees

working on behalf of the Company. The Occupational Health and Safety Management System (ISO

45001) implemented in 2008 ensures continuous identification and assessment of OHS risk factors,

identification of risk management measures and control of their implementation for the Company.

The work and personal protective equipment is selected for the employees following the most

advanced technologies. The professional competence of employees and perception of employees in

the field of occupational safety and health is continuously improved. Much attention is paid to

prevention of accidents and occupational diseases, and reduction of accident likelihood. Partners,

suppliers and others working on behalf of the Company are involved in the processes of the

occupational health and safety system. The human and financial resources are provided to maintain

and continuously improve the occupational health and safety system.

The Company continuously invests in employee training and development courses to improve their

competencies and understanding in the field of occupational health and safety. In 2021 trainings were

organized both at the Company and educational institutions. Total number of trained employees and

managers was 243 in 2021. The employees participated in the following trainings:

- workers performing activities at height,

- load handler,

- locksmiths – fitters of lifting equipment,

- operators of lifting platforms and their equipment,

- OHS specialists,

- site OHS coordinators,

- first aid.

During the emergency and quarantine period, Panevezio statybos trestas AB Group complied with

the provision that appropriate, safe and healthy working conditions should be created for each

employee, i. e. employee work place and environment should be safe and healthy, the risk of infection

in the work environment should be minimize and employees should be protected from COVID-19.

For that purpose the COVID - 19 Preventive Action Plan was developed and implemented.

For the employees who were given the opportunity to work remotely using telecommunications

(Internet, telephone), the work was organized remotely. To increase the abilities to work remotely

for the employees, the Company has invested in purchase of laptops.

For the employees who, based on the analysis results, were not able to work remotely at their work

places, measures were taken to reduce the risk of COVID-19 infection:

- partitions between work places were mounted and organizational measures were applied to

maintain the distance of at least 2 meters between the employees.

- access to administrative premises and construction sites was reduced for third parties (by

installing door locks and control posts);

- clients’ access of to the premises of the Company was restricted, physical communication of

employees with clients was replaced by remote communication;

- employees were provided with the Personal Protective Equipment (PPE);

- For hygienic maintenance and disinfection of premises a special device (hot steam generator

FAST 250 PUMP PRO PLUS) was purchased for disinfection of offices and office

containers on the sites after each case of COVID-19 and periodically afterwards.

Implementation of the planned COVID - 19 preventive measures and compliance with the action

plan resulted in prevention f COVID - 19 virus outbreak in Panevezio statybos trestas AB Group.

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.

On 6 August 2021, the Works Council for representation of the employees consisting of 9 members

was elected at the Company. The Works 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 Group advocates equal opportunities for all employees, regardless of the employee's gender. The

majority of the Group's employees, 81% (85% of the Company), are men. This is greatly influenced

by specifics of the activity performed, i. e. women are less likely to choose the technological work

performed in construction as well as specialties in construction and technical engineering directly

related to such work and outdoor conditions. In 2021, women accounted for 33% of all specialists in

the companies Group and 33% in the Company.

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 2020, there were no violations of human

rights or relevant claims recorded.

Social Initiatives

Panevezio statybos trestas AB keeps on implementing its objective to be a reliable and socially

responsible company. In its activity, the Company follows the principles of sustainable business

development, which also include social responsibility. Panevezio statybos trestas AB invests in

various extra activities, supports different social, sports, cultural and health promotion projects.

In 2021, Panevezio statybos trestas AB Group supported 17 various organizations, public institutions

in the fields of education, sports, culture, health. Among the social initiatives implemented by the

Group, the following activities were initiated by the Company:

- International initiative DUOday. For several days various units/branches allowed people

with disabilities to work there;

- Blood donation campaign in the Business Centre U219 in cooperation with the National

Blood Centre. It is planned to repeat the campaign.

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 Group 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 Group, members of the management and supervisory bodies, any third parties acting on behalf

of the Group.

The risk is mitigated by existing integrated internal controls for identifying potential risk factors for

corruption. The Company and the Group constantly control their activities by improving the

processes.

Panevezio statybos trestas AB and its subsidiary companies refrain from any form of influence on

politicians and does not fund election campaigns of political parties, their representatives or their

candidates.

The Group always co-operates with the institutions and is ready to provide all the necessary

information.

The Company and its subsidiary companies ensure 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.

In 2021, Panevezio statybos trestas AB was included in the civil initiative Integrity Pacts

implemented by Transparency International, during which two projects related to modernization of

the Neris embankments and related public procurements were monitored. One part of this initiative

is assessment of business transparency, which consists of assessment of the largest businesses

operating in Lithuania, transparency assessment of the largest suppliers operating with the Vilnius

City Municipality in the field of infrastructure and construction, and their comparison with

assessment of the tender participants awarded the contract for the Neris embankments. Late 2021 -

early 2022 assessment of the largest suppliers who had participated in the public procurements

arranged by the Vilnius City Municipality and signed contracts for construction works or related

services from 7 August 2019 until 6 August 2021 was repeated. Panevezio statybos trestas AB was

on the top of the list and scored 90 points out of 100 possible.

Remuneration Report

The Remuneration Report of Panevezio statybos trestas AB has been prepared for the reporting

financial period of the year 2021. The report has been prepared in accordance with the Law on

Financial Reporting of Enterprises of the Republic of Lithuania, the Ordinary General Meeting of

Shareholders held on 29 April 2020 approved the Remuneration Policy for Top and Middle

Management Staff of Panevezio statybos trestas AB and the Extraordinary General Meeting of

Shareholders held on 9 April 2021 approved the Procedure for Awarding and Paying Remuneration

of Independent Board Members of Panevezio statybos trestas AB. The Consolidated Remuneration

Report for 2020 was approved at the General Meeting of Shareholders on 29 April 2021 together

with the Set of Financial Statements for 2020.

Remuneration of Board Members

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

performing the supervision function, and one-person management body, the Managing Director, are

set up at the Company.

Following the Law on Companies and Articles of Association of the parent Company, the Board

Members are appointed for the four-year term of office.

On 9 April 2021 the Extraordinary General Meeting of Shareholders approved the procedure for

awarding and paying remuneration of the independent members of the Board for their activities in

the Board. Remuneration (bonuses) is paid to the members of the Board, except for the independent

members of the Board, for their work by the decision of the General Meeting of Shareholders in

accordance with the Law on Companies of the Republic of Lithuania.

Remuneration Paid to Board Members

On 9 April 2021 the Extraordinary General Meeting of Shareholders elected the new Board of

Panevezio statybos trestas AB. The information on payments made to the members of the newly

elected Board over the year 2021 is presented below. The Extraordinary General Meeting of

Shareholders held on 9 April 2021 did not come to the decision to pay bonuses to the members of

the Board.

The amounts in the table are in Euros, before taxes.

Table 8. Information on remuneration of supervisory body members of the issuer in 2021:

Full name

Position

Monthly

remuneration of

independent

member of the

Board (Euros)

Remuneration

of independent

member of the

Board

total for 2021

(Euros)

Total income

from the

company for

2021 (Euros)

Justas Jasiunas

Chairman

62 899

Gvidas Drobuzas

Board Member

232 629

Kristina Maciuliene

Board Member

Vaidas Grincevicius*

Board Member

3 300

25 614

Lina Simaskiene*

Board Member

3 300

25 614

Total

6600

51229

295528

* independent member of the Board

The Company is not aware that the Board Members of the Board have received any remuneration

from other companies of Panevezio statybos trestas AB Group.

After the term of office for the Board expires, the Board Members are not entitled to any severance

pays.

Remuneration of Company’s Employees

The purpose of the remuneration policy is to increase the operation efficiency at the Company and

promote achievement of strategic objectives. The objective of the Company goal is to maximize the

efficiency of the reward programs in order to attract and motivate highly skilled employees who are

necessary for success in business.

Over the year 2021 the salary fund attributed to the Company's employees amounted to 13.405 mln.

Euros compared to 12.404 mln. Euros in 2020.

To attract high-level professionals to management positions, we aim to keep the remuneration close

to the market median of the country in which any company of the Group operates.

In general, the remuneration structure at the Company consists of two parts: Fixed Remuneration

Component (FRC) and Variable Remuneration Component (VRC). The FRC range limits are set

taking into account the remuneration trends in the market, research data and comparative market, i.e.

the market of the companies operating in Lithuania. The VRC is a tool for getting the Top and Middle

Management Staff directly interested in seeking for high performance of the Company, an instrument

to for creating policy and culture of the Company, clearly and accurately indicating what

achievements and contributions are valued/rewarded. The Variable Remuneration Component to the

Top and Middle Management Staff is paid once a year at the end of the financial year and is linked

to performance of the employee, team and/or company.

The Company does not provide for the possibility to restore variable remuneration.

The average monthly salary of employees (FRC and VRC) for the period 2017 through 2021b is

provided in the tables below.

Table 9. Average monthly salary for employees of the Group, Euros (before taxes)

Position category

2021

2020

2019

2018

2017

Average

salary

Average

salary

Average

salary **

Average

salary

Average

salary

Managing Director

8863

7626

Top Management Staff

5107

5323

4524

3887

4568

Middle Management Staff

4297

3478

3216

2630

3030

Specialists

2192

1806

1753

1244

Workers

1380

1319

1322

980

917

Total

1800

1583

1569

1170

1109

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Table 10. Average monthly salary for employees of the Group, Euros (before taxes)

Position category

2021

2020

2019

2018

2017

Average

salary

Average

salary

Average

salary **

Average

salary

Average

salary

Top Management Staff

4482

3957

4083

3040

3193

Specialists

2167

1871

1752

1343

1261

Workers

1407

1363

1322

956

914

Total

1787

1622

1569

1148

1097

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Remuneration Structure for Managing Director and Top Management Staff

The Fixed Remuneration Component is determined considering the impact on general operation of

the Company, management scope, decision making, complexity of activities, knowledge and

experience. Remuneration determined in the Employment Contract, taking into account the level of

position and competence of the employee (conformity with the requirements for the position). The

Fixed Remuneration Component is paid on a monthly basis. The Fixed Remuneration Component of

the Top and Middle Management Staff is reviewed minimum every 12 months.

The new size of the FRC is determined/revised based on performance assessment of the Top and

Middle Management Staff. The PAD of the Top and Middle Management Staff may be changed by

the decision of the Board.

The Variable Remuneration Component is designed to promote achievement of the annual

objectives. The size of the VRC amounts to a fixed percentage of the annual result, which is

determined and approved by the Board. The Chief Executive Officer and directors of the Company

are assigned the percentage of the profit accepted for calculating motivation. For the Directors of the

branches the percentage is determined from the profit accepted for calculating motivation for the

branch managed by him.

Annual Changes in Remuneration

Changes in performance of the Company and average salary of the employees of the Company who

are not members of the management and supervisory bodies during the last five years.

Table 11. Company performance and average monthly gloss salary for the period 2017 through

2021

Company performance

2021

2020

2019 **

2018

2017

Net profit (loss) (thousands Euros)

304

-12,418

590

-4,852

194

Profit (loss) per share (Euros)

0,019

-0.76

0.036

-0.297

0.012

Assets (thousands Euros)

48,478

62,290

71,337

58,986

55,925

Average monthly salary

1,800

1,583

1,569

1,170

1,109

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Long-Term Motivation by Shares

The Company applies neither schemes under which the members of management bodies, managers

and employees receive remuneration in shares, share options or other rights to share acquisition, nor

supplementary pension or early retirement schemes.

Annex 1

Corporate Governance Reporting Form

Panevezio statybos trestas AB (hereinafter referred to as the “Company”), acting in compliance with Article

22 (3) of the Law of the Republic of Lithuania on Securities and paragraph 24.5 of the Listing Rules of

Nasdaq Vilnius AB, hereby discloses how it complies with the Corporate Governance Code for the

Companies listed on Nasdaq Vilnius as well as its specific provisions or recommendations. In case of non-

compliance with this Code or some of its provisions or recommendations, the specific provisions or

recommendations that are not complied with must be indicated and the reasons for such non-compliance

must be specified. In addition, other explanatory information indicated in this form must be provided.

1. Summary of the Corporate Governance Report:

Panevezio statybos trestas AB in principle complies with the recommendatory Governance Code for the

companies listed at NASDAQ Vilnius. Referring to the Articles of Association of the Company, the

governance bodies of the Company include the General Shareholders’ Meeting, the Management 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 Management Board is set up of 5 members, which are elected for the period

of for years. The members of the Management 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

Management 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.

In its Annual Report, in accordance with the requirements of the legal acts, the Company provides

information on the total amounts of money calculated during the reporting period to the members of the

Management Board of the Company, the Chief Executive Officer.

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 Management Board and elected by the Meeting of Shareholders, thus

ensuring independence of the conclusions and opinion provided by the audit company.

2. Structured table for disclosure:

PRINCIPLES/ RECOMMENDATIONS

YES/NO/

NOT

APPLICABLE

COMMENTARY

Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights

The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate

governance framework should protect the rights of shareholders.

1.1. All shareholders should be provided with

access to the information and/or documents

established in the legal acts on equal terms. All

shareholders should be furnished with equal

opportunity to participate in the decision-making

process where significant corporate matters are

discussed.

Yes

All information that shall be made public in

accordance with legal acts is published in

Lithuanian and English via informational system

of stock-exchange Nasdaq Vilnius and on the

website of the Company. The venue, date and

time of the Meeting of Shareholders convened by

the Company are chosen in such a way as to

ensure participation of all shareholders in the

decision-making process of the Company.

1.2. 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 of their holders.

Yes

The Company’s authorized share capital consists

of 16,350,000 ordinary shares, the nominal value

of 0.29 EUR each, which provide their holders

equal voting, property, dividend and other rights.

1.3. 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

The rights attached to the shares are indicated in

the Articles of Association of the Company,

which are published on the website of the

Company.

1.4. Exclusive transactions that are particularly

important to the company, such as transfer of all or

almost all assets of the company which in principle

would mean the transfer of the company, should be

subject to approval of the general meeting of

shareholders.

The Articles of Association of the Company do

not provide that the mentioned transactions are

subject to approval of the General Meeting of

Shareholders. The shareholders of the Company

approve the transactions for approval of which

they have the right prescribed by the Law on

Companies of the Republic of Lithuania and the

Articles of Association of the Company.

1.5. Procedures for convening and conducting a

general meeting of shareholders should provide

shareholders with equal opportunities to

participate in the general meeting of shareholders

and should not prejudice the rights and interests of

shareholders. The chosen venue, date and time of

the general meeting of shareholders should not

prevent active participation of shareholders at the

general meeting. In the notice of the general

meeting of shareholders being convened, the

company should specify the last day on which the

proposed draft decisions should be submitted at the

latest.

Yes

The Company convenes a General Meeting of

Shareholders in accordance with the procedure

established by the Law on Companies of the

Republic of Lithuania.

1.6. With a view to ensure the right of

shareholders living abroad to access the

information, it is recommended, where possible,

that documents prepared for the general meeting of

shareholders in advance should be announced

publicly not only in Lithuanian language but also

in English and/or other foreign languages in

advance. It is recommended that the minutes of the

general meeting of shareholders after the signing

thereof and/or adopted decisions should be made

available publicly not only in Lithuanian language

but also in English and/or other foreign languages.

It is recommended that this information should be

placed on the website of the company. Such

documents may be published to the extent that

their public disclosure is not detrimental to the

company or the company’s commercial secrets are

not revealed.

Yes

All information for investors, notices on

convocation of General Meetings of

Shareholders, drafts of resolutions and

documents proposed for the Meeting of

shareholders by the Management Board and

adopted resolutions and approved documents are

made public in Lithuanian and English languages

through the information system of NASDAQ

OMX Vilnius Stock Exchange and published on

the website of the Company.

1.7. Shareholders who are entitled to vote should

be furnished with the opportunity to vote at the

general meeting of shareholders both 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 at the meeting

in person or delegate the participation to some

other person.

The Company allows the shareholders voting by

filling the general voting ballot in as prescribed

by the law.

1.8. With a view to increasing the shareholders’

opportunities to participate effectively at general

meetings of shareholders, it is recommended that

companies should apply modern technologies on a

wider scale and thus provide shareholders with the

conditions to participate and vote in general

meetings of shareholders via electronic means of

communication. In such cases the security of

transmitted information must be ensured and it

must be possible to identify the participating and

voting person.

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

opinion of the Company, so far there was no need

for any modern technologies at the General

Meeting of Shareholders for the purposes of

participation and voting via electronic means of

communication.

1.9. It is recommended that the notice on the draft

decisions of the general meeting of shareholders

being convened should specify new candidatures

of members of the collegial body, their proposed

remuneration and the proposed audit company if

these issues are included into the agenda of the

general meeting of shareholders. Where it is

proposed to elect a new member of the collegial

body, it is recommended that the information about

his/her educational background, work experience

and other managerial positions held (or proposed)

should be provided.

Yes

Information on the candidates to the members of

the Management Board of the Company is

provided to the shareholders at the General

Meeting of Shareholders with the item related to

the election of the members of the Management

Board on the agenda in accordance with the

procedure established by the Law on Companies

of the Republic of Lithuania.

Information on the audit company to be elected

is made public together with the notice on the

draft resolutions of the General Meeting of

Shareholders to be convened in accordance with

the procedure prescribed by the legal acts.

1.10. Members of the company’s collegial

management body, heads of the administration

other competent persons related to the company

who can provide information related to the agenda

of the general meeting of shareholders should take

part in the general meeting of shareholders.

Proposed candidates to member of the collegial

body should also participate in the general meeting

of shareholders in case the election of new

members is included into the agenda of the general

meeting of shareholders.

Yes

The Managing Director, Chief Accountant,

Chairman and other competent persons who can

provide information on the agenda of the General

Meeting of Shareholders always participate at the

General Meeting of Shareholders. The proposed

candidates to the members of the Management

Board, however not all, participated at the

General Meeting of Shareholders.

Principle 2: Supervisory board

2.1. Functions and liability of the supervisory board

The supervisory board of the company should ensure representation of the interests of the company and its

shareholders, accountability of this body to the shareholders and objective monitoring of the company’s

operations and its management bodies as well as constantly provide recommendations to the management

bodies of the company.

The supervisory board should ensure the integrity and transparency of the company’s financial accounting and

control system.

2.1.1. Members of the supervisory board should

act in good faith, with care and responsibility for

the benefit and in the interests of the company and

its shareholders and represent their interests,

having regard to the interests of employees and

public welfare.

Not applicable

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 Management Board performing the

supervision function, and one-person

management body, the Managing Director, are

set up in the Company. The collegial supervising

– the Supervisory Board is not formed.

For the purposes of this Code, heads of the administration are the employees of the company who hold top level management

positions.

100

2.1.2. Where decisions of the supervisory board

may have a different effect on the interests of the

company’s shareholders, the supervisory board

should treat all shareholders impartially and fairly.

It should ensure that shareholders are properly

informed about the company’s strategy, risk

management and control, and resolution of

conflicts of interest.

Not applicable

See item 2.1.1.

2.1.3. The supervisory board should be impartial

in passing decisions that are significant for the

company’s operations and strategy. Members of

the supervisory board should act and pass

decisions without an external influence from the

persons who elected them.

Not applicable

See item 2.1.1.

2.1.4. Members of the supervisory board should

clearly voice their objections in case they believe

that a decision of the supervisory board is against

the interests of the company. Independent2

members of the supervisory board should: a)

maintain independence of their analysis and

decision-making; b) not seek or accept any

unjustified privileges that might compromise their

independence.

Not applicable

See item 2.1.1.

2.1.5. The supervisory board should oversee that

the company’s tax planning strategies are designed

and implemented in accordance with the legal acts

in order to avoid faulty practice that is not related

to the long-term interests of the company and its

shareholders, which may give rise to reputational,

legal or other risks.

Not applicable

See item 2.1.1.

2.1.6. The company should ensure that the

supervisory board is provided with sufficient

resources (including financial ones) to discharge

their duties, including the right to obtain all the

necessary information or to seek independent

professional advice from external legal,

accounting or other experts on matters pertaining

to the competence of the supervisory board and its

committees.

Not applicable

See item 2.1.1.

For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of

unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.

101

2.2. Formation of the supervisory board

The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest

and effective and fair corporate governance.

2.2.1. The members of the supervisory board

elected by the general meeting of shareholders

should collectively ensure the diversity of

qualifications, professional experience and

competences and seek for gender equality. With a

view to maintain a proper balance between the

qualifications of the members of the supervisory

board, it should be ensured that members of the

supervisory board, as a whole, should have diverse

knowledge, opinions and experience to duly

perform their tasks.

Not applicable

See item 2.1.1.

2.2.2. Members of the supervisory board should

be appointed for a specific term, subject to

individual re-election for a new term in office in

order to ensure necessary development of

professional experience.

Not applicable

See item 2.1.1.

2.2.3. Chair of the supervisory board should be a

person whose current or past positions constituted

no obstacle to carry out impartial activities. A

former manager or management board member of

the company should not be immediately appointed

as chair of the supervisory board either. Where the

company decides to depart from these

recommendations, it should provide information

on the measures taken to ensure impartiality of the

supervision.

Not applicable

See item 2.1.1.

2.2.4. Each member should devote sufficient time

and attention to perform his duties as a member of

the supervisory board. Each member of the

supervisory board should undertake to limit his

other professional obligations (particularly the

managing positions in other companies) so that

they would not interfere with the proper

performance of the duties of a member of the

supervisory board. Should a member of the

supervisory board attend less than a half of the

meetings of the supervisory board throughout the

financial year of the company, the shareholders of

the company should be notified thereof.

Not applicable

See item 2.1.1.

102

2.2.5. When t is proposed to appoint a member of

the supervisory board, it should be announced

which members of the supervisory board are

deemed to be independent. The supervisory board

may decide that, despite the fact that a particular

member meets all the criteria of independence,

he/she cannot be considered independent due to

special personal or company-related

circumstances.

Not applicable

See item 2.1.1.

2.2.6. The amount of remuneration to members of

the supervisory board for their activity and

participation in meetings of the supervisory board

should be approved by the general meeting of

shareholders.

Not applicable

See item 2.1.1.

2.2.7. Every year the supervisory board should

carry out an assessment of its activities. It should

include evaluation of the structure of the

supervisory board, its work organization and

ability to act as a group, evaluation of the

competence and work efficiency of each member

of the supervisory board, and evaluation whether

the supervisory board has achieved its objectives.

The supervisory board should, at least once a year,

make public respective information about its

internal structure and working procedures.

Not applicable

See item 2.1.1.

Principle 3: Management Board

3.1. Functions and liability of the management board

The management board should ensure the implementation of the company’s strategy and good corporate

governance with due regard to the interests of its shareholders, employees and other interest groups.

3.1.1. The management board should ensure the

implementation of the company’s strategy

approved by the supervisory board if the latter has

been formed at the company. In such cases where

the supervisory board is not formed, the

management board is also responsible for the

approval of the company’s strategy.

Yes

As there is no Supervisory Board formed at the

Company, the Management Board performs

supervisory functions, discusses and approves

the strategy of the Company, analyses and

evaluates information on implementation of the

strategy of the Company.

103

3.1.2. As a collegial management body of the

company, the management board performs the

functions assigned to it by the Law and in the

articles of association of the company, and in such

cases where the supervisory board is not formed in

the company, it performs inter alia the supervisory

functions established in the Law. By performing

the functions assigned to it, the management board

should take into account the needs of the

company’s shareholders, employees and other

interest groups by respectively striving to achieve

sustainable business development.

Yes

The Company follows the strategic plan of the

Company based on which the mission of the

management bodies of the Company is to create

and maintain a strong, competitive, financially

capable and technically advanced Company that

creates and maximizes the value for the

shareholders.

3.1.3. The management board should ensure

compliance with the laws and the internal policy of

the company applicable to the company or a group

of companies to which this company belongs. It

should also establish the respective risk

management and control measures aimed at

ensuring regular and direct liability of managers.

Yes

The Management Board ensures compliance

with the laws and internal policy of the Company

applicable to the Company or the Group.

3.1.4. Moreover, the management board should

ensure that the measures included into the OECD

Good Practice Guidance

on Internal Controls,

Ethics and Compliance are applied at the company

in order to ensure adherence to the applicable laws,

rules and standards.

Yes

The Management Board complies with this

recommendation.

3.1.5. When appointing the manager of the

company, the management board should take into

account the appropriate balance between the

candidate’s qualifications, experience and

competence.

Yes

When appointing the Chief Executive Officer,

the Board takes into account the candidate's

qualifications, experience and competence.

3.2. Formation of the management board

3.2.1. The members of the management board

elected by the supervisory board or, if the

supervisory board is not formed, by the general

meeting of shareholders should collectively ensure

the required diversity of qualifications,

professional experience and competences and seek

for gender equality. With a view to maintain a

proper balance in terms of the current

qualifications possessed by the members of the

management board, it should be ensured that the

members of the management board would have, as

a whole, diverse knowledge, opinions and

experience to duly perform their tasks.

Yes

The members of the Management Board of the

Company are elected by the General Meeting of

Shareholders. The members of the Management

Board of the Company are qualified and

competent to perform their functions, have a long

experience in management.

At present the Management Board fails to

maintain gender equality. All members of the

Management Board are male. At present females

make 40 per cents of the members of the

Management Board, i. e. two females and three

males.

104

3.2.2. Names and surnames of the candidates to

become members of the management board,

information on their educational background,

qualifications, professional experience, current

positions, other important professional obligations

and potential conflicts of interest should be

disclosed without violating the requirements of the

legal acts regulating the handling of personal data

at the meeting of the supervisory board in which

the management board or individual members of

the management board are elected. In the event that

the supervisory board is not formed, the

information specified in this paragraph should be

submitted to the general meeting of shareholders.

The management board should, on yearly basis,

collect data provided in this paragraph on its

members and disclose it in the company’s annual

report.

Yes

Information on the positions taken by the

members of the Management Board or their

participation in operation of other companies is

continuously collected and compiled, and at the

end of every year it is revised and presented in

the reports prepared by the Company.

3.2.3. All new members of the management board

should be familiarized with their duties and the

structure and operations of the company.

Yes

The new members of the Management Board

have been familiarised with their duties, the

structure, operations and strategy of the

Company.

3.2.4. Members of the management board should

be appointed for a specific term, subject to

individual re-election for a new term in office in

order to ensure necessary development of

professional experience and sufficiently frequent

reconfirmation of their status.

Yes

The Management Board of the Company is

elected by the General Meeting of Shareholders

for the maximal four-year term in office

prescribed by the Law on Companies of the

Republic of Lithuania. Individual members of

the Management Board or the entire

Management Board may be recalled by the

General Meeting of Shareholders before the end

of their term of office.

3.2.5. Chair of the management board should be a

person whose current or past positions constitute

no obstacle to carry out impartial activity. Where

the supervisory board is not formed, the former

manager of the company should not be

immediately appointed as chair of the management

board. When a company decides to depart from

these recommendations, it should furnish

information on the measures it has taken to ensure

the impartiality of supervision.

Yes

The Chairman of the Management Board

represents the main shareholder and has never

been the Chief Executive Officer of the

Company. The present Chairman of the

Management Board that has been elected on 9

April 2021 and the previous Chairman who was

in office till 9 April 2021, represent the main

shareholder and have never been the Chief

Executive Officers of the Company.

Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-

bribery/44884389.pdf

105

3.2.6. Each member should devote sufficient time

and attention to perform his duties as a member of

the Management Board. Should a member of the

Management Board attend less than a half of the

meetings of the Management Board throughout the

financial year of the company, the Supervisory

Board of the company or, if the Supervisory Board

is not formed at the company, the General Meeting

of Shareholders should be notified thereof.

Yes

The members of the Management Board fulfil

their functions properly: actively participate at

the meetings of collegial body and devote

sufficient time to perform their duties as a

member of the collegial body.

In 2021 there were 12 (twelve) meetings of the

new Management Board elected on 9 April 2021.

All members of the Management Board

participated in these meetings.

The previous Management Board that was in

office till 9 April 2021, had 5 (five) meetings of

the Management Board, four members

participated in all five meetings and one member

participated in four meeting of the Management

Board.

3.2.7. In the event that the management board is

elected in the cases established by the Law where

the supervisory board is not formed at the

company, and some of its members will be

independent4, it should be announced which

members of the management board are deemed as

independent. The management board may decide

that, despite the fact that a particular member

meets all the criteria of independence established

by the Law, he/she cannot be considered

independent due to special personal or company-

related circumstances.

Two independent members of the Management

Board, Vaidas Grincevicius and Lina Simaskiene

were elected for the new term of office of the

Management Board on 9 April 2021. Prior to the

Meeting of Shareholders, it was published that

these two candidates for Board Membership

would be considered as independent Board

Members.

3.2.8. The general meeting of shareholders of the

company should approve the amount of

remuneration to the members of the management

board for their activity and participation in the

meetings of the management board.

Yes

On 9 April 2021 the Extraordinary General

Meeting of Shareholders approved the

Procedure for Awarding and Paying

Remuneration to Independent Board Members of

Panevezio statybos trestas AB for their Activities

in the Board.

The members of the Management Board, except

for the independent members of the Management

Board, are paid remuneration (bonuses) by the

decision of the General Meeting of Shareholders

in accordance with the Law on Companies of the

Republic of Lithuania.

For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated

persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.

106

3.2.9. The members of the management board

should act in good faith, with care and

responsibility for the benefit and the interests of

the company and its shareholders with due regard

to other stakeholders. When adopting decisions,

they should not act in their personal interest; they

should be subject to no-compete agreements and

they should not use the business information or

opportunities related to the company’s operations

in violation of the company’s interests.

Yes

Based on the data available to the Company, all

members of the Management Board act in good

will for the interests of the Company and its

shareholders, they are guided by the interests of

the Company and not those of their own or any

third parties, seek to maintain their independence

in decision-making.

3.2.10. Every year the management board should

carry out an assessment of its activities. It should

include evaluation of the structure of the

management board, its work organization and

ability to act as a group, evaluation of the

competence and work efficiency of each member

of the management board, and evaluation whether

the management board has achieved its objectives.

The management board should, at least once a

year, make public respective information about its

internal structure and working procedures in

observance of the legal acts regulating the

processing of personal data.

Yes/No

The internal documents of the Company do not

directly provide for an activity assessment of the

collegial bodies exercising individual

supervisory functions. However, the collegial

body ensures that its members are competent and

have a variety of knowledge, opinions and

experience to perform their tasks properly.

Principle 4: Rules of procedure of the supervisory board and the management board of the company

The rules of procedure of the supervisory board, if it is formed at the company, and of the management board

should ensure efficient operation and decision-making of these bodies and promote active cooperation between

the company’s management bodies.

4.1. The management board and the supervisory

board, if the latter is formed at the company, should

act in close cooperation in order to attain benefit

for the company and its shareholders. Good

corporate governance requires an open discussion

between the management board and the

supervisory board. The management board should

regularly and, where necessary, immediately

inform the supervisory board about any matters

significant for the company that are related to

planning, business development, risk management

and control, and compliance with the obligations at

the company. The management board should

inform he supervisory board about any derogations

in its business development from the previously

formulated plans and objectives by specifying the

reasons for this.

Not applicable

There is no Supervisory Board formed at the

Company.

107

4.2. It is recommended that meetings of the

company’s collegial bodies should be held at the

respective intervals, according to the pre-approved

schedule. Each company is free to decide how

often meetings of the collegial bodies should be

convened but it is recommended that these

meetings should be convened at such intervals that

uninterruptable resolution of essential corporate

governance issues would be ensured. Meetings of

the company’s collegial bodies should be

convened at least once per quarter.

Yes

The meetings of the Management Board of the

Company are held at least once a month in

accordance with the Rules of Procedures of the

Management Board.

The date of the next meeting of the Management

Board is agreed at each meeting of the

Management Board. If required, the meetings of

the Management Board are held at shorter

intervals.

4.3. Members of a collegial body should be

notified of the meeting being convened in advance

so that they would have sufficient time for proper

preparation for the issues to be considered at the

meeting and a fruitful discussion could be held and

appropriate decisions could be adopted. Along

with the notice of the meeting being convened all

materials 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

present at the meeting agree with such change or

supplement to the agenda, or certain issues that are

important to the company require immediate

resolution.

Yes

The members of the Management Board are

notified of the meeting being convened and its

agenda in advance. All members of the

Management Board get all materials relevant to

the issues on the agenda in advance and have an

opportunity to get familiarised with them and ask

questions before and during the meeting, have

the right to request to supplement or clarify the

materials relevant to the issue to be discussed.

4.4. In order to coordinate the activities of the

company’s collegial bodies and ensure effective

decision-making process, the chairs of the

company’s collegial supervision and management

bodies should mutually agree on the dates and

agendas of the meetings and close cooperate in

resolving other matters related to corporate

governance. Meetings of the company’s

supervisory board should be open to members of

the management board, particularly in such cases

where issues concerning the removal of the

management board members, their responsibility

or remuneration are discussed.

Not applicable

The Company does not have a Supervisory

Board.

108

Principle 5: Nomination, remuneration and audit committees

5.1. Purpose and formation of committees

The committees formed at the company should increase the work efficiency of the supervisory board or, where

the supervisory board is not formed, of the management board which performs the supervisory functions by

ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions

it takes would be free of material conflicts of interest.

Committees should exercise independent judgment and integrity when performing their functions and provide

the collegial body with recommendations concerning the decisions of the collegial body. However, the final

decision should be adopted by the collegial body.

5.1.1. Taking due account of the company-related

circumstances and the chosen corporate governance

structure, the supervisory board of the company or, in

cases where the supervisory board is not formed, the

management board which performs the supervisory

functions, establishes committees. It is recommended

that the collegial body should form the nomination,

remuneration and audit committees

The collegial body of the Company’s

management is the Management Board

performing the functions of Nomination

Committee and the Remuneration

Committees. The Management Board selects

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. The

Management Board 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 auditor

and provides proposals to the General Meeting

of Shareholders for approval.

On 29 April 2021, the Audit Committee was

elected at the Annual General Meeting of

Shareholders.

5.1.2. Companies may decide to set up less than

three committees. In such case companies should

explain in detail why they have chosen the alternative

approach, and how the chosen approach corresponds

with the objectives set for the three different

committees.

Yes

5.1.3. In the cases established by the legal acts the

functions assigned to the committees formed at

companies may be performed by the collegial body

itself. In such case the provisions of this Code

pertaining to the committees (particularly those

related to their role, operation and transparency)

should apply, where relevant, to the collegial body as

a whole.

See the commentary on the recommendation

provided in item 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of

Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to

public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or

of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the

exemptions where the functions of the audit committee may be carried out by the collegial body performing the

supervisory functions).

109

5.1.4. Committees established by the collegial

body should normally be composed of at least three

members. Subject to the requirements of the legal

acts, committees could be comprised only of two

members as well. Members of each committee should

be selected on the basis of their competences by

giving priority to independent members of the

collegial body. The chair of the management board

should not serve as the chair of committees.

Yes/No

See the commentary on the recommendation

provided in 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

The Audit Committee is composed of three

members. Two members conform to the

requirements for independence. The Audit

Committee is elected for the period of one

year.

5.1.5. The authority of each committee formed

should be determined by the collegial body itself.

Committees should perform their duties according to

the authority delegated to them and regularly inform

the collegial body about their activities and

performance on a regular basis. The authority of each

committee defining its role and specifying its rights

and duties should be made public at least once a year

(as part of the information disclosed by the company

on its governance structure and practice on an annual

basis). In compliance with the legal acts regulating

the processing of personal data, companies should

also include in their annual reports the statements of

the existing committees on their composition, the

number of meetings and attendance over the year as

well as the main directions of their activities and

performance.

Yes/No

See the commentary on the recommendation

provided in item 5.1.1.

The Audit Committee follows the Rules of the

Audit Committee prepared by the committee

and approved by the General Meeting of

Shareholders. These rules define the

regulations specifying the rights and duties of

the Audit Committee, size of the Audit

Committee, term of office in the Audit

Committee, requirements for education,

professional experience and principles iof

independence.

The approved Rules of the Audit Committee

are published on the website of the Company.

In 2021, there were 3 meetings of the Audit

Committee held where all members of the

Audit Committee were present.

5.1.6. With a view to ensure the independence and

impartiality of the committees, the members of the

collegial body who are not members of the

committees should normally have a right to

participate in the meetings of the committee only if

invited by the committee. A committee may invite or

request that certain employees of the company or

experts would participate in the meeting. Chair of

each committee should have the possibility to

maintain direct communication with the shareholders.

Cases where such practice is to be applied should be

specified in the rules regulating the activities of the

committee.

Yes/No

See the commentary on the recommendation

provided in item 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

110

5.2. Nomination committee

5.2.1. The key functions of the nomination

committee should be the following:

1) to select candidates to fill vacancies in the

membership of supervisory and management bodies

and the administration and recommend the collegial

body to approve them. The nomination committee

should evaluate the balance of skills, knowledge and

experience in the management body, prepare a

description of the functions and capabilities required

to assume a particular position and assess the time

commitment expected;

2) assess, on a regular basis, the structure, size and

composition of the supervisory and management

bodies as well as the skills, knowledge and activity of

its members, and provide the collegial body with

recommendations on how the required changes

should be sought;

3) devote the attention necessary to ensure succession

planning.

Not applicable

There is no Nomination Committee formed at

the Company.

The functions of the collegial body – the

Management Bord performs the functions of

the Nomination Committee. (See the

commentary on the recommendation provided

in item 5.1.1.).

5.2.2. When dealing with issues related to members

of the collegial body who have employment

relationships with the company and the heads of the

administration, the manager of the company should

be consulted by granting him/her the right to submit

proposals to the Nomination Committee.

Not applicable

5.3. Remuneration committee

The main functions of the remuneration committee

should be as follows:

1) submit to the collegial body proposals on the

remuneration policy applied to members of the

supervisory and management bodies and the heads of

the administration for approval. Such policy should

include all forms of remuneration, including the

fixed-rate remuneration, performance-based

remuneration, financial incentive schemes, pension

arrangements and termination payments as well as

conditions which would allow the company to

recover the amounts or suspend the payments by

specifying the circumstances under which it would be

expedient to do so;

2) submit to the collegial body proposals regarding

individual remuneration for members of the collegial

bodies and the heads of the administration in order to

ensure that they would be consistent with the

company’s remuneration policy and the evaluation of

the performance of the persons concerned;

Not applicable

There is no Remuneration Committee formed

at the Company. (See the commentary on the

recommendation provided in 5.1.1).

111

3) review, on a regular basis, the remuneration policy

and its implementation.

5.4. Audit committee

5.4.1. The key functions of the audit committee are

defined in the legal acts regulating the activities of

the audit committee

Yes

The Company implements this

recommendation.

On 29 April 2020, the Audit Committee was

elected at the Annual General Meeting of

Shareholders. The Audit Committee is

composed of three members, two of which

conform to the requirements for independence.

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

5.4.2. All members of the committee should be

provided with detailed information on specific issues

of the company’s accounting system, finances and

operations. The heads of the company’s

administration should inform the audit committee

about the methods of accounting for significant and

unusual transactions where the accounting may be

subject to different approaches.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

All members of the Committee are provided

with detailed information on specific issues of

the accounting system, finances and

operations of the Company.

5.4.3. The audit committee should decide whether

the participation of the chair of the management

board, the manager of the company, the chief finance

officer (or senior employees responsible for finance

and accounting), the internal and external auditors in

its meetings is required (and, if required, when). The

committee should be entitled, when needed, to meet

the relevant persons without members of the

management bodies present.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

5.4.4. The audit committee should be informed

about the internal auditor’s work program and should

be furnished with internal audit reports or periodic

summaries. The audit committee should also be

informed about the work program of external

auditors and should receive from the audit firm a

report describing all relationships between the

independent audit firm and the company and its

group.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders. The Audit Committee is

provided with the information mentioned

listed herein from independent audit firm.

No internal audit function exists at the

Company/Group.

Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the

Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of

Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the

Bank of Lithuania.

112

5.4.5. The audit committee should examine whether

the company complies with the applicable provisions

regulating the possibility of lodging a complaint or

reporting anonymously his/her suspicions of

potential violations committed at the company and

should also ensure that there is a procedure in place

for proportionate and independent investigation of

such issues and appropriate follow-up actions.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

5.4.6. The audit committee should submit to the

supervisory board or, where the supervisory board is

not formed, to the management board its activity

report at least once in every six months, at the time

that annual and half-yearly reports are approved.

Yes

The Audit Committee makes analysis of ang

gives evaluation to the financial statements of

the Company, gives recommendations on their

approval to the Management Board together

with the reports on their activity over the

period.

Principle 6: Prevention and disclosure of conflicts of interest

The corporate governance framework should encourage members of the company’s supervisory and management

bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of

interest related to members of the supervisory and management bodies.

The Corporate Governance Framework should recognize the rights of stakeholders as established by law and

encourage active co-operation between companies and stakeholders in creating the company value, jobs and

financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees,

creditors, suppliers, clients, local community and other persons having certain interests in the company

concerned.

Any member of the company’s supervisory and

management body should avoid a situation where

his/her personal interests are or may be in conflict

with the company’s interests. In case such a situation

did occur, a member of the company’s supervisory or

management body should, within a reasonable

period of time, notify other members of the same

body or the body of the company which elected

him/her or the company’s shareholders of such

situation of a conflict of interest, indicate the nature

of interests and, where possible, their value.

Yes

Members of the management bodies of the

Company behave in such a way that there is no

conflict of interest with the Company. During

the reporting period, there have been no known

conflict of interest between the Company and

the member of its management body.

Principle 7: Remuneration policy of the company

The remuneration policy and the procedure for review and disclosure of such policy established at the company

should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial

bodies and heads of the administration, in addition it should ensure the publicity and transparency of the

company’s remuneration policy and its long-term strategy.

113

7.1. The company should approve and post the

remuneration policy on the website of the company;

such policy should be reviewed on a regular basis

and be consistent with the company’s long-term

strategy.

Yes

The Company has prepared the draft of revised

Remuneration Policy, which is subject to the

approval at the coming General Meeting of

Shareholders.

7.2. The remuneration policy should include all

forms of remuneration, including the fixed-rate

remuneration, performance-based remuneration,

financial incentive schemes, pension arrangements

and termination payments as well as the conditions

specifying the cases where the company can recover

the disbursed amounts or suspend the payments.

Yes

The Remuneration Policy of the Company

defines the renumeration components and

established the principles of its award and

payment.

7.3. With a view to avoid potential conflicts of

interest, the remuneration policy should provide that

members of the collegial bodies which perform the

supervisory functions should not receive

remuneration based on the company’s performance.

Yes

Remuneration policy is intended to establish

only the principles of remuneration of top and

middle management staff.

See item 3.2.8.

7.4. The remuneration policy should provide

sufficient information on the policy regarding

termination payments. Termination payments should

not exceed a fixed amount or a fixed number of

annual wages and in general should not be higher

than the non-variable component of remuneration for

two years or the equivalent thereof. Termination

payments should not be paid if the contract is

terminated due to inadequate performance.

Yes

The Company complies with this

recommendation in accordance with the

provisions of the Labour Code of the Republic

of Lithuania within the limits established

therein.

7.5. In the event that the financial incentive scheme

is applied at the company, the remuneration policy

should contain sufficient information about the

retention of shares after the award thereof. Where

remuneration is based on the award of shares, shares

should not be vested at least for three years after the

award thereof. After vesting, members of the

collegial bodies and heads of the administration

should retain a certain number of shares until the end

of their term in office, subject to the need to

compensate for any costs related to the acquisition of

shares.

Not applicable

There is no scheme anticipating remuneration

of the directors in shares, share options or any

other right to purchase shares.

114

7.6. The company should publish information about

the implementation of the remuneration policy on its

website, with a key focus on the remuneration policy

in respect of the collegial bodies and managers in the

next and, where relevant, subsequent financial years.

It should also contain a review of how the

remuneration policy was implemented during the

previous financial year. The information of such

nature should not include any details having a

commercial value. Particular attention should be

paid on the major changes in the company’s

remuneration policy, compared to the previous

financial year.

Yes

The Company publishes information about the

implementation of the remuneration policy in

the Annual Report.

7.7. It is recommended that the remuneration policy

or any major change of the policy should be included

on the agenda of the general meeting of shareholders.

The schemes under which members and employees

of a collegial body receive remuneration in shares or

share options should be approved by the general

meeting of shareholders.

The Company does not apply any schemes

under which members and employees of a

collegial body receive remuneration in shares

or share options.

Principle 8: Role of stakeholders in corporate governance

The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or

mutual agreements and encourage active cooperation between companies and stakeholders in creating the

company value, jobs and financial sustainability. In the context of this principle the concept “stakeholders”

includes investors, employees, creditors, suppliers, clients, local community and other persons having certain

interests in the company concerned.

8.1. The corporate governance framework should

ensure that the rights and lawful interests of

stakeholders are protected.

Yes

The Company protects all rights of the

stakeholders, allows the stakeholders to

participate in corporate governance in the

manner prescribed by law.

8.2. The corporate governance framework should

create conditions for stakeholders to participate in

corporate governance in the manner prescribed by

law. Examples of participation by stakeholders in

corporate governance include the participation of

employees or their representatives in the adoption of

decisions that are important for the company,

consultations with employees or their

representatives on corporate governance and other

important matters, participation of employees in the

company’s authorized capital, involvement of

creditors in corporate governance in the cases of the

company’s insolvency, etc.

Yes

The Company complies with this

recommendation.

For example, the Company has a Co-operation

Agreement signed with the Works Council.

According to the signed agreement, the

Company informs the representatives of the

Council about the financial position of the

Company, employer’s status, expected

changes, etc.

115

8.3. Where stakeholders participate in the corporate

governance process, they should have access to

relevant information.

Yes

Detailed information on scheduled events of

the shareholders is made public following the

procedure prescribed by law, the investors

(shareholders) have sufficient opportunities to

familiarize themselves with the relevant

information and vote in adopting decisions.

8.4. Stakeholders should be provided with the

possibility of reporting confidentially any illegal or

unethical practices to the collegial body performing

the supervisory function.

Yes

The stakeholders may submit anonymous

reports to the collegial body.

Principle 9: Disclosure of information

The corporate governance framework should ensure the timely and accurate disclosure of all material

corporate issues, including the financial situation, operations and governance of the company.

9.1. In accordance with the company’s procedure

on confidential information and commercial secrets

and the legal acts regulating the processing of

personal data, the information publicly disclosed by

the company should include but not be limited to the

following:

9.1.1. operating and financial results of the

company;

Yes

The operating and financial results of the

Company are made public in the Intermediate

Semi-annual and Annual Reports of the

Company on the website of the Company and

on the website of stock-exchange Nasdaq

Vilnius.

9.1.2. objectives and non-financial information of

the company;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.3. persons holding a stake in the company or

controlling it directly and/or indirectly and/or

together with related persons as well as the structure

of the group of companies and their relationships by

specifying the final beneficiary;

Yes

All information available to the Company is

published in the Intermediate Semi-annual and

Annual Reports of the Company.

9.1.4. members of the company’s supervisory and

management bodies who are deemed independent,

the manager of the company, the shares or votes held

by them at the company, participation in corporate

governance of other companies, their competence

and remuneration;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.5. reports of the existing committees on their

composition, number of meetings and attendance of

members during the last year as well as the main

directions and results of their activities;

Yes

Information on composition, number of

meeting and attendance of members of the

existing committees is published in the

Intermediate Semi-annual and Annual Reports

of the Company.

116

9.1.6. potential key risk factors, the company’s risk

management and supervision policy;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.7. the company’s transactions with related

parties;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.8. main issues related to employees and other

stakeholders (for instance, human resource policy,

participation of employees in corporate governance,

award of the company’s shares or share options as

incentives, relationships with creditors, suppliers,

local community, etc.);

The Company does not apply any schemes

under which employees receive remuneration

in shares, share options or other rights to share

acquisition.

9.1.9. structure and strategy of corporate

governance;

Yes/No

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.10. initiatives and measures of social

responsibility policy and anti-corruption fight,

significant current or planned investment projects.

This list is deemed minimum and companies are

encouraged not to restrict themselves to the

disclosure of information included into this list. This

principle of the Code does not exempt companies

from their obligation to disclose information as

provided for in the applicable legal acts.

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.2. When disclosing the information specified in

paragraph 9.1.1 of recommendation 9.1, it is

recommended that the company which is a parent

company in respect of other companies should

disclose information about the consolidated results

of the whole group of companies.

Yes

The Company complies with the

recommendation and discloses information

about the results of the Company and the Group

of its subsidiaries. The information is published

in the Intermediate Semi-annual and Annual

Reports of the Company.

9.3. When disclosing the information specified in

paragraph 9.1.4 of recommendation 9.1, it is

recommended that the information on the

professional experience and qualifications of

members of the company’s supervisory and

management bodies and the manager of the company

as well as potential conflicts of interest which could

affect their decisions should be provided. It is further

recommended that the remuneration or other income

of members of the company’s supervisory and

management bodies and the manager of the company

should be disclosed, as provided for in greater detail

in Principle 7.

Yes

The information specified in the

recommendation in provided in the Annual and

Semi-annual Reports of the Company.

117

9.4. Information should be disclosed in such

manner that no shareholders or investors are

discriminated in terms of the method of receipt and

scope of information. Information should be

disclosed to all parties concerned at the same time.

Yes

The Company discloses the information via the

information disclosure system used by the

Vilnius Stock Exchange in the Lithuanian and

English languages simultaneously. The

Company does not disclose the information

likely to impact the price of the issued by it

securities in its comments, interviews or

otherwise by the time such information is

announced via the information system of the

Stock Exchange.

Principle 10: Selection of the company’s audit firm

The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the

audit firm.

10.1. With a view to obtain an objective opinion on

the company’s financial condition and financial

results, the company’s annual financial statements and

the financial information provided in its annual report

should be audited by an independent audit firm.

Yes

The independent audit company performs

auditing of the individual and consolidated

(the Group) annual financial statements of the

Company and its subsidiaries in accordance

with the International Accounting Standards

applicable in the European Union. The

independent audit company evaluates

conformity of the Annual Report to the

audited Financial Statements.

10.2. It is recommended that the audit firm would be

proposed to the general meeting of shareholders by the

supervisory board or, if the supervisory board is not

formed at the company, by the management board of

the company.

Yes

The Management Board proposes an audit

firm to the General Meeting of Shareholders.

10.3. In the event that the audit firm has received

remuneration from the company for the non-audit

services provided, the company should disclose this

publicly. This information should also be available to

the supervisory board or, if the supervisory board is

not formed at the company, by the management board

of the company when considering which audit firm

should be proposed to the general meeting of

shareholders.

Yes

In 2021, the firm of auditors provided no

services other than auditing.