CONFIRMATION OF THE GROUP’S RESPONSIBLE PERSONS

This confirmation of responsible employees concerning the audited Consolidated Financial Statements and

the Consolidated Annual Report, the Corporate Governance Report, the Consolidated Social Responsibility

Report, and the Remuneration Report of AB Panevėžio Statybos Trestas and its subsidiaries (hereinafter

“the Group”) for the year 2022 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 we 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 Group’s financial position, profit or loss and cash flows, and that the

Company’s and the Consolidated Annual Report, the Corporate Governance Report, the Consolidated

Social Responsibility Report, and the Remuneration 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 Financial Officer

Egidijus Urbonas Evaldas Pocevičius

4 April 2023 4 April 2023

AB Panevėžio Statybos Trestas

Consolidated Financial Statements for

the year 2022 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

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Company’s and Consolidated Annual Report, Corporate

Governance Report, Consolidated Social Responsibility Report and

Remuneration Report

Corporate Governance Report

101

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

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Banks

Luminor Bank AS

AB SEB Bankas

AB Swedbank

AB Šiaulių Bankas

OP Corporate Bank Plc Lithuania Branch

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Member of Grant Thornton International Ltd.

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 2022, 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 2022, 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. 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 recognized 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-

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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 2022 with the total

cost estimates and forecasted margins for those contracts used for revenue recognition as of 31

December 2021.

- 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 2022, 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;

- 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.

2. Fair value assessment of the investment property

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

under Investment property caption as of 31 December 2022 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).

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Member of Grant Thornton International Ltd.

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.

3. Impairment of trade accounts receivable and contract assets

As at 31 December 2022, the Group had non-current and current trade accounts receivable and contract

assets balance amounting to EUR 0.20 million and EUR 20.96 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.

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

24.0 % of the total assets of the Group in the statement of financial position as at 31 December 2022 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 2022. 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 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.

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Member of Grant Thornton International Ltd.

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 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.

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• 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 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 two years.

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

consolidated financial statements and translation services.

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

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ended 31 December 2022, 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 (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

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• 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.

Opinion

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

ended 31 December 2022 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, 2023

Jonavos st. 60C, Kaunas

Grant Thornton Baltic UAB

Audit company’s licence No 001513

Company code: 14773296

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	2022	2021
Revenue from contracts with customers	5, 6	115,840	98,451
Cost of sales	7	(106,310)	(86,283)
Gross profit		9,530	12,168
Change in fair value of investment property	11	573	2,260
Other revenue	11	1,883	1,710
Selling expenses	8	(496)	(516)
Administrative expenses, total:	9	(10,101)	(9,238)
Impairment loss on trade debts, contract assets and other receivables		4	5
Other administrative expenses		(10,105)	(9,243)
Other expenses	11	(1,800)	(1,612)
Operating profit (loss)		(411)	4,772
Finance income, total	12	1,622	79
Other finance income		489	79
Reverse of interest charged by the Competition Council	12	1,133	-
Finance expense, total:	12	(802)	(646)
Interest expenses		(689)	(484)
Other finance expenses		(113)	(162)
Profit (loss) before tax		409	4,205
Income tax expense	13	116	(706)
Net profit (loss)		525	3,499
Other comprehensive income
Items that will never be transferred to profit/(loss)		1,482	-
Non-current asset revaluation impact		1,744	-
Deferred income tax on revaluation of non-current assets		(262)	-
Items that can or will be transferred to profit/(loss)		(476)	(95)
Currency translation effect		(476)	(95)
Other comprehensive income (loss), total		1,006	(95)
Total comprehensive income (loss)		1,531	3,404
Net profit/(loss) attributable to:
To the equity holders of the Parent		488	3,049
Non-controlling interest		37	450
		525	3,499
Comprehensive income (loss) attributable to:
To the equity holders of the Parent		1388	2,998
Non-controlling interest		143	406
		1,531	3,404
Basic and diluted earnings/(loss) per share (EUR)	26	0.03	0.20

The notes on pages 14–61 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

Company code: 14773296

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	2022	2021
ASSETS
Non-current assets
Property, plant and equipment	14	10,668	9,846
Intangible Assets	15	235	267
Investment Property	16	32,565	31,400
Right of use assets		123	198
Non-current trade receivables	18	200	29
Other non-current financial assets		742	505
Deferred tax assets	13	609	390
Total non-current assets		45,142	42,635
Current assets
Inventories	17	9,674	10,129
Trade receivables	18	16,759	15,069
Contract assets	18	4,199	3,414
Prepayments		846	1,766
Other assets	19	2,558	1,243
Prepaid income tax	13	24	60
Cash and cash equivalents	20	8,955	11,888
Total current assets		43,015	43,569
TOTAL ASSETS		88,157	86,204

The notes on pages 14–61 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

Company code: 14773296

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	2022	2021
EQUITY AND LIABILITIES
Equity
Issued capital	21	4,742	4,742
Reserves	21	7,771	6,869
Retained earnings		18,200	17,713
Total equity attributable to equity holders of the Parent		30,713	29,324
Non-controlling interest		1,373	1,230
Total equity		32,086	30,554
Loans and borrowings	23	18,862	19,441
Provisions	24	765	965
Deferred tax liability	13	1,088	875
Non-current lease liabilities		33	107
Other liabilities		263	677
Total non-current liabilities		21,011	22,065
Current liabilities
Loans and borrowings	23	696	816
Current lease liabilities		88	87
Trade payables	22	17,083	15,660
Contract liabilities	25	5,927	3,771
Provisions	18, 25	208	148
Income tax payable	13	132	120
Other liabilities	25	10,926	12,983
Total current liabilities		35,060	33,585
Total liabilities		56,071	55,650
TOTAL EQUITY AND LIABILITIES		88,157	86,204

The notes on pages 14–61 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

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

				Foreign		Attributable to
				currency		the equity	Non-
	Issued		Revaluation	translation	Retained	holders of the	controlling
	capital	Legal reserve	reserve	reserve	earnings	Parent	interest	Total equity
Equity as at 31 December 2021	4,742	600	2,008	4,261	17,713	29,324	1,230	30,554
Total comprehensive income for the year
Net profit (loss)	-	-	-	-	488	488	37	525
Revaluation reserve	-	-	1,479	-	-	1,479	3	1,482
Currency translation effect	-	-	-	(579)	-	(579)	103	(476)
Total other comprehensive income	-	-	1,479	(579)	-	900	106	1,006
Total comprehensive income for the year	-	-	1,479	(579)	488	1 388	143	1,531
Increase in legal reserve	-	134	-	-	(134)	-	-	-
Depreciation transfer for buildings	-	-	(132)	-	133	1	-	1
Equity as at 31 December 2022	4,742	734	3,355	3,682	18,200	30,713	1,373	32,086
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	3,049	450	3,499
Currency translation effect	-	-	-	(51)	-	(51)	(44)	(95)
Total other comprehensive income	-	-	-	(51)	-	(51)	(44)	(95)
Total comprehensive income for the year	-	-	-	(51)	3,049	2,998	406	3,404
Depreciation transfer for buildings	-	-	(165)	-	166	1	-	1
Equity as at 31 December 2021	4,742	600	2,008	4,261	17,713	29,324	1,230	30,554

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

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

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	2022	2021
Cash flows from operating activities
Net profit (loss)		525	3,499
Adjustments to:
Depreciation and amortisation (including impairment)	14, 15	1,333	1,063
Proceeds from disposal of property, plant and equipment		(1)	(191)
Income tax expense	13	(116)	706
Elimination of results from financing activities		(75)	394
Change in fair value of investment property	11	(573)	(2,260)
Other non-cash items		(110)	579
Net cash flows from operating activities before changes in working capital		983	3,790
Changes in working capital:
Changes in inventories	17	23	(3,168)
Changes in trade receivables and contract assets	18	(2,649)	(6,306)
Changes in prepayments		920	(1,379)
Changes in other assets	19	(1,446)	1,020
Changes in trade payables	22	1,486	5,710
Changes in prepayments received		(188)	895
Changes in other liabilities		(264)	(1,083)
Income tax paid		(66)	(717)
Net cash flows from operating activities		(1,201)	(1,238)
Cash flows used in investing activities
Acquisition of intangible assets and property, plant and equipment	14, 15	(485)	(796)
Disposal of property, plant and equipment		12	377
Acquisition of investments		-	-
Loans granted		-	-
Collection of loans granted		5	5
Interest and dividends received		2	2
Net cash flows used in investing activities		(466)	(412)
Cash flows from/used in financing activities
Dividends paid	31	(1)	-
Repayment of borrowings	31	(13,465)	(317)
Loans and borrowings received	31	12,961	5,000
Payment of finance lease liabilities	31	(85)	(71)
Interest paid		(676)	(484)
Net cash flows from/used in financing activities		(1,266)	4,128
Net increase/(decrease) in cash and cash equivalents		(2,933)	2,478
Effect of foreign exchange on cash		-	-
Cash and cash equivalents at the beginning of the period		11,888	9,410
Cash and cash equivalents at the end of the period		8,955	11,888

The notes on pages 14–61 are an integral part of these consolidated financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

Notes to the Financial Statements

1. General information

AB Panevėžio Statybos Trestas (hereinafter the “Company”) is a public limited liability 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 2022, the Group had 805

employees (as at 31 December 2021: 840).

As at 31 December 2022 and 2021, 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 Lithuanian Financial Reporting Standards (LFRS). 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 2023.

Financial information of the subsidiaries is as follows:

				Net		Net
				profit/(lo		profit/(lo
				ss) for		ss) for
	Country		Equity as at	the year	Equity as at	the year
(EUR thousand)	of operation	Type of activity	31/12/2022	2022	31/12/2021	2021
UAB PST Investicijos	Lithuania	Real estate
(subgroup consolidated)		development	4808	33	4,848	1,341
		Construction:
UAB Vekada	Lithuania	electrical installation	988	(63)	1,013	(286)
Hustal UAB		Wholesale of steel
(after business combination)	Lithuania	structures	2,095	690	0	0
UAB Metalo Meistrai	Lithuania	Construction: steel
(before business combination)		structures	1,485	455	1,030	272
UAB Hustal		Wholesale of steel
(before business combination)	Lithuania	structures	376	216	360	133
		Construction: wooden
UAB Skydmedis	Lithuania	panel houses	1,507	837	1,170	570
		Construction:
		conditioning
UAB Alinita	Lithuania	equipment	(265)	(241)	(24)	163
		Real estate
OOO Teritorija	Russia	development		0	(1,059)	307
Kingsbud Sp.z.o.o.	Poland	Intermediary services	441	183	456	125
SIA PS Trests	Latvia	Construction	(193)	(51)	(142)	21
		Real estate
UAB Šeškinės Projektai	Lithuania	development	7,615	1,337	6,242	2,084
		Real estate
UAB Ateities Projektai	Lithuania	development	403	204	199	(95)
		Production of
		aluminium profile
UAB Aliuminio Fasadai	Lithuania	systems	(191)	(120)	(71)	(173)
		Real estate
UAB Tauro Apartamentai	Lithuania	development	3	0	3	0

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

1. General information (continued)

Ownership of subsidiaries:

	Registration address	2022	2021
UAB PST Investicijos (group)	Verkių st. 25C, Vilnius	68.3 %	68.3 %
UAB Vekada	Marijonų st.36, Panevėžys	95.6 %	95.6 %
UAB HUSTAL	Tinklų st. 7, Panevėžys	100 %	100 %
(former UAB Metalo Meistrai)
UAB Hustal (removed from the register)	Tinklų st. 7, Panevėžys	-	100 %
UAB Skydmedis	Pramonės st. 5, Panevėžys	100 %	100 %
UAB Alinita	Tinklų st. 7, Panevėžys	100 %	100 %
UAB Šeškinės Projektai	Verkių st. 25C, Vilnius	100 %	100 %
OOO Teritorija (removed from the	Lunačiarsko ave. 43/27, Cherepovec,	-	87.5 %
register)	Vologda, Russian Federation
Kingsbud Sp. z. o. o.	A. Patli st. 12, 16-400 Suwalki, Poland	100 %	100 %
	Skultes st. 28, Skulte, Marupes mun.,	100 %	100 %
SIA PS Trests	Latvia
UAB Tauro Apartamentai	Verkių st. 25C-1, Vilnius	100 %	100 %
UAB Ateities Projektai	Verkių st. 25C-1, Vilnius	100 %	100 %
UAB Aliuminio Fasadai	Pramonės st. 5, Panevėžys	100 %	100 %

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

	Type of activity	2022	2021
ZAO ISK Baltevromarket	Development of real estate projects in
	Kaliningrad	100 %	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)	2022	2021
Total assets	14	19
Total liabilities	3	3
Equity	11	16
Revenue	0	(33)
Net result	(5)	(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. The revaluation was carried

out on 31 December 2022.

• 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 value approach, the Company also relied on the Purchase

and Sale Agreement signed with a third party after the reporting date and related information.

• 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

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

2. Basis of preparation (continued)

• 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.

3. Summary of Significant Accounting Policies

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.

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;

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

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.

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

(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 2022.

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

on or after 1 January 2022.

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, the Group 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 assessed that these amendments has no material impact on the

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 2022 and have not been early adopted when preparing these financial statements are

presented below:

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).

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,

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

so that the Company would be required to apply IFRS 9 for annual periods beginning on or after 1

January 2023.

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

financial statements.

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

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 meeting in March 2020, IASB decided to defer the effective

date of the standard 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 Standard will not have any impact on the financial position or performance of the Group 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).

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 1 January 2023 with earlier application

permitted.

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

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).

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. 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).

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. The

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

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current (issued on 23

January 2020 with effective date of 1 January 2024, 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 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 “Non-current Liabilities with Covenants” (issued on 31 October 2022 with

effective date of 1 January 2024, but not before it is adopted by the EU):

Modify the requirements introduced by Classification of Liabilities as Current or Non-current on how

an entity classifies debt and other financial liabilities as current or non-current in particular

circumstances: Only covenants with which an entity is required to comply on or before the reporting

date affect the classification of a liability as current or non-current. In addition, an entity has to

disclose information in the notes that enables users of financial statements to understand the risk that

non-current liabilities with covenants could become repayable within twelve months. The

amendments are effective for reporting periods beginning on or after 1 January 2024. The

amendments are applied retrospectively in accordance with IAS 8 and earlier application is permitted.

The 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 IFRS 16 “Lease Liability in a Sale and Leaseback” with amendments that

clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy

the requirements in IFRS 15 to be accounted for as a sale (issued on 22 September 2022 with

effective date of 1 January 2024, but not before it is adopted by the EU).

Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback” require a seller-lessee to

subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any

amount of the gain or loss that relates to the right of use it retains. The new requirements do not

prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full

termination of a lease. The amendments become effective for annual reporting periods beginning on

or after 1 January 2024 with earlier application permitted. A seller-lessee applies the amendments

retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and

Errors to sale and leaseback transactions entered into after the date of initial application. The

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.1 Foreign currency (continued)

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 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:

(a) At amortised cost (debt instruments).

(b) 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

2022 and 2021;

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

December 2022 and 2021;

(d) At fair value through profit or loss. The Group did not have such items as at 31 December 2022

and 2021.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.2 Financial Instruments (continued)

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

Based on the Group’s management assessment, trade receivables and contract assets do not include a

significant financing component and are accordingly measured for impairment using the simplified

method, i.e. management makes an individual assessment of expected credit losses for each important

customer taking into account its credit history, future factors and subjective risk factors related to the

borrower. 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.2 Financial Instruments (continued)

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 written off 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

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.2 Financial Instruments (continued)

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

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.3 Property, plant and equipment (continued)

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.

3.4 Intangible assets (other than goodwill)

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.

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.5 Investment Property (continued)

Transfers are made to or from investment property only when there is a change in use. For a transfer

from investment property to owner-occupied property, 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 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.6 Leased Assets and Lease Liabilities (continued)

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.

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.9 Impairment of Non-Financial Assets (continued)

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

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

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 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.13 Revenue (continued)

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

Receivables 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. Interest expenses

3.14 Finance Income and Expense (continued)

are recognized 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.

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.15 Income Tax (continued)

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.

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).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.18 Determination of Fair Values (continued)

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.

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)

	2022	2021
Trade receivables and contract assets	21,158	18,512
Loans granted	1	6
Cash and cash equivalents	8,955	11,888
Total	30,114	30,406

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

4. Financial Risk Management (continued)

Trade receivables and contract assets:

(EUR thousand)

	2022	2021
Municipalities and state institutions	6,266	3,305
Legal persons	14,892	15,207
Total trade receivables and contract assets	21,158	18,512

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)

	2022	%	2021	%
Client 1	3,635	17.2	2,099	11.3
Customer No 2	2,028	9.6	1,692	9.1
Customer No 3	1,848	8.7	925	5.0
Customer No 4	1,685	8.0	826	4.5
Customer No 5	644	3.0	763	4.1
Customer No 6	620	2.9	468	2.5
Customer No 7	534	2.5	467	2.5
Other customers	10,531	49.8	11,644	62.9
Impairment	(367)	(1.7)	(372)	(1.9)
Total	21,158	100	18,512	100

Trade receivables by geographic regions:

(EUR thousand)

	2022	2021
Local market (Lithuania)	20 046	16 078
Euro zone countries	782	2 097
Other countries	330	337
Total	21,158	18,512

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

(EUR thousand)

	2022	Impairment	2021	Impairment
Not overdue	18,395		15,122
Overdue 0-30 days	1,262		2,269
Overdue 30-90 days	1,338		1,079
More than 90 days	531	368	414	372
Total	21,526	368	18,884	372

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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

4. Financial Risk Management (continued)

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 2022 (undiscounted) as to the

agreements, are presented below:

(EUR thousand)

		Contractual
		undiscounted	Up to 6	More than 6
Liabilities	Carrying amount	cash flows	months	months
Loans and lease liabilities	19,559	22,103	793	21,310
Trade payables	17,083	17,083	17,083
Liabilities related to the fine imposed by the Competition Council*	5,775	5,775	5,775
Total	42,417	44,961	23,651	21,310

* The full amount of the fine is presented as payable within six months because, as described above, when preparing these

financial statements, the management was guided by the judgement that the Company does not yet have a court settlement

with the Tax Authority, but the Company currently paying the said fine in equal parts for a period of four years (with

additional interest).

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

agreements, are presented below:

(EUR thousand)

		Contractual
		undiscounted	Up to 6	More than 6
Liabilities	Carrying amount	cash flows	months	months
Loans and lease liabilities	2,0257	22,220	417	21,803
Trade payables	15,660	15,660	15,660	0
Liabilities related to the fine imposed by the Competition Council*	8,542	8,542	8,542	0
Total	44,459	46,422	24,619	21,803

* The full amount of the fine is presented as payable within six months because, as described above, when preparing the

financial statements for the year 2021, the management was guided by the judgement that the Company does not yet have

an irrevocable contractual right to defer the payment until the settlement agreement is signed with the Tax Authority, but

the Company currently paying the said fine in equal parts for a period of eight years (without additional interest).

Interest rate applied for calculation of contractual net cash flows:

	2022	2021
Loans and lease liabilities	3.135–3.625%	1.95–2.7%

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 2022, the

overdraft limit was not used (Note 23).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

4. Financial Risk Management (continued)

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 2022 and 2021, 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:

	As at 31	Average	As at 31	Average
	December 2022	2022	December 2021	2021
1 SEK =	0.0899	0.0841	0.0976	0.0984
1 RUB =	0.0087	0.0114	0.0118	0.0115
1 NOK =	0.0951	0.0990	0.1003	0.0984

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

As at 31 December 2022 (EUR thousand)	EUR	NOK	PLN
Deferred tax assets	273
Trade receivables and contract assets	21,089		69
Excess VAT, prepaid income tax	827		40
Cash and cash equivalents	8,898	30	27
Deferred tax liability	(1,088)
Loans and borrowings	(19,558)
Trade payables	(16,998)	(2)	(83)
Provisions	(973)
Income tax	(24)	(98)	(10)
Other liabilities	(71)
Total exposure	(7,625)	(70)	43

A s at 31 December 2021 (EUR thousand)	EUR	NOK	SEK	RUB
Deferred tax assets	390
Trade receivables and contract assets	18,487		1	24
Excess VAT	726		14	38
Cash and cash equivalents	11741	59	74	14
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)
	,,,,,,,,,,,(17,192)	(231)	(185)	(17)
Total exposure	(23,728)	(249)	(140)	35

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).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

4. Financial Risk Management (continued)

The effect of Euro on Russian subsidiary:

	Increase/(decrease)	Impact on profit
2022	in currency rate	before tax
EUR	+15.00%	(6)
EUR	-15.00 %	6
	Increase/(decrease)	Impact on profit
2021	in currency rate	before tax
EUR	+15.00%	(2,012)
EUR	-15.00 %	2,012

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 2022, the Group’s net profit would

decrease by approximately EUR 98 thousand due to loans received (as at 31 December 2021: net

profit would decrease by EUR 102 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 2022 and

2021, the Group was in line with this requirement. 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 operations of UAB Hustal. 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

5. Segments (continued)

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 89 % of products successfully exported to Norway,

Sweden, the Netherlands, Iceland and other countries.

Other activity includes operations of UAB Šeškinės Projektai, 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).

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	294	33	122	36	485	0	485

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

			Wooden
(EUR thousand)		Steel	panel	Other	Total	Intersegment	Total
As at 31 December 2022 or during 2022	Construction	structures	houses	activity	segments	eliminations	Group
Revenue
Third parties	83,793	10,332	9,133	12,582	115,840	0	115,840
Intersegment	5,679	1	0	1,525	7,205	7,205	0
Total revenue	89,472	10,333	9,133	14,107	123,045	7,205	115,840
Other revenue	855	3	105	1,493	2,456	0	2,456
Expenses							(118,106)
Depreciation and amortisation	(940)	(89)	(137)	(167)	(1,333)	0	(1,333)
Other administrative and selling expenses	(87,887)	(9,133)	(8,107)	(10,447)	(115,574)	0	(115,574)
Interest expenses	1,031	(2)	0	(585)	444	0	444
Interest income	0	0	0	0	0	0	0
Financial activity (other than interest), net	298	1	(22)	99	376	0	376
Other expenses	(591)	(7)	(33)	(1,169)	(1,800)	0	(1,800)
Income tax expense	78	3	(41)	(259)	(219)	0	(219)
Segment result	2 316	1,109	898	3,072	7,395	7,205	190
Segment assets	62,015	3,540	2,940	45,157	113,652	(25,311)	88,341
Segment liabilities	34,857	1,445	2,233	31,010	69,545	(12,954)	56,591

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 31 December 2021 or during 2021

Construction

Steel

structures

Wooden

panel

houses

Other

activity

Total

segments

Intersegment

eliminations

Total

Group

Revenue

Third parties

7,0801

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)

Other administrative and selling expenses

(71,105)

(5,173)

(6,421)

(12,275)

(94,974)

Interest expenses

(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)

Reconciliation of liabilities	2022	2021
Segment operating liabilities	69,545	6,7183
Intersegment liabilities	(12,954)	(11,533)
Total liabilities	56,591	55,650

Geographical information

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

location of the customers:

	2022	2021
Lithuania	96,842	77,654
Russia	0	6,777
Scandinavian countries	17,665	12,051
Other countries	1,333	1,969
	115,840	98,451

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)

	2022	2021
Construction	83,793	70,801
Other revenue from contracts with customers	32,047	27,650
Total sales income	115,840	98,451

In 2022, the Group recognised EUR 694 thousand of revenue from contracts with customers that

were included in the balance of contract liabilities at the beginning of the period (in 2021: EUR

1,800 thousand).

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

7. Cost of sales

(EUR thousand)

	2022	2021
Construction sub-contractors	40,888	32,432
Raw materials and consumables	37,767	2,7847
Wages and salaries (Note 10)	14,104	12,998
Sale of land plots	0	4,826
Depreciation and amortisation	566	670
Other	12,985	7,510
Total cost of sales	106,310	86,283

8. Selling expenses

(EUR thousand)

Reconciliation of assets	2022	2021
Segment operating assets	113,652	109,930
Intersegment assets	(25,311)	(23,726)
Total assets	2022	2021
Advertising and similar expenses	58	78
Wages and salaries (Note 10)	420	395
Other expenses	18	43
Total selling expenses	496	516

88,341

86,204

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

9. Administrative expenses

(EUR thousand)

	2022	2021
Wages and salaries (Note 10)	7,127	6,078
Purchased services for administrative use	2,322	2,080
Operating taxes other than income tax	262	168
Depreciation charge	454	327
Total impairment loss of trade debts, contract assets and other receivables:	(4)	7
Impairment (reversal of impairment) of receivables (Note 18)	(4)	7
Amortisation charge	33	33
Write-down (reversal) of inventories to net realizable value (Note 17)	17	(8)
Rent expenses	323	406
Subsidiary liquidation-related adjustments	(976)	0
Other expenses	543	147
Total administrative expenses	10,101	9,238

10. Payroll expenses

(EUR thousand)

	2022	2021
Wages and salaries	18,475	16,606
Social security contributions	402	347
Daily allowances and incapacity benefits	1,605	1,468
Change in accrued vacation reserve and bonuses	1,326	1,172
Total salary related expenses	21,808	19,593
Recognised in:
Cost of sales	14,104	12,998
Administrative expenses	7,127	6,078
Selling expenses	420	395
Other operating expenses	157	122
Total salary related expenses	21,808	19,593

11. Other Income and Expenses

(EUR thousand)

	2022	2021
Change in fair value of investment property	573	2,260
Rental and other income	324	309
Gain from sale of property, plant and equipment and other	1,559	1,401
Total other income	2,456	3,970
Depreciation of rented premises	(277)	(32)
Other expenses	(1,523)	(1,580)
Total other expenses	(1,800)	(1,612)
Total other income and expenses, net	656	2,358

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

12. Finance Income and Expense

(EUR thousand)

	2022	2021
Interest income	0	0
Interest expenses, related to penalty imposed by the Competition
Council (Note 27)	1,133	0
Foreign currency exchange gain	65	75
Liquidation of subsidiary	421	0
Other finance income	3	4
Total finance income	1,622	79
Loan interest expenses	689	484
Foreign currency exchange loss	90	39
Other expenses	23	123
Total finance expense	(802)	(646)
Total finance income and expense, net	820	(567)

13. Income Tax

Income tax expense:

(EUR thousand)

	2022	2021
Current income tax expense	98	245
Change in deferred tax	(214)	461
Total income tax expense	(116)	706

In 2022 and 2021, 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)

		2022	2021
Profit (loss) before tax		409		4,205
Income tax expense (benefit) applying the Group’s tax rate in Lithuania	15.0 %	61	15.0 %	631
Impact of different tax rates in other countries		31		16
Non-deductible expenses		130		498
Non-taxable income		(422)		(322)
Utilized tax losses		(38)		(186)
Adjustment of income tax of prior periods		0		0
Change in deferred tax asset’s realisation
allowance		(122)		69
	(28.4) %	(116)	16.8 %	706

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

13. Income Tax (continued)

Deferred tax:

(EUR thousand)

		2022		2021
	Temporary		Temporary
	differences	Deferred tax	differences	Deferred tax
Impairment of receivables	333	50	2,558	384
Write-down of inventories to net
realisable value	76	11	58	9
Accrued vacation reserve	525	79	424	64
Accrued bonuses	244	37	428	64
Warranty provisions and other	964	145	1,104	166
Tax losses carry forward	8,333	1,250	5,698	855
Onerous contracts	515	77	0	0
Total deferred tax assets		1,649		1,542
Unrecognised deferred tax asset		(9)		(342)
Deferred tax asset recognised		1,640		1,200
Revaluation of land and buildings	(2,633)	(395)	(1,492)	(224)
Difference in investment property value	(11,496)	(1724)	(9,740)	(1,461)
Deferred tax liabilities		(2,119)		(1,685)
Total deferred tax, net		(479)		(485)
Reported in the statement of financial
position as:
Deferred tax assets		609		390
Deferred tax liability		(1,088)		(875)

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.

Unused tax loss carry forward as at 31 December 2022 amounted to EUR 8,333 thousand (as at

31 December 2021 – EUR 5,986 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)

	2022	2021
Net deferred tax as at 1 January	(485)	(24)
Amounts recognised in other comprehensive income	(262)	0
Recognised in profit or loss	268	(461)
Net deferred tax as at 31 December	(479)	(485)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

13. Income Tax (continued)

Change of income tax payable:

(EUR thousand)

	2022	2021
Prepaid income tax as at 1 January	60	13
Income tax payable as at 1 January	(120)	(83)
Prepaid (payable) income tax as at 1 January	(60)	(70)
Income tax calculated over the reporting period	(158)	(587)
Paid/set off with overpayment of other taxes	242	717
Prepaid income tax as at 31 December	24	60
Income tax payable as at 31 December	(132)	(120)
Prepaid (payable) income tax as at 31 December	(108)	(60)

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

14. Property, Plant and Equipment

(EUR thousand)

		Machinery
	Land and	and		Fixtures and	Construction-
	buildings	equipment	Vehicles	fittings	in-progress	Total
Cost
(revalued carrying amount of land and buildings)
Balance as at 1 January 2022	8,081	4,287	2,611	1,262	0	16,241
Additions	108	98	74	194		474
Revaluation	1,822					1,822
Reclassification	(162)					(162)
Disposals and asset written off		(65)	(35)	(207)		(307)
Balance as at 31 December 2022	,9849	4,320	2,650	1,249	0	18,068
Balance as at 1 January 2021	7,844	3,905	2,765	1,535	0	16,049
Additions	26	468	96	176		766
Reclassification	327	81		(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	0	16,241
Depreciation and impairment
Balance as at 1 January 2022	583	3,042	1,977	793	0	6,395
Depreciation for the year	412	426	249	205		1,292
Disposals and asset written off		(61)	(33)	(193)		(287)
Balance as at 31 December 2022	995	3,407	2,193	805		7,400
Balance as at 1 January 2021	597	2,718	1,774	861	0	5,950
Depreciation for the year	68	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	0	6,395
Residual value
As at 1 January 2021	7,247	1,187	991	674	0	10,099
As at 1 January 2022	7,498	1,245	634	469	0	9,846
As at 31 December 2022	8,854	913	457	444	0	10,668

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

14. Property, Plant and Equipment (continued)

(EUR thousand)

	2022	2021
Depreciation recognised in:
Cost of sales	558	657
Administrative expenses	454	327
Other expenses	280	33
Total depreciation	1,292	1,017

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

31 December 2022 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 value approach. 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.

If the buildings and land were stated at cost model, their net book value as at 31 December 2022

would be equal to EUR 1,767 thousand (as at 31 December 2021: EUR 1,670 thousand).

As at 31 December 2022, the acquisition cost of fully depreciated but still in use assets amounted

to EUR 3,479 thousand, (as at 31 December 2021: EUR 2,660 thousand).

As at 31 December 2022, land and buildings, including investment property, with the carrying

amount of EUR 37,772 thousand were pledged to the banks (as at 31 December 2021: EUR 31,400

thousand). At 31 December 2022, the net book value of right-of-use assets (machinery, equipment

and vehicles) was EUR 126 thousand (in 2021: EUR 147 thousand).

15. Intangible Assets

(EUR thousand)

	Goodwill	Software	Other assets	Total
Cost
Balance as at 1 January 2022	323	367	58	748
Additions		11		11
Asset written-off		(24)	(2)	(26)
Balance as at 31 December 2022	323	354	56	733
Balance as at 1 January 2021	323	408	67	798
Additions		30		30
Asset written-off		(71)	(9)	(80)
Balance as at 31 December 2021	323	367	58	748
Amortisation/impairment losses
Balance as at 1 January 2022	292	137	52	481
Calculated during the year		40	1	41
Amortisation of asset written-off		(24)		(24)
Balance as at 31 December 2022	292	153	53	498
Balance as at 1 January 2021	292	156	60	508
Calculated during the year	0	45	1	46
Amortisation of assets written-off	0	(64)	(9)	(73)
Balance as at 31 December 2021	292	137	52	481
Residual value
As at 1 January 2022	31	230	6	267
	31	252	7	290
As at 31 December 2022	31	201	3	235

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

15. Intangible Assets (continued)

Amortisation was accounted for in the following way: EUR 8 thousand was recorded under cost of

sales, EUR 33 thousand – administrative expenses (in 2021: EUR 13 thousand – under cost of sales,

EUR 33 thousand – administrative expenses).

The goodwill is related to the subsidiary UAB Alinita (construction: conditioning work CGU). The

management has estimated that value in use is higher than the carrying amount; therefore; no

impairment was recognized for the goodwill.

As at 31 December 2022, the acquisition cost of fully amortised intangible assets (but still in use)

amounted to EUR 108 thousand, (as at 31 December 2021: EUR 90 thousand).

16. Investment Property

(EUR thousand)

	2022	2021
Balance as at 1 January	31,400	28,335
Reclassification from (to) property, plant and equipment	165	(404)
Reclassified of project in progress from inventories	427	1,209
Change in fair value	573	2,260
Balance as at 31 December	32,565	31,400

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 2022 and

2021). If the discount rate would increase by 1% (remaining assumptions would not be changed),

then investment property fair value would decrease by approx. EUR 105 thousand, and if exit yield

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

property would decrease by EUR 102 thousand.

The identified fair value of the above investment property of EUR 1,550 thousand (in 2021: EUR

1,420 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 171 thousand in less than one year, EUR 112 thousand

between one and five years (as at 31 December 2021: EUR 123 thousand in less than one year, EUR

165 thousand between one and five years). Revenue from the hotel premises rent in 2022 amounted

to EUR 123 thousand (in 2021: EUR 102 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 2022

amounted to EUR 351 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.

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

December 2022 amounted to: EUR 88 thousand in less than one year, EUR 114 thousand – between

one and five years (as at 31 December 2021: EUR 62 thousand in less than one year, EUR 120

thousand – between one and five years).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

16. Investment Property (continued)

Revenue from lease in 2022 amounted to EUR 69 thousand (in 2021: EUR 60 thousand) and was

accounted under other income.

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

building) UAB Šeškinės projektai from inventories 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 2022 was estimated at EUR 30,664 thousand (as at 31 December 2021: EUR

29,895 thousand). In 2022, 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 573 thousand (in 2021:

EUR 2,433 thousand) 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 2022, 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 2022

were as follows: discount rate – 8.25% (pre-tax), leased area – 93%, with the cost of 11.0–24.41

EUR/sq. m. per month for lease of premises.

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

lease agreements for office premises were as follows: EUR 3,038 thousand in less than one year,

EUR 6,128 thousand between one and five years (in 2021: EUR 1,676 thousand in less than one

year, EUR 4,801 thousand between one and five years). In 2022, lease income comprised EUR

2,195 thousand and was accounted under sales revenue (in 2021: EUR 1,093 thousand).

As at 31 December 2022, the total fair value of the investment property was estimated at EUR

32,514 thousand (in 2021: EUR 31,400 thousand) and was attributed to Level 3 in fair value

hierarchy.

17. Inventories

(EUR thousand)

	2022	2021
Capitalized costs related to real estate development	3,882	4,973
Other inventories	5,792	5,156
Total inventories	9,674	10,129

Capitalised costs related to real estate development are as follows:

(EUR thousand)

	2022	2021
Cost:
Costs of acquired land and real estate	2,666	3,325
Real estate development project costs	1,697	2,151
Total cost	4,363	5,476
Write-down:
Write-down to net realisable value of projects in progress	(481)	(503)
Total write-down	(481)	(503)
Total capitalised costs	3,882	4,973

Change in write-down of capitalised costs:

	2022	2021
Write-down to net realisable value of capitalised costs at the
beginning of the period	503	583
Additional write-down (reversal) recognized under administrative
expenses	(22)	(80)
Write-down to net realizable value of capitalized costs at the end of the period	481	503

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

17. Inventories (continued)

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 2022 and 2021, the Group had the following special purpose entities:

	Total capitalized costs as of	Total capitalized costs as of
	31 December 2022,	31 December 2021,
	carrying amount	carrying amount
AB Panevėžio Statybos Trestas	2,477	2,414
UAB PST Investicijos	194	72
UAB Ateities Projektai	1,211	2,487
Total	3,882	4,973

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

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

price as of 30 November 2022. Income and comparable value approach was applied. In 2022,

following the completion of the project implementation stage I, the construction of cottages

commenced.

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 2022. Residual value approach was

applied. The decision on the start of the project construction is expected in 2023.

Other inventories can be specified as follows:

(EUR thousand)

	2022	2021
Raw materials and consumables	4,551	3,988
Work in progress and finished goods	1,035	1,074
Goods for resale	281	152
Write-down to net realizable value at the beginning of the year	(58)	(66)
Write-off	21	8
Additional write-down to net realisable value during the period	(38)	0
Write-down to net realisable value	(75)	(58)
Total other inventories	5,792	5,156

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)

	2022	2021
Trade receivables	17,327	14,904
Contract assets (accrued income based on the stage of completion)	4199	3,414
Receivables from related parties	0	566
Impairment at the beginning of the year	(372)	(365)
Write-off of doubtful trade receivables	(10)	9
Repayment of doubtful trade receivables	1	0
Additional impairment/(reversal) during the period	13	(16)
Impairment at the end of the year	(368)	(372)
Total trade receivables and contract assets	21,158	18,512

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

18. Trade Receivables and Contract Assets (continued)

The part of trade receivables due from customers is accounted for as non-current trade receivables:

EUR 114 thousand as at 31 December 2022, EUR 29 thousand as at 31 December 2021. These

amounts are related with non-current retentions as described below.

As at 31 December 2022, trade receivables include retentions (retention – a fixed percentage of the

total contract price which is 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

is provided by the Group) of EUR 4,059 thousand (in 2021: EUR 3,775 thousand) relating to

construction contracts in progress. For impairment of trade receivables refer to Note 4.

As at 31 December 2022, the total contract amount attributed to performance obligations under the

construction contracts with customers that were outstanding (or partly outstanding) amounted to

EUR 84,906 thousand (as at 31 December 2021: EUR 82,730 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 2022 and 2021:

(EUR thousand)

	2022	2021
Sales by specific customers’ projects in progress, recognised in the statement of
comprehensive income during the year	70,225	43,188
Sales by specific customers’ projects in progress, recognised over the contract
period	106,675	53,649
Expenses incurred for completing specific customers’ projects in progress, recognised in the statement comprehensive income during the year	66,197	39,769
Expenses incurred for completing specific customers’ projects in progress, recognised in the statement comprehensive income over the contract period	102,528	50,295
Contract assets (accrued income)	4,199	3,332
Contract liability (deferred income) under outstanding contracts at the year-end
(Note 25)	2,718	891
Contract liability (payments from customers for purchase of inventories and etc.)	2,692	2,880
Provisions for onerous contracts (Note 25)	518	0
Trade receivables (under the caption of trade receivables and receivables from related parties)	14,999	9,071

19. Other current assets

(EUR thousand)

	2022	2021
Financial assets
Receivables from the former subsidiary OOO Baltlitstroj related to prepayment paid to the supplier on behalf of this subsidiary	0	1,240
Impairment of receivables from OOO Baltlitstroj	0	(1,240)
Loan granted to OOO Baltlitstroj	0	174
Impairment of loans granted to OOO Baltlitstroj	0	(174)
Non-financial assets
Excess VAT	843	718
Receivable from related parties	1,266	0
Other current assets	449	525
Other current assets, total	2,558	1,243

Former subsidiary OOO Baltlitstroj, removed from the register on 25 November 2022

The Group did not have any term deposits.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

20. Cash and cash equivalents

(EUR thousand)

	2022	2021
Cash at bank	8,955	11,886
Cash on hand	0	2
Cash and cash equivalents, total	8,955	11,888

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 2021. The Group did not hold its own shares in 2022 and 2021.

The reserves were as follows:

(EUR thousand)

	2022	2021
Revaluation reserve	3,355	2,008
Legal reserve	734	600
Foreign currency translation reserve	3,682	4,261
Total reserves	7,771	6,869

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:

	2022	2021
Revaluation reserve as at 1 January	2,008	2,173
Revaluation (Note 14)	1,479	0
Depreciation of revaluation	(132)	(165)
Deferred tax on depreciation of revaluation	0	0
Revaluation reserve as at 31 December	3,355	2,008

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 2022 and 2021 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)

	2022	2021
Lithuania	16,327	14,629
Latvia	445	591
Poland	130	359
Other	181	81
Total trade payables	17,083	15,660

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)

	2022	2021
Loans	19,496	20,172,
Lease liabilities	63	85
Total loans and borrowings	19,559	20,257
Non-current liabilities	18,863	19,441
Current liabilities	696	816
Total loans and borrowings	19,559	20,257

Loans can be specified as follows:

(EUR thousand)

	Interest rate	Maturity	2022	2021
OP Corporate Bank plc.	3-month
Lithuanian branch (loan)	EURIBOR+2.44%	07/2026	9,746	10,000
	6-month
AS Citadele Banka (loan)	EURIBOR+2.7%	07/2026	9,750	10,000
	Fixed at 12%, as from
	30 November 2017 –
	6%, until 31/12/2020 –
Natural persons	0%	12/2022	0	,172
Total loans			19,496	20,172

Under the contract with bank for using the loan on 31 December 2022 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 UAB Šeškinės Projektai, as a collateral.

Other financial liabilities include lease liabilities with the residual value of EUR 63 thousand as at

31 December 2022 (as at 31 December 2021: EUR 85 thousand).

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

24. Non-Current and Current Provisions

(EUR thousand)

	2022	2021
Warranty provisions	580	816
Other	393	297
Total provisions	973	1,113

Change in provisions:

	2022	2022	2022	2021	2021	2021
	Warranty	Pensions*	Other	Warranty	Pensions	Other
Warranty provision at the beginning of the period	816	288	9	837	293	46
Used during the period	(555)	(110)		(259)	(24)	(37)
Accrued during the year	319	206		238	19	0
Warranty provision at the end
of the period	580	384	9	816	288	9

* 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)

	2022	2021
Non-financial liabilities:
Contract liability (deferred income) under contracts in progress (Note
18)	2,718	891
Contract liability (payments from customers for purchase of inventories
and etc.) (Note 18)	2,692	2,880
Accrued vacation reserve	2166	1,775
Salaries and related taxes payable	1,835	1,595
Bonus accrual for employees	244	428
Payable VAT	443	307
Accrued expenses	360	223
Provisions for onerous contracts (Note 18)	518	0
Financial liabilities:
Liabilities related to the fine imposed by the Competition Council (Note
27)	5,775	8,542
Operating lease liabilities	122	87
Other liabilities	364	897
Total contract and other liabilities	17,237	17,625
Whereof:
Non-current portion	296	784
Current portion	16,941	16,841

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

26. Earnings and Dividends per Share

(EUR)

	2022	2021
Net result for the year attributable to equity holders of the Group	525,437	3,049,262
Dividends declared	0	0
Average number of shares	16,350,000	16,350,000
Basic and diluted earnings per share	0.03	0.19
Dividends declared per share	0	0

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 2022, the bank guarantees of EUR 10,603 thousand issued to third parties on

behalf of the Group in connection with the liabilities under the construction contracts performed by

the Group (in 2021: EUR 8,365 thousand). The guarantees expire in the period from 16 January

2023 to 2 March 2025. In addition, the Group has guarantees of EUR 15,840 thousand issued by

insurance companies, which are also related to liabilities in the construction contracts (in 2021: EUR

13,417). The guarantees expire in the period from 1 January 2023 to 16 December 2025. 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 37,772 thousand as at 31 December 2022 (EUR 35,975

thousand as at 31 December 2021) has been pledged to banks for the guarantee limit issued and

guarantees issued by bank. As at 31 December 2022, the guarantee limit amounted to EUR 15,000

thousand, the used amount was EUR 10,456 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 2021, the guarantee

limit amounted to EUR 15,000 thousand, the used amount was EUR 8,013 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 „UAB Regarding Irdaiva

and AB PST actions in joint participation in public tenders of buildings renovation and

modernization works meeting the requirements of 5th article of the Competition law of the Republic

of Lithuania”. Based on the Competition Council decision, joint activity agreement signed between

the Group and UAB Irdaiva for providing joint offers in 24 public tenders organized by UAB

Vilniaus Vystymo Kompanija intended to limit competition and violated the requirements of Article

5(1) of the Competition Law of Republic of Lithuania. A fine was set to the Group in total amount

of EUR 8,514 thousand. On 3 June 2020, the Supreme Administrative Court of Lithuania announced

a non-appealable ruling on the dispute of the Group against the decision of the Competition Council.

As a consequence, the Group recognised in the financial statements for the year ended 31 December

2020 the fine amounting to EUR 8,514 thousand and related interest charge amounting to EUR

1,385 thousand, and the bailiff enforcement fee amounting to EUR 396 thousand.

The Group 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 described below.

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 fine

and interest imposed on the Group 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. On 20

February 2023, the Settlement Agreement was signed with the Tax Authority, with the fine payable

in equal instalments over four years period.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

27. Contingent Liabilities (continued)

Also, the Group’s assets with the net book value of EUR 3,394 thousand as at 31 December 2022

(in 2021: EUR 3,057 thousand) was arrested as a guarantee for fulfilment of the obligations.

The Chamber of Panevėžys of the Panevėžys District Court investigated the appeal of AB

PANEVĖŽIO STATYBOS TRESTAS in a civil case No 2YT-238-1105/2021 regarding the

bailiff’s orders by which the enforcement fees were calculated. By the ruling of 8 February 2022,

the Court overturned the order No S-20-102-25277 of S. Ramanauskas, a bailiff, dated 7 September

2020, regarding the recovery of enforcement fees in the enforcement proceedings No

0102/20/00638. The parties to the proceedings did not appeal, and thus bailiff's enforcement fees

decreased from EUR 396 thousand to EUR 45 thousand.

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. On 14 April 2022, the Supreme Court of Lithuania overturned the ruling of the

Panevėžys Regional Court dated 20 April 2021 and remitted the case to the appeal court for

reconsideration. On 14 June 2022, the Panevėžys Regional Court overturned the ruling of the

Chamber of Panevėžys of the Panevėžys District Court dated 13 January 2021, and decided this

question on the merits: upheld the appeal against the actions of bailiff Saulius Ramanauskas in

enforcement proceedings No OI 02/20/00638; repealed the bailiff's order No S-20- 17054 dated 11

June 2020, order No S-20-102-17225 dated 12 June 2020, order No 20-102-17214 dated 12 June

2020, order No S-20-102-17969 dated 18 June 2020 and order No S-20-102-18809 dated 30 June

2020 concerning the calculation of interest and enforcement fees (bailiff fees), and ordered the

bailiff Saulius Ramanauskas to carry out a recalculation of the interest and enforcement fees

specified in these orders. On this basis, the interest charged decreased from EUR 1,385 thousand to

EUR 252 thousand.

At the Tax Authority (Plaintiff) request, enforcement proceedings No 0102/20/00638 were stayed

by the bailiff's order of 14 July 2022.

On 21 February 2023, the Tax Authority submitted the letter to Saulius Ramanauskas No RNA-

5192 “Regarding Approval of the Settlement Agreement in the Enforcement Proceedings” dated 20

February 2023 and “Settlement Agreement in the Enforcement Proceedings” dated 17 February

2023. The letter contains requests to submit the Settlement Agreement to the court for approval and

to inform the Competition Council of the Republic of Lithuania thereof.

On 13 March 2023, the Panevėžys Regional Court passed the ruling on approval of the settlement

agreement in the enforcement proceedings. The court ruling is not final and subject to appeal.

On 17 March 2023, AB PANEVĖŽIO STATYBOS TRESTAS submitted a separate complaint

regarding the ruling of the Chamber of Panevėžys of the Panevėžys District Court dated 13 March

2023 in the proceedings No 2VP-2582-837/2023, by which it requested to set aside the order of the

Chamber of Panevėžys of the Panevėžys District Court dated 13 March 2023 in the proceedings No

2VP-2582-837/2023, and to pass new ruling to satisfy the statement submitted by the bailiff Saulius

Ramanauskas and to approve the Settlement Agreement.

On 21 March 2023, a separate complaint of the Tax Authority was filed before the Panevėžys

District Court regarding the ruling of the Chamber of Panevėžys of the Panevėžys District Court

dated 13 January 2021, by which it is requested to set aside the order of the Chamber of Panevėžys

of the Panevėžys District Court dated 13 March 2023 in the proceedings No 2VP-2582-837/2023,

and to pass new ruling to satisfy the statement submitted by the bailiff Saulius Ramanauskas and to

approve the Settlement Agreement.

On 20 February 2023, the agreement was signed with the Tax Authority on the payment of the fine

imposed in equal instalments over period of four years. The liabilities are classified as current until

the agreement is approved by the court

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 2022–2021 with the parent of the AB Group

Panevėžio Keliai and with subsidiaries of AB Panevėžio Keliai. Transactions with related parties

during 2022 and 2021 were as follows:

(EUR thousand)

	Type of transaction	2022		2021
Sales:
Shareholder
AB Panevėžio Keliai	Goods and services		185		105
Subsidiaries of shareholder
UAB Ukmergės Keliai	Goods and services		0		9
UAB Panevėžio Ryšių Statyba	Goods and services		1		2
UAB Keltecha	Goods and services		0		3
Purchases:
Shareholder
AB Panevėžio Keliai	Goods and services		593		944
Subsidiaries of shareholder
UAB Ukmergės Keliai	Goods and services		0		18
UAB Keltecha	Goods and services		0		20
UAB Aukštaitijos Traktas	Goods and services				3
Other companies related to the shareholder
UAB Panevėžio Ryšių Statyba	Goods and services		1		0
UAB IOCO Packaging	Services		29		2
UAB IOCO	Services		8		1
UAB Scard	Services		120		90
UAB Specializuota Komplektavimo Valdyba	Goods and services		0		19
UAB Betono Apsaugos Sistemos	Goods and services		0		10
(EUR thousand)		2022		2021
Receivables:
Shareholder
AB Panevėžio Keliai (trade receivable)			0		0
Payables:
Shareholder
AB Panevėžio Keliai			269		210
Subsidiaries of shareholder
Other Other companies related to the shareholder			0		0
Other			13		0

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 2022 and 2021.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

28. Related-Party Transactions (continued) Management remuneration In 2022, wages, salaries and social insurance contributions, payable to the Group`s management and the Board members amounted to EUR 1,518 thousand (in 2021: EUR 1,943 thousand). For the Group’s management and the Board members, there were no guarantees issued, any other paid or accrued amounts or assets transferred. 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 2022	Carrying		Fair value
	amount
Financial assets	Total	Level 1	Level 2	Level 3
Trade receivables	21,158			21,158
Cash and cash equivalents	8,955	8,955
Financial assets, total	30,113	8,955		21,158
Financial liabilities
Interest bearing loans and borrowings	(19,496)			(19,496)
Lease obligations	(63)			(63)
Trade payables	(17,083)			(17,083)
Fine payable under the decision of the Competition Council (Note 27)	(5,775)			(5,775)
Total financial liabilities	(42,417)			(42,417)

As at 31 December 2021	Carrying		Fair value
	amount
Financial assets	Total	Level 1	Level 2	Level 3
Trade receivables	18,512			18,512
Cash and cash equivalents	11,888	11,888
Financial assets, total	30,400	11,888		18,512
Financial liabilities
Interest bearing loans and borrowings	(20,172)			(20,172)
Lease obligations	(85)			(85)
Trade payables	(15,660)			(15,660)
Fine payable under the decision of the Competition Council (Note 27)	(8,542)			(8,542)
Total financial liabilities	(44,459)			(44,459)

There were no transfers between levels of the fair value hierarchy in 2022 and 2021 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.

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

29. Fair Value of Financial Instruments (continued)

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.

29. Fair Value of Financial Instruments (continued)

The fair value of non-current trade receivables was estimated to approximate carrying value as

discounting effect was determined to be not material.

The fair value of loans granted was estimated to approximate carrying value as majority of the loans

are subject of market level variable interest.

Payables, 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. Investments in Subsidiaries, Non-Controlling Interests

As at 31 December 2022 and 2021, AB Panevėžio Statybos Trestas held 95.6% and 68.3% of

ordinary registered shares in subsidiaries UAB Vekada and UAB PST Investicijos, respectively, and

is considered a controlling shareholder of the subsidiaries. As at 31 December 2021, AB Panevėžio

Statybos Trestas also held 87.5% of ordinary registered shares in subsidiary OOO Teritorija, which

was liquidated on 21 December 2022.

The main financial indicators of the subsidiary that has non-controlling interests (thousand EUR):

	UAB PST Investicijos
	2022	2021
Non-controlling interest,%	31.7 %	31.7 %
Non-current assets	1	0
Current assets	4,926	4,865
Total assets	4,927	4,865
Non-current liabilities	9	9
Current liabilities	40	7
Total liabilities	49	16
Net assets	4,878	4,849
Net assets attributable to non-controlling interest	1,546	1,537
Revenue	372	6,787
Expenses	(339)	(5,446)
Net profit (loss)	33	1,341
Other comprehensive income	0	0
Net profit/(loss) attributable to non-controlling interest	10	425
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	(3,767)	919
Cash flows used in investing activities	0	0
Cash flows from/used in financing activities	0	0
Net increase/(decrease) in cash and cash equivalents	(3,767)	919

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

30. Investments in Subsidiaries, Non-Controlling Interests (continued)

	UAB Vekada
	2022	2021
Non-controlling interest,%	4.4 %	4.4 %
Non-current assets	310	245
Current assets	1,280	1,203
Total assets	1,590	1,448
Non-current liabilities	0	0
Current liabilities	491	380
Total liabilities	491	380
Net assets	1,099	1,068
Net assets attributable to non-controlling interest	48	47
Revenue	3,085	2,909
Expenses	(3,148)	(3,195)
Net profit (loss)	(63)	(286)
Other comprehensive income		0
Net profit/(loss) attributable to non-controlling interest	(3)	(13)
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	60	(218)
Cash flows used in investing activities	(4)	76
Cash flows from/used in financing activities	0	0
Net increase/(decrease) in cash and cash equivalents	(56)	(142)

	2022	OOO Teritorija	2021
Non-controlling interest,%	-		12.5 %
Non-current assets		-	0
Current assets		-	14
Total assets		-	14
Non-current liabilities		-	0
Current liabilities		-	1,073
Total liabilities		-	1,073
Net assets		-	(1,059)
Net assets attributable to non-controlling interest		-	(132)
Revenue		-	335
Expenses		-	(28)
Net profit (loss)		-	307
Other comprehensive income		-	0
Net profit/(loss) attributable to non-controlling interest		-	38
Other comprehensive income attributable to non-controlling interest		-	0
Cash flows from operating activities		-	7
Cash flows used in investing activities		-	0
Cash flows from/used in financing activities		-	0
Net increase/(decrease) in cash and cash equivalents		-	7

AB „Panevėžio statybos trestas“

Consolidated Financial Statements

31. Change in Liabilities Arising from Financing Activities

	As at 31					As at 31
	December	Dividends	Accrued	Cash	Currency	December
(EUR thousand)	2021	declared		flow out	exchange	2022
Dividends payable	28	0	0	1	0	27
Loans received and interests payable	20,172		(172)	504	0	19,496
(Finance) lease
liabilities	85			22	0	63
Total	20,285	0	(172)	527	0	19,586

32. Events after the End of the Reporting Period

After the end of the financial year and up until the date these financial statements were approved,

no other significant subsequent events occurred. Geopolitical developments led to a very

significant change in the prices of raw and construction materials in Q1 and Q2 of 2022. The

Group had fixed-price contracts for work, thus the majority of the costs of raw and construction

materials substantially increased the cost of sales. The increased costs were partially offset by

indexation of sales prices to customers, as well as part of the costs was shared by suppliers and

subcontractors. Geopolitical events in 2022 also affected supply chains, resulting in delays in

some materials, and affected the time-limits for the implementation of contract projects, as well

as the Group’s sales volume. In 2023, the geopolitical uncertainty remains, but no significant

negative impact on the Group’s plans for 2023 is expected. To mitigate uncertainty and manage

risks, the Group takes a proactive approach in cost management, in particular, in reducing of costs,

purchasing of materials, etc.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

Company’s and Consolidated Annual Report,

Governance Report,

Consolidated Report of Social Responsibility,

and Remuneration Report

of Panevezio statybos trestas AB

for 2022

I. Consolidated Annual Report

1. Accounting period covered by the Annual Report

This Company’s and Consolidated Annual Report for the year 2022 covers the period from 1 January

2022 until 31 December 2022.

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, production 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 2022, 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

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

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

Hustal UAB

11 December 2018

State Enterprise

Centre of Registers

304968047

Tinklu Str. 7,

Panevezys

Tel.(+370 45) 585087

tomas.stukas@hustal.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:

Subsidiary

company

Registration date,

administrator

Company

code

Registered

address

Telephone, fax,

e-mail, website

Portion of

shares held

(per cents)

Baltevromarket

ZAO ISK

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.

Hustal UAB – design, fabrication and erection of steel structures. The company also supplies steel

structures for other industries where steel items are required. Activity and sale of the company are

focused on the Scandinavian market.

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.

Seskines projektai UAB – real estate development 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.

– 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.

Baltevromarket ZAO ISK – the subsidiary company of PST investicijos UAB carries no activities,

the liquidation procedure has been initiated.

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 2022

Company share price variation at Stock Exchange Market Nasdaq Vilnius for the period 2018

through 2022 (Euros)

Company share price variation at Stock Exchange Market Nasdaq Vilnius in 2022 (Euros)

Table 1. Information on the Company share price at Stock Exchange Market Nasdaq Vilnius for the

period 2018 through 2022:

Indicator

2022

2021

2020

2019

2018

Highest price, Euros

0.694

0.838

0.85

0.878

0.99

Lowest price, Euros

0.50

0.53

0.52

0.71

0.75

Average price, Euros

0.564

0.677

0.629

0,78

0,881

Share price as of the end

of reporting period, Euros

0.518

0.66

0.57

0.75

0.752

Traded volume

991,215

2,935,832

1,980,134

986,685

1,596,044

Turnover, mln. Euros

0.56

1.99

1.25

0.77

1.41

Capitalisation, mln. Euros

8.47

10.79

9.32

12.26

12.3

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

The key events that occurred during 2022 and were published through the GlobeNewswire

information system are listed below.

5 January 2022. The company had appealed in cassation against the mentioned court judgement (the

judgement by the Chamber of Panevezys at the Panevezys District Court on the interest accrued by

the Competition Council for the whole period of legal proceeding when the Company was in dispute

regarding the fine imposed by the Competition Council was left unchanged) 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 ZAO ISK, 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;

- Teritorija OOO has been out of active operation for the period of three years (de-registered

on 21 December 2022) ;

- Baltlitstroj OOO is declared bankrupt and is in the process of the relevant proceedings (de-

registered on 25 November 2022).

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.

15 April 2022. The Supreme Court of Lithuania annulled the decisions of the courts of first and

appeal instance and remitted the case to the Appeal Court. The Supreme Court interpreting the

provisions of the Competition Law regarding the calculation of interest stated that the Appeal Court

misapplied the provisions of the Competition Law governing the procedure for calculating the

interest due for non-payment of fines for competition law infringements and ruled that the maximum

interest period of 180 days shall be applied.

According to the PST the bailiff's order under appeal calculated interest for the entire period of the

court proceedings and for an additional 180 days which amounts to EUR 1,385,178.76, the

recalculated amount of interest for 180 days should amount to EUR 251,906.30.

As of 1 August 2022, Panevezio statybos trestas AB has already paid EUR 2,245,985 in execution

of the decision by the Competition Council, despite the dispute in the courts.

28 April 2022. 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.

24 May 2022. Panevezio statybos trestas AB has signed the construction contract with the Visaginas

Municipality Administration for Reconstruction of Visaginas Sedulina Alley and Fountain. The total

contract value is over EUR 4 million (incl. VAT). The works are expected to be completed within

the period of 12 months but no later than September 2023.

30 May 2022. The State Tax Inspectorate under the Ministry of Finance informed Panevezio statybos

trestas AB (the Company) that the European Commission had closed the procedure for notifying the

state aid to the Company started as a result of distribution of the fine imposed by the Competition

Council. The European Commission had given an explanation that if for payment in instalments by

the Company of the imposed fine (economic sanction) together with the procedural interest rate

established by law is subject to the additional annual interest rate corresponding to market conditions,

such aid shall not be considered to be the state aid.

15 June 2022. By the court judgement dated 14 June 2022, the Panevezys Regional Court satisfied

the complaint by the Company against the actions of the bailiff in the enforcement case and revoked

the bailiff's orders regarding calculation of interest and enforcement costs - the bailiff's remuneration

- and placed the bailiff under the obligation to recalculate the interest and enforcement costs indicated

in the mentioned orders. It should be recalled that in its judgement the Supreme Court of Lithuania

had vacated the ruling and the judgement byre the courts of the first and appeal instances and referred

the case back to the appeal instance. In interpreting the provisions of the Law on Competition in

relation to interest calculation, the Supreme Court of Lithuania found that the appeal court had

misapplied the rules of the Law on Competition governing the procedure for calculation of interest

due for the fine unpaid for infringement of the competition rights and stated that in all cases the

maximum period of 180 days for calculation of interest should be applied.

Based on the orders under complaint, the calculated interest amounted to 1,385,178.76 Euros,

whereas considering interpretation by the Supreme Court of Lithuania, interest due for the period of

180 days amounts to 251,906.30 Euros.

2 August 2022. Two subsidiary companies of Panevezio statybos trestas AB, Hustal UAB

(hereinafter ‘Hustal’) and Metalo meistrai UAB (hereinafter ‘Metalo meistrai’), are in the process of

merging. The activities of both companies overlap to a considerable extent – both of them carry out

the works related to engineering, production and sales of steel structures for various industries,

therefore merger is aimed for optimizing processes and making them more efficient. Hustal is merged

with Metalo meistrai, the company with more than two decades of experience. When merger is

completed, Hustal will cease its operation and Metalo meistrai will continue operating after taking

over the name, assets, rights and liabilities of Hustal.

3 August 2022. Panevezio statybos trestas AB has signed the 10 million Euro provisional sum

contract with the General Contractor, Petrofac International UAE LLC, for building construction

works in Factory Modernization Project at Orlean Lietuva UAB in Mazeikiai. Panevezio statybos

trestas AB plans to complete the building construction works by February 2024.

19 September 2022. Panevezio statybos trestas AB has signed the construction contract with the

Administration of the Panevezys City Municipality for Reconstruction of Sports Palace Aukstaitija

– Construction of Swimming Pool. The total value of the contract exceeds 27 mln. Euros. The floor

area before reconstruction was 6,761.42 square meters, it is subject to extension to ~12,247.74 square

meters after reconstruction. The works are planned to be completed within 35 months from the date

of the contract entry into force.

6 December 2022. The Company has signed the 21.7 million Euro provisional sum contract with the

General Contractor, Petrofac International UAE LLC, for the civil works in Oil Refinery

Modernization Project at Orlean Lietuva UAB in Mazeikiai. The scope of the main works includes

installation of pavements, roads and foundation. The works are scheduled to be completed by

September 2024.

In 2022 the Company successfully completed several major construction projects, such as

Reconstruction of Kedainiai City Wastewater Treatment Facilities, Reconstruction of Laisves Square

in Panevezys. Furthermore, a few apartment building renovation projects were completed in

Panevezys, Utena and Vilnius. In February 2023, construction of Vilnius Lazdynai swimming-pool

was completed and the swimming-pool was opened to the public. At the beginning of 2023,

Construction of Laboratory Block for Faculties of Electronics, Mechanics and Transport Engineering

at Vilnius Gediminas Technical University at Plytines Str. 25 was completed and construction of

Educational Block for Faculties of Mechanics, Electronics and Transport Engineering of the

University is in progress. In addition to that, activities are continued in such projects as

Reconstruction of Wroblewski Library of Academy of Sciences, modernisation of apartment

buildings in Klaipeda, Vilnius, Construction of New Head Office of Lietuvos draudimas at J.

Basanaviciaus Str. 10, Vilnius, Construction of Apartment Building Complex reVINGIS. In 2022,

the contracts were signed and work was started in several sites of wind farms where Konstrukcija

branch will carry out installation of foundations for wind turbines.

More than once the Company has been awarded for successfully implemented projects, their

complexity, high quality and organization of complicated activities. In December 2022, the awards

of the Lithuanian Product of the Year were arranged by Lithuanian Confederation of Industrialists

for the 26th time where our Business Centre U219 was awarded the gold medal in the category of

construction and building materials. U219 is a multifunctional building located in one of the main

arteries of Vilnius – in Ukmerges Street. Among the various benefits of this business centre is the

BREAM New Construction Certificate, which guarantees long-term returns, acknowledges

efficiency of the building and responsible approach of developers to the environment and human

health.

In 2022, 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 are concentrated, this branch

carries out civil and special construction works, 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 2022, the companies of the Group successfully continued their activity both inside and outside

Lithuania. In 2022, two subsidiary companies of Panevezio statybos trestas AB, Hustal UAB and

Metalo meistrai UAB, were merged. The activities of both companies overlap to a considerable

extent – both of them carry out the works related to engineering, production and sales of steel

structures for various industries, therefore merger is aimed for optimizing processes and making them

more efficient. After merger Hustal UAB ceases its operation and Metalo meistrai UAB continues

operating having taken over the name, assets, rights and liabilities of Hustal UAB. 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. 84 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 indoor

heating, ventilation and conditioning, water supply and waste water systems, 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 2022, 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 2023)

2 February 2023. The General Extraordinary Meeting of Shareholders was reconvened to take the

resolution on approval of the agreed material conditions for the settlement agreement with the State

Tax Inspectorate.

For several years now, taking into account the risks involved, the Company 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), geopolitical changes in Lithuania and the countries

where the Group companies operate, Russia's military invasion of Ukraine, and remaining risks

related to COVID-19. 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).

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

environmental and employee matters

Some recent years are a big challenge for the global and Lithuanian economy. At the end of

pandemic, the Russian military invasion of Ukraine, which began at the beginning of the year, caused

a major geopolitical crisis. Therefore, the large increase in prices of energy resources resulted in

further rise of already high inflation.

The war in Ukraine has greatly influenced activities of the Company as well as the entire construction

sector. Since the beginning of the war, the considerable increase in material prices, shortage of raw

materials and supply disturbances have had a significant impact on performance results.

Over the twelve months of 2022, the turnover of Panevezio statybos trestas AB amounted to 79.222

mln. Euros, whereas the revenue of the Company for the twelve months of 2021 amounted to 65.721

mln. Euros. The revenue of the Company increased by 20 per cents compared to that in 2021.

However, due to increase in raw material prices, disturbances in the supply chain and labour

shortages, the Company has suffered the net loss in the amount of 1.720 mln. Euros in 2022. In 2021,

the Company had the profit in the amount of 0.304 million Euros.

Over the same period, the total consolidated revenue of Panevezio statybos trestas AB Group was

115.84 mln. Euros, i.e. by 18 per cents higher than the revenue for the year 2021. In 2021, the revenue

of the Group amounted to 98.451 mln. Euros. The net profit of the Group was 0.525 mln. Euros in

2022, in 2021 the Group had the profit in the amount of 3.499 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 2020 through 2022:

Group

Items

Company

2020

2021

2022

2020

2021

2022

74,912

98,451

115,840

Revenue

59,712

65,721

79,22

68,167

68,283

106,310

Cost of sales

58,531

59,888

77,066

6,745

12,168

9,530

Gross profit

1,181

5,833

2,156

9.00

12.36

8.23

Gross profit margin (per cents) (API)

1.98

8.88

2.72

-9,360

2,414

-1,067

Typical operating result

-12,595

-589

-4,978

94,797

108,464

59,712

65,721

79,222

-5.1%

0.5%

-20.8%

0.5%

-2.2%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

20,000

40,000

60,000

80,000

100,000

120,000

2018 2019 2020 2021 2022

Revenue thousand Euros Net profitability

104,861

110,466

74,912

98,451

115,840

-4.1%

0.7%

-13.9%

3.6%

0.5%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

-20,000

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2018 2019 2020 2021 2022

Revenue thousand Euros Net profitability

Group

Items

Company

2020

2021

2022

2020

2021

2022

-12.49

2.45

-0.92

Typical operating result from

turnover (per cent)

-21.09

-0.90

-6.28

-7,925

3,477

266

EBITDA

(API)

-11,362

259

-4,192

-10.58

3.53

0.23

EBITDA margin (per cents) (API)

-19.03

0.39

-5.29

-10,431

3.499

525

Net profit (API)

-12,418

304

-1,720

-13.92

3.55

0.45

Nets profit (loss) margin (per cents)

-20.80

0.46

-2.17

-0.638

0.214

0.032

Earnings per share (Euros) (EPS)

(API)

-0.76

0.019

-0.105

-34,40

12.58

1.75

Return on equity (per cents) (ROE)

(API)

-43.89

1.38

-7.89

-13.99

4.41

0.60

Return on assets or asset

profitability (ROA)

(API)

-18.59

0.55

-3.40

-35.97

6.65

0.99

Return on investments (ROI)

(API)

-52.81

1.29

-7.67

0.75

1.30

1.23

Current liquidity ratio

(API)

0.88

1.12

1.02

0.53

1.00

0.95

Critical liquidity ratio

(API)

0.81

0.94

0.85

0.36

0.34

0.35

Equity ratio

(API)

0.35

0.46

0.41

0.62

0.65

0.64

Debt ratio

(API)

0.65

0.54

0.59

1.72

1.90

1.82

Debt to equity ratio

(API)

1.85

1.19

1.46

1.61

1.79

1.88

Book value per share

(API)

1.34

1.35

1.31

0.35

0.37

0.28

Price-to-book ratio (P/B ratio)

(API)

0.43

0.49

0.39

-0.89

3.08

16.13

Price-to-earnings ratio (P/E)

(API)

-0.75

35.50

-4.92

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

2022, the revenue of the Group from construction and erection activities totalled 75.5 per cents, the

revenue from real estate development and rent was 1.6 per cents, the revenue from finished products

and other revenue amounted to 22.9 per cents, whereas in 2021, the revenue of the Group from

construction and erection activities totalled 71.9 per cents, the revenue from real estate development

and rent was 8 per cents, the revenue from finished products and other revenue amounted to 20.1 per

cents.

Revenue distribution by activity types for the Company (mln. Euros):

Revenue distribution by activity types for the Group (mln. Euros):

The main activities of the Company were performed in Lithuania and made 99.02 per cents of all

works carried out by the Company in 2022 and 97.2 per cents in 2021. The revenue of the Group

from the works performed inside the country made 83.6 per cents of the revenue, whereas in 2021 it

was 78.9 per cents. In 2022 and 2021, the revenue of the Group in the Scandinavian countries was

respectively 15,25 and 12.24 per cents of the all revenue.

Operating revenue distribution by countries for the Company (mln. Euros):

59.71

65.72

79.22

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

2020

2021

2022

Construction and erection activities

70.42

70.80

87.42

1.24

7.87

1.86

3.26

19.78

26.56

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

2020

2021

2022

Revenue of the Group

Construction works Real estate Products produced and other income

58.40

63.86

78.443

1.31

1.86

0.779

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

2020

2021

2022

Revenue of the Company

Lithuania Latvia

Operating revenue distribution by countries for the Group (mln. Euros):

Environment protection

Quality, sustainability, 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 2022, the number of employees in the Group was 805, in the Company – 536.

As of 31 December 2021, the number of employees in the Group was 833, in the Company – 560.

Table 3. Average number of employees in 2021 and 2022:

Average number of

employees

2021

2022

Group

Company

Group

Company

Managers

Specialists

316

234

304

224

Workers

523

347

486

310

Total

862

592

813

544

60.86

77.65

96.84

6.78

12.02

12.05

17.67

2.04

1.97

1.33

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

2020

2021

2022

Income of the Group (mln. Euros)

Lithuania Russian Federation Scandinavian countries Other countries

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

309

235

Workers

474

327

Total

805

278

340

Employment contracts do not include any special rights and obligations of employees or some part

of them.

In 2022, the Company also paid much attention to qualification improvement, safety (zero fatalities),

welfare, diversity, equality and involvement of employees. 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 continually pay much attention to increase of operational

management efficiency, improvement of construction work quality and introduction of modern

technologies. We are looking for the ways to make activities more efficient, apply innovative and

resource-saving process management methods, improve working conditions of employees, improve

quality of construction works and services.

Realizing that construction activities leave a fairly significant footprint for nature and environment,

we make emphasis on the sustainability issue in our operation. We strive to analyse the impact of our

operation in order to consistently reduce the negative influence on the health of employees,

surrounding communities and nature, amount of CO

. By optimizing production processes, we aim

to reduce the amount of energy used in our activities. We invest the processes allowing to generate

and use green energy.

To maintain the highest competence in the construction sector, the Company introduces and uses

advanced processes and technologies. In cooperation with our partners, we strive for a wider

application of the digital model (BIM) principles in development project management.

The up-to-date design software is used to prepare building designs. We continually follow

innovations and complement the software used with actual applications.

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

Due to the various geopolitical events or even climatic factors, currently having a significant impact

on the construction sector it is difficult to give any forecasts for the year 2023. Increasing uncertainty

about demand or funding can encourage construction customers and real estate developers to

postpone new construction plans until demand becomes more predictable.

Although a difficult year is waiting for the construction sector, the Company will seek to implement

the operational strategy and business goals approved by the Board – to remain competitive and

maintain the position of the construction market leader. Panevezio statybos trestas AB and the

companies of the Group will search for solutions to absorb the negative effects of the war in Ukraine

on the operation 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 2022, 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 2022, the total number of the shareholders was 1,756.

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

2,232,296

13.7%

Natural persons

1,426,839

8.7%

Local investors

Legal entities

8,981,770

54.9%

Natural persons

3,709,095

22.7%

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 (%)

HISK 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

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

28 April 2022 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, business 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 HISK 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);

Board Member at PST investicijos UAB (company code124665689, Ukmerges Str. 219, Vilnius).

As of 31 December 2022, 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 HISK 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 2025, held 5 (five) shares of the Company, a shareholder of HISK 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 2022, 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 HISK AB (company code 147710353, S.

Kerbedzio Str. 7, Panevezys).

Participation in activities of other companies:

Board Member at HISK 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 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 2022, 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), Board Member.

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);

As of 31 December 2022, 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 2022, 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 2022, 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 28 April 2022:

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;

Lina Rageliene – 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 2022, 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 are concentrated, this branch carries out civil and

special construction works,

- 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 has hardly changed from last year. In

2022, two subsidiary companies of Panevezio statybos trestas AB, Hustal UAB and Metalo meistrai

UAB, were merged. The activities of both companies overlap to a considerable extent – both of them

carry out the works related to engineering, production and sales of steel structures for various

industries, therefore merger is aimed for optimizing processes and making them more efficient. After

merger Hustal UAB ceases its operation and Metalo meistrai UAB continues operating having taken

over the name, assets, rights and liabilities of Hustal UAB.

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. In 2023, Teritorija OOO, a subsidiary operating in the Russian Federation was de-

registered.

The Group consists of the parent company, Panevezio statybos trestas AB, and 11 subsidiaries in

Lithuania, Latvia and Poland. 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. Hustal 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 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.

In the segment of concrete floor installation, concrete floor installation in industrial and public

buildings is 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 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.

Strategy, vision, mission and objectives of the Company

In its activity, Panevezio statybos trestas AB follows the strategy approved by the Board. The

strategy of the Company 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, the first choice for clients in terms

of construction companies, 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, thus

creating the value to our clients, shareholders and employees.

Objective - To retain the leading position in the construction market by activity volumes, improve by

applying innovative company management methods, look for new business areas, investment

partners, participate in business development processes, strengthen the position of a builder in the

industrial, infrastructural and public construction sectors, promote training and development of

employees at all levels.

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, Hustal 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, 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 2022 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.

In its activities, the Company uses only green electricity generated from renewable electricity

sources. Panevezio statybos trestas AB takes a responsible approach to the issue 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, which annually generates

approximately 200 thousand kWh of electric power, this makes about 30 per cents of all electric

power consumed by the production facilities.

In 2023, expansion of this power plant is planned so that the amount of electric power generated by

the plant covers up to 60 percent of all electric power consumed by the production facilities. In

addition to that, the Company operates three power plants 30 kW each, which together generate about

80,000 kWh of renewable electric power supplied to the power grid.

In 2022, the company of the Group, Skydmedis UAB, started operating a 50 kW solar power plant.

During the first year of operation, the investments met the expectations, which allowed the company

of the Group company to generate up to 97 per-cents of required electric power.

During 2022, Panevezio statybos trestas AB produced 443.932 thousand kWh of electric power from

its own renewable power generation sources and this allowed to avoid 174,021 kg of CO

greenhouse

gas emissions, which would be equivalent to 5194 planted trees.

The company of Panevezio statybos trestas AB Group, Skydmedis UAB, 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:

2022

2021

Group

incl. Company

Group

incl. Company

Timber waste, t

104.93

98.67

71.03

68.89

Paper, cardboard waste, t

7.445

7.365

12.83

Polyethylene waste, t

0.875

0.065

7.69

To reduce air pollution Gerbusta branch performs control of emissions from vehicles and machinery

with internal combustion engines, Skydmedis UAB monitors air cleaning equipment, Hustal UAB

makes efficiency measurements of air cleaning equipment in painting chambers. Renewable car fleet.

We reject 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.

In 2022 the pollution charges paid amounted to 209,829 Euros (132,955 Euros in 2021) for the Group

and 193,502 Euros (123,071 Euros in 2021) for the Company, including:

2022

2021

Euros

Group

incl. Company

Group

incl. Company

Pollution with packaging waste

2,468

1,173

2,797

1,383

Pollution from mobile pollution sources

7,738

6,747

6,556

5,844

Environment protection (waste management)

199,623

185,582

123,642

115,844

The construction sector is a significant contributor to global CO

emissions due to its huge workload.

The companies of Panevezio statybos trestas AB Group are looking for ways to reduce them. This

is done by prioritizing optimization of resources, search for and implementation of sustainable

solutions and innovations. Modern engineering systems creating a healthy working environment are

applied in the buildings under construction.

The use of hazardous chemicals in construction sites is reduced by replacing them with less

hazardous ones. As an example, in one of our projects we used Ecocrete concrete of a special formula

developed for us and with lower CO

emissions, which has the same standard and early strength

indicators as common concrete, but guarantees a fairly significant reduction in CO

emissions. 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 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.

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. 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. 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 was prepared taking into account the Communication from the European

Commission Guidelines on Non-Financial Reporting (017/C 215/01).

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 2022 trainings were

organized both at the Company and educational institutions. Total number of trained employees and

managers was 243 in 2022. 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.

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, 85% (83% 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.

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 2022, Panevezio statybos trestas AB Group supported 17 various organizations, public institutions

in the fields of education, sports, culture, health. One of such supports is support to Panevezys Lower

Secondary School for Deaf and Hard Hearing Children for acquisition of a new vehicle for

transportation of schoolchildren. We contribute to support actions for Ukraine in their fight for

freedom. Among the social initiatives implemented by the Group, the following activities were

initiated by the Company:

- Periodical blood donation campaigns in the Business Centre U219 in cooperation with the

National Blood Centre;

- Tree planting in Pasiliai Forest, Krekenava Eldership, Panevezys District;

- Collecting employee support for animal sanctuaries.

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.

Overview of the alignment with the EU Taxonomy Regulation

The Taxonomy (Taxonomy regulation, 2020/852) of the European Union (EU) is a classification system for sustainable economic activities designed to direct private

investment to environmentally sustainable activities that contribute to the environmental objectives of the European Green Deal. The Taxonomy regulation sets out

scientific evidence-based criteria for assessing the sustainability of an activity. The activities of those enterprises that fall under the Taxonomy list and meet the

criteria provided can be classified as sustainable and attract green investments.

Taxonomy-eligible economic activity is defined as the activity described in the relevant delegated acts of the Taxonomy regulation, in other words, included in the

Taxonomy. Companies that have determined that their revenue (turnover), capital expenditure (CapEx) and / or operating costs (OpEx) are related to activities

described in the delegated acts must analyse and disclose to what extent their activities meet Taxonomy criteria on these indicators.

In this report, in accordance with the provisions of the Taxonomy regulation and related delegated acts, we provide the main performance indicators and information

on the alignment of Taxonomy-eligible activities with the criteria. For information comparison, we provide data for both 2022 and 2021.

Assessment of revenue in accordance with Taxonomy

After the analysis, we found that Panevezio statybos trestas AB receives part of its revenue from Taxonomy-eligible economic activities. The Company's main

economic activity - construction - is also Taxonomy-eligible; in Taxonomy corresponding to 7.1. Construction of new buildings. Construction economic activity

accounts for the largest share of the Company's revenue, which amounted to 74.71% in 2022, and 70.89% in 2021. Other activities of the Company that are considered

Taxonomy-eligible are listed under Taxonomy as 7.7. Acquisition and ownership of buildings and 7.2. Renovation of existing buildings. The share of revenue

generated from these additional activities totaled 2.36% in 2022 and 10.57% in 2021.

The following tables show detailed results of assessing Taxonomy-eligible activities according to technical screening criteria. Technical screening criteria assess

whether an activity meets Taxonomy requirements and can be designated as sustainable regarding environmental impact. Activities are primarily assessed based on

criteria for substantial contribution to climate change mitigation and adaptation. In addition, it is assessed whether they do no significant harm (DNSH) for other

environmental goals.

During the technical screening, we found that the Company's current activities only meet some Taxonomy criteria. For example, the main activity of the Company 7.1.

Construction of new buildings is subject to quite challenging climate change mitigation criteria: new buildings must meet even higher requirements than are currently

applied to buildings of the highest energy performance class A++, which are almost energy-free. Nevertheless, we plan to look for ways to meet the Taxonomy criteria

as much as possible.

Revenue according to Taxonomy in 2022

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute revenue 2022

Proportion of revenue

2022

Climate change

mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of revenue

2022

Taxonomy

-aligned

proportion of revenue

2021

Category (enabling)

Category

(transi

tional)

thousa

nd Eur

Y/N

A. Taxonomy-eligible activity:

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Revenue of environmentally

sustainable activities (Taxonomy-

aligned) (A.1)

A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

7.1. Construction of new buildings

F41.1,

F41.2,

F43

86,542

74.71%

7.7. Acquisition and ownership of

buildings

L68

1,856

1.6%

100%

n/a

7.2. Renovation of existing buildings

F41,

F43

876

0.76%

100%

n/a

Revenue of Taxonomy-eligible

but not environmentally

sustainable activities (not

89,274

77.07%

Taxonomy-aligned activities)

(A.2)

Total: A.1 + A.2

89,274

77.07%

B. Taxonomy-non-eligible activities

Revenue of Taxonomy-non-eligible

activities (B)

26,566

22.93%

TOTAL: A + B

115,840

100%

Revenue according to Taxonomy in 2021

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute revenue 2021

Proportion of revenue

2021

Climate change

mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of revenue

2021

Category (enabling)

Category

(transitional)

thous

and

Eur

Y/N

A. Taxonomy-eligible activity:

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Revenue of environmentally

sustainable activities

(Taxonomy-aligned) (A.1)

A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

7.1. Construction of new buildings

F41.1,

F41.2,

F43

69,793

70.89%

7.7. Acquisition and ownership of

buildings

L68

7,870

7.99%

100%

n/a

7.2. Renovation of existing buildings

F41,

F43

2,536

2.58%

100%

n/a

Revenue of Taxonomy-eligible

but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

80,199

81.46%

Total: A.1 + A.2

80,199

81.46%

B. Taxonomy-non-eligible activities

Revenue of Taxonomy-non-eligible

activities (B)

18,252

18.54%

TOTAL: A + B

98,451

100%

Assessment of capital expenditure (CapEx) in accordance with Taxonomy

The EU taxonomy defines capital expenditure as all additions to tangible and intangible assets during the financial year considered before depreciation, amortisation

and any re-measurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. Also included

are additions to tangible and intangible assets resulting from business combinations.

In 2022, the Company incurred capital expenditures to improve the investment property (building) and purchase vehicles related to Taxonomy-eligible activities: 7.7.

Acquisition and ownership of buildings; 6.5. Transportation by motorcycles, passenger cars and light commercial vehicles. In 2021, in addition to the same mentioned

activities, a new 150 kW solar power plant was acquired and put into operation in the group company Skydmedis UAB, which is related to one of the individual

measures described in the Taxonomy: 7.6. Installation, maintenance and repair of renewable energy technologies.

In the following tables, we provide detailed results of the analysis of the capital expenditure (Taxonomy CapEx) to Taxonomy-eligible activities according to the

technical screening criteria. In 2021 and 2022, Taxonomy-eligible investments only met some Taxonomy criteria.

Capital expenditure (CapEx) according to Taxonomy in 2022

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute Taxonomy

CapEx in 2022

Proportion of taxonomy

capex 2022

Climate

change mitigation

Climate change

adaptation

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of Taxonomy

CapEx

2022

Taxon

omy-aligned

proportion of Taxonomy

CapEx

2021

Category (enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Taxonomy CapEx of

environmentally sustainable

activities (Taxonomy-aligned) (A.1)

A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

7.7. Acquisition and ownership of

buildings

L68

422,741

48.55%

100%

6.5. Transport by motorbikes,

passenger cars and light commercial

vehicles

H49.32,

H49.39,

N77.11

41,862

4.81%

50.13%

Taxonomy CapEx of Taxonomy-

eligible but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

464,604

53.35%

Total: A.1 + A.2

464,604

53.35%

B. Taxonomy-non-eligible activities

Taxonomy CapEx of Taxonomy-

non-eligible activities (B)

406,212

46.65%

TOTAL: A + B

870,816

100%

Capital expenditure (CapEx) according to Taxonomy in 2021

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute Taxonomy CapEx

2021

Proportion of taxonomy

capex 2021

Climate change mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of Taxonomy

CapEx

2021

Category (enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Taxonomy CapEx of

environmentally sustainable

activities (Taxonomy-aligned)

(A.1)

A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

7.7. Acquisition and ownership of

buildings

L68

1,062,507

54.92%

97.46%

7.6. Installation, maintenance and

repair of renewable energy

technologies

F42, F43, M71,

C16, C17, C22,

C23, C25, C27,

C28

118,000

6.1%

6.5. Transport by motorbikes,

passenger cars and light

commercial vehicles

H49.32, H49.39,

N77.11

73,149

3.78%

Taxonomy CapEx of Taxonomy-

eligible but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

1,253,656

64.8%

Total: A.1 + A.2

1,253,656

64.8%

B. Taxonomy-non-eligible activities

Taxonomy CapEx of Taxonomy-

non-eligible activities (B)

680,852

35.2%

TOTAL: A + B

1,934,508

100%

Assessment of operating costs (OpEx) in accordance with Taxonomy

Operating costs (OpEx) are defined in the Taxonomy regulation as direct non-capitalised costs that relate to research and development, building renovation measures,

short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the

undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets.

The accounting system currently used by the Company is not adapted to exclude data according to the definition of Taxonomy OpEx, so collecting and disclosing the

information required under the regulation in this report would have been complicated. In 2023, we plan to better prepare and provide at least the most significant data

for this indicator in next year's report.

Minimum safeguards

In its activities, Panevezio statybos trestas AB ensures compliance with the Guidelines for Multinational Enterprises of the Organization for Economic Co-operation

and Development (OECD) and the United Nations' Guiding Principles on Business and Human Rights. The Company protects and respects human rights and has a

Code of conduct for employees, suppliers and company's representatives. Being one of the largest construction companies in Lithuania, Panevezio statybos trestas AB

recognizes, understands, and feels responsible for the impact of the corporate activities on the social, economic, and natural environment. The Company is committed

to complying with the laws, regulations and agreements applicable to its operation.

The sustainable business responsibility report prepared according to the model of the international standard Global Reporting Initiative is provided separately.

Consolidated Remuneration Report

The Remuneration Report of Panevezio statybos trestas AB has been prepared for the reporting

financial period of the year 2022. 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 2021 was approved at the General Meeting of Shareholders on 28 April 2022 together

with the Set of Financial Statements for 2021.

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 2022 is presented below. The Extraordinary General Meeting of

Shareholders held on 28 April 2022 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 2022

(Euros)

Total income

from the

company for

2022 (Euros)

Justas Jasiunas

Chairman

77707

Gvidas Drobuzas

Board Member

146400

Kristina Maciuliene

Board Member

Vaidas Grincevicius*

Board Member

3 300

39600

Lina Simaskiene*

Board Member

3 300

39600

Total

6600

79200

146400

* 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.

100

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 2022 the salary fund attributed to the Company's employees amounted to 14.520 mln.

Euros compared to 13.405 mln. Euros in 2021.

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 full text of Renumeration Policy is

provided at www.pst.lt/pst-istatai-ir-audito-nuostatai .

The Company does not provide for the possibility to restore variable remuneration.

The average monthly salary of employees (FRC and VRC) for the period 2018 through 2022 is

provided in the tables below.

Table 9. Average monthly salary for employees of the Group, Euros (before taxes)

Position category

2022

2021

2020

2019

2018

Average

salary

Average

salary

Average

salary

Average

salary **

Average

salary

Managing Director

9281

8863

7626

Top Management Staff

5528

5107

5323

4524

3887

Middle Management Staff

4428

4297

3478

3216

2630

Specialists

2380

2192

1806

1753

1244

Workers

1646

1380

1319

1322

980

Total

2020

1800

1583

1569

1170

** 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

2022

2021

2020

2019

2018

Average

salary

Average

salary

Average

salary

Average

salary **

Average

salary

Top Management Staff

5019

4482

3957

4083

3040

Specialists

2436

2167

1871

1752

1343

Workers

1649

1407

1363

1322

956

Total

2048

1787

1622

1569

1148

** 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

101

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 2018 through

2022

Company performance

2022

2021

2020

2019 **

2018

Net profit (loss) (thousands Euros)

-1,720

304

-12,418

590

-4,852

Profit (loss) per share (Euros)

-0.105

0,019

-0.76

0.036

-0.297

Assets (thousands Euros)

52,762

48,478

62,290

71,337

58,986

Average monthly salary

2,040

1,800

1,583

1,569

1,170

** 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.

102

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 on Securities of the Republic of Lithuania 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.

103

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.

104

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 shareholders, 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

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.

105

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.

106

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. Independent

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.

107

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.

108

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.

109

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

guidance.

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.

110

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.

Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-

bribery/44884389.pdf

111

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 2022 there were 12 (twelve) meetings of the

Management Board where three members

participated in all the meetings, two members

participated in eleven meetings.

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 Board Members are Vaidas

Grincevicius and Lina Simaskiene. 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.

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.

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.

112

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.

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.

113

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.

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.

114

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 28 April 2022, 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.

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.

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).

115

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 2022, there were 2 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.

116

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).

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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 28 April 2022, 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.

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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.

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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.

120

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.

121

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.

122

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.

123

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 2022, the firm of auditors provided no

services other than auditing.