CONFIRMATION OF THE GROUP’S RESPONSIBLE PERSONS

This confirmation of responsible employees concerning the audited Consolidated Financial

Statements. Consolidated Annual Report, Governance Report, Consolidated Social

Responsibility and Remuneration Report of Panevezio statybos trestas AB and its subsidiaries

(hereinafter ‘the Group’) for the year 2023 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 the 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 financial position, profit or loss and

cash flows of the Group, and that the Company’s and Consolidated Annual Report, Governance

Report, Consolidated Social Responsibility and Remuneration Reports fairly state the review of

business development and activities, the Group’s position and description of the main risks and

uncertainties that are faced.

Panevezio statybos trestas AB Panevezio statybos trestas AB

Managing Director Chief Accountant

Tomas Stukas Danguole Sirvinskiene

9 April 2024 9 April 2024

Panevėžio Statybos Trestas AB

Consolidated financial statements for

the year ended 2023 prepared in

accordance with International

Financial Reporting Standards as

adopted by the European Union,

presented together with the Annual

Report

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Contents

Parent Company’s Details

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

Annex 1 Corporate Governance Reporting Form

Annex 2 Social Responsibility and Sustainability Report

102

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Parent Company’s Details

Panevėžio Statybos Trestas AB

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 (01/01/2023-29/10/2023)

Darijus Vilčinskas (30/10/2023-31/12/2023)

Management

Egidijus Urbonas, Managing Director (01/01/2023-30/07/2023)

Tomas Stukas, Managing Director (31/07/2023-31/12/2023)

Auditor

Grant Thornton Baltic UAB

Banks

Luminor Bank AS

SEB Bankas AB

Swedbank AB

OP Corporate Bank Plc Lithuania Branch

Company code: 14773296

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

For the year ended December 31

EUR thousand

Note

		2023	2022
Revenue from contracts with customers	5, 6	119,828	115,840
Cost of sales	7	(107,588)	(106,310)
Gross profit		12,240	9,530
Change in fair value of investment property	11	38	573
Other revenue	11	1,753	1,883
Selling expenses	8	(579)	(496)
Administrative expenses, total:	9	(11,221)	(10,101)
Impairment loss on trade debts, contract assets and other receivables		96	4
Other administrative expenses		(11,317)	(10,105)
Other expenses	11	(1,585)	(1,800)
Operating profit (loss)		646	(411)
Finance income, total	12	3,788	1,622
Other finance income		8	489
Reverse of interest charged by the Competition Council	12	0	1,133
Result of subsidiary liquidation	12	3,780	0
Finance expense, total:	12	(1,272)	(802)
Interest expenses		(1,467)	(689)
Reversal of impairment of contracts in progress	12	341	0
Other finance expenses		(146)	(113)
Profit (loss) before tax		3,162	409
Income tax expense	13	160	116
Net profit (loss)		3,322	525
Other comprehensive income
Items that will never be transferred to profit/(loss)		0	1,482
Non-current asset revaluation impact		0	1,744
Deferred income tax on revaluation of non-current assets		0	(262)
Items that can or will be transferred to profit/(loss)		(3,644)	(476)
Currency translation effect		(3,644)	(476)
Other comprehensive income (loss), total		(3,644)	1,006
Total comprehensive income (loss)		(322)	1,531
Net profit/(loss) attributable to:
To the equity holders of the Parent		3,324	488
Non-controlling interest		(2)	37
		3,322	525
Comprehensive income (loss) attributable to:
To the equity holders of the Parent		(375)	1,388
Non-controlling interest		53	143
		(322)	1,531
Basic and diluted earnings/(loss) per share (EUR)	26	0.20	0.03

The notes on pages 10–57 are an integral part of these consolidated financial statements.

Company code: 14773296

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Managing director Tomas Stukas

09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

Company code: 14773296

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Consolidated Statement of Financial Position

As at 31 December

EUR thousand

Note

		2023	2022
ASSETS
Non-current assets
Property, plant and equipment	14	9,631	10,668
Intangible Assets	15	210	235
Investment Property	16	33,841	32,565
Right of use assets		100	123
Non-current trade receivables	18	66	200
Other non-current financial assets		724	742
Deferred tax assets	13	1,079	609
Total non-current assets		45,651	45,142
Current assets
Inventories	17	8,969	9,674
Trade receivables	18	16,319	16,759
Contract assets	18	3,143	4,199
Prepayments		1,110	846
Other assets	19	1,104	2,558
Prepaid income tax	13	28	24
Cash and cash equivalents	20	10,047	8,955
Total current assets		40,720	43,015
TOTAL ASSETS		86,371	88,157

The notes on pages 10–57 are an integral part of these consolidated financial statements.

Managing director Tomas Stukas

09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

Company code: 14773296

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Consolidated Statement of Financial Position (continued)

As at 31 December

EUR thousand

Note

		2023	2022
EQUITY AND LIABILITIES
Equity
Issued capital	21	4,742	4,742
Reserves	21	3,788	7,771
Retained earnings		21,764	18,200
Total equity attributable to equity holders of the Parent		30,294	30,713
Non-controlling interest		(47)	1,373
Total equity		30,247	32,086
Loans and borrowings	23	21,182	18,862
Provisions	24	583	765
Deferred tax liability	13	1,236	1,088
Non-current lease liabilities		59	33
Other liabilities		663	263
Total non-current liabilities		23,723	21,011
Current liabilities
Loans and borrowings	23	4,817	696
Current lease liabilities		51	88
Trade payables	22	17,859	17,083
Contract liabilities	25	2,651	5,927
Provisions	18, 25	306	208
Income tax payable	13	147	132
Other liabilities	25	6,570	10,926
Total current liabilities		32,401	35,060
Total liabilities		56,124	56,071
TOTAL EQUITY AND LIABILITIES		86,371	88,157

The notes on pages 10–57 are an integral part of these consolidated financial statements.

Managing director Tomas Stukas

09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

Company code: 147732969

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

AB „Panevėžio statybos trestas“AB

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 2022	4,742	734	3,355	3,682	18,200	30,713	1,373	32,086
Total comprehensive income for the year
Net profit (loss)	-	-	-	-	3,324	3,324	(2)	3,322
Currency translation effect	-	-	-	(3,699)	-	(3,699)	55	(3,644)
Total other comprehensive income	-	-	-	(3,699)	0	(3,699)	55	(3,644)
Total comprehensive income for the year	-	-	-	(3,699)	3,324	(375)	53	(322)
Transactions with owners of the Parent, recognised directly in equity
Dividends	-	-	-	-	-	-	(24)	(24)
Repayment of issued capital	-	-	-	-	-	-	(1,449)	(1,449)
Total transactions with owners of the Parent	-	-	-	-	-	-	(1,473)	(1,473)
Depreciation transfer for buildings	-	-	(284)	-	240	(44)	0	(44)
Equity as at 31 December 2023	4,742	734	3,071	(17)	21,764	30,294	(47)	30,247
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

The notes on pages 10–57 are an integral part of these consolidated financial statements.

Managing director Tomas Stukas 09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

Company code: 147732969

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Consolidated Statement of Cash Flows

For the year ended December 31

EUR thousand

Note

		2023	2022
Cash flows from operating activities
Net profit (loss)		3,322	525
Adjustments to:
Depreciation and amortisation (including impairment)	14, 15	1,198	1,333
Proceeds from disposal of property, plant and equipment		(64)	(1)
Income tax expense	13	(160)	(116)
Elimination of results from financing activities		(3,411)	(75)
Change in fair value of investment property	11	(178)	(573)
Other non-cash items		(51)	(110)
Net cash flows from operating activities before changes in working capital		656	983
Changes in working capital:
Changes in inventories	17	240	23
Changes in trade receivables and contract assets	18	1,533	(2,649)
Changes in prepayments		(264)	920
Changes in other assets	19	1,509	(1,446)
Changes in trade payables	22	776	1,486
Changes in prepayments received		(921)	(188)
Changes in other liabilities		(3,275)	(264)
Income tax paid		(98)	(66)
Net cash flows from operating activities		156	(1,201)
Cash flows used in investing activities
Acquisition of intangible assets and property, plant and equipment	14, 15	(1,104)	(485)
Disposal of property, plant and equipment		99	12
Acquisition of investments		(19)	-
Loans granted		-	-
Collection of loans granted		1	5
Interest and dividends received		2	2
Net cash flows used in investing activities		(1,021)	(466)
Cash flows from/used in financing activities
Dividends paid	31	-	(1)
Repayment of borrowings	31	4,120	(13,465)
Loans and borrowings received	31	(672)	12,961
Payment of finance lease liabilities	31	(24)	(85)
Interest paid		(1,467)	(676)
Net cash flows from/used in financing activities		1,957	(1,266)
Net increase/(decrease) in cash and cash equivalents		1,092	(2,933)
Effect of foreign exchange on cash		-	-
Cash and cash equivalents at the beginning of the period		8,955	11,888
Cash and cash equivalents at the end of the period		10,047	8,955

The notes on pages 10–57 are an integral part of these consolidated financial statements.

Managing director Tomas Stukas 09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

Notes to the Financial Statements

1. General information

Panevėžio Statybos Trestas AB (hereinafter the “Company”) is a limited liability company registered

in the Republic of Lithuania 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 2023, the Group had

762 employees (2022: 805).

As at 31 December 2023 and 2022, the principal shareholders of the Company were as follows:

• Hisk AB, S. Kerbedžio st. 7, Panevėžys, company code 147710353, (49.78%) – the ultimate

controlling parent;

• Clairmont Holdings LTD, Grigori Afxentiou, 27 P.O.6021, CY (4.85%);

• The freely traded shares, owned by natural and legal persons (45.38%). No one owns more than

5%.

Hisk AB is the ultimate controlling parent which prepares separate and consolidated financial

statements in accordance with Lithuanian Financial Reporting Standards (LFRS). Majority of

shareholders of Hisk AB 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 9 April 2024.

Financial information of the subsidiaries is as follows:

(EUR thousand)

Country of

operation

Type of activity

Equity as at

31/12/2023

Net

profit/(loss)

for the year

2023

Equity as at

31/12/2022

Net

profit/(loss)

for the year

2021

PST Investicijos UAB

(subgroup consolidated)

Lithuania

Real estate

development

250*

5,502

4,808

Vekada UAB

Lithuania

Construction: electrical

installation

813

(182)

988

(63)

Hustal UAB

(after business

combination)

Lithuania

Wholesale of steel

structures

3,038

1,243

2,095

690

Metalo Meistrai UAB

(before business

combination)

Lithuania

Construction: steel

structures

1,485

455

Hustal UAB

(before business

combination)

Lithuania

Wholesale of steel

structures

376

216

Skydmedis UAB

Lithuania

Construction: wooden

panel houses

1,892

884

1,507

837

Alinita UAB

Lithuania

Construction:

conditioning

equipment

(251)

(265)

(241)

Kingsbud Sp.z.o.o.

Poland

Intermediary services

581

141

441

183

SIA PS Trests

Latvia

Construction

(182)

(193)

(51)

Šeškinės Projektai UAB

Lithuania

Real estate

development

8,280

701

7,615

1,337

Ateities Projektai UAB

Lithuania

Real estate

development

619

216

403

204

Aliuminio Fasadai UAB

Lithuania

Production of

aluminium profile

systems

(198)

(8)

(191)

(120)

Tauro Apartamentai

UAB

Lithuania

Real estate

development

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

* In 2023, the General Meeting of Shareholders of PST Investicijos UAB made a decision to pay

EUR 4,576 thousand in dividends to the shareholders, by decreasing the issued capital of PST

Investicijos UAB.

Ownership of subsidiaries:

	Registration address	2023	2022
PST Investicijos UAB (group)	Verkių st. 25C, Vilnius	69.0 %	68.3 %
Vekada UAB	Marijonų st.36, Panevėžys	95.6 %	95.6 %
HUSTAL UAB	Tinklų st. 7, Panevėžys	100 %	100 %
(former Metalo Meistrai UAB)
Skydmedis UAB	Pramonės st. 5, Panevėžys	100 %	100 %
Alinita UAB	Tinklų st. 7, Panevėžys	100 %	100 %
Šeškinės Projektai UAB	Verkių st. 25C, Vilnius	100 %	100 %
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
Tauro Apartamentai UAB	Verkių st. 25C-1, Vilnius	100 %	100 %
Ateities Projektai UAB	Verkių st. 25C-1, Vilnius	100 %	100 %
Aliuminio Fasadai UAB	Pramonės st. 5, Panevėžys	100 %	100 %
The Group’s subsidiary PST Investicijos UAB has the following subsidiary:		Type of activity	2023	2022
ZAO ISK Baltevromarket	Development of real estate projects in
	Kaliningrad		100 %
ZAO ISK Baltevromarket was removed from the register on 30 May 2023. 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. Under this agreement, 50% of operating expenses, assets and liabilities of PST Un Arms belong to the Company and these amounts were included in these financial statements of the Company. Summarised information of PST Un Arms

0 %

(EUR thousand)	2023	2022
Total assets	14	14
Total liabilities	3	3
Equity	11	11
Revenue	0	0
Net result	0	(5 )

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“AB

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. Given the settlement

agreement with the Tax Authority regarding the payment of the fine by installments, the

liability is classified as current and non-current in the Groups financial statements.

• 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

estimates, particularly

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

2. Basis of preparation (continued)

• 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 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“AB

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.

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Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

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 2023.

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

on or after 1 January 2023.

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

on 1 January 2023 and have not been early adopted when preparing these financial statements are

presented below:

IFRS 17 and IFRS 4: Deferral of the effective date of IFRS 17 and IFRS 9 for insurers (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, so that entities would be required

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

The management has assessed that these amendments will not have any impact on the 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 March 2020 meeting the IASB decided to defer the effective

date to 2023. IFRS 17, Insurance Contracts, establishes principles for the recognition, measurement,

presentation and disclosure of insurance contracts issued. It also requires similar principles to be

applied to reinsurance contracts held and investment contracts with discretionary participation

features issued. The objective is to ensure that entities provide relevant information in a way that

faithfully represents those contracts. This information gives a basis for users of financial statements

to assess the effect that contracts within the scope of IFRS 17 have on the financial position, financial

performance and cash flows of an entity.

This 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 are

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

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. 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,

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Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

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.

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 became effective for annual reporting periods beginning

on or after 1 January 2023 and apply to changes in accounting policies and changes in accounting

estimates that occur on or after the start of that period.

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

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

January 2020 with effective date of 1 January 2024).

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

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

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

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

measurement or timing of recognition of any asset, liability, income or expenses, nor the information

that entities disclose about those items Also, the amendments clarify the classification requirements

for debt which may be settled by the company issuing own equity instruments. The management has

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

Amendments to IAS 1 “Non-current Liabilities with Covenants” (issued on 31 October 2022 with

effective date of 1 January 2024):

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

the Group classifies debt and other financial liabilities as current or non-current in particular

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

date affect the classification of a liability as current or non-current. In addition, the Group 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 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).

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

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Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

Basis for consolidation (continued)

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 management has not yet evaluated the impact of

the implementation of these amendments.

Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements (issued in May 2023 with

effective date of 1 January 2024, with earlier application permitted):

The amendments Supplier Finance Arrangements supplement IAS 7 Statement of Cash Flows and

require an entity to disclose the terms and conditions of supplier finance arrangements. The

amendments also add supplier finance arrangements as an example within the liquidity risk disclosure

requirements in IFRS 7 Financial Instruments: Disclosures. 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 21: Lack of Exchangeability (issued in August 2023 with effective date of 1

January 2025, with earlier application permitted):

The amendments Lack of Exchangeability supplement IAS 21 The Effects of Changes in Foreign

Exchange Rates and require entities to apply a consistent approach in assessing whether a currency

can be exchanged into another currency and, when it cannot, in determining the exchange rate to use

and the disclosures to provide. 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.

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.

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Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.2 Financial Instruments (continued)

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:

At amortised cost (debt instruments).

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

derecognition (debt instruments). The Group did not have such items as at 31 December 2023 and

2022;

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

December 2023 and 2022;

(d) At fair value through profit or loss. The Group did not have such items as at 31 December 2023

and 2022.

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.

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Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.2 Financial Instruments (continued)

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.

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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.

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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.

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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 written-off. 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.

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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.

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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.

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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“AB

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“AB

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.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.13 Revenue (continued)

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. All borrowing costs are recognised using the effective interest method.

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

Borrowing costs directly attributable to the acquisition, construction or production of an asset that

necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as

part of the cost of the respective assets. Other borrowing costs are expensed as incurred.

3.15 Income Tax

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

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

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. Deferred tax is recognised, providing for

temporary differences between the carrying values of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured

using the tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled based on tax rates enacted or substantially enacted

at the date of the statement of financial position.

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

available against which the asset can be utilised.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.15 Income Tax (continued)

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“AB

Consolidated Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.18 Determination of Fair Value (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)	2023	2022
Trade Receivables and Contract Assets	19,528	21,158
Loans granted	0	1
Cash and cash equivalents	10,047	8,955
Total	29,575	30,114

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

4. Financial Risk Management (continued)

Trade receivables and contract assets:

(EUR thousand)	2023	2022
Municipalities and state institutions	1,354	6,266
Legal persons	18,174	14,892
Total trade receivables and contract assets	19,528	21,158

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)	2023	%	2022	%
Client 1	4,212	25.9	3,635	17.2
Customer No 2	3,122	19.2	2,028	9.6
Customer No 3	1,142	7.0	1,848	8.7
Customer No 4	1,116	6.8	1,685	8.0
Customer No 5	747	4.6	644	3.0
Customer No 6	718	4.4	620	2.9
Customer No 7	441	2.7	534	2.5
Other customers	8,302	29.7	10,531	49.8
Impairment	(272)	(0.3)	(367)	(1.7)
Total	19,528	100	21,158	100

Trade receivables by geographic regions:

(EUR thousand)	2023	2022
Local market (Lithuania)	18,432	20,046
Euro zone countries	772	782
Other countries	324	330
Total	19,528	21,158

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

(EUR thousand)	2023	Impairment	2022	Impairment
Not overdue	16,238		18,395
Overdue 0-30 days	1,405		1,262
Overdue 30-90 days	1,126		1,338
More than 90 days	1,031	272	531	368
Total	19,800	272	21,526	368

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“AB

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 2023 (undiscounted) as to the

agreements, are presented below:

		Contractual
		undiscounted	Up to 6	More than 6
(EUR thousand)	Carrying amount	cash flows	months	months
Liabilities
Loans and lease liabilities	22,982	25,939	5,082	20,857
Trade payables	17,859	17,859	17,859
Liabilities related to the fine imposed by the Competition Council	4,409	4,671	772	3,899
Total

Payment maturities of financial liabilities as at 31 December 2022 (undiscounted) as to the

agreements, are presented below:

		Contractual
		undiscounted	Up to 6	More than 6
(EUR thousand)	Carrying amount	cash flows	months	months
Liabilities
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).

Interest rate applied for calculation of contractual net cash flows:

	2023	2022
Loans and lease liabilities	6,349-6,561	3.135-3.625%

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

million. Overdraft with the repayment term as 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, Šeškinės

Projektai UAB signed a credit agreement with OP Corporate Bank PLC and Citadele AB 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. . The agreement was extended until

31 July 2024. As at 31 December 2023, the balance of overdraft limit utilised amounted to EUR 4,120

thousand (Note 23).

AB „Panevėžio statybos trestas“AB

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 2023 and 2022, 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 2023	Average	2022	Average
	December	2023	As at 31 December	2022
1 SEK =	0.0901	0.0871	0.0899	0.0841
1 RUB =	0.0087	0.0114	0.0087	0.0114
1 NOK =	0.0817	0.0876	0.0951	0.0990

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

As at 31 December 2023 (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

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

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“AB

Consolidated Financial Statements

4. Financial Risk Management (continued)

The effect of Euro on Russian subsidiary:

	Increase/(decrease) in
2023	currency rate	Impact on profit before tax
EUR	+15.00 %	0
EUR	-15.00 %	0
	Increase/(decrease) in
2022	currency rate	Impact on profit before tax
EUR	+15.00 %	(6)
EUR	-15.00 %	6

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 2023, the Group’s net profit would

decrease by approximately EUR 115 thousand due to loans received (as at 31 December 2022, net

profit would decrease by EUR 98 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 2023 and

2022, 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 Panevėžio Statybos Trestas AB, Vekada UAB,

Alinita UAB 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 Hustal UAB. The main field of activity is

designing and fabrication of steel structures for construction purposes. This company also supplies

steel structures for other companies where steel items are required.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

5. Segments (continued)

The segment of wooden panel houses includes operation of Skydmedis UAB. 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 97 % of products successfully exported to Norway,

Sweden, the Netherlands, Iceland and other countries.

Other activity includes operations of Šeškinės Projektai UAB, Ateities Projektai UAB, PST

Investicijos UAB, 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 Panevėžio

Statybos Trestas AB (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“AB

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	673	191	159	80	1,103	0	1,103

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 2023 or during 2023	Construction	structures	houses	activity	segments	eliminations	Group
Revenue
Third parties	87,662	10,009	11,163	10,994	119,828	0	119,828
Intersegment	4,033	1	0	1,845	5,879	5,879	0
Total revenue	91,695	10,010	11,163	12,839	125,707	5,879	119,828
Other revenue	964	3	120	704	1,791	0	1,791
Expenses
Depreciation and amortisation	(964)	(85)	(135)	(14)	(1,198)	0	(1,198)
Other administrative and selling expenses	(88,020)	(8,513)	(10,088)	(11,569)	(118,190)	0	(118,190)
Interest expenses	(376)	(3)	0	(1,088)	(1,467)	0	(1,467)
Interest income	0	0	0	0	0	0	0
Financial activity (other than interest), net	(1)	0	1	3,983	3983	0	3983
Other expenses	(894)	(9)	(55)	(627)	(1,585)	0	(1,585)
Income tax expense	455	(2)	(126)	(167)	160	0	160
Segment result	2,859	1,401	880	4,061	9,201	5,879	3,322
Segment assets	57,636	4,589	4,492	41,286	108,003	(21,632)	86,371
Segment liabilities	32,588	1,551	2,601	31,520	68,260	(12,136)	56,124

AB „Panevėžio statybos trestas“AB

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
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“AB

Consolidated Financial Statements

5. Segments (continued)

Reconciliation of assets	2023	2022
Segment operating assets	108,003	113,652
Intersegment assets	(21,632)	(25,311)
Total assets	86,371	88,341
Reconciliation of liabilities	2023	2022
Segment operating liabilities	68,260	69,545
Intersegment liabilities	(12,136)	(12,954)
Total liabilities	56,124	56,591

Geographical information

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

location of the customers:

	2023	2022
Lithuania	97,131	96,842
Scandinavian countries	20,521	17,665
Other countries	2,176	1,333
	119,828	115,840

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)					2023	2022
Construction					88,989	83,793
Other customers	revenue	from	contracts	with	30,839	32,047
Total sales income					119,828	115,840

In 2023, the Group recognised EUR 3,210 thousand of revenue from contracts with customers that

were included in the balance of contract liabilities at the beginning of the period (2022: EUR 674

thousand).

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

7. Cost of sales

(EUR thousand)	2023	2022
Construction sub-contractors	43,867	40,888
Raw materials and consumables	40,324	37,767
Wages and salaries (Note 10)	16,276	14,104
Depreciation and amortisation	418	566
Other	6,703	12,985
Total cost of sales	107,588	106,310

8. Selling expenses

(EUR thousand)	2023	2022
Advertising and similar expenses	58	58
Wages and salaries (Note 10)	475	420
Other expenses	46	18
Total selling expenses	579	496

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

9. Administrative expenses

(EUR thousand)	2023	2022
Wages and salaries (Note 10)	7,870	7,127
Purchased services for administrative use	1,793	2,322
Operating taxes other than income tax	298	262
Depreciation charge	492	454
Total impairment loss of trade debts, contract assets and other receivables:	(96)	(4)
Impairment (reversal of impairment) of receivables (Note 18)	(96)	(4)
Amortisation charge	38	33
Write-down (reversal) of inventories to net realizable value (Note 17)	17	17
Rent expenses	310	323
Subsidiary liquidation-related adjustments	0	(976)
Other expenses	499	543
Total administrative expenses	11,221	10,101

10. Payroll expenses

(EUR thousand)	2023	2022
Wages and salaries	22,011	18,475
Social security contributions	435	402
Daily allowances and incapacity benefits	1,218	1,605
Change in accrued vacation reserve and bonuses	1,016	1326
Total salary related expenses	24,680	21,808
Recognised in:
Cost of sales	16,276	14,104
Administrative expenses	7,870	7,127
Selling expenses	475	420
Other operating expenses	59	157
Total salary related expenses	24,680	21,808

11. Other Income and Expenses

(EUR thousand)	2023	2022
Change in fair value of investment property	178	573
Rental and other income	1,428	324
Gain from sale of property, plant and equipment and other	147	1,559
Total other income	1,753	2,456
Depreciation of rented premises	(251)	(277)
Other expenses	(1,334)	(1,523)
Total other expenses	(1,585)	(1,800)
Total other income and expenses, net	168	656

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

12. Finance Income and Expense

(EUR thousand)	2023	2022
Interest expenses, related to penalty imposed by the Competition
Council (Note 27)	0	1,133
Foreign currency exchange gain	1	65
Liquidation of subsidiary	3,780	421
Other finance income	7	3
Total finance income	3,788	1,622
Loan interest expenses	(1,467)	(689)
Reversal of impairment of contracts in progress	341	0
Foreign currency exchange loss	(5)	(90)
Other expenses	(141)	(23)
Total finance expense	(1,272)	(802)
Total finance income and expense, net	2,516	820

13. Income tax

Income tax expense:

(EUR thousand)	2023	2022
Current income tax expense	162	98
Change in deferred tax	(322)	(214)
Total income tax expense	(160)	(116)

In 2023 and 2022, the Group applied a standard rate of 15% in Lithuania, a 22% 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)		2023		2022
Profit (loss) before tax		3,162		409
Income tax expense (benefit) applying
the Group’s tax rate in Lithuania	15.0 %	474	15.0 %	61
Impact of different tax rates in other countries		38		31
Non-deductible expenses		(175)		130
Non-taxable income		(118)		(422)
Utilized tax losses		(57)		(38)
Change in deferred tax asset’s realisation
allowance		(322)		122
	(5.06)%	(160)	(28.4)%	(116)

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

13. Income Tax (continued)

Deferred tax:

(EUR thousand)		2023		2022
	Temporary		Temporary
	differences	Deferred tax	differences	Deferred tax
Impairment of receivables	257	39	333	50
Write-down of inventories to net
realisable value	91	13	76	11
Accrued vacation reserve	610	91	525	79
Accrued bonuses	295	44	244	37
Warranty provisions and other	787	118	964	145
Tax losses carry forward	12,189	1,828	8,333	1,250
Onerous contracts	102	15	515	77
Total deferred tax assets		2,148		1,649
Unrecognised deferred tax asset		(10)		(9)
Deferred tax asset recognised		2,138		1,640
Revaluation of land and buildings	(2,362)	(354)	(2,633)	(395)
Difference in investment property
value	(12,937)	(1,941)	(11,496)	(1,724)
Deferred tax liabilities		(2,295)		(2,119)
Total deferred tax, net		(157)		(479)
Reported in the statement of financial position as:
Deferred tax assets		1,079		609
Deferred tax liability		(1,236)		(1,088)

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 2023 amounted to EUR 12,189 thousand (as at

31 December 2022, EUR 8,333 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)	2023	2022
Net deferred tax as at 1 January	(479)	(485)
Amounts recognised in other comprehensive income	0	(262)
Recognised in profit or loss	322	268
Net deferred tax as at 31 December	(157)	(479)

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

13. Income Tax (continued)

Change of income tax payable:

(EUR thousand)	2023	2022
Prepaid income tax as at 1 January	24	60
Income tax payable as at 1 January	(132)	(120)
Prepaid (payable) income tax as at 1 January	(108)	(60)
Income tax calculated over the reporting period	(162)	(158)
Paid/set off with overpayment of other taxes	151	242
Prepaid income tax as at 31 December	28	24
Income tax payable as at 31 December	(147)	(132)
Prepaid (payable) income tax as at 31 December	(119)	(108)

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

14. Property, Plant and Equipment

		Machinery			Construction-
	Land and	and		Fixtures and	in-progress
(EUR thousand)	buildings	equipment	Vehicles	fittings		Total
Cost
(revalued carrying amount of land and buildings)
Balance as at 1 January 2023	9,849	4,320	2,650	1,249	0	18,068
Additions	75	382	286	210	134	1,087
Reclassification	(931)					(931)
Disposals and asset written off		(468)	(173)	(261)		(902)
Balance as at 31 December 2023	8,993	4,234	2,763	1,198	134	17,322
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	9,849	4,320	2,650	1,249	0	18,068
Depreciation and impairment
Balance as at 1 January 2023	995	3,407	2,193	805		7,400
Depreciation for the year	477	318	174	188		1,157
Disposals and asset written off		(453)	(168)	(245)		(866)
Balance as at 31 December 2023	1,472	3,272	2,199	748		7,691
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
Residual value
As at 1 January 2022	7,498	1,245	634	469	0	9,846
As at 1 January 2023	8,854	913	457	444	0	10,668
As at 31 December 2023	7521	962	564	450	134	9,631

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

14. Property, Plant and Equipment (continued)

(EUR thousand)	2023	2022
Depreciation recognised in:
Cost of sales	414	558
Administrative expenses	492	454
Other expenses	251	280
Total depreciation	1,157	1,292

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 2023

would be equal to EUR 1,555 thousand (as at 31 December 2022, EUR 1,767 thousand).

As at 31 December 2023, the acquisition cost of fully depreciated but still in use property, plant and

equipment amounted to EUR 4,167 thousand, (as at 31 December 2022, EUR 3,479 thousand).

As at 31 December 2023, land and buildings, including investment property, with the carrying

amount of EUR 42,724 thousand were pledged to the banks (as at 31 December 2022, EUR 37,772

thousand). At 31 December 2023, the net book value of right-of-use assets (machinery, equipment

and vehicles) was EUR 100 thousand (2022: EUR 123 thousand).

15. Intangible Assets

(EUR thousand)	Goodwill	Software	Other assets	Total
Cost
Balance as at 1 January 2023	323	354	56	733
Additions		16		16
Asset written-off		(1)		(1)
Balance as at 31 December 2023	323	369	56	748
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
Amortisation/impairment loss
Balance as at 1 January 2023	292	153	53	498
Calculated during the year		40	1	41
Amortisation of asset written-off		(1)		(1)
Balance as at 31 December 2023	292	192	54	538
Balance as at 1 January 2022	292	137	52	481
Calculated during the year		40	1	41
Amortisation of assets written-off		(24)		(24)
Balance as at 31 December 2022	292	153	53	498
Residual value
As at 1 January 2023	31	201	3	235
	31	252	7	290
As at 31 December 2023	31	177	2	210

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

15. Intangible Assets (continued)

Amortisation is accounted for in the following way: EUR 4 thousand is included under cost of sales,

EUR 38 thousand – administrative expenses (2022: EUR 8 thousand – under cost of sales, EUR 33

thousand – administrative expenses).

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

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

impairment was recognized for the goodwill.

As at 31 December 2023, acquisition cost of fully amortised intangible assets still in use amounted

to EUR 28 thousand, (as at 31 December 2022, EUR 108 thousand).

16. Investment Property

(EUR thousand)	2023	2022
Balance as at 1 January	32,565	31,400
Reclassification from (to) property, plant and equipment	886	165
Reclassified of project in progress from inventories	212	427
Change in fair value (38+140)	178	573
Balance as at 31 December	33,841	32,565

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 Ober-Haus UAB, 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 2023 and

2022).

The identified fair value of the above investment property of EUR 1,690 thousand (2022: EUR

1,550 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 155 thousand in less than one year, EUR 70 thousand

between one and five years (as at 31 December 2022: EUR 171 thousand in less than one year, EUR

112 thousand between one and five years). Revenue from the hotel premises rent in 2023 amounted

to EUR 132 thousand (2022: EUR 123 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 2023

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 2023 amounted to: EUR 62 thousand in less than one year, EUR 13 thousand – between

one and five years (as at 31 December 2022, EUR 88 thousand in less than one year, EUR 114

thousand – between one and five years).

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

16. Investment Property (continued)

Revenue from lease in 2023 amounted to EUR 68 thousand (in 2022: EUR 69 thousand) and was

accounted under other income.

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

building) Šeškinės Projektai UAB 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 2023 was estimated at EUR 31,800 thousand (as at 31 December 2022, EUR

30,664 thousand). In 2023, 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 178 thousand (2022:

EUR 573 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 31 December 2023. Key assumptions used by the management in the estimation of

the recoverable value of investment as of 31 December 2023 were as follows: discount rate – 8.75%

(pre-tax), leased area – 89%, with the cost of 12.36–29.02 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 2,512 thousand in less than one year,

EUR 4,370 thousand between one and five years (2022: EUR 3,038 thousand in less than one year,

EUR 6,128 thousand between one and five years). In 2023, lease income comprised EUR 2,386

thousand and was accounted under sales revenue (2022: EUR 2,195 thousand).

As at 31 December 2023, the total fair value of the investment property was estimated at EUR

33,841 thousand (2022: EUR 32,565 thousand) and was attributed to Level 3 in fair value hierarchy.

17. Inventories

(EUR thousand)	2023	2022
Capitalized costs related to real estate development	3,242	3,882
Other inventories	5,727	5,792
Total inventories	8,969	9,674

Capitalised costs related to real estate development are as follows:

(EUR thousand)	2023	2022
Cost:
Costs of acquired land and real estate	2,700	2,816
Real estate development project costs	542	1,547
Total cost	3,242	4,363
Write-down:
Write-down to net realisable value of projects in progress	0	(481)
Total write-down	0	(481)
Total capitalised costs	3,242	3,882

Change in write-down of capitalised costs:

						2023	2022
Write-down to net realisable value of capitalised costs at the
beginning of the period						481	503
Additional	write-down	(reversal)	recognized	under	administrative
expenses						(481)	(22)
Write-down to net realizable value of capitalized costs at the end of the period						0	481

AB „Panevėžio statybos trestas“AB

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 2023 and 2022, the Group had the following special purpose entities:

	Total capitalized costs as of	Total capitalized costs as of
	31 December 2023,	31 December 2022,
	carrying amount	carrying amount
Panevėžio Statybos Trestas AB	2,723	2,477
PST Investicijos UAB	0	194
Ateities Projektai UAB	519	1,211
Total	3,242	3,882

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

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

price as of 31 December 2023. 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 Panevėžio Statybos Trestas AB in Vilnius

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

Turtas consultation on possible market price as of 31 December 2023. Residual value approach was

applied. The decision on the start of the project construction is expected in 2024.

Other inventories can be specified as follows:

(EUR thousand)	2023	2022
Raw materials and consumables	3,124	4,551
Work in progress and finished goods	2,434	1,035
Goods for resale	261	281
Write-down to net realizable value at the beginning of the year	(75)	(58)
Write-off	8	21
Additional write-down to net realisable value during the period	(25)	(38)
Write-down to net realisable value	(92)	(75)
Total other inventories	5,727	5,792

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)	2023	2022
Trade receivables	16,624	17,327
Contract assets (accrued income based on the stage of completion)	3,176	4199
Receivables from related parties	0	0
Impairment at the beginning of the year	(368)	(372)
Write-off of doubtful trade receivables	12	(10)
Repayment of doubtful trade receivables	49	1
Additional impairment/(reversal) during the period	35	13
Impairment at the end of the year	(272)	(368)
Total trade receivables and contract assets	19,528	21,158

AB „Panevėžio statybos trestas“AB

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 66 thousand as at 31 December 2023, EUR 114 thousand as at 31 December 2022. These

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

As at 31 December 2023, 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 2,200 thousand (2022: EUR 4,059 thousand) relating to

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

As at 31 December 2023, the total contract amount attributed to performance obligations under the

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

EUR 103,298 thousand (as at 31 December 2022, EUR 84,906 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 2023 and 2022:

(EUR thousand)	2023	2022
Sales by specific customers’ projects in progress, recognised in the statement of
comprehensive income during the year	55,180	70,225
Sales by specific customers’ projects in progress, recognised over the contract
period	73,625	106,675
Expenses incurred for completing specific customers’ projects in progress, recognised in the statement comprehensive income during the year	52,287	66,197
Expenses incurred for completing specific customers’ projects in progress, recognised in the statement comprehensive income over the contract period	73,699	102,528
Contract assets (accrued income)	3,143	4,199
Contract liability (deferred income) under outstanding contracts at the year-end
(Note 25)	772	2,718
Contract liability (payments from customers for purchase of inventories and etc.)	2,250	2,692
Provisions for onerous contracts (Note 25)	108	518
Trade receivables (under the caption of trade receivables and receivables from related parties)	14,812	14,999

19. Other Current Assets

(EUR thousand)	2023	2022
Non-financial assets
Excess VAT	540	843
Receivable from related parties	0	1,266
Other current assets	564	449
Other current assets, total	1,104	2,558

The Group did not have any term deposits.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

20. Cash and cash equivalents

(EUR thousand)	2023	2022
Cash at bank	10,047	8,955
Cash on hand	0	0
Cash and cash equivalents, total	10,047	8,955

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 2023. The Group did not hold its own shares in 2023 and 2022.

The reserves were as follows:

(EUR thousand)	2023	2022
Revaluation reserve	3,071	3,355
Legal reserve	734	734
Foreign currency translation reserve	(17)	3,682
Total reserves	3,788	7,771

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:

	2023	2022
Revaluation reserve as at 1 January	3,355	2,008
Revaluation (Note 14)	0	1,479
Depreciation of revaluation	(284)	(132)
Deferred tax on depreciation of revaluation	0	0
Revaluation reserve as at 31 December	3,071	3,355

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 2023 and 2022 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)	2023	2022
Lithuania	15,496	16,327
Latvia	510	445
Poland	1,598	130
Other	255	181
Total trade payables	17,859	17,083

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

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

23. Loans and borrowings

(EUR thousand)	2023	2022
Loans	22,943	19,496
Lease liabilities	39	63
Total loans and borrowings	22,982	19,559
Non-current liabilities	18,165	18,863
Current liabilities	4,817	696
Total loans and borrowings	22,982	19,559

Loans can be specified as follows:

(EUR thousand)	Interest rate	Maturity	2023	2022
OP Corporate Bank plc.	3-month
Lithuanian branch (loan)	EURIBOR+2.44%	07/2026	9,407	9,746
	6-month
AS Citadele Banka (loan)	EURIBOR+2.7%	07/2026	9,416	9,750
OP Corporate Bank plc.	3-month
Lithuania (overdraft)	EURIBOR+2.54%	01/2024	4,120	0
Total loans			22,943	19,496

Under the contract with bank for using the loan on 31 December 2023 the Group has pledged a right

to rent a land plot together with a non-residential building at Ukmergės st. 219, Vilnius owned by

its subsidiary Šeškinės Projektai UAB, as a collateral.

Other financial liabilities include lease liabilities with the residual value of EUR 39 thousand as at

31 December 2023 (as at 31 December 2022, EUR 63 thousand).

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

24. Non-Current and Current Provisions

(EUR thousand)	2023	2022
Warranty provisions	436	580
Other	453	393
Total provisions	889	973

Change in provisions:

	2023	2023	2023	2022	2022	2022
	Warranty	Pensions*	Other	Warranty	Pensions	Other
Warranty provision at the beginning of the period	580	384	9	816	288	9
Used during the period	(584)	(113)		(555)	(110)
Accrued during the year	440	64	109	319	206
Warranty provision at the end
of the period	436	335	118	580	384	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)	2023	2022
Non-financial liabilities:
Contract liability (deferred income) under contracts in progress (Note
18)	772	2,718
Contract liability (payments from customers for purchase of inventories
and etc.) (Note 18)	2,250	2,692
Accrued vacation reserve	2,305	2166
Salaries and related taxes payable	1,852	1,835
Bonus accrual for employees	313	244
Payable VAT	341	443
Accrued expenses	253	360
Provisions for onerous contracts (Note 18)	108	518
Financial liabilities:
Liabilities related to the fine imposed by the Competition Council (Note
27)	4,409	5,775
Operating lease liabilities	110	122
Other liabilities	298	364
Total contract and other liabilities	13,011	17,237
Whereof:
Non-current portion	3,739	296
Current portion	9,272	16,941

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

26. Earnings and Dividends per Share

(EUR)	2023	2022
Net result for the year attributable to equity holders of the Group	3,322,234	525,437
Dividends declared	0	0
Average number of shares	16,350,000	16,350,000
Basic and diluted earnings per share	0.20	0.03
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 2023, the bank guarantees of EUR 9,529 thousand issued to third parties on

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

the Group (in 2022, EUR 10,603 thousand). The guarantees expire in the period from 4 January

2024 to 30 August 2029. In addition, the Group has guarantees issued by insurance companies for

the amount of EUR 14,673 thousand, which are also related to liabilities in the construction contracts

(2022: EUR 15,840). The guarantees expire in the period from 30 January 2024 to 21 December

2026. No additional liabilities are recorded in respect of these guarantees in the financial statements

other than estimated warranty reserve (Note 24).

The property with a carrying amount of EUR 42,724 thousand as at 31 December 2023 (EUR 37,772

thousand as at 31 December 2022) has been pledged to banks, insurance company and the state

authority for the guarantee limit, bank guarantees issued and deferral of payables. As at 31

December 2023, the guarantee limit amounted to EUR 15,000 thousand, the balance withdrawn was

EUR 9,098 thousand. The guarantee limit agreement is effective until 31 March 2024 with the

possibility to issue guarantees until 31 March 2024 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 2022, the guarantee limit amounted to EUR 15,000

thousand, the balance withdrawn was EUR 10,456 thousand.

Legal contingencies

The Group is involved in below described material legal cases:

The Competition Council has made a decision as of 20 December 2017 “Regarding Irdaiva UAB

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

modernization works meeting the requirements of Article 5 of the Competition law of the Republic

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

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

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

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

amount of EUR 8,514 thousand. 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 17

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

27. Contingent liabilities (continued)

February 2023, the settlement agreement was signed with the Tax Authority, with the fine payable

by equal instalments over four years period. On 20 July 2023,

the Chamber of Panevėžys of the Panevėžys District approved the settlement agreement between

the Group and the Tax Authority of 17 February 2023 regarding the collection of the fine imposed

by the Competition Council in enforcement proceedings. The outstanding debt as at the date of

conclusion of the settlement agreement, amounting to EUR 5,568,841.30, is divided over a period

until 1 February 2027, and is paid in equal installments every month. The Group’s non-current assets

with the carrying amount of EUR 4,104,022 were pledged to secure payments.

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

STATYBOS TRESTAS AB 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 PANEVĖŽIO

STATYBOS TRESTAS AB 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.

There is a civil case in Vilnius District Court based on DG Paupio Verslo Namai UAB (Plaintiff)

action against Panevėžio Statybos Trestas AB (civil case No e2-739-863/2024), under which the

Plaintiff seeks that the Group and ERGO Insurance SE acting through ERGO Insurance SE

Lithuanian branch be ordered jointly and severally to pay EUR 827,917.61; the Group be ordered

to pay EUR 397,983.79; and the Group be ordered to pay 6% annual interest from the adjudged

amount calculated from the day when the civil case was lodged in the court until complete execution

of the judgement and the costs incurred.

The dispute arose out of the plaintiff’s allegation that the Group did not properly carry out the

exterior facade tile installation works of the apartment building at Aukštaičių g. 10, Vilnius,

resulting in several tiles falling off external facade.

By judgment delivered by the Court of First Instance on 3 April 2024, the compensation for damages

was reduced to EUR 208,141. The judgment can be appealed to the Lithuanian Court of Appeal

within 30 days.

The management intends to appeal the judgment and is confident that the case will be successfully

resolved, therefore no provision has been made for the amount of the claim.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

27. Contingent liabilities (continued)

The property of EUR 854,736 is pledged to the insurance company to secure fulfilment of the

obligations.

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 2023–2022 with the parent of the Hisk AB and

with subsidiaries of Hisk AB. Transactions with related parties during 2023 and 2022 were as

follows:

(EUR thousand)	Type of transaction	2023		2022
Sales:
Shareholder
Hisk AB	Goods and services		106		185
Shareholder’s subsidiaries
Panevėžio Ryšių Statyba UAB	Goods and services				1
Purchases:
Shareholder
Hisk AB	Goods and services		966		593
Shareholder’s subsidiaries (none)
Other companies related to the shareholder
Scard UAB	Services		110		120
Other (EUR thousand)	Goods and services	2023	42	2022	38
Receivables:
Shareholder
Hisk AB (trade receivable)			0		0
Payables:
Shareholder
Hisk AB			369		269
Shareholder’s subsidiaries
Other Other companies related to the shareholder			0		0
Other			4		13

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 2023 and 2022.

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

28. Related Party Transactions (continued)

Management remuneration

In 2023, wages, salaries and social insurance contributions, payable to the Group`s management and

the Board members amounted to EUR 1,598 thousand (2022: EUR 1,518 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	19,528			19,528
Cash and cash equivalents	10,047	10,047
Financial assets, total	29,575	10,047		19,528
Financial liabilities
Interest bearing loans and borrowings	(27,391)			(27,391)
(Finance) lease payments	(39)			(39)
Trade payables	(17,859)			(17,859)
Total financial liabilities	(45,289)			(45,289)

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	30113	8,955		21,158
Financial liabilities
Interest bearing loans and borrowings	(19,496)			(19,496)
(Finance) lease payments	(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)

There were no transfers between levels of the fair value hierarchy in 2023 and 2022 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“AB

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.

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 liabilities is considered to approximate to their

carrying amount due to short maturities. The fair value of borrowings (overdraft) was estimated to

approximate carrying value as it is subject to variable market interest rates.

30. Non-Controlling Interests

As at 31 December 2023 and 2022, Panevėžio Statybos Trestas AB held 95.6% and 69.0% of

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

is considered a controlling shareholder of the subsidiaries. The main financial indicators of the

subsidiary that has non-controlling interests (thousand EUR):

	PST Investicijos UAB
	2023	2022
Non-controlling interest,%	31.0 %	31.7 %
Non-current assets	75	1
Current assets	185	4,926
Total assets	260	4,927
Non-current liabilities	9	9
Current liabilities	1	40
Total liabilities	10	49
Net assets	250	4,878
Net assets attributable to non-controlling interest	78	1,546
Revenue	4,075	372
Expenses	(273)	(339)
Net profit (loss)	3,802	33
Other comprehensive income	0	0
Net profit/(loss) attributable to non-controlling interest	7	10
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	(548)	(3,767)
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	(548)	(3,767)

AB „Panevėžio statybos trestas“AB

Consolidated Financial Statements

30. Non-controlling interests (continued)

	Vekada UAB
	2023	2022
Non-controlling interest,%	4.4 %	4.4 %
Non-current assets	273	310
Current assets	1,053	1,280
Total assets	1326	1,590
Non-current liabilities	0	0
Current liabilities	434	491
Total liabilities	434	491
Net assets	892	1,099
Net assets attributable to non-controlling interest	39	48
Revenue	2,568	3,085
Expenses	(2,750)	(3,148)
Net profit (loss)	(182)	(63)
Other comprehensive income
Net profit/(loss) attributable to non-controlling interest	(8)	(3)
Other comprehensive income attributable to non-controlling interest	0	0
Cash flows from operating activities	21	60
Cash flows used in investing activities	0	(4)
Cash flows from/used in financing activities	0	0
Net increase/(decrease) in cash and cash equivalents	21	(56)

31. Change in Liabilities Arising from Financing Activities

	As at 31		Accrued			As at 31
	December	Dividends		Cash	Currency	December
(EUR thousand)	2022	declared		outflows	exchange	2023
Dividends payable	27					27
Loans received and interests payable	19,496		4,120	(673)		22,943
(Finance) lease
liabilities	63			(24)		39
Total	19,586		4,120	(697)		23,009

32. Events after the End of the Reporting Period

On 23 January 2024, Panevėžio Statybos Trestas AB, former managing director and insurers R&Q

Syndicate Management Limited and Marco International Insurance Company Limited signed a

settlement agreements, whereby amicably discontinuing all court and arbitration disputes

regarding the civil liability of the former managing director of PST (regarding the fine imposed

by the Competition Council of the Republic of Lithuania under the resolution No 2S-11 (2017)

of 20 December 2017) and the payment of the related insurance benefit. In line with the settlement

agreements, the insurers paid EUR 1,200,000 in favour of PST, and PST waived all its claims

against the insurers and the former managing director.

Managing director Tomas Stukas 09/04/2024

Chief Accountant Danguolė Širvinskienė 09/04/2024

Company’s and Consolidated Annual Report,

Governance Report,

Consolidated Report of Social Responsibility,

and Remuneration Report

of Panevezio statybos trestas AB

for 2023

I. Consolidated Annual Report

1. Accounting period covered by the Annual Report

This Company’s and Consolidated Annual Report for the year 2023 covers the period from 1 January

2023 until 31 December 2023.

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 Panevezys, Lithuania

Telephone

(+370 45) 505 503

Fax

(+370 45) 505 520

Legal-organisational form

Public limited liability company

Date and place of registration

30 October 1993, Panevezys City Board

Registration No.

AB 9376

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 2023, 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

Tinklu Str. 7,

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. (+370 615) 54090

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

16 June 1999

State Enterprise

Centre of Registers

148284860

Tinklu Str. 7,

Panevezys

Tel. (+370 45) 585087

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

6. Nature of operating 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 rent.

Ateities projektai UAB – real estate preparation and sale.

PST investicijos UAB – real estate preparation and sale.

Tauro apartamentai UAB – development of real estate projects.

Aliuminio fasadai UAB – production of aluminium profile systems, aluminium framed windows and

doors.

7. Contracts with the intermediary of public trading in securities

The Company has the contract for securities accounting signed with Siauliu bankas AB.

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 2023

Company share price variation at Stock Exchange Market Nasdaq Vilnius for the period 2019

through 2023 (Euros)

Company share price variation at Stock Exchange Market Nasdaq Vilnius in 2023 (Euros)

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

period 2019 through 2023:

Indicator

2023

2022

2021

2020

2019

Highest price, Euros

0.582

0.694

0.838

0.85

0.878

Lowest price, Euros

0.45

0.50

0.53

0.52

0.71

Average price, Euros

0.514

0.564

0.677

0.629

0,78

Share price as of the end

of reporting period, Euros

0.475

0.518

0.66

0.57

0.75

Traded volume

772,677

991,215

2,935,832

1,980,134

986,685

Turnover, mln. Euros

0.40

0.56

1.99

1.25

0.77

Capitalisation, mln. Euros

7.78

8.47

10.79

9.32

12.26

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 2023 and were published through the GlobeNewswire

information system are listed below.

1 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.

27 April 2023. 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.

27 July 2023. The Extraordinary General Meeting of Panevezio statybos trestas AB took place. The

Extraordinary General Meeting of Shareholders selected the audit company Grant Thornton Baltic

UAB to carry out the audit of the financial statement sets of Panevezio statybos trestas AB and the

companies of Panevezio statybos trestas AB Group for the years 2023 and 2024, and approved the

terms and conditions of payment for the audit services.

31 July 2023. The Board of Panevezio statybos trestas AB (PST) has appointed Tomas Stukas as the

company's CEO. Egidijus Urbonas, who has held this position for the last three years, will remain in

the Group's management team and continue his career as PST Director of Construction.

1 August 2023. By the court judgement dated 20 July 2023, the Panevezys Chamber of the Panevezys

District Court approved the settlement agreement dated 17 February 2023 between the company and

the State Tax Inspectorate at the Ministry of Finance of the Republic of Lithuania on recovery of the

fine imposed by the Competition Council in the enforcement case.

5 October 2023. Panevezio statybos trestas AB (PST) has signed a civil contract with Juodeliai UAB

for construction of the second production building and reconstruction of utility networks. This

extension is planned in the subdivision of the company operating in the Marijampole Municipality.

The contract value totals 13.5 mln. Euros, VAT inclusive. The total area of facilities amounts to

approximately 14,700 square meters. Completion of the works is scheduled for the end of June 2024.

26 October 2023. Panevezio statybos trestas AB has signed a 17 mln. Euros (VAT inclusive) order

with one of the largest food production companies in Lithuania, Kauno grudai AB, for construction

of production and industrial building at Fortu Str. 9, Alytus. The total area of the building will be 7.4

thousand square meters, completion of the works is scheduled 11 months after the date of the signed

contract.

30 October 2023. The Extraordinary General Meeting of Shareholders of Panevezio statybos

trestas AB took place. The Ordinary General Meeting of Shareholders approved the new wording

of the Articles of Association of Panevezio statybos trestas AB. The member of the Board of

Panevezio statybos trestas AB Vaidas Grincevicius was removed from office from 30 October

2023. Darijus Vilcinskas was elected as an independent member to the Board.

6 November 2023. Panevezio statybos trestas AB has signed a 13 mln. Euros (VAT inclusive) order

with Sausiu logistikos parkas UAB for construction of a storage building at Logistikos Str. 30,

Sausiai Village, Lentvaris Subdistrict, Trakai District. The total area of the building will be nearly

10 thousand square meters, completion of the works is scheduled 12 months after the date of the

signed contract. The services of construction management and technical supervision will be provided

by Viconus UAB.

In 2023 the Company has successfully completed several major construction projects, such as

Construction of Vilnius Lazdynai Swimming Pool opened to public, Construction of Laboratory and

Education Blocks for Faculties of Mechanics, Electronics and Transport Engineering at VILNIUS

TECH. The modernization projects of apartment buildings have been completed in Klaipeda.

In 2023 the works on several wind farm projects were completed, where the Konstrukcija branch

carried out the installation of foundations for the wind turbines. In addition to that, activities are

continued in such projects as Modernisation of Oil Refining Plant of ORLEN Lietuva AB in

Mazeikiai, Reconstruction of Panevezys City Sports Centre Aukstaitija – Construction of Swimming

Pool, Reconstruction of Wroblewski Library of Lithuanian Academy of Sciences. Over the year

2023, the Company signed the contracts and started the projects of apartment building renovation.

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

complexity, high quality and organization of complicated activities. In December 2023, the awards

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

for the 27th time where Panevezio statybos trestas AB has been awarded the gold medal for the

Lazdynai Swimming Pool project in the category of construction and construction material industry.

In 2023, 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 2023, the companies of the Group successfully continued their activity inside and outside

Lithuania. 97 per cents of all orders of Hustal UAB engaged in fabrication of steel structures were

directed to Scandinavian countries in 2023. Skydmedis UAB, which is producing pre-fabricated

timber panel houses, sells nearly all of their products in the foreign market. 94 per cents of the

company’s revenue were for the products sold in the Scandinavian countries. Vekada UAB and

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, in 2023 continued to carry out the construction works it had

started.

In 2023, 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 2024)

23 January 2024. Panevezio statybos trestas AB, the former CEO of the Company, D. Gesevicius,

and the insurers R&Q Syndicate Management Limited and Marco International Insurance Company

Limited signed the settlement agreements, on the basis of which all legal and arbitration disputes

regarding the civil liability of the former CEO of the Company, D. Gesevicius, (for the fine imposed

by the decision No. 2S-11(2017) of the Competition Council dated 20 December 2017) and payment

of the insurance benefit related to it will be amicably ended. Referring to the concluded settlement

agreements, the insurers will pay the sum amounting to 1 200 00 Euros in favour of Panevezio

statybos trestas AB, and Panevezio statybos trestas AB will waive all its claims against the insurers

and the former CEO, D. Gesevicius.

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

In 2023, the consolidated revenue of the Group of Panevezio statybos trestas AB amounted to

119.828 mln. Euros, whereas in 2022 the consolidated revenue was 115.84 mln. Euros. Over the

reporting period, the net profit of the Group amounted to 3.322 mln. Euros and in 2022 the Group

had the net profit in the amount of 0.525 mln. Euros.

In May 2023, Baltevromarket OOO (Russia, Kaliningrad), the subsidiary company of PST

investicijos UAB was liquidated. Liquidation of this company have had a significant impact on the

results of the Group. Elimination of the company resulted in additional income from financial

activities for the Group amounting to 3.8 mln. Euros.

Baltevromarket OOO is the last liquidated Russian company in the balance of the Group.

Over the year of 2023, the turnover of Panevezio statybos trestas AB amounted to 80.751 mln. Euros,

and in 2022 the turnover of Panevezio statybos trestas AB was 79.222 mln. Euros.

In 2023, Panevezio statybos trestas AB has suffered the net loss in the amount of 2.279 mln. Euros,

the net loss in 2022 was 1.720 mln. Euros.

Table 2. Performance (thousands Euros) of the Company and the Group of Panevezio statybos

trestas AB for the period 2021 through 2023:

Group

Items

Company

2021

2022

2023

2021

2022

2023

98,451

115,840

119,828

Revenue

65,721

79,22

80,751

68,283

106,310

107,588

Cost of sales

59,888

77,066

76,909

12,168

9,530

12,240

Gross profit

5,833

2,156

3,842

12.36

8.23

10.21

Gross profit margin (per cents) (API)

8.88

2.72

4.76

2,414

-1,067

440

Typical operating result

-589

-4,978

-4,221

2.45

-0.92

0.37

Typical operating result from

turnover (per cents)

-0.90

-6.28

-5.23

3,477

266

1,638

EBITDA

(API)

259

-4,192

-3,551

3.53

0.23

1.37

EBITDA margin (per cents) (API)

0.39

-5.29

-4.40

3.499

525

3,322

Net profit (API)

304

-1,720

-2,279

3.55

0.45

2.77

Nets profit (loss) margin (per cents)

0.46

-2.17

-2.82

0.214

0.032

0.203

Earnings per share (Euros) (EPS)

(API)

0.019

-0.105

-0.139

12.58

1.75

10.89

Return on equity (per cents) (ROE)

(API)

1.38

-7.89

-11.22

4.41

0.60

3.81

Return on assets or asset

profitability (ROA)

(API)

0.55

-3.40

-4.54

6.65

0.99

6.16

Return on investments (ROI)

(API)

1.29

-7.67

-10.01

1.30

1.23

1.26

Current liquidity ratio

(API)

1.12

1.02

1.14

1.00

0.95

0.98

Critical liquidity ratio

(API)

0.94

0.85

0.96

0.34

0.35

Equity ratio

(API)

0.46

0.41

0.40

0.65

0.64

0.65

Debt ratio

(API)

0.54

0.59

0.60

1.90

1.82

1.85

Debt to equity ratio

(API)

1.19

1.46

1.49

1.79

1.88

1,85

Book value per share

(API)

1.35

1.31

1.17

0.37

0.28

0.26

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

(API)

0.49

0.39

0.41

3.08

16.13

2.34

Price-to-earnings ratio (P/E)

(API)

35.50

-4.92

-3.41

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

2023, the revenue of the Group from construction and erection activities totalled 74.3 per cents, the

revenue from real estate development and rent was 2.4 per cents, the revenue from finished products

and other revenue amounted to 23.3 per cents, whereas 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.

Revenue distribution by activity types for the Group:

The main activities of the Company were performed in Lithuania and made 98.01 per cents of all

works carried out by the Company in 2023 compared to 99.02 per cents in 2022. The revenue of the

Group from the works performed inside the country made 81.1 per cents of the revenue, whereas in

2022 it was 83.6 per cents. In 2023 and 2022, the revenue of the Group in the Scandinavian countries

was respectively 17.1 and 15.25 per cents of total revenue.

Operating revenue distribution by countries for the Company:

Operating revenue distribution by countries for the Group:

Environment protection

Work 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.

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.

In 2023, the Lithuanian National Accreditation Bureau accredited the Construction Laboratory of the

Company according to LST EN ISO/IEC 17025:20185 thus granting it the right to perform tests of

building materials for the period of 5 years.

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 2023, the number of employees in the Group was 762, in the Company – 491.

As of 31 December 2022, the number of employees in the Group was 805, in the Company – 536.

Table 3. Average number of employees in 2022 and 2023:

Average number of

employees

2022

2023

Group

Company

Group

Company

Managers

Specialists

304

224

309

229

Workers

486

310

519

336

Total

813

544

850

576

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

288

214

Workers

452

324

Total

762

254

339

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

of them.

In 2023, 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 services.

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

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

operation on the environment and implement the solutions to consistently reduce the emissions of

negative influence on the health of our employees, surrounding communities and nature.

By optimizing production processes, we aim to reduce the amount of energy used in our activities.

We invest in more effective work equipment, technologies allowing to generate and use green energy.

To maintain the highest competence in the construction sector, the Company in cooperation with our

partners strives for a wider application of the digital model (BIM) principles in development project

management.

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

In 2023, the Lithuanian construction market was significantly influenced by the overall

macroeconomic situation of the country and the whole Europe. Economic activity was reduced

throughout the EU, and many countries, including Lithuania, were in fixed recession. The change in

real GDP in Lithuania was negative by about -0.2%. This had a direct impact on the slowdown of

investments, including in the real estate sector. Panevezio statybos trestas AB always diversifies

projects in progress according to different sectors, i.e. implements construction projects in the

residential, industrial, logistics, green energy, and public sectors. This guarantees a stable portfolio

of the Company.

Despite the difficult geopolitical situation, in 2024 economic forecasts show a positive trend, growth

of about 1.5% of GDP in Lithuania is expected. The existing portfolio of signed contracts-

construction projects allows Panevezio statybos trestas AB to forecast growth. The companies of

Panevezio statybos trestas AB forecast maintaining stable activity volumes.

In 2024, the Company and the Group will continue to investing in making processes more efficient

through digitization, implement innovations, and sustainably develop activities taking into account

the benefits for clients, employees, business partners and shareholders.

14. Authorised capital of the issuer and its structure

As of 31 December 2023, 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 2023, the total number of the shareholders was 1,759.

Table 5. Distribution of shareholders by residence country and legal form:

Investors

Number of shares,

pcs.

Portion of authorized

capital, per cents

Foreign investors

Legal entities

1,351,015

8.3%

Natural persons

1,401,132

8.6%

Local investors

Legal entities

9,850,635

60.2%

Natural persons

3,747,218

22.9%

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

Freely floating shares

(shareholders holding or controlling

less than 5 percents of authorized

capital)

8,211,068

50.22

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

27 April 2023 did not come to the decision to pay dividends.

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).

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 the 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.

The 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.

The 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 https://www.pst.lt/en/pst-istatai-ir-audito-nuostatai.

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.

On 30 October 2023 at the Extraordinary General Meeting of Shareholders the independent member

of the Board Vaidas Grincevicius was removed from office and Darijus Vilcinskas was elected as an

independent member to the Board.

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 code 124665689, Ukmerges Str. 219, Vilnius);

Board Member at Lauktuves Jums UAB (company code 147797155, Laisves Sq. 26, Panevezys).

Board Member at Gustoniu zemes ukio technika UAB (company code 168581940, S. Kerbedzio

Str. 7F, Panevezys)

As of 31 December 2023, 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 2023, held 5 (five) shares of the Company, a shareholder of HISK AB.

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 2023, 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);

As of 31 December 2023, held no shares of the Company.

DARIJUS VILCINSKAS, independent Board Member

Educational background: Vilnius Gediminas Technical University (VILNIUS TECH), Master

Degree.

Place and position of employment: Director at VIP Centras UAB, Director at VK Invest UAB;

Director at Restoda UAB.

Participation in activities of other companies:

Board Member at Hunting Club Truskava.

As of 31 December 2023, held no shares of the Company.

Administration:

TOMAS STUKAS – Head of Administration, Managing Director of the Company. Education –

Vilnius Gediminas Technical University, Bachelor in Industrial Engineering, Vilnius Gediminas

Technical University, Master in Industrial Engineering.

As of 31 December 2023, held no shares of the Company

DANGUOLE SIRVINSKIENE – Chief Accountant of the Company. Holds no shares of the

Company. University education (LZUA), Accounting - Economics.

As of 31 December 2023, held no shares of the Company.

In 2023, 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 27 April 2023:

Drasutis Liatukas – an independent auditor, CEO of Finansu auditorius UAB, auditor. Holds no

shares of the Company;

Irena Kriauciuniene – an independent auditor. Holds no shares of the Company;

Lina Rageliene –Accountant at Panevezio statybos trestas AB. 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

The Consolidated Report of Social Responsibility for the Group has been prepared in accordance

with the standards of the Global Reporting Initiative and is provided in the Appendix of the Annual

Report Social Responsibility and Sustainability Report for 2023.

Consolidated Remuneration Report

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

financial period of the year 2023. 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 2022 was approved at the General Meeting of Shareholders on 27 April 2027 together

with the Set of Financial Statements for 2022.

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 2023 is provided below. The Extraordinary General Meeting of

Shareholders held on 27 April 2023 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 7. Information on remuneration of supervisory body members of the issuer in 2023:

Full name

Position

Remuneration

of independent

member of the

Board,

total for 2023

(Euros)

Total income

from the

company for 2023

(Euros)

Justas Jasiunas

Chairman

75,600

Gvidas Drobuzas

Board Member

148,645

Kristina Maciuliene

Board Member

Vaidas Grincevicius* (Jan. through Oct.)

Board Member

32,850

Lina Simaskiene*

Board Member

39,600

Darijus Vilčinskas* (Oct. through Dec.)

Board Member

6,750

Total

79,200

224,245

* an independent member of the Board

The Company is not aware that the Board Members of the Board have received any remuneration

from other companies of Panevezio statybos trestas AB Group.

After the term of office for the Board expires, the Board Members are not entitled to any severance

pays.

Remuneration of Company’s Employees

The purpose of the remuneration policy is to increase the operation efficiency at the Company and

promote achievement of strategic objectives. The objective of the Company goal is to maximize the

efficiency of the reward programs in order to attract and motivate highly skilled employees who are

necessary for success in business.

Over the year 2023 the salary fund attributed to the Company's employees amounted to 16.324 mln.

Euros compared to 14.520 mln. Euros in 2022.

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 https://www.pst.lt/en/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 2019 through 2023 is

provided in the tables below.

Table 8. Average monthly salary for employees of the Group, Euros (before taxes)

Position category

2023

2022

2021

2020

2019

Average

salary

Average

salary

Average

salary

Average

salary

Average

salary

Managing Director

9993

9281

8863

7626

Top Management Staff

6049

5528

5107

5323

4524

Middle Management Staff

4713

4428

4297

3478

3216

Specialists

2754

2380

2192

1806

1753

Workers

2097

1646

1380

1319

1322

Total

2458

2020

1800

1583

1569

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

Position category

2023

2022

2021

2020

2019

Average

salary

Average

salary

Average

salary

Average

salary

Average

salary

Top Management Staff

5569

5019

4482

3957

4083

Specialists

2788

2436

2167

1871

1752

Workers

2122

1649

1407

1363

1322

Total

2471

2048

1787

1622

1569

Remuneration Structure for Managing Director and Top Management Staff

The Fixed Remuneration Component is determined considering the impact on general operation of

the Company, management scope, decision making, complexity of activities, knowledge and

experience. Remuneration determined in the Employment Contract, taking into account the level of

position and competence of the employee (conformity with the requirements for the position). The

Fixed Remuneration Component is paid on a monthly basis. The Fixed Remuneration Component of

the Top and Middle Management Staff is reviewed minimum every 12 months.

The new size of the FRC is determined/revised based on performance assessment of the Top and

Middle Management Staff. The PAD of the Top and Middle Management Staff may be changed by

the decision of the Board.

The Variable Remuneration Component is designed to promote achievement of the annual

objectives. The size of the VRC amounts to a fixed percentage of the annual result, which is

determined and approved by the Board. The Chief Executive Officer and directors of the Company

are assigned the percentage of the profit accepted for calculating motivation. For the Directors of the

branches the percentage is determined from the profit accepted for calculating motivation for the

branch managed by him.

Annual Changes in Remuneration

Changes in performance of the Company and average salary of the employees of the Company who

are not members of the management and supervisory bodies during the last five years.

Table 10. Company performance and average monthly gloss salary for the period 2019 through

2023

Company performance

2023

2022

2021

2020

2019

Net profit (loss) (thousands Euros)

-2,279

-1,720

304

-12,418

590

Profit (loss) per share (Euros)

-0.139

-0.105

0,019

-0.76

0.036

Assets (thousands Euros)

47,727

52,762

48,478

62,290

71,337

Average monthly salary

2,458

2,040

1,800

1,583

1,569

Long-Term Motivation by Shares

The Company applies neither schemes under which the members of management bodies, managers

and employees receive remuneration in shares, share options or other rights to share acquisition, nor

supplementary pension or early retirement schemes.

Annex 1

Corporate Governance Reporting Form

Panevezio statybos trestas AB (hereinafter referred to as “the Company”), acting in compliance with Article

22 (3) of the Law 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.

1.1. All shareholders should be provided with

access to the information and/or documents

established in the legal acts on equal terms. All

shareholders should be furnished with equal

opportunity to participate in the decision-making

process where significant corporate matters are

discussed.

Yes

All information that shall be made public in

accordance with legal acts is published in

Lithuanian and English via informational system

of stock-exchange Nasdaq Vilnius and on the

website of the Company. The venue, date and

time of the Meeting of Shareholders convened by

the Company are chosen in such a way as to

ensure participation of all shareholders in the

decision-making process of the Company.

1.2. It is recommended that the company’s capital

should consist only of the shares that grant the

same rights to voting, ownership, dividend and

other rights to all of their holders.

Yes

The Company’s authorized share capital consists

of 16,350,000 ordinary shares, the nominal value

of 0.29 EUR each, which provide their holders

equal voting, property, dividend and other rights.

1.3. It is recommended that investors should have

access to the information concerning the rights

attached to the shares of the new issue or those

issued earlier in advance, i.e. before they purchase

shares.

Yes

The rights attached to the shares are indicated in

the Articles of Association of the Company,

which are published on the website of the

Company.

1.4. Exclusive transactions that are particularly

important to the company, such as transfer of all or

almost all assets of the company which in principle

would mean the transfer of the company, should be

subject to approval of the general meeting of

shareholders.

The Articles of Association of the Company do

not provide that the mentioned transactions are

subject to approval of the General Meeting of

Shareholders. The shareholders of the Company

approve the transactions for approval of which

they have the right prescribed by the Law on

Companies of the Republic of Lithuania and the

Articles of Association of the Company.

1.5. Procedures for convening and conducting a

general meeting of shareholders should provide

shareholders with equal opportunities to

participate in the general meeting of shareholders

and should not prejudice the rights and interests of

shareholders. The chosen venue, date and time of

the general meeting of shareholders should not

prevent active participation of shareholders at the

general meeting. In the notice of the general

meeting of shareholders being convened, the

company should specify the last day on which the

proposed draft decisions should be submitted at the

latest.

Yes

The Company convenes a General Meeting of

Shareholders in accordance with the procedure

established by the Law on Companies of the

Republic of Lithuania.

1.6. With a view to ensure the right of shareholders

living abroad to access the information, it is

recommended, where possible, that documents

prepared for the general meeting of shareholders in

advance should be announced publicly not only in

Lithuanian language but also in English and/or

other foreign languages in advance. It is

recommended that the minutes of the general

meeting of shareholders after the signing thereof

and/or adopted decisions should be made available

publicly not only in Lithuanian language but also

in English and/or other foreign languages. It is

recommended that this information should be

placed on the website of the company. Such

documents may be published to the extent that

their public disclosure is not detrimental to the

company or the company’s commercial secrets are

not revealed.

Yes

All information for 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.

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.

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.

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.

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.

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.

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

bribery/44884389.pdf

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.

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 2023 there were 19 (nineteen) meetings of the

Management Board where four members

participated in all the meetings and one member

participated in fifteen 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.

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.

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.

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 27 April 2023, 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).

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 2023, 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.

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).

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 27 April 2023, 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.

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.

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.

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.

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.

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:

- 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.

- objectives and non-financial information of

the company;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

- 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.

- 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.

- 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.

- 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.

- the company’s transactions with related

parties;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

- 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

The Company does not apply any schemes

under which employees receive remuneration

in shares, share options or other rights to share

acquisition.

100

share options as incentives, relationships with

creditors, suppliers, local community, etc.);

- structure and strategy of corporate

governance;

Yes/No

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

- 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.

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.

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.

101

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 2023, the firm of auditors provided no

services other than auditing.

SOCIAL

RESPONSIBILITY

AND SUSTAINABILITY

REPORT

2023

CONTENT

Social Responsibility and Sustainability Report 2023

CEO LETTER 3

SUSTAINABILITY IN THE GROUP 6

ENVIRONMENTAL AREA 17

SOCIAL AREA

GOVERNANCE AREA 35

INDEX

ABOUT THE SUSTAINABILITY

REPORT 4

BRIEFLY ABOUT THE GROUP 5

Main sustainability principles 7

Sustainability management 8

Stakeholder involvement 9

Materiality matrix 9

Key sustainability topics 11

EU Taxonomy alignment overview 12

CO2 emissions reduction and energy

efficiency

Waste reduction and resource

management

Water conservation and pollution

reduction

Environmental impact of buildings and

services

Employees and their diversity 24

Diversity, equality and inclusion 26

Employee safety and wellbeing 28

Employee training and education 30

Building an internal culture of

sustainability

Positive impact on local communities

Human rights 34

Business ethics 36

Sustainability in the supply chain 38

Innovation and operational efficiency 39

Quality of services and buildings 40

Risk management 41

GRI index

UN Global Compact Principles

CEO

LETTER

As one of the largest construction groups in Lithuania, we consider sustainability

an integral part of our business. I am pleased to present our latest Sustainability

Report, which reflects our environmental, social, and governance achievements

and ambitions. In this report, we have included the issues that matter most to our

customers, employees, shareholders, suppliers and partners, considering their

sustainability expectations.

Our sustainability and responsibility principles are based on global agreements

and recommendations. We commit to adhering to the guidelines set out by the

United Nations Global Compact, contributing to the Sustainable Development

Goals, and following other generally accepted principles of social responsibility.

In the environmental area, reducing the environmental impact of buildings and

services, waste management and resource efficiency, and reducing CO2

emissions remain our priorities. By investing in solar energy projects and sourcing

100% of our electricity from renewable sources, we are committed to reducing

CO2 emissions and contributing to climate change mitigation. We strive not only to

improve our environmental impact but also to set an example for other

organisations. Last year, the Lithuanian Confederation of Industrialists (LCI) also

noticed our efforts, recognising the Lazdynai swimming pool construction project

as the Product of the Year and awarding it with the gold medal of the "Lithuanian

Product of the Year 2023".

On the social area, our efforts are focused on the safety and well-being of our

employees. Vision Zero for Accidents at Work continues to be our primary

objective. In 2023, we introduced an e-learning platform to enhance occupational

health and safety knowledge, improving the safety and efficiency of the working

environment. Through various projects and events, we have worked to create and

foster an internal culture of sustainability.

In governance (economic) area, we do our best to foster a culture of ethical

business, ensure the high quality of the projects we carry out, manage risks, and

strengthen our cooperation with partners to provide the necessary innovations and

the smooth introduction of technology.

Chief Executive Officer

Tomas Stukas

This Sustainability Report provides a comprehensive overview of our performance

and commitment to sustainability in each business area. We will continue to

pursue sustainability initiatives, considering stakeholders' expectations and

suggestions. For us, sustainability means not only responsibility but also an

opportunity to grow and develop together with our community and society.

I am grateful to all our employees, partners and stakeholders for their

commitment, contribution and continued support on our sustainability journey.

GRI 2-22

Social Responsibility and Sustainability Report 2023

SOCIAL AREASUSTAINABILITY IN THE GROUP GOVERNANCE AREAENVIRONMENTAL AREA INDEXCONTENT CEO LETTER ABOUT THE SUSTAINABILITY REPORT BRIEFLY ABOUT THE GROUP

ABOUT THE SUSTAINABILITY

REPORT

This Social Responsibility and Sustainability Report (hereinafter the Sustainability

Report) of the public limited liability company Panevezio statybos trestas

(hereinafter the Company; PST), registered in Lithuania at P. Puzino g. 1, LT-35173

Panevezys, and its subsidiaries (hereinafter jointly called the Group), is published in

April 2024 for the period from 1 January 2023 to 31 December 2023.

The information presented in this report includes consolidated information of all

Group companies, in some cases highlighting the data of Panevezio statybos

trestas AB. Subsidiaries have no separate sustainability reports produced.

The Group's sustainability report is compiled by the Global Reporting Initiative (GRI)

standards 2021 updated version. The Sustainability Report is presented for the

same period as the annual financial statements. This report is integrated into the

Company’s and Consolidated Annual Report, which is audited by an independent

external auditor; having read the sustainability section of the report, the auditor

confirmed its conformity to the Law of the Republic of Lithuania on Financial

Reporting by Undertakings. The Company’s and Consolidated Annual Report

(together with the Sustainability Report) is approved by the Board and then

presented to the General Meeting of Shareholders.

The Sustainability Report presents the Company's and its subsidiaries'

achievements and aspirations in the environmental, social and governance (ESG)

areas. This report reveals how the Group contributes to the United Nations

Sustainable Development Goals (SDGs) and adheres to the principles of the Global

Compact.

The report is prepared in consultation with external sustainability experts but is not

audited. The information contained in the Sustainability Report complies with the

requirements for the Social Responsibility Report of the Republic of Lithuania and

the guidelines for non-financial reporting of the European Commission.

In 2023, when applying the GRI Standards, the Group focused on conducting

materiality analysis, interviewing stakeholders and developing a materiality matrix

to identify the information most relevant to stakeholders. This Sustainability Report

represents the best available data at the time of publication. Still, in the future the

Group will strive to improve further the quality of the information provided in the

Sustainability Reports and to fully and accurately disclose all relevant

performance indicators.

Questions or feedback on this report

and the Group's sustainability activities

can be sent to the following contacts:

Economist R. Kairienė:

rkairiene@pst.lt

GRI 2-1 GRI 2-2 GRI 2-3 GRI 2-4 GRI 2-5 GRI 2-14

SOCIAL AREASUSTAINABILITY IN THE GROUP ENVIRONMENTAL AREA INDEXCONTENT CEO LETTER ABOUT THE SUSTAINABILITY REPORT BRIEFLY ABOUT THE GROUP GOVERNANCE AREA

Social Responsibility and Sustainability Report 2023

BRIEFLY ABOUT

THE GROUP

Panevezio statybos trestas AB, together with its Group companies, is one of the

largest construction companies in Lithuania. Operating in the construction sector

for over 70 years, the Group has delivered major and complex projects

contributing to the country's economic growth, infrastructure development, and

environmental objectives.

The Group operates in the following countries: Lithuania, Sweden, Norway, Latvia

and Poland. The Group's activities include the construction and design of

buildings, structures, facilities and communications, and other objects for various

purposes in Lithuania and beyond, the production and design of metal structures

for construction, the sale of building materials, and real estate development.

The group consists of the following companies:

GRI 2-1 GRI 2-2 GRI 2-6

Panevezio statybos trestas AB

Skydmedis UAB

Hustal UAB

Vekada UAB

Alinita UAB

Aliuminio fasadai UAB

Seskines projektai UAB

Ateities projektai UAB

PST investicijos UAB

Tauro apartamentai UAB

PS Trests SIA

Kingsbud Sp.z.o.o.

The Group's principal activities are:

Construction and design of buildings,

structures, facilities, communications, and other

objects for various purposes in Lithuania and

abroad.

Sales of building materials.

Production of some building materials.

Real estate development and management.

Subcontractors are among the Group's most important partners. As part of the

subcontractor selection process, the Company assesses the subcontractors'

qualifications. The most important requirements for subcontractors are

environmental protection, compliance with occupational safety and health

legislation, and integrity.

Further information on the nature of the Group's activities is provided in the

Company's and Consolidated Annual Report.

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Social Responsibility and Sustainability Report 2023

SUSTAINABILITY

IN THE GROUP

MAIN SUSTAINABILITY

PRINCIPLES

The Group aims to integrate sustainability topics into its overall business strategy

and key performance indicators. Sustainability is understood as an integral part of

the Group's activities, closely linked to its commitments to its stakeholders and key

strategic directions. The Group's principles of sustainable, responsible, and fair

business conduct are described in the Code of Conduct for Employees, Suppliers,

and Company Representatives and other applicable policies.

Key sustainability principles applied in the Group:

Embedding sustainability in three areas – environmental, social and

governance – to create balanced long-term value.

Taking into account stakeholders' expectations, honoring our commitments to

them, and engaging with them transparently and fairly when making decisions

on the Group's sustainable development.

Sticking to the common objectives set out in the European Green Deal and the

Paris Agreement on climate change.

Implementing the globally recognised good governance recommendations by

OECD.

Contributing to the United Nations Sustainable Development Goals (SDGs).

Supporting and being guided by the United Nations Global Compact principles

on human rights, employees' rights, the environment, and the prevention of

corruption.

Carrying out due diligence on environmental, social and economic impact

management.

Setting sustainability targets based on the precautionary principle, i.e., using

the most up-to-date scientific advice on the environmental protection.

GRI 2-23 GRI 2-24

The Group understands the importance of sustainable development and will seek

to further clarify the directions of its sustainability strategy, develop a framework

for embedding responsible business principles at all organisational levels, and

integrate them into operational strategy, policies, and procedures in the future.

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Social Responsibility and Sustainability Report 2023

SUSTAINABILITY

MANAGEMENT

he management of the Group's environmental, social and economic impacts is

overseen by the Board and the Management Team (top management). The Board

reviews the results of impact management once a year and considers and

approves the Group's strategy. The Board puts executive managers and

employees in charge for sustainability in Company’s day-to-day operations. The

persons in charge shall report to the Board on the results of environmental, social

and economic impact management on a regular basis – at weekly, monthly and

annual meetings and as required.

The CEO immediately informs the Board of critical sustainability issues. In 2023,

there were no essential sustainability issues of particular concern in Group

companies.

Governance structure and composition

According to the Articles of Association of Panevezio statybos trestas AB, the

company's governing bodies are the General Meeting of Shareholders, the Board

(which performs a supervisory function), and the CEO — general director.

The members of the Board have supervisory and control functions. The Company

has an Audit Committee only, elected for one year. The Board exercises the

functions of the Appointment and Remuneration Committee.

The Board is composed of 5 members elected by the General Meeting of

Shareholders for four years to represent the interests of shareholders.

In 2023, the Board consisted of 3 men and two women. 2 Board members were

independent. The Chairman of the Board has not held any other significant position

(as a top manager) in the Company.

In 2023, the Audit Committee comprised one man and two women, with two

independent Audit Committee members.

For more information on the members of the Board and the Audit Committee,

including their other significant responsibilities, please refer to the section

Governance Report of the Company's and the Consolidated Annual Report.

GRI 2-13 GRI 2-15

Nomination and selection of board members

The Company's Board is elected and dismissed by the General Meeting of

Shareholders under the procedure established by the Republic of Lithuania Law

on Companies.

The company's shareholders propose candidates for the Board. Board members

must be qualified and competent to perform their functions and have years of

experience in management. At least two members must be independent, and at

least two-fifths of the Board members must be women.

To date, Board members have been selected disregarding their competencies in

sustainable development, and no specific measures were taken to improve their

knowledge of sustainability; the measures would be applied if needed.

Conflicts of Interest

Board members, employees, suppliers, and representatives of the Company are

required to disclose any situation that may give rise to a conflict of interest that

may compromise the interests of the Company in favour of their own private

interests or those of persons close to them. Situations where the personal, family,

or financial interests of employees could conflict with the interests of the

Company must be avoided.

The potential risk of conflicts of interest is assessed during the annual audit, and

the auditor issues their opinion. No conflicts of interest were identified in 2023.

Whistleblowing channels and processes to remediate negative impacts

Stakeholders can report various infringements and concerns, such as possible

ongoing or committed criminal activities, breach of administrative duty or job

responsibilities, or other offences that threaten or undermine the public interest,

by emailing skundai@pst.lt and through other channels indicated on the PST

website.

Infringement information is dealt with by the description of the procedure for

submitting and handling infringement information by PST.

Depending on the nature of the breach, PST shall, following the Company's

procedures, investigate the breach, report to management and the responsible

authorities and undertake to remedy and/or repair the damage. In the absence of

a prescribed process, the Company shall act by the law.

GRI 2-16 GRI 2-17 GRI 2-25 GRI 2-26

GRI 2-9 GRI 2-10 GRI 2-11 GRI 2-12

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Social Responsibility and Sustainability Report 2023

STAKEHOLDER

INVOLVEMENT

Continuous engagement with stakeholders and assessing and responding to their

expectations is crucial for the Group's success in ensuring sustainable operations.

The Group's strategy defines five main stakeholder groups: customers,

employees, shareholders, suppliers and partners.

Stakeholders are defined as groups that find our activities highly relevant and/or

are significantly affected by our actions, as well as individuals and organisations

that significantly influence the Group. The Sustainability Report's content is based

on key stakeholders' views, needs and expectations.

Social Responsibility and Sustainability Report 2023

GRI 2-29 GRI 3-1

MATERIALITY

MATRIX

At the beginning of 2023, the Group conducted its first materiality analysis of

sustainability topics following GRI standards. The purpose of this assessment is to

identify the Group's key environmental, social, and governance topics, start

developing the Group's sustainability strategy based on these topics, and provide

detailed information on their management in sustainability reports.

The results of the materiality analysis are summarised later in this report.

Critical steps in assessing materiality:

Identification of relevant topics for sector peers.

Topics of interest to companies in the construction and other

sectors in which the Group operates were reviewed, and a list of

potential sustainability topics was compiled. Topics

recommended by other widely used sustainability standards

were also assessed.

An assessment of the topics that are most important to

stakeholders.

An anonymous survey was conducted to compile information on

the most critical sustainability topics for stakeholders. The survey

was carried out in March 2023 by sending a questionnaire to

targeted contacts from each stakeholder group. A total of 204

responses were received.

Impact and risk assessment.

Each sustainability topic has been assessed in terms of its

potential impact on the environment and society and its impact

on the Group's performance. At this stage, the Group also

discussed the principal risks and opportunities related to

sustainability and the potential financial impact on Group

companies. The final result is a materiality matrix, which is

presented further. Risks related to each sustainability topic is

described throughout the report in topic-specific sections.

SOCIAL AREASUSTAINABILITY IN THE GROUP ENVIRONMENTAL AREA INDEXCONTENT CEO LETTER ABOUT THE SUSTAINABILITY REPORT BRIEFLY ABOUT THE GROUP GOVERNANCE AREA

MATERIALITY

MATRIX

GRI 3-2 GRI 3-3

Water conservation and

pollution reduction

Moderately important Very important

Moderately significant Very significant

IMPORTANCE FOR STAKEHOLDERS

IMPACT ON SOCIETY, ENVIRONMENT AND THE GROUP'S PERFORMANCE

Positive impact on local

communities

Sustainability in the supply chain

Employee training and education

Waste reduction and resource

management

Environmental impact of buildings

and services

Innovation

CO2 emissions reduction and

energy efficiency

Building an internal culture of

sustainability

Employee safety and

wellbeing

Business ethics

Quality of services and

buildings

Human rights

Diversity, equality and

inclusion

Operational efficiency

Risk management

The materiality matrix outlines the social, environmental and governance topics (impacts and risks) most relevant to the Group's sustainability. These topics are all important,

but to set sustainability priorities, they are ranked according to their importance to stakeholders and their impact on society, the environment and the Group's performance.

Material topics are the issues of utmost importance to the stakeholders that significantly impact society, the environment, and the Group's results, highlighted in the matrix's

darkest colour. The management principles for all material topics are described by GRI requirements in this report, in chapters arranged by topic.

– Environmental; – Social; – Governance

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Social Responsibility and Sustainability Report 2023

Priority

sustainability

topic

Long-term direction

Sustainable Development

Goals

Environmental area

Environmental

impact of

buildings and

services

To apply and develop new

solutions and services to help

reduce the environmental

impact of buildings throughout

their life cycle.

Waste

reduction and

resource

management

To optimise production

processes to decrease the

amount of raw materials used

and reduce and recycle waste.

CO2 emissions

reduction and

energy

efficiency

To reduce the energy needed

for our operations and the

greenhouse gases (CO2)

emitted.

Social area

Employee

safety and

wellbeing

To create a safe and healthy

working environment and

improve working conditions.

Priority

sustainability

topic

Long-term direction

Sustainable Development

Goals

Social area

Human rights

To support and promote the

protection of fundamental

human rights in the Group's

activities.

Employee

training and

education

To ensure all employees are

given opportunities to improve

and develop their skills.

Diversity,

equality and

inclusion

To ensure equal opportunities,

prevent discrimination at work

and promote equality in

recruitment.

Governance area

Business ethics

To create and foster an ethical

business culture, prevent

corruption and bribery, and

compete fairly.

Quality of

services and

buildings

To ensure that the projects we

deliver are of high quality, meet

our clients' needs and comply

with industry standards.

Innovation

To develop and apply

innovative solutions and

introduce modern technologies

into crucial business processes.

Operational

efficiency

To apply efficient, innovative

and resource-saving process

management methods.

Risk

management

To continuously assess

operational risks and implement

measures to address and

mitigate them.

KEY SUSTAINABILITY

TOPICS

The materiality analysis identified 12 key (priority) sustainability topics that are

closely interlinked and most relevant to the Group's environmental, social, and

governance activities. The Group will continue developing its sustainability

strategy and reporting on these topics.

The United Nations Sustainable Development Goals the Group can contribute to

the most are identified and listed for each topic (if applicable). The Sustainable

Development Goals (SDGs) are a universal set of aspirations that set the direction

for global economic, social and environmental development up to 2030.

This report details the principles behind managing the sustainability topics and the

Group's performance and targets in each area.

SOCIAL AREASUSTAINABILITY IN THE GROUP ENVIRONMENTAL AREA INDEXCONTENT CEO LETTER ABOUT THE SUSTAINABILITY REPORT BRIEFLY ABOUT THE GROUP GOVERNANCE AREA

Social Responsibility and Sustainability Report 2023

EU TAXONOMY

ALIGNMENT OVERVIEW

The European Union (EU) Taxonomy (Taxonomy Regulation 2020/852 and the

delegated acts adopted under it) is a classification system for sustainable

economic activities designed to channel private investment into 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 activities are defined as activities described in the

relevant delegated acts of the Taxonomy Regulation, i.e. included in the

Taxonomy. Companies that have identified that their Turnover, CapEx and/or

OpEx are related to the activities described in the Delegated Acts are required to

carry out an analysis and disclose the extent to which their activities comply with

the Taxonomy criteria with respect to these indicators. Taxonomy-aligned activity

is defined as an activity meeting the Taxonomy technical analysis criteria, i.e.

making a significant contribution to at least one of the six environmental objectives

and causing no significant harm to the other five.

In this overview, we provide information on the taxonomy-eligible activities

conducted and their compliance with the Taxonomy criteria according to the main

indicators. The methodology for calculating the indicators has been updated

compared to our last year's disclosure (described further).

TAXONOMY-ELIGIBILITY ASSESSMENT AND

CALCULATION OF INDICATORS

Turnover. The Group derives part of its revenue from taxonomy-eligible activities.

The primary economic activity of PST, construction, accounts for the majority of

the Company's revenue and corresponds in the Taxonomy to the activity labeled

Construction of new buildings. Other activities of the Company (real estate

activities, building renovation activities) that are considered taxonomy-eligible are

the Acquisition and ownership of buildings and Renovation of existing buildings.

The revenue generated by these activities is calculated accordingly, as shown in

the table provided further.

Capital expenditure (CapEx). In terms of specific acquisitions that can be

attributed to taxonomy-eligible activities in 2023, the Group acquired passenger

vehicles (Transport by motorbikes, passenger cars and light commercial vehicles)

and freight vehicles (Freight transport services by road) and a solar power plant

(Installation, maintenance and repair of renewable energy technologies). The

remaining long-term asset acquisitions have been distributed among taxonomy-

eligible activities based on revenue proportions. This allocation is necessary

because the equipment is utilized across various projects and cannot be directly

linked to a specific activity. This approach was selected as the most suitable given

the prevailing trends in Taxonomy disclosure within the construction sector.

Operating costs (OpEx). Operating costs (OpEx) are defined in the Taxonomy

Regulation as direct non-capitalised costs related to research and development,

building renovation measures, short-term leases, maintenance and repairs, etc.

According to the definition of the Taxonomy OpEx, we have calculated the total

amount of operating costs (denominator) by including only maintenance and

repair costs and short-term rentals. Similar to CapEx, the total operating costs have

been divided among taxonomy-eligible activities based on revenue proportions.

TECHNICAL SCREENING OF ACTIVITIES

So far, the Taxonomy has encompassed and implemented criteria for activities

aiding climate change mitigation and adaptation objectives (that also applies to

our taxonomy-eligible activities). By the end of 2023, the list was broadened to

incorporate criteria for activities addressing the remaining four environmental

objectives. According to the expanded list, the activities Construction of new

buildings and Renovation of existing buildings can also contribute to the transition

to circular economy objective. We have also assessed other activities identified

under the transition to circular economy objective, but have not identified any

taxonomy-eligible activities tied to this objective for projects executed in 2023. In

the future, our taxonomy-eligible activities and the methodology for calculating

indicators may change in the light of possible new official interpretations of the EU

Taxonomy.

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Our technical analysis has shown that the Group's current activities only partially

meet the Taxonomy criteria and are therefore assessed as not taxonomy-aligned.

The Group executes projects based on designs and cost estimates approved by

clients, thus it cannot guarantee alignment with Taxonomy criteria. For example,

the main activity of the Group 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.

Climate risk and vulnerability assessments have not been conducted for individual

projects or at the Group level. Consequently, the activities fail to meet one of the

'do no significant harm criteria' for climate change adaptation, which applies to all

taxonomy-eligible activities.

In line with our support for the EU Green Deal, we intend to consider the

Taxonomy Regulation in our future investment planning, so that our activities align

with the Taxonomy criteria to the extent possible.

The results of the screening are presented further using the template tables set

out in the Taxonomy.

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 assumes

responsibility for the impact of the corporate activities on the social, economic and

natural environment. The Company is committed to complying with the legislation,

regulations and agreements applicable to its operation.

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Substantial

contribution criteria

Do no significant harm criteria

Economic activity

NACE

code(s)

Absolute

revenue

2023

Proportion of

revenue,

2023

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,

2023

Taxonomy-

aligned

proportion of

revenue,

2022

Category

(enabling)

Category

(transitional)

thousand

Eur

Y/N

A. Taxonomy-eligible activity:

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

Revenue of

environmentally

sustainable

activities(Taxonom

y-aligned) (A.1)

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

Construction of

new buildings

F41.1,

F41.2,

F43

81649

68.14%

Acquisition and

ownership of

buildings

L68

2883

2.41%

Renovation of

existing buildings

F41,

F43

7340

6.13%

Revenue of

Taxonomy-

eligiblebut not

environmentally

sustainable

activities (not

Taxonomy-aligned

activities)(A.2)

91872

76.67%

Total: A.1 + A.2

91872

76.67%

B. Taxonomy-non-eligible activities

Revenue of

Taxonomy-non-

eligible activities (B)

27956

23.33%

TOTAL: A + B

119828

100.00%

REVENUE ACCORDING TO TAXONOMY IN 2023

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Substantial

contribution criteria

Do no significant harm criteria

Economic activity

NACE

code(s)

Absolute

Taxonomy

CapEx in

2023

Proportion

of CapEx,

2023

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

CapEx,

2023

Taxonomy-

aligned

proportion of

CapEx,

2022

Category

(enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

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

CapEx of

environmentally

sustainable

activities(Taxonomy-

aligned) (A.1)

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

Transport by motorbikes,

passenger cars and light

commercial vehicles

H49.32,

H49.39,

N77.11

100554

9.11%

Freight transport

services by road

H49,

H53

N77

172065

15.59%

Installation, maintenance

and repair of renewable

energy technologies

F42,

F43,

M71,

C16,

C17,

C22,

C23,

C25,

C27,

C28

113915

10.32%

Construction of new

buildings

F41.1,

F41.2,

F43

582003

52.75%

Acquisition and

ownership of buildings

L68

10143

0.92%

Renovation of existing

buildings

F41, F43

25780

2.34%

CapEx of Taxonomy-

eligiblebut not

environmentally

sustainable activities (not

Taxonomy-aligned

activities)(A.2)

1004459

91.04%

Total: A.1 + A.2

1004459

91.04%

B. Taxonomy-non-eligible activities

Taxonomy CapEx of

Taxonomy-non-eligible

activities (B)

98892

8.96%

TOTAL: A + B

1103352

100 %

CAPITAL EXPENDITURE (CAPEX) ACCORDING TO TAXONOMY IN 2023

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Substantial

contribution criteria

Do no significant harm criteria

Economic activity

NACE

code(s)

Absolute

operating

expenditure

in 2023

Percentage

of operating

expenditure,

2023

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

percentage

of operating

expenditure,

2023

Taxonomy-

aligned

percentage

of operating

expenditure,

2022

Category

(enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

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

Operating expenditure of

environmentally

sustainable

activities(taxonomy-

eligned) (A.1)

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

Construction of new

buildings

F41.1,

F41.2,

F43

547169

68.10%

Acquisition and

ownership of buildings

L68

19284

2.40%

Renovation of existing

buildings

F41, F43

49012

6.10%

Operating expenditure of

Taxonomy-eligiblebut

not environmentally

sustainable activities (not

Taxonomy-aligned

activities)(A.2)

615465

76.60%

Total: A.1 + A.2

615465

76.60%

B. Taxonomy-non-eligible activities

Operating expenses of

non-taxonomy-eligible

activities (B)

188014

23.40%

TOTAL: A + B

803479

100.00%

2023 OPERATING EXPENDITURE (OPEX) ACCORDING TO TAXONOMY

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ENVIRONMENTAL

AREA

To provide a better picture and set specific and

measurable targets, PST also foresees to assess the

indirect emissions of Scope 3 for 2024.

CO2 EMISSIONS REDUCTION

AND ENERGY EFFICIENCY

The Group is responsible for a significant amount of greenhouse gases (GHGs)

emitted into the atmosphere during its activities. Therefore, this topic is identified

as one of the key impact areas to manage. Reducing emissions and increasing

energy efficiency are integral parts of the Group's strategy and will be the focus of

future annual targets and impact reduction. The Group puts great effort into

contributing to climate change mitigation and environmental protection. This is

crucial for the sustainable and long-term preservation of the environment. The

Group keeps investing in developing solar power plants and purchasing energy

from 100% renewable sources. Some Group's companies already generate

electricity to cover 100% of their needs.

The Group keeps investing in developing solar power plants and

purchasing energy from renewable sources. Some Group

companies already generate electricity to cover of their needs.

100%

In this report, the PST publishes its estimated (GHG) emissions from its activities in

CO2 equivalent. The sources of emissions and the methodologies used to

calculate them are identified, including the Scope to which the emission source

belongs. The know-how and methodologies of market-based financial institutions

and energy suppliers were used to calculate GHG emissions. The emissions

calculation was based on the Greenhouse Gas Protocol (GHG) and Global

Reporting Initiative (GRI) standards and recommendations. The calculation of

emissions includes not only CO2 but also all other greenhouse gases (CO2, NH4,

CH4, HFCs) emitted in the activity, converting them to CO2 equivalents using

standard factors and naming the final total figure as CO2-eq. Emission

consolidation method: operational control. The baseline year for calculating GHG

emissions is 2022, the first year PST has chosen to estimate its emissions.

Plans for 2024

Measurement

units

2022

2023

Change

2022/

2023

Change

2022/

2023,

t CO2 eq.

Direct (Scope 1)

t CO2-eq

1 803.5

1 916.5

+ 6.27%*

+ 113.1*

Indirect (Scope 2)

t CO2-eq

243.0

462.8

+ 90.41%**

+ 219.7**

Indirect (Scope 3)

t CO2-eq

GHG emissions

Note: Calculated using the market-based method, based on actual electricity purchases. Calculated using

the location-based method, i.e. based on a country's specific energy production pattern, 2023. The

company's indirect Scope 2 GHG emissions would be 702,1 t CO2 eq., 850.1 t CO2 eq. in 2022.

* Compared to 2022, direct (Scope 1) emissions have increased due to higher fuel consumption in the

transport fleet.

** Compared to 2022, indirect (Scope 2) emissions have increased because part of the electricity in Hustal

UAB was purchased without guarantees of origin (it cannot be classified as green energy), and heating

costs in PST construction sites have increased ~53%.

The GHG emission intensity is calculated by dividing annual emissions by the

number of units of economic activity. PST calculates how much CO2 is emitted per

employee and per million Eur in this case. As with the total emissions calculation,

the intensity ratios include all GHG emissions, converting them into CO2-eq.

2022

2023

Change

2022/2023

t CO2-eq / 1 employee

2.9

3.7

+ 28%

t CO2-eq / €1 million turnover

20.9

23.0

+ 10%

GHG emissions intensity

Note: The emission intensity ratio has been calculated for the total Scope 1 and Scope 2 GHG emissions.

100%

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Energy consumption

Direct & indirect energy consumption

Measureme

nt units

2022

2023

Direct fuel consumption from

renewable sources

0.42

0.84

Biofuels

0.42

0.84

Direct fuel consumption from non-

renewable sources

24.05

25.67

Diesel

22.58

23.48

Petrol

1.47

2.19

Energy purchased and consumed

21.21

17.78

Electricity

12.45

7.18

Heat

9.06

10.60

Total energy consumption in the

organisation:

45.98

44.29

Energy intensity

2022

2023

TJ / 1 million Eur revenue

0.47

0.43

TJ / 1 employee

0.066

0.068

Note: Total energy consumption is calculated using the GRI 302-1 formula. Conversion factors from

convert-measurement-units.com convert energy quantities to TJ.

Energy intensity

The energy intensity index is calculated using the GRI 302 Energy methodology.

GRI 302-3

PST purchased a new Komatsu bulldozer to replace the

previous one manufactured in 2007. The new bulldozer

has a new generation Euro 6 engine (the old bulldozer

had Euro 3 one). In terms of hours actually worked in

2023 and the average fuel consumption per hour for this

model, the new bulldozer consumes half as much fuel

per working hour. During 2023, It emitted approximately

17.5 tonnes less CO2 than the old bulldozer would.

Work and Achievements in 2023

PST has increased the capacity of its solar power plant

(Puzino g. 1, Panevezys) from 30 kW to 60 kW.

Hustal UAB has increased the capacity of its solar power

plant from 200 kW to 320 kW.

Development of solar energy projects: investments in

new solar power plants or the expansion of existing ones

to increase renewable energy production and reduce

dependence on non-renewable sources.

Plans for 2024

Initiation of projects to reduce electricity consumption

by applying energy efficiency improvement measures

and promoting responsible energy use.

GRI 305-1

GRI 305-2 GRI 305-3 GRI 305-4GRI 302-1

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Measurement

units

2021

2022

2023

General waste

12,531.279

3684.020

2772.483

Hazardous waste

2.923

4.759

11.107

Total

12534.203

3688.779

2783.59

Measurement

units

2021

2022

2023

Wood

68.890

98.670

72.86

Metals

20.010

5.118

277.585

Paper

7.770

7.365

19.755

Glass

13.940

2.040

0.14

Plastics

0.040

0.065

8.807

Concrete brick

mixes

3099.940

1042.500

1088.1

Bituminous

mixtures

1200.000

416.400

0.65

Total

4410.59

3590.109

1467.897

WASTE REDUCTION AND

RESOURCE MANAGEMENT

The Group aims to ensure the responsible management of all waste associated

with its operations, continuously increase recycling and ensure responsible

resource management. To conserve the environment and natural resources and to

provide comprehensive pollution prevention, the Company has a practice of

preparing an environmental plan at the beginning of each project. The plan

foresees specific measures to manage significant environmental aspects and the

Company’s activities. This is to minimise the Group's footprint in this area. The

Company's approach to waste reduction is defined explicitly in the PST

Environmental Policy.

To successfully manage this topic, the Company has implemented an

Environmental Management System according to the standard LST EN ISO

14001:2015. Waste reduction targets, describing the proportion of waste sorted to

be achieved, are set each year.

Objectives for 2024:

GRI 306-3 GRI 306-4

Ensure the following minimal proportion of waste sorting on sites:

To keep construction machinery, equipment and

vehicles up-to-date, subject to financial constraints.

PST sorts the generated construction waste on-site. Building materials suitable for

reuse are separated. Waste that is not suitable for reuse is sent to waste handlers.

Waste generated on construction sites is also sorted according to all applicable

requirements.

Internal audits monitor and control the waste sorting process. Records of

generated waste are kept in the electronic Unified Product, Packaging, and Waste

Record Keeping Information System (GPAIS). At the end of the calendar year, the

proportion of waste sorted is calculated.

Waste from operations

PST strives to reduce the Group's negative environmental impact by adequately

managing all waste generated from its operations. The Company supports and

endorses the European Union's (EU) waste policy, which is based on the waste

hierarchy principle of waste management—waste prevention in the first line,

followed by preparation for reuse and only afterwards recycling and recovering.

Waste sent for recycling

Note: All hazardous waste generated by the activity has been passed on to waste handlers.

Note: All of this waste has been sent for recycling; however, PST cannot guarantee that it has actually

been recycled.

new construction – 60 %;

reconstruction, modernisation and renovation of

buildings – 30 %;

environmental management, road construction, site

development and waste sites – 85%;

otherwise unspecified waste sites – 45 %.

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Measurement units

2021

2022

2023

Water consumption

of PST fixed facilities

ML (megaliters)

3.211

4.312

5.233

Water consumption

of PST construction

sites

ML (megaliters)

1.365

12.102

8.822

TOTAL:

ML (megaliters)

4.576

16.414

14.055

WATER CONSERVATION AND

POLLUTION REDUCTION

The company considers water conservation and reducing water pollution as one

of its key objectives and aims to reduce its impact on this topic in every possible

way. The approach to this topic is further described in the Company's

(Environmental Policy.)

Amount of water consumed

GRI 303-5

PST does not use water from areas experiencing water stress, while all

calculations are based on metering devices installed within the Company.

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ENVIRONMENTAL IMPACT OF

BUILDINGS AND SERVICES

The Company sees this topic as one of the most important for managing its impact

on the environment, employees, and society. Therefore, the aim is to apply and

develop new solutions and services to help reduce the environmental impact of

buildings throughout their life cycle. The circular economy is about preserving the

value of products and materials for as long as possible, with as little waste as

possible and as few resources used as possible; the Company aims to do the

same by trying to minimise its impact in this area.

It is important to note that in terms of volume, construction and demolition are

among the largest sources of waste. The construction industry significantly

impacts the overall environmental performance of the life cycle of buildings and

infrastructure. Given the long lifespan of buildings, the Company strives to

promote better design in every possible way to reduce the impact on the

environment and to increase the resilience and recyclability of their components.

At the same time, the use of hazardous chemicals in construction sites is being

steadily reduced by replacing them with less hazardous ones.

The Company's new buildings currently under construction are of energy

efficiency class A++. These buildings use almost no thermal energy, contributing to

climate change mitigation. As the market tightens its requirements for the energy

class of new projects, PST is developing its competencies and technological base

to implement this type of project.

In 2023, the Lazdynai swimming pool was recognised as

the Product of the Year at the Lithuanian Confederation

of Industrialists (LPK) awards, receiving the "Lithuanian

Product of the Year 2023" gold medal.

In 2024, priority will be given to acquiring and installing

equipment and machinery, allowing to reduce the

environmental impact of operations and fuel

consumption.

Work and Achievements in 2023

Plans for 2024

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SOCIAL

AREA

Number of employees

Permanent employees by

gender (indefinite contract)

Temporary employees by

gender (fixed-term contract)

Full-time employees by

gender

Part-time employees gender

PST

Group

PST

Group

PST

Group

PST

Group

PST

Group

Total

491

762

451

721

471

735

Women

108

103

156

Men

411

618

375

578

392

578

Lithuania

490

756

450

716

470

729

Latvia

Poland

EMPLOYEES AND THEIR

DIVERSITY

Professional, competent and responsible employees are the Group's greatest

asset and essential to achieving its goals. The Group aims to ensure a respectful

and caring relationship with its employees, increase diversity, and foster

employees’ well-being and internal corporate culture.

On 6 August 2021, a Labour Council of nine members was elected to represent

employees in the Group. The Labour Council makes proposals to employer on

economic, social, and labour issues of concern to employees, as well as employer

decisions and laws and regulations governing labour relations. The Council is set

up for a term of office of 3 years, starting from the beginning of its mandate.

As of 31 December 2023, the Group had a total of 762 employees, and PST had 491

employees. As of 31 December 2022, the Group had a total of 805 employees, and

PST had 536 employees.

Breakdown of employees by gender and location

Note: The tables present the Group's data at the end of the reporting period (2023). Data for 2022 is available for comparison in the PST Social Responsibility and Sustainability Report for 2022.

There has been a natural turnover of employees in the Group's companies during

2023. The Group does not have information on the total number of employees

(e.g., subcontractors' employees) who are not employees of the Group and whose

work and/or workplace is not controlled by the Group.

GRI 2-7 GRI 2-8

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New hires

Turnover

Total

number in

each

category

(%)*

By gender:

Women

108

9.3%

3.7%

Men

654

225

34.4%

10.9%

By age:

Up to 30

years

91.0%

29.9%

30–50

years

389

131

33.7%

9.8%

Over 50

years

306

14.1%

5.6%

By location:

Lithuania

756

212

28.00%

5.7%

Latvia

0.00%

Poland

33.3%

0.00%

Employees and their diversity

Breakdown by

gender

Total number of employees entitled to parental leave (by

gender).

Men – 7

Women – 1

Total number of employees on parental leave (by

gender).

Men – 0

Women – 1

Total number of employees who returned to work after

parental leave during the reporting period (by gender).

Men – 0

Women – 3

The total number of employees who returned to work

after parental leave and are still working 12 months after

their return (by gender).

Men – 0

Women – 1

*The rate is calculated as follows: the number of new hires in a given category divided by the

total number of employees in that category. For example, the number of new female hires

among all female employees.

Parental leave

Note: The relative rate of return to work of workers on parental leave by the GRI formula is not reported, as

this is the first time the indicator has been reported, and the data are only disclosed for 2023.

GRI 401-1 GRI 401-3

New hires and turnover

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Gender and age group

2022

2023

Share (%)

The board

Women

Men

Up to 30 years

30–50 years

Over 50 years

Gender and age group

Share (%)

2021

2022

2023

PST

Women

Men

Up to 30 years

30–50 years

Over 50 years

Group

Women

Men

Up to 30 years

30–50 years

Over 50 years

Percentage of employees in each of these diversity categories

DIVERSITY, EQUALITY AND

INCLUSION

The Group has placed a strong emphasis on diversity, equality and inclusion in

2023. By creating a work environment based on diversity, equality and inclusion,

the Group ensures that the views of different stakeholders are taken into account

and that the expectations of these stakeholders towards the Group are better

reflected.

In 2023, as in the past, the majority of the Group's employees, 86% (PST – 84%),

were men, which is typical for the construction sector. This is strongly influenced

by the specific nature of the activities carried out, i.e. women are less likely to opt

for technological work in construction and directly related construction-technical-

engineering occupations and outdoor work.

The Group does not discriminate based on gender, assesses employees based on

their qualifications, and provides equal employment and career opportunities.

Every employee's opinions and ideas are accepted. There were no cases of

discrimination in 2023.

Social Responsibility and Sustainability Report 2023

GRI 406-1 GRI 405-1

The group is against forced, involuntary labour and child exploitation. Only persons

of the legal age by the law of the Republic of Lithuania may be recruited.

Percentage of individuals in each of these diversity categories on the Group's

board

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

PST

Group

2021

2022

2023

2021

2022

2023

The ratio of the annual total

compensation for the

organisation’s highest-paid

individual to the median annual

total compensation for all

employees

6.33:1

5.5:1

4.7:1

6:1

7.87:1

7.5:1

The ratio of the percentage

increase in annual total

compensation for the

organisation’s highest-paid

individual to the median

percentage increase in total

yearly compensation for all

employees

0.24:1

0.29:1

2:1

0.73:1

REMUNERATION POLICY

To attract professionals to management positions, the Group aims to maintain

remuneration close to the market median of the country where the Group

operates. The remuneration system is a set of remuneration packages that Group

companies use to attract, motivate and retain the best people to help them

achieve their long-term goals and business strategy. Staff remuneration is based

on the employee's responsibilities, performance, competencies, knowledge and

skills; the pay for equivalent posts is similar.

Employees benefit from advanced bonus schemes and an exceptional working

environment. The Group also provides social security benefits for employees, such

as death benefits for family members or relatives (in the event of an employee's

loss) and gifts at the birth of a child and on the occasion of an anniversary.

For more information on the remuneration policy, please refer to the "Consolidated

Remuneration Report" section of the Annual Report.

GRI 2-19 GRI 2-20

DETERMINING THE REMUNERATION FOR THE BOARD

MEMBERS

The extraordinary general meeting of shareholders of 9 April 2021 approved the

procedure for the appointment and payment of remuneration to independent

members of the board of Panevezio statybos trestas AB.

Under these arrangements, the independent member of the board is paid a fixed

monthly remuneration. The board members, other than the independent members

of the board, are paid remuneration (bonuses) for their work on the board, as

decided by the general meeting of shareholders, by the Law on Companies of the

Republic of Lithuania.

DETERMINING THE REMUNERATION OF TOP AND MIDDLE

MANAGERS

The remuneration policy for top and middle managers of Panevezio statybos

trestas AB was approved at the ordinary general meeting of shareholders on 29

April 2020.

The board approves the remuneration of the Company's chief executive officer

(general director) and the remuneration of functional and branch directors on the

general director's recommendation. The Company currently has no information on

how stakeholders' views (including shareholders) are considered in determining

remuneration or the involvement of consultants in the remuneration setting.

Remuneration for top and middle managers consists of fixed and variable

components. The fixed component is the employee's basic monthly salary, as set

out in the employment contract. The variable component is based on the

Company's and the employee's performance.

The remuneration policy for board members and the management team is not

linked to sustainability performance.

The consolidated remuneration report for 2022 and the set of financial statements

2022 were approved at the general meeting of shareholders on 27 April 2023.

Annual total compensation ratio

The annual increase in total remuneration for the highest-paid individual at PST

was 8%. The annual percentage increase in the median total compensation of all

employees (excluding the highest-paid individual) was 26%.

At the group level, the highest-paid individual had an annual compensation

increase of 18%. The annual percentage increase in the median total remuneration

of all employees (excluding the highest-paid individual) was 24%.

GRI 2-21

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Social Responsibility and Sustainability Report 2023

EMPLOYEE SAFETY AND

WELLBEING

The Group is committed to ensuring a safe working environment for its employees,

so safety is considered one of the highest priorities.

One of the Group's main objectives is to become a leader in the construction

market, guaranteeing safe and hazard-free workplaces for Panevėžio statybos

trestas AB employees and all the employees working on behalf of the Company.

The Group has an Occupational Health and Safety (OHS) Policy and relevant ISO

45001 procedures in place:

Implementation of legal and other requirements for environmental protection

and occupational safety and health (ADSSVP-02).

Emergency preparedness and response (ADSSVP-04).

Monitoring and measurement (ADSSVP-06).

Occupational safety and health management (OSHMP-09).

Identification and risk assessment of occupational hazards (DSSAP-10).

Managing objectives, targets and management programs (KADSSVP-002).

Design Management (KADSSVP-003).

Purchase and sale (KADSSVP-004).

Selection of subcontractors (KADSSVP-005).

This helps to ensure the ongoing identification and assessment of OHS risks,

defining risk management measures, and monitoring their implementation.

GRI 403-1

WORK-RELATED RISKS

Sound occupational health and safety management contributes significantly to the

Group's sustainable and long-term performance. In the construction sector, the

risk of injury and occupational diseases is high where there are high physical loads

or where hazardous work, chemicals, or other materials are involved.

Hazardous and harmful risk factors (hazards) identified:

Noise – noise from mobile electrical work equipment on a construction site.

Hand vibration – when working with portable electrical equipment on a

construction site.

Low and high temperatures (working outdoors, indoors (cold and warm

seasons)).

Inadequate lighting – artificial lighting (when work is carried out outdoors, in

open spaces during the dark daytime, or in basements).

Contact with hazardous chemicals: petroleum products (fuels, lubricants, etc.),

acids, alkalis in mixtures and other hazardous substances, soil, paints,

adhesives, and sealants.

The physical exertion of lifting and carrying loads by hand involving the arms,

legs and back muscles.

Falls from height – scaffolding; mobile towers, ladders; mobile work platforms;

workplaces at a height not protected by safety fencing.

Falling at the same level (horizontal), risk of slipping, tripping, stumbling.

Falling objects – lifting loads with cranes; workplaces at heights not protected

by safety fencing; hazardous areas near buildings; lifting equipment.

Risk of tripping, pinching – erecting and dismantling heavy structures using

lifting equipment.

There is a risk of being run over, pinched, or crushed by moving vehicles

during delivery of building materials, waste removal, or landscaping.

Risk of entrapment and crushing of rotating parts of machinery and equipment.

Risk of cuts and dents when using sharp tools or materials with sharp edges or

corners.

Exposure to electrical currents (alternating current over 50 V and direct current

over 75 V, high voltages of 10 kV and above).

Fragmented, flying particles of work materials – hazardous areas on a

construction site when working with portable electrical work equipment.

Fire hazards include welding, metal cutting with power tools causing sparks,

and the use of electrical household appliances.

Potential displacement and collapse of stored building materials and

structures – storage of building materials and heavy structures.

Hazards in the work and services provided by other organisations and their

employees.

Dust risk – excavation and construction work during the warm season.

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Social Responsibility and Sustainability Report 2023

2022

2023

Injury rate

Number of minor accidents (injuries) per

million hours worked

1.31

Work and Achievements in 2023

Plans for 2024

GRI 403-9

Work-related injuries

Note: The total recordable injury rate per million hours worked is calculated using the GRI 403-9 formula.

The total number of hours worked by all employees in 2023 was 11,269,833.

We introduced an e-learning platform for qualification

and occupational safety and health training to improve

the quality and accessibility of training for every

employee.

The process for issuing personal protective equipment

has been digitised. From 1 March 2023, employees will be

issued personal protective equipment via the VIACOREX

electronic platform.

OCCUPATIONAL HEALTH AND SAFETY TRAINING SYSTEM

The company provides occupational health and safety training to ensure every

employer is informed and prepared to perform their duties safely. The training

program comprises several parts:

Theoretical training covering the basics of health and safety

at work, legislation, Company policies and procedures. It also

focuses on hazard identification and the principles of safe

behaviour, including using personal protective equipment

and accident prevention.

Practical training on specific hazards and activities, such as

fire safety, civil protection, use of chemicals and high-risk

work. It also includes evacuation plan training and first aid

principles.

Periodic knowledge checks and practical training to refresh

and test workers' knowledge and skills in actual or simulated

situations.

The Company's managers and safety officers are responsible for ensuring the

quality of the training and keeping the programs up-to-date with the latest hazards

and legal requirements. This is the Company's way of creating a safe working

environment and ensuring every employee is well-prepared for different situations.

On 16-03-2023, Technical Director K. Grimalis, OHS Senior

Specialist V. Fijalkauskas and Construction Manager K.

Kurpis participated in PETROFAC's “2023 Contractors

Safety Forum Lithuania”, where Lithuanian and foreign

companies shared their experience of creating a safe

environment.

The digitalisation of compulsory health screening for

workers through the electronic platform Esveikata. It has

been launched to improve the quality of health

screening and the accessibility of information for every

employee.

The overarching goal of the Vision Zero for Accidents at

Work 2024 is 0 accidents at work.

The implementation of the e-platform for OSH

management, "SAUGA.lt," should be completed in Q1

2024. OSH and competencies/professional training will

be delivered using the e-platform.

Improve staff and manager awareness of OSH and risk

assessment through better training programs and

presentation of information.

GRI 403-5

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Social Responsibility and Sustainability Report 2023

One of the main objectives of the Group's strategy is to promote the training and

development of employees at all levels. Employee development and improving

specific and general skills ensure the proper and smooth running of the Group's

businesses and operational processes. They are among the most critical factors in

ensuring competitiveness.

Employee development plans are drawn up annually, taking into account the

Group's objectives and the competencies required to achieve them. The Group

provides opportunities for employees to improve their knowledge and skills

through various training courses, seminars and conferences. The Company and its

subsidiaries provide regular in-house training for employees based on the nature

of the work and the workplace requirements.

The Group focuses mainly on Occupational Health and Safety (OHS) training,

which is included and described in the Group's Occupational Health and Safety

Policy. To ensure a smooth process on this topic, the Group has also implemented

the ISO 45001 procedure Personnel Training (KADSSVP-016) and the training

procedures are defined in the Group's procedure for training, testing and

assessment of the Group's employees' knowledge in the field of occupational

safety and health.

The Company and its subsidiaries are responsible for developing the qualifications

and skills of their employees, which means investing time and money in organising

and implementing the necessary training and education programs.

The Group's training is delivered in two tracks, using the services of

1. Training providers (external training).

2. Higher education institutions (employee studies).

The Group continuously invests in training and development courses to improve

its employees' competencies and awareness of occupational safety and health. In

2023, training courses were organised at the Company and training institutions.

The training sessions attended by employees are listed in the table below.

4712

The Group dedicated a total of hours to various external

and internal trainings”, pagal nutartą dizaino kryptį.

EMPLOYEE TRAINING

AND EDUCATION

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Social Responsibility and Sustainability Report 2023

Average hours of training per year per employee



2022

2023

2022

2023

2022

2023

Number of

specialists

Number of hours

Average hours of

training per

employee

Women

130

170

21.67

8.95

Men

143

272

2791

4542

19.52

16.70

Sales and negotiations

4.00

5.33

Workman employed in

the construction of

high-rises

916

148

22.90

6.43

Cargo hanger

277



13.19

Fire safety (employee)

161

176

3.35

2.98

Fire safety (manager)

6.83

5.67

Civil protection

0.11

1.82

Violence and

harassment: risks,

prevention measures,

employees' rights and

obligations

0.11

1.82

Lifting platform and

equipment operator

1274



31.07

The organisation of

crane work



3.00

Tower crane operator



32.00

Mobile work platforms

work manager



16.00

Coordinator for

construction safety

and health at work



32.00

First aid training

143

0.11

2.70

OHS professionals

652

1072

72.44

76.57



2022

2023

2022

2023

2022

2023

Number of

specialists

Number of hours

Average hours of

training per

employee

Improving

occupational health

and safety



21.33

Persons authorised by

the employer*

170

34.00

Energy workers

(heating)

234

29.25

Training of certified

construction

professionals for the

certificate of

competence

8.00

16.00

Training for the

renewal of the

certificate of

competence for

certified construction

professionals

404

704

23.76

24.28

Training of certified

construction

professionals to

supplement the

certificate of

qualification for work in

the territory of a

cultural heritage

object, its protection

zone, a cultural

heritage site

160

259

16.00

19.92

Certification training for

responsible structural

welders

128

32.00

GRI 2-4 GRI 404-1

* Employer's authorised person – the head of the

structural unit to which the head of the company has

delegated the implementation of OHS prevention

measures (head of a department, office, bureau or

other units)

Note: The table for 2023 has been updated with data

for 2022, as the information disclosed in last year's

report was incomplete.

243

employees

and managers

trained

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Social Responsibility and Sustainability Report 2023

The Group consistently strives to foster an internal culture of sustainability. There

is a strong focus on encouraging employees, creating a supportive environment

for developing and implementing new ideas, and constant information sharing.

The Group aims to ensure that employees feel comfortable in their workplace, can

build their skills and knowledge, and are free to create and implement

sustainability-related ideas.

The Group's key principles for a sustainable culture:

Accountability (for impacts on society, economy, environment).

Transparency (decisions and activities affecting society and the environment).

Ethical (decent) conduct.

Respecting (listening and responding to) stakeholders' interests.

Respect for the rule of law.

Compliance with international standards of conduct.

Respect for human rights.

A well-established sustainability culture helps the Company manage its negative

environmental impacts, ensure a sustainable construction process and contribute

to a sustainable society.

To create and foster an internal culture of sustainability, the Group has developed

additional related documents to communicate the Group's position on various

sustainability issues to its employees. The following documents are available to all

employees:

Supplier code of conduct

Environmental policy

BUILDING AN INTERNAL

CULTURE OF SUSTAINABILITY

Practical first aid training for all employees from

Panevėžys and Vilnius who expressed their wish to

participate. During the training, they learned or refreshed

their knowledge on how to deal with life-threatening

situations so that they could help colleagues, relatives, or

other close people if needed.

Expanding the fleet and capacity of existing solar power

plants at Hustal UAB.

Hustal UAB colleagues have taken concrete action on the

environment by producing two Environmental Product

Declarations (EPD). In the main product declaration, one of

the key indicators—the product's Global Warming

Potential (GWP)—was reduced from 2.83 to 1.47

kgCO2/kg, while the box joist declaration achieved an

extremely low GWP of 0.877 kgCO2/kg. This means that

Hustal UAB products now have a lower carbon footprint

and are greener.

2023 achievements:

In May, employees repeatedly participated in the Steps

Challenge initiative, which saw more than 22 million

steps taken.

In 2023, the following initiatives have been implemented within the

Group to promote a culture of sustainability:

PST's subsidiary Skydmedis produces green energy and

fully supplies its needs. Neither electricity nor heating

fuel is bought from outside.

PST purchases and focuses only on green energy

purchases at the company level.

ncreasingly, the Company is using Ecocrete, a low-CO2

formula concrete with the same standard and early

strength characteristics as conventional concrete but a

significant reduction in CO2 emissions, in a wide range of

projects (especially wind farms). The company aims to

keep using more environmentally friendly concrete and

other technologies that help use resources more

efficiently and reduce environmental pollution.

The company gives a second thought and responsibly

gives sustainable gifts to its customers or partners on

special occasions. For example, on the occasion of the

completion of the Lazdynai swimming pool, an oak tree

with a commemorative plaque was planted on the site;

partners OP Bank were also presented with a tree near

their office on the anniversary of their establishment in

Lithuania.

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Social Responsibility and Sustainability Report 2023

Positive impact on communities is one of the Group's key focus areas. The Group

believes that corporate social responsibility - effective only when integrated into

daily work and managed like any other business activity - leads to a sustainable

and responsible economy.

The Group's constant and continuous improvement in business and project

management, quality, customer satisfaction, supply and subcontractors' chain

management, environmental protection and public relations is not only a matter of

being open to the surrounding community but also of acting ethically, honestly

and transparently towards the market, the environment, society and employees.

The Group's businesses are guided by the highest standards of business ethics

and social ethics. Social responsibility activities are based on the Group's values

and define the Group's approach to its activities, the incorporation of social,

environmental and transparency principles into the Company's and the Group's

internal processes, and its relations with its customers.

The construction sector has a significant environmental and ecological footprint. It

depletes natural resources, uses a wide range of machinery (trucks, tractors, etc.),

and pollutes building materials. Without managing the risks associated with such

activities, the impact on the environment and communities can be significant.

To successfully manage this topic, the Group is implementing local community

involvement, impact assessment and the following development programs:

A life cycle perspective is considered when determining the environmental

aspects of projects. The following key stages of the product/service life cycle

are assessed in the process: procurement of raw materials, design,

manufacture of construction products, transport, construction of the building,

use of the building, demolition at the end of the cycle and final disposal.

The Group monitors and measures environmental, social and governance

indicators such as waste, hazardous chemicals used, incidents of ground

contamination by petroleum products, stormwater pollution, internal

combustion engine emissions, particulate air pollution, noise, indoor dust,

street dirt/dust, electricity, water and fuel consumption, etc.

The Group and its companies report the results of the measurements to the

regulatory authorities.

POSITIVE IMPACT ON LOCAL

COMMUNITIES

GRI 413-1

SUPPORTING LOCAL COMMUNITIES

In 2023, the Group continued to pursue its goal of being a reliable and socially

responsible company by investing its financial and human resources in a wide

range of complementary activities and by supporting social, sporting, cultural and

health promotion projects. In 2023, the Group has supported over ten various

organisations. We aim to support the education community, engage with students

and strengthen their interest in the construction sector.

Work and Achievements in 2023

We have contributed to supporting and growing the Lithuanian

scientific community:

We have awarded a scholarship to the author of the

best scientific dissertation of 2022 in the framework

of the "Best Dissertation of 2022" election initiated by

the Lithuanian Society of Young Researchers (LJMS).

In cooperation with Kaunas University of Technology

(KTU) Panevezys Faculty of Technology and

Business, we have established a scholarship for the

best study and scientific achievements for the

student of the master's degree study program

"Integrated Design and Construction Management".

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Social Responsibility and Sustainability Report 2023

The Group aims to provide a working environment based on respect for

fundamental human rights and human values. The importance of ensuring human

rights is defined in PST Code of conduct for employees, suppliers and company

representatives. PST expects the employees, suppliers and representatives in all

branches of the Company to prohibit all forms of discrimination and harassment.

During 2023, the Group identified no human rights risks or violations.

The Company and the Group respect the principles of human rights protection, do

not tolerate any violation of human rights, advocate a fair and transparent

remuneration policy, comply with the laws on overtime and working time, respect

the right of workers to rest and do not tolerate any form of harassment and

violence.

The Company opposes discrimination and forced labour of any kind. Employees

have equal rights and opportunities regardless of gender, nationality, social or

marital status, social or political organisation membership, or personal

characteristics. In 2023, the Company and the Group did not record any cases of

human rights violations or related complaints.

HUMAN

RIGHTS

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GOVERNANCE

AREA

Business ethics is integral to PST and the Group's business activities. The Group

aims to create and foster an ethical business culture, prevent corruption and

bribery and compete fairly.

The PST Code of Conduct, accessible to all stakeholders, describes the Group's

position and broader approach to business ethics.

The Group has identified and is guided by the following principles:

BUSINESS

ETHICS

GRI 205-3

FIGHTING CORRUPTION AND BRIBERY

The Company and its subsidiaries do not tolerate corruption of any kind or its

manifestation. They are committed to open competition, ethical business

conditions and adequate transparency and openness in their operations. The

Group does not tolerate fraud, extortion, the creation of unofficial accounts, the

execution of unofficial and improperly documented transactions, the recording of

fictitious expenses, the use of false documents and other forms of corruption. The

anti-corruption provisions apply to all employees of the Group, members of the

management and supervisory bodies and third parties acting on behalf of the

Group.

Comprehensive internal control mechanisms to identify potential corruption risk

factors mitigate the risk. The Company and the Group's companies continuously

monitor and improve their business processes.

The Company and its subsidiaries refrain from any form of influence with

politicians and do not contribute to the election campaigns of political parties, their

representatives or candidates. The Group always cooperates with the authorities

and is ready to provide all the necessary information.

The Company and its subsidiaries shall ensure that all its procurement is carried

out in a manner that rationally uses resources based on the principles of equality,

non-discrimination, transparency, mutual recognition, proportionality,

confidentiality, and impartiality. Suppliers shall be selected based on the most

economically advantageous tender or the lowest price, based on equal and non-

discriminatory treatment between suppliers.

The group assesses subcontractor qualifications as part of the subcontractor

selection process. Subcontractors must ensure compliance with environmental

and occupational health and safety legislation and their integrity.

There were no significant cases of non-compliance during 2023. There were also

no fines for non-compliance with laws and regulations. The Group complies with

the law as defined by government regulations.

No cases of corruption were reported in 2023.

GRI 2-27

Accountability (for impacts on society, economy, and

environment)

Transparency (of decisions and activities that affect

society and the environment)

Ethical (decent) conduct

Respecting (listening and responding to) stakeholders'

interests

Respect for the rule of law

Compliance with international standards of conduct

Respect for human rights

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Social Responsibility and Sustainability Report 2023

GRI 205-2

COMMUNICATION AND TRAINING ON

ANTI-CORRUPTION POLICIES AND

PROCEDURES

The description of the procedure for reporting and handling irregularities has been

uploaded on the PST website and is available to all management bodies. It was

also emailed to the board members and the general director. All employees (100%)

are informed about the organisation's anti-corruption policies and procedures.

A description of the procedure for reporting and handling infringements is

available to business partners on the PST website. The awareness percentage is

not calculated.

In 2023, no anti-corruption training was provided for governing body members or

employees. The procedure is explicitly explained in the description mentioned

above. It is communicated to employees upon signed acknowledgement.

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Social Responsibility and Sustainability Report 2023

Location

Share of products and services purchased by country (%)

2022

2023

Lithuania

94.4

88.87

Poland

2.7

3.2

Latvia

1.5

7.64

Germany

1.3

0.28

Sustainability in the supply chain is managed by selecting suppliers based on their

practices and their impact on the environment, human rights and communities. By

contributing to sustainability initiatives in the supply chain, the Group can provide

an impetus for suppliers and building product manufacturers to join together and

make their operations more sustainable.

A sale/purchase procedure is foreseen to ensure a proper process for this topic. In

addition, the management of this topic is defined in the Quality and Environmental

policies.

Share of the procurement budget by location of operation

SUSTAINABILITY IN

THE SUPPLY CHAIN

GRI 204-1 GRI 308-1

Note: The Group's geographical definition of ‘local’ is Lithuania. Construction sites define the ‘significant

locations of operation’.

So far, new suppliers have not been evaluated on environmental and social

criteria. In the future, it is envisaged that suppliers will be evaluated based on

sustainability criteria and that suppliers that meet these criteria will be given

preference.

2023 achievements:

The procurement management system was

digitised in 2022, and procurement was

launched on the e-procurement platform

Viacorex. In 2023, 90% of purchases were

made through this system.

Purchase/sales contracts have been

transferred to the program Doclogix, which

allows a significant reduction in paper and ink

consumption. So, in 2023, paper annexes to

generic contracts were abandoned in favour

of e-orders. Up to 80% of purchases are made

this way.

GRI 414-1

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Social Responsibility and Sustainability Report 2023

The Company and its subsidiaries continuously focus on improving operational

management efficiency, improving the quality of construction works, and

introducing modern technologies. The Group seeks ways to improve efficiency,

innovative and resource-efficient process management, working conditions,

construction work and service quality. So, in 2023, the company started optimising

its core business – project management processes. The aim will be to purify and

digitise the processes.

The Company and its subsidiaries aim to reduce the energy used in their

operations by optimising production processes. The Group is investing in

technologies that produce and use green energy.

The Group adopts and uses advanced processes and technologies to maintain

excellence in the construction sector. In cooperation with its partners, the Group

seeks to expand the use of Building Information Modeling (BIM) principles in

project management activities.

The Group uses modern design software to prepare building projects. It also

actively monitors and continuously adds relevant applications to the software.

INNOVATION AND

OPERATIONAL EFFICIENCY

Plans for 2024

In 2024, the company will focus on digitising processes

(project management, HR management, data analysis).

It will also aim to acquire and install equipment and

machinery to increase productivity, improve accuracy

and reduce the environmental impact of the activities

and fuel consumption.

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Quality of services and buildings is one of the Group's key strategic topics. The

Company and its subsidiaries are committed to ensuring that the projects they

deliver are of high quality, meet the needs of their clients and comply with industry

standards.

To meet its customers' needs and expectations, the Group endeavours to

understand not only the customer's current needs but also its forecasted needs by

identifying the key characteristics of its products/services, assessing its position in

the marketplace, identifying market opportunities and weaknesses, and predicting

its future competitive advantage.

The Group is guided by a quality management system that has been developed,

documented, implemented and continuously monitored to ensure the smooth

implementation of this topic. The Group is committed to continuously improving

the performance of its quality management system to the requirements of LST EN

ISO 9001:2015. Specific processes have been identified, their sequence and

interactions defined, and criteria and methods identified for effective process

management.

The Company and its businesses have established quality objectives and

requirements for products or services in their product and service marketing

planning. The requirements are detailed in the Group's Quality Policy. Quality

objectives and requirements are reviewed yearly.

The management systems implemented in the Company and its subsidiaries are

certified by an independent surveillance audit carried out by auditors from the

certification firm Bureau Veritas. The management team analyses the results of

internal and external audits and makes decisions to improve the management

system.

QUALITY OF SERVICES

AND BUILDINGS

Work and Achievements in 2023

2023 Einpix was launched to streamline

communication and task sharing with collaborators,

suppliers, subcontractors, and customers to manage

warranty tasks. It has enabled simplified task and

defect management, efficient handling of urgent

problems, real-time supervision of staff tasks, and

monitoring of the client's reaction to the work

performed.

Plans for 2024

Integrate quality issues into the project management

IT system that is being implemented.

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Risk management is part of strategic management and is integral to the Group's

operations. The Group's primary objective in managing risks is to identify and

optimally manage the higher and more significant risks. The Group aims to

continuously assess its operational risks and implement measures to address and

mitigate them.

PST and the Group companies are exposed to a variety of risks in the course of

their business:

Legal regulation

High levels of competition

Shortage of qualified labour force

Economic cyclicality

Consistency of order intake

Volatile material prices on the global market

Rising material prices

Macroeconomic factors

Dumping

Only some of them may significantly impact the Group's and the Company's

performance. The main factors that create business risks for the Company and the

Group are competition in the construction market and changes in demand for

construction services.

Demand for construction services is also strongly influenced by the volume of

investment and the funding available from EU structural funds. Increases and

fluctuations in the prices of materials and services complicate the budgeting

process for ongoing projects and the ability to complete projects within planned

costs. This creates additional risks in fixed-price construction contracts and

reduces project profitability.

The Company's and the Group's operations are also affected by the economic

situation in Lithuania and the countries where the Group's companies operate

(economic cyclicality), geopolitical changes, Russia's military invasion of Ukraine,

and the remaining risks associated with COVID-19.

Uncertainties remain in global economic developments due to the anticipated

regional and global crisis.

RISK

MANAGEMENT

The section Governance Report of the Company’s and Consolidated Annual

Report provides more information on risks and their management.

Note 4 to the Separate Financial Statements and Note 4 to the Consolidated

Financial Statements provide information on the types of financial risks and risk

management. Legal uncertainties are disclosed in Note 28 to the Separate

Financial Statements and Note 27 to the Consolidated Financial Statements.

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INDEX

GRI INDEX

Statement of use

Panevezio statybos trestas

AB has reported in

accordance with the GRI

Standards for the period

from 1 January to 31

December 2023.

GRI 1 used

GRI 1: Foundation 2021

Applicable GRI Sector Standards

Not applicable

GRI 2: General Disclosures 2021

GRI Standard

Page

1. The organisation and its reporting practices

2-1

Organisational details

4, 5 p.

2-2

Entities included in the organisation's

sustainability reporting

4, 5 p.

2-3

Reporting period, frequency and contact

point

4 p.

2-4

Restatements of information

4, 31 p.

2-5

External assurance

4 p.

2. Activities and workers

2-6

Activities, value chain and otherbusiness

relationships

5 p.

2-7

Employees

24 p.

2-8

Workers who are not employees

24 p.

GRI Standard

Page

3. Governance

2-9

Governance structure and composition

8 p.

2-10

Nomination and selection of the highest

governance body

8 p.

2-11

Chair of the highest governance body

8 p.

2-12

Role of the highest governance body in

overseeing the management of impacts

8 p.

2-13

Delegation of responsibility for managing

impacts

8 p.

2-14

Role of the highest governance body in

sustainability reporting

4 p.

2-15

Conflicts of interest

8 p.

2-16

Communication of critical concerns

8 p.

2-17

Collective knowledge of the highest

governance body

8 p.

2-18

Evaluation of the performance of the

highest governance body

To date, there has been no

specific process for assessing

the board's performance in

terms of sustainability. Such a

process would be foreseen

should the need arise.

2-19

Remuneration policy

27 p.

2-20

Process to determine remuneration

27 p.

2-21

Annual total compensation ratio

27 p.

4. Strategy, policies and practices

2-22

Statement on sustainable development

strategy

3 p.

2-23

Policy commitments

7 p.

2-24

Embedding policy commitments

7 p.

2-25

Processes to remediate negative

impacts

8 p.

2-26

Mechanisms for seeking advice and

raising concerns

8 p.

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GRI Standard

Page

2-27

Compliance with laws and

regulations

36 p.

2-28

Membership associations

Panevezio statybos trestas AB is a

member of the Lithuanian

Construction Association,Association

of construction products testing

laboratories anda member of

Panevezys Chamber of Commerce,

Industry and Crafts.Metalo meistrai

UAB is a member of the Lithuanian

Welders Association,PST investicijos

UAB is a member of the Lithuanian

Real Estate Development Association.

5. Stakeholder engagement

2-29

Approach to stakeholder

engagement

9 p.

2-30

Collective bargaining agreements

The Company does not have a

collective agreement with its

employees.

GRI 3: Material topics 2021

3-1

Process to determine material

topics

9 p.

3-2

List of material topics

10 p.

3-3

Management of material topics

10 p.

Economic topics

GRI 204: Procurement practices 2016

204-1

Proportion of spending on local

suppliers

38 p.

GRI 205: Anti-corruption 2016

205-2

Communication and training on

anti-corruption policies and

procedures

37 p.

205-3

Confirmed incidents of corruption

and actions taken

36 p.

Environmental topics

GRI 302: Energy 2016

302-1

Energy consumption in the

organisation

19 p.

302-3

Energy intensity

19 p.

GRI Standard

Page

GRI 303: Water and Effluents 2018

303-5

Water consumption

21 p.

GRI 305: Emissions 2016

305-1

Direct (Scope 1) GHG emissions

19 p.

305-2

Energy indirect (Scope 2) GHG emissions

19 p.

305-3

Direct (Scope 1) GHG emissions

19 p.

305-4

GHG emissions intensity

19 p.

GRI 306: Waste 2020

306-3

Waste generated

20 p.

306-4

Waste diverted from disposal

20 p.

GRI 308: Supplier Environmental Assessment 2016

308-1

New suppliers that were screened using

environmental criteria

38 p.

Social topics

GRI 401: Employment 2016

401-1

New employee hires and employee

turnover

25 p.

401-3

Parental leave

25 p.

GRI 402: Labor/Management Relations 2016

402-1

Minimum notice periods regarding

operational changes

Matches the deadlines set out

in the Labour Code

GRI 403: Occupational health and safety 2018

403-1

Occupational health and safety

management system

28 p.

403-5

Occupational health and safety

management system

29 p.

403-9

Work-related injuries

29 p.

GRI 404: Training and Education 2016

404-1

Average hours of training per year per

employee

31 p.

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GRI Standard

Page

GRI 405: Diversity and Equal Opportunity 2016

405-1

Diversity of governance bodies

and employees

26 p.

GRI 406: Non-discrimination 2016

406-1

Incidents of discrimination and

corrective actions taken

26 p.

GRI 413: Local Communities 2016

413-1

Activities related to local

community participation, impact

assessment and development

programs

33 p.

GRI 414: Supplier Social Assessment 2016

414-1

New suppliers that were

screened using social criteria

38 p.

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Global Compact principle

Page

We support and respect the protection of internationally proclaimed human rights.

34 p.

We make sure that we are not complicit in human rights abuses.

34 p.

We uphold the freedom of association and the effective recognition of the right to collective bargaining.

34 p.

We do not use forced and compulsory labour and work to eliminate all forms of it.

34 p.

We do not exploit child labour and work to eliminate all forms of it.

34 p.

We do not discriminate and work to eliminate discrimination in respect of employment and occupation.

34 p.

We support a precautionary approach to environmental challenges.

7 p.

We undertake initiatives to promote greater environmental responsibility.

17 p.

We encourage the development and diffusion of environmentally friendly technologies.

17 p.

We do not tolerate corruption and work against corruption in all its forms, including extortion and bribery.

36 p.

UN GLOBAL COMPACT

PRINCIPLES

At the beginning of this century, the United Nations compiled and published the 10

universal principles Global Compact), Global Compact), inviting all organisations

seeking to operate responsibly and sustainably to adhere to voluntarily. We

support these principles in our work and promote their implementation in areas we

can impact. Below is a list of all the principles and the pages in this report that

describe our activities, ambitions and initiatives in relation to these principles.

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