CONFIRMATION OF THE COMPANY’S RESPONSIBLE PERSONS

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

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

Remuneration Report of AB Panevėžio Statybos Trestas for the year 2022 is presented in accordance with

the Law on Securities of the Republic of Lithuania and the Rules for Preparation and Presentation of

Periodic and Additional Information approved by Resolution of the Board of the Bank of Lithuania.

Hereby we confirm that, as to our knowledge, the presented separate 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 AB Panevėžio Statybos Trestas financial position, profit or loss and cash

flows, and that the Consolidated Annual Report, the Corporate Governance Report, the Consolidated Social

Responsibility Report, and the Remuneration Report fairly states the review of business development and

activities, the Company’s position and description of the main risks and uncertainties that are faced.

AB Panevėžio Statybos Trestas AB Panevėžio Statybos Trestas

Managing director Chief Financial Officer

Egidijus Urbonas Evaldas Pocevičius

4 April 2023 4 April 2023

AB Panevėžio Statybos Trestas

Separate Financial Statements for the year 2022

prepared in accordance with International Finan-

cial Reporting Standards as adopted in the Euro-

pean Union, presented together with Independ-

ent Auditor’s Report and Annual Report

AB „Panevėžio statybos trestas“

Separate Financial Statements

Content

Information about the Company 2

Independent auditor's report 3

Statement of comprehensive income 9

Statement of Financial Position 10

Statement of changes in equity 12

Statement of Cash Flows 13

Notes to the Financial Statements 14-50

Consolidated Annual Report 52

Corporate Governance Report 67

Consolidated Report of Social Responsibility 72

Consolidated Remuneration Report 88

Corporate Governance Report 91

AB „Panevėžio statybos trestas“

Separate Financial Statements

Information about the Company

AB Panevėžio Statybos Trestas

Company code: 147732969

Phone: +370 45 505 503

Fax: +370 45 505 520

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

Board

Justas Jasiūnas, Chairman

Gvidas Drobužas

Kristina Mačiulienė

Lina Simaškienė

Vaidas Grincevičius

Management

Egidijus Urbonas, Managing Director

Auditor

Grant Thornton Baltic UAB

Banks

Luminor bank AS

AB SEB bankas

AB Swedbank

AB Šiaulių bankas

OP Corporate Bank plc Lithuania

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Member of Grant Thornton International Ltd.

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of PANEVĖŽIO STATYBOS TRESTAS AB

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of AB PANEVĖŽIO STATYBOS TRESTAS (here-

inafter the ‘Company’), which comprise the statement of financial position as of 31 December 2022, the

statements of comprehensive income, cash flows and changes in equity for the year then ended, and notes

to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying Company’s financial statements present fairly, in all material respects, the

financial position of the Company as at 31 December 2022 and its financial performance and its cash flows

for the year then ended in accordance with International Financial Reporting Standards as adopted by the

European Union.

Basis for Opinion

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

under those standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Financial

Statements’ section of our report. We are independent of the Company in accordance with the International

Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code)

together with the requirements of the Law on Audit of the financial statements of the Republic of Lithuania

that are relevant to the audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities

in accordance with the Law on Audit of the financial statements of the Republic of Lithuania and the IESBA

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

for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

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

audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters. Below is the description of each key audit matter and our response to it.

1. Key audit matter – Revenue recognition for constructions contracts in progress

The Company‘s main revenue stream comes from large long-term construction contracts. As disclosed in

Notes 2, 3.14 and 19, the Company recognizes revenue from the customer specific construction contracts in

progress as of the year-end based on the estimated stage of completion of the projects, which is assessed

by reference to the proportion of total costs incurred through the reporting date compared to total costs of

the contract estimated by management.

This matter was significant to our audit because recognition of revenue for the reporting year is highly de-

pendent on the judgment exercised by the management in assessing the completeness and accuracy of

forecast costs to complete the construction contract and changes in these judgments and related estimates

throughout a contract life can result in material adjustments to revenue and margin recognised on contracts,

which can be either positive or negative.

How the Matter Was Addressed in the Audit

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

this matter.

Our audit procedures, among others, included the following:

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

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

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

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

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

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

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

paring the historical financial performance of selected contracts completed in 2022 with the total cost

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

ber 2021.

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

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

ments for the year ended 31 December 2022, considering both quantitative and qualitative criteria,

such as significant margin changes, loss-making contracts or projects which are unique in their na-

ture, for additional testing as outlined below.

For the sample of contracts selected, we have considered the adequacy of the management’s estimate on

the amount of revenue to be recognized in the financial statements by performing the following procedures,

among others:

- comparing the contracts signed with customers against the total contract value estimates included in

the management’s calculations;

- considering the management’s estimated costs required to complete the contracts by reference to

our understanding of the contract scope and the management’s contracts’ cost budgets and our

inquiries of contract managers;

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

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

tive of the actual progress of the work and are eligible items;

- considering the reasonableness of the margins recognised by the Company for the projects in pro-

gress taking into account our understanding of the contract scope and the historical performance of

the Company;

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

estimation of the management of the amounts of revenue to be recognized for the contracts in pro-

gress based on the assessment of their stage of completion.

Finally, we considered the adequacy of the disclosures about the matter in Notes 2 and 19 of the financial

statements.

2. Key audit matter – Impairment assessment of investments into subsidiaries and receivables

from subsidiaries

As disclosed in Notes 16, 17, 19 and 29 in the financial statements, the carrying value of the Company’s

investments into subsidiaries amounts to EUR 5.98 million and the total balance of receivables from these

subsidiaries, including loans granted and interest accrued, amounted to EUR 7.71 million as at 31 December

2022 (EUR 5.98 million and EUR 7.76 million, respectively, as at 31 December 2021). The management’s

assessment of the recoverable amount of investments into subsidiaries and impairment losses on receiva-

bles from them, including loans granted and accrued interest, requires estimation and judgement around the

assumptions used, including the recoverable value of real estate projects under development by subsidiaries

as disclosed in Notes 2 and 16. Changes to these assumptions could lead to material changes in the esti-

mated recoverable amount of investments and impairment losses on loans and receivables.

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

management estimation.

We, among other audit procedures, have obtained an understanding (including understanding of the as-

sumptions and methods), applied by the management in impairment test of investments in subsidiaries and

receivables from subsidiaries. We considered the completeness of the potential impairment indicators iden-

tified by the management by comparing the carrying value of the Company’s investments into each subsidiary

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Member of Grant Thornton International Ltd.

with the Company’s share in the net assets of the subsidiary at their book value and discussing with the

management their performance and their outlook.

We also considered the assumptions and methodologies used by the management to determine the recov-

erable amounts of the investments in subsidiaries and estimated credit losses (ECL) of accounts receivable

and loans granted.

We also considered the subsidiaries’ ability to repay the amounts due to the Company by examining their

liquidity position based on their financial statements as well as their future cash flow forecasts.

Finally, we considered the adequacy of the Company’s disclosures included in Notes 2, 16 and 17 about the

significant assumptions used in the estimation of recoverable values and the results of the impairment as-

sessment.

3. Key audit matter – Assessment of impairment of trade receivables and contract assets

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

assets balance amounting to EUR 0.11 million and EUR 18.45 million respectively, reported in the statement

of financial position as disclosed in Notes 4 and 19 of the financial statements.

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

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

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

factors related to the specific debtor or debtors’ group.

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

35.0% of the total assets of the Company in the statement of financial position as at 31 December 2022 and

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

How the Matter Was Addressed in the Audit

Our audit procedures, among others, included the following:

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

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

velop the estimate is appropriate and assessment whether the impairment accounting policy ap-

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

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

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

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

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

ysis of expected recoverability of these balances, and also considered independently the indica-

tions of potential understatement of ECL by assessing the ageing of the receivables and amounts

collected after the date of the statement of financial position.

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

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

historical default rate information and forward-looking information as of 31 December 2022. We

tested the correctness of aging of the receivables by agreeing the date to the invoices issued for

selected items and verified the arithmetical accuracy of the management’s calculation of impair-

ment.

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

(Notes 2, 4 and 19).

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Member of Grant Thornton International Ltd.

Other information

Other information consists of the information included in the Company’s and Consolidated Annual Report

(hereinafter the “Company”), including the Corporate Governance Report, the Remuneration Report and the

Corporate Social Responsibility Report, other than the financial statements and our auditor’s report thereon.

Management is responsible for the other information presentation.

Our opinion on the financial statements does not cover the other information and we do not express any form

of assurance conclusion thereon, except as indicated below.

In connection to our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work

we have performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

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

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

financial statements are prepared is consistent with the financial statements and whether the Company’s

Annual Report, including Corporate Governance Statement and Remuneration Report, has been prepared

in compliance with applicable legal requirements. Based on the work carried out in the course of audit of

financial statements, in our opinion, in all material respects:

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

Remuneration Report, for the financial year for which the financial statements are prepared is consistent

with the financial statements; and

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

has been prepared in accordance with the requirements of the Law of the Republic of Lithuania on

Reporting by Undertakings.

It is also our responsibility check whether the Corporate Social Responsibility Report has been provided. If

we identify that the Corporate Social Responsibility Report has not been provided, we are required to report

that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accord-

ance with International Financial Reporting Standards as adopted by the European Union, and for such in-

ternal control as management determines is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless management either intends to liquidate the Company or to cease oper-

ations, or has no realistic alternative but to do so.

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

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit con-

ducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

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Member of Grant Thornton International Ltd.

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that

is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material mis-

statement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effective-

ness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti-

mates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or condi-

tions that may cast significant doubt on the Company’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to

the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.

However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclo-

sures, and whether the financial statements represent the underlying transactions and events in a man-

ner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control

that we identify during our audit.

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

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

that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were

of most significance in the audit of the financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not

be communicated in our report because the adverse consequences of doing so would reasonably be ex-

pected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

been chosen to carry out the audit of the Company’s financial statements for the first time. Our appointment

to carry out the audit of the Company’s financial statements in accordance with the decision made by the

General Meeting of Shareholders is renewed every two years and the period of total uninterrupted engage-

ment is two years.

We confirm that our opinion in the section ‘Opinion’ is consistent with the additional Audit report which we

have submitted to the Company and its Audit Committee.

We confirm that to the best of our knowledge and belief, services provided to the Company are consistent

with the requirements of the law and regulations and do not comprise non-audit services referred to in Article

5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

In the course of audit, we have not provided any other services except for audit and translation of the Com-

pany’s financial statements.

Grant Thornton Baltic UAB

Member of Grant Thornton International Ltd.

Report on the Compliance of the Format of Financial Statements with the Requirements of the Euro-

pean Single Electronic Format

The single electronic reporting format of the Company’s financial statements has been applied by the Com-

pany to comply with the requirements of Article 3 of the Commission Delegated Regulation (EU) 2018/815

of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council

with regard to regulatory technical standards on the specification of a single electronic reporting format (here-

inafter the “ESEF Regulation”). Pursuant to these requirements, the Company’s financial statements must

be prepared in XHTML format. We confirm that the single electronic reporting format of the financial state-

ments for the year ended 31 December 2022 complies, in all material aspects, with the ESEF Regulation.

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

Arvydas Ziziliauskas

Lithuanian Certified Auditor

License No 000467

4 April 2023

Jonavos st. 60C, Kaunas

Grant Thornton Baltic UAB

Audit company’s licence No 001513

Signed with an electronic signature on 4 April 2023

Company code: 147732969

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

Statement of Comprehensive Income

For the year ended December 31

EUR thousand

Note

2022

2021

Revenue from contracts with customers

79,222

65,721

Cost of sales

(77,066)

(59,888)

Gross profit

2,156

5,833

Other revenue

1,432

985

Selling expenses

(337)

(355)

Administrative expenses, total:

(6,797)

(6,067)

Impairment loss (reversal) on trade debts, contract assets and

other receivables

100

235

Other administrative expenses

(6,897)

(6,302)

Other expenses

(620)

(512)

Operating profit (loss)

(4,166)

(116)

Finance income, total

2,188

957

Interest income

231

555

Reverse of interest charged by the Competition Council

1,133

Other finance income

824

402

Finance expense, total:

(126)

(339)

Interest expenses

(102)

(256)

Other finance expense

(24)

(83)

Profit (loss) before tax

(2,104)

502

Income tax expenses (benefit)

384

(198)

Net profit (loss)

(1,720)

304

Other comprehensive income

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

1,029

Non-current asset revaluation impact

1,211

Deferred income tax on revaluation of non-current assets

(182)

Items that will be transferred to profit (loss)

Other comprehensive income, total

1,029

Total comprehensive income (loss)

(691)

304

Basic earnings (loss) per share (EUR)

(0.11)

0.02

Notes disclosed in pages 16–55 are an integral part of these financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief accountant Danguolė Širvinskienė 04/04/2023

Company code: 147732969

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

Statement of Financial Position

As at 31 December

EUR thousand

Note

2022

2021

ASSETS

Non-current assets

Property, plant and equipment

4,051

3,438

Intangible Assets

164

184

Investment Property

3,741

3,396

Right of use assets

691

977

Investments in subsidiaries

5,977

Loans granted

5,954

5,799

Non-current trade receivables

4, 19

114

Other non-current financial assets

535

454

Deferred tax assets

451

249

Total non-current assets

21,678

2,0503

Current assets

Inventories

5,267

4,559

Trade receivables

4, 19

14,232

11,749

Contract assets

4, 19

4,104

3,082

Prepayments

706

1,220

Loans granted

1,358

1,395

Other current assets

404

1,75

Prepaid income tax

Cash and cash equivalents

5,013

5,795

Total current assets

31,084

27,975

TOTAL ASSETS

52,762

48,478

Notes disclosed in pages 16–55 are an integral part of these financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief Accountant Danguolė Širvinskienė 04/04/2023

Company code: 147732969

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

Statement of Financial Position (continued)

As at 31 December

EUR thousand

Note

2022

2021

EQUITY AND LIABILITIES

Equity

Issued capital

4,742

Reserves

2,509

1,612

Retained earnings

14,197

15,785

Total equity

21,448

22,139

Non-current liabilities

Warranty provisions

471

702

Deferred tax liability

Pension fund provision

Non-current lease liabilities

408

690

Total non-current liabilities

966

1,472

Current liabilities

Loans

Current lease liabilities

296

291

Trade payables

13,979

11,811

Contract liability

3,630

1,144

Provisions

19, 25, 27

208

148

Other liabilities

19, 27

12,235

11,473

Total current liabilities

30,348

24,867

Total liabilities

31,314

26,339

TOTAL EQUITY AND LIABILITIES

TOTAL

52,762

48,478

Notes disclosed in pages 16–55 are an integral part of these financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief accountant Danguolė Širvinskienė 04/04/2023

Company code: 147732969

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

Statement of Changes in Equity

EUR thousand

Note

Issued capital

Legal reserve

Revaluation

reserve

Retained earnings

Total equity

Balance as at 31/12/2021

4,742

475

1,137

15,785

22,139

Net profit (loss)

(1,720)

Revaluation reserve after taxes

1,029

Total comprehensive income for the year

1,029

(1,720)

(691)

Depreciation of revalued assets

(132)

132

Balance as at 31/12/2022

4,742

475

2,034

14,197

21,448

Balance as at 31/12/2020

4,742

475

1,270

15,349

21,836

Net profit (loss)

304

Total comprehensive income for the year

304

Depreciation of revalued assets

(133)

132

(1)

Balance as at 31/12/2021

4,742

475

1,137

15,785

22,139

Notes disclosed in pages 16–55 are an integral part of these financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief accountant Danguolė Širvinskienė 04/04/2023

AB „Panevėžio statybos trestas“

Separate Financial Statements

Statement of Cash Flows

For the year ended December 31

EUR thousand

Note

2022

2021

Cash flows from operating activities

Net profit (loss)

(1,720)

304

Adjustments to:

Depreciation and amortisation

13, 14

786

848

Result from disposal of property, plant and equipment

(26)

(84)

Income tax expenses (benefit)

(384)

198

Financing activities

(989)

(309)

Other non-cash items

(305)

Net cash flows from operating activities before changes in work-

ing capital

(2,638)

977

Changes in working capital:

Changes in non-current receivables

352

(2,080)

Changes in inventories

(784)

(1,776)

Changes in trade receivables and contract assets

(3,586)

(3,378)

Changes in prepayments

514

(985)

Changes in other assets

(228)

(162)

Changes in trade payables

2,167

3,624

Change in contract liabilities (prepayments received)

473

(614)

Changes in other liabilities

2,496

(1,670)

Income tax paid

Net cash flows from operating activities

(1,234)

(6,064)

Cash flows used in investing activities

Acquisition of intangible assets and property, plant and equipment

13, 14

(140)

(323)

Disposal of property, plant and equipment

292

Loans granted

(292)

(775)

Collection of loans granted

415

22,859

Dividends received

804

402

Interest received

321

Net cash flows used in investing activities

847

22,776

Cash flows from/used in financing activities

Dividends paid*

(1)

Loans received (overdraft)

4, 23

12,961

Loans repaid (overdraft)

4, 23

(12,961)

(15,000)**

Lease obligations

(306)

(3,09)

Interest paid

(88)

(256)

Net cash flows from/used in financing activities

(395)

(15,565)

Net increase/(decrease) in cash and cash equivalents

(782)

1,147

Effect of foreign exchange on cash

Cash and cash equivalents as at January 1

5,795

4,648

Cash and cash equivalents as at December 31

5,013

5,795

* There were no dividend payments in 2022 and 2021.

** Credit repayment to bank

Notes disclosed in pages 16–56 are an integral part of these financial statements.

Managing director Egidijus Urbonas 04/04/2023

Chief accountant Danguolė Širvinskienė 04/04/2023

AB „Panevėžio statybos trestas“

Separate Financial Statements

Notes to the Financial Statements

1. General information

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

established in 1957. The company code is 147732969, registered address is P. Puzino st. 1, LT-35173

Panevėžys, the Republic of Lithuania. As from 13 July 2006, the Company’s ordinary shares are listed on

the Official trading list of the Vilnius Stock Exchange (VSE). The main activities of the Company are

construction of buildings, structures, plant and communication facilities in Lithuania and abroad. As at 31

December 2022, the Company had 537 employees (31 December 2021: 560 employees).

The Company has the following branches in Lithuania: Genranga, Gerbusta, Pastatų Apdaila, Klaipstata,

and Konstrukcija. The Company also has permanent establishments in the Republic of Latvia and in the

Kingdom of Sweden.

As at 31 December 2022 and 2021, the principal shareholders of the Company were as follows:

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

controlling shareholder);

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

• The freely traded shares, owned by natural and legal persons (44.49 %). No one owns more than 5%.

These financial statements are the Company’s separate financial statements. The Company is also prepar-

ing the Company and its subsidiaries’ consolidated financial statements. Set of consolidated financial state-

ments is kept at the Company’s registered office at P. Puzino st. 1, LT-35173 Panevėžys, the Republic of

Lithuania, and published on website www.pst.lt. The information about the subsidiaries’ activities is pre-

sented in Note 16.

The shareholders of the Company have a statutory right to either approve these financial statements or not

approve them and require a new set of financial statements to be prepared. The Company’s management

authorised these financial statements on 4 April 2023.

2. Basis of Preparation

Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Stand-

ards as adopted by the European Union (hereinafter “IFRS”).

Basis of preparation of the financial statements

The 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.

Functional and presentation currency

The financial statements are presented in euro, the national currency of the Republic of Lithuania, which

is the Company’s functional currency.

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

immaterial in these financial statements.

Judgements and estimates

The preparation of the financial statements in conformity with IFRSs requires management to make judge-

ments 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 under-

lying 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 recognised in the financial statements and have a significant risk of caus-

ing material adjustments to the financial statements in the next financial year is included in the following

notes:

AB „Panevėžio statybos trestas“

Separate Financial Statements

2. Basis of preparation (continued)

• Note 12: 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 13: fair value of land and buildings which are measured using the revaluation model, useful lives

of property, plant and equipment and intangible assets. The Company assesses the useful lives of prop-

erty, 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 Company’s real estate appraisal was carried out when preparing

these financial statements,

• Note 16: measurement of recoverable amounts of investments in subsidiaries. A key factor in estimating

the recoverable amounts of the investment in subsidiaries is the recoverability of ongoing construction

projects and other assets of subsidiaries. Therefore, the Company engaged external appraisers to esti-

mate the fair values of these projects based on discounted cash flow or comparable price technique, the

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

date and related information.

• Notes 19 and 26: impairment of trade receivables and estimation of revenue from contracts with cus-

tomers and contract assets as well as contract liabilities based on the stage of completion of the con-

struction contracts. The accuracy of the recognition of revenue on contracts in progress is highly de-

pendent on the judgement exercised by management in assessing the completeness and accuracy of

planned costs (budget) as it is the key assumption in the assessment of revenue, contract assets and

contract liabilities based on the stage of completion of the contracts in progress. Estimating the recov-

erable amounts of receivables is a process, which requires significant management judgement and esti-

mates, particularly those that are related to expected credit losses assessment based on the analysis of

the historical credit losses, considerations of future factors and other subjective risk factors related to

the specific debtor or debtors’ group. Estimates were applied in assessing the amounts to be collected

and their timing.

• Note 17: loans granted are classified as long-term or short-term. Additionally, the impairment testing

requires the management to make an assessment of the significance of increase in credit risk since initial

recognition, which is performed by the management considering the liquidity situation of subsidiaries

taking into account their financial statements and cash flows forecasts.

• Note 25: the Company estimates warranty provision on a monthly basis having regard to monthly rev-

enue. Warranty provision is being estimated by taking into account revenue, actual warranty expenses

incurred in previous periods, its proportion against actual sales, statutory term of warranty and historical

information.

• Note 28: The management judgements are to predict the outcome of litigations. Provisions are not rec-

ognised in the financial statements as based on the management judgement it is more likely than not,

that the Company will win the legal disputes mentioned in the Note 28, or it is not possible to assess

reliably the possible outcome of the contingency at the moment.

3. Summary of Significant Accounting Policies

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

and their interpretations, which are relevant to the activities and effective for annual periods beginning on

or after 1 January 2022.

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

after 1 January 2022.

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

gent Liabilities and Contingent Assets as well as Annual Improvements 2018-2020 (Amendments)

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

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

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

work for Financial Reporting without changing the accounting requirements for business combinations.

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

of property, plant and equipment amounts received from selling items produced while the company is

preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related

cost in profit or loss of the statement of profit or loss and other comprehensive income.

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

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

company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a

contract is onerous.

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

tional Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustra-

tive Examples accompanying IFRS 16 Leases

These amendments are effective in European Union for annual reporting periods beginning on or after 1

January 2022. The management assessed that these amendments has no material impact on the financial

statements.

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

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

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

below:

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

ments) (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 Jan-

uary 2023, with earlier application permitted. The amendments aim at helping companies implement the

Standard. Overall, the amendments are designed to reduce costs by simplifying some requirements in the

standard; make it easier to explain financial performance; and ease transition by deferring the effective date

of the standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS

17 for the first time.

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

Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9

for annual periods beginning on or after January 1, 2023.

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

statements.

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

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

permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments have

also been applied. In its meeting in March 2020, IASB decided to defer the effective date of the standard

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

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

contracts held and investment contracts with discretionary participation features issued. The objective is to

ensure that entities provide relevant information in a way that faithfully represents those contracts. This

information gives a basis for users of financial statements to assess the effect that contracts within the scope

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

This Standard will not have any impact on the financial position or performance of the Company as insur-

ance 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 with earlier application permitted.

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

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

policies (Amendments) (issued on 12 February 2021 with effective date of 1 January 2023).

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

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

policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’

accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and illus-

trative examples are added in the Practice Statement to assist in the application of the materiality concept

when

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

making judgements about accounting policy disclosures. The management has not yet evaluated the impact

of the implementation of these amendments.

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

Estimates (Amendments) (issued on 12 February 2021 with effective date of 1 January 2023).

The amendments introduce a new definition of accounting estimates, defined as monetary amounts in fi-

nancial statements that are subject to measurement uncertainty. Also, the amendments clarify what changes

in accounting estimates are and how these differ from changes in accounting policies and corrections of

errors. The amendments become effective for annual reporting periods beginning on or after 1 January

2023 with earlier application permitted and apply to changes in accounting policies and changes in ac-

counting estimates that occur on or after the start of that period. The management has not yet evaluated the

impact of the implementation of these amendments.

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

2020 with effective date of 1 January 2024, but not before it is adopted by the EU).

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

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

should be classified as current or non-current. The amendments affect the presentation of liabilities in the

statement of financial position and do not change existing requirements around measurement or timing of

recognition of any asset, liability, income or expenses, nor the information that entities disclose about those

items Also, the amendments clarify the classification requirements for debt which may be settled by the

company issuing own equity instruments. The amendments have not yet been endorsed by the EU. The

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

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

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

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

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

Only covenants with which an entity is required to comply on or before the reporting date affect the clas-

sification of a liability as current or non-current. In addition, an entity has to disclose information in the

notes that enables users of financial statements to understand the risk that non-current liabilities with cov-

enants could become repayable within twelve months. The amendments are effective for reporting periods

beginning on or after 1 January 2024. The amendments are applied retrospectively in accordance with IAS

8 and earlier application is permitted. The amendments have not yet been endorsed by the EU. The man-

agement 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 require-

ments in IFRS 15 to be accounted for as a sale (issued on 22 September 2022 with effective date of 1

January 2024, but not before it is adopted by the EU).

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

measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain

or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from

recognising in profit or loss any gain or loss relating to the partial or full termination of a lease. The amend-

ments become effective for annual reporting periods beginning on or after 1 January 2024 with earlier

application permitted. A seller-lessee applies the amendments retrospectively in accordance with IAS 8

Accounting Policies, Changes in Accounting Estimates and Errors to sale and leaseback transactions en-

tered into after the date of initial application. The amendments have not yet been endorsed by the EU. The

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

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 re-

translated 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 trans-

lated 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.

3.2 Financial instruments

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

equity instrument of another entity.

Financial assets

Initial recognition and measurement

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

other comprehensive income or fair value through profit or loss.

The classification of the financial asset depends on the contractual cash flow characteristics of the asset

and the Company’s business model for managing the asset. These assets, except for trade receivables that

do not have a significant financing component, are initially measured by the Company at fair value plus,

in the case of a financial asset or financial liability 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 Company’s financial asset management model indicates how the Company manages its financial assets

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.

Ordinary purchases or sales of financial assets are recognised on the trade date, i.e. the date on which the

Company commits to purchase or sell the financial asset.

Subsequent measurement

After initial recognition, the Company measures financial assets:

(a) At amortised cost (debt instruments).

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

derecognition (debt instruments). As at 31 December 20221 and 2021, the Company did not have such

financial instruments.

upon derecognition (equity instruments). As at 31 December 20221 and 2021, the Company did not

have such financial instruments.

(d) At fair value through profit or loss. As at 31 December 2022 and 2021, the Company did not have such

financial instruments.

Financial asset at amortised cost (debt instruments)

The Company measures financial assets at amortised cost, if the two 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

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

(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 inter-

est 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 Company’s financial assets at amortised cost includes trade, other current and non-current receivables,

loans granted.

Impairment of financial assets

In general, IFRS 9 requires the Company to recognize expected credit losses (ECLs) for all debt instruments

that are not measured at fair value through profit or loss. ECLs are based on the difference between all

contractual cash flows and all the cash flows that the Company expects to receive, discounted at the ap-

proximate 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 recogni-

tion, 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 remain-

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

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs.

Therefore, the Company does not track changes in credit risk, but instead recognises an impairment loss

based on lifetime ECLs at each reporting date.

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

Based on the Company’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. To

assess all other receivables the Company uses the expected loss rate matrix which is based on historical

credit loss analysis and adjusted to reflect future factors specific to borrowers and the economic environ-

ment.

(b) Estimation of the impairment of loans granted

The Company grants loans to the Group companies with a fixed maturity as it is disclosed in Note 17. 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 Company reassesses 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 compared to the position prevailing at the time of the loan issue, the

Company accounts for all the ECLs over the remaining life of the loan. Loans subject to assessment of

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

The Company considers a financial asset in default when contractual payments are 90 days past due or

when indications exist that the debtors or a group of debtors are experiencing significant financial diffi-

culty, they breach the contract (such as a default or delinquency in interest or principal payments), there

exists a probability that they will enter bankruptcy or other financial reorganisation, and in cases where

observable data indicate that there is a measurable decrease in the estimated future cash flows, such as

changes in arrears or economic conditions that correlate with defaults.

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.

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Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

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 Company’s financial

liabilities include trade and other payables, loans received, including bank overdrafts.

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 liabil-

ities 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 finan-

cial 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 appropriate, a part of a financial asset or part of a group of similar financial

assets) is derecognised (i.e. it is removed from the statement of financial position of the Company) when:

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

(ii) the Company has transferred its contractual rights to receive cash flows from the financial asset;

or undertakes to remit, without material delay, any cash flows received to a third party under a

transfer agreement and (a) has transferred substantially all risks and rewards of the asset, or (b) has

neither transferred, nor retained substantially all the risks and rewards of the asset but has trans-

ferred control of the asset.

Once the Company transfers the contractual rights to receive the cash flows of the financial asset or enters

into a qualifying pass-through arrangement with a third party, the Company evaluates whether and to what

extent it retains the risks and rewards of ownership of the financial asset. When the Company neither trans-

fers nor retains substantially all the risks and rewards of the asset nor transfers control of the asset, the asset

is recognised to the extent of the Company’s continuing involvement in the asset. In this case, the Company

also recognizes the associated liability. The transferred asset and associated liability are measured based

on the rights and obligations retained by the Company.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the

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

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

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or ex-

pired. 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.

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

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 using a straight-line method

over the assessed useful life of an asset.

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 report-

ing date.

The fair value of land and buildings is established by certified independent real estate appraisers. The re-

valuation reserve of land and buildings is reduced by an amount equal to the difference between the depre-

ciation 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 prop-

erty, 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 self-con-

structed assets includes the cost of materials and direct labour, any other costs directly attributable to bring-

ing the asset to a working condition for its intended use, and the costs of dismantling and removing the

items and restoring the site on which they are located. Borrowing costs related to qualifying assets are

capitalised.

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

separate items of property, plant and equipment.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the part will flow to the

Company and its cost can be measured reliably. The residual value of the replaced part is derecognised.

The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as

incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of each part of an item of

property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their

useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease

term.

The estimated useful lives of the assets are the following:

• Buildings and structures 8–40 years

• Plant and equipment 5–10 years

• Vehicles 5–10 years

• Fixtures and fittings 3–6 years

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

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

value of property, plant and equipment and are recognised net within other income or expenses. When

revalued assets are sold or reclassified, the amounts included in the revaluation surplus reserve are trans-

ferred to retained earnings.

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Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.4 Intangible assets

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 Company does not have any intangible assets with infinite useful

life.

3.5 Investment Property

Investment property of the Company consist of buildings that are held to earn rentals or for capital appre-

ciation, 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 recog-

nition, investment property is measured 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 materials and direct labour, any other costs directly attribut-

able

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.

Investment property is derecognised when either they have been disposed of or when the investment prop-

erty is permanently withdrawn from use and no future economic benefit is expected from its disposal. The

difference between the net disposal proceeds and the carrying amount of the asset is recognised in the profit

or loss in the period of derecognition.

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

investment property to owner-occupied property, plant and equipment, the deemed cost for subsequent

accounting is the fair value at the date of change in use. If owner-occupied property, plant and equipment

is reclassified to investment property, the Company 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. Company as a lessee

At inception of a contract, the Company 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 Company (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 Company recognises lease liabilities to make lease

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

Right of use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the un-

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

ciation 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 incen-

tives 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

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Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.6 Leased Assets and Lease Liabilities (continued)

• Buildings and structures 5 years

If ownership of the leased asset transfers to the Company 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 Company recognises lease liabilities measured at the present

value of lease payments to be made over the lease term. The lease payments include fixed payments (in-

cluding 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

Company and payments of penalties for terminating the lease, if the lease term reflects the Company exer-

cising the option to terminate. Variable lease payments that do not depend on an index or a rate are recog-

nised 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 Company uses its incremental borrowing rate at the

lease commencement date because the interest rate implicit in the lease is not readily determinable. After

the commencement date, the amount of lease liabilities is increased to reflect the estimates of interest and

reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if

there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future

payments resulting from a change in an index or rate used to determine such lease payments) or a change

in the assessment of an option to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company 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 Company as a lessor:

The Company’s buildings that are leased under the operating lease agreements are accounted in the state-

ment of financial position as investment property. Lease income is recognised on a straight line basis over

the lease period.

3.7 Investments in Subsidiaries and Joint Arrangements

Investments in subsidiaries are accounted for at cost less impairment.

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 Company has a joint arrangement that is a joint operation (Note 16).

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

• its assets, including its share of any assets held jointly;

• its liabilities, including its share of any liabilities incurred jointly;

• its revenue from the sale of its share of the output arising from the joint operation;

• its share of the revenue from the sale of the output by the joint operation; and

• its expenses, including its share of any expenses incurred jointly.

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.8 Inventories

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, pro-

duction and other costs incurred in bringing them to their existing location and condition. Net realizable

value is the estimated selling price in the ordinary course of business, less the estimated costs of completion

and selling expenses.

Inventories related to ongoing construction projects are accounted for under inventories caption in the

statement of financial position until inventories are used in construction process and further are accounted

for as cost of sales. Project related inventories’ accounting policy is the same as stated above.

Unrealisable inventory is fully write-off.

3.9 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.

3.10 Impairment of Non-Financial Assets

The carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed

at each reporting date to determine whether there is any indication of impairment. If any such indication

exists, then the asset’s recoverable amount is estimated.

The recoverable amount is the greater of the asset’s value in use and its fair value less costs to sell. In

assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to

the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of

assets that generates cash flows from continuing use that are largely independent of the cash flows of other

assets or groups of assets.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its

estimated recoverable amount. An impairment loss on a non-revalued asset is recognised in profit or loss.

However, an impairment loss on a revalued asset is recognised in other comprehensive income to the extent

that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Such an

impairment loss on a revalued asset reduces the revaluation surplus for that asset.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that

the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the

estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that

the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of

depreciation or amortization, if no impairment loss had been recognised.

3.11 Dividends

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

3.12 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 out-

flow of economic benefits will be required to settle the obligation. Provisions are determined by discount-

ing the expected future cash flows to their present value at a pre-tax rate that reflects current market assess-

ments of the time value of money and the risks specific to the liability.

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.12 Provisions (continued)

A provision for warranties is recognised when the underlying construction services are sold, i.e. assurance

type warranties, as the Company does not grant additional warranties to the customers. The provision is

based on historical warranty costs data and probabilities.

3.13 Employee benefits

The Company 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.

In accordance with the requirements of the Labour Code of the Republic of Lithuania, each employee

leaving the Company at the age of retirement is entitled to a one-off payment amounting to two-month

salary. Previously incurred service costs are recognised as expenses 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.

3.14 Revenue

Revenue from contracts with customers

The Company’s primary business activity is the construction of buildings, structures, plant and equipment

and communication facilities. Revenue from contracts with customers is recognised at the amount to which

the entity expects to be entitled to in return for the sale of goods or services when a control of goods or

services is transferred to the customer. Generally, the Company does not have significant variable compo-

nents of remuneration in its contracts with customers.

The Company 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 the Company:

- 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 are fulfilled over time and

respectively revenue from the construction and installation services are recognised over time if any of the

following criteria are met: (a) the customer simultaneously receives and consumes the benefits provided

by the Company’s performance; (b) the Company’s performance creates or enhances an asset that the cus-

tomer controls as the asset is created or enhanced; or (c) the Company’s performance does not create an

asset with an alternative use and the Company has an enforceable right to payment for performance com-

pleted to date.

When the Company can reasonably measure its progress towards complete satisfaction of the performance

obligation, the Company recognises revenue and expenses in relation to each construction contract over

time, based on the progress of performance. The progress of performance is assessed based on the propor-

tion of the costs incurred in fulfilling the contract up to date over to the total estimated costs of the con-

struction 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

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.14 Revenue (continued)

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 Company'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 recognised when the Company 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. Where the contract costs are expected to exceed contract

revenue, the loss is recognised immediately in profit or loss. When performing the contracts the Company

may receive short-term prepayments from its customers. Applying the practical expedient, the Company is

not adjusting the price allocation by the financing component, if at the inception of the contract it is ex-

pected that the time period from the customer payment for goods/services until the delivery of these

goods/services will not exceed one year.

Balances under contract

Contract assets

Contract asset is the right of the Company to remuneration in exchange for the goods or services that have

been transferred to the customer. If the Company performs the contract by transferring goods or services to

a customer before the customer pays consideration or before the Company’s right to amount of consideration

is unconditional, the Company reports such a right to consideration as a contract asset, except for any

amounts reported as receivables.

Receivables

Receivable represents the Company’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 Company’s obligation to transfer goods or services to a customer for which the

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

liability is recognised as revenue when the Company performs under the contract.

Revenue from the sale of other services or goods is recognised when the services are rendered or control

of the inventory is transferred, but such transactions are relatively insignificant.

3.15 Finance Income and Expense

Financial income comprises interest income and dividend income. Interest income is recognised as it ac-

crues, using the effective interest method. Dividend income is recognised on the date that the Company’s

right to receive payment is established. Financial costs comprise interest expense and other financial ex-

penses. 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.

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

3.16 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.

Deferred taxes are calculated using the balance sheet liability method. Deferred tax is recognised, providing

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

poses 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. 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.

3.17 Earnings per Share

The Company presents basic and diluted earnings per share (EPS) data. Basic EPS is calculated by dividing

the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of

ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss

attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the

effects of all dilutive potential ordinary shares, such as convertible notes and share options granted to em-

ployees.

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

basic earnings per share.

3.18 Segment Reporting

An operating segment is a component of the Company that engages in business activities from which it

may earn revenues and incur expenses. An operating segment’s operating results are reviewed regularly by

management of the Company 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. For management purpose, the Company is considered as

a single construction activity business segment. Due to this no additional disclosures are presented in these

financial statements regarding segments on the Company level.

In 2022 and 2021, the Company also does not distinguish geographical segments, as the Company’s income

from foreign countries did not account for more than 10% of the total income and most of its non-current

assets are also located in Lithuania.

3.19 Determination of Fair Value

A number of the Company’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 meas-

urement date in the principal, or in its absence, the most advantageous market to which the Company has

AB „Panevėžio statybos trestas“

Separate Financial Statements

3. Summary of Significant Accounting Policies (continued)

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.

3.19 Determination of Fair Value (continued)

When measuring the fair value of an asset or a liability, the Company uses market observable data as far

as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs

used in the valuation techniques as follows:

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

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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

inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels

of the fair value hierarchy, the fair value measurement is categorised in its entirety in the same level of the

fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises 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 in Notes 13, 15, 16 and 29. Where applicable, further information about the assump-

tions made in determining fair values is disclosed in the notes specific to that asset or liability.

3.20 Offsetting

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 Company has exposure to the following financial risks: credit risk, liquidity risk and market risk. This

note presents information about the Company’s exposure to each of these risks, the Company’s objectives,

policies and processes for measuring and managing risk, and the Company’s management of capital. Fur-

ther quantitative disclosures are included throughout these financial statements.

The Board has overall responsibility for the establishment and oversight of the Company’s risk manage-

ment framework. The Company’s risk management policies are established to identify and analyse the risks

faced by the Company, 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 condi-

tions and the Company’s activities. The Company aims to develop a disciplined and constructive control

environment in which all employees understand their roles and liabilities.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contract

liabilities, and arises principally from the Company’s trade receivables and loans granted.

The Company controls credit risk by credit policies and procedures. The Company 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 Company 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.

AB „Panevėžio statybos trestas“

Separate Financial Statements

4. Financial Risk Management (continued)

The maximum exposure to credit risk is set out below:

(EUR thousand)

2022

2021

Trade Receivables and Contract Assets

18,450

14,860

Loans granted

7,312

7,194

Cash and cash equivalents

5,013

5,795

Total

30,775

27,849

Trade receivables and contract assets:

(EUR thousand)

2022

2021

Municipalities and state institutions

6,266

3,305

Legal persons

12,184

11,555

Total trade receivables and contract assets

18,450

14,860

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 19.

Breakdown of the largest credit risks related to trade receivables and contract assets by customers as at the

reporting date:

(EUR thousand)

2022

2021

Client 1

3,635

19.8

2,099

14.1

Customer No 2

2,028

11.0

1,692

11.4

Customer No 3

1,848

10.0

925

6.2

Customer No 4

1,685

9.1

826

5.6

Customer No 5

644

3.5

763

5.1

Customer No 6

620

3.4

468

3.1

Customer No 7

534

2.9

467

3.1

Other customers

7,582

41.0

7,750

52.3

Impairment

(126)

(0.7)

(130)

(0.9)

Total

18,450

100

14,860

100

Breakdown of trade receivables and contract assets by geographic regions:

(EUR thousand)

2022

2021

Local market (Lithuania)

18 267

14 375

Latvia

183

485

Total

18 450

14 860

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

(EUR thousand)

2022

Impairment

2021

Impairment

Not overdue

15,931

11,946

Overdue 0-30 days

1,142

1,857

Overdue 30-90 days

1,255

1,016

More than 90 days

248

126

171

130

Total

18,576

126

14,990

130

The Company establishes an allowance for impairment that represents its estimate of incurred losses in

respect of trade receivables.

AB „Panevėžio statybos trestas“

Separate Financial Statements

4. Financial Risk Management (continued)

The main components of this allowance are specific losses that relate to individually significant accounts

receivable and expected credit losses recognised using ECLs method (in line with IFRS 9). Methodology

used for establishing the allowance is reviewed regularly to reduce any differences between loss estimate

and actual loss experienced.

Maturity and ageing of loans granted is presented in Note 17.

Following removal of the subsidiary OOO Baltlitstroj from the register on 25 November 2022, the Com-

pany’s other current assets were written off, since were fully impaired as at 31 December 2021 (Note 20).

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

low.

Apart from the impairment already recognised as at 31 December 2022, the management considers that

there is no risk of material loss to the Company.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

The Company’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 Company’s reputation. Typically, the Company

ensures that it has sufficient cash on demand to meet expected operating expenses, including the servicing

of borrowings;

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

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

is approved by the court.

Payment terms of financial liabilities, including calculated interest, as to the agreements, as at 31 December

2022 are presented below:

(EUR thousand)

Carrying

amount

Contractual net cash

flows

Up to 6

months

More than 6

months

Liabilities

Trade payables

13,979

Lease liabilities

704

146

558

Liabilities related to the fine imposed by the Competi-

tion Council*

5,775

Total

20,458

2,0458

19,900

558

* 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 signed with the

Tax Authority. The Company currently pays the said fine in equal parts for a period of four years (with additional interest).

Payment terms of financial liabilities, including calculated interest, as to the agreements, as at 31 December

2021 are presented below:

(EUR thousand)

Carrying

amount

Contractual net cash

flows

Up to 6

months

More than 6

months

Liabilities

Trade payables

11,811

Lease liabilities

977

9,77

146

831

Liabilities related to the fine imposed by the Competi-

tion Council*

8,542

21,330

20,499

831

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

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

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

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

AB „Panevėžio statybos trestas“

Separate Financial Statements

4. Financial Risk Management (continued)

On 17 June 2021, an overdraft agreement was signed with bank with the limit of EUR 5 million. As at 31

December 2022 overdraft limit was not used (Note 23).

Change in Liabilities Arising from Financing Activities

(EUR thousand)

As at

31/12/2021

Accrued

Cash flow

in/out

Other

As at

31/12/2022

Loans received

Dividends payable

(1)

Lease liabilities

981

(277)

704

Total

1,010

(278)

732

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 Company. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters, while optimising the return. As at 31 Decem-

ber 2022 and 2021, the Company did not use any derivatives.

Currency risk. The Company is exposed to the significant risk of changes in foreign currency rates, since

sales and receivables, purchases, payables and borrowings are denominated in a currency other than the

functional currency are not material. The majority of monetary assets and liabilities as at 31 December

2022 and 2021 were denominated in EUR.

Interest rate risk. The Company’s issued and received loans and borrowings are subject to variable interest

rates linked to EURIBOR. No financial instruments are used to manage the risk. Taking into consideration

the current level of issued loans, the change of interest rate would not have a material effect as disclosed

below.

The Company’s financial assets and borrowings subject to variable interest rates outstanding as of 31 De-

cember 2022 were as follows:

Contract cur-

rency

2022

2021

Long-term loans granted

EUR thousand

5,954

5,799

Short-term loans granted

EUR thousand

1,358

1,395

Total

7,312

7,194

Loans received (overdraft)

EUR thousand

Total

With an increase in the interest rate by 0.5% as at 31 December 2022, the Company’s net profit would

increase by approximately EUR 28 thousand. With an increase in the interest rate by 0.5% as at 31 Decem-

ber 2021, the Company’s net profit would increase by approximately EUR 35 thousand.

Capital management

The policy of the Board 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 to ordinary shareholders based on the Company’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 Company adheres

to the requirement set in the Law on Companies of the Republic of Lithuania under which the equity of the

Company must not be less than ½ of the issued capital. As at 31 December 2022 and 2021, the Company

was in line with this regulation. The Company’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.

AB „Panevėžio statybos trestas“

Separate Financial Statements

5. Revenue from Contracts with Customers

Revenue is derived from construction-installation work (approx. 99% in 2022 and 97% in 2021).

(EUR thousand)

2022

2021

Lithuania

78,443

63,863

Latvia

779

1,858

Sales in total

79,222

65,721

Revenue from the largest external customer of the Company in 2022 amounted to approximately EUR

18,214 thousand (in 2021: EUR 8,406 thousand) of the Company’s total revenues.

In 2022, the Company recognised EUR 674 thousand of revenue from contracts with customers that were

included to the balance of contract liabilities at the beginning of the period (in 2021: EUR 1,731 thousand).

Information on contracts outstanding at the end of the financial year is disclosed in Note 19.

6. Cost of sales

(EUR thousand)

2022

2021

Construction sub-contractors

41,919

33,162

Raw materials and consumables

16,136

11,183

Payroll expenses (Note 9)

9,582

8,814

Depreciation charge

391

509

Amortisation charge

Machinery expenses

2,856

1,335

Rent expenses (short term lease)

1,550

1,304

Onerous contracts

515

Other expenses

4,113

3,568

Total cost of sales

77,066

59,888

7. Selling expenses

(EUR thousand)

2022

2021

Advertising and other expenses

Payroll expenses (Note 9)

306

299

Total selling expenses

337

355

8. Administrative expenses

(EUR thousand)

2022

2021

Payroll expenses (Note 9)

4,615

4,325

Purchased services for administrative use

1,425

1,015

Rent expenses

305

254

Depreciation charge

226

279

Operating taxes other than income tax

121

103

Sponsorship

Amortisation charge

Total expenses of impairment (reversal of impairment) of trade re-

ceivables, contract assets and other receivables:

(68)

(235)

Impairment (reversal of impairment) of trade receivables (Note 19)

(13)

(18)

9.9 Impairment of other receivables

(55)

(217)

Other expenses

142

305

Total administrative expenses

6,797

6,067

AB „Panevėžio statybos trestas“

Separate Financial Statements

9. Payroll expenses

(EUR thousand)

2022

2021

Wages and salaries

12,834

11,670

Social security contributions

244

224

Daily allowances and incapacity benefits

1,098

1,085

Change in accrued vacation reserve and bonuses

277

489

Change in pension provision (Notes 25 and 27)

(13)

Total salary related expenses

14,520

13,455

Recognised in:

Cost of sales

9,582

8,814

Administrative expenses

4,615

4,325

Selling expenses

306

299

Other operating expenses

Total salary related expenses

14,520

13,455

10. Other Income and Expenses

(EUR thousand)

2022

2021

Gain from sale of property, plant and equipment

163

Rental income (Note 15)

413

324

Gain on revaluation of assets

346

Other revenue

644

428

Total other income

1,432

985

Depreciation of rented premises

(132)

(30)

Other expenses

(488)

(482)

Total other expenses

(620)

(512)

Total other income and expenses, net

812

473

11. Finance Income and Expense

(EUR thousand)

2022

2021

Interest income

231

555

Interest expenses, related to penalty imposed by the Competition

Council (Note 28)

1,133

Other finance income

824

402

Total finance income

2,188

957

Loan interest expenses

(102)

(256)

Foreign currency exchange loss

(1)

Other expenses

(24)

(82)

Total finance expense

(126)

(339)

Total finance income and expense, net

2,062

618

12. Income tax

Income tax expenses (benefit):

(EUR thousand)

2022

2021

Current income tax expense

Change in deferred tax

(384)

198

Total income tax expense

(384)

198

AB „Panevėžio statybos trestas“

Separate Financial Statements

12. Income Tax (continued)

In 2022 and 2021, the Company applied a standard 15% rate in Lithuania, a 22% rate in the Kingdom of

Sweden and 0% rate in Latvia. Reconciliation of effective tax rate:

(EUR thousand)

2022

2021

Profit (loss) before tax

(2,104)

502

Income tax expense (benefit) applying the

Company’s tax rate in Lithuania

15.0%

(316)

15.0%

Non-deductible expenses

111

(69)

Non-taxable income

(419)

(6)

Change in deferred tax asset’s realisation al-

lowance

(240)

198

(18.3)%

(384)

39.44%

198

Deferred tax:

(EUR thousand)

2022

2021

Temporary

differences

Deferred tax

Temporary

differences

Deferred tax

Impairment of trade and other receivables

184

2,408

361

Accrued bonuses

222

390

Pension provision

296

228

Vacation reserve

Warranty provision

471

702

105

Inventory write-off to net realisable value

Tax loss carry forward (indefinite period)

5,225

785

2,638

396

Onerous contracts

515

Total deferred tax assets

1,053

967

Not recognised deferred tax assets (trade

receivable allowance)

(9)

(342)

Deferred tax asset recognised

1,044

625

Revaluation of land and buildings

(2,394)

(359)

(1 340)

(201)

Difference in investment property value

(1,557)

(234)

(1 167)

(175)

Deferred tax liability

(593)

(376)

Deferred tax, net

451

249

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

available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no

longer probable that the related tax benefit will be realised. Part of deferred tax has not been recognised

due to uncertainty of deferred tax realisation.

Change in deferred income tax:

(EUR thousand)

2022

2021

Net deferred tax as at 1 January

249

447

Amounts recognised in other comprehensive income

(182)

Recognised in profit or loss

348

(198)

Net deferred tax as at 31 December

451

249

The Company does not recognise deferred tax in respect of taxable temporary differences associated with

investments in subsidiaries as the Company controls timing of the reversal of the temporary differences

and it is probable that the temporary differences will not reverse in the foreseeable future.

AB „Panevėžio statybos trestas“

Separate Financial Statements

13. Property, Plant and Equipment

(EUR thousand)

Land and

buildings

Machinery

and equip-

ment

Vehicles

Fixtures and

fittings

Total

Cost (revalued carrying amount of land and buildings)

Balance as at 1 January 2022

2,598

2,614

1,740

603

7,555

Additions

108

245

Revaluation of assets

1,134

Reclassification

Asset written-off

(57)

(138)

(195)

Balance as at 31 December 2022

3,840

2,594

1,759

546

8,739

Balance as at 1 January 2021

2,684

2,756

1,875

740

8,055

Additions

109

243

Reclassification from investment property

Reclassification

(113)

Asset written-off

(160)

(224)

(246)

(630)

Balance as at 31 December 2021

2,598

2,614

1,740

603

7,555

Depreciation and impairment

Balance as at 1 January 2022

500

2,048

1,279

290

4,117

Depreciation for the year

150

296

188

129

763

Impairment (reversal of impairment)

Depreciation of asset written-off

(57)

(135)

(192)

Balance as at 31 December 2022

650

2,287

1,467

284

4,688

Balance as at 1 January 2021

432

1,791

1,119

380

3,722

Depreciation for the year

270

352

246

152

1,020

Impairment (reversal of impairment)

(202)

Depreciation of asset written-off

(95)

(86)

(242)

(423)

Balance as at 31 December 2021

500

2,048

1,279

290

4,117

Residual value

As at 1 January 2022

2,098

566

461

313

3,438

As at 31 December 2022

3,190

307

292

262

4,051

As at 1 January 2021

2,252

965

756

360

4,333

13. Property, Plant and Equipment (continued)

(EUR thousand)

2022

2021

Depreciation recognised in:

Cost of sales

391

509

Operating expenses

226

279

Other expenses

146

Total depreciation

763

818

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

as on 31 December 2022 based on the estimates on possible market prices of the Company’s land

and buildings provided by independent appraisers, having appropriate recognised 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 unob-

servable data was used in fair value measurement, i.e. price per square meter/are. The fair value

would increase with an increase in price per square meter/are and decrease with a decrease in

price per square meter/are.

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

would be equal to EUR 1,638 thousand (as at 31 December 2021: EUR 1,637 thousand).

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

to EUR 2,108 thousand, (as at 31 December 2021: EUR 1,376 thousand).

As at 31 December 2022, land and buildings with the carrying amount of EUR 3,272 thousand

were pledged to banks (as at 31 December 2021: EUR 2,483 thousand) (see Note 28).

14. Intangible assets

(EUR thousand)

Software

Other assets

Total

Cost

Balance as at 1 January 2022

221

Additions

Asset written-off

(22)

Balance as at 31 December 2022

202

Balance as at 1 January 2021

255

256

Additions

Asset written-off

(44)

(1)

(45)

Balance as at 31 December 2021

221

Amortisation and impairment

Balance as at 1 January 2022

(1)

Amortisation charge for the year

Amortisation of asset written-off

(22)

Balance as at 31 December 2022

Balance as at 1 January 2021

Amortisation charge for the year

Amortisation of asset written-off

(44)

(1)

(45)

Balance as at 31 December 2021

(1)

Residual value

As at 1 January 2022

183

184

As at 31 December 2022

164

As at 1 January 2021

203

204

AB „Panevėžio statybos trestas“

Separate Financial Statements

14. Intangible Assets (continued)

(EUR thousand)

2022

2021

Amortisation recognised in:

Cost of sales

Administrative expenses

Total amortisation

The Company did not have any intangible assets fully amortised but still in use neither as at 31

December 2022, nor as at 31 December 2021.

15. Investment Property

(EUR thousand)

2022

2021

Balance as at 1 January

3,396

3,213

Reclassification from (to) property, plant and equip-

ment

130

113

Change in fair value

215

Balance as at 31 December

3,741

3,396

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

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

detailed plans regarding the use of the remaining part of the building yet; however, the building

is not planned to be further used in the Company’s activities; therefore, the whole building is

classified as an investment property.

The fair value measurement has been determined by valuation of the building carried out by the

independent property appraisers UAB Ober-Haus, having appropriate professional qualification

and relevant valuation experience. The discounted cash flow method was used in the valuation

(discount rate – 9%, exit yield – 7%, occupation rate 80–90%; the same assumptions were used

in 2022 and 2021). If the discount rate would increase by 1% (remaining assumptions would not

be changed), then investment property fair value would decrease by approx. EUR 105 thousand,

and if exit yield would increase by 1% (remaining assumptions would not be changed), the fair

value of investment property would decrease by EUR 102 thousand.

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

EUR 1,420 thousand) was attributed to Level 3 in the fair value hierarchy.

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

ble lease agreements were the following: EUR 171 thousand in less than one year, EUR 112

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

one year, EUR 165 thousand between one and five years). Revenue from the hotel premises rent

in 2022 amounted to EUR 123 thousand (in 2021: EUR 102 thousand) and was accounted for

under other income (see Note 10).

In addition, the Company reclassified the operational buildings, storages and other premises,

leased to both subsidiaries and third parties, to investment property. Calculated fair value of these

buildings as at 31 December 2018 amounted to EUR 1,350 thousand, which was evaluated in

accordance with the reports of independent real estate appraisers and a percentage of leased

space. The assessment of assets was carried out by UAB corporation Matininkai. Assets were

evaluated using comparable and income methods, with regard to the larger value. An average

discount rate of 11.91% was applied to income method in accordance with weighted average cost

of capital. The latter investment property was attributed to Level 3 in fair value hierarchy. The

management assessed that the fair value of the investment property did not change significantly.

Expected rental receivables of this investment property under uncancellable contracts as at 31

December 2022 amounted to: EUR 355 thousand in less than one year, EUR 469 thousand be-

tween one and five years (as at 31 December 2021: EUR 281 thousand in less than one year,

EUR 490 thousand between one and five years). Revenue from lease in 2022 amounted to EUR

332 thousand (in 2021: EUR 324 thousand) and was accounted for under other income.

AB „Panevėžio statybos trestas“

Separate Financial Statements

16. Investments in subsidiaries and joint operations

(a) Subsidiaries

(EUR thousand)

2022

2021

Subsidiary

Ownership

interest

Cost

Owner-

ship in-

terest

Cost

UAB PST Investicijos, Verkių st. 25C, Vilnius

68.3 %

8,878

68.3 %

8,878

UAB Šeškinės Projektai, Verkių st. 25C, Vilnius

100 %

1,600

100 %

1,600

UAB Ateities Projektai, Verkių st. 25C, Vilnius

100 %

400

100 %

400

UAB Tauro Apartamentai, Verkių st. 25C-1, Vilnius

100 %

UAB Metalo Meistrai, Tinklų st. 7, Panevėžys (comb.)

100 %

UAB Hustal, Tinklų st. 7, Panevėžys

100 %

UAB Vekada, Marijonų st. 36, Panevėžys

95.6 %

225

95.6 %

225

UAB Skydmedis, Pramonės st. 5, Panevėžys

100 %

145

100 %

145

UAB Alinita, Tinklų st. 7, Panevėžys

100 %

SIA PS Trests, Skultes iela 28, Skulte, Marupes nov., Latvia

100 %

Kingsbud Sp.z.o.o, A. Patli st. 12, 16-400 Suwalki, Poland

100 %

OOO Teritorija, Lunačiarsko ave. 43/27, Cherepovec, Vologda,

Russian Federation – removed from the register

87.5 %

UAB Aliuminio Fasadai, Pramonės st. 5, Panevėžys

100 %*

250

100 %*

250

Impairment:

UAB PST Investicijos

(5,558)

UAB Alinita

(70)

PS Trests SIA

(4)

Total investments

5,977

Financial information on subsidiaries can be specified as follows:

Subsidiaries of AB Panevėžio Statybos Trestas:

(EUR thousand)

Type of activity

Equity

As at 31

December

2022

Net profit

(loss) for

2022

Equity

As at 31

December

2021

Net profit

(loss) for

2021

UAB PST Investicijos (consoli-

dated group, see below)

Real estate development

4,808

4,848

1,341

UAB Vekada

Construction: electrical installa-

tion

988

(63)

1,013

(286)

UAB Skydmedis

Construction: wooden houses

1,507

837

1,170

570

UAB Alinita

Construction: conditioning

equipment

(265)

(241)

(24)

163

UAB Hustal after business com-

bination

Trade, construction

2,095

690

UAB Metalo Meistrai

before business combination

Construction

1,485

455

1,030

2,72

UAB Hustal

before business combination

Trade

376

216

360

133

UAB Aliuminio Fasadai

Production of aluminium profile

systems

(191)

(120)

(71)

(173)

PS Trests SIA

Construction

(193)

(51)

(142)

UAB Šeškinės Projektai

Real estate development

7,615

1,337

6,242

2,084

Kingsbud Sp.z.o.o

Trade

441

183

456

125

OOO Teritorija (removed from

the register)

Real estate development

(1,059)

307

UAB Ateities Projektai

Real estate development

403

204

199

(95)

UAB Tauro Apartamentai

Real estate development

AB „Panevėžio statybos trestas“

Separate Financial Statements

16. Investments in subsidiaries and joint operations (continued)

Subsidiaries of UAB PST Investicijos:

(EUR thousand)

Ownership

interest

Equity

As at 31

December

2022

Net profit

(loss) for 2022

Equity

As at 31

December

2021

Net profit

(loss) for

2021

(9 264)

ZAO ISK Baltevromarket

100 %

5,629

5,301

3,924

As at 31 December 2022 and 2021, based on the management’s assessment, the investments in

UAB Alinita, PS Trests SIA and OOO Teritorija were fully impaired; therefore, 100% impair-

ment was recognised. The management determined the potential impairment indicators and as-

sessed recoverable amount for investment into UAB PST Investicijos as at 31 December 2022

and 2021 as described below. There were no impairment indications for other investments as at

31 December 2022 and 2021.

As at 31 December 2022, UAB PST Investicijos recoverable amount was estimated as follows:

Carrying value of UAB PST Investicijos as at 31 December 2022 (cost less

impairment recognised)

3,320

Other assets less liabilities at estimated fair value

1,566

Recoverable value of UAB PST Investicijos

4,886

Amount of shares controlled by AB Panevėžio Statybos Trestas

68.344%

UAB PST Investicijos recoverable value attributed to AB Panevėžio Statybos

Trestas

3,340

Estimated potential impairment as at 31 December 2022.

Estimated impairment until 31 December 2021

(5,558)

Additional impairment accounted for under financial expenses in 2021

Total impairment for as of 31 December 2022

(5,558)

Since liquidation proceedings of ZAO ISK Baltevromarket, the subsidiary of UAB PST Investi-

cijos, were initiated in Kaliningrad in September 2022, the increase in value was not recorded.

As at 31 December 2021, UAB PST Investicijos recoverable amount was estimated as follows:

Carrying value of UAB PST Investicijos as at 31 December 2021 (cost less

impairment recognised)

3,312

Other assets less liabilities at estimated fair value

1,545

Recoverable value of UAB PST Investicijos

4,857

Amount of shares controlled by AB Panevėžio Statybos Trestas

68.344%

UAB PST Investicijos recoverable value attributed to AB Panevėžio Statybos

Trestas

3,320

Estimated potential impairment as at 31 December 2021.

Estimated impairment until 31 December 2020

(5,566)

Additional impairment accounted for under financial expenses in 2021f2

Total impairment for as of 31 December 2021

(5,558)

Estimation of the recoverable amount of investment made by UAB PST Investicijos was mainly

based on the real estate project, which was developed by ZAO ISK Baltevromarket in Kalinin-

grad. In April 2021, ZAO ISK Baltevromarket in Kaliningrad sold remaining land plots for EUR

7,000, using the exchange rate between euro and rubble prevailing at the date of the transaction.

AB „Panevėžio statybos trestas“

Separate Financial Statements

16. Investments in subsidiaries and joint operations (continued)

(b) Joint operations

In 2016, the Company concluded the agreement with limited liability company SIA ARMS

GROUP, Gobu iela 1-129, Baloži, Kekavas novads, Latvia, regarding joint operations and sev-

eral liability for newly established general partnership enterprise PST Un Arms. General partner-

ship enterprise PST Un Arms is established for certain project developed in Latvia. The devel-

opment of the project was finalised in 2021.

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.

General information of PST Un Arms:

(EUR thousand)

2022

2021

Total assets

Total liabilities

Equity

Revenue

(33)

Net result

(5)

(24)

17. Long-term and short-term loans granted

(EUR thousand)

Interest rate

Maturity

2022

2021

OOO Baltlitstroj (loan)

Fixed at 9 %

31 December 2016

174

OOO Baltlitstroj loan impair-

ment

(174)

Kingsbud Sp.z.o.o

Fixed at 1.5 %

31 December 2023

UAB Šeškinės Projektai

3-month EURIBOR+0.98 %, as

from 05/11/2019 3-month

EURIBOR+3.0%

1 July 2026

5,954

5,728

OOO Teritorija

Fixed at 12%, as from 30 Novem-

ber 2017 – 6%

31 December 2021

865

OOO Teritorija loans impair-

ment

(865)

Employees

0 %

25 February 2023

Short-term loans

UAB Ateities Projektai

6-month EURIBOR+3.0 %

31 December 2023

372

UAB Ateities Projektai

6-month EURIBOR+3.0%

31 December 2023

1,286

948

Kingsbud Sp.z.o.o

Fixed at 1.5 %

31 December 2023

Employees

0 %

25 February 2023

Employees

1.50 %

25 August 2022

Total

7,312

7,194

As at 31 December 2022 and 2021, the recoverability of loans was assessed under the principles

disclosed in Note 3.2, and the principal assumptions that impact the assessment are the same as

disclosed in Note 16.

All Company’s long term loans granted as at 31 December 2022 and 2021 were not past due.

18. Inventories

(EUR thousand)

2022

2021

Raw materials and consumables

2,223

2,202

Projects under development

3,119

2,414

Write-down to net realisable value

(75)

(57)

Total inventories

5,267

4,559

In 2022 and 2021, the change in write-down of inventory to the net realizable value was ac-

counted for in administrative expenses.

AB „Panevėžio statybos trestas“

Separate Financial Statements

19. Trade Receivables and Contract Assets

(EUR thousand)

2022

2021

Trade receivables

14,075

11,341

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

4,104

3,082

Receivables from subsidiaries

397

567

Impairment at the beginning of the year

(130)

(157)

Write-off of doubtful trade receivables

(10)

Repayment of doubtful trade receivables

Additional impairment/(reversal) during the period

Impairment at the end of the year

(126)

(130)

Total trade receivables and contract assets, net

18,450

14,860

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

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

These amounts are related with non-current retentions as indicated below.

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

the total contract price which shall be paid by the customer when the construction is completed

and the bank guarantee in the amount of the retained payment is provided or warranty document

of the insurance Company is provided to the customer) of EUR 3,555 thousand (as at 31 Decem-

ber 2021: EUR 3,775 thousand) relating to construction contracts in progress. For impairment of

trade receivables refer to Note 4.

Information about customers’ specific projects in progress as at 31 December 2022 and 2021:

(EUR thousand)

2022

2021

Sales by specific customers’ projects in progress, recognised in the statement of

comprehensive income during the year

65,689

39,030

Sales by specific customers’ projects in progress, recognised over the contract

period

101,987

49,685

Expenses incurred for completing specific customers’ projects in progress, rec-

ognised in the statement comprehensive income during the year

62,233

36,167

Expenses incurred for completing specific customers’ projects in progress, rec-

ognised in the statement comprehensive income over the contract period

98,550

46,471

Contract assets (Note 19)

4,104

3,082

Contract liability (deferred income) under outstanding contracts at the year-end

(Note 27)

3,210

674

Contract liability (payments from customers for purchase of inventories and etc.)

785

470

Provisions for onerous contracts (Note 27)

515

Trade receivables (under the caption of trade receivables and receivables from

related parties)

12,347

6,981

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

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

to EUR 79,160 thousand (as at 31 December 2021: EUR 78,005 thousand). Most of these con-

struction projects are expected to be completed and revenue recognised within one year.

20. Other current assets

(EUR thousand)

2022

2021

Financial assets

Receivables from the former subsidiary OOO Baltlitstroj related to pre-

payment paid to the supplier on behalf of this subsidiary

1,240

Impairment of receivables from OOO Baltlitstroj

(1,240)

Loan granted to OOO Baltlitstroj

174

Impairment of loans granted to OOO Baltlitstroj

(174)

Financial assets, total

AB „Panevėžio statybos trestas“

Separate Financial Statements

Non-financial assets

Excess VAT

135

171

Accrued revenue from contracts

269

Other current assets

Non-financial assets, total

404

175

Other current assets, total

404

175

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

As at 31 December 2022 and 2021, the Company did not have any term deposits.

21. Cash and cash equivalents

(EUR thousand)

2022

2021

Cash at bank

5,013

5,793

Cash on hand

Cash and cash equivalents, total

5,013

5,795

As from 21 June 2022, the Company does not have any cash on hand.

22. Capital and reserves

The Company’s issued capital consists of 16,350,000 ordinary shares with a nominal value of 29

euro cents each. The Company’s issued capital is fully paid. The holders of the ordinary shares

are entitled to one vote per share in the shareholders’ meeting 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 2022 and 2021. The Company did not hold its own shares

as at 31 December 2022 and 2021. As at 31 December 2022 and 2021, the subsidiaries had not

acquired any shares of the Company.

The reserves were as follows:

(EUR thousand)

2022

2021

Revaluation reserve

2,034

1,139

Legal reserve

475

Total reserves

2,509

1,614

The revaluation reserve relates to the revaluation of land and buildings and is equal to the residual

value of revaluation less the related deferred tax liability.

Dynamics in revaluation reserve:

2022

2021

Revaluation reserve as at 1 January

1,137

1,270

Revaluation

1,030

Depreciation of revaluation reserve

(132)

(133)

Revaluation reserve as at 31 December

2,035

1,137

Legal reserve is a compulsory reserve allocated in accordance with the legislation. An annual

allocation of at least 5% of the net profit is required until the reserve is not less than 10% of the

issued capital. The reserve cannot be paid out in dividends. Legal reserve at 31 December 2022

and 2021 amounted to 10% of the issued capital.

AB „Panevėžio statybos trestas“

Separate Financial Statements

23. Loans

(EUR thousand)

Interest rate

Maturity

2022

2021

OP Corporate Bank plc. Lithuania

(overdraft)

3-month

EURIBOR+1.95

As at 30 June

2023

Total

In June 2021, the Company concluded the overdraft agreement with OP Corporate Bank plc.,

Lithuania branch, for EUR 5,000 thousand. As at 31 December 2022, the overdraft was not used.

24. Trade payables

Payables to suppliers by geographic region:

(EUR thousand)

2022

2021

Local market (Lithuania)

13,509

11,154

Latvia

264

591

Netherlands

145

Ukraine

Poland

Germany

Total

13,979

11,811

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

25. Provisions

Warranty provisions are related to constructions built in 2018–2022. Based on the legislation of

the Republic of Lithuania, the Company has a warranty liability for construction works. The term

of liability varies from 5 to 10 years after delivery of construction works, i.e. an assurance type

warranty and it is not provided as the Company’s separate service. Provision for warranties is

based on estimates made from historical data of actually incurred costs of warranty repairs.

Warranty

Pension*

Warranty

Pension

Change in provisions:

2022

2021

Provisions at the beginning of the

year

702

228

744

241

Used and recognised in the cost of

sales and operating costs

(430)

(33)

(191)

(21)

Accrued during the year

199

100

149

Provisions at the end of the year

471

295

702

228

* Represents current and non-current part of provision.

AB „Panevėžio statybos trestas“

Separate Financial Statements

26. Right-of-Use Assets and Lease Liabilities

Dynamics of the Company’s right-of-use assets during the reporting period:

(EUR thousand)

Buildings

Cars

Total

Balance as at 1 January 2022

779

198

977

Additions

Asset written-off

Depreciation charge

(211)

(89)

(300)

Balance as at 31 December 2022

568

123

691

As at 31 January 2021

990

140

1 129

Additions

Asset written-off

(131)

Depreciation charge

(80)

(3)

(83)

Residual value as at 31 December 2021

779

198

977

The Company has long-term contracts with two lessors for lease of premises and cars.

Lease liabilities and their dynamics:

(EUR thousand)

2022

2021

Residual value at the beginning of the period

981

1 129

Contracts signed under IFRS 16

135

Contracts terminated (write-off of liability and accrued interest)

Accrued interest

Lease payments (principal portion and interest)

(307)

(309)

Residual value as at 31 December

704

981

Non-current lease liabilities

408

689

Current lease liabilities

296

292

The Company’s payments under leases were as follows:

(EUR thousand)

2022

2021

Minimum payments

Within first year

308

287

From two to five years

420

726

More than five years

Total

728

1 013

Future finance costs

Within first year

(16)

From two to five years

(8)

(16)

More than five years

Total

(24)

(32)

Residual value

704

981

AB „Panevėžio statybos trestas“

Separate Financial Statements

27. Contract and Other Liabilities

(EUR thousand)

2022

2021

Non-financial liabilities

Contract liability (deferred income) under contracts in progress (Note

19)

2,687

674

Contract liability (payments from customers for purchase of invento-

ries and etc.) (Note 19)

943

470

Liabilities related to the fine imposed by the Competition Council

(Note 28)

5,775

8,542

Payable VAT

Accrued vacation reserve

1,635

1,339

Salaries and related taxes payable

1,191

1,096

Bonus accrual for employees

222

390

Provisions for onerous contracts

515

Liabilities to subsidiary

2,734

Other liabilities

163

106

Other liabilities, total

15,865

12,617

28. Contingent Liabilities

Guarantees

As at 31 December 2022, the bank guarantees of EUR 10,456 thousand issued to third parties on

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

by the Group (in 2021: EUR 8,013 thousand). The guarantees expire in the period from 16 Jan-

uary 2023 to 2 March 2025. In addition, the Group has guarantees of EUR 15,503 thousand issued

by insurance companies, which are also related to liabilities in the construction contracts (in

2021: EUR 13,392). The guarantees expire in the period from 1 January 2023 to 16 December

2025. No additional liabilities are recorded in respect of these guarantees in the financial state-

ments other than estimated warranty reserve (Note 25).

Property with a carrying amount of EUR 3,272 thousand as at 31 December 2022 (EUR 2,475

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

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

15,000 thousand, the used amount was EUR 10,456 thousand. The guarantee limit agreement is

effective until 30 June 2023 with the possibility to issue guarantees until 30 June 2023 that would

be valid for 3 years following their date of issue. Guarantees are valid for 5 years following their

date of issue if the amount does not exceed EUR 1,500 thousand. As at 31 December 2021, the

guarantee limit amounted to EUR 15,000 thousand, the used amount was EUR 8,013 thousand.

Legal contingencies

The Group is involved in below described material legal cases:

(1) The Competition Council has made a decision as of 20 December 2017 „UAB Regarding

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

modernization works meeting the requirements of 5th article of the Competition law of the Re-

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

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

UAB Vilniaus Vystymo Kompanija intended to limit competition and violated the requirements

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

total amount of EUR 8,514 thousand. On 3 June 2020, the Supreme Administrative Court of

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

the Competition Council. As a consequence, the Group recognised in the financial statements for

the year ended 31 December 2020 the fine amounting to EUR 8,514 thousand and related interest

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

396 thousand.

AB „Panevėžio statybos trestas“

Separate Financial Statements

28. Contingent Liabilities (continued)

The Group recognised the full amounts of fine, interest and enforcement fees in its financial

statements for the year ended 31 December 2020, however the management took additional legal

actions to reduce the interest and the enforcement fee amounts, as further described below.

The Tax Authority informed the participants involved in the enforcement process by the letter

No 21915 (individual administrative act) of 12 August 2020 on the decision to set the payment

of fine and interest imposed on the Group in equal parts for a period of eight years. The Tax

Authority also stated that the bailiff's enforcement fees should not be included in the payment

schedule. On 20 February 2023, the Settlement Agreement was signed with the Tax Authority,

with the fine payable in equal instalments over four years period.

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

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

tions.

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

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

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

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

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

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

decreased from EUR 396 thousand to EUR 45 thousand.

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

PANEVĖŽIO STATYBOS TRESTAS in a civil case No 2YT-8648-452/2020 [2YT-230-

452/2021] regarding the bailiff’s orders by which the interest payable and the enforcement fees

were calculated under the Decision No 2S-11(2017) of 20 December 2017 of the Competition

Council of the Republic of Lithuania. The Chamber of Panevėžys of the Panevėžys District Court

dismissed the appeal by an order of 13 January 2021. This order was appealed by bringing a

separate appeal on 20 January 2021. By order of 20 April 2021, the Panevėžys Regional Court

upheld the decision of the Chamber of Panevėžys of the Panevėžys District Court unchanged.

This decision was appealed in cassation. On 14 April 2022, the Supreme Court of Lithuania

overturned the ruling of the Panevėžys Regional Court dated 20 April 2021 and remitted the case

to the appeal court for reconsideration. On 14 June 2022, the Panevėžys Regional Court over-

turned 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 or-

der 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 de-

creased from EUR 1,385 thousand to EUR 252 thousand.

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

stayed by the bailiff's order of 14 July 2022.

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

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

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

ary 2023. The letter contains requests to submit the Settlement Agreement to the court for ap-

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

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

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

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

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

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

the Chamber of Panevėžys of the Panevėžys District Court dated 13 March 2023 in the proceed-

ings No 2VP-2582-837/2023, and to pass new ruling to satisfy the statement submitted by the

bailiff Saulius Ramanauskas and to approve the Settlement Agreement.

AB „Panevėžio statybos trestas“

Separate Financial Statements

28. Contingent Liabilities (continued)

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

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

dated 13 January 2023, by which it is requested to set aside the order of the Chamber of

Panevėžys of the Panevėžys District Court dated 13 March 2023 in the proceedings No 2VP-

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

Ramanauskas and to approve the Settlement Agreement.

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

fine imposed in equal instalments over period of four years. The liabilities are classified as cur-

rent until the agreement is approved by the court.

29. 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 Company, 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 Company had sales and purchase transactions during 2021–2022 with subsidiaries, the con-

trolling company AB Panevėžio Keliai and with its subsidiaries (reported under other caption

“Other related companies” below). Transactions with related parties during 2021 and 2022 were

as follows:

(EUR thousand)

Type of transaction

2022

2021

Sales:

Companies under control

UAB Šeškinės Projektai

Interest and services

332

988

UAB Vekada

Goods and services

UAB Alinita

Goods and services

126

UAB Metalo Meistrai

Goods and services

181

336

UAB PST Investicijos

Services

135

UAB Skydmedis

Goods and services

UAB Ateities Projektai

Services

167

UAB Aliuminio Fasadai

Services

697

783

UAB Hustal

Services

PS Trests SIA

Services

Kingsbud Sp.z.o.o

Interest

Controlling company

AB Panevėžio Keliai

Goods and services

185

Other related companies

Goods and services

(EUR thousand)

Type of transaction

2022

2021

Purchases:

Companies under control

UAB Alinita

Goods and services

1,620

2,000

Kingsbud Sp.z.o.o

Goods and services

777

277

UAB Vekada

Goods and services

1,600

134

UAB Metalo Meistrai

Goods and services

PS Trests SIA

Services

865

445

UAB Aliuminio Fasadai

Goods and services

966

906

UAB Šeškinės Projektai

Goods and services

308

288

UAB PST Investicijos

Services

357

Other

Services

Controlling company

AB Panevėžio Keliai

Goods and services

593

884

Other related companies

UAB Scard

Goods and services

120

UAB Betono Apsaugos Sistemos

Goods and services

Other

Goods and services

AB „Panevėžio statybos trestas“

Separate Financial Statements

29. Related Party Transactions (continued)

(EUR thousand)

2022

2021

Receivables

Companies under control

UAB Šeškinės Projektai

458

515

UAB Metalo Meistrai

UAB Aliuminio Fasadai

376

390

Other

Payables:

Companies under control

UAB Vekada

435

105

Kingsbud Sp.z.o.o

176

PS Trests SIA

222

UAB Šeškinės Projektai

166

Other

Controlling company

AB Panevėžio Keliai

269

210

Other related companies

Other

Loans receivable incl. accrued interests from companies under control:

OOO Teritorija (gross value)

865

Kingsbud Sp.z.o.o

140

UAB Šeškinės Projektai

5,954

5,728

UAB Ateities Projektai

1,286

1,320

Payment terms for receivables and payables with the related parties are up to 30–90 days, except

for the loans granted, which are disclosed in Note 17.

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 re-

ceivable or payable and no allowances have been made for the doubtful receivables from related

parties by the Company. The balances outstanding with related parties of the Company were not

overdue as at 31 December 2022 and 2021.

Management remuneration

Wages, salaries and social insurance contributions, calculated to the Company’s directors and

the Board members for the year 2022, amounted to EUR 995 thousand (in 2021: EUR 1,327

thousand). For Company’s directors and the Board members there were no guarantees issued,

any other paid or accrued amounts or assets transferred, except board remuneration paid in 2021.

30. 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 principal (or the most advantageous)

market independent irrespective of whether this price is directly observable or established using

valuation techniques.

AB „Panevėžio statybos trestas“

Separate Financial Statements

30. Fair value of financial instruments (continued)

As at 31 December 2022

(EUR thousand)

Carrying

amount

Fair value

Total

Level 1

Level 2

Level 3

Financial assets

Trade receivables

18,450

Loans granted

7,312

Cash and cash equivalents

5,013

Financial assets, total

30,775

5,013

25,762

Financial liabilities

Loans (overdraft)

Trade payables

(13,979),

(13,979)

Lease liabilities

(704)

Liabilities related to the fine imposed by

the Competition Council

(5,775)

Total financial liabilities

(20,458)

As at 31 December 2021

(EUR thousand)

Carrying

amount

Fair value

Total

Level 1

Level 2

Level 3

Financial assets

Trade receivables

14,860

Loans granted

7,194

Cash and cash equivalents

5,795

Financial assets, total

27,849

5,795

22,054

Financial liabilities

Loans (overdraft)

Trade payables

(11,811)

Lease liabilities

(981)

Liabilities related to the fine imposed by

the Competition Council

(8,542)

Total financial liabilities

(21,334)

There were no transfers between levels of the fair value hierarchy in 2022 and 2021 at the Com-

pany.

The following methods and assumptions are used by the Company to estimate the fair value of

the financial instruments not carried at fair value:

Cash

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

Receivables

The fair value of trade and other receivables and loans granted is estimated at the present value

of future cash flows, discounted at the market rate of interest at the reporting date. Fair value of

short-term trade and other receivables with no stated interest rate is deemed to approximate their

face value on initial recognition and carrying value on any subsequent date as the effect of dis-

counting 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.

AB „Panevėžio statybos trestas“

Separate Financial Statements

30. Fair value of financial instruments (continued)

Financial 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 borrowings (overdraft) was estimated to approximate

carrying value as it is subject to variable interest. The carrying value of lease liabilities approxi-

mates the fair value as it is a subject to interest. The fair value of fine under the decision of the

Competition Council is considered its carrying value, since it is not subject to interest.

31. Earnings and dividends per share

(EUR)

2022

2021

Net result for the year

(1 720 126)

303,350

Dividends declared

Average number of shares

16,350,000

Basic and diluted earnings/(loss) per share

(0.11)

0.02

Dividends declared per share

32. Events after the End of the Reporting Period

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

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

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

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

als substantially increased the cost of sales. The increased costs were partially offset by indexa-

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

tractors. Geopolitical events in 2022 also affected supply chains, resulting in delays in some ma-

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

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

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

Group takes a proactive approach in cost management, in particular, in reducing of costs, pur-

chasing of materials, etc.

Managing director Egidijus Urbonas 04/04/2023

Chief accountant Danguolė Širvinskienė 04/04/2023

Company’s and Consolidated Annual Report,

Governance Report,

Consolidated Report of Social Responsibility,

and Remuneration Report

of Panevezio statybos trestas AB

for 2022

I. Consolidated Annual Report

1. Accounting period covered by the Annual Report

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

2022 until 31 December 2022.

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

The auditor of the company is Grant Thornton Baltic UAB.

In this report, Panevezio statybos trestas AB can also be referred to as ‘the Company’, and the

Company together with its subsidiary companies can be referred to as ‘the Group’.

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

Name of issuer

Public limited liability company

Panevezio statybos trestas

Authorised capital

4,741,500 Euros

Address of registered office

P. Puzino Str. 1, LT-35173 Panevezio, Lithuania

Telephone

(+370 45) 505 503

Fax

(+370 45) 505 520

Legal-organisational form

Public limited liability company

Date and place of registration

30 October 1993, Panevezys City Board

Registration No.

AB 9376

147732969

VAT code

LT477329610

LEI code

529900O0VPCGEWIDCX35

Administrator of Legal Entity Register

State Enterprise Centre of Registers

E-mail

pst@pst.lt

Website

www.pst.lt

4. Nature of the main activities of the issuer

The main area of activities of the Company and its subsidiaries (the Group) is design and construction

of buildings, structures, equipment and communications and other objects for various applications in

and outside Lithuania, sale of building materials, production and real estate development. In addition

to the listed activities, the Company is engaged in rent of premises and machinery.

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

As of 31 December 2022, the Group of Panevezio statybos trestas AB included the following

companies:

Subsidiary

company

Registration date,

administrator

Company

code

Registered

address

Telephone, fax,

e-mail, website

Portion of

shares held

(per cents)

Skydmedis

UAB

17 June 1999

State Enterprise

Centre of Registers

148284718

Pramones Str. 5,

Panevezys

Tel. (+370 45) 467626

Fax (+370 45) 460259

info@skydmedis.lt

www.skydmedis.lt

100

Vekada UAB

16 May 1994

State Enterprise

Centre of Registers

147815824

Marijonu Str. 36,

Panevezys

Tel. (+370 45) 461311

Fax (+370 45) 461311

info@vekada.lt

www.vekada.lt

95.6

Alinita UAB

8 December 1997

State Enterprise

Centre of Registers

141619046

Tinklu Str. 7,

Panevezys

Tel. (+370 45) 467630

Fax (+370 45) 467630

info@alinita.lt

www.alinita.lt

100

Kingsbud Sp.z

o.o.

11 August 2010

District Court in

Bialystok,

XII Economic

Department of

National Court

200380717

A. Patli Str. 12,

16-400 Suwalki,

Poland

Tel. (+48 875) 655 021

Fax (+48 875) 655 021

biuro@kingsbud.pl

www.kingsbud.lt

100

PS Trests SIA

22 May 2000

Centre of Registers,

Republic of Latvia

40003495365

Skultes Str. 28,

Skulte,

Marupes Parish,

Riga Region,

Latvia

Tel. +371 29525066

100

Seskines

projektai UAB

9 November 2010

State Enterprise

Centre of Registers

302561768

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

info@psti.lt

gbujokas@psti.lt

100

Ateities

projektai UAB

25 April 2006

State Enterprise

Centre of Registers

300560621

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

Fax (+370 5) 2102131

info@psti.lt

gdieckuviene@psti.lt

100

PST

investicijos

UAB

23 December 1998

State Enterprise

Centre of Registers

124665689

Ukmerges Str. 219,

Vilnius

Tel. (+370 5) 2102130

info@psti.lt

gbujokas@psti.lt

Tauro

apartamentai

UAB

23 October 2018

State Enterprise

Centre of Registers

304937621

Ukmerges Str. 219,

Vilnius

Tel.(+370 610) 09222

gbujokas@psti.lt

100

Hustal UAB

11 December 2018

State Enterprise

Centre of Registers

304968047

Tinklu Str. 7,

Panevezys

Tel.(+370 45) 585087

tomas.stukas@hustal.eu

www.hustal.eu

100

Aliuminio

fasadai UAB

2 January 2020

State Enterprise

Centre of Registers

305412441

Pramones Str. 5,

Panevezys

Tel. +370 686 32727

info@alfasadai.lt

www.alfasadai.lt

100

Subsidiary companies of PST investicijos UAB:

Subsidiary

company

Registration date,

administrator

Company

code

Registered

address

Telephone, fax,

e-mail, website

Portion of

shares held

(per cents)

Baltevromarket

ZAO ISK

13 July 2001

Independent

Registration

Company AB –

Administrator of

Shareholders’

3906214631

Rostovskaja Str.

5-7,

Kaliningrad,

Kaliningrad Obl.,

Russian Federation

Tel.+79097772202

baltevromarketao@

mail.ru

100

6. Nature of principle activities of the companies included in the Group

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

houses are the main product of the company. Products are successfully exported to Norway, Sweden,

Switzerland, Iceland and other countries.

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

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

focused on the Scandinavian market.

Vekada UAB – installation of electrical systems. Alongside with the usual electrical engineering

activities, works in the low current fields are carried out: video surveillance systems, security and

fire alarm systems, utility system control.

Alinita UAB – installation of heating, ventilation and air-conditioning systems in buildings, indoor

water supply, waste water and fire-fighting systems, design, start-up and commissioning of indoor

utility systems.

Kingsbud Sp. z o.o. – wholesale of construction materials. Kingsbud Sp. z o.o. has a branch

established in Lithuania, which focuses on wholesale of stoneware and glazed tiles for indoor and

outdoor application.

PS Trests SIA – construction activities. The company was established for searching of new markets

and carrying out construction activities in Latvia.

Seskines projektai UAB – real estate development and sale.

Ateities projektai UAB – real estate preparation and sale.

PST investicijos UAB – real estate preparation and sale. PST investicijos UAB has the subsidiary

company, Baltevromarket ZAO ISK, established for development of real estate projects in the

Kaliningrad Oblast, Russian Federation.

Tauro apartamentai UAB – development of real estate projects.

– sale, erection and design of steel structures. Activity and sale of the company are focused on the

Scandinavian market.

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

doors.

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

the liquidation procedure has been initiated.

7. Contracts with the intermediary of public trading in securities

In 2013, the Company signed the contract with the Financial Brokerage Company Finasta AB for

accounting of securities and provision of services related to securities accounting. On 21 December

2015, the Financial Brokerage Company Finasta AB had been rearranged by way of merge with

Siauliu bankas AB, which took over all assets, rights and liabilities of the Financial Brokerage

Company Finasta AB from the mentioned date.

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

The ordinary registered shares of Panevezio statybos trestas AB have been on the Official Trading

List of Nasdaq Vilnius AB since 13 July 2006 (company symbol PTR1L).

Share type

Number of shares,

pcs.

Par value,

Euros

Total par value,

Euros

Emission code

ISIN

Ordinary registered shares

(ORS)

16,350,000

0.29

4,741,500

LT0000101446

Comparison of PTR1L Panevezio statybos trestas and OMX Vilnius Benchmark GI indexes in 2022

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

through 2022 (Euros)

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

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

period 2018 through 2022:

Indicator

2022

2021

2020

2019

2018

Highest price, Euros

0.694

0.838

0.85

0.878

0.99

Lowest price, Euros

0.50

0.53

0.52

0.71

0.75

Average price, Euros

0.564

0.677

0.629

0,78

0,881

Share price as of the end

of reporting period, Euros

0.518

0.66

0.57

0.75

0.752

Traded volume

991,215

2,935,832

1,980,134

986,685

1,596,044

Turnover, mln. Euros

0.56

1.99

1.25

0.77

1.41

Capitalisation, mln. Euros

8.47

10.79

9.32

12.26

12.3

9. Fair review of position, performance and development of the Company and the Group,

description of the principal risks and uncertainties the company faces

Key events of the reporting period

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

information system are listed below.

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

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

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

regarding the fine imposed by the Competition Council was left unchanged) to the Supreme Court of

Lithuania. On 5 January 2022, the Supreme Court of Lithuania upheld the judgement of 17 February

2021 by the Panevezys Regional Court.

7 January 2022. On 6 January 2022, the Supreme Court of Lithuania delivered the judgement on the

decision by the State Enterprise Ignalina Nuclear Power Plant to reject the submitted bid in the

tender for Procurement of Works for Construction of INPP Near Surface Repository for Low and

Intermediate-Level Short-Lived Radioactive Waste (Construction Stages I/A, II/A) and Design,

Construction and Connection of External Rainwater Drainage Networks to INPP Infrastructure

thereby dismissing the cassation appeal of Panevezio statybos trestas AB and hearing the case in

cassation proceedings. The court motivated their decision mainly by the fact that the case is of little

significance to the practice of the Lithuanian courts and public procurement. The court judgement

and the outcome of the dispute will not affect the future operations of the company as its possibilities

for participation in public procurement are no longer restricted.

8 March 2022. Panevezio statybos trestas AB notified that it ceases to operate its companies located

in the region of the Russian Federation:

- Operation of Baltevromarket ZAO ISK, with 100 per cents of the authorized capital hold by

PST Investicijos UAB, is ceased though there have been no assets owned by the company

since mid of 2021;

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

on 21 December 2022) ;

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

registered on 25 November 2022).

For several years now, taking into account the risks involved, Panevezio statybos trestas AB has

been putting tendentious efforts to withdraw from the market of the Russian Federation.

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

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

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

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

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

interest period of 180 days shall be applied.

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

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

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

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

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

28 April 2022. The Ordinary General Meeting of Shareholders of Panevezio statybos trestas AB took

place. The Ordinary General Meeting of Shareholders did not come to the decision to pay dividends.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

180 days amounts to 251,906.30 Euros.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

of the contract entry into force.

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

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

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

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

September 2024.

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

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

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

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

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

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

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

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

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

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

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

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

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

branch will carry out installation of foundations for wind turbines.

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

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

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

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

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

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

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

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

health.

In 2022, the following branches continued their operation in the structure of the Company: Gerbusta,

focusing on construction of utility networks and landscaping, Pastatu apdaila, carrying out indoor

and outdoor finishing works, Konstrukcija, where production capacities are concentrated, this branch

carries out civil and special construction works, Vilnius branch Genranga, performing general

contracting activities and project management in the Vilnius Region, and Klaipstata, performing

general contracting activities and project management in the Klaipeda Region.

The Company has permanent establishments in the Republic of Latvia and Kingdom of Sweden.

In 2022, the companies of the Group successfully continued their activity both inside and outside

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

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

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

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

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

operating having taken over the name, assets, rights and liabilities of Hustal UAB. The main direction

for selling the steel structures is the Scandinavian countries.

Skydmedis UAB, which is producing pre-fabricated timber panel houses, sells nearly all of their

products in the foreign market. 84 per cents of the company’s revenue were for the products sold in

the Scandinavian countries. Vekada UAB, Alinita UAB‚ which specialize in installation of indoor

heating, ventilation and conditioning, water supply and waste water systems, and in installation of

electric systems, renewable energy and low current fields, implemented the projects in Lithuania.

The most advanced aluminium profile systems, aluminium windows and doors, façades are produced

at Aliuminio fasadai UAB. PST investicijos UAB, Ateities projektai UAB and Seskines projektai

UAB are the real estate development companies. Ateities projektai UAB develops the project of

residential houses in Kunigiskes.

PS Trests SIA operating in Latvia is continuing the started construction and is looking for new orders.

In 2022, the wholesale of building materials is further developed.

Kingsbud Sp.z o.o, the company operating in Poland, is engaged in this.

Key events after the reporting period (in the year 2023)

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

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

Tax Inspectorate.

For several years now, taking into account the risks involved, the Company has been putting

tendentious efforts to withdraw from the market of the Russian Federation.

Risk factors related to the Company’s activities:

In their operation, both the Company and the Group face various types of risks, such as legal

regulation, severe competition, shortage of qualified labour, cyclical nature of economy, consistency

of orders, volatile material prices in the global market, macroeconomic factors, damping. However,

only a few of them may have significant impact on the performance results of the Group and the

Company. The main factors that create business risk for the Company and the Group are competition

in the construction market and changes in the demand for construction services. The demand for

construction services also depends heavily on the volume of investments and financing received from

the EU structural funds. Increase and variation of material and service prices make the process of the

project budgeting and possibility to complete the already started projects based on the planned costs

more difficult. This results in extra risk for performance of fixed price construction contracts and

reduces profitability of projects. Furthermore, activity of the Company and the Group is influenced

by the economic situation (economic cycles), geopolitical changes in Lithuania and the countries

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

related to COVID-19. Although there is still some uncertainty about the trends in global economic

development as well as regional and global crisis in future.

Information on the types of financial risks and risk management is provided in the Notes to the

Separate Financial Statements (Note 4) and Consolidated Financial Statements (Note 4). Legal

uncertainties are provided in the Notes to the Separate Financial Statements (Note 28) and

Consolidated Financial Statements (Note 27).

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

environmental and employee matters

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

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

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

further rise of already high inflation.

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

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

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

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

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

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

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

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

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

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

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

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

2022, in 2021 the Group had the profit in the amount of 3.499 mln. Euros.

Revenue and net profitability variation for the Company:

Revenue and net profitability variation for the Group:

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

trestas AB for the period 2020 through 2022:

Group

Items

Company

2020

2021

2022

2020

2021

2022

74,912

98,451

115,840

Revenue

59,712

65,721

79,22

68,167

68,283

106,310

Cost of sales

58,531

59,888

77,066

6,745

12,168

9,530

Gross profit

1,181

5,833

2,156

9.00

12.36

8.23

Gross profit margin (per cents) (API)

1.98

8.88

2.72

-9,360

2,414

-1,067

Typical operating result

-12,595

-589

-4,978

94,797

108,464

59,712

65,721

79,222

-5.1%

0.5%

-20.8%

0.5%

-2.2%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

20,000

40,000

60,000

80,000

100,000

120,000

2018 2019 2020 2021 2022

Revenue thousand Euros Net profitability

104,861

110,466

74,912

98,451

115,840

-4.1%

0.7%

-13.9%

3.6%

0.5%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

-20,000

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2018 2019 2020 2021 2022

Revenue thousand Euros Net profitability

Group

Items

Company

2020

2021

2022

2020

2021

2022

-12.49

2.45

-0.92

Typical operating result from

turnover (per cent)

-21.09

-0.90

-6.28

-7,925

3,477

266

EBITDA

(API)

-11,362

259

-4,192

-10.58

3.53

0.23

EBITDA margin (per cents) (API)

-19.03

0.39

-5.29

-10,431

3.499

525

Net profit (API)

-12,418

304

-1,720

-13.92

3.55

0.45

Nets profit (loss) margin (per cents)

-20.80

0.46

-2.17

-0.638

0.214

0.032

Earnings per share (Euros) (EPS)

(API)

-0.76

0.019

-0.105

-34,40

12.58

1.75

Return on equity (per cents) (ROE)

(API)

-43.89

1.38

-7.89

-13.99

4.41

0.60

Return on assets or asset

profitability (ROA)

(API)

-18.59

0.55

-3.40

-35.97

6.65

0.99

Return on investments (ROI)

(API)

-52.81

1.29

-7.67

0.75

1.30

1.23

Current liquidity ratio

(API)

0.88

1.12

1.02

0.53

1.00

0.95

Critical liquidity ratio

(API)

0.81

0.94

0.85

0.36

0.34

0.35

Equity ratio

(API)

0.35

0.46

0.41

0.62

0.65

0.64

Debt ratio

(API)

0.65

0.54

0.59

1.72

1.90

1.82

Debt to equity ratio

(API)

1.85

1.19

1.46

1.61

1.79

1.88

Book value per share

(API)

1.34

1.35

1.31

0.35

0.37

0.28

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

(API)

0.43

0.49

0.39

-0.89

3.08

16.13

Price-to-earnings ratio (P/E)

(API)

-0.75

35.50

-4.92

EBITDA = profit before taxes, interest, depreciation and amortization. The essence of EBITDA indicator is to determine

the most objective profit (loss) of the company, which is least dependable on circumstances (least variable).

Earnings per share (Euros) = net profit (loss) / number of issued shares.

Return on equity (per cents) (ROE) = net profit / equity capital (a portion equity capital belonging to the shareholders).

Return on assets (ROA) or asset profitability = net profit / assets.

Return on investments (ROI) = net profit / (assets-current debt).

Critical liquidity ratio = (current assets – inventories) / current liabilities.

Equity ratio = equity capital / assets.

Debt ratio = liabilities / assets.

Debt to equity ratio = liabilities / equity.

Book value per share = equity capital / number of shares.

Price-to-book ratio (P/B ratio) = share price as of the end of reporting period / share book value.

Price-to-earnings ratio (P/E) = share price as of the end of reporting period / net profit allocated for one share.

Panevezio statybos trestas AB uses Alternative Performance Indicators to better disclose the

financial performance of the Group and the Company. The description of these indicators and

methodology for their calculation are available on the Company's website

https://www.pst.lt/en/finansines-ataskaitos

The main revenue of the Company by activity types is from construction and erection activities. In

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

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

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

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

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

cents.

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

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

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

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

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

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

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

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

59.71

65.72

79.22

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

2020

2021

2022

Construction and erection activities

70.42

70.80

87.42

1.24

7.87

1.86

3.26

19.78

26.56

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

2020

2021

2022

Revenue of the Group

Construction works Real estate Products produced and other income

58.40

63.86

78.443

1.31

1.86

0.779

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

2020

2021

2022

Revenue of the Company

Lithuania Latvia

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

Environment protection

Quality, sustainability, environment protection, occupational health and safety play a very important

role in activities of Panevezio statybos trestas AB. Quality Management (ISO 9001), Environmental

Management (ISO 14001) and Occupational Health and Safety Management (OHSAS 18001)

Systems introduced and available at the Company allow taking proper care of these significant

factors. Assessment of occupational risk is carried out, analyses are performed and measures for risk

reduction or elimination are taken on each site. For the purposes of environment and resource

protection and sustainability, ensuring pollution prevention, in the beginning of each project the

environmental plan including specific measures for control of significant aspects of environment

protection and activities performed is prepared.

In 2020, the Lithuanian National Accreditation Bureau accredited the Construction Laboratory of the

Company in accordance with LST EN ISO/IEC 17025:2018 for the period of 5 years, thus granting

the right to perform tests of building materials.

The companies of the Group also have Quality, Environmental and Occupational Health and Safety

Management Systems in accordance with the requirements of LST EN ISO 9001:2015, LST EN ISO

14001:2015 and LST ISO 45001:2018 introduced and successfully functioning.

Employees

Professional, competent and responsible employees are the biggest asset of the Company. Therefore,

much attention is paid to motivation of employees: environment favourable for generation and

implementation of new ideas is being created and sharing of information is being promoted. In

modern environment, competence of employees is one of the key factors describing competitiveness

of the company. Taking this factor into account, the company encourages employees in all

organizational levels to learn and improve their skills. The employees are motivated not only by

material incentives – competitive salaries, progressive bonus system but also by exceptional quality

of working environment.

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

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

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

Average number of

employees

2021

2022

Group

Company

Group

Company

Managers

Specialists

316

234

304

224

Workers

523

347

486

310

Total

862

592

813

544

60.86

77.65

96.84

6.78

12.02

12.05

17.67

2.04

1.97

1.33

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

2020

2021

2022

Income of the Group (mln. Euros)

Lithuania Russian Federation Scandinavian countries Other countries

Table 4. Education level of the Group employees as of the end of the period:

PST Group

employees

Payroll

number

Higher

university

level

education

Higher non-

university

education

Junior

college

education

Secondary

education

Incomplete

secondary

education

Managers

Specialists

309

235

Workers

474

327

Total

805

278

340

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

of them.

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

welfare, diversity, equality and involvement of employees. Training in the Company is done in two

directions using:

1. Services of training institutions (external training);

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

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

Information on key events having occurred after the end of the financial year is provided in the Notes

to the Separate Financial Statements (Note 32) and Consolidated Financial Statements (Note 32),

also refer to Section 13 of this Annual Report.

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

Group

The Company and companies of the Group continually pay much attention to increase of operational

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

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

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

quality of construction works and services.

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

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

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

surrounding communities and nature, amount of CO

. By optimizing production processes, we aim

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

and use green energy.

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

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

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

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

innovations and complement the software used with actual applications.

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

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

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

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

postpone new construction plans until demand becomes more predictable.

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

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

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

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

on the operation of the Group, seek to ensure that the costs of the projects in progress as well as

investments and operating activities are optimal.

In 2022, the Company and the Group will make every effort to assess and manage the risks that have

arisen, find new markets and increase the cost-effectiveness of new projects. The Company and the

Group will continue developing real estate in order to achieve a return on investments.

14. Authorised capital of the issuer and its structure

As of 31 December 2022, the authorised capital of the company amounted to 4,741,500 Euros divided

into 16,350,000 ordinary registered shares (ORS) the nominal value of each share being 0.29 Euros.

All shares are fully paid. The proof of ownership is the record in the securities accounts.

The Company has not acquired any shares of the Company.

On 31 December 2022, the total number of the shareholders was 1,756.

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

Investors

Number of shares,

pcs.

Portion of authorized

capital, per cents

Foreign investors

Legal entities

2,232,296

13.7%

Natural persons

1,426,839

8.7%

Local investors

Legal entities

8,981,770

54.9%

Natural persons

3,709,095

22.7%

Table 6. Shareholders holding or controlling more than 5 per cents of the authorised capital of the

Company:

Full name of a shareholder

(company name, type, headquarter

address, company code)

Number of ordinary

registered shares held by

a shareholder under

ownership right (pcs.)

Portion of the

authorized

capital held (%)

Portion of votes

granted by the shares

held under ownership

right (%)

HISK AB

S. Kerbedzio Str. 7, Panevezys

Company code: 147710353

8,138,932

49.78

CLAIRMONT HOLDINGS LTD

Company number 85573

GRIGORI AFXENTIOU, 27

P.O. 6021, CYPRUS

936,052

5.72

Freely floating shares

7,275,016

44.50

None of the shareholders of the issuer has any special control rights. All shareholders have equal

rights prescribed by Section 4 of the Law on Companies of the Republic of Lithuania.

The number of shares carrying votes at the General Meeting of Shareholders of Panevezio statybos

trestas AB is 16,350,000, one ordinary registered share of the Company carries one vote at the

General Meeting of Shareholders.

15. Dividends

The decision to pay dividends is taken and the amount to be paid as dividends is set by the General

Meeting of Shareholders. The company pays the allocated dividends within 1 month from the date

when decision on profit appropriation has been taken.

The persons who were the shareholders of the Company at the end of the tenth business day from the

General Meeting of Shareholders that adopted the relevant decision are entitled to the dividends.

Dividends are taxable in accordance with the Law on Income Tax of Individuals and the Law on

Corporate Income Tax of the Republic of Lithuania.

The Ordinary General Meeting of Shareholders of Panevezio statybos trestas AB that took place on

28 April 2022 did not come to the decision to pay dividends.

Table 7. History of dividends paid over the previous years:

Profit of financial year allocated for dividends

2015

2016

2017

2018

2019

Total amount allocated for dividends,

Euros

261,977

1,062,750

981,000

490,500

Dividends per share

0.016

0.065

0.060

0.030

Ratio of dividends to the Company's net

profit, per cent

79.80

59.33

504.50

83.09

Dividend profitability (dividends per

share / share price as of the end of the

period), per cents

1.7

6.9

6.6

5.3

16. Information on significant transactions between the related parties

All transactions with related parties are provided in the Notes to the Separate Financial Statements

(Note 29) and Consolidated Financial Statements (Note 28).

17. Published information

In accordance with the procedure established by the laws of the Republic of Lithuania, all material

events related to operation of the Company and information on the time and place of the General

Meeting of Shareholders are published on the website of the Company

https://www.pst.lt/investuotojams and on the stock exchange NASDAQ Vilnius AB

(www.nasdaqomxbaltic.com).

Corporate Governance Report

Information on compliance with the Corporate Governance Code

The information on compliance with the Corporate Governance Code is provided in Appendix 1 to

the Annual Report.

Panevezio statybos trestas AB in principle complies with the recommendatory Governance Code for

the companies listed at NASDAQ OMX Vilnius. Referring to the Articles of Association of the

Company, the governance bodies of the Company include the General Meeting of Shareholders, the

Board and the Managing Director. According to the Law on Companies of the Republic of Lithuania,

either two (supervisory and management) or one collegial management body may be set up in the

Company at the discretion of the Company. As no Supervisory Board is set up in the Company, the

Board is elected, which performs the supervision functions pursuant to the Law on Companies of the

Republic of Lithuania. Following the Articles of Association of the Company, the Board is set up of

5 members, which are elected for the period of four years. The members of the Board represent the

shareholders and perform the supervisory and control functions. Only the Audit Committee, which

is elected for the period of one year, is formed in the Company. The functions of the Nomination and

Remuneration Committees are performed by the Board.

The system of the corporate governance ensures fair treatment of all shareholders, including minority

and foreign shareholders, and protects the rights of the shareholders.

The management system of the Company ensures that any information on all essential issues,

including financial situation, operation and Company management, is disclosed in a timely and

accurate manner.

The Audit Committee of the Company gives recommendations to the Board on nomination of an

auditing company/auditor. The Board selects the candidate for the auditing company/auditor and

submits it to the General Meeting of Shareholders for approval. This ensures independence of the

conclusions and opinion provided by the auditing company.

Information on extent of risk and risk management

Risk management is a part of strategic management and integral to the day-to-day operations of the

Group. In managing risks, the main objective of the Group is to identify higher and significant risks

and manage them in the optimal way. The following financial risks are faced within the Group: credit,

liquidity, market, business and operational.

The Board is responsible for setting up and maintaining the risk management structure. The risk

management policy of the Group is aimed at identifying and analysing the risks faced by the Group,

introduction and maintenance of appropriate limits and controls. The risk management policy and

risk management systems are reviewed at regular intervals to reflect changes in market conditions

and operation of the Group. The Group seeks to create a disciplined and constructive environment

for risk management where all employees know their roles and responsibilities.

Based on the credit risk policy established by the Group, standard payments and terms are only

offered after credit standing of each new client has been assessed. The potential credit risk for the

clients of the Group and the Company is managed through continuous monitoring of outstanding

balances. The aim to ensure that the services are provided to reliable clients and do not exceed the

permissible credit risk limit is continuously maintained. The clients failing to meet the established

limit may only make purchases with the Group after paying prepayments.

The Group manages liquidity risk to ensure, as far as possible, sufficient liquidity, which allows

fulfilling its obligations under both normal and complex conditions without incurring unacceptable

losses and without facing the risk to lose reputation of the Group. The Company and the Group strives

to maintain sufficient amount of cash and cash equivalents or secure of appropriate credit instruments

so as to fulfil their obligations.

The market risk is the risk that changes in market prices, for example, changes in exchange rates and

interest rates will affect the result of the Group or the value of available financial instruments. The

purpose of the market risk management is to manage open positions of risk in order to optimize

returns.

Business risk is related to the Group's entry into new markets, segments, management of available

inventories and investments, and execution of construction contracts. One of the peculiarities related

to construction activities is that the fulfilment of concluded construction contracts is a long-term

process, which makes the sector inert to changes in the economic environment. For this reason, both

positive and negative changes reach the economic environment in the construction sector with

considerable delay. In order to manage business risk, the Company and the Group seek to diversify

their sources of revenue. To this end, orders are being sought and contracts are being concluded in

both private and public sectors, and markets are being searched not only in Lithuania but in other

countries as well. The companies of the Group operate in different sectors, such as construction, real

estate development, production and engineering network installation. The construction sector is not

limited to the construction of single-purpose buildings. The Company implements construction

projects for industrial, engineering, environmental and residential buildings. Before starting new

projects, the Company and the companies of the Group make a thorough analysis of the project

specifics and only after are confident that the environment is sufficiently stable and a competent team

is collected, final decisions are made.

The accounts of the Company are kept and financial statements are prepared in accordance with

International Financial Reporting Standards adopted for application in the EU. The annual financial

statements are audited by the independent auditors selected by the General Meeting of Shareholders.

This procedure ensures relevance and transparency of the data provided in the financial statements.

Operational risk constitutes the risk of probability to incur losses due to people, systems, inadequate

internal processes or their failure, effects of external events, including legal risks. For the purposes

of operational risk management, the Group implements appropriate measures to ensure functioning

of the internal control system and appropriate co-operation with relevant third parties. The main

elements of internal control applied in the Group are control of operations and accounting, limits of

decision-making powers and their control, separation of business decision-making and control

functions, etc. The aim is to minimize the risk of legal compliance and ensure that the activities

carried out comply with the applicable legislation. To this end, the advice of professional lawyers

and their participation are used in the processes of drafting internal instruments and contracts.

Information on significant directly or indirectly held share portfolios

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

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

the Law on Companies.

There were no such transactions concluded.

Information on shareholders with special control rights

There are no shareholders with special control rights in the Company. The ordinary dematerialised

shares of the Company grant equal voting rights to all shareholders of the Company.

Information on all existing limitations on voting rights

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

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

of Articles of Association

The Board of the Company consisting of five members is elected by the General Meeting of

Shareholders for a period not longer than 4 years. At present there are five members in the Board.

The procedure of electing and dismissing the members of the Board is not different from that

prescribed by the Law on Companies.

The Articles of Association may be amended only by the General Meeting of Shareholders by the

qualified majority of at least 2/3 of the total votes of the shareholders attending the meeting. The

resolution amending the Articles of Association is adopted following the procedure set forth in the

Law on Companies of the Republic of Lithuania.

Information on powers of members of the Board

The powers of the members of the Board are set forth in the Law on Companies of the Republic of

Lithuania and the Articles of Association. The Articles of Association of Panevezio statybos trestas

AB are published on the website at http://www.pst.lt/en/investuotojams.

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

exercising

The powers of the General Meeting of Shareholders and the rights of shareholders are set forth in the

Articles of Association and are not different from that prescribed by the Law on Companies.

Information on composition of management, supervisory bodies and their committees, their activities

and field of activities of the Chief Executive Officer

Referring to the Articles of Association of Panevezio statybos trestas AB, the management bodies

of the Company are the General Meeting of Shareholders, the Board and the Managing Director. The

Supervisory Council is not formed in the Company.

The General Meeting of Shareholders is the highest governing body of the Company, resolving the

issues assigned to its competence by the Law on Companies and the Articles of Association of the

Company. The competence of the General Meeting of Shareholders does not differ from that of the

competence prescribed by the Law on Companies.

According to the Law on Companies of the Republic of Lithuania, one collegial management body

may be formed in the Company. The Board consists of 5 (five) members, who are elected by the

General Meeting of Shareholders for the period of 4 (four) years. They represent the shareholders

and perform supervisory and control functions. The activities of the Board are managed by the

Chairman. The Board elects the Chairman from the members of the Board.

The Chief Executive officer of the Company is the Managing Director. The Managing Director is

the sole governing body of the Company. The Managing Director is the main person managing and

representing the Company. The Board elects and dismisses the Chief Executive Officer of the

Company – the Managing Director, fixes his salary, sets other terms and conditions in the

employment contract with him, approves his job description, gives incentives and imposes penalties.

The Managing Director shall organize the activities of the Company.

The Board:

The Board members of Panevezio statybos trestas AB were elected for a new 4 (four) year term at

the General Meeting of Shareholders on 9 April 2021, 2 (two) members of the Board are independent.

The term of office of all members of the Board will end on 9 April 2025.

JUSTAS JASIUNAS, Chairman

Educational background: Mykolas Romeris University, Master in Law.

Place and position of employment: Consultant at Panevezio statybos trestas AB (company code

147732969, P. Puzino Str. 1, Panevezys).

Participation in activities of other companies:

Board Member at HISK AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys);

Chairman at Aliuminio fasadai UAB (company code 305412441, Pramones Str. 7, Panevezys);

Chairman at Vekada UAB (company code 147815824, Marijonu Str. 36, Panevezys);

Board Member at Skydmedis UAB (company code 148284718, Pramones Str. 5, Panevezys);

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

As of 31 December 2022, held no shares of the Company.

GVIDAS DROBUŽAS, Board Member

Educational background: Panevezys Polytechnic School, higher non-university.

Place and position of employment: General Director, Board Member at IOCO Packaging UAB

(company code 110564826, Pusaloto Str. 212, Panevezys).

Participation in activities of other companies:

Chairman at HISK AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys);

Consultant at Panevezio statybos trestas AB (company code 147732969, P. Puzino Str. 1, Panevezys);

Board Member at PST investicijos UAB (company code 124665689, Ukmerges Str. 219, Vilnius);

Director at Pokstas UAB (company code 168424572, Gustonys Vlg., Naujamiestis Eldership,

Panevezys District Municipality);

Director at IOCO UAB (company code 302547850, Verkiu Str. 25C-1, Vilnius);

Director at Stenrosus UAB (company code 300007108, B. Sruogos Str. 6-14, Vilnius).

As of 31 December 2025, held 5 (five) shares of the Company, a shareholder of HISK AB.

VAIDAS GRINCEVICIUS, independent Board Member

Educational background: Vilnius University, Master in Management and Business Administration.

Participation in activities of other companies:

Venture Capital Investor, Member of LitBAN (Lithuanian Business Angel Network) Association

(company code 304811409, L. Stuokos-Guceviciaus Str. 9-10, Vilnius);

Chairman at SIQOR industries UAB (company code 304755864, Konstitucijos Ave. 21A, Vilnius).

As of 31 December 2022, held no shares of the Company.

KRISTINA MACIULIENE, Board Member

Educational background: Kaunas University of Technology, Bachelor in Business Administration,

Lithuanian University of Law, Master in Law.

Place and position of employment: Expert-Consultant at HISK AB (company code 147710353, S.

Kerbedzio Str. 7, Panevezys).

Participation in activities of other companies:

Board Member at HISK AB (company code 147710353, S. Kerbedzio Str. 7, Panevezys); Chairman

at Skydmedis UAB (company code 148284718, Pramones Str. 5, Panevezys);

Chairman at Hustal UAB (company code 148284860, Tinklu Str. 7, Panevezys);

Board Member at Vekada UAB (company code 147815824, Marijonu Str. 36, Panevezys);

Board Member at Aliuminio fasadai UAB (company code 305412441 Pramones Str. 5, Panevezys);

Chairman at Lauktuves Jums UAB (company code 147797155, Laisves Sq. 26, Panevezys);

Chairman at Gustoniu zemes ukio technika UAB (company code 168581940, S. Kerbedzio Str. 7F,

Panevezys).

As of 31 December 2022, held 10 (ten) shares of the Company.

LINA SIMASKIENE, independent Board Member

Educational background: Kaunas University of Technology, Engineer-Economist.

Place and position of employment: Chief Financial Officer at IOCO Packaging UAB (company code

110564826, Pusaloto Str. 212, Panevezys), Board Member.

Participation in activities of other companies:

Chief Accountant at IOCO UAB (company code 302547850, Verkiu Str. 25C-1, Vilnius);

Chief Accountant at Pokstas UAB (company code 168424572, Gustonys Vlg., Naujamiestis

Eldership, Panevezys District Municipality);

Chief Accountant at Stenrosus UAB (company code 300007108, B. Sruogos Str. 6-14, Vilnius);

Chief Accountant at New Miracle UAB (company code 304552981, J. Zikaro Str. 33A, Panevezys);

As of 31 December 2022, held no shares of the company.

Administration:

EGIDIJUS URBONAS – Head of the Company Administration, Managing Director. Holds no shares

of the Company. University education, Construction Engineering, Kaunas Technology University.

Master Degree in Construction Engineering, Vilnius Gediminas Technical University, postgraduate

program in Construction Management.

Participation in activities of other companies: Chairman at PST investicijos UAB (company code

124665689, Ukmerges Str. 219, Vilnius)

As of 31 December 2022, held no shares of the Company

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

Company. University education (LZUA, 1983), Accounting - Economics.

In 2022, no loans, guarantees, sureties were granted and no property was transferred to any Board

Members or top managers of Panevezio statybos trestas AB.

Audit Committee

Following Article 52 of the Law on Audit of the Republic of Lithuania, the General Meeting of

Shareholders of Panevezio statybos trestas AB elects the Audit Committee. The Audit Committee

consists of three members, two of them being independent. The term of office of the Audit Committee

is one year. The continuous term of office of a committee member cannot exceed 12 years.

The functions of the Audit Committee are as follows:

1) to monitor the financial reporting process;

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

if applicable, systems;

3) to monitor the process of the audit;

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

The following members were elected to the Audit Committee at the Annual General Meeting of

Shareholders of Panevezio statybos trestas AB on 28 April 2022:

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

shares of the Company;

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

Lina Rageliene – Deputy Chief Accountant of the Company. Holds no shares of the Company.

Diversity policies applied to election of the CEO and members of the supervisory bodies of the

company

The Company has no diversity policy for election of the CEO and members of the supervisory bodies

of the Company. The main criterion for election of a candidate to CEO and members of the

supervisory or management bodies is competence of the candidate.

Information on all agreements between the shareholders

The Company has no information on any agreements between the shareholders available.

Consolidated Report of Social Responsibility

We believe that corporate social responsibility is effective only when integrated into everyday work

and, if managed like any other business activity, it leads to a sustainable and responsible economy.

Constant and continuous improvement of business and project management, quality, customer

satisfaction, supply and subcontracting chain management, environmental and public relations at

PST is not only openness to the surrounding environment, but also the goal of operating ethically,

fairly and transparently in respect of the market, environmental protection, society and employees.

In their activities both, the Company and the companies of the Group, follow the highest standards

of business ethics and principles of social ethics. Social responsibility is based on its values and

defines the approach of the Company to its activities, integration of social, environmental and

transparent business principles in the internal processes of the Company and the Group as well as in

relations with its clients.

Short Description of Activity Model

Panevezio statybos trestas AB is one of the largest local construction companies, which has been

operating in the construction sector for more than 60 years and has the highest competence for

creation of exceptional quality. Honesty, responsibility, professionalism, quality workmanship and

efficient solutions are the values that have allowed us to achieve our goals – today we are one of the

largest construction companies in Lithuania. The Company has implemented many especially

important and complex projects that have contributed to the economic growth of Lithuania and have

a significant impact on development of infrastructure and improvement of environment protection in

the country.

In 2022, the Company made structural changes in order to optimize costs, concentrate services and

strengthen production capacity. One of them, merge of the branches Konstrukcija and Betonas,

Genranga and Stogas, took place at the beginning of the year. This merge resulted in reduction of

branch administration costs and faster decision-making processes.

The Company comprises the following branches:

- Gerbusta, focusing on construction of utility networks and landscaping.

- Pastatu apdaila, carrying out indoor and outdoor finishing works,

- Konstrukcija where production capacities are concentrated, this branch carries out civil and

special construction works,

- Vilnius branch Genranga, performing general contracting activities and project management

in the Vilnius Region,

- Klaipstata, performing general contracting activities and project management.

The business model of Panevezio statybos trestas AB Group has hardly changed from last year. In

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

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

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

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

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

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

In view of the increased geopolitical tension in the region, new sanctions and restrictive measures

imposed on the Russian Federation and Republic of Belarus by the European Union and its allies,

Panevezio statybos trestas AB ceases to operate its companies located in the region of the Russian

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

registered.

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

Lithuania, Latvia and Poland. Information on the portion of the capital held by Panevezio statybos

trestas AB in the subsidiaries is provided in Section 5 of the Consolidated Annual Report.

Panevezio statybos trestas AB and the companies of Panevezio statybos trestas AB Group belong to

various associations. Panevezio statybos trestas AB is the member of the Lithuanian Construction

Association, Association of Testing Laboratories for Construction Products, Panevezys Chamber of

Commerce, Industry and Crafts. Hustal UAB is the member of the Lithuanian Association of

Welders and PST investicijos UAB is the member of the Lithuanian Real Estate Development

Association.

For management purposes, the Group is divided into business units based on the nature of their

activity and has the following accountable segments:

• Construction;

• Steel structures;

• Timber panel houses;

• Concrete floor installation;

• Aluminium structure production;

• Real estate development;

• Other activity.

The segment of construction includes activity of Panevezio statybos trestas AB, Vekada UAB, Alinita

UAB and PS Trests SIA. The main area of activity is construction, design and erection of various

buildings, structures, equipment and communications, construction/installation of other objects

(electrical installation, building renovation, installation of plumbing, waste water systems, fire

protection systems, video surveillance, security and fire alarm) in Lithuania and other countries.

The segment of steel structures includes activity of Hustal UAB. The main area of their activity is

design and fabrication of steel structures for construction. The company also delivers steel structures

to other companies based on their demand.

The segment of timber panel houses includes activities of Skydmedis UAB. The area of activity is

design, production, construction and outfitting of prefabricated timber panel houses, production of

timber structures and millwork.

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

buildings is carried out by Pastatu apdaila, the branch of Panevezio statybos trestas AB.

The aluminium structure production (the production of aluminium profile systems, aluminium

framed windows and doors) was started by Aliuminio fasadai UAB in the beginning of 2020.

The segment of real estate development includes Seskines projektai UAB, Ateities projektai UAB,

Tauro apartamentai UAB and PST investicijos UAB.

The segment of other activity includes Kingsbud Sp.z o.o., which is engaged in wholesale of

construction materials.

Due to insignificance of volumes, the segments of concrete floor installation and production of

aluminium structures are not distinguished and are presented in the segment of Other activity in the

consolidated financial statements.

Strategy, vision, mission and objectives of the Company

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

strategy of the Company is based on growth in operation, enhancement in corporate value,

management of client relations, ensuring of safe working environment and development of

employees.

Vision – To become a reputed construction company in Europe, the first choice for clients in terms

of construction companies, which uses advanced technologies, ensures quality and agreed work

completions terms.

Mission - While honestly fulfilling our obligations, promoting long-term cooperation and proposing

mature solutions in construction, we ensure profitable and sustainable business development, thus

creating the value to our clients, shareholders and employees.

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

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

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

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

employees at all levels.

Principles of social responsibility:

Accountability (for impact on society, economy, environment);

Transparency (of decisions and activity, which have impact on society and environment);

Ethical (proper) behaviour;

Respect (listening attentively and responding) for stakeholders’ interest;

Respect for the rule of law;

Respect for international norms of behaviour;

Respect for human rights.

Environment Protection

Panevezio statybos trestas AB and the companies of the Group (Skydmedis UAB, Hustal UAB,

Alinita UAB, Vekada UAB) have the Environmental Management System (EMS) consistent with the

requirements of ISO 14001:2015/LST EN ISO 14001:2015, legal and other environmental

regulations established, documented and constantly reviewed to ensure its suitability, adequacy and

effectiveness.

In the process of implementation related to the established Environmental Policy, the Company seeks

to preserve a healthy environment to any employee, biological and landscape diversity as well as

optimal use of natural resources. The Environmental Policy is published in all branches, subsidiary

companies and sites of Panevezio statybos trestas AB, available for public and all interested parties

on the website at www.pst.lt.

When making plans of the environmental system, external and internal issues with regard to the

objectives and strategic direction of the Company as well as needs and requirements of interested

parties are taken into account resulting in defining risks and opportunities to make sure that the

integrated management system is able to achieve the intended outcome, strengthen the desired

impact, prevent or reduce undesired effects and achieve continual improvement. The Company plans

actions to eliminate risks, how actions should be integrated and implemented in the EMS processes,

assessment criteria and effectiveness of these actions. Panevezio statybos trestas AB has the Risk

and Opportunity Register prepared.

The significant environmental aspects are determined in all branches, subsidiary companies and sites

of the Company after significance of activity impact on environment is taken into account and legal

requirements are identified. The environmental aspects are identified by analysing past, current and

potential beneficial and adverse environmental impact of activities, services and products of the

subdivisions. The review of these aspects is performed at least once per year and in case the nature

of activities or any other conditions, such as a process, materials used, technologies, etc., changes,

provided they condition occurrence of new environmental aspects. The site aspects are identified

individually for each project.

The significant environmental aspects can cause one or more significant environmental impacts and

therefore can result in risks and opportunities to be assessed in order to ensure the Company is able

to achieve the intended outcomes of the EMS. When determining environmental aspects, a life cycle

perspective is taken into account. The following key life cycle stages of a product/service are thought

over and evaluated: raw material acquisition, design, production of construction products,

transportation, construction of a building, use of a building, end-of-life treatment and final disposal

(waste recycling and management). For each aspect possible legal and other requirements, which can

affect activities of the Company and the Group, are identified.

As every year, in 2022 the Company monitored the EMS indicators and performed measurements:

amount of waste, amount of hazardous chemicals used, incidents related to soil pollution with oil

products, rainwater pollution, emissions from internal combustion engines, air pollution with

particulate matter, noise, indoor dust, street pollution with dirt/dust, consumption of electricity,

water, fuel, etc.

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

hazardous ones.

In its operation the company uses only green electricity produced from renewable energy sources.

Panevezio statybos trestas AB has a responsible approach on the issues of climate change and is not

only a consumer of electricity, but also a producer.

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

sources. Panevezio statybos trestas AB takes a responsible approach to the issue of climate change

and is not only a consumer of electricity, but also a producer.

Panevezio statybos trestas AB operates a 200 kW solar power plant, which annually generates

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

power consumed by the production facilities.

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

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

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

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

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

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

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

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

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

greenhouse

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

The company of Panevezio statybos trestas AB Group, Skydmedis UAB, started using a bioboiler for

heating of premises. 30 per cents of the biofuel required for operation of this boiler is obtained from

production timber waste, which does not need to be disposed of.

The MobyDick ConLine KIT Flex400 MC Wheel Washing System has been successfully in use. The

closed-cycle wheel washing system not only reduces street pollution with dirt, prevents contaminated

water from entering urban sewage networks, but also does not interfere with other road users when

cleaning roads and is an alternative to sweeping brooms that cause dust and particulate matter spread

in the city.

The accounting of generated waste is performed in the GPAIS module: https://www.gpais.eu.

The Group sorted out the following quantities of waste for recycling and reuse, as well as secondary

raw materials:

2022

2021

Group

incl. Company

Group

incl. Company

Timber waste, t

104.93

98.67

71.03

68.89

Paper, cardboard waste, t

7.445

7.365

12.83

Polyethylene waste, t

0.875

0.065

7.69

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

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

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

We reject old polluting cars by adding new, less polluting cars to the fleet. 30 per cents of the vehicles

owned by the Group comply with the requirements of the Euro 6 emission standard.

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

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

2022

2021

Euros

Group

incl. Company

Group

incl. Company

Pollution with packaging waste

2,468

1,173

2,797

1,383

Pollution from mobile pollution sources

7,738

6,747

6,556

5,844

Environment protection (waste management)

199,623

185,582

123,642

115,844

The construction sector is a significant contributor to global CO

emissions due to its huge workload.

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

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

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

applied in the buildings under construction.

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

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

developed for us and with lower CO

emissions, which has the same standard and early strength

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

emissions. The

changed climatic conditions are taken into account in the construction process of the new buildings.

As the temperature conditions change, the needs for indoor ventilation, heating and cooling also

change. Therefore, new technological and architectural solutions are being implemented. The new

buildings construction of which is currently started by the Company are of the A++ energy efficiency

class. The buildings of the A ++ energy efficiency class use almost no thermal energy, which

contributes to the climate change mitigation.

The construction sector uses very unsustainable CO

-neutral materials: steel, cement, glass, etc.,

therefore solutions are being sought to make the construction process more environmentally friendly,

i. e. use of organic materials. For construction of new buildings, sustainable materials are used more

often. After the life cycle of the building these materials could be reused for a new life cycle or be

environmentally friendly and do not result in pollutions by means of recycling. One such material is

timber. Skydmedis UAB, the company of the Group, uses timber panels for the construction of

houses. Designers apply the highest standards for design and construction of a building, contributing

to environmental sustainability and healthy work environment. In the design process much attention

is paid to ensuring indoor air quality, intelligent lighting in accordance with good international

practices, sound resistance that retains external noise. The B2EAM New Construction Very Good

certificate confirming the above measures has been awarded to the Business Centre U219. This

certificate also acknowledges the responsible approach of developers to the environment and human

health, and guarantees long-term returns.

The report was prepared taking into account the Communication from the European

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

Relationship with Employees

The main asset of the Company is employees, who are the most important link in achieving the

objectives. Therefore, much attention is paid to motivation of employees: environment favourable

for development of new ideas and their implementation is being created, continuous exchange of

information is taking place. In the present-day environment, competence of employees is one of the

key factors describing competitiveness of the Company. Considering this factor, the Company

encourages employees in all organizational levels to learn and develop. Employees are given the

opportunity to study, improve their qualifications, and participate in various seminars and trainings.

In 2021, the training cycles on emotional intelligence were organized, and a course on improvement

of performance appraisal skills was provided for managers. The lawyers together with the staff of

the Personnel Department attended the Annual Labour Law Conference, and training was provided

to the lawyers on the continuously changing regulation of public procurement. In 2021 considerable

attention was also paid to improving the practical skills of internal communication, for that purpose

professional lecturers were invited.

We constantly strive to become the leader in the construction market, guaranteeing safe and non-

hazardous work places for the employees of Panevezio statybos trestas AB and all employees

working on behalf of the Company. The Occupational Health and Safety Management System (ISO

45001) implemented in 2008 ensures continuous identification and assessment of OHS risk factors,

identification of risk management measures and control of their implementation for the Company.

The work and personal protective equipment is selected for the employees following the most

advanced technologies.

The professional competence of employees and perception of employees in the field of occupational

safety and health is continuously improved. Much attention is paid to prevention of accidents and

occupational diseases, and reduction of accident likelihood. Partners, suppliers and others working

on behalf of the Company are involved in the processes of the occupational health and safety system.

The human and financial resources are provided to maintain and continuously improve the

occupational health and safety system.

The Company continuously invests in employee training and development courses to improve their

competencies and understanding in the field of occupational health and safety. In 2022 trainings were

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

managers was 243 in 2022. The employees participated in the following trainings:

- workers performing activities at height,

- load handler,

- locksmiths – fitters of lifting equipment,

- operators of lifting platforms and their equipment,

- OHS specialists,

- site OHS coordinators,

- first aid.

Employees are motivated not only by material incentives, such as competitive wages and salaries,

progressive bonus system, but also by exceptional quality of working environment. The Company

and the Group provides social guarantees: the allowance is paid in the event of the death of a family

member or immediate family of the employee, in case of an employee’s death, a gift to an employee

when a baby is born, on the employee’s anniversary birthday.

On 6 August 2021, the Works Council for representation of the employees consisting of 9 members

was elected at the Company. The Works Council submits proposals to the employer on economic,

social and work issues, which are topical to the employees, employer’s decisions, laws and other

regulations governing work relations. The Council is elected for the period of three years, which

starts from the beginning of their term of office.

Human Rights

The Group advocates equal opportunities for all employees, regardless of the employee's gender. The

majority of the Group's employees, 85% (83% of the Company), are men. This is greatly influenced

by specifics of the activity performed, i. e. women are less likely to choose the technological work

performed in construction as well as specialties in construction and technical engineering directly

related to such work and outdoor conditions.

The Company and the Group adhere to the principles for the protection of human rights and do not

tolerate any violations of human rights in their activities. They are for the fair and transparent wage

and salary policy, comply with the laws regulating overtime and working hours, respect the right of

employees to rest and do not tolerate harassment and violence of any nature.

The Company opposes any discrimination and forced labour. Employees of the Company have equal

rights and possibilities regardless their gender, nationality, social or family status, membership in

public or political organisations or personal qualities. In 2020, there were no violations of human

rights or relevant claims recorded.

Social Initiatives

Panevezio statybos trestas AB keeps on implementing its objective to be a reliable and socially

responsible company. In its activity, the Company follows the principles of sustainable business

development, which also include social responsibility. Panevezio statybos trestas AB invests in

various extra activities, supports different social, sports, cultural and health promotion projects.

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

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

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

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

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

initiated by the Company:

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

National Blood Centre;

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

- Collecting employee support for animal sanctuaries.

Fight against Corruption and Bribery

The Company and its subsidiaries do not tolerate corruption or its manifestations of any nature and

pursue open competition, ethical business conditions and proper ensuring of transparency and

publicity in their activities. The Group does not tolerate fraud, extortion, unofficial accounting,

unofficial and inadequately executed transactions, accounting for fictitious expenses, use of forged

documents and other forms of corruption. Provisions of corruption intolerance apply to all employees

of the Group, members of the management and supervisory bodies, any third parties acting on behalf

of the Group.

The risk is mitigated by existing integrated internal controls for identifying potential risk factors for

corruption. The Company and the Group constantly control their activities by improving the

processes.

Panevezio statybos trestas AB and its subsidiary companies refrain from any form of influence on

politicians and does not fund election campaigns of political parties, their representatives or their

candidates.

The Group always co-operates with the institutions and is ready to provide all the necessary

information.

The Company and its subsidiary companies ensure that its procurement is carried out in compliance

with the principles of equality, non-discrimination, transparency, mutual recognition, proportionality

and requirements of confidentiality as well as impartiality at the same time using the Company’s

funds in a rational manner. Suppliers are selected on the basis of the most economically advantageous

proposal or the lowest price under equal and non-discriminatory conditions.

In performing selection of subcontractors, the Company carries out assessment of subcontractors’

qualification. Compliance with environmental, occupational health and safety requirements as well

as honesty are the fundamental requirements for subcontractors.

Overview of the alignment with the EU Taxonomy Regulation

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

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

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

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

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

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

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

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

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

Assessment of revenue in accordance with Taxonomy

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

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

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

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

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

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

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

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

environmental goals.

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

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

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

as much as possible.

Revenue according to Taxonomy in 2022

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute revenue 2022

Proportion of revenue

2022

Climate change

mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of revenue

2022

Taxonomy

-aligned

proportion of revenue

2021

Category (enabling)

Category

(transi

tional)

thousa

nd Eur

Y/N

A. Taxonomy-eligible activity:

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

Revenue of environmentally

sustainable activities (Taxonomy-

aligned) (A.1)

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

7.1. Construction of new buildings

F41.1,

F41.2,

F43

86,542

74.71%

7.7. Acquisition and ownership of

buildings

L68

1,856

1.6%

100%

n/a

7.2. Renovation of existing buildings

F41,

F43

876

0.76%

100%

n/a

Revenue of Taxonomy-eligible

but not environmentally

sustainable activities (not

89,274

77.07%

Taxonomy-aligned activities)

(A.2)

Total: A.1 + A.2

89,274

77.07%

B. Taxonomy-non-eligible activities

Revenue of Taxonomy-non-eligible

activities (B)

26,566

22.93%

TOTAL: A + B

115,840

100%

Revenue according to Taxonomy in 2021

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute revenue 2021

Proportion of revenue

2021

Climate change

mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of revenue

2021

Category (enabling)

Category

(transitional)

thous

and

Eur

Y/N

A. Taxonomy-eligible activity:

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

Revenue of environmentally

sustainable activities

(Taxonomy-aligned) (A.1)

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

7.1. Construction of new buildings

F41.1,

F41.2,

F43

69,793

70.89%

7.7. Acquisition and ownership of

buildings

L68

7,870

7.99%

100%

n/a

7.2. Renovation of existing buildings

F41,

F43

2,536

2.58%

100%

n/a

Revenue of Taxonomy-eligible

but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

80,199

81.46%

Total: A.1 + A.2

80,199

81.46%

B. Taxonomy-non-eligible activities

Revenue of Taxonomy-non-eligible

activities (B)

18,252

18.54%

TOTAL: A + B

98,451

100%

Assessment of capital expenditure (CapEx) in accordance with Taxonomy

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

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

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

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

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

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

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

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

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

Capital expenditure (CapEx) according to Taxonomy in 2022

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute Taxonomy

CapEx in 2022

Proportion of taxonomy

capex 2022

Climate

change mitigation

Climate change

adaptation

Climate change mitigation

Climate change

adaptation

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of Taxonomy

CapEx

2022

Taxon

omy-aligned

proportion of Taxonomy

CapEx

2021

Category (enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

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

Taxonomy CapEx of

environmentally sustainable

activities (Taxonomy-aligned) (A.1)

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

7.7. Acquisition and ownership of

buildings

L68

422,741

48.55%

100%

6.5. Transport by motorbikes,

passenger cars and light commercial

vehicles

H49.32,

H49.39,

N77.11

41,862

4.81%

50.13%

Taxonomy CapEx of Taxonomy-

eligible but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

464,604

53.35%

Total: A.1 + A.2

464,604

53.35%

B. Taxonomy-non-eligible activities

Taxonomy CapEx of Taxonomy-

non-eligible activities (B)

406,212

46.65%

TOTAL: A + B

870,816

100%

Capital expenditure (CapEx) according to Taxonomy in 2021

Substantial

contribution

criteria

Do no significant harm criteria

Economic activity

NACE code(s)

Absolute Taxonomy CapEx

2021

Proportion of taxonomy

capex 2021

Climate change mitigation

Climate change

adaptation

Climate change

mitigation

Climate change

adaptation

Water and marine resources

Circular economy

Pollution

Biodiversity and ecosystems

Minimum

safeguards

Taxonomy

-aligned

proportion of Taxonomy

CapEx

2021

Category (enabling)

Category

(transitional)

Eur

Y/N

A. Taxonomy-eligible activity:

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

Taxonomy CapEx of

environmentally sustainable

activities (Taxonomy-aligned)

(A.1)

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

7.7. Acquisition and ownership of

buildings

L68

1,062,507

54.92%

97.46%

7.6. Installation, maintenance and

repair of renewable energy

technologies

F42, F43, M71,

C16, C17, C22,

C23, C25, C27,

C28

118,000

6.1%

6.5. Transport by motorbikes,

passenger cars and light

commercial vehicles

H49.32, H49.39,

N77.11

73,149

3.78%

Taxonomy CapEx of Taxonomy-

eligible but not environmentally

sustainable activities (not

Taxonomy-aligned activities)

(A.2)

1,253,656

64.8%

Total: A.1 + A.2

1,253,656

64.8%

B. Taxonomy-non-eligible activities

Taxonomy CapEx of Taxonomy-

non-eligible activities (B)

680,852

35.2%

TOTAL: A + B

1,934,508

100%

Assessment of operating costs (OpEx) in accordance with Taxonomy

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

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

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

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

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

for this indicator in next year's report.

Minimum safeguards

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

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

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

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

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

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

Consolidated Remuneration Report

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

financial period of the year 2022. The report has been prepared in accordance with the Law on

Financial Reporting of Enterprises of the Republic of Lithuania, the Ordinary General Meeting of

Shareholders held on 29 April 2020 approved the Remuneration Policy for Top and Middle

Management Staff of Panevezio statybos trestas AB and the Extraordinary General Meeting of

Shareholders held on 9 April 2021 approved the Procedure for Awarding and Paying Remuneration

of Independent Board Members of Panevezio statybos trestas AB. The Consolidated Remuneration

Report for 2021 was approved at the General Meeting of Shareholders on 28 April 2022 together

with the Set of Financial Statements for 2021.

Remuneration of Board Members

As the Law on Companies of the Republic of Lithuania provides for the possibility to elect only one

either collegial supervision or management body, the collegial management body, the Board

performing the supervision function, and one-person management body, the Managing Director, are

set up at the Company.

Following the Law on Companies and Articles of Association of the parent Company, the Board

Members are appointed for the four-year term of office.

On 9 April 2021 the Extraordinary General Meeting of Shareholders approved the procedure for

awarding and paying remuneration of the independent members of the Board for their activities in

the Board. Remuneration (bonuses) is paid to the members of the Board, except for the independent

members of the Board, for their work by the decision of the General Meeting of Shareholders in

accordance with the Law on Companies of the Republic of Lithuania.

Remuneration Paid to Board Members

On 9 April 2021 the Extraordinary General Meeting of Shareholders elected the new Board of

Panevezio statybos trestas AB. The information on payments made to the members of the newly

elected Board over the year 2022 is presented below. The Extraordinary General Meeting of

Shareholders held on 28 April 2022 did not come to the decision to pay bonuses to the members of

the Board.

The amounts in the table are in Euros, before taxes.

Table 8. Information on remuneration of supervisory body members of the issuer in 2021:

Full name

Position

Monthly

remuneration of

independent

member of the

Board (Euros)

Remuneration

of independent

member of the

Board

total for 2022

(Euros)

Total income

from the

company for

2022 (Euros)

Justas Jasiunas

Chairman

77707

Gvidas Drobuzas

Board Member

146400

Kristina Maciuliene

Board Member

Vaidas Grincevicius*

Board Member

3 300

39600

Lina Simaskiene*

Board Member

3 300

39600

Total

6600

79200

146400

* independent member of the Board

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

from other companies of Panevezio statybos trestas AB Group.

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

pays.

Remuneration of Company’s Employees

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

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

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

necessary for success in business.

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

Euros compared to 13.405 mln. Euros in 2021.

To attract high-level professionals to management positions, we aim to keep the remuneration close

to the market median of the country in which any company of the Group operates.

In general, the remuneration structure at the Company consists of two parts: Fixed Remuneration

Component (FRC) and Variable Remuneration Component (VRC). The FRC range limits are set

taking into account the remuneration trends in the market, research data and comparative market, i.e.

the market of the companies operating in Lithuania. The VRC is a tool for getting the Top and Middle

Management Staff directly interested in seeking for high performance of the Company, an instrument

to for creating policy and culture of the Company, clearly and accurately indicating what

achievements and contributions are valued/rewarded. The Variable Remuneration Component to the

Top and Middle Management Staff is paid once a year at the end of the financial year and is linked

to performance of the employee, team and/or company. The full text of Renumeration Policy is

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

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

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

provided in the tables below.

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

Position category

2022

2021

2020

2019

2018

Average

salary

Average

salary

Average

salary

Average

salary **

Average

salary

Managing Director

9281

8863

7626

Top Management Staff

5528

5107

5323

4524

3887

Middle Management Staff

4428

4297

3478

3216

2630

Specialists

2380

2192

1806

1753

1244

Workers

1646

1380

1319

1322

980

Total

2020

1800

1583

1569

1170

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Table 10. Average monthly salary for employees of the Group, Euros (before taxes)

Position category

2022

2021

2020

2019

2018

Average

salary

Average

salary

Average

salary

Average

salary **

Average

salary

Top Management Staff

5019

4482

3957

4083

3040

Specialists

2436

2167

1871

1752

1343

Workers

1649

1407

1363

1322

956

Total

2048

1787

1622

1569

1148

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Remuneration Structure for Managing Director and Top Management Staff

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

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

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

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

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

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

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

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

the decision of the Board.

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

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

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

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

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

branch managed by him.

Annual Changes in Remuneration

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

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

Table 11. Company performance and average monthly gloss salary for the period 2018 through

2022

Company performance

2022

2021

2020

2019 **

2018

Net profit (loss) (thousands Euros)

-1,720

304

-12,418

590

-4,852

Profit (loss) per share (Euros)

-0.105

0,019

-0.76

0.036

-0.297

Assets (thousands Euros)

52,762

48,478

62,290

71,337

58,986

Average monthly salary

2,040

1,800

1,583

1,569

1,170

** Salary adjustment due to changes in taxation in effect since beginning of 2019.

Long-Term Motivation by Shares

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

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

supplementary pension or early retirement schemes.

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.

3.2.2. Names and surnames of the candidates to

become members of the management board,

information on their educational background,

qualifications, professional experience, current

positions, other important professional obligations

and potential conflicts of interest should be

disclosed without violating the requirements of the

legal acts regulating the handling of personal data

at the meeting of the supervisory board in which

the management board or individual members of

the management board are elected. In the event that

the supervisory board is not formed, the

information specified in this paragraph should be

submitted to the general meeting of shareholders.

The management board should, on yearly basis,

collect data provided in this paragraph on its

members and disclose it in the company’s annual

report.

Yes

Information on the positions taken by the

members of the Management Board or their

participation in operation of other companies is

continuously collected and compiled, and at the

end of every year it is revised and presented in

the reports prepared by the Company.

3.2.3. All new members of the management board

should be familiarized with their duties and the

structure and operations of the company.

Yes

The new members of the Management Board

have been familiarised with their duties, the

structure, operations and strategy of the

Company.

3.2.4. Members of the management board should

be appointed for a specific term, subject to

individual re-election for a new term in office in

order to ensure necessary development of

professional experience and sufficiently frequent

reconfirmation of their status.

Yes

The Management Board of the Company is

elected by the General Meeting of Shareholders

for the maximal four-year term in office

prescribed by the Law on Companies of the

Republic of Lithuania. Individual members of

the Management Board or the entire

Management Board may be recalled by the

General Meeting of Shareholders before the end

of their term of office.

3.2.5. Chair of the management board should be a

person whose current or past positions constitute

no obstacle to carry out impartial activity. Where

the supervisory board is not formed, the former

manager of the company should not be

immediately appointed as chair of the management

board. When a company decides to depart from

these recommendations, it should furnish

information on the measures it has taken to ensure

the impartiality of supervision.

Yes

The Chairman of the Management Board

represents the main shareholder and has never

been the Chief Executive Officer of the

Company.

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

bribery/44884389.pdf

100

3.2.6. Each member should devote sufficient time

and attention to perform his duties as a member of

the Management Board. Should a member of the

Management Board attend less than a half of the

meetings of the Management Board throughout the

financial year of the company, the Supervisory

Board of the company or, if the Supervisory Board

is not formed at the company, the General Meeting

of Shareholders should be notified thereof.

Yes

The members of the Management Board fulfil

their functions properly: actively participate at

the meetings of collegial body and devote

sufficient time to perform their duties as a

member of the collegial body.

In 2022 there were 12 (twelve) meetings of the

Management Board where three members

participated in all the meetings, two members

participated in eleven meetings.

3.2.7. In the event that the management board is

elected in the cases established by the Law where

the supervisory board is not formed at the

company, and some of its members will be

independent4, it should be announced which

members of the management board are deemed as

independent. The management board may decide

that, despite the fact that a particular member

meets all the criteria of independence established

by the Law, he/she cannot be considered

independent due to special personal or company-

related circumstances.

Two independent Board Members are Vaidas

Grincevicius and Lina Simaskiene. Prior to the

Meeting of Shareholders, it was published that

these two candidates for Board Membership

would be considered as independent Board

Members.

3.2.8. The general meeting of shareholders of the

company should approve the amount of

remuneration to the members of the management

board for their activity and participation in the

meetings of the management board.

Yes

On 9 April 2021 the Extraordinary General

Meeting of Shareholders approved the

Procedure for Awarding and Paying

Remuneration to Independent Board Members of

Panevezio statybos trestas AB for their Activities

in the Board.

The members of the Management Board, except

for the independent members of the Management

Board, are paid remuneration (bonuses) by the

decision of the General Meeting of Shareholders

in accordance with the Law on Companies of the

Republic of Lithuania.

3.2.9. The members of the management board

should act in good faith, with care and

responsibility for the benefit and the interests of

the company and its shareholders with due regard

to other stakeholders. When adopting decisions,

they should not act in their personal interest; they

should be subject to no-compete agreements and

they should not use the business information or

opportunities related to the company’s operations

in violation of the company’s interests.

Yes

Based on the data available to the Company, all

members of the Management Board act in good

will for the interests of the Company and its

shareholders, they are guided by the interests of

the Company and not those of their own or any

third parties, seek to maintain their independence

in decision-making.

For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated

persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.

101

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.

102

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.

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5.1.1. Taking due account of the company-related

circumstances and the chosen corporate governance

structure, the supervisory board of the company or, in

cases where the supervisory board is not formed, the

management board which performs the supervisory

functions, establishes committees. It is recommended

that the collegial body should form the nomination,

remuneration and audit committees

The collegial body of the Company’s

management is the Management Board

performing the functions of Nomination

Committee and the Remuneration

Committees. The Management Board selects

and approves the candidacy of the Chief

Executive Officer of the Company –

Managing Director and agrees with the

candidacies of Directors of the Company

proposed by the Managing Director. The

Management Board continuously evaluates

their experience, professional capabilities and

implementation of the Company’s strategic

goals, hears out their reports. The Board

selects the candidate for the external auditor

and provides proposals to the General Meeting

of Shareholders for approval.

On 28 April 2022, the Audit Committee was

elected at the Annual General Meeting of

Shareholders.

5.1.2. Companies may decide to set up less than

three committees. In such case companies should

explain in detail why they have chosen the alternative

approach, and how the chosen approach corresponds

with the objectives set for the three different

committees.

Yes

5.1.3. In the cases established by the legal acts the

functions assigned to the committees formed at

companies may be performed by the collegial body

itself. In such case the provisions of this Code

pertaining to the committees (particularly those

related to their role, operation and transparency)

should apply, where relevant, to the collegial body as

a whole.

See the commentary on the recommendation

provided in item 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

5.1.4. Committees established by the collegial body

should normally be composed of at least three

members. Subject to the requirements of the legal

acts, committees could be comprised only of two

members as well. Members of each committee should

be selected on the basis of their competences by

giving priority to independent members of the

collegial body. The chair of the management board

should not serve as the chair of committees.

Yes/No

See the commentary on the recommendation

provided in 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

The Audit Committee is composed of three

members. Two members conform to the

requirements for independence. The Audit

Committee is elected for the period of one

year.

The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of

Financial Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to

public limited liability companies whose securities are traded on a regulated market of the Republic of Lithuania and/or

of any other Member State) are under the obligation to set up an audit committee (the legal acts provide for the

exemptions where the functions of the audit committee may be carried out by the collegial body performing the

supervisory functions).

104

5.1.5. The authority of each committee formed

should be determined by the collegial body itself.

Committees should perform their duties according to

the authority delegated to them and regularly inform

the collegial body about their activities and

performance on a regular basis. The authority of each

committee defining its role and specifying its rights

and duties should be made public at least once a year

(as part of the information disclosed by the company

on its governance structure and practice on an annual

basis). In compliance with the legal acts regulating

the processing of personal data, companies should

also include in their annual reports the statements of

the existing committees on their composition, the

number of meetings and attendance over the year as

well as the main directions of their activities and

performance.

Yes/No

See the commentary on the recommendation

provided in item 5.1.1.

The Audit Committee follows the Rules of the

Audit Committee prepared by the committee

and approved by the General Meeting of

Shareholders. These rules define the

regulations specifying the rights and duties of

the Audit Committee, size of the Audit

Committee, term of office in the Audit

Committee, requirements for education,

professional experience and principles iof

independence.

The approved Rules of the Audit Committee

are published on the website of the Company.

In 2022, there were 2 meetings of the Audit

Committee held where all members of the

Audit Committee were present.

5.1.6. With a view to ensure the independence and

impartiality of the committees, the members of the

collegial body who are not members of the

committees should normally have a right to

participate in the meetings of the committee only if

invited by the committee. A committee may invite or

request that certain employees of the company or

experts would participate in the meeting. Chair of

each committee should have the possibility to

maintain direct communication with the shareholders.

Cases where such practice is to be applied should be

specified in the rules regulating the activities of the

committee.

Yes/No

See the commentary on the recommendation

provided in item 5.1.1.

The recommendation is implemented to the

extent it is related to the activities of the Audit

Committee in the Company.

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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).

106

3) review, on a regular basis, the remuneration policy

and its implementation.

5.4. Audit Committee

5.4.1. The key functions of the audit committee are

defined in the legal acts regulating the activities of

the audit committee

Yes

The Company implements this

recommendation.

On 28 April 2022, the Audit Committee was

elected at the Annual General Meeting of

Shareholders. The Audit Committee is

composed of three members, two of which

conform to the requirements for independence.

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

5.4.2. All members of the committee should be

provided with detailed information on specific issues

of the company’s accounting system, finances and

operations. The heads of the company’s

administration should inform the audit committee

about the methods of accounting for significant and

unusual transactions where the accounting may be

subject to different approaches.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

All members of the Committee are provided

with detailed information on specific issues of

the accounting system, finances and

operations of the Company.

5.4.3. The audit committee should decide whether

the participation of the chair of the management

board, the manager of the company, the chief finance

officer (or senior employees responsible for finance

and accounting), the internal and external auditors in

its meetings is required (and, if required, when). The

committee should be entitled, when needed, to meet

the relevant persons without members of the

management bodies present.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders.

5.4.4. The audit committee should be informed

about the internal auditor’s work program and should

be furnished with internal audit reports or periodic

summaries. The audit committee should also be

informed about the work program of external

auditors and should receive from the audit firm a

report describing all relationships between the

independent audit firm and the company and its

group.

Yes

The Audit Committee organizes its activities

in accordance with the Rules of the Audit

Committee approved at the Meeting of

Shareholders. The Audit Committee is

provided with the information mentioned

listed herein from independent audit firm.

No internal audit function exists at the

Company/Group.

Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the

Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of

Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the

Bank of Lithuania.

107

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.

108

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.

109

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.

110

8.3. Where stakeholders participate in the corporate

governance process, they should have access to

relevant information.

Yes

Detailed information on scheduled events of

the shareholders is made public following the

procedure prescribed by law, the investors

(shareholders) have sufficient opportunities to

familiarize themselves with the relevant

information and vote in adopting decisions.

8.4. Stakeholders should be provided with the

possibility of reporting confidentially any illegal or

unethical practices to the collegial body performing

the supervisory function.

Yes

The stakeholders may submit anonymous

reports to the collegial body.

Principle 9: Disclosure of information

The corporate governance framework should ensure the timely and accurate disclosure of all material

corporate issues, including the financial situation, operations and governance of the company.

9.1. In accordance with the company’s procedure

on confidential information and commercial secrets

and the legal acts regulating the processing of

personal data, the information publicly disclosed by

the company should include but not be limited to the

following:

9.1.1. operating and financial results of the

company;

Yes

The operating and financial results of the

Company are made public in the Intermediate

Semi-annual and Annual Reports of the

Company on the website of the Company and

on the website of stock-exchange Nasdaq

Vilnius.

9.1.2. objectives and non-financial information of

the company;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.3. persons holding a stake in the company or

controlling it directly and/or indirectly and/or

together with related persons as well as the structure

of the group of companies and their relationships by

specifying the final beneficiary;

Yes

All information available to the Company is

published in the Intermediate Semi-annual and

Annual Reports of the Company.

9.1.4. members of the company’s supervisory and

management bodies who are deemed independent,

the manager of the company, the shares or votes held

by them at the company, participation in corporate

governance of other companies, their competence

and remuneration;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.5. reports of the existing committees on their

composition, number of meetings and attendance of

members during the last year as well as the main

directions and results of their activities;

Yes

Information on composition, number of

meeting and attendance of members of the

existing committees is published in the

Intermediate Semi-annual and Annual Reports

of the Company.

111

9.1.6. potential key risk factors, the company’s risk

management and supervision policy;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.7. the company’s transactions with related

parties;

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.8. main issues related to employees and other

stakeholders (for instance, human resource policy,

participation of employees in corporate governance,

award of the company’s shares or share options as

incentives, relationships with creditors, suppliers,

local community, etc.);

The Company does not apply any schemes

under which employees receive remuneration

in shares, share options or other rights to share

acquisition.

9.1.9. structure and strategy of corporate

governance;

Yes/No

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.1.10. initiatives and measures of social

responsibility policy and anti-corruption fight,

significant current or planned investment projects.

This list is deemed minimum and companies are

encouraged not to restrict themselves to the

disclosure of information included into this list. This

principle of the Code does not exempt companies

from their obligation to disclose information as

provided for in the applicable legal acts.

Yes

Information is published in the Intermediate

Semi-annual and Annual Reports of the

Company.

9.2. When disclosing the information specified in

paragraph 9.1.1 of recommendation 9.1, it is

recommended that the company which is a parent

company in respect of other companies should

disclose information about the consolidated results

of the whole group of companies.

Yes

The Company complies with the

recommendation and discloses information

about the results of the Company and the Group

of its subsidiaries. The information is published

in the Intermediate Semi-annual and Annual

Reports of the Company.

9.3. When disclosing the information specified in

paragraph 9.1.4 of recommendation 9.1, it is

recommended that the information on the

professional experience and qualifications of

members of the company’s supervisory and

management bodies and the manager of the company

as well as potential conflicts of interest which could

affect their decisions should be provided. It is further

recommended that the remuneration or other income

of members of the company’s supervisory and

management bodies and the manager of the company

should be disclosed, as provided for in greater detail

in Principle 7.

Yes

The information specified in the

recommendation in provided in the Annual and

Semi-annual Reports of the Company.

112

9.4. Information should be disclosed in such

manner that no shareholders or investors are

discriminated in terms of the method of receipt and

scope of information. Information should be

disclosed to all parties concerned at the same time.

Yes

The Company discloses the information via the

information disclosure system used by the

Vilnius Stock Exchange in the Lithuanian and

English languages simultaneously. The

Company does not disclose the information

likely to impact the price of the issued by it

securities in its comments, interviews or

otherwise by the time such information is

announced via the information system of the

Stock Exchange.

Principle 10: Selection of the company’s audit firm

The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the

audit firm.

10.1. With a view to obtain an objective opinion on

the company’s financial condition and financial

results, the company’s annual financial statements and

the financial information provided in its annual report

should be audited by an independent audit firm.

Yes

The independent audit company performs

auditing of the individual and consolidated

(the Group) annual financial statements of the

Company and its subsidiaries in accordance

with the International Accounting Standards

applicable in the European Union. The

independent audit company evaluates

conformity of the Annual Report to the

audited Financial Statements.

10.2. It is recommended that the audit firm would be

proposed to the general meeting of shareholders by the

supervisory board or, if the supervisory board is not

formed at the company, by the management board of

the company.

Yes

The Management Board proposes an audit

firm to the General Meeting of Shareholders.

10.3. In the event that the audit firm has received

remuneration from the company for the non-audit

services provided, the company should disclose this

publicly. This information should also be available to

the supervisory board or, if the supervisory board is

not formed at the company, by the management board

of the company when considering which audit firm

should be proposed to the general meeting of

shareholders.

Yes

In 2022, the firm of auditors provided no

services other than auditing.