As of 31 December 2016, the registered authorised capital of Panevėžio keliai AB comprised

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3 As of 31 December 2016, the registered authorised capital of Panevėžio keliai AB comprised EUR 541, Capital comprised 1,867,668 ordinary registered shares with a nominal value of EUR As of 31 December 2016, the number of shareholders was 86 entities. Shares As of 31 December 2016: Remigijus Juodviršis Gvidas Drobužas Ksaveras Balčėtis A group of shareholders operating under the agreement Minority shareholders percent percent percent percent 7.24 percent Shareholder structure General Meeting of Shareholders Supervisory Board Board Administration Management structure 5

4 Company management Supervisory Board Board Rasa Juodviršienė Chairperson Giedrius Stasevičius Almantas Balčėtis Ksaveras Balčėtis Remigijus Juodviršis Audrius Balčėtis Audrius Butkūnas Artūras Bučas Chairperson Administration Director General Virmantas Puidokas Technical Director Vilius Gražys Deputy Director General in Marketing Algimantas Janušauskas Director of Finance and Economic Affairs Danutė Valentina Blaškienė Project Manager Audrius Butkūnas Commercial Director Rolandas Zabilevičius Development Director Eugenijus Rečiūnas Director of Panevėžys Branch Arvydas Zapalskis Director of Rokiškis Branch Gintaras Genys Director Latvia Branch Vitalis Marščionka Senior Accountant Inga Jurevičienė 6

5 Turbo roundabout construction at the intersection of Panevėžys city bypass and Panevėžys Pasvalys Riga road is nearly completed.

6 AB Panev io Keliai group of companies AB PANEVĖŽIO KELIAI REAL ESTATE Road and railway construction UAB UKMERGĖS KELIAI UAB SOSTINĖS GATVĖS UAB AUKŠTAITIJOS TRAKTAS UAB ZARASŲ AUTOMOBILIŲ KELIAI SIA LATGALES CELDARIS SIA UNION ASPHALTTECHNIK OOO DOROGI BALTIKI OOO SOVRIEMIENNYJE TECHNOLOGIJI DOROG Building construction AB Panevėžio statybos trestas UAB ALINiTA SIA PS Trests UAB METALO MEISTRAI OOO Teritorija UAB SKYDMEDIS OOO Baltlitstroij UAB ALPROKA UAB ŠEŠKINĖS PROJEKTAI UAB PST INVESTICIJOS UAB ATEITIES PROJEKTAI Zao ISK BALTEVROMARKET AB PK Road OOO BALTDORMOSTSTROJ UAB VEKADA SP.Z.O.O KINGSBUD UAB DANGŲ EMULSIJA OOO Baltstrojbeton AB PST Nordic UAB KELTECHA OOO Niemanskij Rajavtodor PS PST un ARmS UAB PAVERSMIO KARJERAS OOO Dorogi Černiachovska UAB Visdievų karjeras 8

7 MAP OF AB PANEV IO KELIAI GROUP sweden stockholm: AB pst NORDIC malmö: AB PK Road panevėžys: AB Panevėžio keliai AB Panevėžio keliai PanevėžYS BRANCH UAB Dangų emulsija UAB Keltecha UAB Paversmio karjeras UAB visdievų karjeras AB Panevėžio statybos trestas UAB Metalo meistrai UAB Skydmedis UAB Vekada PST BRANCHES: Gerbusta, Pastatų apdaila, KALININGRAD: Ooo Baltdormoststroj OOO Baltstrojbeton Ooo Baltlitstroij Ooo Dorogi Baltiki ZAO ISK Baltevromarket Ooo Dorogi Černiachovska OOO Niemanskij RajAvtodor POLAND LIthuania KALININGRAD Konstrukcija, Betonas, Stogas, Genranga klaipėda: UAB Alinita PST BRANCH Klaipstata zarasai: Uab Zarasų automobilių keliai UtenA: Uab Aukštaitijos traktas UKMERGĖ: Uab Ukmergės keliai LATVIA SUWALKI: Sp.Z.o.O Kingsbud BELARUS UKRAINE VILNIUS: Uab Sostinės gatvės Uab pst Investicijos Uab Alproka Uab šeškinės projektai PST BRANCH Genranga PALANGA: Uab Ateities projektai ROKIŠKIS: AB Panevėžio keliai RokiškiS BRANCH RIGA: Sia Union Asphalttechnik PST permanent establishment in Latvia AB Panevėžio keliai branch in Latvia UAB Keltecha Latvian branch SIA PS Trests PS PST un ARmS DAUGAVPILS: Sia Latgales Celdaris KIEV: OOO Sovriemiennyjie Technologiji Dorog RUSSIA CHerepovETS: OOO Teritorija 9

8 A word from AB Panev io keliai director general 10 In 2016, the environment in which Panevėžio keliai AB group of companies had work reminds of a roller coaster. The technological development and creation of a smart road were bringing us to the dizzying heights. At the same time, you could quickly end up in a blatant pit left behind by the political and economic situation, change of the client needs and slashing and intensifying competition. The main task in such a situation is to maintain a cost-effective operating speed and on each slope and rise concentrate and apply the best practices for your own advantage. It is very important to stay alert despite all the rocking. The company s consolidated revenue in the reporting year amounted to 190 million euro, which is nearly one fifth less than in This modest indicator is a result of obvious causes. After announcing open procurement procedure in the middle of the year and with the examination of tenders, determination of a successful tenderer and award of the contract taking longer than expected, the start of works at the site has been postponed until the autumn or even later. For the first time we had to apply a compulsory technological break from mid-december to mid-march, which also influenced the volume of works completed and revenue received. Part of works has been transferred to the next reporting year, thus, in 2017, we have been busy since the very spring. Another indicator demonstrating the results of the reporting year is net profit amounting to 9.1 million euro, which is 2.8 million euro more than in I see our ability to maintain positive operational outcomes while the volumes of work have been decreasing as a positive thing. This proves that even in the most difficult market conditions our specialists manage to organise works in such a way that modern technological and management solutions enable to partially compensate lost income and other associated losses. Even while the volumes of works dropped, we were still able to maintain the production, technical, technological and intellectual potential and continue developing it in terms of quality. Panevėžio keliai AB and its subsidiary companies Aukštaitijos traktas UAB, Sostinės gatvės UAB, Ukmergės keliai UAB, Zarasų automobilių keliai UAB and Dangų emulsija UAB operate in the field of road and rail design and construction in Lithuania. These enterprises, along with the parent company, have successfully implemented and now use the modern work organisation methods and technologies in their production, which ensure a competitive advantage in the market. The outcomes of the subsidiary companies Union Asphalttechnik SIA and Latgales Celdaris SIA operating in Latvian transport infrastructure construction market have been affected by the amalgamation of volume in the announced procurement, which restricted participation of smaller enterprises in the procedure. In Latvia our companies commonly operate as partners of large market participants. The road construction companies Baltdormoststroj and Dorogi Baltiki operating in the Kaliningrad Region of the Russian Federation maintained their market positions in 2016, but their development possibilities are restricted due to tighter infrastructure financing conditions. Director General of Panevėžio keliai AB virmantas puidokas In 2016, the newbie in the road sector, PK Road, a subsidiary of Panevėžio keliai AB in Sweden, has completed one of the rail infrastructure projects. Panevėžio statybos trestas AB (PST), a member of Panevėžio keliai group of companies, and its subsidiaries, operate in the building and structure construction market The total consolidated revenue of PST group of companies amounted to 99.4 million euro in the reporting year, demonstrating a 18 per cent decrease as compared to The consolidated net profit of PST group totalled 3.2 million euro in In that year the main activities of PST were conduced in Lithuania. The revenue of PST group yielded from the works performed in the country comprised 88.9 per cent of the revenue, while the remaining 10 percentage points are sales in foreign markets. The fundamental change in working on a complicated Lithuanian building and structure construction market is that the delayed start of EU financing leads to a decreased volume of orders in the public sector, however, income from the private sector is growing. PST names the Scandinavian countries and Latvia as its key foreign markets. The important event of the reporting year in the field of development of real property projects was the agreement on the sale of shares of Naujasis Užupis, a subsidiary of Panevėžio keliai, incorporated for the development of Paupys project. The clean and duly arranged territory of the former Skaiteks plant in Vilnius, prepared for the next stage of development, was sold at the same time. This is one of the largest real property transactions in Lithuania in the past years. Paupys project was implemented with the view that is could be disposed of at any stage of its development. Current market changes force to concentrate on the primary fields of activities road and rail construction, development thereof in the neighbouring and remote markets, including Scandinavia. I think it is reasonable to concentrate the financial and intellectual resources in the

9 A word from AB Panev io keliai director general priory areas. We are very hopeful about the project for development of the business centre on Ukmergės g. 219 in Vilnius conducted by PST and its subsidiary Šeškinės projektai. It is expected to launch construction of the business centre with an area of a 16 thousand square metres on the Šeškinė Hill already this year. Going back to the roller coaster topic, I would like to mention that we are operating in the market conditions that are less than unfavourable, where investments into all types of public infrastructure are only in the planning stage and it is hard to forecast a realistic start of their implementation. At the same time, the technological revolution is like an explosion with an all-consuming amplitude: from creation of the concept of a smart road and installation of complex data transmission systems to being tasked with training of competent specialists. In some cases, the transformation is more rapid than our ability to integrate the changes, while in others, our skills and technologies surpass the time and the market needs. However, there is no reason to lose heart. The time when the task of a road builder was reduced to basic paving work and waving of shovels is in the past. Today, at the start of a working day, a machine operator first turns on a computer, reads his assignments on a digital project drawing and only then releases the heavy duty equipment. The work of the entire levelling team is now performed by a single land-surveyor with a portable height measuring device able to measure any point required quickly and with utmost precision. Even the work of road rollers is automated and synchronised. Our company has implemented the automatic control systems, and use of advanced engineering tools is no longer a novelty, but practically our daily routine. The acquired skills give us the competitive advantage, because the market is filling up with public procurement procedures, where design and construction are entrusted to a single contractor. Thus, the ability to work in the BIM environment and short terms of project completion become one of the two tender evaluation criteria. The first criteria is still the price. In order to maintain competitive advantage in the intensifying strife for contracts, it is especially important to invest into company s technical and technological resources, find additional capacities and measures facilitating efficiency of work through application of the newest work organisation and production methods and tools, IT and other engineering solutions. Following these steps will guarantee that the delivered work meets the quality bar ensuring the optimal ratio of price and completion terms. We have already successfully mastered creation of the spatial model of structure and its integration into the operating automated mechanism control system on all levels, however we hope to continue improving our capacities in this area. In the field of design we need to focus on the technical project drafted with the help of modern tools and the spatial model of structure, by including all road-related engineering systems, as well as lighting and communication networks, traffic status identification and other traffic management systems. Implementation of new technologies and automation of production are inseparable from improvement of the staff qualification. For these purposes we maintain close cooperation with the scientific institutions. In 2016, we signed a new strategic cooperation agreement with Panevėžys College and the Lithuanian Road Administration on the common project for setting up a new study programme in the field of construction engineering. The road engineers demanded on the market will be prepared in Panevėžys starting the autumn of this year. Keeping up the pace with the technological progress, the principles of sustainable construction have become an equally important part of the production processes. We understand sustainability and green construction as conservation of energy and other resources, application of environment-friendly materials and technologies, and extension of an average life cycle of structures. We make achievement of these goals possible through creation of modern work organisation principles and technologies and their application in production. Alongside these activities Panevėžio keliai group of companies supports comprehensive social responsibility. Development of transparent business and honesty in fiscal duties are some of the paramount principles demonstrating the approach of the companies towards a responsible policy focused on the state and its every citizen. In the reporting year of 2016, Panevėžio keliai AB has been officially recognised as a socially responsible enterprise. The activities demonstrating social responsibility were acknowledged by the Committee on the Budget and Finance of the Republic of Lithuania. In 2015, Panevėžio keliai, excluding its subsidiaries, paid 10.5 million euros in taxes into the stage budge of Lithuania and has become the second enterprise in the construction field in Lithuania according to its tax contributions. By its scope of operations and taxes paid, Panevėžio keliai is labelled as a major tax payer. Social responsibility means a concept of implementation of activities where a company voluntarily includes social, environmental and transparency principles into its internal processes and into its approach to the environment. These principles focus both on conducting operations pursuant to the requirements prescribed by the legislation or implemented standards, and setting the operational goals higher than the mandatory indicators and implementation thereof in daily activities of the company. Seeking fulfilment of the voluntarily assumed obligations, Panevėžio keliai group of companies is committed to realisation of significant social programmes. The company s assistance policy and practice includes support of cultural, educational and sports projects, however it devotes most of its attention to those who are unable to help themselves: children, elderly, patients and people with disabilities. I would like to thank the shareholders, the Supervisory Board, the Board and the entire team, clients and partners for their achievements, and to encourage them to welcome new challenges. The year 2017 is a door to new adventures and into a period of enhanced development and smarter solutions. I am proud of our team of specialists who are able to adjust to the changing conditions, new needs of users and clients and different rules of the game. I greatly value each one of your contributions. 11

10 Important events of the year 2016 Prestigious awards for the engineering insights and unconventional solutions Panevėžio keliai AB group of companies finished their working season with a great victory acknowledging the persistent efforts of the team, unorthodox engineering ideas, commitment to the common goal and innovative insight. At the Lithuanian Product of the Year 2016 contest organised by the Lithuanian Confederation of Industrialists three projects implemented by the group of companies received the highest awards golden medals. In the transport infrastructure area, the acknowledgement was granted to Panevėžio keliai AB for its project Reconstruction of the national network road No 115 Panevėžio keliai on the sections km and km. The project developer Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania. The golden medal was awarded for the project Overhaul of the flight training base runway at Kyviškiai Airport of VGTU Antanas Gustaitis Aviation Institute. The contest application for this project was submitted by the client Vilnius Gediminas Technical University and the contractor Panevėžio keliai AB. The third golden medal in the contest was awarded to Panevėžio statybos trestas AB for the project Police Headquarters of Klaipėda County. Client State Enterprise Turto bankas. On 16 December 2016, the honourable awards launched by the Lithuanian Confederation of Industrialists were presented at the Lithuanian Government Office by the country s new Prime Minister Saulius Skvernelis. The attention to Panevėžio keliai AB projects participating in the contest was a result of the created and implemented modern work organisation methods and technologies, innovative engineering solutions and unconventional thinking of the engineers, which helped to realise complex projects within short periods of time. From left to right on the photograph: Saulius Skvernelis, Prime Minister of the Republic of Lithuania, Virmantas Puidokas, Director General of Panevėžio keliai AB, Prof Dr Alfonsas Daniūnas, rector at VGTU, Robertas Dargis, President of the Lithuanian Confederation of Industrialists. 12

11 Important events of the year 2016 Efficiency of application of advanced technologies tested in practice The contractor of the winning project for reconstruction of the sections from 2.43 km to km and from km to km of the national network road No 115 Ukmergė-Molėtai was tasked with a challenging assignment of performing, within a very short period, high volumes of road works in places where traffic is intensive and cannot be restricted. When preparing the engineering design, Panevėžio keliai AB applied the modern technologies created, implemented and used in company production, which included integration of the building information modelling (BIM) and digital models into the automatic control system of equipment used in the company. This enabled it to reduce the duration of work required for reconstruction of a km long section of the road and carry out construction by using only the required quantity of materials and other resources. Application of the BIM was integrated during preparation of the engineering design of the structure by drafting a part there of as a digital structural model. This model was prepared in accordance with the engineering design provided by the client, which mainly comprised the non-digitalised data that needed to be converted into the digital model elements. Seven design axes of the road with longitudinal design profiles have been created on the basis of this engineering design. More than twenty cross-sectional profiles for design of a dynamic road corridor have been created in order to represent the road structure. Following the modelling of the road corridor, it was used to prepare the digital surfaces of each structural layer. The created digital surfaces and axes were used in the automatic control systems (ACS) integrated into the road building machinery: excavators, bulldozers, paver-finishers, etc. The digital model was useful for setting the works performance and earth moving schedule. The work volumes have also been digitalised in order to enable the project management group to analyse them on different layers. During the reconstruction, the geodetic measurements have been conducted for every layer provided, the comparative maps have been drawn up where the areas with the allowable deviations and areas where the deviations exceed the maximum allowable parameters (if any) have been mark in different colours. These maps provided information to the construction manages, on the basis of which they were able to take the necessary measures and ensure top quality promptly and efficiently. The acknowledged national network road No 115 Ukmergė Molėtai after reconstruction. 13

12 Important events of the year 2016 Innovative and environmentfriendly solutions for the aviation project At the end of 2015, by order of the Vilnius Gediminas Technical University (VGTU) Panevėžio keliai AB implemented the project for overhaul of the runway surface of the Kyviškiai Airport of VGTU Antanas Gustaitis Aviation Institute (AGAI) used for flight training. When training aircraft pilots, it is important to ensure that the available infrastructure conforms to the requirements set forth in the international civil aviation legislation. The reconstructed runway helped to improve the quality of the student flight practice and protect the resources of the aircraft fleet. Flight training in the months from May to August is very intensive, where 200 to 300 flights are carried out daily. From now on the flight instructors and students can feel more confident when landing on the new, smooth and safe runway, said Jonas Vytautas Jusionis, Director of VGTU AGAI. For the first time in history of national aviation the works on the runway of the Kyviškiai Airport have been performed in accordance with the requirements of the FIDIC Yellow Book approved by the International Federation of Consulting Engineers, which includes performance of a contract where the design and general construction works are implemented by one contractor. This allowed application of non-standard modern solutions in this project and their realisation within much shorter terms it took just a little more than 2 months to completed the works expected to be completed within 4 months. By consulting the client in the process of economic assessment and design, it was decided to perform the overhaul of the runway by providing the base layer made of regenerated cold bituminous mixture, two thirds (72 %) of which comprised recycled materials from the old runway construction. This allowed not only to reduce the production costs, but also to preserve the non-renewable natural resources. Kyviškiai project was an interesting example of the use of 3D design technologies, said Tomas Bačiūnas, Head of the Technological Division at Panevėžio keliai AB We planned to install all structural layers, except the asphalt surface, using the automatic control systems: bulldozer and paver ACS. After asphalt reclamation, the blading of the existing gravel was performed by 2 bulldozers equipped with the automatic control system, positioned by high-precision GNSS sensors. The same bulldozers were used to perform the blading of the taxiway next to the runway. The use of the ACS allowed to save time, avoid the marking and ensure that the equipment operators moved the soil to optimum distances. The levelling works have been performed without having to change the equipment, added he. According to Mr Bačiūnas, the regenerated base laid by the paver equipped with the ACS was positioned by a tacheometer. In order to install the base along the entire runway, the equipment had to make numerous runs. The application of a digital model enabled to synchronise the altitudes of the adjacent runs ensuring the difference of only a few millimetres. The base installed in this matter conformed to the initial design. When training aircraft pilots, it is important to ensure that the available infrastructure conforms to the requirements set forth in the international civil aviation legislation. 14

13 Important events of the year 2016 Panev io statybos trestas receives a golden medal for the project in Klaip da The golden medal at the Lithuanian Product of the Year 2016 contest was awarded to Panevėžio statybos trestas AB from Panevėžio keliai AB group of companies for the project Police Headquarters of Klaipėda County. The total area of the building is nearly 16,00 square metres, of which 2,400 square metres is the area allocated for the three-storey deten- tion facilities. The works included rearrangement of the site, installation of engineering networks, provision of parking lots, fencing and lighting of the complex. Various police divisions over 500 officers have already moved into the new building. From left to right on the photograph: Saulius Skvernelis, Prime Minister of the Republic of Lithuania, Dalius Gesevičius, Director General of Panevėžio statybos trestas AB and Robertas Dargis, President of the LithuanianConfederation of Industrialists. Police Headquarters of Klaipėda County. 15

14 Important events of the year 2016 The overhaul works of the bridge over the Neris River completed half a year earlier Panevėžio keliai AB, one of the largest Lithuanian equity companies in the Baltic States operating in the field of road and rail design and construction has completed the overhaul works of the bridge over the Neris River, located at km of the national network highway No A6 Kaunas Zarasai Daugavpils. The traffic flow over the bridge has not been restricted. The design and general construction works in this project have been assigned to everyone on the team, which allowed prompt organisations of works and reducing the initial deadline provided in the contract. This enabled us to deliver the finished product to the users not in July 2017, as originally planned, but six months earlier, said Audrius Butkūnas, Project Manager at Panevėžio keliai AB. The works carried out in the Jonava District have been performed in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 27 October Panevėžio keliai AB implemented the project in cooperation with its partners. Contract price incl. VAT 2.42 million euro. The expected completion date 27 June The construction was started following performance of the design works by Panevėžio keliai AB. The bridge over the Neris River was built in The width of the river at the point of the bridge is 91 metre. The length of the bridge between the edges of the guardrails is m, width m. The overhaul works involved replacement of the bridge flooring, laying of a concrete levelling blanket, installation of waterproof measures, rainwater run off system, laying of the bridge walkway plates, driveway surface and installation of parapets and safety partitions. The structure of the bridge driveway comprises a 2 cm thick protective bituminous layer, a 4 cm thick bottom layer of the bituminous surface and a 4 cm thick top layer of the bituminous surface made of stone mastic asphalt SMA11S. The bridge base and side slabs have been cleaned, damaged areas have been repaired, the surfaces have been primed and coated with protective paint. The slope reinforcing elements have been renewed, the stairs on the slopes have been improved and their metal railings have been replaced with galvanized steel railings. The new rainwater run off system with oil product precipitators have been installed at the bottom of the bridge. The bridge was provided with the lighting system (total length km) with new poles (9 units) and LED lights. The bridge over the Neris River after reconstruction. 16

15 Important events of the year 2016 Reconstruction of 10 kilometres of Daugavpils Rokiškis Panev ys road In December 2016, Panevėžio keliai Rokiškis branch completed renovation of several sections of the national network road No 122 Daugavpils Rokiškis Panevėžys. The project included geological and economic assessment of the sections from km to km and from km to km, preparation of the engineering design, supervision of project implementation and reconstruction works. The reconstructed sections are a category IV national road. According to the traffic capacity and other indicators, the client formulated the objective where reconstruction of these sections of the road would enable their conformity to the requirements for higher category roads category III. During reconstruction, the road bed of the section from km to km was unified to a width of 11 metres, the road surface was expanded to 8 metres and 1.5 m wide shoulders have been provided. The old culvert in the road bed over the Šetekšna River has been repaired, where 5 concrete culvert overflow pipes have been replaced with corrugated metal pipes. 13 typical exits, 7 individual exits and 2 intersections (1 two-way and 1 four-way) with the regional and local roads have been provided. Taking into account the increasing volumes of traffic, the reconstruction included laying of a new bituminous surface with the necessary resistance grade, and 3 sections with noise mitigating surface (a total of ~1,460 m) were installed in places of bordering farmsteads or where they enter the protection zone, which reduced the noise level to 4 db as compared to a regular bituminous surface. The second section of Daugavpils Rokiškis Panevėžys road extends from to km. The road bed at 5.3 km of this section also conforms to the parameters for category III road: width 11 m, road surface 8 m wide, shoulders 1.5 m wide. 11 culverts in poor condition and 4 bus stops have been reconstructed. The works have been carried out in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 30 June Contract price excl. VAT 8.35 million euro. The sections of Daugavpils Rokiškis Panevėžys road have been reconstructed with the view to the increasing volumes of traffic. 17

16 Important events of the year 2016 Construction of turbo roundabout on Via Baltica road network is nearing completion In the summer of 2016, Panevėžio keliai prepared the engineering design of the first turbo roundabout and its access lanes on Via Baltic network road and launched the works in the month of August. This non-standard intersection is constructed at the point where Panevėžys bypass road crosses the Panevėžys Pasvalys Riga road. The intensive works on this crossroad junction were in process until the end of the year and completion thereof is expected before the summer of The majority of construction works of the turbo roundabout have been completed. The only things left are laying of a 2,500 sq m top bituminous layer, marking, furnishing and final works, stated Aurimas Gudonis, Project Engineer at Panevėžio keliai AB. The driveway of the turbo roundabout is provided with two traffic lanes. Due to the special arrangement system of the traffic lanes, the capacity of turbo roundabouts is up to 20 cent higher than that of regular roundabouts of the same size. The speed limit on the turbo roundabout is 50 km/h. The connecting road is provided within the roundabout boundaries to ensure road safety. The outcome of this project is that the international network road Via Baltica will no longer be treated as secondary in terms of minor roads. The contract on implementation of this project was signed with the client at the end of March. The works were launched already in August. The design works and acquisition of all documents required to authorise the construction took a little longer than three months. If everything goes as planned, the contractor hopes to finish the main works already this year. By announcing separate procurement procedures for design and then for construction, all processes could take up to three years and longer. Through integration of advanced work organisation methods and digital construction tools mastered by our company, we will be able to achieve the desired results in less than three year. The time for solving of the problem is reduced by three-fold, said Virmantas Puidokas. The three way junction with highway road A 10 Panevėžys Pasvalys Riga of the international network road A17, otherwise referred to as Panevėžys bypass road, is transformed into the turbo roundabout. These roads and the intersection are part of the international network road Via Baltica. The turbo roundabout in the Panevėžys District is also called Ūta intersection by the residents. The access roads to this junctions are designed according to the new 2+1 principle of traffic organisation on this highway. Panevėžio keliai AB performs the design and construction works at the said sites in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 25 March Project Preparation of the engineering design, project supervision and construction works for reconstruction of the three way junction with highway road A 10 Panevėžys Pasvalys Riga of the Panevėžys bypass road of the international network road A17 into the turbo roundabout. This contract and project comprise reconstruction of two objects. The first is the reconstruction of the aforementioned intersection, the second is the reconstruction of road A10 Panevėžys Pasvalys Riga section from to km at the border with Latvia. The engineering design has already been approved. The construction works will be started on 18 April The preliminary proposal of the turbo roundabout has been drafted. 18

17 Prior to reconstruction, the international network road Via Baltica at the point of Ūta junction, where the traffic flow reaches 10,000 vehicles per day, used to only have the status of a secondary road. This problem was solved by the construction of a non-standard roundabout, which equalised the priority of the traffic flows and enhanced traffic capacity in all directions.

18 Important events of the year 2016 The intersection on A2 highway is the finest project of Panev io keliai AB In September 2016, Panevėžio keliai AB have successfully implemented the important stage I works of the second contract for implementation of the safety and environmental protection measures on TEN-T roads for The results of this project have not only helped to improve road conditions on the international network road, but has all the rights to be called one of the finest infrastructure projects of The project included construction of the pedestrian viaduct on the Vilnius Panevėžys section along Žemaitkiemis intersection of the national network road A2, which has a high accident concentration, expansion of the road, provision of the acceleration and deceleration lanes, connec ting roads on both sides of the road and two roundabouts. The works have been carried out on the road section with the total length of 1,223 km. The works on road A2 included laying of over 40,000 sq. m. of asphalt surface, half of which was laid on the road, and the other half on the connecting road and platform. We have also installed more than 2 kilometres of security partitions, about a thousand square metres of pedestrian and cycling path surfaces, installed 3,000 metres of drainage networks, nearly 1,000 metres of storm drain network, 0.5 km concrete gutters and a 117 m long reinforced concrete retaining wall, stated Jevgenijus Šaškovas, Project Manager at Panevėžio keliai AB. A non-standard method was used to lift components before placing them on the support base of the pedestrian viaduct along Žemaitkiemis junction of A2 road on km. The partition was lifted on the support base on the night from 28 to 29 April of Its length is 58 metres, while its weight reaches 77 tons. The pedestrian viaduct along Ukmergė and turn to Žemaitkiemis has an The results of the project implemented on A2 road have not only helped to improve road conditions on the international network road, but can be deservedly called one of the finest infrastructure projects of

19 Important events of the year 2016 The intersection on A2 highway is the finest project of Panev io keliai AB exceptional structure. Due to the unorthodox engineering solutions, the centre of gravity of the partition is not on its bottom, therefore, performing the lifting, pivoting and pushing it on the support base was somewhat more complicated. It is expected that the viaduct, under which traffic had opened at the end of April, will be comfortable and safe for both the pedestrians and drivers. The viaduct is supported by two bases with no third base in the middle, which reduces the incidence of accidents. The viaduct allows pa ssage of vehicles with the maximum height of 5.5 metres. This height is sufficient to transport any bulky load. The newly built viaduct and the roundabouts of the connecting roads are provided with lightning through installation of 22 pillars. The new road signs, safety partitions, road markers and a 125 m long protective animal fence have been installed to ensure road safety. Other works for implementation of safety and environmental protection measures were conducted on Via Baltic road, where the former intersection of the national road A10 Panevėžys Pasvalys Riga on 38.7 km with a regional road No 3101 Pasvalys Vabalninkas was reconstructed into a roundabout. The aforementioned works are part of the project Implementation of traffic safety and environmental protection measures on TEN-T roads for Stage I. Contract No 2. Panevėžio keliai AB carried out the works in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 24 March The acceleration and deceleration lanes, connecting roads on both sides of the road and two roundabouts have been provided along Žemaitkiemis junction on A2 road. 21

20 Important events of the year 2016 Reconstruction of a 10 km section of Bir ai Raubonys road In 2016, the reconstruction works of the national road No 125 Biržai Raubonys have been progressing rapidly. This project included construction of the first roundabout junction in Biržai. The project was aimed at rearrangement of section from 0.00 km to 6.98 km and section from 6.98 km to km of Biržai Raubonys road, reconstruction of the pedestrian path on the section from 2.14 km to 6.90 km and renovation of the engineering networks and systems on the entire 10 km section. During the reconstruction, the width of the road surface was brought everywhere to 8 metres with 1.5 metre wide shoulders with grass. The works included reconstruction of 19 intersections and 14 bus stop, installation of a 4.76 km long pedestrian and cycling path, storm drain networks with a total length of 1.8 km and lighting of the roundabout junction and along the pedestrian paths. A noise mitigating asphalt surface has been installed in the section running through the city of Biržai and Pabiržė town. Panevėžio keliai AB has been conducting the construction works on the section from 0.00 k to 6.98 km of Biržai Raubonys road since the spring of At the moment the largest part of the works has been completed. The company only needs to lay 2.3 km of top bituminous surface and perform the completion works (installation of shoulders and finishing), and the horizontal and vertical marking of the road. The second reconstructed section, part of Biržai Raubonys road from 6.98 km to km, starts just after Pabiržė town and continues until the edge of Kirdoniai Village on Pasvalys side. The engineering design for reconstruction of this section was prepared in 2016 and the works have been postponed until The preparation works have already been completed, the earth embankment constructions have been arranged on both sections and application of a frost-resistant layer is currently being applied. In the near future it is expected to perform the milling of the other side of the road of the said section. The Building Information Modelling (BIM) was used in the works implemented on the entire 10 km long section of Biržai Raubonys road. This means that all structural elements of the reconstructed road were designed in 3D space, which enabled the contractor to fully integrate the automated equipment control system allowing prompt and precise performance of the works. Biržai-Raubonys is a transit road with intensive traffic flows. This road is the main connection of Biržai with A10 highway Panevėžys Pasvalys Riga, which coincides with Via Baltica road. The client is the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania and Biržai District Municipality Administration. Contract price incl. VAT million euro. The contractor, Panevėžio keliai AB, has undertaken to complete the works within 18 months. 22

21 The first roundabout junction in Biržai is the most appropriate complex solution seeking to ensure road safety on two nearby intersections. This is the crossing of Biržai Raubonys and Biržai Vabalninkas roads and of Biržai Raubonys and Biržai Germaniškis roads.

22 Important events of the year 2016 Stylish colourful solutions on the streets in Anykš iai In 2016, Panevėžio keliai AB completed the works of the project, the visual solutions of which made a particular decorative contribution to one of the famous resort towns in Lithuania. Žiburio street in Anykščiai was provided with an unconventional red cycling path, which is not the only one of its kind in the town. The cycling path of the same colour has been also laid during the reconstruction of Vilniaus street of this town. It was the client s wish that we install a path of a distinct colour, which was requested during the design works for reconstruction of Žiburio street. The town is creating its own style, said Gintaras Genys, Director of Panevėžio keliai Rokiškis branch, supervising the reconstruction works of Žiburio street in Anykščiai. The average width of Žiburys street prior to reconstruction was 10 metres. The old asphalt surface was in a poor state, with cracks, potholes, longitudinal irregularities and chipped off edges of the surface around the well grids. The reconstruction encompassed the full length of the street, i.e. a section of 531 metres. During reconstruction the street was narrowed from 10 to 7 metres. The reason for this change is a 2 metres wide cycling path provided on the right side of the road. Its surface has an unusual distinctive colour, which was obtained by using special pigmentation in the bituminous mixture. The path is separated from the driveway by kerbs and metal partitions. The structure of the cycling path comprises a 6 cm thick bituminous surface, a 15 cm thick rubble base and a 20 cm frost-resistant layer (sand). During reconstruction of Žiburio street, the old asphalt surface has been reclaimed. The base of the street structure is prepared by mixing the existing base with an additional 10 cm thick layer of dolomite grit mixture. The new asphalt surface has two 8 cm and 4 cm thick layers. The contractor Panevėžio keliai also renovated the existing parking lots, exits to the side-streets of the apartment blocks and private houses and provided three crossings with directional lighting. The crossings and exits are provided with dropped kerbs to facilitate movement of people with disabilities, while the uneven surface of bricks will warn visually-impaired pedestrians. Implementation of the project objectives allows to reduce pollution of the environment, fuel consumption and to improve safety conditions of renovated dangerous crossings. Client Anykščiai District Municipality Administration. Project Reconstruction of Žiburio street in Anykščiai. The contract for implementation of this project was signed in June The works have been completed in July Contract price excl. VAT million euro. Unconventional red cycling paths in Anykščiai. 24

23 Important events of the year 2016 Implementation of one of the largest real property projects in the company s history In May of 2016, Panevėžio keliai AB, a large Lithuanian equity company in the Baltic States operating in the field of road and rail construction, signed the agreement with MG Valda, a real property management and development company, in relation to one of the largest real property transactions in Lithuania in the past years. By means of this agreement the company transferred the right to MG Valda to continue development of Stage I of Park of Architecture (Architektūros Parkas) project Paupys. This project includes transformation of the industrial areas in the Old Town of Vilnius into a residential and commercial territory. The project was implemented with the view that is could be disposed of at any stage of its development. Currently, the market changes force to concentrate on the primary fields of activities road and rail construction, development thereof in the neighbouring and remote markets, including Scandinavia, said Virmantas Puidokas, Director General of Panevėžio keliai AB. We think it is reasonable to concentrate the financial and intellectual resources in the priory areas, added he. According to Sigita Survilaitė-Mekionienė, Director General of MG Valda, the exclusive nature of Paupys project was a decisive factor for the company s investment decision. After transformation of the entire district it will have every opportunity to become not only a model project, but also a centre of attraction for tourists fancying the old centre of Vilnius or residents who enjoy spending time in the heart of the city, stated Mrs Survilaitė-Mekionienė. Under the agreement, the shares of Naujasis Užupis, a subsidiary of Panevėžio keliai incorporated for the purposes of development of Paupys project, have been transferred to MG Valda, and the territory of the former Skaiteks plant has been rearranged and prepared for the next phase of development. The value of the transaction has not been announced. Vilnius Park of Architecture (Architektūros Parkas) is a project initiated by the municipality of the capital, the implementation of which will transform the quays of the Vilnia River extending from Užupis to Belmontas into an exceptional area of the capital city. The aim of the project is to remove industrial companies from the old town area of Vilnius and convert this part of the city into a residential district with provided engineering and transport infrastructure, jobs, cultural life and active community. The demolition and territory organisation works at the premises of the former electrical measuring equipment plant Skaiteks on Aukštaičių g. 7 in Vilnius have been started on 30 October

24 Important events of the year 2016 Awards for BIM application in transport infrastructure During the conference Digital Construction Vilnius that took place on 29 April 2016, the representatives of Panevėžio keliai received the prizes awarded in the competition Lithuanian BIM Projects Panevėžio keliai AB has been nominated in the category BIM in Infrastructure (Transport Infrastructure). In the competition the company submitted an application titled Application of the building information modelling and automatic control systems in equipment for reconstruction of the sections of the road No 115 Ukmergė Molėtai. Panevėžio keliai AB presented its works completed under the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on the national network road No 115 Ukmergė Molėtai on the sections from 2.43 km to km and from km to km. Project Manager of Panevėžio keliai AB Zenonas Poznanskis. In accordance with the design provided by the client, prior to starting the work on the road No 115 Ukmergė Molėtai, Panevėžio keliai carried out the topographic surveys. The benchmark network was prepared according to the provided geodetic foundation. The re- ferential GNSS base was provided within the boundaries of the entire site in order to ensure high precision of geodetic measurements. The current digital surface of the territory was created on the basis of the surveys. Application of the building information modelling (BIM) was integrated during preparation of the engineering design of the structure by drafting a part thereof as a digital structural model. Following the modelling of the road corridor, it was used to prepare the digital surfaces of each structural layer. The created digital surfaces and axes were used in the automatic control systems (ACS) integrated in the road building machinery. The application of the advanced tools for creation of a digital structural model and integration thereof into the operating ACS allowed to perform large volumes of work within a particularly short period of time, offer utmost precision, optimal use of resources and deliver high quality product meeting the client s expectations. Panevėžio statybos trestas, which is a member of Panevėžio keliai AB group of companies, was also acknowledged in this competition for the United Life Sciences Center project implemented in Vilnius. Lithuanian BIM Projects 2016 competition was organised for the first time by Skaitmeninė statyba VšĮ in cooperation with the Lithuanian Builders Association and Construction and Architecture magazine. The aim of the contest is to choose the best practice of the Lithuanian enterprises in implementation of BIM technologies and methodology. The national network road No 115 Ukmergė Molėtai after reconstruction. United Life Sciences Center in Vilnius. 26

25 Important events of the year 2016 Reconstruction of road surface and engineering networks on K dainiai Š ta Ukmerg road section In the summer of 2016, Panevėžio keliai AB launched the reconstruction works of the national network road No 145 Kėdainiai Šėta Ukmergė on the section from km to km. The project involves reconstruction of the road surface and engineering networks. The km long section under reconstruction starts just outside Deltuva town and ends at a one-level roundabout junction at Deltuvos and Garseniškių streets in Ukmergė. The section extends through the agricultural territories, 670 metre of which borders with the gardening society, and then runs further until the territory of Ukmergė city. The width of the two-lane road after reconstruction will be 8 metres. The shoulders of 1.5 metres in width will be provided on both sides of the road, except the places provided with the sidewalks. The renovated section will have 26 typical exits and intersections, and 8 bus stops. All the above will be reconstructed. The engineering networks under reconstruction comprise the power lines with voltage of 10 kv (0.135 km) and 0.4 kv (0.118) and rearrangement of the lightning networks on the km section. A nearly 3 km long drainage system and the surface wastewater collection system have been reconstructed. The reinforced concrete culvert is replaced with a new m long corrugated metal pipe of 1 meter in diameter. The culvert (a reinforced concrete drainage structure) has been reconstructed using a closed method into a corrugated metal structure. Its length is metres. Part of culverts installed crossways to exits and intersections have been removed. Plastic culverts of 0.4 m in diameter were installed under the exits. The pedestrian paths have been provided next to the bus platforms and pedestrian crossings leading towards the existing pedestrian and cycling path, which has also been renewed. The width of the pedestrian and cycling path is 2 metres, provided with 0.25 m shoulders. For the purposes of ensuring safety the road is provided with traffic islands, new road signs on metal poles (101), safety partitions (1780 m), metal fencing (75 m), road markers (159) and horizontal marking of the road surface. The works are carried out in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 14 June Project Reconstruction of the national and regional roads. Stage II. Contract No 3. The works include reconstruction of the national network road No 145 Kėdainiai Šėta Ukmergė on the section from km to km. Project price million euro incl. VAT. Expected date of completion June The Fix the Road (Taisom kelią) initiative of the driver tolerance education programme on the construction site of road No 145 Kėdainiai Šėta Ukmergė. 27

26 Important events at the closing of the reporting year Reconstruction of Mol tai Anykš iai road section is expected to be completed before August In the second half of March 2017, Panevėžio keliai AB Rokiškis branch started reconstruction of the national road No 119 Molėtai Anykščiai section from 35.9 to 41.3 km. The project involves renovation of a 5.4 km long section of one of the most picturesque Lithuanian roads, named Biržinka by the locals. The reconstruction of Biržinka section starts at the border of the Anykščiai Regional Park stretching along the park territory and ends on Liudiškių street in Anykščiai. Even though according to the contract the expected completion date is May 2018, because we realise that road works create inconvenience for road users, we set an ambitious aim of implementing the project within a much shorter period, i.e. before September 1 of this year. In order to reduce the duration of works, our company introduced digital technologies and automated mechanism control systems. Seeking to ensure safety of road users, already in the second half of April it is expected to restrict traffic in separate points of the section under reconstruction: one lane traffic, temporary traffic lights, traffic regulation by flagmen, etc. When planning a trip, we advise to reserve additional minutes for passing this section, informed Rasa Čepienė, PR Representative at Panevėžio keliai AB. The old Biržinka, a road connecting the cities of Molėtai and Anykščiai, is a challenge even for experienced drivers. The road is going through a picturesque hilly area. Only the section where reconstruction was recently started contains 47 turns. The width of the existing asphalt surface prior to reconstruction was somewhere between 3.30 and 3.50 metres and the shoulder width was between 2.5 and 3 metres. The thickness of asphalt surface was between 6 and 21 cm. The main hindrances for traffic constituted the disintegrated bottom of the surface and chipped off edges. Such road can be dangerous even in the absence of the road works. The reconstructed section of road No 119 extends along the territory of Anykščiai Regional Park, therefore the road reconstruction will maintain the existing longitudinal profile, introducing as little changes to the landscape as possible and minimising impact on the environment. The road bed after reconstruction will be 9 metres, which in the areas of safety partitions and turns will be further widened to 9.80 metres. The width of a new road surface will reach 7 metres, of which 6 metres will be allocated for the driveway. The road will be provided with 0.5 m wide shoulders on both sides. The structure of new surface design includes a 36 cm frost-resistant (sand) layer, a 25 cm grit and chip asphalt layer and 4 or 8 cm bottom and top asphalt layers. For the purposes of preservation of non-renewable natural resources, 20 per cent of the grit mix will comprise recycled materials. The reconstructed road section will be provided with 32 new exits. The three-way junction with the turn to Rubikiai will be provided with an additional lane for the left turn, traffic islands from red bricks, a crossroad junction warning system using noise and a pedestrian crossing. The intersection safety will also be enhanced in accordance with the EU road safety requirements. It is expected to rebuilt 4 bus parking lots on the reconstructed section. The works are carried out in accordance with the contract concluded with the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania on 14 November Project Reconstruction of the national network road No 119 Molėtai Anykščiai section from 35.9 to 41.3 km. Contract price incl. VAT 2.2 million euro. The expected completion date 24 May

27 The reconstruction of road No 119 Molėtai Anykščiai section extends along the territory of Anykščiai Regional Park, therefore the road reconstruction will maintain the existing longitudinal profile, introducing as little changes to the landscape as possible and minimising impact on the environment.

28 Important events at the closing of the reporting year Modern 2+1 road solutions on Via Baltica road along Panev ys Reconstruction of Panevėžys bypass of the national highway A17 coinciding with Via Baltica highway road started in April This is an important step in improvement of international network roads crossing through the territory of Lithuania. A 22 km long bypass will be expanded from two to three lanes by building a 2+1 road, where a third traffic lane is added in the middle of the road changing the traffic direction every so many kilometres. This offers a safe opportunity to overtake slow vehicles every few kilometres, which is particularly important on Via Baltica road characterised by intensifying flows of heavy duty vehicles and high accident indicators. For safety purposes, the 2+1 road will be equipped with metal partitions separating traffic moving in opposite directions and other safety measures. The decision to build a 2+1 road was taken on the basis of good practice of the Scandinavian countries, where roads of this type have already become a norm, stated Egidijus Skrodenis, Director of the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania. The reconstruction will involve the entire road of the bypass. The contract for Stage I reconstruction works of Panevėžys bypass, involving the section from 0.00 km to km, was signed with the successful tenderer Panevėžio keliai AB on 27 March The section under reconstruction extends from a cloverleaf interchange near Šilagalis Village, which is a point of intersection of highway A2 Vilnius Panevėžys and highway A8 Panevėžys Aristava Sitkūnai (Via Baltica), to Nausodė cloverleaf interchange, which is a point of intersection of A17 Panevėžys bypass and highway A9 Panevėžys Šiauliai. Traffic restrictions during reconstruction are not expected. 30

29 Traffic organisation scheme 2+1 ryga šiauliai End of roadworks Lane transition point Intersection with right-hand turns only road No. 195 kėdainiai krekenava panevėžys Lane transition point road a8 panevėžys aristava sitkūnai bityno g. į berniūnus K. Naruševičiaus g. J. Tilvyčio g. road a17 panevėžio aplinkkelis Start of roadworks į sąvartyno g. road a2 vilnius panevėžys vilnius Lane transition point Roundabout intersection į krekenavą Turbo roundabout intersection Traffic organisation solutions using a 2+1 road method on Panevėžys bypass section from a cloverleaf interchange near Šilagalis Village, which is a point of intersection of highway A2 Vilnius Panevėžys and highway A8 Panevėžys Aristava Sitkūnai (Via Baltica), to Nausodė cloverleaf interchange, which is a point of intersection of A17 Panevėžys bypass and highway A9 Panevėžys Šiauliai.

30 Important events at the closing of the reporting year The works on the project for reconstruction of Grigišk s transport node are progressing quickly During one of the most important current transport infrastructure projects in Vilnius stage III reconstruction of Grigiškės transport node the road builders work 24/7, including weekends. In order to increase capacity of the reconstruction road section, the works are organised in such a way where during rush hours on working days between 7 a.m. and 10 a.m. and on weekends from 4 p.m. there are two lanes open in both directions for the traffic in the work zone. This is possibly the first case in the country s history of roads, when due to heavy traffic in the capital city, the workers must stop the works. The hottest spots of this site are the construction of a two-lane bridge over the Vokė River dam and construction of the retaining walls. The work teams are busy 24/7, including weekends. In other points of the site, the staff work longer shifts. In order to reinforce the road bed, 1.5 km long retaining walls are being constructed, and for the improvement of living quality of the residents, a 2 km long section of noise barriers will be provided, stated Arūnas Puluikis, project manager at Panevėžio keliai AB. Project for reconstruction of the Trans-European Network Road E85 (Vilnius Kaunas Klaipėda). Reconstruction of Grigiškės transport node. Stage III ordered by the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania is being implemented by Panevėžio keliai AB together with the partners under the concluded joint venture agreement. The third stage of the project concerns the national network highway A1 Vilnius Kaunas Klaipėda, section from to km. The reconstructed section crosses through Grigiškės. The laying of the connecting road on the left side of the highway is almost completed. The length of this section reaches km. The width of the road bed of the two-lane connecting road will reach metres. Bituminous opening width m, shoulders 1.5 m, sidewalk width 1.60 m. At the same time reconstruction of the intersection with the national regional road No 4707 Grigiškės Lentvaris Dobrovolė is in progress. In order to facilitate traffic flow, a two-lane bridge over the Vokė River dam is constructed on Lentvario street. The bridge will be connected to Lentvario street with a newly designed street section. The old bridge will be left for the pedestrian use. The project includes reconstruction of two underground pedestrian crossings situated on and km. The pedestrian crossing on km next to Kovo 11-osios bus stop is currently in reconstruction. During the reconstruction period that will continue until June 10, the pedestrians are re-directed to the underground crossing along Lentvario street. It is also planned to rebuild the bus stop with the passenger shelter. The electricity and communication networks have been relocated and reconstructed, the A1 highway will be provided with a 2.2 km long lighting network, while the total length of the lighting networks of the connecting road section will comprise 2.4 km. The total length of the installed storm drain network is 867 metres. The works for reconstruction of Grigiškės transport node have been launched upon signing the agreement in November The trees, bushes and vegetation layer have been removed and access roads have been arranged already last year. The installation works of the retaining walls and poles have been started. The construction works of the bridge over the Vokė River dam have been started in 2017, as well as installation of the retaining walls. The project developer Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania. Project price million euro. The works are financed by the EU Cohesion Fund and the Road Maintenance and Development Programme of the Republic of Lithuania. The expected completion date August

31 During implementation of the stage III of the project for reconstruction of Grigiškės transport node, the team of Panevėžio keliai AB and partners are working 24/7, including weekends. The hottest spots of this site are the construction of a two-lane bridge over the Vokė River dam and construction of the retaining walls.

32 Main consolidated indicators of Panev io keliai AB in 2016 Panevėžio keliai AB is one of the largest Lithuanian equity groups of companies in the Baltic States operating in the field of construction of roads, railways, buildings and structures and development of real property projects. Operating since 1965, the company has created an extensive network of enterprises and manufacturing bases in the Baltic States, Scandinavia, Poland, the Russian Federation and Ukraine. In the reporting year, the consolidated revenue of Panevėžio keliai AB group of companies amounted to 190 million euro. As compared to the year 2015, when the sale revenue totalled million euro, this indicator demonstrated a 19.4 per cent drop. The net profit of the group, except the minority, amounted to 9.1 million euro in This is 2.8 million euro more than in 2015, which yielded 6.3 million euro. In 2016, Panevėžio keliai AB group of companies had on average 2,520 employees, which is 7.7 per cent less than in per cent of employees in the group of companies have higher education. The average wages of employees increased as compared to the previous reporting period, and remains higher than the country s statistical average wage in the construction sector. In the reporting year, the companies of the group continued implementation of innovative technologies and work organisation methods, applying BIM and integrating it into the automatic control system of equipment on different levels. The group of companies invests into modern deign software and expends the available programme package, therefore, the engineers are enabled to prepare full scale projects in the BIM environment. The priorities set by Panevėžio keliai AB group of companies for the year 2017 are enhancement of the manufacturing, technological and intellectual potential, optimisation of operating costs and production efficiency, and continuous and consistent application of digital construction tools for implementation of the design and construction works. The current market situation forces to concentrate the financial and intellectual resources on the main activity areas road and rail construction, and expansion of these activities on the Lithuanian and foreign markets, including Scandinavia. 34

33 Main indicators of Panev io keliai AB in 2016 Panevėžio keliai AB is one of the largest Lithuanian equity companies in the Baltic States operating in the field of road and rail design and construction. The company operating for more than half a century has become an important participant in the country s infrastructure development process. As a company certified in the area of construction of special structures, Panevėžio keliai concentrates its activities in the field of communications: design and construction of roads, railways, bridges and viaducts. In 2016, the revenue of Panevėžio keliai AB, excluding affiliates and subsidiaries, amounted to 49.6 million euro. This constitutes a 27.9 million drop as compared to The income from construction and assembling operations totalled 44 million euro, The company s net profit in the reporting year amounted to 3.8 million euro, which demonstrated a decrease in income by 36 per cent compared to the previous year, however the company s profitability was 7.6 per cent, i.e. 0.5 per cent higher than in In the reporting year, the funds invested into non-current assets, and renewal and modernisation of production comprised 3.7 million euro. We also invested 0.35 million euro into financial assets PK Road AB, a subsidiary in Sweden. One of the most important financial events during the reporting period was sale of all shares of Naujasis Užupis UAB. In the reporting period the company employed 639 people. Implementation of new technologies and enhanced automation of processes requires continuous expansion of competences and improvement of qualification of the company employees. The company allocates resources for comprehensive training of its staff both internally and by engaging external partners. 38 per cent of employees have acquired higher education, which makes it possible to develop the company s engineering capacities. Panevėžio keliai AB maintain cooperation with educational institutions, which creates possibilities for higher education and college students to take part in vocational training. In this reporting year the company signed a tripartite cooperation agreement with the Lithuanian Road Administration under the Ministry of Transport and Communications and Panevėžys University on long-term cooperation for creation of the Road Engineering study programme in the field of construction engineering and organisation of vocational training of the future students of this programme including their involvement in the production activities. During more than five decades of operation, Panevėžio keliai and companies of its group went through a number of political and economic crises, and shifts in technologies and values. In 2017, the company will strive to preserve its competitiveness on the market, therefore, it is of utmost important to find additional resources and means for enhancement of work through the use of the newest implemented organisation and production methods and tools, IT and other engineering solutions. The strongest advantage of the company in the battle of competitors is consistent development of its technical and technological resources. The company continuously improves efficiency of the integrated management system and seeks to minimise impact of its construction processes on the environment. The company implemented the quality, environmental protection and occupational safety and health management systems in accordance with the requirements of ISO 9001, ISO and LST 1977 (original marking BS OHSAS 18001) standards. In 2016, in the contest the Lithuanian Product of the Year 2016, the Lithuanian Confederation of Industrialists acknowledged two projects implemented by Panevėžio keliai with the highest awards golden medals. The first medal was received for overhaul of the runway of Kyviškiai Airport of the VGTU Antanas Gustaitis Aviation Institute. The second golden medal was granted for the reconstruction of Ukmergė Molėtai section of the national road No 115. This object also received a prize for application of the BIM in the objects of transport infrastructure. The state budget of the Republic of Lithuania for the year 2017 has a small increase of financing for the Road Maintenance and Development Programme. It is expected to increase the size of financing for the national roads and allocate funds for pavement of gravel roads, development of Trans-European Network Road E67 (Via Baltica), expansion of local transport infrastructure related to Rail Baltica project and implementation of other project eligible for EU assistance. Taking into account the planned state investments into transport infrastructure, an increase in the volumes of work, as compared to 2016, is expected in the company. 35

34 AB Panev io Keliai subsidiary and associated companies Road and railway construction Šilinė Village, LT Utena District, Lithuania Tel./fax: Deputy Director Ričardas Puodžiukas Average annual number of employees Sales revenue Net profit (loss) 122 employees ǀ 130 employees million euro ǀ million euro (0.473) million euro ǀ million euro Activities and specialisation Construction and repair of roads, streets and railways Manufacturing and sale of bitumen, concrete products and mineral materials Rent of machinery Construction waste management Main projects of 2016 Reconstruction of the road No 2804 Giedraičiai Bekupė Želva on the section from 9.30 km to km Construction of a road section between J. Basanavičiaus street and Pievų street in Utena Construction of the Utena hippodrome street Reconstruction of the road No 4918 Daugailiai Šlepečiai Salakas on the section from km to 5.36 km Reconstruction of a section of Lygumos street and Lygumos intersection in Ignalina and new construction works General repair works of asphalt surface on the road No 4903 Daugailiai Šlepečiai Salakas on the section from 5.50 km to km; road No 179 Dusetos Degučiai Dūkštas on the section from km to km; road No 5305 Zarasai Mukuliai Vencavai Antalieptė on the section from 2.10 km to 3.59 km and road No 5306 Zarasai Kopūstinė Tumiškė Salakas on the section from km to km Renovation (repair) works of the priority forest paths 36

35 AB Panev io Keliai subsidiary and associated companies Road and railway construction Žarijų g. 8A, LT Vilnius, Lithuania Tel./fax: info@sostinesgatves.lt Director General Edmundas Jakubauskas Average annual number of employees Sales revenue Net profit (loss) 111 employees ǀ 110 employees million euro ǀ million euro million euro ǀ million euro Activities and specialisation Construction and repair of road, street and rail and landscaping works Installation of drainage engineering networks of roads and streets Manufacturing and sale of asphalt products Sale of bitumen products (bitumen and emulsions) Transport and equipment services Rent of facilities, equipment and other machinery Electrotechnical works up to 1000W Main projects of 2016 Installation of traffic regulation measures as part of the project Implementation of traffic safety and environmental protection measures on TEN-T roads for Stage I. Contract No. 2 General repair works of asphalt surface of the national network road No 4903 Utena Pakalniai Alanta on the section from 5.50 km to km and road No 5310 Dusetos Užpaliai Vyžuonos on the section from km to km General repair works of asphalt surface of the national network roads in Utena District, with the total length of the section comprising 6.39 km Design of general repair works and implementation of the works on the regional road No 5231 Leičiai Rastinėnai Kasmiškės on the section from 0.02 km to 0.9 km Laying of the pedestrian and cycling path of the national network road No 103 Vilnius Polockas on the section from km to km in Vilnius. Overhaul works of the national network road No 5224 Mickūnai Skaisteriai Sadūniškės on the section from 5.66 km to 5.78 km and from 6.78 km to 7.58 km General repair works of the national regional road No 5212 Pilaitė Čekoniškės Sudervė on the section from 6.33 km to 7.15 km Overhaul of the national regional road No 5211 Tumosai Savičiūnai Šumskas on the section from 3.69 km to 4.27 km Overhaul of the national regional road No 4735 Rykantai Lazdėnai on the section from 5.03 km to 5.78 km Overhaul works of Bilkiškių str., Sakiškių str. and Miškonių str. of the Bezdoniai Eldership Partial repair works of Lauko str. and Šilo str. in Glitiškiai Village of the Vilnius District 37

36 AB Panev io Keliai subsidiary and associated companies Road and railway construction Deltuvos g. 26, LT Ukmergė, Lithuania Tel./fax: Director General Vytas Kromelis Average annual number of employees Sales revenue Net profit (loss) 188 employees ǀ 174 employees million euro ǀ million euro million euro ǀ million euro Activities and specialisation Construction and repair of bridges, viaducts and tunnels Building and repair of roads and streets Building of airport runways Manufacturing of bituminous mixtures Rent of construction machinery and equipment Transportation of various types of cargo Main projects of 2016 Reconstruction works of Veterinarijos street in Ukmergė Reconstruction of the road Kėdainiai Šėta Ukmergė on the section from km to km Development works of Mega Trade Centre in Kaunas Overhaul of Karaliaus Mindaugo street in Rukla Stage II constructions works of Vilnius Western bypass a link with the Trans-European Network Road 38

37 AB Panev io Keliai subsidiary and associated companies Road and railway construction Kauno g. 32, LT Zarasai, Lithuania Tel./ fax Director Pranas Bačiulis Tiekimo g. 14, LT Panevėžys, Lithuania Tel./fax: Director Vytenis Velutis Average annual number of employees Sales revenue Net profit (loss) Average annual number of employees in 2016 Sales revenue Net profit (loss) 32 employees ǀ 40 employees million euro ǀ million euro million euro ǀ million euro 7 employees million euro ǀ million euro million euro ǀ million euro Activities and specialisation Construction and repair of roads and streets Construction and repair of parking lots and sports fields Territory arrangement works (construction of sidewalks, laying of paving blocks, landscaping) Gravel, sand and grit mix manufacture Rent of machinery Activities and specialisation Manufacturing and sale of bitumen emulsion Main projects of 2016 Manufacturing and sale of bitumen emulsion Main projects of 2016 Reconstruction of Vytauto street in Zarasai, Zarasai Municipality Reconstruction of the intersection of Savanorių and Žemaitės streets in Zarasai Zarasai Municipality reconstruction of Ignalinos street and parking lot in Vidiškiai Village Kriaunai Mill yard installation works 39

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39 AB Panev io Keliai subsidiary and associated companies Road and railway construction Skultes iela 28, Skulte, Mārupes novads LV 2108, Latvia Tel.: Fax: Executive Director Juris Krievs Višķu iela 21D, Daugavpils LV 5410, Latvia Тel./fax: Director Aleksandr Trunin Average annual number of employees Sales revenue Net profit (loss) Average annual number of employees in 2016 Sales revenue Net profit (loss) 40 employees ǀ 36 employees million euro ǀ million euro million euro ǀ million euro 81 employee million euro ǀ million euro million euro ǀ (0.393) million euro Activities and specialisation Management of road construction projects Manufacturing and sale of bituminous mixtures Installation of gravel, grit base and covers Hydrotechnical construction Bituminous surface treatment Installation of paving and concrete blocks and kerbs Installation of road signs and road marking Road construction equipment services and rent Main projects of 2016 Reconstruction of the national road A5 Riga bypass (Salaspilis Babitė), section km and of the right shore drainage system of Riga's Hydroelectric Power Plant Renewal of surface of the national road A10 Riga Ventspils, section km Reconstruction of Lapinai dam (section from Jelgavos Rd to Silaputniņų str.) in Marupė Activities and specialisation Reconstruction and construction of roads, streets and squares Manufacturing and sale of bitumen Manufacturing and sale of grit Main projects of 2016 Renovation of surface of the state local road V678 Līksna Kalupe Upmala Rožupe on the section from 1.60 km to 9.65 km Renovation of surface of the state regional road P62 Krāslava Preiļi Madona on the section from 4.00 km to km and state regional road P64 Višķi Nīcgale from 7.00 km to km and section from km to km Renovation of the bituminous surface of streets in Daugavpils in 2016 Renovation of surface of the state regional road P65 Stropi Krauja on the section from 0.05 km to 2.30 km Renovation of surface of the state main road A6 Riga Daugavpils Kraslava BY border (Paternieki) on the section from km to km 41

40 AB Panev io Keliai subsidiary and associated companies Road and railway construction OOO BĮ BALTDORMOSTSTROJ OOO BĮ DOROGI BALTIKI Sovietskij prospekt 43, Kaliningrad, Russian Federation Tel.: Fax: Director General Gurgenas Mnacakanovas Sovietskij prospekt 43, Kaliningrad, Russian Federation Tel.: Director General Artūras Imbrasas Average annual number of employees * 131 employee ǀ 185 employees Sales revenue * Net profit (loss) * million euro ǀ (0.782) million euro Average annual number of employees * 37 employees ǀ 32 employees Sales revenue * Net profit (loss) * million euro ǀ million euro million euro ǀ million euro million euro ǀ million euro 42 Activities and specialisation Construction and repaid of roads Manufacturing and sale of asphalt and concrete products Main projects of 2016 Renovation of the road No 229 Kaliningrad Cherniachovsk Nesterov on the section from 53 km to the state border of the Republic of Lithuania Creation of a pedestrian and tourism zone and reconstruction of two streets in Svietlogorsk Overhaul of Zariečnaya and Olchovaya streets and the intersection in Svietlogorsk Overhaul of the road Kaliningrad Znamensk Ozjorsk Goesev Dobrovo Neman from 4.0 km to 13.5 km Construction of a bypass road and bridge over the Nemunas River in Sovietsk on the federal road No 216 to the state border of the Republic of Lithuania Reconstruction of the road Kaliningrad Zelenogradsk on the section from km to 31.5 km Overhaul of the road Kaliningrad Znamensk Ozjorsk Goesev Dobrovo Neman from 0.0 km to 4.0 km Reconstruction of the bridge over Staraya Pregolya and Novaya Pregolya Rivers on the Southern Bypass of Kaliningrad Qualifications and specialisations Road and street construction Manufacturing of construction materials Main projects of 2016 Works in transport infrastructure projects in the capacity of a parter, general contractor Baltdormoststroj Welfare works at the residential complex Naujoji Selma, District No 1 Reconstruction of roads and sidewalks at Yantar Baltic Shipbuilding plant * In accordance with the accounting standards of the Russian Federation

41 AB Panev io Keliai subsidiary and associated companies Road and railway construction Svärdvägen 21, Danderyd Stockholms Iän, Stockholm kommun, Sverige (Švedija) Tel Director Ulf Erik Elofsson Ender Average annual number of employees in 2016 Sales revenue in 2016 Net profit (loss) in employees 0,211 million euro (0,655) million euro Activities and specialisation Road and railway design and construction services Main projects of 2016 Project Installation of Railway SSY 5 Safety Measures in Skone Region 43

42 On 10 January 2017 UAB Šeškinės Projektai, a subsidiary of AB Panevėžio Statybos Trestas, announced the winner of architectural design contest for a new business centre at Ukmergės Str. 219, Vilnius. The winning proposal was submitted by UAB Cloud Architektai.

43 AB Panev io Keliai subsidiary and associated companies Building construction P. Puzino g. 1, LT Panevėžys, Lithuania Tel.: , fax: Director General Dalius Gesevičius Average annual number of employees Sales revenue Net profit (loss) Company 774 employees ǀ 783 employees Group 1071 employee ǀ 1214 employees Company million euro ǀ million euro Group million euro ǀ million euro Company million euro ǀ million euro Group million euro ǀ million euro Activities and specialisation Construction and design of buildings, structures, facilities and communications of various purposes in Lithuania and abroad Sale of construction materials Real property development Rent of facilities and equipment Main projects of 2016 Reconstruction of the former hospital building complex on Bokšto street in Vilnius Development of the trade and entertainment centre Mega and Lidl, and construction of the warehousing facilities of Lemora UAB and Wirtgen Lietuva UAB Reconstruction works of the National M. K. Čiurlionis School of Art Renovation projects of residential buildings Design and construction works of the manufacturing and industrial building of JMJ Baltic UAB in Kėdainiai Design and construction works of the manufacturing annex to the building of Schmitz Cargobull Baltic UAB Reconstruction work of the Jelgava Palace of the Latvia University of Agriculture Branches: Gerbusta Pastatų apdaila Konstrukcija Betonas Stogas Genranga Klaipstata Subsidiaries: Skydmedis UAB Metalo meistrai UAB Vekada UAB Alinita UAB Kingsbud Sp.z.o.o. PS Trests SIA PST un ARMS PS Baltlitstroij OOO Teritorija OOO Nordic AB PST Šeškinės projektai UAB PST Investicijos UAB 45

44 AB Panev io Keliai subsidiary and associated companies Building construction Verkių g. 25C, LT Vilnius Tel.: info@paupys.lt Director Eugenijus Rečiūnas Average annual number of employees Sales revenue Profit (loss) in 2016, mln euro and change (%) as compared to 2015 Activities and specialisation Development of real property projects Main projects of 2016 In May of 2016, Panevėžio keliai AB signed the agreement with MG Valda, a real property management and development company, in relation to one of the largest real property transactions in Lithuania in the past years. By means of this agreement the company transferred the right to MG Valda to continue development of Stage I of Park of Architecture (Architektūros Parkas) project Paupys. The objective of this project is transformation of the former industrial areas of Vilnius old town into a residential and commercial territory. Under the agreement, the shares of Naujasis Užupis, a subsidiary of Panevėžio keliai incorporated for the purposes of development of Paupys project, have been transferred to MG Valda, and the territory of the former Skaiteks plant has been rearranged and prepared for the next phase of development. Cleaning works at Skaiteks factory grounds began with a joint waltz of dancers and excavators. 46

45 AB Panev io Keliai subsidiary and associated companies Building construction Verkių g. 25C, LT Vilnius, Lithuania Tel.: info@psti.lt Director Adomas Jokubaitis Verkių g. 25C, LT Vilnius, Lithuania Tel.: gintare.dieckuviene@paneveziokeliai.lt Director Gintarė Diečkuvienė Average annual number of employees Company 3 employees ǀ 5 employees Group 4 employees ǀ 8 employees Sales revenue Company 0.00 million euro ǀ million euro Group 0.00 million euro ǀ million euro Activities and specialisation Development, lease and sale of real property Net profit (loss) Company million euro ǀ (0.553) million euro Group million euro ǀ million euro Main projects of 2016 Sale of shares (100 %) of a subsidiary Šeškinės projektai UAB Preparation of a detailed plan of a site managed by Ateities projektai UAB Average annual number of employees 3 employees ǀ 1 employees Sales revenue million euro ǀ million euro Activities and specialisation Development of real property projects Main projects of 2016 Sale of real property Implementation warranty period obligations of buildings Net profit (loss) (0.036) million euro ǀ million euro Subsidiaries: Ateities projektai UAB Baltevromarket AO ISK 47

46 AB Panev io Keliai subsidiary and associated companies Other activities UAB PAVERSMIO KARJERAS UAB Visdievų karjeras Senamiesčio g. 102B, II korp., LT Panevėžys, Lithuania Tel.: Fax: Average annual number of employees 49 employees ǀ 51 employees Deputy Director Marius Liubartas Sales revenue million euro ǀ million euro Net profit (loss) million euro ǀ million euro S. Kerbedžio g. 7, LT Panevėžys, Lithuania Tel.: Director Nijolė Lukjančiuk Paversmio karjeras UAB Average annual number of employees in employees Sales revenue thousand euro ǀ thousand euro Net profit (loss) in 2016 (0.099) thousand euro Activities and specialisation Transportation of cargo by road Main projects of 2016 Surface treatment works in the Republic of Lithuania and the Republic of Latvia Road works on the sections Pabiržė Biržai, Zarasai Daugavpils and Ukmergė Deltuva Grit transportation and paving works in the Republic of Latvia Bitumen transportation in the Republic of Lithuania and the Republic of Latvia Transportation of bitumen for construction of the Vilnius Western bypass by order of Ukmergės keliai UAB Visdievų karjeras UAB Average annual number of employees in employees Sales revenue in 2016 Activities and specialisation Quarrying Main projects of 2016 Preparation of technical documentation Net profit (loss) (1.494) thousand euro ǀ (2.720) thousand euro 48

47 A look into the future Smart roads Wireless systems enabling vehicle communication with the road When talking about creation of a smart road, the wireless systems in the vehicle enabling communication with the road are very important. The vehicle-to-vehicle communication is also a possibility. The vehicle communicates with the systems installed in the road via the wireless networks, such as Wi-Fi. After connecting to them, the vehicle will receive the necessary information about the traffic situation, routes, road accidents, etc. This way the driver will be aware of what is happening ahead and can plan the trip accordingly. The communication stations are installed at certain intervals of the road zone in order to insure a stable connection in a vehicle allowing to receive necessary information at any point on the road. The following step is vehicle-to-vehicle communication. Smart payment of the road tax The direct contact of the vehicle with road could also offer a simple solution for the taxation issue of the road users. Currently, a road user has to stop at a particular place, like a gas station, and pay the road tax. This process can and should be automated. The taxation system must be applicable to all types of transport, not only to heavy duty vehicles as is now the case. The new systems would identify all vehicles on the road and automatically debit the amount of road tax from the account linked to a specific vehicle independent of whether it is a light or heavy duty vehicle. 49

48 A look into the future Smart roads Vehicle control technology based on traffic information In the opinion of experts, smart driving is inseparable from a safe driving system using radars and databases. The equipment installed inside a vehicle can navigate in the environment and has databases with information about the road and surrounding territories, which are scanned on a continuous basis. The system provides information to the driver and optimises the driving. When using the vehicle databases, autonomous driving is still possible at certain sections. The databases can show the location of a vehicle, the number of lanes, route, speed-limit and can plan the optimum instructions for the set distance. It is call an autopilot. The regular autopilots only detect the speed, while the smart vehicle system can think instead of a driver. Most of the modern cars already have integrated systems, which can scan the road markings, and warn by a sound or visual signal when a driver departs from the lane. The driver is sitting behind the wheel, while the vehicle keeps driving on the lane, or slows down when approaching another vehicle. Simpler systems, for example, a lane departure warning system, gives a warning when a driver accidentally moves out of traffic lane, whereas a smart system controls actual changing of lanes. When wishing to change lanes, the vehicle will automatically evaluate the situation other vehicles in front and behind and offer a solution. Traffic information based vehicle control technology is highly efficient. The roads are equipped with devices transmitting the information. For example, following a warning about an accident up the road, a vehicle will automatically stop or slow down. Warning information can be displayed, such as, SHARP CURVE AHEAD. If the speed-limit is exceeded, the car will automatically slow down. 50