ANNUAL REPORT 2019 by AS_UPB

S OF NCE

PERI

2019

ANNUAL REPORT

CONT ENTS INFORMATION ON THE GROUP INFORMATION ON GROUP COMPANIES THE MARKET STRUCTURE

MANAGEMENT’S REPORT

UPB IN 2019

PRODUCTS AND SERVICES SUSTAINABLE CONSTRUCTION UPB ENVIRONMENTAL RESPONSIBILITY DESIGN & BUILD ENGINEERING 3C PROJECTS GLASS STEEL CONCRETE ENERGY MACHINERY INDUSTRY 4.0

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SUMMARY CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF BALANCE SHEET CONSOLIDATED STATEMENT OF PROFIT OR LOSS CONSOLIDATED STATEMENT OF CASH FLOW CONSOLIDATED STATEMENT OF CHANGES IN EQUITY INDEPENDENT AUDITOR’S REPORT MAJOR PROJECTS IN 2019

This document is in all respects a translation of the Latvian original Annual Report. In the event of any differences between this translation and the Latvian original, the latter shall prevail.

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20 21 22 23

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4 | INFORMATION ON THE GROUP

UPB ANNUAL REPORT 2019

INFORMATION ON THE GROUP NAME OF THE PARENT COMPANY

UPB

LEGAL STATUS OF THE PARENT COMPANY

Joint Stock Company

NUMBER, PLACE AND DATE OF REGISTRATION OF THE PARENT COMPANY

42103000187, Liepaja, 26 April 1991 Registered with the Commercial Register on 30 December 2004

PLACE OF OPERATION OF THE PARENT COMPANY’S EXECUTIVE BODY

Dzintaru Street 17, Liepaja, LV-3401, Latvia

BOARD MEMBERS OF THE PARENT COMPANY AND THEIR POSITIONS

Dainis Berzins, Chairman of the Board Ugis Grinbergs, Member of the Board Nora Kalna, Member of the Board

SUPERVISORY BOARD MEMBERS OF THE PARENT COMPANY AND THEIR POSITIONS

Uldis Pilens, Chairman of the Council Madara More, Deputy Chairman of the Council from 20 March 2020 Normunds Horsts, Member of the Supervisory Board Oskars Mors, Deputy Chairman of the Council until 20 March 2020

REPORTING YEAR

01.01.2019 - 31.12.2019

AUDITORS

KPMG Baltics JSC Vesetas Street 7, Riga, LV-1013 Licence No.55

INFORMATION ON GROUP COMPANIES

AILE grupa, LTD Reg. No. 42103034060 Legal address: Pulvera Street 28, Liepaja, LV-3405, Latvia UPB group: 100.00% ALTO 4.0, LTD Reg. No. 42103083225 Legal address: Maskavas Street 250, Riga, LV-1063, Latvia UPB group: 100.00% Betona Pētījumu Centrs, LTD Reg. No. 50003479061 Legal address: Maskavas Street 246, Riga, LV-1063, Latvia Indirect UPB group through MB Betons, JSC: 93.50% Būvmehanizācija, LTD Reg. No. 42103005199 Legal address: Martina Street 18, Liepaja, LV-3401, Latvia UPB group: 100.00% Daugavpils Dzelzsbetons, LTD Reg. No. 41503019513 Legal address: Rupniecibas Street 1a, Daugavpils, LV-5420, Latvia Indirect UPB group through MB Betons, JSC: 93.50% Dzelzsbetons MB, LTD Reg. No. 42103029801 Legal address: Cukura Street 34, Liepaja, LV-3414, Latvia Indirect UPB group through MB Betons, JSC: 93.50% ENNA, LTD Reg. No. 52103030501 Legal address: Dzintaru Street 19, Liepaja, LV-3401, Latvia UPB group: 100.00%

INFORMATION ON THE GROUP | 5

UPB ANNUAL REPORT 2019 UPB enterprises UPB agencies UPB export markets

RK Metāls, LTD Reg. No. 42103009504 Legal address: Lauktehnikas Street 12, Grobina, LV-3430, Latvia UPB group: 100.00% Stiklu Centrs, LTD Reg. No. 40003491838 Legal address: Pulvera Street 20, Liepaja, LV-3405, Latvia Indirect UPB group through AILE grupa, LTD: 100.00%

THE MARKET STRUCTURE

60% Export markets

Transportbetons MB, LTD Reg. No. 48503013571 Legal address: Graudu Street 4, Jelgava, LV-3001, Latvia Indirect UPB group through MB Betons, JSC: 93.50% UPB Nams, LTD Reg. No. 42103041363 Legal address: Dzintaru Street 19, Liepaja, LV-3400, Latvia UPB group: 100% UPB Projekti, LTD Reg. No. 41203030418 Legal address: Dzintaru Street 17, Liepaja, LV-3401, Latvia UPB group: 100.00%

40% Latvian market

Export markets (2019) Latvian market (2019)

H&L STUDIJA, LTD Reg. No. 42103025231 Legal address: Pulvera Street 28, Liepaja, LV-3405, Latvia UPB group: 100.00% HF Technology, LTD Reg. No. 52103028831 Legal address: Pulvera Street 28, Liepaja, LV-3405, Latvia UPB group: 100.00% from 30 April 2019 IMS Latgale, LTD Reg. No. 41503039473 Legal address: Rupniecibas Street 1a, Daugavpils, LV-5404, Latvia Indirect UPB group through MB Betons, JSC: 93.50% until March 2019 Inerto Materiālu Serviss, LTD Reg. No. 42103025829 Legal address: Dzintaru Street 19, Liepaja, LV-3401, Latvia Indirect UPB group through MB Betons, JSC: 93.50% Jelgavas MB, LTD Reg. No. 43603014065 Legal address: Graudu Street 4, Jelgava, LV-3001, Latvia Indirect UPB group through MB Betons, JSC: 93.50% MB Betons, JSC Reg. No. 42103019343 Legal address: Dzintaru Street 17, Liepaja, LV-3401, Latvia UPB group: 93.50% MBD, JSC Reg. No. 4000344690 Legal address: Rupniecibas Street 1a, Daugavpils, LV-5420, Latvia Indirect UPB group through MB Betons, JSC: 93.50%

UPB Engineers, LTD Reg. No. 304828700 Legal address: Savanoriu a. 2A, Panevežys, LT 35201, Lithuania UPB group: 100.00% UPB Sweden, LTD Reg. No. 556757-7688 Legal address: c/o Advokatfirman Delphi, Master Samuelsgatan 17 Box 1432 111 84, Stockholm, Sweden UPB group: 100.00% UPB AS GmbH Reg. No. CH-092.4.017.548-3 Legal address: Schlossgasse 4, Münchenstein, CH-4142, Switzerland UPB group: 100.00% UPB AS, LTD Reg. No. 9086239 Legal address: 4th floor Imperial House 15 Kingsway, London, WC2B 6UN, Great Britain UPB group: 100% UPB Engineering, LTD Reg. No. 191829367 Legal address: ул. Гинтовта 1, кабинеm 603 (БЦ А-100), Минск, 220125, Belarus UPB group: 100.00% Inženieru birojs “Būve un Forma”, LTD Reg. No. 40003511937 Legal address: Maskavas Street 246, Riga, LV-1063, Latvia UPB group: 100.00% - as of 19.10.2018 UPB Energy, LTD Reg. No. 42103028844 Legal address: Dzintaru Street 19, Liepaja, LV-3401 UPB group: 100.00%

UPB, LTD Reg. No. HRB 4293 Legal address: Plauener Strasse 163-165, Berlin, 13053, Germany AS UPB decisive influence on the basis of Group agreement 100% until 18 July 2019 UPB group: 100% from 18 July 2019 to 14 November 2019

6 | MANAGEMENT’S REPORT

UPB ANNUAL REPORT 2019

MANAGEMENT’S REPORT

The joint-stock company UPB and its subsidiaries together form an industrial group whose business is based on the design and construction of complex buildings / technological facilities, including consultations during the early stages of the project, design, manufacture and assembly of building structures and facades. The UPB group consists of glass facade, steel and reinforced concrete structure production units, a cogeneration module production unit, a mechanical engineering production unit, 11 ready-mix concrete production units throughout Latvia, complex engineering and construction companies in Latvia, as well as an IT solution company. UPB group ensures its operations with companies and their representative offices in nine countries — Latvia, Sweden, Norway, Denmark, Lithuania, Belarus, Great Britain, Switzerland and Azerbaijan — employing more than 1,800 people in total. In 2019, UPB group’s consolidated net turnover reached 213 million euros. Throughout the reporting year, the main focus in the development of the group was on the creation of novel and innovative products, construction of increasingly larger and more complex projects, including the implementation of combined design and construction projects, as well as constant digitalisation and automation of the engineering, manufacturing and construction processes. The proportion of volumes sold in Latvia and export markets is 36% vs. 64%. Last year, UPB group companies in total paid more than 25 million euros in taxes. UPB is working on increasingly intricate and more complex projects, offering products and solutions with greater added value. There have been more projects carried out with highly processed wall elements included already, such as production unit-installed windows, brick treatments, tile finish, terracotta finish, pigmented concrete, curved surfaces, glass fiber reinforced concrete (GRC) solutions etc. In 2019, several significant Design & Build projects were launched and implemented — the largest of which are the shopping and entertainment centre ‘SĀGA’ in Stopiņi, Latvia, and the Boeing 747-8 hangar at Baku Airport, Azerbaijan. Several of UPB’s 3C projects combining glass, steel and concrete structures, various facade and frame

projects have also been completed, and work has been performed on several impressive high-rise projects, including the 37-storey office building ‘Citygate’ in Sweden, where UPB designs, manufactures, supplies and assembles steel and reinforced concrete structures. The largest projects in Latvia in 2019 were the newly erected building of the tennis hall of the Liepāja Olympic Centre, the construction of the LIDL store in Liepāja and construction of the Jensen Metal production unit in the territory of Karosta Industrial Park in Liepāja, as well as several projects for the needs of the Ministry of Defence. In 2020, construction works will continue at the largest project of UPB in Latvia — the shopping and entertainment centre ‘SĀGA’. The total area of the object is 57,000 m2, and designing for this project has been fully performed with BIM (Building information modelling). Last year, UPB also completed the design of a multifunctional building complex in Ķīpsala, Latvia and signed a contract for its construction. Also the development concept of Liepāja Airport was created. Among the major projects abroad are the multifunctional building ‘Stora Frosunda’ in Sweden with a total area of 66,900 m2 where UPB provides the design, manufacture, supply and assembly of steel and reinforced concrete structures, the head office building of the brewer ‘Carlsberg’ in Denmark where UPB designed, manufactured, supplied and installed a facade with pure copper and copper composite cladding, as well as the 13-storey office building ‘Princeton’ in Sweden and the 16-storey office building ‘Parallell’ in Norway. The Fargskrappan community building was an impressive 3C project in Sweden. The building has 15 floors, and its frame was built using 760 tonnes of steel and 4090 cubic metres of concrete, while the facade consists of glass structures of 12 colours (a single element may have up to six different colour shades). An element façade project, Bloom Clerkenwell, is currently in development in the UK and being built on the new underground line building. In order to facilitate further development of the UPB group, we invested in nearly all of our business structures. A major digitisation programme has been implemented in our pre-fab reinforced concrete component production units, and the expansion and upgrade project for the

MANAGEMENT’S REPORT | 7

UPB ANNUAL REPORT 2019

Liepāja reinforced concrete production unit has entered its design stage. A new ready-mix concrete production unit was set up in Liepāja, and we continue to invest in modernising our readymix concrete infrastructure and expanding the vehicle fleet. A new accredited concrete research laboratory has been created in Daugavpils, and we are preparing for setting up new premises for the lab in Riga. At the same time, we conducted various projects for developing new concrete products: we developed a new solution for glass-fibre reinforced concrete (GRC) lining, and worked out complex concrete formulas for high-strength and self-sealing concrete. The manufacturing spaces of the aluminium-glass production unit have grown by 50%, investments have also been made towards the development of technologies, such as the new insulated glass unit production line, a laminated glass cutting rig and a glass edge grinding machine etc.

in Basel, Switzerland, meeting its strict requirements for sound insulation. We set up a 50 kW cogeneration plant at the production unit of ‘Užavas alus’, to provide it with the electric power it consumes. Last year, we signed a few contracts for building innovative production systems, such as the construction of a main heating line to connect the heating systems of Baloži and Titurga, and the construction of a heat battery system for the production unit CHPP-2 of JSC (AS) Latvenergo. Alto 4.0, a company of the UPB group, has developed an enterprise resource planning system — Alto ERP — which provides centralised and full optimisation of the business process cycle. After the end of the financial year, on 11 March 2020, the World Health Organization declared the outbreak of a new coronavirus ‘Covid-19’ as a global pandemic, and on 12 March 2020, the Government of the Republic of Latvia declared a state of emergency in Latvia which was in force from 12 March to 9 June 2020.

The amount of mechanical engineering structures we produced went up by 26% in comparison with 2018. The investments include buying various hardware and software that improves production efficiency.

Taking into account the existing portfolio of orders, in 2020, we forecast that the consolidated turnover will exceed the threshold of 200 million euros.

Our activities in the field of energy included a 600 kW cogeneration plant made at our Liepāja factory for a hospital

The shareholders shall make the decision on the use of profit of 2019.

Dainis Berzins

Chairman of the UPB Management Board

14 July 2020

Nora Kalna

Member of the Board

Ugis Grinbergs

Member of the Board

8 | UPB IN 2019

UPB ANNUAL REPORT 2019

UPB IN 2019 FINANCES

UPB CONSOLIDATED 5-YEAR NET TURNOVER

815 Mill.euro

200

OTHER INFORMATION

100

2015 2016 2017 2018 2019

UPB IN 2019 | 9

UPB ANNUAL REPORT 2019

GROWTH

3C SOLUTION

STRUCTURAL FRAME SOLUTION

CITYGATE, OFFICE BUILDING GOTHENBURG, SWEDEN

DRAKEN, HOTEL, GOTHENBURG, SWEDEN

STOCKHOLM NEW, OFFICE BUILDING STOCKHOLM, SWEDEN

GARDA VESTA, OFFICE BUILDING GOTHENBURG, SWEDEN

MUNKSJÖSTADEN, OFFICE BUILDING JÖNKÖPING, SWEDEN

STOREYS

FACADE SOLUTION

STOREYS

25 STOREYS

STOREYS

28 16

3C SOLUTION

STRUCTURAL FRAME SOLUTION

2016

2019

AWARDS

Environment and Safety award

2019 WINNER ESS

EUROPEAN RESEARCH INSTITUTE LUND, SWEDEN

gada balva

THE BEST ENGINEER 2019 MOST ENERGY EFFICIENT PUBLIC BUILDING IN LATVIA 2019

LIEPAJA OLYMPIC CENTRE TRACK-AND-FIELD ARENA

2019

ANNUAL REPORT

PRODUCTS AND SERVICES

SUSTAINABLE CONSTRUCTION UPB ENVIRONMENTAL RESPONSIBILITY DESIGN & BUILD ENGINEERING 3C PROJECTS GLASS STEEL CONCRETE ENERGY MACHINERY INDUSTRY 4.0

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12 | PRODUCTS AND SERVICES

UPB ANNUAL REPORT 2019

CTS

IN THE

•

ING CONT

2019

JECTS

77%

AINABLE

RTFOLIO PO

GREEN OF

UPB has high competence in the field of sustainable and energy efficient construction. We represent one of the largest construction companies in the Baltic states, and we care about the impact we leave both on the environment and the parties involved in the process.

SORKEDALSVEIEN 8, OFFICE AND APARTMENT BUILDING OSLO, NORWAY

SUSTAINABLE CONSTRUCTION

•

UPB ENVIRONMENTAL RESPONSIBILITY ENERGY EFFICIENCY and CO2 REDUCTION

RECYCLING AND REUSE OF MATERIALS

• Environmental declarations of products • Energy-efficient solutions during the engineering stage • Electrical power from renewable energy sources • Cogeneration station that provides heating and electricity for the production unit • Biofuel additive for transport vehicles • Implementation of the energy efficiency programme in accordance with the results of the energy audit (EN 16247)

• Sorting and recycling of waste • Reuse of packaging • Products from recycled raw materials – use of recycled steel in production • More environmentally friendly solutions for the production of reinforced concrete elements – new waste-free production facility – coming soon!

EFFICIENT USE OF RESOURCES AND REDUCTION OF ENVIRONMENTAL FOOTPRINT • Product lifecycle analysis using One Click LCA software - New! • Material optimisation already in the engineering stage • New, more environmentally friendly equipment at production plant

RESPONSIBLE OPERATION PRINCIPLES IN FULL ECONOMIC CYCLE • Process digitalisation and automation • Systematic maintenance of equipment and vehicle fleet • Use of modernised, environment-friendly ferries for transport • Trucks: Euro V and higher

EFFORTS TO REDUCE THE CONSUMPTION OF RESOURCES AND IMPLEMENT ENVIRONMENTALLY FRIENDLY SOLUTIONS

DESIGN & BUILD Design and construction under a single contract

GENERAL CO N ST R U CT I O N

57 000m2

BENEFITS

PRODUCTS AND SERVICES | 13

UPB ANNUAL REPORT 2019

• ONE CONTRACTOR • ONE CONTRACT • UNIFIED WORKFLOW • SHORTER PROJECT TURNAROUND TIME • LOWER COST

SĀGA, RECREATION AND SHOPPING CENTRE RIGA, LATVIA. DEVELOPER VPH

total area

ROOF STRUCTURES

LS • SANDWICH PANE PANELS TE NA BO AR • POLYC S ARBONATE WINDOW LYC • ROOF RIDGE PO N SU D AN L RO NT TE CO • AUTOMATED CLIMA SHADES

DEEP SOIL 2415m3 9580m2 1530t 6415m3 MIXING piles steel structures ready-mix concrete reinforced concrete floor panels

EARLY-STAGE CONSULTING FOR FRAME AND BUILDING ENVELOPE YOUR IDEA

OUR UN IQUE 3 CONSTRUCTION EXPERTISE

STEEL CONCRETE GLAZED STRUCTURES

GRC

O D U CT

NEW

BENEFITS:

• EXPERIENCE-BASED EXPERT CONSULTING IN THE EARLY PHASE OF THE PROJECT • PRECISE SYSTEM DRAWINGS OF THE STRUCTURAL FRAME AND FACADE • BUDGET CONTROL

ENGINEERING UPB

ENGINEERING CAPACITY

180+ THE LARGEST PROJECT IN THE HISTORY OF UPB

COMPLEX 3D ASSEMBLIES AND COMPONENTS PARTICIPATION

Integrated engineering of steel, concrete and glass structures

• CUSTOM MOCK-UP OF THE FINAL PRODUCT

THE HIGHEST BUILDING DESIGNED BY UPB TO DATE

BLOOM CLERKENWELL COMMERCIAL BUILDING, LONDON, UK

Developer: HB Reavis

144 METERS 39 STOREYS

66 900m2 6 MONTHS 5 MONTHS 4 MONTHS ENGINEERING MANUFACTURING ASSEMBLING OF ELEMENTS

STORA FROSUNDA, MULTIFUNCTIONAL BUILDING, SOLNA, SWEDEN

X ST E E L COMPLE NS IO T U SOL

PRINCETON, OFFICE BUILDING STOCKHOLM, SWEDEN CITYGATE, OFFICE BUILDING, GOTHENBURG, SWEDEN

G OFFICESA RIN ENGINEERLIN US BEL ITHUANIA L AT V I A

14 | PRODUCTS AND SERVICES

UPB ANNUAL REPORT 2019

PROJECTS* *UPB engineered, manufactured and assembled combined glass, steel and concrete solutions

GLASS

STEEL

CONCRETE

GLAZED STRUCTURES

STEEL STRUCTURES

CONCRETE STRUCTURES

BENEFITS

FARGSKRAPAN, PUBLIC BUILDING SOLLENTUNA, SWEDEN

REDUCED TOTAL CONSTRUCTION TIME SEAMLESS DESIGN IN 3D EARLY-STAGE CONSULTING FOR IMPLEMENTATION OF THE CUSTOMERâ&#x20AC;&#x2122;S IDEA KEEPING A SINGLE PROJECT BUDGET OPTIMAL USE OF CONSTRUCTION SITE EQUIPMENT

GLASS PRODUCTS ALUMINIUM AND WOODALUMINIUM GLASS STRUCTURES BESPOKE FACADE SOLUTIONS

SAFETY CERTIFICATE

50%

INCREASE IN ORDERS

FU LLY AU TO MAT ED P RO DU CT I O N

NEW MARKET

5 3mx r t e es

NEW

sions in dimen

insulated glass unit production line

PRODUCTION AREA

+1000m2

ING IN INVEST LOGY TECHNO STORA FROSUNDA, MULTIFUNCTIONAL BUILDING, SOLNA, SWEDEN

Weight from 243 to 682kg

0 3.

3 PR D ST OJ EE EC L L T IN KS

m fro 9m 5. to

STEEL ø from 32 to 46cm

PRODUCTS

EXPLOSION-RESISTANT CONTAINERS PRESSURE-RESISTANT CISTERNS

COMPLEX COLUMN SOLUTIONS

21%

PRODUCTION EQUIPMENT FOR REINFORCED CONCRETE PLANT

STEEL CONSTRUCTION STRUCTURES

28 STOREYS

STEEL INDUSTRIAL PRODUCTS

E OF INCREASTION PRODUC VOLUME

USE OF RECYCLED STEEL

Mill. INVESTING IN NEW

2000 t

es structur of steel

THE HIGHEST BUILDING IN THE HISTORY OF UPB STOCKHOLM NEW OFFICE BUILDING

LAMINA STRUCTURE

EURO PRODUCTION FACILITIES

VERY HIGH PERFORMANCE CONCRETE

CONCRETE

READY-MIX CONCRETE AGGREGATES CONCRETE LABORATORY

OF READY-MIX CONCRETE PLANTS

ACCREDITED CONCRETE TESTING LABORATORY IN DAUGAVPILS, LATVIA

FILIGREE SLABS

with installed engineering networks

RETE BUSINESS READY-MIX CONC NORWAY N AND IN

SE NEW RV ICE

PREFAB CONCRETE STRUCTURES

+15%

INCREASE OF TURNOVER SELF-CONSOLIDATING CONCRETE

PRODUCTS

UHPC SWEDE

FOR STRUCTURAL ELEMENTS • BALCONIES • STAIRS

MOBILE CONCRETE LABORATORY

S FOR DETERMIWIRELESS SENSOR PROPERTIES TE RE NING CONC

THE LARGEST HEAT ACCUMULATION TANK IN THE BALTIC STATES

550 MWh

3 m 0 0 0 18

pacity Thermal ca

E VOLUM RRIER A C T A HE

ENERGY

PRODUCTS ENERGY TURNKEY SOLUTIONS COGENERATION MODULES TRIGENERATION MODULES SERVICE

design of heat storage system for Latvenergo TEC-2, Latvia

SERVICE

3 MW

BIOMASS BOILER HOUSE VANGAZI, LATVIA

50 kW

UŽAVAS ALUS, COGENERATION PLANT UZAVA, LATVIA

IVE INNOVAAINTPROJECT

M HEATING

operation, service and maintenance of power plants 24/7

600 kW

CHP module maintenance remote monitoring and control

COGENERATION MODULE FOR A HOSPITAL BASEL, SWITZERLAND

HEATING MAIN PROJECT BALOZI, LATVIA

FULL-CYCLE PRODUCTION engineering | production | assembly

MACHINERY

PROCESS AUTOMATION EQUIPMENT SOLUTIONS FOR OIL AND GAS INDUSTRY

assembly area

+26%

VOLUME GROWTH

for the finished products

CUSTOM NS FOR SOLUTIO IAL INDUSTR OBJECTS

TECHNICAL LIFT STOPINI CULTURE CENTRE

CONVEYOR SYSTEMS ELEVATORS AND LIFTS

PARTICIPATION IN INTERNATIONAL FAIRS

INDUSTRIAL LINES UKRAINE

+21%

INCREASE OF PRODUCTION IN FINLAND

s on

Extensive production facility digitalisation programme que applicati un i

20+ PROGRAMMERS

LIFTING SYSTEM LIDAN, UNITED KINGDOM

INDUSTRY 4.0

4 .0

GRABS AND BUCKETS

+600m

PRODUCTS

Construction file sharing system

BIM INTEGRATED ERP SYSTEMS SMART FACTORY SOLUTIONS

altoerp.com

TEKLA PLUGINS ENGINEERING TOOLS

A full-cycle enterprise process management system designed for the construction industry.

ope

PRODUCTS

d by A

2019

ANNUAL REPORT

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF BALANCE SHEET CONSOLIDATED STATEMENT OF PROFIT OR LOSS CONSOLIDATED STATEMENT OF CASH FLOW CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT AUDITORSâ&#x20AC;&#x2122; REPORT

| | | | | |

18 20 21 22 23 24

18 | CONSOLIDATED STATEMENT OF BALANCE SHEET

UPB ANNUAL REPORT 2019

CONSOLIDATED STATEMENT OF BALANCE SHEET as at 31 December 2019 ASSETS

2019 (EUR)

2018 (EUR)

1 410 100

1 315 747

282 828 42 577

292 500 12 233

1 735 505

1 620 480

16 103 242

16 198 488

602 778

697 787

Equipment and devices

7 915 823

7 609 570

Other fixed assets

5 236 398

5 013 351

Construction in progress

2 764 593

220 128

948 070

150 000

33 570 904

29 889 324

128 165

229 180

673

78 031

37 637

400

Total long term financial assets

206 596

267 890

Total long-term investments

35 513 005

31 777 694

13 881 379

10 035 624

Work in progress and unfinished orders

3 365 810

3 357 720

Finished goods and goods for sale

1 967 291

3 982 189

Long-term investments Intangible assets Concessions, patents, licenses, trademarks and similar rights Goodwill Creation of intangible assets Total intangible assets

Fixed assets Land, buildings and engineering structures Leasehold improvements

Prepayments for fixed assets Total fixed assets

Long term financial investments Other loans and other long term receivables Investments in associated companies Prepaid expenses Other securities and investments

Current assets Stock Raw materials

Prepayments for goods

2 349 055

1 801 816

21 563 535

19 177 349

Trade receivables

4 592 369

9 231 641

Other receivables

10 030 939

9 207 519

Prepaid expenses

1 059 719

1 028 198

15 105 861

8 046 213

30 788 888

27 513 571

23 565 792

12 800 210

75 981 215 111 431 220

59 491 130 91 268 824

Total stock

Receivables

Accrued income Total receivables

Cash Total current assets Total assets

CONSOLIDATED STATEMENT OF BALANCE SHEET | 19

UPB ANNUAL REPORT 2019

EQUITY, PROVISIONS AND LIABILITIES

2019 (EUR)

2018 (EUR)

15 720 305

(20 515)

(9 602)

Shareholderâ&#x20AC;&#x2122;s equity Share capital Foreign exchange revaluation reserve Other reserves

287

275 018

Retained earnings brought forward from previous years

20 409 524

16 779 178

Profit for the reporting year

13 410 508

11 514 520

961 379

1 283 168

50 481 488

45 562 587

4 187 216

5 507 755

4 187 216

5 507 755

987 131

974 521

2 089 288

1 372 156

815 405

340 389

Minority interest Total equity Provisions Other provisions Total provisions Liabilities Long-term liabilities Loans from credit institutions Other loans Other liabilities Deferred income Total non-current liabilities

144 346

211 730

4 036 170

2 898 796

8 868

Short-term liabilities Loans from credit institutions Other loans

1 246 801

920 991

Customer advances

17 366 684

8 757 674

Accounts payable to suppliers and contractors

12 547 219

9 881 632

Taxes and compulsory state social security contributions

2 067 091

2 074 025

Other liabilities

1 051 989

948 171

Deferred income

168 014

208 017

Dividends payable

6 010 203

5 166 944

Accrued liabilities

12 304 345

9 333 364

Total short-term liabilities

52 726 346

37 299 686

Total liabilities

56 762 516

40 198 482

111 431 220

91 268 824

Total equity, provisions and liabilities

20 | CONSOLIDATED STATEMENT OF PROFIT AND LOSS

UPB ANNUAL REPORT 2019

CONSOLIDATED STATEMENT OF PROFIT AND LOSS for the year ended 31 December 2019 2019 (EUR)

2018 (EUR)

213 068 518

197 234 597

(187 042 271)

(174 484 973)

Gross profit

26 026 247

22 556 560

Selling expenses

(2 604 542)

(1 791 058)

Administrative expenses

(8 560 956)

(7 808 796)

466 237

338 619

Other operating expenses

(690 998)

(1 229 480)

Expenses from disposal of long-term financial investments

(512 499)

76 072

99 559

(275 396)

(301 005)

13 924 165

11 864 399

(384 015)

(245 582)

13 540 150

11 618 817

(129 642)

(104 297)

13 410 508

11 514 520

Net sales Cost of goods sold, cost of services

Other operating income

Interest and similar income Interest and similar expenses Profit before corporate income tax Corporate income tax Profit for the reporting year Minority interest Profit after minority interest

CONSOLIDATED STATEMENT OF CASH FLOW | 21

UPB ANNUAL REPORT 2019

CONSOLIDATED STATEMENT OF CASH FLOW for the year ended 31 December 2019 2019 (EUR)

2018 (EUR)

13 924 165

11 864 399

4 182 676 726 299 (1 312 439) (10 913) 512 499 (58 829) 94 594

4 109 967 827 613 1 399 868 135 697 (37 852) 77 212

18 058 052

18 376 904

(3 513 814) (3 062 661)

(3 665 489) 1 600 551

14 608 594 26 090 171 (94 594) (413 949) 24 991

(6 271 497) 10 040 469 (77 212) (1 069 960) 332 580

25 606 619

9 225 877

(165 344)

(300 000)

929 316 700 (6 339 561) 142 190 (2 324) 232 58 829 (447 591)

34 336 (4 268 058) 108 214 (1 651) 61 048 37 852 -

(6 435 940)

(4 328 259)

12 610 26 018 (8 868) (1 401 247) (7 033 610)

8 868 5 016 (55 836) (890 128) (6 090 919)

(8 405 097)

(7 022 999)

Net cash flows for the reporting year

10 765 582

(2 125 381)

Cash and cash equivalents at the beginning of the year

12 800 210

14 925 591

Cash and cash equivalents at the end of the year

23 565 792

12 800 210

Cash flows from operating activities 1. Profit before corporate income tax Adjustments for:

Depreciation and adjustments to impairment of fixed assets Amortization and adjustments of impairment of intangible assets Change in provisions (except allowances for doubtful debt) Profit or loss from foreign exchange rate fluctuations Net loss/(profit) from transactions with subsidiary shares Interest and similar income Interest and similar expenses 2. Profit or loss before adjustments for the effect of changes to current assets and short term liabilities Adjustments for:

(Increase)/decrease of receivables (Increase)/decrease of stock Increase or (decrease) of accounts payable to suppliers, contractors and other creditors 3. Gross cash flows from operating activities 4. Interest paid 5. Corporate income tax paid 6. Received overpaid corporate income tax Net cash flows from operating activities

Cash flows from investing activities Investments in related or associated companies Cash and cash equivalents obtained through acquisition of related companies Income from disposal of investments in related companies Purchase of fixed and intangible assets Income from disposal of fixed and intangible assets Loans issued Income from the repayment of loans Interest received Expenses on disposal of shares in related companies Net cash flows from investing activities

Cash flows from financing activities Loans received Subsidies, grants, donations or gifts received Repayment of loans Finance lease payments Dividends paid Net cash flows from financing activities

22 | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

UPB ANNUAL REPORT 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2019

Share capital (EUR)

Retained earnings brought forward from Other reserves previous years (EUR) (EUR)

Profit of the reporting year (EUR)

Foreign exchange revaluation reserve (EUR)

Minority interest (EUR)

Total shareholdersâ&#x20AC;&#x2122; equity (EUR)

15 720 305

275 000

18 167 627

5 349 349

(145 299 )

1 317 771

40 684 753

Profit for 2017 transferred to retained earnings

5 349 349

(5 349 349)

Change due to acquisition of a subsidiary

18-

(18)

Distribution of dividends

(6 737 780)

(138 900)

(6 876 680)

Foreign exchange revaluation result

135 697

Profit of the reporting year

11 514 520

104 297

11 618 817

15 720 305

275 018

16 779 178

11 514 520

(9 602)

1 283 168

45 562 587

Profit for 2018 transferred to retained earnings

11 514 520

(11 514 520)

Changes due to acquisition of subsidiaries

269

137 231

(300 000)

(162 500)

Changes in relation to disposal of a subsidiary

(275 000)

275 000

Distribution of dividends

(8 296 405)

(151 431)

(8 447 836)

Foreign exchange revaluation result

(10 913)

Profit of the reporting year

13 410 508

129 642

13 550 150

15 720 305

287

20 409 524

13 410 508

(20 515)

961 379

50 481 488

At 31.12.2017

At 31.12.2018

At 31.12.2019

UPB ANNUAL REPORT 2019

NOTE TO THE FINANCIAL STATEMENTS The summary consolidated financial statements comprise the consolidated balance sheet as at 31 December 2019 and the consolidated statements of profit and loss, cash flow and changes in equity for the year then ended derived from the audited consolidated financial statements of AS UPB and its subsidiaries in accordance with the “Annual Reports and Consolidated Annual Report Law” of the Republic of Latvia. The full audited consolidated financial statements of AS UPB its subsidiaries and companies under Group agreement and the Auditors’ Report thereon are available at Dzintaru 17, Liepaja, Latvia. Management believes that the content of the summary consolidated financial statements is consistent with the objective of the summary consolidated financial statements.

NOTE TO THE FINANCIAL STATEMENTS | 23

24 | INDEPENDENT AUDITORS’ REPORT

UPB ANNUAL REPORT 2019

INDEPENDENT AUDITORS’ REPORT To the shareholders of AS UPB report on the summary consolidated financial statements

Opinion The accompanying summary consolidated financial statements on pages 18 to 23, which comprise the summary consolidated balance sheet as at 31 December 2019 and the summary consolidated statements of profit and loss, cash flow and changes in equity for the year then ended, and related note to the summary consolidated financial statements, are derived from the audited consolidated financial statements of AS UPB and its subsidiaries for the year ended 31 December 2019. In our opinion, the summary consolidated financial statements derived from the audited consolidated financial statements of AS UPB and its subsidiaries for the year ended 31 December 2019 are consistent, in all material respects, with the audited consolidated financial statements on the basis described in the Note to the summary consolidated financial statements. Summary Consolidated Financial Statements The summary consolidated financial statements do not contain all the disclosures required by the ‘Law on the Annual Reports and Consolidated Annual Reports’ of the Republic of Latvia. Reading the summary consolidated financial statements, therefore, is not a substitute for reading the audited consolidated financial statements of AS UPB and its subsidiaries, and our report thereon. The Audited Consolidated Financial Statements and our Report Thereon We expressed an unmodified audit opinion on AS UPB and its subsidiaries consolidated financial statements in our report dated 14 July 2020. Management’s Responsibility for the Summary Consolidated Financial Statements Management is responsible for the preparation of the summary consolidated financial statements based on audited consolidated financial statements on the basis described in the Note to the summary consolidated financial statements. Auditors’ Responsibility Our responsibility is to express an opinion on the summary consolidated financial statements whether based on our procedures, which were conducted in accordance with International Standard on Auditing 810, “Engagements to Report on Summary Financial Statements” summary consolidated financial statements are consistent, in all material respects, with the audited consolidated financial statements.

Riga, Latvia July 14, 2020 KPMG Baltics AS License No. 55

Valda Uzane

Member of the Board Riga, Latvia

2019

ANNUAL REPORT

MAJOR PROJECTS IN 2019

26 | MAJOR PROJECTS IN 2019

UPB ANNUAL REPORT 2019

MAJOR PROJECTS IN 2019 COMPLEX SOLUTIONS

Office building STOCKHOLM NEW Stockholm, Sweden STEEL

Multifunctional building STORA FROSUNDA 2 Solna, Sweden

CONCRETE

Office building GEELEY INNOVATION CENTER Gothenburg, Sweden

STEEL

Office building DIALOGEN Jonkoping, Sweden GLASS

CONCRETE

STEEL

Public building FARGSKRAPAN Sollentuna, Sweden

GLASS

Residental building UMAMI Stockholm, Sweden

STEEL

CONCRETE

Office building CARLSBERG Copenhagen, Denmark GLASS

CONCRETE

Recreation and shopping center SAGA Riga, Latvia

Public building CAMP ĀDAŽI SPORTS CENTER Adazi, Latvia

D&G

DESIGN & BUILD

GENERAL CONSTRUCTION

DESIGN & BUILD

GENERAL CONSTRUCTION