UPB annual report 2018

S OF NCE

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PERI

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2018

ANNUAL REPORT

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

|4

MANAGEMENT’S REPORT

|6

UPB IN 2018

|8

PRODUCTS AND SERVICES DESIGN AND BUILD ENGINEERING SUSTAINABLE CONSTRUCTION CERTIFICATES AND SYSTEMS 3C PROJECTS GLASS STEEL CONCRETE ENERGY MACHINERY INDUSTRY 4.0

| 12 | 13 | 14 | 15 | 16

SUMMARY CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS CONSOLIDATED STATEMENT OF CASH FLOW CONSOLIDATED STATEMENT OF CHANGES IN EQUITY INDEPENDENT AUDITOR’S REPORT

| | | | |

MAJOR PROJECTS IN 2018

| 26

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.

18 20 21 22 23

4 | INFORMATION ON THE GROUP

UPB ANNUAL REPORT 2018

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 Supervisory Board Oskars Mors, Deputy Chairman of the Supervisory Board Normunds Horsts, Member of the Supervisory Board

REPORTING YEAR

01.01.2018 - 31.12.2018

AUDITORS

KPMG Baltics AS 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% - from 26 March 2018 Betona pētījumu centrs, LTD Reg. No. 50003479061 Legal address: Brivibas Avenue 221, Riga, LV-1039, 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%

INFORMATION ON THE GROUP | 5

UPB ANNUAL REPORT 2018 UPB enterprises UPB agencies UPB export markets

THE MARKET STRUCTURE

RK Metāls, LTD Reg. No. 42103009504 Lauktehnikas Street 12, Grobina, LV-3430, Latvia UPB group: 100.00%

64% Export markets

Stiklu Centrs, LTD Reg. No. 40003491838 Legal address: Pulvera Street 20, Liepaja, LV-3405, Latvia Indirect UPB group through AILE grupa, LTD: 100.00% Transportbetons MB, LTD Reg. No. 48503013571 Legal address: Robezu Street 34, Saldus, LV-3801, Latvia Indirect UPB group through MB Betons, JSC: 93.50%

36% Latvian market

Export markets (2018) Latvian market (2018)

ENNA, LTD Reg. No. 52103030501 Legal address: Dzintaru Street 19, Liepaja, LV-3401, Latvia UPB group: 100.00% H&L STUDIJA, LTD Reg. No. 42103025231 Legal address: Pulvera Street 28, Liepaja, LV-3405, Latvia UPB group: 100.00% IMS Latgale, LTD Reg. No. 41503039473 Legal address: Rupniecibas Street 1a, Daugavpils, LV-5404, Latvia Indirect UPB group through MB Betons, JSC: 93.50% 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 Reg. No. 4000344690 Legal address: Rupniecibas Street 1a, Daugavpils, LV-5420, Latvia Indirect UPB group through MB Betons, JSC: 93.50%

UPB Nams, LTD Reg. No. 42103041363 Legal address: Dzintaru Street 19, Liepaja, LV-3401, Latvia UPB group: 100% UPB Projekti, LTD Reg. No. 41203030418 Legal address: Dzintaru Street 19, Liepaja, LV-3401, Latvia UPB group: 100.00% UPB Engineers, LTD Reg. No. 304828700 Legal address: Savanoriu a. 2A, Panevežys, LT 35201, Lithuania UPB group: 100.00% - from 17 April 2018 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% GmbH UPB AS Legal address: Schlossgasse 4, Münchenstein, CH-4142, Switzerland UPB holding: 100.00% UPB AS, LTD Reg. No. 9086239 Legal address: 4th floor Imperial House 15 Kingsway, London, WC2B 6UN, United Kingdom UPB group: 100% Inženieru birojs “Būve un Forma”, LTD Legal address: Karla Ulmana 2A, Riga, LV-1004 UPB holding: 100.00% - as of 19.10.2018 UPB Energy, LTD Reg. No. 42103028844 Legal address: Dzintaru Street 19, Liepaja, LV-3401 UPB holding: 100.00% - as of 18.12.2018

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%

6 | MANAGEMENT’S REPORT

UPB ANNUAL REPORT 2018

MANAGEMENT’S REPORT

Joint stock company UPB and its subsidiaries constitute an industrial group whose core business consists of the construction of complex buildings, including engineering, manufacturing and assembling structures and facades.

The group consists of glass facade, steel and prefab concrete structure factories, a cogeneration module factory, a mechanical engineering production unit, 11 ready-mix concrete production units throughout Latvia, complex engineering and construction companies in Latvia and abroad, as well as an IT solution company.

Activities outside Latvia are provided not only by the subsidiary companies of UPB established abroad, but also by the permanent representative offices in Sweden, Norway, Ireland, Denmark and the branch of SIA UPB Nams in Azerbaijan.

At the beginning of 2018, UPB established the digital solutions company SIA ALTO 4.0 , in June it set up a new engineering bureau in Lithuania, and in turn, at the end of the year, it acquired the engineering bureau Būve un Forma .

Major investments were made in order to expand the factories and technologies, and several research projects were undertaken to facilitate the development of innovative products.

In 2018, UPB group’s consolidated net turnover reached 197 million euros. The main focus in the development of the group was on the creation of a novel product, construction of increasingly larger objects, as well as constant digitalisation and automation of the engineering, manufacturing and construction processes. The ratio between export projects and local projects in 2018 was 64:36.

Understanding the processes and trends of the construction sector, the development of digital and automation solutions has been set as one of the priorities in the UPB group. The team of SIA ALTO 4.0 , established at the beginning of 2018, is comprised of programmers, analysts, project and sales managers. The main task of ALTO 4.0 is to work on the automation of engineering, effectiveness of operation of the production units, enterprise resource planning and controlling system.

The created solutions are implemented and tested in the business units of the UPB group, and are also being sold to other construction sector companies.

In 2018, a number of new products with higher added value were created by the UPB group enterprises. High-

performance concrete products under the Lamina brand can be mentioned as one of them, providing for the possibilities to create complex concrete product forms for facades, as well as ensuring more exquisite shapes for the structures of the buildings.

Projects constructed by UPB are becoming increasingly more complex, combining modern solutions with irregular shapes. Over the period of 2018, the UPB group has been working with 12 high-rise buildings, with the height exceeding 16 storeys. The most significant project was the 28-storey and 115 metre tall office building Stockholm New in Sweden. The technical solution and all the designing works have been performed by the engineers of UPB .

The assembly of the object will be completed in the first half of 2019.

We have completed the work on the Boeing 747-8 hangar in Azerbaijan, in Baku Airport, which was a Design&Build project implemented by the UPB team. The hangar area is 8, 046 m2 and its height reaches 31 metres, which is equivalent to an 11-storey building. The total amount of metal used in the construction of the object is about 1, 850 tonnes, and the roof boarding covers almost 14, 500 m2. A unique foam extinguishing system has also been installed in the object.

In 2018, the largest projects in Latvia included the IKEA Shopping Centre, which was put into operation in July 2018, and the newly constructed building of the Tennis Hall of Liepāja Olympic Centre. Work on several industrial and military projects in Latvia has also been carried out over the year.

At the beginning of 2019, we concluded the Design&Build contract on the construction of the new Shopping and Entertainment Centre in Stopiņi. Designing for this project has been fully performed with BIM (Building information modelling). The construction works will be commenced in the second half of 2019.

In order to facilitate further development of the UPB group, in 2018, major investments were made in almost all business structures. The precast concrete production unit in Liepāja has gained equipment for automated reinforcement mesh production; extra facilities for carpentry, as well as a new office for precast concrete structure engineers has been created. The significant research project dedicated to the creation of a specifically thin outer layer of 3-layer precast concrete panels is now complete, and three new research projects have

MANAGEMENT’S REPORT | 7

UPB ANNUAL REPORT 2018

been launched with the goal to develop new products.

A new production unit has been created, where the aforementioned Lamina products will be produced innovative pigmented concrete blocks of challenging shapes for facades that are impossible to create using traditional means of production.

The aluminium-glass facade production units have gained new profile treatment lines that allow one to work on orders of large façade elements more efficiently. The aluminium and glass production unit has been expanded to almost twice its original size, allowing an increase in the number of curtain wall production lines up to eight. In turn, a new factory has been built in Grobiņa for the wood-aluminium composite window production unit. It is planned that in 2019 the glass facade production units will produce a record high volume of facade elements, because largescale contracts have been concluded with several objects in Sweden, Denmark and Great Britain.

The steel construction and engineering production units have been expanded, gaining new assembly, welding and storage facilities; in addition, a new milling machine has been acquired and product prototyping with a 3D printer has been started. The structural steel production unit produced constructions for several major projects last year,

Dainis Berzins

Chairman of the UPB Management Board

20 June 2019

thus the amount of the produced constructions in tonnes has increased considerably in comparison with 2017.

In order to expand the car park and the machinery of the ready-mix concrete production unit, significant investments were made. In addition to this, a new mobile concrete plant was created, specialising in pigmented concrete products.

As construction in Latvia becomes more active, the readymix concrete turnover has grown considerably in 2018.

Also, in the field of ready-mix concrete, the position in the Swedish market continued to develop, expanding both the area that is served and the range of available services.

In 2018, several projects in the field of energy have been implemented in Germany. We have successfully completed the work on a large-scale project in Basel, Switzerland.

Namely, a cogeneration station with 600 kW capacity meeting high acoustic and environmental requirements is being created for the needs of Basel Hospital.

Taking into account the existing portfolio of orders, in 2019, we forecast that the consolidated turnover would exceed the threshold of 200 million euros.

The shareholders shall make the decision on the use of profit of 2018.

Nora Kalna

Member of the Board

Ugis Grinbergs

Member of the Board

8 | UPB IN 2018

UPB IN 2018 FINANCES

PRODUCTION

UPB ANNUAL REPORT 2018

UPB IN 2018 | 9

UPB ANNUAL REPORT 2018

EMPLOYEES

AWARDS

health and security award

WINNER

WINNER

WINNER

GLASS PRISET 2018

SKANSKA HEALTH AND SECURITY AWARD

TEKLA BIM AWARDS 2018

UMESTAN BUSINESS PARK, OFFICE BUILDING UMEA, SWEDEN

EPIC, OFFICE BUILDING MALMO, SWEDEN

EPIC, OFFICE BUILDING MALMO, SWEDEN

THE MOST BEAUTIFUL GLASS BUILDING IN SWEDEN

WINNER OF 2018

THE BEST SMALL PROJECT DESIGNED IN CIS COUNTRIES

Photo: FOJAB arkitekter

2nd PLACE 1st PLACE

ANNUAL CONSTRUCTION AWARD OF LATVIA 2018

MOST SUSTAINABLE BUILDING AND PROJECT 2018

BUILDING OF THE YEAR IN SWEDEN 2019

GAMLESTADS TORG, OFFICE BUILDING GOTHENBURG, SWEDEN

ADAZI FREE WALDORF SCHOOL, SPORT HALL ADAZI, LATVIA

LUNDS TINGSRÄTT, ADMINISTRATIVE BUILDING LUND, SWEDEN

1st PLACE IN CATEGORY “NEW BUILDING - PUBLIC BUILDING”

2nd PLACE IN THE CATEGORY “PUBLIC BUILDING”

ONE OF THE TOP 20 BUILDINGS IN SWEDEN

2018

ANNUAL REPORT

PRODUCTS AND SERVICES DESIGN AND BUILD ENGINEERING SUSTAINABLE CONSTRUCTION CERTIFICATES AND SYSTEMS 3C PROJECTS GLASS STEEL CONCRETE ENERGY MACHINERY INDUSTRY 4.0

| 12 | 13 | 14 | 15 | 16

12 | PRODUCTS AND SERVICES

UPB ANNUAL REPORT 2018

LOW ORKF S T S W E O GL ND C | SIN AC T T I M E A R T N N CO ONE UTIO OR | T E X E C T C A R OJEC CONT ONE C E D P R U RED

DESIGN & BUILD Designing and construction in a single contract.

INDUSTRIAL BUILDINGS MILITARY BUILDINGS COMMERCIAL BUILDINGS MULTI-APARTMENT BUILDINGS PUBLIC BUILDINGS

NEW

ENGINEERING COMPANY

LIEPAJA OLYMPIC CENTRE, TENNIS HALL LIEPAJA, LATVIA

ACQUIRED

Y

RTIFIED B CE

LIEPAJA OLYMPIC CENTRE , TRACK-AND-FIELD ARENA LIEPAJA, LATVIA

AZERBAIJAN AIRLINES BOEING 747-8 HANGAR BAKU, AZERBAIJAN

EARLY STAGE

100 m

width of steel constructions

8047m2

ADVANCED

GENERAL CONSTRUCTION

security solutions

total area

IKEA, SHOPPING MALL STOPINU DISTRICT, LATVIA

UPB PROFESSIONAL ADVISORY IN EARLY STAGE OF THE PROJECT FOR MORE EFFICIENT CONSTRUCTION

ENGINEERING

PROJECT WITH SPECIAL PREFAB CONCRETE PRODUCT -

Integrated engineering for steel, concrete and glass structures.

SANDWICH WALL

BRICK

130+ PROFESSIONAL ENGINEERS

210

UNIQUENTS* E EM BLY ELEM IO N | A SS

INDUSTRY 4.0

*E N G IN EE

O D U CT R IN G | PR

UMAMI APARTMENT BUILDING STOCKHOLM, SWEDEN

SHARED MODEL

FOR ENGINEERING STORA FROSUNDA 2, MULTIFUNCTIONAL BUILDING SOLNA, SWEDEN

UPB ENGINEER GROUP IN RIGA, LATVIA UPB ENGINEER GROUP IN LIEPAJA, LATVIA UPB ENGINEER GROUP IN BELARUS

15 600 m2 area of unitised faรงade elements produced by UPB

LARGE COMPLEX PROJECTS CAMPUS ALBANO, STUDENT CAMPUS STOCKHOLM, SWEDEN

14 000 m3

concrete structures

600

faรงade elements

2000 t

steel structures

25 FLOORS

FAร ADE F THE SIZE O MORE THAN 8 HOCKEY FIELDS

GARDA VESTA, OFFICE BUILDING GOTHENBURG, SWEDEN

PRODUCTS AND SERVICES | 13

UPB ANNUAL REPORT 2018

SUSTAINABLE CONSTRUCTION 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.

U

CTS

RA

LD

ING CONT

•

2018

JECTS

58%

RO

IN THE

RTFOLIO PO

I

ST

GREEN OF

BU

AINABLE

ND

P

A

•

S

CERTIFICATES AND SYSTEMS

N O V E L T Y

ST. ERIK EYE HOSPITAL, MEDICAL INSTITUTION SOLNA, SWEDEN

certification in progress

WELL - CERTIFICATION STANDARD FOR ADVANCING HUMAN HEALTH AND WELLBEING IN BUILDINGS, SWEDEN 3 UPB PROJECTS IN CERTIFICATION PROGRESS

ISO 9001, ISO 14001 - ENVIRONMENTAL AND QUALITY MANAGEMENT SYSTEMS

EPD - ENVIRONMENTAL PRODUCT DECLARATION

OHSAS 18001 - OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEMS

NORSOK - QUALITY STANDARDS BY THE NORWEGIAN PETROLEUM INDUSTRY

BREEAM - SUSTAINABLE BUILDING CERTIFICATION SCHEME, INTERNATIONAL

BASTA - PRODUCT REGISTRATION AND ASSESSMENT SYSTEM FOR CONSTRUCTION PRODUCTS, SWEDEN

MILJOBYGGNAD - SUSTAINABLE BUILDING CERTIFICATION SCHEME, SWEDEN

SUNDA HUS - PRODUCT REGISTRATION AND ASSESSMENT SYSTEM FOR CONSTRUCTION PRODUCTS, SWEDEN

LEED - SUSTAINABLE BUILDING CERTIFICATION SCHEME, INTERNATIONAL

FUTURE BUILT - GREEN CONSTRUCTION SYSTEM IN NORWAY

ACHILLES - SUPPLIER EVALUATION AND ASSESSMENT SYSTEM, UNITED KINGDOM

PRODUCT XCHANGE - PRODUCT REGISTRATION AND ASSESSMENT SYSTEM FOR CONSTRUCTION PRODUCTS, NORWAY

STARTBANK - SUPPLIER EVALUATION AND ASSESSMENT SYSTEM, NORWAY

BYGGVARU BEDÖMNINGEN - PRODUCT REGISTRATION AND ASSESSMENT SYSTEM FOR CONSTRUCTION PRODUCTS, SWEDEN

14 | PRODUCTS AND SERVICES

UPB ANNUAL REPORT 2018

3C

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

GLASS

STEEL

CONCRETE

Combined engineering Shorter assembly time Single estimate Precise execution deadline Efficient use of construction machinery Smooth coordination of work

REGIONENS HUS, SWEDEN OFFICE BUILDING

+

631 t

steel structures

11 285 m2

glass aluminium structures

18 782 m2

certification in progress

precast structures

Very Good

certification in progress

BLENDA OFFICE BUILDING

SORKEDALSVEIEN 8 OFFICE AND APARTMENT BUILDING

8 LINES FOR ELEMENT PRODUCTION

GLASS PRODUCTS ALUMINIUM AND WOODALUMINIUM GLASS STRUCTURES

FOR GLASS ALUMINIUM PRODUCTS

FAÇADES FOR MEDICAL INSTITUTIONS

N EW PR

NEW PRODUCTION AREA

ODU EQUIPMCTION ENT

FOR WOOD ALUMINIUM PRODUCTS

antibacterial glass x-ray resistant glass sunlight resistant glass ST. ERIK EYE HOSPITAL MEDICAL INSTITUTION

+3500m2 AREA FOR ALUMINIUM GLASS PRODUCTION

IN PRO PR JE OG CT RE SS

INDUSTRY 4.0

BESPOKE FAÇADE SOLUTIONS

+50

* PRODUCTION % CAPACITY

HIGHEST BUILDING

IN UPB HISTORY

32m+

STEEL PRODUCTS STEEL CONSTRUCTION STRUCTURES EXPLOSION-RESISTANT CONTAINERS PRESSURE-RESISTANT CISTERNS

28 FLOORS

21%

high steel constructions

* INCREASED PRODUCTION

el res structu

ste t 2000

OF STRUCTURAL STEEL

STOCKHOLM NEW OFFICE BUILDING

EXCLUSIVE

STEEL CONSTRUCTIONS SOUTHBANK PLACE APARTMENT BUILDING

AZERBAIJAN AIRLINES BOEING 747-8 HANGAR

RETEBUSINESESN C N O C IX -M Y D A RE SWED NORWAY AND IN

PREFAB CONCRETE +17%* INCREASED PRODUCTION AREA

E

PREFAB CONCRETE STRUCTURES READY-MIX CONCRETE

+34%

* INCREASED TURNOVER

CONCRETE RESEARCH CENTRE

OF READY-MIX CONCRETE

SPECIAL MACHINES for:

Testing and development of new concrete products

11

READY-MIX CONCRETE FACTORIES IN LATVIA

TORY E FACTE MOBILPI GMEN D FOR ODUCTS CONCRETE PR

AGGREGATES CONCRETE LABORATORY INDUSTRY 4.0

* C OM PAR ED TO 2017

SERV IC

E

PRODUCTS

W

N

CONCRETE

COMPLEX STEEL SOLUTIONS

wire folding and straightening mesh welding

42% 25%

MARKET STRUCTURE

PRODUCTS

50-4000kW POWER RANGE

ENERGY

10% 23%

other markets

ENERGY TURNKEY SOLUTIONS COGENERATION MODULES TRIGENERATION MODULES

250+

COGENERATION MODULES

LARGEST FACTORY IN THE BALTICS

SERVICE operation, service and maintenance

SERVICE

of power plants 24/7 CHP module maintenance remote monitoring and control

3 MW

BIOMAS BOILER HOUSE

600 kW

HIGH ENVIRONMENTAL REQUIREMENTS

MODULE PRODUCES LESS HARMFUL EMMISSIONS THAN ONE MOTORCAR

COGENERATION MODULE FOR HOSPITAL IN BASEL

150 kW

VISORC WASTE RECYCLING PLANT

NEW EXPORT MARKETS MACHINERY

PRODUCTS GRABS AND BUCKETS PROCESS AUTOMATION EQUIPMENT SOLUTIONS FOR OIL AND GAS INDUSTRY

SPAIN TURKEY

EXPANDED

PRODUCTION AREA

+24 %* TURNOVER INCREASE

ONS S O LU T I CRAMLINGTON BIOMASS BIOMAS COGENERATION PLANT

CONVEYOR SYSTEMS

FOR

RIAL T S U D N I SSES E C O R P

ELEVATORS AND LIFTS DESIGNING AND MANUFACTURING OF ELECTRIC CABINETS

WIND TUNNEL

MANUFACTURING EQUIPMENT

TEKLA PLUGINS

NEW COMPANY ESTABLISHED

ALTO 4.0 has developed a set of tools that covers the workflow on modelling in TEKLA Structures.

for DIGITAL SOLUTION DEVELOPMENT

GLAZED STRUCTURES PRECAST STRUCTURES STEEL STRUCTURES

INDUSTRY 4.0

* CO MPA R ED TO 2 017

ENGINEERING TOOLS

ALTO 4.0 ERP is a full cycle business process management system designed for the construction industry through a combination of digital capabilities and in depth industry knowledge Prefab production Steel production Supply chain management Logistics management Assembly planning

s on

TEKLA PLUGINS

4.0

lo

ped

T

by AL

O

BIM INTEGRATED ERP

e

SMART FACTORY SOLUTIONS

dev

BIM INTEGRATED ERP SYSTEMS

e applicati qu

uni

PRODUCTS

FULL IN-HOUSE DEVELOPMENT TEAM

TILBURY GREEN POWER BIOMAS COGENERATION PLANT

LAWN MOWER

Y ALREALD S GTION U OLS G 2N0D E+NGP IN R INEE A

SMART FACTORY SOLUTIONS

2018

ANNUAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS CONSOLIDATED STATEMENT OF CASH FLOW CONSOLIDATED STATEMENT OF CHANGES IN EQUITY INDEPENDENT AUDITOR’S REPORT

| | | | |

18 20 21 22 23

18 | CONSOLIDATED STATEMENT OF FINANCIAL POSITION

UPB ANNUAL REPORT 2018

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2018 ASSETS

2018 (EUR)

2017 (EUR)

1 315 747

1 526 244

292 500 12 233

35 353 14 518

-

4 140

1 620 480

1 580 225

16 198 488

16 428 658

697 787

671 533

Non-current investments Intangible assets Concessions, patents, licenses, trademarks and similar rights Goodwill Creation of intangible assets Prepayments for intangible assets Total intangible assets

Fixed assets Land, buildings and engineering structures Leasehold improvements Equipment and machinery

7 609 570

6 485 703

Other fixed assets

5 013 351

4 684 897

Construction in progress

220 128

160 027

Prepayments for fixed assets

150 000

45 941

29 889 324

28 476 759

229 180

248 499

673

-

37 637

38 658

400

-

Total non-current financial assets

267 890

287 157

Total non-current investments

31 777 694

30 344 171

10 035 624

9 705 439

Unfinished products and orders

3 357 720

4 546 648

Finished goods and goods for sale

3 982 189

3 791 659

Total fixed assets

Non-current financial assets Other loans and other long-term receivables Investments in associated companies Prepaid expenses Other loans and investments

Current assets Inventories Raw materials

1 801 816

2 656 492

19 177 349

20 700 238

9 231 641

8 311 295

Other receivables

9 207 519

8 558 558

Prepaid expenses

1 028 198

764 695

Accrued income

8 046 213

5 428 515

27 513 571

23 063 063

12 800 210

14 925 591

59 491 130 91 268 824

58 688 892 89 033 063

Prepayments for goods Total inventories

Receivables Trade receivables

Total receivables

Cash Total current assets Total assets

CONSOLIDATED STATEMENT OF FINANCIAL POSITION | 19

UPB ANNUAL REPORT 2018

EQUITY, PROVISIONS AND LIABILITIES

2018 (EUR)

2017 (EUR)

15 720 305

15 720 305

(9 602)

(145 299)

Shareholder’s equity Share capital Foreign currency revaluation reserve Other reserves

275 018

275 000

Retained earnings of previous year

16 779 178

18 167 627

Profit for the year

11 514 520

5 349 349

Minority interest

1 283 168

1 317 771

45 562 587

40 684 753

5 507 755

4 107 887

5 507 755

4 107 887

974 521

1 030 357

1 372 156

601 256

340 389

193 569

Total equity Provisions Other provisions Total provisions Liabilities Non-current liabilities Loans from credit institutions Finance lease liabilities Other liabilities Deferred income Total non-current liabilities

211 730

279 114

2 898 796

2 104 296

8 868

-

Current liabilities Loans from credit institutions Finance lease liabilities

920 991

622 400

8 757 674

13 149 332

Trade payables

9 881 632

10 604 918

Taxes and compulsory state social security contributions

2 074 025

2 102 569

948 171

1 163 529

Customer advances

Other liabilities Deferred income

208 017

85 789

Dividends payable

5 166 944

4 846 475

Accrued liabilities

9 333 364

9 561 115

Total current liabilities

37 299 686

42 136 127

Total liabilities

40 198 482

44 240 423

91 268 824

89 033 063

Total equity, provisions and liabilities

20 | CONSOLIDATED STATEMENT OF PROFIT AND LOSS

UPB ANNUAL REPORT 2018

CONSOLIDATED STATEMENT OF PROFIT AND LOSS for the year ended 31 December 2018

Net sales Cost of goods sold

2018 (EUR)

2017 (EUR)

197 234 597

149 631 972

(174 484 973) (134 178 676)

Gross profit

22 749 624

15 453 296

Selling expenses

(1 984 122)

(1 963 914)

Administrative expenses

(7 912 411)

(7 137 670)

338 619

385 004

(1 125 865)

(352 298)

99 559

60 166

(301 005)

(662 404)

11 864 399

5 782 180

(245 582)

(1 095 682)

11 618 817

4 686 498

-

850 299

11 618 817

5 536 797

(104 297)

(187 448)

11 514 520

5 349 349

Other operating income Other operating expenses Interest and similar income Interest and similar expenses Profit before corporate income tax Corporate income tax Profit after corporate income tax Income or charge from changes in deferred tax assets and liabilities Profit before minority interest Profit of minority share Profit for the year

CONSOLIDATED STATEMENT OF CASH FLOW | 21

UPB ANNUAL REPORT 2018

CONSOLIDATED STATEMENT OF CASH FLOW for the year ended 31 December 2018 2018 (EUR)

2017 (EUR)

11 864 399

5 782 180

4 109 967 827 613 1 399 868 135 697 (37 852) 77 212 18 376 904

3 764 255 545 929 (88 892) 5 902 (31 193) 77 285 10 055 466

(3 665 489) 1 600 551 (6 271 497) 10 040 469 (77 212) (1 069 960) 332 580

(3 226 389) (5 533 957) 8 891 663 10 186 783 (77 285) (1 535 836) 64 011

Net cash flows from operating activities

9 225 877

8 637 673

Cash flows from investing activities Acquisition of shares of related companies Cash and cash equivalents excluded under the sale of subsidiaries Purchase of fixed and intangible assets Income from disposal of fixed and intangible assets Loans issued Income from the repayment of loans Interest received

(300 000) 34 336 (4 268 058) 108 214 (1 651) 61 048 37 852

(2 775 923) 63 833 (2 808) 268 893 31 193

Net cash flows from investing activities

(4 328 259)

(2 414 812)

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

12 347 (60 600) (839 697) (4 137 552)

(7 022 999)

(5 025 502)

Net increase in cash and cash equivalents

(2 125 381)

1 197 359

Cash and cash equivalents at 1 January

14 925 591

13 728 232

Cash and cash equivalents at 31 December

12 800 210

14 925 591

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

Depreciation and adjustments to impairment of fixed assets Amortization and adjustments to impairment of intangible assets Change in provisions (except for doubtful debt allowance) Foreign exchange reserve Interest and similar income Interest and similar expenses 2. Profit or loss before adjustments for the effect of changes to working capital Adjustments for:

(Increase)/decrease of trade and other receivables (Increase)/decrease of inventories Increase or (decrease) of trade payables and other liabilities 3. Gross cash flows from operating activities 4. Interest paid 5. Corporate income tax paid 6. Received overpaid corporate income tax

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 IN EQUITY

UPB ANNUAL REPORT 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2018

Share capital (EUR)

At 31.12.2016 Profit for 2016 transferred to retained earnings

Profit for the year (EUR)

Foreign currency revaluation reserve (EUR)

Minority interest (EUR)

Total shareholders’ equity (EUR)

720 385

2 874 333

30 076 179

7 229 814

(151 201 )

1 269 223

42 018 733

-

-

7 229 814

(7 229 814)

-

-

-

(2 599 333)

2 599 333

-

(14 999 920)

-

-

-

-

-

(6 737 779)

-

-

(138 900)

(6 876 679)

Other reserves tranferred to retained earnings Share capital increase

Other reserves (EUR)

Retained earnings of previous years (EUR)

14 999 920

Distribution of dividends

Foreign currency revaluation result

-

-

-

-

5 902

-

5 902

Profit for the year

-

-

-

5 349 349

-

187 448

5 536 797

15 720 305

275 018

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 after acquisition of a subsidiary

-

18

(18)

-

-

-

-

-

(6 737 780)

-

-

(138 900)

(6 876 680)

At 31.12.2017

Distribution of dividends Foreign currency revaluation result

-

-

-

-

135 697

-

135 697

Profit for 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

At 31.12.2018

UPB ANNUAL REPORT 2018

NOTE TO THE FINANCIAL STATEMENTS | 23

INDEPENDENT AUDITOR’S REPORT on the summary consolidated financial statements To the shareholders of AS UPB

Our Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of AS UPB (“the Company”) and its subsidiaries (“the Group”) set out on pages 18 to 22 of the accompanying consolidated Annual Report, which comprise: • the consolidated statement of financial position as at 31 December 2018, • the consolidated statement of profit and loss for the year then ended, • the consolidated statement of cash flow for the year then ended, and • the consolidated statement of changes in equity for the year then ended.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of AS UPB and its subsidiaries as at 31 December 2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the ‘Law on the Annual Reports and Consolidated Annual Reports’ of the Republic of Latvia.

Basis for Opinion In accordance with the ’Law on Audit Services’ of the Republic of Latvia we conducted our audit in accordance with International Standards on Auditing adopted in the Republic of Latvia (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibility for the Audit of the Consolidated Financial Statements section of our report.

We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and independence requirements included in the ‘Law on Audit Services’ of the Republic of Latvia that are relevant to our audit of the consolidated financial statements in the Republic of Latvia. We have also fulfilled our other professional ethics responsibilities and objectivity requirements in accordance with the IESBA Code and ’Law on Audit Services’ of the Republic of Latvia.

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

Reporting on Other Information The Company’s management is responsible for the other information. The other information comprises: • Information on the Group, as set out on pages 4 and 5 of the accompanying consolidated Annual Report, • the Management’s Report, as set out on pages 6 and 7 of the accompanying consolidated Annual Report.

Our opinion on the consolidated financial statements does not cover the other information included in the Annual Report, and we do not express any form of assurance conclusion thereon, except as described in the Other Reporting Responsibilities in Accordance with the Legislation of the Republic of Latvia section of our report.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed and in light of the knowledge and understanding of the Group and its environment obtained in the course of our audit, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Other Reporting Responsibilities in Accordance with the Legislation of the Republic of Latvia In addition, in accordance with the ‘Law on Audit Services‘ of the Republic of Latvia with respect to the Management Report, our responsibility is to consider whether the Management Report is prepared in accordance with the requirements of the ‘Law on the Annual Reports and Consolidated Annual Reports’ of the Republic of Latvia.

Based solely on the work required to be undertaken in the course of our audit, in our opinion: • the information given in the Management Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Management Report has been prepared in accordance with the requirements of the ‘Law on the Annual Reports and Consolidated Annual Reports’ of the Republic of Latvia.

24 | INDEPENDENT AUDITOR’S REPORT

UPB ANNUAL REPORT 2018

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with the ‘Law on the Annual Reports and Consolidated Annual Reports’ of the Republic of Latvia and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibility for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves a fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Riga, Latvia June 20, 2019 KPMG Baltics AS License No. 55

Valda Uzane

Member of the Board Riga, Latvia

2018

ANNUAL REPORT

MAJOR PROJECTS IN 2018

26 | MAJOR PROJECTS IN 2018

UPB ANNUAL REPORT 2018

MAJOR PROJECTS IN 2018 COMPLEX SOLUTIONS

Boeing 747-8 hangar AZERBAIJAN AIRLINES Baku, Azerbaijan Design & Build

STEEL

Office building PRINCETON Solna, Sweden GLASS

STEEL

GLASS

STEEL

Office building PARALLEL Oslo, Norway GLASS

Office building HAMMARBY TERASSEN Stockholm, Sweden CONCRETE

Office building CARLSBERG Copenhagen, Denmark

Public building FARGSKRAPAN Sollentuna, Sweden

GLASS

Residental building WELLINGEBY Stockholm, Sweden STEEL

Office building AXIS Lund, Sweden STEEL

CONCRETE

CONCRETE

CONCRETE

Residental building UMAMI Stockholm, Sweden STEEL

CONCRETE

Public building TENNIS HALL Liepaja, Latvia

Industrial building JENSEN METAL Liepaja, Latvia

Production plant UZAVAS BEER FACTORY Uzava, Latvia

Design & Build

General construction

General construction

www.facebook.com/UPBgrupa www.linkedin.com/company/upb-as

2018-3/1-EN

UPB, JSC Adress: Dzintaru street 17, Liepaja, LV-3401, Latvia Phone: (+371) 67358933, e-mail: info@upb.eu.com www.upb.eu.com