Joint Stock Company Eco Baltia - Dom Maklerski BZ WBK SA

Joint Stock Company Eco Baltia
a joint stock company, having its registered office at Darza iela 2, Riga, Latvia and registered with the Commercial Register of the Republic
of Latvia under number 40103446506
Offering of up to 12,558,000 Shares, with a nominal value of LVL 1.00 each, and admission to trading on the Warsaw Stock
Exchange and the Riga Stock Exchange of up to 28,704,000 Shares of Joint Stock Company Eco Baltia
This document (the “Prospectus”) has been prepared for the purpose of (i) the offering (the “Offering”) of up to 12,558,000 bearer shares in
the share capital, with a nominal value of LVL 1.00 each, in Joint Stock Company Eco Baltia (the “Issuer” or the “Company”), and (ii) the
admission of up to 28,704,000 bearer shares of the Issuer (the “Shares”) to trading on the Warsaw Stock Exchange (Giełda Papierów
Wartościowych w Warszawie S.A., the “WSE”) and the Riga Stock Exchange (NASDAQ OMX Riga, the “RSE”). The Issuer will be
offering for subscription up to 6,279,000 newly issued Shares (the “New Shares”). Otrais Eko Fonds (the “Selling Shareholder”), the Issuer’s
minority shareholder, will be offering up to 6,279,000 existing Shares (the “Sale Shares”). The New Shares to be issued by the Issuer and the
Sale Shares offered by the Selling Shareholder are referred to, where the context permits, as the offer shares (the “Offer Shares”). The Issuer
will only receive the net proceeds from the sale of the New Shares, whereas the Selling Shareholder will receive the net proceeds from the
sale of its respective Sale Shares. The Offer Shares offered in this Offering constitute a minority interest in the Issuer. Prior to the completion
of the Offering, the Selling Shareholder holds 28% of the issued share capital of the Issuer.
The Offering consists of: (i) public offering to retail investors in Poland (the “Retail Investors”), (ii) public offering to institutional investors
in Poland (the “Polish Institutional Investors”) and (iii) private placement to institutional investors in certain jurisdictions outside the United
States and Poland in reliance on Regulation S under the U.S. Securities Act (the “International Investors”, and together with the Polish
Institutional Investors, the “Institutional Investors”), in each case in accordance with applicable securities laws.
The Offer Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “US
Securities Act”), or under any securities laws of any state or other jurisdiction of the United States. The Offer Shares are being
offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the US Securities Act
(“Regulation S”) and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as
defined in Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the US Securities Act (see "Selling Restrictions").
The Offer Shares are being offered, as specified in this Prospectus, subject to cancellation or modification of the Offering and subject to
certain other conditions.
This Prospectus constitutes a prospectus for the purposes of Article 3 of European Union (EU) Directive 2003/71/EC (the “Prospectus
Directive”) and has been prepared in accordance with the Financial Instrument Market Law of the Republic of Latvia, dated 20 November
2003 (the “Latvian Financial Instrument Market Law”). The Latvian Financial and Capital Market Commission (Finanšu un kapitāla tirgus
komisija, the “FKTK”) in its capacity as the competent authority in Latvia under the Latvian Financial Instrument Market Law, has approved
this document as a prospectus. The Issuer has requested that the FKTK provide the competent authority in Poland, Polish Financial
Supervision Authority (Komisja Nadzoru Finansowego, the “PFSA”) with a certificate of approval attesting that this Prospectus has been
drawn up in accordance with the Prospectus Directive. The Issuer will be authorised to carry out the Offering to the public in Poland, once
the FKTK has provided the PFSA with a certificate of approval of this Prospectus and after the Prospectus has been made available to the
public together with a translation of the summary into the Polish language. See "Risk Factors" for a discussion of certain considerations
to be taken into account when deciding whether to invest in the Offer Shares.
Prior to the Offering, there was no public market for the Shares. Based on this Prospectus, the Issuer intends to apply for up to 28,704,000
Shares, including the Offer Shares, to be admitted to listing and trading on the main market of the WSE and the main market (list) of the RSE
(the “Admission”). The Issuer expects that trading in the Shares on the WSE and the RSE will commence in on or about 16 July 2012 (the
“Listing Date”). Settlement of the Offering is expected to occur on or about 12 July 2012 (the “Settlement Date”). Prospective Retail and
Institutional Investors may subscribe for or purchase the Offer Shares during a period which is expected to commence on or about 29 June
2012 and is expected to end on or about 4 July 2012 (the “Subscription Period”). The final offer price per one Offer Share denominated in
PLN (the "Offer Price"), the final number of the Offer Shares, and the final number of Offer Shares allocated to each tranche will be
determined by the Issuer and the Selling Shareholder, acting jointly, upon recommendation of the Offering Broker after completion of bookbuilding
process for Institutional Investors and prior to commencement of the subscription period in the retail and institutional tranche no
later than on or about 29 June 2012 (by 9:00 am CET) and will, in accordance with Art. 17.7 and 21.4 of the Latvian Financial Instrument
Market Law and Art. 54 of the Polish Public Offerings Act, be filed with the FKTK and PFSA and published on the websites of the Issuer
(www.ecobaltia.lv) and the Offering Broker (www.dmbzwbk.pl), otherwise in accordance with applicable Latvian and Polish regulations.
The Shares of the Company are bearer shares and are registered with the Latvian Central Depository (Latvijas Centrālais Depozitārijs, the
“LCD“) under ISIN code LV0000101350. The delivery of the Offer Shares will be made through the book-entry facilities by transferring
them from the LCD to the Polish clearing and settlement institution – the National Depository for Securities (Krajowy Depozyt Papierów
Wartościowych S.A., the “NDS”). Shareholders in the Issuer may hold the Shares through the NDS and/or LCD participants, such as
investment firms and custodian banks operating in Poland and/or Latvia.
Offer Price: To be determined in PLN and announced no later than on or about 29 June 2012
BIC Securities SIA is the financial advisor (the “Financial Advisor”) and Bank Zachodni WBK S.A. is the capital advisor (the “Capital
Advisor”) of the Issuer. AS SEB Enskilda is the sales agent (the “Sales Agent”). Dom Maklerski BZ WBK S.A. is the global co-ordinator
and sole bookrunner (the “Global Coordinator”), and the offering broker in Poland for the purposes of the Offering and Admission of the
Shares on the WSE (“Offering Broker”).
Financial Advisor
Capital Advisor
Global Coordinator and Offering Broker
Sales Agent
The date of this Prospectus is 18 June 2012

TABLE OF CONTENTS
SUMMARY 3
PERSONS RESPONSIBLE 11
RISK FACTORS 12
EXCHANGE RATES 32
USE OF PROCEEDS 33
DIVIDENDS AND DIVIDEND POLICY 34
CAPITALISATION AND INDEBTEDNESS 35
SELECTED HISTORICAL FINANCIAL INFORMATION 37
OPERATING AND FINANCIAL REVIEW 41
PRO FORMA FINANCIAL INFORMATION 77
INDUSTRY OVERVIEW 82
REGULATORY INFORMATION 96
GENERAL INFORMATION ON THE ISSUER 101
GROUP STRUCTURE 103
BUSINESS OVERVIEW 109
MATERIAL CONTRACTS 131
RELATED PARTY TRANSACTIONS 138
MANAGEMENT AND CORPORATE GOVERNANCE 141
SHAREHOLDERS 152
DESCRIPTION OF THE SHARES AND CORPORATE RIGHTS AND OBLIGATIONS 155
CERTAIN LATVIAN AND POLISH SECURITIES MARKET REGULATIONS AND PROCEDURES,
THE WARSAW STOCK EXCHANGE AND THE RIGA STOCK EXCHANGE 163
THE OFFERING AND PLAN OF DISTRIBUTION 168
PLACING 178
SELLING RESTRICTIONS 180
TAXATION 184
INDEPENDENT AUDITORS 189
ADDITIONAL INFORMATION 190
FINANCIAL INFORMATION F-1
ANNEX I DEFINED TERMS A-1
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SUMMARY
The following constitutes the summary of the essential characteristics and risks associated with the Issuer, the
Group and the Offer Shares. This summary is not exhaustive, does not contain all information of importance to
prospective investors, is not a substitute for reading the entre Prospectus and must be read as an introduction to
this Prospectus. Prospective investors should read this Prospectus thoroughly and completely, including the
"Risk Factors", any supplements to this Prospectus required under applicable laws and the Consolidated
Financial Statements, the Condensed Consolidated Interim Financial Statements, the Pro Forma Financial
Information and other financial information and related notes, before making any decision with respect to
investing in the Offer Shares. No civil liability will attach to the Issuer and other companies of the Group in
respect of this summary (including the Summary Financial and Operating Information) or any translation
thereof, unless it is misleading, inaccurate or inconsistent when read together with the other parts of this
Prospectus. Where a claim relating to the information contained in this Prospectus is brought before a court in a
Member State, the plaintiff may, under the national legislation of the Member State where the claim is brought,
be required to bear the costs of translating this Prospectus before the legal proceedings are initiated.
Summary of the Business
The Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments, providing wide
variety of services, starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting
and trading, and finally (iv) recycling. The Group is market leader in Latvia in organisation of waste recovery
segment in terms of market share and turnover and the Group is one of the largest waste collectors in Latvia in
terms of turnover and the leader in terms of geographical coverage. The Group collects waste in cities and
surrounding regions of Riga, Liepaja, Talsi, Tukums, Jurmala and Sigulda. The Group also holds large market
share in terms of volume in recyclables sorting and trading segment in the Baltics. Moreover, the Group has an
unrivalled position in polyethylene terephthalate (“PET”) bottle and polyethylene (“PE”) recycling segments in
the Baltics in terms of amount of recycled material and turnover. The Group has a long lasting cooperation with
all key customers and municipalities.
In the three months period ended 31 March 2012 the Group had consolidated revenue of LVL 6,969,000 and net
profit of LVL 1,052,000. In the three months period ended 31 March 2012 55.5% of revenue was generated by
waste recycling segment, 22.7% by waste collection segment, 14.6% by organisation of waste recovery segment
and 7.2% by recyclables sorting and trading segment. In 2011 the Group recorded consolidated revenue of LVL
26,595,000 and net profit of LVL 3,378,000. In 2011 54.5% of revenue was generated by waste recycling
segment, 21.9% by waste collection segment, 15.9% by organisation of waste recovery segment and 7.7% by
recyclables sorting and trading segment. For the avoidance of doubt it should be noted that the above mentioned
financial results were derived from the Consolidated Financial Statements and the Condensed Consolidated
Interim Financial Statements and are financial results of Eko Baltija Group and not of the Group as it is at the
date of the Prospectus.
Competitive Strengths and Advantages
The Group believes that the competitive strengths and advantages of its business are as follows:
Highly competitive vertically integrated business model.
Successful experience in accelerated growth.
Diversified business model.
Modern equipment and unique technologies.
Market leadership.
Highly competent growth oriented local management.
Solid and consistent financial performance.
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Excellent ongoing collaboration with local authorities.
Diversified client and supplier base.
Positive public image.
Business Strategy
Being the leading waste management group in the Baltics by revenues, the Group believes that it can capitalise
on significant market growth potential and the market’s fragmented structure, by identifying attractive
consolidation opportunities and continuing its organic growth. The Group’s strategy rests on the following key
pillars:
Investing into sorting of municipal solid waste by construction of the mechanical biological treatment
plant.
Introduction of new products in the recycling business line.
Geographical expansion.
Securing raw material base.
Launching new cross-sector business projects.
Introduction of one-stop-shop concept.
Applying global trends, technologies and processes to local conditions.
Actively seeking for the opportunities of financing from the EU.
Use of Proceeds
The net proceeds the Issuer receives from the issuance of the New Shares will be used primarily for fulfilling of
the Group’s business plan which envisages the following capital investments:
Construction of the first mechanical-biological treatment (MBT) plant in Latvia.
Launch of food grade PET pellet production at PET Baltija production site with capacity of around
11,500 tonnes of new products that are used in the food industry (material used in production of food
packaging).
Capacity expansion at Nordic Plast by installation of a second production line for production of
polypropylene (“PP”) pellets with capacity of around 3,700 tonnes, thus doubling the current capacity.
Summary of Risk Factors
Risks Relating to the Group’s Business and Industry
The Group operates in a highly regulated industry what limits its ability to adapt to changing economic
conditions and any breaches of regulations may put at risk continuity of its operations.
Changes in the regulatory environment may have an adverse effect on the Group’s operations.
Amount of generated waste may fluctuate.
The Group depends on licenses and permits that could be revoked, the Group may not be able to
prolong them or the Group may not be able to obtain required licenses and permits.
The Group is subject to regulations and liability under environmental laws.
The Group’s operations are regulated by the municipalities.
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Agreements on providing the waste management services with municipalities may be terminated.
Latvijas Zalais punkts may not be able to organise waste recovery system in the future.
Increased competition could reduce the Group's revenue and profits and constrain the Group's growth.
The Group’s revenues may decrease if the Group fails to win tenders for waste collection organised by
the municipalities.
Latvijas Zalais punkts may lose the right to use the “Green Dot” trademark.
The tariffs for household waste management are subject to regulation by the authorities.
Increase in operating costs and/or inability to pass on any increases in costs on Group’s customers
could adversely affect the Group’s profits.
The Group doesn’t conclude long-term agreements with its major customer.
Disruptions in the Group’s production facilities may have a material adverse impact on the Group.
Prices for the Group’s products are subject to fluctuations.
Demand for certain services and products of the Group is subject to fluctuations.
The Group has grown through acquisitions.
Further expansion through acquisitions entails certain risks, which could have adverse consequences
for the Group's business.
The lease agreements concluded by the Group may be terminated or the Group may not be able to
prolong them.
A number of lease agreements have not been registered with the Land Register and in case of transfer
of ownership to properties these leases may cease to be valid.
Failure to register transfer of title to real properties as a result of merger of Tukuma Ainava into
Kurzemes Ainava with the public registers and failure to register respective amendments to Nordea
Financing Agreements and security agreements in the public registers may lead to event of default
under Nordea Financing Agreements.
Certain Group Companies are and in the future may be recognized as having dominant position on the
market.
The Group may be subject to claims for unpaid remuneration for fulfilment of duties of members of
corporate bodies of certain Group Companies.
Current and future assets of the Group Companies, certain amount of the Shares in the Issuer, as well
as all the shares of the Group Companies are pledged.
Certain of the Group’s credit facilities are subject to certain covenants and restrictions.
The Group may not be able to obtain financing from the EU funds or the financing may be revoked.
The Group’s ability to obtain debt financing may depend on the performance of its business and market
conditions.
The Group is exposed to currency exchange risk and interest rate risk.
The Group is exposed to the credit risks of its customers and suppliers.
The Group may not be able to grow or effectively manage its growth.
The Group is dependent on its key personnel.
The Group’s insurance coverage may be insufficient for any incurred losses.
The Group may infringe third party IP rights.
The tax office may determine that agreements executed by the Group Companies with each other and
the related parties are not on arm-length basis and impose fines on the Group Companies.
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Historical financial statements of the Group may not be representative of its historic or future results
and may not be comparable across periods, which may make it difficult to evaluate the Group’s results
and future prospects.
Risks Relating to Latvia
Political and economic changes could negatively impact the Group.
Pegged currency may have adverse impact on Latvian economy and therefore materially adversely
influence the Group.
Inflation risk may have material adverse impact on the Group.
Unfavourable changes in taxes may have material adverse influence on the Group.
Latvian judicial system is undergoing development.
Risk Relating to the Issuer
The Issuer is a holding company with no assets other than shares of its subsidiary.
The rights of Latvian company shareholders differ from the rights of the shareholders of Polish listed
companies.
Judgments of Polish courts against the Company and the Group may be more difficult to enforce than if
the company and its management were located in Poland.
The Issuer has been, and will continue to be, influenced by three principal shareholders.
The Issuer may have limited ability to attract financing through secondary offerings of Shares.
Risks Relating to Shares, Listing and Trading on the WSE and the RSE
The Offering may be delayed, suspended or cancelled.
There has been no prior public trading market for the Shares.
The price of the Shares may fluctuate significantly.
Turmoil in emerging markets could cause the value of the Shares to suffer.
The market value of the Shares may be adversely affected by future sales or issues of substantial
amounts of Shares.
Holders of the Offer Shares may not be able to exercise pre-emptive rights, and as a result may
experience substantial dilution upon future issuances of Shares.
The Issuer is established and organised under laws of Latvia while the Shares will be listed on a
regulated market in Poland.
There is no guarantee that the Issuer will pay dividends in the future.
The Issuer may be unable to list the Shares on the WSE and/or the RSE, or the Issuer may be delisted
from the WSE and/or the RSE.
Trading in the Shares on the WSE and/or the RSE may be suspended.
The Issuer may have a limited free float, which may have a negative effect on the liquidity,
marketability or value of its Shares.
The marketability of the Issuer’s Shares may decline and the market price of the Issuer’s Shares may
fluctuate disproportionately in response to adverse developments that are unrelated to the Group’s
operating performance and decline below the Offer Price.
Dual listing of the Shares will result in differences in liquidity, settlement and clearing systems, trading
currencies and transaction costs between the WSE and the RSE, which may hinder the transferability of
the Shares between the WSE and the RSE.
Tax treatment for non-Latvian investors in a Latvian company may vary.
The Issuer has no experience in complying with requirements for publicly-listed companies.
6

Summary of the Offering
Issuer ................................................................ Joint Stock Company Eco Baltia, a joint stock company,
incorporated under the laws of Latvia, having its registered
office at Darza iela 2, Riga, LV-1007, Latvia, and registered
under the corporate code 40103446506.
Selling Shareholder ............................................. Limited partnership Otrais Eko Fonds, corporate code:
40003837498, with registered office at Darza iela 2, Riga, LV-
1007, Latvia.
Principal Shareholders .......................................Ṃrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris
Simanovics.
Offering ................................................................ The Offering consists of: (i) public offering to retail investors in
Poland (the "Retail Investors"), (ii) public offering to
institutional investors in Poland (the “Polish Institutional
Investors”), and (iii) private placement to institutional investors
in certain jurisdictions outside the United States and Poland in
reliance on Regulation S under the U.S. Securities Act (the
“International Investors”, and together with the Polish
Institutional Investors, the “Institutional Investors”), in each case
in accordance with applicable securities laws.
Offer Shares ........................................................Ụp to 12,558,000 bearer shares in the share capital of the Issuer.
Consist of up to 6,279,000 bearer shares with a nominal value of
LVL 1.00 each to be issued by the Issuer and up to 6,279,000
existing bearer shares offered by the Selling Shareholder.
New Shares..........................................................Ụp to 6,279,000 bearer shares with a nominal value of LVL 1.00
each to be issued by the Issuer.
Sale Shares..........................................................Ụp to 6,279,000 existing bearer shares offered by the Selling
Shareholder.
Book-building ...................................................... Before the commencement of subscription period, the bookbuilding
process will be conducted, during which selected
Institutional Investors, who have been invited by the Issuer and
the Selling Shareholder through the Offering Broker will be able
to make, in a manner agreed between them and the Offering
Broker, declarations as to the total number of the Offer Shares
they are willing to acquire and the price they are willing to pay
for one Offer Share.
Subscription Period........................................... The subscriptions by the Retail Investors and Institutional
Investors will be accepted between on or about 29 June 2012 and
on or about 4 July 2012 (inclusive).
Maximum Price.................................................... The maximum price at which the Offer Price will be set, which
will be announced no later than on or about 27 June 2012.
Offer Price............................................................ The Offer Price at which the Offer Shares are being offered, the
final number of the Offer Shares and the final number of Offer
Shares allocated to each tranche will be determined by the Issuer
and the Selling Shareholder, acting jointly, upon
recommendation of the Offering Broker after completion of the
book-building process and after taking into account other
conditions. In particular, the following considerations will be
taken into account: (i) the size and price sensitivity of demand
indicated in the book-building process, (ii) the current and
anticipated sentiment in the capital market in Poland, the
European Union and globally and (iii) assessment by investors of
Company’s business prospects, risk factors and other
7

information contained in this Prospectus or available elsewhere.
The Offer Price will not be higher than Maximum Price, will be
identical for both New Shares and Sale Shares and for both
Institutional and Retail Investors and will be set in PLN.
The Issuer will announce the Offer Price prior to commencement
of the Subscription Period. A pricing statement setting forth the
Offer Price, the number of Offer Shares and the final number of
Offer Shares allocated to each tranche will be filled with the
FKTK and the PFSA and published no later than on or about 29
June 2012 (09.00 a.m. CET) on the websites of the Issuer
(www.ecobaltia.lv) and the Offering Broker
(www.dmbzwbk.pl).
Allotment ............................................................Ạllotment will take place on or about 5 July 2012, after closing
of the Subscription Period.
Settlement and Delivery of the Offer Shares....... The settlement of the Offering is expected to be made on or
about 12 July 2012, after which delivery of the Offer Shares will
follow. Delivery of the Offer Shares will be made in accordance
with settlement instructions placed by the Investors upon
subscription, through the facilities of the NDS, by registration of
the Offer Shares on the Investors’ securities accounts indicated
by such Investors. Delivery of the Offer Shares is expected to
take place no longer than 14 days after the Settlement Date,
barring unforeseen circumstances, by appropriate entry on the
Investors’ securities accounts held through members of the NDS.
The exact delivery dates will depend on timing of: (i)
registration of capital increase of the Company with the
Commercial Register, (ii) registration of the Shares of the Issuer
(including the Offer Shares) with the LCD and (iii) registration
of the Shares of the Issuer (including the Offer Shares) in the
facilities of the NDS.
Listing and Trading ............................................. The Issuer intends to apply for admission to listing and trading
on the main market of the WSE and the main market (list) of the
RSE of all the Issuer’s Shares, including the Offer Shares,
immediately after the Settlement Date. The Issuer believes that
trading on the WSE and the RSE will commence on or about 16
July 2012, or as soon as possible thereafter, barring unforeseen
circumstances.
Form of Offer Shares and Deliver of the The Shares of the Company are bearer shares and are registered
Offer Shares ......................................................... with the LCD. The delivery of the Offer Shares will be made
through the book-entry facilities by transferring them from the
LCD to the NDS. After the successful closing of the Offering,
the Offer Shares will be held in book entry form in the NDS
and/or the LCD. Shareholders in the Issuer may hold the Shares
through the NDS and/or LCD participants, such as investment
firms and custodian banks operating in Poland and/or Latvia.
Shares outstanding before and after the The Issuer’s issued and outstanding share capital as of the date
completion of the Offering................................ of this Prospectus is LVL 22,425,000, divided into 22,425,000
Shares, each with a nominal value of LVL 1.00. The Issuer
expects that up to 6,279,000 Shares will be issued and
outstanding which Shares will comprise the Issuer’s share capital
in the amount of LVL 6,279,000, assuming that all Offer Shares
are subscribed for, allotted and issued. The Selling Shareholder
is offering up to 6,279,000 Shares. Upon completion of the
Offering no more than 28,704,000 Shares will be issued and
outstanding, which Shares will comprise the Issuer’s share
8

Securities code.................................................. ISIN code LV0000101350
capital in the amount not exceeding LVL 28,704,000 (assuming
that all of the Offer Shares have been issued).
In case all the Offer Shares are subscribed or purchased and
allotted, the Offer Shares will constitute up to 43.75% of the
share capital of the Issuer and up to 43.75% of total votes at the
General Meeting. Shares issued and outstanding as of the date of
this Prospectus will be in bearer form.
Dividends.............................................................Ạll Shares carry full dividend rights if and when the distribution
of profit is declared.
Voting Rights ....................................................... Each Share entitles its holder to one vote at the General Meeting.
Lock-up ................................................................ Subject to certain exceptions, the Issuer, the Principal
Shareholders the Selling Shareholder and ESOMTAX INVEST
LIMITED (Cyprus) agreed that for a period of 12 months from
the Settlement Date, they will not, without the prior written
consent of the Offering Broker, propose or otherwise support an
offering of any of the Company’s shares, announce any intention
to offer new shares and/or to issue any securities convertible into
Company’s shares or securities that in any other manner
represent the right to acquire the Company’s shares, or conclude
any transaction (including any transaction involving derivatives)
of which the economic effect would be similar to the effect of
selling the Company’s Shares.
Financial Advisor ................................................ BIC Securities SIA
Capital Advisor..................................................... Bank Zachodni WBK S.A.
Global Coordinator and Offering Broker ..........Ḍom Maklerski BZ WBK S.A.
Sales Agent..........................................................ẠS SEB Enskilda
Managers.............................................................. The Financial Advisor, the Capital Advisor, the Offering Broker
and the Sales Agent.
Selling Restrictions .............................................. The Offer Shares may not be offered outside Poland in any
manner that would constitute public offering or would otherwise
require authorization under applicable local regulations. The
Offer Shares have not been and will not be registered under the
US Securities Act or with any securities regulatory authority of
any state or any jurisdiction in the United States and subject to
certain exceptions, may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons (as
defined in the Regulation S) except in certain transactions
exempt from the registration requirements of the US Securities
Act. For information on further selling restrictions please see:
"Selling Restrictions".
9

Summary financial and operating information
The following tables set forth summary consolidated financial data on the level of Eko Baltija Group for the
periods indicated, which have been extracted without material adjustments from the Consolidated Financial
Statements and the Condensed Consolidated Interim Financial Statements.
The information below should be read in conjunction with the Consolidated Financial Statements and the
Condensed Consolidated Interim Financial Statements, including the notes thereto and included elsewhere in
this Prospectus and with the information included in “Operating and Financial Review” section of the
Prospectus.
Comprehensive Income Information
For three months ended
31 March For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Net sales 6,969 6,315 26,595 21,088 13,851
Cost of sales (4,979) (4,320) (19,354) (15,079) (10,174)
Gross profit 1,990 1,995 7,241 6,009 3,677
Operating profit/(loss) 1,206 1,200 3,981 2,325 (144)
Profit before corporate income tax 1,154 1,142 3,722 2,039 (352)
Income taxes (102) (63) (344) (245) (163)
Current year profit/ (loss) and comprehensive
1,052 1,079 3,378 1,794 (515)
income
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Financial Position Information
ASSETS
As of 31 March
As of 31 December
2012 2011 2010 2009
(LVL in thousands)
Total non-current assets 10,960 10,900 11,586 12,934
Total current assets 8,016 7,566 5,781 4,665
Total assets 18,976 18,466 17,367 17,599
EQUITY AND LIABILITIES
Total equity 7,171 6,119 7,989 6,198
Total liabilities 11,805 12,347 9,378 11,401
Total equity and liabilities 18,976 18,466 17,367 17,599
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Cash Flows Information
For three months
ended 31 March
For the year ended 31
December
2012 2011 2011 2010 2009
(LVL in thousands)
Net cash from operating activities 1,541 1,678 4,989 2,694 936
Net cash used in investing activities (910) (563) (7,764) (918) (42)
Net cash used in financing activities (810) (1,011) 2,885 (1,730) (100)
Profit or loss from currency fluctuations - - (3) - (3)
Net increase in cash and cash equivalents (179) 104 107 46 791
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
10

PERSONS RESPONSIBLE
The Issuer and the Selling Shareholder (in case of the Selling Shareholder, only with respect to information
relating to the Selling Shareholder and the Sale Shares offered by the Selling Shareholder) accept responsibility
for the information contained in this Prospectus. To the best of the knowledge and belief of the Issuer and the
Selling Shareholder (with respect to the above indicated information), which have taken all reasonable care to
ensure that such is the case, the information contained in this Prospectus is in accordance with the facts and
contains no omission likely to affect its import.
Neither the delivery of this Prospectus nor any sale made hereby at any time after the date hereof should, under
any circumstances, create any implication that there has been no change in the affairs of the Issuer or any of its
subsidiaries or the Issuer and its subsidiaries taken as a whole (the “Eco Baltia Group”, the “Group”) since the
date hereof or that the information contained herein is correct as of any date subsequent to the earlier of the date
hereof or any date specified with respect to such information.
Neither the Managers nor the legal advisers to the Issuer accept any responsibility whatsoever for the contents of
this Prospectus, or for its transaction, or for any other statement made or purported to be made by any of them or
on their behalf in connection with the Issuer or the Offering. The Managers and the legal advisers to the Issuer
accordingly disclaim all and any liability whether arising in tort or contract which they might otherwise have in
respect of this Prospectus or any such statement. No representation or warranty, express or implied, is made by
the Managers as to the accuracy or completeness of the information set forth herein and nothing contained in this
Prospectus is, or should be relied upon as a promise or representation, whether as to the past or the future.
11

RISK FACTORS
Prospective investors in the Offer Shares should carefully consider the following risks and uncertainties, as well
as other information contained in this Prospectus before deciding to invest in any of the Offer Shares. The
Issuer’s business, financial condition and results of operations have been, and could be, materially adversely
affected by the following risks. If any of the following risks actually occurs, the value and trading price of the
Shares could decline and investors could lose all or part of their investment. Described below are the risks and
uncertainties the Issuer believes are material, but these risks and uncertainties may not be the only ones faced by
the Issuer or the Group Companies. Additional risks and uncertainties, including those that the Issuer is not
currently aware of or deems immaterial, may also result in decreased revenues, increased expenses or other
events that could result in a decline in the value of the Shares.
Risks Relating to the Group’s Business and Industry
The Group operates in a highly regulated industry what limits its ability to adapt to changing economic
conditions and any breaches of regulations may put at risk continuity of its operations.
The Group’s main area of business operations is waste management (including: organisation of waste recovery,
waste collection, recyclables sorting and trading, and recycling) in Latvia. In Latvia, as in many other countries,
companies operating in waste management industry are subject to various regulations. Each of the segments of
the business has different regulations. The Group is subject to constant supervision by the state authorities and
continuous reporting obligations. The Group’s business depends on the continuing validity of a number of
licenses granted to the Group Companies and the Group Companies’ compliance with the terms of such licenses,
permits etc. Breaches of regulations by the Group, negative publicity concerning the Group or the waste
management sector and/or fines or criminal prosecutions resulting from violation of regulations may result in
imposition of fines or withdraw of licenses necessary to carry on the operations, what may have material adverse
impact on the Group’s operations, prospects and financial results. See: “Regulatory Information” for more
information on regulations relating to waste management industry.
Changes in the regulatory environment may have an adverse effect on the Group’s operations.
The Group operates in the waste management industry, which is regulated and therefore there are substantial
uncertainties embedded in operations in this industry. The legal framework in Latvia could change in
unpredictable way. Furthermore, some steps may be undertaken on the European Union level or may result from
judgments of the European Court of Justice. New laws may be unfavourable to the operations of the Group or
may require necessary adjustments to the operations. The Group Companies may be unable to implement new
regulations in the prescribed period or to do it at all. Consequently, the Group’s operations may have to be
changed, causing inability to use common solutions or implement the Group’s strategy. Moreover, the
collaboration with the state and municipal authorities are very important to the business of the Group.
All of factors mentioned above, especially adverse changes in the laws or their interpretation and/or deterioration
of collaboration with the state and municipal authorities may have a material adverse effect on the business of
the Group or create obstacles to further expansion.
Amount of generated waste may fluctuate.
Amount of generated waste is subject to fluctuations that cannot be predicted. The level of generated waste
depends on, among others, stage of economic growth, macroeconomic situation, disposable income of the
population and the structure of the population. Latvian population is decreasing as a result of migrations and low
birth rate. Moreover, generation of different types of waste depends on many specific factors, e.g. generation of
construction waste depends on, inter alia, availability of crediting and market conditions for construction
business, and amount of disposed PET bottles depends on, among others, the weather conditions and
consumption of beverages. As a consequence the generation of waste in general or different types of waste may
be volatile in the next years. Adverse fluctuations in the amount of generated waste may have material adverse
impact on the Group’s operations, prospects and financial results.
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The Group depends on licenses and permits that could be revoked, the Group may not be able to prolong them
or the Group may not be able to obtain required licenses and permits.
The business operations and activities undertaken by the Group Companies are subject to regulatory
requirements imposed by law, including requirements to obtain certain licenses and permits. Such licenses and
permits may be revoked due to, inter alia, incompliance to its terms. Usually, licenses and permits are granted on
the defined period of time and after expiry of their term they should be prolonged. The Group may not be able to
prolong its licenses and permits. Moreover, as the Group’s business and operations are expanding, the Group
may require obtaining additional licenses and permits. The Group cannot assure that it will be able to obtain such
additional licenses and permits.
As of the date of the Prospectus, the Group has all required licenses and permits, although it cannot assure that in
the future any of the events described above would not appear. If any of those factors appear, it may have
material adverse impact on the Group’s operations, prospects and financial results.
The Group is subject to regulations and liability under environmental laws.
While operating in waste management business in Latvia the Group is subject to certain regulation and liability
under environmental laws. Certain Group Companies, including Eko Riga, Eko Kurzeme, Jurmalas ATU, Jumis,
Kurzemes Ainava, Eko Reverss, PET Baltija and Nordic Plast, are subject to the so-called strict liability, i.e. in
case of environmental damage or imminent threat of damage to environment would emerge, they could be liable
for environmental damage or imminent threat of damage irrespective of their fault. Any such environmental
damage or imminent threat of damage could lead to penalties and fines imposed by the authorities, as well as
claims raised by third parties. Although, the Group holds a third party liability insurance, which covers sudden
and unforeseen damages to the environment, it cannot assure that the insurance coverage is sufficient for any
incurred damages, penalties, fines and claims from third parties (see risk factor: “The Group’s insurance
coverage may be insufficient for any incurred losses”). If any of those factors appear, it may have material
adverse impact on the Group’s operations, prospects and financial results.
The Group’s operations are regulated by the municipalities.
The Group’s operations in the field of waste collection are subject to municipal regulation and supervision (for
more information please see: “Regulatory Information - Environmental and other Licenses and Permits”).
Adverse legislative changes in any of the municipalities where the Group operates may have adverse effect on
the business of the Group or create obstacles to further growth. Any possible amendments to the enforced
legislation, the frequency of adoption of such amendments, resolutions passed by municipalities, which provide
additional obligations for service providers, and the results of controls carried out by various inspectorates and
municipal authorities are additional risk factors in the field of waste collection.
All of factors mentioned above, especially unfavourable changes in the municipal regulations may have a
material adverse effect on the business of the Group or create obstacles to further expansion of the Group.
Agreements on providing the waste management services with municipalities may be terminated.
The Group Companies operating in the waste collection segment has concluded number of agreements with the
municipalities on providing the waste management services (e.g. collection, transportation and disposal of
household waste). Following the conclusion of number of these contracts, the applicable Latvian law changed
the system of granting of rights to collect and transport household waste in the territories of municipalities.
Currently, municipalities are entitled to grant such rights to contractors only by undergoing a public procurement
procedure. According to the transitional provisions of the Waste Management Law, the contracts concluded for a
definite period of time prior to 26 July 2005 without undergoing public procurement procedure, will be
terminated on the date determined in the contract, and similar contracts concluded indefinitely and contracts
entered into or extended after 26 July 2005 without applying public procurement procedure will be terminated no
later than on 1 July 2013. The aforementioned transitional provisions authorising the municipalities to continue
the validity of the contracts concluded for definite period of time by the end date determined in the contract is
currently being examined in the Constitutional Court.
Certain Group Companies, including Eko Kurzeme, Jumis, Jurmalas ATU and Kurzemes Ainava, prior to 26
July 2005 concluded contracts with municipalities on granting rights to provide waste management services
without determining their validity or entered into or extended such contracts after 26 July 2005 without applying
13

the public procurement procedure. In accordance with applicable regulations such contracts have to be
terminated no later than by 1 July 2013 and the municipality should select a municipal waste manager in
accordance with the procedures specified in the regulatory enactments regulating public procurement or publicprivate
partnership. When the waste manager has been selected, municipal authorities should conclude waste
management contracts with the selected entity and should terminate the former waste management contracts no
later than one month after the new contract of the municipality with the selected waste manager comes into
force. For more information please see: “Material Contracts – Waste Management Agreements”.
The Group Companies, including Eko Riga and Eko Kurzeme, prior to 26 July 2005 concluded long-term
agreements with municipalities for a definite period of time without undergoing public procurement procedure
(for more information please see: Material Contracts – Waste Management Agreements”). In accordance with
transitional provisions those agreements should end on the date determined therein. However, there could be no
assurance that the transitional provisions would not be change (e.g. due to the ruling of the Constitutional Court)
and the agreements would not be terminated prior to their term.
Termination of the agreements concluded by the Group Companies with municipalities prior to their term may
have material adverse impact on the Group’s operations, prospects and financial results.
Latvijas Zalais punkts may not be able to organise waste recovery system in the future.
Latvijas Zalais punkts (“LZP”) has right to establish and implement waste recovery system of: (i) waste harmful
to the environment, (ii) waste electric and electronic equipment, and (iii) packaging waste and disposable
tableware and accessories, based on orders No 430, 431 and 428 issued on 29 December 2010 by the Ministry of
Environment Protection and Regional Development of Latvia. The orders were issued on the grounds of the
plans for implementation of waste recovery systems for above mentioned types of waste for period 2011-2013
prepared by LZP and accepted by the Ministry of Environment Protection and Regional Development of Latvia.
The orders grant rights to NRT payers, who have signed the agreement with LZP on participation in the waste
recovery system to apply exemption from NRT for a period indicated in the orders, i.e. until 31 December 2013.
Granted rights are conditional on validity of an agreement entered into between LZP and Latvian Environmental
Protection Fund Administration. On 30 December 2010 LZP concluded three agreements with the Latvian
Environmental Protection Fund Administration regarding implementation of waste recovery system of: (i) waste
harmful to the environment, (ii) waste electric and electronic equipment, and (iii) packaging waste and
disposable tableware and accessories. Each agreement is concluded for defined period starting from 1 January
2011 till 31 December 2013.
Prior to expiration of the term of validity of plans for implementation of waste recovery systems for above
mentioned types of waste, a new waste recovery plans may be coordinated with competent authorities and the
term may be extended for additional 3 years (the number of such extensions is currently not limited). Although,
there could be no assurance that such new waste recovery plans for next periods would be coordinated with
competent authorities, that the Ministry of Environment Protection and Regional Development of Latvia would
issue required orders allowing LZP to establish and implement waste recovery systems of certain types of waste,
and that LZP would conclude agreements with the Latvian Environmental Protection Fund Administration
regarding implementation of waste recovery systems of certain types of waste.
If LZP failed to extend the terms of validity of its waste recovery systems, it would not be allowed to organise
waste recovery system. As a consequence, LZP would not be able to undertake its core business activities, which
may have material adverse impact on the Group’s business model, strategy, operations, prospects and financial
results.
Increased competition could reduce the Group's revenue and profits and constrain the Group's growth.
The Group faces competition from other waste management companies in Latvia and in the Baltics. Due to the
specificity of its business model and carried operations the Group has to compete with both local and
international waste management companies, which are present in different segments of waste management
industry. There can be no assurance that the Group will be able to compete effectively against current and future
competitors, in particular those with greater financial or operational resources than the Group. Although the
Group believes that there are certain barriers to entry in its key markets, any new entrants to or other changes in
the competitive environment may result in price reductions, reduced margins or loss of market share, any of
which could materially adversely affect the Group’s profit margins. Current and potential competitors may
increase their advertising expenditures and promotional activities and/or engage in irrational or predatory pricing
14

ehaviour in an effort to gain market share. There can be no assurance that current or potential competitors will
not provide services or products comparable or superior to those provided by the Group, adapt more quickly to
the evolving industry trends, changing market requirements and legal framework, or price at level below those of
the Group’s competing services and products, any of which could result in the Group losing its market share.
There can be no assurance that competition from new or existing competitors who operates in the waste
management industry in Latvia and in the Baltics will not have a material adverse effect on the Group’s
operating results. In addition, there can be no assurance that any future development or investment by the Group
will not be matched or surpassed by its competitors. The inability of the Group to compete effectively could have
a material adverse effect on the Group’s business, prospects, results of operations, financial condition or the
price of the Shares.
The Group’s revenues may decrease if the Group fails to win tenders for waste collection organised by the
municipalities.
As of the date of the Prospectus municipalities in Latvia are entitled to grant rights to provide the household
waste management services within the territory of municipality only by undergoing a public procurement
procedure. Therefore, after expiry or termination of currently valid agreements between the Group Companies
and municipalities, the only way to conclude such agreement will be participation in the public procurement
procedure, e.g. in the public tenders. Due to competition in the waste management sector, the Group Companies
may not be able to win tenders organised by the municipalities which in turn may have material adverse impact
on the Group’s operations, prospects and financial results.
Latvijas Zalais punkts may lose the right to use the “Green Dot” trademark.
Latvijas Zalais punkts is a shareholder of Packaging Recovery Organization Europe (PRO Europe), which
unifies “Green Dot” systems from 33 European and North American countries. Recently, amendments to the
statutes of PRO Europe were proposed to impose the obligation to meet certain conditions to become a
shareholder of PRO Europe and to keep the shares of the Packaging Recovery Organization Europe. One of
discussed criteria was that a shareholder should not be controlled by the government or any waste management
companies or recyclers. Should one or more criteria not be met, the shareholders should have one year to make
the necessary adjustments in order to meet the criteria. After expiry of that term without making those necessary
adjustments, the status of the shareholder should be reassessed by the general assembly of PRO Europe which
will have the power to decide on expulsion of the shareholder from PRO Europe. Ultimately with the expulsion
from PRO Europe, the former shareholder will lose the right to use “Green Dot” trademark.
Amended statutes of Packaging Recovery Organization Europe were not adopted at the shareholders meeting of
PRO Europe held on 20 April 2012. However, it is possible that PRO Europe and its shareholders will return to
discussing issue in the future and such amendments in the statutes of PRO Europe will be accepted. Due to the
fact that LZP is part of the Group, which also indirectly owns companies engaged in a waste management, LZP
may be forced to dispose shares of PRO Europe and ultimately LZP may lose the sub-license to use the “Green
Dot” trademark.
Consequences of such event may have material adverse effect on the Group’s business operations. LZP may be
forced to undertake rebranding and may not offer its customers the legal right to use “Green Dot” trademark as
part of the Group’s services, what may have negative influence on the Group’s market position.
Furthermore, LZP has registered national trademark LZP (“Latvia’s Green Dot”) and uses it as a corporate logo,
disregarding the prohibition included in Article 2 of the Principal Licensing Agreement of 27 August 2003,
concluded with the Packaging Recovery Organisation Europe, which forbids registration of the trademarks
identical or similar to Green Dot trademark and using Green Dot trademark for business activities other than
indication for financial participation in system of collection and recycling of packaging and packaging waste in
Latvia. The registration of national trademark LZP or use of Green Dot trademark other than in relation to
participation in packaging and packaging waste recovery system in Latvia may trigger termination of the
Principal Licensing Agreement and loss of rights of LZP to use and sub-license of this trademark in relation to
activities related to packaging and packaging waste in Latvia.
Consequences of termination of the Principal Licensing Agreement may have material adverse effect on the
Group’s business operations. Furthermore, LZP may lose the rights to use and sub-license its trademark in
relation to activities related to packaging and packaging waste in Latvia.
15

All these factors may have material adverse impact on the Group’s operations, prospects and financial results.
The tariffs for household waste management are subject to regulation by the authorities.
The tariffs of household waste management are subject to regulation by the authorities. Pursuant to the Waste
Management Law, during the transition period (i.e. until municipalities have entered into a contracts on
household waste management with waste management companies selected in accordance with the public
procurement procedures), the fees for household waste management should comply with the last tariff approved
by the Latvian Public Utilities Commission (the “LPUC”) for household waste management which has been
determined prior to 18 November 2010. Municipalities are entitled to adjust the tariff for household waste
management due to the changes in the tariff for the municipal waste disposal in landfill sites and waste dumps
approved by the LPUC or in the Natural Resources Tax (the “NRT”) for disposal of waste in the amount
specified in the regulatory enactments. For more information on price controls in waste management industry
please see: “Regulatory Information – Price Controls”.
Certain Group Companies, including Eko Riga, Eko Kurzeme, Jumis, Jurmalas ATU and Kurzemes Ainava,
concluded agreements with the municipalities on household waste management without undergoing the public
procurement procedures, and therefore fees paid to the Group Companies for household waste management
should comply with the tariffs approved by the authorities.
There could be no assurance that the tariffs for household waste management would be in line with costs of
household waste management borne by the Group Companies. As a consequence, this may result in decrease of
profit margins and adversely affect the financial results of the Group.
Increase in operating costs and/or inability to pass on any increases in costs on Group’s customers could
adversely affect the Group’s profits.
Operating costs the Group Companies doing business in the waste collection segment include, but are not limited
to, fuel charges and costs of disposing of waste that cannot be recycled. The above mentioned costs depend on a
variety of factors, many of which are beyond the Group’s control. The market price of fuel has historically
fluctuated and fluctuations could continue. If the costs of fuel increase this could lead to increase in operating
costs of the Group Companies. Waste collected by the Group Companies is disposed predominantly on the
landfills and the Group Companies pay disposal charges. Disposal charges are set by the LPUC and depend on,
inter alia, the level of the Natural Resource Tax imposed on the landfilled waste. If the disposal charges for
landfilling of waste increase, this could increase the operating costs of Group Companies. Increase in operating
costs due to, inter alia, factors mentioned above could not always be passed on customers by increasing the
prices of services provided and therefore may have material adverse impact on the Group’s operations, prospects
and financial results.
The Group doesn’t conclude long-term agreements with its major customer.
Certain Group Companies, including PET Baltija and Nordic Plast, cooperate with some major clients on the
basis of separate orders without signing any long-term sales agreements. Therefore, there could be no assurance
that the Group will continue to cooperate with its major clients on the current basis or at all.
In the event the Group is not able to further cooperate with its major customers, it may have material adverse
impact on the Group’s operations, prospects and financial results.
Disruptions in the Group’s production facilities may have a material adverse impact on the Group.
Certain Group Companies, namely PET Baltija and Nordic Plast, are engaged in recycling packaging waste into
PET flakes and PE pellets. The recycling processes are sophisticated and therefore performed by specially
equipped production facilities. The Group’s production facilities may be subject to disruptions, including
breakdowns, accidents and/or other force majeure situations. Depending on how serious is the disruption, the
production facilities may be partially or fully non-operational for certain period of time.
In the event the Group’s production facilities are subject to disruptions, it may have material adverse impact on
the Group’s operations, prospects and financial results. Please also see risk factor: “The Group’s insurance
coverage may be insufficient for any incurred losses”.
16

Prices for the Group’s products are subject to fluctuations.
Certain Group Companies, namely Nordic Plast and PET Baltija, recycle secondary raw materials into products,
which prices are subject to market volatility. Nordic Plast produces PE pellets, which prices are linked with,
among other, the price of primary PE and, to some extent, with crude oil prices. PET Baltija produces PET
flakes, which prices are variable depending on, inter alia, crude oil and cotton prices and virgin PET prices.
There can be no assurance that future fluctuations in prices of products manufactured by the Group will not have
an adverse effect on the Group’s results of operations. As of the date of the Prospectus, the Group does not have
any specific hedging arrangements, including long-term sales agreements, in place to cover risk of product prices
fluctuations and there can be no assurance that the Group will enter into such arrangements in the future. If the
Group does enter into hedging arrangements, it cannot assure that hedging arrangements will not result in
additional losses.
The above mentioned factors could not be controlled by the Group and may have material adverse impact on the
Group’s operations, prospects and financial results.
Demand for certain services and products of the Group is subject to fluctuations.
Demand for certain services and products provided by the Group may fluctuate. For example, in the summer
time there is more packaging generated and placed on the market, households generate more waste, but the
demand for street cleaning decreases. In the winter time the demand for street cleaning increases due to snowfall.
Moreover, due to the market specificity, the Group does not sell PET flakes produced by PET Baltija in the
second half of December.
The above mentioned factors could not be controlled by the Group and may have material adverse impact on the
Group’s operations, prospects and financial results.
The Group has grown through acquisitions.
The Group has developed its business and fuelled its growth through number of acquisitions and reorganisations
(including mergers) of companies operating in waste management sector in Latvia. In accordance with Latvian
law, the acquiring and/or merging company is liable for all historical obligations and liabilities, including tax
liabilities, of the target entity. Therefore, there is a potential risk that the Group would be liable for any
obligations and/or liabilities that could be material for Group’s business and/or financial position.
As a consequence, the above mentioned factors may have material adverse impact on the Group’s operations,
prospects and financial results.
Further expansion through acquisitions entails certain risks, which could have adverse consequences for the
Group's business.
The Group may consider further growing through acquisitions in the near future. In particular, the Group may
want to enter into or strengthen its presence in certain markets through the acquisition of other waste
management businesses. If the Group made an acquisition it would need to integrate new operations, products,
services and personnel into the Group’s business. The Group’s ability to realise the expected benefits from future
acquisitions will depend, in large part, on its ability to integrate new operations with existing operations in a
timely and effective manner and to manage a greater number of portfolio assets. In addition, the Group’s
potential acquisition plans involve numerous risks, including the following: the Group's acquisitions may not be
profitable or generate anticipated cash flows, the Group may fail to expand its corporate infrastructure to
facilitate the integration of its operations with those of acquired assets, the Group may face difficulties entering
into markets and geographic areas where it has limited or no experience, the Group may have potential
difficulties in integrating its operations and systems with those of acquired companies, the Group may face
possible anti-monopoly review by relevant competition authorities that could result in such authorities seeking to
prohibit or unwind its acquisition of new businesses, and the possibility that the failure of the Group's acquisition
strategy could hamper its continued growth and profitability.
As a consequence, the above mentioned factors may have material adverse impact on the Group’s operations,
prospects and financial results.
17

The lease agreements concluded by the Group may be terminated or the Group may not be able to prolong
them.
The Group leases number of real estates, including warehouse and industrial premises, which have material
importance for the Group’s business and operations (for more information on leased real estate please see:
“Business Overview - Real Estate”). Although, most of the lease agreements are long-term, there could be no
assurance that they would not be terminated before expiry of their term or the Group would be able to prolong
them on reasonable conditions or at all. Termination of the lease agreements concluded by the Group or inability
to prolong them may have material adverse impact on the Group’s operations, prospects and financial results.
A number of lease agreements have not been registered with the Land Register and in case of transfer of
ownership to properties these leases may cease to be valid.
Under Latvian law lease agreements may be registered with the Land Register. In case of change of the owner of
the real property, the new owner will not be bound by the lease agreement and will be entitled to terminate lease
agreement prior to its term if the lease agreement is not registered in the Land Register. Certain lease agreements
concluded by the Group Companies have not been registered with the Land Register. Consequently, in case the
change of ownership of leased premises, new owners would not be obliged to perform the obligations of the
lessor under such agreements and the Group Companies might have an obligation to abandon the leased
premises. Such events may have material adverse impact on the Group’s operations, prospects and financial
results.
Failure to register transfer of title to real properties as a result of merger of Tukuma Ainava into Kurzemes
Ainava with the public registers and failure to register respective amendments to Nordea Financing
Agreements and security agreements in the public registers may lead to event of default under Nordea
Financing Agreements.
On 19 April 2012 merger of Tukuma Ainava into its subsidiary Kurzemes Ainava has been registered with the
Commercial Register. According to the Latvian Commercial Law on the indicated date Eko Baltija acquired all
shares of Kurzemes Ainava owned by Tukuma Ainava, Kurzemes Ainava acquired all assets, rights and
obligations of Tukuma Ainava and Tukuma Ainava ceased to exist.
Transfer of title to the real properties from Tukuma Ainava to Kurzemes Ainava as a result of merger of Tukuma
Ainava into Kurzemes Ainava has not been registered with the Land Register. Consequently, currently
Kurzemes Ainava is not considered as the owner of real properties in its relations with third parties and may not
execute ownership rights until such registration. Moreover, Nordea Financing Agreements foresee several
mortgages over real properties formerly owned by Tukuma Ainava. Mortgage agreements have been amended
respectively providing that Kurzemes Ainava pledges real properties previously owned by Tukuma Ainava.
However, these amendments were not and may not be registered with Land Register until registration of transfer
of title to the real properties. Lack of registration of transfer of title to real properties and lack of registration of
the amendments (novations) with the Land Register may lead that it will become impossible for Nordea Bank to
enforce these securities which would constitute the event of default under Nordea Financing Agreements. Such
default would entitle Nordea Bank to require full repayment of outstanding loans from Group Companies and
satisfying its outstanding claims by: (i) enforcement of financial collaterals; (ii) taking over the receivables of the
Group Companies; (iii) enforcement of guarantees; (iv) sale of pledged assets (including pledged Shares)
without court proceedings or auction at a freely determined price; and/or (v) sale of the mortgaged assets at
auction at the terms and conditions approved by court or on the basis of court decision on recovering of the debt
secured by mortgage.
The occurrence of any of the indicated events may have material adverse impact on the Group’s operations,
prospects and financial results.
Certain Group Companies are and in the future may be recognized as having dominant position on the
market.
On 18 August 2010 the Latvian Competition Council took a decision to terminate the case on potential abuse of
dominant position by Eko Kurzeme and Eko Riga by violation of law provisions prohibiting abuse of a dominant
position and restricting application of unfair purchase or selling prices. Although, in this decision the Latvian
Competition Council established that Eko Kurzeme holds a dominant position in the market for collection,
transportation, loading and storage of waste in the territory of Liepaja city, due to having a market share of over
18

70% with a tendency to increase during the past 3 years and administrative barriers preventing potential
competitors from entry to this market.
Eko Kurzeme, as entity recognized as having dominant position, has a special responsibility not to abuse its
dominant position that includes, inter alia, refraining from: (i) refusal to enter into transactions or to amend the
provisions of a transaction without an objectively justifiable reason; (ii) limiting production, markets or technical
development to the prejudice of consumers; (iii) imposing unfair purchase or selling prices or other unfair
trading conditions. If operations of Eko Kurzeme are recognised as abusing its dominant position, Eko Kurzeme
may be subject to an administrative fine of up to 10% of the net turnover for the preceding financial year, as well
as compensation of third party claims for damages.
On 27 August 2009 the Latvian Competition Council indicated that it had no grounds to conclude that LZP did
not possess a dominant position in the market for organisation of systems/alternative solutions to fulfil the
environmental obligations in Latvia and therefore drew attention of LZP to a special responsibility of a dominant
market participant in the relevant market. LZP as being potentially in a dominant position in the market of the
organisation of systems/alternative solutions to fulfil the environmental obligations in Latvia should apply fair
prices and other trading provisions.
If any of the Group Companies will be recognized as abusing its dominant position and will be subject to fines
and obligation to compensate damages of third parties, it may have material adverse impact on the Group’s
operations, prospects and financial results.
The Group may be subject to claims for unpaid remuneration for fulfilment of duties of members of corporate
bodies of certain Group Companies.
Certain Group Companies, namely, Eko Riga, Eko Kurzeme, Jurmalas ATU, Nordic Plast, Kurzemes Ainava,
Vaania, Eko Reverss, PET Baltija and MRTL, didn’t conclude agreements with current and former members of
their corporate bodies (management boards) and didn’t pay remuneration for the performance of their duties.
According to the Latvian Commercial Law, members of the management board are entitled to remuneration,
which is commensurate with their duties and the financial condition of the company. Therefore, current and
former members of the management boards of above mentioned Group Companies, as well as former members
of the management boards of Eko Baltija and Tukuma Ainava, may request remuneration, which is
commensurate with their duties and the financial condition of the Group Company, for the performance of the
duties for the entire period in the office. The term of limitation for bringing claims for unpaid remuneration is 3
years.
If compensation of any such unpaid remuneration will be claimed and the Group Companies will be obliged to
compensate such claims, it may have material adverse impact on the Group’s operations, prospects and financial
results.
Current and future assets of the Group Companies, certain amount of the Shares in the Issuer, as well as all
the shares of the Group Companies are pledged.
All current and future assets of Eko SPV, Eko Baltija, Eko Riga, Eko Reverss, Eko Kurzeme, Kurzemes Ainava,
Jurmalas ATU, PET Baltija, Vaania, Nordic Plast and LZP are pledged in favour of Nordea Bank as security
under the Nordea Financing Agreements. Moreover, the obligations under the Nordea Financing Agreements are
secured by mortgages on certain real properties owned by the Group Companies. For more information please
see: “Business – Encumbrances” and “Material Contracts - Financing Agreements - Agreements with Nordea
Bank”).
Additionally, the obligations under the Nordea Financing Agreements are secured by commercial pledge over
100% of shares in Eko Baltija, 100% of shares in Eko SPV, 100% of shares in Jurmalas ATU, 100% of shares in
Eko Kurzeme, 100% of shares in Eko Riga, 100% of shares in Nordic Plast, 75.13% of shares in LZP, 91.03% of
shares in PET Baltija, 90% of shares in Vaania, 100% of shares in Kurzemes Ainava and 100% of shares in Eko
Reverss. Pledged shares may not be transferred or otherwise disposed of without the consent of Nordea Bank.
Moreover, the Nordea Financing Agreements and related security agreements provide that consent of Nordea
Bank is required to undertake certain corporate actions by the Group Companies, among others, to pay out
dividends (for more information please see: “Material Contracts - Financing Agreements - Agreements with
Nordea Bank”).
19

In case of failure to fulfil the Nordea Financing Agreements by any of the borrowers or security providers
Nordea Bank would have a right to satisfy its outstanding claims by, inter alia, sale of the pledged and
mortgaged assets (including pledged shares) without court proceedings or auction at a freely determined price
and/or sale of the mortgaged assets at auction at the terms and conditions approved by court or on the basis of
court decision on recovering of the debt secured with mortgage. The occurrence of such events may have
material adverse impact on the Group’s operations, prospects and financial results.
On 11 June 2012, the Principal Shareholders, ESOMTAX INVEST LIMITED (Cyprus), certain Group
Companies and Nordea Bank concluded an agreement, whereby the parties agreed that the commercial pledge
over the pledged shares of the Group Companies in favour of Nordea Bank will be cancelled after setting in of
the following conditions: (i) a subscription of at least 5,000,000 (five million) New Shares of the Issuer during
the Offering with the nominal value of LVL 1.00; (ii) at least 50% + 1 of the Issuer’s Shares are jointly or
individually owned by Viesturs Tamuzs, Maris Simanovics, Undine Bude, ESOMTAX INVEST LIMITED
(Cyprus) and those shares have been pledged as a financial pledge in favour of Nordea Bank; (iii) amendments
to the Nordea Financing Agreements of Group Companies have been signed indicating that the shares of Group
Companies may not be encumbered in favour of other persons without prior consent of Nordea Bank until Group
Companies have performed all their obligations towards Nordea Bank.
Certain of the Group’s credit facilities are subject to certain covenants and restrictions.
The operating and financial restrictions and covenants in existing and any future financing agreements could
adversely affect the Group’s ability to finance future operations or capital needs or to pursue and expand its
business activities. For example, some of the loan agreements require maintaining certain level of cash flow on
the bank accounts, opened with the respective bank, to provide the bank with regular financial statements,
information on the borrower’s business activity, to fulfil certain financial covenants, to notify the bank on the
changes in statutory documents, as well as any changes of management.
The Group’s ability to comply with covenants and restrictions contained in debt instruments may be affected by
events beyond its control, including prevailing economic, financial and industry conditions. If market or other
economic conditions deteriorate, the Group may fail to comply with these covenants. Failure to comply with the
above mentioned requirements and failure to pay any principal, interest, fees, expenses or other amounts when
due, as well as deterioration of the borrower’s financial condition, entitles the bank to suspend granting of the
loan facilities or to accelerate respective loans, and grants other rights to the bank, determined by the agreements
and applicable laws. Though the Group believes that it complies with the conditions of the credit facilities in all
material respects, there can be no guarantee that the Group will not be required to repay such facilities in the
future with limited advance notice and when not provided for in the Group’s budget. See: “Material Agreements
– Financing Arrangements” for more information about the Group’s existing credit facilities.
A default under financing agreements could also result in foreclosure on any of the Group’s assets securing
related loans, as well as could result in execution by Nordea Bank of the financial pledge over the Shares subject
to lock-up arrangements (see risk factor: “Current and future assets of the Group Companies, certain amount of
the Shares in the Issuer, as well as all the shares of the Group Companies are pledged” and section
“Shareholders – Lock-up agreement”). The occurrence of any of these events may have material adverse impact
on the Group’s operations, prospects and financial results.
The Group may not be able to obtain financing from the EU funds or the financing may be revoked.
The business strategy of the Group includes active search for opportunities of obtaining financing from the EU
funds (for more information please see: “Business Overview – Business Strategy”). Such financing may be
invested in various projects, which could fuel the Group’s growth. Although, there could be no assurance that
such financing would be obtained at all or in the amount, and on conditions, allowing the Group to undertake
planned investments. Moreover, usually projects co-financed by the EU are subject to strict terms and
conditions, breach of which may lead to revoking of the financing and could force the Group to abandon its
investment plans and projects, and return obtained financing. Additionally, the Group may also be obliged to
return the obtained financing, if the Group is in breach of terms and conditions of EU financing in certain period
after the successful execution of project.
Each of these factors may have material adverse impact on the Group’s business strategy, operations, prospects
and financial results.
20

The Group’s ability to obtain debt financing may depend on the performance of its business and market
conditions.
The actual or perceived credit quality of the Group’s business and market conditions affecting the waste
management industry and the credit markets may materially affect the Group’s ability to obtain the additional
capital resources that may be required or may significantly increase the Group’s costs of obtaining such capital.
The Group’s inability to obtain additional financing at all or at a higher than anticipated cost may have material
adverse impact on the Group’s operations, prospects and financial results.
The Group is exposed to currency exchange risk and interest rate risk.
Although the Group generates most of its revenues and costs in LVL, certain of its revenues and expenses
(including financial expenses) are generated in currencies other than LVL, particularly EUR. Although, LVL is
pegged to EUR, there could be no assurance that this would not change in the future. Any unfavourable
fluctuations in LVL/EUR exchange rate in the future may have material adverse impact on the Group’s
operations, prospects and financial results.
Moreover, the value of investment in the Shares may be affected by prevailing rates of exchange between LVL
and PLN because the Company’s share capital is denominated in LVL, while the Shares will be subscribed and
traded on the WSE in PLN. Changes in LVL to PLN exchange rate between the time of pricing and receiving the
proceeds from the Offering by the Company could reduce LVL denominated proceeds received from the
Offering and result in a decline in the Company’s equity capital for reasons unrelated to the performance of its
business.
The majority of Group’s financing is at variable interest rates. As a result the Group is subject to the effects of
interest rate fluctuations on such indebtedness. A significant increase in the interest rate will negatively influence
the Group’s results.
There can be no assurance that future exchange rate and interest rate fluctuations may not have an adverse effect
on the Group’s results of operations. As of the date of the Prospectus, the Group does not have any specific
hedging arrangements in place to cover exchange rate or interest rate fluctuations and there can be no assurance
that the Group will enter into such arrangements in the future. If the Group does enter into hedging
arrangements, it cannot assure that hedging arrangements will not result in additional losses or that further shifts
in exchange rates or interest rates will not have a material effect on the Group’s operations and results. Adverse
exchange and interest rate fluctuations, if not hedged, may have material adverse impact on the Group’s
operations, prospects and financial results.
The Group is exposed to the credit risks of its customers and suppliers.
The Group’s financial performance and position are dependent, to a certain extent, on the creditworthiness of its
customers and suppliers. If there are any unforeseen circumstances affecting the Group’s customers’ and/or
suppliers’ ability or willingness to pay, the Group may experience payment delays or non-payment. Each of
these factors may have material adverse impact on the Group’s operations, prospects and financial results.
The Group may not be able to grow or effectively manage its growth.
The Group’s future growth will depend on a number of factors which include, among others, ability to: maintain
or develop new and existing customer relationships; identify and consummate desirable acquisitions, joint
ventures or strategic alliances; introduce new and attractive services; identify and capitalise on opportunities in
new markets; successfully adapt to changing market conditions, such as changes to the regulatory framework;
successfully manage the Group’s liquidity and obtain the required financing for existing and new operations;
secure necessary third party service providers; and attract, hire and retain qualified personnel. A deficiency in
any of these factors could adversely affect the Group’s ability to achieve anticipated growth in cash flow or
realize other anticipated benefits. Future investments could result in incurring additional indebtedness and
liabilities that could have a material adverse effect on the Group’s profitability. In addition, the Group’s current
operating and financial systems may not be adequate to support growth and attempts to improve those systems
may be ineffective. Failure to execute the Group’s business strategy or to manage growth effectively could
adversely affect the Group’s business, results of operations, cash flow and financial condition. In addition, even
if the Group successfully implements its business strategy, it may not improve results of operations.
Furthermore, the Group may decide to alter or discontinue aspects of business strategy and may adopt alternative
21

or additional strategies in response to operating environment or competitive situation or factors or events beyond
the Group’s control. Each of these factors may have material adverse impact on the Group’s operations,
prospects and financial results.
The Group is dependent on its key personnel.
The Group’s success depends to a significant extent upon the contributions of a limited number of the Group’s
key senior management and personnel. There can be no certainty that the Group will be able to retain its key
personnel. Factors critical to retaining the Group’s present staff and attracting and motivating additional highly
qualified personnel include the Group’s ability to provide these individuals with competitive compensation
arrangements. As of the date of the Prospectus the Group has not entered into any non-compete agreements with
any of its key senior management and personnel. Furthermore, the Group is not insured against risks of loss or
removal of its key senior management and personnel.
The loss (whether temporary or permanent) of the services of any director, member of the senior management
team or other key personnel, either at the Issuer level or within the Group Companies, could have a material
adverse effect on the business, financial condition or results of operations of the Group.
The Group’s insurance coverage may be insufficient for any incurred losses.
The Group’s operations are subject to risks inherent in the waste management sector. The Group maintains
insurance in accordance with industry standards and applicable laws and regulations. The Group cannot assure
that it has adequately insured against all risks, that any future claims, penalties and/or fines will be paid or that it
will be able to procure adequate insurance coverage at commercially reasonable rates in the future. If
environmental regulations become more stringent, insurance costs may increase or make insurance unavailable
against the risk of environmental damage or pollution. Further, there can be no assurance that the insurance
policies will cover all losses that the Group incurs, or that disputes over insurance claims will not arise with the
insurance carriers. There can be no assurance that the Group will be able to renew its insurance policies on the
same or commercially reasonable terms, or at all, in the future. Any uninsured or underinsured loss may have
material adverse impact on the Group’s operations, prospects and financial results.
The Group does not carry business interruption insurance. Business interruption insurance is intended to cover
some of costs and loss of revenues during period when the company’s operations are adversely affected due to
any disruptions (e.g., accidents or damages) in the production facilities. Accordingly, any circumstances which
adversely affect the Group’s operations may have material adverse impact on the Group’s operations, prospects
and financial results.
The Group may infringe third party IP rights.
The Group deals with two major groups of intellectual property rights relating to: software and trademarks.
Some software was developed or adjusted to the Group’s activities and is used by the Group Companies. It is
possible that IT solutions were implemented in a particular Group Companies without first obtaining all of the
necessary licenses. Furthermore, rights to use trademarks designed for the Group by particular Group Companies
may not be properly secured, e.g. not registered. There is also a risk that the Group may violate third parties'
rights to trademarks and other IP rights. If action is taken by a third party against the Group as a result of its
alleged infringement of IP rights, this may have a material adverse impact on the operations, financial results and
prospects of the Group.
The tax office may determine that agreements executed by the Group Companies with each other and the
related parties are not on arm-length basis and impose fines on the Group Companies.
Latvian transfer pricing rules require that prices in transactions between related parties and, under certain
circumstances, between unrelated parties be set on an arm’s length basis. Latvian tax authorities may make
transfer pricing adjustments and impose additional tax liabilities in respect of transactions between related
parties and, as applicable, unrelated parties if the transaction prices differ from market prices.
In the ordinary course of the Group’s business there have been and continue to be a number of transactions
between companies within the Group, as well as with related parties regarding, among others, providing waste
management services, business advisory services and use of software. In addition, the Group Companies entered
into numerous loan agreements, which generate revenues and costs in the Group. It is not always possible to
22

determine an appropriate market price for all such transactions, and the Latvian tax authorities’ view as to what
constitutes a market price may differ from that adopted by the Group. These differences may also be concluded,
as none of the Group Companies has transfer pricing documentation prepared in accordance with the applicable
laws. As a result, there can be no assurance that the Latvian tax authorities will not challenge the prices used by
the Group for these transactions and assess additional taxes and/or impose fines on the Group. If such price
adjustments are implemented, the Group’s effective tax rate could increase and its future financial results could
be materially adversely affected. In addition, the Group could face significant losses associated with the assessed
amount of prior tax underpaid and related fines and penalties, which may have a material adverse effect on the
Group’s business, results of operations and financial condition.
Historical financial statements of the Group may not be representative of its historic or future results and may
not be comparable across periods, which may make it difficult to evaluate the Group’s results and future
prospects.
The Issuer was incorporated in 2011. The legal restructuring aimed at transferring certain existing legal entities
to the Issuer was not completed before 31 December 2011. As a result, the Issuer did not have control over all
the Group Companies as of 31 December 2011 and was not permitted to present consolidated financial
statements for the Group as it is at the date of the Prospectus. Therefore, the Issuer decided to prepare the audited
consolidated annual report of Eko Baltija Group for the years ended 31 December 2011, 2010, 2009 (the
“Consolidated Financial Statements”), the reviewed condensed consolidated interim financial statements for the
three months ended 31 March 2012 and 2011 (the “Condensed Consolidated Interim Financial Statements”) and
pro forma consolidated financial information of Eco Baltia (the "Pro Forma Financial Information"). Such
presentation of historical financial information may make it difficult to evaluate the Group’s results of operations
and future prospects. Moreover, such presentation of historical financial information may not be representative
of historic or future results of the Group and may not be comparable across periods, which may make it difficult
to evaluate the Group’s results and future prospects.
Risks Relating to Latvia
Political and economic changes could negatively impact the Group.
The Group operates mainly in Latvia. The economic, regulatory and administrative situation in Latvia is
developing continuously, mainly as a result of transformation and accession to the EU and as reaction to the
global economic crisis in recent years. Latvia was heavily affected by the global crisis with GDP rate falling by
17.7% in 2009. According to Eurostat in 2011 the Latvian real GDP growth rate was 5.5%, unemployment rate
was 16.2% and inflation rate was 4.2%. Due to relatively small domestic market, Latvia is exposed to events in
global economy to much more extent than many other countries, including Poland. The Group has no or limited
influence on these events. Changes and developments in economic, regulatory, administrative or other policies
and conditions in Latvia, over which the Group has no control, could significantly affect the Group’s business,
prospects, financial conditions and results of operations in a manner that could not be predicted.
Pegged currency may have adverse impact on Latvian economy and therefore materially adversely influence
the Group.
Since May 2005 Latvia has been part of the ERM II and committed to observe a central exchange rate of LVL
0.702804 to EUR 1.00 with a fluctuation band of ±15%. However, Latvia unilaterally maintains a 1% fluctuation
band around the central rate.
The fact that Latvian lat is pegged to euro could have material adverse effect on the Latvian economy. Namely,
pegged currency limits the self-regulatory mechanisms of the economy. For example, during financial turmoil
substantial amounts of investments are withdrawn from developing countries (such as Latvia), what causes
depreciation of local currency. Although, depreciation of local currency increases the trade competitiveness of
the country (by fuelling exports), and therefore softens the impact and economic consequences of the financial
turmoil. Counties with pegged currency cannot rely on above mentioned self-regulatory mechanisms and
therefore could be struck by the financial turmoil in more severe way. Therefore, during any financial turmoil the
Latvian economy may have limited ability to recover due to peg between lat and euro.
Any potential turmoil in economic conditions in Latvia, over which the Group has no control, could significantly
affect the Group’s business, prospects, financial conditions and results of operations in a manner that could not
be predicted.
23

Inflation risk may have material adverse impact on the Group.
In previous years Latvia has been heavily affected by financial instability, caused by the global financial crisis.
According to Eurostat, before the financial crisis struck inflation rate in Latvia was double digit, amounting to
10.1% in 2007 and 15.3% in 2008. In 2009 the inflation rate fell to 3.3% and this trend continued in years 2010
and 2011, with inflation rate amounting to -1.2% (deflation) and 4.2%, respectively.
Relevant expenses of the Group Companies, e.g., operating costs, are closely related to the general price level.
The Group Companies’ expenditures may increase considerably due to high inflation and the Group Companies
may not always be able to increase prices of their services and/or products. Consequently, high inflation as well
as deflation may have a considerable adverse influence on the Group’s financial situation and business results.
Unfavourable changes in taxes may have material adverse influence on the Group.
The Group Companies are subject to the following taxes in Latvia: VAT, social security contributions, personal
income tax, corporate income tax, natural resource tax and real estate tax.
According to the Tax Policy Strategy for 2011-2014 set by the Latvian Ministry of Finance, no additional tax
load should be imposed on tax payers in Latvia within the period to 2014 (including), except for potentially
moderate increase in real estate tax. At the same time, the effective personal income tax charge may be reduced
by increasing the tax-exempt ceiling. However, there could be no assurance that the tax policy in Latvia would
not change in manner having adverse effect on the Group’s business and financial results.
Moreover, the Group is subject to the continual examinations and audits by the Latvian tax authorities. While the
Group regularly evaluates its compliance with tax legislation and uncertain tax positions, any adverse outcome
from these continuous examinations may have adverse effect on Group’s operating results and financial position.
All above mentioned factors may have material adverse effect on the Group’s business, operations, financial
position and financial results.
Latvian judicial system is undergoing development.
The Company and the Group are incorporated in Latvia. The majority of the assets of the Group Companies are
located in Latvia and the majority of the management personnel working for the Group reside in Latvia. Latvian
commercial and financial instruments laws regulate existence and operations of the Company and the Group,
including Shares and shareholder rights. Therefore Latvian courts might be the sole venue for hearing the claims
against the Company, the Group and/or their management. Latvian commercial and financial instruments laws
have been adopted only approximately 10 years ago and are subject to frequent amendments. For these reasons
there is not much practice established and case law settled in relation to commercial and financial instruments
laws issues, including shares and shareholder rights. Moreover, court proceedings in Latvia may be lengthier
than in other EU countries, including Poland. Henceforth, investors in the Shares (including the Offer Shares)
may encounter difficulties with foreseeable, fast and effective defence of their interests in the Latvian courts,
related with claims against the Company, any other of the Group Companies and/or their management.
Risk Relating to the Issuer
The Issuer is a holding company with no assets other than shares of its subsidiary.
The Issuer is a holding company with no other assets than the shares in the Group Companies. All business
operations are carried out by the Group Companies. The Issuer could pay dividends only to the extent it is
entitled to receive indirectly dividends from the Group Companies. It recognizes gains from the sale of its assets
and proceeds from the issuance of the Shares only (see: “General information on the Issuer”). Furthermore, the
Issuer will depend upon external sources of financing, the earnings and cash flows from the Group Companies
and dividends on shares indirectly held in the Group Companies to pay expenses and meet any future obligations.
There is no guarantee that the earnings and cash flows from the Group Companies will be sufficient to meet
future needs.
24

The rights of Latvian company shareholders differ from the rights of the shareholders of Polish listed
companies.
The Issuer was incorporated and organized under the laws of Latvia in particular, in accordance with, inter alia,
Latvian Commercial Law and consequently the rights of the Issuer’s shareholders are governed by the laws of
Latvia and by the Issuer’s Articles of Association. Accordingly, the Issuer’s corporate structure as well as the
rights and obligations of its shareholders may be different from the rights and obligations of the shareholders of
Polish-based companies listed on the WSE. In addition, Latvian regulations may provide shareholders with
particular rights and privileges which could not exist in Poland and, vice versa, certain rights and privileges that
shareholders may benefit from in Polish companies may not be guaranteed. The exercise of some of the
shareholders’ rights in a Latvian company could be more complicated or expensive for investors from Poland
than the exercise of similar rights in a Polish company. Resolutions of the General Meeting of Shareholders may
be adopted with majorities different from the majorities required for adoption of equivalent resolutions in Polish
companies. Rectification of the Company’s registers and/or some corporate actions may require the approval of
Latvian courts.
Judgments of Polish courts against the Company and the Group may be more difficult to enforce than if the
company and its management were located in Poland.
The Company and the Group were formed in accordance with the Latvian laws and its registered office is in
Latvia. The majority of the assets of the Group Companies are located in Latvia and the majority of the
management personnel working for the Group reside in Latvia. For this reason Polish investors may encounter
difficulties in serving summons and other documents relating to court proceedings on any of the entities within
the Group and/or the management personnel working for the Group. For the same reason it may be more difficult
for Polish investors to enforce a judgment of the Polish court issued against any entities within the Group and/or
the management personnel working for the Group than if those entities and/or the management personnel were
located in Poland.
The Issuer has been, and will continue to be, influenced by three principal shareholders.
As of the date of the Prospectus each of Mrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics (the
“Principal Shareholders”) owns directly 10% of the Issuer’s share capital. Principal Shareholders are also
beneficial owners of ESOMTAX INVEST LIMITED (Cyprus), which owns 42% of the Issuer’s share capital.
Moreover, the Principal Shareholders are direct and indirect shareholders of AS Perseus, which is partner in
Otrais Eko Fonds. Otrais Eko Fonds owns 28% of the Shares of the Issuer as of the date of the Prospectus.
Following the Offering each of Mrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics will
continue to own directly 7.81% of the Issuer’s Shares, assuming all of the Offer Shares are placed with investors.
Moreover, ESOMTAX INVEST LIMITED (Cyprus) will continue to own 32.82% of the Issuer’s share capital,
assuming all of the Offer Shares are placed with investors. Together, the Principal Shareholders will continue to
own directly and indirectly up to 56.25% of the Issuer’s issued share capital, assuming all of the Offer Shares are
placed with investors. Although, the Principal Shareholders should not be deemed as acting in concert, they have
the ability to influence most actions requiring shareholder approval, including electing the majority of the
Issuer’s Supervisory Board and determining the outcome of most corporate matters, without recourse to the
Issuer’s minority shareholders. As a result, the Principal Shareholders could, for example, cause the Group to
pursue transactions, which may involve higher risk for the Group. Moreover, the interests of the Principal
Shareholders may, in some circumstances, conflict with the interests of other holders of the Shares. If
circumstances were to arise where the interests of the Principal Shareholders conflicted with the interests of
other holders of the Shares, they could take actions materially adverse to the interests of holders of the Shares.
See: “Management and Corporate Governance” and “Related Party Transactions”.
The Issuer may have limited ability to attract financing through secondary offerings of Shares.
In general, in case of any increase of the share capital of the Issuer, the existing shareholders of the Issuer have a
pre-emptive right to acquire newly issued shares. The pre-emptive right requires that the Company gives priority
treatment to the current shareholders. Pre-emptive rights of the shareholders may not be revoked or restricted by
the foundation agreement, the Articles of Association or a decision of the General Meeting, except in cases of
increase of the share capital for a special purpose (e.g. for exchange of newly issued shares for convertible
bonds; for exchange of newly issued shares for the shares of a company to be merged in case of reorganisation;
for issuing of employee shares). The time limit for a shareholder to acquire the shares by exercising pre-emptive
rights may not be shorter than 1 month after the public announcement thereof. For more information on pre-
25

emptive rights please see “Description of the Shares and Corporate Rights and Obligations - Pre-emptive
Rights”.
Due to the above mentioned provisions of the Latvian law the Issuer may have limited ability to attract financing
through secondary offerings of new shares in the Issuer, attract new investors and widening investors’ base.
Moreover, to date the LCD has never been involved in settlement (except for registration of newly issued shares)
of the capital increase through exercise of the pre-emptive rights. Therefore, there can be no assurance that a
potential share capital increase of the Issuer will not experience technical or organizational difficulties.
Risks Relating to Shares, Listing and Trading on the WSE and the RSE
The Offering may be delayed, suspended or cancelled.
Public offerings are subject to various circumstances independent from the Company and the Principal
Shareholders. In particular, the demand for the Offer Shares is shaped by, among others, investors’ sentiment
toward sector, legal and financial conditions of the Offering. In case such circumstances would have adverse
impact on the results of the Offering. The Issuer may decide to delay, suspend or cancel the Offering (for further
details see: “The Offering and the plan of distribution – Cancellation, Suspension or Postponement of the
Offering”). Consequently, the investors may be unable to successfully subscribe for the Offer Shares and
payments made by investors during the Offering, if any, may be returned without any compensation.
There has been no prior public trading market for the Shares.
Prior to the Offering, there has been no public trading market for the Shares. Although the Issuer will apply for
the Shares to be admitted to trading on the WSE and the RSE, as well as intends to engage the market maker on
the RSE and does not exclude possibility to engage the market maker on the WSE, there can be no assurance that
an active trading market for the Shares will develop or, if developed, can be sustained following the closing of
the Offering. If an active trading market is not developed or maintained, the liquidity and trading price of the
Shares could be materially and adversely affected. Active, liquid trading markets generally result in lower price
volatility, lower spreads and more efficient execution of buy and sell orders for investors. If an actual liquid
trading market for the Shares does not develop, the price of the Shares may be more volatile and it may be
difficult to complete a buy or sell order for the Shares.
The price of the Shares may fluctuate significantly.
The trading prices of the Shares may be subject to significant price and volume fluctuations in response to many
factors, including but not limited to:
variations in the Group’s operating results and those of other companies operating in the same industry
sector;
negative research reports or adverse brokers’ comments;
future sales of the Shares owned by the Issuer’s significant shareholders, or the perception that such sales
will occur; and
extreme price and volume fluctuations on the WSE, the RSE or other stock exchanges, including those in
other emerging markets.
Fluctuations in the price and volume of the Shares may not be correlated in a predictable way to the Group’s
performance or operating results. The Offer Price may not be indicative of prices that will subsequently prevail
in the market and an investor may not be able to resell its Shares at or above the Offer Price.
Turmoil in emerging markets could cause the value of the Shares to suffer.
Financial or other turmoil in emerging markets has in the recent past adversely affected market prices in the
world’s securities markets for companies operating in the affected developing economies. There can be no
assurance that renewed volatility stemming from future financial turmoil, or other factors, such as political
26

unrests, that may arise in other emerging markets or otherwise, will not adversely affect the value of the Shares
even if the Latvian economy remains relatively stable.
The market value of the Shares may be adversely affected by future sales or issues of substantial amounts of
Shares.
Future sales of the Shares owned by the Principal Shareholders, the Selling Shareholder and/or ESOMTAX
INVEST LIMITED (Cyprus), future sales of the Shares by Nordea Bank in case of execution of the financial
pledge over certain Shares (for more information please see: “Material Contracts – Financing Agreements –
Agreements with Nordea Bank”), and/or new issuances of the Shares by the Issuer, or the perception that such
sales and/or new issuances will occur, could cause a decline in the market price of the Shares. In connection with
the Offering, each of the Issuer, the Principal Shareholders, the Selling Shareholder and/or ESOMTAX INVEST
LIMITED (Cyprus), as well as Nordea Bank, have agreed to certain lock-up arrangements in respect to the
Shares. For further details please see: “Shareholders – Lock-up agreement”. The Issuer cannot predict whether
substantial numbers of the Shares will be sold by such persons following the expiry of the lock-up period. In
particular, there can be no assurance that after the lock-up period expires, the Principal Shareholders, the Selling
Shareholder and/or ESOMTAX INVEST LIMITED (Cyprus) will not reduce their holdings of the Shares.
Moreover, there can be no assurance that in case of a default under the Nordea Financing Agreements and after
execution of the financial pledge over certain Shares by Nordea or after expiry of the lock-up period Nordea
Bank will not sell substantial amounts of the Shares. Future sales of the Shares could be made by the Issuer, the
Principal Shareholders, the Selling Shareholder, ESOMTAX INVEST LIMITED (Cyprus) and/or Nordea Bank
or through a capital increase undertaken by the Issuer to fund an acquisition or for another purpose. A sale of a
substantial number of the Shares, or the perception that such sales could occur, could materially and adversely
affect the market price of the Shares and could also impede the Issuer’s ability to raise capital through the issue
of equity securities in the future.
Holders of the Offer Shares may not be able to exercise pre-emptive rights, and as a result may experience
substantial dilution upon future issuances of Shares.
Holders of the Shares generally will have a pre-emptive right with respect to any issue for cash consideration of
the Shares or the granting of rights to subscribe for the Shares, unless additional shares are issued for a special
purpose in the following cases: (i) for exchange of newly issued shares for convertible bonds, (ii) for exchange
of newly issued shares for the shares of a company to be merged in case of reorganisation, (iii) as a
compensation to minority shareholders that as an exchange of shares is conducted by the dominant undertaking
of a group of companies, (iv) for the issuing of employee shares or the holders of the Shares each individually
waive their pre-emption rights. As a result, shareholders may experience significant dilution if additional Shares
of the Issuer were to be offered and would not apply towards them or have been waived by them. Moreover,
holders of the Shares in certain jurisdictions may not be able to exercise pre-emptive rights for the Shares unless
the applicable securities law requirements in such jurisdiction are adhered to or an exemption from such
requirements is available. Accordingly, such holders may not be able to exercise their pre-emptive rights on
future issuances of the Shares, and, as a result, their percentage ownership interest in the Issuer would be
reduced.
The Issuer is established and organised under laws of Latvia while the Shares will be listed on a regulated
market in Poland.
The Issuer is a company organised and existing under the laws of Latvia while the Shares will be listed on a
regulated market in Poland. The Issuer’s corporate structure as well as rights and obligations of its shareholders
may be different from the rights and obligations of shareholders in Polish companies listed on the WSE.
Latvia will be the home Member State of the Issuer for the purpose of the European Union securities regulations,
and Poland will be its host Member State. The EU directives provide different competencies for the home
Member State and host Member State with respect to rights and obligations of the investors in public companies,
depending on the subject of regulations. In addition, the directives are not always implemented in the proper
manner at a national level. Consequently, investors in the Offer Shares may be forced to seek complex legal
advice in order to comply with all regulations when exercising their rights or when fulfilling their obligations. In
case an investor fails to fulfil its obligations or violates law when exercising rights from or regarding the Offer
Shares, he or she may be fined or sentenced for such non-compliance or be unable to exercise rights from the
Offer Shares.
27

Resolutions of the General Meeting of Shareholders may be taken with majorities different from the majorities
required for adoption of equivalent resolutions in Polish companies. Certain protections such as pre-emption
rights and anti-takeover measures, may not be available to holders of the Offer Shares, or their application may
be uncertain (see risk factors: “Holders of the Offer Shares may not be able to exercise pre-emptive rights, and
as a result may experience substantial dilution upon future issuances of Shares” and “Holders of Shares may
face legal uncertainty if the Issuer is the subject of a takeover”).
There is no guarantee that the Issuer will pay dividends in the future.
The Issuer is under no continuous obligation to pay regular dividends to its shareholders. Any payment of
dividends in the future will depend upon decisions of the General Meeting (at which the Principal Shareholders
may represent a majority of voting rights). Payment of (future) dividends may be made only if mandatory
provisions so allow, as required by law or by the Articles of Association and the respective articles of association
of the Group Companies. Furthermore, for the decision to pay dividend the following factors (among others)
should also be taken into account: future results of operations, cash flows, financial position, reinvestment needs,
expansion plans, contractual restrictions, and other factors the Management Board, Supervisory Board and/or the
General Meeting deem relevant, which do not necessarily have to coincide with the short-term interests of all the
Issuer’s shareholders. Moreover, according to the Nordea Financial Agreements, Nordea’s consent is required to
pay out dividends from the Group Companies.
There can be no assurance that the Issuer will make any dividend payments in the future. As of the date of the
Prospectus, the Issuer does not expect to pay dividends in the medium term. However the Issuer may pay
dividends at some future date, including in the short-to-medium term, if the General Meeting (having considered
the recommendation of the Management Board) approves a dividend. The Management Board and the General
Meeting will take into account various factors, including the Group’s business prospects, future earnings, cash
requirements, financial position, expansion plans and the requirements of the law of Latvia (See: “Dividends and
Dividend Policy”). Accordingly, investors cannot rely on dividend income from the Offer Shares and any returns
on an investment in the Offer Shares will likely depend entirely upon any future appreciation in the price of the
Shares.
The Issuer may be unable to list the Shares on the WSE and/or the RSE, or the Issuer may be delisted from
the WSE and/or the RSE.
The admission of the Shares to trading on the WSE requires, inter alia, that (i) the Shares are registered with the
clearing and settlement system and (ii) the management board of the WSE approves the listing and trading of the
Shares on the WSE. To obtain the WSE management board’s approval the Issuer has to meet certain
requirements provided for in the respective regulations of the WSE and other applicable laws. Such requirements
include, but are not limited to: (i) the appropriate free float of the Shares; (ii) the appropriate market value of the
Shares or the equity of the Issuer; (iii) no restriction on transferability of the Shares; (iv) the approval of this
Prospectus by the FKTK and its notification to the PFSA; and (v) no bankruptcy or liquidation proceedings
pending with respect to the Issuer. Furthermore, while examining the Issuer’s application for admission of the
Shares to trading on the WSE, the management board of the WSE will take into consideration: (i) the Issuer’s
current and projected financial standing; (ii) the Issuer’s development perspectives, in particular, assessment of
investments objectives taking into account its financial sources; (iii) experience and qualifications of the
members of the Issuer’s Management Board; (iv) the terms on which the securities were issued and the
compliance of these terms with the principles of the public nature laid out in the WSE Rules; and (v) security of
public trading on the WSE and interests of trading participants. Some of the conditions mentioned above are
discretionary in nature and, therefore, the Issuer cannot provide any assurance that the management board of the
WSE will conclude that the Issuer meets all of them.
The rules of the WSE require the Issuer to file an application for introduction of the Shares to trading on the
WSE within a period of six months from the date on which the Issuer’s Shares have been admitted to such
trading. If the Issuer fails to comply with this obligation, the decision of the management board of the WSE on
the admission of the Issuer’s Shares to trading on the WSE could be annulled.
Similar rules to the aforementioned apply for admission of the Shares to trading on the RSE.
The Issuer intends to take all the necessary steps to ensure that its Shares are admitted to trading on the WSE and
the RSE as soon as possible after the closing of the Offering. However, there is no guarantee that all of the
aforementioned conditions will be met and that the Shares will be admitted to trading on the WSE and the RSE
28

on the Listing Date as expected or at all. Moreover, if the PFSA, which is the competent authority of the Issuer’s
host state, finds that the Issuer has failed to perform or has unduly performed its obligations under applicable
Polish securities laws, it should notify the FKTK, which is the competent authority of the Issuer’s home state, of
such event. If, despite the PFSA’s notification, the FKTK does not take any measures aimed at preventing
further breach by the Issuer of its obligations, or when such measures prove ineffective, after the notification of
the FKTK, the PFSA may, in order to protect investors’ interests, impose a fine and/or delist the Shares from
trading on the WSE. The PFSA should notify the European Commission immediately of the application of such
measures. If the FKTK, which is the competent authority of the Issuer’s home state, finds that the Issuer has
failed to perform or has unduly performed its obligations under applicable Latvian securities laws, the Shares
may be delisted from trading on the RSE.
Mandatory delisting of the Shares will be effected by the WSE management board where: (i) transferability of
the Shares has become restricted, (ii) the Shares are no longer in book-entry form, (iii) the PFSA has requested
so in accordance with the Polish Trading in Finance Instruments Act, or (iv) the Shares have been delisted from
another regulated market by a competent supervisory authority over such market, provided that the Shares were
traded on another regulated market. In addition, the WSE management board should delist the Shares from
trading upon the request of the PFSA, if the PFSA concludes that trading in the Issuer’s Shares imposes a
significant threat to the proper functioning of the WSE or the safety of trading on that exchange, or infringes
investors’ interest. Mandatory delisting rules from the RSE are similar to the aforementioned, which are
applicable for the delisting from the WSE.
The WSE management board may also delist the Shares where, (i) the Shares cease meeting all requirements for
admission to trading on the WSE; (ii) the Issuer persistently violates the regulations of the WSE; (iii) the Issuer
has requested so; (iv) the Issuer has been declared bankrupt or a petition for bankruptcy has been dismissed by
the court because the Issuer’s assets do not suffice to cover the costs of the bankruptcy proceedings; (v) the WSE
considers it necessary to protect the interests of the market participants; (vi) following a decision on a merger,
split or transformation of the Issuer; (vii) no trading was effected in the Shares within a period of three previous
months; (viii) the Issuer has become involved in a business that is illegal under the applicable provisions of laws;
and (ix) the Issuer is in liquidation proceedings.
The RSE management board may delist the Shares (i) upon the Issuer’s request; (ii) if the Shares and/or the
Issuer do not conform to the requirements for trading on the RSE; (iii) if the Issuer repeatedly and materially
violates the regulations of the RSE; (iv) in case the interruption of trade in Shares has been longer than six
months and the Issuer has not taken measures to prevent the circumstances on the grounds of which trading was
suspended; (v) if other circumstances occur under which continuing trading of the Shares becomes impossible;
(vi) if the Issuer has not paid the listing fees to the RSE upon repeated notice.
The Issuer believes that as at the date of the Prospectus there are no circumstances which could give grounds for
delisting of the Shares from the WSE and/or the RSE in the foreseeable future. However, there can be no
assurance that any of such circumstances will not arise in relation to the Issuer’s Shares in the future. Delisting
of the Shares from the WSE and/or the RSE could have an adverse effect on the liquidity of the Shares and,
consequently, on investors’ ability to sell the Shares at a satisfactory price.
Trading in the Shares on the WSE and/or the RSE may be suspended.
The WSE management board has the right to suspend trading in the Shares for up to three months (i) at the
request of the Issuer, (ii) if the Issuer fails to comply with the respective regulations of the WSE (such as specific
disclosure requirements), or (iii) if it concludes that such a suspension is necessary to protect the interests and
safety of market participants.
The RSE management board has the right to suspend trading in the Shares for up to six months (i) at the request
of the Issuer, (ii) in extraordinary circumstances, in order to protect the interests of investors (extraordinary
circumstances should, inter alia, mean ample price fluctuation; existence of information which may materially
affect the price of the Shares and which is planned to be disclosed shortly; other situations, circumstances or
conditions which may obstruct the process of transparent and fair trading); (iii) if the information disclosed by
the Issuer through RSE information system is clearly erroneous or has to be processed or checked for other
reasons; (iv) the trading may also be suspended during the General Meeting of the Issuer at which it is planned to
adopt resolutions or disclose information which may materially affect the price of the Shares. In such case the
trading may be suspended from the beginning of the said event until the moment when the information about the
adapted resolutions or other relevant information has been published.
29

Furthermore, the WSE management board should suspend trading in the Shares for up to one month upon the
request of the PFSA, if the PFSA concludes that trading in the Shares is carried out in circumstances which may
impose a possible threat to the proper functioning of the WSE or the safety of trading on that exchange, or may
harm investors’ interest. Likewise the RSE management board should suspend trading of the Shares upon
decision of the FKTK, if the FKTK concludes that regular trading of the Shares has become impossible or may
harm investors’ interest.
The Issuer will make all endeavours to comply with all applicable regulations in this respect. However, there can
be no assurance that trading in the Shares will not be suspended. Any suspension of trading could adversely
affect the Share price.
The Issuer may have a limited free float, which may have a negative effect on the liquidity, marketability or
value of its Shares.
Prior to the Offering, each of Mrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics (the “Principal
Shareholders”) owns directly 10% of the Issuer’s share capital. Principal Shareholders are also beneficial owners
of ESOMTAX INVEST LIMITED (Cyprus), which owns 42% of the Issuer’s share capital. Moreover, Principal
Shareholders are direct and indirect shareholders of AS Perseus, which is partner in Otrais Eko Fonds. Otrais
Eko Fonds owns 28% of the Shares as of the date of the Prospectus. Immediately after the Offering the Principal
Shareholders will own directly and indirectly up to 56.25% of the Issuer’s outstanding Shares, provided that all
Offer Shares are placed with investors. Consequently, the free float of Shares held by the public will be no more
than 43.75% of the Issuer’s share capital.
In addition, the WSE requires that the share capital of a company to be listed on the main market of the WSE
must be adequately diluted, i.e. part of the capital must be held by minority shareholders holding individually
less than 5% of that company’s share capital. If the Offer Shares are acquired by a limited number of large
investors, there is a risk that the share capital would not be adequately diluted and as a result the WSE would not
approve the Shares for listing on the main market of the WSE and, consequently, the Shares would be listed on
the parallel market.
The RSE requires that not later than the day on which the trading with shares starts, a sufficient free float (i.e.
part of share capital of the Issuer is held by minority shareholders holding individually less than 10% of the share
capital of the Issuer) is ensured. This condition should be deemed as met if: (i) at least 25% of the shares of the
category which the Issuer wants to list at the exchange are in free float, or (i) the number of shares in free float is
smaller than that specified above, but the capitalisation of the shares on free float exceeds EUR 10,000,000.
Consequently, there is a risk, similar as regarding to WSE rules, that the free float requirements of Company’s
Shares will not be met and as a result the RSE would not approve the Shares for listing on the main list of the
RSE and, thus, the Shares would be listed on the secondary list.
The marketability of the Issuer’s Shares may decline and the market price of the Issuer’s Shares may
fluctuate disproportionately in response to adverse developments that are unrelated to the Group’s operating
performance and decline below the Offer Price.
The Company cannot assure that the marketability of the Company’s Shares will improve or remain consistent.
The Offer Price in the Offering may not be indicative of the market price for the Company’s Shares after the
Offering has been completed. Shares listed on regulated markets, such as the WSE and the RSE, have from time
to time experienced and may experience in the future, significant price fluctuations in response to developments
that are unrelated to the operating performance of particular companies. The market price of the Company’s
Shares may fluctuate widely, depending on many factors beyond the Company’s control. These factors include,
amongst other things, actual or anticipated variations in operating results and earnings by the Group Companies
and/or its competitors, changes in financial estimates by securities analysts, market conditions in the industry and
in general the status of the securities market, governmental legislation and regulations, as well as general
economic and market conditions, such as recession. These and other factors may cause the market price and
demand for the Company’s Shares to fluctuate substantially and any such development, if adverse, may have an
adverse effect on the market price of the Company’s Shares which may decline disproportionately to the Group
Companies’ operating performance. The market price of the Company’s Shares is also subject to fluctuations in
response to further issuance of shares by the Company, sales of Shares by the Company’s major shareholders,
the liquidity of trading in the Shares and capital reduction or purchases of Shares by the Company as well as
investor perception. As a result of these or other factors, there can be no assurance that the public trading market
price of the Company’s Shares will not decline below the Offer Price.
30

Dual listing of the Shares will result in differences in liquidity, settlement and clearing systems, trading
currencies and transaction costs between the WSE and the RSE, which may hinder the transferability of the
Shares between the WSE and the RSE.
The existing Shares are not listed on the regulated market. Applications will be made to list the Shares on the
WSE and the RSE. Therefore, trading and liquidity of the Shares will be split between those two exchanges.
Furthermore, the price of the Shares may fluctuate and may at any time be lower on the RSE than the price at
which the shares are traded on the WSE and vice versa.
Differences in settlement and clearing systems, trading currencies, transaction costs and other factors may hinder
the transferability of Shares between the WSE and the RSE. This could adversely affect the trading of the Shares
on these exchanges and increase their price volatility and/or adversely affect the price and liquidity of the shares
on these exchanges.
Furthermore, the Shares will be quoted and traded either in EUR or in LVL on the RSE and in PLN on the WSE.
The Shares to be traded on the RSE will be settled and cleared through the LCD. The Shares to be traded on the
WSE will be settled and cleared through the NDS. The transfer of the Shares between the RSE and the WSE will
be effectuated through a direct settlement link established between the LCD and the NDS. Although the LCD
and the NDS established the indicated link and the NDS and the LCD will settle transfers of shares between the
NDS and the LCD, they will be under no obligation to perform or to continue to perform such procedures and
such procedures may be discontinued at any time, which may limit the liquidity of the Shares and have a
negative impact on the efficiency of the pricing mechanisms of the secondary market of the Shares.
Tax treatment for non-Latvian investors in a Latvian company may vary.
The Company is organised and existing under the laws of Latvia and, as such, the Latvian tax regime applies to
the distribution of profit and other payments from the Company to its investors. The taxation of income from
such payments as well as other income, for instance, from the sale of the Shares, may vary depending on the tax
residence of particular investors as well as the existence and the provisions of double tax treaties between an
investor’s country of residence and Latvia. Tax provisions applying to particular investors may be unfavourable
and/or may change in the future in a way which has an adverse effect on the tax treatment of an investor’s
holding of the Shares.
The Issuer has no experience in complying with requirements for publicly-listed companies.
A public company is subject to a number of obligations, mostly relating to the disclosure of relevant information
for investors. The Issuer has never been subject to such obligations and may fail to fulfil such obligations. As a
consequence, investors may not be provided with price-sensitive information on time, or at all, or the content of
materials made public may be of unsatisfactory quality. In addition, in case of its non-compliance with relevant
rules and regulations relating to a public company, the Issuer may be fined or have other sanctions imposed on it,
which may have an adverse impact on the Issuer’s financial results, share price and demand for the Shares.
31

EXCHANGE RATES
The Consolidated Financial Statements, the Condensed Consolidated Interim Financial Statements and the Pro
Forma Financial Information included in this Prospectus are presented in Latvian lats (“LVL”).
The following table shows, for the periods provided, and unless indicated otherwise, certain information
regarding the exchange rates between Latvian lat (“LVL”), euro (“EUR”), US dollar (“USD”) and Polish zloty
(“PLN”).
Average weighted rate for the year ended
December 31, 2009
LVL per EUR LVL per USD LVL per PLN
0.702804 0.505310 0.162810
Closing rate as of December 31, 2009 0.702804 0.489000 0.169000
Average weighted rate for the year ended
December 31, 2010
0.702804 0.530426 0.176012
Closing rate as of December 31, 2010 0.702804 0.535000 0.176000
Average weighted rate for the year ended
December 31, 2011
0.702804 0.505474 0.171087
Closing rate as of December 31, 2011 0.702804 0.544000 0.160000
Average weighted rate for the 3 month period
ended March 31, 2012
0.702804 0.536277 0.166062
Closing rate as of March 31, 2012 0.702804 0.528000 0.169000
Source: National Bank of Latvia
32

USE OF PROCEEDS
The amount of the gross proceeds raised from issue of the New Shares depends on the number of the New
Shares actually placed and the set Offer Price. The net proceeds depend on final costs and expenses associated
with issue of the New Shares. The Company expects the net proceeds from the issue of the New Shares,
provided that all of the New Shares are subscribed, paid and allotted, to be between LVL 10.5 million and LVL
14.6 million. The final amount of proceeds may however change due to possible fluctuations in PLN/LVL ratio.
The Issuer will receive the net proceeds from the issuance of the New Shares.
The Issuer will publish information regarding the proceeds from the issue of the New Shares in the form and
scope specified under applicable laws and regulations.
The net proceeds from the issue of the New Shares will be used primarily for fulfilling of the Group’s business
plan which envisages the following capital investments:
Construction of the first mechanical-biological treatment (MBT) plant in Latvia which will be among the
largest and the most modern in the Baltics and will ensure sorting of municipal waste generated in Riga
and surrounding districts. This would allow the Group to increase sorting capacities from 11,400 tonnes
per year as of the date of the Prospectus to approximately 88,500 tonnes per year (subject to quality of
pre-sorted waste). The total estimated investment is LVL 8.3 million. The Issuer expects to construct the
plant by the end of 2013.
Launch of food grade PET pellet production at PET Baltija production site with capacity of around
11,500 tonnes of new products that are used in the food industry (material used in production of food
packaging). As a result the Group aims to develop production of crystallized PET pellets, which would
use significant part of current PET Baltija output as raw material. This would allow PET Baltija to
increase output capacities from 19,320 tonnes of products per year as of the date of the Prospectus to
approximately 30,550 tonnes of products per year (subject to quality of pre-sorted waste). The total
estimated investment would be LVL 4.1 million. The Group expects to finish the investment in the first
half of 2013.
Capacity expansion at Nordic Plast by installation of a second production line for production of
polypropylene (“PP”) pellets with capacity of around 3,700 tonnes of products per year, thus doubling the
current capacity. The total estimated investment would be LVL 2.2 million. The Group expects to finish
the investment in the first half of 2013.
Should the net proceeds from the issue of the New Shares fall below the total required amount to undertake the
above capital investments additional financing may be covered by debt financing commitments from Nordea as
well cash flows from operations.
To the extent the net proceeds of the Offering of the New Shares are not invested as described above they will be
used to modernize existing production facilities, support the Group’s working capital needs as well as to finance
possible corporate acquisitions in the existing and new markets in line with the Group’s business strategy.
Reasons for the Offering
The Offering and the Admission are expected to provide a number of benefits to the Company, such as:
Enabling the Company to raise funds with a view to implementing the Group’s business strategy and
achieving its strategic goals;
Providing the Company’s access to the capital markets and, improving opportunities for future growth,
expansion and development of the Group’s business and, thus increasing shareholders value; and
Strengthening the Group’s position as one of the leading waste management companies in the Baltics.
33

DIVIDENDS AND DIVIDEND POLICY
The Management Board intends that the Company will re-invest any net earnings to finance the development of
its assets and, accordingly, it is not intended that the Company should pay any dividends in the medium term.
The Issuer is under no continuous obligation to pay regular dividends to its shareholders. Any payment of
dividends in the future will depend upon decisions of the General Meeting (at which the Principal Shareholders
may represent a majority of voting rights). Payment of (future) dividends may be made only if mandatory
provisions so allow, as required by law or by the Articles of Association and the respective articles of association
of the Group Companies. Furthermore, for the decision to pay dividend the following factors (among others)
should also be taken into account: future results of operations, cash flows, financial position, reinvestment needs,
expansion plans, contractual restrictions and other factors the Management Board, Supervisory Board and/or the
General Meeting deem relevant, which do not necessarily have to coincide with the short-term interests of all the
Issuer’s shareholders.
All Shares, including the Offer Shares, carry equal dividend rights.
As a holding company the ability of the Company to pay dividends will principally depend upon dividends or
interest paid to it by the Group Companies.
For information related to dividend rights and dividend payments, please see “Description of the Shares and
Corporate Rights and Obligations-Dividends and Other Distributions”.
Dividends for the years ended 31 December 2011, 2010 and 2009 constituted approximately LVL 0.00,
approximately LVL 0.00 and approximately LVL 1,000 respectively.
34

CAPITALISATION AND INDEBTEDNESS
The following tables set out the Group’s capitalisation and indebtedness on a consolidated basis as at 31 March
2012. For the avoidance of doubt is should be noted that the following tables set out capitalisation and
indebtedness of the Group as it is at the date of the Prospectus (i.e. of the Eco Baltia Group and not the Eko
Baltija Group).
This information should be read in conjunction with the section “Operating and Financial Review”, the
Consolidated Financial Statements including accompanying notes, the Condensed Consolidated Interim
Financial Statements including accompanying notes and the Pro Forma Financial Information including
accompanying notes.
As at 31 March 2012
(LVL thousands)
Total current debt:
Secured/guaranteed (1) 3,963
Unsecured/unguaranteed 0
Total current debt 3,963
Total non-current debt, net of current portion of long term
debt:
Secured/guaranteed (1) 14,276
Unsecured/unguaranteed 0
Total long-term liabilities 14,276
Shareholders’ equity:
Share capital 22,425
Share premium 0
Other reserves (including retained earnings) 721
Total shareholders’ equity 23,146
Minority interest 1,158
Total capitalisation and indebtedness 42,543
(1)
Secured and guaranteed debt consists of bank loans and overdraft facilities which are secured by, among others: pledges over current and
future assets of the Group Companies, and pledges over shares in the Group Companies. For more information please see: “Material
Contracts – Financing Agreements – Agreements with Nordea Bank”.
Source: The Group, based on the Pro Forma Financial Information and the Condensed Consolidated Interim Financial Statements
35

Net indebtedness as at 31 March 2012
As at 31 March 2012
(LVL thousands)
Cash 787
Cash equivalents 0
Trading securities 0
Liquidity 787
Current financial receivable
Current bank debt 3,534
Current portion of non current debt 0
Other current financial debt - lease 429
Current financial debt 3,963
Net current financial indebtedness 3,176
Non-current bank loans 13,126
Bonds issued 0
Other non-current financial debt 1,150
Non-current financial indebtedness 14,276
Subordinated loan 0
Net Financial Indebtedness 17,452
Source: The Group, based on Pro Forma Financial Information and the Condensed Consolidated Interim Financial Statements
36

SELECTED HISTORICAL FINANCIAL INFORMATION
The following tables set forth summary consolidated financial data on the Eko Baltija Group level and not the
Group as it is at the date of the Prospectus level for the periods indicated, which have been extracted without
material adjustments from the Consolidated Financial Statements and the Condensed Consolidated Interim
Financial Statements.
The information below should be read in conjunction with the Consolidated Financial Statements and the
Condensed Consolidated Interim Financial Statements, including the notes thereto and included elsewhere in
this Prospectus and with the information included in “Operating and Financial Review” section of the
Prospectus.
Consolidated Statement of Comprehensive Income
For three months ended
31 March For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Net sales 6,969 6,315 26,595 21,088 13,851
Cost of sales (4,979) (4,320) (19,354) (15,079) (10,174)
Gross profit 1,990 1,995 7,241 6,009 3,677
Selling expenses (43) (67) (325) (484) (323)
Administrative expenses (702) (699) (2,932) (2,629) (2,682)
Other operating income 60 73 284 236 191
Other operating expenses (99) (102) (287) (807) (1,007)
Write-off of long-term financial investments - - - (19) -
Interest income and similar income 32 7 70 18 55
Interest expenses and similar expenses (82) (64) (324) (280) (257)
Other taxes (2) (1) (5) (5) (6)
Profit before corporate income tax 1,154 1,142 3,722 2,039 (352)
Corporate income tax for the reporting year (119) (75) (211) (248) (103)
Deferred income tax 17 12 (133) 3 (60)
Current year profit/ (loss) and comprehensive
income
Attributable to:
1,052 1,079 3,378 1,794 (515)
Owners of the parent 974 962 3,203 1,539 (498)
Non-controlling interests 78 117 175 (255) 17
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
37

Consolidated Statement of Financial Position
As of 31 March
As of 31 December
2012 2011 2010 2009
(LVL in thousands)
ASSETS
Non-current assets
Goodwill 5,056 5,056 5,238 6,121
Intangible assets 39 40 35 30
Property, plant and equipment 5,611 5,662 5,839 6,640
Investments in subsidiaries and associates 177 2 2 -
Long-term loans and receivables - - 404 138
Other financial assets 77 140 68 5
Total non-current assets 10,960 10,900 11,586 12,934
Current assets
Inventories 898 1,459 1,057 693
Trade and other receivables 2,241 1,626 1,731 1,502
Loans to related companies 2,398 1,852 - -
Other short-term receivables 1,521 1,546 1,874 1,399
Corporate income tax 55 116 101 176
Other short-term financial investments 116 1 159 82
Cash and cash equivalents 787 966 859 813
Total current assets 8,016 7,566 5,781 4,665
Total assets 18,976 18,466 17,367 17,599
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
38

As of 31 March
As of 31 December
2012 2011 2010 2009
(LVL in thousands)
EQUITY AND LIABILITIES
Capital and reserves
Share capital 150 150 150 150
Share premium 5,442 5,442 5,442 5,442
Reorganization reserve (4,625) (4,625) - -
Retained earnings /(losses) 5,046 4,072 591 (944)
Equity attributed to the shareholders 6,013 5,039 6,183 4,648
Non-controlling interests 1,158 1,080 1,806 1,550
Total equity 7,171 6,119 7,989 6,198
Non-current liabilities
Interest bearing borrowings 5,363 5,556 736 2,689
Finance lease liabilities 1,150 1,085 1,876 2,541
Liabilities to related companies - - - 158
Deferred tax liabilities 283 317 184 187
Other liabilities - - - 183
Other provisions - - 51 51
Deferred income 180 182 180 300
Total non-current liabilities 6,976 7,140 3,027 6,109
Current liabilities
Trade and other payables 980 999 880 816
Interest bearing borrowings 2,096 2,392 3,124 1,979
Finance lease liabilities 429 595 935 1,018
Deferred income and customer prepayments 264 215 167 177
Corporate income tax liabilities 12 43 113 20
Tax liabilities 327 246 411 254
Other liabilities 721 717 721 1,028
Total current liabilities 4,829 5,207 6,351 5,292
Total liabilities 11,805 12,347 9,378 11,401
Total equity and liabilities 18,976 18,466 17,367 17,599
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
39

Consolidated Statement of Cash Flows
For three months
ended 31 March
For the year ended 31
December
2012 2011 2011 2010 2009
(LVL in thousands)
Net cash from operating activities 1,541 1,678 4,989 2,694 936
Net cash used in investing activities (910) (563) (7,764) (918) (42)
Net cash used in financing activities (810) (1,011) 2,885 (1,730) (100)
Profit or loss from currency fluctuations - - (3) - (3)
Net increase in cash and cash equivalents (179) 104 107 46 791
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
40

OPERATING AND FINANCIAL REVIEW
The following review of the operating and financial situation relates to historical financial conditions and
results of operations of the Eko Baltija Group for the financial years ended on 31 December 2011, 2010, 2009
respectively, and for the three months ended 31 March 2012 and 2011 respectively. Any reference in this
section to the Group is reference to the Eko Baltija Group and not to the Group as it is at the date of the
Prospectus. The “Operating and Financial Review” section was based on the Consolidated Financial
Statements and the Condensed Consolidated Interim Financial Statements that are contained in the
Prospectus and this section should be read in conjunction with the Consolidated Financial Statements and
the Condensed Consolidated Interim Financial Statements. The “Operating and Financial Review” section
does not present historical financial conditions and results of operations of the Group as it is at the date of the
Prospectus. Therefore, the prospective investors shall read this section in conjunction with the “Capitalisation
and Indebtedness” and “Pro Forma Financial Information” sections of the Prospectus.
Certain information contained in the section set forth below includes forward-looking statements. Such forwardlooking
statements are subject to risks, uncertainties and assumptions about the Group. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this Prospectus may not occur. Any
statements regarding past trends or activities should not be taken as a representation that such trends or
activities will continue in the future.
Overview
The Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments:
(i)
(ii)
(iii)
(iv)
organisation of waste recovery, which accounted for revenue of LVL 4,237,000 (or 15.9% of the Group’s
consolidated revenue) in the year ended 31 December 2011 and LVL 1,020,000 (or 14.6% of the Group’s
consolidated revenue) in three months period ended 31 March 2012;
waste collection, which accounted for revenue of LVL 5,820,000 (or 21.9% of the Group’s consolidated
revenue) in the year ended 31 December 2011 and LVL 1,583,000 (or 22.7% of the Group’s consolidated
revenue) in three months period ended 31 March 2012;
recyclables sorting and trading, which accounted for revenue of LVL 2,040,000 (or 7.7% of the Group’s
consolidated revenue) in the year ended 31 December 2011 and LVL 499,000 (or 7.2% of the Group’s
consolidated revenue) in three months period ended 31 March 2012; and
recycling, which accounted for revenue of LVL 14,498,000 (or 54.5% of the Group’s consolidated
revenue) in the year ended 31 December 2011 and LVL 3,867,000 (or 55.5% of the Group’s consolidated
revenue) in three months period ended 31 March 2012.
In the three months period ended 31 March 2012 the Group had consolidated revenue of LVL 6,969,000 and net
profit of LVL 1,052,000, as compared to consolidated revenue of LVL 6,315,000 and net profit of LVL
1,079,000 in the three months period ended 31 March 2011. In the year ended 31 December 2011 the Group had
consolidated revenue of LVL 26,595,000 and net profit of LVL 3,378,000, as compared to consolidated revenue
of LVL 21,088,000 and net profit of LVL 1,794,000 in the year ended 31 December 2010. In the year ended 31
December 2009 the Group had consolidated revenue of LVL 13,851,000 and net loss of LVL 515,000.
Major Factors Affecting the Group’s Operations
The Group’s performance and results of operations have been and continue to be affected by a number of factors,
including, the Group’s operations, production volumes and prices of the Group’s services and products. See also
“Risk Factors”.
Macroeconomic trends in Latvia and the Baltics
Due to the fact that the Group concentrates its business activities in Latvia and is also active in other Baltic
countries, Lithuania and Estonia, its business operations depend on macroeconomic trends in Latvia and the
41

Baltics. Basic data on the macroeconomic situation in Latvia and the Baltics are presented in section “Industry
Overview”.
In general, level of waste generation is connected with stage of economic growth and macroeconomic situation.
Moreover, macroeconomic conditions have significant influence on the levels of disposable income of
population and consumption. Level of consumption affects total volume of waste generated in Latvia and the
Baltics, and therefore affects the Group’s businesses. However, it should be noted that these changes are slow
and affect Group operations in the long term. Additionally, consumption is one of the key drivers of consumer
goods industry, and therefore is influencing volume of packaging, electronic and electronic equipment and goods
harmful to the environment, which are released into the environment by producers and importers. The volume of
released packaging, electronic and electronic equipment and goods harmful to the environment by clients of the
Group is a direct driver of the revenue of one of the Group Companies, LZP.
Volume of waste under recovery
The Group’s revenue is influenced by the volume of waste under recovery of LZP, the Group Company engaged
in organisation of waste recovery.
The table below presents data on packaging waste, WEEE and GHE (excluding oil filters) under recovery of
LZP in periods indicated (in tonnes).
For three months ended 31
March
For the year ended 31 December
2012 2011 Change 2011 Change 2010 Change 2009
tonnes tonnes % tonnes % tonnes % tonnes
Packaging waste 28,747 27,399 4.9 122,055 (1.3) 123,685 11.1 111,346
WEEE 673 654 2.9 3,323 (10.5) 3,711 (27.9) 5,149
GHE* 1,822 1,594 14.3 7,249 8.8 6,664 75.1 3,806
Total 31,242 29,647 5.4 132,627 (1.07) 134,060 11.44 120,301
* excluding oil filters
Source: The Group’s data
Total volume of packaging waste under recovery of LZP was 28,747 and 27,399 tonnes as of three months ended
31 March 2012 and 2011, respectively, representing an increase of 4.9%. The increase was due to continuous
efforts to improve sales.
Total volume of packaging waste under recovery of LZP was 122,055, 123,685 and 111,346 tonnes as of the
years ended 31 December 2011, 2010 and 2009, respectively. In the year ended 31 December 2010 amount of
packaging waste under recovery increased by 11.1% comparing with the year ended 31 December 2009. The
increase was due to the recovery of Latvian economy from the financial crisis, which led to recovery of stock
levels of products held by retailers, which are clients of LZP. In the year ended 31 December 2011 the Group
observed decrease of packaging waste volume under recovery by 1.3% in comparison with the year ended 31
December 2010. This was caused by stabilisation of internal consumption, i.e. volume of goods supplied by LZP
clients to the local market matched the internal demand. The growth of export which is now one of the drivers of
recovery of Latvian economy had a minor impact on the volume of packaging waste under recovery.
Total volume of WEEE under recovery of LZP was 673 and 654 tonnes as of three months ended 31 March 2012
and 2011, respectively, representing an increase of 2.9%. The increase is attributed to the fact that the Group
continued to retain stable client base, which increased the volumes of WEEE under recovery, and attracted few
new clients.
Total volume of WEEE under recovery of LZP was 3,323, 3,711 and 5,149 tonnes as of the years ended 31
December 2011, 2010 and 2009, respectively. In the year ended 31 December 2010 volume of WEEE under
recovery decreased by 27.9% comparing with the year ended 31 December 2009. In the year ended 31 December
2011 the Group observed further decrease of WEEE volume under recovery by 10.5% in comparison with the
year ended 31 December 2010. The decrease during those periods was due to lose of market share, because of
lower fees for recovery of WEEE offered by the Group’s competitors. The Group didn’t participate in price wars
which led to decrease of fees on the WEEE recovery market.
42

Total volume of GHE (excluding oil filters) under recovery of LZP was 1,822 and 1,594 tonnes as of three
months ended 31 March 2012 and 2011, respectively, representing and increase of 14.3%. This significant
increase was due to attracting new clients and retaining stable client base, which increased the volumes of GHE
under recovery.
Total volume of GHE (excluding oil filters) under recovery of LZP was 7,249, 6,664 and 3,806 tonnes as of the
years ended 31 December 2011, 2010 and 2009, respectively. In the year ended 31 December 2010 volume of
GHE (excluding oil filters) under recovery increased by 75.1% comparing with the year ended 31 December
2009. The Group increased volume of GHE under recovery (excluding oil filters) by attracting new clients.
Moreover, there was change in legislation regarding recovery of batteries and accounting system (i.e., before
mid-2009 the batteries being part of electric and electronic equipment were accounted as part of this equipment,
and starting from mid-2009 they became separate object of recovery). In the year ended 31 December 2011 the
Group observed increase of GHE (excluding oil filters) volume under recovery by 8.8% in comparison with the
year ended 31 December 2010. This was achieved by attracting new clients.
Due to the factors mentioned above, the total volume of waste (excluding oil filters) under recovery of LZP was
31,242 and 29,647 tonnes as of three months ended 31 March 2012 and 2011, respectively. In three months
ended 31 March 2012 volume of waste (excluding oil filters) under recovery increased by 5.4% comparing with
the three months ended 31 March 2011. Furthermore, the total volume of waste (excluding oil filters) under
recovery of LZP was 132,627, 134,060 and 120,301 tonnes as of the years ended 31 December 2011, 2010 and
2009, respectively. In the year ended 31 December 2010 volume of waste (excluding oil filters) under recovery
increased by 11.44% comparing with the year ended 31 December 2009. In the year ended 31 December 2011
the Group observed decrease of total volume of waste (excluding oil filters) under recovery by 1.07% in
comparison with the year ended 31 December 2010.
Volume of waste collected
The Group’s operations and results are affected by the amount of waste collected by the Group Companies. First
of all, revenue of the Group Companies operating in waste collection segment is, to some extent, linked with
amount of waste collected. Second of all, increase in volume of waste collected allows the Group to enjoy
economies of scale. Third of all, the Group Companies collecting waste are suppliers of raw materials to other
Group Companies, namely Eko Reverss which is engaged in sorting and trading of recyclables, and indirectly
(through intermediary of Eko Reverss) to the Group Companies engaged in recycling.
The table below presents amounts of municipal waste collected by the Group Companies in periods indicated (in
m 3 ).
For three months ended 31
March
For the year ended 31 December
2012 2011 Change 2011 Change 2010 Change 2009
m 3 m 3 % m 3 % m 3 % m 3
Eko Riga 89,453 68,346 30.9 330,930 41.4 234,058 54.7 151,284
Eko Kurzeme 42,882 40,652 5.5 193,521 (0.2) 193,968 (3.1) 200,128
Jurmala ATU 39,477 18,414 114.4 115,582 1.4 114,017 (12.6) 130,465
Kurzemes Ainava 26,698 24,634 8.4 107,797 0.5 107,223 (11.0) 120,436
Jumis 10,559 11,669 (9.5) 51,492 25.2 41,121 26.1 32,616
Total 209,069 163,715 27.7 799,322 15.8 690,387 8.7 634,929
Source: The Group’s data
Total volume of waste collected by the Group was 209,069 and 163,715 m 3 as of three months ended 31 March
2012 and 2011, respectively, representing an increase of 27.7%. This increase was mainly due to increase of
volume of waste collected by Eko Riga (which was achieved by increase of sales, partially caused by hiring new
employees) and Jurmalas ATU (the company started to serve the whole territory of Jurmala city and Babite).
Total volume of waste collected by the Group was 799,322, 690,387 and 634,929 m 3 as of the years ended 31
December 2011, 2010 and 2009, respectively. In the year ended 31 December 2010 waste collection volume
increased by 8.7% comparing with the year ended 31 December 2009. In the year ended 31 December 2011 the
43

Group observed further increase of waste collection volume by 15.8% in comparison with the year ended 31
December 2010. The increase during those periods was achieved primarily due to increase of volume of waste
collected by Eko Riga. This was achieved by the Group wining new tenders for waste collection in
Sarkandaugava (part of Riga) and Carnikava (Riga’s region), which are executed by Eko Riga. Moreover, during
the 2008 the Group has acquired 8 waste collection companies, which had been gradually consolidated into the
activities of the Group by 2011. The integration included joint administration and sales activities, establishment
of cooperation with other segments of the Group (organisation of waste recovery, sorting and trading, recycling),
which has led to improvement of operational efficiency and as a consequence increase in volume of waste
collected. Furthermore, the Group implemented efficient sales approach, by attracting new clients in the territory
that had already been under the Group’s operations.
Volume of recyclables traded
The Group’s revenue is influenced by the volume of recyclables which the Group trades.
The table below presents amounts of different types of recyclables sorted and traded by the Group in periods
indicated (in tonnes).
For three months ended 31
March
For the year ended 31 December
2012 2011 Change 2011 Change 2010 Change 2009
tonnes tonnes % tonnes % tonnes % tonnes
Sorted recyclables 1,365 1,830 (25.4) 6,620 14.4 5,789 32.7 4,363
Traded recyclables* 9,555 7,059 35.4 39,964 11.9 35,704 44.0 24,797
* includes sorted recyclables
Source: The Group’s data
Total volume of recyclables traded by the Group was 9,530 and 8,889 tonnes as of three months ended 31 March
2012 and 2011, respectively, representing an increase of 35.4%. This increase was mainly due to increasing sales
of cardboard, which is in line with LZP orders for cardboard recovery. What refers to total volume of recyclables
sorted by the Group, it was 1,365 and 1,830 tonnes as of three months ended 31 March 2012 and 2011,
respectively, representing a decrease of 25.4%. This decrease was caused by technical maintenance work with
sorting equipment done in winter period 2012.
Total volume of recyclables traded by the Group was 39,964, 35,704 and 24,797 tonnes as of the years ended 31
December 2011, 2010 and 2009, respectively. In the year ended 31 December 2010 volume of recyclables traded
increased by 44.0% comparing with the year ended 31 December 2009. This was due to increase of orders from
LZP, which switched from outsourcing of recyclables sorting and trading to intra-group orders. The other growth
driver was increase of demand for cardboard and polymers. In the year ended 31 December 2011 the Group
observed further increase of volume of recyclables traded by 11.9% in comparison with the year ended 31
December 2010. The increase was due to increase of orders from LZP, which continued switch from outsourcing
of recyclables sorting and trading to intra-group orders. The other growth driver was increase of demand for
cardboard and polymers.
Volume of recycling
The Group’s results of operations are affected by the production levels of recycling segment, namely production
output of PET Baltija and Nordic Plast.
The table below sets forth information on sales volumes of PET Baltija in periods indicated.
44

For three months ended 31
March
For the year ended 31 December
2012 2011 Change 2011 Change 2010 Change 2009
tonnes tonnes % tonnes % tonnes % tonnes
PET flakes (clear) 3,853 3,445 11.9 12,870 24.7 10,321 131.1 4,466
PET flakes (mix) 1,250 1,071 16.7 4,256 30.1 3,270 120.5 1,483
Other 666 670 (0.7) 952 (51.7) 1,971 129.8 858
Total 5,769 5,186 11.2 18,078 16.2 15,562 128.6 6,807
Source: The Group’s data
The table below sets forth information on sales volumes of Nordic Plast in periods indicated.
For three months ended 31
March
For the year ended 31 December
2012 2011 Change 2011 Change 2010 Change 2009
tonnes tonnes % tonnes % tonnes % tonnes
LDPE (natural) 366 659 (44.5) 2,061 (19.0) 2,546 3.5 2,459
LDPE (mix) 180 194 (7.2) 735 (28.3) 1,025 (10.6) 1,147
HDPE 328 61 437.7 922 1,781.6 49 - 0
New products* 23 - - - - - - -
Total 897 914 (1.9) 3,718 2.7 3,620 0.4 3,606
* e.g., PP pellets
Source: The Group’s data
The Group’s sales volumes of recycled materials are driven by a number of factors, including capacity utilisation
levels, suspensions of production, availability of raw materials and quality of raw materials (higher quality of
raw materials means higher production efficiency). During the period under review, the Group’s recycling
facilities operated as a non-stop production on 4 shifts (each 12 hours), including weekends, subject to
undergoing routine maintenance and one major annual maintenance for approximately one week, typically in the
second half of December. Combination of modern and well maintained equipment and high quality of recycled
raw material allows PET Baltija and Nordic Plast using production capacities of its facilities with maximum
efficiency.
Sales volume of PET Baltija was 5,769 and 5,186 tonnes as of three months ended 31 March 2012 and 2011,
respectively, representing an increase of 11.2%. This increase was primarily driven by improvement of
production efficiency and growing demand for PET flakes.
Sales volume of PET Baltija was 18,078, 15,562 and 6,807 tonnes as of the years ended 31 December 2011,
2010 and 2009, respectively. In the year ended 31 December 2010 PET Baltija sales volume increased by
128.6% comparing with the year ended 31 December 2009. In the year ended 31 December 2011 the Group
observed further increase of PET Baltija sales volume by 16.2% in comparison with the year ended 31 December
2010. This material increase during those periods was achieved due to modernization of production facilities and
improvement of production technology, which resulted in decreasing of a percentage of contaminated product
(which in general are cheaper than the general production of PET Baltija) to just 1.2% of the overall volume.
Moreover, the Group introduced constant control of raw material quality, which corresponds to ISO standards.
The Group also introduced training and motivation programs for production workers.
Sales volume of Nordic Plast was 897 and 914 tonnes as of three months ended 31 March 2012 and 2011,
respectively, representing a decrease of 1.9%, which was caused primarily by continuing of the Group’s strategy
to shift production targets to products with higher profit margin (i.e. from LDPE to HDPE pellets). In addition
Nordic Plast started pilot production runs for new types of products (e.g., PP pellets) in order to decide whether
to acquire new production equipment.
Sales volume of Nordic Plast was 3,718, 3,620 and 3,606 tonnes as of the years ended 31 December 2011, 2010
and 2009, respectively. In the year ended 31 December 2010 Nordic Plast sales volume increased by 0.4%
45

comparing with the year ended 31 December 2009. In the year ended 31 December 2011 the Group observed an
increase of Nordic Plast sales volume by 2.7% in comparison with the year ended 31 December 2010. During
those periods the Group kept the general level of production output of PE pellets on the stable level, but switch
the production aims. The aim was to increase the proportion of higher value added products, but switching from
production of mix LDPE to natural LDPE and later to HDPE (when the recycling of PET bottle corks and labels
into HDPE pellets was launched).
Prices for recycling products and costs of raw materials
In accordance with common practices in the recycling business both PET Baltija and Nordic Plast cooperates
with their clients on the basis of separate orders without signing any long-term agreements.
The prices for PET flakes and PE pellets are variable. Prices of PET flakes are variable depending on, inter alia,
crude oil and cotton prices and virgin PET prices. Prices of PE pellets are linked with, among other, the price of
primary PE and, to some extent, with crude oil prices. All of above mentioned factors are outside the Group’s
control. Moreover, due to growing environmental concerns globally, many companies have been increasing their
usage of raw materials which are product of recycling. The companies want to be seen as socially responsible
and green and this trend influences demand for products of the Group Companies engaged in recycling activities.
PET and PE raw materials are the biggest cost items of the Group Companies operating in the recycling
business. Therefore, fluctuations in costs of raw materials may influence cost levels in both PET Baltija and
Nordic Plast. Although, it should be noted that as of the date of the Prospectus the Group Companies engaged in
recycling business purchase raw materials on order basis, without having long term agreement with fixed prices
and amounts. It allows flexibility in adjusting prices of final products to reflect the costs of raw materials.
The chart below outlines prices for virgin PET and disposable PET bottle prices in period of July 2009 – March
2012 (in EUR per tonne).
2000
1500
1000
500
0
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Disposable PET bottle price, EUR/ton
Virgin PET price, EUR/ton
Source: EUWID - Europäischer Wirtschaftsdienst GmbH
Market average monthly virgin PET price is used as a proxy to show the movement of PET flakes price, which is
the end product of PET Baltija. In period from July 2009 till March 2012 the average monthly price of virgin
PET increased by EUR 560 per tonne, or 52%, from EUR 1,080 to EUR 1,640 per tonne.
Market average disposable PET bottle price shows the raw material price movement. In period from July 2009
till March 2012 the average monthly price of disposable PET bottles increased by EUR 292 per tonne, or 141%,
from EUR 208 EUR to EUR 500 per tonne.
The chart below outlines prices for LDPE pellets and disposable LDPE film in the period of January 2009 –
March 2012 (in EUR per tonne).
46

1500
1000
500
0
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Disposable LDPE film price, EUR/ton
LDPE pellet price, EUR/ton
Source: New Media Publisher GmbH (www.plasticker.de)
Market average monthly LDPE pellet price is used as a proxy to show dynamics in the sales price of Nordic
Plast output. In period from January 2009 till March 2012 the average monthly price of LDPE pellets increased
by EUR 330 per tonne, or 57%, from EUR 580 to EUR 910 per tonne.
Market average price of disposable LDPE film shows the raw material price movement. In period from January
2009 till March 2012 the average monthly price of disposable LDPE film increased by EUR 30 per tonne, or
13%, from EUR 230 to EUR 260 per tonne.
The chart below outlines prices for HDPE pellets and disposable HDPE regrind in the period of January 2009 –
March 2012 (in EUR per tonne).
1500
1000
500
0
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Disposable HDPE regrind price, EUR/ton
HDPE pellet price, EUR/ton
Source: New Media Publisher GmbH (www.plasticker.de)
Market average monthly price for HDPE pellet is used as a proxy to show dynamics in the sales price of Nordic
Plast output. In period from January 2009 till March 2012 the average monthly price of HDPE pellets increased
by EUR 330 per tonne, or 55%, from EUR 600 EUR to 930 per tonne.
Market average disposable HDPE regrind price can be used as proxy for raw material price movement, as
regrind material is already a semi-finished good for Nordic Plast. In period from January 2009 till March 2012
the average monthly price of disposable HDPE regrind increased by EUR 140 per tonne, or 29%, from EUR 490
to EUR 630 per tonne.
47

Results of Operations for three months ended 31 March 2012 compared to three months ended 31 March
2011
The following table sets forth the Group’s results of operations for three months ended 31 March 2012 and 2011
derived from the Condensed Consolidated Interim Financial Statements.
For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Net sales 6,969 6,315 10.4
Cost of sales (4,979) (4,320) 15.6
Gross profit 1,990 1,995 (0.3)
Gross profit margin 28.6% 31.6% -
Selling expenses (43) (67) (35.8)
Administrative expenses (702) (699) (0.4)
Other operating income 60 73 (17.8)
Other operating expenses (99) (102) (2.9)
Operating profit 1,206 1,200 0.5
Operating profit margin 17.3% 19.0% -
Write-off of long-term financial investments - - -
Interest income and similar income 32 7 357.1
Interest expenses and similar expenses (82) (64) 28.1
Other taxes (2) (1) 100.0
Profit before corporate income tax 1,154 1,142 1.1
Corporate income tax for the reporting year (119) (75) 58.7
Deferred income tax 17 12 41.7
Current period’s profit 1,052 1,079 (2.5)
Net profit margin 15.1% 17.1% -
Source: Condensed Consolidated Interim Financial Statements
Revenue
The following table sets forth the breakdown of the Group’s net sales by business segment for three months
ended 31 March 2012 and 2011.
(LVL in
thousands)
For three months ended 31 March
2012 2011 Change
(As a % of total
revenue)
(LVL in
thousands)
(As a % of
total revenue)
Revenue from recycling 3,867 55.5 3,473 55.0 11.3
Revenue from waste collection 1,583 22.7 1,488 23.6 6.4
Revenue from organisation of waste
recovery
Revenue from recyclables sorting and
trading
1,020 14.6 945 15.0 7.9
(%)
499 7.2 409 6.5 22.0
Other - - - - -
Total Revenue from core services 6,969 100.0 6,315 100.0 10.4%
Source: Condensed Consolidated Interim Financial Statements
48

The Group’s total net sales increased by 10.4% to LVL 6,969,000 for three months ended 31 March 2012 from
LVL 6,315,000 for three months ended 31 March 2011. The increase in net sales in three months ended 31
March 2012 was primarily driven by increase of net sales from recycling and recyclables sorting and trading
segments.
Summary of revenue from each segment is presented below. It should be underlined that as a result of
consolidation the revenue of each business segment is adjusted by intra-group transactions. For more details
please see Note 1 to the Condensed Consolidated Interim Financial Statements.
Revenue from recycling
The Group’s revenue from recycling segment was LVL 3,867,000 for three months ended 31 March 2012, as
compared to LVL 3,473,000 for three months ended 31 March 2011, representing an increase of 11.3%. The
increase was in line with the increase in sales volume.
Revenue from waste collection
The Group’s revenue from waste collection segment was LVL 1,583,000 for three months ended 31 March 2012,
as compared to LVL 1,488,000 for three months ended 31 March 2011, representing an increase of 6.4%, mainly
due to increase of the volume, which was partially offset by decrease of prices (which were lowered in order to
increase market share).
Revenue from organisation of waste recovery
The Group’s revenue generated from organisation of waste recovery segment was LVL 1,020,000 for three
months ended 31 March 2012, as compared to LVL 945,000 for three months ended 31 March 2011. The
revenue from this segment increased by 7.9%, due to increase of the volume of waste under recovery and
increase of average price for waste recovery services.
Revenue from recyclables sorting and trading
The Group’s revenue from recyclables sorting and trading segment was LVL 499,000 for three months ended 31
March 2012, as compared to LVL 409,000 for three months ended 31 March 2011, representing an increase of
22.0%, mainly due to increase of sales of cardboard and glass to external customers.
Revenue by geographical location
The following table sets forth the breakdown of the Group’s revenue by geographical location for three months
ended 31 March 2012 and 2011.
(LVL in
thousands)
For three months ended 31 March
2012 2011 Change
(As a % of
total revenue)
(LVL in
thousands)
(As a % of
total
revenue)
Latvia 2,662 38.2 2,507 39.7 6.2
European Union (EU) 3,866 55.5 3,753 59.4 3.0
Non-EU countries 441 6.3 55 0.9 701.8
Total Revenue 6,969 100.0 6,315 100.0 10.4
Source: Condensed Consolidated Interim Financial Statements
In three months period ended 31 March 2012 net sales from export totalled LVL 4,307,000 meaning that export
accounted for 61.8% of the total net sales of the Group. In three months period ended 31 March 2011 net sales
from export amounted to LVL 3,808,000 or 60.3% of the total net sales of the Group. The total net sales from
export increased by 13.1% in three months period ended 31 March 2012 in comparison with the three months
period ended 31 March 2011. This was mainly due to increase of sales of Eko Reverss to non-EU countries
(increase in sales of cardboard to customers in Asia), increase of sales of PET Baltija to EU countries, which was
partially offset by decrease of sales of Eko Reverss to EU countries.
(%)
49

Cost of sales
The table below sets forth the principal components of the Group’s cost of sales for three months ended 31
March 2012 and 2011.
For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Raw materials and other material costs (2,711) (2,339) 15.9
Transportation expenses (442) (396) 11.6
Municipal waste landfilling and disposal of sewage water (404) (306) 32.0
Salaries and wages (431) (404) 6.7
Depreciation and amortization (302) (273) 10.6
Outsourcing (191) (164) 16.5
Rent of production premises and related costs (141) (142) (0.7)
Professional services (189) (91) 107.7
Social security taxes (102) (96) 6.3
Natural resources tax (1) (1) 0.0
Other production costs (65) (108) (39.8)
Total (4,979) (4,320) 15.3
Source: Condensed Consolidated Interim Financial Statements
The Group’s cost of sales was LVL 4,979,000 for three months ended 31 March 2012 (71.4% of revenue), as
compared to LVL 4,320,000 (68.4% of revenue) for three months ended 31 March 2011, representing an
increase of 15.3%. The increase was primarily due to increase of total sales volume, as well as increase of costs
of raw materials and costs of landfilling of municipal waste.
Raw materials and other material costs were LVL 2,711,000 for three months ended 31 March 2012, as
compared to LVL 2,339,000 for three months ended 31 March 2011, representing an increase of 15.9%. The
increase was primarily due to increase of sales volume and increase of prices of raw materials.
Transportation expenses amounted to LVL 442,000 for three months ended 31 March 2012, as compared to LVL
396,000 for three months ended 31 March 2011, representing an increase of 11.6%. The increase was mainly due
to increase in volume of waste collected of 27.7%, as well as increase of fuel costs.
Costs of municipal waste landfilling and disposal of sewage water were LVL 404,000 for three months ended 31
March 2012, as compared to LVL 306,000 for three months ended 31 March 2011, representing an increase of
32.0%. The increase was primarily due to increase in volume of waste collected of 27.7% and increase of the
NRT by LVL 2, which resulted in increase of landfilling cost per tonne by approximately 10% to 15%
(depending on region).
Salaries and wages amounted to LVL 431,000 for three months ended 31 March 2012, as compared to LVL
404,000 for three months ended 31 March 2011, representing an increase of 6.7%. The increase was primarily
due to employing additional employees in Eko Riga to increase sales.
Costs of depreciation of fixed assets and amortization of intangible investments were LVL 302,000 for three
months ended 31 March 2012, as compared to LVL 273,000 for three months ended 31 March 2011,
representing an increase of 10.6%. The increase was primarily due to amortization of new equipment in Nordic
Plast and amortization of containers in waste collection segment.
Outsourcing costs were LVL 191,000 for three months ended 31 March 2012, as compared to LVL 164,000 for
three months ended 31 March 2011, representing an increase of 16.5%. The increase was primarily due to
increase in sales of construction and demolition waste and consequent increase of costs of delivery of the
collected material to recycling, which is carried out by third parties.
Costs of rent of production premises and other related costs were LVL 141,000 for three months ended 31 March
2012, as compared to LVL 142,000 for three months ended 31 March 2011, representing a decrease of 0.7%.
50

Costs of professional services were LVL 189,000 for three months ended 31 March 2012, as compared to LVL
91,000 for three months ended 31 March 2011, representing an increase of 107.7%. The increase was primarily
due to inclusion of costs of services related to the Offering, which amounted to approximately LVL 86,000.
Social insurance costs were LVL 102,000 for three months ended 31 March 2012, as compared to LVL 96,000
for three months ended 31 March 2011, representing an increase of 6.3%.
Other expenses amounted to LVL 65,000 for three months ended 31 March 2012, as compared to LVL 108,000
for three months ended 31 March 2011, representing a decrease of 39.8%.
Costs of sales by the business segments
The following table sets forth the breakdown of the Group’s costs of sales by business segment for three months
ended 31 March 2012 and 2011.
For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Recycling (2,821) (2,531) 11.5
Waste collection (1,125) (1,080) 4.2
Organisation of waste recovery (697) (663) 5.1
Recyclables sorting and trading (664) (660) 0.6
Other expenses (151) (47) 221.3
Consolidation adjustments and eliminations 779 938 (17.0)
Total* (4,679) (4,043) 15.7
* In segment report cost of sales are showed before depreciation and amortisation
Source: Condensed Consolidated Interim Financial Statements
The Group’s cost of sales in the recycling segment was LVL 2,821,000 for three months ended 31 March 2012,
as compared to LVL 2,531,000 for three months ended 31 March 2011, representing an increase of 11.5%. The
increase was primarily due to increase in sales volume.
The Group’s cost of sales in the waste collection segment was LVL 1,125,000 for three months ended 31 March
2012, as compared to LVL 1,080,000 for three months ended 31 March 2011, representing an increase of 4.2%.
The increase was primarily due to increase in volume of waste collected.
The Group’s cost of sales in the organisation of waste recovery segment was LVL 697,000 for three months
ended 31 March 2012, as compared to LVL 663,000 for three months ended 31 March 2011, representing an
increase of 5.1%. The increase was primarily due to increase in sales volume.
The Group’s cost of sales in the recyclables sorting and trading segment was LVL 664,000 for three months
ended 31 March 2012, as compared to LVL 660,000 for three months ended 31 March 2011, representing an
increase of 0.6%.
Cost of sales from other activities was LVL 151,000 for three months ended 31 March 2012, as compared to
LVL 47,000 for three months ended 31 March 2012, representing an increase of 221.3%. The increase was due
to inclusion of costs of services related to the Offering, which amounted to approximately LVL 86,000.
Gross profit
The Group’s consolidated gross profit was LVL 1,990,000 for three months ended 31 March 2012, as compared
to LVL 1,995,000 for three months ended 31 March 2011, representing a decrease of 0.3%. The gross profit
margin for three months ended 31 March 2012 was 28.6%, as compared to 31.6% for three months ended 31
March 2011.
51

The decrease in gross profit for three months ended 31 March 2012 in comparison with three months ended 31
March 2011 was mainly caused by decrease of gross profit in recyclables sorting and trading segment.
The Group’s gross profit, if adjusted with costs relating to the Offering (which amounted to approximately LVL
86,000 for three months ended 31 March 2012) was LVL 2,076,000 for three months ended 31 March 2012.
Gross profit margin (adjusted with costs relating to the Offering) was 29.8% for three months ended 31 March
2012.
Gross profit by segment
The following table sets forth the breakdown of the Group’s gross profit by business segment for three months
ended 31 March 2012 and 2011.
For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Recycling 1,302 1,205 8.0
Waste collection 668 651 2.6
Organisation of waste recovery 324 282 14.9
Recyclables sorting and trading 146 189 (22.8)
Other 262 188 39.4
Consolidation adjustments and eliminations (412) (243) 69.5
Total* 2,290 2,272 0.8
* In segment report gross profit is showed before depreciation and amortisation
Source: Condensed Consolidated Interim Financial Statements
Taking into consideration that gross profit by segment is presented excluding depreciation and amortization,
changes in gross profit for waste collection and recycling could be considered as relatively immaterial.
The gross profit in recycling segment increased by 8.0% to LVL 1,302,000 for three months ended 31 March
2012 from LVL 1,205,000 for three months ended 31 March 2011. The increase in gross profit was due to
increase in sales volume, which was partially offset by increase of prices of raw materials.
The gross profit in waste collection segment increased by 2.6% to LVL 668,000 for three months ended 31
March 2012 from LVL 651,000 for three months ended 31 March 2011. The increase in gross profit was due to
increase in sales volume, which was partially offset by increase of costs of transportation and landfilling.
The gross profit in organisation of waste recovery segment increased by 14.9% to LVL 324,000 for three months
ended 31 March 2012 from LVL 282,000 three months ended 31 March 2011. The increase in gross profit was
due to increase of sales volume.
The gross profit in recyclables sorting and trading segment decreased by 22.8% to LVL 146,000 for three
months ended 31 March 2012 from LVL 189,000 for three months ended 31 March 2011. The decrease in gross
profit was due to shift to sorting and trading of less profitable recyclables.
Selling expenses
The Group’s selling expenses were LVL 43,000 (0.6% of revenue) for three months ended 31 March 2012, as
compared to LVL 67,000 (1.1% of revenue) for three months ended 31 March 2011, representing a decrease of
35.8%.
The following table sets forth the elements of the Group’s selling expenses for three months ended 31 March
2012 and 2011.
52

For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Salaries and wages (4) (5) (20.0)
Social security taxes (1) (1) 0.0
Marketing expenses (1) (1) 0.0
Transportation expenses - (13) (100.0)
Other expenses (37) (47) (21.3)
Total (43) (67) (35.8)
Source: Condensed Consolidated Interim Financial Statements
The decrease in selling expenses in three months ended 31 March 2012 was primarily due to the decrease in
transportation expenses and other expenses.
Administrative expenses
The Group’s administrative expenses were LVL 702,000 (10.1% of revenue) for three months ended 31 March
2012, as compared to LVL 699,000 (11.1% of revenue) for three months ended 31 March 2011, representing an
increase of 0.4%.
The following table sets forth the elements of the Group’s administrative expenses for three months ended 31
March 2012 and 2011.
For three months ended 31 March
2012 2011 Change
(LVL in thousands) (%)
Salaries and wages (339) (229) 48.0
Consultations of business development and organization (96) (216) (55.6)
Social security taxes (82) (67) 22.4
Transportation expenses (22) (26) (15.4)
Communications expenses (14) (13) 7.7
Auditing fees - - -
Rent of premises and related costs (23) (17) 35.3
Office expenses (8) (9) (11.1)
Depreciation and amortization (50) (67) (25.4)
Legal services (6) (8) (25.0)
Business trips expenses (10) (6) 66.7
Representation expenses (9) (4) 125.0
Other administrative expenses (43) (37) 16.2
Total (702) (699) 0.4
Source: Condensed Consolidated Interim Financial Statements
Administrative expenses for three months ended 31 March 2012 remained on relatively similar level as for three
months ended 31 March 2011. During the period under review the Group observed increase in costs of, among
others: salaries and wages, social security taxes, as well as rent of premises and related costs. The increase was
offset by decrease in costs of, among others: consultations of business development and organization, as well as
depreciation and amortization.
53

Other operating income
The Group’s other operating income was LVL 60,000 for three months ended 31 March 2012, as compared to
LVL 73,000 for three months ended 31 March 2011, representing a decrease of 17.8%.
Other operating expenses
The Group’s other operating expenses were LVL 99,000 for three months ended 31 March 2012, as compared to
LVL 102,000 for three months ended 31 March 2011, representing a decrease of 2.9%. The decrease in other
operating expenses was primarily due to decrease of expenses related to implementation of EU education
project, which was partially offset by increase in other expenses.
Operating profit
The Group’s operating profit was LVL 1,206,000 for three months ended 31 March 2012, as compared to LVL
1,200,000 for three months ended 31 March 2011, representing an increase of 0.5%.
The operating profit margin for three months ended 31 March 2012 was 17.3%, as compared to 19.0% for the
three months ended 31 March 2011.
EBITDA
The Group’s EBITDA was LVL 1,562,000 for three months ended 31 March 2012, as compared to LVL
1,540,000 for three months ended 31 March 2011, representing an increase of 1.4%. EBITDA margin was 22.4%
for three months ended 31 March 2012, as compared to 24.4% for three months ended 31 March 2011.
The Group’s EBITDA, if adjusted with costs relating to the Offering (which amounted to approximately LVL
86,000 for three months ended 31 March 2012), was LVL 1,648,000 for three months ended 31 March 2012.
EBITDA margin (adjusted with costs relating to the Offering) was 23.7% for three months ended 31 March
2012.
Interest income/(expense) and similar income/(expenses)
The Group’s net financial expenses for three months ended 31 March 2012 were LVL 50,000, as compared to
LVL 57,000 for three months ended 31 March 2011, representing a decrease of 12.3%. The decrease in net
financial expenses was primarily due to increase in interest and similar income, which was however offset by
increase in interest and similar expenses. The Group’s interest and similar income was LVL 32,000 for three
months ended 31 March 2012, as compared to LVL 7,000 for three months ended 31 March 2011, representing
an increase of 357.1%. The Group’s interest and similar expenses were LVL 82,000 for three months ended 31
March 2012, as compared to LVL 64,000 for three months ended 31 March 2011, representing an increase of
28.1%.
Profit before taxes
The Group’s profit before taxes was LVL 1,154,000 for three months ended 31 March 2012, as compared to
LVL 1,142,000 for three months ended 31 March 2011, representing an increase of 1.1%.
Taxes
The Group had corporate income tax expenses of LVL 119,000 for three months ended 31 March 2012, as
compared to LVL 75,000 for three months ended 31 March 2011, representing an increase of 58.7%.
The Group had deferred income tax income of LVL 17,000 for three months ended 31 March 2012, as compared
with deferred income tax income of LVL 12,000 for three months ended 31 March 2011, representing an
increase of 41.7%.
Current period’s profit
For the reasons discussed above, the Group’s profit for three months ended 31 March 2012 was LVL 1,052,000,
as compared to LVL 1,079,000 for three months ended 31 March 2011, representing a decrease of 2.5%.
54

The net profit margin for three months ended 31 March 2012 was 15.1%, as compared to 17.1% for three months
ended 31 March 2011.
The Group’s net profit, if adjusted with costs relating to the Offering (which amounted to approximately LVL
86,000 for three months ended 31 March 2012) was LVL 1,138,000 for three months ended 31 March 2012. Net
profit margin (adjusted with costs relating to the Offering) was 16.3% for three months ended 31 March 2012.
Results of Operations for year ended 31 December 2011 compared to year ended 31 December 2010
The following table sets forth the Group’s results of operations for the years ended 31 December 2011 and 2010
derived from the Consolidated Financial Statements.
For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Net sales 26,595 21,088 26.1
Cost of sales (19,354) (15,079) 28.4
Gross profit 7,241 6,009 20.5
Gross profit margin 27.2% 28.5% -
Selling expenses (325) (484) (32.9)
Administrative expenses (2,932) (2,629) 11.5
Other operating income 284 236 20.3
Other operating expenses (287) (807) (64.4)
Operating profit 3,981 2,325 71.1
Operating profit margin 15.0% 11.0% -
Write-off of long-term financial investments - (19) -
Interest income and similar income 70 18 288.9
Interest expenses and similar expenses (324) (280) 15.7
Other taxes (5) (5) 0.0
Profit before corporate income tax 3,722 2,039 82.5
Corporate income tax for the reporting year (211) (248) (14.9)
Deferred income tax (133) 3 -
Current year’s profit 3,378 1,794 88.3
Net profit margin 12.7% 8.5% -
Source: Consolidated Financial Statements
Revenue
The following table sets forth the breakdown of the Group’s net sales by business segment for years ended 31
December 2011 and 2010.
55

(LVL in
thousands)
For the year ended 31 December
2011 2010 Change
(As a % of total
revenue)
(LVL in
thousands)
(As a % of
total revenue)
Revenue from recycling 14,498 54.5 9,663 45.8 50.0
Revenue from waste collection 5,820 21.9 5,568 26.4 4.5
Revenue from organisation of waste
recovery
Revenue from recyclables sorting and
trading
4,237 15.9 4,249 20.1 (0.3)
2,040 7.7 1,582 7.5 29.0
Other 0.0 0.0 26 0.1 (100.0)
Total Revenue from core services 26,595 100.0 21,088 100.0 26.1
Source: Consolidated Financial Statements
The Group’s total net sales increased by 26.1% to LVL 26,595,000 for the year ended 31 December 2011 from
LVL 21,088,000 for the year ended 31 December 2010. The increase in net sales in the year ended 31 December
2011 was primarily driven by increase of net sales from recycling and recyclables sorting and trading segments.
Summary of revenue from each segment is presented below. It should be underlined that as a result of
consolidation the revenue of each business segment is adjusted by intra-group transactions. For more details
please see Note 1 to the Consolidated Financial Statements.
Revenue from recycling
The Group’s revenue from recycling segment was LVL 14,498,000 for the year ended 31 December 2011, as
compared to LVL 9,663,000 for the year ended 31 December 2010, representing an increase of 50.0%. The
increase was primarily due to increase of production, and as a consequence, sales volume of PET flakes by
16.2%, as well as increase of PET flakes prices.
Revenue from waste collection
The Group’s revenue from waste collection segment was LVL 5,820,000 for the year ended 31 December 2011,
as compared to LVL 5,568,000 for the year ended 31 December 2010, representing an increase of 4.5%, mainly
due to increase of volume of waste collected by the Group of 15.8%. The increase in amount of waste collected
allowed the Group to increase the revenues in this segment, despite the fact that in the year ended 31 December
2011 the Group observed decrease of the average fee for waste collection in comparison with the year ended 31
December 2010.
Revenue from organisation of waste recovery
The Group’s revenue generated from organisation of waste recovery segment was LVL 4,237,000 for the year
ended 31 December 2011, as compared to LVL 4,249,000 for the year ended 31 December 2010. The revenue
from this segment decreased by 0.3% due to decrease of total volume of waste (excluding oil filters) under
recovery of 1.07%. Although, it should be noted that in the year ended 31 December 2011 the Group observed
increase of the average fee for waste recovery in comparison with the year ended 31 December 2010.
Revenue from recyclables sorting and trading
The Group’s revenue from recyclables sorting and trading segment was LVL 2,040,000 for the year ended 31
December 2011, as compared to LVL 1,582,000 for the year ended 31 December 2010, representing an increase
of 28.95%, mainly due to increase of volume of recyclables traded by the Group of 11.9%. Moreover, the
increase in revenue from recyclables sorting and trading segment was fuelled by the increase of average price of
recyclables sold in the year ended 31 December 2011 in comparison with the year ended 31 December 2010.
(%)
56

Revenue by geographical location
The following table sets forth the breakdown of the Group’s revenue by geographical location for years ended 31
December 2011 and 2010.
(LVL in
thousands)
For the year ended 31 December
2011 2010 Change
(As a % of
total revenue)
(LVL in
thousands)
(As a % of
total
revenue)
Latvia 10,416 39.2 10,208 48.4 2.0
European Union (EU) 15,989 60.1 10,610 50.3 50.7
Non-EU countries 190 0.7 270 1.3 (29.6)
Total Revenue 26,595 100.0 21,088 100.0 26.1
Source: Consolidated Financial Statements
(%)
In the year ended 31 December 2011 net sales from export totalled LVL 16,179,000 meaning that export
accounted for 60.8% of the total net sales of the Group. In the year ended 31 December 2010 net sales from
export amounted to LVL 10,880,000 or 51.6% of the total net sales of the Group. The total net sales from export
increased by 48.7% in the year ended 31 December 2011 in comparison with the year ended 31 December 2010.
This was generally due to increase of net sales to the EU by 50.7%, from LVL 10,610,000 in the year ended 31
December 2010 to LVL 15,989,000 in the year ended 31 December 2011. This increase was fuelled by increase
of net sales in recycling segment, namely increase of sales of PET flakes (in 2011 the whole production output of
PET flakes was exported to the EU), and increase of volume in recyclables sorting and trading.
Cost of sales
The table below sets forth the principal components of the Group’s cost of sales for the years ended 31
December 2011 and 2010.
For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Raw materials and other material costs (9,541) (5,244) 81.9
Transportation expenses (1,814) (1,505) 20.5
Municipal waste landfilling and disposal of sewage water (1,562) (1,297) 20.4
Salaries and wages (1,511) (1,668) (9.4)
Depreciation and amortization (1,291) (1,365) (5.4)
Outsourcing (1,064) (1,728) (38.4)
Rent of production premises and related costs (875) (1,204) (27.3)
Professional services (451) (532) (15.2)
Social security taxes (358) (394) (9.1)
Natural resources tax (3) - -
Other production costs (884) (142) 522.5
Total (19,354) (15,079) 28.4
Source: Consolidated Financial Statements
The Group’s cost of sales was LVL 19,354,000 for the year ended 31 December 2011 (73% of revenue), as
compared to LVL 15,079,000 (72% of revenue) for the year ended 31 December 2010, representing an increase
of 28.4%.
Raw materials and other material costs were LVL 9,541,000 for the year ended 31 December 2011, as compared
to LVL 5,244,000 for the year ended 31 December 2010, representing an increase of 81.9%. The increase was
primarily due to increase of production volume in recycling segment and increase of volume of recyclables
purchased, sorted and traded.
57

Transportation expenses amounted to LVL 1,814,000 for the year ended 31 December 2011, as compared to
LVL 1,505,000 for the year ended 31 December 2010, representing an increase of 20.5%. The increase was
mainly attributed to expansion of collection business and subsequent growth in volumes of collected waste as
well as increasing fuel costs.
Costs of municipal waste landfilling and disposal of sewage water were LVL 1,562,000 for the year ended 31
December 2011, as compared to LVL 1,297,000 for the year ended 31 December 2010, representing an increase
of 20.5%. The increase was primarily due to increase in landfilling tariffs on the back of increased Natural
Resource Tax, as well as due to growth in volume of waste collected.
Salaries and wages amounted to LVL 1,511,000 for the year ended 31 December 2011, as compared to LVL
1,668,000 for the year ended 31 December 2010, representing a decrease of 9.4%. The decrease was primarily
due to optimization of remuneration system used in recycling segment which effectively resulted in increase
productivity and decreased overtime hours.
Costs of depreciation of fixed assets and amortization of intangible investments were LVL 1,291,000 for the year
ended 31 December 2011, as compared to LVL 1,365,000 for the year ended 31 December 2010, representing a
decrease of 5.4%. The decrease was primarily due to lower volume of capital investments carried out during
2011.
Outsourcing costs were LVL 1,064,000 for the year ended 31 December 2011, as compared to LVL 1,728,000
for the year ended 31 December 2010, representing a decrease of 38.4%. The decrease was primarily due to
reclassification of packaging and delivery expense in the amount of LVL 559,000 incurred by PET Baltija from
outsourcing costs to raw materials and other material costs.
Costs of rent of production premises and other related costs were LVL 875,000 for the year ended 31 December
2011, as compared to LVL 1,204,000 for the year ended 31 December 2010, representing a decrease of 27.3%.
The decrease was primarily due to reclassification of electricity costs in the amount of LVL 333,000 from cost of
rent of production premises and other related costs to other production costs. If like-for-like costs are compared
than increase in costs amounts to 0.3% in the year ended 31 December 2011 compared with the year ended 31
December 2010.
Costs of professional services were LVL 451,000 for the year ended 31 December 2011, as compared to LVL
532,000 for the year ended 31 December 2010, representing a decrease of 15.2%. The decrease was primarily
due to decrease of production equipment maintenance related costs in the recycling segment.
Social insurance costs were LVL 358,000 for the year ended 31 December 2011, as compared to LVL 394,000
for the year ended 31 December 2010, representing a decrease of 9.1%. The decrease was primarily due to
optimization of remuneration system used in recycling segment which effectively resulted in increase
productivity and decreased overtime hours.
Other expenses, which primarily consisted of production process related costs, amounted to LVL 884,000 for the
year ended 31 December 2011, as compared to LVL 142,000 for the year ended 31 December 2010, representing
an increase of 522.5%. The increase was primarily due to reclassification electricity costs from costs of rent of
production and other related costs as described above as well as increased costs related to maintenance and repair
of production equipment in the amount of LVL 414,000 incurred by PET Baltija.
Costs of sales by the business segments
The following table sets forth the breakdown of the Group’s costs of sales by business segment for years ended
31 December 2011 and 2010.
58

For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Recycling (11,084) (7,515) 47.5
Waste collection (4,384) (3,965) 10.6
Organisation of waste recovery (3,419) (3,371) 1.4
Recyclables sorting and trading (3,140) (2,492) 26.0
Other expenses (248) (195) 27.2
Consolidation adjustments and eliminations 4,207 3,824 10.0
Total* (18,068) (13,714) 31.7
* In segment report cost of sales are showed before depreciation and amortisation
Source: Consolidated Financial Statements
The Group’s cost of sales in the recycling segment was LVL 11,084,000 for the year ended 31 December 2011,
as compared to LVL 7,515,000 for the year ended 31 December 2010, representing an increase of 47.5%. The
increase was primarily due to the increase in sales volumes of PET flakes by 16.2%. Additionally, the increase
was caused by increase of costs of energy.
The Group’s cost of sales in the waste collection segment was LVL 4,384,000 for the year ended 31 December
2011, as compared to LVL 3,965,000 for the year ended 31 December 2010, representing an increase of 10.6%.
The increase was primarily due to the increase in amount of waste collected by the Group by 15.8%.
Additionally, the increase was caused by increase of fuel and landfilling costs.
The Group’s cost of sales in the organisation of waste recovery segment was LVL 3,419,000 for the year ended
31 December 2011, as compared to LVL 3,371,000 for the year ended 31 December 2010, representing an
increase of 1.4%. The increase was primarily due to increase in the cost of collection caused by growing fuel
costs.
The Group’s cost of sales in the recyclables sorting and trading segment was LVL 3,140,000 for the year ended
31 December 2011, as compared to LVL 2,492,000 for the year ended 31 December 2010, representing an
increase of 26.0%. The increase was primarily due to the increase in volume of recyclables traded by the Group
by 11.9%.
Cost of sales from other activities, including mainly consulting costs for the holding company, was LVL 248,000
for the year ended 31 December 2011, as compared to LVL 195,000 for the year ended 31 December 2010,
representing an increase of 27.2%. The increase was caused by more extensive use of different type of advisers
(i.e. legal, financial and other).
Gross profit
The Group’s consolidated gross profit was LVL 7,241,000 for the year ended 31 December 2011, as compared
to LVL 6,009,000 for the year ended 31 December 2010, representing an increase of 20.5%. The gross profit
margin for the year ended 31 December 2011 was 27.2%, as compared to 28.5% for the year ended 31 December
2010.
The increase in gross profit for year ended 31 December 2011 in comparison with the year ended 31 December
2010 was mainly caused by increase in revenue from recycling, recyclables sorting and trading as well as waste
collection in combination with effective management of production costs.
Gross profit by segment
The following table sets forth the breakdown of the Group’s gross profit by business segment for the years ended
31 December 2011 and 2010.
59

For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Recycling 4,716 3,215 46.7
Waste collection 2,634 2,772 (5.0)
Organisation of waste recovery 822 880 (6.6)
Recyclables sorting and trading 568 609 (6.7)
Other 693 67 934.3
Consolidation adjustments and eliminations (906) (169) 436.1
Total* 8,527 7,374 15.6
* In segment report gross profit is showed before depreciation and amortisation
Source: Consolidated Financial Statements
Taking into consideration that gross profit by segment is presented excluding depreciation and amortization,
changes in gross profit for waste collection, organization of waste recovery and recyclables sorting and trading
could be considered as relatively immaterial.
The gross profit in recycling segment increased by 46.7% to LVL 4,716,000 for the year ended 31 December
2011 from LVL 3,215,000 for the year ended 31 December 2010. The increase in gross profit in the year ended
31 December 2011 was primarily driven by increase of production, and as a consequence, sales volume of PET
flakes.
The gross profit in waste collection segment decreased by 5.0% to LVL 2,634,000 for the year ended 31
December 2011 from LVL 2,772,000 for the year ended 31 December 2010. The decrease in gross profit in the
year ended 31 December 2011 was primarily driven by increasing costs of collection activities influenced by the
price of fuel as well as increasing landfilling costs.
The gross profit in organisation of waste recovery segment decreased by 6.6% to LVL 822,000 for the year
ended 31 December 2011 from LVL 880,000 for the year ended 31 December 2010. The decrease in gross profit
in the year ended 31 December 2011 was primarily driven by increasing recovery targets and the relative
increase of recovery costs.
The gross profit in recyclables sorting and trading segment decreased by 6.7% to LVL 568,000 for the year
ended 31 December 2011 from LVL 609,000 for the year ended 31 December 2010. The increase in gross profit
in the year ended 31 December 2011 was primarily driven by increasing costs of transportation expense
connected with product in-house deliveries and deliveries to the client.
Selling expenses
The Group’s selling expenses were LVL 325,000 (1.2% of revenue) for the year ended 31 December 2011, as
compared to LVL 484,000 (2.3% of revenue) for the year ended 31 December 2010, representing a decrease of
32.9%.
The following table sets forth the elements of the Group’s selling expenses for the years ended 31 December
2011 and 2010.
60

For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Salaries and wages (172) (149) 15.4
Social security taxes (41) (36) 13.9
Depreciation and amortization (17) (13) 30.8
Marketing expenses (17) (18) (5.6)
Transportation expenses (13) (12) 8.3
Bad debt write-off expense - (162) (100.0)
Other expenses (65) (94) (30.9)
Total (325) (484) (32.9)
Source: Consolidated Financial Statements
The decrease in selling expenses in the year ended 31 December 2011 was primarily due to the decrease in bad
debt write-off expense. This position was influenced by bankruptcy of one of the customers in 2010. The
decrease was partially offset by the increase of salaries and wages as a result of increasing number of sales
personnel.
Administrative expenses
The Group’s administrative expenses were LVL 2,932,000 (11% of revenue) for the year ended 31 December
2011, as compared to LVL 2,629,000 (12.5% of revenue) for the year ended 31 December 2010, representing an
increase of 11.5%.
The following table sets forth the elements of the Group’s administrative expenses for the years ended 31
December 2011 and 2010.
For the year ended 31 December
2011 2010 Change
(LVL in thousands) (%)
Salaries and wages (1,277) (910) 40.3
Consultations of business development and organization (776) (981) (20.9)
Social security taxes (269) (179) 50.3
Transportation expenses (107) (75) 42.7
Communications expenses (49) (46) 6.5
Auditing fees (47) (23) 104.3
Rent of premises and related costs (45) (71) (36.6)
Office expenses (38) (15) 153.3
Depreciation and amortization (36) (36) 0.0
Legal services (35) (24) 45.8
Business trips expenses (30) (27) 11.1
Representation expenses (28) (8) 250.0
Other administrative expenses (195) (234) (16.7)
Total (2,932) (2,629) 11.5
Source: Consolidated Financial Statements
The increase in administrative expenses in the year ended 31 December 2011 was primarily due to the increase
in employees’ salaries and wages. The salaries and wages increased because increase of number of
administrative personnel on the level of the Group and the Group Companies, and pay out of performance
bonuses for fulfilling budget targets for the year ended 31 December 2011.
61

Consultations of business development and organization decreased by 20.9% from LVL 981,000 in the year
ended 31 December 2011 to LVL 776,000 in the year 31 December 2010. The main reason for such decrease
was cancellation of part of the management fee in the amount of that was paid to the previous shareholders in the
year ended 31 December 2010.
Other operating income
The Group’s other operating income was LVL 284,000 for the year ended 31 December 2011, as compared to
LVL 236,000 for the year ended 31 December 2010, representing an increase of 20.3%. The increase in other
operating income was primarily the result of the increased income from EU project financing.
Other operating expenses
The Group’s other operating expenses were LVL 287,000 for the year ended 31 December 2011, as compared to
LVL 807,000 for the year ended 31 December 2010, representing a decrease of 64.4%. The decrease in other
operating expenses was primarily the result of the write-off of goodwill impairment, which was carried out in
2010 in the amount of LVL 656,000.
Operating profit
The Group’s operating profit was LVL 3,981,000 for the year ended 31 December 2011, as compared to LVL
2,325,000 for the year ended 31 December 2010, representing an increase of 71.1%.
The operating profit margin for the year ended 31 December 2011 was 14.9%, as compared to 11.0% for the
year ended 31 December 2010.
EBITDA
The Group’s EBITDA was LVL 5,328,000 for the year ended 31 December 2011, as compared to LVL
3,739,000 for the year ended 31 December 2010, representing an increase of 42.5%. EBITDA margin was 20.0%
for the year ended 31 December 2011, as compared to 18% for the year ended 31 December 2010.
The Group’s EBITDA if adjusted for goodwill impairment (LVL 656,000 for the year ended 31 December 2010)
was LVL 4,395,000 for the year ended 31 December 2010 and EBITDA margin (adjusted for goodwill
impairment) was 20.8% for the year ended 31 December 2010.
Interest income/(expense) and similar income/(expenses)
The Group’s net financial expenses for the year ended 31 December 2011 were LVL 254,000, as compared to
LVL 281,000 for the year ended 31 December 2010, representing a decrease of 9.6%. The decrease in net
financial expenses was primarily due to increase in interest and similar income, which was however offset by
increase in interest and similar expenses. The Group’s interest and similar income was LVL 70,000 for the year
ended 31 December 2011, as compared to LVL 18,000 for the year ended 31 December 2010, representing an
increase of 288.9%. The Group’s interest and similar expenses were LVL 324,000 for the year ended 31
December 2011, as compared to LVL 280,000 for the year ended 31 December 2010, representing an increase of
15.7%.
Profit before taxes
The Group’s profit before taxes was LVL 3,722,000 for the year ended 31 December 2011, as compared to LVL
2,039,000 for the year ended 31 December 2010, representing an increase of 82.5%.
Taxes
The Group had corporate income tax expenses of LVL 211,000 for the year ended 31 December 2011, as
compared to LVL 248,000 for the year ended 31 December 2010, representing a decrease of 14.9%.
The Group had deferred income tax expenses of LVL 133,000 for the year ended 31 December 2011, as
compared with deferred income tax income of LVL 3,000 for the year ended 31 December 2010. The main
62

eason for such decease was utilization tax credits in the year ended 31 December 2010 that were carried forward
after PET Baltija incurred losses in 2008 and 2009.
Current year’s profit
For the reasons discussed above, the Group’s profit for the year ended 31 December 2011 was LVL 3,378,000,
as compared to LVL 1,794,000 for the year ended 31 December 2010, representing an increase of 88.3%.
The net profit margin for the year ended 31 December 2011 was 12.7%, as compared to 8.5% for the year ended
31 December 2010.
However, the result for the year ended 31 December 2010 was influenced by goodwill impairment in the amount
of LVL 656,000. The Group’s profit for the year ended 31 December 2010, if adjusted for goodwill impairment,
was LVL 2,450,000 and the net profit margin (adjusted for goodwill impairment) for the year ended 31
December 2010 was 11.6%.
Results of Operations for year ended 31 December 2010 compared to year ended 31 December 2009
The following table sets forth the Group’s results of operations for the years ended 31 December 2010 and 2009
derived from the Consolidated Financial Statements.
For the year ended 31 December
2010 2009 Change
(LVL in thousands) (%)
Net sales 21,088 13,851 52.2
Cost of sales (15,079) (10,174) 48.2
Gross profit 6,009 3.677 63.4
Gross profit margin 28.5% 26.5% -
Selling expenses (484) (323) 49.8
Administrative expenses (2,629) (2,682) (2.0)
Other operating income 236 191 23.6
Other operating expenses (807) (1,007) (19.9)
Operating profit 2,325 (144) 1714.6
Operating profit margin 11.0% neg. -
Write-off of long-term financial investments (19) - -
Interest income and similar income 18 55 (67.3)
Interest expenses and similar expenses (280) (257) 8.9
Other taxes (5) (6) (16.7)
Profit before corporate income tax 2,039 (352) 679.3
Corporate income tax for the reporting year (248) (103) 140.8
Deferred income tax 3 (60) 105.0
Current year’s profit 1,794 (515) 448.4
Net profit margin 8.5% neg. -
Source: Consolidated Financial Statements
Revenue
The following table sets forth the breakdown of the Group’s net sales by business segment for years ended 31
December 2010 and 2009.
63

(LVL in
thousands)
For the year ended 31 December
2010 2009 Change
(As a % of total
revenue)
(LVL in
thousands)
(As a % of
total revenue)
Revenue from recycling 9,663 45.8 3,865 27.9 150.0
Revenue from waste collection 5,568 26.4 5,128 37.0 8.6
Revenue from organisation of waste
recovery 4,249 20.1 4,161 30.0 2.1
Revenue from recyclables sorting and
trading 1,582 7.5 665 4.8 137.9
Other 26 0.1 32 0.2 (18.8)
Total Revenue from core services 21,088 100.0 13,851 100.0 52.2
Source: Consolidated Financial Statements
The Group’s total net sales increased by 52.2 % to LVL 21,088,000 for the year ended 31 December 2010 from
LVL 13,851,000 for the year ended 31 December 2009. The increase in net sales in the year ended 31 December
2010 was primarily driven by material increase of net sales from recycling and recyclables sorting and trading
segments.
Revenue from recycling
The Group’s revenue from recycling segment was LVL 9,663,000 for the year ended 31 December 2010, as
compared to LVL 3,865,000 for the year ended 31 December 2009, representing an increase of 150.0%. The
increase was primarily due to increase of production, and as a consequence, sales volume of PET flakes by
128.6% and increase of PET flakes prices.
Revenue from waste collection
The Group’s revenue from waste collection segment was LVL 5,568,000 for the year ended 31 December 2010,
as compared to LVL 5,128,000 for the year ended 31 December 2009, representing an increase of 8.6%, mainly
due to increase of volume of waste collected by the Group of 8.7% combined with small decrease in price of
services.
Revenue from organisation of waste recovery
The Group’s revenue generated from organisation of waste recovery segment was LVL 4,249,000 for the year
ended 31 December 2010, as compared to LVL 4,161,000 for the year ended 31 December 2009. The revenue
from this segment increased by 2.1%, due to increase of total volume of waste (excluding oil filters) under
recovery of 11.44%. Although, it should be noted that increase of total volume of waste (excluding oil filters)
under recovery was offset by decrease of the average fee for waste recovery due to issuing discounts to key
customers.
Revenue from recyclables sorting and trading
The Group’s revenue from recyclables sorting and trading segment was LVL 1,582,000 for the year ended 31
December 2010, as compared to LVL 665,000 for the year ended 31 December 2009, representing an increase of
137.9%, mainly due to increase of volume of recyclables traded by the Group of 44.0%. It was achieved by
increasing activity in cardboard sorting and trading, and expanding cooperation with clients in different
countries. Moreover, the increase in revenue from recyclables sorting and trading segment was fuelled by the
increase of average price of recyclables traded in the year ended 31 December 2011 in comparison with the year
ended 31 December 2010.
Revenue by geographical location
The following table sets forth the breakdown of the Group’s net sales by geographical location for years ended
31 December 2010 and 2009.
(%)
64

(LVL in
thousands)
For the year ended 31 December
2010 2009 Change
(As a % of
total revenue)
(LVL in
thousands)
(As a % of
total revenue)
Latvia 10,208 48.4 9,851 71.1 3.6
European Union (EU) 10,610 50.3 3,970 28.7 167.3
Non-EU countries 270 1.3 30 0.2 800.0
Total Revenue 21,088 100 13,851 100 52.2
Source: Consolidated Financial Statements
In the year ended 31 December 2010 net sales from export amounted to LVL 10,880,000 or 51.6% of the total
net sales of the Group. In the year ended 31 December 2009 net sales from export totalled LVL 4,000,000
meaning that export accounted for 28.9% of the total net sales of the Group. The total net sales from export
increased by 172.0% in the year ended 31 December 2010 in comparison with the year ended 31 December
2009. This was generally due to increase of net sales to the EU by 167.3%, from LVL 3,970,000 in the year
ended 31 December 2009 to LVL 10,610,000 in the year ended 31 December 2010. This increase was primarily
fuelled by increase of net sales in recycling segment, namely increase of production volume and sales of PET
flakes by 128.6% and fact that in 2010 the whole production output of PET flakes was exported to the EU.
Moreover, in the year ended 31 December 2010 the Group increased export to non-EU countries to LVL 270,000
from LVL 30,000 in the year ended 31 December 2009 (an increase of 800.0%). The increase in export to non-
EU countries was achieved by launching sale of recyclables (mainly glass) to Ukraine.
Cost of sales
The Group’s cost of sales was LVL 15,079,000 (72% of revenue) for the year ended 31 December 2010, as
compared to LVL 10,174,000 (73% of revenue) for the year ended 31 December 2009, representing an increase
of 48.2%. The increase was in general caused by increase of costs of: raw and other materials, transportation
expenses municipal waste landfilling and disposal of sewage water as well as outsourcing, costs of rent of
production premises and professional services.
The table below sets forth the principal components of the Group’s cost of sales for the years ended 31
December 2010 and 2009.
For the year ended 31 December
(%)
2010 2009 Change
(LVL in thousands) (%)
Raw materials and other material costs (5,244) (2,673) 96.2
Outsourcing (1,728) (322) 436.6
Salaries and wages (1,668) (1,635) 2.0
Transportation expenses (1,505) (1,358) 10.8
Depreciation and amortization (1,365) (1,386) (1.5)
Municipal waste landfilling and disposal of sewage water (1,297) (752) 72.5
Rent of production premises and related costs (1,204) (822) 46.5
Professional services (532) (421) 26.4
Social security taxes (394) (382) 3.1
Other production costs (142) (387) (63.0)
Natural resources tax - (36) (100.0)
Total (15,079) (10,174) 48.2
Source: Consolidated Financial Statements
Raw materials and other material costs were LVL 5,244,000 for the year ended 31 December 2010, as compared
to LVL 2,673000 for the year ended 31 December 2009, representing an increase of 96.2%. The increase was
primarily due to corresponding increase in sales volumes of PET flakes.
65

Outsourcing costs were LVL 1,728,000 for the year ended 31 December 2010, as compared to LVL 322,000 for
the year ended 31 December 2009, representing an increase of 436.6%. The main reasons for increase were
reclassification of costs incurred by Latvijas Zalais punkts in the amount of LVL 708,000 used to organize the
segregated waste collection schemes and waste management from raw materials and other material cost to
outsourcing costs in the year ended 31 December 2010.
Transportation expenses amounted to LVL 1,505,000 for the year ended 31 December 2010, as compared to
LVL 1,358,000 for the year ended 31 December 2009, representing an increase of 10.8%. The increase was
mainly attributed to increasing amount of sales for recycling segment and increase of volume of recyclables
purchased, sorted and traded.
Costs of municipal waste landfilling and disposal of sewage water were LVL 1,297,000 for the year ended 31
December 2010, as compared to LVL 752,000 for the year ended 31 December 2009, representing an increase of
83.2%. The increase was primarily due to increase in landfilling tariffs on the back of increased Natural
Resource Tax, as well as due to growth in volume of collected waste.
Costs of rent of production premises and related costs were LVL 1,204,000 for the year ended 31 December
2010, as compared to LVL 822,000 for the year ended 31 December 2009, representing an increase of 46.5%.
The increase was primarily due to entering a new rent contract for larger warehouse premises for recycling
segment.
Costs of professional services were LVL 532,000 for the year ended 31 December 2010, as compared to LVL
421,000 for the year ended 31 December 2009, representing an increase of 26.1%. The increase was primarily
due to increase of production equipment maintenance related costs in the recycling segment.
Other expenses, amounted to LVL 142,000 for the year ended 31 December 2010, as compared to LVL 387,000
for the year ended 31 December 2009, representing a decrease of 63.0%. The decrease was primarily due to the
fact that in the year ended 31 December 2009 the Company has one time written-off a number of obsolete
equipment items which did not happen in the year ended 31 December 2010.
Costs of sales by the business segments
The following table sets forth the breakdown of the Group’s costs of sales by business segment for years ended
31 December 2010 and 2009.
For the year ended 31 December
2010 2009 Change
(LVL in thousands) (%)
Recycling (7,515) (3,864) 94.5
Waste collection (3,965) (3,258) 21.7
Organisation of waste recovery (3,371) (3,126) 7.8
Recyclables sorting and trading (2,492) (1,181) 111.0
Other expenses (195) (150) 30.0
Consolidation adjustments and eliminations 3,824 2,790 37.1
Total* (13,714) (8,789) 56.0
* In segment report cost of sales are showed before depreciation and amortisation
Source: Consolidated Financial Statements
The Group’s cost of sales in the recycling segment was LVL 7,515,000 for the year ended 31 December 2010, as
compared to LVL 3,864,000 for the year ended 31 December 2009, representing an increase of 94.5%. The
increase was primarily due to the increase in sales volumes of PET flakes by 128.6% as well as the purchase
price of raw materials. Additionally, the increase was caused by increase of costs of energy.
The Group’s cost of sales in the waste collection segment was LVL 3,965,000 for the year ended 31 December
2010, as compared to LVL 3,258,000 for the year ended 31 December 2009, representing an increase of 21.7%.
The increase was primarily due to the increase of 8.7% in amount of waste collected by the Group. Additionally,
the increase was caused by increase of fuel and landfilling costs.
66

The Group’s cost of sales in the organisation of waste recovery segment was LVL 3,371,000 for the year ended
31 December 2010, as compared to LVL 3,126,000 for the year ended 31 December 2009, representing an
increase of 7.8%. The increase was primarily due to higher volume of waste (excluding oil filters) under
recovery.
The Group’s cost of sales in the recyclables sorting and trading segment was LVL 2,492,000 for the year ended
31 December 2010, as compared to LVL 1,181,000 for the year ended 31 December 2009, representing an
increase of 111.0%. The increase was primarily due to the increase in volume of recyclables traded by the
Group. Additionally, the increase was caused by increase of costs of transportation of raw materials (partly due
to increase of fuels costs).
Cost of sales from other activities, including mainly consulting costs for the holding company, was LVL 195,000
for the year ended 31 December 2010, as compared to LVL 150,000 for the year ended 31 December 2009,
representing an increase of 30.0%. The increase was caused by more extensive use of different type of advisers
(i.e. legal, financial and other).
Gross profit
The Group’s consolidated gross profit was LVL 6,009,000 for the year ended 31 December 2010, as compared
to LVL 3,677,000 for the year ended 31 December 2009, representing an increase of 63.4%. The gross profit
margin for the year ended 31 December 2010 was 28.5%, as compared to 26.5% for the year ended 31 December
2009.
The following table sets forth the breakdown of the Group’s gross profit by business segment for the years ended
31 December 2010 and 2009.
For the year ended 31 December
2010 2009 Change
(LVL in thousands) (%)
Recycling 3,215 866 271.2
Waste collection 2,772 2,662 4.1
Organisation of waste recovery 880 1,036 (15.1)
Recyclables sorting and trading 609 589 3.4
Other 67 (28) 339.3
Consolidation adjustments and eliminations (169) (63) 168.3
Total* 7,374 5,062 45.7
* In segment report gross profit is showed before depreciation and amortisation
Source: Consolidated Financial Statements
Taking into consideration that gross profit by segment is presented excluding depreciation and amortization,
changes in gross profit for waste collection, organization of waste recovery and recyclables sorting and trading
could be considered as relatively immaterial, except for the recycling segment which has experienced the most
significant growth.
The gross profit in recycling segment increased by 271.2% to LVL 3,215,000 for the year ended 31 December
2010 from LVL 866,000 for the year ended 31 December 2009. The increase in gross profit in the year ended 31
December 2010 was primarily driven by increase of production, and as a consequence, sales volume of PET
flakes.
The gross profit in waste collection segment increased by 4.1% to LVL 2,772,000 for the year ended 31
December 2010 from LVL 2,662,000 for the year ended 31 December 2009. The increase in gross profit in the
year ended 31 December 2010 was mainly influenced by getting new contracts and, in consequence, increase of
volume of waste collected.
The gross profit in organisation of waste recovery segment decreased by 15.1% to LVL 880,000 for the year
ended 31 December 2010 from LVL 1,036,000 for the year ended 31 December 2009. The decrease in gross
67

profit in the year ended 31 December 2010 was mainly influenced by issuing discounts to key customers and, in
consequence, decrease of average fees.
The gross profit in recyclables sorting and trading segment increased by 3.4% to LVL 609,000 for the year
ended 31 December 2010 from LVL 589,000 for the year ended 31 December 2009. The increase in gross profit
in the year ended 31 December 2010 was mainly influenced by increase of volumes of sorted and traded
materials as well as increase of average sales price of recyclables.
Selling expenses
The Group’s selling expenses were LVL 484,000 (2.3% of revenue) for the year ended 31 December 2010, as
compared to LVL 323,000 (2.3% of revenue) for the year ended 31 December 2009, representing an increase of
49.8%.
The following table sets forth the elements of the Group’s selling expenses for the years ended 31 December
2010 and 2009.
For the year ended 31 December
2010 2009 Change
(LVL in thousands) (%)
Salaries and wages (149) (147) 1.4
Social security taxes (36) (35) 2.9
Depreciation and amortization (13) (14) (7.1)
Marketing expenses (18) (23) (21.7)
Transportation expenses (12) (13) (7.7)
Bad debt write-off expense (162) - -
Other expenses (94) (91) 3.3
Total (484) (323) 49.8
Source: Consolidated Financial Statements
The increase in selling expenses in the year ended 31 December 2010 was primarily due to the increase in bad
debt write-off expense. This increase was caused by the fact that one of the clients of recycling business located
in Estonia went bankrupt and could not settle its liabilities.
Administrative expenses
The Group’s administrative expenses were LVL 2,629,000 (12.5% of revenue) for the year ended 31 December
2010, as compared to LVL 2,682,000 (19.4% of revenue) for the year ended 31 December 2009, representing a
decrease of 1.98%.
The following table sets forth the elements of the Group’s administrative expenses for the years ended 31
December 2010 and 2009.
68

For the year ended 31 December
2010 2009 Change
(LVL in thousands) (%)
Salaries and wages (910) (905) 0.6
Consultations of business development and organization (981) (1 004) (2.3)
Social security taxes (179) (175) 2.3
Transportation expenses (75) (62) 21.0
Communications expenses (46) (51) (9.8)
Auditing fees (23) (21) 9.5
Rent of premises and related costs (71) (69) 2.9
Office expenses (15) (18) (16.7)
Depreciation and amortization (36) (43) (16.3)
Legal services (24) (52) (53.8)
Business trips expenses (27) (13) 107.7
Representation expenses (8) (5) 60.0
Other administrative expenses (234) (264) (11.4)
Total (2,629) (2,682) (2.0)
Source: Consolidated Financial Statements
There were no material changes in administrative expenses between the year ended 31 December 2010 and the
year ended 31 December 2009 primarily due to effective administrative costs management carried out by the
Group.
Other operating income
The Group’s other operating income was LVL 236,000 for the year ended 31 December 2010, as compared to
LVL 191,000 for the year ended 31 December 2009, representing an increase of 23.6%. The increase in other
operating income was primarily the result of reversal in allowances for doubtful debts.
Other operating expenses
The Group’s other operating expenses were LVL 807,000 for the year ended 31 December 2010, as compared to
LVL 1,007,000 for the year ended 31 December 2009, representing a decrease of 19.9%. The decrease in other
operating expenses was primarily the result of the lower amount of goodwill impairment recognized in year
ended 31 December 2010 as compared to year ended 31 December 2009.
Operating profit
The Group’s operating profit was LVL 2,325,000 for the year ended 31 December 2010, as compared to loss of
LVL 144,000 for the year ended 31 December 2009.
The operating profit margin for the year ended 31 December 2010 was 11.0%, as compared to negative operating
profit margin for the year ended 31 December 2009.
EBITDA
The Group’s EBITDA was LVL 3,739,000 for the year ended 31 December 2010, as compared to LVL
1,302,000 for the year ended 31 December 2009, representing an increase of 187.2%. EBITDA margin was 18%
for the year ended 31 December 2010, as compared to 9.4% for the year ended 31 December 2009.
The Group’s EBITDA, if adjusted for goodwill impairment (LVL 656,000 and LVL 823,000 for the year ended
31 December 2010 and 2009, respectively), was LVL 4,395,000 for the year ended 31 December 2010, as
compared to LVL 2,125,000 for the year ended 31 December 2009, representing an increase of 106.8%.
69

EBITDA margin (adjusted for goodwill impairment) was 20.8% for the year ended 31 December 2010, as
compared to 15.3% for the year ended 31 December 2009.
Interest income/(expense) and similar income/(expenses)
The Group’s net financial expenses for the year ended 31 December 2010 were LVL 262,000 as compared to
LVL 202,000 for the year ended 31 December 2009, representing an increase of 39.1%. The increase in net
financial expenses was primarily due to decrease in interest and similar income and increase of interest and
similar expenses. The Group’s interest and similar income was LVL 18,000 for the year ended 31 December
2010, as compared to LVL 55,000 for the year ended 31 December 2009, representing a decrease of 67.3%. The
Group’s interest and similar expenses were LVL 280,000 for the year ended 31 December 2010, as compared to
LVL 257,000 for the year ended 31 December 2009, representing an increase of 8.95%.
Profit before taxes
The Group’s profit before taxes was LVL 2,044,000 for the year ended 31 December 2010, as compared to
operating loss of LVL 346,000 for the year ended 31 December 2009, representing an increase of 690.8%.
Taxes
The Group had corporate income tax expenses of LVL 248,000 for the year ended 31 December 2010, as
compared to LVL 103,000 for the year ended 31 December 2009, representing an increase of 140.8%. The
increase is attributable to higher taxable income for the year ended 31 December 2010 compared to the year
ended 31 December 2009.
The Group had deferred income tax income of LVL 3,000 for the year ended 31 December 2010, as compared
with deferred income tax expenses of LVL 60,000 for the year ended 31 December 2009.
Current year’s profit
For the reasons discussed above, the Group’s profit for the year ended 31 December 2010 was LVL 1,794,000,
as compared to loss of LVL 515,000 for the year ended 31 December 2009, representing an increase of 448.4%.
The net profit margin for the year ended 31 December 2010 was 8.5%, as compared to negative net profit margin
for the year ended 31 December 2009.
However, the above results were influenced by goodwill impairment in the amount of LVL 656,000 in 2010 and
LVL 823,000 in 2009. The Group’s profit, if adjusted for goodwill impairment, for the year ended 31 December
2010 was LVL 2,450,000, as compared to LVL 308,000 for the year ended 31 December 2009, representing an
increase of 695.5%. The net profit margin (adjusted for goodwill impairment) for the year ended 31 December
2010 was 11.6%, as compared to 2.2% for the year ended 31 December 2009.
Liquidity and Capital Resources
In the periods under review, the Group has met most of its liquidity needs through cash generated from its
operating activities and financing activities.
70

Cash flows
The following table sets forth a summary of the Group’s cash flows for the periods indicated.
For three months
ended 31 March
For the year ended 31
December
2012 2011 2011 2010 2009
(LVL in thousands)
Net cash from operating activities 1,541 1,678 4,989 2,694 936
Net cash used in investing activities (910) (563) (7,764) (918) (42)
Net cash used in financing activities (810) (1,011) 2,885 (1,730) (100)
Profit or loss from currency fluctuations - - (3) - (3)
Net increase in cash and cash equivalents (179) 104 107 46 791
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Net cash from operating activities
The Group’s net cash inflow from operating activities decreased 8.2% to LVL 1,541,000 for three months ended
31 March 2012 from LVL 1,678,000 for three months ended 31 March 2011. The decrease was mainly due to
increase in trade receivables.
The Group’s net cash inflow from operating activities increased 85.2% to LVL 4,989,000 for the year ended 31
December 2011 from LVL 2,694,000 for the year ended 31 December 2010. The increase was mainly due to
increase of revenue from operating activities and also improvement in working capital management.
The Group’s net cash inflow from operating activities was LVL 2,694,000 for the year ended 31 December 2010
as compared with LVL 936,000 for the year ended 31 December 2009, representing an increase of 187.8%. The
increase was primarily due to increase of revenue from operating activities.
Net cash used in investing activities
The Group’s net cash outflow used in investing activities increased 61.6% to LVL 910,000 for three months
ended 31 March 2012 from LVL 563,000 for three months ended 31 March 2011. The increase was mainly due
to purchase of waste collection trucks and containers, renovation of premises, investment into Eko PET (for
more information please see “Business Overview - Investments”) and loans granted to Eko SPV for monthly
payments under Nordea Financing Agreements (Eko SPV was not consolidated in the Condensed Consolidated
Interim Financial Statements as of 31 March 2012).
The Group’s net cash outflow used in investing activities increased 745.8% to LVL 7,764,000 for the year ended
31 December 2011 from LVL 918,000 for the year ended 31 December 2010. The increase was mainly due to
loan in amount of LVL 1,852,000 granted to Eko SPV, which was used to partially finance management buyout
of Eko Baltija Group (Eko SPV was not consolidated in the Consolidated Financial Statements as of 31
December 2011) and reorganization carried out in the year ended 31 December 2011 (for more information on
reorganization please see note 25(b) to the Consolidated Financial Statements).
The Group’s net cash outflow used in investing activities was LVL 918,000 for the year ended 31 December
2010 as compared with LVL 42,000 for the year ended 31 December 2009, representing an increase of
2,805.7%. The increase was primarily due to increased volume of small investments into purchase of property,
plant and equipment.
Net cash used in financing activities
The Group’s net cash outflow in financing activities decreased 19.9% to LVL 810,000 for three months ended 31
March 2012 from LVL 1,011,000 for three months ended 31 March 2011. The decrease was mainly due to
receiving of new loans to finance acquisition of assets.
71

The Group’s net cash inflow in financing activities for the year ended 31 December 2011 increased to LVL
2,885,000 from net cash outflow of LVL 1,730,000 for the year ended 31 December 2010. The increase was
mainly due to attracting additional debt financing.
The Group’s net cash outflow in financing activities was LVL 1,730,000 for the year ended 31 December 2010
as compared with net cash outflow of LVL 100,000 for the year ended 31 December 2009. The increase was
primarily due to increase in amount of repaid loans.
Borrowings
The Group’s operations are financed through a combination of cash flows generated by its operations and shortterm
and long-term loan facilities that have been granted to various members of the Group.
It should be noted that information on borrowings presented below is based on the Consolidated Financial
Statements and the Condensed Consolidated Interim Financial Statements. For more information regarding
borrowing and capitalisation and indebtedness of the Group please see: “Capitalisation and Indebtedness” and
“Pro Forma Financial Information”.
The table below sets forth details of the Group’s short-term and non-current borrowings as at the dates indicated.
As at 31 March
As at 31 December
2012 2011 2010 2009
(LVL in thousands)
Short-term bank borrowings 1,323 1,409 1,934 600
Credit lines 773 983 1,190 1,379
Non-current bank borrowings 5,363 5,556 736 2,689
Total 7,459 7,948 3,860 4,668
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Until May 2011 the loans of the Group were placed in Swedbank and SEB. Starting from May 2011 all banking
loans were refinanced by a new arrangement with Nordea Bank. Below is summary of loan agreements
concluded with Nordea Bank (the “Nordea Financing Agreements”):
Overdraft Agreement No 2011-134-OD between Eko Reverss and Nordea Bank, dated 3 May 2011, with
overdraft limit of EUR 280,000, maturing on 31 May 2013. The interest rate is the aggregate of the
margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was EUR 280,000
(LVL 196,785).
Loan Agreement No 2011-173-A between Eko Reverss and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 33,438, maturing on 30 June 2012. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 13,399 (LVL 9,417).
Loan Agreement No 2011-165-A between Eko Baltija and Nordea Bank, dated 3 May 2011, as amended,
for the total amount of EUR 6,200,000, maturing on 31 December 2016. The interest rate is the aggregate
of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of loan was
EUR 5,478,352 (LVL 3,850,208).
Loan Agreement No 2011-166-A between PET Baltija and Nordea Bank, dated 3 May 2011, as amended,
for the total amount of EUR 1,570,100, maturing on 31 December 2016. The interest rate is the aggregate
of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of loan was
EUR 1,406,060 (LVL 988,185).
Overdraft Agreement No 2011-167-OD between PET Baltija and Nordea Bank, dated 3 May 2011, as
amended, with overdraft limit of EUR 1,330,000, maturing on 31 May 2013. The interest rate is the
aggregate of the margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was
EUR 591,157 (LVL 415,468).
72

Overdraft Agreement No 2011-169-OD between LZP and Nordea Bank, dated 3 May 2011, as amended,
with overdraft limit of EUR 600,000, maturing on 31 May 2013. The interest rate is the aggregate of the
margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was EUR 271,411
(LVL 190,749).
Overdraft Agreement No 2011-168-OD between Nordic Plast and Nordea Bank, dated 3 May 2011, as
amended, with overdraft limit of EUR 290,000, maturing on 31 May 2013. The interest rate is the
aggregate of the margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was
EUR 258,954 (LVL 181,988).
Loan Agreement No 2011-170-A between Jurmalas ATU and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 1,386,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 1,214,529 (LVL 853,576).
Loan Agreement No 2011-171-A between Kurzemes Ainava and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 881,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 771,442 (LVL 542,172).
Loan Agreement No 2011-172-A between Eko Kurzeme and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 1,155,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 1,011,044 (LVL 710,566).
Pursuant to the Nordea Financing Agreements, the Group Companies have to comply with number of financial
covenants, namely:
(i)
(ii)
(iii)
total equity/total assets ratio, calculated by the bank 4 times per year using the data from the Group
Companies, should not be less than 20% in 2011, not less than 30% in 2012 and not less than 35% starting
from the first quarter of 2013;
the total interest bearing debt/EBITDA ratio, calculated by the bank 4 times a year using data from the
Group Companies, should not exceed 3.6 in 2011; starting from 2012 it should not exceed 3; and
Debt-Service Coverage Ratio, calculated by the bank 4 times a year using data from the Group Companies
and Jumis, should not be less than 1.3.
According to the Management, as of the date of the Prospectus, the above indicators are fulfilled. Please see:
“Risk Factors – Risks Relating to the Group’s Business – Certain of the Group’s credit facilities are subject to
certain covenants and restrictions”.
Additionally Jurmalas ATU has concluded Loan Agreement No 2011-515-A with Nordea Bank, dated 15
February 2012, for the total amount of EUR 100,000, maturing 28 February 2014. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. According to the agreement financial covenants which
should be followed are similar to the ones stipulated with Nordea Financing Agreements.
Working Capital Statement
Having done due analysis, the Management Board is of the opinion that the working capital available to the
Group is sufficient to meet its present requirements for at least the next 12 months following the date of
publication of the Prospectus.
Recent Trends and Developments
In April 2012 PET Baltija started deliveries of PET bottles from Belarus which considerably strengthens
situation with sourcing of raw materials.
In recyclables trading segment Eko Reverss has started experimental deliveries of semi-final RDF material.
73

In April 2012 Eko Riga won waste collection tender in Marupe region, neighbourhood of Riga City. Contract
was signed on 13 April 2012 and the Group expects to start servicing the new region from 1 July 2012.
Estimated annually collected volume in this area is 40,000 m 3 . The whole contractual price amounted to
approximately LVL 451,496. Also in 2012 Eko Riga won tender for waste collection organised by Rigas Udens
(water utilities’ supplier in Riga).
Starting from April 2012 the Group increased its fees for recovery of packaging waste.
The Group launched moving headquarters of Eko Baltija, LZP, Eko Reverss and Eko Riga to one office space.
This process should be finished in June 2012. This will allow the Group to consolidate operations and decrease
administrative expenses.
On 19 April 2012 merger of Tukuma Ainava into its subsidiary Kurzemes Ainava has been registered with the
Commercial Register.
Critical Accounting Policies
These are Group’s first consolidated financial statements that have been prepared in accordance with and comply
with International Financial Reporting Standards as adopted by EU (IFRS) and Interpretations issued by its
International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European Union.
The functional currency of the Group and the reporting currency for the Consolidated Financial Statements and
the Condensed Consolidated Interim Financial Statements is the Latvian lat. Balances disclosed as at 31
December and 31 March reflects the position as at the close of business on that date.
Estimates and judgments
The preparation of consolidated financial statements in conformity with IFRS as adopted by the EU requires the
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingencies. The significant areas of estimation used in the preparation of the
accompanying consolidated financial statements relate to revenue recognition, depreciation, allowance for bad
debts and inventories, and impairment evaluation. Although these estimates are based on the management’s best
knowledge of current events and actions, the actual results may ultimately differ from those estimates. The areas
involving a higher degree of judgment or complexity are described below.
Useful lives for property, plant and equipment
Asset useful lives are assessed annually and changed when necessary to reflect current thinking on their
remaining lives in light of technological change, prospective economic utilisation and physical condition of the
assets concerned.
Inventories
The Group performs estimates for calculation of net realisable values for slow-moving and obsolete inventories
to determine the loss of decrease in the value of inventories. Typically net realisable values are determined for
each position separately, if it is not possible historical experience is used to estimate possible loss.
Revenue recognition
Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods have
passed to the buyer, usually on delivery of goods, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably.
Revenue from services is recognised when services are rendered to customers in accordance with contractual
terms and conditions.
The Group recognises revenue based on the amount invoiced to customer net of value added tax when it has
earned revenue from sale of the goods or services and the net amount retained (that is, the amount billed to
customer less the amount paid to service provider) when it has earned a commission or fee.
74

Allowances for doubtful debts
The Group makes allowances for doubtful accounts receivable. Estimates based on historical experience are used
in determining the level of debts that management believes will not be collected.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are measured in the statement of financial position at the best estimate of the expenditure required to
settle the present obligation at the end of the reporting period date. Provisions are used only for expenditures for
which the provisions were originally recognised and are reversed if an outflow of resources is no longer
probable.
Provisions for restructuring costs include employee termination benefits and are recognised in the period when
the Group takes on legal or logical obligations to pay out such expenses; when the Group has developed a
detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement the plan or announcing its main features to those affected by it. The
measurement of a restructuring provision includes only the direct expenditures arising from the restructuring.
Goodwill impairment
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value.
Basis of consolidation
Subsidiaries
The consolidated financial statements include subsidiaries that are controlled by the parent company. Control is
presumed to exist where more than a half of the subsidiary’s voting rights are controlled by the parent company
or it otherwise has the power to exercise control over the operating and financial policies so as to obtain benefits
from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and
until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting
year as the parent company, using consistent accounting policies.
The purchase method of accounting is used to account for the acquisition of subsidiaries other than those
acquired from parties under common control. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured at their fair values at the acquisition date.
The consideration transferred for the acquirer is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent
consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar
professional services. Transaction costs incurred for issuing equity instruments are deducted from equity;
transaction costs incurred for issuing debt are deducted from its carrying amount and all other transaction costs
associated with the acquisition are expensed.
Associated companies
Investments in associated companies are accounted for by the equity method and are recognised initially at cost.
These are undertakings in which the Group holds from 20% to 50% of the voting rights and over which the
Group exercises significant influence, but which it does not control.
Equity method of accounting involves recognising in the profit or loss the Group’s share of the associate’s net
profit or loss for the year and eliminating unrealised gains and unrealised losses on transactions between the
Group and the associated undertaking to the extent of the Group’s interest in the associates. Dividends received
75

from the associate reduce the carrying amount of the investment. The Group’s interest in the associate is carried
in the statement of financial position at an amount that reflects its share of the net assets of the associate
including any goodwill on acquisition. Investments in associated undertakings are reported as non-current assets
in the Group’s consolidated statement of financial position.
Transactions eliminated on consolidation
The consolidated financial statements comprise the financial statements of the parent company and its
subsidiaries as at 31 December 2011. All intra-group balances, income and expenses and unrealised gains and
losses resulting from intra-group transactions are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment
to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
76

PRO FORMA FINANCIAL INFORMATION
Formation and Reorganisation of the Group
The Group’s assets have been gradually consolidated under Eko Baltija as a holding company of Eko Baltija
Group since 2007. The Issuer, as well as Eko SPV. were not a member of Eko Baltija Group (but were related
parties) until the below described legal restructuring was completed on 25 April 2012. In the preparation for the
Offering, the Group has completed the reorganisation to change its corporate structure. The legal restructuring
consisted of in-kind contribution of 58% of shares in Eko Baltija to Eko SPV, which allowed Eko SPV to hold
100% of shares in Eko Baltija, and the following in-kind contribution of 100% of shares in Eko SPV into the
Issuer (for more information on current Group structure please see: “Group Structure”).
The Issuer was incorporated on 11 August 2011 and during the financial year ended 31 December 2011 did not
carry out active commercial operations. As of 31 December 2011 the balance sheet value of the Issuer was LVL
25,336, where the liabilities consisted of paid up share capital of LVL 25,000, non-allocated profit of the year of
account LVL 286 and short term liabilities in relation to taxes and compulsory state social insurance payments of
LVL 50, but the assets consisted of loans to related companies of LVL 24,927 and cash of LVL 409.
Before the legal restructuring the Issuer did not have control over all of the Group Companies as of 31 December
2011 and therefore was not permitted to present consolidated financial statements for the whole Group for the
year ended 31 December 2011. In-kind contribution of 100% of shares in Eko SPV into the Issuer had a material
influence on the financial condition of the Group, due to the fact that Eko SPV is a party to financial agreements
with Nordea Bank, which provided financing for management buyout of Eko Baltija Group, which was finalized
in 2011.
Eko SPV is party to the following agreements with Nordea Bank:
Loan Agreement No 2011-387-A between Eko SPV and Nordea Bank, dated 15 September 2011, as
amended, for the total amount of EUR 14,000,000, maturing on 15 September 2018. The interest rate is
the aggregate of the margin of 4.5% and EURIBOR 3M. As of 31 December 2011 the outstanding
amount of loan was EUR 13,662,650 (LVL 9,602,165).
Nordea Client Agreement on Transactions with Derivative Financial Instruments No 11/2011 between
Eko SPV and Nordea Bank, dated 15 September 2011. In accordance with the agreement the maximum
exposure amount of the base currency equals to EUR 960,000 (LVL 674,692).
Moreover, in-kind contribution of 100% of shares in Eko SPV into the Issuer would have influence on the results
of operations of the Group for the year ended 31 December 2011, if it had been carried out in the year ended 31
December 2011.
Therefore, in addition to the Consolidated Financial Statements for the years ended on 31 December 2011, 2010
and 2009 and the Condensed Consolidated Interim Financial Statements for the three months ended on 31 March
2012, the pro forma consolidated financial information of Eco Baltia for the year ended 31 December 2011 (the
“Pro Forma Financial Information”) was prepared to provide information about how the restructuring operations
might have affected the financial information of the Group, if these operations had been completed by 31
December 2011. The Pro Forma Financial Information was also prepared in order to ensure potential investors
with comparable information about the Group and process of formation and reorganisation of the Group.
The Pro Forma Financial Information has been prepared on the basis of the financial reports of the following
companies of the Group: Eko Baltija, Eko SPV and the Issuer. The principles used in preparation of the Pro
Forma Financial Information will be used when preparing consolidated financial reports of the Issuer for
upcoming financial years.
The Prospectus does not include the non-consolidated financial report of the Issuer as for period from 11 August
2011 till 31 December 2011 due to the following reasons:
information about the Issuer from non-consolidated financial report of the Issuer as for period from 11
August 2011 till 31 December 2011 is reflected in the Pro Forma Financial Information;
77

the non-consolidated report of the Issuer as for period from 11 August 2011 till 31 December 2011 does
not reflect legal structure of the Group as of the date of the Prospectus and therefore could be misleading;
and
the non-consolidated report of the Issuer as for period from 11 August 2011 till 31 December 2011 is not
material for proper presentation of the operations and financial results of the Group.
Items derived from the Pro Forma Financial Information are presented below.
Pro Forma Statement of Comprehensive Income
As of 31
December
2011
Historical
Adjustments
(LVL in thousands)
As of 31
December
2011
Pro Forma
Net sales 26,595 - 26,595
Cost of sales (19,354) - (19,354)
Gross profit 7,241 - 7,241
Selling expenses (325) - (325)
Administrative expenses (2,932) - (2,932)
Other operating income 284 - 284
Other operating expenses (287) - (287)
Write-off of long-term financial investments - - -
Interest income and similar income 70 (23) 47
Interest expenses and similar expenses (324) (453) (777)
Other taxes (5) - (5)
Profit before corporate income tax 3,722 (476) 3,246
Corporate income tax for the reporting year (211) 71 (140)
Deferred income tax (133) - (133)
Current year profit/ (loss) and comprehensive income 3,378 (405) 2,973
Attributable to:
Owners of the parent 3,203 (405) 2,798
Non-controlling interests 175 - 175
Source: Pro Forma Financial Information
78

Pro Forma Statement of Financial Position
ASSETS
Non-current assets
As of 31
December
2011
Historical
Adjustments
(LVL in thousands)
As of 31
December
2011
Pro Forma
Goodwill 5,056 28,971 34,027
Intangible assets 40 - 40
Property, plant and equipment 5,662 - 5,662
Investments in subsidiaries and associates 2 - 2
Long-term loans and receivables - 25 25
Other financial assets 140 - 140
Total non-current assets 10,900 28,996 39,896
Current assets
Inventories 1,459 - 1,459
Trade and other receivables 1,626 - 1,626
Loans to related companies 1,852 (1,852) -
Other short-term receivables 1,546 - 1,546
Corporate income tax 116 - 116
Other short-term financial investments 1 - 1
Cash and cash equivalents 966 - 966
Total current assets 7,566 (1,852) 5,714
Total assets 18,466 27,144 45,610
Source: Pro Forma Financial Information
79

EQUITY AND LIABILITIES
Capital and reserves
As of 31
December
2011
Historical
Adjustments
(LVL in thousands)
As of 31
December
2011
Pro Forma
Share capital 150 22,275 22,425
Share premium 5,442 (5,442) -
Reorganization reserve (4,625) 4,625 -
Retained earnings 4,072 (4,072) -
Equity attributed to the shareholders 5,039 17,386 22,425
Non-controlling interests 1,080 - 1,080
Total equity 6,119 17,386 23,505
Non-current liabilities
Interest bearing borrowings 5,556 8,111 13,667
Finance lease liabilities 1,085 - 1,085
Deferred tax liabilities 317 - 317
Deferred income 182 - 182
Total non-current liabilities 7,140 8,111 15,251
Current liabilities
Trade and other payables 999 - 999
Interest bearing borrowings 2,392 1,437 3,829
Finance lease liabilities 595 - 595
Deferred income and customer prepayments 215 - 215
Corporate income tax liabilities 43 - 43
Derivatives - 210 210
Tax liabilities 246 - 246
Other liabilities 717 - 717
Total current liabilities 5,207 1,647 6,854
Total liabilities 12,347 9,758 22,105
Total equity and liabilities 18,466 27,144 45,610
Source: Pro Forma Financial Information
80

Pro Forma Statement of Cash Flows
As of 31
December
2011
Historical
Adjustments
(LVL in thousands)
As of 31
December
2011
Pro Forma
Net cash from operating activities 4,989 298 5,287
Net cash used in investing activities (7,764) (9,393) (17,157)
Net cash used in financing activities 2,885 9,095 11,980
Profit or loss from currency fluctuations (3) - (3)
Net increase in cash and cash equivalents 107 - 107
Source: Pro Forma Financial Information
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INDUSTRY OVERVIEW
Macroeconomic data in Latvia and the Baltics
The Group concentrates its business activities in Latvia, however it is also active in other Baltic countries -
Lithuania and Estonia.
Latvia
In 2004 Latvia became a member of the EU. Since May 2005 Latvia has been part of the ERM II and committed
to observe a central exchange rate of LVL 0.702804 to EUR 1 with a fluctuation band of ±15%, but Latvia
unilaterally maintains a 1% fluctuation band around the central rate.
The table below presents the population in Latvia in years 2007-2011 (in millions).
2011 2010 2009 2008 2007
Population 2.23 2.25 2.26 2.27 2.28
Source: Eurostat
Latvia with its 2.23 million population is one of the smallest countries in Europe. The population has been
slowly decreasing during the past five years.
The table below presents main macroeconomic indicators in Latvia in years 2007-2013.
real GDP growth rate (% change on
previous year)
GDP per capita, market prices
(EUR thousand)
2013 2012 2011 2010 2009 2008 2007
3.6* 2.2* 5.5 (0.3) (17.7) (3.3) 9.6
- - 9.7 8.0 8.2 10.1 9.2
inflation rate (%) - - 4.2 (1.2) 3.3 15.3 10.1
unemployment rate (%) - - 16.2 18.7 17.1 7.5 6.0
* forecast
Source: Eurostat
The economic growth of Latvia after accession in 2004 remained one of the highest in the EU until 2007. The
Latvian economy was heavily affected by the crisis and the GDP growth rate started to decrease in 2008 and
plummeted in 2009 by almost 18%. The Latvian government nationalized Parex Bank, the country’s second
largest bank and was forced to ask the International Monetary Fund and the European Union for an emergency
bailout loan. The state authorities reacted to the crisis by, inter alia, increase in taxes and sharp cuts in the state
expenses. In accordance with Eurostat in 2011 GDP in Latvia increased by 5.5% as compared to 2010.
Moreover, Eurostat estimates that Latvian GDP will continue to increase in 2012 and 2013.
The GDP per capita decreased after 2008 as a result of the crisis, partially reflecting the measures undertaken by
the government in response to the economic situation. However, it should be underlined that in 2011 GDP per
capita in Latvia was EUR 9,700, constituting a 21.3% growth as compared to 2010.
After accession to the EU the inflation rate in Latvia was growing continuously reaching peak in 2008. The
dynamic of the inflation rate growth in 2008 resulted from overheating of the economy, fuelled by, inter alia,
easy access to crediting. The decrease in the following years was attributable to down turn of the economic.
According to Eurostat, in 2011 inflation rate was 4.2%.
The unemployment rate in Latvia increased dramatically, reaching double digits, after 2008 financial turmoil. In
accordance with Eurostat in 2011 the unemployment rate in Latvia was 16.2%.
The table below sets forth data on annual disposable income per household (constant 2010 value) in Latvia in
years 2011-2020.
82

2020 2015 2011 Change
(in thousands of households) (%)
above USD 500 799 805 809 (1.2)
above USD 1000 797 802 805 (1.1)
above USD 5000 751 742 732 2.5
above USD 10,000 657 622 589 11.6
above USD 25,000 352 280 222 58.6
above USD 45,000 131 87 60 119.7
above USD 75,000 39 28 22 82.6
above USD 150,000 14 11 9 56.4
Source: Euromonitor International
The provided data indicate that in general the number of households with the lowest annual disposable income
will decrease by 2020. At the same time framework, the number of households with annual disposable income
per household above USD 25,000 will increase significantly which should drive the increase in consumer
spending in the future.
Lithuania
Lithuania became member of the EU in 2004. Since June 2004 Lithuania has been part of the ERM II and
committed to observe a central exchange rate of litas 3.45280 to EUR 1.00 with a fluctuation band of ±15%, but
Lithuania unilaterally maintains a 0% fluctuation band around the central rate.
The table below presents main macroeconomic indicators in Lithuania in years 2007-2013.
2013 2012 2011 2010 2009 2008 2007
population (millions) - - 3.24 3.33 3.35 3.37 3.38
real GDP growth rate (% change on
previous year)
GDP per capita, market prices
(EUR thousand)
3.5* 2.4* 5.9 1.4 (14.8) 2.9 9.8
- - 9.5 8.4 8.0 9.7 8.5
inflation rate (%) - - 4.1 1.2 4.2 11.1 5.8
unemployment rate (%) - - 15.4 17.8 13.7 5.8 4.3
* forecast
Source: Eurostat
Estonia
Estonia became member of the EU in 2004. Since 1 January 2011 has been part of the euro zone.
The table below presents main macroeconomic indicators in Estonia in years 2007-2013.
2013 2012 2011 2010 2009 2008 2007
population (millions) - - 1.34 1.34 1.34 1.34 1.34
real GDP growth rate (% change on
previous year)
GDP per capita, market prices
(EUR thousand)
3.8* 1.6* 7.6 2.3 (14.3) (3.7) 7.5
- - 11.9 10.7 10.3 12.2 12.0
inflation rate (%) - - 5.1 2.7 0.2 10.6 6.7
unemployment rate (%) - - 12.5 16.9 13.8 5.5 4.7
* forecast
Source: Eurostat
83

Comparison
The chart below presents real GDP per capita (EUR in thousands) in the selected European countries in 2011.
40
35.8
35.6
33.5
31.4
30
26.0
25.1
23.3
20
19.0
16.1
10
12.7
11.9
10.1
9.7
9.5
9.3
5.8
4.8
0
Austria
Finland
Belgium
Germany
Italy
EU average
Spain
Greece
Portugal
Slovakia
Estonia
Hungary
Latvia
Lithuania
Poland*
Romania*
Bulgaria*
* data for 2010
Source: Eurostat
With its GDP per capita in 2011 amounting to EUR 6,400 Latvia belongs to the EU members with the lowest
GDP per capita also behind Estonia (EUR 9,000) and Lithuania (EUR 7,300). Moreover, Latvian GDP per capita
is much lower than the EU average of EUR 23,300 providing significant room for convergence.
Characteristics of Waste Management in the EU
By definition waste means any substance or object which the holder discards or intends or is required to discard.
There are different types and divisions of waste. There are, e.g., municipal waste (meaning waste from
households, as well as other waste which, because of its nature or composition, is similar to waste from
household), commercial waste (consisting of waste from premises used wholly or mainly for the purposes of a
trade or business or for the purpose of sport, recreation, education or entertainment), industrial waste (being a
type of waste produced by industrial activity, such as that of factories, mills and mines), construction waste
(consisting of unwanted material produced directly or incidentally by the construction or industries) and
demolition waste (meaning waste debris from destruction of a building). In accordance with other classifications
waste could be divided into, e.g., packaging waste (where packaging means all products made of any materials
of any nature to be used for the containment, protection, handling, delivery and presentation of goods, from raw
materials to processed goods, from the producer to the user or the consumer), waste electrical and electronic
equipment or WEEE (covering variety of household appliances, IT and telecommunication equipment etc.),
waste goods harmful to the environment or GHE (including, e.g., batteries, tires, oils filters etc.) or hazardous
waste (covering broad set of, e.g., toxic, explosive, flammable, corrosive waste).
Waste management is a process, which consists of collection, transportation, recovery and disposal of waste,
including the supervision of such operations and the after-care of disposal sites, as well as actions taken as a
dealer or broker. Collection of waste is, in general, the process of gathering of waste, including the preliminary
sorting and storage of waste, for the purposes of transport to a waste treatment facility. Further, generated waste,
which was collected, could be treated, what means carrying out certain activities required to ensure that waste
has the least impact on the environment.
Waste could be treated in various ways, including, e.g., deposit into or onto land (e.g. landfill etc.), biological
treatment (e.g. composting), incineration and recovery (including recycling). Before landfilling the waste can be
pre-treated, meaning extraction of certain recyclable waste by means of mechanical sorting. Process of recovery
is understood as any operation the principal result of which is waste serving a useful purpose by replacing other
materials which would otherwise have been used to fulfil a particular function. Recycling is any recovery
84

operation by which waste materials (named recyclables) are reprocessed into products, materials or substances
whether for the original or other purposes.
Waste management occupies an important place in the EU policy. First of all, one of the main objectives of the
EU regarding waste management, as manifested in many EU framework documents (programs and strategies), is
to decouple the generation of waste from economic growth. Second of all, the EU aims at minimising the
negative effects of the generation and management of waste on human health and the environment, and reducing
the use of resources. To support the second aim the EU adopted the waste hierarchy, which should apply as a
priority order in waste prevention legislation and policy throughout the EU. The waste hierarchy is as follows: (i)
prevention; (ii) preparing for re-use; (iii) recycling; (iv) other recovery, e.g., energy recovery; and (v) disposal.
In general the EU legislation implements the polluter-pays principal, where the costs of waste management
should be borne by the original waste producers or by the current waste holders. Moreover, the EU has
implemented various steps to encourage either original waste producers or current waste holders to recover waste
in order to reduce the final disposal of waste. In accordance with European Parliament and Council Directive
94/62/EC of 20 December 1994 on packaging and packaging waste Member States have been obliged to achieve
certain levels of recovery and recycling of packaging waste. Certain obligations have been also imposed on the
Member States in regard to recovery and recycling of WEEE (in accordance with Directive 2002/96/EC of the
European Parliament and of the Council of 27 January 2003 on waste electrical and electronic equipment
(WEEE)). Detailed regulations on means to meet obligations contained in above mentioned acts should have
been implemented in legal framework of each Member State.
The following tables summarize basic data on waste management in the EU.
The table below presents data on municipal waste generated in selected EU countries in years 2007 – 2010
(kilogram per capita).
2010 2009 2008 2007
Denmark 673* 762 830 790
Germany 583* 592 589 582
Finland 470 480 521 506
Slovenia 422 448 457 439
Hungary 413 430 454 457
Bulgaria 410 470 474 433
Lithuania 381 361 408 401
Romania 365* 362* 392* 379*
Slovakia 333 322 328 309
Czech Republic 317 316 305 293
Poland 315* 316* 320* 322*
Estonia 311 346 391 449
Latvia 304 334 332 378
EU (27 countries) 503 510 520 523
Euro area (16 countries) 542 549 555 556
* estimated values
Source: Eurostat
As the table above presents, generation of waste per capita in Latvia in years 2007 – 2010 was substantially
lower than the average for the EU countries. In the presented period the amount of waste generated in Latvia per
capita was also lower than in the neighbouring Lithuania and Estonia. This trend is in general due to lower GDP
per capita in Latvia in comparison with most of the EU countries.
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The table below presents data on waste by category of treatment in selected EU countries in 2010 (in kilogram
per capita).
Waste treated Landfilled Recycled* Incinerated**
Denmark 673 23 284 365
Germany 583 2 361 220
Slovenia 471 272 194 5
Finland 470 212 154 104
Hungary 413 284 89 41
Bulgaria 404 404 0 0
Lithuania 348 328 19 0
Slovakia 322 260 29 34
Latvia 304 275 29 0
Czech Republic 303 205 50 47
Romania 294 290 4 0
Poland 263 193 68 3
Estonia 261 199 61 0
EU (27 countries) 487 186 193 108
Euro area (16 countries) 530 163 230 137
* Material recycling and other forms of recycling (including composting)
** Including energy recovery
Source: Eurostat
Presented data indicates that waste in Latvia is mostly disposed at the landfills (app. 91%) and to the less extend
recycled (app. 9%). Latvia does not use incineration as a category of treatment. In comparison to the average for
the entire EU (where app. 38% of waste is landfilled, app. 40% of waste is recycled and incineration covers app.
22% of waste treatment), it should be noted that Latvia is well below those averages. Similar trends could be
observed for other Baltic countries and Central and Eastern Europe in general.
Characteristics of Waste Management Industry in the Baltics
Overview
The Group concentrates its operations on waste management industry in Latvia. However, due to limited
capacity of the Latvian market, some business operations of the Group are carried throughout the Baltics.
The table below presents main indicators regarding waste generation in the Baltics in years 2007-2010 (in
thousands tonnes).
Latvia 2010 2009 2008 2007
Waste generated 680 753 752 861
Waste collected (total treatment) 680 753 756 782
Waste treated as percentage of waste generated 100% 100% 101% 91%
Deposit onto or into land 617 694 705 735
Waste deposited onto or into land as percentage of
waste treated
91% 92% 93% 94%
Material recycling 60 56 43 38
Waste recycled as percentage of waste treated 9% 7% 6% 5%
Other treatment* 3 3 8 9
Waste treated in other way as percentage of waste
0% 0% 1% 1%
treated
* Including other than material recycling forms of recycling (e.g. composting)
Source: Eurostat
86

Lithuania 2010 2009 2008 2007
Waste generated 1,253 1,206 1,369 1,354
Waste collected (total treatment) 1,142 1,146 1,292 1,297
Waste treated as percentage of waste
generated
91% 95% 94% 96%
Deposit onto or into land 1,079 1,093 1,237 1,245
Waste deposited onto or into land as
percentage of waste treated
94% 95% 96% 96%
Material recycling 43 37 40 29
Waste recycled as percentage of waste
treated
4% 3% 3% 2%
Other treatment* 20 16 15 23
Waste treated in other way as percentage
2% 1% 1% 2%
of waste treated
* Including other than material recycling forms of recycling (e.g. composting)
Source: Eurostat
Estonia 2010 2009 2008 2007
Waste generated 417 464 524 602
Waste collected (total treatment) 349 383 440 531
Waste treated as percentage of waste
generated
84% 83% 84% 88%
Deposit onto or into land 267 287 333 390
Waste deposited onto or into land as
percentage of waste treated
77% 75% 76% 73%
Material recycling 50 52 78 122
Waste recycled as percentage of waste
treated
14% 14% 18% 23%
Other treatment* 32 44 29 19
Waste treated in other way as percentage
9% 11% 6% 4%
of waste treated
* Including other than material recycling forms of recycling (e.g. composting)
Source: Eurostat
In accordance with presented data, in 2010 in Latvia 100% of generated waste was treated (either landfilled or
recycled). It should be noted that the same trend wasn’t observed in Estonia and Lithuania, where not all
generated waste was treated. In years 2007 – 2010 in all three Baltic countries majority of waste was landfilled.
Other treatment ways as percentage of total waste treated ranged in 2010 from 23% in Estonia, 9% in Latvia to
6% in Lithuania. In all three Baltic States material recycling was the most popular way of waste treatment (apart
from depositing onto or into land). Waste recycled as percentage of total waste treated ranged in 2010 from 14%
in Estonia, 9% in Latvia to 4% in Lithuania.
Major competitors of the Group in waste management industry in the Baltics
Latvia
The Group is the largest player in the waste management industry in Latvian market in terms of turnover, while
the second largest player is Finnish Lassila & Tikanoja (L&T). Largest part of revenues generated by
competitors of Eco Baltia is generated from waste collection services.
The table below sets forth financial data of four biggest waste management companies in Latvia for periods
indicated.
87

Revenue for the
year ended 31
December 2011
Revenue for the
year ended 31
December 2010
Change
2011/2010
EBITDA margin
for the year ended
31 December 2011
LVL in thousands % %
The Group 26,595 21,088 26 20
L&T* 12,041 12,977 (7) 25
Vides Investicijas** 4,811 4,214 14 11
Ragn Sells 1,892 1,565 21 6
* Revenue of L&T in the year ended 31 December 2011 are taken from the annual report for the year ended 31 December 2011 and EBITDA
margin is presented as of year ended 31 December 2010 (latest available information);
** Formerly Veolia.
Source: Annual reports of L&T, Eco Baltia, Veolia and Ragn Sells; available through: www.lursoft.lv
Lithuania
Leaders of Lithuanian waste management industry are: Econovus (owned by local investors - Avestis Group)
and Ecoservice (owned by large facility management company - City Service). Smaller market player is VSA
Vilnius.
The table below sets forth data on revenues of three biggest waste management companies in Lithuania for the
year ended 31 December 2010.
Revenue
LVL in thousands
Econovus 9,157
Ecoservice 7,306
VSA Vilnius 3,722
Source: Annual reports of Ecoservice and VSA Vilnius; available through: www.registrucentras.lt; information on revenues of Econovus was
obtained from: http://www.avestis.lt/index.php?page_id=19&news_id=99
Estonia
Estonian waste management market is dominated by Swedish Ŗagn-Sells and French Veolia.
The table below sets forth data on revenues of three biggest waste management companies in Estonia for the
year ended 31 December 2010.
Revenue
LVL in thousands
Ragn Sells 14,171
Veolia EE 11,648
Eesti Pakendiringlus 3,167
Source: Annual reports of Ragn Sells, Veolia EE and Eesti Pakendiringlus; available through: www.ariregister.rik.ee
Characteristics of Waste Management Industry in Latvia
Waste management industry in Latvia could be divided into the following segments: organisation of waste
recovery, waste collection, sorting and trading of recyclables, recycling and landfilling.
Organisation of waste recovery
Overview
In accordance with European Parliament and Council Directive 94/62/EC of 20 December 1994 on packaging
and packaging waste Latvia has been obliged to achieve certain levels of recovery and recycling of packaging
materials.
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The table below presents Latvia’s annual recovery targets for different types of packaging materials for years
2007-2015 (in %).
2015 2014 2013 2012 2011 2010 2009 2008 2007
Glass 65 63 61 58 55 50 45 40 35
Plastic 41 40 39 37 36 35 32 28 21
Metal 50 49 48 46 45 44 42 38 30
Wood 29 28 28 27 27 26 25 25 24
Paper, cardboard 83 82 81 79 78 77 76 74 67
Total all materials 60 59 58 56 55 54 52 51 50
Source: Cabinet Regulation No. 983 to the Packaging Law, dated 19 September 2010
In order to meet the required levels of recovery of packaging waste, as well as to encourage proper treatment of
other types of waste, the legislation of the Republic of Latvia set out the producers’ and importers’ responsibility
for the environmental impact of packaging and disposable tableware and accessories, WEEE, as well as GHE.
The system applies the principal ‘polluter pays’, where all the producers and importers of packaged goods,
electric and electronic equipment and goods harmful to the environment are obliged either to collect and recycle
those waste by themselves and pay the NRT or transfer the collection and recycling duties to the producers’
responsibility organization (“PRO”). The clients of PRO transfer the responsibility for execution of recycling
quota of the certain types of waste to PRO, which procure waste recovery so that their clients are exempted from
the NRT. For more information please see: “Regulatory Information – Environmental and other Licenses and
Permits”.
The table below presents NRT rates for different types of packaging products (EUR per ton).
Since 2009 2008 2007
Glass 357 286 229
Polymers (including PET) 929 857 571
Metal 1,000 643 343
Wood, paper, cardboard 214 214 71
Source: Natural Resources Tax Law of the Republic of Latvia, dated 15 December 2005
PRO in cooperation with waste management organisations (collectors, traders, recyclers) develops the system for
separate collection of waste and organises recycling of the collected materials and implements activities to
educate and motivate the inhabitants. The payment for the services provided by PRO is even up to 95 % lower
than the amount of NRT for an identical volume of materials.
The table below presents data on fees for waste recovery in 2012 in different EU countries (EUR per tonne, VAT
excluded).
Material
Latvia
Estonia (Sales
packaging)
Estonia
(Transport
packaging)
Lithuania
Glass 56.3 102.0 - 59.37
Paper, cardboard 33.0 105.0 93.0 1.3
Plastics (polymers) 149.1 409.0 109.0 27.51*
Metal 68.3 255.0 128.0 27.51
Wood 15.6 41.0 41.0 1.3
* excluding PET
Source: Official website of PRO Europe, http://pro-e.org/Overviewoflicensefees.html
89

The table below presents amounts of different types of packaging waste under PRO recovery in Latvia in years
2009 – 2013 (in tonnes).
2011 2010 2009
Glass 51,200 49,042 42,608
Polymers 34,203 33,078 27,984
Metal 9,852 9,279 7,777
Paper, cardboard 60,207 59,846 54,707
Wood 47,205 48,885 39,948
Total 202,667 200,130 173,024
Source: The Latvian Environmental Protection Fund Administration
The table below presents amounts of WEEE under PRO management in years 2009 – 2011 (in tonnes).
2011 2010 2009
WEEE 15,704 15,441 15,555
Source: The Latvian Environmental Protection Fund Administration
The table below presents amounts of different types of GHE under PRO management in years 2009 – 2011 (in
tonnes and pieces).
2011 2010 2009
Lubricant oils 18,532 16,275 12,737
Electric batteries, led 4,940 3,788 2,623
Electric batteries, Ni-Cd and Fe-Ni 44 42 36
Galvanic elements and galvanic batteries 349 330 290
Other electric batteries 61 59 21
All types of tires 12,100 8,601 5,437
Total 36,026 29,094 21,144
Oil filters (piece) 557,321 556,399 488,684
Source: The Latvian Environmental Protection Fund Administration
Market structure
According to calculations based on data from Latvian Environmental Protection Fund Administration (calculated
as percentage of total volume of waste under PRO’s management) LZP had 52% market share in organisation of
waste recovery segment in 2011.
Due to the high market entry barriers (high capital investments and licensing requirement) the packaging waste
segment is dominated by two local players: LZP (the Group Company) and Zala Josta. The smallest market
player Zalais Centrs is locally owned company, mainly competing with lower prices. In 2011 LZP had 60%
market share (calculated as percentage of total volume of packaging waste under PRO’s management) in
packaging waste recovery segment.
The WEEE segment is also characterized by the high market entry barriers due to capital investments and
licensing requirements. There are three main players operating in this segment: LZP, Latvijas Zalais Elektrons
and Zala Josta. In 2011 LZP had 23% market share (calculated as percentage of total volume of WEEE under
PRO’s management) in WEEE recovery segment. The other two market players have been increasing their
market shares by decreasing prices, while LZP has maintained a loyal client base, mainly servicing those
companies, which also have packaging waste or GHE to be recovered.
As two other organisations of waste recovery segments, the GHE segment is also characterized by the high
market entry barriers due to capital investments and licensing requirements. The main market participants are
LZP and Zala Josta. Other relatively small market participants are locally owned companies. In 2011 LZP had
90

20% market share (calculated as percentage of total volume of GHE, excluding oil filters, under PRO’s
management) in GHE recovery segment.
Waste Collection
Overview
Municipal solid waste forms the major part of total waste collected in Latvia, followed by construction and bulky
waste, WEEE and GHE. Waste collection companies collect different types of waste and transport them to:
landfills, companies that purchase, sort and trade recyclable waste, or waste recyclers.
Market for waste collection is regionally fragmented – there are 10 waste management regions, each having its
rules, tariffs and market participants. This is caused by the delegation of waste management tasks to
municipalities in accordance with the legislation (please see: “Regulatory Information - Environmental and other
Licenses and Permits”). In 5 out of 10 waste management regions the waste collection market is still controlled
by companies which are owned by municipalities. The regions where private waste collection companies operate
are: capital city of Riga and its region, Piejura, Liepaja, Austrumlatgale and Zemgale.
The chart below presents percentage breakdown of waste landfilled in Latvian regions in 2010.
Piejura*
6%
Others
14%
Zemgale
7%
Riga region
48%
Liepaja region
7%
Dienvidlatgale**
7%
Austrumlatgale***
11%
* In English: Costal region
** In English: Southern Latgale
*** In English: Eastern Latgale
Source: Latvian Environment, Geology and Meteorology Centre
According to the chart presented above almost half of waste landfilled in Latvia, are disposed in Riga region.
Based on the assumption, that most of waste generated in the region is landfilled in the same region (due to costs
of transportation), it could be stated that Riga region generates almost half of total volume of waste generated in
Latvia.
Waste collection companies are also involved in providing broader range of services, e.g., street and beach
cleaning; communal services: city cleaning in winter and summer, grass mowing, planting of greenery and daily
maintenance, biological waste management and sewage and pit services.
Market structure
Both local and international companies are present on the Latvian waste collection market. International market
participants include Finnish Lassila & Tikanoja (hereinafter L&T) and Swedish Ragn Sells. Each of 5 regions,
where private waste collection companies operate, differs in terms of companies present on the waste collection
market.
91

Riga and its region, as the biggest, is the most competitive. The following companies are active in this market:
L&T, Vides Investicijas (company which acquired business of Veolia in Latvia in May 2012), Ragn Sells, and
the Group.
In Piejura (Costal) region, the biggest market share belongs to the Group Companies - Jurmalas ATU and
Kurzemes Ainava, with minor competition from other waste collection companies.
Waste collection market in Liepaja region is divided between Eko Kurzeme (Group Company), having strong
position and company Nordia.
Waste collection market in Austrumlatgale (Eastern Latgale) region is divided between Vides Investicijas
(formerly Veolia), L&T and regional municipal companies.
Waste collection market in Zemgale region is dominated by Jelgava Kulk, with smaller market share of regional
municipal companies.
Recyclables Sorting and Trading
Overview
Companies active in this market purchase or collect materials that can be recycled from waste management
companies and companies that generate packaging waste. The major part of materials being recycled are:
packaging waste (paper and cardboard, polymers, glass, metal), GHE and WEEE. The purchased material is then
sorted and sold as raw materials to recyclers (both in Latvia and abroad) for further recycling or regeneration.
Sorting and trading market is closely correlated with organisation of waste recovery market and companies
present in this market widely cooperate with PROs.
Market structure
Both Latvian and international companies are active on sorting and trading market. Key market players are: the
Group Company - Eko Reverss (paper and cardboard, PET and PE, glass, metal, tires, mineral oils and WEEE ),
L&T (paper and cardboard, PET and PE), Vides Investicijas (paper and cardboard, PET and PE, glass), Ragn
Sells (paper and cardboard), Gofre Baltija (paper and cardboard, PET and PE), Juglas Papirs (paper and
cardboard), MKK (paper and cardboard), Pak Demiks (PET and PE) and Riork (paper and cardboard, PET and
PE). Depending on their strategy and core activities market participants implement different business models: (i)
sorting of recyclables collected by group companies, buying additional recyclables and then exporting them or
supplying group companies (Eko Reverss), (ii) sorting own (collected) recyclables, buying small amount of
recyclable material from industrial companies and then exporting them (L&T, Vides Investicijas, Ragn Sells),
(iii) buying recyclables and then exporting them (Gofre Baltija, Juglas Papirs, MKK, Pak Demiks, Riork).
The chart below sets forth market structure in export of recyclables in 2010.
Eko Reverss
41%
L&T
18%
Other market
players
41%
Source: Latvian Environment, Geology and Meteorology Centre
92

In accordance with data from Latvian Environment, Geology and Meteorology Centre 41% of total amount of
recyclables exported from Latvia was exported by Eko Reverss. The second biggest exporter was L&T with 18%
share. Other market participants had 41% export market share.
Recycling
Overview
Latvian recycling market cannot be treated as purely local market, but part of regional market instead. Therefore
it is difficult to estimate its size on the country level. Recycling companies usually specialize in one specific
sector depending on the type of material they recycle.
All market participants in Latvia are niche oriented with focus on one specific type of material. Main Latvian
companies operating on the recycling market are as follows: Nordic Plast (LDPE and HDPE pellets), PET Baltija
(PET flakes), Ligatnes paper mill (paper and cardboard), Juglas papirs (paper and cardboard), Tolmets (scrap
metal) and Liepajas Metalurgs (scrap metal).
PET and polymers collected in Latvia are mainly recycled locally. PET Baltija has strong position in the Baltic
region in PET bottles recycling, while Nordic Plast is the leading PE recycler in Latvia and has strong position in
the Baltics. Other independent market participants in the region are: Preformia (Finland) and Plastitehase
(Estonia).
Paper and cardboard waste collected in Latvia is mainly exported for recycling and regeneration due to
insufficient local processing capacities. Lithuanian recycling factories obtain the most paper and cardboard waste
for recycling in the Baltics. Key players in the region are: Klaipedos Kartonas (Lithuania), Ligatnes paper mill
and V.L.T. (both Latvia).
Glass waste from Latvia is mainly exported to recyclers in Estonia, Lithuania, Belarus and Ukraine, since local
recycling factories have terminated their operations due to their small size. Key market participants in the region
are: Jarvakandi klaas (Estonia), Jelizava (Belarus), Warta Glass Panevezys (Lithuania) and Vetropac (Ukraine).
PET recycling
The Group is active in recycling of PET raw material into PET flakes.
The chart below presents data on maximum output capacity of European PET recycling industry in years 2003-
2011 (tonnes in thousands).
1500
1102
1218
1305
1000
825
935 952
562
603
693
500
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Petcore, 2012
According to estimates based on data from Petcore in 2011 PET Baltija was market leader in both Latvia and the
Baltics with 100% and 86% market share respectively. Looking on the broader perspective, market share of PET
Baltija could be estimated (based on data from Petcore) on: 9% in CEE and Scandinavia and 1.8% in Europe.
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128 126 110
98 96 100
Landfilling
Landfills are currently primarily places to dispose waste. During last 10 years more than 500 waste disposal sites
were closed in Latvia. Currently, 10 up to date landfill sites are operational. Each waste management region has
one landfill, which is owned by the regional municipality. The biggest landfill in Latvia is Eko Getlini, which is
located 15 kilometres from the centre of Riga.
As of today vast majority of waste is disposed without any treatment. Although, in accordance with EU
regulations implemented in the Latvian law, in the nearest future all landfilled waste should be pre-treated,
meaning that before being disposed of in landfill, all waste must be treated to reduce its quantity and/or its
environmental impact.
According to data released by the Latvian Public Utilities Commission landfill tariffs in Latvia in 2012 range
from EUR 20 per tonne to EUR 32.2 per tonne, amounting to EUR 23.7 per tonne in Getlini Eko, EUR 31.9 per
tonne on Liepajas RAS and EUR 27.5 per tonne on Piejura (all presented amounts excluding VAT).
The chart below presents data on average price for waste disposal on landfills in certain EU countries in 2012 (in
EUR per tonne).
200
182
150
135
100
87
50
43 40 35 33
28 23
0
Source: Confederation of European Waste-to-Energy Plants, Landfill taxes & bans, 12 December 2011
In accordance with the chart presented above, average price for waste disposal on landfills in Latvia is
substantially lower than in other EU countries. It should be underlined that average price for waste disposal on
landfills in Latvia is lower than in other Baltic States - Lithuania and Estonia.
Industry Prospects
The waste management industry in Latvia, as well as in other Baltic States, is undergoing rapid convergence
with developed Western European countries. The following factors could be deemed as having crucial role in
future development of waste management industry in Latvia:
Increase in waste generation. While undergoing economical and social convergence to the levels of
development of Western European countries and level of residual income and domestic consumption
levels of per capita waste produced in Latvia should increase in accordance with increase in average
income levels of the population.
Decrease in waste disposal on landfills. In accordance with the EU policy, Latvia should decrease volume
of waste disposed into or onto land. This could be reached by, e.g. pre-treatment of waste. In other EU
countries (including, e.g., Estonia) this target was reached by increase of taxes for landfill waste. In
accordance with Confederation of European Waste-to-Energy Plants dated 12 December 2011 the
environmental tax for landfill in Estonia will raise 20% per year until 2015.
Increase in packaging waste recycling and recovery ratio. In accordance with EU legislation implemented
in Latvia the ratios of recovered waste in 2015 should reach 60% (from 55% in 2011) of total packaging
waste generated.
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Opening market for waste collection in certain regions. Currently 5 out of 10 waste collection regions in
Latvia are open (meaning that private waste collection companies are allowed to operate there), while in
other regions the waste collection markets are still controlled by companies which are owned by
municipalities. Opening of waste collection markets in those regions could give development
opportunities for privately owned waste management companies. In accordance with Latvian law, it’s
municipality’s decision to open the waste collection market in its region.
Changes in tariffs calculation. The waste collection industry will observe a shift from collection tariff
calculation on per person/m 3 basis towards calculation based on actual amount collected, which could
increase waste collection tariffs.
Implementation of deposit system for one-way soft drink bottles. Expected implementation of one-way soft
drink bottles deposit system in next 2-3 years in Latvia will significantly increase the domestic supply of
raw materials, including PET bottles.
Increase in fees for packaging waste recovery under PRO. The expected fee growth should be based on
increasing recycling targets (i.e., more amount of packaging waste should be recovered), which will lead
to increase of marginal cost of packaging recovery.
Innovation in recycling technology. Continuous development of technology allows introducing new
recycling methods. This provides opportunity to, e.g., produce higher value added products in recycling.
Increase in environmental public awareness. Educating society in order to urge people to sort different
types of waste in the households could lead to increase availability and value of recyclable material. This
allows more efficient treatment of waste.
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REGULATORY INFORMATION
This section provides a short summary of laws and legal regulations in Latvia binding at the date of this
Prospectus that, in the Company’s opinion, are relevant for carrying out waste management business activities
by the Group. Please note that the selection of legal provisions has been made at the sole discretion of the
Company and this does not purport to be a complete overview of the relevant regulatory systems. Please note
that laws and regulations are subject to changes and amendments, and the information contained herein is not
updated following the issuance of the Prospectus. Investors are advised to make their own investigation and
obtain independent legal advice should they wish to incorporate regulatory information into their investment
decisions.
Environmental and other Licenses and Permits
The Group Companies operate in the environment management sector and in particular in the waste
management, including waste collection, transport, reloading, storage, sorting and, trading, as well as waste
recycling. However, one of the Group Companies LZP maintains the major producers’ responsibility system in
Latvia, which ensures the management of packaging waste, waste electric and electronic equipment and waste of
goods harmful to the environment. Pursuant to the general principles provided in the Waste Management Law of
the Republic of Latvia, dated 28 October 2010, as amended (the “Waste Management Law”), waste management
should not negatively affect the environment and should be performed in such a way which would not threaten
human life and health. Accordingly, the operations of waste management companies are subject to various
mandatory environmental and licensing requirements. In addition, operations of waste managers are subject to
the so-called strict liability, i.e. in case of environmental damage or imminent threat of damage to environment
occurred, waste managers would be liable for environmental damage or imminent threat of damage irrespective
of their fault.
Pursuant to the definition provided in the Waste Management Law, waste is any object or substance, which the
holder discards or intends or is required to discard. For regulatory purposes 3 groups of waste may be separated:
(i) household waste, (ii) hazardous waste, and (iii) waste packaging and goods harmful to the environment,
including without limitation waste accumulators, used vehicles and waste electrical and electronic equipment.
Any activities with waste in Latvia may be performed only in accordance with the provisions of the Waste
Management Law and secondary legislation adopted on the basis of this law. For the purposes, inter alia, of
ensuring of establishment of a rational packaging waste management system in the state and thereby reducing
the undesirable impact of packaging waste on the environment the legislator has adopted the Packaging Law of
the Republic of Latvia, dated 20 December 2001, as amended (the “Packaging Law”). However, waste
packaging should be managed in accordance with the requirements of the Waste Management Law.
In accordance with the Waste Management Law, waste management includes the collection, storage, transport,
recovery and disposal of waste, supervision of such activities, after-care of disposal sites (landfills) after their
closure, as well as trade with recyclables and mediation in the waste management. The collection, reloading,
sorting, recovery or disposal of waste should be permitted only in places equipped for these purposes. Prior to
commencement of performance of the relevant waste management activities the waste manager should obtain a
permit from the State Environmental Service for collection, transport, reloading, sorting and storage of waste.
Procedure for issue of permits is prescribed in the Regulations on Procedure for Issue and Annul of Waste
Collection, Transportation, Reloading, Sorting or Storage, as well as on State Duty and Payment of it approved
by the Latvian government. The permit may be issued for the term of 10 years or for a shorter term, if requested
by the waste manager. In case a waste manager performs transportation of animal by-products and derived
products not intended for human consumption, the waste manager should comply with the conditions set by the
21 October 2009 European Parliament and Council Regulation (EC) No 1069/2009 laying down health rules as
regards animal by-products and derived products not intended for human consumption and repealing Regulation
(EC) No 1774/2002 and the waste manager should be registered with the Food and Veterinary Service. Whereas
if a waste manager performs other activities which fall within the category of polluting activities, a separate
permit for performance of category A, B or C polluting activities should be obtained in accordance with the Law
on Pollution of the Republic of Latvia, dated 15 March 2001, as amended (the “Law on Pollution”). If a waste
manager receives a permit for performance of category A or B polluting activities and requirements of waste
collection, reloading, sorting or storage are included in this permit, the waste manager should not be obliged to
receive a separate permit for waste collection, reloading, sorting or storage.
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Pursuant to the Waste Management Law, the responsibility for waste management is divided in two levels –
regional level and state level. Local municipalities are responsible for organisation of household waste
management in the territory of the respective municipality. The state is responsible for organisation of hazardous
waste management.
The municipalities should, inter alia, (i) organise the management of household waste, including household
produced hazardous waste, in conformity with the binding regulations of the municipality regarding management
of household waste, taking into account the state waste management plan and regional plans within the
administrative territory thereof; (ii) issue binding regulations regarding the management of household waste
within the administrative territory thereof, determining the division of such territory into municipal waste
management zones, the requirements for waste collection, also for the minimum frequency of household waste
collection, transport, reloading and storage, as well as the procedures according to which payments for such
waste management should be made; (iii) organise a separate waste collection within the administrative territory
thereof in compliance with the state waste management plan and regional plans. Municipalities should in
accordance with the procedures specified in the regulatory enactments regulating public procurement or publicprivate
partnership, select a waste manager, which will perform collection, transportation, reloading and storage
of household waste in the relevant household management zone. Waste producers (e.g. households) should enter
into a contract with the selected waste manager. Only the waste producer, which has been exempted from paying
the Natural Resources Tax (as described further in this section), is entitled to enter into a contract with the waste
manager selected by the waste producer itself.
In case of application of a public procurement procedure for selection of a household waste manager the
municipality and the waste manager should enter into the contract for a term not shorter than 3 years and not
longer than 5 years. The contract based on a public-private partnership may be entered into for a term not
exceeding 20 years. According to the transitional provisions of the currently effective Waste Management Law,
the contracts concluded for a definite period of time prior to 26 July 2005 without undergoing public
procurement procedure, should end on the date determined in the contract; the contracts granting rights to
provide waste management services concluded with municipality prior to 26 July 2005 without determining their
validity and contracts entered into or extended after 26 July 2005 without applying the regulatory enactments
regarding public procurement have to be terminated no later than by 1 July 2013 and the municipality should
select a municipal waste manager in accordance with the procedures specified in the regulatory enactments
regulating public procurement or public-private partnership. When the waste manager has been selected,
municipal authorities should conclude waste management contracts with the selected entity and should terminate
the former waste management contracts no later than one month after the new contract of the municipality with
the selected waste manager comes into force.
In parallel collection of separate waste goods in Latvia are facilitated by application of the exemption from the
NRT payments for packaging and goods harmful to the environment. According to the Natural Resources Tax
Law of the Republic of Latvia, dated 15 December 2005, as amended (the “Natural Resource Tax Law”)
packaging and disposable tableware and accessories (including electrical and electronic equipment), as well as
goods harmful to the environment and vehicles are the objects of the NRT. The NRT in relation to management
of goods harmful to the environment should be by paid by a person, who first in the territory of the Republic of
Latvia: (i) sells goods harmful to the environment, or (ii) for ensuring of economic activities uses goods harmful
to the environment. However, in relation to packaging and disposal tableware and accessories the NRT should be
paid by a person, who first in the territory of the Republic of Latvia: (i) sells goods in packaging; (ii) upon
provision of a service, attaches packaging to the product; or (iii) in public catering and retail trade sells
disposable tableware and accessories which are manufactured from plastic (polymers), paper, cardboard,
composite materials thereof (laminates) with polymer or metal components and metal foil.
Tax rates are provided in the Waste Management Law for each type of goods and packaging either for item or
for kilogram of them. However, the law provides that a taxpayer should not pay the NRT for packaging or
disposable tableware and accessories and for goods harmful to the environment, if the tax payer ensures
fulfilment of the norms for recovery specified in the regulatory enactments regarding environment protection or
has entered into agreement with the manager, which in turn has entered into an agreement with the Ministry of
Environment Protection and Regional Development and the Latvian Environmental Protection Fund
Administration regarding participation in the waste recovery system.
On 3 November 2009 the Latvian Government has adopted two regulations on the procedure for exemption from
payment of the NRT for goods harmful to the environment, including waste electrical and electronic equipment,
and for packaging and disposable tableware and accessories. Namely, the Cabinet of Ministers of the Republic of
97

Latvia adopted the Cabinet Regulations No. 1294 Order of exemption of payment of the natural resources tax for
goods harmful to the environment and the Cabinet Regulations No. 1293 Order of exemption of payment of the
natural resources tax for packaging and disposal tableware and accessories. Pursuant to those regulations, the
manager should co-ordinate with the Latvian Environmental Protection Fund Administration a waste recovery
plan with the maximum term of 3 years on the grounds whereof the respective waste recovery system should be
implemented. Prior to expiration of the indicated maximum term of 3 years a new waste recovery plan should be
coordinated with competent authorities and the term may be extended for additional 3 years (the number of such
extensions is currently not limited).
A tax payer is entitled to enter into a contract on the management of one kind of goods harmful to the
environment or waste packaging and disposal tableware and accessories only with one waste manager at a time.
The manager of waste packaging and disposal tableware and accessories may be changed once a year, however,
the manager of goods harmful to the environment – not more frequently than once a quarter.
Production Facilities and Technological Processes
Collection, reloading, sorting, storage, recovery or disposal of waste should be permitted only in places equipped
for these purposes. Licenses and permits for certain processes of waste management are valid only for the places
specified in the respective license or permit, and particular activities cannot be performed in other places. Waste
items dangerous to environment can be collected, only if a company owns specific equipment for storage and/or
utilization of such waste.
According to the Waste Management Law, waste management should be performed ensuring that it does not
negatively affect the environment, inter alia, does not cause threat to the water, air, soil, as well as plants and
animals, does not cause a nuisance through noise or odours, does not negatively affect the countryside and
specially protected nature territories or pollute or litter the environment.
Fire, Health and Safety Regulation
Facilities and equipment (including storage facilities, manufacturing units, waste collection and transportation
vehicles) used by the Group may be considered as hazardous facilities and place of work with increased risk, and
therefore they are subject to various fire, health and safety requirements.
Fire safety
According to the Latvian Fire Safety and Fire-fighting Law of the Republic of Latvia, dated 24 October 2002, as
amended, and secondary regulatory enactments, the management board of the company is responsible for fire
safety in the company. The management board of the company may delegate individual obligations in relation to
fire safety to a responsible employee. The company should have instructions applicable in case of fire, as well as
fire safety instructions. In a company employing more than 10 employees a responsible person and persons
developing instructions applicable in case of fire and fire safety instructions must have completed specific
educational programs accepted by the state authorities. Evacuation plans should be developed for facilities and
premises, where more than 50 persons may be present at the same time. Prior to commencement of operation of
a newly constructed facility, the permit from the State Fire and Rescue Service (the “SFRS”) must be obtained.
If a fire safety violation occurs, the SFRS may impose fines, oblige the entity to eliminate the shortages or apply
preventive measures on the relevant entity (including suspension of its operations, manufacturing facilities, or
use of buildings, premises and equipment).
Health and safety
The management of waste involves employees performing certain hazardous tasks, such as collection and
transportation of waste materials, working with potentially dangerous substances, operating storage and
transportation facilities, loading and unloading potentially dangerous materials, operating manufacturing
equipment, etc. Each of these tasks can raise the risks of accidents at workplace. Companies, operating in Latvia
and employing employees, are subject to various requirements in relation to safety of workplace.
According to the Labour Protection Law of the Republic of Latvia, dated 20 June 2001, as amended, an
employer is obliged to organise a labour protection system, which includes internal supervision of the working
environment, evaluation of the working environment risks, establishment of an organisational structure of the
labour protection (appointing responsible person in relation to labour protection, development of labour
98

protection documents, including, development of labour protection instructions), consultation with employees in
order to involve them in the improvement of labour protection. The State Labour Inspectorate (the “SLI”)
monitors correspondence of operations of employers to the labour protection and safety requirements. The SLI
has the power to inspect the work process, working environment and labour protection measures of a company at
any time. The SLI also has wide powers to apply remedial measures, including, to issue warnings and orders to
employers or possessors of dangerous equipment requiring elimination of inconsistency with labour safety
requirements and to suspend all activities of a company, the operations whereof do not comply with the
applicable law and regulations regarding labour safety. The SLI is authorised to impose fines on employers for
violation of applicable regulations.
Price Controls
As from 18 November 2010 pursuant to the new Waste Management Law, the Latvian Public Utilities
Commission (the “LPUC”) is obliged to approve the tariffs for disposal of household waste in waste landfill sites
and waste dumps. Municipalities approve the binding regulations regarding fees for household waste
management (except for household waste recovery) to be paid by waste producers or waste holders. On the basis
of the procedures provided for in the binding regulations, municipalities determine the fees for household waste
management (except household waste recovery) by their decisions, and such fees include: (i) payment for
collection, transport, reloading, storage, maintaining of separate waste collection, sorting and reloading
infrastructure objects in compliance with a contract, which has been entered into with the waste manager, (ii) the
tariff for the municipal waste disposal in landfill sites and waste dumps approved by the LPUC; and (iii) NRT
for disposal of waste in the amount specified in the regulatory enactments. The waste manager determines its
fees for collection, transport, reloading, storage, maintaining of separate waste collection, sorting and reloading
infrastructure objects in a competitive manner with an aim to be selected in accordance with the public
procurement procedure for entering into a contracts on household waste management with municipalities.
Municipalities are entitled to adjust these fees due to changes in the tariff for the municipal waste disposal in
landfill sites and waste dumps approved by the LPUC or in the natural resources tax for disposal of waste in the
amount, specified in the regulatory enactments.
Pursuant to the Waste Management Law, during the transition period (until municipalities have entered into a
contracts on household waste management with waste management companies selected in accordance with the
public procurement procedures), the fees for household waste management should comply with the last tariff
approved by the LPUC for household waste management which has been determined prior to 18 November
2010. Municipalities are entitled to adjust the tariff for household waste management due to the changes in the
tariff for the municipal waste disposal in landfill sites and waste dumps approved by the LPUC or in the natural
resources tax for disposal of waste in the amount specified in the regulatory enactments.
Antimonopoly Laws
Under Competition Law of the Republic of Latvia, dated 1 October 2001, as amended, a market participant
(including all entities connected to it by virtue of control) or several market participants jointly having position
of economic strength which enables them individually or jointly to significantly hinder, restrict or distort
competition in any relevant market for a sufficient period of time by acting with full or partial independence
from competitors, clients, suppliers or consumers are considered to have an individual or collective dominant
position in the relevant market. Although Latvian laws do not provide for a particular market share in the
relevant market at which a dominant position should be presumed, determining of the market share is an
important criterion for establishment of a dominant position under the law. The Latvian Competition Council
(the “LCC”) and courts when analysing dominance of a market player in the relevant market refer to the
European Court of Justice (the “ECJ”) case law in relation to the market shares as one of the criteria for
establishment of dominance. A market participant having market share of 50% in the relevant market is
presumed to have a dominant position in the relevant product market, unless it can prove that significant
competition exists in that relevant market and that it is subject to such competition. A company with a market
share of 35% or less can still be recognised as having a dominant market position if such company does not face
high competition in relation to the relevant market, for example, due to low market shares of its competitors.
Being in a dominant position is not itself punishable. However, the law applies additional restrictions on
companies in a dominant position and the LCC reviews the activities of such companies with particular scrutiny.
Potentially dominant companies should regularly perform self-evaluation of their positions in the relevant
markets and in case of finding themselves in a dominant position in any of relevant market, should make sure
99

that they observe the provisions binding upon the dominant market participants, which in particular prohibit
abuse of such a dominant position.
Latvian law provides a non-exhaustive list of activities that may be regarded as abuses of one’s dominant market
position. The abuse of one’s dominant position is prohibited by law and is punishable with an administrative fine
of up to 10% of the net annual global group turnover of the company and its related entities in the preceding
financial year.
Latvian law provides that if damages are caused to third parties as a result of abuse by a company of its dominant
position, such damages can be sought by third parties through court proceedings.
Activities that can be regarded as abuse of a dominant position include, but are not limited to: refusal to enter
into transactions or to amend provisions of a transaction without an objectively justifiable reason, limiting
production, markets or technical development to the prejudice of consumers, making conclusion of contracts
subject to acceptance by other parties of supplementary obligations, which, by their nature or according to
commercial usage, have no connection with the subject of such contracts, imposing unfair purchase or selling
prices or other unfair trading conditions, applying dissimilar conditions to equivalent transactions with other
trading parties, thereby placing them at a competitive disadvantage.
100

GENERAL INFORMATION ON THE ISSUER
The Issuer
The Issuer was incorporated in Latvia as Joint Stock Company KREDO TONIKA on 11 August 2011. On 25
April 2012 it was renamed into Joint Stock Company Eco Baltia. The registered office of the Issuer is at Darza
iela 2, Riga, LV-1007, Latvia. The telephone and fax number of the registered office is +371 6784 3796 and
+371 6784 3765 respectively.
Joint Stock Company Eco Baltia is a holding company of the Group whose principal assets are interests in equity
of the Group Companies incorporated and/or operating in Latvia in waste management industry. The Issuer does
not carry any business operations except for direct and indirect holding of interests in equity in the Group
Companies. The Group’s business operations are conducted through its Latvian subsidiaries.
Corporate Purpose
The Articles of Association of the Company are in conformity with the requirements of the Latvian law. The
latest version of the Articles of Association was registered with the Commercial Register on 18 May 2012.
The Company has been established to gain profit by carrying out commercial activities efficiently and
productively as provided in Article 1 of the Latvian Commercial Law. The Company is a holding company for a
number of waste management companies. The main types of commercial activities of the Company are provided
in Article 3 and are the following: (i) activities of holding companies, (ii) activities of head offices, and (iii)
management consultancy activities.
Corporate Resolutions and the Share Capital
Upon the Issuer’s incorporation on 11 August 2011 its issued share capital amounted to LVL 25,000
consisting of 25,000 ordinary registered shares, with a nominal value of LVL 1.00 each.
On 25 April 2012 the Issuer’s share capital was increased up to LVL 22,425,000 consisting of 22,425,000
ordinary registered shares, with a nominal value of LVL 1.00 each.
On 18 May 2012 the Issuer’s 22,425,000 ordinary registered shares with a nominal value of LVL 1.00
each were converted into 22,425,000 bearer shares with a nominal value of LVL 1.00 each.
On 17 May 2012 the Supervisory Board consented to and the Management Board adopted the decision to
increase the share capital of the Issuer up to LVL 6,279,000, by issuing up to 6,279,000 new bearer shares
with the nominal value of LVL 1.00 each.
As at the date of this Prospectus, all of the Shares, including the Sale Shares, are bearer shares and are fully paid
up and rank pari passu with each other and there is no other class of shares authorised. There are no different
voting rights, and each share should carry one vote. The Shares, including the Sale Shares, are registered with
the LCD under ISIN number LV0000101350. The Issuer offers for subscription also the New Shares. The
shareholders will acquire the rights arising from the New Shares after their issue. The New Shares, when issued,
will be bearer shares and will rank pari passu with other Shares, including the Sale Shares. The New Shares will
be provided with the same ISIN number. No depositary receipts for Shares in the capital of the Issuer have been
issued with the agreement of the Issuer, and the Issuer has not been informed that depositary receipts for Shares
in the capital of the Issuer have been issued without its agreement.
The Issuer has not issued any shares that do not represent participation in the share capital. No shares in the
Issuer are held by or on behalf of the Issuer or by direct and indirect subsidiaries of the Issuer. The Issuer has not
issued any convertible shares or bonds, exchangeable shares or shares with warrants. The Issuer has not issued
any acquisition rights or obligations over authorized but unissued capital or an undertaking to increase the
capital. The Issuer has not issued any share options.
Furthermore, there are no provisions of the Issuer’s Articles of Association or other documentation that would
have an effect of delaying, deferring or preventing a change in control of the Issuer, also governing the
101

ownership threshold, above which the shareholder ownership must be disclosed. Moreover, there are no
conditions imposed by the Articles of Association governing changes in the capital, where such conditions are
more stringent than is required by the law.
All the Shares, including the Offer Shares, have been or will be issued under the Latvian Financial Instrument
Market Law, the Latvian Commercial Law, the Latvian Civil Law dated 28 January 1937, as amended, and other
related legal acts.
The table below shows the current Issuer’s issued and paid-up share capital and the Issuer’s issued and paid-up
share capital assuming all of the New Shares have been issued.
Cumulative number
of shares
Nominal value
(LVL per share)
Current shares issued as at the date of the Prospectus 22,425,000 1.00
Shares to be issued for the Offering 6,279,000 1.00
Total issued shares post-Offering 28,704,000 1.00
102

GROUP STRUCTURE
Description of the Group
The following chart sets out the Issuer’s principal subsidiaries and interests in those subsidiaries, as well as the
structure of the Group, in each case as on the date of the Prospectus. For a more detailed description of the
assets, see “Business”.
Eco Baltia
100%
Eko SPV
100%
Eko Baltija
75.13%
Latvijas Zalais punkts
91.03%
100%
PET Baltija
Nordic Plast
100%
Eko Reverss
100%
90%
100%
100%
100%
Eko Riga
Vaania
Eko Kurzeme
Jurmalas ATU
Kurzemes Ainava
Eco Baltia (the Issuer)
The Issuer is the parent company of the Group. The table below sets forth certain important information on the
Issuer.
For further information on Eco Baltia, please see: “General Information on the Issuer.”
Company name:
Registered office:
Date of incorporation: 11 August 2011
Corporate code: 40103446506
Profile of business:
Members of the
Management Board:
Members of the
Supervisory Board:
Joint Stock Company Eco Baltia
Darza iela 2, Riga, LV-1007, Latvia
Holding company
Maris Simanovics (chairman of the Management Board)
Undine Bude
Viesturs Tamuzs
Olaf Martens
Raitis Maurans (chairman of the Supervisory Board)
Eduards Ekarts (deputy chairman of the Supervisory Board)
Lelde Vitina
Ugis Treilons
Martins Knipsis
Authorized capital: LVL 22,425,000
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Shares:
22,425,000 bearer shares with a nominal value of LVL 1.00 each
Subsidiaries
The Issuer is a sole direct shareholder of Eko SPV, which is the sole direct shareholder of Eko Baltija, holding
company of the Group Companies. Eko Baltija is a Latvian holding company that is the direct and indirect
shareholder of Latvian operating companies.
Company name:
Registered office:
Date of incorporation: 8 July 2011
Corporate code: 40103435432
Profile of business:
Members of the
management board:
Limited Liability Company Eko SPV
Darza iela 2, Riga, LV-1007, Latvia
Holding company
Maris Simanovics
Undine Bude
Viesturs Tamuzs
Authorized capital: LVL 10,000
Shares:
Shareholders:
10,000 one class capital shares with nominal value LVL 1.00 each
Joint Stock Company Eco Baltia – 10,000 shares (100% of the share capital)
Company name:
Registered office:
Date of incorporation: 12 February 2002
Corporate code: 40003582465
Profile of business:
Members of the
management board:
Members of the supervisory
board:
Limited Liability Company Eko Baltija
Darza iela 2, Riga, LV-1007, Latvia
Holding company
Maris Simanovics (chairman of the management board)
Undine Bude
Viesturs Tamuzs
Eduards Ekarts (chairman of the supervisory board)
Raitis Maurans (deputy chairman of the supervisory board)
Lelde Vitina
Authorized capital: LVL 150,000
Shares:
Shareholders:
150 one class capital shares with nominal value LVL 1,000 each
Limited Liability Company Eko SPV – 150 shares (100% of the share capital)
The Group’s business is carried out by operating companies incorporated under the laws of Latvia. The tables
below indicate the most important corporate information on the Group’s operating companies:
Company name:
Registered office:
Date of incorporation: 11 January 2000
Corporate code: 40003475890
Profile of business:
Members of the
management board:
Joint Stock Company Latvijas Zalais punkts
Maskavas iela 240-3, Riga, LV-1063, Latvia
Packaging recovery organization
Maris Simanovics (chairman of the management board)
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Members of the supervisory
board:
Edmunds Jansons
Sigita Namateva
Kaspars Zakulis
Undine Bude (chairman of the supervisory board)
Viesturs Tamuzs (deputy chairman of the supervisory board)
Martins Knipsis
Iveta Krauja
Egils Svars
Authorized capital: LVL 764,000
Shares:
Shareholders:
764 ordinary registered shares with nominal value LVL 1,000 each
Limited Liability Company Eko Baltija – 574 shares (75.13% of the share
capital)
Latvian Packaging Association – 38 shares (4.97% of the share capital)
Limited Liability Company TETRA PAK – 102 shares (13.35% of the share
capital)
Limited Liability Company Zala Josta – 50 shares (6.54% of the share capital)
Company name:
Registered office:
Date of incorporation: 27 February 2004
Corporate code: 40003667382
Profile of business:
Members of the
management board:
Limited Liability Company Eko Riga
Maskavas iela 240-3, Riga, LV-1063, Latvia
Waste collection
Management board should consist of 4 members. Currently 3 members are
elected to the board; Mr. Petur Valdimarsson has resigned from the
management board member position on 17 October 2011; the changes have not
been made public with the Commercial Register. Consequently, as of the date of
the Prospectus one position is vacant, and the management board consist of:
Edmunds Jansons (chairman of the management board)
Maris Simanovics
Gints Barkovskis
Authorized capital: LVL 258,330
Shares:
Shareholders:
25,833 one class capital shares with nominal value LVL 10 each
Limited Liability Company Eko Baltija – 25,833 shares (100% of the share
capital)
Company name:
Registered office:
Date of incorporation: 28 April 2003
Corporate code: 42103030389
Profile of business:
Members of the
management board:
Limited Liability Company Eko Kurzeme
Ezermalas iela 11, Liepaja, LV-3401, Latvia
Waste collection
Gints Barkovskis (chairman of the management board)
105

Laura Berga
Edmunds Jansons
Sigita Namateva
Maris Simanovics
Authorized capital: LVL 123,120
Shares:
144 one class capital shares with nominal value LVL 855 each
Shareholders:
Limited Liability Company Eko Baltija – 144 shares (100% of the share capital)
Company name:
Registered office:
Date of incorporation: 20 September 1996
Corporate code: 40003309841
Profile of business:
Members of the
management board:
Limited Liability Company Jurmalas ATU
Dzirnavu iela 5A, Jurmala, LV-2011, Latvia
Waste collection
Gints Barkovskis (chairman of the management board)
Laura Berga
Edmunds Jansons
Sigita Namateva
Maris Simanovics
Authorized capital: LVL 143,000
Shares:
Shareholders:
286 one class capital shares with nominal value LVL 500 each
Limited Liability Company Eko Baltija – 286 shares (100% of the share capital)
Company name:
Registered office:
Date of incorporation: 11 June 1998
Corporate code: 40003397793
Profile of business:
Members of the
management board:
Limited Liability Company Kurzemes Ainava
Dienvidu iela 2, Tukums, Tukums District, LV-3101, Latvia
Waste collection
Edmunds Jansons (chairman of the management board)
Sigita Namateva
Maris Simanovics
Gints Barkovskis
Laura Berga
Authorized capital: LVL 69,000
Shares:
Shareholders:
1,380 one class capital shares with nominal value LVL 50 each
Limited Liability Company Eko Baltija – 1,380 shares (100% of the share
capital)
Company name:
Limited Liability Company Vaania
Registered office:
Rudolfa Blaumana iela 10, Sigulda, Sigulda District, LV-2150, Latvia
Date of incorporation: 15 May 2003
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Corporate code: 40003630534
Profile of business:
Members of the
management board:
Holding concession to use Jumis
Management board should consist of 3 members. Currently 2 members are
elected to the board. Mr. Petur Valdimarsson has resigned from the
management board member position on 17 October 2011; the changes have not
been made public with the Commercial Register. Consequently, as of the date of
the Prospectus and one position is vacant, and the management board consist of:
Janis Pukis (chairman of the management board)
Ausma Ece
Authorized capital: LVL 52,000
Shares:
Shareholders:
52,000 one class capital shares with nominal value LVL 1.00 each
Limited Liability Company Eko Baltija – 46,800 shares (90% of the share
capital)
Aktsiaselts VSA Eesti – 5,200 shares (10% of the share capital)
Vaania holds 30-year concession to provide waste management services in the territory of Sigulda municipality
using the municipality owned Jumis as the pool of property. For more information on the concession please see:
“Material agreements – Waste Management Agreements – Concession agreement to use Jumis”.
Company name:
Registered office:
Date of incorporation: 5 December 1991
Corporate code: 40103032305
Profile of business:
Member of the
management board:
Limited Liability Company Jumis
Rudolfa Blaumana iela 10, Sigulda, Sigulda District, LV-2150, Latvia
Waste collection
Janis Pukis
Authorized capital: LVL 40,000
Shares:
Shareholders:
40,000 one class capital shares with nominal value LVL 1.00 each
Sigulda Town Council – 40,000 shares (100% of the share capital)
Company name:
Registered office:
Date of incorporation: 23 March 2001
Corporate code: 50003537891
Profile of business:
Members of the
management board:
Limited Liability Company Eko Reverss
Maskavas iela 240-3, Riga, LV-1063, Latvia
Recyclables sorting and trading
Kaspars Zakulis (chairman of the management board)
Edmunds Jansons
Ausma Ece
Authorized capital: LVL 60,000
Shares:
Shareholders:
6,000 one class capital shares with nominal value LVL 10 each
Joint Stock Company Latvijas Zalais punkts – 6,000 shares (100% of the share
capital)
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Company name:
Registered office:
Date of incorporation: 2 January 2003
Corporate code: 42103029708
Profile of business:
Members of the
management board:
Members of the supervisory
board:
Joint Stock Company PET Baltija
Aviacijas iela 18, Jelgava, LV-3004, Latvia
Recycling
Undine Bude (chairman of the management board)
Edmunds Jansons
Ausma Ece
Maris Simanovics (chairman of the supervisory board)
Viesturs Tamuzs (deputy chairman of the supervisory board)
Eduards Ekarts
Authorized capital: LVL 1,560,000
Shares:
Shareholders:
15,600 ordinary registered shares with nominal value LVL 100 each
Limited Liability Company Eko Baltija – 14,200 shares (91.03% of the share
capital)
PREVIERO N. S.R.L. – 1,400 shares (8.97% of the share capital)
Company name:
Registered office:
Date of incorporation: 24 May 2000
Corporate code: 40003495810
Profile of business:
Members of the
management board:
Limited Liability Company Nordic Plast
Rupnicu iela 4, Olaine, Olaine District, LV-2114, Latvia
Recycling
Undine Bude (chairman of the management board)
Edmunds Jansons
Ausma Ece
Authorized capital: LVL 1,524,324
Shares:
Shareholders:
1,524,324 one class capital shares with nominal value LVL 1.00 each
Limited Liability Company Eko Baltija – 1,524,324 shares (100% of the share
capital)
Company name:
Registered office:
Date of incorporation: 8 April 2011
Corporate code: 40103404377
Profile of business:
Member of the
management board:
Limited Liability Company MRTL
Darza iela 2, Riga, LV-1007, Latvia
Holding real estates
Gints Barkovskis
Authorized capital: LVL 2,000
Shares:
Shareholders:
2,000 one class capital shares with nominal value LVL 1.00 each
Limited Liability Company Eko Baltija – 2,000 shares (100% of the share
capital)
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BUSINESS OVERVIEW
Overview
The Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments, providing wide
variety of services, starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting
and trading, and finally (iv) recycling. The Group is market leader in Latvia in organisation of waste recovery
segment in terms of market share and turnover and the Group is one of the largest waste collectors in Latvia in
terms of turnover and the leader in terms of geographical coverage. The Group collects waste in cities and
surrounding regions of Riga, Liepaja, Talsi, Tukums, Jurmala and Sigulda. The Group also holds large market
share in terms of volume in recyclables sorting and trading segment in the Baltics. Moreover, the Group has an
unrivalled position in polyethylene terephthalate (“PET”) bottle and polyethylene (“PE”) recycling segments in
the Baltics in terms of amount of recycled material and turnover. The Group has a long lasting cooperation with
all key customers and municipalities.
In the three months period ended 31 March 2012 the Group had consolidated revenue of LVL 6,969,000 and net
profit of LVL 1,052,000. In the three months period ended 31 March 2012 55.5% of revenue was generated by
waste recycling segment, 22.7% by waste collection segment, 14.6% by organisation of waste recovery segment
and 7.2% by recyclables sorting and trading segment. In 2011 the Eko Baltija Group recorded consolidated
revenue of LVL 26,595,000 and net profit of LVL 3,378,000. In 2011 54.5% of revenue was generated by waste
recycling segment, 21.9% by waste collection segment, 15.9% by organisation of waste recovery segment and
7.7% by recyclables sorting and trading segment. For the avoidance of doubt it should be noted that the above
mentioned financial results were derived from the Consolidated Financial Statements and the Condensed
Consolidated Interim Financial Statements and are financial results of Eko Baltija Group and not of the Group as
it is at the date of the Prospectus.
History and Development of the Group
2000 Latvijas Zalais punkts (which can be translated into English as Green Dot Latvia) is established as
a “non-profit” organization by Latvian Packaging Association, Latvian Packaging Institute and
four industry players (Gutta, Laima, PTC and Tetra-Pak).
2001 Eko Investors, company established by Viesturs Tamuzs, establishes Eko Reverss, the company
engaged in sorting and trading of recyclable material.
2002 Mrs. Undine Bude and Mr. Maris Simanovics join Eko Investors.
2003 Eko Investors acquires Latvian Packaging Institute and thus becomes shareholder of LZP. Later
Eko Investors together with LZP establishes PET Baltija, the company engaged in PET recycling.
Company Vaania is established in order to enter into 30-year long concession agreement with
Sigulda city to operate Sigulda municipality owned waste collection company Jumis.
2004 Eko Investors, together with two individuals, establish Eko Riga. Eko Riga obtains 16-year long
license for providing waste collection services in Riga.
Eko Investors takes over distressed assets of Nordic Plast with the aim to make turnaround.
Eko Investors acquires majority stake in LZP.
2006 LZP broadens services it provides as PRO, by introducing, apart from packaging waste, also
WEEE and GHE recovery systems.
2007 The Group’s assets are separated from Eko Investors and consolidated under Eko Baltija as a
holding company.
Eko Baltija increases the number of shares owned in LZP and reaches 75.13% stake.
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Icelandic strategic investor Gamarjonustan (through its Latvian subsidiary Gamar Holding)
acquires 69.6% stake in Eko Baltija.
2008 Eko Baltija in cooperation with Otrais Eko Fonds, an investment fund established by Eko Investors
and financial investors, starts acquisitions of stakes in 8 regional waste collection companies,
including Eko Kurzeme, Jurmalas ATU, Tukuma Ainava and their subsidiaries. This allows the
Group to enter new regions.
The Group successfully finishes the turnaround of Nordic Plast PE recycling factory in the
industrial park in the city of Olaine.
The Group launches new PET Baltija recycling plant located in industrial park in the city of
Jelgava.
2009 PET Baltija increases the efficiency of its operations by installing two independent sorting lines
that help to decrease the amount of dropouts created during the production process.
2010
Nordic Plast commences the recycling of PET bottle corks and labels in the result of what high
density polyethylene (“HDPE”) pellets are produced.
8 regional waste collection companies are consolidated into the Group and Otrais Eko Fonds
becomes a shareholder of Eko Baltija. As a result of this transaction as well as debt to equity swap
the stake of strategic investor Gamarjonustan decreases to 42%.
2011 Remaining stake (42%) in Eko Baltija of Icelandic strategic investor is bought out by the Group’s
managers (Mrs. Undine Bude, Mr. Maris Simanovics and Mr. Viesturs Tamuzs).
The Group wins 2 large tenders for household waste collection (in Jurmala and Babite
municipalities).
PET Baltija receives the awards “Gazele” and “Zemgales Gazele” for the financial achievements in
2010 and the title “The best exporter” for the achievements in the area of export in 2010.
The Group finishes the reconstruction of polyethylene first stage processing line in Nordic Plast
production facilities, implementing new technology that considerably decreases the energy
consumption.
The Group launches its pilot program for separating different not recyclable waste from the
household waste and deliver to mechanical biological treatment production facilities thus
decreasing the amount of waste deposited to landfills and optimizing the costs.
2012 In the preparation for the Offering, the Group completes the reorganisation to change its corporate
structure. The legal restructuring consists of in-kind contribution of 58% of shares in Eko Baltija to
Eko SPV, which allows Eko SPV to hold 100% of shares in Eko Baltija, and the following in-kind
contribution of 100% of shares in Eko SPV into the Issuer (for more information on current Group
structure please see: “Group Structure”).
Competitive Strengths and Advantages
The Group believes that the competitive strengths and advantages of its business are as follows:
Highly competitive vertically integrated business model. The Group is the largest vertically integrated
multi-service waste management group in the Baltics in terms of turnover, consisting of companies that
operate in four different waste management segments: organisation of waste recovery, waste collection,
recyclables sorting and trading, and recycling. Presence in those waste management segments allows the
Group to efficiently implement and exploit vertical integration of the Group Companies operating in
segments, which are complementary to each other. Vertical integration enables the Group to manage its
operations in more effective way and therefore decreases costs. Moreover, the vertical integration and
economies of scale allow the Group to provide wide range of services at competitive prices.
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Successful experience in accelerated growth. In recent years the Group has executed number of
significant acquisitions and investments, which fuelled the Group’s growth. The acquisitions of other
market players allowed the Group to enter new markets and consolidate waste management industry in
Latvia. The Group has completed numerous restructurings and turnarounds of the waste management and
production companies. The Group was also engaged in number of greenfield investments, including
launch of PET Baltija and Eko Reverss. All those successful investments and projects allowed the
Group’s management to gain extensive experience and rare skills, which are essential in further expansion
and growth of the Group’s business and operations.
Diversified business model. The Group operates in four different waste management segments, what
allows diversifying its cash flows. Moreover, business model implemented by the Group means that in the
financial year ended 31 December 2011 approximately 80% of the Group’s revenue was not tariff driven.
Diversification of business operations mitigates certain risks and facilitates risk management activities.
Modern equipment and unique technologies. Throughout all its operations the Group uses modern and
well maintained equipment. The Group profits especially from modern equipment installed in the
production facilities of PET Baltija and Nordic Plast, which are the only PET and PE recycling facilities
of such kind in the Baltics. Combination of modern and well maintained equipment and high quality of
recycled raw material allows PET Baltija and Nordic Plast to offer products of higher quality and allows
using capacities of its production facilities more efficiently. The Group also implements unique
production technologies in Nordic Plast. Namely, recycling of PET bottle corks and labels in the result of
what HDPE pellets are produced is unique in the Baltics and gives the Group a notable advantage over its
competitors.
Market leadership. The Group is market leader in Latvia in organisation of waste recovery segment and is
one of the largest waste collectors in Latvia in terms of turnover and the leader in terms of geographical
coverage. The Group also holds large market share in terms of volume in recyclables sorting and trading
segment in the Baltics. Moreover, the Group has an unrivalled position in PET and PE recycling segments
in the Baltics. Market leadership allows the Group to capitalize on increased scale of operations, as well
as on introduction of new services and products. Thanks to its market position and broad experience the
Group could exploit appearing market opportunities in more efficient and cost effective way.
Highly competent growth oriented local management. The Group’s management is broadly experienced
in the area of waste management business. Mr. Viesturs Tamuzs and Mrs. Undine Bude have more than
12 and Mr. Maris Simanovics has more than 10 years of experience in waste management industry.
Moreover, throughout its career the Group’s management was engaged in waste management business in
Latvia and therefore has gained unique experience, knowledge and know-how, which is essential for
success in Latvian market. Based on the successful historical track record, the Group’s management has
strong experience in organic development, greenfield project development, business acquisitions and
consolidation which could be used in expansion of Group’s business outside Latvia.
Solid and consistent financial performance. In the three months period ended 31 March 2012 the Group
had consolidated revenue of LVL 6,969,000, EBITDA of LVL 1,562,000 (EBITDA margin of 22.4%)
and net profit of LVL 1,052,000 (net profit margin of 15.1%), as compared to consolidated revenue of
LVL 6,315,000, EBITDA of LVL 1,540,000 (EBITDA margin of 24.4%) and net profit of LVL1,079,000
(net profit margin of 17.1%) in the three months period ended 31 March 2011. In the financial year ended
31 December 2011 the Group had consolidated revenue of LVL 26,595,000 and net profit of LVL
3,378,000 (net profit margin of 12.7%), as compared to consolidated revenue of LVL 21,088,000 and net
profit of LVL 1,794,000 in the financial year ended 31 December 2010 (net profit margin of 8.5%) and
consolidated revenue of LVL 13,851,000, and net loss of LVL 515,000 in the financial year ended 31
December 2009 (including LVL 823,000 recognized as goodwill impairment loss). The Group’s EBITDA
was LVL 5,328,000 for the financial year ended 31 December 2011 (EBITDA margin of 20.0%), as
compared to LVL 3,739,000 for the financial year ended 31 December 2010 (EBITDA margin of 18%),
and LVL 1,302,000 for the financial year ended 31 December 2009 (EBITDA margin of 9.4%). For the
avoidance of doubt it should be noted that the above mentioned financial results were derived from the
Consolidated Financial Statements and the Condensed Consolidated Interim Financial Statements and are
financial results of Eko Baltija Group and not of the Group as it is at the date of the Prospectus.
Excellent ongoing collaboration with local authorities. Throughout its history the Group has established
excellent and long lasting collaboration with local authorities. The Group has been engaged in
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development of waste management infrastructure in the regions, what increased standard of living of the
local societies. Excellent ongoing collaboration with local authorities is essential in day-to-day operations
of the Group, as well as could be very useful in further expansion and growth of the Group’s business and
operations.
Diversified client and supplier base. The Group profits from broad portfolio of clients and suppliers.
Thanks to that the Group is not dependant on any major client or supplier, what substantially decreases
certain operational risks. Moreover, the Group exploits excellent customers and suppliers network
throughout the Baltics and Europe, what could be essential in further growth and expansion of the Group.
Positive public image. Certain Group Companies are well-recognized and have positive image. LZP
especially profits from use the “Green Dot” trademark, which is recognizable throughout Europe.
Moreover, Eko Baltija is recognized as reputable and trustworthy partner among decision makers,
politicians and local authorities.
Business Strategy
Being the leading waste management group in the Baltics by revenues, the Group believes that it can capitalise
on significant market growth potential and the market’s fragmented structure, by identifying attractive
consolidation opportunities and continuing its organic growth. The Group’s strategy rests on the key pillars
described below:
Investing into sorting of municipal solid waste by construction of the mechanical biological treatment
plant. The Group plans to develop the mechanical biological treatment (the “MBT”) plant to be located
near Getlini landfill. This would potentially be the first MBT plant in Latvia. In general, the waste
entering the MBT plant is split into three major parts: (i) recyclables (ii) material suitable for burning in
cement kilns or incineration plants with certain calorific value and (iii) waste to be disposed in landfill.
Technology will allow extracting up to 20% of recyclable materials from the total input. Development of
the MBT plant would secure supply of new types of recyclable raw materials and therefore would allow
introducing new business lines in the recycling business. The Group sees two alternatives for MBT plant
development: greenfield or acquisition of market players outside Latvia which operate own MBT plant
and transfer this technology to Latvia. Development of the MBT plant would allow the Group to increase
the volume of recyclables traded to 96,500 tonnes in 2013 and 181,000 tonnes in 2015.
Introduction of new products in the recycling business line. The Group plans to expand portfolio of
products of PET Baltija and Nordic Plast. PET Baltija aims at developing production of crystallized PET
pellets, which could be used in food industry (as material for production of food packaging). This would
allow PET Baltija to increase output volume to 22,700 tonnes of products in 2013 and 29,000 tonnes of
products in 2015. Nordic Plast plans to increase its production capacities by adding a new line for
production of polypropylene (“PP”) pellets from woven bags. This would allow Nordic Plast to increase
output volume to 7,400 tonnes of products in 2013 and is planned to stay on the same level until 2015.
Moreover, the Group wants to develop recycling of construction and demolition waste. As above
mentioned recycling business lines have not been developed in Latvia yet, the Group has unique
opportunity to profit from its introduction, as well as capitalize on the first mover advantage.
Geographical expansion. The Group plans to expand its business through acquisitions in waste
management segment across the Baltics. This will allow the Group to strengthen its market position and
enter new, attractive markets. The Group will concentrate on seeking targets in collection and recyclables
sorting and trading segments across the Baltics. Moreover, the Group aims at using opportunities arising
from potential liberalization of waste collection markets in Latvian regions.
Securing raw material base. The Group aims at securing stable, internal supply of raw materials for the
Group Companies, by integrating collection and recyclables sorting and trading segments. This aim
would be reached by local and international expansion in order to create a pan-Baltic collection business,
which would serve as solid raw material base. Not taking into potential acquisitions, the Group plans to
increase volume of waste collected to 1,120,000 m 3 in 2013 and 1,500,000 m 3 in 2015. Moreover, the
Group plans to take part in introduction of one-way soft drink bottles deposit system in Latvia as soon as
it will be possible, which could be developed in accordance with public-private partnership. Introduction
of such system will facilitate the flow of raw materials (including PET packaging) for the Group’s
recycling business. Furthermore, the Group plans to introduce separate waste collection system (i.e. by
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providing separate waste containers in collection sites), in order to improve sorting efficiency and
therefore obtain access to recyclable material of higher quality. The Group also considers obtaining
concessions on use of municipality owned landfills, which would add additional source of raw materials
flow for the Group Companies. Additionally, the Group plans to increase its presence in collection of
construction and demolition waste and thus facilitate flow of raw material, which would allow
introducing new business lines in the recycling business (i.e., recycling of construction and demolition
waste).
Launching new cross-sector business projects. The Group actively seeks market opportunities for
launching new business lines, which include processing of waste biomass, including wood waste,
agricultural waste, sewage sludge, biological waste from food production, household waste and others.
Projects include development of a biogas plant for production of electricity and heat from anaerobic
digestion of biological waste, and renewable energy power plant for production of electricity and heat
using biomass from municipal solid waste. Cogeneration plants will produce heat for local commercial
entities and households, while electricity will be sold to Latvian national grid according to feed-in tariffs.
The Group is also developing new regional projects for recycling of commercial and industrial waste,
including electronic scrap, construction waste, end-of-life tires. The Group would use its extensive
experience in waste recovery organisation segment to profit from development of such new initiatives.
Introduction of one-stop-shop concept. The Group aims to develop on-stop-shop concept providing wide
range of services for households, including not only waste collection, but also snow removal and sewage
services.
Applying global trends, technologies and processes to local conditions. The Group seeks to make use of
the market opportunities resulting from transition of waste management industry in the Baltics to the
levels of its development in Western European countries. The Group wants to monetize on changes
connected with decrease of waste landfilled, reduction of “grey” part of waste market, increase in waste
recycling and recovery (due to EU requirements), growing social awareness, and PRO introduction aimed
at construction and demolition waste and other types of waste. The Group also aims at implementing of
so-called “zero waste concept”, where separate waste disposal, proper sorting and existence of recycling
facilities makes waste flow a valuable material base. Moreover, the Group is constantly monitoring
appearance of new technologies and processes in the global waste management industry, in order to
identify, adjust to local conditions and implement profitable business and operational solutions.
Actively seeking for the opportunities of financing from the EU. The Group operates in industry, which
has great importance for sustainable growth of EU community and therefore is subject to financing from
different EU funds. In the Management’s view such financing may be invested in various projects, which
could fuel the Group’s further growth. Therefore, the Group aims at active seeking for the opportunities
of obtaining financing from different EU funds.
Principal Business Activities
The Group’s business model represents vertically integrated multi-service waste management provider. The
Group operates in four different waste management segments: (i) organisation of waste recovery, (ii) waste
collection, (iii) sorting and trading of recyclables, and (iv) recycling.
Organisation of waste recovery
Overview
The Group is present in the organisation of waste recovery through LZP, which was the first to enter and now is
one of the leading producers’ responsibility organizations (“PRO”) in Latvia. Since 2000 LZP is a member of
Packaging Recovery Organization Europe (PRO Europe), which unifies “Green Dot” systems from 33 European
and North American countries. In the territory of Latvia the rights to use in respect to financial participation in
system of collection and recycling of packaging and packaging waste and to grant “Green Dot” trademark
belongs exclusively to LZP.
In 2001 Latvia introduced producers’ responsibility system. The system applies the principal ‘polluter pays’,
where all the producers and importers of packaged goods, electric and electronic equipment and goods harmful
to the environment are obliged either to collect and recycle those waste by themselves and pay the NRT or
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transfer the collection and recycling duties to the PRO. The clients of LZP or other PROs transfer the
responsibility for execution of recycling quota of the certain types of waste to LZP or other PRO, which procure
waste recovery so that their clients are exempted from the NRT.
LZP is implementing and coordinating the collection, processing, recycling and utilisation of certain types of
waste. LZP is not involved in physical processes of waste management. LZP acts as coordinator between
companies generating waste (e.g., producers, importers) and waste collectors, sorters, recyclers and traders
(including exporters). By becoming the client of LZP, the company transfers the responsibility for execution of
recycling quota of the certain types of waste to LZP, which procures waste recovery so that its clients are
exempted from NRT (for more information please see “Regulatory Information – Environmental and other
Licenses and Permits”). Throughout the whole cycle of activities LZP is supervised by competent state
institutions.
LZP implements and manages waste recovery system of the following types of waste:
Waste packaging and disposable tableware and accessories. This type of waste includes paper and
cardboard, glass, polymers, metal and wood.
WEEE. This type of waste includes, among others, refrigerators, monitors, electric bulbs, TV sets and
mobile phones.
GHE. This type of waste includes lubricant oils, different types of batteries, tires and oil filters.
The table below presents data on certain types of packaging waste under recovery of LZP in periods indicated (in
tonnes).
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
Glass 5,685 5,869 27,061 26,504 23,698
Polymers 5,752 5,549 23,619 23,681 21,823
Metal 1,432 1,335 6,101 5,929 4,886
Paper, cardboard 9,256 8,909 37,720 39,508 37,192
Wood 6,622 5,737 27,555 28,063 23,748
Total 28,747 27,399 122,055 123,685 111,346
Source: The Group’s data
The table below presents data on WEEE under recovery of LZP in periods indicated (in tonnes).
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
WEEE 673 654 3,323 3,711 5,149
Source: The Group’s data
The tables below present data on certain types of GHE under recovery of LZP in periods indicated (in tonnes or
pieces).
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For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
Lubricant oils 1,194 1,076 4,605 4,266 1,980
Electric batteries, led 463 328 1,758 1,470 1,081
Electric batteries, Ni-Cd and Fe-Ni 3 4 16 17 11
Galvanic elements and galvanic batteries 49 35 177 174 142
Other electric batteries 12 11 51 43 12
All types of tires 101 140 642 695 580
Total 1,822 1,594 7,249 6,664 3,806
Oil filters (piece) 53,649 46,054 207,365 202,253 150,132
Source: The Group’s data
The process of providing waste recovery services by LZP is as follows:
Identification of clients. LZP identifies entities, which have the duties under the producers’ responsibility
system and signs contracts with them, in accordance to which the client transfers the responsibility for
execution of recycling quota of the certain types of waste to LZP.
Clients’ reporting. LZP collects clients’ reports on the volume of packaged goods, electric and electronic
equipment and goods harmful to the environment placed by the clients on the market and based on those
reports calculates fees to be paid.
Organisation of collection and delivery of waste. LZP, in cooperation with local municipalities and waste
collectors, ensures collection of packaging waste, WEEE and GHE. LZP usually pays for packing waste,
WEEE and GHE collected (partly covering collection costs) and often finances, together with the waste
collectors, separate collection containers and special collection sites for different types of waste.
Moreover, LZP usually finances the process of delivery of the sorted packaging waste and other collected
goods from waste managers to processing and recycling companies.
Organisation of recycling. LZP organizes the process of recycling of collected packing waste, WEEE and
GHE and submits reports on the results to state institutions. Annually, LZP distributes certificates on
accomplishment of the recovery quotas to the clients.
Educating society. LZP implements projects for educating society in order to urge people to sort different
types of waste in the households. LZP also engages in informative campaigns on the benefits of joining
the waste recovery system and tax exemptions connected therewith. Moreover, LZP engages in
educational activities with current clients through organisation of seminars on compliance procedures,
changes in legislation, accounting issues and other information.
LZP has established long-term cooperation with local municipalities and over 30 major waste collectors in
Latvia. To collect packaging waste from inhabitants, LZP in cooperation with the waste management companies
designated by the municipalities adds to the container sites in densely populated areas special containers for
separate waste collection. In total more than 50 such separate waste collection sites are in operation and more
than 10 000 containers of various volumes have been placed for collecting packaging waste from inhabitants.
This ensures that LZP system for managing waste recovery covers approximately 75% of the territory of Latvia,
where resides approximately 80% of the country’s population.
In accordance with the orders of LZP, the waste packing collected in the containers is sorted on specially
equipped sorting lines. Sorting (e.g. PET bottles sorting by colours) is required to obtain high quality recyclable
material that complies with the requirements of processing and recycling companies. When the waste packing is
sorted on the sorting lines, it is pressed in bales to increase the volumes to be transported and thus decreasing the
transportation costs, because the most distant stage is delivery for processing. To obtain maximum effect from
the technological possibilities of the press, presses of different types and sizes are purchased and used. The
volume of waste packing ordered by LZP after collection and first stage processing (sorting, pressing) is sent to
recycling companies in Latvia and abroad.
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The optimal way for collecting WEEE from inhabitants is setting up collection points in the municipalities of
Latvian regions or at commercial centres, in cooperation with the local waste management companies and
recycled raw material management companies. In WEEE collection sites the inhabitants can dispose free of
charge of all types of household WEEE. The collection of WEEE from inhabitants and companies is also
arranged by using mobile WEEE collection sites. In the WEEE processing all hazardous components and
materials and substances not suitable for recycling, e.g. insulation foam and cotton, are separated from the
WEEE. Such hazardous components as water-resistant substances, waste containing Hg, PCS and other are
delivered to hazardous waste processing companies. Component, which can be recycled are delivered to
recycling companies.
The collection of GHE is done at the separate waste collection sites, equipped in cooperation with waste
management operators, as well as in car services and shops selling GHE. Used batteries are collected in
cooperation with joint-stock company BAO, which services more than 2,500 battery containers in shopping
centres, state, municipal and educational institutions. In approximately 57 sites equipped by LZP cooperation
partners – waste and recycling management companies it is also possible to dispose of car tires and power
batteries, while car lubricant oils and filters are collected mainly through car services and traders selling car
accessories. GHE requires special transport in order to be taken from collection units at the municipalities and
retail shops to processing plants. Such transport is equipped with freight container covers and flooring that
prevent any leaks of polluting material into the environment.
Customers
Majority of clients of LZP are leading importers, producers and retailers in Latvia, including international
corporations. Moreover, most of the companies, which import goods labelled with the Green Dot trademark, are
concluding agreements with LZP. Agreements with clients are usually signed for indefinite period with
possibility to terminate the contract with one or three month written notice. When concluding the agreement on
recovery of packing waste, the customer receives the right to use the “Green Dot” trademark for free.
The biggest clients of LZP are: RIMI Latvia (second leading supermarket chain in Latvia), Maxima Latvia
(leading supermarket chain in Latvia), Cido Grupa (largest producer of beverages and soft drinks in Latvia),
Coca-Cola Latvia, Mobil Plus (one of the oldest alcohol producers and distributors in Latvia owned by Finnish
Altia), Aldaris (the largest brewery in Latvia, owned by Carlsberg), Spilva (leading producer of meals and meal
additives), Procter & Gamble (Latvian branch of the world leading provider of consumer package goods), Greis
Logistika (one of the biggest wholesalers of FMCG products in Latvia) and LATALKO (alcohol wholesaler
serving more than 2,500 clients in Latvia). For detailed information in regard to terms of agreements with certain
major clients of LZP please see: “Material Contracts – Waste management agreements – Waste recovery
agreements of Latvijas Zalais punkts”.
The table below presents number of clients of LZP in the years 2000 – 2011.
Packaging Waste
management
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
2,424 2,085 2,193 1,690 1,459 1,254 1,050 756 501 286 12 7
WEEE management 558 503 504 468 404 323 32 - - - - -
GHE management 367 308 257 135 105 75 - - - - - -
Total 3,349 2,896 2,954 2,293 1,968 1,652 1,082 756 501 286 12 7
Source: The Group’s data
LZP clients pay two types of fees: one time joining fee (paid only by the clients of packaging waste recovery)
and weight-based or unit-based waste material service fee. Fees are not regulated or controlled by any
authorities. Service fee is usually paid quarterly, based on a report on the volume of packaged goods, electric and
electronic equipment and goods harmful to the environment actually placed by the client on the market. The
service fee is calculated based on the costs of collection, sorting, transportation and recycling of each type of
waste. Service fees received by LZP are on average higher than its main competitor Zala Josta’s fees, because
LZP has competitive advantage providing integrated solutions, including: waste management consultancy, onsite
visits, online reporting, material stream audit, seminars and implementation of efficient packaging waste
recovery solutions in cooperation with Eko Reverss.
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Suppliers
The main suppliers of LZP are waste collection, recyclables sorting and trading, and recycling companies both in
Latvia and abroad. LZP pays them for collection, transportation, sorting and recycling of certain amounts and
types of waste. Significant part of orders is fulfilled intra-group, mainly with Eko Reverss, Eko Riga, PET
Baltija and Nordic Plast. Other major suppliers of LZP are: ZAAO (municipal waste management company
operating in North-Western Latvia), Eko Osta (GHE waste manager), L&T (waste collection company), Ragn
Sells (Scandinavian waste management company), BAO (GHE waste manager), Eko Latgale (recycling
company operating in the second biggest Latvian city). Agreements with suppliers are usually signed for a longterm
period.
LZP cooperates with recyclers in Latvia and abroad where the following types of products are recycled:
PET. Major part is recycled by PET Baltija.
Polymers. Major part is recycled by Nordic Plast and Scholler Arca Systems.
Glass. Mainly exported to Lithuania (Warta Glass Panevezys) and Ukraine (Vetropac).
Paper and cardboard. Major part is exported to Lithuania and Ukraine, key local suppliers are V.L.T. and
Ligatnes paper mill.
WEEE. Major part is exported for recycling to Lithuania due to limited recycling possibilities in Latvia.
Some metal parts are recycled in Latvia: Liepajas Metalurgs recycles ferrous metals. Refrigerators are
recycled in cooperation with BAO. Lampu demerkurizacijas centrs ensures recycling of fluorescent bulbs.
GHE. Oil and oil filters are recycled by Eko Osta. Used batteries are mainly exported to Germany for
recycling, power batteries are mainly exported to Lithuania for processing and accumulators are exported
to Estonia for recycling at Ecometal company. Tires’ recycling is mainly covered by Latvian cement
manufacturing plant Cemex for heating, with some part being pressed into blocks for later use in road
construction through marshlands, as filter material for landfills or as insulation for explosive devices in
use by the military.
Licenses, permits and certificates
LZP has right to establish and implement waste recovery system of: (i) waste harmful to the environment, (ii)
WEEE, and (iii) waste packaging and disposable tableware and accessories, based on orders No 430, 431 and
428 issued on 29 December 2010 by the Ministry of Environment Protection and Regional Development of
Latvia. The orders were issued on the grounds of the plans for implementation of waste recovery systems for
above mentioned types of waste for period 2011-2013 prepared by LZP and accepted by the Ministry of
Environment Protection and Regional Development of Latvia. The orders grant rights to NRT payers, who have
signed the agreement with LZP on participation in the waste recovery system to apply exemption from NRT for
a period indicated in the orders, i.e. until 31 December 2013. Granted rights are conditional on validity of an
agreement entered into between LZP and Latvian Environmental Protection Fund Administration. On 30
December 2010 LZP signed such agreements with Latvian Environmental Protection Fund Administration (for
more information please see: “Material Contracts – Waste Management Agreements – Agreements with the
Latvian Environmental Protection Fund Administration”).
Additionally, LZP carries out the assessment, control and recovery of used packaging waste, WEEE and GHE in
compliance with the requirements set by ISO 9001:2008 standard, which is confirmed by the certificate issued
by the international auditing bureau Det Norske Veritas, stating that the quality control system implemented by
LZP is compliant with the aforementioned standard.
Waste collection
Overview
The following Group Companies, together with their certain subsidiaries, are engaged in the waste collection
business: Eko Riga, Vaania (through Jumis), Eko Kurzeme, Jurmalas ATU and Kurzemes Ainava.
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Eko Riga, Vaania (through Jumis), Eko Kurzeme, Jurmalas ATU and Kurzemes Ainava concentrate their
activities on providing waste collection services, including collection of waste from household and commercial
clients, as well as collection of construction waste. Depending on the season, every Group Company operates
twenty to forty different domestic waste collection routes, which are developed with maximum efficiency, so
that no excess passages, near-empty containers or ineffective runs are present. The Group Companies have
enough machinery units at their disposal to ensure persistent waste collection process for all of their customers,
as well as to change the frequency of waste collection from each object and the number and capacity of
containers at any moment, should such need arise or given the customer’s request or suggestion. The Group
Companies ensure high-quality container repair and replacement service – depending on the damage suffered by
the container, it may either be repaired at the object itself (by a mobile brigade) or replaced with another, in case
it’s not possible to repair the container quickly. The Group Companies wash and disinfect the containers up to 4
times a year, offering an innovative solution for the issue – it is possible to disinfect a container at the spot,
having all the hygiene and environmental demands complied with. A container is being washed with a special
compound that has disinfecting capability, but has no impact on the environment whatsoever.
The Group Companies also offer large-size waste collection, using vehicles equipped with a press, vehicles
specialized for the removal of construction and demolition waste or container vehicles with a hydraulic elevator
especially suitable for operations at the objects with limited access (narrow streets, inner courts etc.), as well as
offer transportation of animal by-products and derived products not intended for human consumption.
The waste collected is transported to the landfills or recyclables sorting and trading companies (if it is recyclable
waste).
The Group Companies are present in three out of five waste management regions in Latvia, where private waste
collection companies could operate (for more information please see: “Industry Overview – Characteristics of
Waste Management Industry in Latvia – Waste Collection”). Eko Riga and Vaania (through Jumis) are active in
Riga and its region, Jurmalas ATU and Kurzemes Ainava operate in Piejura region and Eko Kurzeme is active in
Liepaja region.
In accordance with Latvian law each municipality should select a waste manager (based on public procurement
or public-private partnership procedures), which will perform collection, transportation, unloading and storage of
household waste in the relevant household management zone. Waste producers (e.g. households) should enter
into a contract with the selected waste manager. Only the waste producer, which has been exempted from paying
the NRT (e.g. commercial entity), is entitled to enter into a contract with the waste manager selected by itself
(for more information please see: “Regulatory Information – Environmental and other Licenses and Permits”).
Based on above mentioned legal requirements imposed on the municipalities, the Group Companies concluded
number of agreements with municipalities on providing waste management services. Eko Riga signed
agreements with Riga, Carnikava District and Marupe District municipalities. Eko Kurzeme concluded
agreements with, among others, Liepaja and Grobina municipalities. Jurmalas ATU executed similar agreements
with Jurmala and Babite municipalities. Kurzemes Ainava has contracts with, inter alia, numerous
municipalities located in: Talsi, Dundaga, Engure, Jaunpils, Mersrags, Roja, Tukums and Kandava regions.
Jumis signed agreements with Sigulda City Council and Ligatne Region municipality. For more information on
terms and conditions of the above mentioned agreements please see: “Material Contracts – Waste Management
Agreements”.
The Group actively engages in expanding its territorial presence in waste collection industry in Latvia by
participating in public tenders organized by the municipalities. In 2011 the Group won two major public tenders
for waste collection services in Babite municipality and Jurmala.
Moreover, in order to broaden the services provided and satisfy customers’ needs the Group Companies provide
the following services: construction and demolition waste collection, production waste collection, sewage and pit
services, secondary raw materials collection, WEEE and GHE collection, winter services (e.g. snow removal),
waste management services to the municipalities (including street and beach cleaning; communal services: city
cleaning in winter and summer, grass mowing, planting of greenery and daily maintenance, cemetery
maintenance), public events services, cleaning services, BIO toilets rental, non-standard metal constructions,
catching of stray animals, biological waste management, food oil management, “inner” sorting (sorting waste in
offices and staircases), trading in non-slip materials (sand, salt, sand & salt mix available through retail and
delivery) and transportation services of animal by-products and derived products not intended for human
consumption.
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The table below shows certain other services provided by the Group Companies.
Eko Riga
Jumis
Jurmalas
ATU
Eko
Kurzeme
Kurzemes
Ainava
Construction and demolition waste
collection x x x x x
Production waste collection x x x x x
Sewage and pit services x x x x -
Secondary raw materials collection x x x x x
WEEE collection x x - x x
GHE collection x x - x -
Winter services x x x x x
Street cleaning - - x - x
Area cleaning / beach cleaning services x - x x -
Cemetery management - - - - x
Public event services x x x x x
Source: The Group’s data
Customers
The Group Companies generate revenues from fees paid by their clients. Waste disposal tariffs for household
waste management depend on the procedure in which the agreement between the municipality and the waste
manager was concluded. In general, if the waste manager is selected through the public procurement procedure,
the tariff is determined in competitive manner during public tender. On the other hand, during the transition
period (until municipalities have entered into contracts on household waste management with waste management
companies selected in accordance with the public procurement procedures), the fees for household waste
management should comply with the last tariff approved by the authorities. For more information please see:
“Regulatory Information – Price Controls”. Agreements with those clients are usually signed in accordance with
provisions prescribed in the agreements between the municipality and waste manager.
Other clients (including: large retail networks, manufacturers) pay for services provided by the Group on the
market basis. Agreements with those clients are usually signed annually.
Some of the big clients of Eko Riga are Vangazu namsaimnieks and CDZP, which are facility managers in Riga,
and Maxima Latvia, the biggest grocery chain in Latvia. The big clients of Eko Kurzeme are Rigas namu
parvaldnieks (Riga municipal facility manager), Liepajas namu apsaimniekotajs (Liepaja municipal facility
manager) and Nam Serviss (facility manager). Jurmalas ATU serves: Jurmala City Council and Jurmalas udens
(utility company). Kurzemes Ainava provides services to: Tukuma nami and Talsu namsaimnieks (both
companies are facility managers).
Selling method for household waste services for potential clients is direct active selling carried by permanent
sales managers of the Group Companies.
Suppliers
The major suppliers of waste collection companies are fuel suppliers and landfills. The Group Companies
purchase the fuel from Statoil Latvia.
The Group Companies pay landfill tariffs per tonne of waste disposed. According to data released by the Latvian
Public Utilities Commission landfill tariffs in 2012 range from EUR 20 per tonne to EUR 32.2 per tonne,
amounting to EUR 23.7 per tonne in Getlini Eko, EUR 31.9 per tonne on Liepajas RAS and EUR 27.5 per tonne
on Piejura (all presented amounts excluding VAT). The following Latvian landfills are major suppliers for the
Group Companies: Getlini Eko (used by Eko Riga, Eko Kurzeme and Jumis), Piejura (used by Jurmalas ATU
and Kurzemes Ainava) and Liepajas RAS (used by Eko Kurzeme).
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Licenses, permits and certificates
As of the date of the Prospectus all the Group Companies involved in the waste collection activities received all
necessary permits for performance of those activities. Those permits include, among others, permits for waste
collection and transportation, including transportation of animal by-products and derived products not intended
for human consumption, as well as permits for performance of category C polluting activities related to waste
transportation, i.e. management of own vehicle repair and maintenance workshop, parking lots and petrol station.
Please see: “Risk Factors – Risks Relating to the Group’s Business – The Group depends on licenses and permits
that could be revoked, the Group may not be able to prolong them or the Group may not be able to obtain
required licenses and permits”.
Eko Riga received ISO 9001:2009 (equal to European Standard EN ISO 9001:2008) certificate, issued by
Bureau Veritas which is valid until 25 September 2014.
Recyclables Sorting and Trading
Overview
The Group operates in the recyclables sorting and trading market through one of the Group Companies – Eko
Reverss. Eko Reverss has a leading position in terms of turnover in recyclables sorting and trading sector in
Latvia. Eko Reverss has also strong position in Lithuania and Estonia in the same segment.
In its business activity Eko Reverss concentrates on obtaining, sorting and trading of recyclables. Eco Reverss
obtains recyclables mainly in three ways: (i) by purchasing it from waste management organizations all across
Latvia (those operators generally sell material prepared for further resale, i.e. there is no need in sorting it); (ii)
by purchasing it from industrial customers, i.e. factories, warehouses, logistics centres, retail shops (the material
acquired from these partners has to be sorted and pressed); and (iii) by collecting it from containers for separate
collection placed in different regions (the material gathered from such containers has to be sorted and pressed).
The developed wholesale chain of recyclable raw materials works actively in whole Baltics, allowing Eko
Reverss to purchase materials also from Lithuania and Estonia. Key purchase criteria in the market are price and
quality correlation. Product purchase pricing is very flexible and depends on several issues, e.g. type and sort of
material and its volumes, and transportation costs, which depend on the distance where collected recyclables has
to be picked up from.
Depending on the type of material, its quality and place where it was obtained, the material is either transported
to the Eko Reverss facilities in Riga or delivered directly to the clients.
The material transported to Eko Reverss facilities is processed depending on its type and readiness for further
resale. The processing itself may be divided in two main directions: sorting and pressing the used packaging
material and disassembling and sorting WEEE and GHE. The used packaging material is sorted into different
groups: cardboard; polymers; PET; glass and other materials. The packaging material is being sorted at two
separation lines. The sorted material is then being pressed using three presses, which have different output and
application. When sorted and pressed, the material is kept in a warehouse within the Eko Reverss premises.
WEEE and GHE are sorted by different types of materials, depending on its recyclability value. When sorted, the
material is being kept in a warehouse until it’s sold.
Further, the material is sold both in Latvia and abroad. The prices of products that are sold are calculated based
on prices in international markets for those materials. Eko Reverss maintains database of its clients and contact
them whenever sufficient amount of recyclables for sale is available.
In its business activity Eko Reverss is involved in obtaining, sorting and trading of, inter alia, the following
recyclable materials:
Glass. Obtained both sorted and unsorted. First sort glass of high quality and mixed glass of lower
quality, used as construction material, are sold to the factories in Ukraine and Lithuania.
PE. Sorted by Eko Reverss and later vast majority sold to Nordic Plast. The rest is exported to Lithuania
and Germany.
PET. Sorted by Eko Reverss and sold to PET Baltija only.
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Paper and cardboard. Sorted by Eko Reverss and sold mainly to Ligatnes paper mill in Latvia. Is also
shipped to Klaipedos Kartonas in Lithuania.
Metal. Not sorted by Eko Reverss and sold in Latvia to Kuusakoski, Grobinas Metals and Tolmets.
WEEE. Sorted by Eko Reverss. Metal parts are disassembled and sold as metal scrap. The rest is sold to
Lithuanian recyclers EMP recycling and Baltijos Perdirbimas.
GHE. Used batteries are mainly exported to Germany, power batteries are mainly exported to Zalvaris in
Lithuania and accumulators are exported to Estonia for recycling at Ecometal company. Tires are sold
Latvian cement manufacturing plant Cemex.
The table below presents amounts of different types of recyclables sorted by the Group in periods indicated (in
tonnes).
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
PE 246 281 1,018 1,172 911
Paper and Cardboard 1,096 1,505 5,483 4,575 3,392
PET 23 43 119 42 60
Total 1,365 1,830 6,620 5,789 4,363
Source: The Group’s data
The table below presents amounts of different types of recyclables traded by the Group in periods indicated (in
tonnes).
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
Glass 4,971 4,625 20,488 19,416 15,081
PET 75 33 454 566 409
PE 1,370 1,303 7,350 5,760 2,900
Paper and Cardboard 3,009 891 10,679 9,180 5,766
WEEE 130 207 993 782 641
Total 9,555 7,059 39,964 35,704 24,797
Source: The Group’s data
Customers
Eko Reverss cooperates broadly with LZP, its biggest client. Eko Reverss has a long-term framework
agreements with LZP and the detailed agreements are signed annually or quarterly for particular volume of
specific type of recyclables (glass, polymers (including PE), PET, paper and cardboard, metal, WEEE, GHE) to
be collected and sent for processing. LZP pays Eko Reverss on the market basis. Eko Reverss also cooperates
with Nordic Plast and PET Baltija.
Apart from LZP and other Group Companies, Eko Reverss cooperates with major waste management companies
and material recyclers active in the Baltics and Ukraine, including: Eko Group (collection and sorting company
in Lithuania), Gemini Corporation (international commodity specialist from Belgium), Virginijus ir KO (waste
purchase, sorting and trading company from Lithuania) and Vetropac (Ukrainian factory which is part of the
Switzerland based Europe's leading manufacturers of packaging glass). Agreements with clients are usually
signed for a one year period and renewed annually.
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Suppliers
Throughout its business activities Eko Reverss buys recyclable materials (both sorted and unsorted) from waste
collection companies, producers and retail chains. Eko Reverss is active on the whole Latvia, as well as in
Lithuania and Estonia. Eko Reverss doesn’t conclude long-term agreements with its suppliers.
Major suppliers of Eko Reverss are: Ragn Sells (Swedish waste management company), Eko Latgale (recycling
company operating in the second biggest Latvian city), Eko Group (collection and sorting company in
Lithuania), L&T (Finish waste collection company), ZAAO (municipal waste management company operating
in North-Western Latvia) and Piejura landfill.
Licenses, permits and certificates
As of the date of the Prospectus Eko Reverss has been granted all permits necessary for performance of its
business activities, including permit for performance of category B polluting activities (please see: “Regulatory
Information – Environmental and other Licenses and Permits”). Permit for performance of category B polluting
activities for Eko Reverss was issued on 19 September 2007 for period of 5 years. The renewed permit for
performance of category B polluting activities for Eko Reverss was issued on 18 May 2012 for period of 7 years.
Please see: “Risk Factors – Risks Relating to the Group’s Business – The Group depends on licenses and permits
that could be revoked, the Group may not be able to prolong them or the Group may not be able to obtain
required licenses and permits”.
Recycling
Overview
The Group is involved in recycling business through two of the Group Companies: PET Baltija and Nordic Plast.
This allows the Group to engage in two different business lines, namely, recycling of raw materials into PET
flakes (PET Baltija) and PE pellets (Nordic Plast). PET Baltija operates the largest PET bottle recycling plant in
the Baltics in terms of production volume and Nordic Plast is the leading used PE waste recycler in Latvia in
terms of production volume.
PET Baltija
PET Baltija uses clean and mixed colour PET packaging material (e.g. bottles) to recycle them into PET flakes.
The Group aims at recycling raw material of good quality (i.e. lower contamination), that allows it to more
efficiently use capacities of its production facilities.
PET Baltija produces colour sorted, cleaned, hot washed PET flakes that can be further used in production of
food packaging material as well as in fibre and strapping industries. PET Baltija produces high-quality PET
flakes for food grade industry. It offers: clear flakes, light blue flakes, green flakes, brown flakes and dark mix
flakes. PET Baltija also produces several by-products: PET flakes with metal components, PET dust, PET
cuttings, grinded corks and labels, ungrinded corks and labels, ungrinded labels, PET cuttings from sewage
treatment.
The prices of PET flakes are variable depending on various factors, including: seasonality of demand (on the one
hand, increased demand for PET flakes could be observed in spring and summer, but on the other hand PET
Baltija doesn’t sell its products in the second half of December), crude oil and cotton prices, and prices of virgin
PET. The Group is monitoring prices of PET flakes on the daily basis, allowing the Group to faster adjust to
changing prices of PET flakes and raw material used for recycling. Therefore, in the Management’s view, the
Group is able to secure stable and historically higher level of the margins.
The recycling process in PET Baltija begins with used PET packaging in 150-500 kg bales being forwarded by a
conveyor through the bale cleaver and a conveyor system into the hot wash. There the incoming PET packaging
is washed with hot water and steam, thus removing most of the sand and other impurities, moistening the
material and partially removing the labels. Bottle caps are also removed in the process. After the preliminary
wash the PET packaging is forwarded onto the automatic sorting line, where it is sorted by colour and rid of
other polymers and metal objects. Upon the completion of the automatic sorting, several workers are conducting
the final visual inspection of the PET flow. Upon being sorted away, the otherwise coloured PET packaging is
forwarded onto the second processing line where it gets processed into coloured PET flakes. After the sorting is
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complete, the valid main flow is forwarded into the grinder, where it gets ground until the certain size of PET
flakes has been achieved. The ground material is mixed with water and pumped into the washing device, where
the remaining glue, label pieces and other impurities are washed off the material using high temperature and
alkaline chemicals. Most of the impurities are separated after the wash by means of a vibrating sieve. Afterwards
the flakes get into the flotation separator. Since PET is heavier than water, the PET flakes sink onto the bottom
of the device, while the cap and label material is lighter and therefore floats on the surface. Both material flows
are separated and clean PET flakes with no impurities get into the rinsing device. After the rinsing, the PET
flakes get dried with hot air and rid of small dust-like PET particles and small pieces of paper during a spin in
the cyclone. This stage involves the PET flakes being finally cleaned of metal particles using a metal detector.
The dry flakes are packed into bags, which are then stored at the warehouse before being shipped by the clients.
In accordance with common practices in the recycling business PET Baltija cooperates with its clients on the
basis of separate orders without signing any long-term agreements. This is due to the fact that prices of PET
flakes are variable. The sales agreements are signed at the end of each month and the prices are set monthly. The
amount, price, payment terms are fixed in the order application form. PET Baltija services mostly its long term
clients and every year is adding few new clients by standard way of marketing: emails etc.
The major customers of PET Baltija are: Celoplast (international distributor and recycler of plastic raw
materials), IMP Comfort (Polish textile producer which manufactures both polyester staple fibre and fibre-based
products such as high weight non-wovens and interlinings), Lietpak (Lithuanian manufacturer of packaging
materials from the polymer film), Silon (company from Czech Republic producing polyester staple fibres, PE
and PP compounds) and Sky-Light (company from Denmark, being one of the leading companies in Europe
within the development, design and manufacture of extruded plastic sheet and thermoformed plastic packaging).
It should be noted that the major customers of PET Baltija are also the biggest clients of the whole Group (please
see: “Risk Factors - The Group doesn’t conclude long-term agreements with its major customer”). Other
customers of PET Baltija include: Retail Baltic (Lithuania), Boryszew (Poland), Greenfiber (Romania), Liljendal
Bruk (Finland), ORV (Italy), RPC Cobelplast (Italy) and Strapa (Lithuania).
In year ended 31 December 2011 PET Baltija exported 100% of its PET flakes production to the other EU
countries. In year ended 31 December 2011 the main countries of destination of output of PET Baltija were:
Denmark (19.35% of sales), Poland (17.69% of sales), Lithuania (17.13% of sales), Czech Republic (14.32% of
sales), Italy (10.02% of sales) and the Netherlands (8.80% of sales).
The table below presents amounts (in tonnes) and percentage of total amount of PET flakes sold by PET Baltija
by country of destination in periods indicated.
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For three months ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
tonnes % tonnes % tonnes % tonnes % tonnes %
Denmark 1,524 29.87 599 13.26 3,313 19.35 1,889 13.90 1,931 32.46
Poland 473 9.26 924 20.46 3,030 17.69 2,194 16.14 1,380 23.20
Lithuania 603 11.81 665 14.72 2,933 17.13 1,389 10.22 481 8.08
Czech
Republic
699 13.70 773 17.12 2,452 14.32 2,205 16.23 - -
Italy 527 10.33 702 15.54 1,717 10.02 2,575 18.95 831 13.97
The
Netherlands
643 12.59 395 8.75 1,506 8.80 1,827 13.44 624 10.49
Finland 466 9.13 274 6.07 1,164 6.80 637 4.68 - -
Romania 169 3.31 184 4.07 634 3.70 640 4.70 86 1.45
Luxembourg - - - - 346 2.02 235 1.73 - -
Slovenia - - - - 31 0.18 - - - -
Estonia - - - - - - - - 93 1.55
Latvia - - - - - - - - 502 8.44
Austria - - - - - - - - 21 0.36
Total 5,104 100 4,516 100 17,126 100 13,591 100 5,949 100
Source: The Group’s data
Raw materials recycled by PET Baltija are purchased from local and foreign waste handling companies. The
Group aims at purchasing raw material from deposit systems in Scandinavia, due to its better quality (lower
contamination) in comparison with raw material from Germany and CEE countries. The rest of raw material is
purchased on the spot basis.
PET bottle purchase prices are agreed with the sellers based on the spot prices published monthly by German
industry magazine EUWID. Agreements with deposit systems are usually long-term agreements, revised
annually and the terms of the contracts do not include the minimum volume and the fixed price. In the
Management’s opinion this allows to have more flexible procurement policy.
The purchase price of PET bottles depends on seasonality of demand (demand increases in summer and
decreases in winter), fluctuations of supply (mainly from China, where supply of PET bottles depends on, inter
alia, customs policy), crude oil and cotton prices.
PET Baltija purchases most of the raw material from abroad, namely from: Scandinavia (Finland, Denmark), the
Baltics, other European and CIS countries. The major suppliers of PET Baltija are also the biggest suppliers of
the Group. Those major suppliers include: Dansk Retursystem (Denmark), Palpa (Finland), EPP – Eesti
Pandipakend (Estonia), Lidl (Finland), Inland Holding (Estonia). If the planned MBT facilities will be
constructed, this will allow increasing the supply PET Baltija with the raw material from Latvia. For more
information on planned MBT facilities please see: “Use of Proceeds”.
Nordic Plast
Nordic Plast recycles (by sorting, washing, cutting, drying and extruding) used PE waste into different types of
PE pellets. Nordic Plast recycles primarily the post-industrial, retail and agricultural PE films (e.g. shrink films).
The Group aims at recycling less contaminated PE films, what decreases costs of cleaning and allows reaching
the most efficient cost-quality ratio. Moreover, it allows use capacities of the production facilities in more
efficient way.
Nordic Plast produces low density polyethylene (“LDPE”) and high density polyethylene (“HDPE”) pellets. In
the result three types of products are obtained: natural pellets (from clear PE), grey or dark pellets (from dark
colour PE and used packaging bags) and mixed pellets (from different colour PE packaging). The PE pellets can
be further used in production of, e.g., PE films or waste and packaging bags.
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In general, the price of PE pellets depends on the price of primary PE. Moreover, prices of PE pellets are, to
some extent, linked with crude oil prices. The Group is monitoring prices of PE pellets on the daily basis,
allowing the Group to faster adjust to changing prices of end products and raw material. Therefore, in the
Management’s view, the Group is able to secure stable and historically higher level of the margins.
In the beginning of the PE recycling process carried by Nordic Plast, metal, wood, paper and other plastics
admixtures that are unsuitable for the production of pellets are being manually sorted out from the delivered PE
waste (used packaging). The sorted-out PE material is transported by a belt conveyor and reaches the grinder
with water, where the material is crushed into flakes. The flakes are washed in a metallic bath with water. The
flakes are stirred with moving fork-rollers in order to separate sand, dust, fat. Afterwards, the flakes go from the
bath to centrifuge, where the water is removed. After the excessive water is removed, the flakes enter tubes with
the help of a blower, where the flakes are dried with hot air flow. After drying, the flakes are accumulated in a
bunker. After the bunker with a screw and with the help of a belt conveyor, the flakes enter the granulator, where
they are repeatedly cut in smaller fractions. Further, in the beginning of screw in a high temperature, the mass is
melted, filtered, moisture and other admixtures are drained with a degassing unit. The acquired mass is cut in
pellets by rotating knives. The pellets are cooled in a bath with water, dried on a vibrating screen and by a
blower. Finally, the pellets are poured into a bunker and then packaged into bags, which are then stored at the
warehouse before being shipped by the clients.
In accordance with common practices in the recycling business, Nordic Plast cooperates with its clients on the
basis of separate orders without entering into contracts for several orders lasting over period of time. The basic
payment condition for Nordic Plast clients is prepayment. The clients, who do not agree to prepayment, are
offered to work with factoring or guarantee letters. Nordic Plast services mostly its long term clients and every
year is adding few new clients by standard way of marketing: emails etc.
Customers include both local and foreign manufacturers of end PE products (PE films, waste and packaging bags
etc.). The major customers of Nordic Plast include: Trioplast Nyborg (Danish industrial group, which develops,
manufactures, and markets packaging and hygiene films), Sodivas (French trading company), KUFA Polymer
(German waste disposal and recycling company), Sphere Nederland (one of Europe’s largest producers of waste
and packaging bags) and Lenbra (Lithuanian company offering various polyethylene film for packing).
In year ended 31 December 2011 Nordic Plast exported 93.4% of its products. In year ended 31 December 2011
the main countries of destination of output of Nordic Plast were: Denmark (27.4% of sales), the Netherlands
(22.0% of sales), France (19.3% of sales), Germany (15.1% of sales) and Lithuania (7.3% of sales).
The table below presents amounts (in tonnes) and percentage of total amount of products sold by Nordic Plast by
country of destination in periods indicated.
For three months ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
tonnes % tonnes % tonnes % tonnes % Tonnes %
Denmark 113 12.60 333 36.43 1,019 27.4 1,714 47.3 839 23.3
The
Netherlands
22 2.45 242 26.48 817 22.0 1,266 35.0 865 24.0
France 383 42.72 231 25.27 719 19.3 49 1.3 183 5.1
Germany 227 25.32 - - 563 15.1 92 2.5 23 0.6
Lithuania 11 1.17 59 6.46 271 7.3 181 5.0 792 22.0
Latvia 95 10.60 49 5.36 245 6.6 70 1.9 28 0.8
Poland 46 5.13 - - 56 1.5 - - - -
Estonia - - - - 27 0.7 199 5.5 408 11.3
Belgium - - - - - - - - 303 8.4
Italy - - - - - - - - 163 4.5
Others - - - - 1 0.03 49 1.4 2 0.05
Total 897 100 914 100 3,718 100 3,620 100 3,606 100
Source: The Group’s data
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Nordic Plast implements high requirements for quality of raw material for recycling, by purchasing separately
clear and colourful PE. Nordic Plast purchases PE films (e.g. shrink films) primarily obtained from the postindustrial,
retail and agricultural waste. In order to prevent repeated manual sorting and thus lighten the
workload, the Group aims at purchasing less contaminated raw materials.
The price of raw material varies depending on its composition and impurity level. Moreover, the price is, to
some extent, linked with prices of crude oil. Additionally, certain seasonality could be observed in prices of PE
raw material, as demand for it increases in summer period and decreases in winter.
Most of the raw material for Nordic Plast is supplied by Eko Reverss and PET Baltija and the rest is purchased
on the spot basis. In 2011 most of raw material was supplied locally, whereas the rest of material was supplied
from the neighbouring countries: mainly Estonia, Lithuania and Sweden. The main suppliers of raw material for
Nordic Plast are waste management companies, which collect and sort waste.
Licenses, permits and certificates
As of the date of the Prospectus both Nordic Plast and PET Baltija have all permits necessary for performance of
their business activities, including permits for performance of category B polluting activities (please see:
“Regulatory Information – Environmental and other Licenses and Permits”). Permit for performance of category
B polluting activities for Nordic Plast was issued on 3 September 2010 for period of 7 years. Permit for
performance of category B polluting activities for PET Baltija was issued on 7 October 2008 for period of 5
years. Please see: “Risk Factors – Risks Relating to the Group’s Business – The Group depends on licenses and
permits that could be revoked, the Group may not be able to prolong them or the Group may not be able to
obtain required licenses and permits”.
PET Baltija holds ISO 14001:2004 and ISO 9001:2008 certificates issued by DET Norske Veritas Latvia. Both
certificates are valid till 5 November 2014.
Employees
In three months ended 31 March 2012 and years ended 31 December 2011, 2010 and 2009 the Group Companies
(including Jumis) employed 459, 451, 447 and 479 employees respectively.
The table below presents data on headcount of the employees working in the Group Companies and Jumis in
periods indicated.
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As of 31 March
As of 31 December
2012 2011 2010 2009
Eco Baltia - - - -
Eko SPV - - - -
Eko Baltija 9 9 3 3
Latvijas Zalais punkts 21 21 20 19
Eko Riga 58 51 41 35
Eko Kurzeme 51 52 47 48
Jurmalas ATU 75 69 76 74
Kurzemes Ainava 55 62 66 87
Tukuma Ainava* - - 22 24
Eko Reverss 47 46 40 38
PET Baltija 84 83 78 77
Nordic Plast 39 38 35 39
Vaania - - - -
Jumis 20 20 19 35
MRTL - - - -
Total 459 451 447 479
* merged into Kurzemes Ainava
Source: The Group’s data
In three months ended 31 March 2012 and years ended 31 December 2011, 2010 and 2009 respectively the
Group employed its employees in Latvia only.
The Group recognises the importance of its staff in operating a stable and efficient business and the provision of
a high level of customer service and, accordingly, the Group strives to recruit, train, reward and retain the best
personnel. The Group introduces different types of remuneration systems, depending on the Group Company and
position held. Those remuneration systems includes: standard gross salary, salary bound to EBITDA on the
Group Company level, salary bound to monthly number of new contracts signed (sales managers), salary
depending on aggregated work time (drivers and stackers).
Subject to certain exceptions, personnel is usually employed based on labour agreements concluded in
accordance with Latvian Labour Law. From time to time the Group employs temporary workers, however their
number is marginal. The Group employs disabled persons, however their number is insignificant.
There are no trade unions and workers councils registered in the Group Companies, except from trade union
organized in Jumis. There are no collective bargaining agreements concluded in the Group Companies, except
from Jurmalas ATU and Jumis. The collective bargaining agreements concluded in Jurmalas ATU and Jumis set
out certain obligations of those Group Companies in regard to, among others, minimum wages, additional
holidays and certain social services.
As at the date of this Prospectus, the Group’s employees, except Mr. Maris Simanovics, Mr. Viesturs Tamuzs
and Mrs. Undine Bude, do not have any shareholdings in the Issuer, do not hold any stock options or other rights
to the Shares and do not participate in any other way in the capital of the Issuer. There are no arrangements
relating to such participation.
Investments
The Group didn’t undertake investments that should be considered as principal in the financial years ended 31
December 2009 and 2010.
In the financial year ended 31 December 2011 the Group completed implementation of the project
“Reconstruction of the recycling line of polyethylene of Nordic Plast – improvement of energy efficiency”. The
project was implemented in cooperation with the Environmental Investment Fund of Latvia and the Ministry of
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Environmental Protection and Regional Development. Total costs of the project were estimated at approximately
LVL 348,000 (EUR 495,000) and its implementation in amount of approximately LVL 158,000 (EUR 225,000)
was co-funded by the Climate Change Financial Instrument.
In the financial year ended 31 December 2011 the Group also purchased real estate to be adopted as new
premises for daily operations of Jurmalas ATU. The total investment was approximately LVL 90,000.
At the beginning of 2012 the Group has made investment of approximately LVL 175,000 into Eko PET,
company which was aimed to build PET pelletizing factory and receive EU grant for support of this project. PET
Baltija owns 48% of Eko PET.
Research and Development
PET Baltija aims at developing production of crystallized PET pellets, which could be used in food industry (as
material for production of food packaging). Nordic Plast plans to increase its production capacities by adding a
new line for production of polypropylene (“PP”) pellets from woven bags. Both projects are planned to start in
2012 and finish in 2013. For more information please see: “Use of Proceeds”.
Real Estate
Certain Group Companies own real properties in Latvia. Eko Kurzeme owns real property in Liepaja, composed
of a land plot with the area of 21,381 m 2 and 11 buildings. Jurmalas ATU owns two real properties: (i) real
property in Jurmala, composed of a land plot with the area of 7,880 m 2 and 4 buildings, and (ii) real property in
Jurmala, composed of a land plot with the area of 4,964 m 2 and 5 buildings. Kurzemes Ainava owns: (i) real
property in Talsi, composed of a land plot with the area of 517 m 2 and one office building, (ii) a land plot in
Tukums with the area of 4,576 m 2 , and (iii) number of buildings in Tukums (including administrative building,
garage – workshop, warehouses). Eko Reverss owns land plot located in Olaine district with the area of 124,800
m 2 . Properties in Jurmala and Tukums are used for daily operations of Jurmalas ATU and Kurzemes Ainava,
while properties in Liepaja and Olaine are planned for future new business development projects.
The Group leases number of real estates, including warehouse and industrial premises. PET Baltija leases from
Jelgavas biznesa parks certain premises located in Jelgava, where production facilities are located, including
industrial premises with the area of 3,774 m 2 , office and social premises with the area of 392 m 2 and warehouse
premises with total area of approximately 6,142 m 2 . PET Baltija concluded the lease agreement until 3 March
2018. Nordic Plast leases from Nordic Industrial Park premises located in Olaine, where production facilities are
located, including industrial premises with total area of approximately 3,000 m 2 and warehouse premises with
the area of 432 m 2 . The lease agreements concluded by Nordic Plast are valid until 31 December 2014 and 31
December 2016. Eko Riga leases certain premises in Riga, including: non-residential premises with area of 174
m 2 (lease is valid till 31 August 2013), workshop premises with the area of 239 m 2 (lease is valid till 1 February
2014) and land plot of 1,364 m 2 and two storey buildings (lease is valid till 1 February 2014). Eko Reverss leases
premises in Riga, including: hangar with the total area of 434 m 2 and warehouses with the total area of
approximately 1,400 m 2 (lease is valid till 31 December 2021). All properties are used for daily operations of
respective Group Companies.
Additional, the certain Group Companies lease, inter alia, office and administrative premises in Riga, Kandava
and Tukums.
Property and Equipment
Set below is information regarding material pieces of property (excluding real property) and equipment of the
Group.
Organisation of waste recovery
The major pieces of equipment used by LZP in its business operations are cars, which are either owned by LZP
or leased through financial leasing.
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Waste collection
The Group Companies operating in waste collection segment use vehicles, including: cargo vehicles, waste
collection and transportation trucks and agricultural machinery (including tractors). Vehicles are either owned by
the Group or leased through financial leasing. Additionally, in their business activities the Group Companies use
different types of waste containers, presses and other specialist pieces of equipment, which are either owned by
the Group or leased through financial leasing.
The main assets used by the Group Companies operating in the waste collection segment are listed in the table
below.
Household
waste
collection
trucks
Waste
container
trucks
Construction
rubble
containers
Household
waste
containers
Waste press
containers
Eko Riga 11 6 49 6,600 23
Eko Kurzeme 10 4 50 8,000 -
Jurmalas ATU 7 2 5 10,000 -
Kurzemes Ainava 8 5 20 7,500 -
Vaania 4 2 52 1,000 -
Total 40 19 176 33,100 23
Source: The Group’s data
Recyclables sorting and trading
In its business operations Eko Reverss uses vehicles, including: cargo vehicles and transportation trucks.
Vehicles are either owned by Eko Reverss or leased through financial leasing. Additionally, Eko Reverss uses
different types of waste containers, presses and other specialist pieces of equipment, which are either owned by
the Eko Reverss or leased through financial leasing.
As of the date of the Prospectus sorting capacities of Eko Reverss are on level of 11,400 tonnes per annum.
Recycling
Nordic Plast is equipped with specialist production facilities allowing recycling of used PE. Production facilities
of Nordic Plast were equipped in 2008 with new equipment, including: PE recycling line, PE washing line,
recycling line and drying system equipment, allowing the production of high-quality LDPE pellets. In 2010
Nordic Plast adjusted the technology for recycling of PET bottle corks and labels in the result of what HDPE
pellets are produced. In 2011 the Group completed implementation of the project “Reconstruction of the
recycling line of polyethylene of Nordic Plast – improvement of energy efficiency”. The aim of the project was
to decrease the energy consumption of Nordic Plast and limit CO 2 emission into atmosphere. During the project
the polyethylene first stage processing line was reconstructed, replacing the most capacious component in terms
of energy – drying knot – with a new technology that considerably decreases the energy consumption. The
annual saving of energy consumption of the company in the result of the project will be ca. 1,488,000 kWh, thus
decreasing also by 194.95 t the harmful CO 2 emission.
As of the date of the Prospectus output capacities of Nordic Plast are on the level of 3,700 tonnes of product per
annum.
PET Baltija uses specialist equipment, which is required in the process of recycling of PET bottles. Production
facilities of PET Baltija were equipped in 2008 with new equipment, including: waste water treatment and
sludge treatment complex, PET bottles sorting line and PET bottles recycling line.
As of the date of the Prospectus output capacities of PET Baltija are on the level of 19,320 tonnes of product per
annum.
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Encumbrances
As of the date of the Prospectus, all current and future assets of Eko SPV, Eko Baltija, Eko Riga, Eko Reverss,
Eko Kurzeme, Kurzemes Ainava, Jurmalas ATU, PET Baltija, Vaania, Nordic Plast and LZP are pledged in
favour of Nordea Bank as security under the Nordea Financing Agreements (for more information please see:
“Material Contracts – Financing Agreements – Agreements with Nordea Bank”). The pledges secure the
obligations under the Nordea Financing Agreements with the maximum secured amount of EUR 38,560,000.
Pledged assets may not be transferred or otherwise disposed of without the consent of Nordea Bank. Moreover,
the Group Companies may not undertake any action, which would reduce the value of the pledged assets, except
actions within the ordinary course of business.
Additionally, the obligations under the Nordea Financing Agreements are secured by mortgages on certain real
properties owned by the Group Companies. The following real properties are encumbered with 8 mortgages
each: real property in Liepaja owned by Eko Kurzeme, real property in Talsi and real properties in Tukums
owned by Kurzemes Ainava, and real property located in Olaine owned by Eko Reverss. The obligations of
Jurmalas ATU under 15 February 2012 Loan Agreement No 2011-515-A are secured by mortgages on real
properties located in Jurmala and owned by Jurmalas ATU. Mortgaged properties may not be, inter alia,
transferred, disposed of and encumbered without the consent of Nordea Bank and the Group Companies may not
undertake any action, which would reduce the value of the mortgaged properties.
Intellectual Property
The Group relies on the strength of its brands, most of which are registered trademarks and are protected in
Latvia. As at the date of the Prospectus, the Group has 9 trademarks registered, including LZP trademark. Use of
LZP trademark is conditional upon validity of the agreement concluded by LZP with Der Grune Punkt – Duales
System Deutschland AG of 2 February 2009 and Packaging Recovery Organisation Europe s.p.r.l. of 27 August
2003 (please see: “Risk Factors – Latvijas Zalais punkts may lose the right to use the “Green Dot” trademark”.
The Group uses 11 registered Internet domains, including: www.zalaispunkts.lv, www.zalais.lv,
www.ekobaltija.lv, www.nordicplast.lv and www.petbaltija.lv.
Insurance
The Group has insured its principal assets (including production equipment of PET Baltija and Nordic Plast),
which have been pledged or mortgaged as collateral for financing granted to the Group Companies against, inter
alia, risks of: fire, storm, hail, leaks from engineering communications, illegal activities of third parties,
vandalism and/or collision.
The Group holds general third party liability and liability for products insurance. This insurance also covers
liability for loss and/or damages to environment, including, among others: (i) sudden and unforeseen damages to
environment caused by individual (not repeated or continued) mistake or negligence of the insured entity; and
(ii) expenses related to necessary preclusive measures in order to prevent direct threat of possible loss to third
parties.
The Group believes that it maintains insurance coverage at the level required by applicable laws and regulations
and in accordance with customary market standards. Please see: “Risk Factors – Risks Relating to the Group’s
Business – The Group’s insurance coverage may be insufficient for any incurred losses”.
Legal and Administrative Proceedings
As of the date of the Prospectus, there are no governmental, legal or arbitration proceedings involving the Issuer
and/or any of the Group Companies, which could have significant effects on the Issuer and/or Group’s financial
position or profitability. In the period of 12 months before the date of the Prospectus there were no
governmental, legal or arbitration proceedings involving the Issuer and/or any of the Group Companies, which
could have significant effects on the Issuer and/or Group’s financial position or profitability.
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MATERIAL CONTRACTS
The following contracts are the contracts that (i) have been entered into by the Company or any of its Group
Companies within the two years immediately preceding the date of this Prospectus which are or may be material
to their business or (ii) have been entered into by the Company or any of its Group Companies at any other time
but which contain provisions under which the Company or any of its Group Companies has an outstanding
obligation or entitlement that is material to the Group as at the date of this Prospectus.
Waste Management Agreements
Agreements with the Latvian Environmental Protection Fund Administration
In accordance with Latvian regulations LZP as an organisation of waste recovery offering services that allow its
clients to be exempted from the NRT should co-ordinate with the Latvian Environmental Protection Fund
Administration a waste recovery plan with the maximum term of 3 years on the grounds whereof the respective
waste recovery system should be implemented (for more information please see: “Regulatory Information –
Environmental and other Licenses and Permits”). On 30 December 2010 LZP concluded three agreements with
the Latvian Environmental Protection Fund Administration regarding implementation of waste recovery system
of: (i) waste harmful to the environment, (ii) WEEE, and (iii) waste packaging and disposable tableware and
accessories. Each agreement is concluded for defined period starting from 1 January 2011 till 31 December 2013.
The agreements may be terminated only in accordance with the procedure set in the Cabinet Regulations No.
1294 Order of exemption of payment of the natural resources tax for goods harmful to the environment and the
Cabinet Regulations No. 1293 Order of exemption of payment of the natural resources tax for packaging and
disposal tableware and accessories (the “Cabinet Regulations”). Any termination is subject to a decision on
termination of the agreement(s) adopted by the Ministry of Environmental Protection and Regional Development.
Term for adoption of such decision is not clearly stated in the Cabinet Regulations. Material conditions of the
agreements are set by the Cabinet Regulations and other laws and regulations to ensure that all agreements are
equal. Therefore, the agreements are subject to changes in accordance to any changes and amendments in the
respective laws and regulations.
Waste recovery agreements of Latvijas Zalais punkts
LZP concluded three agreements with RIMI Latvia on recovery of: (i) packaging waste, (ii) goods harmful to the
environment and (iii) WEEE, generated as a result of activities of RIMI Latvia or placed on the Latvian market.
RIMI Latvia was granted the right to use “Green Dot” trademark. License fees are paid quarterly, based on a
report on the volume of packaged goods, electric and electronic equipment and goods harmful to the
environment placed by RIMI Latvia on the market. Agreements were concluded for unlimited duration. However,
each party is entitled to terminate the agreement(s) with 3 month prior written notice and if RIMI Latvia does not
agree on changes in the tariff it may terminate the agreement(s) by giving a 1 month written notice.
Similar agreements on implementation of recovery system of different types of waste were concluded with other
key clients of LZP, including: Maxima Latvia, Cido Grupa, Coca-Cola Latvia and Mobil Plus. Principal
provisions of the agreements (e.g. condition of payment of license fee and duration) are similar to the provisions
of agreements described above. Although, there are certain differences, including, e.g. duration of termination
notices.
Waste management agreements of Eko Riga
Eko Riga is party to the cooperation agreement with Riga municipality dated 16 December 2004. According to
the agreement Riga municipality grants Eko Riga the rights to collect and transport household waste from natural
and legal persons in the territory of Riga city. Eko Riga should organise and perform regular waste collection in
the territory of Riga city and transportation to the Getlini landfill. Fees paid to Eko Riga for household waste
management should comply with the tariffs approved by authorities (see: “Regulatory Information – Price
Controls”). The agreement was concluded for defined period, until 31 December 2020. Due to the fact that the
agreement was concluded before 26 July 2005, the transitional provisions of the currently effective Waste
Management Law should not be applicable and therefore there is no requirement to terminate the agreement by 1
July 2013. Although, there is a risk that the transitional provisions change materially and the agreement will be
terminated before its term expires (see: “Risk Factors – Risks Relating to the Group’s Business – Agreements on
providing the waste management services with municipalities may be terminated”).
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On 9 July 2009 Eko Riga executed contract with Carnikava District municipality agency Carnikavas
Komunalserviss on collection and removal of household waste from the territory of Carnikava District. The
contract was granted as the result of an open tender. In accordance with the contract Eko Riga should
systematically collect and remove waste to the indicated places using own materially technical means. Eko Riga
should also install containers for sorted waste and regularly empty them. Eko Riga has right to conclude
individual contracts on collection and removal of waste with natural and legal persons – owners of the real
estates in private housing sectors and organisations. Fee for collection and removal of the dry household waste is
LVL 2.84 plus VAT per m 3 and fee for collection and removal of large-size waste amounts to LVL 9.99 plus
VAT per m 3 . Maximum contract fee within the term of contract operation cannot exceed LVL 114,015 plus VAT.
The contract was concluded for defined period of time, from 1 August 2009 till 31 July 2013, but its term ends,
if prior to the contract term the maximum contract amount (i.e. LVL 114,015 plus VAT) is reached.
On 13 April 2012 Eko Riga signed waste management service contract with Marupe District municipality, which
was granted by way of a public tender. Marupe District municipality granted Eko Riga the rights to collect and
transport household waste from natural and legal persons in the territory of Marupe District. Eko Riga should
ensure regular emptying of containers, maintenance of containers, waste collection and removal from the agreed
places. The contractual price amounted to approximately LVL 451,496. The agreement was concluded for
defined period of 5 years. Marupe District municipality is entitled to terminate the contract unilaterally by
written notice, in case Eko Riga, inter alia: fails to fulfil its obligation due to its fault, does not fulfil the
technical specifications, becomes insolvent, as well as in case the required permits of Eko Riga are revoked.
Waste management agreements of Eko Kurzeme
Eko Kurzeme is party to the cooperation agreement with Riga municipality dated 16 December 2004, foreseeing
similar provisions as the agreement entered into between Eko Riga and Riga municipality. For more information
on this agreement please see: “Waste management agreements of Eko Riga” above.
On 3 January 2005 Eko Kurzeme signed service contract with Liepaja City Council regarding management
(sorting, collection, transportation) of household waste generated in Liepaja City. Liepaja City municipality
granted Eko Kurzeme the rights to collect and transport household waste from natural and legal persons in the
territory of Liepaja city. Eko Kurzeme should organise and perform regular waste collection in the territory of
Liepaja city and transportation to the landfill sites. Fees paid to Eko Kurzeme for household waste management
should comply with the tariffs approved by authorities (see: “Regulatory Information – Price Controls”). The
agreement was concluded for defined period, until 31 December 2020. Due to the fact that the agreement was
concluded before 26 July 2005, the transitional provisions of the currently effective Waste Management Law
should not be applicable and therefore there is no requirement to terminate the agreement by 1 July 2013.
Although, there is a risk that the transitional provisions change materially and the agreement will be terminated
before its term expires (see: “Risk Factors – Risks Relating to the Group’s Business – Agreements on providing
the waste management services with municipalities may be terminated”).
Eko Kurzeme is party to an agreement with Grobina municipality dated 2 May 2005 on management (sorting,
collection, transportation) of household waste generated in Grobina municipality. Eko Kurzeme should organise
and perform regular waste collection in the territory of Grobina municipality and transportation to the landfill
sites. Fees paid to Eko Kurzeme for household waste management should comply with the tariffs approved by
authorities (see: “Regulatory Information – Price Controls”). The agreement was concluded for defined period,
until 31 December 2020. Due to the fact that the agreement was concluded before 26 July 2005, the transitional
provisions of the currently effective Waste Management Law should not be applicable and therefore there is no
requirement to terminate the agreement by 1 July 2013. Although, there is a risk that the transitional provisions
change materially and the agreement will be terminated before its term expires (see: “Risk Factors – Risks
Relating to the Group’s Business – Agreements on providing the waste management services with municipalities
may be terminated”).
On 19 April 2010 Eko Kurzeme signed contract, which was granted as the result of an open tender, with RP SIA
Sarkandaugava (which currently is a part of the merged SIA Rigas namu parvaldnieks (Riga municipality facility
manager)) on waste management services in the territory of Riga City managed by RP SIA Sarkandaugava. Eko
Kurzeme provides the clients with waste containers and ensures regular emptying, waste collection and removal
from the agreed places to the places for processing or storing of waste. Prospective monthly volume of waste is
estimated at 3,300 m 3 . In period from 1 June 2010 until 1 December 2012 the waste management tariff was LVL
2.69 plus VAT per m 3 and starting from 1 December 2012 the waste management tariff will amount to LVL 3.98
plus VAT per m 3 . The contract was concluded for defined period of time, from 19 April 2010 till 19 April 2015.
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In case the cooperation agreement with Riga municipality dated 16 December 2004 is terminated before its term
expires and Riga municipality selects a waste manager, pursuant to the transitional provision of the currently
effective Waste Management Law the contract with RP SIA Sarkandaugava will be terminated before its term
expires (see: “Risk Factors – Risks Relating to the Group’s Business – Agreements on providing the waste
management services with municipalities may be terminated”).
Eko Kurzeme concluded number of standard agreements on provision of waste management services with
numerous municipalities located in Liepaja Region (except Liepaja City). According to the agreements, Eko
Kurzeme ensures collection and removal of solid household waste from agreed places. Eko Kurzeme provides
the household clients with waste containers and ensures regular emptying, waste collection and removal. Fees
paid to Eko Kurzeme are in compliance with the tariffs approved by authorities (see: “Regulatory Information –
Price Controls”). The agreements were concluded for unlimited duration. Due to the fact that the agreements
were concluded with municipality prior to 26 July 2005 and without determining their validity, they have to be
terminated no later than by 1 July 2013 (see: “Regulatory Information – Environmental and other Licenses and
Permits”).
Waste management agreements of Jurmalas ATU
On 3 October 2011 Jurmalas ATU (in association with Eko Riga) signed waste management service contract
with Jurmala City Council, which was granted by way of a public tender. Jurmala City Council granted Jurmalas
ATU the rights to collect and transport household waste from natural and legal persons in the territory of Jurmala
city. Jurmalas ATU should ensure regular emptying of containers, maintenance of containers, waste collection
and removal from the agreed places. The contractual price amounted to approximately LVL 2,500,000. The
agreement was concluded for defined period of 5 years. Jurmala City Council is entitled to terminate the contract
unilaterally by written notice in case Jurmalas ATU, inter alia, fails to fulfil its obligation due to its fault, does
not fulfil the technical specifications, becomes insolvent, as well as in case the required permits of Jurmalas
ATU are revoked.
Jurmalas ATU won public tenders and on 22 November 2011 signed number of 3-year agreements with Babite
municipality on providing of waste management services to natural and legal persons in the numerous waste
management zones of Babite municipality. The waste management tariff was set at LVL 2.69 plus VAT per m 3 .
Babite municipality is entitled to terminate the contracts unilaterally by written notice in case Jurmalas ATU,
inter alia: becomes insolvent, fails to fulfil its obligation, as well as in case the required permits of Jurmalas
ATU are revoked.
Waste management agreements of Kurzemes Ainava
Eko Kurzeme concluded number of standard agreements on provision of waste management services with
numerous municipalities located in: Talsi, Dundaga, Engure, Jaunpils, Mersrags, Roja, Tukums and Kandava
Regions. According to the agreements, Kurzemes Ainava ensures collection and removal of solid household
waste from the agreed places. Kurzemes Ainava provides the household clients with waste containers and
ensures regular emptying, waste collection and removal. Fees paid to Kurzemes Ainava are in compliance with
the tariffs approved by authorities (see: “Regulatory Information – Price Controls”). The validity terms depend
on provisions of each agreement, the expiry dates vary from 31 December 2012 to 31 December 2016. Due to
the fact that the agreements were concluded with municipalities without applying public procurement procedure,
the transitional provisions of the currently effective Waste Management Law should be applicable and they have
to be terminated no later than by 1 July 2013 (see: “Regulatory Information – Environmental and other Licenses
and Permits”).
Concession agreement to use Jumis
On 16 June 2003 Vaania concluded a concession agreement with Sigulda City Council. The agreement was
concluded for a defined period of 30 years and could be terminated if Vaania, inter alia, fails to fulfil its
obligations under the agreement, allowed occurrence of insolvency of Jumis, allowed material reduction of
assets of Jumis resulting in the company not being able to provide services in the same capacity as at the time of
entering into agreement. According to the agreement Vaania has exclusive rights to use the municipality owned
Jumis as the pool of property. Jumis has a right to provide waste management services in the territory of Sigulda
municipality (including exclusive rights to provide waste management services to the municipality enterprises
and institutions located in the administrative territory of Sigulda Town). Vaania is the holder of the capital shares
of Jumis and the deputy of the owner (Sigulda Town Council) in the possession of capital rights of Jumis. Rights
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of Vaania arising from the agreement include the rights to vote and to receive dividends. According to the
agreement Vaania is responsible for fulfilment of all the liabilities of Jumis during the validity of the agreement,
even for those arisen before signing of the concession agreement.
Waste management agreements of Jumis
On 2 June 2006 Jumis executed contract with Sigulda City Council of granting rights to perform waste
management services. The contract grants to Jumis rights to provide waste management services to legal and
natural persons in the territory of Sigulda Region. Jumis should provide waste management services, including,
placing containers and ensuring regular emptying and transports of waste to landfills. Moreover, Jumis possess
exclusive rights to provide waste management services to the municipality enterprises and institutions located in
the administrative territory of the Sigulda City. Fees paid to Jumis for household waste management should
comply with the tariffs approved by authorities (see: “Regulatory Information – Price Controls”). Agreement
was concluded for defined period until 31 December 2015. Although, unilateral termination is not permitted, the
contractual penalty for breach of that provision is inconsiderable. In accordance with the transitional provisions
of the currently effective Waste Management Law the agreement, as concluded or extended after 26 July 2005
without undergoing public procurement procedure or in non-compliance with the said legal requirements, should
be terminated no later than by 1 July 2013 (see: “Regulatory Information – Environmental and other Licenses
and Permits”). As the above mentioned provisions apply only to management of household waste, Jumis will
retain its exclusive rights to provide waste management services to the municipality enterprises and institutions
located in the administrative territory of the Sigulda City.
On 1 June 2010 Jumis concluded agreement with Ligatne Region municipality of granting rights to perform
waste management services to legal and natural persons in the territory of Ligatne. Fees paid to Jumis for
household waste management should comply with the tariffs approved by authorities (see: “Regulatory
Information – Price Controls”). Agreement was concluded for defined period until 31 December 2012 and
cannot be unilaterally terminated. Due to the changes in the applicable laws, the agreement will not be prolonged
for another term due to the fact that in accordance to currently applicable laws, municipalities grant commissions
undergoing the public procurement procedures (see: “Regulatory Information – Environmental and other
Licenses and Permits”).
Financing Agreements
Agreements with Nordea Bank
The management buyout of Eko Baltija finalized in 2011 was primarily financed using loans granted to the
Group Companies by Nordea Bank Finland Plc, Riga branch (the “Nordea Bank”). The Group Companies also
use financing of Nordea Bank for operational activities. Therefore, the Group Companies are parties to the
following loan agreements concluded with Nordea Bank (the “Nordea Financing Agreements”):
Overdraft Agreement No 2011-134-OD between Eko Reverss and Nordea Bank, dated 3 May 2011, with
overdraft limit of EUR 280,000, maturing on 31 May 2013. The interest rate is the aggregate of the
margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was EUR 280,000.
Loan Agreement No 2011-173-A between Eko Reverss and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 33,438, maturing on 30 June 2012. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 13,399.
Loan Agreement No 2011-165-A between Eko Baltija and Nordea Bank, dated 3 May 2011, as amended,
for the total amount of EUR 6,200,000, maturing on 31 December 2016. The interest rate is the aggregate
of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of loan was
EUR 5,478,352.
Loan Agreement No 2011-166-A between PET Baltija and Nordea Bank, dated 3 May 2011, as amended,
for the total amount of EUR 1,570,100, maturing on 31 December 2016. The interest rate is the aggregate
of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of loan was
EUR 1,406,060.
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Overdraft Agreement No 2011-167-OD between PET Baltija and Nordea Bank, dated 3 May 2011, as
amended, with overdraft limit of EUR 1,330,000, maturing on 31 May 2013. The interest rate is the
aggregate of the margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was
EUR 591,157.
Overdraft Agreement No 2011-169-OD between LZP and Nordea Bank, dated 3 May 2011, as amended,
with overdraft limit of EUR 600,000, maturing on 31 May 2013. The interest rate is the aggregate of the
margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was EUR 271,411.
Overdraft Agreement No 2011-168-OD between Nordic Plast and Nordea Bank, dated 3 May 2011, as
amended, with overdraft limit of EUR 290,000, maturing on 31 May 2013. The interest rate is the
aggregate of the margin of 2% and EONIA. As of 31 December 2011 the outstanding amount of loan was
EUR 258,954.
Loan Agreement No 2011-170-A between Jurmalas ATU and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 1,386,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 1,214,529.
Loan Agreement No 2011-171-A between Kurzemes Ainava and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 881,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 771,442.
Loan Agreement No 2011-172-A between Eko Kurzeme and Nordea Bank, dated 3 May 2011, as
amended, for the total amount of EUR 1,155,000, maturing on 31 December 2016. The interest rate is the
aggregate of the margin of 2.5% and EURIBOR 1M. As of 31 December 2011 the outstanding amount of
loan was EUR 1,011,044.
Loan Agreement No 2011-387-A between Eko SPV and Nordea Bank, dated 15 September 2011, as
amended, for the total amount of EUR 14,000,000, maturing on 15 September 2018. The interest rate is
the aggregate of the margin of 4.5% and EURIBOR 3M. As of 31 December 2011 the outstanding
amount of loan was EUR 13,662,650.
Nordea Client Agreement on Transactions with Derivative Financial Instruments No 11/2011 between
Eko SPV and Nordea Bank, dated 15 September 2011. In accordance with the agreement the maximum
exposure amount of the base currency equals to EUR 960,000.
The initial credit amount under the Nordea Financing Agreements was EUR 27,725,538.
The Nordea Financing Agreements are secured by various security instruments, including:
Commercial pledge with the amount of EUR 38,560,000 over: 100% of shares in Eko SPV, 100% of
shares in Eko Baltija, 100% of shares in Jurmalas ATU, 100% of shares in Eko Kurzeme, 100% of shares
in Eko Riga, 100% of shares in Nordic Plast, 75.13% of shares in LZP, 91.03% of shares in PET Baltija,
90% of shares in Vaania, 100% of shares in Kurzemes Ainava and 100% of shares in Eko Reverss.
Pledged shares may not be transferred or otherwise disposed of without the consent of Nordea Bank.
Moreover, the Nordea Financing Agreements and related security agreements provide that consent of
Nordea Bank is required to undertake certain corporate actions by the Group Companies, among others,
to pay out dividends (see: “Risk Factors – Risks Relating to the Group’s Business – Current and future
assets of the Group Companies, certain amount of the Shares in the Issuer, as well as all the shares of the
Group Companies are pledged”).
Commercial pledge with the amount of EUR 38,560,000 over all current and future assets of Group
Companies. Pledged assets may not be transferred or otherwise disposed of without the consent of Nordea
Bank (see: “Risk Factors – Risks Relating to the Group’s Business – Current and future assets of the
Group Companies, certain amount of the Shares in the Issuer, as well as all the shares of the Group
Companies are pledged”).
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Mortgage of real property owned by Eko Reverss, Eko Kurzeme and Kurzemes Ainava (for more
information please see: “Business – Encumbrances” and “Risk Factors – Risks Relating to the Group’s
Business – Current and future assets of the Group Companies, certain amount of the Shares in the Issuer,
as well as all the shares of the Group Companies are pledged”). Mortgaged assets may not be donated,
transferred, divided or encumbered without prior written consent of Nordea Bank.
Guarantees issued by the Group Companies, whereby each Group Company has undertaken payment
liabilities, which are due under the Nordea Financing Agreements.
Assignment of receivables of the Group Companies in favour of Nordea Bank, applicable in case of
default.
Financial collateral over the bank accounts of the Group Companies.
Subordination of loans issued intra-group and to related parties.
Insurance of pledged assets in favour of Nordea Bank.
The Nordea Financing Agreements provide, inter alia, the following events of default: failure to pay any amount
according to the Nordea Financing Agreements in a timely manner and not remedying it during the following 15
business days; failure to fulfil any other obligation under the Nordea Financing Agreements and not remedying it
during the following 10 business days; any document submitted to Nordea Bank turns out to be untrue and
Nordea Bank reasonably considers that it may threaten to delay execution of any obligation; procedures of the
borrower’s or owners’ of capital shares/shareholders insolvency or liquidation have been declared which in
Nordea Bank’s opinion materially affects the borrower’s ability to fulfil the Nordea Financing Agreements; any
item of security or any right provided for Nordea Bank by any item of security becomes insufficient or would be
unfeasible after default rights; borrower has failed to pay any other loan granted to borrower and it is not
remedied during the following 30 days.
Moreover, pursuant to the Nordea Financing Agreements, the Group Companies have to comply with number of
financial covenants, namely:
(i)
(ii)
(iii)
equity ratio, calculated by the bank 4 times per year using the data from the Group Companies and
Jumis, should not be less than 20% in 2011, not less than 30% in 2012 and not less than 35% starting
from the first quarter of 2013;
the total interest bearing debt/EBITDA ratio, calculated by the bank 4 times a year using data from the
Group Companies, should not exceed 3.6 in 2011; starting from 2012 it should not exceed 3; and
Debt-Service Coverage Ratio, calculated by the bank 4 times a year using data from the Group
Companies and Jumis, should not be less than 1.3.
According to the Management, as of the date of the Prospectus, the above indicators are fulfilled. Please see:
“Risk Factors – Risks Relating to the Group’s Business – Certain of the Group’s credit facilities are subject to
certain covenants and restrictions”.
In case of failure to fulfil the Nordea Financing Agreements by any of the borrowers or security providers
Nordea Bank would have a right to satisfy its outstanding claims by: (i) enforcement of financial collaterals; (ii)
taking over the receivables of the Group Companies; (iii) enforcement of guarantees; (iv) sale of the pledged and
mortgaged assets (including pledged shares) without court proceedings or auction at a freely determined price
and/or (v) sale of the mortgaged assets at auction at the terms and conditions approved by court or on the basis of
court decision on recovering of the debt secured with mortgage.
On 11 June 2012 the Principal Shareholders, ESOMTAX INVEST LIMITED (Cyprus), certain Group
Companies and Nordea Bank concluded an agreement, whereby the parties agreed that the commercial pledge
over the pledged shares of the Group Companies in favour of Nordea Bank will be cancelled after setting in of
the following conditions: (i) a subscription of at least 5,000,000 (five million) New Shares during the Offering
with the nominal value of LVL 1.00; (ii) at least 50% + 1 Issuer’s Shares are jointly or individually owned by
Viesturs Tamuzs, Maris Simanovics, Undine Bude, ESOMTAX INVEST LIMITED (Cyprus) and those shares
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have been pledged as a financial pledge in favour of Nordea Bank; (iii) amendments to the Nordea Financing
Agreements of Group Companies have been signed indicating that the shares of Group Companies may not be
encumbered in favour of other persons without prior consent of Nordea Bank until Group Companies have
performed all their obligations towards Nordea Bank.
Other Material Contracts
Placement Agreement
The Issuer and the Selling Shareholder intend to enter, prior to the Allotment Date, into a placement agreement
(the “Placement Agreement”) in respect of the Offering with, inter alia, the Managers, in which the Offering
Broker will commit to undertake certain actions in connection with organization of the Offering.
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RELATED PARTY TRANSACTIONS
In the ordinary course of its business, the Group has engaged, and continues to engage, in transactions with
related parties. It is generally not possible to objectively determine whether any transaction with a related party
would have been entered into if the parties had not been related, or whether such transactions would have been
effected on the same terms, conditions and amounts if the parties had not been related.
Related Party Transactions of Eko Baltija Group
The following review describes the related party transactions of Eko Baltija Group for the financial years ended
on 31 December 2011, 2010, 2009 respectively, and for the three months ended 31 March 2012 and 2011
respectively. Information provided in the sub-sections below is based on the Consolidated Financial Statements
and the Condensed Consolidated Interim Financial Statements and should be read in conjunction with the
Consolidated Financial Statements and the Condensed Consolidated Interim Financial Statements. The subsections
below do not present the related party transactions of the Group as it is at the date of the Prospectus.
During the three months ended 31 March 2012 and the years ended 31 December 2011, 2010 and 2009,
respectively, Eko Baltija Group entered into the following transactions with related parties that were not
members of Eko Baltija Group.
Sales of services and goods
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Related to Eko Baltija Group 31 23 78 29 32
Related parties via key management - 1 1 2 2
Other related parties - - 1 6 6
Total 31 24 80 37 40
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Purchases of goods and services
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Related parties via key management (117) (148) (686) (716) (670)
Related to Eko Baltija Group (35) (66) (284) (427) (403)
Other related parties (14) (17) (69) (71) (49)
Total (166) (231) (1,039) (1,214) (1,122)
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Sales of goods to related parties were made at the usual list prices. Purchases were made at market price
discounted to reflect the quantity of goods purchased and the relationships between the parties.
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Outstanding balances arising from sale/purchase of goods/services
As of 31 March
As of 31 December
2012 2011 2010 2009
(LVL in thousands)
Receivables
Related to Eko Baltija Group 2,575 1,852 290 4
Related parties via key management - - - 1
Other related parties - - 120 114
Total 2,575 1,852 410 119
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
As of 31 March
As of 31 December
2012 2011 2010 2009
(LVL in thousands)
Liabilities
Related to Eko Baltija Group 18 6 30 213
Related parties via key management 71 150 109 163
Other related parties 5 7 13 4
Total 94 163 152 380
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts
owed by related parties.
Employee costs and Key management remuneration
Employee costs
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Salaries and wages (765) (680) (2,958) (2,784) (2,589)
Social insurance payments (183) (163) (669) (550) (616)
Other benefits (12) (11) (5) (15) (129)
Total (960) (854) (3,632) (3,349) (3,334)
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
Key management remuneration
Employee costs include key management remuneration in following amount.
For three months
ended 31 March
For the year ended 31 December
2012 2011 2011 2010 2009
(LVL in thousands)
Salaries (26) (26) (121) (119) (51)
Social insurance payments (6) (6) (35) (29) (12)
Total (32) (32) (156) (148) (63)
Source: Consolidated Financial Statements and Condensed Consolidated Interim Financial Statements
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Related Party Transactions of the Issuer
The Issuer issued loan to AS Eko Investors, company being a partner with a full liability in Otrais Eko Fonds
(shareholder of the Issuer, holding 28% of the Issuer’s share capital as of the date of the Prospectus). The loan
was issued by the Issuer to AS Eko Investors in amount of LVL 24,500 (EUR 34,860). As of 31 December 2011
the outstanding loan amount issued to AS Eko Investors amounted to LVL 24,500 (EUR 34,860) principal loan
amount and LVL 427 (EUR 608) calculated interest. Annual interest rate of the loan is 6%. The date of
repayment is 15 September 2013.
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MANAGEMENT AND CORPORATE GOVERNANCE
Set out below is a summary of relevant information concerning the Management Board, the Supervisory Board,
senior management well as a brief summary of certain significant provisions of Latvian corporate law, the
Issuer’s Articles of Association and particular issues from the corporate governance codes in respect of the
Management Board and Supervisory Board.
Management Structure
The Issuer has two-tier board structure consisting of the Management Board and the Supervisory Board.
Management Board
The Management Board is a collegial body jointly managing the Company and consisting of 4 members elected
by the Supervisory Board for a maximum term of office of 5 years.
The competence of the Management Board is the same as the competence of the Management Board defined
under the Latvian Commercial Law, in particular:
(i)
(ii)
(iii)
(iv)
management and representation of the Company;
supervision and management of the affairs of the Company;
ensuring that the business activities of the Company and accounting are compliant with the law;
administration of the property of the Company.
Additionally the Articles of Association of the Company authorise the Management Board to increase the share
capital in the amount not exceeding 30 per cent of the share capital of the Company at the time of approval of the
Articles of Association by the General Meeting. The Management Board may adopt the decision for increase of
the share capital within 5 years from the approval of the Articles of Association by the General Meeting (i.e.
from 24 April 2012. On 17 May 2012 the Supervisory Board consented to and the Management Board adopted
the decision to increase the share capital of the Issuer up to LVL 6,279,000, by issuing up to 6,279,000 new
bearer shares with the nominal value of LVL 1.00 each. The authorisation of the Management Board to increase
the share capital should not apply to increase the share capital for a special purpose (e.g. for exchange of newly
issued shares for convertible bonds; for exchange of newly issued shares for the shares of a company to be
merged in case of reorganisation; for issuing of employee shares etc.).
The Supervisory Board may recall the members of the Management Board until expiry of their term of office
due to important reasons, inter alia, gross violations of the scope of authorisation, failure to perform his or her
duties, inability to manage the Company, causing harm to the interests of the Company, as well as due to loss of
confidence expressed at the General Meeting. The Supervisory Board determines that there is a reason for
revocation. The General Meeting may take a decision in relation to loss of confidence of a member of the
Management Board at any time. A member of the Management Board may at any time leave the office by giving
a written notice to the Company.
Pursuant to Article 6.7 of Articles of Association, the Management Board should require the consent of the
Supervisory Board to decide on issues of major importance. The following should be deemed to be such issues
of major importance:
(i)
(ii)
(iii)
(iv)
acquiring participation in other companies and increasing or decreasing such participation;
acquisition or disposal of undertakings;
acquisition of immovable property, disposal of or encumbering thereof with rights in rem, if the value of
each such transaction in aggregate exceeds EUR 1,000,000 (one million euro) or other amount specified
by decisions of the Supervisory Board;
opening or closing of branches and representative offices;
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(v)
(vi)
(vii)
deciding on transactions, if the value of each such transaction in aggregate exceeds EUR 1,000,000 (one
million euro) or other amount specified by decisions of the Supervisory Board;
issuing of such loans as are not related to the usual commercial activities of the Company;
issuing loans to employees of the Company;
(viii) starting new kinds of activities or ceasing existing activities;
(ix)
determining the general principles for activities.
As at the date of the Prospectus, the Issuer’s Management Board is composed of 4 members. The table below
sets forth the names, function, appointment date, and terms of office of the current members of the Management
Board as at the date of the Prospectus.
Name Function Date of Appointment Expiration of term of office
Maris Simanovics
Viesturs Tamuzs
Undine Bude
Olaf Martens
Chairman of the Board -
managing the Company and
the Board
Member of the Board -
managing the Company
Member of the Board -
managing the Company
Member of the Board -
managing the Company
17 May 2012 17 May 2017
17 May 2012 17 May 2017
17 May 2012 17 May 2017
17 May 2012 17 May 2017
The business address of the Management Board is Darza iela 2, Riga, LV-1007, Latvia.
A brief description of qualifications and professional experience of the members of the Management Board is
presented below.
Maris Simanovics
Mr. Maris Simanovics is the Chairman of the Management Board of the Company. Mr. Simanovics joined the
Group in 2002 and since then has served at various executive positions in the Group Companies, which allowed
him to gain valuable experience and knowledge on waste management industry. Before joining the Group Mr.
Simanovics was associated with Latvijas Mobilais Telefons as a financial analyst.
Mr. Maris Simanovics has higher economic education. He graduated from Stockholm School of Economics in
Riga with B.Sc. in economics and business administration (2001) and from Institute of International Affairs
University of Latvia with M.Sc. in economics (2003). Furthermore, Mr. Simanovics completed various trainings,
seminars and courses in the areas of: waste management, entrepreneurship and business administration.
Viesturs Tamuzs
Mr. Viesturs Tamuzs is a member of the Management Board of the Company. Mr. Tamuzs is a founder of the
Group and holds various executive positions in the Group Companies. Mr. Viesturs Tamuzs started his career as
a research associate and lecturer at the Chemistry Faculty of the University of Latvia. In 1993 Mr. Tamuzs
moved to private sector, starting career as director of Iepakojuma centrs. From 1996 until 2000 Mr. Viesturs
Tamuzs was associated with Stora Enso Packaging in Latvia, where he held positions of vice president and
executive director.
Mr. Viesturs Tamuzs holds M.Sc. in chemistry from University of Latvia. Mr. Tamuzs completed various
trainings, seminars and courses in Latvia and abroad in the areas of: waste management, chemistry, quality
management and accounting. Mr. Tamuzs also finished executive education program for professional board
members organised by the Baltic Institute of Corporate Governance.
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Undine Bude
Mrs. Undine Bude is a member of the Management Board of the Company. Mrs. Bude joined the Group in 2002
and since then has served at various executive positions in the Group Companies. Mrs. Undine Bude has gained
valuable experience and knowledge on waste management industry, while working as deputy director and
director at SIA PTC (1993-1997), director at Packaging Association of Latvia (1997-1998) and director at
Packaging Institute of Latvia (1998-2000). Since 2000 Mrs. Bude has been associated with Latvijas Zalais
punkts.
Mrs. Undine Bude graduated from the University of Latvia with a degree in biology, chemistry and biology
pedagogy. Moreover, in 2005 Mrs. Bude graduated from Stockholm School of Economics in Riga with MBA
degree. Mrs. Undine Bude also finished executive education program for professional board members organised
by the Baltic Institute of Corporate Governance.
Olaf Martens
Mr. Olaf Martens is a member of the Management Board of the Company. Mr. Martens joined the Group in
2012. In years 1997-2007 Mr. Martens was marketing director at Dianos Aleskeviciutes Firma. From 2009 till
2011 he worked for DnB Nord Bankas Lietuva as manager of loan restructuring department. Since 2011 Mr.
Martens has been associated with JSC Putoksnis, where he has hold post of chief executive officer.
Mr. Olaf Martens finished executive education program for professional board members organised by the Baltic
Institute of Corporate Governance.
The following table sets out additional past and current directorships held by the members of the Management
Board of the Issuer in the past five years.
Name of the member of
Management Board
Maris Simanovics
Former directorships:
Positions Held
Eko PET – Board member/partner (2009-2010)
SIA Trikatas Logistika – Chairman of the board/partner (2005-2009)
SIA PANKRATOFF KOMPANIJA – Board member/partner (2006-2007)
Trikatas Siers – Board member/partner (2005-2007)
Current directorships:
Malka24.lv - Board member/partner (since 2012)
SIA ENRIAL Obsidione – Board member (since 2011)
Sila Gardedis – Board member/partner (since 2010)
Krasta Investment - Board member/partner (since 2010)
Eko Investors – Board member (2007-2009); Chairman of the board (since 2009)
Enria Capital – Director (since 2009)
SCOTA GRUPA – Chairman of the board/partner (since 2008)
SIA PTC – Chairman of the board (2005-2008); Board member (since 2008)
Sport Federation of Latvian Schools – Board member (since 2008)
SIA Riga Consulting Group – Chairman of the board/partner (since 2005)
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Viesturs Tamuzs
Former directorships:
Public and Private Business Partnership (NGO) – Official (2009-2011)
Latvian private equity and venture capital association (NGO) – Official (2005-
2010)
Orienteering club MONA (NGO) – Official (2007-2009)
Current directorships:
Foundation ‘Apdavinatibas sistema nacijas izaugsmei’ (NGO) – Board member
(since 2011)
Eko Investors – Chairman of the management board (2001-2009); chairman of the
supervisory board (since 2009)
Perseus – Chairman of the supervisory board (since 2006)
Undine Bude
Former directorships:
Eko PET – Chairman of the board (2009-2010)
Eko Investors – Member of the board (2006-2009)
Eko Media – Chairman of the board (2007-2008)
PACKAGING (Technical committee of Standardization) – Chairman (1998-2007)
Current directorships:
Baltic Institute of Corporate Governance – Board member (since 2012)
Foundation ‘Apdavinatibas sistema nacijas izaugsmei’ (NGO) – Chairman of the
board (since 2011)
Eko Investors – Deputy chairman of the supervisory board (since 2009)
Latvian National Library Foundation (NGO) – Chairman of the board (since 2007)
LZP 2 – Board member (since 2007)
Perseus – Deputy chairman of the supervisory board (since 2006)
Association of secondary raw material recyclers (NGO) Official (since 2005)
Olaf Martens
Packaging Association of Latvia (NGO) – Board member (since 1995)
Former directorships:
None
Current directorships:
Energijos Tiekimas – Board member (since 2011)
Supervisory Board
The Supervisory Board of the Company is a collegial body supervising the activities of the Company. The
Supervisory Board consists of 5 members, elected by the General Meeting of Shareholders for a maximum term
of office of 5 years. The competence of the Supervisory Board is determined by the Latvian Commercial Law
and Articles 5.5 and 6.7 of the Articles of Association, in particular:
(i)
(ii)
(iii)
election and recalling of the members of the Management Board, regular supervision of the activities of
the Management Board;
monitoring that the business of the Company is conducted in accordance with law, the Articles of
Association and the decisions of the General Meeting;
examination of the annual report of the Company and the proposal of the Management Board for the use
of profit and preparing of a report on the draft annual report prepared by the Management Board prior the
General Meeting is convened for approval of the annual report, pursuant to the Latvian Commercial Law
(Article 174);
144

(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
representation of the Company in a court in all actions brought by the Company against members of the
Management Board, as well as in actions brought by the member of the Management Board against the
Company and representation the Company in other legal relations with members of the Management
Board; approval of concluding transactions between the Company and members of the Management
Board or the auditor;
prior examination of all issues, which are within the competence of the General Meeting of Shareholders
or which, pursuant to the proposal of members of the Management Board or the Supervisory Board, have
been proposed for discussion at the meeting, and provision of its opinion on such issues;
giving consent to decision of the Management Board to increase the share capital of the Company in the
case, described below, exercising its authorisation to increase the share capital foreseen in the Articles of
Association of the Company, and making amendments to the Articles of Association of the Company in
case of capital increase;
giving consent to the Management Board to decide on acquiring participation in other companies and
increasing or decreasing such participation; acquisition or disposal of undertakings; acquisition of
immovable property, disposal of or encumbering thereof with rights in rem, if the value of each such
transaction in aggregate exceeds EUR 1,000,000 (one million euro) or other amount specified by
decisions of the Supervisory Board; opening or closing of branches and representative offices; deciding
on transactions, if the value of each such transactions in aggregate exceeds EUR 1,000,000 (one million
euro) or other amount specified by decisions of the Supervisory Board; issuing of such loans, which are
not related to the usual commercial activities of the Company; issuing loans to employees of the
Company; starting new kinds of activities or ceasing existing activities; determining the general principles
for activities;
at any time to request that the Management Board would report on the circumstances of the Company and
to become acquainted with all the activities of the Management Board;
to examine the Company’s registers and documents, as well as the cashier’s office and all of the property
of the Company;
to entrust one of the members of the Supervisory Board to perform an examination or invite experts to
perform the examination or to clarify separate issues;
to convene a General Meeting of Shareholders or to request that the Management Board would convene
the General Meeting if the interests of the Company so require.
The members of the Supervisory Board are elected by the General Meeting of Shareholders of the Company.
The General Meeting of Shareholders by its decision may recall the members of Supervisory Board at any time.
A member of the Supervisory Board may at any time leave the office by giving a written notice to the Company.
As at the date of the Prospectus, the Issuer’s Supervisory Board is composed of 5 members. The table below sets
forth the names, function, appointment date, and terms of office of the current members of the Supervisory
Board as at the date of the Prospectus.
Name Function Date of Appointment Expiration of term of office
Raitis Maurans
Eduards Ekarts
Chairman of the Supervisory
Board –supervising the
activities of the Management
Board and managing the
Supervisory Board
Deputy Chairman of the
Supervisory Board –
supervising the activities of
the Management Board and
managing the Supervisory
Board during absence of the
Chairman
17 May 2012 17 May 2017
17 May 2012 17 May 2017
145

Lelde Vitina
Ugis Treilons
Martins Knipsis
Member of the Supervisory
Board - supervising the
activities of the Management
Board
Independent member of the
Supervisory Board -
supervising the activities of
the Management Board
Independent member of the
Supervisory Board -
supervising the activities of
the Management Board
17 May 2012 17 May 2017
17 May 2012 17 May 2017
17 May 2012 17 May 2017
The business address of the Supervisory Board is Darza iela 2, Riga, LV-1007, Latvia.
A brief description of qualifications and professional experience of the members of the Supervisory Board is
presented below.
Raitis Maurans
Mr. Raitis Maurans is the Chairman of the Supervisory Board of the Company. Mr. Maurans also holds various
executive and non-executive positions in the Group Companies. Mr. Raitis Maurans started his professional
career as an analyst in Magnum Medical in 2002, where he worked till 2003 and later in period 2004-2006. Since
2005 Mr. Raitis Maurans has been associated with Latvijas Zalais punkts, where he has served as a financial
analyst. Moreover, since 2006 Mr. Maurans has been a financial manager and since 2009 board member in Eko
Investors.
Mr. Raitis Maurans received bachelor’s degree in finance (2002) and master’s degree in international economic
affairs (2004) from University of Latvia.
Eduards Ekarts
Mr. Eduards Ekarts holds the position of the Deputy Chairman of the Supervisory Board of the Company. Mr.
Eduards Ekarts started his professional career in 1996 as lawyer in Zunda and its group companies. In years
2000-2002 Mr. Ekarts gained experience as lawyer in Zelta Kukulitis. In 2002 Mr. Eduards Ekarts joined Eko
Investors and since then has been associated with the Group.
Mr. Eduards Ekarts has second level higher professional education in legal science from the Faculty of Law of
the University of Latvia. In 2008 Mr. Ekarts received MBA degree from the Riga Technical University in
collaboration with Buskerud University College in Kongsberg (Norway).
Lelde Vitina
Mrs. Lelde Vitina is a member of the Supervisory Board of the Company. Since 2011 Mrs. Vitina has also held
post of a member of the advisory board of Eko Baltija. Mrs. Lelde Vitina has gained experience as an accountant
since (2001) and internal auditor, quality manager (since 2007) in Eko Investors and manager and board member
in Artha (since 2001).
Mrs. Lelde Vitina received bachelor’s degree in economics (2001) and master’s degree in economics (2003)
from University of Latvia. Mrs. Vitina is an accountant certified by Institute of financial accountants (since
2006). Moreover, Mrs. Lelde Vitina is certified as quality manager (since 2007) and quality auditor (since 2010)
by Beureau Veritas and Det Norske Veritas respectively.
Ugis Treilons
Mr. Ugis Treilons has held post of the independent member of the Supervisory Board of the Company since
2012. Since 2000 Mr. Treilons has been a sworn advocate. In years 2003-2011 he was partner at the law firm
Treilons & Petrovics. Since 2011 he has been partner at the law firm Treilons.
146

Mr. Ugis Treilons graduated from the Faculty of Law of the University of Latvia with LLB (1995) and LLM
(1997) degrees. In 1999 Mr. Treilons received diploma in English commercial law from the College of Law of
England and Wales, London.
Martins Knipsis
Mr. Martins Knipsis has held post of the independent member of the Supervisory Board of the Company since
2012. Mr. Knipsis has also been member of the supervisory board of Latvijas Zalais punkts since 2004. In years
1998-2005 Mr. Martins Knipsis was director of law office Merkants. Mr. Knipsis has also served as member of
supervisory boards and supervisory councils of various companies, including PJSC Gutta (2002-2005).
Mr. Martins Knipsis graduated from the Faculty of Law of the University of Latvia in 2004 with bachelor’s
degree in legal science.
The following table sets out additional past and current directorships held by the members of the Supervisory
Board of the Issuer in the past five years.
Name of the member of
Supervisory Board
Positions Held
Eduards Ekarts
Former directorships:
None
Current directorships:
REGULS law office – Board member, owner (since 2009)
Raitis Maurans
Former directorships:
None
Current directorships:
Eko Investors – Board member (since 2009)
Metro Serviss - Board member, owner (since 2008)
Lelde Vitina
Former directorships:
Accenta – Board member (2011-2012)
Current directorships:
Perseus – Member of the advisory board (since 2010)
LV CONSILIUM – Board member (since 2010)
Eko Investors – Member of the advisory board (since 2009)
3 of Us – Board member (since 2009)
Artha – Chairman of the board (since 2005)
Ugis Treilons
Former directorships:
None
Current directorships:
Martins Knipsis
None
Former directorships:
WAP World Jsc. - Chairman of the supervisory board (2007-2010)
ZUNDS AL - Chairman of the supervisory board (2006-2010)
Eko Investors - Member of the supervisory board (2004-2009)
S & G Jsc. – Member of the supervisory board (2007-2008)
Naftimpeks Ltd. – Member of the supervisory board (2006-2008)
Current directorships:
IDEA Bits Latvia – Chairman of the supervisory board (since 2007)
147

Key Executives
In the Opinion of the Issuer, the following persons, being the key executives responsible for management and
operations of the Group Companies, are the most important for the Group (the “Key Executives”). A brief
description of qualifications and professional experience of the Key Executives is presented below.
Edmunds Jansons
Mr. Edmunds Jansons holds executive positions in various Group Companies. He has been with the Group since
2011. Mr. Jansons has gained broad experience, starting his professional career in 1993 in Hackman Latvia. In
years 1995-2007 Mr. Jansons was associated with Tetra Pak Baltic States (as sales manager), Tetra Pak Saudi
Arabia (as sales manager) and Tetra Pak Latvia (first as commercial manager and later as sales director for Baltic
States, and board member). In 2007 Mr. Jansons joined Tukuma Piens as a managing director.
Mr. Edmunds Jansons completed condensed MBA program in Stockholm School of Economics in Riga (1997).
In 2008 Mr. Jansons received MBA degree from Riga Business School. Additionally, Mr. Edmunds Jansons
completed various international courses in the areas of: project introduction, strategic marketing, operational
marketing and sales.
Ausma Ece
Mrs. Ausma Ece holds various executive positions in certain Group Companies. Mrs. Ece has been with the
Group since 2008. Before joining the Group Mrs. Ausma Ece was: chief accountant (1994-1999) and controller
(1999-2000) in Electrolux Latvia, administration and financial manager in Incukalns Timber (2000-2008) and
financial manager in Swedwood Latvia (2002-2008). Currently, Mrs. Ausma Ece is also a financial consultant to
DPA (IT company).
Mrs. Ausma Ece graduated from University of Latvia with degree in finance and trade. She also holds MBA
degree from School of Business Administration Turiba. Mrs. Ausma Ece participated in various courses in the
areas of financial and credit management.
The business address of the Key Executives is Darza iela 2, Riga, LV-1007, Latvia.
The following table sets out additional past and current directorships held by the members of the Key Executives
of the Issuer in the past five years.
Name of the Key Executives
Edmunds Jansons
Former directorships:
Positions Held
Latvian Central Union of dairy producers – Board member (2010-2011)
Tukuma Piens – Board member (2007-2011)
Latvian non-alcoholic beverage entrepreneur association – Board member (2003-
2008)
Tetra Pak – Board member (2003-2007)
Current directorships:
E&J Projekts – Board member (since 2011)
Ausma Ece
Former directorships:
Association Dzivesprieks – Board member (2008-2012)
Rozenbahs – Board member (2005-2009)
Swedwood Latvia – Board member (2004-2009)
Current directorships:
None
148

Shares and Share Options held
As of the date of the Prospectus the following members of the Management Board hold Shares: each of Mrs.
Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics (“Principal Shareholders”) owns directly 10% of
the Issuer’s share capital. Principal Shareholders are also beneficial owners of ESOMTAX INVEST LIMITED
(Cyprus), which owns 42% of the Issuer’s share capital. Moreover, Principal Shareholders are direct and indirect
shareholders of AS Perseus, which is partner in Otrais Eko Fonds. Otrais Eko Fonds owns 28% of the Shares of
the Issuer as of the date of the Prospectus. Following the Offering each of Mrs. Undine Bude, Mr. Viesturs
Tamuzs and Mr. Maris Simanovics will continue to own directly 7.81% of the Shares, assuming all of the Offer
Shares are placed with investors. Moreover, ESOMTAX INVEST LIMITED (Cyprus) will continue to own
32.82% of the Shares, assuming all of the Offer Shares are placed with investors. Together, the Principal
Shareholders will continue to own directly and indirectly up to 56.25% of the Shares, assuming all of the Offer
Shares are allotted to investors.
The Principal Shareholders concluded a lock-up agreement with regard to the Shares they hold directly and
indirectly. For more information on lock-up agreements please see: “Shareholders - Lock-up agreement”.
As of the date of the Prospectus the following members of the Supervisory Board hold Shares: Mrs. Lelde Vitina
owns indirectly (through its indirect shareholding in AS Perseus, partner in Otrais Eko Fonds) approximately
0.019% and Mr. Eduards Ekarts owns indirectly (through its indirect shareholding in AS Perseus, partner in
Otrais Eko Fonds) approximately 0.037% of the Issuer’s share capital. Following the Offering Mrs. Lelde Vitina
and Mr. Eduards Ekarts will not own directly or indirectly any Shares, assuming all of the Offer Shares are
allotted to investors.
Apart from the above mentioned persons, no other member of the Management Board, no other member of the
Supervisory Board and no other member of Key Executives holds directly or indirectly any Shares or stock
options over such Shares.
At the date of this Prospectus, the Issuer has no stock option plan or other arrangements in place for members of
the Management Board, Supervisory Board, Key Executives and/or Group’s employees pursuant to which such
persons can acquire Shares or options of such Shares in the Issuers’ capital or its subsidiaries. The Issuer may
however implement such arrangements in the future.
Remuneration and Terms of Service Contracts
Remuneration and terms of contracts of members of the Management Board
Members of the Management Board receive remuneration from the Company and certain Group Companies.
Moreover, each of Mr. Maris Simanovics, Mr. Viesturs Tamuzs and Mrs. Undine Bude have indirectly received
remuneration from the Group Companies for consultancy services provided by consulting companies which are
owned by above mentioned persons or their relatives. The total remuneration (including remuneration paid to the
consulting companies) paid to each member of the Management Board in the financial year ended 31 December
2011 by the Group was as follows: Mr. Maris Simanovics received approximately LVL 145,000, Mr. Viesturs
Tamuzs received approximately LVL 56,600 and Mrs. Undine Bude received approximately LVL 130,000.
Other benefits granted to the members of the Management Board included company cars, mobile phones, laptops
and health insurance. Mr. Olaf Martens was not with the Group in the financial year ended 31 December 2011.
The members of the Management Board are not granted any pensions, retirement or similar benefits by the
Issuer or the Group Companies. No amounts have been set aside or accrued by the Company or the Group
Companies to provide pension, retirement or similar benefits to members of the Management Board.
The agreements between the Group and each Mr. Maris Simanovics, Mr. Viesturs Tamuzs and Mrs. Undine
Bude (including agreements for consultancy services provided by consulting companies which are owned by
above mentioned persons or their relatives) provide special financial benefits in the case of dismissal of above
mentioned persons or termination of those agreements. The total financial benefits that should be paid in the case
of dismissal or termination of those agreements are as follows: Mr. Maris Simanovics should receive
approximately LVL 24,000, Mr. Viesturs Tamuzs should receive approximately LVL 42,000 and Mrs. Undine
Bude should receive approximately LVL 65,000. The agreement entered into between the Company and Mr.
Olaf Martens does not provide special benefits in the case of dismissal or termination of his service.
149

Remuneration and terms of contracts of members of the Supervisory Board
Current members of the Supervisory Board receive remuneration from the Company. Mr. Raitis Maurans and Mr.
Martins Knipsis also receive remuneration from certain Group Companies. The total remuneration paid to each
member of the Supervisory Board in the financial year ended 31 December 2011 by the Group was as follows:
Mr. Raitis Maurans received approximately LVL 14,339 and Mr. Martins Knipsis received approximately LVL
2,100. Mr. Eduards Ekarts, Mrs. Lelde Vitina and Mr. Ugis Treilons did not receive remuneration from the
Group in the financial year ended 31 December 2011.
The members of the Supervisory Board are not granted any pensions, retirement or similar benefits by the Issuer
or the Group Companies. No amounts have been set aside or accrued by the Company or the Group Companies
to provide pension, retirement or similar benefits to members of the Supervisory Board.
The service contracts, employment agreements or other similar agreements entered into between the Company or
the Group Companies and the members of the Supervisory Board do not provide special benefits in the case of
dismissal or termination of such person’s service, employment contract or other similar agreement.
Remuneration of Key Executives
The Key Executives receive remuneration from various Group Companies. The total remuneration paid to each
of the Key Executives in the financial year ended 31 December 2011 by the Group was as follows: Mr. Edmunds
Jansons received approximately LVL 42,100 and Mrs. Ausma Ece received approximately LVL 47,240. Other
benefits granted to the Key Executives included company cars, mobile phones, laptops and health insurance.
The Key Executives are not granted any pensions, retirement or similar benefits by the Issuer or the Group
Companies. No amounts have been set aside or accrued by the Company or the Group Companies to provide
pension, retirement or similar benefits to the Key Executives.
Certain information on the members of the Management Board, Supervisory Board and of the Key
Executives
At the date of this Prospectus, except as stated above, none of the members of the Management Board, none of
the members of the Supervisory Board and no Key Executive for at least the previous five years:
has been convicted of any offences relating to fraud;
has been the subject of any official public incrimination or has been sanctioned by statutory or regulatory
authorities (including professional associations); or
has been disqualified by a court from acting as a member of the administrative, management or
supervisory bodies of a company or from acting in the management or conducting the affairs of any
company; or
has been associated with any bankruptcy, receivership or liquidation, or similar proceedings, in their
capacity as members of any administrative, managing, or supervisory body or as a senior executive.
None of the members of the Management Board, none of the members of the Supervisory Board and no Key
Executive hold a supervisory or a non-executive position in any other listed company or perform principal
activities outside the Group which are significant with respect to the Issuer.
There are no family relationships among the members of the Management Board, members of the Supervisory
Board and/or the Key Executives.
There are no actual or potential conflicts of interest between the obligations of the members of the Management
Board, members of the Supervisory Board and/or the Key Executives, except Mr. Maris Simanovics, Mr.
Viesturs Tamuzs, Mrs. Undine Bude, Mrs. Lelde Vitina and Mr. Eduards Ekarts (as direct and indirect
shareholders of the Issuer) toward the Issuer and their respective private interests and duties or obligations to the
Issuer. Moreover, due to the fact that interests of the Group are not always in line with the interests of the
Principal Shareholders, there is a potential conflict of interest between private interests of Mr. Maris Simanovics,
150

Mr. Viesturs Tamuzs and Mrs. Undine Bude, as the Principal Shareholders, and the interests of the Issuer. Please
see risk factor: “The Issuer has been, and will continue to be, influenced by three principal shareholders”.
Except as stated above, there are no arrangements or understandings with Principal Shareholders of the Issuer,
customers, suppliers or others pursuant to which any member of the Management Board, member of the
Supervisory Board and/or of the Key Executives was selected or appointed.
Corporate Governance Rules
Latvia
Since the Company is incorporated in Latvia, it has to comply with Latvia law, as well as with provisions
relating to corporate governance issues prescribed in the Company’s Articles of Association, the Latvian
Commercial Law and the Latvian Financial Instrument Market Law. Moreover, the Company will be subject to
the requirements of any national corporate governance rules, including the Corporate Governance Principles and
Recommendations on their Implementation issued by NASDQ OMX Riga (available on the website:
http://www.nasdaqomxbaltic.com/files/riga/corp_gov_May_2010_final_EN.pdf), when its Shares will be listed
on the RSE, regulated market in Latvia.
Poland
The WSE, a regulated market on which the Shares will be listed, has its own corporate governance code, Code of
Best Practices for WSE Listed Companies (the “WSE Corporate Governance Code”). The Issuer has decided to
observe the majority of the WSE Corporate Governance Rules. However, certain principles will apply to the
Issuer only to the extent allowed by the Latvian corporate law and corporate structure of the Group.
The WSE Corporate Governance Rules introduce a comply or explain principle, according to which an issuer
should provide the market with direct information about any non-compliance with the corporate governance
code. In accordance with the WSE Rules, should a specific corporate governance rule set forth in the WSE
Corporate Governance Rules not be applied on a permanent basis or be breached incidentally, the Issuer should
publish a report containing information about which rule is not applied at all or has not been applied on an
occasion, under what circumstances and for what reasons and how the Issuer intends to remove effects, if any, of
not having applied a given rule on an occasion or what steps it intends to take to mitigate the risk of the
corporate governance rules not being applied in the future. The report should be published on the Issuer’s official
website and should be submitted as a current report through the EBI system. The report should be published as
soon as the issuer becomes reasonably convinced that a given rule will not be applied at all, or on a specific
occasion, and in any case promptly after an event representing a breach of a corporate governance rule occurs.
Furthermore, any issuer listed on the WSE is required to include a report on the extent of compliance with the
WSE Corporate Governance Rules in its annual report or as a separate report.
151

SHAREHOLDERS
Principal Shareholders
As of the date of the Prospectus each of Mrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics (the
“Principal Shareholders”) owns directly 10% of the Issuer’s share capital. Principal Shareholders are also
beneficial owners of ESOMTAX INVEST LIMITED (Cyprus), which owns 42% of the Issuer’s share capital.
Moreover, Principal Shareholders are direct and indirect shareholders of AS Perseus, which is partner in Otrais
Eko Fonds. Otrais Eko Fonds owns 28% of the Shares as of the date of the Prospectus. Following the Offering
each of Mrs. Undine Bude, Mr. Viesturs Tamuzs and Mr. Maris Simanovics will continue to own directly 7.81%
of the Shares, assuming all of the Offer Shares are allotted to investors. Moreover, ESOMTAX INVEST
LIMITED (Cyprus) will continue to own 32.82% of the Shares, assuming all of the Offer Shares are allotted to
investors. Together, the Principal Shareholders will continue to own directly and indirectly up to 56.25% of the
Shares, assuming all of the Offer Shares are allotted to investors. The Principal Shareholders are not acting in
concert with respect to the Issuer.
Control over the Company
As at the date of this Prospectus, so far as the Company is aware, there is no arrangement that might result in the
change of control over the Company.
Dilution
The tables below indicate the Issuer’s shareholding structure as at the date of this Prospectus and after the
Offering:
Shareholder
Shares owned prior to the
Offering
Number of
shares %
Shares owned after the
Offering (1)
Number of
shares %
ESOMTAX INVEST LIMITED (Cyprus) (2) 9,418,500 42 9,418,500 32.82
Otrais Eko Fonds (3) 6,279,000 28 0 0
Mr. Viesturs Tamuzs 2,242,500 10 2,242,500 7.81
Mrs. Undine Bude 2,242,500 10 2,242,500 7.81
Mr. Maris Simanovics 2,242,500 10 2,242,500 7.81
Public - - 12,558,000 43.75
Total 22,425,000 100 28,704,000 100
(1) Assuming that all the Offer Shares are allotted in the Offering.
(2)
Beneficial owners of ESOMTAX INVEST LIMITED (Cyprus) are: Mr. Viesturs Tamuzs, Mrs. Undine Bude and Mr. Maris
Simanovics.
(3)
Otrais Eko Fonds is a limited partnership with 5 partners: Latvian Guarantee Agency, AS Perseus, AS Swedbank
Ieguldijumu parvaldes sabiedriba, Swedbank Investeerimisfondid Aktsiaselts and AS Eko Investors (management company of
the fund, general partner). Shareholders of AS Perseus are: AS Eko Investors, Mr. Viesturs Tamuzs and Mrs. Undine Bude.
Shareholders of AS Eko Investors are: Mr. Viesturs Tamuzs, Mrs. Undine Bude, Mr. Maris Simanovics, Mr. Eduards Ekarts
and Mrs. Lelde Vitina.
The voting rights of the Principal Shareholders with respect to its Shares do not differ in any respect from the
rights attaching to the Offer Shares. The Principal Shareholders will not have other voting rights from other
shareholders, other than the greater or lesser voting power inherent in its percentage ownership in the Company’s
share capital.
Selling Shareholder
Limited partnership Otrais Eko Fonds, corporate code: 40003837498, with registered office at Darza iela 2, Riga,
LV-1007, Latvia is the Selling Shareholder.
152

Lock-up agreement
On 11 June 2012 the Company, the Principal Shareholders, the Selling Shareholder, ESOMTAX INVEST
LIMITED (Cyprus), the Offering Broker, the Financial Advisor and Nordea Bank entered into lock-up
agreement (the “Lock-up Agreement”) on terms described below.
Except for: (i) the issue of the New Shares in the Offering, (ii) the issue of securities linked to the Issuer’s share
capital under any share / management incentive plan that may be implemented by the Issuer and (iii) the pledge
of existing shares of the Company in favour of Nordea Bank, the Issuer agreed that for the period of 12 months
from the Settlement Date, the Issuer, its General Meeting, Supervisory Board and/or Management Board will
not, without the prior written consent of the Offering Broker, which consent shall not be unreasonably withheld,
propose or otherwise support an offering of any of the Company’s existing shares, announce any intention to
offer new shares or and/or issue any securities convertible or exchangeable into the Company’s existing or new
shares or securities that in any other manner represent the right to acquire existing or new shares in the
Company, and/or conclude any transaction (including any transaction involving derivatives) of which the
economic effect would be similar to the effect of selling the Company’s shares.
Furthermore, except for: (i) the issue of the New Shares in the Offering, (ii) the issue of securities linked to the
Issuer’s share capital under any share / management incentive plan that may be implemented by the Issuer, (iii)
the pledge of existing shares of the Company in favour of Nordea Bank, and (iv) selling the Sale Shares by the
Selling Shareholder in the Offering, the Principal Shareholders, the Selling Shareholder and ESOMTAX
INVEST LIMITED (Cyprus) agreed that for a period of 12 months from the Settlement Date shall not, without
the prior consent of the Offering Broker, which consent shall not be unreasonably withheld: (i) sell or otherwise
transfer any of the Company’s existing shares, (ii) propose or otherwise support an offering of any of the
Company’s existing shares, (iii) announce any intention to sell (or otherwise transfer) any of the Company’s
existing shares, (iv) propose or otherwise support intention to offer new shares of the Company; (v) issue any
securities convertible or exchangeable into the Company’s existing or new shares, (vi) issue any securities that in
any other manner represent the right to acquire existing or new shares in the Company; (vii) encumber existing
or new shares in the Company, and (viii) conclude any transaction (including any transaction involving
derivatives) whose economic effect would be similar to the effect of the sale, encumbrance or transfer of the
Company’s shares.
In addition, except for: (i) the issue of the New Shares in the Offering, (ii) the issue of securities linked to the
Issuer’s share capital under any share / management incentive plan that may be implemented by the Issuer and
(iii) the pledge of existing shares of the Company in favour of Nordea Bank, the Principal Shareholders, the
Selling Shareholder and ESOMTAX INVEST LIMITED (Cyprus) for a period of 12 months from the Settlement
Date agreed not to propose, vote in favour of or otherwise support, without the prior consent of the Offering
Broker, which consent shall not be unreasonably withheld: (i) any increase of the Company's share capital, (ii)
any issuance of securities convertible or exchangeable into the Company’s existing or new shares, (iii) any
issuance of any other securities that in any other manner represent the right to acquire existing or new shares in
the Company, and (iv) the conclusion of any transaction (including any transaction including derivatives) of
which the economic effect would be similar to the effect of causing the Company to issue such instruments.
Additionally, Nordea Bank agreed that for a period of 12 months from the Settlement Date will not, without the
prior consent of the Offering Broker, which consent shall not be unreasonably withheld: (i) sell or otherwise
transfer any of the Company’s shares pledged to Nordea Bank, (ii) propose or otherwise support an offering of
any of the Company’s shares pledged to Nordea Bank, (iii) announce any intention to sell (or otherwise transfer)
any of the Company’s shares pledged to Nordea Bank, (iv) issue any securities convertible or exchangeable into
the Company’s shares pledged to Nordea Bank, (v) issue any securities that in any other manner represent the
right to acquire the Company’s shares pledged to Nordea Bank, (vi) encumber the Company’s shares pledged to
Nordea Bank for the benefit of third parties, and (vii) conclude any transaction (including any transaction
involving derivatives) whose economic effect would be similar to the effect of the sale, encumbrance or transfer
of the Company’s shares pledged to Nordea Bank. The Offering Broker shall not unreasonably reject its consent
for sale of the Company’s shares pledged to Nordea Bank to the purchaser presented to the Offering Broker by
Nordea Bank and under terms and conditions acceptable for the Offering Broker and Nordea Bank shall not be
prohibited, in order to satisfy its outstanding claims arising from the Nordea Financing Agreements, from: (i)
taking over any of the Company’s shares pledged to Nordea Bank in accordance with certain pledge agreements,
and (ii) selling or otherwise transferring any of the Company’s shares pledged to Nordea Bank outside the
regulated market to affiliate of Nordea Bank or to a strategic investor. Moreover, taking over, selling or
otherwise transferring the Company’s shares pledged to Nordea Bank during a lock-up period shall only be made,
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without the prior written consent of the Offering Broker, if: (i) the entity acquiring the Company’s shares
pledged to Nordea Bank prior to becoming the owner of any of the Company’s shares pledged to Nordea Bank
will enter into the Lock-up Agreement; or (ii) it will made as a result of acceptance of a general offer (a public
tender offer) directed to all the holders of the issued and allotted shares of the Company for the time being on
terms which treat all such holders, including Nordea Bank, alike.
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DESCRIPTION OF THE SHARES AND CORPORATE RIGHTS AND OBLIGATIONS
Rights and obligations granted by the Shares
All the Shares are pari passu (at an equal pace without preference) with regard to property and non-property
rights they grant to shareholders.
The shareholders acquire the property rights to the Shares upon the payment for the subscribed Shares and
registration of the increase of the share capital of the Company in the Commercial Register after lapse of
subscription period, pursuant to the Regulations for Increasing of the Share Capital of the Company approved
every time together with the relevant decision on capital increase. After registration of the increase of the share
capital of the Company property rights to the shares of the Company are passed by transferring them to the
financial instruments accounts of the acquirers against payment or free of charge.
The rights arising from the shares belong to the person, the share of which has been registered in the financial
instrument account in accordance with the provisions of the Latvian Financial Instrument Market Law.
Pursuant to Article 226 of the Latvian Commercial Law the Shares of the Company give, inter alia, the
following rights:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
to take part in the management of the Company,
to participate and vote in the General Meeting;
to exercise pre-emptive rights;
to receive dividends;
to receive funds in case of reduction of the share capital of the Company;
to receive a liquidation quota, in case of liquidation of the Company;
to request information regarding the issues included in the agenda of the General Meeting before the
meeting;
(viii) to submit the drafts of the decisions on the issues on the agenda of the General Meeting before the
meeting or during the meeting if all the drafts of the decisions submitted before the meeting have been
reviewed and the suggested drafts of the decisions have been refused;
(ix)
(x)
to request information about the economic position of the Company to such an extent as is necessary to
examine the relevant issue on the agenda and to objectively take a decision;
to decide on bringing an action on behalf of the Company against the Management Board, the Supervisory
Board and the auditor on compensation of losses caused to the Company.
General Meetings of Shareholders
Competence of General Meeting
According to the Latvian Commercial Law and Article 4.2 of the Articles of Association, the General Meeting
has the exclusive right on making decisions on the following issues:
(i)
(ii)
approval of the annual report of the Company and use of profit from the previous year of operations;
election and recall of the members of the Supervisory Board, the auditor, the controller and liquidator;
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(iii)
(iv)
(v)
(vi)
(vii)
bringing of actions against members of the Management Board, the Supervisory Board and the auditor or
withdrawing actions against them, as well regarding the appointment of a representative of the Company
to maintain actions against the members of Supervisory Board;
amending of Articles of Association of the Company;
increase or reduction of the share capital of the Company, except the case referred to in Clause 2.10 of the
Articles of Association;
issue and conversion of the Company’s securities;
general principles, types and criteria for determining the remuneration intended for the members of the
members of the Management Board and the Supervisory Board; determining the remuneration for
members of the Supervisory Board and the auditor;
(viii) termination of activities of the Company or their continuation or reorganisation of the Company;
(ix)
other issues only if it is provided for by applicable laws.
Decision making of the General Meeting does not differ from the rules of the Latvian Commercial Law. The
General Meeting takes the following decisions by a qualified majority vote that must be no less than ¾ of all the
votes conferred by the shares held by the shareholders attending the meeting:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
amendments to the Articles of Association of the Company;
issuance of convertible bonds;
reorganisation of the Company;
entering into a group of companies agreement (e.g. contract whereby a company subjects its management
and/or undertakes to transfer all or part of its profit to another company or private individual), amending
or termination thereof;
taking over of the Company (e.g. taking over of the company by another company (principal company)
holding more than 90% of the shares of the taken over company exchanging the shares of the shareholders
of the taken over company with the shares the principal company and/or by compensating in cash);
consent for inclusion and the termination or continuation of operations of the Company.
All other decisions of the General Meeting require a simple majority vote, i.e. no less that ½ of all the votes
conferred by the shares of the shareholders present at the General Meeting.
The General Meeting of shareholders is entitled to adopt decisions if more than a half of the Company’s share
capital with the voting rights is represented in the meeting.
Procedures of the General Meeting
The right of initiative to convene the General Meeting is vested to the Management Board, the Supervisory
Board or the Commercial Register. As a rule, the General Meetings are convened by a decision of the
Management Board.
General Meetings are annual and extraordinary. An annual General Meeting must be held every year within four
months after the close of the financial year. The Latvian Commercial Law indicates that an extraordinary
General Meeting must be convened: (i) upon initiative of the Management Board, request of the Supervisory
Board, the auditors or shareholders who jointly represent no less than 1/20 of the share capital of the Company;
(ii) if the loss of the Company exceeds ½ of the share capital of the Company or the Company has limited
solvency, the signs of insolvency procedures have been determined by the Management Board or they are likely
to occur in the Company.
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Once the Shares are listed on the WSE and the RSE, a notice of convocation of the General Meeting should be
made public no later than 30 days before the date of the General Meeting through the information distribution
systems (e.g. ESPI) as a material event, and is also to be published on the Company’s website: www.ecobaltia.lv.
Additional matters to be included on the agenda of the General Meeting may be proposed by shareholders no
later than 7 days prior to the meeting. In addition, if all the draft decisions proposed no later than 7 days prior to
the meeting have been reviewed and declined, they may propose new draft decisions on the matters on the
agenda prior to and during the General Meeting.
Right to Receive Information
Shareholders execute their rights to participate in the management of the Company through rights to attend the
General Meetings of shareholders of the Company. Pursuant to the Latvian Commercial Law and the Latvian
Financial Instrument Market Law, shareholders rights to receive information are related to process of
convocation of shareholders meeting, including, shareholders are entitled, before the General Meeting, to receive
agenda of the meeting, draft decisions of the meeting, draft amendments to incorporation documents of the
Company, annual report, report of the Supervisory Board and report of the auditor (if the meeting is convened
for approval of annual report). Moreover, shareholders are also entitled to receive all additional information
related to items of the agenda of the General Meeting of the Company, which includes at least information on
profit or loss of the Company, solvency of the Company, future development prospective and agreements
concluded between the Company and shareholders, members of the Management Board or members of the
Supervisory Board of the Company.
Voting at the General Meeting
Pursuant to Article 279 of the Latvian Commercial Law, each share of the Company confers one vote in the
General Meeting. Only shareholders, who have fully paid-up their shares, are entitled to vote at the General
Meeting. The persons who were shareholders of the Company at the close of the record date of the General
Meeting (i.e. the close of the sixth business day prior the date of the General Meeting) have the right to attend
and vote at the General Meeting. The shareholder’s right to attend the General Meeting also includes the right to
speak and to ask questions regarding the items on the agenda of the meeting.
The persons, who were shareholders of the Company at the close of the record date of the General Meeting (i.e.
the close of the sixth business day prior the date of the General Meeting), have the right to attend and vote at the
General Meeting.
To be able to participate in the General Meeting the investors that hold the Shares through securities accounts
maintained by NDS participants should inform the investment firm maintaining its securities account in which its
Shares are recorded about their will to participate in such General Meeting. The participants of the NDS should
collect such information from its accountholders, forward it to the NDS, who should collect all information and
prepare the list of shareholders willing to participate in the General Meeting to be provided to the LCD. The
LCD will then provide the list of shareholders willing to participate in the General Meeting received from the
NDS to the Company.
A person attending the General Meeting and entitled to vote must present a document, which is a proof of his/her
identity. A person who is not a shareholder must additionally present a document authorising him/her to vote at
the General Meeting. A proxy should be attached to the minutes of the General Meeting. A proxy may be
submitted prior to the beginning of the General Meeting. A proxy is not necessary for persons who represent a
shareholder on the basis of law, e.g. if they are statutory representatives of the shareholder. Those persons should
present documents, which certify their authorisation.
The Company does not provide a possibility to vote in advance in writing by mail on the issues included on the
agenda of the General Meeting or to attend the General Meeting and to vote by means of electronic
communications.
The Company should post the voting results of the General Meeting on its website no later than within 14 days
following the General Meeting.
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Challenging of Decisions
Decisions of the General Meeting of shareholders of the Company may be recognized as void by court, if such
decisions are in conflict with law, incorporation documents, including the Articles of Association of the
Company, objectives of the Company, public interests or morality, decisions infringe rights of third parties,
procedure of convening of the meeting, procedure of the meeting itself or rights of shareholders to receive
information in relation to the meeting have been violated. A statement of claim may be filed by the Management
Board or the Supervisory Board of the Company or an individual member of those bodies, the auditor,
shareholder or other persons specified by the Latvian Commercial Law. Such claim may be filed in a competent
court of Latvia within three months as from the day the General Meeting of shareholders has been held; or in
case the claim is brought by a shareholder, who has been unlawfully not allowed to participate in the meeting –
within three months from the day, on which the shareholder learnt or should have learnt about the challenged
decision, but not longer than one year from the day of the meeting. The statement of claim should be brought
against the Company.
In addition, a shareholder or a group of shareholders, representing at least 5% of the voting rights or whose
investments in share capital of the Company are at least LVL 50,000 (approx. EUR 71,150), may apply to the
court in favour of the Company for compensation of damages caused by the members of the Management Board
or the Supervisory Board of the Company by non-performance or improper performance of their duties
prescribed by the laws of the Republic of Latvia and the Articles of Association, as well as in other cases
provided by laws.
Procedure of amending the Articles of Association
The Articles of Association should be amended under the procedure provided for in the laws of the Republic of
Latvia and the Articles of Association:
(i)
(ii)
(iii)
the decision to amend the Articles of Association is adopted by the General Meeting by a ¾ qualified
majority vote of shareholders present at the General Meeting, save for the exceptions provided for in the
Latvian Commercial Law and the Articles of Association;
after the General Meeting decides to amend the Articles of Association, the entire text of the amended
Articles of Association should be drawn up and signed by the Management Board members entitled to
represent the Company or a person authorised by the General Meeting;
all amendments and additions to the Articles of Association should come into effect only after they are
registered with the Commercial Register under the procedure set by laws and regulations of the Republic
of Latvia.
Pre-emptive Rights
Pursuant to the Latvian Commercial Law, the Company’s share capital may be increased by a decision of the
General Meeting and may be effectuated by issuing additional shares in an ordinary manner or with a special
purpose. Additional shares are issued for a special purpose in the following cases: (i) for exchange of newly
issued shares for convertible bonds, (ii) for exchange of newly issued shares for the shares of a company to be
merged in case of reorganisation, (iii) as a compensation to minority shareholders that as an exchange of shares
is conducted by the dominant undertaking of a group of companies, (iv) for the issuing of employee shares.
Increases in share capital by way of issuance of additional shares may be effectuated through one or a
combination of the following: (i) in consideration for cash; (ii) in consideration for assets contributed in kind;
(iii) by conversion of bonds previously issued.
If the Company issues additional shares in an ordinary manner, the current shareholders will have a pre-emptive
right to subscribe for such securities on a pro rata basis. The pre-emptive right requires that the Company gives
priority treatment to the current shareholders. The Company must announce the proposal to exercise the preemptive
rights as well as the period of such exercising in the official gazette Latvijas Vestnesis and report the
same to the Commercial Register. When the Company is listed on the WSE and the RSE, the relevant
announcement should have to be additionally made through the stock exchanges information distribution
systems, and also published on the Company’s website: www.ecobaltia.lv. The time limit for a shareholder to
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acquire the securities on a pre-emptive basis may not be less than 1 month after the public announcement
thereof.
Pre-emptive rights of the shareholders may not be revoked or restricted by the foundation agreement, the Articles
of Association or a decision of the General Meeting, except in cases of increase of the share capital for a special
purpose (e.g. for exchange of newly issued shares for convertible bonds; for exchange of newly issued shares for
the shares of a company to be merged in case of reorganisation; as compensation to minority shareholders which
as an exchange of shares is conducted by the dominant undertaking of a group of companies; for issuing of
employee shares). If the intermediaries organise the offering and subscription of new shares of the Company,
they should ensure pre-emptive rights of the current shareholders.
The pre-emptive right to acquire the shares issued by the Company is granted to the persons, who were
shareholders of the Company at the record date (i.e. the close of the six business days prior to the General
Meeting).
The subscription for the pre-emptive rights for the Issuer’s shares by the investors that hold the Shares through
securities accounts maintained by the NDS participants will be conducted through the NDS and the LCD and
may be executed with participation of the Issuer’s agent, being a member of the LCD. The LCD will provide
information to the NDS regarding any increase of share capital with pre-emptive rights immediately on receipt of
this information from the Issuer, either directly, or indirectly (i.e. via the Issuer’s agent). The pre-emptive right
to acquire the shares issued by Issuer will be granted to the persons who owned Shares as per the record date.
Only these shareholders, who will grant permission to provide their identification data to the Issuer and entities
participating in the capital increase will be allowed to exercise pre-emptive rights. Information regarding
shareholders who want to participate in the capital increase and therefore disclosed their identity will be
collected by entities maintaining securities accounts for those shareholders, being participants of the NDS.
Further, this information will be forward by participants of the NDS to the NDS. The NDS will prepare the list
of shareholders who want to participate in the capital increase of the Issuer and provide it with the LCD. The
LCD will then provide this list to the Issuer, either directly, or indirectly (i.e. via the Issuer’s agent). Upon valid
issuance, the new shares will be delivered to the investors that hold the Shares through securities accounts
maintained by NDS participants by transferring them from the LCD to the NDS. Subsequently, the NDS will
distribute the new shares among its participants and the NDS participants will credit the respective shareholders’
securities accounts.
Transfer of Shares
According to the Latvian Financial Instrument Market Law, only book-entry shares are eligible for public
trading. The LCD manages the book-entry system which consists of two account levels. The first level is
managed by the LCD and consists of the issue accounts and correspondent accounts of banks and investment
brokerage companies that are members of the LCD (the custodian). The second level is managed by the
custodians and consists of accounts of holders of securities. In order to effect any transactions with book-entry
shares, an investor must open a book-entry account with a custodian. All transactions with book-entry shares are
executed as electronic book-entry transfers. The holders of Shares are entitled to receive statements from their
custodians confirming the book-entry transfers as well as periodical or on-the-date statements of their total or
separate holdings.
Shareholders in the Issuer may hold and transfer the Shares through the NDS participants, such as investment
firms and custodian banks operating in Poland.
Dividends and Other Distributions
A dividend is a share of profit allocated to a shareholder in proportion to the nominal value of shares owned by
this shareholder. Dividends should be calculated and paid out for fully paid-up shares. If the share is not fully
paid-up, no dividend is paid.
Dividends may be declared only once per financial year by a decision of the annual General Meeting on the
division of profit based on the proposal of the Management Board on the distribution of profit. Dividends may
not be determined, calculated and paid out, if the net value of the own funds of the Company at the time of the
end of the accounting year fall below, or as a result of this payment would fall below the total amount of the
share capital of the Company.
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Dividends are paid to persons, who at the record date (i.e. a date specified by Issuer without delay, but no earlier
than the tenth business day following the day the decision to distribute dividends was adopted by the General
Meeting) were the shareholders of the Company or were otherwise entitled to receive dividends. As a general
rule, the Company pays the dividends through the LCD and the intermediaries. The Company pays the declared
dividends to the LCD within 10 business days from the record date. The LCD within one business day transfers
the received funds to holders of securities accounts in the LCD, which subsequently transfers the dividends to
the shareholders within one business day after receiving funds from the LCD.
Dividend payments and other payments made by the Issuer in favour of the investors that hold the Shares
through securities accounts maintained by NDS participants will be conducted through the LCD, acting as
primary depository. The Issuer should transfer via the LCD system to the NDS the amount due to the
shareholders which hold the Shares through securities accounts maintained by the NDS participants.
Subsequently, the NDS should redistribute the dividend and other payments among its participants and the NDS
participants should credit the respective investors’ accounts.
Both residents and non-residents of Latvia are subject to the same dividend payment rule (there is no restriction
on the ability of the Issuer to pay dividends to non-Latvian shareholders and there are no special procedures
applicable to the payment of dividends to non-Latvian shareholders), except for the taxation matters (please see:
“Taxation – Taxation in Latvia”).
Dividends can be paid only in cash. The dividends attributable to the Shares are non-cumulative, as the Company
has not issued any preference shares with cumulative dividends, owners of which would be guaranteed the right
to dividend in the amount indicated in such shares.
Right to receive funds during the reduction of the share capital
When the share capital of the company is decreased in order to pay out the funds to its shareholders, each
shareholder is entitled to receive funds from the Company. Only the annual General Meeting may adopt the
decision to decrease the share capital with the purpose of paying funds to the shareholders also approving the
Regulations for Decrease of Share Capital for each particular case. The indicated Regulations should provide for
the term for return or exchange of shares and the provisions of payment out of the funds. The funds must be paid
to the shareholders, who have submitted the shares for return or exchange within the term foreseen in the
Regulations for Decrease of Share Capital and the payment should be made pursuant to the provisions of
payment specified in the Regulations. The funds are paid pro rata to the nominal value of shares held by each
shareholder and may only be paid in cash.
The share capital may be reduced provided that all of the following conditions are met: (i) all known creditors of
the company, whose claim rights against the Company have arisen prior to taking of the decision to decrease the
share capital, have been personally notified in writing and a notice regarding the decision taken to decrease the
equity capital has been published in the official gazette Latvijas Vestnesis inviting creditors to apply for securing
of their claims within the specified time period; (ii) all claims of creditors who have applied within the specified
time period have been secured.
The decision to decrease the share capital with the purpose of paying out the funds to its shareholders may not be
adopted, if after decrease the share capital will fall below the amount specified in Article 225 of the Latvian
Commercial Law, i.e. a minimum share capital of a public limited liability company in Latvia LVL 25,000 (EUR
35,572).
Right to share in any surplus in the event of liquidation
In the event of liquidation, the Company’s surplus assets remaining after settlement of accounts with creditors or
depositing cash due to creditors are distributed to the shareholders in proportion to the aggregate sum of the
nominal value of the shares held by shareholders. In case the Company’s liquidation is voluntary the surplus
assets may be distributed to the shareholders only after settlement of debts with creditors or depositing cash due
to creditors and after a lapse of two months after the day when the liquidation closing financial report and the
plan for division of the remaining property of the Company has been sent to the shareholders or a notice has
been published informing on the opportunity to review those documents. The liquidation closing financial report
and the plan for division of the remaining property of the Company can be prepared only after a lapse of 3 month
period for application of the creditors’ claims. If any judicial disputes with respect to the payment of the
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Company’s debts arise, the surplus assets may not be distributed to the shareholders until the final settlement of
disputes and debts.
Acquiring of the Issuer’s own Shares
Pursuant to the Latvian Commercial Law, the Company may not subscribe for or acquire its own shares or
accept its own shares as a security or finance third parties in the acquisition of the shares of the Company, save
exceptional circumstances when the Company may acquire its own shares or accept its own shares as a security:
(i) if the Company decreases its share capital by withdrawing part of shares from circulation and cancelling
them, (ii) if the Company acquires its own shares in order to protect itself from substantial direct losses, (iii) if
the Company acquires its own employee shares, (iv) if the Company acquires its own shares as a result of
reorganisation, by paying compensation to the shareholders in the cases specified by law, (v) if the Company
acquires its own shares when it acquires some other undertaking or its part, (vi) if the Company acquires its own
shares as a result of a free-of-charge transaction, (vii) if the Company acquires its own shares by way of
inheritance, (viii) if the Company acquires its own shares by collecting on its claims from third parties, (iv) if the
shares held by a shareholder, who has not paid-up such shares within the specified time period, pass to the
Company. In the cases indicated in items (ii), (vi) and (viii) above the Company may acquire only fully paid-up
shares.
The Company may acquire its own shares in order to protect itself from substantial direct losses, only upon a
decision of the General Meeting, under the condition that the total par value of the acquired shares together with
the shares already owned by the Company does not exceed 1/10 of the subscribed share capital of the Company.
The Company may acquire the shares only if the own funds of the Company exceed the amount of the share
capital, and as a result of the acquisition of such shares the own funds of the Company do not become less than
this amount. The decision of the General Meeting should indicate the maximum number of shares to be acquired,
as well as the time period, when the shares should be acquired (this period may not exceed 18 months). If the
shares are acquired for remuneration, the decision should indicate the minimum and maximum amount of
remuneration.
Aforementioned procedure for repurchasing the own shares is laid down in the Latvian Commercial Law, the
Latvian Financial Instrument Market Law and the Rules of the LCD. The Company is not entitled to purchase its
own shares, if as a result of the acquisition the value of the own funds of the Company would fall below the
amount of the share capital of the Company. Furthermore, the Company may not repurchase its own shares
unless the reserve for acquisition of such shares, the amount of which may not be less than the aggregate
purchase price of the shares being acquired, is formed in the Company. In order to repurchase its shares the
Company must submit a voluntary takeover bid and when redeeming its shares, the Company must ensure equal
possibilities for all the shareholders to sell shares of the Company to the Company.
In all other of the indicated cases shares may be repurchased by the Company on the basis of a decision adopted
by the Management Board.
Having purchased its shares, the Company is not entitled to exercise any property or non-property rights
conferred by such shares.
Further capital calls by the Company
If the loss of the Company exceeds half of the share capital of the Company or the Company has limited
solvency, the Company has the signs of insolvency or they are likely to occur, the General Meeting may, inter
alia, adopt a decision to cover the Company’s losses or part thereof by additional contributions of the
shareholders by way of increase in share capital or other means (e.g. in providing the loan to the Company). If
the General Meeting adopts the decision to cover the Company’s losses or part thereof by additional
contributions of the shareholders by way of increase in share capital, the shareholders who will subscribe to the
shares of the new issue will be obliged to pay the contributions to the Company. If the General Meeting adopts
the decision to cover the Company’s losses or part thereof by additional contributions of the shareholders by
other means, the shareholders who have voted in favour of such decision will be obliged to pay the contributions
to the Company. The shareholders, who have not participated at the General Meeting or have voted against such
decision, are entitled not to pay any additional contributions to the Company.
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Conversion provisions
As of the date of the Prospectus the Company has not issued any convertible securities.
Annual accounts
According to the applicable legislation, the set of annual financial statements of the Company has to be approved
by the annual General Meeting, which has to be convened within 4 months after close of the relevant financial
year. Announcement on convocation of the General Meeting should be made no later than on the next business
day after the auditor’s report. The set of annual financial statements of the Company together with the annual
report of the company and the auditor’s report, as well as an explanation as to when the annual report has been
approved has to be submitted to the Latvian State Revenue Service no later than 1 month after the annual
General Meeting.
Upon approval of the set of annual financial statements, the annual General Meeting has to appropriate the profit
(loss) of the Company available for appropriation, pursuant to the proposal for use of profit prepared by the
Management Board and provided to the shareholders together with the annual report. The proposal should
indicate the amount of the net profit of the Company, the part of the net profit to be paid out as dividends and use
of the profit for other purposes, as well as the date of calculation of the dividends, the amount of the dividend per
one share and the date of payment out of the dividends.
Amendments to the rights of shareholders
The Articles of Association do not provide for any specific conditions regarding amendments of shareholders’
rights. Shareholders’ rights may be modified only pursuant to the provisions of the Latvian laws.
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CERTAIN LATVIAN AND POLISH SECURITIES MARKET REGULATIONS AND PROCEDURES,
THE WARSAW STOCK EXCHANGE AND THE RIGA STOCK EXCHANGE
European Union Tender Offer Regulations
In the absence of regulatory guidance, a clear resolution to conflicts of laws issues relating to various tender
offer regulatory regimes cannot be provided. Polish and Latvian regulations reflect the provisions of the
Takeover Directive.
Latvian Regulations
The issued securities of a listed company, including the Issuer, are subject to all voluntary takeover bid and
mandatory takeover bid rules, as well as the sell-out and squeeze-out rules, as indicated in the Latvian Financial
Instrument Market Law.
Voluntary takeover bids
Pursuant to the Latvian Financial Instrument Market Law, a person is entitled to make a voluntary takeover bid,
if the purpose thereof is to acquire shares and thus ensure having at least 10% of the total amount of voting
shares of the Issuer. When making voluntary takeover bid, a person should establish in the voluntary takeover
bid prospectus minimal and maximal amount of shares it intends to acquire. If other shareholders accept the bid
for the shares exceeding maximum amount established in the prospectus, the shares should be acquired
proportionally from all shareholders who have accepted the bid (proportion is calculated proportionally to the
amount of shares other shareholders have accepted to sell). In such case the amount of acquired shares cannot be
less than maximum amount established in the prospectus. If other shareholders accept voluntary takeover bid for
the shares not reaching minimal determined amount, all shares from shareholders, which accepted the bid,
should be acquired except in the prospectus it is specifically established that the bid is not effective if other
shareholders accept the bid for the amount of shares not reaching minimal established amount.
Mandatory takeover bids
Pursuant to the Latvian Financial Instrument Market Law, a mandatory takeover bid to buy the remaining voting
shares of the Issuer should be made by a person who has directly or indirectly acquired, acting individually or in
concert with other persons, more than 50% of the total amount of voting shares of the Issuer.
A person who fails to fulfil the obligation to make a mandatory takeover bid within an established period of time
or makes and implements a mandatory takeover bid contrary to requirements of the Latvian Financial Instrument
Market Law, for the period until the proper execution of requirements of the law, should be deprived of the
voting rights at general meetings of shareholders of the Issuer. Decisions of general meeting of shareholders of
the Issuer, which are adopted through exercising deprived voting rights contrary to these provisions, should be
void and entries in any type of public registers may not be requested on the basis of such decisions.
Sell-out and squeeze-out rules
A person having acquired shares conferring not less than 95% of the total amount of voting shares of the Issuer
(or a person, who during the voluntary or mandatory takeover bid has concluded agreements, according to which
it will directly acquire voting rights in amount not less than 95% of the total amount of voting shares of the
Issuer), is entitled to require that the remaining shareholders of the Issuer sell their voting shares and such
remaining shareholders are obliged to sell those shares (squeeze-out). The person can exercise this right within
three months after it has acquired shares conferring not less than 95% of the total amount of voting shares of the
Issuer or, if the requirement has not been made within this term – within three months after the deadline of the
mandatory takeover bid or voluntary takeover bid to acquire all the remaining voting shares of the Issuer. The
exercise of squeeze-out rights triggers the termination of the listing of shares on the RSE and the WSE (the
squeeze-out rights may be exercised only after the decision on withdrawal of the shares from regulated markets
has been made).
Moreover, any minority shareholder, before the final takeover bid has been made, has the right to demand that a
person, having acquired shares conferring not less than 90% of the total amount of voting shares of the Issuer,
buy the shares held by this minority shareholder, in which case that person must buy such shares (sell-out).
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The price offered for shares under the mandatory takeover bid as well as squeeze-out or sell-out procedures
should be determined in accordance with mechanism described by Latvian Financial Instrument Market Law.
Nevertheless, the price offered for shares should be equitable price and should not be lower than:
(i)
(ii)
(iii)
highest price for which the bidder or persons acting in concert with the bidder have acquired the shares of
the Issuer within a period of last 12 months;
the average weighted price of shares on the regulated market within a period of last 12 months;
the value of share calculated by dividing the net assets of the Issuer by the total number of shares issued.
The minority shareholders have the rights to challenge the squeeze-out price in court if, in their opinion, the set
price is not equitable or is established contrary to requirements of law.
Application on voluntary takeover bid, mandatory takeover bid or squeeze-out should be submitted to the FKTK,
which adopts the decision on approval or denial the applicant to implement the bid within 10 business days after
all the documents required by the Latvian Financial Instrument Market Law have been submitted.
The issue of Shares does not cause appearance of any duties related to a mandatory takeover bid and any rights
related to sell-out or squeeze-out or any other rights provided for in the Latvian Financial Instrument Market
Law.
As of the date of the Prospectus there have been no public takeover bids by third parties in respect of the
Company’s Shares.
Obligations of Shareholders to Disclose Holdings
Pursuant to Article 61 of the Latvian Financial Instrument Market Law, any person who, directly or indirectly,
acquires or disposes of the voting rights in the Issuer must promptly (within 4 (four) trading days) give written
notice to the FKTK and the Issuer by means of a standard form of such acquisition or disposal if, as the result of
such acquisition or disposal, the percentage of voting rights held by such person exceeds or falls below the
following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75%, 90% and 95%.
Under the Latvian Financial Instrument Market Law the Issuer is required to publicly announce the indicated
notice within 1 (one) trading day as from its receipt.
A person, who fails to fulfil the aforementioned obligation within the established period of time, for the period
until the proper disclosure of the data concerned should be deprived of all rights related to shares, including the
right to hold at general meetings of shareholders of the Issuer more votes than the last threshold, of which he has
duly notified. Moreover, all the decisions adopted during the period between the acquisition of the shareholding
and the moment of a proper disclosure of the information may be annulled by a decision of the court.
Polish Regulations
Takeover bids
The Takeover Directive allows the Member States to introduce, next to the mandatory takeover bids, additional
protection of the interests of the minority shareholders, such as the obligation to make a partial bid where the
offeror does not acquire control of the company. Poland introduced such additional instruments.
Pursuant to Article 72 of the Polish Public Offerings Act, any acquisition of shares in a public company in
secondary trading and within a period of less than 60 days by a shareholder who holds shares entitling it to less
than 33% of votes at a general shareholders’ meeting, leading to the increase of its share in the total number of
voting rights by more than 10%, should be effected exclusively through a public tender offer.
Furthermore, any acquisition of shares in a public company by a shareholder who holds shares entitling it to at
least 33% of votes at a general shareholders’ meeting, in secondary trading and within a period of less than
twelve months, leading to the increase of its share in the total number of voting rights by more than 5%, should
be effected exclusively through a public tender offer.
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Additionally a shareholder that wishes to cross the 33% voting rights threshold is obliged to launch a public
tender for shares that will entitle it to hold 66% of votes. However, if the indicated thresholds are exceeded due
to the acquisition of shares in a public offering, in-kind contribution, merger or division of a company,
amendments to the articles of incorporation of the company or occurrence of certain other events, the
shareholder must either launch a public tender as described above within three months, or sell the appropriate
amount of shares so that the number of votes to which the shareholder is entitled is no more than 33% of votes.
It should be noted that Polish law explicitly excludes application of Polish regulations concerning thresholds
only with respect to 66% threshold as the mandatory threshold under the Takeover Directive. In such case,
Latvian threshold of 50% should apply. On the other hand, the additional threshold of 33% stipulated in Polish
law is a separate obligation imposed by Poland irrespective of the Takeover Directive. Therefore, the
announcement of a takeover bid when exceeding 50% of votes to satisfy the obligations imposed by the
Takeover Directive should be deemed a different obligation from the obligation to announce a bid for 66% of
votes when exceeding 33% of votes to satisfy additional Polish requirements.
The regulations set a number of detailed conditions to be followed in connection with a public tender offer,
including without limitation the rules of determining the tender price, required security and settlement.
Sell-out and squeeze-out rules
Pursuant to Article 82 of the Polish Public Offerings Act, a shareholder in a public company that, on its own or
together with its subsidiaries or parent companies or with companies which are parties to an agreement regarding
the purchase of shares, voting in concert at the shareholders’ meeting or conducting long-term policy against the
company, reaches or exceeds 90% of the overall number of votes in such public company, may demand, within
three months from the date on which such shareholder reaches or exceeds of the relevant threshold, that the
remaining shareholders sell all the shares held by them to such shareholder.
Pursuant to Article 83 of the Polish Public Offerings Act, a shareholder in a public company may demand that
another shareholder, which has reached or exceeded 90% of the total number of votes, purchase from it the
shares it holds in such company. The demand is made in writing within three months from the date on which
such shareholder reaches or exceeds the relevant threshold.
It should be noted that Polish law does not explicitly exclude the application of Polish regulations concerning
squeeze-out and sell-out in public companies to companies listed on the WSE which are incorporated outside of
Poland.
Obligations of Shareholders to Disclose Holdings
For the purpose of calculating a significant shareholding the Polish Public Offerings Act refers to the voting
rights held by each shareholder (i.e., the number of votes held in relation to the total number of votes at the
shareholders’ meeting), and not to the share percentage held in the company’s share capital. Voting shares of all
classes are aggregated. For the purposes of calculating the number of votes, it is assumed that all shares give full
voting rights, even if such voting rights are restricted or excluded by an agreement, or by the articles of
association of a company or by applicable laws.
Pursuant to the Polish Public Offerings Act, an entity that:
(i)
(ii)
achieves or exceeds 5%, 10%, 15%, 20%, 25%, 33%, 33 1⁄3%, 50%, 75% or 90% of the total votes in a
public company; or
holds at least 5%, 10%, 15%, 20%, 25%, 33%, 33 1/3%, 50%, 75% or 90% of the total vote in a public
company, and as a result of a reduction of its equity interest, holds 5%, 10%, 15%, 20%, 25%, 33%, 33
1⁄3%, 50%, 75% or 90% or less of the total votes, respectively,
should notify the PFSA and the public company of such fact immediately and, in no event, not later than within
four business days from the date of a change in such shareholder’s share in the total votes, or from the date on
which the shareholder becomes, or by exercising due care could have become, aware of such change; if such
change resulted from the acquisition of shares in a public company in a transaction concluded on a regulated
market, the notification should be made not later than within six session days of the transaction date. Session
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days should mean session days specified by the WSE Rules pursuant to the Trading in Financial Instruments Act
and announced by the PFSA on its website.
The notification requirement also arises in the event that:
(i)
(ii)
an entity holding over 10% of the total vote, changes its share by at least (a) 2% of the total vote (in the
case of a public company whose shares have been admitted to trading on the official stock market); or (b)
5% of the total vote (in the case of a public company whose shares have been admitted to trading on a
regulated market other than the official stock market);
an entity holding over 33% of the total vote changes its share by at least 1% of the total vote.
The notification requirements referred to above should also be borne by the entity which reached or exceeded a
given threshold of the total number of votes in connection with:
(i)
(ii)
(iii)
the occurrence of a legal event other than an act in law;
the acquisition or disposal of financial instruments from which there results the unconditional right or
duty to acquire already issued shares of a public company;
indirect acquisition of shares of a public company.
The notification requirements referred to above do not apply if upon the settlement in the depository for
securities of a number of transactions executed on the regulated market on a single day, the change in the
shareholder’s share in the total votes at the end of the settlement day does not result in reaching or exceeding any
threshold which triggers the notification requirement.
In order to perform these obligations, a public company should promptly forward the information obtained from
its shareholder, simultaneously, to the public, the PFSA, and the company operating the regulated market on
which the company shares are listed. The Polish Public Offerings Act sets forth details on the required scope of
information to be included in a notification addressed to the PFSA and the affected public company.
The Warsaw Stock Exchange
The WSE operates one of the two regulated markets in Poland within the meaning of the MiFID. The other
regulated market (operated as an OTC market by BondSpot, the subsidiary of the WSE) concentrates mainly on
bond trading. The WSE is a listed joint-stock company and is controlled by the Polish State. Members of the
WSE include banks and Polish and international brokers.
Shares listed on the WSE may be traded in a continuous price-setting system or in the single-price auction
system, depending on capitalisation and intensity of trading. In addition, there are two markets for shares: main
and parallel, the latter being for smaller, less liquid issuers. Listed companies are classified into four segments
according to their capitalisation: MINUS 5, 5 PLUS, 50 PLUS or 250 PLUS. To be traded in a specific market
and segment, certain non-statutory criteria must be met by the securities in addition to the statutory listing
criteria. Shares of companies which have high price volatility, or which are under bankruptcy or winding-up
proceedings may be classified into the Alert List segment and then moved to listing under the single-price
auction system.
Settlement of all transactions executed on the WSE is handled by the NDS, a joint-stock company in which the
WSE has a 33.3% stake (with the remaining shares held by the National Bank of Poland and the State Treasury
of the Republic of Poland) and the NDS’s subsidiary, KDPW_CCP.
The electronic trading system used by the WSE is WARSET, a trading system similar to the system used in
Paris, Brussels, Amsterdam, Chicago, and Singapore.
As of 13 June 2012, shares of 435 companies have been listed on the WSE.
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The Riga Stock Exchange
NASDAQ OMX Riga (the Riga Stock Exchange, or the RSE) is the only regulated market operator in Latvia,
offering trading, listing and information services. Only NASDAQ OMX Riga, Tallinn and Vilnius exchanges
members – banks and brokerage companies – may trade on the Baltic exchanges either on their own account or
for the account of their clients. The NASDAQ OMX Riga is a self-regulated organization (joint stock company),
issuing and enforcing its own rules and regulations consistent with the international standards for exchange
operations, settlement and surveillance. Securities are kept and traded in a dematerialized form. The electronic
register of publicly issued securities and securities transactions is registered at the Latvian Central Registry of
Securities, which is maintained by the LCD.
NASDAQ OMX Riga is a part of harmonized Baltic securities market and represents NASDAQ OMX group in
the Baltic region providing outstanding and globally recognized electronic trading platforms INET and Genium
INET and post-trading services for Baltic-listed securities: equities, bonds and investment fund units.
A regulated market is subject to both stock exchange and respective financial market regulator’s supervision. On
the NASDAQ OMX Riga regulated market financial instruments may be listed in one of the following lists: (i)
the Baltic Main List (equities), (ii) the Baltic Secondary List (equities), (iii) the Baltic Bond List (debt
securities), (iv) the Baltic Fund List (investment fund units). Settlement of all transactions executed on
NASDAQ OMX Riga is handled by the LCD, a joint-stock company, in which the NASDAQ OMX Riga has a
100% stake.
Taking into consideration that after the Offering (if successfully executed) the Company’s Shares will be listed
both on the WSE and NASDAQ OMX Riga, the Company follows both the corporate governance regimes – of
the WSE and of the NASDAQ OMX Riga, also publicly announcing on its compliance with the indicated
regimes. Taking into consideration also the aforementioned issues, the Company’s announcements on material
events will be published according to the applicable Polish and Latvian laws and rules.
As of May 17, 2012, shares of 80 companies have been listed on NASDAQ OMX Baltic Main and Secondary
lists, 32 out of 80 companies have been listed on NASDAQ OMX Riga Main and Secondary list.
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THE OFFERING AND PLAN OF DISTRIBUTION
General Information
The Issuer and the Selling Shareholder are offering for subscription up to 12,558,000 bearer shares (the “Offer
Shares”), of which 6,279,000 are newly issued bearer Shares of the Issuer (the “New Shares”) and 6,279,000 are
bearer shares offered by the Selling Shareholder (the “Sale Shares”). The Offer Shares are being offered at the
Offer Price, which should be determined through a book-building process and after taking into account other
conditions.
The New Shares and the Sale Shares are offered jointly, so to the Investors subscribing for Offer Shares can be
allocated both types of shares (only the New Shares, only the Sale Shares or both, New Shares and the Sale
Shares).
The Offering consists of: (i) public offering to retail investors in Poland (the “Retail Investors”), (ii) public
offering to institutional investors in Poland (the “Polish Institutional Investors”) and (iii) private placement to
institutional investors in certain jurisdictions outside the United States and Poland in reliance on Regulation S
under the U.S. Securities Act (the “International Investors”, and together with the Polish Institutional Investors,
the “Institutional Investors”), in each case in accordance with applicable securities laws and regulations. For
information on applicable selling restrictions in respect of the Offer Shares, please refer to “Selling Restrictions”.
The Retail Investors together with the Institutional Investors should be referred as the Investors.
No public offering in Latvia will take place, although the Issuer has taken and will take certain actions in Latvia
as its home Member State required for the purpose of the public offering in Poland. Furthermore, following the
Offering, certain actions will be taken in order that the Shares of the Issuer would be introduced to trading on the
RSE (and on the WSE).
Only such prospective Investors will be eligible to participate in the Offering who at or by the time of placing
their orders (before the end of the Subscription Period) have opened securities accounts with entities of their
choice which are licensed to provide such services within the territory of the Republic of Poland.
The Offering will be conducted in two tranches: a retail tranche and an institutional tranche. The Issuer and the
Selling Shareholder reserves the right to shift the Offer Shares between tranches; provided that only those the
Offer Shares that have not been duly subscribed and paid for in each of the tranches and the Offer Shares, that
have not been taken by the Investors as a result of withdrawal of the Investors’ subscription orders can be
transferred to another tranche. This will not have any impact on the final number of the Offer Shares offered in
the Offering.
The Offer Price at which the Offer Shares are being offered, the final number of Offer Shares and the final
number of Offer Shares allocated to each tranche will be determined by the Issuer and the Selling Shareholder,
acting jointly, upon recommendation of the Offering Broker after completion of a book-building process and
after taking into account other conditions that may be prevailing at the time.
The Issuer and the Selling Shareholder reserve the right to allocate in total a smaller number of Offer Shares than
12,558,000. This may happen, for instance, as a result of insufficient demand at a price level satisfactory to the
Issuer and the Selling Shareholder.
The issuance of the New Shares is scheduled to occur after subscription and payment for the New Shares on or
about 5 July 2012, subsequent registration of the increase of the share capital of the Issuer with the Commercial
Register and registration of the New Shares with the LCD with the permanent ISIN code, as well as with the
NDS nominee account in the LCD, shortly prior to delivery and listing of the Offer Shares, and in accordance
with the Management Board’s decision to increase the share capital of the Issuer dated 17 May 2012. For
information on corporate resolutions and share capital, please refer to “General Information on the Issuer” and
for information regarding the rights pertained to the Shares, please refer to “Description of the Shares and
Corporate Rights and Obligations”.
Notices relating to the Offering, and in particular the final Offer Price and final results of the Offering will be
filed with the FKTK and the PFSA, and will be published on the websites of the Issuer (www.ecobaltia.lv) and
the Offering Broker (www.dmbzwbk.pl). In addition, any notices relating to the approval of the Prospectus and
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its supplements (if any) which have to be published by the FKTK in accordance with Latvian law will be
published on its website (www.fktk.lv).
The terms “subscription” and “purchase” and “subscription order” and “purchase order” and similar expressions
are used interchangeably and mean subscription with respect to Offer Shares.
Expected timetable of the Offering
The expected timetable below lists expected key dates relating to the Offering.
No later than on or about 27 June
2012
Announcement on the Maximum Price
27 June - 28 June 2012 (16.00 CET) Book-building
No later than or on about 29 June
2012 (09.00 CET)
Announcement of the Offer Price and the final number of Offer Shares
in each tranche
29 June - 4 July 2012 Subscription period in the retail tranche
29 June – 4 July 2012 Subscription period in the institutional tranche
On or about 5 July 2012
On or about 12 July 2012
On or about 16 July 2012
Allotment Date
Settlement Date
Listing Date on the WSE and the RSE
All times and dates referred to in this timetable are based on Warsaw local time and maybe adjusted by the
Issuer and the Selling Shareholder, acting jointly, in consultation with the Offering Broker, if deemed necessary
for the successful completion of the Offering and Admission. In particular, the Issuer and the Selling
Shareholder upon recommendation from the Offering Broker, may extend the subscription period for the Offer
Shares, base on monitoring the market. An extension of the subscription period will result in the postponement
of the allotment date of the Offer Shares, as well as in the postponement of the date of listing of the Shares on
the WSE and the RSE. An extension of the book-building process will have the similar consequences.
Information of any changes in the above dates should be published on the websites of the Issuer
(www.ecobaltia.lv) and the Offering Broker (www.dmbzwbk.pl).
Where required by law, any changes in the Offering dates should be published in the form of a supplement to the
Prospectus. Information of any change of the dates should be published no later than on the originally set date,
provided that if the period of acceptance of subscription orders or the book-building period is shortened, relevant
information should be published no later than on the date preceding the last day (according to the new schedule)
of the acceptance of subscription orders or the book-building process.
Corporate Resolutions
On 17 May 2012 the General Meeting adopted the decision inter alia (i) to authorize the Management Board to
increase the share capital of the Issuer; (ii) to approve the provisions for the increase of the share capital of the
Issuer, (iii) to waive the pre-emptive rights to acquire the New Shares by 100% of shareholders of the Issuer; (iv)
to authorise the Management Board to determine the final conditions of the Offering; (v) to list all of the Shares
of the Issuer (including the Offer Shares) on the WSE and the RSE; and (vi) to authorise the Management Board
to approve and sign the Prospectus of the Issuer and to take corresponding actions.
On 17 May 2012 the Supervisory Board adopted the decision inter alia (i) to provide consent to the decision of
the Management Board to increase the share capital of the Issuer; and (ii) taking into consideration the increase
of share capital of the Issuer, to amend and approve a new wording of the Articles of Association of the Issuer.
On 17 May 2012 the Management Board adopted the decision inter alia (i) to increase the share capital of the
Issuer; and (ii) to offer the New Shares in the Offering.
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On 21 May 2012 the Management Board adopted the decision to approve the Prospectus.
The issuance of the New Shares is scheduled to occur upon the Management Board’s execution of a resolution to
that effect, registration of the increase of the share capital of the Company in the Commercial Register and
registration of the New Shares with the LCD, as well as with the NDS nominee account in the LCD, shortly prior
to delivery and listing of the Offer Shares, as outlined below.
Book-building
Before the commencement of subscription period, the book-building process will be conducted, during which
selected Institutional Investors, who have been invited by the Issuer and the Selling Shareholder through the
Offering Broker, will be able to make, in a manner agreed between them and the Offering Broker, declarations as
to the total number of the Offer Shares they are willing to acquire and the price they are willing to pay for one
Offer Share. Retail Investors will not participate in the book-building process. Invitations can be made in any
form. In order to obtain more detailed information as to the participation in the book-building process, investors
interested should contact the Offering Broker. The results of the book-building process should be used to
determine the Offer Price, the number of Offer Shares and the number of Offer Shares allocated to each tranche
and to initially allot the Offer Shares to selected Institutional Investors who during the book-building process
have offered a price for the Offer Shares not lower than the Offer Price.
Book-building results will not be made public.
Principles Relating to the Subscription and the Offer Shares
Subscription Procedure
In the retail tranche, the Retail Investor may subscribe for the minimum of 100 Offer Shares.
In the institutional tranche:
in the case of Institutional Investors who have been invited to subscribe, they are required to place a
subscription order or orders for a number of Offer Shares no less, in total, than the number of Offer
Shares given in the invitation; however, the Offering Broker may at its own discretion deem valid also
those subscriptions that do not comply with the aforementioned requirement; and
other Institutional Investors may place a subscription order or orders, in total, for the minimum of 14,300
Offer Shares per one subscription order.
Investors are entitled to place multiple subscription orders, provided that the total number of Offer Shares
subscribed for by any single Investor does not exceed the total number of the Offer Shares offered in the given
tranche, such subscription orders should be deemed to have been placed in total for the total number of Offer
Shares offered in that tranche.
Place and Form of Subscription
Subscriptions will be accepted at the offices of the Offering Broker and at the offices of Bank Zachodni WBK
S.A., who operates as an agent of the Offering Broker or other entities accepting subscriptions. A detailed list of
places where subscriptions in each tranche will be accepted will be published before the start of the subscriptions
at the Issuer’s website (www.ecobaltia.lv) and the website of the Offering Broker (www.dmbzwbk.pl).
The Offering Broker reserves the right to establish a distribution consortium. If such a consortium is created, it
will be publicly announced in compliance with applicable regulations. In such case, an updated list of points
accepting subscriptions will also be made available on the aforesaid websites.
Subscriptions will be accepted on a subscription form or via the Internet, fax and by phone or other means of
communication if Investors have a brokerage account agreement with the Offering Broker, other entities
accepting subscription orders or entities of their choice, which are licensed to provide such services within the
territory of the Republic of Poland and the agreement provides for placing subscriptions via the Internet, fax or
by phone or other means of communication. The subscription forms will be available at the offices of the
Offering Broker or other entities accepting subscriptions. Such subscriptions will be accepted in accordance with
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such agreement and technical requirements of using the Internet application made available by the Offering
Broker or other entities accepting subscriptions for placing subscriptions. Subscriptions will be accepted on a
subscription form in Polish or in English (for persons who are not Polish residents).
Firms managing securities portfolios on a discretionary basis should place subscription orders for the Offer
Shares by submitting the subscription order form along with a list of investors on whose behalf the subscription
order is placed. The list must include details required to be included in the subscription order form with respect
to each investor listed, and must be signed by persons authorised to represent the firm.
At the time of placing a subscription order, Investors are required to make an irrevocable instruction for
depositing the Offer Shares in a securities or custodian account maintained in their name. Only such perspective
investors will be eligible to participate in the Offering who at or by the time of placing their subscription orders
(before the end of the Subscription Period in the relevant tranche) have opened securities or custodian accounts
with entities of their choice which are licensed to provide such service within the territory of the Republic of
Poland.
By placing a subscription order, each Investor is deemed to have read this Prospectus and the Company’s
Articles of Association and accepted their content, as well as have read the terms of the Offering, consented to
being allotted a lower number of Offer Shares than the number specified in such Investor’s subscription orders,
or to not being allotted any Offer Shares at all, pursuant to the terms and conditions set forth in the Prospectus.
Any consequences of a form of subscription for the Offer Shares being incorrectly filled out will be borne by the
Investor.
For information on detailed rules governing the placement of subscription orders, in particular the documents
required if an order is placed by a statutory representative, proxy or any other person acting on behalf of an
Investor, the Investor should contact the Offering Broker or other entities accepting subscription orders.
Procedure and Dates for Payment for the Offer Shares
Subscriptions for the Offer Shares in the retail tranche should be fully paid for no later than on the day on which
they are made. Subscriptions for the Offer Shares in the institutional tranche should be fully paid for no later
than on the last day of accepting subscriptions in that tranche.
The full payment means payment equal to the number of the Offer Shares indicated in the subscription order
multiplied by the Offer Price.
All monetary amounts used in the Offering will be expressed in PLN. In particular, the Maximum Price and the
Offer Price will be set and the book-building process will be carried out in PLN.
When determining the Offer Price in a relevant decision it will also be reflected in LVL according to the official
currency exchange rate provided by the Bank of Latvia at the day of adoption of the decision. The Offer Price for
one share expressed in PLN should not be less than the nominal value of the share, i.e. LVL 1.00 as on the day of
settlement of the Offer Price.
Payments can be made in cash or by wire transfer and should be made in PLN to the account of the entity
accepting the subscription and according to the regulations and procedures of the entity accepting the
subscription. Payments for the Offer Shares are interest free. Payment of the Offer Price in PLN should be
deemed as due settlement for the Offer Shares by the Investor, having subscribed them, disregarding any
possible fluctuations of the rates of LVL and/or PLN from the day of settlement of Offer Price until full payment
for the subscribed Offer Shares.
A legal consequence of non-payment on time or a partial payment for the Offer Shares will be the invalidity of
the entire subscription, provided that in the case of the institutional tranche a partial payment before the deadline
results in the subscription being valid only for the number of shares for which the payment has been made,
ignoring fractional entitlements.
Investors will not bear any additional costs or taxes in filing subscription orders for the Offer Shares, except for
Retail Investors who may incur costs associated with opening and maintaining a securities account and any
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oker’s commission payable under any relevant agreements or pursuant to the regulations of the entity
accepting such subscription order. For information regarding Latvian and Polish taxation, see “Taxation”.
Withdrawal of Subscriptions
A subscription for the Offer Shares is irrevocable except for situation described below.
In accordance with Article 18 of the Latvian Financial Instrument Market Law and Article 51.1 of the Polish
Public Offerings Act, any significant change to the Prospectus, as defined in the aforementioned regulations will
be communicated through a supplement to the Prospectus, if required. Any supplement to the Prospectus will
need to be approved by the FKTK, notified to the PFSA and published on the websites of the Issuer
(www.ecobaltia.lv) and the Offering Broker (www.dmbzwbk.pl).
In accordance with Article 18.4 of the Latvian Financial Instrument Market Law and Article 51a of the Polish
Public Offerings Act, when, after the start of the Offering, a supplement to the Prospectus is made public
concerning an event or circumstances occurring before the allotment of the Offer Shares, of which the Issuer
became aware before the allotment, an Investor who has made a subscription before the publication of the
supplement to the Prospectus may withdraw such subscription by submitting a written statement to the institution
where the subscription was made, within two business days from the date of publication of the supplement to the
Prospectus. Under 51a of the Polish Public Offerings Act, the right to withdraw the subscription will not apply to
these cases when a supplement to the Prospectus is made available in connection with errors in the prospectus of
which the Issuer became aware after the allotment, and in connection with factors which occurred or of which
the Issuer became aware after the allotment.
Any refund of payments for Offer Shares included in any withdrawn subscription will be made in accordance
with instructions included in the subscription form within three business days after withdrawal of the
subscription. The refund will be made without interest or compensation.
Allotment of the Offer Shares
Both the New Shares and the Sale Shares (existing Offer Shares) will be offered jointly in both retail tranche and
institutional tranche. Consequently, Investors will receive an allotment of New Shares or Sale Shares only or
both New Shares and Sale Shares.
In case of insufficient demand for all the Offer Shares, in the first place to the Investors will be allocated the
New Shares (allocation is to be done by the Issuer) and after that Sale Shares (allocation is to be done by the
Selling Shareholder).
Institutional Investors will be notified about their allocations by the Offering Broker other entities accepting
subscriptions. Retail Investors, in order to receive such information, should contact the Offering Broker’s or
other entities accepting subscriptions or members of the distribution consortium (if any) relevant office accepting
subscription orders. The admission and introduction of the Offer Shares to stock exchange trading is not
dependent on informing all Investors about the Offer Shares allotted to them.
Allotment in the Retail Tranche
If the total number of the Offer Shares subscribed for in the retail tranche is equal to or less than the number of
the Offer Shares in that tranche, Offer Shares will be allotted based on subscription orders placed.
If the total number of the Offer Shares subscribed for in the retail tranche is more than the number of the Offer
Shares in that tranche, including after potential shifts between the tranches, the Offer Shares will be allotted in
accordance with the proportionate reduction principle.
The Issuer will not give preferential treatment or discriminate against and between Retail Investors.
There is no target minimum individual allotment within the retail tranche.
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Allotment in the Institutional Tranche
Preliminary Allotment
Offer Shares will be preliminarily allotted to the selected Institutional Investors who in declarations for the
acquisition have offered a price no less than the finally determined Offer Price. Making a declaration with a price
equal to or higher than the finally determined Offer Price does not guarantee that an Institutional Investor will be
placed on the preliminary allotment list or that the Investor will be allocated all the Offer Shares that the Investor
declared in its declaration.
The Offer Shares will be preliminarily allotted in an entirely discretional manner, i.e. the allotment rate can be
different for the different Institutional Investors.
After the completion of the book-building, the Offering Broker will advise Institutional Investors of the number
of preliminarily allotted Offer Shares and will request them to place a subscription order and make a payment.
Final Allocation
If the total number of Offer Shares subscribed for in the institutional tranche is equal to or less than the number
of Offer Shares in that tranche, the Offer Shares will be allotted based on subscription orders placed.
If the total number of Offer Shares subscribed for in the institutional tranche is more than the number of Offer
Shares in that tranche, including after potential shifts between the tranches, the Offer Shares will be allotted in
accordance with the following principles:
first, Offer Shares will be allotted to Institutional Investors who have participated in the book-building
process and who have been invited to subscribe – the number of Offer Shares will be allotted based on
subscription orders placed, but no more than the number of Offer Shares given in the invitation to
subscribe;
next, Offer Shares will be allotted to Institutional Investors, referred to above, with respect to
subscriptions made by them in excess of the number of Offer Shares specified in the invitation; and
next, Offer Shares will be allotted to the remaining Institutional Investors.
If the total number of Offer Shares subscribed for in the institutional tranche exceeds the number of Offer
Shares offered in that tranche, then a reduction of subscriptions is possible in the case of: subscription
orders placed by Institutional Investors who have been invited to subscribe, but only with respect to the
number of Offer Shares in the subscription which exceeds the number specified in the invitation; and
subscription orders made by Institutional Investors who have not been invited to subscribe.
Public Announcement of the Offering Results
The Issuer will announce the results of the Offering within 14 days from the Settlement Date, by means of a
press release in Poland and in a manner compliant with applicable regulations, as well as market practices in
Latvia and Poland. Results of the Offering will be published on the websites of the Issuer (www.ecobaltia.lv)
and the Offering Broker (www.dmbzwbk.pl). Furthermore, the placement report will be filed with the FKTK
within 3 business days as from the registration of the capital increase of the Issuer.
The Offering is expected to close on or about 12 July 2012, upon subscription, allotment and payment for the
Offer Shares and issuance by the Issuer of the New Shares. The Placement Agreement includes conditions to the
closing of the Offering (see “Placing”).
Cancellation, Suspension or Postponement of the Offering
The Issuer and the Selling Shareholder, acting jointly, may cancel the Offering, upon recommendation of the
Offering Broker or at their own initiative, at any time prior to the Settlement Date without disclosing any reason
for doing so. The Issuer and the Selling Shareholder, acting jointly, may also change the dates of opening and
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closing of the book-building and subscription periods, or decide that the Offering will be postponed and that new
dates of the Offering will be provided by the Issuer and the Selling Shareholder later.
The Issuer and the Selling Shareholder, acting jointly, may cancel the Offering, upon recommendation of the
Offering Broker if the Issuer and the Selling Shareholder consider it impracticable or inadvisable to proceed with
the Offering. Such reasons include, but are not limited to: (i) suspension or material limitation of trading in
securities generally on the WSE, as well as any other official stock exchange in the European Union and the
United States; (ii) sudden and material adverse change in the economic or political situation in Latvia, Poland or
worldwide; (iii) a material loss or interference with the Issuer’s or its Group’s business; (iv) any material change
or development in or affecting the general affairs, management, financial position, shareholders’ equity or results
of the Issuer’s operations or the operations of the Group, or (v) an insufficient, in the Issuer’s and the Selling
Shareholder’s opinion or in that of the Offering Broker, expected free float of the Issuer’s Shares on the WSE
talking into account preliminary results of the book-building or of the subscriptions. In such an event,
subscriptions for Offer Shares that have been made will be disregarded, and any subscription payments made
will be returned without interest or any other compensation.
If the Offering is suspended, the Issuer and the Selling Shareholder, acting jointly, may decide that subscriptions
made, book-building declarations submitted and payments made will be deemed to remain valid, however for not
longer than seven business days. In such case, Investors may withdraw subscriptions and declarations made by
submitting a relevant statement to that effect within two business days after the report on the suspension if
announced.
Any decision on cancellation, suspension, postponement or changes of dates of the Offering will be published by
way of an update report and a press release in Poland and in a manner compliant with applicable regulations, as
well as market practices in Latvia and Poland. The Offering may not be cancelled or suspended after the official
trading in the Offer Shares on the WSE or RSE has begun.
All dealings in Offer Shares prior to the commencement of the official trading on the WSE and RSE will be at
the sole risk of the investor concerned, irrespective of whether or not the Investor concerned has been notified of
the number of Offer Shares allotted to him.
If a decision on the suspension of the Offering is taken after the book-building but before subscriptions start, the
Issuer and the Selling Shareholder, upon consultation with the Offering Broker, may once again run the bookbuilding
process, however, in such a case they must decide whether declarations previously made will or will not
remain valid. Such information will be made public in the form of a statement published on the websites of the
Issuer and Offering Broker.
If the Offering is cancelled or suspended, Investors who placed subscription orders and paid for the subscription
will get their payments back:
if the Offering is cancelled – within three business days after the public announcement by the Company
of the Offering cancellation;
if the Offering is suspended – within three business days after the date on which the Investor has made a
statement cancelling his subscription or three business days after the date that the Issuer announces in a
supplement to the Prospectus that the orders placed are not valid.
The timely repayment of money paid will be without any interest or compensation.
Overallotment and Overallotment Option
The Issuer nor the Selling Shareholder will grant any overallotment option or the green shoe type option and
therefore no overallotment is foreseen. No stabilisation will be undertaken.
Delivery of the Offer Shares
The Shares of the Company are bearer shares. The Shares of the Company, as bearer shares, are registered with
the Latvian Central Depository under ISIN number LV0000101350. The delivery of the Offer Shares, which will
be provided with the same ISIN number as indicated above, will be made through the book-entry facilities by
transferring them from the LCD to the Polish clearing and settlement institution – the National Depository for
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Securities (Krajowy Depozyt Papierów Wartościowych S.A., the “NDS”). After the successful closing of the
Offering, the Offer Shares will be held in book entry form in the NDS and/or the LCD. Shareholders in the
Issuer may hold the Offer Shares through the NDS and/or LCD participants, such as investment firms and
custodian banks operating in Poland and/or Latvia.
An application will be made for the Offer Shares to be accepted for delivery through the book-entry facilities of
the NDS, either directly as a participant of that system or indirectly through participants of the NDS. Investors
should note that in order to trade the Shares on the WSE the Shares must be in book entry form.
Delivery of the Offer Shares will be made in accordance with settlement instructions placed by the Investors
upon subscription, through the facilities of the NDS, by registration of the Offer Shares on the Investors’
securities accounts indicated by such Investors. Delivery of the Offer Shares is expected to take place no longer
than 14 days after the Settlement Date, bearing unforeseen circumstances, by appropriate entry on the Investors’
securities accounts held through members of the NDS. The exact delivery dates will depend on timing of: (i)
registration of capital increase of the Company with the Commercial Register, (ii) registration of the Shares of
the Issuer (including the Offer Shares) with the LCD and (iii) registration of the Shares of the Issuer (including
the Offer Shares) in the facilities of the NDS.
Bearing the above in mind, the Issuer, the Selling Shareholder and the Offering Broker do not envisage any
delivery of documents concerning the Offer Shares acquired. Notices of the recording of the Offer Shares in the
Investor’s securities account will be delivered to Investors in accordance with the rules of a given investment
firm and custodian bank. However, the date of the delivery of such notice to the Investors will not have any
impact on the date of starting the listing of the Issuer’s Shares, including the Offer Shares, on the WSE and the
RSE as the notices may be delivered to the Investors after the listing commenced.
Offer Price
The Offer Shares are being offered at the Offer Price, which should be determined through a book-building
process and after taking into account other conditions as specified below.
The Maximum Price per Offer Share will be determined by the Issuer and the Selling Shareholder and will be
announced no later than on or about 27 June 2012. The Maximum Price will be based on (i) the current and
anticipated situation on the Polish and international capital markets, and (ii) assessment of the growth prospects,
risk factors and other information relating to the Issuer’s activities. The Maximum Price will be announced
through a press release in Poland and in a manner compliant with applicable regulations as well as market
practices in Poland and in Latvia.
During a book-building process amongst Institutional Investors invited by the Offering Broker, such Institutional
Investors interested in subscribing for the Offer Shares will indicate the number of the Offer Shares they will be
willing to acquire and the price, which they will be willing to pay per one Offer Share.
The Offer Price at which the Offer Shares are being offered, the final number of the Offer Shares and the final
number of Offer Shares allocated to each tranche will be determined by the Issuer and the Selling Shareholder,
acting jointly, upon recommendation of the Offering Broker after completion of the book-building process and
after taking into account other conditions. In particular, the following considerations will be taken into account:
(i) the size and price sensitivity of demand indicated in the book-building process, (ii) the current and anticipated
sentiment in the capital market in Poland, the European Union and globally and (iii) assessment by Investors of
Company’s business prospects, risk factors and other information contained in this Prospectus or available
elsewhere.
The Offer Price will not be higher than the Maximum Price, will be identical for both New Shares and Sale
Shares and for both Institutional and Retail Investors and will be set in PLN.
The Issuer will announce the Offer Price prior to commencement of the subscription period. A pricing statement
setting forth the Offer Price, the number of Offer Shares and the final number of Offer Shares allocated to each
tranche will be filled with the FKTK and the PFSA and published no later than on or about 29 June 2012 on the
websites of the Issuer (www.ecobaltia.lv) and the Offering Broker (www.dmbzwbk.pl).
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Listing and Trading
The Issuer intends to apply for admission and introduction to listing and trading on the main market of the WSE
and the main list of the RSE of all the Shares, including the Offer Shares, immediately after the Settlement Date.
The Issuer expects that the trading in the Shares on the WSE and RSE will commence on or about 16 July 2012
or as soon as possible thereafter.
In connection with the planned listing of the Shares on the WSE and RSE, all of the Shares, including the Offer
Shares, will be registered with and cleared through the NDS which is the central clearinghouse and depository of
securities in Poland, including those listed on the WSE and LCD which is the central clearinghouse and
depository of securities in Latvia, including those listed on the RSE.
Investors trading on the WSE and RSE should consider that under the laws of Latvia the following registration
processes are needed in order to validly issue new shares: (i) registration of the increase of the authorised capital
of the company with the Commercial Register and (ii) registration of the New Shares with the LCD as well as on
the NDS nominee account in the LCD. Thus, the New Shares will be eligible for the listing application upon
their payment by the Investors and the aforementioned registrations.
After admission of the Shares to listing and trading on the WSE and the RSE all the Issuer’s reports and
regulated information should be communicated via the ESPI system in Poland and the Central Storage of
Regulated Information of the FKTK and Nasdaqomx system in Latvia. The Issuer’s reports will be available to
the public on the Issuer’s website (www.ecobaltia.lv) and on the website of the Central Storage of Regulated
Information operated by the FKTK (http://www.oricgs.lv/) and on the website operated by the WSE
(www.gpwinfostrefa.pl) and on the website operated by the RSE (www.nasdaqomxbaltic.com).
The Issuer will not be seeking to apply for listing on the WSE and/or RSE of any temporary share receipt, such
as “rights to shares” (“prawa do akcji”) under Polish law.
At present the Issuer does not intend to seek a listing of the Shares at any stock exchange other than the WSE
and the RSE but may consider such listing in the future.
Securities Code
The ISIN number for Shares is LV0000101350.
Offering Broker
The Company has appointed Dom Maklerski BZ WBK Spółka Akcyjna, with its registered seat at pl. Wolności
15, Poznań, Poland, to act as the offering broker in Poland.
Market Makers
As of the date of the Prospectus the Company has not concluded an agreement in subject of market maker
service for Shares to be admitted to trading on the WSE. The Company can conclude such an agreement with the
Offering Broker. If the Company will enter in to such an agreement, then the Offering Broker will perform
market making service in accordance with the regulations of the WSE.
As of the date of the Prospectus the Company has not concluded an agreement in subject of market maker
service for Shares to be admitted to trading on the RSE. The Company intends to conclude such an agreement
with the entity engaged in market making activities on the RSE. If the Company will enter in to such an
agreement, then such entity will perform market making service in accordance with the regulations of the RSE.
Deposit of Shares
The Shares, including the Offer Shares will be registered on the NDS nominee account in the LCD (in Latvian:
Latvijas Centrālais depozitārijs) which is a Latvian depository of securities, with its seat at Valnu iela 1, Riga,
LV – 1050, Latvia. Thus, the NDS (in Polish: Krajowy Depozyt Papierów Wartościowych S.A.), which is a
Polish central clearinghouse and depository of securities with its seat at ul. Książęca 4, 00-498 Warsaw, Poland,
will act as a sub-depository for the Shares, including the Offer Shares.
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Intentions of the Shareholders and Members of the Management, Supervisory and Administrative Bodies
of the Issuer as to Participation in the Offering
According to the information available to the Issuer, obtained after a review carried out with due diligence, none
of the present members of the management, supervisory or administrative bodies, nor either of the existing
shareholders of the Issuer intends to subscribe for the Offer Shares.
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PLACING
Placement Agreement
The Issuer and the Selling Shareholder intend to enter, prior to the Allotment Date, into a placement agreement
(the “Placement Agreement”) in respect of the Offering with, inter alia, the Managers, in which the Offering
Broker will commit to undertake certain actions in connection with organization of the Offering.
The Issuer, the Selling Shareholder, the Managers do not expect to enter into an underwriting agreement.
The Offering Broker will act as an offering agent with respect to the Offer Shares for the purposes of the
Offering and admission to trading on the WSE.
In connection with the Offering, the Issuer and the Selling Shareholder have agreed to pay to the Managers total
fee of 5.75% of the gross proceeds from the placement and sale of the Offer Shares (which should also include
the expenses to be incurred for advisory services). Moreover, the Issuer and the Selling Shareholder have agreed
to pay to the Managers discretionary fee, depending on the outcome of the Offering.
In addition, the Issuer and the Selling Shareholder have agreed to hold harmless the Managers against certain
liabilities and to reimburse the Managers for some of their expenses in connection with the management of the
Offering. The Managers are entitled in certain circumstances to be released and discharged from their respective
obligations under the Placement Agreement prior to the Listing Date. Such circumstances include the nonsatisfaction
of certain conditions precedent and the occurrence of certain force majeure events. The Offering
should be conducted following the principle of “best endeavours”.
Lock-up Agreement
For description of lock-up agreement, concluded with regard to the Company’s Shares please see “Shareholders
– Lock-up agreement”.
Fees and Expenses
As of the date of this Prospectus, the Issuer estimates the amount of fixed expenses for preparation of the
Offering of up to PLN 2,025,000 (excluding the aforementioned combined fee of 5.75% and any discretionary
fee). These expenses consist of costs of preparation of the Prospectus, auditors’ fees, marketing of the Offering
and costs of analyses prepared with respect to the Offering.
The final amount of expenses will be calculated after the Offering and will be publicly announced within two
weeks from the Settlement Date.
The Issuer and the Selling Shareholder agreed to pay all commissions and expenses in connection with the
Offering. However, Investors will bear their own costs connected with the evaluation and participation in the
Offering, i.e. standard brokerage fees charged by broker.
Interests of Natural and Legal Persons Participating in the Offering
The Offering Broker has a contractual relationship with the Issuer and the Selling Shareholder in connection
with the Offering and the Admission, and has been mandated to act as the offering agent for the Offering and
listing of the Issuer’s Shares on the WSE.
The Financial Adviser, the Capital Advisor and the Offering Broker advise the Issuer and the Selling
Shareholder in connection with the Offering and Admission and coordinate the structuring and execution of the
transaction. Furthermore, the Financial Adviser, the Capital Advisor and Offering Broker are involved in the
Prospectus preparation process. If the transaction is successfully executed, the Managers will receive a combined
commission which depends on the actual value of the sold Offer Shares.
The Managers and their affiliates have engaged in and may in the future engage in, investment banking, advisory
services and other commercial dealings in the ordinary course of business with the Company and the Selling
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Shareholder and any of its affiliates. The Managers and their affiliates have received and may receive in the
future receive customary fees and commissions for these transactions and services.
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SELLING RESTRICTIONS
Important information about this Prospectus
This Prospectus constitutes a prospectus within the meaning of the Prospectus Directive and the Latvian
Financial Instrument Market Law (which implemented the Prospectus Directive into Latvian law), for the
purpose of giving the information with regard to the Issuer and the Offer Shares the Issuer and the Selling
Shareholder intend to offer pursuant to this Prospectus which is necessary to enable prospective investors to
make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of
the Issuer.
This Prospectus constitutes a prospectus in the form of a single document within the meaning of article 5 of
Prospectus Directive and Article 17 of Latvian Financial Instrument Market Law. This Prospectus has been filed
with, and was approved on 18 June 2012 by the FKTK, which is the competent authority in Latvia to approve
this document as a prospectus. Under the Prospectus Directive and the Latvian Financial Instrument Market
Law, this Prospectus, once approved by the competent authority of one member state of the EU (“Home Member
State”) may be used for making a public offering and admission of securities to listing on a regulated market in
another Member State of the EU (“Host Member State”), provided that the competent authority of the Home
Member State provides the competent authority of the Host Member State with a certificate of approval of the
Prospectus (in accordance with article 18 of the Prospectus Directive and Article 22 of the Latvian Financial
Instrument Market Law).
The Company and the Selling Shareholder intend to undertake a public offering of the Offer Shares in Poland.
Consequently, the Company and the Selling Shareholder will be authorized to carry out the Offering to the
public in Poland, once the FKTK has provided the PFSA with (1) a certificate of approval of this Prospectus (in
accordance with Article 22 of the Latvian Financial Instrument Market Law, Article 18 of the Prospectus
Directive and Article 37 of the Polish Public Offerings Act) and (2) a copy of the Prospectus together with a
summary of the Prospectus in the Polish language and after the Prospectus in the English language and its
summary in the Polish language have been made available to the public, which is equivalent to authorizing the
Offering to the public in Poland.
For the purposes of the public offering in Poland a Polish translation of the summary of the Prospectus will be
published. For the purposes of admission of Shares of the Issuer to trading on the RSE a Latvian translation of
the summary of the Prospectus will be published.
The Issuer accepts responsibility for the information contained in this Prospectus. The Selling Shareholder’s
responsibility for the information contained in this Prospectus is limited to the data, related to the Selling
Shareholder and Sale Shares as indicated in section “Persons Responsible”. The Issuer and the Selling
Shareholder (with regard to information, the Selling Shareholder assumes the responsibility of) declares that,
after having taken all reasonable care to ensure that such is the case, the information in this Prospectus is in
accordance with the facts and does not omit anything likely to affect the importance of such information.
Investors are authorised to use this Prospectus solely for the purpose of considering the purchase of the Offer
Shares in the Offering. You acknowledge and agree that the Managers make no representation or warranty,
express or implied, as to the accuracy or completeness of information, and nothing contained in this Prospectus
is, or should be relied upon as, a promise or representation by the Managers.
No person is authorised to give information or to make any representation in connection with the Offering other
than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as
having been authorised by the Issuer, and the Selling Shareholder, the Managers or any of their affiliates or
advisers or selling agents. Neither the delivery of this Prospectus nor any sale made hereunder should under any
circumstances imply that there has been no change in the affairs of the Issuer and its subsidiaries or that the
information set forth in this Prospectus is correct as at any date subsequent to the date of this Prospectus.
In making an investment decision, prospective investors must rely upon their own examination of the
Issuer and the terms of this Prospectus, including the risks involved. The distribution of this Prospectus
and the offering of the Offer Shares in certain jurisdictions may be restricted by law. The Company, the
Selling Shareholder and the Managers require persons into whose possession this Prospectus comes to
inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer
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of, or an invitation to purchase, any of the ordinary shares in any jurisdiction in which such offer or sale
would be unlawful. No one has taken any action that would permit a public offering to occur in any
jurisdiction except Poland.
No Public Offering outside of Poland
This Prospectus has been prepared on the basis that there will be no public offers of the Offer Shares, other than
the Offering to the public in the territory of Poland in accordance with the Prospectus Directive, as implemented
in Latvia and Poland, respectively. Accordingly, any person making or intending to make any offering, resale or
other transfer within the European Economic Area (the “EEA”), other than in Poland, of the Offer Shares may
only do so in circumstances under which no obligation arises for the Issuer, the Selling Shareholder, the
Principal Shareholders or the Offering Broker to produce an approved prospectus or other offering circular for
such offering. Neither the Issuer, the Selling Shareholder, the Principal Shareholders, nor the Offering Broker
have authorized, nor will any of them authorize, the making of any offer of the Offer Shares through any
financial intermediary, other than offers made by the Offering Broker under this Prospectus.
No action has been or will be taken by the Issuer, the Selling Shareholder, the Principal Shareholders or the
Offering Broker in any jurisdiction other than Poland that would permit a public offering of the Offer Shares, or
the possession or distribution of this Prospectus or any other offering material relating to the Issuer or the Shares
in any jurisdiction where action for that purpose is required. Accordingly, the Shares may not be offered or sold,
directly or indirectly, and neither this Prospectus nor any other offering material or advertisements in connection
with the Shares may be distributed or published, in or from any country or jurisdiction except in compliance with
any applicable rules and regulations of any such country or jurisdiction.
The distribution of this Prospectus and the Offering in certain jurisdictions may be restricted by law and
therefore persons into whose possession this Prospectus comes should inform themselves about and observe any
such restrictions on the distribution of this Prospectus and the Offering, including those in the paragraphs that
follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such
jurisdictions. This Prospectus does not constitute an offer to subscribe for or buy any of the Offer Shares offered
hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such
jurisdiction.
Notice to Investors
Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making
any offer, resale, pledge or other transfer of the shares offered hereby.
No actions have been taken to register or qualify the Offer Shares or otherwise permit a public offering of the
Offer Shares in any jurisdiction other than in Poland. The distribution of this Prospectus and the offer of the
Offer Shares in certain jurisdictions may be restricted by law, and therefore persons into whose possession this
Prospectus comes should inform themselves about and observe any such restrictions, including those in the
paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities
laws of any such jurisdictions.
Notice to Investors in the European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a “Relevant Member State”), an offer to the public of any Offer Shares may not be made in that
Relevant Member State, other than the offer in Poland after the publication of a Prospectus in relation to the
Offer Shares which has been approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority in that relevant
member state, all in accordance with the Prospectus Directive, except that it may make an offer of the Offer
Shares to the public in that Relevant Member State under the following exemptions under the Prospectus
Directive, if such exemptions have been implemented in that Relevant Member State:
to legal entities which are qualified investors as defined under the Prospectus Directive;
by the Offering Broker to fewer than 100, or, if the Relevant Member State has implemented the relevant
provisions of the “2010 PD Amending Directive”, 150 natural or legal persons, as permitted under the
Prospectus Directive; or
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in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of the Offer Shares should result in a requirement for the Issuer and the Offering
Broker to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus
pursuant to Article 16 of the Prospectus Directive.
Each person in a Relevant Member State (other than, in the case of paragraph (a) below, persons in Poland
receiving the offer in Poland contemplated in the Prospectuses) who receives any communication in respect of,
or who acquires any the Offer Shares under, the offer contemplated in the Prospectuses will be deemed to have
represented, warranted and agreed to and with each of the Issuer and the Offering Broker limited that:
(a)
(b)
it is a qualified investor as defined under the Prospectus Directive; and
in the case of any of the Offer Shares acquired by it as a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive, the Offer Shares acquired by it in the offer have not been
acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any
Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive,
or in circumstances in which the prior consent of the Offering Broker has been given to the offer or
resale.
For the purposes of the provisions and representations above, the expression an “offer to the public” in relation
to any the Offer Shares in any Relevant Member State means the communication in any form and by any means
of sufficient information on the terms of the Offering so as to enable an investor to decide to purchase any the
Offer Shares, as the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant
Member State), and includes any relevant implementing measure in each Relevant Member State and the
expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Notice to investors in the United Kingdom
This Prospectus and any other material in relation to the securities described herein may only be distributed to
and may only be directed at persons in the United Kingdom (the “UK”) that are qualified investors within the
meaning of Article 2(1)(e) of the Prospectus Directive (“Qualified Investors”) that are also (i) investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom the Prospectus may lawfully
be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) to whom it may otherwise lawfully
be distributed (all such persons together being referred to as “Relevant Persons”). The Offer Shares are only
available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such the Offer
Shares will be engaged in only with, Relevant Persons. This document and its contents are confidential and
should not be distributed, published or reproduced (in whole or in part) by recipients to any other person in the
UK. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.
_______________________
No prospective investor should consider any information in this Prospectus to be investment, legal, tax or other
advice. Each prospective investor should consult its own counsel, accountant and other advisers for such advice.
None of the Issuer and the Managers makes any representation to any offeree or purchaser of the Offer Shares
regarding the legality of an investment in such shares by such offeree or purchaser.
The Offering Broker is acting solely for the Issuer and the Selling Shareholder and no one else in connection
with this offering and is not, and will not be, responsible to any other person for providing advice in respect of
this offering or for providing the protections afforded to their respective clients. The Offering Broker and certain
related entities may acquire a portion of the Offer Shares for their own accounts.
In connection with the Offering, the Managers and any affiliate acting as an investor for its own account may
acquire the Offer Shares and in that capacity may retain, purchase or sell for its own account the Offer Shares
and any of the Issuer’s other securities or related investments and may offer or sell the Offer Shares or other
investments otherwise than in connection with the Offering. Accordingly, references in this document to the
Offer Shares being offered should be read as including any offering of securities to the Offering Broker and any
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affiliate acting in such capacity. The Offering Broker and other Managers do not intend to disclose the extent of
any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so.
In relation to member states of the EEA other than the United Kingdom, there may be further rules and
regulations of such country or jurisdiction within the EEA relating to the offering of the Offer Shares or
distribution or publication of this Prospectus or any other offering material or advertisement; persons into whose
possession this Prospectus comes should inform themselves about and observe any restrictions on the
distribution of the Prospectus and the offer of Offer Shares applicable in such EEA member state.
United States
The Offer Shares have not been, and will not be, registered under the US Securities Act and may not be offered
or sold within the United States or to, or for the account or benefit of, US persons except in certain transactions
in reliance on Regulation S under the US Securities Act. Terms used in this paragraph have the meanings given
to them by Regulation S under the US Securities Act.
In addition, until 40 days after the commencement of the Offering, an offer or sale of Offer Shares within the
United States by any dealer (whether or not participating in the Offering) may violate the registration
requirements of the US Securities Act if such offer or sale is made otherwise than in accordance with an
available exemption from registration under the US Securities Act.
Offering Broker has agreed that, except as permitted by the Placement Agreement, it will not offer, sell or
deliver the Offer Shares within the United States or to, or for the account or benefit of, US persons (i) as part of
their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering
and the closing date, and that it will have sent to each dealer to which it sells Offer Shares during the distribution
compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Offer
Shares within the United States or to, or for the account or benefit of, US persons.
This Prospectus has been prepared by the Company for use in connection with the offer and sale of the Offer
Shares outside the United States and for the listing of the Offer Shares on the Warsaw Stock Exchange and the
Riga Stock Exchange. The Company, the Selling Shareholder and the Offering Broker reserve the right to reject
any offer to purchase the Offer Shares, in whole or in part, for any reason.
Canada
This Prospectus is not, and under no circumstances is to be construed as, a Prospectus, an advertisement or a
public offering of the securities described herein in any province or territory of Canada. No securities
commission or similar authority in Canada has reviewed or in any way passed upon this document or the merits
of the securities described herein, and any representation to the contrary is an offence.
Japan
The Shares have not been and will not be registered under the Securities and Exchange Law of Japan (Law No.
25 of 1948, as amended), and are not being offered or sold and may not be offered or sold, directly or indirectly,
in Japan or to or for the account of any resident of Japan (which term as used herein includes any corporation or
other entity organized under the laws of Japan), or to others for offering or sale, directly or indirectly, in Japan or
to, or for the account of, any resident of Japan, except (i) pursuant to an exemption from the registration
requirements of the Securities and Exchange Law of Japan and (ii) in compliance with any other applicable
requirements of Japanese law.
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TAXATION
The information set out below describes the principal Latvian and Polish tax consequences of the acquisition,
holding and disposal of the Shares and is included for general information only. This summary does not purport
to be a comprehensive description of all Latvian and Polish tax considerations that may be relevant to a decision
to acquire, hold or dispose of the Company’s Shares. Each prospective investor should consult a professional
tax adviser regarding tax consequences of acquiring, holding and disposing of the Company’s Shares under the
laws of their country and/or state of citizenship, domicile or residence. Should any withholding taxes be payable
on amounts payable by the Company, the Company assumes responsibility for withholding of such taxes at the
source.
This summary is based on tax legislation, published case law, treaties, rules, regulations and similar
documentation, in force as at the date of this Prospectus, without prejudice to any amendments introduced at a
later date and implemented with retroactive effect.
Taxation in Latvia
Taxation on Dividends payable to legal persons
Withholding tax
Dividends payable by a Latvian legal entity to Latvian legal entities are exempted from withholding tax.
Dividends payable by a Latvian legal entity to foreign legal entities are subject to withholding tax at a rate of
10%. The obligation to calculate, withhold and pay the withholding tax on dividends is imposed on the Latvian
legal entity (the payer of dividends).
The withholding tax does not apply to dividends payable to foreign legal entities that are tax residents in the EU
member state or a member state of the European Economic Area if the respective recipient of dividends:
(i)
(ii)
under the terms of any double taxation treaties with third states, is not considered to be a tax resident
outside the EU and European Economic Area; and
is subject to corporate income tax in the residence country, without the possibility of an option or of being
exempt from the above tax.
Dividends payable to legal entities that are tax residents in a foreign country with which Latvia has concluded a
double taxation treaty and such a treaty limits the rights of Latvia to tax the dividends, the rules set in that treaty
will be applied.
Corporate income tax
Dividends received by legal entities that are tax residents in Latvia are exempted from corporate taxation in
hands of the dividend recipient.
Dividends received by legal entities that are tax residents in foreign countries are taxable according to the tax
law of the respective country.
Taxation on Dividends payable to individuals
Withholding tax
Dividends payable by a Latvian legal entity to individuals are subject to withholding tax at a rate of 10%
irrespective of the recipient’s tax-residency status.
The obligation to calculate, withhold and pay the withholding tax on dividends is imposed on the Latvian legal
entity (the payer of dividends).
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Individual income tax
Dividends received by individuals that are tax residents in Latvia are not taxed in hands of the dividend recipient
as the tax has been withheld by the dividend payer.
Dividends received by individuals that are tax residents in foreign countries are taxable according to the tax law
of the respective country.
Taxation on Capital Gains
Legal persons
Capital gains from the sale of shares received by legal entities that are tax residents in Latvia are exempted from
corporate taxation.
Capital gains from the sale of shares received by legal entities that are tax residents in foreign countries are
taxable according to the tax law of the respective country.
Individuals
Capital gains from the sale of shares received by individuals that are tax residents in Latvia are subject capital
gains tax at a flat rate of 15%.
The responsibility to calculate, declare and pay capital gains tax is imposed on the individual. The tax is payable
on a monthly basis by the 30 th day of the month following the month when capital gains have been received.
Capital gains from the sale of shares received by individuals that are tax residents in a foreign country are tax
exempt in Latvia but may be taxed according to the tax law of the respective country.
Taxation on Gifts and Inheritance
If the Issuer’s shares are given as a gift to a natural person, generally the acquisition of shares is subject to
personal income tax at a flat rate of 25%, charged on income received at the transfer of the shares as a gift. The
tax is not applicable where a spouse, children, parents, brothers, sisters, grandchildren or grandparents give
shares as a gift or where shares are given as a gift to a non-Latvian resident.
Inheritance income (inherited shares) is tax exempt in Latvia.
Value added tax
Transactions with shares are not subject to VAT in Latvia.
Taxation in Poland
This section provides information regarding the taxation of income related to holding and trading in shares
admitted to trading on the regulated market. For the avoidance of doubt, all references to shares presented in this
section also pertain to the Shares.
The information presented below is of a general nature and should not constitute the sole basis for evaluating the
tax consequences of making any investment decisions. Potential investors are urged to consult their tax advisors.
Please note that the information presented below has been prepared based on the legal statutes as at the date of
the Prospectus.
Polish Corporate Investors
Taxation of Income Relating to Holding Shares
Dividends and other income (revenue) actually earned on holding shares (such as e.g. remuneration for redeemed
shares – excluding buy-back of shares) actually earned by legal persons and companies in organization, as well
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as other unincorporated entities (except civil, general, limited partnerships, professional partnerships, and limited
joint-stock partnerships) with their registered office or place of management in Poland (the “Polish Corporate
Shareholders”), should be subject to taxation on the general rules under the Corporate Income Tax (“CIT”) Act.
They are taxed at the basic 19% rate.
Pursuant to Article 20 section 3 of the CIT Act, an income tax exemption applies to dividends and other revenue
earned on the holding of shares in companies whose seat or management office is outside Poland by Polish
companies whose worldwide income is subject to CIT in Poland, regardless of where the source of income is
located, if all of the following conditions are met:
the entity which distributes the dividends and other revenue earned on shares is a company whose
worldwide income (regardless of where the source of income is located) is subject to income tax in a
European Union Member State other than Poland, or in a other Member State of the European Economic
Area;
Polish company holds directly not less than 10% of shares in the capital of the company referred to in
item (a) above for an uninterrupted period of at least 2 years;
Polish company does not enjoy income tax exemption on the total amount of its incomes, regardless of the
source from which they are earned.
CIT Act expressly provides that in order to benefit from the above exemption, the 2-year holding period
requirement may be also met after the dividend is paid, provided that a given taxpayer would actually satisfy that
requirement afterwards. Otherwise, a taxpayer who did not meet the 2-year holding period requirement would be
obliged to pay the due income tax along with penalty interests.
The above exemption will not apply, however, if distributions are made upon liquidation of a company or upon
buy-back of shares.
Moreover, dividends paid out by a Latvian company to Polish Corporate Shareholders may be exempt from
Latvian withholding tax under Council Directive of July 23, 1990 on the common system of taxation applicable
in the case of parent companies and subsidiaries of different Member States, provided that the conditions
specified by the Latvian tax laws are satisfied.
The Double Tax Treaty concluded by the Republic of Poland and the Republic of Latvia (“Double Tax Treaty”)
provides that dividends paid by a company with its registered office in Latvia to Polish Corporate Shareholders
may be taxed both in Poland and Latvia, although if the recipient of the dividend is its beneficial owner, such
Latvian tax cannot exceed:
5% of the gross amount of the dividend, provided that the beneficial owner is a company which holds
directly at least 25% of the capital of the company paying the dividend;
15% of the gross amount of the dividend in all other cases.
It should be noted that in relation to the dividends which may be subject to taxation in Latvia, pursuant to Article
24 Section 1(b) of the Double Tax Treaty, a tax credit applies in Poland.
Pursuant to the provisions of the Double Tax Treaty, if a Polish Corporate Shareholder carries on business in
Latvia through a permanent establishment situated in Latvia (i.e. a fixed place of business through which the
business of an enterprise is wholly or partly carried on), and the shares in respect to which the dividends are paid
are effectively connected with such permanent establishment, dividends will be taxed in Latvia as business
profits earned by that permanent establishment.
Taxation of Income from Disposal of Shares
Under Article 13 section 4 of the Double Tax Treaty income earned by Polish Corporate Shareholders on
disposal of shares of a Latvian company (including buy-back of shares) is subject to corporate income tax in
Poland. Such an income is taxable in accordance with the general rules. This income is aggregated with the
business incomes of the given fiscal year, and subject to the general 19% CIT rate. It should be noted, however,
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that if the assets of a Latvian company consist mainly of immovable property in the meaning of Article 13
section 1 of the Double Tax Treaty, income earned on disposal of shares of such company will be subject to
taxation in Latvia.
The income is computed as the difference between the revenue (in principle, the price agreed for the shares) and
tax deductible costs (in principle, the costs of acquisition of the shares and costs related to the sale).
However, it should be noted that if the value of shares expressed in the price specified in the agreement on the
disposal of shares differs materially, without a legitimate reason, from the market value of the shares, such
agreed price may be challenged by the tax authorities.
Polish Individual Investors
Taxation of Income Relating to Holding Shares
Income earned by individuals domiciled in Poland (the “Polish Individual Shareholders”) on dividends and other
income (revenue) actually earned on holding shares (such as e.g. remuneration for redeemed shares excluding
buy-back of shares, liquidation proceeds) in a Latvian company is considered to be income from a separate
basket and it is not aggregated with incomes from other sources. Such income is subject to the 19% flat rate
Personal Income Tax (“PIT”). The tax is settled on annual basis. Annual tax returns should be filed by April 30
of the calendar year following the year in which the income was earned.
It is not absolutely clear whether the tax due on dividend income earned by a Polish Individual Investor from a
Latvian company should be withheld by a Polish brokerage house assisting in the payment or not. On the one
hand, there is a regulation (Article 41 section 4 of the PIT Act) that clearly imposes on brokerage houses the
obligation to withhold the tax. On the other hand, there is a regulation which provides that amounts of tax due on
dividends earned outside Poland and the amounts of tax paid outside Poland on such dividends should be
reported by a taxpayer (i.e. Polish Individual Investor) in his annual tax return (Article 30a Section 11). Most tax
advisers seem to regard the latter provision as overruling the first one, and are thus of the opinion that a Polish
brokerage house should not withhold any tax. However, in case of any doubts, a tax adviser should be consulted
by a taxpayer.
The Double Tax Treaty provides that dividends paid by a company with its registered office in Latvia to Polish
Individual Shareholders may be taxed both in Poland and Latvia, but such Latvian tax cannot exceed 15% of the
gross amount of the dividend, provided that the recipient of the dividend is its beneficial owner.
It should be noted that in relation to the dividends which may be subject to tax in Latvia, the tax credit method of
avoidance of double taxation should apply in Poland, pursuant to Article 24 section 1(b) of the Double Tax
Treaty.
Pursuant to the provisions of the Double Tax Treaty, if the Polish Individual Shareholder carries on business in
Latvia through a permanent establishment situated in Latvia (i.e. fixed place of business through which the
business of an enterprise is wholly or partly carried on) or performs in Latvia independent personal services from
a fixed base situated in Latvia, and the shares in respect of which the dividends are paid are effectively
connected with such permanent establishment or fixed base, dividends will be taxed in Latvia as business profits
or as income from independent personal services earned by that permanent establishment or fixed base.
Taxation of Income from a Disposal of Shares
Under Article 13 section 4 of the Double Tax Treaty income earned by Polish Individual Shareholders on
disposal of shares of a Latvian company (including buy-back of shares) is subject to corporate income tax in
Poland. Such an income should be classified as income from capital gains and as such it should not be combined
with incomes from other sources but should be subject to the 19% flat PIT rate. It should be noted, however, that
if the assets of a Latvian company consist mainly of immovable property in the meaning of Article 13 section 1
of the Double Tax Treaty, income earned on disposal of shares of such company will be subject to taxation in
Latvia.
The income is computed as the difference between the revenue earned on disposal of shares (in principle, the
price for the shares) and the related costs (in principle, the costs of acquisition of the shares and costs related to
the sale). The tax is settled on annual basis. Annual tax returns should be filed by April 30 of the calendar year
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following the year in which income was earned (this also being the deadline for paying the tax). No obligation
exists to pay tax advances during the tax year.
The above is not applicable if a Polish Individual Shareholder holds the shares within the scope of its business
activity. If this is the case, the income should be classified as a business income. In such case, income tax should
be paid at the progressive tax rates, which varies from 18% to 32%, or at the 19% flat rate (depending on the
form of taxation chosen by the given Polish Individual Shareholder).
It should be noted that if the value of shares expressed in the price specified in the agreement on the disposal of
shares differs materially, without a legitimate reason, from the market value of the shares, this may be
challenged by the tax authorities.
It should also be noted that pursuant to Article 9 section 6 of the Polish PIT Act, losses incurred during a fiscal
year on account of the disposal of shares may be deducted from the income received from that source over five
consecutive fiscal years, provided that the amount of the deduction does not exceed 50% of the amount of the
loss in any single fiscal year of the five-year period.
Foreign Investors
Individuals who do not have their place of residence in Poland and legal entities, companies in organization and
other entities with no legal personality, if they are treated as tax residents under tax law of a given state, that
have their registered office and place of management outside Poland are subject to PIT and CIT respectively,
only with respect to the profits that are derived from sources of income located on the territory of Poland.
Although this is not expressly provided for in Polish tax law, it should be noted that dividends from a Latvian
company should not be treated as income derived from Poland, even if the company is listed on the WSE.
Consequently, it should be noted that dividends paid by a Latvian company to a foreign investor should not be
subject to Polish income tax.
Polish tax law does not give clear direction on whether income from a sale of shares of a Latvian company
should be treated as income derived from Poland if the shares are traded on the WSE. It seems that the prevailing
approach of the tax authorities is that trades on the WSE should be treated as Polish source income.
Consequently, as a rule, such income would be subject to Polish income tax and settled on general rules. In
practice, however, most of the tax treaties would exempt such income from taxation in Poland. This should be
verified on a case-by-case basis.
Tax on Civil Law Transactions
The tax on civil law transactions (“TCLT”) is levied on agreements providing for a sale or exchange of rights,
provided that these rights are executed in Poland or, if executed abroad, that the purchaser is a Polish tax resident
and the transaction is effectuated in Poland.
The tax rate on the sale of shares and the exchange of shares is 1% at their market value and should be paid
within fourteen days of the date on which the tax obligation arose (that is, the date the share or exchange
agreement was concluded), unless the sale of shares and the exchange of shares agreements are concluded in a
form of a notary deed. In that case the due tax should be collected by the notary public acting as a tax remitter.
The purchaser of shares is liable for paying the due tax on civil law transactions. In the case of an exchange of
shares, the liability for paying the due tax is borne jointly and severally by the parties to the exchange of shares
transaction.
Exemptions from the tax on civil law transactions apply, without limitation, to transactions concerning the sale
of financial instruments (including shares) to investment companies or to foreign investment companies or,
through them, the sale of such instruments within the boundaries of a regulated market, as well as the sale of
such instruments made by investment companies or foreign investment companies outside the boundaries of a
regulated market, provided that such instruments were acquired by those companies within the boundaries of a
regulated market, as defined in the Trading in Financial Instruments Act.
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INDEPENDENT AUDITORS
The Consolidated Financial Statements for the years ended 31 December 2011, 2010 and 2009 and the Pro
Forma Financial for the year ended 31 December 2011 presented in the Prospectus were audited and the
Condensed Consolidated Interim Financial Statements for three months ended 31 March 2012 were reviewed by
Deloitte Audits Latvia, with its seat at Gredu iela 4a, Riga LV-1019, Latvia. The Consolidated Financial
Statements for the years ended 31 December 2011, 31 December 2010 and 31 December 2009, the Condensed
Consolidated Interim Financial Statements for three months ended 31 March 2012 and the Pro Forma Financial
for the year ended 31 December 2011 presented in the Prospectus were prepared in accordance with IFRS.
Deloitte Audits Latvia has given, and has not withdrawn, its written consent to the inclusion of its reports and the
reference to themselves herein in the form and context in which they are included. Deloitte Audits Latvia has no
interest in the Issuer.
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ADDITIONAL INFORMATION
Capitalized terms used in this Prospectus and not otherwise defined herein have the meaning ascribed to such
terms in Annex I “Defined Terms”.
This Prospectus has been prepared by the Issuer in connection with the Offering and the Admission solely for the
purpose of enabling a prospective investor to consider an investment in the Offer Shares. The information
contained in this Prospectus has been provided by the Issuer and other sources identified herein.
Prospective investors are expressly advised that an investment in the Offer Shares entails financial risk
and that they should, therefore, read this Prospectus in its entirety, and in particular, a section “Risk
Factors”, when considering an investment in the Offer Shares. The contents of this Prospectus are not to
be construed as legal, financial or tax advice. Each prospective investor should consult his, her or its own
legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice and not rely
exclusively on the legal, financial or tax information contained in this Prospectus.
Save for the provisions of mandatory laws, no person is or has been authorized to give any information or to
make any representation in connection with the Offering and/or Admission, other than as contained in this
Prospectus, and if given or made, any other information or representation must not be relied upon as having been
authorized by the Issuer, the Selling Shareholder or by the Offering Broker.
The corporate governance structure of the Issuer is set out in its Articles of Association which are available on
the Issuer’s website: www.ecobaltia.lv.
Notice to Prospective Investors
The distribution of this Prospectus and the Offering of the Offer Shares in certain jurisdictions may be restricted
by law. This Prospectus may not be used for, or in connection with, and does not constitute, any offer to sell, or
any solicitation or invitation to purchase, any of the Offer Shares offered hereby in any jurisdiction in which
such an offer or solicitation or invitation would be unlawful. Persons in possession of this Prospectus are
required to inform themselves about and to observe any such restrictions, including those set out under “Selling
Restrictions”. Any failure to comply with these restrictions may constitute a violation of the securities laws of
any such jurisdiction.
As a condition to the purchase of any Offer Shares in the Offering, each purchaser will be deemed to have made,
or in some cases be required to make, certain representations and warranties and will be required to take certain
actions described in particular in “The Offering and Plan of Distribution”, which will be relied upon by the
Issuer, the Selling Shareholder, the Offering Broker and others. The Issuer, the Selling Shareholder and the
Principal Shareholders reserve the right, in its sole and absolute discretion, to reject any purchase of Offer Shares
that the Issuer, the Selling Shareholder, the Principal Shareholders, the Offering Broker or any agents believe
may give rise to a breach or a violation of any law, rule or regulation. See, in particular: “Selling Restrictions”.
The Offer Shares have not been approved or disapproved by the United States Securities and Exchange
Commission, any State securities commission in the United States or any other Unites States regulatory
authority, nor have any of the foregoing passed upon or endorsed the merits of the Offering or the accuracy or
adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States.
Presentation of Financial and Other Information
In this Prospectus, the terms “Issuer”, “Company” “Eco Baltia Group”, “the Group” and similar terms refer to
Eco Baltia and its direct and indirect consolidated subsidiaries, unless the context requires otherwise. Unless
otherwise noted, references to “management” are to the members of the Management Board and Key Executives,
and statements as to the Company’s beliefs, expectations, estimates and opinions are to those of the Company’s
management. The term “Group Companies”, refers to Latvian companies: LZP, Eko Riga, Eko Kurzeme,
Jurmalas ATU, Kurzemes Ainava, Eko Reverss, PET Baltija, Nordic Plast, Vaania, Jumis, Eko SPV and MRTL.
The Company maintains its financial statements (the “IFRS Financial Statements”) in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the International Accounting Standards
Board (“IASB”), and interpretations, issued by the International Financial Reporting Interpretations Committee
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(“IFRIC”) and as applicable in the respective years. The IFRS Financial Statements included in this Prospectus
comprise of the Consolidated Financial Statements for the years ended 31 December 2011, 2010 and 2009 and
the Condensed Consolidated Interim Financial Statements for three months ended 31 March 2012. In addition,
the Issuer provides the Pro Forma Financial Information for the year ended 31 December 2011 to show the effect
of acquisition of control of the Group Companies by the Issuer.
The Consolidated Financial Statements, the Condensed Consolidated Interim Financial Statements and the Pro
Forma Financial Information included in the Prospectus are presented in LVL which is the accounting currency
of the Group and of the Company.
The Group Companies maintain their accounting records in local currencies in accordance with the accounting
and reporting regulations of the countries of their incorporation. Local statutory accounting principles and
procedures may differ from those generally accepted under IFRS. Accordingly, the Consolidated Financial
Statements, the Condensed Consolidated Interim Financial Statements and the Pro Forma Financial Information
which have been prepared based on the Group Companies’ local statutory accounting records, reflect
adjustments necessary for such financial statements to be presented in accordance with IFRS.
Certain figures contained in this Prospectus, including financial information, have been subject to rounding
adjustments. Accordingly, in certain instances the sum of the numbers in a column or a row in tables contained
in this Prospectus may not conform exactly to the total figure given for that column or row. Some percentages in
tables in this Prospectus have also been rounded and accordingly the totals in these tables may not add up to
100%.
Unless otherwise indicated, all references in this Prospectus to “USD” are to the lawful currency of the United
States and all references to “EUR”, “Euro” or “€” are to the lawful currency of the European Economic and
Monetary Union. References to “LVL” or “lat” are to the lawful currency of Latvia, whereas all references to
“PLN” and “Polish zloty” are to the lawful currency of Poland.
Potential investors should consult their own professional advisers to gain an understanding of the financial
information contained herein.
Market, Economic and Industry Data
All references to market, economic or industry data, statistics and forecasts in this Prospectus consist of
estimates compiled by professionals, state agencies, market and other organisations, researchers or analysts,
publicly available information from other external sources as well as our knowledge of our sales and markets and
assessments made by our management.
Certain statistical data and market, economic or industry information and forecasts relating to the waste
management industry have been extracted and derived by us from reports and analysis produced by, inter alia,
the following sources:
statistical data of National Bank of Latvia (www.bank.lv);
statistical data of National Bank of Poland (www.nbp.gov.pl);
statistical data of Eurostat (www.ec.europa.eu);
statistical data of Latvian Central Statistical Bureau (www.csb.gov.lv);
statistical data of Euromonitor International (www.euromonitor.com);
Official website of PRO Europe (http://pro-e.org);
The Latvian Environmental Protection Fund Administration;
Latvian Environment, Geology and Meteorology Centre;
Petcore (www.petcore.org);
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Confederation of European Waste-to-Energy Plants, Landfill taxes & bans, 12 December 2011;
New Media Publisher GmbH (www.plasticker.de);
Information available on website: www.lursoft.lv;
Information available on website: www.registrucentras.lt;
Information available on website: www.ariregister.rik.ee;
Information available on website: http://www.avestis.lt/index.php?page_id=19&news_id=99;
EUWID - Europäischer Wirtschaftsdienst GmbH.
While the Issuer has compiled, extracted and reproduced market or other industry data from external sources,
including third parties or industry or general publications, neither the Issuer, the Selling Shareholder or the
Offering Broker have independently verified that data. The information in this Prospectus that has been sourced
from third parties has been accurately reproduced and, as far as the Issuer is aware and able to ascertain from the
information published by the cited sources, no facts have been omitted that would render the reproduced
information inaccurate or misleading. Subject to the foregoing, none of the Issuer, the Selling Shareholder or the
Offering Broker can assure investors of the accuracy or completeness of, or take any responsibility for, such
data. The source for such third party information is cited whenever such information is used in this Prospectus.
With respect to industries in which the Group operates, some of estimates and assessments could not be
substantiated by reliable external market and/or industry information as such information is not often available or
may be incomplete. While the Company has taken every reasonable care to provide the best possible assessments
of the relevant market situation and the information about the relevant industry, such information may not be
relied upon as final and conclusive. Investors are encouraged to conduct their own investigations of the relevant
markets or employ a professional consultant. Industry publications generally state that their information is
obtained from sources they believe reliable, but that the accuracy and completeness of such information is not
guaranteed and that the projections they contain are based on a number of significant assumptions. The Issuer
has relied on the accuracy of such data and statements without carrying out an independent verification thereof
and therefore cannot guarantee their accuracy and completeness. Furthermore, Issuer believes that its
management’s estimates and assessments are accurate and reliable; however, they have not been verified by
independent external professionals. Consequently, the Issuer can guarantee neither their accuracy and
completeness nor that estimates or projections made by another entity relying on other methods of collecting,
analysing and assessing market data would be the same as the Issuer’s.
Save where required by mandatory provisions of laws, the Issuer does not intend and does not undertake to
update market, economic or industry data, statistics and forecasts contained in this Prospectus. Industry trends
may change or significantly differ from the ones projected in this Prospectus. Therefore investors should be
aware that estimates made in this Prospectus may not be relied upon as indicatives of our future performances
and actual trends.
In this Prospectus, the Issuer makes certain statements regarding its competitive position, growth and market
leadership. The Issuer believes these statements to be true based on market data and industry statistics regarding
the competitive position of certain of the Group’s competitors. In presenting the overview of the Issuer’s
competitive position in the relevant markets, the Issuer also relied on management’s assessments and analysis of
such competitive position. In making such assessments and analysis the management has used market
information collected by its own employees and advisors for such purpose, either available on the basis of public
information or derivable from the same.
Documents Incorporated by Reference
No documents or content of any website are incorporated by reference in this Prospectus.
192

Forward-looking Statements
Some of the statements in some of the sections in this Prospectus include forward-looking statements which
reflect the Issuer’s current views with respect to future events and financial performance of its Group. Such
forward-looking statements can be identified by the use of forward-looking terminology, including the terms
such as “believes”, “expects”, “estimates”, “anticipates”, “intends”, “plans”, “may”, “will”, “should”, “would”,
“could” or, in each case, their negatives or other variations or comparable terms. All statements other than
statements of historical facts included in this Prospectus are forward-looking statements. Such items in this
Prospectus include, but are not limited to, statements under “Risk Factors”, “Business”, “Industry Overview” and
“Operating and Financial Review”.
By their nature, forward-looking statements involve known and unknown risk and uncertainty, and other factors
that may cause the Group’s actual results, performances and achievements to differ materially from any future
results, performances, achievements or developments expressed in or implied by such forward-looking
statements. The Issuer has based these forward-looking statements on numerous assumptions regarding the
Group‘s present and future business strategies, the Group’s current expectations and projections about future
events and the environment in which the Group will operate in the future. These forward-looking statements are
subject to risks, uncertainties and assumptions about the Eco Baltia Group, including, among other things:
the Group’s ability to develop and expand its business;
the Group’s ability to keep up with new technologies and expand into new markets;
the Group’s and the Group Companies’ ability to control their costs;
the Group’s future capital spending and availability of financial resources to finance capital spending;
political and economic conditions in the countries in which the Group Companies operate;
volatility in the world’s securities markets;
the effects of regulation (including tax regulations) in Latvia and other countries in which the Group
Companies operate.
The forward-looking statements speak only as at the date of this Prospectus. The Issuer expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein, whether to reflect any new information, future events, any change in expectations with regard
thereto or any change in events, conditions or circumstances on which any such statements is based, except as
required by law, including under the Latvian Financial Instrument Market Law and the Polish Public Offerings
Act.
In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Prospectus
might not occur. Any statements regarding past trends or activities should not be taken as a representation that
such trends or activities will continue in the future.
Prospective investors are cautioned not to place undue reliance on such forward-looking statements,
which are based on facts known to the Issuer only as at the date of this Prospectus.
Documents Available for Inspection
Copies of the following documents will, when published, be available for inspection free of charge during usual
business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered office of the
Company from the date of this Prospectus throughout its validity period:
the most recent version of the Articles of Association;
Consolidated Financial Statements;
Condensed Consolidated Interim Financial Statements;
193

Pro Forma Financial Information;
this Prospectus (including a summary translated into the Polish and Latvian languages) and supplements
thereto, if any;
copies of all corporate resolutions mentioned in this Prospectus.
Moreover, the following documents will be available through the Company’s website (www.ecobaltia.lv):
this Prospectus, together with a summary translated into the Polish and Latvian languages, and
supplements thereto, if any;
the most recent version of the Articles of Association.
194

FINANCIAL INFORMATION
Consolidated Financial Statements .................................................................................................................F-2
Condensed Consolidated Interim Financial Statements..............................................................................F-53
Pro Forma Financial Information.................................................................................................................F-86
F-1

Eko Baltija Group
Consolidated Annual Report
for the years ended 31 December 2011, 2010 and 2009
(according to International Financial Reporting Standards
as adopted by the EU)
Riga, 23 April 2012
F-2

EKO BALTIJA GROUP
MANAGEMENT REPORT
MANAGEMENT REPORT
The Management Board of SIA Eko Baltija presents the management report and consolidated financial statements
of Eko Baltija Group (hereinafter The Group) for the financial years ended 31 December 2011, 2010 and 2009.
The companies included in consolidation are: Eko Baltija SIA, Eko Kurzeme SIA, PET Baltija AS, Nordic Plast
SIA, Eko Rīga SIA, Jūrmalas ATU SIA, Kurzemes Ainava SIA, Eko Reverss SIA, Latvijas Zaļais Punkts AS ,
Vaania SIA and Jumis SIA (the Group).
The Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments, providing wide
variety of services, starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting
and trading, and finally (iv) recycling. The Group is market leader in Latvia in organisation of waste recovery
segment in terms of market share and turnover and the Group is the second largest waste collector in Latvia in
terms of turnover and the leader in terms of geographical coverage. The Group collects waste in cities and
surrounding regions of Riga, Liepaja, Talsi, Tukums, Jurmala and Sigulda. The Group also holds large market
share in terms of volume in recyclables sorting and trading segment in the Baltics. Moreover, the Group has an
unrivalled position in polyethylene terephthalate (“PET”) bottle and polyethylene (“PE”) recycling segments in
the Baltics in terms of amount of recycled material and turnover. The Group has a long lasting cooperation with
all key customers and municipalities
BUSINESS REVIEW
2011 is the 5th year when consolidation is prepared and the Eko Baltija Group finished it with a profit of LVL 3.2
million (2010: 1.54 million lats profit). The net turnover of the Group in 2011 was 26.6 million lats (2010: 21.1
million LVL). The management of the Group considers the financial results being satisfactory.
The structure of shareholders of Eko Baltija Ltd. has changed in 2011. Merger with Polignac Ltd. has been
completed in October 2011. As the result, proportion of shareholding among Gamar Holding Ltd., E-Somtax
Invest LLP and limited partnership Otrais Eko fonds has been established as 42/42/16% in October 2011. In
October 2011 42% of shares owned by Gamar Holding Ltd. have been acquired by Eko SPV Ltd.
Legal reorganization process of several Group companies took place: Merger of Eko Kurzeme Ltd. and Sikari Ltd.
has been finalized, merger of Kurzemes ainava Ltd. and Tukuma Ainava Ltd. has been started and will be finished
in April 2012.
Several share purchase transactions between Group companies have been concluded in 2011: AG Inter Ltd.
(owned by Kurzemes ainava Ltd.) has been sold to Mr. Arnis Ruža; Eko Baltija Ltd. has acquired 204 shares of
Latvijas Zaļais Punkts JSC from Ullus Limited; Eko Baltija Ltd. has acquired 3721 shares of PET Baltija JSC
from Latvijas Zaļais Punkts JSC.
In 2011 the Group continued to grow the business of the waste management companies in Latvia by strengthening
and expanding the market share of group companies and in the secondary raw material processing and recycling
market.
In the reporting year the Group companies have participated in a number of municipality organized tenders on
street cleaning and city area maintenance, household waste collection and transportation in Jūrmala, Tukums,
Liepāja, Mārupe, Inčuklans and Riga. The Group’s waste collection companies have collected more than 80 000
tons of household waste increasing the total amount by 10% comparing to previous year. Nordic Plast Ltd.
considerably improved result by introducing new, competitive products on the market. PET Baltija JSC achieved
record high financial results on the back of increasing production volumes. Both factories produced 20 800 tons of
products, improving the total output by 20%. Latvian Environmental Protection Fund Administration at the end of
2010 has accepted improved management plans submitted by JSC „Latvijas Zaļais punkts” (LZP) and concluded
a cooperation agreement with LZP for realization of plans for 3 years; therefore the clients of LZP have received
the natural resource tax exemption until the 31st of December, 2013, and that allows the Group to plan its longterm
development. In 2011 LZP have increased availability of separate waste collection in Latvia and now it is
available to 75% of population. With support of LZP, 63 separate collection sites are available to general public in
the territory of Latvia.
F-3

SHARE CAPITAL
The Parent company’s registered and paid up capital equals LVL 150 thousand, that consists of 150 shares.
Nominal value per share is LVL 1 thousand.
Eko Baltija Ltd. shareholders as of 31 December 2011 are as follows:
Shareholders 31/12/2011
LVL’000
150,000 ordinary shares of LVL 1 thousand each
1. E-SomTAX Invest LLP (Great Britain), 42% (2010:26.0%) 63
2. KS 2 Eko Fonds, 16% (2010:10.0%) 24
3. SIA Eko SPV, 42%; from 18.10.2011 63
150
MANAGEMENT BOARD RESPONSIBILITY FOR THE ANNUAL REPORT
The Management Board is responsible for the preparation of the financial statements of the Group. The financial
statements fairly present the financial position of the Group as at the end of the reporting years, and the results of
its operations and cash flows during the reporting years.
The Management Board confirms that appropriate accounting principles were applied consistently in the
preparation of the 2011, 2010 and 2009 financial statements set out on pages 9 to 52, and that prudence was
exercised in making estimates and forecasts. The Management Board confirms that International Financial
Reporting Standards for the preparation of financial reports and Latvian legislation were complied with, and that
the financial statements were prepared on a going concern basis.
The Management Board is responsible for maintaining proper accounting records, for taking reasonable steps to
safeguard the assets of the company, and to prevent and detect any fraud or other irregularities.
RISK MANAGEMENT
Eko Baltija Ltd. and its Group companies follow the market development and plan the operations in order to
identify the possible risks which could prevent the Companies to achieve the set goals. The constant follow up on
financial resources safeguards the possibility of the Group to settle all obligations in due time.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
There have been no events after the end of the reporting period date that could materially affect the financial
statements of Eko Baltija Group for the reporting year ended 31 December 2011.
FUTURE DEVELOPMENT OF THE PARENT COMPANY EKO BALTIJA AND SUBSIDIARIES
The Group is planning further expansion in the fields of organisation of waste recovery, waste collection,
recyclables sorting and trading, and recycling.
Planned merger of offices in Riga will help to develop stronger organization with common targets, determined
management and motivated employees.
The Group is planning considerable investments to improve efficiency of existing business, development of new
products and geographical expansion.
F-4

AUDITORS
F-5

EKO BALTIJA GROUP
SUPERVISORY COUNCIL
SUPERVISORY COUNCIL
Chairman of the Council Eduards Ekarts (since 24.05.2010.)
Deputy Chairman of the Council Raitis Maurāns (since 30.11.2011.)
Sveinn Hannesson (till 30.11.2011.)
Council members Lelde Vītiņa (since 30.11.2011.)
Raimonds Ozols (till 30.11.2011.)
Eduards Ekarts (till 24.05.2010.)
Sveinn Hannesson (till 24.05.2010.)
F-6

EKO BALTIJA GROUP
MANAGEMENT BOARD
MANAGEMENT BOARD
Chairman of the Board Māris Simanovičs (since 26.04.2007.)
Board members Viesturs Tamužs (since 15.12.2006.)
Undīne Būde (since 26.04.2007.)
Petur Valdimarsson (till 30.11.2011.)
Gunnar Bragason (till 30.11.2011.)
F-7

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
F-8

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 2011 2010 2009
LVL’000 LVL’000 LVL’000
Net sales 1 26 595 21 088 13 851
Cost of sales 2 (19 354) (15 079) (10 174)
Gross profit 7 241 6 009 3 677
Selling expenses 3 (325) (484) (323)
Administrative expenses 4 (2 932) (2 629) (2 682)
Other operating income 5 284 236 191
Other operating expenses 6 (287) (807) (1 007)
Write-off of long-term financial investments 7 - (19) -
Interest income and similar income 8 70 18 55
Interest expenses and similar expenses 9 (324) (280) (257)
Other taxes 10 (5) (5) (6)
Profit before corporate income tax 3 722 2 039 (352)
Corporate income tax for the reporting year 11 (211) (248) (103)
Deferred income tax 11 (133) 3 (60)
Current year profit/ (loss) and comprehensive income 3 378 1 794 (515)
Attributable to:
Owners of the parent 3 203 1 539 (498)
Non-controlling interests (175) (255) 17
F-9

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes
31 December 31 December 31 December
2011
2010
2009
LVL’000 LVL’000 LVL’000
ASSETS
Non-current assets
Goodwill 12 5 056 5 238 6 121
Intangible assets 15 40 35 30
Property, plant and equipment 16 5 662 5 839 6 640
Investments in subsidiaries and associates 13, 14 2 2 -
Long-term loans and receivables 17 - 404 138
Other financial assets 18 140 68 5
Total non-current assets 10 900 11 586 12 934
Current assets
Inventories 19 1 459 1 057 693
Trade and other receivables 20 1 626 1 731 1 502
Loans to related companies 21 1 852 - -
Other short-term receivables 22 1 546 1 874 1 399
Corporate income tax 116 101 176
Other short-term financial investment 23 1 159 82
Cash and cash equivalents 24 966 859 813
Total current assets 7 566 5 781 4 665
Total assets 18 466 17 367 17 599
F-10

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes
31 December 31 December 31 December
2011
2010 2009
LVL’000 LVL’000 LVL’000
EQUITY AND LIABILITIES
Capital and reserves
Share capital 25 150 150 150
Share premium 5 442 5 442 5 442
Reorganization reserve 25 (4 625) - -
Retained earnings /(losses) 4 072 591 (944)
Equity attributed to the shareholders 5 039 6 183 4 648
Non-controlling interests 1 080 1 806 1 550
Total equity 6 119 7 989 6 198
Non-current liabilities
Interest bearing borrowings 26 5 556 736 2 689
Finance lease liabilities 27 1 085 1 876 2 541
Liabilities to related companies 28 - - 158
Deferred tax liabilities 11 317 184 187
Other liabilities 31 - - 183
Other provisions - 51 51
Deferred income 29 182 180 300
Total non-current liabilities 7 140 3 027 6 109
Current liabilities
Trade and other payables 30 999 880 816
Interest bearing borrowings 26 2 392 3 124 1 979
Finance lease liabilities 27 595 935 1 018
Deferred income and customer prepayments 29 215 167 177
Corporate income tax liabilities 11 43 113 20
Tax liabilities 31 246 411 254
Other liabilities 32 717 721 1 028
Total current liabilities 5 207 6 351 5 292
Total liabilities 12 347 9 378 11 401
Total equity and liabilities 18 466 17 367 17 599
F-11

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO EQUITY HOLDERS OF THE
COMPANY
Share
capital
Share
premium
Reorganization
reserve
Retained
earnings
(losses)
Noncontrolling
interest
Total
equity
LVL’000 LVL’000 LVL’000 LVL’000
Year ended 31 December 2009
Balance at 1 January 2009 125 - 345 (55) 181 596
Other comprehensive income - - - - - -
Increase in share capital 25 - - - - 25
Share premium - 5 442 - - - 5 442
Changes in reserves ** - - (345) - - (345)
Changes in retained earnings ** - - - (391) - (391)
Changes in non-controlling interest - - - - 1 386 1 386
Net profit for the year 2009 - - - (498) - (498)
Non-controlling interest in current - - - - (17) (17)
year profit
Balance at 31 December 2009 150 5 442 - (944) 1 550 6 198
Year ended 31 December 2010
Balance at 1 January 2010 150 5 442 - (944) 1 550 6 198
Changes in retained earnings - - - (4) 1 (3)
Net profit for the year 2010 - - - 1 539 - 1 539
Non-controlling interest in current - - - - 255 255
year profit
Balance at 31 December 2010 150 5 442 - 591 1 806 7 989
Year ended 31 December 2011
Balance at 1 January 2011 150 5 442 - 591 1 806 7 989
Changes in reserves* - - (4 625) - - (4 625)
Changes in retained earnings ** - - - 278 - 278
Changes in non-controlling interest - - - - (901) (901)
**
Net profit for the year 2011 - - - 3 203 - 3 203
Non-controlling interest in current - - - - 175 175
year profit
Balance at 31 December 2011 150 5 442 (4 625) 4 072 1 080 6 119
*Reorganization of Eko Baltija SIA and Polignac SIA (Note 25 (b))
**See NOTE 25 (c)
F-12

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes 2011 2010 2009
LVL’000 LVL’000 LVL’000
Operating activities
Profit before tax 3 722 2 039 (352)
Adjustments for:
Depreciation, amortisation and impairment loss 1 347 1 414 1 446
Losses from write-off of financial investments - 20 63
Impairment of goodwill - 656 823
Changes in provisions 105 29 4
Gain on disposal of assets - net (5) 14 4
Interest income (68) (20) (59)
Interest expenses 320 277 253
Income from associates (583) - (1 754)
Foreign exchange difference 3 - 8
Operating profit before working capital changes 4 841 4 429 436
Decrease / (increase) in trade and other receivables (1 075) (634) 1 097
(Increase) in inventories (401) (376) (118)
Increase /(decrease) in trade and other payables 2 048 (405) (101)
Cash generated from operations 5 413 3 014 1 314
Interest received 6 8 31
Interest paid (278) (233) (259)
Corporate income tax paid (148) (89) (144)
Property tax expenses (4) (6) (6)
Net cash from operating activities 4 989 2 694 936
Investing activities
Purchase of property, plant and equipment (1 157) (490) (178 )
Proceeds from sale of property, plant, equipment and investments 8 (8) 17
Investments in capital shares 93 (1) 20
Cash income from shares in associated companies 7 - 660
Payments for financial investments 88 (142) (80)
Loans granted (7 022) (287) (938)
Income from repayment of loans 118 4 447
Interest income 101 6 10
Net cash used in investing activities (7 764) (918) (42 )
Financing activities
Dividends paid - - (1)
Proceeds from issue of share capital (21) - (613)
Loans received 9 199 185 2 114
Interest paid (48) (52) (15)
Repayment of amounts borrowed (5 470) (1 128) (1 046)
Finance lease payments (775) (735) (539)
Net cash used in financing activities 2 885 (1 730) (100)
Profit or loss from currency fluctuation (3) - (3)
Net increase in cash and cash equivalents 107 46 791
Cash and cash equivalents at the beginning of the year 859 813 22
Cash and cash equivalents at the end of the year 24 966 859 813
F-13

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
The principal activities of Eko Baltija Group (The Group) are the provision of waste management services. The
Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments, providing wide
variety of services, starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting
and trading, and finally (iv) recycling. The number of employees of the Group at the end of the period was 451.
The ultimate controlling party of the Group are three private individuals - Mr.Māris Simanovičs, Mr. Viesturs
Tamužs, Mrs. Undīne Būde.
The Parent company of the Group, SIA Eko Baltija (further - Eko Baltija) was incorporated on 12 February, 2002.
The name of the company initially was “LZP 1” SIA. In September 2007 it was changed to Eko Baltija SIA. It
was the period when development of Eko Baltija Group has started.
At the end of 2011 there were 6 wholly owned subsidiaries of the “Eko Kurzeme” SIA, “PET Baltija” AS,
“Nordic Plast” SIA, “Eko Rīga” SIA, “Jūrmalas ATU” SIA, “Kurzemes Ainava” SIA, and partly owned 2
subsidiaries – “Latvijas Zaļais punkts” AS and “Vaania” SIA. Eko Baltija indirectly owned “Eko Reverss” SIA,
that is the wholly owned subsidiary by “Latvijas Zaļais punkts” AS, the main activities of which are recyclables
sorting and trading. Eko Baltija also indirectly owned “Jumis” PSIA, on concession rights owned subsidiary of
“Vaania” SIA, the main activities of which are waste collection.
SIA "Eko Kurzeme” was founded on 28 April 2003 (legal address: Ezermalas iela 11, Liepaja, LV 3400). The
principal activity is waste management. It was acquired by Eko Baltija Group in February 2009. The company
was reorganized in May 2011, whereby it took over its subsidiary company “Sikari SIA”.
“Sikari” SIA was founded on 1 July 2003 (legal address: Ezermalas iela 11, Liepāja, LV 3400). The principal
activity is waste management. It was acquired by Eko Baltija Group in February 2009. The company was
reorganized in May 2011 whereby it was merged with its parent company “Eko Kurzeme” SIA.
SIA “Eko Rīga” was founded on 27 February 2004 (legal address: Uriekstes iela 2a, Rīga, LV-1005). SIA „Eko
Rīga” is the operator for collection of municipal waste, used packaging and construction waste performing its
activities in Riga and Riga territory. The company offers collection of domestic waste, used packaging and
construction waste to legal and physical persons. “Eko Rīga” was acquired by the Group in 2007.
“Nordic Plast” SIA was founded on 24 May 2000 (legal address: Rūpnīcu iela 4, Olaine; LV-2114). SIA „Nordic
Plast” basic activity is recycling of secondary raw material - polyethylene. “Nordic Plast” was acquired by Eko
Baltija Group in 2007.
“PET Baltija“ AS was founded on 2 January 2003.(legal address: Aviācijas iela 18, Jelgava, LV 3004). The
company deals with recycling of used PET bottles. The company was acquired by the Eko Baltija Group in 2007.
“PET Baltija AS” owns 10% shares in its associated company “EKO PET SIA”, the registered basic activities of
which include sorted materials and secondary raw materials recycling services.
SIA “Jūrmalas ATU” was founded on 20 September 1996 (legal address: Slokas iela 69b, Jūrmala, LV- 2015).
The basic activities of SIA “Jūrmalas ATU ” are road transport services, collection and disposal of dry and liquid
waste, street cleaning and city area maintenance. It was acquired by Eko Baltija group in 2009.
SIA “Kurzemes Ainava” was foundedon 9 October 2002.(legal address: Dienvidu iela 2, Tukums, LV 3101). The
company is specializing in the sphere of waste management. It was acquired by Eko Baltija Group in 2009. The
company was reorganized. It took over its parent company “Tukuma Ainava” SIA.
SIA “Tukuma Ainava” was founded on 3rd February 1999 (legal address: Dienvidu iela 2, Tukums, LV 3101).
The basic activity is to provide communal services to Tukums area Council in the town Tukums. It was acquired
by the “Eko Baltija” Group in 2009. The company was reorganized in 2011. It was joined with its subsidiary
“Kurzemes Ainava” SIA.
F-14

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
“Vaania” SIA was founded on 15 May 2003 (legal addess: R.Blaumaņa iela 10, Sigulda, LV-2150). The basis
activity of the company is lease of trucks and waste containers. On the basis of a concession agreement the
company has the rights to the management of “PSIA Jumis”. The company was acquired by “Eko Baltija” Group
in 2007.
“PSIA Jumis” was founded on 5 December 1991 (legal address: Blaumaņa iela 10, Sigulda, LV-2150). The basic
activities of the company “PSIA JUMIS” are management of dry municipal waste and used packaging, collection
of construction and bulky waste, lease of production premises and others. On the basis of a concession agreement
the right to manage the company belongs to SIA “Vaania”. The company was acquired by Eko Baltija Group in
2007.
„Latvijas Zaļais punkts” AS was founded on 11 January 2000 (legal address: Baznīcas iela 20/22, Rīga, LV 1001).
AS „Latvijas Zaļais punkts” (LZP) in conformity with the agreements for cooperation entered into with the
Environment Ministry of the Republic of Latvia is introducing and implementing the manufacturers’
responsibility systems in the field of packaging waste, electric and electronic equipment waste (EEE) as well as,
environmentally hazardous waste products management in Latvia. “LZP” acquired 100% shares of “Eko Reverss”
SIA in 2007. “LZP” was acquired by the Eko Baltija Group in 2007.
“Eko Reverss” was founded on 23 March 2001 (legal address: Nautrānu iela 12, Rīga, LV-1079). SIA „Eko
Reverss” is a company servicing secondary raw materials collection systems operating in Latvia and cooperating
with other companies in the Baltic States in the field of collection and recycling of secondary raw materials. The
company offers the services of separated collection of waste for municipalities and legal persons. Its parent
company is “Latvijas Zaļais punkts” AS. The company was acquired by Eko Baltija Group in 2007.
“AG Inter” SIA was founded on 21 May 1998 (legal address: Dienvidu iela 2, Tukums, LV 3101). The principal
activity is waste management. “Kurzemes Ainava” SIA was the company’s parent company. The company was
acquired by Eko Baltija Group in 2009. The company shares were sold in the end of year 2011 and it is not
consolidated in year 2011.
“Martell SIA” was founded on 8 April 2011 (legal address: Dārza iela 2, Rīga, LV 1007). The registered basic
activity of the company is management of real estate. The company has not yet started its activities. The company
is not consolidated.
“EKO PET” SIA was founded on 15 October 2009 (legal address: Dārza iela 2, Rīga, LV 1007). The registered
basic activity of the company is sorted materials and secondary raw materials recycling services. “PET Baltija”
AS owns 10 % of “Eko PET” SIA equity. The company has not yet started its activities. The company is not
consolidated.
F-15

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
(a) Basis of preparation
These are Group`s first consolidated financial statements that have been prepared in accordance with and comply
with International Financial Reporting Standards as adopted by EU (IFRS) and Interpretations issued by its
International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European Union.
The accounting policies set out in notes b) to t) have been applied in preparing the financial statements for the
year ended 31 December 2011, the comparative information presented in these financial statements for the years
ended 31 December 2010 and 2009 and in the preparation of an opening IFRS balance sheet at 1 January 2009
(the Group’s date of transition to IFRSs).
A number of new standards, amendments to standards and interpretations, which are not yet effective for the year
ended 31 December 2011, have not been applied in preparing these consolidated statements:
Amendments to IFRS 7 Disclosures - Transfers of Financial Assets (effective for annual periods
beginning on or after 1 July 2011). The amendment requires additional disclosures in respect of risk
exposures arising from transferred financial assets. The amendment includes a requirement to disclose by
class of asset the nature, carrying amount and a description of the risks and rewards of financial assets
that have been transferred to another party yet remain on the entity's balance sheet. Disclosures are also
required to enable a user to understand the amount of any associated liabilities, and the relationship
between the financial assets and associated liabilities. Where financial assets have been derecognised but
the entity is still exposed to certain risks and rewards associated with the transferred asset, additional
disclosure is required to enable the effects of those risks to be understood. The Group does not expect the
amendments to have any material effect on its financial statements.
IFRS 9 Financial Instruments Part 1: Classification and Measurement, issued in November 2009 with
amendments issued in October 2010, as well as further issued amendments of IFRS 9 and IFRS 7 in
December 2011 (effective for annual periods beginning on or after 1 January 2015; not yet adopted by
the EU). IFRS 9 replaces those parts of IAS 39 relating to the classification and measurement of financial
assets. IFRS 9 was further amended in October 2010 to address the classification and measurement of
financial liabilities. Amendments made in December 2011 to IFRS 9 and IFRS 7 Mandatory Effective
Date and Transition Disclosures determines that the effective date of IFRS 9 is annual periods beginning
on or after 1 January 2015, and modifies the relief from restating comparative periods and the associated
disclosures in IFRS 7.
Key features are as follows:
- Financial assets are required to be classified into two measurement categories: those to be
measured subsequently at fair value, and those to be measured subsequently at amortised cost. The
decision is to be made at initial recognition. The classification depends on the entity’s business model for
managing its financial instruments and the contractual cash flow characteristics of the instrument.
- An instrument is subsequently measured at amortised cost only if it is a debt instrument and both
(i) the objective of the entity’s business model is to hold the asset to collect the contractual cash flows,
and (ii) the asset’s contractual cash flows represent only payments of principal and interest (that is, it has
only “basic loan features”). All other debt instruments are to be measured at fair value through profit or
loss.
- All equity instruments are to be measured subsequently at fair value. Equity instruments that are
held for trading will be measured at fair value through profit or loss. For all other equity investments, an
irrevocable election can be made at initial recognition, to recognise unrealised and realised fair value
gains and losses through other comprehensive income rather than profit or loss. There is to be no
recycling of fair value gains and losses to profit or loss. This election may be made on an instrument-byinstrument
basis. Dividends are to be presented in profit or loss, as long as they represent a return on
investment.
- Most of the requirements in IAS 39 for classification and measurement of financial liabilities
were carried forward unchanged to IFRS 9. The key change is that an entity will be required to present
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EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
the effects of changes in own credit risk of financial liabilities designated as at fair value through profit
or loss in other comprehensive income.
The Group is considering the implications of the standard, the impact on the Group and the timing of its
adoption by the Group.
IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011): a package of
five Standards on consolidation, joint arrangements, associates and disclosures issued in May 2011
effective for annual periods beginning on or after 1 January 2013; not yet adopted by the EU). Earlier
application is permitted provided that all of these five standards are applied early at the same time. Key
requirements of these five Standards are described below.
- IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal
with consolidated financial statements. SIC-12 Consolidation – Special Purpose Entities has been
withdrawn upon the issuance of IFRS 10. Under IFRS 10, there is only one basis for consolidation, that is
control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power
over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and
(c) the ability to use its power over the investee to affect the amount of the investor's returns. Extensive
guidance has been added in IFRS 10 to deal with complex scenarios.
- IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint
arrangement of which two or more parties have joint control should be classified. SIC-13 Jointly
Controlled Entities – Non-monetary Contributions by Venturers has been withdrawn upon the issuance of
IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures,
depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31,
there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly
controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using
the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for
using the equity method of accounting or proportionate accounting.
- IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries,
joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure
requirements in IFRS 12 are more extensive than those in the current standards.
The Group does not consider that the issued five standards would have material impact on financial
statements.
IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013,
with earlier application permitted; not yet adopted by the EU). IFRS 13 establishes a single source of
guidance for fair value measurements and disclosures about fair value measurements. The Standard
defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair
value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and
non-financial instrument items for which other IFRSs require or permit fair value measurements and
disclosures about fair value measurements, except in specified circumstances. In general, the disclosure
requirements in IFRS 13 are more extensive than those required in the current standards. The Group
currently is assessing the implications of the standard, the impact on the Group and the timing of its
adoption by the Group.
Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets (effective for annual periods
beginning on or after 1 January 2012; not yet adopted by the EU). The amendment introduces an
exception to the existing principle for the measurement of deferred tax assets or liabilities arising on
investment property measured at fair value. The Group is currently assessing the impact of the amended
standard on its financial statements.
Amendment to IFRS 1 Severe hyperinflation and removal of fixed dates for first-time adopters (effective
for annual periods beginning on or after 1 July 2011; not yet adopted by the EU). The amendments will
provide relief for first-time adopters of IFRSs from having to reconstruct transactions that occurred
before their date of transition to IFRSs, and guidance for entities emerging from severe hyperinflation
either to resume presenting IFRS financial statements or to present IFRS financial statements for the first
time. The Group does not expect the amendments to have any material effect on its financial statements.
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EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
The amendments to IAS 1 Presentation of Items of Other Comprehensive Income (effective for annual
periods beginning on or after 1 July 2012; not yet adopted by the EU). The amendments retain the option
to present profit or loss and other comprehensive income in either a single statement or in two separate
but consecutive statements. However, the amendments to IAS 1 require additional disclosures to be made
in the other comprehensive income section such that items of other comprehensive income are grouped
into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that
will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items
of other comprehensive income is required to be allocated on the same basis. The Group does not expect
that amendments to have material impact on financial statements.
The amendments to IAS 19 Employee Benefits (effective for annual periods beginning on or after 1
January 2013 and require retrospective application with certain exceptions; not yet adopted by the EU).
The amendments change the accounting for defined benefit plans and termination benefits. The most
significant change relates to the accounting for changes in defined benefit obligations and plan assets.
The amendments require the recognition of changes in defined benefit obligations and in fair value of
plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous
version of IAS 19 and accelerate the recognition of past service costs. The amendments require all
actuarial gains and losses to be recognised immediately through other comprehensive income in order for
the net pension asset or liability recognised in the consolidated statement of financial position to reflect
the full value of the plan deficit or surplus. The Group does not expect that amendments to have material
impact on financial statements.
The amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities (effective
for annual periods beginning on or after 1 January 2014 and require retrospective application in order to
have full comparability; not yet adopted by the EU). Information disclosure requirements related to the
impact of offsetting financial assets and financial liabilities on financial position. New information
disclosure requirements determines entities to present gross amounts, for which the offsetting rights
apply, the amounts in accordance with applicable accounting standards and related net effect. The Group
does not expect the amendments to have material impact on financial statements.
The amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities (effective for annual
periods beginning on or after 1 January 2014 and require retrospective application; not yet adopted by the
EU). Amendments explain requirements in relation to offsetting of financial instruments. The Group does
not expect the amendments to have material impact on financial statements.
IFRIC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine (effective for annual
periods beginning on or after 1 January 2013; not yet adopted by the EU). IFRIC does not apply to the
Group.
Except for the amendments to IFRS 7 Disclosures - Transfers of Financial Assets, the above mentioned changes
have not been endorsed by EU yet.
The directors do not anticipate that these amendments will have a significant effect on amounts reported in the
consolidated financial statements.
The amounts shown in these consolidated financial statements are derived from the Group companies’ accounting
records, maintained in accordance with Latvian Accounting Regulations, appropriately reclassified for
recognition, measurement and presentation in accordance with the IFRS as adopted by the EU. The consolidated
financial statements are prepared under the historical cost convention except for the financial instruments
(including derivative instruments) at fair value through profit or loss are measured at fair value.
The functional currency of Eko Baltija and each of its subsidiaries and the reporting currency for these
consolidated financial statements is the Latvian Lat. All amounts shown in these consolidated financial statements
are presented in thousands of Latvian Lats (LVL) unless stated differently. Balances disclosed as at 31 December
reflect the position as at the close of business on that date.
(b) Estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS as adopted by the EU requires the
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and
F-18

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
expenses, and disclosure of contingencies. The significant areas of estimation used in the preparation of the
accompanying consolidated financial statements relate to revenue recognition, depreciation, allowance for bad
debts and inventories, and impairment evaluation. Although these estimates are based on the management’s best
knowledge of current events and actions, the actual results may ultimately differ from those estimates. The areas
involving a higher degree of judgement or complexity are described below.
(i) Useful lives for property, plant and equipment
Asset useful lives are assessed annually and changed when necessary to reflect current thinking on their remaining
lives in light of technological change, prospective economic utilisation and physical condition of the assets
concerned.
(ii) Inventories
The Group performs estimates for calculation of net realisable values for slow-moving and obsolete inventories to
determine the loss of decrease in the value of inventories. Typically net realisable values are determined for each
position separately, if it is not possible historical experience is used to estimate possible loss.
(iii) Revenue recognition
Principles for revenue allocation are described in policy (n).
(iv) Allowances for doubtful debts
The Group makes allowances for doubtful accounts receivable. Estimates based on historical experience are used
in determining the level of debts that management believes will not be collected (see Note 20).
(v) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are measured in the statement of financial position at the best estimate of the expenditure required to
settle the present obligation at the end of the reporting period date. Provisions are used only for expenditures for
which the provisions were originally recognised and are reversed if an outflow of resources is no longer probable.
Provisions for restructuring costs include employee termination benefits and are recognised in the period when
the Group takes on legal or logical obligations to pay out such expenses; when the Group has developed a
detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement the plan or announcing its main features to those affected by it. The
measurement of a restructuring provision includes only the direct expenditures arising from the restructuring.
(vi) Goodwill impairment
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value.
The carrying amount of goodwill at 31 December 2011 was 5 056 LVL`000. Details of the impairment loss
calculation are set out in note 12.
(c) Basis of consolidation
(i) Subsidiaries
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EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include subsidiaries that are controlled by the Parent Company. Control is
presumed to exist where more than a half of the subsidiary’s voting rights are controlled by the Parent Company
or it otherwise has the power to exercise control over the operating and financial policies so as to obtain benefits
from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and
until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting
year as the Parent Company, using consistent accounting policies.
The purchase method of accounting is used to account for the acquisition of subsidiaries [other than those
acquired from parties under common control]. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured at their fair values at the acquisition date.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent
consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar
professional services. Transaction costs incurred for issuing equity instruments are deducted from equity;
transaction costs incurred for issuing debt are deducted from its carrying amount and all other transaction costs
associated with the acquisition are expensed.
(ii) Associated companies
Investments in associated companies are accounted for by the equity method and are recognised initially at cost.
These are undertakings in which the Group holds from 20% to 50% of the voting rights and over which the Group
exercises significant influence, but which it does not control.
Equity method of accounting involves recognising in the profit or loss the Group’s share of the associate’s net
profit or loss for the year and eliminating unrealised gains and unrealised losses on transactions between the
Group and the associated undertaking to the extent of the Group’s interest in the associates. Dividends received
from the associate reduce the carrying amount of the investment. The Group’s interest in the associate is carried in
the statement of financial position at an amount that reflects its share of the net assets of the associate including
any goodwill on acquisition. Investments in associated undertakings are reported as non-current assets in the
Group’s consolidated statement of financial position.
(iii) Transactions eliminated on consolidation
The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries
as at 31 December 2011. All intra-group balances, income and expenses and unrealised gains and losses resulting
from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains
arising from transactions with equity accounted investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to
the extent that there is no evidence of impairment.
(d) Foreign currencies
All transactions denominated in foreign currencies are translated into Lats at the Bank of Latvia rate of exchange
prevailing on the day the transaction took place. Gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are
recognised in the profit or loss. At the end of year foreign currency monetary assets and liabilities are translated at
the Bank of Latvia rate of exchange ruling at 31 December, and all associated exchange differences are dealt with
through the profit or loss.
Exchange rates in the last three years have been:
2011 2010 2009
as at 31 December as at 31 December as at 31 December
USD/LVL 0.544 0.535 0.489
LTL/LVL 0.204 0.203 0.204
GBP/LVL 0.840 0.824 0.783
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EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Within the framework of Latvia's preparation for full-fledged membership in the Economic and Monetary Union,
the Bank of Latvia has fixed the peg rate of the Lat and the euro at EUR 1 = LVL 0.702804 effective since 1
January 2005.
(e) Intangible assets
(i) Goodwill
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in
the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill”) is
recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all
liabilities and contingent liabilities assumed and reviews appropriateness of their measurement. Goodwill is not
amortised and instead is tested for impairment annually or more frequently if indicators of impairment exist.
Following initial recognition goodwill is measured at cost less any accumulated impairment losses. An
impairment loss in respect of goodwill is not reversed.
(iii) Other intangible assets
Other intangible assets comprise costs of acquired computer software licences and other licences. Where the
software is an integral part of the related hardware that cannot operate without that specific software, computer
software is treated as property, plant and equipment. Other intangible assets are amortised using the straight-line
method over their useful lives as follows:
Useful lives,
years
Software and licences 3 – 5
Other intangible assets are stated at historical cost less accumulated amortisation and any accumulated
impairment losses. Where an indication of impairment exists, the carrying amount of any intangible asset is
assessed and written down immediately to its recoverable amount, which is the higher of an asset’s net selling
price and value in use, recognising impairment loss as an expense in the profit or loss. Review for impairment is
carried out at each end of the reporting period date. The recoverable amount of an intangible asset not yet
available for use is tested for impairment annually, irrespective of whether there is any indication that it may be
impaired. For the purposes of assessing impairment, assets are grouped at the lowest level, for which there are
separately identifiable cash inflows.
(f)
Property, plant and equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Depreciation of property, plant and equipment is calculated using the straight-line method to
allocate the depreciable amount of the assets over their estimated useful lives as follows:
Useful lives,
Years
Buildings 10 – 40
Other fixed assets 3 – 7
Land is not depreciated as it is deemed to have an indefinite life.
The useful life and residual value of an asset is reviewed at least at each financial year-end. Effect from a change
in the estimated useful life of an asset is recognised prospectively by including it in the profit or loss in the
current period and future periods.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount, which is the higher of an asset’s fair value less cost to sell and value in
use, recognising impairment loss as an expense in the profit or loss. Review for impairment is carried out at the
end of the reporting period. For the purposes of assessing impairment, assets are grouped at the lowest level, for
which there are separately identifiable cash inflows.
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EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Gains and losses on disposals of assets are determined by comparing proceeds with the carrying amount, and are
included in the results from operating activities.
Leasehold improvements are included within buildings and amortised over the shorter of the useful life of the
improvement and the term of lease.
The cost of the construction of property, plant and equipment is determined by the reference to the actual costs
incurred to the suppliers and subcontractors as at the end of the reporting period. Interest costs on borrowings to
finance the construction of property, plant and equipment and other operating expenses directly attributable to the
construction of property, plant and equipment (costs of own labour, material and other costs) are capitalised as
part of the cost of the asset during the period of time that is required to complete and prepare the property for its
intended use.
(g) Financial assets
Financial assets comprise investments in equity and debt securities (excluding investments in associates), trade
and other receivables, cash and cash equivalents and loans issued and derivative financial assets.
Cash and cash equivalents comprise current accounts with banks, cash on hand, and deposits with banks with
initial maturity up to three month.
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to
maturity investment, or available-for-sale financial assets, as appropriate:
(i) Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon
initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages
such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s
documented risk management or investment strategy. Upon initial recognition attributable transaction costs are
recognised in the profit or loss as incurred. Financial instruments at fair value through profit or loss are measured
at fair value, and changes therein are recognised in the profit or loss.
(ii) Loans and receivables
Loans and receivables are initially recognised at fair value plus any directly attributable transaction costs, which
for trade receivables is usually the original invoiced amount and subsequently carried at amortised cost using the
effective interest method less allowances made for doubtful receivables. Allowances are made specifically where
there is objective evidence of a dispute or an inability to pay. The additional allowances are made based on an
analysis of balances by age and previous losses experienced. Loans and receivables are classified in current
assets, except for maturities greater than 12 months after the end of the reporting period date. These are classified
as non-current assets.
An impairment or bad debt loss is recognised in the profit or loss whenever it is probable that the Group will not
collect all amounts due according to the contractual terms of loans or receivables. The impairment loss is
measured as the difference between that asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate. The impairment loss is only reversed if it
can be related objectively to an event after the impairment was recognised and is reversed to the extent the
carrying value of the asset does not exceed its amortised cost at the date of reversal. The amount of the reversal is
included in the profit or loss.
(iii) Held-to-maturity investments
If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as heldto-maturity.
Held-to-maturity financial assets are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost
using the effective interest method, less any impairment losses.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment
F-22

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
losses, and foreign currency differences on available-for-sale monetary items, are recognised directly in other
comprehensive income. When an investment is derecognised, the cumulative gain or loss is reclassified from other
comprehensive income to profit or loss for the year.
Financial assets are derecognised when the rights to receive cash flows from assets have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
Financial assets are reviewed for impairment at the end of the reporting period. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider
otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a
security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value
below its cost is objective evidence of impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by
reference to its fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively. In assessing collective impairment the Group uses historical trends of the
probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment
as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less
than suggested by historical trends.
All impairment losses are recognised in the profit or loss. An impairment loss is reversed if the reversal can be
related objectively to an event occurring after the impairment loss was recognised.
(h) Financial liabilities
Non – derivative financial liabilities comprise trade and other payables and borrowings.
(i)Trade and other payables
Trade payables are recognised initially at fair value plus any directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method. The carrying value of trade and
other payables approximate their fair values due to their short maturity. A financial liability is removed from the
statement of financial position, when the obligation specified in the contract is discharged or cancelled or expires.
(ii) Borrowings
All borrowings are initially recognised at the fair value of the consideration received plus directly attributable
transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in the profit or loss as interest income/expense
when the liabilities are derecognised as well as through the amortisation process. The part of outstanding amount,
which is due after more than 12 months, is included in non-current liabilities.
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised
as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation is determined by
applying the capitalisation rate to the expenditures on a qualifying asset. Capitalisation rate is the weighted
average interest rate on borrowings that are outstanding during the period.
(i)
Leases
Leases of assets under which the lessee assumes substantially all the benefits and risks of ownership are classified
as finance leases. All other leases are classified as operating leases.
F-23

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
(i) A Group company is a lessor
When assets are leased out under an operating lease, income from operating leases is recognised in the profit or
loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an
operating lease are included in the initial measurement of the finance lease receivable and reduce the amount of
income recognized over the lease term.
If a Group company is a lessor in a finance lease arrangement, it recognizes the asset in the statement of financial
position as a receivable at an amount equal to the present value of the lease payments. Lease income is recognised
over the term of the lease on the basis of constant periodic rate of return.
(ii) A Group company is a lessee
Payments made under operating leases are charged to the profit or loss on a straight-line basis over the period of
the lease.
If a Group company is a lessee in a finance lease arrangement, it recognises in the statement of financial position
the assets as an item of property, plant and equipment and a lease liability measured as the lower of the fair value
of the leased property and the present value of the minimum lease payments. Each lease payment is allocated
between the liability and finance charge so as to achieve a constant interest rate on the balance of liability
outstanding. The interest element of the lease payment is charged to the profit or loss over the lease period. The
item of property, plant and equipment acquired under a finance lease is depreciated over the shorter of the useful
life of the asset and the lease term, unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term.
(j)
Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the weighted
average cost method for items that are interchangeable. For inventory items that are not interchangeable, specific
costs are attributed to the specific individual items of inventory. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs of completion and selling expenses.
(k) Contingent assets and liabilities
Contingent assets are not recognised in the consolidated financial statements, but disclosed in the notes when an
inflow of economic benefits is probable. Contingent liabilities are not recognised in the financial statements. They
are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is
remote.
(l)
Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are recognised as a current expense in the period when employees render the
services. These include salaries and wages, social security contributions, bonuses, paid holidays and other
benefits.
(m) Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the profit of loss, except to
the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the
tax is also recognized in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying value for financial reporting purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
F-24

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred income tax is provided on temporary
differences arising on investments in subsidiaries and associated undertakings, except where the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
The principal temporary differences arise from depreciation of property, plant and equipment and accrued
expenses.
(n) Revenue recognition
Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods have
passed to the buyer, usually on delivery of goods, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably.
Revenue from services is recognised when services are rendered to customers in accordance with contractual
terms and conditions.
The Group recognises revenue based on the amount invoiced to customer net of value added tax when it has
earned revenue from sale of the goods or services and the net amount retained (that is, the amount billed to
customer less the amount paid to service provider) when it has earned a commission or fee.
Dividends are recognised when the right to receive payment is established.
(o) Earnings per share
Earnings per share are calculated by dividing profit or loss for the year by the weighted-average number of
ordinary shares outstanding during the year.
(p) Dividends
Dividends are recorded in the financial statements of the Group in the period in which they are approved by the
Group’s shareholders and the shareholder`s right to receive payment has been established.
(q) Events after the Reporting Period
The amounts recognised in financial statements are adjusted to reflect events after the reporting period that
provide additional information about the Group’s position at reporting period (adjusting events). Events after the
reporting period that are not adjusting events are disclosed in the notes to the financial statements when material.
(r) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
The carrying value of short-term financial assets and liabilities is assumed to approximate their fair values. Fair
value of the remaining financial instruments is estimated by discounting the expected future cash flows to net
present values using appropriate prevailing market interest rates available at the end of the period. Market interest
rates apply to interest-bearing debt and the book value of these items is regarded as corresponding to their fair
value.
(s)
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received
F-25

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government
grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current
assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to
profit or loss on a systematic and rational basis over the useful lives of the related assets.
NOTE 1
REVENUE AND OTHER INCOME
2011 2010 2009
NET SALES LVL’000 LVL’000 LVL’000
Revenue from recycling 14 498 9 663 3 865
Revenue from waste collection 5 820 5 568 5 128
Revenue from organisation of waste recovery 4 237 4 249 4 161
Revenue from recyclables sorting and trading 2 040 1 582 665
Other income - 26 32
Total Revenue from core services 26 595 21 088 13 851
Geographical information
2011 2010 2009
LVL’000 LVL’000 LVL’000
Latvia 10 416 10 208 9 851
European Union (EU) 15 989 10 610 3 970
Non-EU countries 190 270 30
26 595 21 088 13 851
F-26

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Segment revenue and results
Operating segments are reported in the manner consistent with the internal reporting provided to the chief operating decision-maker. Information reported to the chief operating
decision maker for the purposes of resource allocation and assessment of segment performance focuses on revenue and gross profit for each segment. The Group's reportable
segments under IFRS 8 are therefore as follows:
Revenue from organisation of waste recovery,
Revenue from waste collection,
Revenue from recyclables sorting and trading,
Revenue from recycling.
Segment revenue and results for 2011
Revenue from
organisation of
waste recovery
Revenue from
waste collection
Revenue from
recyclables sorting
and trading
Revenue
from
recycling
Other
Consolidation
adjustments and
eliminations
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Deals with non-related parties 4 237 5 820 2 040 14 498 - - 26 595
Deals with other segments 4 1 198 1 668 1 302 941 (5 113) -
Revenues 4 241 7 018 3 708 15 800 941 (5 113) 26 595
Cost of sales * (3 419) (4 384) (3 140) (11 084) (248) 4 207 (18 068)
Gross profit * 822 2 634 568 4 716 693 (906) 8 527
Selling expenses * (306)
Administrative expenses * (2 890)
Other operating income 284
Other operating expenses (287)
Depreciation and amortization (1 347)
Income from participation in related companies -
Interest income and similar income 70
Interest expenses and similar expenses (324)
Other taxes (5)
Profit before taxes 3 722
Corporate income tax for the reporting year (211)
Deferred income tax (133)
Current year's profit 3 378
Segment Assets 4 164 9 238 1 787 8 766 11 794 (17 283) 18 666
Segment Liabilities 1 867 5 531 830 3 838 8 032 (7 751) 12 347
* Segment report cost of sales, gross profit, selling and administrative expenses are showed before depreciation and amortisation
Consolidation adjustments and eliminations include corrections of consolidation (internal group investments of own equity, balances and deals)
TOTAL
F-27

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Segment revenue and results
Segment revenue and results for 2010
Revenue from
organisation of
waste recovery
Revenue from
waste collection
Revenue from
recyclables sorting
and trading
Revenue
from
recycling
Other
Consolidation
adjustments and
eliminations
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Deals with non-related parties 4 249 5 568 1 582 9 663 26 - 21 088
Deals with other segments 2 1 169 1 519 1 067 236 (3 993) -
Revenues 4 251 6 737 3 101 10 730 262 (3 993) 21 088
Cost of sales * (3 371) (3 965) (2 492) (7 515) (195) 3 824 (13 714)
Gross profit * 880 2 772 609 3 215 67 (169) 7 374
Selling expenses *
Administrative expenses * (2 593)
Other operating income 236
Other operating expenses (807)
Depreciation and amortization (1 414)
Income from participation in related companies -
Long-term financial investments and short-term
(19)
bond expenses
Interest income and similar income 18
Interest expenses and similar expenses (280)
Other taxes (5)
Profit before taxes 2 039
Corporate income tax for the reporting year (248)
Deferred income tax 3
Current year's profit 1 794
Segment Assets 3 719 10 148 1 619 7 144 6 940 (12 203) 17 367
Segment Liabilities 1 442 6 803 638 4 031 1 976 (5 512) 9 378
TOTAL
(471)
* Segment report cost of sales, gross profit, selling and administrative expenses are showed before depreciation and amortisation
Consolidation adjustments and eliminations include corrections of consolidation (internal group investments of own equity, balances and deals)
F-28

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Segment revenue and results
Segment revenue and results for 2009
Revenue from
organisation of
waste recovery
Revenue from
waste collection
Revenue from
recyclables
sorting and
trading
Revenue from
recycling
Other
Consolidation
adjustments
and
eliminations
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Deals with non-related parties 4 161 5 128 665 3 865 32 - 13 851
Deals with other segments 1 792 1 105 865 90 (2 853) -
Revenues 4 162 5 920 1 770 4 730 122 (2 853) 13 851
Cost of sales * (3 126) (3 258) (1 181) (3 864) (150) 2 790 (8 789)
Gross profit * 1 036 2 662 589 866 (28) (63) 5 062
Selling expenses * (309)
Administrative expenses * (2 641)
Other operating income 191
Other operating expenses (1 003)
Depreciation and amortization (1 444)
Long-term financial investments and short-term
-
bond expenses
Interest income and similar income 55
Interest expenses and similar expenses (257)
Other taxes (6)
(352)
Profit before taxes
Corporate income tax for the reporting year (103)
Deferred income tax (60)
Current year's profit (515)
Segment Assets 3 332 10 749 1 588 6 342 6 881 (11 293) 17 599
Segment Liabilities 1 220 8 198 673 4 848 1 779 (5 317) 11 401
TOTAL
* Segment report cost of sales, gross profit, selling and administrative expenses are showed before depreciation and amortisation
Consolidation adjustments and eliminations include corrections of consolidation (internal group investments of own equity, balances and deals)
F-29

EKO BALTIJA GROUP
MANAGEMENT BOARD
NOTE 2
COST OF SALES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Raw materials and other material costs (9 541) (5 244) (2 673)
Transportation expenses (1 814) (1 505) (1 358)
Municipal waste landfilling and disposal of sewage water (1 562) (1 297) (752)
Salaries and wages (1 511) (1 668) (1 635)
Depreciation and amortization (1 291) (1 365) (1 386)
Outsourcing * (1 064) (1 728) (322)
Rent of production premises and related costs (875) (1 204) (822)
Professional services (451) (532) (421)
Social security taxes (358) (394) (382)
Natural resources tax (3) - (36)
Other production costs (884) (142) (387)
Total (19 354) (15 079) (10 174)
*In comparison with the previous reporting periods the costs of the received outsourcing services have increased
considerably in 2010 and 2011. Approximately 80 % of the increase in costs is attributable to the increase of
costs of the segregated waste collection schemes and waste management.
NOTE 3
SELLING EXPENSES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Salaries and wages (172) (149) (147)
Social security taxes (41) (36) (35)
Depreciation and amortization (17) (13) (14)
Marketing expenses (17) (18) (23)
Transportation expenses (13) (12) (13)
Bad debt write-off expense - (162) -
Other expenses (65) (94) (91)
Total (325) (484) (323)
NOTE 4
ADMINISTRATIVE EXPENSES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Salaries and wages (1 277) (910) (905)
Consultations of business development and organization (776) (981) (1 004)
Social security taxes (269) (179) (175)
Transportation expenses (107) (75) (62)
Communications expenses (49) (46) (51)
Auditing fees (47) (23) (21)
Rent of premises and related costs (45) (71) (69)
Office expenses (38) (15) (18)
Depreciation and amortization (36) (36) (43)
Legal services (35) (24) (52)
F-30

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Business trips expenses (30) (27) (13)
Representation expenses (28) (8) (5)
Other administrative expenses (195) (234) (264)
Total (2 932) (2 629) (2 682)
NOTE 5
OTHER OPERATING INCOME
2011 2010 2009
LVL’000 LVL’000 LVL’000
Amortization of received state subsidies* 158 120 120
Decrease in allowances for doubtful debts 53 65 -
Income from sale of fixed assets and current assets 20 14 29
Income from lease of immovable property and movables 1 8 11
Other income 52 29 31
Total 284 236 191
* On 29th December 2006 an agreement was concluded between group company PET Baltija AS and VA
„Latvijas Investīciju un attīstības aģentūra” (Sate agency- Latvian investment and development agency) on
drawing funding for implementation of a State support program. In 2009 the project was implemented and the
financing in the amount of LVL 600 000 was received. The management of the company has recognized the
financing as income over a five year period, i.e., LVL 120 thousand yearly. Group company Eko Riga SIA has
received funding for implementation of education of sales management in 2011 (Note 29).
NOTE 6
OTHER OPERATING EXPENSES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Grants, donations and other expenses not related to operating
activities
(102) (71) (24)
Expenses related to implementation of EU education project (62) - -
Depreciation (2) (5) (4)
Goodwill impairment - (656) (823)
Other expenses (121) (75) (156
Total (287) (807) (1 007)
NOTE 7
WRITE OFF OF LONG-TERM FINANCIAL INVESTMENTS
2011 2010 2009
LVL’000 LVL’000 LVL’000
Disposal of long-term investment - (19) -
Total - (19) -
NOTE 8
INTEREST INCOME AND SIMILAR INCOME
2011 2010 2009
LVL’000 LVL’000 LVL’000
Interest income from short-term loans 67 8 39
Interest income from deposits 3 10 13
Interest for bank account balance - - 3
Total 70 18 55
F-31

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9
INTEREST EXPENSES AND SIMILAR EXPENSES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Interest expenses for
Bank credit (242) (173) (92)
Leasing (81) (101) (153)
Other borrowings (1) (6) (12)
Total (324) (280) (257)
NOTE 10
OTHER TAXES
2011 2010 2009
LVL’000 LVL’000 LVL’000
Land and property tax (5) (5) (6)
Total (5) (5) (6)
NOTE 11
CORPORATE INCOME TAX
2011 2010 2009
LVL’000 LVL’000 LVL’000
Current income tax expense (211) (248) (103)
Deferred tax income/(expense) (133) 3 (60)
Total (344) (245) (163)
Eko Baltija Ltd. applied the officially enacted tax rate of 15% upon calculation of corporate income tax for the
current year.
Movement in the deferred income tax account is as follows:
2011 2010 2009
LVL’000 LVL’000 LVL’000
At the beginning of the year (184) (187) (127)
temporary differences
Property, plant and equipment and intangible assets (3 239) (1 013) (1 418)
Accrued expenses, provisions and tax losses 1 120 (212) 171
Total change in temporary differences (2 119) (1 225) (1 247)
Income tax rate 15% 15% 15%
Released/(charged) to the profit or loss (133) 3 (60)
At the end of the year (317) (184) (187)
Deferred income tax assets and liabilities are off-set when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when the deferred income taxes relate to the same taxable entity and
the same fiscal authority.
F-32

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
The following amounts, determined after offsetting, are shown on the statement of financial position:
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Assets
Corporate income tax advance payments 116 101 176
Total 116 101 176
Liabilities
Deferred income tax liabilities (317) (184) (187)
Corporate income tax liabilities (43) (113) (20)
Total (360) (297) (207)
NOTE 12
GOODWILL
31/12/11 31/12/10 31/12/09
LVL’000 LVL’000 LVL’000
Cost 5 238 6 121 6 944
Impairment losses - (656) (823)
Disposal (182) (227) -
In 2011 the company continued management of investment companies.
5 056 5 238 6 121
In 2009 the Group invested intensively in companies operating in the waste management field in Latvia. The
Group had investments in the amount of 50 % of equity in three newly established companies – SIA Waste Baltija,
Waste Baltija 2 and SIA Waste Baltija 3. In the year 2009 the company Eko Baltija acquired shares in the
aforementioned companies via the parent company Gamar Holding SIA, and became the sole owner of these
companies. In 2009 reorganization of enterprises took place, and as a result the Waste Baltija companies were
merged with their respective affiliated companies, i.e. SIA Waste Baltija and SIA Eko Kurzeme, SIA Waste Baltija
2 and Jūrmalas ATU, SIA Waste Baltija 3 and Tukuma Ainava.
In 2009 Eko Baltija purchased shares of other companies at a price which exceeded the purchase price of their
identifiable asset value. The value of investments in the subsidiary companies were estimated applying the future
discounted cash flow (with a 10 % rate), and applying an approximate increase in turnover 3.7-9.1% per year and
increase of direct expenses of 2-10% per year.
On 1 July 2011 Eko Baltija SIA was reorganized. As a result of the reorganization Eko Baltija SIA merged with
its shareholder of 38% as of 31.12.2010 - Polignac SIA. As a result of the transaction a reorganization reserve of
4,625 thousand LVL was recongised in Eko Baltija SIA equity. No goodwill was recognised in tis transaction.
Based on impairment test performed by the management as of 31 December 2011, no goodwill impairment has
been identified.
F-33

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13
INVESTMENTS IN SUBSIDIARIES
SUBSIDIARIES
Details of the Group's subsidiaries at the end of the reporting period are as follows.
Name of
subsidiary
Principal activity
Place of
incorporation and
operation
Proportion of ownership interest and
voting power held by the Group
1. NORDIC PLAST
SIA
31/12/11 31/12/10 31/12/09
Recycling Latvia 100% 100% 100%
2. VAANIA SIA Waste collection Latvia 90% 90% 90%
3. PET Baltija A/S Recycling Latvia 91.03% 85.10% 67.13%
4. LATVIJAS
ZAĻAIS
PUNKTS A/S
5. EKO REVERSS
SIA
Organisation of
waste recovery
Sorting and
trading of
recyclables
Latvia 75.13% 48.43% 48.43%
Latvia 75.13% 48.43% 48.43%
6. EKO RĪGA SIA Waste collection Latvia 100% 100% 100%
7. EKO KURZEME
SIA
Waste collection Latvia 100% 100% 100%
8. JŪRMALAS ATU Waste collection Latvia 100% 100% 100%
SIA
9. KURZEMES Waste collection Latvia 100% 100% 100%
AINAVA SIA
10. JUMIS, Siguldas Waste collection Latvia 90% 90% 90%
P SIA
11. SIKARI SIA Waste collection Latvia Nil 100% 100%
12. TUKUMA Waste collection Latvia Nil 100% 100%
AINAVA SIA
13. AG INTER SIA Waste collection Latvia Nil 100% 100%
The Group owns 48.43% equity shares of Latvijas Zaļais punkts AS. However, based on the contractual
arrangements between the Group and other investors, the Group has the power to appoint and remove the
majority of the board of directors of Latvijas Zaļais punkts AS, and hence the Group has control over the
financial and operating policies of Latvijas Zaļais punkts AS. Therefore, Latvijas Zaļais punkts AS is controlled
by the Group and is consolidated in these financial statements.
Latvijas Zaļais punkts AS owns 100% equity shares of Eko Reverss SIA. Eko Reverss is consolidated in these
financial statements because of control over Latvijas Zalais punkts AS as described above.
F-34

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14
INVESTMENTS IN ASSOCIATES
Details of the Group's associates at the end of the reporting period are as follows.
Name of associate
Principal activity
Place of
incorporation
and operation
EKO PET SIA Recycling Latvia 10%
LVL 2
Proportion of ownership interest and
voting power held by the Group
LVL’000 LVL’000 LVL’000
31/12/2011 31/12/2010 31/12/2009
10%
LVL 2
PET Baltija AS, the subsidiary of Eko Baltija has made an investment into the the equity of the associated
company „EKO PET” in the amount of LVL 2 thousand which constitutes a 10% participation. In 2011 the
newly founded company has not started its business activity.
In 2011 Eko Baltija has made an investment in the capital of SIA Martell in the amount of LVL 2 thousand,
which constitutes a 100% participation. The newly founded company has not started its business activities yet.
NOTE 15
INTANGIBLE ASSETS
Intangible assets in 2009
Concessions,
patents, licences
and trade marks
Other
intangible
assets
Historical cost LVL’000 LVL’000 LVL’000
At 31 December 2008 3 12 15
Additions 4 2 6
Taken over at purchase or reorganization (transfers) 28 14 42
Eliminated (1) - (1)
Total
At 31 December 2009 34 28 62
Amortisation charge
At 31 December 2008 2 - 2
Amortisation 5 5 10
Transfers 13 8 22
Eliminated (1) - (2)
At 31 December 2009 19 13 32
Net book value
At 31 December 2008 1 12 13
At 31 December 2009 15 15 30
Intangible assets in 2010
Concessions,
patents, licences
and trade marks
Other
intangible
assets
Historical cost LVL’000 LVL’000 LVL’000
at 31 December 2009 34 28 62
Additions 9 10 19
Disposal (2) - (2)
At 31 December 2010 41 38 79
Total
-
F-35

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Amortisation charge
At 31 December 2009 19 13 32
Amortisation 9 4 13
Eliminated (1) - (1)
At 31 December 2010 27 17 44
Net book value
At 31 December 2009 15 15 30
At 31 December 2010 14 21 35
Intangible assets in 2011
Concessions,
patents, licences
and trade marks
Other
intangible
assets
Historical cost LVL’000 LVL’000 LVL’000
At 31 December 2010 41 38 79
Additions 25 7 32
Eliminated (5) (18) (23)
Total
At 31 December 2011 61 27 88
Amortisation charge
At 31 December 2010 27 17 44
Amortisation 9 5 14
Eliminated (6) (4) (10)
At 31 December 2011 30 18 48
Net book value
At 31 December 2010 14 21 35
At 31 December 2011 31 9 40
NOTE 16
PROPERTY, PLANT AND EQUIPMENT
Year 2009
Land and
buildings
Leasehold
improvements
Technological
equipment
Other
fixed
assets
Unfinished
construction
and advance
payments
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Historical cost
31.12.2008. - 7 823 244 3 1 077
Additions 20 24 132 131 6 313
Transfers 514 108 5 908 3 848 341 10 719
Reclassified - - 268 (29) (268 ) (29)
Disposal (1) (73) (259) (219) (50) (602)
Total
31.12.2009. 533 66 6 872 3 975 32 11 478
Depreciation charge
31.12.2008. - 1 98 113 - 212
F-36

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Calculated 8 8 786 634 - 1 436
Transfers 55 24 1 752 1 822 - 3 653
Reclassified - (22) - (64) - (86)
Eliminated (1) - (241) (135) - (377)
31.12.2009. 62 11 2 395 2 370 - 4 838
Net book value
31.12.2008. - 6 725 131 3 865
31.12.2009. 471 55 4 477 1 605 32 6 640
Property, plant and equipment
Year 2010
Land and
buildings
Leasehold
improvements
Technological
equipment
Other
fixed
assets
Unfinished
construction
and advance
payments
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Historical cost
31.12.2009. 534 65 6 872 3 975 32 11 478
Additions 15 93 142 326 45 621
Reclassified - - (6) (2) - (8)
Disposal (107) (78) (43) (228)
Total
31.12.2010. 549 158 6 901 4 221 34 11 863
Depreciation charge
31.12.2009. 62 11 2 395 2 370 - 4 838
Calculated 12 14 775 601 1 402
Reclassified - - (6) 6 - -
Eliminated - - (107) (109) - (216)
31.12.2010. 74 25 3 057 2 868 - 6 024
Net book value
31.12.2009. 472 54 4 477 1 605 32 6 640
31.12.2010. 475 133 3 844 1 353 34 5 839
Property, plant and equipment
Year 2011
Land and
buildings
Leasehold
improvements
Technological
equipment
Other
fixed
assets
Unfinished
construction
and advance
payments
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Historical cost
31.12.2010. 549 158 6 901 4 221 34 11 863
Additions 28 79 451 782 253 1 593
Disposal (26) - (133) (332) (66) (557)
Total
31.12.2011. 551 237 7 219 4 671 221 12 899
Depreciation charge
31.12.2010. 74 25 3 057 2 868 - 6 024
F-37

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Calculated 21 35 791 694 - 1 541
Eliminated (8) - (117) (203) - (328)
31.12.2011. 87 60 3 731 3 359 - 7 237
Net book value
31.12.2010. 475 133 3 844 1 353 34 5 839
31.12.2011. 464 177 3 488 1 312 221 5 662
PROPERTY, PLANT AND EQUIPMENT
(a) Capitalisation to property, plant and equipment
The additions to property, plant and equipment include capitalised direct expenses related with development of
fixed assets incurred on qualifying capital expenditure projects and capitalised based on the labour hours spent
on those projects.
During 2011, 2010 and 2009 the Group did not bear borrowing costs to finance construction of property.
(b) Fully depreciated property, plant and equipment
A number of property, plant and equipment items that have been fully depreciated are still used in operations.
The total acquisition cost of this property, plant and equipment as at 31 December 2011 amounted to LVL 2.631
million (LVL 1.898 million in 2010, and LVL 1.765 million in 2009).
(c) Title to the assets
Altogether 81% (in 2010 – 90%, and in 2009 – 100%) of total land and buildings owned by the Group
companies have been registered with the Land Registry by 31 December 2011. The residual of property has not
been registered yet and the Group is in the process of preparing documentation for registration with the Land
Registry due to insufficient technical documentation.
(d) Finance lease assets and cadastre value of property
Means of transport, special equipment and containers have been procured using leasing as a source of finance
(See Note 27) The objects of agreements on finance lease are pledged in accordance with the agreement terms
and conditions, and their remaining value as at 31 December 2011 is LVL 2.043 million.
The finance lease agreements are effective until December 2016.
The cadastre value of the land plots owned by the Eko Baltija Group presented in the financial reports at
31.12.2011. amounts to LVL 130 thousand and the cadastre value of the buildings amounts to LVL 102
thousand.
NOTE 17
LONG-TERM LOANS AND RECEIVABLES
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL`000
Loan for project “Piejūra” - 14 14
Loan to associated company - 290 -
Loan for target investment - 100 100
Other receivables - - 24
Total - 404 138
The company SIA „AG Inter” belonging to the “Eko Baltija” group had a loan to the associated company for
implementation of the environment ecology project „Piejūra”. At the end of 2011 SIA „ AG Inter” was sold.
F-38

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
In 2010 the company „Eko Baltija” SIA provided a loan to its shareholder „Polignac” (38% ) with annual
interest 6% and the term of repayment in December 2012. “Eko Baltija” SIA was reorganized 1 July 2011. As a
result of the reorganization Eko Baltija SIA was merged with Polignac SIA. (See note 25 b). The loan was
mutually off-settled.
Eko Baltija had issued a loan for the amount of LVL 100 thousand with purpose to buy shares in Latvian
company which acts in waste management market. The target investment was realized in 2011.
NOTE 18
OTHER FINANCIAL ASSETS
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Safety deposits 134 63 -
Other financial investments 6 5 5
Total 140 68 5
In 2005 Latvijas Zaļais punkts AS has made an investment in the capital of PRO Europe in the amount of LVL
4 thousand, which constitutes approximately 5% participation.
NOTE 19
INVENTORIES
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Raw materials, basic materials and auxiliary materials 885 654 324
Spare parts 251 74 26
Finished products 119 189 195
Low-value items 115 88 31
Prepayment for goods 52 14 64
Packaging 39 22 6
Chemicals and fuel 35 52 54
Fixed assets not in use - - 28
Provisions for impairment of obsolete and slow moving
inventories (37) (36) (35)
Total 1 459 1 057 693
Provisions for impairment of obsolete and slow moving inventories:
2011 2010 2009
LVL’000 LVL’000 LVL’000
At the beginning of the year (36) (35) (34)
Charged to profit or loss during the year (1) (1) (1)
At the end of the year (37) (36) (35)
NOTE 20
TRADE AND OTHER RECEIVABLES
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Trade receivables 2 195 2 299 1 945
Allowance for doubtful debts (569) (568) (443)
1 626 1 731 1 502
F-39

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Movement on impairment loss allowance for trade and other receivables was as follows:
Individually
impaired
Collectively
impaired
Total
LVL’000 LVL’000 LVL’000
Balance at 1 January 2009 153 153
Charged to profit or loss during the year 2009 290 290
Debts written-off - - -
Balance at 31 December 2009 443 443
Charged to profit or loss during the year 2010 249 249
Debts written-off (124) - (124)
Balance at 31 December 2010 568 568
Charged to profit or loss during the year 2011 52 52
Debts written-off (51) - (51)
Balance at 31 December 2011 569 - 569
As at 31 December, the ageing structure of current trade receivables is as follows:
31/12/2011 31/12/ 2010 31/12/2009
Gross Net Gross Net Gross Net
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Not due 1 289 1 011 1 426 1 135 783 715
Overdue less than 30 days 155 155 122 122 131 131
Overdue 30-90 days 104 104 142 142 211 211
Overdue 90-180 days 133 78 70 41 91 57
Overdue 180-365 days 255 142 235 130 137 76
Overdue more than 365 days 259 136 304 161 592 312
Total 2 195 1 626 2 299 1 731 1 945 1 502
The average payment terms of accounts receivable is 45 days for non-related parties, and 30 days for intra group
receivables.
NOTE 21
LOANS TO RELATED COMPANY
2011 2010 2010
LVL’000 LVL’000 LVL’000
EKO SPV SIA 1 852 - -
Total 1 852 - -
Eko Baltija SIA has issued loan to its shareholder Eko SPV SIA with annual interest 6% and the term of
repayment in December 2012. Loan issued without collateral.
NOTE 22
OTHER SHORT TERM RECEIVABLES
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Accrued income 1 069 1 155 1 009
Overpaid taxes and tax pre-payments 352 474 427
F-40

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Security bank deposits 125 246 33
Insurance payments 45 27 31
Advance payments 6 11 -
Other receivables 65 62 75
Total 1 662 1 975 1 575
NOTE 23
OTHER SHORT TERM FINANCIAL INVESTMENT
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Other securities (LVL reserve foundation in SEB Bank) 1 159 82
Total 1 159 82
NOTE 2
CASH AND CASH EQUIVALENTS
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Cash at bank and in hand 854 758 568
Short-term bank deposits 112 101 245
Total 966 859 813
As at 31 December 2011 the weighted average interest rate of short-term bank deposits was 1.27% and the
average maturity - 28 days (2010 – 0.57% and 60 days respectively). Changes in interest rates were in line with
the overall market trends.
NOTE 25
EQUITY AND RESERVES
(a) Share capital
The Parent company’s registered and paid up share capital equals LVL 150 thousand, which is divided into 150
ordinary shares. Nominal value per share is LVL 1 thousand.
Shareholders 31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Authorised
1. SIA Gamar Holding, 42% till 15.09.2011 - 39 96
2. SIA Polignac, 38%; till 18.08.2011. (merged to Eko
- 57 -
Baltija)
3. E-SomTAX Invest LLP, 42% (2010:26.0%) 63 39 39
4. KS 2 Eko Fonds, 16% (2010:10.0%) 24 15 15
5. SIA Eko SPV, 42%; from 18.10.2011 63 - -
150 150 150
F-41

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Issued and Fully Paid-Up
150,000 ordinary shares of LVL 1 thousand each
1. SIA Gamar Holding, 42% till 15.09.2011 - 39 96
2. SIA Polignac, 38%; till 18.08.2011. (merged to Eko
- 57 -
Baltija)
3. E-SomTAX Invest LLP (Great Britain), 42%
63 39 39
(2010:26.0%)
4. KS 2 Eko Fonds, 16% (2010:10.0%) 24 15 15
5. SIA Eko SPV, 42%; from 18.10.2011 63 - -
150 150 150
The administration and management of the Company shall be entrusted to a Board of three Directors.
The judicial and legal representation of the Company shall be vested in the two Directors acting jointly.
(b) Reorganisation reserve
In 2008 the share capital of the companies included in the Group was increased. Minority shareholders
purchased shares for the amount which exceeds the nominal value of the shares. The consolidated reserves
included a part of the paid emission premium.
In 2009 as a result of reorganization SIA ‘Eko Baltija” became the only member in the Group to which the
consolidated reserves were attributed and the consolidated reserve was eliminated.
On 1 July 2011 Eko Baltija SIA was reorganized. As a result of the reorganization Eko Baltija SIA merged with
its shareholder of 38% as of 31.12.2010 - Polignac SIA. As a result of the transaction a negative reorganization
reserve of 4,625 thousand LVL was recongised in Eko Baltija SIA equity. No goodwill was recognised in this
transaction.
(c) Changes in retained earnings and non-controlling interest
The Group owns 48.43% equity shares of Latvijas Zaļais punkts AS. However, based on the contractual
arrangements between the Group and other investors, the Group has the power to appoint and remove the
majority of the board of directors of Latvijas Zaļais punkts AS, and hence the Group has control over the
financial and operating policies of Latvijas Zaļais punkts AS. Changes in retained earnings and non-controlling
interest have occurred due to the fact that 75.13% equity shares of Latvijas Zaļais punkts AS and its subsidiary
Eko Reverss SIA were consolidated before year 2009; other changes in retained earnings are related with
reorganization of Group companies. According to accounting principles, profit or loss of merged company that
was gained till the reorganization, is considered as profit or loss of previous periods.
NOTE 26
INTEREST BEARING BORROWINGS
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Short-term bank borrowings 1 409 1 934 600
Credit lines 983 1 190 1 379
Total 2 392 3 124 1 979
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Non-current bank borrowings 5 556 736 2 689
Total 5 556 736 2 689
F-42

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Available undrawn borrowing facilities
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Expiring within one year 774 567 378
Expiring beyond one year - - -
Until May 2011 the loans of Eko Baltija Group companies were received from Swedbank As and SEB bank AS,
from May 2011 all loan liabilities were refinanced to Nordea Bank Finland Plc Latvia branch with interest rate
of 3 month EURIBOR +2.5%. The bank borrowings are drawn in EUR. The loan of SIA Eko Baltija expires
January 2015, but loan of other Group Companies in December 2016.
As at 31 December 2011 the short term part of bank loan is LVL 2.392 million, the long term part is LVL 5.556
million.
Four Group companies – A/S LZP, SIA Eko Reverss, PET Baltija and SIA Nordic Plast have overdraft available
in Nordea bank. Companies had used LVL 983 thousand of available credit line resources as at 31.12.2011.
The total borrowing facility expiring beyond one year is EUR 2.50 million credit line from Nordea Bank Finland
Plc Latvia branch.
NOTE 27
FINANCE LEASE LIABILITIES
Finance lease liabilities
Minimum lease Present value of minimum
payments 2011 lease payments 2011
LVL’000
LVL’000
Amounts payable under finance leases:
Within one year 596 595
In the second to fifth years inclusive 1 152 1 085
1 748 1 680
Less future finance charges (68) -
Present value of minimum lease payments 1 680 1 680
Minimum lease Present value of minimum
payments 2010 lease payments 2010
LVL’000
LVL’000
Amounts payable under finance leases:
Within one year 941 935
In the second to fifth years inclusive 1 964 1 876
2 905 2 811
Less future finance charges (94) -
Present value of minimum lease payments 2 811 2 811
Minimum lease Present value of minimum
payments 2009 lease payments 2009
LVL’000
LVL’000
Amounts payable under finance leases:
Within one year 1 052 1 018
In the second to fifth years inclusive 2 638 2 541
3 690 3 559
F-43

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Less future finance charges (131) -
Present value of minimum lease payments 3 559 3 559
The Group has 87 leasing agreements with SEB bank AS, Swedbank AS and Nordea Bank Finland Plc Latvia
branch. Production equipment, vehicles, special equipment, containers and cars are leased. The interest rate for
leasing varies from 2% to 6.7% from the unpaid amount. The expiration of leasing varies from year 2012 to year
2016. As at 31 December 2011 the short term part of of leasing is in the amount of LVL 595 thousand, the long
term part in the amount of LVL 1 085 thousand. The fair value of the Group’s lease obligations approximates
their carrying amount.
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets (see Note 16).
NOTE 28
LIABILITIES TO RELATED PARTIES
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Loan from parent company - - 158
Total - - 158
Eko Baltija had loan liabilities to parent company Gamar Holding as at 31.12. 2009. During the year 2010 the
loan was paid.
NOTE 29
DEFERRED INCOME AND CUSTOMER PREPAYMENTS
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Deferred income in non-current liabilities * 182 180 300
Deferred income in current liabilities 158 120 120
Customer prepayments 57 47 57
Total 396 347 477
* The whole amount of non-current deferred income consist of funding received. On 29th December 2006 an
agreement was concluded between the Group company PET Baltija AS and VA „Latvijas Investīciju un
attīstības aģentūra” (State agency- Latvian investment and development agency) on drawing funding for
implementation of a State support program. In 2009 the project was implemented and the financing in the
amount of LVL 600 000 was received. The management of the company has recognized the financing as income
over a five year period, i.e., LVL 120 thousand every year.
Current part of deferred income and customer prepayments is LVL 215 thousand as at 31.12.2011.
Non-current part of deferred income and customer prepayments is LVL 182 thousand as at 31.12.2011.
NOTE 30
TRADE AND OTHER PAYABLES
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Trade payables to providers of goods and services 999 880 816
Total 999 880 816
The average payment terms of accounts payable are 45 days for foreign companies, 30 days for local companies
and for other suppliers.
F-44

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 31
TAX LIABILTIES
31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Social insurance payments 111 142 77
Value added tax 70 169 117
Personal income tax 63 99 59
Other taxes 2 1 1
Total 246 411 254
NOTE 32
OTHER LIABILTIES
Current: 31/12/2011 31/12/2010 21/12/2009
LVL’000 LVL’000 LVL’000
Accrued liabilities for services received 224 103 82
Unused vacations 222 229 188
Accrued liabilities for salaries 118 126 117
Payments for capital shares 55 250 626
Accrued audit expenses 43 6 7
Other liabilities 55 7 8
Total 717 721 1 028
Non-current:
Non-current part of other liabilities in 2009 was LVL 183 thousand for capital shares in subsidiaries.
NOTE 33
RELATED PARTY TRANSACTIONS
Balances and transactions between Eko Baltija SIA and its subsidiaries, which are related parties of Eko Baltija
SIA, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the
Group and other related parties are disclosed below.
During the reporting periods group entities entered into the following transactions with related parties that are
not members of the Group:
a) Sales of services and goods
2011 2010 2009
LVL’000 LVL’000 LVL’000
Related to Eko Baltija Group 78 29 32
Related parties via key management 1 2 2
Other related parties 1 6 6
Total 80 37 40
b) Purchases of goods and services
2011 2010 2009
LVL’000 LVL’000 LVL’000
Related parties via key management (686) (716) (670)
Related to Eko Baltija Group (284) (427) (403)
Other related parties (69) (71) (49)
Total (1 039) (1 214) (1 122)
Sales of goods to related parties were made at the Group's usual list prices. Purchases were made at market price
discounted to reflect the quantity of goods purchased and the relationships between the parties.
F-45

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
c) Outstanding balances arising from sale/purchase of goods/services
31/12/2011 31/12/2010 31/12/2009
LVL’000 LVL’000 LVL’000
Receivables
Related to Eko Baltija Group 1 852 290 4
Related parties via key management - - 1
Other related parties - 120 114
Total 1 852 410 119
Liabilities
Related to Eko Baltija Group 6 30 213
Related parties via key management 150 109 163
Other related parties 7 13 4
Total 163 152 380
The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.
No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts
owed by related parties.
d) Employee costs and Key management remuneration
Employee costs
2011 2010 2009
LVL’000 LVL’000 LVL’000
Salaries and wages (2 958) (2 784) (2 589)
Social insurance payments (669) (550) (616)
Other benefits (5) (15) (129)
Total (3 632) (3 349) (3 334)
Average number of permanent and temporary employees
during the year
2011 2010 2009
423 423 439
Employee costs include key management remuneration in following amount
2011 2010 2009
LVL’000 LVL’000 LVL’000
Salaries (121) (119) (51)
Social insurance payments (35) (29) (12)
Total (156) (148) (63)
NOTE 34
FINANCIAL RISK MANAGEMENT
Financial risks with respect to the Group’s liquidity, currency, interest rate and counter-party credit risk are
managed by Eko Baltija SIA on a centralised basis.
The Group due to its day-to-day business operations is exposed to financial risks, primarily to currency risk and
interest rate risk, which may impact directly the operating results and financial position of the Group companies.
Financial risk management activities are undertaken to support the underlying operating business transactions of
the Group, and the Group companies do not undertake any speculative transactions that would increase exposure
to currency or interest rate risks.
F-46

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
(a) Liquidity risk
Appropriate treasury policies are in place to ensure that the Group companies have sufficient liquidity and are
able to finance their operations without funding constraints. Financing and liquidity risk is reduced by spreading
maturities of the borrowings and by maintaining flexibility in funding by keeping credit facilities available. In
addition, the management believes that the Group's operating cash flows, available long term credit facilities and
the Group's track record of expanding maturing credit lines will continue to ensure that is has sufficient liquidity.
The following table demonstrates contractual maturities of financial liabilities:
As at 31 December 2011 TOTAL 6 months
or less
6-12
months
From 1 to 5
years
More than
5 years
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial liability
Trade and other payables 2 220 2 165 55 - -
Finance lease liabilities 595 261 334 - -
Short-term borrowings 2 392 704 1 688 - -
Total current financial liabilities 5 207 3 130 2 077 - -
Non-current financial liabilities
Interest bearing borrowings 5 556 - - 5 556 -
Finance lease liabilities 1 085 - - 1 085 -
Total non-current liabilities 6 641 - - 6 641 -
As at 31 December 2010 TOTAL 6 months
or less
6-12
months
From 1 to 5
years
More than
5 years
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial liability
Trade and other payables 2 292 2 185 107 - -
Finance lease liabilities 935 394 541 - -
Short-term borrowings 3 124 966 2 158 - -
Total current financial liabilities 6 351 3 545 2 806 - -
Non-current financial liabilities
Interest bearing borrowings 736 - - 736 -
Finance lease liabilities 1 876 - - 1 876 -
Total non-current liabilities 2 612 - - 2 612 -
As at 31 December 2009 TOTAL 6 months
or less
6-12
months
From 1 to 5
years
More than
5 years
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial liability
Trade and other payables 2 295 2 140 155 - -
Finance lease liabilities 1 018 471 547 - -
Short-term borrowings 1 979 299 1 680 - -
Total current financial liabilities 5 292 2 910 2 382 - -
Non-current financial liabilities
Interest bearing borrowings 2 689 - - 2 689 -
Finance lease liabilities 2 541 - - 2 541 -
Total non-current liabilities 5 230 - - 5 230
(b) Currency risk
The Group companies are exposed to currency risk arising from movements in exchanges rates.
Euro is the preferred currency in settlements with foreign business partners. Within the framework of Latvia's
preparation for full-fledged membership in the Economic and Monetary Union, the Bank of Latvia has fixed the
peg rate of the lats and the euro at EUR 1 = LVL 0.702804. Since January 2005 the Bank of Latvia unilaterally
F-47

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
limits the lats’ exchange rate against the euro to +/- 1% of the peg rate. Due to the peg of LVL to EUR and the
relatively well-balanced operating cash inflows and outflows in foreign currencies, the Group is not significantly
exposed to EUR and USD exchange risk.
The following table demonstrates the sensitivity to a possible change in exchange rates, with all other variables
held constant:
As at 31 December 2011 TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial asset/(liability)
Cash and cash equivalents 968 666 297 5 -
Trade and other receivables 5 140 2 530 2 610 - -
Trade and other payables (2 220) (1 942) (273) (5) -
Short-term borrowings (2 987) (614) (2 373) - -
Net statement of the financial position
exposure 901 640 261 - -
Impact to net result if EUR had strengthened/
(weakened) against EUR/LVL peg rate fixed
by Bank of Latvia by 1% - - 3/(3) - -
As at 31 December 2010 TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial asset/(liability)
Cash and cash equivalents 1 101 1 027 74 - -
Trade and other receivables 3 623 2 814 809 - -
Trade and other payables (2 292) (2 108) (184) - -
Short-term borrowings (4 059) (1 211) (2 848) - -
Net statement of financial position exposure (1 627) 522 (2 149) - -
Impact to net result if EUR had strengthened/
(weakened) against EUR/LVL peg rate fixed
by Bank of Latvia by 1% - - (21)/21 - -
As at 31 December 2009 TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Financial asset/(liability)
Cash and cash equivalents 895 845 50 - -
Trade and other receivables 3 077 2 487 590 - -
Trade and other payables (2 295) (2 085) (210) - -
Short-term borrowings (2 997) (738) (2 259) - -
Net statement of financial position exposure (1 320) 509 (1 829) - -
Impact to net result if EUR had strengthened/
(weakened) against EUR/LVL peg rate fixed
by Bank of Latvia by 1% - - (18)/18 - -
As at 31 December 2011 - Group TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
ASSETS
Goodwill and other intangible assets 5 096 5 096 - - -
Property, plant and equipment 5 662 5 662 - - -
Investments in subsidiaries 2 2 - - -
F-48

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Other financial assets 140 140 - - -
Inventories 1 459 1 459 - - -
Trade and other receivables 1 626 868 758 - -
Loans to associate companies 1 852 - 1 852 - -
Other short-term receivables 1 662 1 662 - - -
Other short-term financial investment 1 1 - - -
Cash and cash equivalents 966 664 297 5 -
Total assets 18 466 15 554 2 907 5
LIABILITIES AND EQUITY
Interest bearing borrowings 7 948 - 7 948 -
Finance lease liabilities 1 680 39 1 641 - -
Trade and other payables 999 721 273 5 -
Deferred tax liabilities and current tax liabilities 606 606 - -
Deferred income and customer prepayments 397 397 - -
Other liabilities and provisions 717 717 - -
Total liabilities 12 347 2 480 9 862 -
Share capital and reserves 5 039 5 039 - - -
Minority interest 1 080 1 080 - - -
Total liabilities and equity 18 466 8 599 9 862 5 -
Net balance sheet long/(short) position - 6 955 (6 955) - -
-
As at 31 December 2010 - Group TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
ASSETS
Goodwill and other intangible assets 5 273 5 273 - - -
Property, plant and equipment 5 839 5 839 - - -
Investments in subsidiaries 2 2 - - -
Long-term loans and receivables 404 14 390 - -
Other financial assets 68 68 - - -
Inventories 1 057 1 057 - - -
Trade and other receivables 1 731 942 789 - -
Other short-term receivables 1 975 1 955 20 - -
Other short-term financial investment 159 159 - - -
Cash and cash equivalents 859 785 74 - -
Total assets 17 367 16 094 1 273 - -
LIABILITIES AND EQUITY
Interest bearing borrowings 3 860 62 3 798 - -
Finance lease liabilities 2 811 32 2 779 - -
Trade and other payables 880 696 184 - -
Deferred tax liabilities and current tax liabilities 708 708 - - -
Deferred income and customer prepayments 347 347 - - -
Other liabilities and provisions 772 772 - - -
Total liabilities 9 378 2 617 6 761 - -
Share capital and reserves 6 183 6 183 - - -
Minority interest 1 806 1 806 - - -
F-49

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Total liabilities and equity 17 367 10 606 6 761 - -
- -
Net balance sheet long/(short) position - 5 488 (5 488) - -
As at 31 December 2009 - Group TOTAL LVL EUR USD Other
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
ASSETS
Goodwill and other intangible assets 6 151 6 151 - - -
Property, plant and equipment 6 640 6 640 - - -
Long-term loans and receivables 138 38 100 - -
Other financial assets 5 5 - - -
Inventories 693 693 - - -
Trade and other receivables 1 502 914 588 - -
Other short-term receivables 1 575 1 573 2 - -
Other short-term financial investment 82 82 - - -
Cash and cash equivalents 813 763 50 - -
Total assets 17 599 16 859 740 - -
LIABILITIES AND EQUITY
Interest bearing borrowings 4 668 68 4 600 - -
Finance lease liabilities 3 559 - 3 559 - -
Liabilities to related companies 158 - 158 - -
Trade and other payables 816 606 210 - -
Deferred tax liabilities and current tax liabilities 461 461 - - -
Deferred income and customer prepayments 477 477 - - -
Other liabilities and provisions 1 262 1 262 - - -
Total liabilities 11 401 2 874 8 527 - -
Share capital and reserves 4 648 4 648 - - -
Minority interest 1 550 1 550 - - -
Total liabilities and equity 17 599 9 072 8 527 - -
Net balance sheet long/(short) position - 7 787 (7 787)
(c) Interest rate risk
The Group’s is primarily financed from shareholder’s equity, cash flows from operating activities and to a lesser
extent borrowings. The Group’s exposure to market risk from changes in interest rates is related to its debt
obligations, since the bank borrowings and facilities are maintained on floating interest rates which are fixed for
a period of 1 month.
As at 31 December, 2011, the Group bank borrowings amounted totally to LVL 7.948 million (see Note 26) and
Lease liabilities amounted totally to LVL 1.680 million (see Note 27). Assuming that the bank borrowings and
lease liabilities would be at the year 2011 level over the period of the next 12 months, a one percentage point
higher interest rate than the prevailing rate as per 31 December, 2011, would increase the interest expense by
LVL 3 thousand.
As at 31 December 2010, the Group bank borrowings totally amounted to LVL 3.860 million and lease
liabilities totally amounted to LVL 2.811 million.
(d) Credit risk
F-50

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments, which potentially subject the Group to concentrations of credit risk, consist principally of
trade receivables (Note 20), cash at bank and short-term bank deposits (Note 22 and 24). The carrying amount of
the above instruments represents the maximum credit exposure of the Group. The Group has policies in place to
ensure that sales of products and services are provided to customers with an appropriate credit history. Credit
risk concentration with respect to trade receivables is limited due to the extent of the customer base of the Group.
Trade receivables are presented net of allowances for doubtful debts. Derivative counterparties and cash
transactions are limited to financial institutions with an appropriate credit standing. The Group closely monitors
and limits the amount of credit exposure of the Group companies to any financial institution. There are no
significant concentrations of credit risk within the Group based on the type of customers (no significant reliance
on specific individual customers).
(e) Categories of financial instruments
Financial assets
31/12/2011 31/12/2010 31/12/2009
Cash and bank balances 966 859 813
Fair value through profit or loss (FVTPL) 1 159 82
Loans and receivables (including trade receivables balance in
a disposal group held for sale) 5 280 4 178 3 220
Available-for-sale financial assets 2 2 -
Financial liabilities
Amortised cost 10 916 8 075 9 658
NOTE 35
CAPITAL MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as going concern
while maximising the return to shareholders through the optimization of the debt and equity balance.
The capital structure of the Group consists of net debt (borrowings as detailed in notes 26, 27 offset by cash and
bank balances) and equity of the Group (comprising issued capital, reserves, retained earnings and noncontrolling
interests as detailed in notes 25).
The Group is not subject to any externally imposed capital requirements.
The Group's management reviews the capital structure of the Group on annual basis. As part of this review, the
committee considers the cost of capital and the risks associated with each class of capital.
Gearing ratio
The gearing ratio at end of the reporting period was as follows.
31/12/11 31/12/10 31/12/09
LVL'000 LVL'000 LVL'000
Debt (i) 9 628 6 671 8 226
Cash and bank balances (including cash and bank
balances in a disposal group held for sale) (966) (859) (813)
Net debt 8 662 5 812 7413
Equity (ii) 6 263 7 989 6 198
Net debt to equity ratio 138% 73% 120%
(i) Debt is defined as long- and short-term borrowings (excluding derivatives and financial guarantee
contracts), as described in notes 26,
(ii) Equity includes all capital and reserves of the Group that are managed as capital.
F-51

EKO BALTIJA GROUP
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 36
COMMITMENTS AND CONTINGENCIES
On 15.09.2011 Eko SPV SIA has entered into a Loan agreement No.2011-387-A with Nordea Bank Finland Plc
Latvia branch in the amount of EUR 14.000 million EUR (LVL 9.839 million). The principal amount due as of
31.12.2011 amounts to EUR 13.663 million.
Commercial Mortgage Agreement for loan collateral has been concluded for all property of the Group at the
moment of pledging, as well as for the future assets of this Eko Baltija Group, and the share capital of “Eko
Baltija” owned by “SIA Eko SPV” as a commercial pledge.
Loan maturity is 15.09.2018, loan agreement interest rate is EURIBOR+ 4.5%.
NOTE 37
EVENTS AFTER THE REPORTING PERIOD
The shareholders of SIA Eko Baltija - E-Somtax Invest Ltd and KS Otrais Eko Fonds have invested their shares
of SIA Eko Baltija as contribution in kind in the share capital of SIA Eko SPV. As the result of the contribution
SIA Eko SPV owns 100% of SIA Eko Baltija shares. The transaction was registered in the Enterprise register
April 23, 2012
Eko Riga has won waste collection tender in Mārupe, neighborhood of Riga City.
Contract was signed on April 13 and company expects to start servicing the new region from July1, 2012.
Estimated amount is 40 000 m3/year which will add another 120 000 LVL annually in turnover of Eko Riga.
F-52

Eko Baltija Group
Condensed Consolidated Interim Financial Statements
For 3 months ended 31 March 2012
(prepared according to International Financial Reporting Standards
as adopted by the EU)
Riga, 6 June 2012
F-53

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
MANAGEMENT REPORT
The Management Board of SIA Eko Baltija presents the management report and condensed consolidated interim
financial statements of Eko Baltija Group (hereinafter The Group) for the financial period from January 1, 2012 till
March 31, 2012 (hereinafter 1 st quarter of 2012).
The companies included in consolidation are: Eko Baltija SIA, Eko Kurzeme SIA, PET Baltija AS, Nordic Plast SIA,
Eko Rīga SIA, Jūrmalas ATU SIA, Kurzemes Ainava SIA, Eko Reverss SIA, Latvijas Zaļais Punkts AS, Vaania SIA and
Jumis SIA (the Group).
The Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of turnover,
consisting of companies that operate in four different waste management segments, providing wide variety of services,
starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting and trading, and finally (iv)
recycling. The Group is market leader in Latvia in organisation of waste recovery segment in terms of market share and
turnover and the Group is the second largest waste collector in Latvia in terms of turnover and the leader in terms of
geographical coverage. The Group collects waste in cities and surrounding regions of Riga, Liepaja, Talsi, Tukums,
Jurmala and Sigulda. The Group also holds large market share in terms of volume in recyclables sorting and trading
segment in the Baltics. Moreover, the Group has an unrivalled position in polyethylene terephthalate (“PET”) bottle and
polyethylene (“PE”) recycling segments in the Baltics in terms of amount of recycled material and turnover. The Group
has a long lasting cooperation with all key customers and municipalities
BUSINESS REVIEW
In the 1 st quarter of 2012 the Group continued to grow the business of the waste management companies in Latvia by
strengthening and expanding the market share of group companies and in the secondary raw material processing and
recycling market.
In the reporting period the Group companies have achieved total turnover of LVL 6.969 million, which is 10% more than
in the 1 st quarter of 2011. Main contribution comes from recycling companies, which total sales growth is + 10% against
same period in 2011. Net profits of Group companies have been LVL 1.052 million, whereas attributable to parent entity
- LVL th 974, which is 0.6% more than in 1 st quarter of 2011.
The management of the Group considers the financial results being satisfactory.
SHARE CAPITAL
The Parent company’s registered and paid up capital equals LVL 150 thousand, that consists of 150 shares. Nominal
value per share is LVL 1 thousand.
Eko Baltija Ltd.shareholders as of 31 March 2012 were as follows:
Shareholders 31/03/2012
LVL’000
150,000 ordinary shares of LVL 1 thousand each:
1. E-SomTAX Invest LLP (Great Britain), 42% (2010:26.0%) 63
2. KS 2 Eko Fonds, 16% (2010:10.0%) 24
3. SIA Eko SPV, 42%; from 18.10.2011 63
150
F-54

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
MANAGEMENT BOARD RESPONSIBILITY FOR THE CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
The Management Board is responsible for the preparation of the condensed consolidated interim financial statements of
the Group. The condensed consolidated interim financial statements fairly present the financial position of the Group as
as of 31 March 2012, and the results of its operations and cash flows during the reporting period.
The Management Board confirms that appropriate accounting principles were applied consistently in the preparation of
the condensed consolidated interim financial statements set out on pages 8 to 33, and that prudence was exercised in
making estimates and forecasts. The Management Board confirms that International Financial Reporting Standards as
adopted by the EU, for the preparation of condensed consolidated interim financial reports and Latvian legislation were
complied with, and that the condensed consolidated interim financial statements were prepared on a going concern basis.
The Management Board is responsible for maintaining proper accounting records, for taking reasonable steps to
safeguard the assets of the company, and to prevent and detect any fraud or other irregularities.
RISK MANAGEMENT
Eko Baltija Ltd. and its Group companies follow the market development and plan the operations in order to identify the
possible risks which could prevent the Companies to achieve the set goals. The constant follow up on financial resources
safeguards the possibility of the Group to settle all obligations in due time.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
The shareholders of SIA Eko Baltija - E-Somtax Invest Ltd and KS Otrais Eko Fonds have invested their shares of SIA
Eko Baltija as contribution in kind in the share capital of SIA Eko SPV. As the result of the contribution SIA Eko SPV
owns 100% of SIA Eko Baltija shares. The transaction was registered in the Enterprise register April 23, 2012.
In April 2012 Eko Riga won waste collection tender in Mārupe region, neighbourhood of Riga City. Contract was signed
on April 13th and company expects to start servicing the new region from July 1st, 2012. Estimated annually collected
volume in this area is 40 000 m3. As a result of this agreement it is expected that there be at least 120 000 Ls per year
increase in sales.
FUTURE DEVELOPMENT OF THE PARENT COMPANY EKO BALTIJA AND SUBSIDIARIES
The Group is planning further expansion in the fields of organisation of waste recovery, waste collection, recyclables
sorting and trading, and recycling.
The Group is planning considerable investments to improve efficiency of existing business, development of new
products and geographical expansion.
AUDITORS
F-55

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
SUPERVISORY COUNCIL
Chairman of the Council Eduards Ekarts (since 24.05.2010.)
Deputy Chairman of the Council Raitis Maurāns (since 30.11.2011.)
Sveinn Hannesson (till 30.11.2011.)
Council members Lelde Vītiņa (since 30.11.2011.)
Raimonds Ozols (till 30.11.2011.)
Eduards Ekarts (till 24.05.2010.)
Sveinn Hannesson (till 24.05.2010.)
F-56

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
MANAGEMENT BOARD
Chairman of the Board Māris Simanovičs (since 26.04.2007.)
Board members Viesturs Tamužs (since 15.12.2006.)
Undīne Būde (since 26.04.2007.)
Petur Valdimarsson (till 30.11.2011.)
Gunnar Bragason (till 30.11.2011.)
F-57

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
F-58

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Notes 1Q 2012 1Q 2011
LVL’000 LVL’000
Net sales 1 6 969 6 315
Cost of sales 2 (4 979) (4 320)
Gross profit 1 990 1 995
Selling expenses 3 (43) (67)
Administrative expenses 4 (702) (699)
Other operating income 5 60 73
Other operating expenses 6 (99) (102)
Interest income and similar income 8 32 7
Interest expenses and similar expenses 9 (82) (64)
Other taxes 10 (2) (1)
Profit before corporate income tax 1 154 1 142
Corporate income tax for the reporting year 11 (119) (75)
Deferred income tax 11 17 12
Current year profit and comprehensive income 1 052 1 079
Attributable to:
Owners of the parent 974 962
Non-controlling interests 78 117
F-59

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
Notes
31 March
2012
LVL’000
31 December
2011
LVL’000
ASSETS
Non-current assets
Goodwill 5 056 5 056
Intangible assets 39 40
Property, plant and equipment 5 611 5 662
Investments in associates 13 177 2
Other financial assets 77 140
Total non-current assets 10 960 10 900
Current assets
Inventories 898 1 459
Trade and other receivables 14 2 241 1 626
Loan to related company 15,19 2 398 1 852
Other short-term receivables 1 521 1 546
Corporate income tax 55 116
Other short-term financial investment 116 1
Cash and cash equivalents 787 966
Total current assets 8 016 7 566
Total assets 18 976 18 466
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
Notes
31 March
2012
LVL’000
31 December
2011
LVL’000
EQUITY AND LIABILITIES
Capital and reserves
Share capital 16 150 150
Share premium 5 442 5 442
Reorganization reserve (4 625) (4 625)
Retained earnings 5 046 4 072
F-60

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Equity attributed to the shareholders 6 013 5 039
Non-controlling interests 1 158 1 080
Total equity 7 171 6 119
Non-current liabilities
Interest bearing borrowings 17 5 363 5 556
Finance lease liabilities 18 1 150 1 085
Deferred tax liabilities 11 283 317
Deferred income 180 182
Total non-current liabilities 6 976 7 140
Current liabilities
Trade and other payables 980 999
Interest bearing borrowings 17 2 096 2 392
Finance lease liabilities 18 429 595
Deferred income and customer prepayments 264 215
Corporate income tax liabilities 12 43
Tax liabilities 327 246
Other liabilities 721 717
Total current liabilities 4 829 5 207
Total liabilities 11 805 12 347
Total equity and liabilities 18 976 18 466
F-61

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share
capital
Share
premium
Reorganization
reserve
Retained
earnings
(losses)
Noncontrolling
interest
Total
equity
LVL’000 LVL’000 LVL’000 LVL’000
Balance at 1 January 2011 150 5 442 - 591 1 806 7 989
Changes in retained earnings - - - 278 - 278
Changes in non-controlling
- - - - (901) (901)
interest
Net profit for the 1Q 2011 - - - 962 - 962
Non-controlling interest in current
year profit
- - - - 117 117
Balance at 31 March 2011 150 5 442 - 1 831 1 022 8 445
Balance at 1 January 2011 150 5 442 (4 625) 4 072 1 080 6 119
Net profit for the 1Q 2012 - - - 974 - 974
Non-controlling interest in current
year profit
- - - - 78 78
Balance at 31 March 2012 150 5 442 (4 625) 5 046 1 158 7 171
F-62

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
Notes 1Q 2012 1Q 2011
LVL’000 LVL’000
Operating activities
Profit before corporate income tax 1 154 1 142
Adjustments for:
Depreciation and amortisation 356 340
Changes in provisions 30 22
Gain on disposal of assets - net (5) (2)
Interest income 8 (32) 1
Interest expenses 9 82 64
Operating profit before working capital changes 1 585 1 567
(Increase)/decrease in trade and other receivables (669) 112
Decrease in inventories 562 261
Increase /(decrease) in trade and other payables 168 (200)
Cash generated from operations 1 646 1 740
Interest paid (72) (37)
Corporate income tax paid (31) (24)
Property tax expenses (2) (1)
Net cash from operating activities 1 541 1 678
Investing activities
Purchase of property, plant and equipment (287) (99)
Proceeds from sale of property, plant, equipment and investments 17 -
Investments in capital shares 13 (175) (2)
Payments for financial investments - (222)
Repaid financial investments 63 -
Loans granted (528) (243)
Interest income received - 3
Net cash used in investing activities (910) (563)
Financing activities
Proceeds from issue of share capital - 1
Loans received 126 1
Interest paid (10) (26)
Repayment of amounts borrowed (627) (853)
Finance lease payments (299) (134)
Net cash used in financing activities (810) (1 011)
Net increase in cash and cash equivalents (179) 104
Cash and cash equivalents at the beginning of the year 966 859
Cash and cash equivalents at the end of the year 787 963
F-63

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
GENERAL INFORMATION
The principal activities of Eko Baltija Group (The Group) are the provision of waste management services. The
Group is the largest vertically integrated multi-service waste management group in the Baltics in terms of
turnover, consisting of companies that operate in four different waste management segments, providing wide
variety of services, starting from (i) organisation of waste recovery, (ii) waste collection, (iii) recyclables sorting
and trading, and finally (iv) recycling. The average number of employees of the Group during the reporting period
was 460.
The ultimate controlling party of the Group are three private individuals - Mr.Māris Simanovičs, Mr. Viesturs
Tamužs, Mrs. Undīne Būde.
The Parent company of the Group, SIA Eko Baltija (further - Eko Baltija) was incorporated on 12 February, 2002.
The name of the company initially was “LZP 1” SIA. In September 2007 it was changed to Eko Baltija SIA. It
was the period when development of Eko Baltija Group has started.
At the end of 2011 there were 6 wholly owned subsidiaries of the “Eko Kurzeme” SIA, “PET Baltija” AS,
“Nordic Plast” SIA, “Eko Rīga” SIA, “Jūrmalas ATU” SIA, “Kurzemes Ainava” SIA, and partly owned 2
subsidiaries – “Latvijas Zaļais punkts” AS and “Vaania” SIA. Eko Baltija indirectly owned “Eko Reverss” SIA,
that is the wholly owned subsidiary by “Latvijas Zaļais punkts” AS, the main activities of which are recyclables
sorting and trading. Eko Baltija also indirectly owned “Jumis” PSIA, on concession rights owned subsidiary of
“Vaania” SIA, the main activities of which are waste collection.
SIA "Eko Kurzeme” was founded on 28 April 2003 (legal address: Ezermalas iela 11, Liepaja, LV 3400). The
principal activity is waste management. It was acquired by Eko Baltija Group in February 2009. The company
was reorganized in May 2011, whereby it took over its subsidiary company “Sikari SIA”.
“Sikari” SIA was founded on 1 July 2003 (legal address: Ezermalas iela 11, Liepāja, LV 3400). The principal
activity is waste management. It was acquired by Eko Baltija Group in February 2009. The company was
reorganized in May 2011 whereby it was merged with its parent company “Eko Kurzeme” SIA.
SIA “Eko Rīga” was founded on 27 February 2004 (legal address: Uriekstes iela 2a, Rīga, LV-1005). SIA „Eko
Rīga” is the operator for collection of municipal waste, used packaging and construction waste performing its
activities in Riga and Riga territory. The company offers collection of domestic waste, used packaging and
construction waste to legal and physical persons. “Eko Rīga” was acquired by the Group in 2007.
“Nordic Plast” SIA was founded on 24 May 2000 (legal address: Rūpnīcu iela 4, Olaine; LV-2114). SIA „Nordic
Plast” basic activity is recycling of secondary raw material - polyethylene. “Nordic Plast” was acquired by Eko
Baltija Group in 2007.
“PET Baltija“ AS was founded on 2 January 2003.(legal address: Aviācijas iela 18, Jelgava, LV 3004). The
company deals with recycling of used PET bottles. The company was acquired by the Eko Baltija Group in 2007.
“PET Baltija AS” owns 10% shares in its associated company “EKO PET SIA”, the registered basic activities of
which include sorted materials and secondary raw materials recycling services.
SIA “Jūrmalas ATU” was founded on 20 September 1996 (legal address: Slokas iela 69b, Jūrmala, LV- 2015).
The basic activities of SIA “Jūrmalas ATU ” are road transport services, collection and disposal of dry and liquid
waste, street cleaning and city area maintenance. It was acquired by Eko Baltija group in 2009.
SIA “Kurzemes Ainava” was foundedon 9 October 2002.(legal address: Dienvidu iela 2, Tukums, LV 3101). The
company is specializing in the sphere of waste management. It was acquired by Eko Baltija Group in 2009. The
company was reorganized. It took over its parent company “Tukuma Ainava” SIA.
SIA “Tukuma Ainava” was founded on 3rd February 1999 (legal address: Dienvidu iela 2, Tukums, LV 3101).
The basic activity is to provide communal services to Tukums area Council in the town Tukums. It was acquired
by the “Eko Baltija” Group in 2009. The company was reorganized in 2011. It was joined with its subsidiary
“Kurzemes Ainava” SIA.
F-64

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
“Vaania” SIA was founded on 15 May 2003 (legal addess: R.Blaumaņa iela 10, Sigulda, LV-2150). The basis
activity of the company is lease of trucks and waste containers. On the basis of a concession agreement the
company has the rights to the management of “PSIA Jumis”. The company was acquired by “Eko Baltija” Group
in 2007.
“PSIA Jumis” was founded on 5 December 1991 (legal address: Blaumaņa iela 10, Sigulda, LV-2150). The basic
activities of the company “PSIA JUMIS” are management of dry municipal waste and used packaging, collection
of construction and bulky waste, lease of production premises and others. On the basis of a concession agreement
the right to manage the company belongs to SIA “Vaania”. The company was acquired by Eko Baltija Group in
2007.
„Latvijas Zaļais punkts” AS was founded on 11 January 2000 (legal address: Baznīcas iela 20/22, Rīga, LV 1001).
AS „Latvijas Zaļais punkts” (LZP) in conformity with the agreements for cooperation entered into with the
Environment Ministry of the Republic of Latvia is introducing and implementing the manufacturers’
responsibility systems in the field of packaging waste, electric and electronic equipment waste (EEE) as well as,
environmentally hazardous waste products management in Latvia. “LZP” acquired 100% shares of “Eko Reverss”
SIA in 2007. “LZP” was acquired by the Eko Baltija Group in 2007.
“Eko Reverss” was founded on 23 March 2001 (legal address: Nautrānu iela 12, Rīga, LV-1079). SIA „Eko
Reverss” is a company servicing secondary raw materials collection systems operating in Latvia and cooperating
with other companies in the Baltic States in the field of collection and recycling of secondary raw materials. The
company offers the services of separated collection of waste for municipalities and legal persons. Its parent
company is “Latvijas Zaļais punkts” AS. The company was acquired by Eko Baltija Group in 2007.
“AG Inter” SIA was founded on 21 May 1998 (legal address: Dienvidu iela 2, Tukums, LV 3101). The principal
activity is waste management. “Kurzemes Ainava” SIA was the company’s parent company. The company was
acquired by Eko Baltija Group in 2009. The company shares were sold in the end of year 2011 and it is not
consolidated in year 2011.
“Martell SIA” was founded on 8 April 2011 (legal address: Dārza iela 2, Rīga, LV 1007). The registered basic
activity of the company is management of real estate. The company has not yet started its activities. The company
is not consolidated.
“EKO PET” SIA was founded on 15 October 2009 (legal address: Dārza iela 2, Rīga, LV 1007). The registered
basic activity of the company is sorted materials and secondary raw materials recycling services. “PET Baltija”
AS owns 10 % of “Eko PET” SIA equity. The company has not yet started its activities. The company is not
consolidated.
F-65

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
(a) Basis of preparation
The condensed consolidated interim financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (the “EU”) issued by the International
Accounting Standards Board (“IASB”), Interpretations issued by the International Financial Reporting
Interpretations Committee (“IFRIC”).
These condensed consolidated interim financial statements are prepared in accordance with IAS 34 Interim
Financial Reporting. The accounting policies adopted in the preparation of the condensed interim consolidated
financial statements are consistent with those followed in the preparation of the Group’s annual financial
statements for the year ended 31 December 2011, to which is referred.
The functional currency of Eko Baltija and each of its subsidiaries and the reporting currency for these condensed
consolidated interim financial statements is the Latvian Lat. All amounts shown in these financial statements are
presented in thousands of Latvian Lats (LVL) unless stated differently.
(b) Estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS as adopted by the EU requires the
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses, and disclosure of contingencies. The significant areas of estimation used in the preparation of the
accompanying consolidated financial statements relate to revenue recognition, depreciation, allowance for bad
debts and inventories, and impairment evaluation. Although these estimates are based on the management’s best
knowledge of current events and actions, the actual results may ultimately differ from those estimates. The areas
involving a higher degree of judgement or complexity are described below.
(i) Useful lives for property, plant and equipment
Asset useful lives are assessed annually and changed when necessary to reflect current thinking on their remaining
lives in light of technological change, prospective economic utilisation and physical condition of the assets
concerned.
(ii) Inventories
The Group performs estimates for calculation of net realisable values for slow-moving and obsolete inventories to
determine the loss of decrease in the value of inventories. Typically net realisable values are determined for each
position separately, if it is not possible historical experience is used to estimate possible loss.
(iii) Revenue recognition
Principles for revenue allocation are described in policy (n).
(iv) Allowances for doubtful debts
The Group makes allowances for doubtful accounts receivable. Estimates based on historical experience are used
in determining the level of debts that management believes will not be collected (see Note 14).
(v) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
Provisions are measured in the statement of financial position at the best estimate of the expenditure required to
settle the present obligation at the end of the reporting period date. Provisions are used only for expenditures for
which the provisions were originally recognised and are reversed if an outflow of resources is no longer probable.
Provisions for restructuring costs include employee termination benefits and are recognised in the period when
the Group takes on legal or logical obligations to pay out such expenses; when the Group has developed a
detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out
F-66

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
the restructuring by starting to implement the plan or announcing its main features to those affected by it. The
measurement of a restructuring provision includes only the direct expenditures arising from the restructuring.
(vi) Goodwill impairment
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value.
The carrying amount of goodwill at 31 March 2012 was 5 056 LVL`000.
(c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements include subsidiaries that are controlled by the Parent Company. Control is
presumed to exist where more than a half of the subsidiary’s voting rights are controlled by the Parent Company
or it otherwise has the power to exercise control over the operating and financial policies so as to obtain benefits
from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and
until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting
year as the Parent Company, using consistent accounting policies.
The purchase method of accounting is used to account for the acquisition of subsidiaries [other than those
acquired from parties under common control]. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured at their fair values at the acquisition date.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent
consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar
professional services. Transaction costs incurred for issuing equity instruments are deducted from equity;
transaction costs incurred for issuing debt are deducted from its carrying amount and all other transaction costs
associated with the acquisition are expensed.
(ii) Associated companies
Investments in associated companies are accounted for by the equity method and are recognised initially at cost.
These are undertakings in which the Group holds from 20% to 50% of the voting rights and over which the Group
exercises significant influence, but which it does not control.
Equity method of accounting involves recognising in the profit or loss the Group’s share of the associate’s net
profit or loss for the year and eliminating unrealised gains and unrealised losses on transactions between the
Group and the associated undertaking to the extent of the Group’s interest in the associates. Dividends received
from the associate reduce the carrying amount of the investment. The Group’s interest in the associate is carried in
the statement of financial position at an amount that reflects its share of the net assets of the associate including
any goodwill on acquisition. Investments in associated undertakings are reported as non-current assets in the
Group’s consolidated statement of financial position.
(iii) Transactions eliminated on consolidation
The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries
as at 31 March 2012. All intra-group balances, income and expenses and unrealised gains and losses resulting
from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains
arising from transactions with equity accounted investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to
the extent that there is no evidence of impairment.
(d) Foreign currencies
All transactions denominated in foreign currencies are translated into Lats at the Bank of Latvia rate of exchange
prevailing on the day the transaction took place. Gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are
F-67

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
recognised in the profit or loss. At the end of year foreign currency monetary assets and liabilities are translated at
the Bank of Latvia rate of exchange ruling at 31 March 2012, and all associated exchange differences are dealt
with through the profit or loss.
Exchange rates in the last three years have been:
2012 2011
as at 31 March as at 31 December
USD/LVL 0.528 0.544
LTL/LVL 0.204 0.204
GBP/LVL 0.840 0.840
Within the framework of Latvia's preparation for full-fledged membership in the Economic and Monetary Union,
the Bank of Latvia has fixed the peg rate of the Lat and the euro at EUR 1 = LVL 0.702804 effective since 1
January 2005.
(e) Intangible assets
(i) Goodwill
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in
the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill”) is
recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all
liabilities and contingent liabilities assumed and reviews appropriateness of their measurement. Goodwill is not
amortised and instead is tested for impairment annually or more frequently if indicators of impairment exist.
Following initial recognition goodwill is measured at cost less any accumulated impairment losses. An
impairment loss in respect of goodwill is not reversed.
(ii) Other intangible assets
Other intangible assets comprise costs of acquired computer software licences and other licences. Where the
software is an integral part of the related hardware that cannot operate without that specific software, computer
software is treated as property, plant and equipment. Other intangible assets are amortised using the straight-line
method over their useful lives as follows:
Useful lives,
years
Software and licences 3 – 5
Other intangible assets are stated at historical cost less accumulated amortisation and any accumulated
impairment losses. Where an indication of impairment exists, the carrying amount of any intangible asset is
assessed and written down immediately to its recoverable amount, which is the higher of an asset’s net selling
price and value in use, recognising impairment loss as an expense in the profit or loss. Review for impairment is
carried out at each end of the reporting period date. The recoverable amount of an intangible asset not yet
available for use is tested for impairment annually, irrespective of whether there is any indication that it may be
impaired. For the purposes of assessing impairment, assets are grouped at the lowest level, for which there are
separately identifiable cash inflows.
(f)
Property, plant and equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Depreciation of property, plant and equipment is calculated using the straight-line method to
allocate the depreciable amount of the assets over their estimated useful lives as follows:
Useful lives,
Years
Buildings 10 – 40
Other fixed assets 3 – 7
F-68

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Land is not depreciated as it is deemed to have an indefinite life.
The useful life and residual value of an asset is reviewed at least at each financial year-end. Effect from a change
in the estimated useful life of an asset is recognised prospectively by including it in the profit or loss in the
current period and future periods.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount, which is the higher of an asset’s fair value less cost to sell and value in
use, recognising impairment loss as an expense in the profit or loss. Review for impairment is carried out at the
end of the reporting period. For the purposes of assessing impairment, assets are grouped at the lowest level, for
which there are separately identifiable cash inflows.
Gains and losses on disposals of assets are determined by comparing proceeds with the carrying amount, and are
included in the results from operating activities.
Leasehold improvements are included within buildings and amortised over the shorter of the useful life of the
improvement and the term of lease.
The cost of the construction of property, plant and equipment is determined by the reference to the actual costs
incurred to the suppliers and subcontractors as at the end of the reporting period. Interest costs on borrowings to
finance the construction of property, plant and equipment and other operating expenses directly attributable to the
construction of property, plant and equipment (costs of own labour, material and other costs) are capitalised as
part of the cost of the asset during the period of time that is required to complete and prepare the property for its
intended use.
(g) Financial assets
Financial assets comprise investments in equity and debt securities (excluding investments in associates), trade
and other receivables, cash and cash equivalents and loans issued and derivative financial assets.
Cash and cash equivalents comprise current accounts with banks, cash on hand, and deposits with banks with
initial maturity up to three month.
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to
maturity investment, or available-for-sale financial assets, as appropriate:
(i) Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon
initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages
such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s
documented risk management or investment strategy. Upon initial recognition attributable transaction costs are
recognised in the profit or loss as incurred. Financial instruments at fair value through profit or loss are measured
at fair value, and changes therein are recognised in the profit or loss.
(ii) Loans and receivables
Loans and receivables are initially recognised at fair value plus any directly attributable transaction costs, which
for trade receivables is usually the original invoiced amount and subsequently carried at amortised cost using the
effective interest method less allowances made for doubtful receivables. Allowances are made specifically where
there is objective evidence of a dispute or an inability to pay. The additional allowances are made based on an
analysis of balances by age and previous losses experienced. Loans and receivables are classified in current
assets, except for maturities greater than 12 months after the end of the reporting period date. These are classified
as non-current assets.
An impairment or bad debt loss is recognised in the profit or loss whenever it is probable that the Group will not
collect all amounts due according to the contractual terms of loans or receivables. The impairment loss is
measured as the difference between that asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate. The impairment loss is only reversed if it
can be related objectively to an event after the impairment was recognised and is reversed to the extent the
F-69

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
carrying value of the asset does not exceed its amortised cost at the date of reversal. The amount of the reversal is
included in the profit or loss.
(iii) Held-to-maturity investments
If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as heldto-maturity.
Held-to-maturity financial assets are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost
using the effective interest method, less any impairment losses.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment
losses, and foreign currency differences on available-for-sale monetary items, are recognised directly in other
comprehensive income. When an investment is derecognised, the cumulative gain or loss is reclassified from other
comprehensive income to profit or loss for the year.
Financial assets are derecognised when the rights to receive cash flows from assets have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
Financial assets are reviewed for impairment at the end of the reporting period. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider
otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a
security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value
below its cost is objective evidence of impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by
reference to its fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively. In assessing collective impairment the Group uses historical trends of the
probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment
as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less
than suggested by historical trends.
All impairment losses are recognised in the profit or loss. An impairment loss is reversed if the reversal can be
related objectively to an event occurring after the impairment loss was recognised.
(h) Financial liabilities
Non – derivative financial liabilities comprise trade and other payables and borrowings.
(i)Trade and other payables
Trade payables are recognised initially at fair value plus any directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method. The carrying value of trade and
other payables approximate their fair values due to their short maturity. A financial liability is removed from the
statement of financial position, when the obligation specified in the contract is discharged or cancelled or expires.
(ii) Borrowings
All borrowings are initially recognised at the fair value of the consideration received plus directly attributable
transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in the profit or loss as interest income/expense
F-70

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
when the liabilities are derecognised as well as through the amortisation process. The part of outstanding amount,
which is due after more than 12 months, is included in non-current liabilities.
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised
as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation is determined by
applying the capitalisation rate to the expenditures on a qualifying asset. Capitalisation rate is the weighted
average interest rate on borrowings that are outstanding during the period.
(i)
Leases
Leases of assets under which the lessee assumes substantially all the benefits and risks of ownership are classified
as finance leases. All other leases are classified as operating leases.
(i) A Group company is a lessor
When assets are leased out under an operating lease, income from operating leases is recognised in the profit or
loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an
operating lease are included in the initial measurement of the finance lease receivable and reduce the amount of
income recognized over the lease term.
If a Group company is a lessor in a finance lease arrangement, it recognizes the asset in the statement of financial
position as a receivable at an amount equal to the present value of the lease payments. Lease income is recognised
over the term of the lease on the basis of constant periodic rate of return.
(ii) A Group company is a lessee
Payments made under operating leases are charged to the profit or loss on a straight-line basis over the period of
the lease.
If a Group company is a lessee in a finance lease arrangement, it recognises in the statement of financial position
the assets as an item of property, plant and equipment and a lease liability measured as the lower of the fair value
of the leased property and the present value of the minimum lease payments. Each lease payment is allocated
between the liability and finance charge so as to achieve a constant interest rate on the balance of liability
outstanding. The interest element of the lease payment is charged to the profit or loss over the lease period. The
item of property, plant and equipment acquired under a finance lease is depreciated over the shorter of the useful
life of the asset and the lease term, unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term.
(j)
Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the weighted
average cost method for items that are interchangeable. For inventory items that are not interchangeable, specific
costs are attributed to the specific individual items of inventory. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs of completion and selling expenses.
(k) Contingent assets and liabilities
Contingent assets are not recognised in the consolidated financial statements, but disclosed in the notes when an
inflow of economic benefits is probable. Contingent liabilities are not recognised in the financial statements. They
are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is
remote.
(l)
Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are recognised as a current expense in the period when employees render the
services. These include salaries and wages, social security contributions, bonuses, paid holidays and other
benefits.
F-71

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(m) Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the profit of loss, except to
the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the
tax is also recognized in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying value for financial reporting purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred income tax is provided on temporary
differences arising on investments in subsidiaries and associated undertakings, except where the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
The principal temporary differences arise from depreciation of property, plant and equipment and accrued
expenses.
(n) Revenue recognition
Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods have
passed to the buyer, usually on delivery of goods, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably.
Revenue from services is recognised when services are rendered to customers in accordance with contractual
terms and conditions.
The Group recognises revenue based on the amount invoiced to customer net of value added tax when it has
earned revenue from sale of the goods or services and the net amount retained (that is, the amount billed to
customer less the amount paid to service provider) when it has earned a commission or fee.
Dividends are recognised when the right to receive payment is established.
(o) Earnings per share
Earnings per share are calculated by dividing profit or loss for the year by the weighted-average number of
ordinary shares outstanding during the year.
(p) Dividends
Dividends are recorded in the financial statements of the Group in the period in which they are approved by the
Group’s shareholders and the shareholder`s right to receive payment has been established.
(q) Events after the Reporting Period
The amounts recognised in financial statements are adjusted to reflect events after the reporting period that
provide additional information about the Group’s position at reporting period (adjusting events). Events after the
reporting period that are not adjusting events are disclosed in the notes to the financial statements when material.
(r) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
F-72

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
made in determining fair values is disclosed in the notes specific to that asset or liability.
The carrying value of short-term financial assets and liabilities is assumed to approximate their fair values. Fair
value of the remaining financial instruments is estimated by discounting the expected future cash flows to net
present values using appropriate prevailing market interest rates available at the end of the period. Market interest
rates apply to interest-bearing debt and the book value of these items is regarded as corresponding to their fair
value.
(s)
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government
grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current
assets are recognised as deferred revenue in the consolidated statement of financial position and transferred to
profit or loss on a systematic and rational basis over the useful lives of the related assets.
NOTE 1
REVENUE AND OTHER INCOME
1Q 2012 1Q 2011
NET SALES LVL’000 LVL’000
Revenue from recycling 3 867 3 473
Revenue from waste collection 1 583 1 488
Revenue from organisation of waste recovery 1 020 945
Revenue from recyclables sorting and trading 499 409
Total Revenue from core services 6 969 6 315
Geographical information
1Q 2012 1Q 2011
LVL’000 LVL’000
Latvia 2 662 2 507
European Union (EU) 3 866 3 753
Non-EU countries 441 55
6 969 6 315
F-73

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Segment revenue and results
Operating segments are reported in the manner consistent with the internal reporting provided to the chief operating decision-maker. Information reported to the chief operating
decision maker for the purposes of resource allocation and assessment of segment performance focuses on revenue and gross profit for each segment. The Group's reportable
segments under IFRS 8 are therefore as follows:
Revenue from organisation of waste recovery,
Revenue from waste collection,
Revenue from recyclables sorting and trading,
Revenue from recycling.
Segment revenue and results for 1Q 2012
Revenue from
organisation of
waste recovery
Revenue from
waste collection
Revenue from
recyclables
sorting and
trading
Revenue from
recycling
Other
Consolidation
adjustments
and
eliminations
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Deals with non-related parties 1 020 1 583 499 3 867 - - 6 969
Deals with other segments 1 210 311 256 413 (1 191) -
Revenues 1 021 1 793 810 4 123 413 (1 191) 6 969
Cost of sales * (697) (1 125) (664) (2 821) (151) 779 (4 679)
Gross profit * 324 668 146 1 302 262 (412) 2 290
Selling expenses * - - - - - - (43)
Administrative expenses * - - - - - - (651)
Other operating income - - - - - - 60
Other operating expenses - - - - - - (99)
Depreciation and amortization - - - - - - (355)
Interest income and similar income - - - - - - 32
Interest expenses and similar expenses - - - - - - (82)
Other taxes - - - - - - (2)
Profit before taxes - - - - - - 1 154
Corporate income tax for the reporting year - - - - - - (119)
Deferred income tax - - - - - - 17
Current year's profit - - - - - - 1 052
Segment Assets 4 009 8 753 1 645 9 023 9 989 (14 443) 18 976
Segment Liabilities 1 568 5 366 724 3 429 8 403 (7 685) 11 805
* Segment report cost of sales, gross profit, selling and administrative expenses are showed before depreciation and amortisation
Consolidation adjustments and eliminations include corrections of consolidation (internal group investments of own equity, balances and deals)
TOTAL
F-74

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Segment revenue and results
Segment revenue and results for 1Q 2011
Revenue from
organisation of
waste recovery
Revenue from
waste collection
Revenue from
recyclables
sorting and
trading
Revenue from
recycling
Other
Consolidation
adjustments
and
eliminations
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Deals with non-related parties 945 1 488 409 3 473 - - 6 315
Deals with other segments - 243 440 263 235 (1 181) -
Revenues 945 1 731 849 3 736 235 (1 181) 6 315
Cost of sales * (663) (1 080) (660) (2 531) (47) 938 (4 043)
Gross profit * 282 651 189 1 205 188 (243) 2 272
Selling expenses * - - - - - - (67)
Administrative expenses * - - - - - - (632)
Other operating income - - - - - - 73
Other operating expenses - - - - - - (107)
Depreciation and amortization - - - - - - (340)
Interest income and similar income - - - - - - 8
Interest expenses and similar expenses - - - - - - (64)
Other taxes - - - - - - (1)
Profit before taxes - - - - - - 1 142
Corporate income tax for the reporting year - - - - - - (75)
Deferred income tax - - - - - - 12
Current year's profit - - - - - - 1 079
Segment Assets 4 164 9 238 1 787 8 766 11 794 (17 283) 18 466
Segment Liabilities 1 867 5 531 830 3 838 8 032 (7 751) 12 347
TOTAL
* Segment report cost of sales, gross profit, selling and administrative expenses are showed before depreciation and amortisation
Consolidation adjustments and eliminations include corrections of consolidation (internal group investments of own equity, balances and deals)
F-75

NOTE 2
COST OF SALES
1Q 2012 1Q 2011
LVL’000 LVL’000
Raw materials and other material costs (2 711) (2 339)
Transportation expenses (442) (396)
Municipal waste landfilling and disposal of sewage water (404) (306)
Salaries and wages (431) (404)
Depreciation and amortization (302) (273)
Outsourcing * (191) (164)
Rent of production premises and related costs (141) (142)
Professional services (189) (91)
Social security taxes (102) (96)
Natural resources tax (1) (1)
Other production costs (65) (108)
Total (4 979) (4 320)
*In comparison with the previous reporting periods the costs of the received outsourcing services have increased
considerably in 2010 and 2011. Approximately 80 % of the increase in costs is attributable to the increase of
costs of the segregated waste collection schemes and waste management.
NOTE 3
SELLING EXPENSES
1Q 2012 1Q 2011
LVL’000 LVL’000
Salaries and wages (4) (5)
Social security taxes (1) (1)
Marketing expenses (1) (1)
Transportation expenses - (13)
Other expenses (37) (47)
Total (43) (67)
NOTE 4
ADMINISTRATIVE EXPENSES
1Q 2012 1Q 2011
LVL’000 LVL’000
Salaries and wages (339) (229)
Consultations of business development and organization (96) (216)
Social security taxes (82) (67)
Transportation expenses (22) (26)
Communications expenses (14) (13)
Rent of premises and related costs (23) (17)
Office expenses (8) (9)
Depreciation and amortization (50) (67)
Legal services (6) (8)
Business trips expenses (10) (6)
Representation expenses (9) (4)
Other administrative expenses (43) (37)
Total (702) (699)
NOTE 5
F-76

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
OTHER OPERATING INCOME
1Q 2012 1Q 2011
LVL’000 LVL’000
Amortization of received state subsidies* 38 30
Decrease in allowances for doubtful debts 1 2
Income from sale of fixed assets and current assets 7 11
Income from lease of immovable property and movables 4 4
Other income 10 26
Total 60 73
* On 29th December 2006 an agreement was concluded between group company PET Baltija AS and VA
„Latvijas Investīciju un attīstības aģentūra” (Sate agency- Latvian investment and development agency) on
drawing funding for implementation of a State support program. In 2009 the project was implemented and the
financing in the amount of LVL 600 000 was received. The management of the company has recognized the
financing as income over a five year period, i.e., LVL 120 thousand yearly.
NOTE 6
OTHER OPERATING EXPENSES
1Q 2012 1Q 2011
LVL’000 LVL’000
Grants, donations and other expenses not related to operating activities (11) (5)
Bad debt write-off expense (8) -
Expenses related to implementation of EU education project (5) (60)
Depreciation (4) (2)
Other expenses (71) (35)
Total (99) (102)
NOTE 8
INTEREST INCOME AND SIMILAR INCOME
1Q 2012 1Q 2011
LVL’000 LVL’000
Interest income from short-term loans 31 7
Interest income from deposits 1 -
Interest for bank account balance - -
Total 32 7
NOTE 9
INTEREST EXPENSES AND SIMILAR EXPENSES
1Q 2012 1Q 2011
LVL’000 LVL’000
Interest expenses for
Bank loan (64) (29)
Leasing (18) (25)
Other borrowings - (10)
Total (82) (64)
F-77

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 10
OTHER TAXES
1Q 2012 1Q 2011
LVL’000 LVL’000
Land and property tax (2) (1)
Total (2) (1)
NOTE 11
CORPORATE INCOME TAX
a) Income tax expense included in profit and loss statement
1Q 2012 1Q 2011
LVL’000 LVL’000
Current income tax expense (119) (75)
Deferred tax income/(expense) 17 12
Total (102) (63)
Eko Baltija Ltd. applied the officially enacted tax rate of 15% upon calculation of corporate income tax for the
current year.
b) Movement in the deferred income tax was as follows:
1Q 2012 1Q 2011
LVL’000 LVL’000
At the beginning of the year 300 162
temporary differences
Property, plant and equipment and intangible assets 2 861 1 096
Accrued expenses, provisions and tax losses (974) (95)
Total change in temporary differences 1 887 1 001
Income tax rate 15% 15%
Released/(charged) to the profit or loss 17 12
At the end of the year 283 150
Deferred income tax assets and liabilities are off-set when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when the deferred income taxes relate to the same taxable entity and
the same fiscal authority.
c) The following amounts are shown on the statement of financial position:
31/03/2012 31/12/2011
LVL’000 LVL’000
Assets
Corporate income tax advance payments 55 116
Total 55 116
F-78

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Liabilities
Deferred income tax liabilities (283) (317)
Corporate income tax liabilities (12) (43)
Total (295) (360)
NOTE 12
INVESTMENTS IN SUBSIDIARIES
SUBSIDIARIES
Details of the Group's subsidiaries at the end of the reporting period are as follows.
Name of subsidiary
Principal activity
Place of
incorporation
and operation
Proportion of ownership interest
and voting power held by the
Group
31/03/12 31/12/11 31/12/10
1. NORDIC PLAST SIA Recycling Latvia 100% 100% 100%
2. VAANIA SIA Waste collection Latvia 90% 90% 90%
3. PET Baltija A/S Recycling Latvia 91.03% 91.03% 85.10%
4. LATVIJAS ZAĻAIS Organisation of waste Latvia 75.13% 75.13% 48.43%
PUNKTS A/S
recovery
5. EKO REVERSS SIA Sorting and trading of Latvia 75.13% 75.13% 48.43%
recyclables
6. EKO RĪGA SIA Waste collection Latvia 100% 100% 100%
7. EKO KURZEME SIA Waste collection Latvia 100% 100% 100%
8. JŪRMALAS ATU SIA Waste collection Latvia 100% 100% 100%
9. KURZEMES AINAVA Waste collection Latvia 100% 100% 100%
SIA
10. JUMIS, Siguldas P SIA Waste collection Latvia 90% 90% 90%
11. SIKARI SIA Waste collection Latvia Nil Nil 100%
12. TUKUMA AINAVA Waste collection Latvia Nil Nil 100%
SIA
13. AG INTER SIA Waste collection Latvia Nil Nil 100%
The Group owns 48.43% equity shares of Latvijas Zaļais punkts AS. However, based on the contractual
arrangements between the Group and other investors, the Group has the power to appoint and remove the
majority of the board of directors of Latvijas Zaļais punkts AS, and hence the Group has control over the
financial and operating policies of Latvijas Zaļais punkts AS. Therefore, Latvijas Zaļais punkts AS is controlled
by the Group and is consolidated in these financial statements.
Latvijas Zaļais punkts AS owns 100% equity shares of Eko Reverss SIA. Eko Reverss is consolidated in these
financial statements because of control over Latvijas Zalais punkts AS as described above.
F-79

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 13
INVESTMENTS IN ASSOCIATES
Details of the Group's associates at the end of the reporting period are as follows.
Place of
Name of associate Principal activity
incorporation
and operation
Proportion of ownership interest and
voting power held by the Group
LVL’000
LVL’000
31/03/2012 31/12/2011
EKO PET SIA Recycling Latvia 47.48%
LVL 177
10%
LVL 2
PET Baltija AS, the subsidiary of Eko Baltija has made an investment into the equity of the associated company
„EKO PET” in the amount of LVL 177 thousand which constitutes a 47.48% participation. In 2012 the newly
founded company still has not started its business activity.
NOTE 14
TRADE AND OTHER RECEIVABLES
31/03/2012 31/12/2011
LVL’000 LVL’000
Trade receivables 2 856 2 195
Allowance for doubtful debts (615) (569)
2 241 1 626
Movement on impairment loss allowance for trade and other receivables was as follows:
Individually
impaired
Collectively
impaired
Total
LVL’000 LVL’000 LVL’000
Balance at 1 January 2010 443 443
Charged to profit or loss during the year 2010 249 249
Debts written-off (124) - (124)
Balance at 31 December 2010 568 568
Charged to profit or loss during the year 2011 52 52
Debts written-off (51) - (51)
Balance at 31 December 2011 569 - 569
Charged to profit or loss during the year 2012 47 47
Debts written-off (1) - (1)
Balance at 31 March 2012 615 - 615
F-80

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at 31 March 2012 and 31 December 2011, the ageing structure of current trade receivables was as follows:
31/03/2012 31/12/2011
Gross Net Gross Net
LVL’000 LVL’000 LVL’000 LVL’000
Not due 946 946 1 289 1 011
Overdue less than 30 days 501 501 155 155
Overdue 30-90 days 407 407 104 104
Overdue 90-180 days 157 157 133 78
Overdue 180-365 days 234 183 255 142
Overdue more than 365 days 611 47 259 136
Total 2 856 2 241 2 195 1 626
The average payment terms of accounts receivable is 45 days for non-related parties, and 30 days for intra group
receivables.
NOTE 15
LOANS TO RELATED COMPANY
31/03/2012 31/12/2011
LVL’000 LVL’000
EKO SPV SIA 2 398 1 852
Total 2 398 1 852
Eko Baltija SIA has issued loan to its shareholder Eko SPV SIA with annual interest 6% and the term of
repayment in December 2012. Loan issued without collateral.
NOTE 16
EQUITY AND RESERVES
(a) Share capital
The Parent company’s registered and paid up share capital equals LVL 150 thousand, which is divided into 150
ordinary shares. Nominal value per share is LVL 1 thousand.
Shareholders 31/03/2012 31/12/2011
LVL’000 LVL’000
3. E-SomTAX Invest LLP, 42% (2010:26.0%) 63 63
4. KS 2 Eko Fonds, 16% (2010:10.0%) 24 24
5. SIA Eko SPV, 42%; from 18.10.2011 63 63
150 150
The administration and management of the Company shall be entrusted to a Board of three Directors.
The judicial and legal representation of the Company shall be vested in the two Directors acting jointly.
(b) Reorganisation reserve
In 2008 the share capital of the companies included in the Group was increased. Minority shareholders
purchased shares for the amount which exceeds the nominal value of the shares. The consolidated reserves
included a part of the paid emission premium.
F-81

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
In 2009 as a result of reorganization SIA ‘Eko Baltija” became the only member in the Group to which the
consolidated reserves were attributed and the consolidated reserve was eliminated.
On 1 July 2011 Eko Baltija SIA was reorganized. As a result of the reorganization Eko Baltija SIA merged with
its shareholder of 38% as of 31.12.2010 - Polignac SIA. As a result of the transaction a negative reorganization
reserve of 4,625 thousand LVL was recongised in Eko Baltija SIA equity. No goodwill was recognised in this
transaction.
(c) Changes in retained earnings and non-controlling interest
The Group owns 48.43% equity shares of Latvijas Zaļais punkts AS. However, based on the contractual
arrangements between the Group and other investors, the Group has the power to appoint and remove the
majority of the board of directors of Latvijas Zaļais punkts AS, and hence the Group has control over the
financial and operating policies of Latvijas Zaļais punkts AS. Changes in retained earnings and non-controlling
interest have occurred due to the fact that 75.13% equity shares of Latvijas Zaļais punkts AS and its subsidiary
Eko Reverss SIA were consolidated before year 2009.
NOTE 17
INTEREST BEARING BORROWINGS
31/03/2012 31/12/2011
LVL’000 LVL’000
Short-term bank borrowings 1 323 1 409
Credit lines 773 983
Total 2 096 2 392
31/03/2012 31/12/2011
LVL’000 LVL’000
Non-current bank borrowings 5 363 5 556
Total 5 363 5 556
Available undrawn borrowing facilities
31/03/2012 31/12/2011
LVL’000 LVL’000
Expiring within one year 984 774
Expiring beyond one year - -
Until May 2011 the loans of Eko Baltija Group companies were received from Swedbank As and SEB bank AS,
from May 2011 all loan liabilities were refinanced to Nordea Bank Finland Plc Latvia branch with interest rate
of 3 month EURIBOR +2.5%. The bank borrowings are drawn in EUR. The loan of SIA Eko Baltija expires
January 2015, but loan of other Group Companies in December 2016.
As at 31 March 2012 the short term part of bank loan is LVL 2.096 million, the long term part is LVL 5.363
million.
Four Group companies – A/S LZP, SIA Eko Reverss, PET Baltija and SIA Nordic Plast have overdraft available
in Nordea bank. Companies had used LVL 773 thousand of available credit line resources as at 31.03.2012.
The total borrowing facility expiring beyond one year is EUR 2.50 million credit line from Nordea Bank Finland
Plc Latvia branch.
F-82

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 18
FINANCE LEASE LIABILITIES
Finance lease liabilities
Minimum lease Present value of minimum
payments 2012 lease payments 2012
LVL’000
LVL’000
Amounts payable under finance leases:
Within one year 472 429
In the second to fifth years inclusive 1 211 1 150
1 683 1 579
Less future finance charges (104) -
Present value of minimum lease payments 1 579 1 579
Minimum lease Present value of minimum
payments 2011 lease payments 2011
LVL’000
LVL’000
Amounts payable under finance leases:
Within one year 596 595
In the second to fifth years inclusive 1 152 1 085
1 748 1 680
Less future finance charges (68) -
Present value of minimum lease payments 1 680 1 680
The Group has 87 leasing agreements with SEB bank AS, Swedbank AS and Nordea Bank Finland Plc Latvia
branch. Production equipment, vehicles, special equipment, containers and cars are leased. The interest rate for
leasing varies from 2% to 6.7% from the unpaid amount. The expiration of leasing varies from year 2012 to year
2016. As at 31 March 2012 the short term part of of leasing is in the amount of LVL 429 thousand, the long term
part in the amount of LVL 1 150 thousand. The fair value of the Group’s lease obligations approximates their
carrying amount.
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets.
NOTE 19
RELATED PARTY TRANSACTIONS
Balances and transactions between Eko Baltija SIA and its subsidiaries, which are related parties of Eko Baltija
SIA, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the
Group and other related parties are disclosed below.
During the reporting periods group entities entered into the following transactions with related parties that are
not members of the Group:
e) Sales of services and goods
1Q 2012 1Q 2011
LVL’000 LVL’000
Related to Eko Baltija Group 31 23
Related parties via key management - 1
Total 31 24
F-83

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
f) Purchases of goods and services
1Q 2012 1Q 2011
LVL’000 LVL’000
Related parties via key management (117) (148)
Related to Eko Baltija Group (35) (66)
Other related parties (14) (17)
Total (166) (231)
g) Outstanding balances arising from sale/purchase of goods/services
31/03/2012 31/12/2011
LVL’000 LVL’000
Receivables
Related to Eko Baltija Group 2 398 1 852
Related parties via key management - -
Other related parties - -
Total 2 398 1 852
Liabilities
Related to Eko Baltija Group 18 6
Related parties via key management 71 150
Other related parties 5 7
Total 94 163
The amounts outstanding are unsecured and will be settled in cash. No expense has been recognised in the
current or prior years for bad or doubtful debts in respect of the amounts owed by related parties.
h) Employee costs and Key management remuneration
Employee costs
1Q 2012 1Q 2011
LVL’000 LVL’000
Salaries and wages (765) (680)
Social insurance payments (183) (163)
Other benefits (12) (11)
Total (960) (854)
1Q 2012 1Q 2011
Average number of permanent and temporary employees during the year 460 444
Employee costs include key management remuneration in following amount
1Q 2012 1Q 2011
LVL’000 LVL’000
Salaries (26) (26)
Social insurance payments (6) (6)
Total (32) (32)
F-84

EKO BALTIJA GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 20
COMMITMENTS AND CONTINGENCIES
On 15.09.2011 Eko SPV SIA has entered into a Loan agreement No.2011-387-A with Nordea Bank Finland Plc
Latvia branch in the amount of EUR 14.000 million EUR (LVL 9.839 million).
Commercial Mortgage Agreement for loan collateral has been concluded for all property of the Group at the
moment of pledging, as well as for the future assets of this Eko Baltija Group, and the share capital of “Eko
Baltija” owned by “SIA Eko SPV” as a commercial pledge.
Loan maturity is 15.09.2018, loan agreement interest rate is EURIBOR+ 4.5%.
NOTE 21
EVENTS AFTER THE REPORTING PERIOD
The shareholders of SIA Eko Baltija - E-Somtax Invest Ltd and KS Otrais Eko Fonds have invested their shares
of SIA Eko Baltija as contribution in kind in the share capital of SIA Eko SPV. As the result of the contribution
SIA Eko SPV owns 100% of SIA Eko Baltija shares. The transaction was registered in the Enterprise register
April 23, 2012.
Eko Riga has won waste collection tender in Mārupe, neighborhood of Riga City.
Contract was signed on April 13 and company expects to start servicing the new region from1 July 2012.
Estimated amount is 40 000 m3/year which will add another 120 000 LVL annually in turnover of Eko Riga.
There have been no other events after the end of the reporting period date that could materially affect the
financial statements of Eko Baltija Group for the reporting period ended 31 March 2012.
F-85

ECO BALTIA AS
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
for the year ended 31 December 2011
Riga, 10 May 2012
F-86

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
ANCILLARY INFORMATION
Name of the Company
ECO BALTIA AS
Legal status of the Company
Joint Stock Company
Registration number, date of
registration
40103446506,
11 August 2011
Legal address Dārza street 2, Riga, LV 1007
Shareholders As of 31.12.2011: EKO INVESTORS AS, 100%
As of date of signing these Pro Forma financial information
(10.05.2012):
Viesturs Tamužs – 2 242 500 shares, 10%
Undīne Būde - 2 242 500 shares, 10%
Māris Simanovičs - 2 242 500 shares, 10%
Otrais Eko Fonds – 6 279 000 shares, 28%
E-Somtax Invest LLP – 9 418 500 shares, 42%
Members of the board
Members of the council
Edmunds Jansons
Viesturs Tamužs
Māris Simanovičs
Undīne Būde
F-87

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
F-88

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
PRO FORMA STATEMENT OF COMPREHENSIVE INCOME
31 December
2011
Historical Adjustments Notes
31 December
2011
Pro Forma
LVL’000 LVL’000 LVL’000
Net sales 26 595 - 26 595
Cost of sales (19 354) - (19 354)
Gross profit 7 241 - 7 241
Selling expenses (325) - (325)
Administrative expenses (2 932) - (2 932)
Other operating income 284 - 284
Other operating expenses (287) - (287)
Interest income and similar income 70 (23) 1.b.2 47
Interest expenses and similar
1.b.1
(324) (453)
expenses
(777)
Other taxes (5) - (5)
Profit before corporate income tax 3 722 (476) 3 246
Corporate income tax for the
reporting year
(211) 71
1.b.1,
1.b.2
(140)
Deferred income tax (133) - (133)
Current year profit/ (loss) and
comprehensive income
3 378 (405) 2 973
Attributable to:
Owners of the parent 3 203 (405) 2 798
Non-controlling interests 175 - 175
The notes on pages from 10 to 20 form an integral part of this Pro Forma financial information.
On behalf of the Management Board:
___________________________________
Edmunds Jansons
Board member
Riga, 10 May 2012
F-89

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
PRO FORMA STATEMENT OF FINANCIAL POSITION
31 December
2011
Historical Adjustments Notes
31 December
2011
Pro Forma
LVL’000 LVL’000 LVL’000
ASSETS
Non-current assets
Goodwill 5 056 28 971 1.c.1 34 027
Intangible assets 40 - 40
Property, plant and equipment 5 662 - 5 662
Investments in subsidiaries and associates 2 - 2
Long-term loans and receivables - 25 25
Other financial assets 140 - 140
Total non-current assets 10 900 28 996 39 896
Current assets
Inventories 1 459 - 1 459
Trade and other receivables 1 626 - 1 626
Loans to related companies 1 852 (1 852) 1.c.2 -
Other short-term receivables 1 546 - 1 546
Corporate income tax 116 - 116
Other short-term financial investments 1 - 1
Cash and cash equivalents 966 - 966
Total current assets 7 566 (1 852) 5 714
Total assets 18 466 27 144 45 610
The notes on pages from 10 to 20 form an integral part of this Pro Forma financial information.
On behalf of the Management Board:
___________________________________
Edmunds Jansons
Board member
Riga, 10 May 2012
F-90

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
PRO FORMA STATEMENT OF FINANCIAL POSITION
31 December
2011
Historical Adjustments
31 December
2011
Pro Forma
LVL’0000 LVL’000 Notes LVL’000
EQUITY AND LIABILITIES
Capital and reserves
Share capital 150 22 275 1.c.1 22 425
Share premium 5 442 (5 442) 1.c.1 -
Reorganization reserve (4 625) 4 625 1.c.1 -
Retained earnings 4 072 (4 072) 1.c.1 -
Equity attributed to the shareholders 5 039 17 386 22 425
Non-controlling interests 1 080 - 1 080
Total equity 6 119 17 386 23 505
Non-current liabilities
Interest bearing borrowings 5 556 8 111 1.c.2 13 667
Finance lease liabilities 1 085 - 1 085
Deferred tax liabilities 317 - 317
Deferred income 182 - 182
Total non-current liabilities 7 140 8 111 15 251
Current liabilities
Trade and other payables 999 - 999
Interest bearing borrowings 2 392 1 437 1.c.2 3 829
Finance lease liabilities 595 - 595
Deferred income and customer
215 - 215
prepayments
Corporate income tax liabilities 43 - 43
Derivatives - 210 1.c.3 210
Tax liabilities 246 - 246
Other liabilities 717 - 717
Total current liabilities 5 207 1 647 6 854
Total liabilities 12 347 9 758 22 105
Total equity and liabilities 18 466 27 144 45 610
The notes on pages from 10 to 20 form an integral part of this Pro Forma financial information.
On behalf of the Management Board:
___________________________________
Edmunds Jansons
Board member
Riga, 10 May 2012
F-91

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
PRO FORMA STATEMENT OF CHANGES IN EQUITY
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
Notes
Share
capital
Share
premium
Retained
earnings
Reorganisation
reserve
Noncontrolling
interest
Total
equity
LVL’000 LVL’000 LVL’000 LVL’000 LVL’000 LVL’000
Year ended 31
December 2011
Historical
Balance at 1 January
150 5 442 - 591 1 806 7 989
2011
Changes in retained
- - - 278 - 278
earnings
Reorganisation of the
- - ( 4 625) - - (4 625)
group
Changes in noncontrolling
interest - - - - (901) (901)
Net profit for the year
- - - 3 203 175 3 378
2011
Balance at 31
150 5 442 (4 625) 4 072 1 080 6 119
December 2011
Pro forma adjustments
related to net profit 1.c.1 - - - (405) - (405)
for the year 2011
Pro forma adjustments
related to change of 1.c.1 22 275 (5 442) 4 625 (3 667) - 17 791
controlling entity
Pro Forma
Balance at 31
December 2011
22 425 - - - 1 080 23 505
The notes on pages from 10 to 20 form an integral part of this Pro Forma financial information.
On behalf of the Management Board:
___________________________________
Edmunds Jansons
Board member
Riga, 10 May 2012
F-92

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
PRO FORMA STATEMENT OF CASH FLOWS
2011
Historical Adjustments Notes
2011
Pro
Forma
LVL’000 LVL’000 LVL’000
Operating activities
Profit before tax 3 722 (476) 3 246
Adjustments for:
Depreciation, amortisation and impairment loss 1 347 - 1 347
Changes in provisions 105 - 105
Gain on disposal of assets - net (5) - (5)
Interest income (68) 23 (45)
Interest expenses 320 453 1.b.1 773
Income from associates (583) - (583)
Foreign exchange difference 3 - 3
Operating profit before working capital changes 4 841 - 4 841
Decrease / (increase) in trade and other receivables (1 075) (23) (1 098)
(Increase) in inventories (401) - (401)
Increase /(decrease) in trade and other payables 2 048 321 2 369
Cash generated from operations 5 413 298 5 711
Interest received 6 - 6
Interest paid (278) - (278)
Corporate income tax paid (148) - (148)
Property tax expenses (4) - (4)
Net cash from operating activities 4 989 298 5 287
Investing activities
Purchase of property, plant and equipment (1 157) - (1 157)
Proceeds from sale of property, plant, equipment
and investments 8 - 8
Investments in capital shares 93 (11 245) 1.d.1 (11 152)
Cash income from shares in associated companies 7 - 7
Payments for financial investments 88 - 88
Loans granted (7 022) 1 852 1.c.2 (5 170)
Income from repayment of loans 118 - 118
Interest income 101 - 101
Net cash used in investing activities (7 764) (9 393) (17 157)
Financing activities
Proceeds from issue of share capital (21) - (21)
Loans received 9 199 9 785 1.c.2 18 984
Interest paid (48) (453) 1.b.1 (501)
Repayment of amounts borrowed (5 470) (237) 1.c.2 (5 707)
Finance lease payments (775) - (775)
Net cash used in financing activities 2 885 9 095 11 980
Profit or loss from currency fluctuation (3) - (3)
Net increase in cash and cash equivalents 107 - 107
Cash and cash equivalents at the beginning of
859 - 859
the year
Cash and cash equivalents at the end of the year 966 - 966
The notes on pages from 10 to 20 form an integral part of this Pro Forma financial information.
On behalf of the Management Board:
___________________________________
Edmunds Jansons
Board member
Riga, 10 May 2012
F-93

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
NOTES TO THE PRO FORMA FINANCIAL INFORMATION
1. BASIS OF PREPARATION OF PRO FORMA FINANCIAL INFORMATION
In connection with the initial public offering of ECO BALTIA AS shares, to present an economic view of ECO
BALTIA AS and its subsidiaries (further “GROUP”) business as a whole, historical consolidated financial
statements of Eko Baltija SIA and its subsidiaries (further “Eko Baltija”) have been prepared for the year 2011.
Historical consolidated IFRS financial statements of Eko Baltija SIA, and financial statements of ECO BALTIA
AS and EKO SPV SIA have been used as the basis for preparing Pro Forma financial information for the year
ended 31 December 2011. The main Pro Forma adjustments are presented below.
The purpose of the Pro Forma financial information is to present GROUP’s statement of financial position and
statement of comprehensive income as if the current legal structure of the GROUP and funding obtained to
acquire the shares from other shareholders had existed throughout the year 2011.
This Pro Forma financial information is provided for illustrative purposes only. It is not necessarily
representative of the financial position or performance that would have been reported if the current legal
structure of the GROUP and additional funding obtained would exist throughout 2011, nor is it indicative of the
GROUP’s financial position or performance at any future date or in any future period.
Pro Forma financial information for 2011 has been prepared on the basis of Eko Baltija historical consolidated
financial statements for the year 2011 prepared in accordance with the IFRSs adopted by the European Union.
Therefore the source data of historical information as of 31 December 2011 and for the year ended 31 December
2011 are derived from the consolidated financial statements of Eko Baltija prepared in accordance with IFRS.
The Pro Forma financial information should therefore be read in conjunction with those historical consolidated
financial statements.
Main Pro Forma adjustments
The Pro Forma adjustments described below are based on accounting conventions that, by definition, are
simulations performed by applying the described method and conventions. The Pro Forma financial information
cannot and should not be considered as representative of the financial position and performance that would have
been reported by the GROUP if the current legal structure and funding structure would exist throughout 2011.
ECO BALTIA AS decided to make the Pro Forma adjustments that it considered necessary in order to provide
the best possible indication of the impact from establishing the current legal structure of the GROUP and
attracting additional funding.
Pro Forma financial information is based on the historical consolidated financial data of Eko Baltija SIA for the
year ended 31 December 2011 adjusted for several transactions involving companies EKO SPV SIA and ECO
BALTIA AS.
All adjusting entries are expected to have continuous effect on the Group in the future periods.
a) Transaction
Listed below are the main transactions that provide basis for the adjusting entries to the historical consolidated
financial data of the GROUP in order to obtain the Pro Forma financial information:
- In September 2011 EKO SPV SIA obtained a loan from a credit institution in the amount of
EUR 14 million (LVL 9.8 million). The funding was used to acquire 42% of the shares of Eko
Baltija SIA;
- In September 2011 EKO SPV SIA entered into interest swap agreement with a credit
institution exchanging variable interest rate on its financing to fixed rate;
- In April 2012 all other direct shareholders of Eko Baltija SIA, representing 58% of the
shareholding made a contribution-in-kind of their shares of Eko Baltija SIA into share capital
F-94

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
of EKO SPV SIA. As a result of this transaction, EKO SPV SIA became 100% owner of Eko
Baltija SIA.
- In April 2012 all shares of EKO SPV SIA were contributed to the share capital of ECO
BALTIA AS by making contribution-in-kind based on market values. As a result of this
transaction, ECO BALTIA AS became 100% owner of EKO SPV SIA.
b. Pro forma adjustments to the statement of comprehensive income
b.1. Interest expense on loan
Pro Forma statement of comprehensive income comprises adjustment to include estimated additional interest
expense that the GROUP would incur if it had the aforementioned loan from credit institution, used to acquire
Eko Baltija SIA shares, throughout the year 2011. Additional interest expense has been estimated in the amount
of LVL 453 thousand before tax (LVL 385 thousand after tax).
b.2. Interest expense on intra-group lending
Pro Forma statement of comprehensive income has been adjusted to eliminate interest charged on loan between
Eko Baltija SIA and EKO SPV SIA. Elimination has been made in the amount of LVL 23 thousand before tax
(LVL 20 thousand after tax).
The above Pro forma adjustments have been prepared on the basis of estimates and assumptions determined by
the GROUP management and therefore cannot and do not reflect the results of any future events. As a result,
these are not necessarily representative of the costs that would have been incurred in 2011 based on the specific
market conditions prevailing in 2011.
There are no other material income or expense items relating to transactions involving EKO SPV SIA or ECO
BALTIA AS that would need to be included in the Pro Forma statement of comprehensive income.
c. Pro forma adjustments to the statement of the financial position
c.1. Contribution in capital and goodwill
As a result of contribution-in-kind of Eko Baltija SIA shares into share capital of EKO SPV SIA, EKO SPV SIA
obtained control over the GROUP, and, accordingly, goodwill is calculated based on the estimated fair value of
contributed shares and minority interest plus estimated fair value of previously held 42% shares less net
identifiable consolidated assets of Eko Baltija at fair values. The estimated goodwill amounting to 28 971
thousand lats is included in the Pro Forma statement of the financial position.
The corresponding adjusting entry to share capital amounts to LVL 22 275. As a result of change of controlling
entity other capital items (share premium, reorganisation reserve, and accumulated retained earnings) are
eliminated.
c.2. Financing transactions
The Pro Forma statement of the financial position as at 31 December 2011 includes elimination of the loan
principal and accrued interest related to the loan between EKO SPV and Eko Baltija in the amount of LVL 1 852
thousand as at 31 December 2011.
The Pro Forma statement of the financial position also includes the loan principal and accrued interest in the
amount of LVL 9 548 thousand received by EKO SPV SIA from the credit institution to be used in acquisition of
the shares in Eko Baltija SIA.
c.3. Derivative transactions
The Pro Forma statement of the financial position as at 31 December 2011 includes adjustment for the fair value
of the interest rate swap entered by EKO SPV SIA resulting in additional liability and corresponding debit entry
to retained earnings in the amount of LVL 210 thousand as at 31 December 2011.
F-95

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
There are no other material items relating to transactions involving EKO SPV SIA or ECO BALTIA AS that
would need to be included in the Pro Forma statement of financial position.
The above Pro forma adjustments have been prepared on the basis of estimates and assumptions determined by
the GROUP management. The goodwill amount is calculated based on the management estimates of the fair
value of the net identifiable asset assets as at 31 December 2011 and not as of the actual transaction date. As a
result, the correction to goodwill and other adjustments might be necessary. The presented Pro forma financial
information should not be considered as representative of the financial position as at 31 December 2011.
d. Pro forma adjustments to the statement of cash flows
d.1. Investment in shares
In 2011 EKO SPV SIA acquired 42% shares of EKO Baltija SIA. As a result, an investment book value in the
amount of LVL 11 245 was recognized on the balance sheet of the GROUP.
2. STATEMENT OF ACCOUNTING POLICIES
(a) Basis of preparation
The Pro Forma financial information has been prepared in the format that is compatible with the accounting
policies and principles that the GROUP has applied in the preparation of the historical consolidated financial
statements for the year ended 31 December 2011.
The GROUP historical consolidated financial statements have been prepared in accordance with and comply
with International Financial Reporting Standards as adopted by EU (IFRS) and Interpretations issued by its
International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European Union.
The accounting policies set out in notes b) to r) have been applied in preparing the financial statements and Pro
Forma financial information for the year ended 31 December 2011.
A number of new standards, amendments to standards and interpretations, which are not yet effective for the
year ended 31 December 2011, have not been applied in preparing the mentioned historical consolidated
statements:
Amendments to IFRS 7 Disclosures - Transfers of Financial Assets (effective for annual periods
beginning on or after 1 July 2011). The amendment requires additional disclosures in respect of risk
exposures arising from transferred financial assets. The amendment includes a requirement to disclose
by class of asset the nature, carrying amount and a description of the risks and rewards of financial
assets that have been transferred to another party yet remain on the entity's balance sheet. Disclosures
are also required to enable a user to understand the amount of any associated liabilities, and the
relationship between the financial assets and associated liabilities. Where financial assets have been
derecognised but the entity is still exposed to certain risks and rewards associated with the transferred
asset, additional disclosure is required to enable the effects of those risks to be understood. The Group
does not expect the amendments to have any material effect on its financial statements.
IFRS 9 Financial Instruments Part 1: Classification and Measurement, issued in November 2009 with
amendments issued in October 2010, as well as further issued amendments of IFRS 9 and IFRS 7 in
December 2011 (effective for annual periods beginning on or after 1 January 2015; not yet adopted by
the EU). IFRS 9 replaces those parts of IAS 39 relating to the classification and measurement of
financial assets. IFRS 9 was further amended in October 2010 to address the classification and
measurement of financial liabilities. Amendments made in December 2011 to IFRS 9 and IFRS 7
Mandatory Effective Date and Transition Disclosures determines that the effective date of IFRS 9 is
annual periods beginning on or after 1 January 2015, and modifies the relief from restating comparative
periods and the associated disclosures in IFRS 7.
F-96

ECO BALTIA AS
PRO FORMA FINANCIAL INFORMATION
Key features are as follows:
- Financial assets are required to be classified into two measurement categories: those to be
measured subsequently at fair value, and those to be measured subsequently at amortised cost. The
decision is to be made at initial recognition. The classification depends on the entity’s business model
for managing its financial instruments and the contractual cash flow characteristics of the instrument.
- An instrument is subsequently measured at amortised cost only if it is a debt instrument and
both (i) the objective of the entity’s business model is to hold the asset to collect the contractual cash
flows, and (ii) the asset’s contractual cash flows represent only payments of principal and interest (that
is, it has only “basic loan features”). All other debt instruments are to be measured at fair value through
profit or loss.
- All equity instruments are to be measured subsequently at fair value. Equity instruments that
are held for trading will be measured at fair value through profit or loss. For all other equity
investments, an irrevocable election can be made at initial recognition, to recognise unrealised and
realised fair value gains and losses through other comprehensive income rather than profit or loss.
There is to be no recycling of fair value gains and losses to profit or loss. This election may be made on
an instrument-by-instrument basis. Dividends are to be presented in profit or loss, as long as they
represent a return on investment.
- Most of the requirements in IAS 39 for classification and measurement of financial liabilities
were carried forward unchanged to IFRS 9. The key change is that an entity will be required to present
the effects of changes in own credit risk of financial liabilities designated as at fair value through profit
or loss in other comprehensive income.
The Group is considering the implications of the standard, the impact on the Group and the timing of its
adoption by the Group.
IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011): a package of
five Standards on consolidation, joint arrangements, associates and disclosures issued in May 2011
effective for annual periods beginning on or after 1 January 2013; not yet adopted by the EU). Earlier
application is permitted provided that all of these five standards are applied early at the same time. Key
requirements of these five Standards are described below.
- IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal
with consolidated financial statements. SIC-12 Consolidation – Special Purpose Entities has been
withdrawn upon the issuance of IFRS 10. Under IFRS 10, there is only one basis for consolidation, that
is control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a)
power over an investee, (b) exposure, or rights, to variable returns from its involvement with the
investee, and (c) the ability to use its power over the investee to affect the amount of the investor's
returns. Extensive guidance has been added in IFRS 10 to deal with complex scenarios.
- IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint
arrangement of which two or more parties have joint control should be classified. SIC-13 Jointly
Controlled Entities – Non-monetary Contributions by Venturers has been withdrawn upon the issuance
of IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures,
depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31,
there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and
jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for
using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be
accounted for using the equity method of accounting or proportionate accounting.
- IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries,
joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure
requirements in IFRS 12 are more extensive than those in the current standards.
EKO Group management does not consider that the aforementioned five standards would have material
impact on the financial statements or Pro Forma financial information.
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IFRS 13 Fair Value Measurement (effective for annual periods beginning on or after 1 January 2013,
with earlier application permitted; not yet adopted by the EU). IFRS 13 establishes a single source of
guidance for fair value measurements and disclosures about fair value measurements. The Standard
defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair
value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and
non-financial instrument items for which other IFRSs require or permit fair value measurements and
disclosures about fair value measurements, except in specified circumstances. In general, the disclosure
requirements in IFRS 13 are more extensive than those required in the current standards. The Group
currently is assessing the implications of the standard, the impact on the Group and the timing of its
adoption by the Group.
Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets (effective for annual periods
beginning on or after 1 January 2012; not yet adopted by the EU). The amendment introduces an
exception to the existing principle for the measurement of deferred tax assets or liabilities arising on
investment property measured at fair value. The Group is currently assessing the impact of the amended
standard on its financial statements.
Amendment to IFRS 1 Severe hyperinflation and removal of fixed dates for first-time adopters
(effective for annual periods beginning on or after 1 July 2011; not yet adopted by the EU). The
amendments will provide relief for first-time adopters of IFRSs from having to reconstruct transactions
that occurred before their date of transition to IFRSs, and guidance for entities emerging from severe
hyperinflation either to resume presenting IFRS financial statements or to present IFRS financial
statements for the first time. The Group does not expect the amendments to have any material effect on
its financial statements.
The amendments to IAS 1 Presentation of Items of Other Comprehensive Income (effective for annual
periods beginning on or after 1 July 2012; not yet adopted by the EU). The amendments retain the
option to present profit or loss and other comprehensive income in either a single statement or in two
separate but consecutive statements. However, the amendments to IAS 1 require additional disclosures
to be made in the other comprehensive income section such that items of other comprehensive income
are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and
(b) items that will be reclassified subsequently to profit or loss when specific conditions are met.
Income tax on items of other comprehensive income is required to be allocated on the same basis. The
Group does not expect that amendments to have material impact on financial statements.
The amendments to IAS 19 Employee Benefits (effective for annual periods beginning on or after 1
January 2013 and require retrospective application with certain exceptions; not yet adopted by the EU).
The amendments change the accounting for defined benefit plans and termination benefits. The most
significant change relates to the accounting for changes in defined benefit obligations and plan assets.
The amendments require the recognition of changes in defined benefit obligations and in fair value of
plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous
version of IAS 19 and accelerate the recognition of past service costs. The amendments require all
actuarial gains and losses to be recognised immediately through other comprehensive income in order
for the net pension asset or liability recognised in the consolidated statement of financial position to
reflect the full value of the plan deficit or surplus. The Group does not expect that amendments to have
material impact on financial statements.
The amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities
(effective for annual periods beginning on or after 1 January 2014 and require retrospective application
in order to have full comparability; not yet adopted by the EU). Information disclosure requirements
related to the impact of offsetting financial assets and financial liabilities on financial position. New
information disclosure requirements determines entities to present gross amounts, for which the
offsetting rights apply, the amounts in accordance with applicable accounting standards and related net
effect. The Group does not expect the amendments to have material impact on financial statements.
The amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities (effective for annual
periods beginning on or after 1 January 2014 and require retrospective application; not yet adopted by
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the EU). Amendments explain requirements in relation to offsetting of financial instruments. The Group
does not expect the amendments to have material impact on financial statements.
IFRIC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine (effective for
annual periods beginning on or after 1 January 2013; not yet adopted by the EU). IFRIC does not apply
to the Group.
Except for the amendments to IFRS 7 Disclosures - Transfers of Financial Assets, the above mentioned changes
have not been endorsed by EU yet.
ECO BALTIA Group management does not anticipate that these amendments will have a significant effect on
amounts reported in the consolidated financial statements or Pro Forma financial information.
The amounts shown in these consolidated financial statements are derived from the Group companies’
accounting records, maintained in accordance with Latvian Accounting Regulations, appropriately reclassified
for recognition, measurement and presentation in accordance with the IFRS as adopted by the EU. The
consolidated financial statements are prepared under the historical cost convention except for the financial
instruments (including derivative instruments) at fair value through profit or loss are measured at fair value.
The functional currency of Eko Baltija SIA and each of its subsidiaries and the reporting currency for these
consolidated financial statements is the Latvian Lat. All amounts shown in these consolidated financial
statements are presented in thousands of Latvian Lats (LVL) unless stated differently. Balances disclosed as at
31 December reflect the position as at the close of business on that date.
(b) Estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS as adopted by the EU requires the
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingencies. The significant areas of estimation used in the preparation of the
accompanying consolidated financial statements relate to revenue recognition, depreciation, allowance for bad
debts and inventories, and impairment evaluation. Although these estimates are based on the management’s best
knowledge of current events and actions, the actual results may ultimately differ from those estimates. The areas
involving a higher degree of judgement or complexity are described below.
(i) Useful lives for property, plant and equipment
Asset useful lives are assessed annually and changed when necessary to reflect current thinking on their
remaining lives in light of technological change, prospective economic utilisation and physical condition of the
assets concerned.
(ii) Inventories
The Group performs estimates for calculation of net realisable values for slow-moving and obsolete inventories
to determine the loss of decrease in the value of inventories. Typically net realisable values are determined for
each position separately, if it is not possible historical experience is used to estimate possible loss.
(iii) Revenue recognition
Principles for revenue allocation are described in policy (n).
(iv) Allowances for doubtful debts
The Group makes allowances for doubtful accounts receivable. Estimates based on historical experience are used
in determining the level of debts that management believes will not be collected.
(v) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
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Provisions are measured in the statement of financial position at the best estimate of the expenditure required to
settle the present obligation at the end of the reporting period date. Provisions are used only for expenditures for
which the provisions were originally recognised and are reversed if an outflow of resources is no longer
probable.
Provisions for restructuring costs include employee termination benefits and are recognised in the period when
the Group takes on legal or logical obligations to pay out such expenses; when the Group has developed a
detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out
the restructuring by starting to implement the plan or announcing its main features to those affected by it. The
measurement of a restructuring provision includes only the direct expenditures arising from the restructuring.
(vi) Goodwill impairment
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value.
(c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements include subsidiaries that are controlled by the Parent Company. Control is
presumed to exist where more than a half of the subsidiary’s voting rights are controlled by the Parent Company
or it otherwise has the power to exercise control over the operating and financial policies so as to obtain benefits
from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and
until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting
year as the Parent Company, using consistent accounting policies.
The purchase method of accounting is used to account for the acquisition of subsidiaries [other than those
acquired from parties under common control]. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured at their fair values at the acquisition date.
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent
consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar
professional services. Transaction costs incurred for issuing equity instruments are deducted from equity;
transaction costs incurred for issuing debt are deducted from its carrying amount and all other transaction costs
associated with the acquisition are expensed.
(ii) Associated companies
Investments in associated companies are accounted for by the equity method and are recognised initially at cost.
These are undertakings in which the Group holds from 20% to 50% of the voting rights and over which the
Group exercises significant influence, but which it does not control.
Equity method of accounting involves recognising in the profit or loss the Group’s share of the associate’s net
profit or loss for the year and eliminating unrealised gains and unrealised losses on transactions between the
Group and the associated undertaking to the extent of the Group’s interest in the associates. Dividends received
from the associate reduce the carrying amount of the investment. The Group’s interest in the associate is carried
in the statement of financial position at an amount that reflects its share of the net assets of the associate
including any goodwill on acquisition. Investments in associated undertakings are reported as non-current assets
in the Group’s consolidated statement of financial position.
(iii) Transactions eliminated on consolidation
The consolidated financial statements comprise the financial statements of the parent company and its
subsidiaries as at 31 December 2011. All intra-group balances, income and expenses and unrealised gains and
losses resulting from intra-group transactions are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment
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to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
(d) Foreign currencies
All transactions denominated in foreign currencies are translated into Lats at the Bank of Latvia rate of exchange
prevailing on the day the transaction took place. Gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are
recognised in the profit or loss. At the end of year foreign currency monetary assets and liabilities are translated
at the Bank of Latvia rate of exchange ruling at 31 December, and all associated exchange differences are dealt
with through the profit or loss.
Exchange rates in the last three years have been:
2011 2010 2009
as at 31 December as at 31 December as at 31 December
USD/LVL 0.544 0.535 0.489
LTL/LVL 0.204 0.203 0.204
GBP/LVL 0.840 0.824 0.783
Within the framework of Latvia's preparation for full-fledged membership in the Economic and Monetary
Union, the Bank of Latvia has fixed the peg rate of the Lat and the euro at EUR 1 = LVL 0.702804 effective
since 1 January 2005.
(e) Intangible assets
(i) Goodwill
Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in
the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill”) is
recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all
liabilities and contingent liabilities assumed and reviews appropriateness of their measurement. Goodwill is not
amortised and instead is tested for impairment annually or more frequently if indicators of impairment exist.
Following initial recognition goodwill is measured at cost less any accumulated impairment losses. An
impairment loss in respect of goodwill is not reversed.
(iii) Other intangible assets
Other intangible assets comprise costs of acquired computer software licences and other licences. Where the
software is an integral part of the related hardware that cannot operate without that specific software, computer
software is treated as property, plant and equipment. Other intangible assets are amortised using the straight-line
method over their useful lives as follows:
Useful lives,
years
Software and licences 3 – 5
Other intangible assets are stated at historical cost less accumulated amortisation and any accumulated
impairment losses. Where an indication of impairment exists, the carrying amount of any intangible asset is
assessed and written down immediately to its recoverable amount, which is the higher of an asset’s net selling
price and value in use, recognising impairment loss as an expense in the profit or loss. Review for impairment is
carried out at each end of the reporting period date. The recoverable amount of an intangible asset not yet
available for use is tested for impairment annually, irrespective of whether there is any indication that it may be
impaired. For the purposes of assessing impairment, assets are grouped at the lowest level, for which there are
separately identifiable cash inflows.
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(f)
Property, plant and equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and any
accumulated impairment losses. Depreciation of property, plant and equipment is calculated using the straightline
method to allocate the depreciable amount of the assets over their estimated useful lives as follows:
Useful lives,
Years
Buildings 10 – 40
Other fixed assets 3 – 7
Land is not depreciated as it is deemed to have an indefinite life.
The useful life and residual value of an asset is reviewed at least at each financial year-end. Effect from a
change in the estimated useful life of an asset is recognised prospectively by including it in the profit or loss in
the current period and future periods.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount, which is the higher of an asset’s fair value less cost to sell and value in
use, recognising impairment loss as an expense in the profit or loss. Review for impairment is carried out at the
end of the reporting period. For the purposes of assessing impairment, assets are grouped at the lowest level, for
which there are separately identifiable cash inflows.
Gains and losses on disposals of assets are determined by comparing proceeds with the carrying amount, and are
included in the results from operating activities.
Leasehold improvements are included within buildings and amortised over the shorter of the useful life of the
improvement and the term of lease.
The cost of the construction of property, plant and equipment is determined by the reference to the actual costs
incurred to the suppliers and subcontractors as at the end of the reporting period. Interest costs on borrowings to
finance the construction of property, plant and equipment and other operating expenses directly attributable to
the construction of property, plant and equipment (costs of own labour, material and other costs) are capitalised
as part of the cost of the asset during the period of time that is required to complete and prepare the property for
its intended use.
(g) Financial assets
Financial assets comprise investments in equity and debt securities (excluding investments in associates), trade
and other receivables, cash and cash equivalents and loans issued and derivative financial assets.
Cash and cash equivalents comprise current accounts with banks, cash on hand, and deposits with banks with
initial maturity up to three month.
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-to
maturity investment, or available-for-sale financial assets, as appropriate:
(i) Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such
upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group
manages such investments and makes purchase and sale decisions based on their fair value in accordance with
the Group’s documented risk management or investment strategy. Upon initial recognition attributable
transaction costs are recognised in the profit or loss as incurred. Financial instruments at fair value through profit
or loss are measured at fair value, and changes therein are recognised in the profit or loss.
(ii) Loans and receivables
Loans and receivables are initially recognised at fair value plus any directly attributable transaction costs, which
for trade receivables is usually the original invoiced amount and subsequently carried at amortised cost using the
effective interest method less allowances made for doubtful receivables. Allowances are made specifically
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where there is objective evidence of a dispute or an inability to pay. The additional allowances are made based
on an analysis of balances by age and previous losses experienced. Loans and receivables are classified in
current assets, except for maturities greater than 12 months after the end of the reporting period date. These are
classified as non-current assets.
An impairment or bad debt loss is recognised in the profit or loss whenever it is probable that the Group will not
collect all amounts due according to the contractual terms of loans or receivables. The impairment loss is
measured as the difference between that asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate. The impairment loss is only reversed if it
can be related objectively to an event after the impairment was recognised and is reversed to the extent the
carrying value of the asset does not exceed its amortised cost at the date of reversal. The amount of the reversal
is included in the profit or loss.
(iii) Held-to-maturity investments
If the Group has the positive intent and ability to hold debt securities to maturity, then they are classified as heldto-maturity.
Held-to-maturity financial assets are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost
using the effective interest method, less any impairment losses.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than
impairment losses, and foreign currency differences on available-for-sale monetary items, are recognised directly
in other comprehensive income. When an investment is derecognised, the cumulative gain or loss is reclassified
from other comprehensive income to profit or loss for the year.
Financial assets are derecognised when the rights to receive cash flows from assets have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
Financial assets are reviewed for impairment at the end of the reporting period. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not
consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active
market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its
fair value below its cost is objective evidence of impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the original
effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by
reference to its fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively. In assessing collective impairment the Group uses historical trends of the
probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment
as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less
than suggested by historical trends.
All impairment losses are recognised in the profit or loss. An impairment loss is reversed if the reversal can be
related objectively to an event occurring after the impairment loss was recognised.
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(h) Financial liabilities
Non – derivative financial liabilities comprise trade and other payables and borrowings.
(i)Trade and other payables
Trade payables are recognised initially at fair value plus any directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method. The carrying value of trade and
other payables approximate their fair values due to their short maturity. A financial liability is removed from the
statement of financial position, when the obligation specified in the contract is discharged or cancelled or
expires.
(ii) Borrowings
All borrowings are initially recognised at the fair value of the consideration received plus directly attributable
transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost using the
effective interest rate method. Gains and losses are recognised in the profit or loss as interest income/expense
when the liabilities are derecognised as well as through the amortisation process. The part of outstanding
amount, which is due after more than 12 months, is included in non-current liabilities.
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are
capitalised as part of the cost of that asset. The amount of borrowing costs eligible for capitalisation is
determined by applying the capitalisation rate to the expenditures on a qualifying asset. Capitalisation rate is the
weighted average interest rate on borrowings that are outstanding during the period.
(i)
Leases
Leases of assets under which the lessee assumes substantially all the benefits and risks of ownership are
classified as finance leases. All other leases are classified as operating leases.
(i) A Group company is a lessor
When assets are leased out under an operating lease, income from operating leases is recognised in the profit or
loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an
operating lease are included in the initial measurement of the finance lease receivable and reduce the amount of
income recognized over the lease term.
If a Group company is a lessor in a finance lease arrangement, it recognizes the asset in the statement of financial
position as a receivable at an amount equal to the present value of the lease payments. Lease income is
recognised over the term of the lease on the basis of constant periodic rate of return.
(ii) A Group company is a lessee
Payments made under operating leases are charged to the profit or loss on a straight-line basis over the period of
the lease.
If a Group company is a lessee in a finance lease arrangement, it recognises in the statement of financial position
the assets as an item of property, plant and equipment and a lease liability measured as the lower of the fair value
of the leased property and the present value of the minimum lease payments. Each lease payment is allocated
between the liability and finance charge so as to achieve a constant interest rate on the balance of liability
outstanding. The interest element of the lease payment is charged to the profit or loss over the lease period. The
item of property, plant and equipment acquired under a finance lease is depreciated over the shorter of the useful
life of the asset and the lease term, unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term.
(j)
Inventories
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the weighted
average cost method for items that are interchangeable. For inventory items that are not interchangeable, specific
costs are attributed to the specific individual items of inventory. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and selling expenses.
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(k) Contingent assets and liabilities
Contingent assets are not recognised in the consolidated financial statements, but disclosed in the notes when an
inflow of economic benefits is probable. Contingent liabilities are not recognised in the financial statements.
They are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is
remote.
(l)
Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are recognised as a current expense in the period when employees render the
services. These include salaries and wages, social security contributions, bonuses, paid holidays and other
benefits.
(m) Income taxes
Income tax expense comprises current and deferred tax. Income tax is recognized in the profit of loss, except to
the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the
tax is also recognized in other comprehensive income or directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying value for financial reporting purposes. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. Deferred income tax is provided on temporary
differences arising on investments in subsidiaries and associated undertakings, except where the timing of the
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
The principal temporary differences arise from depreciation of property, plant and equipment and accrued
expenses.
(n) Revenue recognition
Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods have
passed to the buyer, usually on delivery of goods, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably.
Revenue from services is recognised when services are rendered to customers in accordance with contractual
terms and conditions.
The Group recognises revenue based on the amount invoiced to customer net of value added tax when it has
earned revenue from sale of the goods or services and the net amount retained (that is, the amount billed to
customer less the amount paid to service provider) when it has earned a commission or fee.
Dividends are recognised when the right to receive payment is established.
(o) Dividends
Dividends are recorded in the financial statements of the Group in the period in which they are approved by the
Group’s shareholders and the shareholder`s right to receive payment has been established.
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(p) Events after the Reporting Period
The amounts recognised in financial statements are adjusted to reflect events after the reporting period that
provide additional information about the Group’s position at reporting period (adjusting events). Events after the
reporting period that are not adjusting events are disclosed in the notes to the financial statements when
material.
(q) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or
disclosure purposes based on the following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The carrying value of short-term financial assets and liabilities is assumed to approximate their fair values. Fair
value of the remaining financial instruments is estimated by discounting the expected future cash flows to net
present values using appropriate prevailing market interest rates available at the end of the period. Market
interest rates apply to interest-bearing debt and the book value of these items is regarded as corresponding to
their fair value.
(r) Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
recognises as expenses the related costs for which the grants are intended to compensate. Specifically,
government grants whose primary condition is that the Group should purchase, construct or otherwise acquire
non-current assets are recognised as deferred revenue in the consolidated statement of financial position and
transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
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Admission............................................................
Allotment Date ...................................................
ANNEX I
DEFINED TERMS
Admission of the Shares, including the Offer Shares, to
trading on the WSE and the RSE
On or about 5 July 2012 – the date on which the Offer Shares
will be allocated to Investors
Articles of Association ........................................ The articles of association of the Company
Capital Advisor ................................................... Bank Zachodni WBK S.A.
Commercial Pledges Register ............................ Commercial Pledges Register of the Republic of Latvia
Commercial Register .......................................... Commercial Register of the Republic of Latvia
Company, Issuer ................................................. Joint Stock Company Eco Baltia, a joint stock company,
incorporated under the laws of Latvia, having its registered
office at Darza iela 2, Riga, LV-1007, Latvia, and registered
under the corporate code 40103446506
Condensed Consolidated Interim
Reviewed condensed consolidated interim financial statements
Financial Statements........................................... of Eko Baltija Group for three months ended 31 March 2012
Consolidated Financial Statements ................... Audited consolidated annual report of Eko Baltija Group for
the years ended 31 December 2011, 2010 and 2009
Sales Agent .......................................................... AS SEB Enskilda, with its registered seat at Alberta 13, Riga
LV-1010, Latvia
Current Report ................................................... The official electronic information dissemination service as
defined in Article 56.1 of the Polish Public Offerings Act
Eco Baltia Group ................................................ The Issuer together with its direct and indirect subsidiaries
EEA ...................................................................... European Economic Area
Eko Baltija........................................................... Limited Liability Company Eko Baltija, corporate code:
40003582465, with registered office at Darza iela 2, Riga, LV-
1007, Latvia
Eko Baltija Group............................................... Eko Baltija together with its direct and indirect subsidiaries,
consolidated in the Consolidated Financial Statements and the
Condensed Consolidated Interim Financial Statements
Eko Kurzeme....................................................... Limited Liability Company Eko Kurzeme, corporate code:
42103030389, with registered office at Ezermalas iela 11,
Liepaja, LV-3401, Latvia
Eko Reverss ......................................................... Limited Liability Company Eko Reverss, corporate code:
50003537891, with registered office at Maskavas iela 240-3,
Riga, LV-1063, Latvia
Eko Riga .............................................................. Limited Liability Company Eko Riga, corporate code:
40003667382, with registered office at Maskavas iela 240-3,
Riga, LV-1063, Latvia
Eko SPV............................................................... Limited Liability Company Eko SPV, with registered office at
Darza iela 2, Riga, LV-1007, Latvia, corporate code:
40103435432
A-1

ESPI ..................................................................... The electronic public company reporting system in Poland
EU......................................................................... The European Union
EUR, €, Euro ......................................................
The lawful currency of the European Economic and Monetary
Union
FKTK................................................................
Latvian Financial and Capital Market Commission (Finanšu
un kapitāla tirgus komisija), address Kungu iela 1, Riga, LV-
1050, Latvia
Financial Advisor................................................ BIC Securities SIA
GDP...................................................................... Gross domestic product
General Meeting of Shareholders, General The General Meeting of Shareholders of the Company
Meeting ................................................................
GHE ..................................................................... Goods harmful to the environment
Group ................................................................
Any reference to the Group made in the Prospectus is a
reference to either Eko Baltija Group or Eco Baltia Group
Group Companies............................................... Any direct or indirect subsidiary of the Issuer
IAS........................................................................ International Accounting Standards
IASB..................................................................... International Accounting Standards Board
IFRIC................................................................
IFRS ................................................................
International Financial Reporting Interpretations Committee
International Financial Reporting Standards
IFRS Financial Statements................................ Consolidated Financial Statements, the Condensed
Consolidated Interim Financial Statements and Pro Forma
Financial Information contained in the Prospectus
IMF ...................................................................... The International Monetary Fund
Institutional Investors......................................... Selected corporate entities (legal persons) and non-corporate
entities other than individuals (which term includes firms
managing securities portfolios on a discretionary basis), to
whom the Offering is addressed
Investors .............................................................. The Retail Investors together with the Institutional Investors
Jumis ................................................................ Limited Liability Company Jumis, corporate code:
40103032305, with registered office at Rudolfa Blaumana iela
10, Sigulda, Sigulda District, LV-2150, Latvia
Jurmalas ATU..................................................... Limited Liability Company Jurmalas ATU, corporate code:
40003309841, with registered office at Dzirnavu iela 5A,
Jurmala, LV-2011, Latvia
Key Executives ...................................................
The most important managers of the Group
Kurzemes Ainava ...............................................
Land Register .....................................................
Limited Liability Company Kurzemes Ainava, corporate code:
40003397793, with registered office at Dienvidu iela 2,
Tukums, Tukums District, LV-3101, Latvia
Land Register of the Republic of Latvia, which is publicly
reliable register of immovable properties and the rights
related thereto
A-2

Latvian Commercial Law................................
Commercial Law of the Republic of Latvia, dated 13 April
2000, as amended
Latvian Financial Instrument Market
Law......................................................................
Latvijas Zalais punkts, LZP..............................
Law on Pollution ................................................
Financial Instrument Market Law of the Republic of Latvia,
dated 20 November 2003, as amended
Joint Stock Company Latvijas Zalais punkts, corporate code:
40003475890, with registered office at Baznicas Maskavas
iela 240-3, Riga, LV-1063, Latvia
Law on Pollution of the Republic of Latvia, dated 15 March
2001, as amended
LCC .....................................................................
Latvian Competition Council
LCD .....................................................................
Listing Date.........................................................
Joint Stock Company Latvijas Centralais depozitarijs,
registered in the Latvian Commercial Register with
registration number 40003242879, registered address Valnu
iela 1, Riga, LV-1050, Latvia, which is the sole central
securities depository in the Republic of Latvia, which
administers Latvian central register of publicly issued
securities
On or about 16 July 2012 – first day of trading in Shares on
the WSE and the RSE
Lock Up Period ..................................................
LPUC................................................................
LVL, Latvian lat.................................................
The period of 12 months after Settlement Date
Latvian Public Utilities Commission
The lawful currency of Latvia
Management .......................................................
Members of the Management Board and Key Executives
(unless otherwise stated)
Management Board............................................
The Management Board of the Company
Managers ............................................................
The Financial Advisor, the Capital Advisor, the Offering
Broker and the Sales Agent
MRTL ................................................................ Limited Liability Company MRTL, corporate code:
40103404377, with registered office at Darza iela 2, Riga,
LV-1007, Latvia
Maximum Price..................................................
MBT ................................................................
The maximum price at which the Offer Price will be set
Type of waste processing facility that combines a sorting
facility with a form of biological treatment such as
composting or anaerobic digestion; MBT plants are designed
to process mixed household waste as well as commercial and
industrial wastes
Member State...................................................... A Member State of the European Economic Area
MIFiD ................................................................
Directive 2004/39/EC of the European Parliament and of the
Council of 21 April 2004 on markets in financial instruments
amending Council Directives 85/611/EEC and 93/6/EEC and
Directive 2000/12/EC of the European Parliament and of the
Council and repealing Council Directive 93/22/EEC, as
amended
NBL...................................................................... The National Bank of Latvia
A-3

NBP ...................................................................... The National Bank of Poland
NDS ...................................................................... The National Depository for Securities (Krajowy Depozyt
Papierów Wartościowych S.A.) with its seat at ul. Książęca 4,
00-498 Warsaw, Poland, the sole central securities depository
in Poland, which administers Polish central register of publicly
issued or traded securities
New Shares .......................................................... Up to 6,279,000 bearer shares with a nominal value of LVL
1.00 each to be issued by the Issuer
Nordic Plast ......................................................... Limited Liability Company Nordic Plast, corporate code:
40003495810, with registered office at Rupnicu iela 4, Olaine,
Olaine District, LV-2114, Latvia
Nordea Bank........................................................ Nordea Bank Finland Plc, a company incorporated under the
laws of Finland, having its registered office at
Aleksanterinkatu 36, Helsinki, Finland, and registered under
business identity code 1680235-8, represented within the
Republic of Latvia by Nordea Bank Finland Plc Latvia branch,
having its registered office at Krisjana Valdemara iela 62,
Riga, Latvia, and registered with the Commercial Register of
the Republic of Latvia under number 40003486767.
NRT...................................................................... Latvian Natural Resource Tax pursuant to Natural Resources
Tax Law of the Republic of Latvia, dated 15 December 2005,
as amended
Offer Price ..........................................................
The offer price per Offer Share determined prior to
commencement of the subscription period in the retail and the
institutional tranches, but no later than on or about 29 June
2012 (09.00 a.m. CET)
Offer Shares........................................................
The New Shares and the Sale Shares offered jointly
Offering...............................................................
Offering Broker or Global Coordinator ..........
Packaging Law ...................................................
The offering of up to 12,558,000 Offer Shares, based on this
Prospectus
Dom Maklerski BZ WBK S.A. with its registered seat at pl.
Wolności 15, Poznań, Poland
Latvian Packaging Law, dated 20 December 2001, as
amended
PAP......................................................................
PE ........................................................................
PE pellets.............................................................
PET......................................................................
The Polish Press Agency
Polyethylene
Polyethylene pellets
Polyethylene terephthalate
PET Baltija ......................................................... Joint Stock Company PET Baltija, corporate code:
42103029708, with registered office at Aviacijas iela 18,
Jelgava, LV-3004, Latvia
PET flakes...........................................................
Small, pure PET fragments, being the final product of
recycling of PET raw material
PFSA ................................................................
The Polish Financial Supervision Authority (Komisja
Nadzoru Finansowego), the capital market regulatory
authority of the Republic of Poland
A-4

Placement Agreement ........................................
Agreement between, inter alia, the Issuer, the Selling
Shareholder, the Principal Shareholders and the Managers to
be entered prior to the Allotment Date
PLN, Polish zloty................................................
Polish Institutional Investors ............................
The lawful currency of the Republic of Poland
Institutional Investors participating in the Offering in Poland
Polish Public Offerings Act ...............................
Principal Shareholder........................................
The Polish Act of 29 July 2005, on Public Offerings and
Conditions governing the Admission of Financial Instruments
to Trading on Organized Markets, and on Listed Companies,
as amended
Mrs. Undine Bude, Mr. Maris Simanovics and Mr. Viesturs
Tamuzs
PRO.....................................................................
Producers’ responsibility organizations
Pro Forma Financial Information ....................
Pro forma consolidated financial information of Eco Baltia
for the year ended 31 December 2011
Prospectus............................................................ This Prospectus constituting a prospectus in the meaning of
the Prospectus Directive prepared or the purpose of the
Offering and the Admission
Prospectus Directive ..........................................
Regulation 809/2004, Prospectus
Regulation...........................................................
Regulation S........................................................
Retail Investors...................................................
RSE......................................................................
RSE Corporate Governance Code....................
Sale Shares..........................................................
Selling Shareholder............................................
Directive 2003/71/EC of the European Parliament and of the
Council of the European Union of 4 November 2003, on the
prospectus to be published when securities are offered to the
public or admitted to trading and amending Directive
2001/34/EC and any relevant implementing measures, as
amended
Commission Regulation (EC) no 809/2004 of 29 April 2004
implementing Directive 2003/71/EC of the European
Parliament and of the Council as regards information
contained in prospectuses as well as the format, incorporation
by reference and publication of such prospectuses and
dissemination of advertisements, as amended
Regulation S promulgated under the US Securities Act
governing offers and sales made outside the United States
without registration under the
Individuals and corporate entities (legal persons) and noncorporate
entities other than individuals, not being the
Institutional Investors, who intend to purchase Offer Shares
in the Offering
The Riga Stock Exchange (NASDAQ OMX Riga), a regulated
market in Latvia
The Corporate Governance Principles and Recommendations
on their Implementation issued by NASDQ OMX Riga
Up to 6,279,000 bearer shares offered by the Selling
Shareholder
Limited partnership Otrais Eko Fonds, corporate code:
40003837498, with registered office at Darza iela 2, Riga,
LV-1007, Latvia
Settlement Date .................................................. On or about 12 July 2012 – the date of the settlement of the
A-5

Offering
SFRS................................................................
Shares................................................................
SLI .......................................................................
Latvian State Fire and Rescue Service
Any shares of the Issuer with a nominal value of 1.00 LVL
each issued and outstanding at any time
Latvian State Labour Inspection
Subscription Periods ..........................................
The periods in which Investors may place orders to subscribe
for or purchase the Offer Shares
Takeover Directive.............................................. Directive 2004/25/EC of the European Parliament and of the
Council of 21 April 2004, on takeover bids, as amended
Trading in Financial Instruments Act..............
Tukuma Ainava..................................................
The Polish Act of 29 July 2005, on Trading in Financial
Instruments, as amended
Limited Liability Company Tukuma Ainava, corporate code:
40003429641, with registered office at Dienvidu iela 2,
Tukums, Tukums District, LV-3101, Latvia; until 19 April
2012 – 100% shareholder of Kurzemes Ainava; on 19 April
2012 reorganised and incorporated into Kurzemes Ainava
US Securities Act................................................. The United States Securities Act of 1933, as amended
USD, US$, US Dollars ........................................
US dollar, the lawful currency of the United States of
America
Vaania ................................................................ Limited Liability Company Vaania, corporate code:
40003630534, with registered office at Rudolfa Blaumana
iela 10, Sigulda, Sigulda District, LV-2150, Latvia
Waste Management Law ................................ Waste Management Law of the Republic of Latvia, dated 28
October 2010, as amended
WEEE ................................................................
Waste Electrical and Electronic Equipment
WSE.....................................................................
The WSE (Giełda Papierów Wartościowych w Warszawie
S.A.), a regulated market in Poland
WSE Corporate Governance Code ................... Code of Best Practices for WSE Listed Companies
WTO ................................................................
The World Trade Organization
A-6

THE ISSUER
Joint Stock Company Eco Baltia
Darza iela 2
Riga LV-1007
Latvia
THE SELLING SHAREHOLDER
Limited partnership Otrais Eko Fonds
Darza iela 2
Riga LV-1007
Latvia
THE FINANCIAL ADVISOR
BIC Securities SIA
16 Z.A. Meierovica Blvd
Riga LV-1050
Latvia
THE CAPITAL ADVISOR
Bank Zachodni WBK S.A.
Rynek 9/11
50-950 Wrocław
Poland
SALES AGENT
AS SEB Enskilda
Alberta 13
Riga LV1010
Latvia
THE GLOBAL
COORDINATOR AND THE
OFFERING BROKER
Dom Maklerski BZ WBK S.A.
Plac Wolności 15
60-967 Poznań
Poland
As to Polish law:
Baker & McKenzie
Krzyżowski i Wspólnicy
Rondo ONZ 1
00-124 Warsaw
Poland
LEGAL ADVISERS TO THE ISSUER
As to Latvian law:
Tark Grunte Sutkiene
Brivibas 43 (2nd floor)
Riga LV-1010
Latvia
AUDITOR
Deloitte Audits Latvia
Gredu iela 4a
Riga LV-1019
Latvia