Annual Report (ESEF) • Apr 29, 2022
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Linas AB Company code 147689083 S. Kerbedzio 23, Panevezys March 21, 2022 APPROVAL OF RESPONSIBLE PERSONS Following Art. 22 of the Law on Securities of the Republic of Lithuania and the Regulations for Drawing-up and Submission of the Periodic and the Additional Information issued by the Board of Lithuanian Bank, we, Vilita Skersienė, Director of Linas AB and Egidijus Mikeliūnas, Head of finance dept. hereby confirm that to our best knowledge condensed consolidated financial statements of year 2021 of Linas AB Group of companies were drawn following the International Financial Reporting Standards (IFRS) adopted for use in the European Union and present the fair and accurate status of the consolidated assets, liabilities, financial condition and profit or loss and money flows of the Linas AB Group of companies. Added: AB Linas consolidated and the Company's financial statements, annual report and independent auditor's report for the year ended December 31, 2021. Director Linas AB Vilita Skersienė Head of finance dept. Linas AB Egidi jus Mikeliūnas LINAS, AB CONSOLIDATED AND COMPANY‘S FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR YEAR ENDED DECEMBER 31, 2021 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 2 TABLE OF CONTENTS STATEMENTS OF FINANCIAL POSITION ................................................................................... 3 STATEMENTS OF FINANCIAL POSITION (CONTINUED) ........................................................ 4 STATEMENTS OF COMPREHENSIVE INCOME .......................................................................... 5 THE GROUP‘s STATEMENTS OF CHANGES IN EQUITY .......................................................... 6 THE COMPANY‘S STATEMENTS OF CHANGES IN EQUITY ................................................... 7 CASH FLOW STATEMENTS ........................................................................................................... 8 FINANCIALS STATEMENTS EXPLANATORY NOTES .............................................................. 9 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 3 STATEMENTS OF FINANCIAL POSITION The Group The Company December 31 December 31 Notes 2021 2020 2021 2020 ASSETS Non-current assets Intangible assets 4 89 77 89 77 Tangible assets 5 1,164 1,255 1,156 1,246 Investment property 6 374 374 374 374 Right-of-Use assets 7 356 366 299 253 Investments in subsidiaries - - 3 3 Loans granted from associates 24 - 1,388 - 1,388 Loans granted - 11 - 11 Deferred income tax asset 17 17 - 13 - Total non-current assets 2,000 3,471 1,934 3,352 Current assets Inventories 8 5,105 4,204 5,103 4,231 Tangible assets held for sale - 60 - 60 Prepayments 9 805 268 804 261 Amounts receivable within one year: Trade accounts receivable 10 1,154 1,041 1,154 1,041 Short-term loans receivable from related companies 24 1,424 - 1,424 - Other accounts receivable 11 147 117 139 84 Cash and cash equivalents 12 2,136 2,873 2,084 2,867 Total current assets 10,771 8,563 10,708 8,544 TOTAL ASSETS 12,771 12,034 12,642 11,896 (continued on next page) The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 4 STATEMENTS OF FINANCIAL POSITION (CONTINUED) The Group The Company Notes December 31 December 31 2021 2020 2021 2020 EQUITY AND LIABILITIES Capital and reserves Share capital 1 6,971 6,971 6,971 6,971 Legal reserve and other reserves 13 357 318 356 317 Own shares (-) (45) (184) (45) (184) Retained earnings 2,607 1,578 2,531 1,491 Total Equity 9,890 8,683 9,813 8,595 Liabilities Non-current liabilities Loans received 15 1,080 1,330 1,080 1,330 Other non-current liabilities - 50 - - Obligations under finance lease 7 269 277 269 222 Long term provision for defined employee benefits 32 - 14 - Total non-current liabilities 1,381 1,657 1,363 1,552 Current liabilities Loans received 15 - 133 - 133 Obligations under finance lease current year part 7 98 97 40 38 Trade accounts payable 450 1,042 298 926 Trade accounts payable for related companies 24 443 17 795 411 Contracts liabilities 24 66 24 66 Employment obligations 198 129 53 51 Accrued expenses 11 10 40 7 Income tax payable 17 153 48 154 47 Other current liabilities 123 152 62 70 Total current liabilities 1,500 1,694 1,466 1,749 TOTAL EQUITY AND LIABILITIE 12,771 12,034 12,642 11,896 The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 5 STATEMENTS OF COMPREHENSIVE INCOME The Group The Company December 31 December 31 Notes 2021 2020 2021 2020 Revenue of sales 16,746 14,007 16,746 14,004 Cost of sales (13,297) (11,709) (13,735) (12,151) GROSS PROFIT 3,449 2,298 3,011 1,853 Operating and selling expenses 20 (2,399) (1,899) (2,022) (1,626) Other operating income 21 1,083 931 1,219 1,342 Other operating expenses 21 (890) (705) (957) (698) PROFIT (LOSS) FROM OPERATIONS 1,243 625 1,251 871 Financial income 22 56 38 56 38 Financial expenses 22 (55) (53) (51 (50) PROFIT (LOSS) BEFORE TAX 1,244 610 1,256 859 Income tax benefit (expense) 17 (194) (98) (195) (77) NET PROFIT 1,050 512 1,061 782 Earnings (loss) per share, Eur* 0,044 0,021 0,044 0,033 Net profit 1,050 512 1,061 782 Other comprehensive income 18 - 18 - Total comprehensive income 1,068 512 1,079 782 * Basic earnings per share is calculated by dividing net profit (loss) for the period by the weighted average number of ordinary shares in issue during the period. The Group has no potential convertible ordinary shares, so diluted earnings per share equals basic earnings per share. The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 6 THE GROUP‘S STATEMENTS OF CHANGES IN EQUITY The Group Notes Share capital Own shares (-) Legal and other reserves Reserve for own shares acquisiti on Retained Earnings (loss) Total Balance as of 31 December 2019 6,971 - 215 264 910 8,360 Impact of IFRS 16 adoption - - - - (5) (5) Balance as of 31 December 2019 (corrected) 6,971 - 215 264 905 8,355 Net profit - - - - 512 512 Dividends - - - - (370) (370) Own shares - (184) - - - (184) Transfers to reserves - - (161) - 161 - Balance as of 31 December 2020 6,971 (184) 54 264 1,581 8,686 Impact of IFRS 16 adoption - - - - (3) (3) Balance as of 31 December 2020 (corrected) 6,971 (184) 54 264 1,578 8,683 Net profit - - - - 1,050 1,050 Unrecognized gain (loss) in the statement of comprehensive income - - - - 18 18 Total comprehensive income - - - - 1,068 1,068 Own shares - 139 - - - 139 Transfers to reserves - - 39 - (39) - Balance as of 31 December 2021 6,971 (45) 93 264 2,607 9,890 The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 7 THE COMPANY‘S STATEMENTS OF CHANGES IN EQUITY The Company Notes Shar e capit al Own shares (-) Legal and other reserves Reserve for own shares acquisit ion Retaine d Earning s (loss) Total Balance as of 31 December 2019 6,971 - 45 264 721 8,001 Impact of IFRS 16 adoption - - - - (5) (5) Balance as of 31 December 2019 (corrected) 6,971 - 45 264 716 7,996 Net profit - - - - 782 782 Dividends - - - - - - Own shares - (184) - - - (184) Transfers to reserves - - 8 - (8) 0 Balance as of 31 December 2020 6,971 (184) 53 264 1,493 8,597 Impact of IFRS 16 adoption - - - - (2) (2) Balance as of 31 December 2020 (corrected) 6,971 (184) 53 264 1,491 8,595 Net profit - - - - 1,061 1,061 Unrecognized gain (loss) in the statement of comprehensive income - - - - 18 18 Total comprehensive income - - - - 1,079 1,079 Own shares - 139 - - - 139 Transfers to reserves - - 39 - (39) - Balance as of 31 December 2021 6,971 (45) 92 264 2,531 9,813 The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 8 CASH FLOW STATEMENTS The Group The Company December 31 December 31 Notes 2021 2020 2021 2020 Cash flows to operating activities Net profit 1,050 512 1,061 782 Recovery of non-monetary costs (income): Depreciation and amortization 4,5,7 226 254 163 180 Interest expense 22 52 38 52 38 Interest income 22 (40) (53) (40) (50) Gain (loss) on disposal and write offs of non-current assets 5 (34) 5 (23) Impairment of inventories 8 84 - 84 - Impairment (reversal) of accounts receivable (1) - (1) - Change in accrued charges 118 1 55 1 Income tax expense for the period 17 212 98 208 77 Decrease (increase) in deferred tax asset 17 (18) - (13) - Changes in working capital: (Increase) decrease in inventories (925) 1259 (896) 1200 (Increase) decrease in trade receivables (112) 31 (112) 31 (Increase) decrease in other receivables (30) 118 (55) 106 (Increase) decrease in prepayments (537) (29) (543) (27) (Decrease) increase in trade payables (166) (873) (244) (825) Increase (decrease) in contractual obligations (42) (11) (42) (11) (Decrease) increase income tax payables (89) (39) (72) (30) Increase (decrease) in other payables and current liabilities (81) 139 (14) 27 Net cash flows from operating activities (294) 1,411 (404) 1,476 Cash flows from (to) investing activities Acquisition of intangible assets (except investment) 4,5,7 (61) (47) (56) (42) Transfer of intangible assets (except investment) - 280 - 155 Net cash flows (to) investing activities (61) 233 (56) 113 Cash flows from (to) financing activities Loans received 15 - 1330 - 1330 Loans granted 15 (383) (177) (383) (177) Paid interest (56) (23) (56) (23) Financial lease payments (100) (98) (41) (39) Own shares transfers 157 (184) 157 (184) Net cash flows from (to) financial activities (382) 848 (323) 907 Net increase (decrease) in cash and cash equivalent (737) 2,492 (783) 2,496 Cash and cash equivalents at the beginning of the year 2,873 381 2,867 371 Cash and cash equivalents at the end of the year 2,136 2,873 2,084 2,867 The accompanying explanatory notes are an integral part of these consolidated and Company‘s financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 9 FINANCIALS STATEMENTS EXPLANATORY NOTES 1. General information A public company AB Linas (hereinafter – the Company) was registered on 8 March 1993, registration No. 003429, company code – 147689083, data accumulated and stored at the Register of Legal Entities. The company is a limited liability company. Address: S. Kerbedžio St. 23, Panevėžys, LT-35114. Tel. (370 - 45) 506100, e-mail address: [email protected]; internet website: www.linas.lt . The Company started its operations in 1957. As of 31 December 2021, AB Linas Company Group (hereinafter – the Group) consisted of the parent company AB Linas, and its subsidiary UAB Lino apdaila. UAB Lino apdaila was registered in the Register of Legal Entities on 23 May 2008, registration No. 114552, company code 301733421. The registered office of the Subsidiary is located at S. Kerbedžio St. 23, Panevėžys. AB Linas owns 100 % of the shares of the Subsidiary. Shares of AB Linas are listed in the Baltic Secondary Trading List of AB NASDAQ OMX Vilnius. December 31, 2020 and 2021 the shareholders of the Company were: December 31, 2021 December 31, 2020 Number of shares (thousand) Share of share capital (percent) Number of shares (thousand) Share of share capital (percent) Asociacija EEEE 5,565 23.15 5,565 23.15 UAB "Verslo dizainas" 4,808 20 - - UAB "Vasana" 4,755 19.78 9,563 39.78 UAB 'Rivena" 2,423 10.08 2,423 10.08 Other shareholders 6,488 26.99 6,488 26.99 24,039 100 24,039 100 The Company's authorized capital was worth EUR 6,971,307.10; the capital was divided into 24,038,990 registered ordinary shares, each being of EUR 0.29 in value. The Company does not have any issued and yet unpaid shares. There were no changes in the authorized capital of the Company during the reporting period. At December 31, 2021 the company had acquired 450 thousand. pcs. shares of the Company (1,836 thousand at 31 December 2020), which makes up 1.87% of the ownership share. Neither the Company, nor the Subsidiary has any branches or representative offices. At December 31, 2021 the number of employees in the Group was 120 (113 as of 31 December 2020). The principal activity of a public company Linas is trade in linen products and provision of related services; another area of activity of the Company is management of financial assets (shares and granted loans), supply of heat energy, rent of property, accounting and administration services. The activities carried out by UAB Lino apdaila – provision of textile production services, i.e., sewing of textile articles. The Group of companies provides services from the preparation of yarn for weaving to the delivery of the final product to the buyer. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 10 The uniqueness of the group of companies is that the produced linen products are natural, ecological and long-lasting. Individual orders are requested to meet the needs of customers who want exclusivity. The main incomes of Group of companies of 12 months of year 2020 were received from textile items sales activities and the services of textile items production. During the 12 months of year 2020 the Group ordered to produce or to treat technologically: linen and tow yarns – 59 tons (12 months of year 2019 – 68 tons); raw fabrics – 623 thousand meters (12 months of year 2019 – 761 thousand meters); ready-made fabrics – 1,939 thousand meters (12 months of year 2019 – 1,931 thousand meters), 23 % of all produced fabrics were used for sewn items during 12 months of year 2020 (12 months of year 2019 – 20.4 %). During 12 months of year 2020 the Group produced 937 thousand pcs sewn items (during 12 months of year 2019 – 823 thousand pcs), using 449 thousand meters of ready-made fabrics (during 12 months of year 2019 – 445 thousand meters). The volume of exports during 12 months of 2020 was 74.83 % of the total product sales. Linas AB group of companies sold linen textile goods and services for 16,746 thousand Eur during the 12 months of 2021. Comparing to the 12 months of 2020 the volume of sales increased by 2,739 thousand Eur or about 16,36 %. During twelve months of 2021 the Group received 1,244 thousand Eur profit before taxation, the result of the same period of 2020 was 610 thousand Eur profit. During twelve month of year 2021 the Group’s operating results compared to 2020 during the same period was due to increased volumes of sales. Due to the threat of Covid-19 spread, the Group's business continuity and preventive measures have been reviewed and implemented, and the impact of related factors on the Group's operations and results is regularly assessed. The Company's management assessed the potential disruption of cash flows, funding sources, the impact on demand for goods and services, the risk of contamination of critical personnel and the risk of delays in ongoing projects by analyzing all information about Covid-19's future risks available at the time of these condensed interim financial statements. there are no significant circumstances that may cast doubt on the Group's going concern. The Company's management approved these financial statements for 2022. March 21 The Company's shareholders have the statutory right to approve or not to approve these financial statements and to require management to prepare new financial statements. 2. Accounting principles 2.1. Basis of preparation of the financial statements The Group manages accounting and prepares financial statements in accordance with International Financial Reporting Standards (IFRS) adopted in the European Union (EU), The Company's management approved these financial statements for 2022. March 21. The Company's shareholders have the statutory right to approve or not to approve these financial statements and to require management to prepare new financial statements. Adoption of new and/or changed interpretations of IFRS and International Financial Reporting Interpretations Committee (IFRIC). The Group and the Company have applied these IFRSs, their amendments and IFRIC for the first time in the year ended 31 December 2021: Amendments to IFRS 16 Leases: COVID-19 Related Rent Concessions beyond 30 June 2021 (Amendments) (issued on 31 March 2021, effective from 1 April 2021) Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 11 These amendments extend the scope of the 2020 amendments by increasing the period of eligibility to apply the practical expedient from 30 June 2021 to 30 June 2022. On 28 May 2020, the Board issued COVID-19-Related Rent Concessions, which amended IFRS 16 Leases. The 2020 amendments permit lessees, as a practical expedient, not to assess whether rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications. Among other conditions, the 2020 amendments permit a lessee to apply the practical expedient only to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2021. If a rent concession reduces lease payments both before and after 30 June 2021, IFRS 16 does not permit the practical expedient to be applied to that concession. The amendments are effective in European Union for annual reporting periods beginning on or after 1 April 2021. The management of the Group ant the Company has assessed that these amendments have no significant impact on these financial statements as no significant concessions/discounts have been received during the reporting period and are not expected to be received in subsequent periods. Interest Rate Benchmark Reform – Phase 2 – IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Amendments) (issued on 27 August 2020, effective from 1 January 2021). These amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include the following practical expedients: • A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest • Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued • Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component. The amendments are effective in European Union for annual periods beginning on or after 1 January 2021. The management of the Group ant the Company has assessed that these amendments have no significant impact on these financial statements. Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (published on 27 August 2020, effective from 1 January 2021 and must be applied retrospectively). Amendments to IFRS 9, IAS 39 and IFRS 7 will conclude phase two focused on issues that could affect financial reporting when an existing interest rate benchmark is replaced with a risk-free interest rate (an RFR). These amendments will not have an impact on the Group and the Company financial statements. Standards and amendments that have been approved but are not yet effective and have not been applied in advance New standards, amendments and interpretations that are not mandatory for reporting period beginning on 1 January 2021 and have not been early adopted when preparing these financial statements are presented below: IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements 2018-2020 (Amendments) (All issued 14 May 2020, effective from 1 January 2022) The IASB has issued narrow-scope amendments to the IFRS Standards as follows: • IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 12 • IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss of SPLOCI. • IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is onerous. • Annual Improvements 2018-2020 make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases. The amendments are effective in European Union for annual reporting periods beginning on or after 1 January 2022 with earlier application permitted. The management of the Group and the Company is currently assessing the impact of these amendments on the financial statements. IFRS 17: Insurance Contracts (published 18 May 2017, effective from 1 January 2023, but not before approval by the EU) The amendments to IFRS 17 are effective, retrospectively, for annual periods beginning on or after 1 January 2023, with earlier application permitted. The amendments aim at helping companies implement the Standard. In particular, the amendments are designed to reduce costs by simplifying some requirements in the Standard, make financial performance easier to explain and ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time. The amendments to IFRS 4 change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023. The management has assessed that these amendments will not have any impact on the Group and the Company’s financial statements. Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on 7 May 2021, effective from 1 January 2023, but not before approval by the EU). The amendments introduce a new definition of accounting estimates, defined as monetary amounts in financial statements that are subject to measurement uncertainty. Also, the amendments clarify what changes in accounting estimates are and how these differ from changes in accounting policies and corrections of errors. The amendments become effective for annual reporting periods beginning on or after January 1, 2023 with earlier application permitted and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. The Amendments have not yet been endorsed by the EU. The Group and the Company has not yet evaluated the impact of the implementation of these amendments. Amendments to IAS 1: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current (issued on 23 January 2020 and 15 July 2020 respectively, effective from 1 January 2023, but not before approval by the EU). the amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by the company issuing own equity instruments. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 13 The Group and the Company is currently assessing the impact of this amendment on their financial statements. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021, effective from 1 January 2023, but not before approval by the EU). The Amendments are effective for annual periods beginning on or after January 1, 2023 with earlier application permitted. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Amendments have not yet been endorsed by the EU. The Group and the Company has not yet evaluated the impact of the implementation of these amendments 2.2. Correction of Errors Standards effective from January 1, 2019 application. The Group and the Company have applied IFRS 16 “Leases” from January 1, 2019, retrospectively, due to a calculation error in adjusting the comparative information (Notes 2.17, 7) in the financial statements for the year ended 31 December 2020. The following information is provided about the specific items of the Group's and the Company's revised statements of financial position and comprehensive income. STATEMENTS OF FINANCIALS POSITION The Group Until clarification Clarification After clarification Notes December 31, 2020 December 31, 2020 December 31, 2020 Right-of-Use assets 7 - 366 366 Retained earnings 1,586 (8) 1,578 Obligations under finance lease - 277 277 Obligations under finance lease current year part - 97 97 STATEMENTS OF COMPREHENSIVE INCOME The Group Until clarification Clarification After clarification Notes December 31, 2020 December 31, 2020 December 31, 2020 Operating and selling expenses (1,907) 8 (1,899) Financial expenses (42) (11) (53) Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 14 STATEMENTS OF FINANCIALS POSITION The Company Until clarification Clarification After clarification Notes December 31, 2020 December 31, 2020 December 31, 2020 Right-of-Use assets - 253 253 Retained earnings 1,498 (7) 1,491 Obligations under finance lease - 222 222 Obligations under finance lease current year part - 38 38 STATEMENTS OF COMPREHENSIVE INCOME The Company Until clarification Clarification After clarification Notes December 31, 2020 December 31, 2020 December 31, 2020 Operating and selling expenses (1,632) 6 (1626) Financial expenses (42) (8) (50) 2.3. Functional and financial statements currency The amounts in these financial statements are presented in euros. Rounded to thousands unless otherwise specified. The Group and the Company maintain their accounting records and in these financial statements all amounts are accounted for and presented in the national currency of the Republic of Lithuania, the euro, which is also the functional currency of the Group and the Company. 2.4. Business continuity In preparing the consolidated financial statements of the Group and the Company, management has assessed business continuity assumptions. Management believes that no events or conditions, including those related to the current COVID- 19 pandemic and the war in Ukraine, cast doubt on the Group's ability to continue as a going concern. This conclusion is based on our knowledge of the Group and the Company, its expected economic prospects and the risks and uncertainties surrounding them. In addition, this conclusion is based on a review of expected changes in liquidity and capital, existing credit facilities, including contractual and expected terms and conditions. It was therefore concluded that the application of the going concern basis as a key assumption in the financial statements is justified. 2.5. Principles of consolidation The consolidated financial statements include the Company and its subsidiaries. The financial statements of the Group companies have been prepared for the same date and using the same accounting policies. A subsidiary is an entity that is controlled, directly or indirectly, by the Company. Control of a subsidiary arises when the Company has, or is entitled to receive, variable returns arising from those relationships and may affect the amount of variable returns due to its power to govern the investee. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 15 Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. All intercompany transactions, balances and unrealized gains and losses on transactions between Group companies have been eliminated. In the separate financial statements of the parent, investments in subsidiaries are accounted for using the cost method. The value of an investment is reduced through the recognition of an impairment loss. Such impairment is assessed and applied on a case-by-case basis. Business combinations are accounted for using the acquisition method. The cost of an acquisition is determined by adding together the fair value of the consideration transferred at the acquisition date and the amount of any minority interest in the acquiree, if any. The contingent portion of the consideration that the buyer will have to pay is recognized at fair value at the acquisition date. Subsequent measurement of contingent consideration that is treated as an asset or liability at fair value will be recognized in accordance with IFRS 9: through profit or loss. If the contingent consideration is classified as equity, it is not remeasured and its subsequent payment is recognized in equity. For each business acquisition, the acquirer measures the minority interest in the acquiree either at fair value or in proportion to the acquiree's identifiable net assets. Acquisition costs incurred are written off to include administrative expenses. Acquisition costs are capitalized in the separate financial statements of the Group's components. If the business combination is achieved in stages, the acquirer 's interest in the acquiree is measured at fair value through profit or loss at the acquisition date. Goodwill is recognized at cost and is the amount by which the total consideration transferred, including the amount of the minority interest recognized, exceeds the net amount of the assets acquired and liabilities measured. If this consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in the statement of comprehensive income. After initial recognition, goodwill is carried at cost less any accumulated impairment losses. For the purpose of measuring impairment, goodwill acquired in a business combination from the acquisition date is allocated to those Group cash- generating units that are expected to benefit from the merger, regardless of whether other assets or liabilities of the acquiree are allocated to those units. When goodwill forms part of a revenue-generating unit and part of the operations of that unit are sold, goodwill relating to the operation sold is included in the carrying amount of the disposal operation in determining the gain or loss on disposal of the operation. In this case, the goodwill sold is measured by reference to the relative value of the business sold to the remainder of the revenue-generating unit. 2.6. Investments in associates An associate is an entity over which the Group has the power to exercise significant influence. The Group accounts for its interest in an associate using the equity method. The financial statements of associates are prepared for the same reporting year as the Group, using the same accounting policies. Any differences in accounting policies are adjusted. Investments in associates are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Unrealized gains and losses arising from transactions between the Group and its associates are eliminated to the extent of the associate's interest in the associate. The Group does not currently have any associates. Investments in associates are accounted for in the Company's separate financial statements using the cost method, less impairment. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 16 2.7. Intangible assets Intangible assets acquired separately are initially recognized at cost. The cost of an intangible asset acquired in a business combination is measured at fair value at the acquisition date. Intangible assets are recognized when it is probable that future economic benefits associated with the asset will flow to the Group and the Company and the value of the asset can be measured reliably. The useful lives of intangible assets may be finite or indefinite. After initial recognition, intangible assets that have a finite useful life are carried at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over their estimated useful lives. Gains or losses on derecognition of intangible assets are recognized as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized. An intangible asset that has a finite useful life is assessed for impairment whenever events or changes in circumstances indicate that the asset may be impaired. The useful lives, residual values and amortization method are reviewed annually to ensure that they are consistent with the expected pattern of use of the intangible assets other than goodwill. Intangible assets that have an indefinite useful life are not amortized, but are reviewed annually for impairment, either individually or at the cash-generating unit level. Each year there is an evaluation of an indefinite useful life with the objective of determining whether the asset can be used indefinitely. If not, such intangible assets are reclassified prospectively from indefinite time of use. Software The cost of acquiring new software is capitalized and recognized as an intangible asset if it is not part of the hardware. The software is depreciated over a period of 3 to 4 years. Expenses incurred in restoring or maintaining the expected economic benefits that the Group expects to derive from the operation of existing software systems are recognized as an expense in the period in which they are incurred. 2.8. Non-current tangible assets Non-current tangible assets are stated at cost less accumulated depreciation and impairment losses. The initial cost of non-current tangible assets comprises its purchase price, including non-refundable purchase taxes and all directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure, such as repairs and maintenance, incurred after an item of non-current tangible assets is ready for its intended use is usually recognized in the statement of comprehensive income in the period in which it is incurred. Depreciation is calculated on a straight-line basis over the following time of use: • Property – 15 years; • Equipment – 5 years; • Vehicles - 4–10 years; • Other non-current tangible assets - 3-8 years. The time of use, residual values and depreciation method are reviewed periodically to ensure that they are consistent with the expected pattern of use of the property, plant and equipment. When events or changes in circumstances indicate that the carrying amount of an item of property, plant and equipment may not be recoverable, it is reviewed for impairment. Non-current tangible assets are derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 17 Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the year in which the asset is derecognized. Construction in progress is stated at cost. It comprises the value of construction, plant and equipment and other directly attributable costs. Depreciation on construction in progress is not calculated until construction is complete and the asset is ready for its intended use. 2.9. Investment property Land leased to third parties is considered an investment property. The Group's and the Company's investment property consists of land that is held for capital appreciation. Investment property is stated at cost less accumulated depreciation and any accumulated impairment losses. The initial cost of an investment property comprises its purchase price, including non-refundable purchase taxes and all directly attributable costs of bringing the asset to its working condition and location for its intended use. Costs, such as repairs and maintenance, incurred after an investment property is ready for its intended use are usually recognized in the statement of comprehensive income in the period in which they are incurred. Depreciation of assets other than land is calculated using the straight-line method to write off such assets to their residual values. Investment property is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the year in which the asset is derecognized. Transfers to and from investment property are made when, and only when, there is a significant change in the purpose of the property. 2.10. Financial assets (excluding derivatives classified as hedging instruments) A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Initial recognition and measurement of financial assets Financial assets are initially recognized at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss. The classification of a financial asset at initial recognition depends on the contractual cash flow characteristics of the financial asset and the Group's business model governing the management of the financial asset. Except for trade receivables that do not have a significant financing component, the Group measures financial assets at fair value on initial recognition, plus transaction costs where the financial assets are not carried at fair value through profit or loss. Trade receivables that do not include a significant financing component are measured at the transaction price in accordance with IFRS 15. For a financial asset to be classified and measured at amortized cost or fair value through other comprehensive income, the cash flows arising from the financial asset need only be the principal and interest payments (IORPs) on the principal outstanding. This assessment is called the SPPI test and is performed for each financial instrument. The Group's financial asset management model specifies how the Group manages its financial assets to generate cash flows. The business model determines whether the cash flows will be generated by collecting the contractual cash flows, selling the financial asset, or both. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 18 Ordinary purchases or sales of financial assets are recognized on the trade date, i.e., y. the date on which the Group commits to purchase or sell the financial asset. Subsequent measurement of financial assets After initial recognition The Group measures financial assets: • Amortized cost (debt instruments); • At fair value through other comprehensive income, when the gain or loss accumulated on derecognition is transferred to profit or loss (debt instruments). 2021 The Group did not have such financial instruments. • At fair value through other comprehensive income, when the gain or loss accumulated on derecognition is not transferred to profit or loss (equity instruments). 2021 The group did not have such facilities. • At fair value through profit or loss. Financial assets (debt financial instruments) measured at amortized cost. The Group measures financial assets at amortized cost if both of the following conditions are met: • financial assets are held in accordance with the business model, the purpose of which is to hold financial assets in order to collect contractual cash flows; and • The contractual terms of a financial asset may give rise to cash flows at specified dates that are only interest payments on the principal and the principal amount outstanding. Financial assets measured at amortized cost are subsequently measured using the effective interest method, less any impairment losses. Gains or losses are recognized in the statement of comprehensive income when the assets are derecognized, replaced or impaired. The Group's financial assets at amortized cost include trade receivables, other current and non-current receivables and loans. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets that were initially recognized at fair value through profit or loss or financial assets that are required to be measured at fair value. A financial asset is classified as held for trading if it is acquired for the purpose of selling or repurchasing in the near future. Derivatives, including segregated embedded derivatives, are also classified as held for trading. unless they are classified as effective hedging instruments. Financial assets related to cash flows other than principal and interest payments are classified and measured at fair value through profit or loss, regardless of business model. Notwithstanding the above criteria for designating debt instruments at amortized cost or fair value through other comprehensive income, debt instruments may be designated at fair value through profit or loss on initial recognition if this eliminates or significantly reduces accounting inconsistencies. . Financial assets at fair value through profit or loss are carried at fair value through profit or loss. This category also includes derivatives and leased debt securities that the Group has not elected to classify as at fair value through other comprehensive income. Dividends on leased debt securities are recognized as other income in the statement of comprehensive income when the right is established. Impairment of financial assets Other disclosures about impairment of financial assets are also made in the following notes: • Disclosures about significant estimates and assumptions about use are disclosed in Note 2.29 • Trade receivables, including assets arising from contracts with customers, are disclosed in Note 10. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 19 The Group recognizes expected credit losses (ECLs) on all debt financial instruments that are not measured at fair value through profit or loss. The ECL is based on the difference between the contractual cash flows receivable and the cash flows the Group expects to receive, discounted at the approximate initial effective interest rate. ECLs are recognized in two stages. For credit exposures for which the credit risk has not increased significantly since initial recognition, the ECL shall be calculated for credit losses arising from default events that may occur over the next 12 months (12 - month ECL). For those credit exposures for which the credit risk has been significantly increased since initial recognition, an impairment loss is recognized for the amount of credit loss that is expected over the remaining life of the credit exposure, irrespective of the default period (ECL over the life of the exposure). The Group uses a simplified method to calculate ECL for trade receivables and assets arising from contracts with customers. Therefore, the Group does not monitor for changes in credit risk, but recognizes an impairment loss at each reporting date based on the ECL over the period of validity. The Group has constructed a matrix of expected loss rates based on historical credit loss analysis and adjusted to reflect future factors specific to borrowers and the economic environment. Trade receivables were grouped by recovery date after eliminating the largest individual receivables, which are analyzed separately. The Group considers that a debtor has defaulted on its obligations in respect of a financial asset if the contractual payments are more than 90 days overdue or if there are indications that the debtor or group of debtors is in serious financial difficulty, default (principal or interest). the likelihood that they will enter bankruptcy or reorganization proceedings and, where observable data indicate that future cash flows are expected to decline, such as changes in arrears or changes in economic conditions that correlate with default. Financial assets are written off when there is no reasonable expectation of recovering the contractual cash flows. Expected credit losses for 12 months are assessed and accounted for in the assessment of impairment. In subsequent periods, in the absence of a significant increase in credit risk related to the borrower, the Group adjusts the 12-month expected credit loss balance based on the outstanding loan amount at the measurement date. If it is determined that the borrower's financial condition has significantly deteriorated compared to the situation at the time the loan was granted, the Company accounts for all expected credit losses over the life of the loan. Loans that are subject to expected credit losses over their estimated useful lives are classified as impaired financial assets. According to the management's assessment, ECL 2021 31 December are immaterial to these financial statements. The maximum exposure to credit risk at the reporting date is the carrying amount of each category of financial asset as disclosed in Note 15. 2.11. Derecognition of financial assets and liabilities Financial property A financial asset (where appropriate, part of a financial asset or part of a group of similar financial assets) is derecognized when: • the right to receive cash flows from the financial asset expires; • The Group retains the right to receive cash flows but assumes the obligation to pay the full amount to a third party under a transfer agreement within a short period of time; and • The Group transfers its right to receive cash flows from the asset and / or a) transfers substantially all the risks and rewards incidental to ownership of the financial asset; or b) neither transfers nor retains the risks and rewards of ownership of the financial asset but transfers control of that asset. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 20 When the Group transfers rights to the cash flows of an asset but does not transfer or retain the risks and rewards of ownership of the asset and does not transfer control of the asset, the asset is recognized to the extent that the Group is still involved. A link to an asset that has been transferred as security is carried at the lower of the carrying amount of the asset and the maximum amount of consideration that the Group could be required to pay. Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or canceled or expires. When one existing financial liability is replaced by another liability to the same lender but on different terms, or when the terms of an existing liability change substantially, the change is treated as a termination of the original liability and the creation of a new liability. The difference between the respective carrying amounts is recognized in the statement of comprehensive income. 2.12. Inventory Inventories are stated at the lower of cost and net realizable value, less any allowance for obsolete and slow-moving inventories. Net realizable value is the selling price in the ordinary course of business, less the costs of completion and distribution. The cost of inventories is calculated using the FIFO method. Cost of finished goods and work in progress consists of an appropriate allocation of variable and fixed overheads based on normal operating practices. Inventories that are no longer available for sale are written off. 2.13. Cash and cash equivalents Cash consists of cash on hand and in bank accounts. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash. The term of such investments does not exceed three months and the risk of changes in value is very small. In the statement of cash flows, cash and cash equivalents comprise cash on hand and in bank current accounts and deposits with original maturities of three months or less. Restricted cash held as a deposit for trading on a futures exchange is accounted for as other current financial assets. 2.14. Non-current assets held for sale Non-current assets held for sale are stated at the lower of carrying amount and fair value less costs to sell. Non-current assets are classified as held for sale if it is highly probable that the carrying amount of the asset will be recovered principally through a sale transaction rather than through continuing use. The condition is met when the sale of the asset is highly probable and the asset is in a condition for immediate sale. Management must be willing to sell and the sale must take place within one year of the reclassification date. Property, plant and equipment and intangible assets classified as held for sale are not depreciated / amortized. 2.15. Financial liabilities Initial recognition and measurement of financial liabilities Financial liabilities are initially recognized at fair value through profit or loss, borrowings and payables. All financial liabilities are initially recognized at fair value and, in the case of borrowings and payables, less directly attributable transaction costs. The Group's and the Company's financial liabilities include trade and other payables, borrowings, including bank overdrafts and finance lease liabilities. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 21 Subsequent evaluation The measurement of financial liabilities depends on their classification as described below: Financial liabilities are recognized at fair value through profit or loss. Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities that were initially recognized at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred in the near term for repurchase purposes. Gains or losses arising from financial liabilities held for trading are recognized in the statement of comprehensive income. 2.16. Loans and other receivables received Subsequent to initial recognition, loans and other payables are carried at amortized cost using the effective interest method (EIR). Gains and losses are recognized in the statement of comprehensive income when the liabilities are derecognized or amortized. Amortized cost is calculated by taking into account the discount or premium on acquisition, as well as taxes or expenses that are an integral part of the EIO. Depreciation of an EIO is included in finance costs in the statement of comprehensive income. 2.17. Lease assets and lease liabilities The Group determines whether the arrangement is a lease or includes a lease, depending on the nature of the transaction at the date of the arrangement, when performance of the arrangement depends on the use of the specific asset or the arrangement gives the right to use the asset. Adoption of IFRS 16 from January 1, 2019. IFRS 16 replaces IAS 17 Leases, IFRIC 4 Testing whether an Agreement is a Lease, and SIC-15 Operating Leases. Promotion ”and SIC-27 Evaluating the substance of transactions in legal leases. The standard establishes principles for recognizing, measuring, presenting and disclosing leases and requires lessees to recognize most leases in the balance sheet. The Group and the Company apply the same recognition and measurement method to all leases, except for short-term leases and leases of low value assets. The Group and the Company recognize lease obligations to pay lease payments and assets under usable rights, which means the right to use non-current assets. Leased assets Initial recognition of rights - of - use assets Initially, the Group and the Company measure an asset held for use at cost, which comprises: the amount equal to the lease liability at initial recognition, the lease payments paid at or before the inception of the lease (less any lease discounts received), and all initial direct costs incurred by the Group; The Group's and the Company's estimated costs to be incurred in dismantling, removing or relocating an item of property, plant and equipment as required by the terms of a lease, unless such costs are incurred in producing the inventories. The Group and the Company undertake to cover these costs on the inception date of the lease or because they have used the leased asset for a period of time. The Group and the Company recognize these costs as part of the cost of rights-of-use assets, with the Group and the Company committing to cover these costs. Subsequent measurement of rights - of - use assets Subsequent measurement of rights - of - use assets Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 22 Subsequent to initial recognition, the Group and the Company measure the assets held for use at cost. In measuring assets held for use using the cost method, the Group and the Company measure assets subject to usage at cost less depreciation and any accumulated impairment losses, adjusted for the revalued amount of the lease liability. Depreciation of assets under a right of use in accordance with IAS 16 Property, Plant and Equipment. If the lease agreement provides that the right to the leased asset is transferred to the Group and the Company at the end of the lease term, or the cost of the asset reflects the purchase option, the Group and the Company calculate depreciation from the inception of the lease to its useful life. Otherwise, the lessee depreciates the leased asset from the inception of the lease and ends before the end of the useful life of the leased asset or the lease: • Land from 65 to 79 years; • Premises from 2 to 10 years; • Machinery and equipment from 2 to 4 years; • Vehicles from 2 years. Lease obligations Initial measurement of the lease liability On the commencement date, the Group and the Company measure lease liabilities at the present value of the lease payments outstanding at that date. Rents are discounted using a rental rate that is readily applicable. If it is not possible to determine the exact rental interest rate, the Group and the Company apply the accrued credit interest rate. Leases included in the measurement of a lease liability at inception include the following payments for the right to use the leased asset during the lease term that were not paid at inception: fixed payments less any lease incentives receivable; variable rents that depend on an index or rate are initially calculated using the index or rate on the start date; the amounts that the lessee would have to pay under the residual value guarantees; the exercise price of the call option, if the Group and the Company are reasonably certain that it will exercise the option; payment of penalties for termination of the lease, if the lease term reflects the possibility for the Group and the Company to terminate the lease. Variable rents that depend on an index or rate are, for example, payments related to a consumer price index, payments related to a reference interest rate (such as LIBOR), or payments that vary according to changes in market rental rates. Subsequent measurement of the lease liability After the commencement date, the lessee measures the lease liability by increasing it carrying amount to reflect interest on the lease liability; reducing the carrying amount to reflect rents; and reassessing the carrying amount to reflect any revaluations or changes in leases or to reflect adjusted substantially fixed rents. Interest on a lease for each lease term is the amount that gives rise to a constant periodic rate of interest on the remaining balance of the lease. The periodic interest rate is the discount rate or, if applicable, the adjusted discount rate. After the commencement date, the Group and the Company recognize a gain or loss, unless the expense is included in the carrying amount of another asset in accordance with other applicable standards: interest on lease liabilities; and variable lease payments that are not included in the measurement of the lease liability in the period in which the event or condition that gave rise to the lease occurs. Reassessment of the lease liability After the commencement date, the lease liability is restated to reflect changes in rents. The amount of the revaluation of the lease liability is recognized by the Group and the Company as an adjustment to the asset under management. However, if the carrying amount of the asset held for use is reduced to zero and the measurement of the lease liability decreases further, the lessee shall recognize the remaining revaluation surplus in profit or loss. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 23 Discount rate revised The Group and the Company reassesses the lease liability by discounting the adjusted lease tax at the adjusted discount rate if the lease term changes. The Group and the Company determine the adjusted lease payments based on the adjusted lease term or the change in the possibility to acquire the leased asset, assessed taking into account the events and circumstances. The Group and the Company determine the adjusted lease payments to reflect the amounts payable under the change in the call option. If, after a change in the lease term or after estimating a call option, the Group and the Company determine the adjusted discount rate as the interest rate specified in the lease for the lease term, if that rate can be readily determined, or the lessee’s additional credit rate at the revaluation date the interest rates stipulated in the lease agreement. Unchanged discount rate The Group and the Company reassesses the lease liability by discounting the adjusted lease payments if: • Changes in the amounts expected to be paid under the residual value guarantee. The Group and the Company determine the adjusted lease payments to reflect the change in the amounts expected to be paid under the residual value guarantee. • Changes in future rents resulting from changes in the index or rate used to determine those payments, including, for example, changes in market rents following changes in market rents. The Group and the Company reassesses the lease liability to reflect those adjusted rents only when the cash flows change (i.e., when the lease adjustment takes effect). The Group and the Company determine the adjusted rents for the remaining lease term based on the revised contractual payments. The Group and the Company apply an unchanged discount rate unless the lease has changed due to a change in variable interest rates. In this case, the lessee applies a revised discount rate that reflects changes in interest rates. Lease changes The leaseholder shall account for the change in lease as a separate lease if: • The amendment increases the amount of the lease by adding the right to use one or more items of the leased asset. • The rent increases by an amount that is proportional to the price of the individually increased volume, and any appropriate adjustments to that separate price, depending on the circumstances of the particular contract. If the lease modification is not accounted for as a separate lease, the Group and the Company: • distributes the consideration in the amended contract; • determines the period of the modified lease; • reassesses the lease liability by discounting the adjusted rents using the adjusted discount rate. For a change in lease that is not accounted for as a separate lease, the Group and the Company account for the reassessment of the lease liability: • Decreasing the carrying amount of the leased asset to reflect the partial or total termination of the lease due to changes in the lease that reduce the scope of the lease. The Group and the Company recognize in profit or loss any gain or loss arising on the partial or total termination of the lease. • Adjusting the usufruct accordingly for all other changes in the lease. In the statement of financial position of the Group and the Company, lease liabilities are presented separately from other liabilities. The cost of a lease is presented separately from the depreciation expense of the asset managed. The related expense for the lease liability is a component of finance costs that is included in the statement of comprehensive income. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 24 Short-term and low-value property leasing The Group and the Company apply the exemption from the recognition of short-term leases to its short-term leases of machinery and equipment (i.e., leases with a maximum lease term of 12 months from the date of commencement) that do not have a call option. It also applies the lease of the low-value asset exemption to the lease of office equipment that is considered to be of low value. Rents for short-term leases and leases of low-value assets are recognized as an expense on a straight-line basis over the lease term. Adoption of IFRS 16 From the date of application of IFRS 16, which is January 1, 2019 the Group and the Company adopted the standard retrospectively due to a calculation error in adjusting the comparative information in the financial statements as at 31 December 2020. The Group and the Company have decided to apply a transitional practical arrangement, according to which in January 1, 2019 it did not reassess whether the contract is a lease or includes a lease. Instead, the Group and the Company have applied the standard only to contracts that were previously recognized as leases and to which IAS 17 and IFRIC 4 were applied at the date of initial application. The Group has applied the exceptions in IFRS 16 to the following: • Use an individual discount rate for leases of the same type, with the same asset characteristics, • Exemptions for short-term leases, for leases that expire within 12 months from the date of initial application, • Exclude estimates of direct costs associated with the leased asset at the date of initial application, • The option to extend the lease is used if the contracts provide for it. The Group has leases of land, premises, various equipment, vehicles and other equipment. Prior to the adoption of IFRS 16, the Group and the Company classified each of their leases (lessees) as finance or operating leases at the inception date. Leases previously classified as finance leases The Group and the Company have not changed the initial carrying amounts of recognized assets and liabilities previously classified as finance leases at the date of the initial lease (i.e., the assets and liabilities held for use are equal to the leased assets and liabilities recognized in accordance with IAS 17). The requirements of IFRS 16 have been applied to this lease since January 1, 2019. Operating leases - The Group as lessor Assets leased out under operating leases are recognized in the statement of financial position as property, plant and equipment and investment property. These assets are depreciated over their useful lives using the same depreciation rates as other property, plant and equipment used in the Group's operations. Rental income is recognized on a straight-line basis over the term of the lease. Finance leases - The Group as a lessee Leases of assets under which the risks and rewards of ownership are transferred to the Group are classified as finance leases. The Group accounts for finance leases as assets and liabilities in the statement of financial position at the lower of the fair value of the leased asset at the inception of the lease and the present value of the minimum lease payments. The discount rate used in calculating the present value of the minimum lease payments is the interest rate for the lease payments, where it is practicable to do so, otherwise the Group's alternative borrowing rate is used. Direct initial costs are included in the value of the asset. Finance lease payments are apportioned between the interest expense and the reduction of the outstanding liability. Interest is determined so that its percentage of the outstanding balance of the finance lease liability at each time of payment remains constant over the lease term. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 25 Depreciation is charged on assets acquired under finance leases. The depreciation procedure for assets acquired under finance leases is similar to that for own assets. Such assets may not be depreciated over the lease term unless, under the lease, ownership is transferred to the Group at the end of the lease term. Leases of assets under which all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognized as an expense in the statement of comprehensive income on a straight-line basis over the term of the lease. 2.18. The share capital Ordinary shares are carried at their nominal value. The amount received for the shares sold in excess of their nominal value is accounted for as share premium. Incremental costs directly attributable to the issue of new shares are recognized in equity net of share premium. 2.19. Provisions A provision is recognized when, and only when, the Group has a present obligation as a result of a past event (legal or constructive) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of the provision is the present value of the expenditures expected to be required to settle the obligation. When discounting is used, the increase in the provision that reflects the passage of time is recognized as an interest expense. Provisions for onerous contracts Provisions for onerous contracts are recognized when the Group has a present obligation (legal or constructive) to purchase goods from third parties in the future at a price above the market price or to sell the goods to a third party at a price below the market date. The difference between the contract value and its market price at the reporting date is recognized in the statement of comprehensive income at the cost of goods sold. Such accounting is applied to the Group's contracts when they are not derivative financial instruments. 2.20. Long-term employee benefits According to the requirements of the Labor Code of the Republic of Lithuania, each employee leaving the Group or the Company upon reaching retirement age is entitled to a one-time 2-month period salary amount benefit. Actuarial gains or losses are recognized in the statement of other comprehensive income. The cost of past service is recognized as an expense on a straight-line basis over the average period until the benefit becomes vested. Any gain or loss arising on the curtailment and / or settlement of a liability is recognized immediately in the statement of comprehensive income. The employee benefit obligation is calculated on the basis of actuarial valuations using the projected unit credit method. The liability is recognized in the statement of financial position and reflects the present value of those benefits at the statement of financial position date. The present value of employee benefit obligations is determined by discounting the estimated future cash flows at the interest rate for government securities denominated in the same currency as the benefits and with a payout period that is similar to the expected payout period. Actuarial gains and losses are recognized immediately in other comprehensive income. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 26 2.21. Grants and subsidies Grants and subsidies (hereinafter - grants) are recognized when there is sufficient assurance that the grant will be received and all conditions attached to the grant will be met. Grants received in cash for the purchase, construction or other acquisition of fixed assets are treated as grants related to the asset. The amount of the grant related to the asset is recognized as deferred income in the financial statements and used to the extent that the depreciation is charged to the amount of the related expense in the statement of comprehensive income. Grants received to offset current or prior period expenses or unearned income, as well as all other grants other than grants related to assets, are treated as grants related to income. Grants related to revenue are recognized in profit or loss to the extent that it is probable that future economic benefits associated with the item will flow to the entity and the revenue will be recovered. 2.22. Income tax Current and prior period income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, including adjustments for prior years. Income tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. The calculation of income tax is based on the annual profit after deferred income tax. The income tax of the Group and the Company is calculated in accordance with the requirements of the tax laws of the Republic of Lithuania. The corporate income tax rate in 2021 is applied to the companies of the Republic of Lithuania. 31 December and 2020 31 December - 15%. According to the Law on Corporate Income Tax of the Republic of Lithuania since 2014. January 1 the amount of deductible tax losses carried forward may not exceed 70% of the amount of taxable profit for the year. Tax losses may be incurred indefinitely, except for losses arising from the transfer of securities and / or derivatives. Such a transfer is terminated if the Group and the Company cease to carry on the activities that gave rise to the loss, unless the Group and the Company cease to operate for reasons beyond their control. Losses from the transfer of securities and / or derivatives may be incurred for 5 years and covered only from the profits of transactions of the same type. Deferred income tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the temporary differences reverse. Deferred tax assets are recognized in the statement of financial position to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. If part of the deferred tax asset is not expected to be realized, that part of the deferred tax asset is not recognized in the financial statements. Deferred income tax assets and liabilities are offset to the extent that it is probable that future taxable profits will be available against which the deferred tax assets and liabilities can be utilized. 2.23. Earnings and diluted earnings per share Basic earnings per share are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary registered shares in issue. Where the number of shares changes but does not affect the change in economic resources, the weighted average number of ordinary registered shares issued is adjusted in proportion to the Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 27 change in the number of shares as if it had occurred at the beginning of the previous reporting period. As there are no dilutive instruments, there is no difference between basic and diluted earnings per share (Note 18). 2.24. Revenue recognition Revenue from contracts with customers Revenue from contracts with customers is recognized only when control of the goods or services is transferred to the customer in an amount that reflects the consideration that the Group and the Company expects to receive in exchange for those goods or services. The preparation of financial statements in conformity with IFRS requires the application of certain assumptions and estimates by the Company's and the Group's management that have a significant effect on the amounts presented in the financial statements. In the opinion of management, the most significant estimates and related uncertainties in the calculation and recognition of revenue from contracts with customers relate to: • The expected profit margin of the product (percentage) is used; • The application of historical management and production accounting data to calculate the value factors associated with each stage of production. • In addition to those discussed above, management also considered the effects of other matters on revenue recognition, such as the existence of significant financing components, non-cash settlements, discounts applied, and the like. The Company's and the Group's contracts with customers do not contain these listed contractual terms or, in the opinion of management, are immaterial in the context of the application of IFRS 15. Contract assets - accrued income Contract assets are a contingent right to consideration. The right is conditional because the Company or the Group must first perform another contractual performance obligation in order to be entitled to payment from the customer. If the Company / Group has an unconditional right to receive consideration from a customer, the contract assets are accounted for as a receivable and disclosed separately from other contract assets. If the Company and the Group deliver goods or provide services to a customer before or before the due date, the asset is accounted for in the amount equal to the contingent consideration earned because the order is not yet complete. Assets arising from contracts with customers - accrued income - are recognized as a trade receivable at the end of the production cycle (usually within 60 days) after all contractual obligations have been fulfilled and invoiced. Contractual obligations - prepayments received Contractual obligations include prepayments received from customers for future services or goods sold. Trade receivables Trade receivables represent the right of the Company and the Group to earn a consideration that is unconditional (i.e., the consideration must be paid after the agreed date without exception). Trade receivables are usually set at 30-60 days. deferral of payment. Interest income Interest income is recognized on a time proportion basis using the effective interest method. When a receivable is impaired, the Company and the Group reduce it carrying amount to its recoverable amount, being the estimated future cash flows discounted at the asset's original effective interest rate, and continue to add the discount as interest income. Interest income on impaired loans is recognized using the original effective interest rate. Dividend income Dividend income is recognized in the period in which the right to receive payment is established. Rental income Payments made under operating leases (net of any discounts granted to the lessee) are recognized as income on a straight- line basis over the term of the lease. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 28 2.25. Recognition of costs Expenses are recognized on an accrual basis. The cost is usually estimated by the amount of money paid or payable, excluding VAT. In cases where a long settlement period is expected and interest is not excluded, the cost is estimated by discounting the settlement amount at market interest rate. 2.26. Impairment of non-financial assets The Group assesses at each reporting date whether there is any indication that a non-financial asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required (for example, prestige), the Group estimates the asset's recoverable amount. The recoverable amount of an asset is the higher of an assets or cash-generating unit's fair value less costs to sell and its value in use. The recoverable amount of an asset is determined separately for each asset, unless the asset does not generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of „the time value“ of money and the risks specific to the asset. An appropriate valuation model is used to define the fair value less costs to sell. These calculations are performed using independent valuations, valuation factors or other possible fair value indicators. Impairment losses are recognized in the statement of comprehensive income in those expense items that best reflect the nature of the impaired asset. Non-financial assets other than goodwill are measured at each reporting date. An assessment is made as to whether there is any indication that the previously recognized impairment loss may no longer exist or may have decreased. If any such indication exists, the Group estimates the asset's recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. In this case, the carrying amount of the asset is increased to its recoverable amount. This increase in value shall not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized for the asset in prior periods. Such a reversal is recognized in the statement of comprehensive income. 2.27. Segments A business segment is a separate component of the Group that is engaged in providing an individual product or service or group of related products or services whose performance is reviewed regularly by the Group's management to determine the resources available to the segment and for which separate financial information is available. For management purposes, the Group's operations are organized into the following operating segments according to products and services: fabrics, sewn products, yarns and manufacturing services. The Group's and the Company's revenue by business and geographical region is disclosed in Note 3. Revenue and expenses include revenue and expenses that can be allocated to that segment directly or through established allocation criteria. Revenue is allocated to individual countries based on the location of customers. Costs are not allocated to individual operating segments and are presented as total expenses. The assets and liabilities of the Group and the Company cannot reasonably be allocated to separate segments. All assets and liabilities of the Group and the Company are not allocated by business or geographical segment. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 29 2.28. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the settlement date. The determination of fair value is based on the assumption that the sale of an asset or the transfer of a liability takes place either: • In the primary market for the asset or liability, or • in the absence of a primary market, for assets or liabilities in the most favorable market. The main or most favorable market must be available to the Group. The fair value of an asset or liability is determined using those assumptions that market participants would use to determine the price of the asset or liability, assuming that market participants have the best economic interests at stake. The fair value of a non-financial asset is determined by reference to the ability of the market participant to generate the economic benefits from the most efficient or best use of the asset or by selling it to another market participant using the asset most efficiently and best. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to determine fair value, using as much relevant observable data as possible and as little unobservable data as possible. All assets and liabilities whose fair value is determined or disclosed in the financial statements are classified according to the fair value hierarchy described below, which is based on the significant lowest level data used to determine fair value: • Level 1 - quoted (unadjusted) prices in active markets for the same assets or liabilities; • Level 2 - valuation methodologies that directly or indirectly monitor the lowest level data that is significant in determining fair value; • Level 3 - valuation methodologies that do not observe the lowest level data that is significant in determining fair value. For the revaluation of assets and liabilities in the financial statements, the Group reassesses whether the transfers have occurred between levels of the hierarchy (based on the lowest level that is significant in determining fair value in general) at the end of each reporting period. Evaluations are performed by the Group's management on each reporting date. In order to disclose fair value, the Group and the Company have determined the classes of assets and liabilities according to the nature, characteristics and risks of the assets and liabilities and the level of the fair value hierarchy described above. 2.29. Use of estimates and assumptions in preparing financial statements The preparation of financial statements in conformity with International Financial Reporting Standards requires management to make certain assumptions and estimates that affect the reported amounts of assets, liabilities, income and expenses and the disclosure of uncertainties. Significant accounting decisions The significant accounting judgments used in the preparation of these financial statements are set out below. Assessing whether a principal or agent acting on its own account The Group has identified itself as a person acting on its own account in the supply of goods or services because: • controls the goods and services until they are delivered to the customer; • is responsible for the overall performance of the contract and assumes its risk; • can set the selling price. The significant accounting estimates used in the preparation of these financial statements relate to depreciation (Notes 2.8, 2.9, 5 and 6) and the determination of the net value of inventories (Notes 2.12 and 8). Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 30 Possible future events may change the assumptions used in the estimates. The effects of changes in valuation will be included in financial statements as soon as they are determined. The key assumptions concerning the future and other significant sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. December 31, 2021 and 2020 The Group assesses at least annually whether there is any indication that an intangible asset may be impaired. If any such indication exists, the Group performs an impairment test. The recoverable amount of a cash-generating asset is determined by reference to its value in use model, which is based on a discounted cash flow model. Cash flows are estimated using the forecast for the next 5 years and do not include restructuring costs for which the Group is not committed or significant future investments that would significantly increase the value of the cash-generating unit's assets. 2021 31 December there were no significant indications that the carrying amount of property, plant and equipment was in the balance sheet the value could exceed the recoverable amount, except for assets that are already impaired. Impairment of land At least annually, the Group assesses whether there is any indication that land carried as property, plant and equipment may be impaired. If any such indication exists, the Group performs an impairment test. The recoverable amount of land is determined as the fair value less costs to sell based on comparable market prices for similar land provided by independent appraisers. December 31, 2021 there were no possible changes in the assumptions that would cause the carrying amount of the available land to exceed its recoverable amount, except for assets that have already been written down. Impairment of the Company's investments and loans granted December 31, 2021 and 2020 the Company has investments in subsidiaries. The Company assesses, at least annually, whether there is any indication that an investment in a subsidiary or associate may be impaired. December 31, 2021 and 2020 as at the date of the investment, there was no expected change in the assumptions that would cause the carrying amount of these investments to exceed their recoverable amount. Valuation of inventories The Group's management has made assumptions for measuring inventories below their fair value. The key factors included in the measurement of the fair value of management's inventories are: inventory obsolescence, market prices, and post- balance sheet selling prices. Future events may change these assumptions. Changes in these effects are recorded in the financial statements as they occur. 2.30. Uncertainties Contingent liabilities are not recognized in the financial statements, except for contingent liabilities related to business combinations. They are disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when it is probable that future economic benefits or service potential will flow to the entity. 2.31. Subsequent events Subsequent events that provide additional information about the Group's claims at the reporting date (adjusting events) are reflected in the financial statements. Subsequent events that are not adjusting events are disclosed in the notes when material. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 31 2.32. Offsetting and rounding In preparing the financial statements, assets and liabilities and income and expenses are not offset unless a separate IFRS requires or permits such offsetting. Due to rounding of individual amounts to thousands of euros, the figures in the tables may not add up, such rounding errors are insignificant in these financial statements. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 32 3. Segment information For management purposes, the segments of the textile manufacturing business are divided into products and services, fabrics, sewing products, yarns and manufacturing services. They are measured at profit or loss. The following is information on the textile business segments of the Group and the Company: The Group Fabrics Sewn items Yarns Manufacturing services Total December 31, 2021 Income (third parties) 11,389 4,966 32 359 16,746 Cost (third parties) (9,098) (3,963) (41) (195) (13,297) Gross profit (loss) 2,291 1,003 (9) 164 3,449 Operating and selling expenses - - - - (2,399) Segment operating profit (loss) 2,291 1,003 (9) 164 1,050 The Group Fabrics Sewn items Yarns Manufacturing services Total December 31, 2020 Income (third parties) 9,625 4,079 42 261 14,007 Cost (third parties) (8,083) (3,340) (138) (148) (11,709) Gross profit (loss) 1,542 739 (96) 113 2,298 Operating and selling expenses - - - - (1,907) Segment operating profit (loss) 1,542 739 (96) 113 391 Inter-segment transactions are eliminated on consolidation (Continued on next page) Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 33 The following is information on the textile business segments: The Company Fabrics Sewn items Yarns Manufacturing services Total December 31, 2021 Income (third parties) 11,389 4,966 32 359 16,746 Cost (third parties) (9,098) (4,401) (41) (195) (13,735) Gross profit (loss) 2,291 565 (9) 164 3,011 Operating and selling expenses - - - - (2,022) Segment operating profit (loss) 2,291 565 (9) 164 989 The Company Fabrics Sewn items Yarns Manufacturing services Total December 31, 2020 Income (third parties) 9,625 4,079 42 258 14,004 Cost (third parties) (8,083) (3,785) (138) (145) (12,151) Gross profit (loss) 1,542 294 (96) 113 1,853 Operating and selling expenses - - - - (1,626) Segment operating profit (loss) 1,542 294 (96) 113 227 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 34 The following is information on the textile business geographical segments of the Group: The Group Lithuania Europe countries Scandinavian countries USA Other countries Total December 31, 2021 Income 4,215 7,196 3,018 630 1,687 16,746 Cost (3,251) (5,939) (2,180) (487) (1,440) (13,297) Gross profit (loss) 964 1,257 838 143 247 3,449 Operating and selling expenses - - - - - (2,399) Segment operating profit (loss) 964 1,257 838 143 247 1,050 The Group Lithuania Europe countries Scandinavian countries USA Other countries Total December 31, 2020 Income 3,803 6,165 1,970 402 1,667 14,007 Cost (3,192) (5,251) (1,543) (311) (1,412) (11,709) Gross profit (loss) 611 914 427 91 255 2,298 Operating and selling expenses - - - - - (1,907) Segment operating profit (loss) 611 914 427 91 255 391 (Continued on next page) Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 35 Segment information (continued) The following is information on the textile business geographical segments of the Company: The Company Lithuania Europe countries Scandinavian countries USA Other countries Total December 31, 2021 Income 4,215 7,196 3,018 630 1,687 16,746 Cost (3,387) (6,118) (2,246) (502) (1,482) (13,735) Gross profit (loss) 828 1,078 772 128 205 3,011 Operating and selling expenses - - - - - (2,022) Segment operating profit (loss) 828 1,078 772 128 205 989 The Company Lithuania Europe countries Scandinavian countries USA Other countries Total December 31, 2020 Income 3,800 6,165 1,970 402 1,667 14,004 Cost (3,335) (5,435) (1,597) (322) (1,462) (12,151) Gross profit (loss) 465 730 373 80 205 1,853 Operating and selling expenses - - - - - (1,626) Segment operating profit (loss) 465 730 373 80 205 227 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 36 4. Intangible assets The Ground and the Company Software Other intangible assets Prepayments for unfinished projects Total Costs: Balance as at 31 December 2019 105 - - 105 Acquisitions 37 - - 37 Balance as at 31 December 2020 142 - - 142 Acquisitions 10 3 - 13 Overwriting from one article to another (87) 18 69 - Balance as at 31 December 2021 65 21 69 155 Accumulated amortization: - - - Balance as at 31 December 2019 58 - - 58 Amortization 6 - 6 Balance as at 31 December 2020 64 - - 64 Amortization 1 1 2 Balance as at 31 December 2021 65 1 - 66 Net book value as at 31 December 2021 0 20 69 89 Net book value as at 31 December 2020 77 77 - 77 Net book value as at 31 December 2019 46 46 - 46 The Group has no internally generated intangible assets. Amortization of intangible assets is included in operating expenses in the statement of comprehensive income (Note 20). December 31, 2021 the acquisition cost of fully amortized, but still used intangible assets of the Group and the Company amounted to 65 thousand Eur (December 31, 2020 - EUR 65 thousand). The company December 31, 2021 reclassified 69 thousand from the acquisition of software to unfinished projects, as the planned acquisition of software project is not yet complete. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 37 5. Non-current tangible assets The Group Land Buildings and structures Machinery and equipment Motor Vehicles Other property, plant and equipment Construction in progress and prepayments Total Balance as at 31 December 2019 Acquisitions - 1,586 1,324 247 61 - 3,218 Assets sold and written off - - - 6 4 1 11 Balance as at 31 December 2020 - - (587) (50) - - (637) Acquisitions - 1,586 737 203 65 1 2,592 Assets sold and written off - - 4 - 12 32 48 Reclassifications to other tangible assets - - (2) - (13) - (15) Reclassifications - - - (6) - - (6) Balance as at 31 December 2021 - - 20 (20) 1 (1) - Accumulated depreciation: - 1,586 759 177 65 32 2,619 Balance as at 31 December 2019 Depreciation - 311 1,057 160 45 - 1,573 Assets sold and written off - 107 26 17 6 - 156 Balance as at 31 December 2020 - - (354) (38) - - (392) Depreciation - 418 729 139 51 - 1,337 Assets sold and written off - 106 5 16 6 - 133 Reclassifications to other tangible assets - - (2) (13) - (15) Reclassification - - - (1) - - (1) Balance as at 31 December 2021 - - 20 (20) - - - - 524 752 134 45 - 1,455 Net book value as at 31 December 2021 Net book value as at 31 December 2020 - 1,062 7 43 20 32 1,164 Net book value as at 31 December 2019 - 1,168 8 64 14 1 1,255 Balance as at 31 December 2019 - 1,275 267 87 16 - 1,645 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 38 The Company Land Buildin gs and structu res Machine ry and equipme nt Motor Vehicles Other property, plant and equipment Construction in progress and prepayments Total Cost: Balance as at 31 December 2019 - 1,580 883 231 54 - 2,748 Acquisitions - - - 6 4 1 11 Assets sold and written off - - (232) (50) - - (282) Balance as at 31 December 2020 - 1,580 651 187 58 1 2,477 Acquisitions - - - - 10 32 42 Assets sold and written off - - - - (13) - (13) Reclassifications to other tangible assets - - - (6) - - (6) Reclassifications - - 14 (14) 1 (1) 0 Balance as at 31 December 2021 - 1,580 665 167 56 32 2,500 Accumulated depreciation: Balance as at 31 December 2019 - 306 755 144 38 - 1,243 Depreciation - 106 11 18 6 - 141 Assets sold and written off - - (115) -38 - - (153) Balance as at 31 December 2020 - 412 651 124 44 0 1231 Depreciation - 106 15 6 - 127 Assets sold and written off - - - - (13) - (13) Reclassifications to other tangible assets - - - (1) - - (1) Reclassification - - 14 (14) - - - Balance as at 31 December 2021 - 518 665 124 37 0 1344 Net book value as at 31 December 2021 - 1,062 0 43 19 32 1,156 Net book value as at 31 December 2020 - 1,168 0 63 14 1 1,246 Net book value as at 31 December 2019 - 1,274 128 87 16 - 1,505 Depreciation of non-current tangible assets is included in operating and selling expenses and other operating expenses in the statement of comprehensive income (Notes 20, 21). December 31, 2021 the acquisition cost of fully depreciated but still used property, plant and equipment of the Group and the Company amounted to LTL 870 thousand, respectively. EUR and 773 thousand. (December 31, 2020: EUR 868 thousand and EUR 780 thousand). December 31, 2021 was reclassified from the group of vehicles to the group of machinery and equipment for use. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 39 6. Investment property The Ground and the Company Cost: Land Total Balance as at 31 December 2019 416 416 Balance as at 31 December 2020 416 416 Balance as at 31 December 2021 416 416 Impairment losses Balance as at 31 December 2019 42 42 Balance as at 31 December 2020 42 42 Balance as at 31 December 2021 42 42 Net book value as at 31 December 2021 374 374 Net book value as at 31 December 2020 374 374 Net book value as at 31 December 2019 374 374 The Group's investment property consists of land that is held for capital appreciation. The fair value of the Group's and the Company's investment property in 2021 31 December is 374 thousand, respectively. EUR (374 thousand in 2020). The fair value was estimated based on the analysis of price changes (source: https://www.aruodas.lt/kainu-statistika/) using the comparable price method (level 2). The price level remained similar during the period under review, so we assume that the carrying amount of the investment property is equal to its fair value. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 40 7. Right-of-use assets and lease liabilities The Group Land Buildings and structures Machinery and equipment Motor Vehicles Total Cost: Balance as at 31 December 2019 269 193 70 5 537 Acquisitions 125 - 125 Assets sold and written off (80) (29) (70) (179) Balance as at 31 December 2020 189 164 125 5 483 Acquisitions 80 1 - 81 Assets sold and written off (5) (5) Balance as at 31 December 2021 269 165 125 0 559 Accumulated depreciation: Balance as at 31 December 2019 4 36 55 2 97 Depreciation 3 39 46 2 90 Assets sold and written off - - (70) - (70) Balance as at 31 December 2020 7 75 31 4 117 Depreciation 4 39 47 1 91 Assets sold and written off - - - (5) (5) Balance as at 31 December 2021 11 114 78 0 203 Net book value as at 31 December 2021 258 51 47 0 356 Net book value as at 31 December 2020 182 89 94 1 366 Net book value as at 31 December 2019 265 157 15 3 440 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 41 The Company Land Buildings and structures Machinery and equipment Motor Vehicles Total Cost: Balance as at 31 December 2019 269 154 5 428 Acquisitions 2 - 2 Assets sold and written off (80) (29) (109) Balance as at 31 December 2020 189 125 2 5 321 Acquisitions 80 1 - - 81 Assets sold and written off -5 -5 Balance as at 31 December 2021 269 126 2 0 397 Accumulated depreciation: Balance as at 31 December 2019 4 29 0 2 35 Depreciation 3 28 0 2 33 Assets sold and written off - - - - - Balance as at 31 December 2020 7 57 0 4 68 Depreciation 4 29 1 1 35 Assets sold and written off - - - (5) (5) Balance as at 31 December 2021 11 86 1 0 98 Net book value as at 31 December 2021 258 40 1 0 299 Net book value as at 31 December 2020 182 68 2 1 253 Net book value as at 31 December 2019 265 125 0 3 393 Depreciation expense of the Group and the Company on December 31, 2021 was 91 thousand euros and 35 thousand euros (December 31, 2021 - 90 thousand euros and 33 thousand euros). Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 42 8. Stocks The Group The Company December 31 December 31 2021 2020 2021 2020 Raw materials 2,515 2,167 2,488 2,153 Finished Productions 2,633 2,020 2,685 2,077 Work in progress 27 16 Goods for resale 14 1 14 1 Write-downs to net realizable value (84) - (84) - Total 5,105 4,204 5,103 4,231 December 31, 2021 inventories of the Group and the Company amounting to 5,105 thousand Eur (2020 - 4,204 thousand Eur) were pledged to banks as collateral for loans (Note 18), the value of collateral pledged under pledge notes was 1,448 thousand Eur. 9. Prepayments The Group The Company December 31 December 31 2021 2020 2021 2020 Prepayments to suppliers for resale of long- term assets 604 - 604 - Prepayments to suppliers for raw materials, goods, services 201 268 200 201 Impairment of doubtful prepayments to suppliers - - - - Total 805 268 804 201 Advance payment is interest free and usually has a term of 30-180 days. 10. Accounts receivable The Group's and the Company's trade receivables consist of trade receivables from Lithuanian and foreign customers, interest is not charged on trade receivables and the settlement term is 30-90 days. IFRS 9 requires the Group and the Company to recognize expected credit losses for all debt instruments that are not carried at fair value through profit or loss and for assets arising from contracts with customers. The Group and the Company use the Expected Loss Rate (TNN) matrix to calculate the expected credit loss (ECL) on trade receivables. Expected credit loss rates are based on the customer default history, which is grouped by customer type. The TNN matrix is based on the Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 43 Group's and the Company's historical information on customer defaults. The Group and the Company adjust the values of the matrix to include projected future information. For example, if next year's economy is expected to deteriorate / slow down according to future projections (e.g., GDP levels), which may increase the growth of defaults, historical expected loss rates will be adjusted to reflect future projections. Historical credit loss rates are reviewed for each reporting period. In assessing impairment of trade receivables, individual trade receivables are grouped according to the period of maturity. The Company has calculated the expected credit loss rate used to calculate the ECL and has determined that the calculated amounts do not have a material impact on the financial statements. Trade receivables are secured by credit insurance or collateral. Limitation analysis of the Group's and the Company's trade receivables in December 31, 2021 and December 31, 2021. The Group/The Company Receivables that are not past due and are not impaired Receivables that are past due but not impaired Total Not overdue Less than 30 days 31 - 90 days 91 - 180 days 181- 365 days More than 365 days 2021 1,014 90 26 15 9 - 1,154 2020 902 106 13 12 8 - 1,041 11. Other receivables Other receivables of the Group and the Company comprise: The Group The Company December 31 December 31 2021 2020 2021 2020 Receivable taxes 142 74 136 74 Other receivables 5 43 3 10 Total: 147 117 139 84 12. Cash and cash equivalents The Group The Company December 31 December 31 2021 2020 2021 2020 Cash in bank 1,734 2,871 1,682 2,865 Cash in hand 8 2 8 2 Letter of credit 394 - 394 - Total: 2,136 2,873 2,084 2,867 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 44 13. Reserves Legal reserve The required reserve is required under the legislation of the Republic of Lithuania. At least 5 percent of the net profit calculated in accordance with International Financial Reporting Standards must be transferred to it annually until the reserve reaches 10 percent authorized capital. December 31, 2021 legal reserve was 92 thousand Eur (53 thousand - December 31, 2020). Legal reserve in December 31, 2021 and December 31, 2020 was not fully formed. Reserve for acquisition of own shares The Annual General Meeting of the Company, held on May 16, 2019, the decision formed 264 thousand reserves for the acquisition of own shares. The purpose of acquisition own shares is to maintain and increase the price of the Company's shares. The term during which the Company may acquire its own shares is 18 months from the date of the decision. During the financial year ended at December 31, 2021, the Company transferred 1,385,833 units. treasury shares, the net result from this operation is recognized directly in the statement of changes in equity. 14. Grants and subsidies The Group The Company December 31 December 31 2021 2020 2021 2020 Balance at the beginning of the period 42 0 9 0 Subsidy amounts received 5 303 1 149 Subsidy receivables 1 42 0 9 Amounts of subsidies used (46) 303 (10) 149 Balance at end of period 1 42 - 9 Subsidy amounts were received for staff downtime that occurred in 2020 for Covid-19. 15. Borrowings The Group The Company December 31 December 31 2021 2020 2021 2020 Non-current borrowings 1,080 1,330 1,080 1,330 Other non-current borrowings 1,080 1,330 1,080 1,330 Current borrowings - 133 - 133 Current bank borrowings secured by the Group assets - 133 - 133 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 45 Interest payable is usually paid monthly. As at December 31, 2021, the amount of unused credit limits and overdrafts of the Group and the Company amounted to LTL 434 thousand. EUR (December 31, 2020 - EUR 1,141 thousand). Weighted interest rate 3%. December 31, 2021 and 2020 the Company complied with all obligations under the credit agreements. 145 thousand Eur credit sum is granted to the Company acc. to the account lending contract which was signed between the bank and AB “Linas” on 2012 04 10 Company’s reserves, the balancing value of which are 1 448 thousand Eur according to the mortgage sheets, are mortgaged for the credit sum UAB “Lino apdaila” is guarantee for all credit sum and term to ensure credit sum The validation term of account credit contract is till March 31, 2022 Alternate interests are paid for used credit, which are accounted as three months term Eur EURIBOR plus bank margin. According to the financial obligations limit contract signed between the bank and AB “Linas” on 07 10 2013, the credit of 290 thousand Eur is granted to the Company, for which company resources are mortgaged with the latest mortgage, the balance value of which acc. to the mortgage sheets are 1 448 thousand Eur For the insurance of credit sum the warranty for all credit sum and term is received from UAB “Lino apdaila” The validation term of the financial obligations limit contract has been extended until 2022 September 30,. Alternate interests are paid for used credit, which are accounted as six months term Eur EURIBOR plus bank margin According to the loan agreement, concluded on 17/04/2020 between Linas AB and Verslo dizainas, UAB was granted 1.330 thousand Eur. On 16 June 2021 the loan was taken over by Verslo dizainas, UAB parent company Lidera LT, UAB according to the assignment agreement. 16. Trade debts Trade debts are interest-free and are usually paid within 30 days. 17. Income tax The Group The Company December 31 December 31 2021 2020 2021 2020 Income tax expense components: Income tax expense for the year (212) (98) (208) (77) Deferred income tax expense (income) 18 - 13 - Income tax expense recognized in the statement of comprehensive income (194) (98) (195) (77) The Group The Company December 31 December 31 2021 2020 2021 2020 Deferred income tax assets Impairment of inventories 13 13 Long-term employee benefits 8 3 Others - - Deferred income tax assets, net 21 0 16 0 Deferred income tax liability Depreciation of non-current tangible assets (3) (3) Others - - Deferred income tax liability (3) 0 (3) 0 Deferred income tax, net 18 0 13 0 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 46 The Group The Company December 31 December 31 2021 2020 2021 2020 Profit before tax 1,244 610 1,256 859 Income tax calculated at the tax rate specified in the regulatory enactments (187) (92) (188) (129) Constant differences (7) (6) (5) 52 Temporary differences (18) (15) Income tax (income) expenses (212) (98) (208) (77) Comparison of the amount of income tax expense recognized for the year with the amount of income tax expense that would have been calculated on the pre-tax profit using the statutory income tax rate. 2021 deferred income tax assets and liabilities related to the Group's companies operating in Lithuania are accounted for using 15% tax rate (15% in 2020). 18. Earnings per share Earnings per share represent the Group's net profit divided by the number of shares. The Company has no dilutive measures, so basic and diluted earnings per share are equal. The calculation of earnings per share is as follows: The Group The Company December 31 December 31 2021 2020 2021 2020 Profit (loss) attributable to shareholders of the Group 1,050 512 1,061 782 Weighted number of shares for the period 24,039 24,039 24,039 24,039 Earnings per share, Eur 0.044 0.021 0.044 0.033 19. Financial assets and liabilities and risk management Credit risk None of the Group's customers accounts for more than 10%. The Group has no significant credit risk concentrations in the Group. The Group considers the risk concentration related to receivables to be low because the main customers are concentrated in several jurisdictions and sectors and operate in large independent markets. The Group has measures in place to ensure on an ongoing basis that products are sold only to customers with a relevant credit history and do not exceed an acceptable credit risk limit. December 31, 2021 part of the receivables of Linas, AB customers are insured with an insurance limit of 920 thousand Eur (861 thousand as at December 31, 2020). The Group does not warrant against the obligations of other parties. The maximum exposure to credit risk is the carrying amount of each financial asset, including derivative financial instruments, if any. Therefore, the Group's management believes that the maximum risk is equal to the amount of other receivables from customers, cash and cash equivalents, less any impairment of doubtful receivables at the reporting date. Part of the trade receivables and other receivables are secured by collateral. Interest rate risk Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 47 The majority of the Group's financial liabilities consist of loans with variable interest rates, which are linked to EURLIBOR, EURIBOR and give rise to interest rate risk. The Group and the Company do not have any financial instruments designed to manage the risk of interest rate fluctuations. There is no direct effect of changes in interest rates on equity. The sensitivity of the Group's and the Company's pre-tax profit to potential changes in interest rates does not have a significant impact. Liquidity risk It is the policy of the Group and the Company to maintain a sufficient amount of cash and cash equivalents or to secure funding through appropriate lines of credit to meet the obligations set out in its strategic plans. The Group's liquidity (total current assets / total amounts payable and liabilities within one year) and contingency ratios (total current assets - inventories) / total amounts payable and liabilities within one year in December 31, 2021 were 7.18 and 3.77, respectively, the Company's 7.30 and 3.48 (respectively 5.05 and 2.53 and the Company's 4.88 and 2.43 as at December 31, 2020). The table below summarizes the maturity of the Group's financial liabilities by undiscounted contractual payments (scheduled interest payments): The Group On request until 3 moths Total From 3 to 12 months From 1 to 2 years From 2 to 5 years After 5 years Leasing liabilities - 23 58 99 117 495 792 Loans to banks - - - - - - - Loans to others - - - - - - - Loans to related companies - - - 1,123 - - 1,123 Trade debt - 450 - - - - 450 Trade payables to related companies - 443 - - - - 443 Accrued charges - 11 - - - - 11 Other liabilities - 91 189 - - - 280 December 31, 2021 balance - 1,018 247 1,222 117 495 3,099 Leasing liabilities - 23 76 96 98 401 694 Loans to banks - 136 - - - - 136 Loans to others - - - - 1,423 - 1,423 Loans to related companies - - - - - - - Trade debt - 926 - - - - 926 Trade payables to related companies - 411 - - - - 411 Accrued charges - 10 - - - - 10 Other liabilities - 117 100 50 - - 267 December 31, 2020 balance - 1,623 176 146 1,521 401 3,867 Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 48 The table below summarizes the maturity of the Company's financial liabilities in terms of undiscounted contractual payments (scheduled interest payments): The Company On request until 3 moths After 5 years Total From 3 to 12 months From 1 to 2 years From 2 to 5 years Leasing liabilities - 8 14 40 117 495 674 Loans to banks - - - - - - - Loans to others - - - - - - - Loans to related companies - - - 1,123 - - 1,123 Trade debt - 298 - - - - 298 Trade payables to related companies - 795 - - - - 795 Accrued charges - 8 - - - - 8 Other liabilities - 61 154 - - - 215 December 31, 2021 balance - 1,170 168 1,163 117 495 3,113 Leasing liabilities - 8 32 37 55 401 533 Loans to banks - 136 - - - - 136 Loans to others - - - - 1,423 - 1,423 Loans to related companies - - - - - - - Trade debt - 926 - - - - 926 Trade payables to related companies - 411 - - - - 411 Accrued charges - 7 7 Other liabilities - 117 - - - - 117 December 31, 2020 balance - 1,605 32 37 1,478 401 3,553 Fair value of financial assets and liabilities The carrying amounts of the Company's financial instruments accounted for in the financial statements approximate their fair values. The following methods and assumptions are used to measure each type of financial asset and financial liability: • The carrying amounts of current trade receivables, current trade payables, current liabilities and other receivables and payables approximate their fair values. • The fair value of long-term debt is determined based on the market price of the same or a similar loan or the interest rate that is currently applicable to debt of the same maturity. The fair value of long-term floating rate debt is close to it carrying amount. Foreign exchange risk The currency risk of the Group and the Company is caused by import and export activities. Group policy seeks to align cash flows from highly probable future sales with purchases in each foreign currency. The Group does not use any financial instruments to manage foreign currency risk. except that it is seeking to meet its monetary obligations in euro. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 49 December 31, 2021 and 2020 The Group's monetary assets and monetary liabilities denominated in different currencies were as follows (euro equivalent): The Group December 31, 2021 December 31, 2020 Assets Liabilities Assets Liabilities Euros 4,740 2,857 5,312 3,285 USA dollars 139 - 97 - 4,879 2,857 5,409 3,285 The Company December 31, 2021 December 31, 2020 Assets Liabilities Assets Liabilities Euros 4,676 2,805 5,273 3,235 USA dollars 139 - 97 - 4,815 2,805 5,370 3,235 The table below shows the sensitivity to the realistic change in the exchange rate, with all other variables related to the Group's pre-tax profit unchanged (due to the change in the fair value of monetary assets and liabilities). There is no direct effect of exchange rate fluctuations on equity. The Group / The Company Exchange rate increase / decrease Impact on profit before tax (in thousands of euros) at the end of the year December 31, 2021 December 31, 2020 USA dollars 15,00% (21) (16) USA dollars (15,00%) 21 16 Capital management The objective of the Group's and the Company's management policy is to maintain a significant proportion of equity in relation to borrowed funds in order not to discredit the confidence of investors, creditors and the market, as well as to support future business development. Management monitors the return on capital and makes proposals for the payment of dividends to ordinary shareholders, taking into account the Company's financial performance and strategic plans. The primary objective of capital management is to ensure that the Group and the Company comply with external capital requirements and that they maintain appropriate capital ratios to support their business and maximize shareholder benefits. 2021 31 December The capital of the Company and the Group consisted of the authorized capital in the amount of LTL 6,971 thousand. EUR, own shares with the value of (-) 45 thousand EUR, retained earnings, other and required reserves. According to the Law on Companies of the Republic of Lithuania, the equity of a public limited company must be at least 50%. the size of the company's authorized capital. 2021 and 2020 The Company and its subsidiaries registered in Lithuania have complied with these requirements. In 2021, no changes were made to capital management objectives, policies or processes. The Group and the Company measure capital using the ratio of liabilities to equity. The management of the Group and the Company has not set a specific target-to-equity ratio, but seeks to strike a balance between the higher return that can be achieved with a higher level of borrowed funds and the security provided by a higher level of equity. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 50 20. Operating Expenses The Group The Company December 31 December 31 2021 2020 2021 2020 Selling expenses Expenses on commissions (290) (269) (290) (269) Wages and salaries and social security (260) (189) (260) (189) Evaluate of customers creditworthiness and insurance costs of marketable credits (23) (19) (23) (19) Expenses on productions advertising and fair (40) (43) (40) (43) Expenses on transporting of sold production (16) (32) (16) (32) Depreciation (1) - (1) - Other sales expenses (33) (75) (33) (75) (663) (627) (663) (627) General and administrative expenses Wages and salaries and social security (770) (564) (601) (418) Rent, operating and repairing expenses (396) (146) (274) (146) Depreciation and amortization (176) (192) (113) (124) Expenses of security services (39) (33) (26) (22) Expenses of info technologies (39) (35) (35) (32) Expenses of operating tax (28) (26) (28) (26) Expenses of social guarantees, stated in collective agreement (21) (17) (15) (12) Expenses of bank services (18) (19) (17) (18) Legal services expenses (19) (22) (19) (22) Expenses of support provided (7) (16) (7) (5) Telecommunications expenses (7) (10) (6) (9) Representation expenses (4) (4) (3) (4) Other expenses (2120) (188) (215) (161) (1,736) (1,272) (1,359) (999) Total operating expenses (2,399) (1,899) (2,022) (1,626) 21. Other Income (Expenses) The Group The Company December 31 December 31 2021 2020 2021 2020 Other activity income Income for thermal heating supply 821 409 912 444 Income of rent 117 153 128 148 Income of various storages selling 96 313 106 327 Gains of disposals of fixed assets - 38 27 Other incomes 49 18 73 396 1,083 931 1,219 1,342 Other activity (expenses) Expenses for thermal heating supply (684) (370) (760) (370) Deprecation of rent property, plant, equipment (48) (60) (48) (55) Net cost of sold various storages (158) (275) (149) (273) (890) (705) (957) (698) Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 51 22. Financial activity income (expenses) The Group The Company December 31 December 31 2021 2020 2021 2020 Financial activity income Income interest of borrowings 36 38 36 38 Foreign exchange gain 16 - 16 - Other income 4 - 4 - 56 38 56 38 Financial activity (expenses) Expenses of interest (42) (40) (42) (40) Loss of foreign exchange - (1) - (1) Exchange rate loss (13) (12) (9) (9) (55) (53) (51) (50) 23. Off-balance sheet liabilities and contingencies December 31, 2021 The Group is committed to purchase property, plant and equipment for 821 thousand Eur (0 thousand as at December 31, 2020), which will be resold to the related company. The Company's subsidiary UAB Lino apdaila has provided the Bank with LTL 434 thousand. Guarantees in the amount of EUR 1,274 thousand (2020: EUR 1,274 thousand) for loans received by AB Linas. UAB Lino apdaila is obliged to fully cover the Company's liabilities to the bank if AB Linas is unable to do so. The Group's management believes that the Company for which the guarantee has been provided will meet its obligations to creditors. December 31 2021 and 2020 did not record in the financial statements any liabilities relating to that guarantee. On July 28, 2021 the Bank of Lithuania has decided to postpone the decisions on the tender offer submitted by UAB Verslo dizainas in order to delist the shares of Linas, AB from trading on the regulated market of Nasdaq Vilnius AB, and on the tender offer for 2006. The acceptance of the approval circulars of the acquired control of Linas, AB will be completed by UAB Vasana and UAB Verslo dizainas until the implementation of the purchase and sale agreements of Linas, AB shares and until the Bank of Lithuania investigates whether trading in Linas, AB shares December 20, 2019 until March 9, 2021 without prejudice to the legislation in force. The Group did not recognize any liabilities in respect of that decision in the consolidated financial statements as at December 31, 2021. 24. Related Parties Transactions The parties are considered related when party has to possibility to control the other or have significant influence over the other party in making financial and operating decisions. The related parties of the Group for the years ended 31 December 2021 and 31 December 2020 were as follows: Members of the board of the Company: Egidijus Mikeliūnas, Vilita Skersienė, Renata Railienė. Subsidiary company Lino Apdaila, UAB Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 52 The Group‘s transactions with related parties in 12 month ended 31 December 2021 and 2020 were as follow: As at December 31, 2021 Purchases Sales Non-current loan receivable Payables UAB „Rivena“ - 36 1,424 - UAB „Lidera LT“ 18 - - 1,083 UAB „Verslo dizainas“ 18 - - - UAB “Audilina“ 4,896 942 - 440 Total 4,932 978 1,424 1,523 As at December 31, 2020 Purchases Sales Non-current loan receivable Payables UAB „Rivena“ - 36 1.388 - UAB „Verslo dizainas“ 28 - - 1.347 Total 28 36 1388 1.347 The Company‘s transactions with related parties in 12 month ended 31 December 2021 and 2020 were as follow: As at December 31, 2021 Purchases Sales Non-current loan receivable Payables UAB „Lino apdaila“ (subsidiary) 1,685 153 353 UAB „Rivena“ - 36 1,424 - UAB „Lidera LT“ 18 - - 1,083 UAB „Verslo dizainas“ 18 - - - UAB “Audilina“ 4,896 942 - 440 Total 6,617 1,131 1,424 1,876 As at December 31, 2020 Purchases Sales Non-current loan receivable Payables UAB „Lino apdaila“ (subsidiary) 1,414 87 - 411 UAB „Rivena“ - 36 1,388 - UAB „Verslo dizainas“ 28 - - 1,347 Total 1,442 112 1388 1,758 A loan of 1,170 thousand Eur was granted to UAB Rivena until September 1, 2022. Interest receivable during 2021 amounted to 254 thousand Eur (218 thousand Eur in 2020). The Group and the Company have no guarantees or pledges related to amounts payable or receivable from related parties in December 31, 2021 (December 31, 2020 was a pledge of non-current tangible assets of UAB “Rivena” for the granted loan). Receivables and payables from related parties / related parties will be settled in cash or offset against amounts due / receivable from the respective related parties / related parties. December 31, 2021 and 2020 the annual interest rate on loans granted and received by the Company to related parties is 3%. Transactions with related parties include the sale of goods and purchases of goods and the financing of ordinary activities that are carried out on market terms. Interest payable is usually paid at the end of the loan agreement. The Group's receivables and payables from related parties were not past due and impaired. Linas, AB, company code 147689083, S. Kerbedžio g 23, Panevėžys Consolidated and company‘s financial statements For the year ended December 31, 2021 (All amounts in EUR thousands unless otherwise stated) 53 25. Management remuneration and other benefits The Group's management consists of the Board of Directors and the directors of each Group company. December 31, 2021 Remuneration accrued to the Group's management (3 persons) and the Company (2 persons) amounted to 175 thousand Euros and 147 thousand Euros (As at December 31, 2020 - 147 thousand Eur and 121 thousand Eur). During the financial year ended December 31, 2021 and 2020 there were no other payments or transfers or accruals to / from management, and no other loans or guarantees were received / granted. 26. Subsequent events At March 15, 2022 UAB Rivena has completed the repayment of the entire loan and interest to the Company in accordance with the November 19, 2014 financing agreement. The total amount of covered debt is 1,431 thousand. EUR (EUR 1,171 thousand loan and EUR 260 thousand interest). UAB Rivena no longer has any debt obligations to the Company. March 18, 2022 The company has finished covering its long-term debt to UAB Lidera LT. During 2020 March. the entire remaining loan was repaid - 1,080 thousand EUR and the full balance of accrued interest - 3 thousand. Eur. The company no longer has any debt obligations to UAB Lidera LT. On March 24, 2022, the existing overdraft agreement with Luminor Bank on 145 thousand Eur was extended until 03/10/23. In 2022 due to the protracted raw materials crisis and the war in Ukraine, as a significant part of raw materials was purchased from Belarus, the supply of raw fabrics is partially disrupted. There are no disruptions to the supply of yarns, manufacturing services and auxiliary raw materials. The company has always valued alternative raw material suppliers, so the regrouping of raw fabric supply is currently underway. The current situation does not have a significant impact on the Company's operations. There were no other significant events after the balance sheet events that could have a material impact on December 31, 2021 the financial statements of the Company and the Group. The consolidated financial statements of the Group and the financial statements of the Company were approved and signed in March 21, 2022. . CONFIRMED at the meeting of the Board by the protocol No. 8 on 08 April, 2022 „LINAS“ AB CONSOLIDATED ANNUAL REPORT FOR THE YEAR 2021 Linas AB consolidated annual report for the year 20 2 1 2 INDEX 1. Accounting period the annual report is covering. ............................................................................ 2 2. Companies comprising the Company Group and their contact data. ............................................. 2 3. Principal nature of activity. ............................................................................................................... 2 4. Contracts with intermediaries of public trading securities. ............................................................. 2 5. Data on trading in securities of the issuer in regulated markets. ................................................... 3 6. Fair review of entity’s position, performance and development of the entity’s business, description of the principal risks and uncertainties that it faces. ........................................................ 3 7. Analysis of financial and non-financial performance. .................................................................... 6 8. References and additional explanatory notes regarding the date provided in the consolidated financial statements. .............................................................................................................................. 7 9.Important events after the end of the preceding financial year. ....................................................... 7 10. Operating plans and forecasts of the Company Group. ................................................................. 7 11. Information about research and development activities of the Company Group. ........................ 7 12. Environment control. ...................................................................................................................... 7 13. Information about financial risk management objectives, its measures for hedging major types of forecasted transactions for which hedge accounting is used, and the Company Group’s exposure to the cope of price risk, credit risk, liquidity risk and cash flow risk where the Company Group uses financial instruments and where this is of importance for the evaluation of the Group’s assets, equity capital, liabilities, financial position and performance results. ..................... 8 14. Main features of internal control and risk management systems of Group of companies in relation with consolidated financial reports preparation..................................................................... 8 15. Information about branches and representative offices of the Company. .................................... 8 16. Issuer’s structure of authorised capital and encumbrances for transfer/disposal of said securities. ............................................................................................................................................... 8 17. Information about the own shares acquired and held by the Company and the Group and the same acquired and transferred during the reporting period. .............................................................. 9 18. Shareholders. ................................................................................................................................... 9 19. Employees. ..................................................................................................................................... 10 20. Procedure for amendment of the Articles of association of the Issuer. ...................................... 10 21. Management bodies of the Issuer ................................................................................................. 10 22. Data about the Supervisory Council members, Board members, Audit committee members and administration of the Company........................................................................................................... 14 23. All material agreements to which the Issuer is a party and which would come into effect, be amended or terminated in case of change in the issuer‘s control, also their impact except the cases where the disclosure of the nature of the agreements would cause significant damage to the Issuer15 24. All agreements of the Issuer and the members of its management bodies or the employee agreements providing for a compensation in case of the resignation or in case they are dismissed without due reason or their employment is terminated in view of the change of control of the Issuer. ................................................................................................................................................... 15 25. Information on the significant transactions between related parties. ......................................... 15 26. Information about signed bad contracts (which are not corresponding the goals, present common market conditions, breaking the interest of shareholders or interest of other persons, etc.) of the company in the name of inssuer during the accounting period, which had or in future will have negative influence on the activity of issuer and (or) activity results, also the information about the contracts which were signed during the conflicts between issuer managers, controlling shareholders or other related parties obligations for issuer and their private interest and (or) other obligations. ........................................................................................................................................... 15 27. Information on the compliance with the corporate governance code. ........................................ 16 28. Data about publicly disclosed information. .................................................................................. 16 Linas AB consolidated annual report for the year 20 2 1 2 1. Accounting period the annual report is covering. The AB „Linas“ consolidated annual report has been prepared for the year 2021. 2. Companies comprising the Company Group and their contact data. Principal Company data Name AB „Linas“ (hereinafter the Company) Authorised (share) capital 6,971,307.10 Eur Domicile address S. Kerbedžio g. 23, LT-35114 Panevėžys Telephone (8-45) 506100 E-mail address [email protected] Webpage www.linas.lt Legal-organisational form Public Limited Liability Company Date and place of registration 08-03-1993, Company Register/ City of Panevėžys Company registration number 003429 Date and place of re-registration September 9, 2004, Register of Legal Persons, Registration Certificate No. 003429. Company code 1476 89083 VAT code LT476890811 Legal Entity Identifier (LEI) code 52990054JBNAT4BLVY62 Principal subsidiary data Name UAB „Lino apdaila“ Authorised (share) capital 2,896 Eur Domicile address S. Kerbedžio g. 23, LT-35114 Panevėžys Telephone (8-45) 506111 E-mail address [email protected] Legal –organisational form Private Limited Liability Company Date and place of registration May 23, 2008 Register of Legal Persons, Registration Certificate No. 114552 Company code 3017 33421 VAT code LT100004113316 3. Principal nature of activity. Principal nature of activity is production of textile products and sales. On December 31, 2021 the Group of companies was comprised of AB “Linas” and its subsidiary company UAB “Lino apdaila”. AB “Linas” holds 100% shares of the subsidiary company. The activity of AB “Linas” is sales of linen textile items; other activity of AB “Linas” - management of financial asset (shares and granted loans), supply of the thermal energy, rental of property. The activity of the textile products production is carried out at the subsidiary company UAB „Lino apdaila“. 4. Contracts with intermediaries of public trading securities. On August 24, 2018 AB “Linas” has signed the service contract with the Šiaulių bankas AB (company code 112025254, Tilžės str.149, Šiauliai) regarding the management of company’s stock accounting. Linas AB consolidated annual report for the year 20 2 1 3 5. Data on trading in securities of the issuer in regulated markets. The total of 24,038,990 ordinary registered shares (ISIN code LT0000100661) the total nominal value of which is 6,971,307.10 Eur have been on the Baltic trading secondary list of the Vilnius Securities Exchange (VVPB symbol – LNS1). 6. Fair review of entity’s position, performance and development of the entity’s business, description of the principal risks and uncertainties that it faces. Business continuity or liquidity risk relates to an organization’s ability to continue as a going concern now and in the foreseeable future. The Company's management assessed the potential disruption of cash flows, funding sources, the impact on demand for goods and services, the risk of contamination of critical personnel and the risk of project delays by analyzing all available future information on Covid-19 at the time of preparing this annual report. circumstances that may cast doubt on the Group's going concern. 2021 the pandemic had an indirect positive effect as demand for natural fibers increased and supply chains were shortened. 2022 due to the protracted raw materials crisis and the war in Ukraine, as a significant part of raw materials was purchased from Belarus, the supply of raw fabrics is partially disrupted. There are no disruptions to the supply of yarns, manufacturing services and auxiliary raw materials. The company has always valued alternative raw material suppliers, so the regrouping of raw fabric supply is currently underway. The current situation does not have a significant impact on the Company's operations. 2021 sales to customers in Ukraine, Belarus and Russia totaled only 0.03%. The Group constantly evaluates alternative suppliers of manufacturing services, therefore, in case of unfavorable situation due to the continuity of the activities of current suppliers of manufacturing services (weaving and fabric processing), it has prepared a list of alternative suppliers of manufacturing services. Potential suppliers of production services are evaluated not only in Lithuania, but also outside Lithuania. The Group has no financial liabilities that depend on the needs of the creditor, i.e. on demand. Also, no lawsuits are currently pending, so there are no negative consequences for financial obligations arising or likely to arise from an unfavorable court decision. The only company with a guarantee (surety) for the Company's liabilities is the subsidiary UAB Lino apdaila. The risk of business continuity of the subsidiary is minimal, therefore the possibility of loss of the guarantee is minimal. The amount of the Group's equity is constant and sufficient. No significant changes in the amount of equity are expected. In 2021, in continue of pandemy, raw materials crisis and war in Ukraine, according forecast of activities it wouldn’t increase risk of business continuity. The company has an emergency management commission. By default, without assessing the outbreak of the COVID-19 virus, the Company manages liquidity risk by planning cash flows, which facilitates cash management and, in the absence of cash, the choice of financing method. The company's conservative liquidity risk management allows it to maintain the required amount of cash, and the company seeks to maintain funding flexibility. In a company, liquidity risk management includes cash flow forecasting. The more detailed and accurate this forecast, the better the firm manages liquidity. Deferred payment for goods sold is from 14 to 30 days, in rare cases up to 60-90 days. Suppliers of services and goods are settled in an average of 30 days, and suppliers of raw materials in 0-30 days. This cash flow forecast predicts the nearest cash receipts and payments and allows you to plan short-term borrowing and investing money. At the end of the current year, the budget for the following year is drawn up. Long-term forecasting (over a year) is part of strategic business planning. These cash flow projections provide information about the amount of cash surplus and demand, when there will be a cash surplus or demand, how long the period of cash surplus or additional demand will last, how the cash surplus will be used or the demand will be financed. Linas AB consolidated annual report for the year 20 2 1 4 Risk factors related to the activities of the issuer: Business risk. It is a group of risks related to the environment in which the Company operates and influences the financial results of the Company: the Company's competitiveness in comparison with other manufacturers of products. The Company faces business risk in its environment. Business risk is more related to the environment in which the Company operates and affects the Company's financial performance, which is the Company's competitiveness; economic viability of the Company's major customers; the political and economic environment in the European Union; legal regulations for the purchase of the main raw material. The rise in the price of energy (gas and electricity) and the growth of wages have an impact on the Company, as production costs are rising, as are the costs of importing raw materials and transporting products. By reducing the above-mentioned risks, the company streamlines production by digitizing and standardizing workplaces; improves planning processes; optimizes logistics routes. Competitive risk. The Company faces competitive risks in the domestic and export markets, which is why the Company's primary objective is to increase sales to large dealers, supermarkets to produce large batches of recurring products and thus reduce production costs. The Company faces the main financial risks, which are market risks, which can be divided into three parts: interest rate risk, exchange rate risk and commodity price risk, as well as liquidity risk and credit risk. Currency risk. The Company operates internationally and is therefore exposed to currency risk. In international business, the company settles accounts in foreign currencies, which exposes it to exchange rate risk, which is mainly related to US dollars. Exchange rate risk arises from the purchase of raw materials from China as well as the export of products to the United States and other countries settling for goods in a currency other than the Company's functional currency. The main currency in which the Company reports is Euro. The Company's operating income and expenses are largely independent of changes in market interest rates. However, the Company faces interest rate risk due to long-term loans. In order to determine the impact of interest rates on the Company's results of operations, it is necessary to identify the positions that give rise to interest rate risk. Assets and liabilities that are sensitive to changes in interest rates include actual transactions of the Company such as: investments, loans granted and any other on-balance-sheet and off-balance-sheet transactions that are subject to fixed or variable interest rates and are positively correlated with interest rate fluctuations. The Company does not use any financial instruments to hedge against interest rate risk. Credit risk. In order to avoid customer / buyer non-payment, before signing the contract of sale or sale, the responsible manager or market manager minimally checks the financial / economic situation of the Buyer in public sources (various bases, registers, etc.). Concentration of buyers may affect the Company's overall credit risk as these buyers may be similarly exposed to changes in economic conditions. The company has procedures in place (1 pic.)to ensure that sales are made within the accepted credit risk limits, that is, the company evaluates the reliability of each customer when selling or purchasing goods or services. Sales of products (unloading of goods) within the company are started if there is a 90-100% payment guarantee. The company has various payment methods / guarantees, such as: 100% prepayment; pledging of liquid real estate (value is determined by property appraisers); Bank Guarantor (Bank Guarantee - a security for a settlement, but not a settlement instrument. It is triggered when a payment is not made); documentary letter of credit (L / C); mostly used trade credit limit insurance; collection of documents. Linas AB consolidated annual report for the year 20 2 1 5 1 pic. Geagraphy of the Company‘s sales in 2021 The company pays for the goods and services purchased on time, and evaluates, ranks, determines their reliability, i.e. what kind of hedging they can require, credit line and intraday credit, and constantly monitors their payments. Because this type of risk is extremely well-managed, the company does not have any major new bad debts and can therefore plan its cash flow more easily. Purchasing and supplier risks. Purchases of goods (basic, auxiliary materials, parts, equipment, etc.) and services in the company are carried out through public and restricted tenders or by sending inquiries to suppliers of services or goods. The supplier of the goods or services is usually selected from at least two offers submitted. The Company has procedures for identifying and analyzing purchasing and supplier risk factors. Reputation risk. These risks are related to the decisions made by the Company and the behavior of employees. Reputational risk is important to the company. The company values its reputation and reputation and takes measures to reduce reputational risk. The Company approved a Code of Ethics. The Code of Ethics would establish standards of conduct for all Group employees, regardless of their position, scope of employment, etc. Operational risk. It is the widest group of risks covering the risks related to the activities within the Company, including the safety, reliability, legal basis, and security of internal processes and operations. Operational risk is the risk of an increase in loss, loss of goodwill, loss of confidence, which may be caused by external environmental factors (eg natural disasters, criminal acts of third parties, etc.) or internal factors (eg inefficiency and management, use, deficiencies in internal control, ineffective procedures, malfunctions of information systems, inadequate allocation of functions or responsibilities, etc.). In order to manage operational risk, the Company implements appropriate organizational measures, procedures and information systems supporting business processes, all of which must ensure the proper functioning of the internal control system and proper cooperation with related third parties. The Company applies the following key elements of internal control: separation of business decision making and control functions, procedures for controlling the accounting of operations execution, limits and control of decision-making powers, making collegial decisions in business processes and so on. Representatives of potential and existing clients visited the company to carry out independent audits and positively evaluate the state of the existing infrastructure, the organization of Linas AB consolidated annual report for the year 20 2 1 6 key operational and safety processes, the cooperation with interested third parties and the control system established. The preparation of the Company's financial statements, internal control and financial risk management systems, and compliance with legal acts governing the preparation of financial statements are overseen by the Audit Committee. The Company is responsible for overseeing the preparation of the financial statements. 7. Analysis of financial and non-financial performance. Indicators The Group 2021 The Group 2020 Net profitability (net profit/sales * 100) 6.27% 3.66% Return on equity ROE (net profit/equity) 0,11 0,06 Debt ratio (liabilities/assets) 0,22 0,28 Turnability of assets (sales/assets) 1.3 1.2 Book value of shares (equity/number of shares) 0.41 0.36 Net profit (loss) (thou. Eur) 1,050 512 EBITDA (mln. Eur) (earnings before interest + interest expense + depreciation and amortization) 1.457 0.770 Profit per share 0.044 0.021 Lowest share price (Eur) 0.107 0.09 Highest share price (Eur) 0.2 0.121 Closing price (Eur) 0.14 0.121 Capitalisation (mln. Eur) 3.37 2.91 Net profitability indicator help to estimate company’s gain to shareholders/investitors. Return on equity ROE indicator shows how effectively is using company’s equity. Debt ratio indicator shows opportunities of Group’s short-term and long-term solvency to shareholders and investitors. Turnability of assets shows efficiency of activity. EBITDA indicator shows Profit without influence of capital structure, profit tax and influence of depreciation and amortization. Profit per share indicator is Profit indicator in respect from shareholders. The range pf the pure linen fabrics accounted for 90.2 % of the total products produced in 2021 (in 2020 – 86.7 %). In 2021 19.3 % of the total fabrics produced were used for sewing articles (in 2020 – 23.2 %). In 2021 the Company Group had 1,244 thou. Eur profit before taxes, and taking into account the taxes the net profit of the Group was 1,050 thou. Eur. On 2020 the net profit of the Group was 512 thou. Eur. Export (out of Lithuania borders) volumes during year 2021 made 74.6 % of all sold production. Geographically sales is as follows: Lithuania – 25.6 %, Sweden – 10.3%, Great Britain – 10.1 %, Latvia – 8.9 %, Finland – 6.8 %, Japan – 6.7%, Spain – 5.1 %, USA – 3.7 %, Denmark and Germany – 3.4 % each, Poland – 2.7%, France – 2.2 % and other countries – 9.9 %. During 2021 it was bought 46 tons of cotton yarns: 97% from the Lithuanian suppliers and 3% from Germany. During 2021 it was purchased 333 tons on linen yarn, which was purchased from Chinese (4 companies) suppliers – 67.1 % , Lithuanian (4) suppliers - 20%, Italian (4) suppliers – 6.9%, Dutch (2) suppliers - 2.5 % each and remaining 0.8% from Polish, Spanish, British and USA suppliers. Linas AB consolidated annual report for the year 20 2 1 7 1,599 thou. m of raw fabric was bought in 2021, 95 % of it – from Belarus, 3 % from Lithuania, from Portugal 1%. Pilot purchases of raw materials were made from suppliers in the Netherlands, Latvia and Estonia. 2021-12-31 Group had any debts to the banks and 1,080 thou. Eur long-term debts to others lenders. On 2021-12-31 the sum of AB “Linas” granted loans with interests made 1,424 thou. Eur. 8. References and additional explanatory notes regarding the date provided in the consolidated financial statements. The financial statements have been prepared following the International Financial Accounting Standards. The data provided in the annual financial statements and in the explanatory note are sufficient and comprehensive. 9.Important events after the end of the preceding financial year. At March 15, 2022 UAB Rivena has completed the repayment of the entire loan and interest to the Company in accordance with the November 19, 2014 financing agreement. The total amount of covered debt is 1,431 thousand. EUR (EUR 1,171 thousand loan and EUR 260 thousand interest). UAB Rivena no longer has any debt obligations to the Company. March 18, 2022 The company has finished covering its long-term debt to UAB Lidera LT. During 2020 March. the entire remaining loan was repaid - 1,080 thousand EUR and the full balance of accrued interest - 3 thousand. Eur. The company no longer has any debt obligations to UAB Lidera LT. On March 24, 2022, the existing overdraft agreement with Luminor Bank on 145 thousand Eur was extended until 03/10/23. In 2022 due to the protracted raw materials crisis and the war in Ukraine, as a significant part of raw materials was purchased from Belarus, the supply of raw fabrics is partially disrupted. There are no disruptions to the supply of yarns, manufacturing services and auxiliary raw materials. The company has always valued alternative raw material suppliers, so the regrouping of raw fabric supply is currently underway. The current situation does not have a significant impact on the Company's operations. 10. Operating plans and forecasts of the Company Group. In 2021 the Group of Linas, AB plans to supply linen products to customers which put value upon combination of naturalness and modernity. Companies of the Group will vouch for reliable partnership with customers and suppliers, also will vouch for safe environment to employees as before. The main objectives of the Group are: to increase volume of sales, expanding market in foreign countries and Lithuania, and to decrease cost price of production, optimizing expenses of production and activity costs, buying cheaper raw materials. 11. Information about research and development activities of the Company Group. The Company Group was not carrying out activities related to research and development. 12. Environment control. The items, which are produced by AB „Linas“ Group of companies, are ecological, non- waste product which is not making harmful effect for nature and ecologic. The Group is working acc.to internationally acknowledged quality requirements corresponding to OEKO-TEX 100 standard. AB “Linas” Group of the Companies is executing it’s activity acc.to BAPM (the best accessible production methods) requirements. The Group constantly observe its indicators, executing Linas AB consolidated annual report for the year 20 2 1 8 water taking, sewage and air pollution monitoring, planning and implementing investments, which allow to decrease production and activity expenses and energetic costs and improve environmental control of the Group. All secondary wastes which form in the company – glass, metal, packages of paper and carton, plastic packages and others – are being sorted and passed to the waste administering companies acc.to the signed contracts. The possibility to limit company’s activity or to stop it regarding the influence on the surrounding is very small. 13. Information about financial risk management objectives, its measures for hedging major types of forecasted transactions for which hedge accounting is used, and the Company Group’s exposure to the cope of price risk, credit risk, liquidity risk and cash flow risk where the Company Group uses financial instruments and where this is of importance for the evaluation of the Group’s assets, equity capital, liabilities, financial position and performance results. The Company Group was not using the financial instruments which are of importance for the evaluation of the Group’s assets, equity capital, financial position and performance results. 14. Main features of internal control and risk management systems of Group of companies in relation with consolidated financial reports preparation. The audit committee is supervising the preparation of consolidated financial reports, management systems of internal control and financial risk, observation law regulations which regulate preparation of consolidated financial reports. The application of internal control measures of the Group are indicated by separate orders of the manager, other internal documents. The managers of the Group, through the long job experience, know very well the specific of the activity and risk fields. All this allows to implement sufficient level internal control system in the company. Financial reports of the Group are prepared acc.to International financial accountability standards (TFAS) confirmed by EU. The same internal control organization and accounting principles are applied for all companies of the Group. When preparing these consolidated financial reports, all inter operation between the Group and balance remainders of the accounts and unrealized profit (losses) from the contracts between the Group of companies are being eliminated. Responsible accounting employees constantly checking International financial accounting standards (TFAS), analyzing contracts which are significant for the activity of the company and the Group, ensuring timely and correct processing of collected information and its preparation for financial accountability. 15. Information about branches and representative offices of the Company. The AB „Linas“ does not have any branches or representative offices. 16. Issuer’s structure of authorised capital and encumbrances for transfer/disposal of said securities. The authorised capital registered in the company register of the Republic of Lithuania is equal to 6,971,307.10 Eur. The structure of the authorised capital of the AB „Linas“ according to types of shares is as below: Linas AB consolidated annual report for the year 20 2 1 9 Type of shares Number of shares Nominal value (Eur) Total nominal value Percentage in the authorised capital Ordinary registered shares 24,038,990 0.29 6,971,307.10 100.00 Total: 24,038,990 - 6,971,307.10 100.00 All shares of the AB „Linas“ have been paid in full and they are not subject to any encumbrances for transfer/disposal of said securities. The shares of the Company present the same property and non-property rights and liabilities according to the indications of Joint Stock Company’s law. 17. Information about the own shares acquired and held by the Company and the Group and the same acquired and transferred during the reporting period. In 31 st December 2021, Company has acquired 450,000 pieces of own shares or 7.64% of all shares. 18. Shareholders. The total number of shareholder of the AB „Linas“ as for December 31, 2021 was 1,203. The shareholders holding or in command of more than 5 per cent of the authorised capital of the Company as for December 31, 2021 were: Shareholder‘s name, surname, company‘s name, type, domicile address, code in the Register of Enterprises) Number of ordinary registered shares held on property ownership right (pcs.) Percenta-ge of authorised capital held Percentage of votes granted by the shares held on property ownership right Asociacija „EEEE“, Savanorių pr. 192, Kaunas, company c ode 302572729 5,564,579 23.15% 23.59% UAB „Verslo dizainas“, Savanorių pr. 192, Kaunas, company code 302529076 4,807,800 20.00% 20.38% UAB „Vasana“, Partizanų g. 216-77, Kaunas, company code 305457041 4,755,318 19.78% 20.16% „Rivena“, UAB, P. Žadeikos g. 13-35, Vilnius, company code 302521510 2,423,030 10.08% 10.27% The Company has not been notified any agreements between the shareholders due to which the transfer of securities and/or voting rights could be encumbered. The Company has not information about shareholders which are acting together. None of the shareholders of the Company have any special control rights. All shareholders have equal rights, so the number of shares of the AB „Linas“ carrying votes at the general meeting of shareholders is 25,588,990 (own shares does not have voting rights). Linas AB consolidated annual report for the year 20 2 1 10 19. Employees. The average listed number of employees in AB „Linas“ Group of companies was 120 employees on year 2021. On 2020 this average was 133. During the year the average number of employees decreased by 7 or 6.2 %. Employees 2021 2020 Average conditional number of employees Average salary/wage, Eur Average conditional number of employees Average salary/wage, Eur Management personnel 8 2,579 6 2,433 Specialists and clerks 31 1 , 434 34 1 , 14 9 Workers 81 884 73 828 Total 120 1,113 113 1,014 The salary for the group’s employees was paid acc.to the regulations of Lithuanian Republic Labour codex and juridical acts implementing those regulations, to the confirmed labour payment regulations, to the employees’ work and safety acts and other Lithuanian Republic juridical acts. Average calculated wage in 2021 was 1,143 Eur and compared to 2020 increased by 13 % (in 2020 – 1,014 Eur). The Collective Agreement in AB „Linas“ Group of companies indicates: 1.One-off irretrievable pay is paid: -when employee of the company dies and the family of employee grows children (adoptee) till 18 years old, also the oldest if they are studying at secondary schools at day shift, at professional or higher schools at day shift (including the period of academic holidays), but no longer till 24 – 6 base social pays; -when spouse of company’s employee dies and the family of employee grows children (adoptee) till 18 years old, also the oldest if they are studying at secondary schools at day shift, at professional or higher schools at day shift (including the period of academic holidays), but no longer till 24 – 6 base social pays. 2.Additional paid holidays: up to 3 calendar days in case of death of a family member (parents, husband, wife, child, brother, sister); -1 calendar day for the marriage. 3. The employees who must undergo compulsory medical examination shall be paid average wage for the time spent for such medical check-up. The employer shall also cover all the costs related to such medical checkups. 20. Procedure for amendment of the Articles of association of the Issuer. The Law on Companies of the Republic of Lithuania provides that the right to amend the Articles of Association shall be vested exclusively in the general meeting of shareholders. Adoption of amendment of the Articles of Association requires 2/3 majority vote of the shareholders attending the meeting. 21. Management bodies of the Issuer As determined by the Articles of Association of the AB „Linas” the management bodies of the Company are: General meeting of shareholders; Linas AB consolidated annual report for the year 20 2 1 11 Supervisory Council of AB „Linas“; The Board of the AB „Linas”; Head (Director) of the AB „Linas”. The Supervisory Council shall not be formed. General meeting of the shareholders is the highest body of the company. Only General meeting of the shareholders has the right to: -change the regulations of the company, except the exceptions indicated by Joint Stock Company’s law of Lithuanian Republic; -to elect and revoke members of the Supervisory Council; -to elect and revoke a certified auditor or audit firm intended to carry out an audit of a set of annual financial statements, to establish terms and conditions of payment for audit services; -to approve the set of annual financial statements; -to confirm the set of intermediate financial reports which is done in order to achieve the decision regarding the pay of dividends for the period shorter than financial year; -to make a resolution on allocation of dividends for a period of less than a financial year; -to take the decision to increase the authorized capital; -to indicate the shares class, number and nominal value of issued company’s shares and the minimal price of the emission; -to take the decision to cancel the priority right to all shareholders to obtain company’s shares of concrete emission or convertible bonds; -to take the decision to decrease authorized capital, except the exceptions indicated in Joint Stock Company’s law of Lithuanian Republic; -to take the decision to issue convertible bonds; -to take the decision to convert company’s one class shares into the other class, to confirm the order of shares convert; -to take the decision to obtain own shares for the Company; -to take the decision to liquidate the company, to cancel the liquidation of the company, except the cases indicated in Joint Stock Company’s law of Lithuanian Republic; -to elect and to cancel company’s liquidator, except the cases indicated in Joint Stock Company’s law of Lithuanian Republic; -to take the decision regarding company’s reorganization or separation and to confirm the conditions of reorganization or separation; -to take the decision to reorganize the company; -to take the decision to shake-up the company; -to take the decision regarding the allotment of profit (loss); -to take the decision regarding the reserves making, using, decreasing or cancelling. General Meeting of shareholders can also solve other questions, which are not attributed to the competence of other company’s bodies according to Joint Stock Company’s law of Lithuanian Republic, and if they are not the function of other managing bodies. The call order of General meeting of shareholders of the company doesn’t differ from the order indicated in Joint Stock Company’s law of Lithuanian Republic. The Supervisory Council is a Collegial Body supervising company’s activities. The Supervisory Council is headed by a chairman. The Supervisory Council shall be composed of 3 members. The Supervisory Council shall be elected and revoked by the general shareholders’ meeting. The procedure of election and revocation of the Supervisory Council shall agree with provisions of the Law on Companies of the Republic of Lithuania. The Supervisory Council shall be appointed for a four-year period. The Supervisory Council shall perform its functions within the period fixed in the Articles of Association or until a new Supervisory Council is elected, but not longer than until the ordinary general shareholders’ meeting that is held in the year of expiry of cadence of the Supervisory Council. Number of cadences of a member of the Supervisory Council is not limited. The Supervisory Council shall elect a chairman of the Supervisory Council of its members. Linas AB consolidated annual report for the year 20 2 1 12 The members of the Supervisory Council for their activity can get the bonuses acc.to the order indicated in the article No.59 of the law of Stock Companies. Competence and decision- making of the Supervisory Council shall agree with provisions of the Law on Companies of the Republic of Lithuania. The order of call of the Supervisor‘s Meeting, voting in the Meeting of the Supervisor‘s Council and acceptance of decisions is not differ from the one which is indicated in the law of stock companies of Lithuania Republic. The meetings of the Supervisory Council should be recorded. The procedure of work of the Supervisory Council shall be established by the rules of procedure adopted by the Supervisory Council. The Board is the collegial management body of the company. The Board is elected by Supervisory Council according to the order indicated in Joint Stock Company’s law of Lithuanian Republic. If single members of the Board are elected, so they are elected only up to the end of existing Board cadence. The Board consists of 3 members for 4 years. The chief of the Board is elected by the Board from its members. The working order of the Board is indicated in the accepted work regulation of the Board. Supervisory Council can cancel all the Board or its single members if there cadence is still not over. The member of Board can resign from his post even if the cadence is still not over and to inform the company in written not later 14 days. The competence of the Company’s Board the procedure of it election and dismissal are not different from the same provided for in the Law on Companies of the Republic of Lithuania. The Board shall consider and confirm: Activity strategy of the Company; Activity report of the Company; Organisation/management structure of the Company and list of positions; List of positions to which the employees are admitted following selection procedure; Regulations of branches and representative offices of the Company. The Board shall elect the head of the Company and fix his salary, other terms and conditions of the employment contract with him, confirm his job description, apply motivation and disciplinary measures. The Board shall decide on the information to be treated as commercial (production) secret of the Company. The Board shall adopt: Decisions on becoming the founder or member of other legal persons; Decisions on establishing branches and representative offices of the Company; Decisions regarding the buying of long-term asset, investment, transfer, lease, mortgage and hypotec; Decisions regarding the sponsion or guarantee of liabilities execution of other; Decisions regarding the support providing; Decision to reorganise the Company in cases provided for in Law on Reorganisation of Companies; Other decisions attributed to the competence of the Board by the Articles of Association or by resolutions of the General meeting of shareholders; Before investing the funds or other assets into other legal persons the Board must notify the creditors with who the Company has not settled accounts in the event the total outstanding amount to such creditors is exceeding 1/20 of the authorised capital of the Company. The Board shall analyse and assess the materials presented by the head of the Company concerning: Implementation of the strategy of Company’s activities; Organisation of company’s activities; Financial condition of the Company; Linas AB consolidated annual report for the year 20 2 1 13 Results of business activities, budgets for income and expenses, data of stocktaking and other changes related to assets of the Company; A project of a set of company’s annual and interim financial statements as well as a project of distribution of profit (losses) and submit them to the Supervisory Council and the general shareholders’ meeting accompanied by comments, relevant offers, and the annual report of the company; A project of allocation of dividends for the period of less than a financial year and a set of interim financial statements submitted for its approval, and submit them to the Supervisory Council and the general shareholders’ meeting accompanied by comments, relevant offers, and the interim report of the company. The competence of company’s director, the order of his election or cancelation is not differ from the order indicated in Joint Stock Company’s law of Lithuanian Republic. Director of the company: -organizes daily activity of the company, hires or fires employees, makes and terminates job contracts with them, motivates employees or signs penalties for them; -acts in the name of the company and has the right to sign contracts autocratically; -has to secure company’s commercial (production) secrets which he knew being at this post; -represents the company at the court, in relationships with other juridical and physical persons; -presents the authorization to other persons to execute ions which are at his competence; -perform other functions established by the laws, other regulations of the Republic of Lithuania as well as by company’s Articles of Association and job descriptions. Director of the company is responsible for: -organization of company’s activity and execution of its goals; -preparation of the set of annual financial statements and the annual report of the company; -preparation of a resolution on the project of allocation of dividends for the period of less than a financial year, preparation of the set of interim financial statements and the interim report intended to adopt the resolution on the project of allocation of dividends for the period of less than a financial year; - conclusion of an agreement with an auditor or an audit firm; -presentation of information and documents for General Meeting of shareholders, for the Supervisory Council, for the Board, in the cases indicated in Joint Stock Company’s law of Lithuanian Republic or according their request; -presentation of company’s documents and data to the manager of juridical persons register; -presentation of company’s documents to the Securities Commission and to Central Security Depository of Lithuania; -public announcement of information, indicated in Joint Stock Company’s law of Lithuanian Republic, in newspaper „Lietuvos rytas”; -presentation of information to shareholders; -presentation of all necessary documents which are indicated in the contract with an auditor or an audit company for concrete inspection; -other post execution indicated in Joint Stock Company’s law of Lithuanian Republic and other laws and regulations, also in regulations of the company and in job description of company’s manager. According to the decision of General meeting of Shareholders the Audit committee is formed at AB „Linas“. Company’s Audit committee consists of three members, two of which should be independent. General Meeting of shareholders elect or cancel members of Audit committee according to the offer of company’s Board. The cadence period of audit committee – four years. Continuous cadence period of the member of Audit committee could not be longer than twelve years. Main duties of Audit committee: Linas AB consolidated annual report for the year 20 2 1 14 -to present recommendations to company’s Supervisory Council in relation with selection, nomination, repeated nomination and cancellation of external audit company and to present the contract conditions with audit company; -to watch the execution process of external audit; -to watch how external auditor keeps to the principles of objectivity and independence; -to watch the preparation process of company’s financial reports; -to watch the system effectiveness of Company’s internal control, risk management and internal audit, if it is working in the company; -to execute other functions indicated in Lithuanian Republic laws and to keep to provided recommendations of management codex of companies listed at Vilnius NASDAQ OMX. 22. Data about the Supervisory Council members , Board members, Audit committee members and administration of the Company. V IRGINIJUS KUNDROTAS – independent member of the Supervisory Council. Director of UAB “Integral Leadership Initiatives” (company code 302339130, M. Sederavičiaus St. 11, Kaunas). Head of Baltic Management Development Association (company code 135963288, E. Ožeškienės St. 18, Kaunas). Does not hold shares of the Company. D ARIUS KAZLAUSKAS – independent member of the Supervisory Council. Commercial Director of UAB “Parnidis” (company code 300080024, Kampo g. 25-40, Kaunas). Does not hold shares of the Company. A RŪNAS K ETRYS – independent member of the Supervisory Council. Deputy director of Alba UAB (company code 132713272, Neries kr. 16, Kaunas). Does not hold shares of the Company. Members of the Supervisory Council were elected on April 30, 2021 by the General meeting of shareholders for four periods in office. E GIDIJUS M IKELIŪNAS – Chairman of the Board and head of finance departament. Holds 0,1 % shares of the Company V ILITA S KERSIENĖ – member of the Board. Head of administration of the Company – The Director. Does not hold shares of the Company. R ENATA R AILIENĖ – member of the Board. Head of administration of the subsidiary UAB “Lino apdaila” – The Director. Does not hold shares of the Company. Members of the Board were elected on July 09, 2021 by the Supervisory Council for four periods in office. I NDRĖ G EČIAUSKIENĖ – chief of accountant of the Company until April 16, 2021. Does not hold shares of the Company. I RMA Š LEKYTĖ – chief of accountant of the Company since April 26, 2021 until March 15, 2022. Does not hold shares of the Company. V ANDA N EKRAŠAITĖ – chief of accountant of the Company until April 10, 2020. Does not hold shares of the Company. I NDRĖ G EČIAUSKIENĖ – chief of accountant of the Company since December, 2020. Does not hold shares of the Company. The members of the management bodies of the AB „Linas“ have never been convicted for property, business or financial offences. Information about total amounts and averages per person of the salaries and annual payments from profit paid during the reporting period to the members of the Supervisory Council, the Board and head of administration (head of administration of the Company and chief of accountant of the Company): Linas AB consolidated annual report for the year 20 2 1 15 Indicator Salary for 20 21 (Eur) Payment from profit for 2021 (Eur) Other payments from profit (Eur) Total (Eur) Average per member of the Supervisory Council - - - - Total for all members of the Supervisory Council - - - - Average per member of the Board - - - - Total for all members of the Board - - - - Average per member of administration 73,524 - - 73,524 Total for all members of administration 147,048 - - 147,048 Members of Audit committee were elected for four years cadence during General meeting of shareholders on April 30, 2021. Authorizations are granted to the members of Audit committee and their executing functions are according to regulations of Audit committee. A NA S IRIENĖ – independant member of Audit committee. Head of committee. Certified Internal Auditor. MB ELSAN Owner. Does not hold shares of the Company. L INA B ELICKIENĖ – independant member of Audit committee. Senior accountant of Panevežio miesto greitosios medicinos pagalbos stotis UAB since year 2008. Does not hold shares of the Company. L INA L IESYTĖ – member of Audit committee. Senior accountant of AB “Linas” since year 2008. Does not hold shares of the Company. 23. All material agreements to which the Issuer is a party and which would come into effect, be amended or terminated in case of change in the issuer‘s control, also their impact except the cases where the disclosure of the nature of the agreements would cause significant damage to the Issuer None. 24. All agreements of the Issuer and the members of its management bodies or the employee agreements providing for a compensation in case of the resignation or in case they are dismissed without due reason or their employment is terminated in view of the change of control of the Issuer. None. 25. Information on the significant transactions between related parties. Information on the transactions between the related parties is provided in section 24 of the explanatory notes to the financial statements. 26. Information about signed bad contracts (which are not corresponding the goals, present common market conditions, breaking the interest of shareholders or interest of other persons, etc.) of the company in the name of inssuer during the accounting period, which had or in future will have negative influence on the activity of issuer and (or) activity results, also the information about the contracts which were signed during the conflicts between issuer managers, Linas AB consolidated annual report for the year 20 2 1 16 controlling shareholders or other related parties obligations for issuer and their private interest and (or) other obligations. None. 27. Information on the compliance with the corporate governance code. The information regarding compliance with the corporate governance code is presented in Annex 1. 28. Data about publicly disclosed information. During January – December of year 2021 the Company announced following essential events: 2021-11-30 Activity results of nine months of year 2021 of company AB “Linas” Group of companies. AB “Linas” not audited consolidated interim information of nine months of year 2021 2021 - 09 - 3 0 Activity results of six months of year 2021 of AB “Linas” Group of companies 2021-07-30 The decision of the Bank of Lithuania to postpone decisions approval of circulars of tender o ffe rs submitted by UAB “Verslo dizainas” 2021-07-09 The Board and the Chairman of the Board of AB Linas have been elected 2021-05-31 Activity results of three months of year 2021 of company AB “Linas” group of companies. AB “Linas” not audited consolidated interim information of three months of year 2021 2021-05-31 Regarding intention to announce a mandatory offe r 2021-05-25 Resolutions of the extraordinary General Meeting of Shareholders 2021-04-30 Activity results of year 2020 of AB “Linas” and the G roup of companies 2021-04-30 Resolutions of the Annual General Meeting of Shareholders 2021-04-26 Notice on the intent to remove the shares of AB “Linas” from NASDAQ OMX Vilnius stock exchange and to suspend public offer of shares 2021-04-26 AB “Linas” the extraordinary General Meeting of Shareholders convocation 2021-04-16 Notification of the acquisition of a block of the voting rights 2021-04-16 Notification of the disposal of a block of the voting rights 2021-04-09 Draft Resolutions of the Annual G eneral Meeting of Sharehold ers 2021-03-31 AB “Linas” the Ordinary General Meeting of Shareholders convocation 2021-02-26 Activity results of twelve months of year 2020 of company AB “Linas” Group of companies. AB “Linas” not audited consolidated interim information of twelve months of year 2020 2021-01-19 Regarding th e sale of AB Linas own shares All information on material events made public during 2021 is available on the AB „Linas“ webpage www.linas.lt. Dire ctor Vilita Skersienė Annex 1 To AB “Linas” annual report of year 2021 Corporate Governance Reporting Form The public limited liability company „Linas“ (hereinafter referred to as the “Company”), hereby discloses how it complies with the Corporate Governance Code for the listed NASDAQ OMX Vilnius as well as its specific provision or recommendations. In case of non-compliance with this Code or some of its provisions or recommendations the specific provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance must be specified. In addition, other explanatory information indicated in this form must be provided. Summary of the Corporate Governance Report: According to the By-Laws, the governing bodies of the Company are the General Shareholder’s Meeting, the Supervisory Council, the Board and CEO. The Supervisory Council and the Board represents the shareholders, the Supervisory Council performs supervision functions and the Board performs control functions. The Supervisory Council consists of three independent members elected for the term of four year. The Board consists of three members elected for the term of four years Audit committee is formed in the company which is appointed and cancelled by general meeting of shareholders. Audit committee is formed from three members the two of who is independent. The cadence period of Audit committee is four years. The Board elects and recalls CEO of the Company, sets his/her remuneration and other conditions of the employment agreement. Structured table for disclosure PRINCIPLES/ RECOMMENDATIONS YES/NO /NOT APPLICABLE COMMENTARY Principle 1: General Meeting of Shareholders, equitable treatment of shareholders, and shareholders‘ rights The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders. 1.1. All shareholders should be provided with access to the information and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed. YES The company publishes the most important information and presents it at the general meetings of shareholders. It also enables access to information in other ways and participation in the management of the company in the ways and according to the procedure provided by legal acts. 1.2. It is recommended that the Company capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to all of their holders. YES The company's shares give all shareholders equal rights. 1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. YES The recommendation is followed in accordance with the procedure established by legal acts. 1.4. Exclusive transactions that are particularly important to the Company, such as transfer of all or almost all assets of the Company which in principle would mean the transfer of the Company, should be subject to approval of the General Meeting of shareholders . YES The recommendation is followed in accordance with the procedure established by legal acts. 1.5. Procedures for convening and conducting a General Meeting of Shareholders should provide shareholders with equal opportunities to participate in the General Meeting of Shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the General Meeting of Shareholders should not prevent active participation of shareholders at the General Meeting. In the not ice o f the General Meeting of Shareholders YES The recommendation is followed in accordance with the procedure established by legal acts. Linas AB consolidated annual report for the year 20 2 1 2 being convened, the Company should specify the last day on which the proposed draft decisions should be submitted at the latest. 1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the General Meeting of Shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the General Meeting of Shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the Company. Such documents may be published to the extent that their public disclosure is not detrimental to the Company or the Company commercial secrets are not revealed. YES All meeting documents are prepared in Lithuanian and English languages. The recommendations are followed, and the rights of shareholders living abroad to receive and acquaint with information are ensured. 1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the General Meeting of Shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the General voting ballot. YES Shareholders have the opportunity to vote both directly at shareholders' meetings and in advance. 1.8. With a view to increasing the effectively at General Meetings of Shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in General Meetings of Shareholders via electronic means of communication. In such cases the security of transmitted information must be ensured, and it must be possible to identify the participating and voting person. YES If necessary from the shareholders, consider the recommendation taking into account the potential costs, technological possibilities and other aspects. 1.9. It is recommended that the notice on the draft decisions of the General Meeting of Shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit Company if these issues are included into the agenda of the General Meeting of Shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided. YES Where possible, recommendations are followed. 1.10.Members of the Company‘s collegial managementmbod, heads of administration or other competent persons related to the agenda of general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also partivi[ate in the general meeting of shareholders in case election of new members is included into agenda of the general meeting of shareholder s YES Where possible, recommendations are followed. Linas AB consolidated annual report for the year 20 2 1 3 Principle 2: Supervisory Board 1 For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions. 2.1. Functions and liability of the Supervisory Board The Supervisory Board of the Company should ensure representation of the interests of the Company and its shareholders, accountability of this body to the shareholders and objective monitoring of the Company operations and its management bodies as well as constantly provide recommendations to the management bodies of the Company. The Supervisory Board should ensure the integrity and transparency of the Company accounting and control system. 2.1.1. Members of the Supervisory Board should act in good faith, with care and responsibility for the benefit and in the interests of the Company and its shareholders and represent their interests, having regard to the interests of employees and public welfare. YES All members of the Supervisory Board are independent, which ensures the impartiality of decisions. 2.1.2. Where decisions of the Supervisory Board may have a different effect on the interests of the Company Supervisory Board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the Company risk management and control, and resolution of conflicts of interest. YES All members of the supervisory board are independent, which ensures responsible decisions of the members vis-à-vis all stakeholders. 2.1.3. The Supervisory Board should be impartial in passing decisions that are significant for the Company strategy. Members of the Supervisory Board should act and pass decisions without an external influence from the persons who elected t hem. YES All members of the supervisory board are independent, which ensures responsible decisions of the members vis-à-vis all stakeholders. 2.1.4.Members od supervisory board should clearly voice their objections in case they they beleive that decison of supervisory board is against the interest of the company. Independent memebers of supervisory board should: a) maintain independence of their analysis and decision making; b) not seek or accept any unjustified priviligies that minght compromise their i ndepe ndence. YES 2.1.5. The Supervisory Board should oversee that the Company are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the longterm interests of the Company and its shareholders, which may give rise to reputational, legal or other risks. YES 2.1.6. The Company should ensure that the Supervisory Board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek independent professional advice from external legal, accounting or other experts on matters pertaining to the competence of the Supervisory Board and its committees. YES The recommendation is followed in accordance with the procedure established by legal acts. 2.2. Formation of the Supervisory Board The procedure of the formation of the Supervisory Board should ensure proper resolution of conflicts of interest and effective and fair corporate governance. 2.2.1. The members of the Supervisory Board elected by the General Meeting of Shareholders should collectively ensure the diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the members of the Supervisory Board, it should be ensured that YES Recommendations are followed. Linas AB consolidated annual report for the year 20 2 1 4 members of the Supervisory Board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks. 2.2.2. Members of the Supervisory Board should be appointed for a specific term, subject to individual reelection for a new term in office in order to ensure necessary development of professional experience. YES Recommendations are followed. 2.2.3. Chair of the Supervisory Board should be a person whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or Management Board member of the Company should not be immediately appointed as chair of the Supervisory Board either. Where the Company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision. YES Recommendations are followed. 2.2.4. Each member should devote enough time and attention to perform his duties as a member of the Supervisory Board. Each member of the Supervisory Board should undertake to limit his other professionalobligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the Supervisory Board. Should a member of the Supervisory Board attend less than a half of the meetings of the Supervisory Board throughout the financial year of the Company, the shareholders of the Company should be notified thereof. YES 2.2.5. When it is proposed to appoint a member of the Supervisory Board, it should be announced which members of the Supervisory Board are deemed to be independent. The Supervisory Board may decide that, even though a particular member meets all the criteria of independence, he/she cannot be considered independent due to special personal or Company related circumstances. YES Recommendations are followed. 2.2.6. The amount of remuneration to members of the Supervisory Board for their activity and participation in meetings of the Supervisory Board should be approved by the General Meeting of Shareholders. NOT APPLICABLE During the reporting period, the members of the Supervisory Board acted free of charge 2.2.7. Every year the Supervisory Board should carry out an assessment of its activities. It should include evaluation of the structure of the Supervisory Board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the Supervisory Board, and evaluation whether the Supervisory Board has achieved its objectives. The Supervisory Board should, at least once a year, make public respective information about its internal structure and working procedures. YES Partially executed Linas AB consolidated annual report for the year 20 2 1 5 Principle 3: Management Board 3.1.Principle and liability of management Board The Management Board should ensure the inplementation of the Company‘s strategy and good corporative governance with due regard also to the interest of shareholders, employees and other interest groups. 3.1.1. The Management Board should ensure the implementation of the Company strategy approved by the Supervisory Board if the latter has been formed at the Company. In such cases where the Supervisory Board is not formed, the Management Board is also responsible for the approval of the Company‘s strategy. YES Recommendation are followed. 3.1.2. As a collegial management body of the Company, the Management Board performs the functions assigned to it by the Law and in the Statutes of the Company, and in such cases where the Supervisory Board is not formed in the Company, it performs inter alia the Supervisory functions established in the Law. By performing the functions assigned to it, the Management Board should consider the needs of the Company other interest groups by respectively striving to achieve sustainable business development YES Recommendations are followed 3.1.3. The Management Board should ensure compliance with the laws and the internal policy of the Company applicable to the Company or a group of companies to which this Company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers. YES Recommendations are followed 3.1.4.Moreover, the management board shoudl ensure that the measures included into OECD Good Practice Guidace on International Control. Ethic and Compliance are applied at the company in order to asure adherence to applicable laws, rules and standard s. YES Recommendations are followed acc.to circumstances 3.1.5. When appointing the manager of the Company, the Management Board should consider the appropriate balance between the competence. Recommendations are followed 3.2. Formation of the Management Board 3.2.1. The members of the Management Board, elected by the Supervisory Board or, if the Supervisory Board is not formed, by the General Meeting of Shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the Management Board, it should be ensured that the members of the Management Board would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks. YES Linas AB consolidated annual report for the year 20 2 1 6 3.2.2. Names and surnames of the candidates to become members of the Management Board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of personal data at the meeting of the Supervisory Board in which the Management Board or individual members of the Management Board are elected. If the Supervisory Board is not formed, the information specified in this paragraph should be submitted to the General Meeting of Shareholders. The Management Board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the Company anual report. YES The recommendation is followed in accordance with the procedure established by legal acts. 3.2.3. All new members of the Management Board should be familiarized with their duties and the structure and operations of the Company. YES Recommendations are followed 3.2.4. Members of the Management Board should be appointed for a specific term, subject to individual re- election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status. YES Recommendations are followed 3.2.5. Chair of the Management Board should be a person whose current or past positions constitute no obstacle to carry out impartial activity. Where the Supervisory Board is not formed, the former manager of the Company should not be immediately appointed as chair of the Management Board. When a Company decides to depart from these recommendations, it should furnish information on the measures it has taken to ensure the impartiality of supervision. YES The chairman of the board is the chief financial officer of the company, but does not vote when decisions are made that could cause a conflict of interest 3.2.6. Each member should devote enough time and attention to perform his duties as a member of the Management Board. Should a member of the Management Board attend less than a half of the meetings of the Management Board throughout the financial year of the Company, the Supervisory Board of the Company or, if the Supervisory Board is not formed at the Company, the General Meeting of Shareholders should be notified thereof. YES 3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members willbe independent4 , it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company - related circumstances. NOT APPICABLE 3.2.8. The General Meeting of Shareholders of the Company should approve the amount of remuneration to the members of the Management Board for their activity and participation in the meetings of the Management Board. YES Currently, the members of the Board act free of charge, but if the situation changes, their remuneration would be determined by the company's general meeting of shareholders. Linas AB consolidated annual report for the year 20 2 1 7 3.2.9. The members of the Management Board should act in good faith, with care and responsibility for the benefit and the interests of the Company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to noncompete agreements and they should not use the business information or opportunities related to the Company‘ operations in violation of the Company‘s interests. YES 3.2.10. Every year the Management Board should carry out an assessment of its activities. It should include evaluation of the structure of the Management Board, its work organization and ability to act as a group, evaluation of the competence and work efficiency of each member of the Management Board, and evaluation whether the Management Board has achieved its objectives. The Management Board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data. YES Partially executed 4.Principle 4: Rules of procedure and of Supervisory Boadd and the Management Board of the company The rules of procedure of Supervisory Board, if it is formed at the company and of the management board should ensure eficient operation and decision making of those bodies and promote active cooperation of between the company‘s management bodies. 4.1. The Management Board and the Supervisory Board, if the latter is formed at the Company, should act in close cooperationin order to attain benefit for the Company and its shareholders. Good corporate governance requires an open discussion between the Management Board and the Supervisory Board. The Management Board should regularly and, where necessary, immediately inform the Supervisory Board about any matters significant for the Company that are related to planning, business development, risk management and control, and compliance with the obligations at the Company. The Management Board should inform he Supervisory Board about any derogations in its business development from the previously formulated plans and objectives by specif ying the reasons for this. YES Recommendations are followed 4.2. It is recommended that meetings of the Company‘s collegial bodies should be held at the respective intervals, according to the preapproved schedule. Each Company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings of the Company‘scollegial bodies should be convened at least onec per quater. YES/NO Meetings of collegial bodies are held according to a preliminary schedule. Meetings of the Board of the Company are held at least once a quarter, meetings of the Supervisory Board of the Company are held at least once every six months. 4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have enough time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of th e meeting should not be changed or YES Recommendations are followed Linas AB consolidated annual report for the year 20 2 1 8 supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the Company require immedia te re solution. 4.4. In order to coordinate the activities of the Company‘s collegial bodies and ensure effective decision-making process, the chairs of the Company‘s collegial supervision and management bodies should mutually agree on the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate governance. Meetings ofthe Company‘s Supervisory Board should be open to members of the Management Board, particularly in such cases where issues concerning the removal of the Management Board members, their responsibility or remuneration are discussed YES Principle 5: Nomination, remuneration and audit committees 5.1. Purpose and formation of committees The committees formed at the Company should increase the work efficiency of the Supervisory Board or, where the Supervisory Board is not formed, of the Management Board which performs the Supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest. Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the collegial body. 5.1.1.Taking due acccont of the cmpany-related circumstances and the chosen corporate governant structure, the supervisory board of the company or, in cases where the supervisory board is not foarmed, the management board which perfors the supervisory functiopns, establishes committees. It is recommended that the collegial body should form the nomination, remnumerationa nd audit committees. YES/NO Audit committee is formed 5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the t hree different committees. YES/NO The functions of the Nomination and Remuneration Committee are performed by the collegial bodies themselves 5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole. YES/No Principle is partially executed 5.1.4. Committees established by the collegial body should normally be composed of at least three members. Subject to the requirements of the legal acts, committees could be comprised only of two members as well. Members of each committee should be selected on the basis of their competences by giving priority to independent members of the collegial body. The chair of the Management Board should not serve as the chair of committees. YES 5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and YES/NO Linas AB consolidated annual report for the year 20 2 1 9 performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the Company on its governance structure and practice on an annual basis). In compliance with the legal acts regulating the processing of personal data, companies should also include in their annual reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance. 5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the Company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee. YES 5.2. Nomination committee 5.2.1. The key functions of the nomination committee should be the following: 1) to select candidates to fill vacancies in the membership of Supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected; 2) assess, on a regular basis, the structure, size and composition of the Supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought; 3) devote the attention necessary to ensure succession planning. NO The Nomination Committee has not been formed, its functions are performed by collegial bodies 5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the Company and the heads of the administration, the manager of the Company should be consulted by granting him/her the right to submit proposals to the Nomination Committee. NO 5.3. Remuneration committee The main functions of the remuneration committee should be as follows: 1) submit to the collegial body proposals on the remuneration policy applied to members of the Supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed rate remuneration, performance- based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the Company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so; 2) submit to the collegial body proposals regarding individual remuneration for The Remuneration Committee has not been formed, its functions are performed by collegial bodies Linas AB consolidated annual report for the year 20 2 1 10 members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the Company evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation. 5.4. Audit committee 5.4.1.The key functions of audit committee are defined in the legal acts regulating the activity of the audit committee. YES 5.4.2. All members of the committee should be provided with detailed information on specific issues of the Company‘s accounting system, finances and operations. The heads of the Company‘s administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches. YES The members of the audit are acquainted with the peculiarities of the company's activities. 5.4.3. The audit committee should decide whether the participation of the chair of the Management Board, the manager of the Company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, to meet the relevant persons without members of the management bodies present. YES The company creates all the conditions for the implementation of the recommendation. 5.4.4. The audit committee should be informed aboit interim auditor‘s work program and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work program of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the Company and its group. YES 5.4.5. The audit committee should examine whether the Company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the Company and should also ensure that there is a procedure in place for proportionate and independent investigation of such issues and appropriate follow - up actions. YES 5.4.6. The audit committee should submit to the Supervisory Board or, where the Supervisory Board is not formed, to the Management Board its activity report at least once in every six months, at the time that annual and half - yearly reports are approved. YES Linas AB consolidated annual report for the year 20 2 1 11 Principle 6. Preventon and disclosure of conficts of interest The corporate governance framework shold encourage members Company‘s supervisory and management bodies to avoid confilcts of interest and ensure transparent and effective mechanism of disclosure of conficts of interests related to the members of the supervisory and management body. Any member of the Company Supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the Company interests. In case such a situation did occur, a member of the Company Supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the Company which elected him/her or the Company‘shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value. YES Principle 7: Remuneration policy of the Company The remuneration policy and the procedure for review and disclosure of such policy established at the Company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the administration, in addition it should ensure the publicity and transparency of the Company‘ renumeration policy and its long -term strategy. 7.1. The Company should approve and post the remuneration policy on the website of the Company, such policy should be reviewed on a regular basis and be consistent with the Company‘s long -term strategy. NOT APPLICABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the Company can recover the disbursed amounts or suspend the payments. NOT APPLICABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the Supervisory functions should not receive remuneration based on the Company‘s performance. NOT APPLCABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.4. Remuneration policy should provide enough information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in General should not be higher than the nonvariable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance. NOT APPLICABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.5. If the financial incentive scheme is applied at the Company, the remuneration policy should contain enough information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three years after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares. NOT APPLICABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.6. The Company should publish information about NOT The remuneration policy has not yet been Linas AB consolidated annual report for the year 20 2 1 12 the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial year. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the Company remuneration policy, compared to the previous fin ancia l year. APPLICABLE approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 7.7. It is recommended that the remuneration policy or any major change of the policy should be included on the agenda of the General Meeting of Shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the General Meeting of Shareholders. NOT APPLICABLE The remuneration policy has not yet been approved when preparing the report on compliance with the governance code, therefore the principle is not relevant for the company during the reporting period. 8. Rules of sharehlders in corporate governance The corporate governance framework should recognize the rights of stakehoders entrenched in the laws or mutual agreements and encourage active corporation between companies and stakeholders in creatins the Company value, jobs and financial sustainability. In the context of this principle the concept „stakeholders“ includes investors, employees, creditors, suppliers, clients, local community and other persons having certains interest in the company concerned. 8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected YES 8.2. The corporate governance framework Company applies a should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the Company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the Company authorized capital, involvement of creditors in corporate governance in the cases of the Company‘s insolvencys, etc. YES Follow recommendation acc.to circumstances 8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information. YES 8.4.Where stakeholders participate in the corporate governance process, they should have access to the relevat information. YES Linas AB consolidated annual report for the year 20 2 1 13 Principle 9: Disclosure of information The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including the financial situation, operations and governance of the Company. 9.1. In accordance with the Company procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the Company should include but not be limited to the following: 9.1.1. operating and financial results of the Company; 9.1.2. objectives and non-financial information of the Company; 9.1.3. persons holding a stake in the Company or controlling it directly and/or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary; 9.1.4. members of the Company Supervisory and management bodies who are deemed independent, the manager of the Company, the shares or votes held by them at the Company, participation in corporate governance of other companies, their competence and remuneration; 9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities; 9.1.6. potential factors, the Company‘s risk management and supervision policy; 9.1.7. the Company transaction with related parties; 9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the Company;s shares or share option as incentives, relationships with creditors, suppliers, local community, etc.); 9.1.9. structure and strategy of corporate governance; 9.1.10. initiatives and measures of social responsibility policy and anti-corruption fight, significant current or planned investment projects. This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list. This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts. YES Significant events and key information of the company are made public in accordance with the procedure established by legal acts. Shareholders have access to non-confidential information and other means. 9.2. When disclosing the information specified in paragraph 9.1.1 of recommendation 9.1, it is recommended that the Company which is a parent Company in respect of other companies should disclose information about the consolidated results of the whole group of companies. YES 9.3. When disclosing the information specified in paragraph 9.1.4 of recommendation 9.1, it is recommended that the information on the professional experience and qualifications of members of the Company Supervisory and management bodies and the manager of the Company as well as potential conflicts of interest which could affect their decisions should be provided. It is further recommended that the remuneration or other income of members of the Company Supervisory and management bodies and the manager of the Company should be disclosed, as provided for in greater detail in Principle 7. YES The recommendation is followed in accordance with the procedure established by legal acts. Linas AB consolidated annual report for the year 20 2 1 14 9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time. YES Principle 10. Selection of Company‘s audit firm The Company‘s audit firm selection mechanism shouls ensure the independence of the report and option of the audit firm. 10.1. With a view to obtain an objective opinion on the Company‘s financial condition and financial results, the Company‘ annual financial statements and the financial information provided in its annual report should be audited by an independent audit firm. YES 10.2. It is recommended that the audit firm would be proposed to the General Meeting of Shareholders by the Supervisory Board or, if the Supervisory Board is not formed at the Company, by the Management Board of the Company. YES 10.3. If the audit firm has received remuneration from the Company for the nonaudit services provided, the Company should disclose this publicly. This information should also be available to the Supervisory Board or, if the Supervisory Board is not formed at the Company, by the Management Board of the Company when considering which audit firm should be proposed to the General Meeting of Shareholders. YES
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